0001 1 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 2 ___________________________________________________________ 3 TASHEENA C. RIEHEMANN (previously ) 4 TaSheena Davis), ) ) 5 Plaintiff, ) ) 6 vs. ) No. C-06-05442 RJB ) 7 WASHINGTON MUTUAL BANK, FA dba ) WASHINGTON MUTUAL MORTGAGE - WA ) 8 PROFESSIONAL FORECLOSURE CORPORATION ) OF WASHINGTON, and DOE DEFENDANTS ) 9 1 through 20, inclusive, ) ) 10 Defendants. ) ___________________________________________________________ 11 30(b)(6) EXAMINATION OF 12 ERIC BOVEE 13 Washington Mutual Bank 14 ___________________________________________________________ 15 16 17 August 8, 2007 18 9:00 a.m. 19 705 Second Avenue, 6th Floor Conference Room 20 Seattle, Washington 21 22 23 24 J. Kay Corbett, C.C.R. 25 Court Reporter 0002 1 I N D E X O F E X A M I N A T I O N 2 3 Examination Page 4 5 By Ms. Huelsman ---------------------------------- 5 6 7 8 9 10 I N D E X O F E X H I B I T S 11 12 No. Description Marked Identified 13 1 Customer Service Printout 28 29 14 15 2 Customer Service Printout 34 35 16 3 Consolidated Notes Log 39 39 17 18 4 Delinquency Printout 58 58 19 5 WaMu Bankruptcy Microfiche 60 61 20 Printout 21 6 Collections/Customer Service 87 88 22 Loan Activity Archive 23 7 Loan History Printout 92 92 24 25 8 6/11/05 Correspondence 94 94 0003 1 9 6/19/04 Correspondence 96 96 2 10 8/7/03 Correspondence 97 97 3 4 11 7/7/03 Correspondence 98 98 5 12 6/10/03 Correspondence 99 99 6 7 13 12/7/02 Correspondence 100 100 8 14 6/1/02 Correspondence 101 101 9 10 15 9/16/01 Correspondence 102 102 11 16 8/17/01 Correspondence 102 102 12 13 17 7/29/02 Corespondence 103 104 14 18 Email Chain and Order 106 106 15 Dismissing Case 16 19 Spreadsheet Prepared by the 112 113 17 Witness 18 20 Spreadsheet Prepared by the 121 121 19 Witness 20 21 Spreadsheet Prepared by the 147 147 21 Witness 22 22 PinPointe Report 149 149 23 24 25 0004 1 A P P E A R A N C E S 2 3 For the Plaintiff: MELISSA A. HUELSMAN 4 Law Offices of Melissa A. 5 Huelsman 6 705 Second Avenue, Suite 501 7 Seattle, Washington 98104 8 (206) 447-0103 9 Mhuelsman@predatorylendinglaw.com 10 11 For the Defendants: MARK J. PHELPS 12 Washington Mutual Legal Dept. 13 1301 Second Avenue, Ste. 3501 14 Seattle, Washington 98101 15 (206) 500-4256 16 mark.phelps@wamu.net 17 18 Court Reporter: J. KAY CORBETT, C.C.R. 19 Van Pelt, Corbett & Bellows 20 100 South King Street, Suite 360 21 Seattle, Washington 98104 22 (206) 682-9339 23 reporters@vanpeltdep.com 24 25 0005 1 ERIC BOVEE, having been first duly sworn 2 by the Notary Public, appeared 3 and testified as follows: 4 5 6 E X A M I N A T I O N 7 BY MS. HUELSMAN: 8 Q. We've already met this morning. I'm Melissa Huelsman, 9 and I'm going to take your deposition. 10 I need you to state your name and your address 11 for the record, and please spell your name. 12 A. It's Eric, E-r-i-c, Bovee, B-o-v-e-e. 13 Q. Again, I'm sorry, o-v -- 14 A. O-v -- "B" as in "boy," "o" as in "orange," "v" as in 15 "Victor," "e" as in "Eric," "e" as in "Eric." 16 Q. And your address? 17 A. Currently I'm working out of my home, so I don't know if 18 I should -- I don't want to give my home address. 19 I don't know how you want to do this. Should I 20 just give the Seattle address, because I'm employed by 21 Washington Mutual? 22 Q. I guess I've never had anybody be concerned that I would 23 misuse their personal address, but go ahead. 24 THE WITNESS: Mark, what's the address here 25 for -- 0006 1 MR. PHELPS: Gosh. 2 Q. [By Ms. Huelsman] Why don't you tell me what city you 3 live in. 4 A. Milwaukee, Wisconsin. And, no, I don't think that you 5 would misuse it. 6 Q. Can you give me your current title? 7 A. My current title is a research operations analyst. 8 Q. And that is for which Washington Mutual entity? 9 A. Washington Mutual Bank. 10 Q. And how long have you held that position? 11 A. I think it's -- this current position, I have been in it 12 since January of -- March of '03 -- or of '07, sorry. I 13 have been with the bank since June of '03. 14 Q. And why don't you tell me what your job entails as a 15 research operations analyst? 16 A. Basically I work with the legal department, researching 17 any of the information they would need regarding 18 litigation. I do payment histories, reviewing loans, 19 notes, providing documentation for them, like copies of 20 origination files -- basically anything that they need, 21 I provide for them. 22 Q. And you're able to do all of this out of your house? 23 A. Yes. 24 Q. Technology is fabulous. Can you just give me a general 25 description of how you're able to do that by working out 0007 1 of your house? 2 A. Basically, payment history is another thing. We have 3 what is called the Fidelity System. It's the computer 4 operating system they use for tracking all of the loan 5 data for payment histories and notes. 6 I access that from the system. I can print them 7 out at my home. I can also go into a program called 8 Image Web on the Internet for Washington Mutual, where I 9 can pull down loan documents. I have access to Pacer to 10 look at bankruptcy information. 11 I also go into the vendor files and look at, you 12 know, ordering them; and I can look at whatever is going 13 on in regards to foreclosure or a bankruptcy. 14 Q. And you're doing that -- essentially you're accessing on 15 this computer system through the Internet? 16 A. Yes, or ordering hard files from the vendor or from one 17 of our record-retention areas. 18 Q. And then they're just shipped to you at your house for 19 you to look at and review? 20 A. Yes. 21 Q. I started leaping ahead into questions, but I'm just 22 going to take a second to remind you of a few of the 23 rules of depositions. 24 A. Go ahead. 25 Q. Have you ever had your deposition taken before? 0008 1 A. Yes. 2 Q. And I'm going to remind you, you have to let me finish 3 asking the questions before you answer so that we don't 4 make this nice lady crazy. 5 And I talk very fast, generally, so -- today I 6 might not because I'm so tired, but I generally talk 7 fast, so it's even more important that you let me finish 8 because me talking fast and you talking over me is going 9 to make her life miserable. 10 And how many times have you had your deposition 11 taken before? 12 A. Oh, probably over a dozen. 13 Q. And were those all on behalf of Washington Mutual? 14 A. The majority of them, yes. Before that I worked for a 15 company called Marshall & Ilsley Bank, and I had maybe 16 two depositions for them. 17 Q. Of Washington & Marshall? 18 A. No, it's Marshall & Ilsley. 19 Q. Thank you. See. Sorry. 20 A. That's okay. 21 Q. As soon as I said it, I realized what was wrong. 22 A. And it's not the Starbucks. 23 Q. Yes. And you understand that you are here today 24 testifying as the corporate representative for 25 Washington Mutual Bank; is that correct? 0009 1 A. That's correct. 2 Q. Under Federal Rules of Civil Procedure 30(b)(6), 3 correct? 4 A. Yes. 5 Q. So when you are answering questions, you're answering 6 them on behalf of Washington Mutual. You understand 7 that, correct? 8 A. Yes. 9 Q. And I assume you have reviewed the Notice of Deposition, 10 so you know the topics that I want to cover; is that 11 correct? 12 A. Yes. 13 Q. So, in general, the questions I want to ask you are only 14 on behalf of the bank, but I do want to get a little bit 15 of background information about you so I understand the 16 basis for your knowledge, okay? 17 A. Sure. Okay. 18 Q. So right now you've already given me a general 19 description of what you're doing currently for 20 Washington Mutual. I'm going to backtrack a bit and get 21 a little bit of your background, okay? 22 A. Sounds good. 23 Q. Why don't you give me your educational background since 24 high school. 25 A. Undergraduate at UW-Parkside. That's the University of 0010 1 Wisconsin-Parkside. 2 Q. You have to watch saying "UW" out here. 3 A. Oh? 4 Q. It's the University of Washington. 5 A. Oh, okay. I thought there was some rivalry going on. 6 Q. No, no. So the University of Wisconsin -- 7 A. Parkside. 8 Q. Parkside, okay. 9 A. Yes. I got an undergrad degree in political science. 10 That was my bachelor's. 11 I got a paralegal certification at Carthage 12 College in Kenosha, Wisconsin. 13 Q. Carthage? 14 A. Yeah, Carthage. 15 Q. C-a-r-t-h-a-g-e? 16 A. Yes. 17 Q. Just like in the ancient country? 18 A. Yes. 19 Q. Okay, go ahead. 20 A. And then I got my J.D. from Marquette University out of 21 Milwaukee, Wisconsin. 22 Q. And when did you get your undergrad degree? 23 A. I graduated in 1994. 24 Q. And when did you get the paralegal certification? 25 A. 1995. 0011 1 Q. And when did you get your J.D.? 2 A. 2003. 3 Q. Are you admitted to any Bars? 4 A. Yes. I'm a member of the Wisconsin Bar. 5 Q. Any other Bars? 6 A. Other than the ABA, general, no. Just the Wisconsin 7 Bar. 8 Q. Any other education since high school? 9 A. No. 10 Q. Why don't you give me your job history since high 11 school. 12 A. Wow, we're going back a ways. In high school I was a 13 lifeguard for a number of years. 14 I did, in undergrad, odd jobs, like driving a 15 school bus at one point. After college I joined the law 16 offices of Gerald Shapiro, which was a vendor, default 17 vendor, for Fleet Mortgage in 1997. 18 Q. Okay, I'm just going to slow you down for just a minute 19 here. 20 A. Sure. 21 Q. That was the law offices of -- 22 A. Gerald Shapiro. 23 Q. Is that with a "J" or a "G"? 24 A. "G." Their acronym is LOGS. 25 Q. And how did you describe that law firm? 0012 1 A. Well, actually, it's a default vendor service for a lot 2 of banks. We were working with the Fleet Mortgage 3 account. 4 LOGS is now First Am. First Am bought out LOGS. 5 Q. What position did you hold with LOGS? 6 A. I was a bankruptcy specialist. 7 Q. And what did that job entail? 8 A. Basically preparing for outside counsel, filing Proof of 9 Claims, Motions for Relief, basically anything that was 10 needed during the bankruptcy. All of the payment 11 histories, documents, whatever they needed. 12 Q. Did you receive training for that job? 13 A. In-house training, yes. 14 Q. Can you tell me what it consisted of? 15 A. Basically it walked us through the steps that we would 16 go through from cradle to grave on a bankruptcy: 17 Preparing the documents for the filing of the Proof of 18 Claim in a Chapter 13; submitting that information out 19 to local counsel. 20 For a Chapter 7 it was reviewing the account to 21 see if we needed to file a Motion for Relief; and if we 22 needed to file a Motion for Relief, we would go through 23 what we needed to provide to file the Motion for Relief. 24 And then monitoring the account, as the case was either 25 dismissed, discharged, or Relief was granted. 0013 1 Q. I will just tell you, I understand what you do in this 2 whole process -- 3 A. Yes. 4 Q. -- unfortunately, but I'm going to just make sure that 5 I'm understanding what you're saying for the record, so 6 we have a good record, okay? 7 A. Uh-huh. 8 Q. So LOGS was a vendor who was contracted by various 9 lenders, and then the account that you worked on was 10 Fleet Mortgage -- 11 A. Correct. 12 Q. -- to handle their accounts, once they had filed 13 bankruptcy -- once one of their clients had filed 14 bankruptcy? 15 A. Correct. 16 Q. And so where was LOGS located? 17 A. It was located in Milwaukee, Wisconsin. 18 Q. Now, did LOGS only handle accounts for Fleet Mortgage in 19 Wisconsin? 20 A. I believe they -- yes, only Fleet Mortgage in Wisconsin. 21 That's the only one I was aware of. 22 Q. But they do handle accounts for other lenders 23 nationwide, correct? 24 A. Yes. 25 Q. And so what LOGS does, is, they're then the entity that 0014 1 gets the file, handles it, prepares it, as you 2 described, to be dealt with in a bankruptcy proceeding. 3 It then subcontracts that work out to the local law firm 4 wherever the bankruptcy has been filed; is that correct? 5 A. That's correct. I mean, they have -- the local counsel 6 are all part of this LOGS matrix of different attorneys. 7 They have -- a lot of them are all Shapiro and whatever, 8 other attorneys in that local jurisdiction. 9 There was some kind of contract between LOGS and 10 those attorney offices. And I don't really pretend to 11 understand everything there -- 12 Q. Sure. 13 A. -- but there was a relationship, and we would use a 14 certain network of attorneys that were in the LOGS 15 network. 16 Q. And that's my understanding as well. I just wanted to 17 be clear that I understand what you're saying. 18 A. Yes. 19 Q. So if a debtor's attorney somewhere in Wisconsin 20 needed -- was objecting to, say, a Proof of Claim, that 21 objection would go to the local attorney to handle, 22 correct? 23 A. Correct. 24 Q. But then that local attorney would escalate to LOGS to 25 get information from you or get documentation from you, 0015 1 correct? 2 A. Yes. If there were certain things they needed, they 3 would come to us, for us to provide that for them. 4 Q. And the same is true if that local attorney was retained 5 to provide or to bring a Motion for Relief and Stay or 6 whatever, LOGS would be the one that would provide the 7 information to that local attorney for utilizing in that 8 bankruptcy? 9 A. That's correct. 10 Q. And then you prepare whatever documentation is needed by 11 that local counsel? 12 A. Correct. 13 Q. Were you actually preparing Proofs of Claim? 14 A. Yes. 15 Q. And did you actually prepare Motions for Relief or just 16 the supporting documentation? 17 A. Let me backtrack. It was mostly the supporting 18 documentation for the filing. The attorneys would 19 actually fill the forms out, the Proof of Claim, or, you 20 know, fill out the Motion for Relief. 21 We didn't actually prepare those documents. We 22 just provided the backup document to prove what -- you 23 know, those figures. 24 Q. And then was it somebody at LOGS who determined whether 25 or not a Relief of Stay or Motion should be filed? 0016 1 A. It was actually more of a computer-generated thing. If 2 a debtor filed more than three to four months, depending 3 on the jurisdiction, delinquent post-petition, it would 4 automatically get queued up to have a Motion for Relief 5 sent out to local counsel. 6 Q. And then was LOGS also the entity that was keeping track 7 of Chapter 13 plan payments that were received? 8 A. Yes. There would be -- there was, again, through the 9 computer system, if a payment came in, it would pump up. 10 One post-petition trustee would go towards the 11 pre-petition. Payments for those were all tracked. A 12 lot of it was done by hand at that time. 13 Q. And I'm sorry, I didn't -- can you clarify -- 14 A. 1997, sorry. 15 Q. Okay, that's good, for clarity. 16 A. Yes. 17 Q. So you started working at LOGS in 1997? 18 A. Correct, April of '97. 19 Q. And when did you leave? 20 A. I left in December of '99, right before Y2K. 21 Q. And I have that you graduated in '94; is that correct -- 22 A. Yeah. 23 Q. -- as an undergrad? 24 A. Yeah, undergrad in '94. 25 Q. Where did you work between '94 and '97? 0017 1 A. I worked at a lot of odd jobs, you know: Lifeguarding, 2 driving school buses. I can't even remember that far 3 back, some of the jobs I did. 4 Q. Sure. 5 A. I worked for the city, doing yard waste pickup at one 6 point. A lot of different things. 7 Q. Now, you left LOGS in December of '99. 8 A. Correct. 9 Q. And why did you leave the job? 10 A. I got another job with the Marshall & Ilsley Bank. 11 Q. Can you spell Ilsley for me, please. 12 A. It's I-l-s-l-e-y, I believe. I'm pretty bad at 13 spelling, myself, but I think that's right. 14 Q. And how long did you work there? 15 A. From, basically, January of 2000 until March of '03. 16 Yeah, that's about right. 17 Q. And what was your job title there? 18 A. Bankruptcy specialist. 19 Q. And what did you do in that job as a bankruptcy 20 specialist? 21 A. Pretty much the same thing I did for LOGS: Preparing 22 Proof of Claims, preparing Motions for Relief, 23 monitoring accounts while they were in bankruptcy. 24 The only thing that was kind of different there 25 is that we actually filed our own in-house reports. 0018 1 Q. Did Marshall & Ilsley only do loans in the state of 2 Wisconsin? 3 A. No. They did some outside of Wisconsin, not very many; 4 but the majority of the stuff that I handled was all 5 Wisconsin. 6 Q. And was that your job title the entire time you were 7 there with Marshall & Ilsley? 8 A. Yes. 9 Q. So that takes us to March of '03? 10 A. Uh-huh. 11 Q. So you worked while you were in law school? 12 A. Yes. 13 Q. When did you start law school? 14 A. I think it was the fall of 1999. It was four years. 15 Yeah, that would be right. I went part-time 16 nights, for four years. 17 Q. Okay. And then you left Marshall & Ilsley in March of 18 2003? 19 A. Yes. 20 Q. And where did you go to work then? 21 A. Actually, I took some time off, because I had my last 22 semester of finals, and then preparing all of my stuff 23 for the application to the Bar, you know, the background 24 checks and stuff like that, I just took some time off to 25 finish it out. I was pretty burned out at that point 0019 1 from working and going to night school. 2 Q. So that lasted until when? 3 A. June of '03 I started with Washington Mutual. 4 Q. What was your job title when you started at WaMu? 5 A. I was a business analyst when I first started. 6 Q. What did that job entail? 7 A. Basically I was hired, as part of the foreclosure 8 department, to review the timelines from when accounts 9 were getting out of bankruptcy and when foreclosures 10 were restarting. I did a lot of foreclosure timeline 11 management. I was hired because of my bankruptcy 12 knowledge. 13 Q. Was that only for Wisconsin or nationwide? 14 A. That was nationwide, Washington Mutual, nationwide, 15 interestingly enough, reviewing the things that LOGS was 16 doing. 17 Q. It all comes full circle. 18 A. Yes, it does. 19 Q. So you said you were reviewing timelines when accounts 20 came out of bankruptcy in the foreclose process; is that 21 correct? 22 A. Yes. 23 Q. Were those only Chapter 13s or Chapter 7s or both? 24 A. Both. Also I was involved in writing -- or helping 25 write -- giving input into the creation of new policies 0020 1 regarding the relationship between Washington Mutual 2 default and our vendors, be it LOGS, which eventually 3 became Fidelity -- Fidelity came onboard as well. 4 Q. Now, I don't want to put words in your mouth, but was 5 there a presumption that if an account came out of 6 bankruptcy, that the foreclosure process would begin on 7 a regular basis, or was that just the ones that you were 8 reviewing were -- 9 A. Basically, there were accounts coming out of bankruptcy 10 that were still going, because they were either 11 dismissed or Relief was granted. And there were delays 12 occurring from when we removed it from the bankruptcy 13 department and put it back into the foreclosure 14 department. 15 There was delays there, and we were trying to 16 figure out why we were having delays because we were 17 taking penalties from our investors for the gaps that 18 were going on. 19 Q. I just want to get this down. 20 A. Just to make it clear, it's only when the loans were 21 still in default, coming out of bankruptcy. 22 Q. Was it part of your job to determine whether or not the 23 loans actually were in default when they came out of 24 bankruptcy? 25 A. I did review some of those that got into question. 0021 1 Normally what happens when an account comes out of 2 bankruptcy, especially if it's discharged, the vendor 3 does a reconciliation and makes sure that the loan is 4 paid through where it's supposed to be, and then it 5 would go on to the collection department. 6 If there was a question about whether or not 7 money was applied, I would review those -- if they were 8 applied correctly, I would review those. 9 Q. So I want to make sure I understand. If the case was 10 discharged, then it was going to be reviewed to make 11 sure that all of the vendors are cleared out of the 12 account; is that correct? 13 A. To make sure that all of the money was applied correctly 14 during the bankruptcy, so that at the end of the 15 discharge, it should be current. 16 We've got to make sure that it is current. If 17 it's not current, we need to figure out why it's not 18 current. 19 Q. Okay. And you were one of the people who was making 20 that determination? 21 A. Oh, no. If it's discharged, that would be our vendors 22 that would be doing that. It's part of the 23 reconciliation process. 24 Q. And you weren't checking the vendors, though? 25 A. I was only checking the vendors if there was a question 0022 1 about whether or not it was current or money was applied 2 correctly. If it got escalated up to my level, I would 3 get involved. 4 Q. Okay, but if the vendor just said: Hey, we think this 5 money is still -- you know, they're still showing in 6 arrears -- since I'm not phrasing it properly -- if a 7 vendor thought that the loan was still in arrears and 8 unless somebody questioned that, it would just go 9 through the process? 10 A. Yes. 11 Q. It wouldn't get escalated to you? 12 A. Right. 13 Q. So who would identify that something was wrong or that 14 it needed to be escalated to you? 15 A. Usually those came in when we would get a dispute from 16 the mortgagor about where they were post-petition -- 17 where they were after the bankruptcy, post-bankruptcy. 18 They would get their -- if the vendor couldn't 19 resolve it, it got kicked up to us. If we couldn't 20 resolve it because there was something else going on, 21 then we would kick it further up to Legal or some other 22 entity above us. 23 Q. And Washington Mutual, what process did they have in 24 place for applying payments while people were in, say, a 25 Chapter 13? 0023 1 A. Well, like every other major lender, money is only 2 actually applied contractually, but we do have a system, 3 and we do also hand-analysis to track money coming in 4 during the bankruptcy, what is post-petition, what is 5 pre-petition. 6 We have ledgers that we prepare for these things 7 and make sure that everything was applied correctly and 8 didn't have money going to, say, fees or something 9 inappropriately that weren't claimed. 10 Q. So you said that this was all done electronically as 11 well as in handwritten ledgers? 12 A. Well, actually, the ledgers are all in Excel 13 spreadsheets, so -- 14 Q. Okay. 15 A. We don't do hand ledgers anymore. That was back in the 16 dark days. That was really time-consuming. 17 Q. Oh, I'm sure it was. So when you -- I thought you used 18 that phrase a few minutes ago, and what you were really 19 referring to is Excel spreadsheets? 20 A. Yeah. We still call them pencil ledgers even though 21 they are no longer done by pencil. It's just a name 22 that sticks. 23 Q. Okay, sure. But the payment system on the computer 24 system, did that have a name? 25 A. It's all part of the Fidelity System. It's -- I don't 0024 1 think they have a specific name for -- other than that 2 -- for money, the money system. 3 But it -- again, like I said, it applies money 4 only contractually. It's just a system limitation that 5 we have with our -- all mortgagors have that kind of 6 thing, from the experiences I've had. 7 I'm sorry, your question: Did they have a name? 8 No, it doesn't. Other than the Fidelity System, it 9 doesn't have a name. 10 Q. That's all right. You're trying to explain it to me, 11 and that's all good. 12 A. I lost track there for a second. 13 Q. That's fine. 14 MR. PHELPS: I'm going to interject, you 15 know, to the extent that this is relevant or 16 applies to his expertise and what he is going to 17 be talking about here with regard to this loan, I 18 don't have a problem; but you're getting a little 19 bit far afield here. 20 MS. HUELSMAN: Actually, no. I think we're 21 right on target, because if he's going to testify 22 about how my client's payments were applied, then 23 I think it's absolutely relevant for me to ask 24 him questions regarding the system that was used. 25 MR. PHELPS: Okay. 0025 1 Q. [By Ms. Huelsman] So when would the Excel spreadsheet 2 or the pencil ledgers be used in this process? 3 A. They come in at a number of different points, like if 4 there's a Motion for Relief having to be filed, we would 5 parry a pencil ledger to make sure that our system is 6 showing correctly that the money was applied correctly 7 before we would file a Motion. 8 We don't want to end up filing a Motion and find 9 out, you know, that there was a payment misapplication, 10 that they're not delinquent when we're showing they are. 11 So we would make sure everything was in line if 12 we're filing a Motion for Relief. Or upon -- when it 13 was discharged, we would reconcile the loan by doing a 14 pencil ledger and make sure all the money was applied 15 correctly during the bankruptcy. 16 Q. I think when you started answering this question, you 17 were referring to a time when you were at LOGS? 18 A. Yeah. Well, that's the same procedures they have with 19 the vendor now, even though I'm now with Washington 20 Mutual. I know how they do their work, and I would 21 review their work and would do it that way. 22 Q. Okay. So if the vendor, LOGS, now called Fidelity -- 23 A. Yes. No, now called First Am. We have a new vendor 24 called Fidelity. 25 Q. Okay, that provides the payment history system or the 0026 1 payment computation system, is that correct, to 2 Washington Mutual? 3 A. They would take our payment history from our system, and 4 then they would make a pencil ledger and provide that to 5 outside counsel to -- 6 Q. Okay. 7 A. Well, like in the case of a Motion for Relief, to make 8 sure that all the figures add up correctly; or upon 9 reconciliation, they would review the loan to make sure 10 that all the money was applied correctly. 11 Q. Okay. So I want to make sure that I'm understanding you 12 correctly. 13 A. Uh-huh. 14 Q. Washington Mutual's payment history, computerized 15 system, you said that it was supposed to be applying 16 payments per the contract; is that correct? 17 A. Yes. 18 Q. So what you're saying is that Washington Mutual's 19 computer system has programmed into it knowledge, 20 essentially, regarding what the contract terms were and 21 how a payment should be applied for each particular 22 loan? 23 A. Yeah. The loan is set up in our system. All of that 24 information is put into the system: what the interest 25 rates are, if it's an ARM loan, if there's ARM changes, 0027 1 it tracks all of that. It tracks payment amounts. 2 Just about anything and everything that would go 3 on in the account is tracked in our Fidelity System. 4 That's the computer system we use, as opposed to 5 Fidelity, the vendor we use. I want to make sure that 6 there's a distinction between the two Fidelitys there. 7 Q. And right now you're describing Washington Mutual's use. 8 of the Fidelity System? 9 A. Correct. 10 Q. Okay. I want to be certain we're -- 11 A. I want to make sure that we're clear on that, because 12 that can get confusing. 13 Q. Absolutely. Somebody needs to come up with some new 14 names. 15 A. Shall we just call the Fidelity System "FS," and then 16 the vendor is Fidelity. Would that make it easier? 17 Q. Sure. So you started working at Washington Mutual in 18 June of 2003, correct? 19 A. That's correct. 20 Q. Do you have knowledge regarding what Washington Mutual's 21 policies and procedures were regarding payment histories 22 dating back to the '98-'99 time frame? 23 A. No, I wasn't with Washington Mutual, but, I mean, the 24 payment histories are the same from as far back in all 25 of the ledgers I have ever done. I have gone back to 0028 1 '89. The money is applied still the same -- the same 2 way. 3 Q. So you can review a payment history even for periods of 4 time when you weren't with Washington Mutual -- 5 A. Correct. 6 Q. -- and understand it? 7 A. Yes. 8 Q. Part of that comes form your knowledge from having 9 worked also with the vendors? 10 A. Yes, and working at Marshall & Ilsley and other -- you 11 know, everybody pretty much applies money the same way. 12 You apply it to your principal, your interest, 13 and your escrow. And if there's anything left over, 14 depending on what they wanted done, it goes to fees 15 or -- late charges or other fees or extra principal, 16 extra escrow, depending on the situation, and sometime 17 the direction from the mortgagor. 18 Q. So you're, I assume, familiar with the case that we're 19 here about? 20 A. Yes. 21 MS. HUELSMAN: I am just going to mark this 22 whole thing as Exhibit 1. 23 [Exhibit No. 1 was marked.] 24 Q. [By Ms. Huelsman] It's a couple of different printouts 25 I have from Washington Mutual, and I need you to tell me 0029 1 where one document starts, because I'm not making -- 2 MR. PHELPS: Do you have any extra 3 paperclips here? 4 MS. HUELSMAN: I can run down and get some 5 if you want. 6 MR. PHELPS: Yes. 7 Q. [By Ms. Huelsman] So we'll mark this right now as 8 Exhibit 1, but I'm assuming we're probably going to need 9 to break it up a bit, but I wanted you to be able to 10 tell me. I didn't want to assume. 11 A. Okay. 12 Q. So the first -- and these are marked with Washington 13 Mutual's identification -- 14 A. I can't tell what page we're looking at. 15 Q. Now, it looks to me like Documents 1 through 53 is one 16 payment history record, I guess, using laypeople terms. 17 Let me know if I'm correct. 18 A. What -- I'm sorry, we'll have to break this up a little, 19 because you've got combinations of -- 20 Q. That's fine. That's why I wanted you to tell me -- 21 A. -- histories and notes and -- 22 MS. HUELSMAN: In fact, why don't we go off 23 the record for a second, and I will go get some 24 other clips. 25 [A brief recess was taken.] 0030 1 MS. HUELSMAN: So I'm going to mark these as 2 additional exhibit numbers, once you identify for 3 me, you know, what should go with what. Does 4 that make sense? 5 THE WITNESS: That makes sense. 6 Q. [By Ms. Huelsman] So we have Page 1 of Exhibit 1 in 7 front of us. 8 A. Uh-huh. 9 Q. And does this document go with any other pages? 10 A. No. This is a copy of our SCR 1. It's our main screen, 11 that when someone pulls up a loan, they would go to 12 SCR 1. They would punch in the loan number. 13 This gives you, like, an overview of what's all 14 going on with the loan. It tells you, you know, the 15 principal, the escrow, the reserved escrow, any fees out 16 there, what they're due for contractually. You can get 17 the breakdown of their payments. I mean, it's -- their 18 information, their Social Security -- this is the main 19 screen that we use when we look up a loan. 20 Q. So it looks to me like it was printed, in the upper 21 right-hand corner, on 9/9/06 at 12:38 and 49 seconds; is 22 that correct? 23 A. That's correct. 24 Q. I'm looking at the right-hand corner. I think I said 25 "left." 0031 1 I see an entry here -- it's kind of right below 2 the name. It says, "Received Attorney refund of 725 and 3 1772.90 from PSC. Do you see that? 4 Q. Can you tell what that is referring to? 5 A. That actually captures the last note that was put into 6 our note system prior to -- you know, before this was 7 printed out. 8 And I would have to look in our note system to 9 figure out exactly what that is, but it looks like we 10 did receive an attorney refund of some dollar amount 11 for -- I would assume that it was for a foreclosure 12 action. 13 Q. PFC -- 14 A. I'm not sure what PFC stands for. 15 Q. I think it means Professional Foreclosure Corporation. 16 A. Thank you. That would be our outside vendor then. 17 Q. And it looks to me like that note was entered on 6/5/06? 18 A. Yes. 19 Q. And it doesn't say why a refund was provided, does it? 20 A. No, it does not. 21 Q. Further down on the left it shows a 10/1/02 payment? 22 A. Yes. That's what it is contractually due for. 23 Q. So that's the money that, as of September of '06, this 24 loan last received payment in September of '02? 25 A. That's not exactly correct. It's saying that it was due 0032 1 for the 10 of '02 contractual payment. 2 Q. So it may have received a payment, but it would be 3 applied to any other past-due -- 4 A. Yes. 5 Q. -- and that that was the most recently applied payment, 6 was September of '02? 7 A. Correct. 8 Q. It may not have been applied in September of '02, but 9 the last payment received was applied to the September 10 of '02 outstanding payment? 11 A. Right. Just as a hypothetical here, just to clarify 12 that, let's say we received a payment in 8 of '06 for a 13 payment amount. It would have been applied 14 contractually, and it made the 9 of '02 payment, leaving 15 the loan due for 10 of '02. 16 Q. And I see a note further down on the left that says 17 "Pending Payment 5/03, $930.03." Do you see that? 18 A. Oh, $930.03? Yes, I see that. 19 Q. Do you know what that refers to? 20 A. No, I do not. I'm sorry. I was thinking that it would 21 be -- wait a minute. No, that's doesn't make sense. 22 I thought it might be the total amount due plus 23 all of the fees and costs on the loan. If you add up 24 the payment amount of $626.77 plus the $149, you don't 25 get to $930.03. I'm not sure what that is. 0033 1 MR. PHELPS: If you want you to use your 2 spreadsheet, Eric, you can. I just want to make 3 sure that you're not -- 4 THE WITNESS: No, that's not part of a -- 5 there's not anything in the spreadsheet either 6 that would explain that unless -- I don't know 7 for sure. 8 A. I was thinking that that might have been the next 9 escrow -- it was projecting an escrow change, so it 10 would be a pending payment change, but I don't know for 11 sure. 12 Q. [By Ms. Huelsman] Looking back up at the 10/1/02 13 payment area, it indicates "County," $89.89. Would that 14 be for County property taxes? 15 A. Yeah, that's what we're collecting, escrow-wise, for 16 when we make our disbursements. 17 Q. And "Hazard" it shows $40.42. Would that be for 18 homeowner's insurance? 19 A. Uh-huh. 20 Q. Yes? 21 A. Yes. Sorry. 22 Q. And can you tell me what the "OV/SH" is for $166.42? 23 A. I believe that is the escrow shortage that they were 24 collecting at that point. 25 Q. Now, those three amounts don't total up to the $626.77 0034 1 that's next listed, but I'm guessing, and you can 2 clarify for me, that these amounts are being added to 3 the actual payment that's due -- 4 A. For the principal and interest, yes. 5 Q. And that's how you get to the $626.77? 6 A. Correct. 7 Q. And is there anything indicating -- showing on here what 8 the actual principal and interest payment is? 9 A. No, I believe that's no longer on here because when this 10 was printed, if you look at "Principal," it's been paid 11 off. So this had kind of been -- the principal and 12 interest part has been chopped off of this part, off of 13 this actual printout here. 14 Q. So the next document I have is this WMB 0002, and I see 15 you have it grouped together with some other documents. 16 What does it go with? 17 A. This is a copy of our SCR history screen. 18 Q. I want you to tell me what numbers -- what pages we go 19 through on this set. 20 A. 0002 through 0008. 21 Q. And so these documents should all go together? 22 A. Yes. 23 MS. HUELSMAN: We'll mark this as Exhibit 2. 24 [Exhibit No. 2 was marked.] 25 Q. [By Ms. Huelsman] Why don't you tell me what these 0035 1 documents constitute? 2 A. You have a copy of our history from -- I don't know why 3 you only have it from 3/28 of '06 through 6/7 of '06. 4 And this is basically a printout from our history 5 that shows what money was applied, what payments went 6 out for escrow disbursements, any corporate advances, 7 which would be our attorney fees and costs that were 8 applied to the loan. 9 It basically covers everything that occurred on 10 this loan, payment-wise, except for any property 11 preservation fees or NSF fees or other non-attorney fees 12 that would have been incurred to the loan. 13 Q. So you said that this starts on March 28, '06 -- 14 A. Uh-huh. 15 Q. -- which is on the page numbered WMB 0008? 16 A. Yes. 17 Q. And then it goes to 6/7/06, and that's on Page WMB 0002? 18 A. Correct. 19 Q. So we're going from the most recent to the least 20 recent -- 21 A. Yes. 22 Q. -- I guess, in the way this is put together? 23 A. Correct. 24 Q. And so if I ask you questions about this document, are 25 you going to be able to answer it, or is it going to be 0036 1 better for us to look at whatever documents -- 2 A. I can answer right off of this. If there's any 3 questions I might have, I might need to refer to the 4 ledger. 5 Q. And just for the record, because we were not on the 6 record when we were discussing the ledger a few minutes 7 ago, you and your attorney have -- or the attorney for 8 Washington Mutual -- have provided me today with some 9 additional documents -- I guess they're discovery 10 responses -- that include some spreadsheets that you 11 created in order to analyze this loan history, correct? 12 A. Correct. 13 Q. And so we're going to mark those as separate exhibits, 14 and we'll go over them, but you may need to refer to 15 them today in order to better give me testimony; is that 16 correct? 17 A. That's correct. 18 Q. And you said when you were looking at this that you 19 don't why this printout would have only started from 20 3/28/06, the one that we're looking at right now, right? 21 A. Right. Normally on our computer system we will have two 22 years' worth of payments from the date you printed it 23 out, but you only have, basically, three months here. 24 I'm not sure why you only have this amount. 25 Q. So you described this as the SCR 1 system? 0037 1 A. Yes, the SCR 1 history screen. 2 MR. PHELPS: I'm sorry, can we take a quick 3 break? 4 MS. HUELSMAN: Absolutely, go ahead. Sure. 5 [A brief recess was taken.] 6 Q. [By Ms. Huelsman] So we're looking at this payment 7 history, and as of -- turning back to the 3/28/06 -- 8 A. Okay. 9 Q. -- it's showing -- I see over here on the left on the 10 last entry on this page -- it's probably the first in a 11 series -- that the transaction amount, it says, $999.99. 12 A. Yes. 13 Q. You've got a "corporate advance" code over to the far 14 right. Can you explain that to me? 15 A. Part of the thing is when we -- a corporate advance, we 16 can only apply money at less than $1,000, so they put in 17 a bunch of $999.99s. It's the most they can use there, 18 so they use a lot of those transaction codes. 19 This is something going on with the corporate 20 advancement, but unfortunately we're kind of in the 21 middle of it. If I can look at the ledger, I could tell 22 you exactly what all of this is. 23 Q. So we will -- 24 A. We'll jump to that real quick. 25 Q. We'll go to the ledger when -- 0038 1 A. Oh, okay. 2 Q. What I'm going to do is, I'm going to go through these 3 and see what you can answer with these, and then we'll 4 go to the ledger, since that should be -- then we won't 5 have to go back and forth. Does that work for you? 6 A. It works for me. 7 Q. And then on WMB 0005, it looks to me like there's an 8 entry on April 10, 2006, "Loan Removed." 9 A. Yes. 10 Q. Can you tell me what that refers to? 11 A. If I recall correctly, this loan was actually paid off 12 at that date. That's why it was removed, but I might be 13 confusing that with another loan right now. I would 14 have to look at the ledgers again to -- 15 Q. Okay. 16 A. I do so many of these things that they all start to 17 blend together. 18 Q. Well, down on the bottom part of all of these printouts 19 I see this "Full Settlement" date of 4/7/06. 20 MR. PHELPS: Pardon me. 21 [A brief recess was taken.] 22 Q. [By Ms. Huelsman] We were talking about the notation: 23 Full Settlement, Completed Chapter 13 Bankruptcy. Can 24 you tell me what that refers to? 25 A. That's a note from the -- that the bankruptcy 0039 1 workstation was closed. It says "Completed" -- it means 2 that they completed the work. The bankruptcy vendor 3 completed their work on the Chapter 13 bankruptcy. 4 That's not in reference to a discharge. It was -- the 5 bankruptcy is over. 6 Q. So Washington Mutual's work on it is over? 7 A. Correct. 8 Q. We'll go to the next set. 9 A. Okay. 10 Q. So why don't you tell me -- the next starts with -- 11 A. 09. 12 Q. And it goes to? 13 A. 0034. 14 Q. It includes 34. 15 MS. HUELSMAN: So that's Exhibit 3. 16 [Exhibit No. 3 was marked.] 17 Q. [By Ms. Huelsman] Why don't you tell me -- 18 A. This is a copy of our Consolidated Notes Log. These are 19 our most current notes. They hadn't gone to microfiche 20 at the time that these were printed. And, again, these 21 notes go from 9/15 of '04 through June 5th of '06. 22 Q. So this is different from the SCR 1 payment screen? 23 A. Well, yes, it's different. It's the same FS system. 24 It's just a different screen. Instead of SCR 1, this is 25 the N-O-T-S or notes screen. 0040 1 This captures, you know, any notes that we would 2 have put on the loan regarding things going on or 3 conversations we may have had with the mortgagor or 4 sometimes with outside counsel, because I see a couple 5 of things blocked out. This captures anything that is 6 going on with the loan if you do put a note on there. 7 Q. Who within Washington Mutual, or even outside of 8 Washington Mutual, would have access to this system to 9 input information? 10 A. It would be all internal. There would be foreclosure 11 people. There would be vendor people. They are inside 12 our building, but they're not Washington Mutual 13 employees. 14 Q. So would that be, like, LOGS people? 15 A. Yeah, like LOGS or Fidelity, our new -- we no longer use 16 LOGS First Am anymore. We went to Fidelity as our 17 vendor. 18 For a while they were both there, and there was 19 like a -- we called it a showdown between the two to see 20 who was fast, and we went with Fidelity. 21 They called it a championship showdown or 22 something like that. I forget, but we ended up going 23 with only Fidelity. 24 Q. And they were competing to be the fastest at what? 25 A. Doing the best work for us for the default stuff. 0041 1 Q. How was that measured? 2 A. That is measured by people above me in the default 3 world. They measured it probably by accuracy, timeline 4 management, fees and costs, stuff like that. 5 Q. So I note on Page 29 of this, we're looking at the time 6 frame -- I'll refer you back to the page previous, 7 Page 30. It notes that my client's bankruptcy case was 8 dismissed on 8/10/05 per Pacer. Do you see at that 9 notation? 10 A. Yes. 11 Q. And then it looks like the information on Page 29 12 occurred after that had happened, and it indicates that 13 there's a Suspense total of $72.64. 14 A. Uh-huh. 15 Q. And then I see an entry, another entry, on 9/20/05, and 16 it says -- it indicates that the Chapter 13 case was 17 dismissed. Attorney fees and costs of $2,332.05 are 18 collectable. 19 And then it says "FHA action start valid, resume 20 by 11/08/05." What does that refer to? 21 A. Basically "FHA action start valid" means that we are 22 valid to go ahead and restart the foreclosure. And the 23 "Resume by 11/08/05," that is the deadline that we have 24 per HUD FHA guidelines of when an account needs to come 25 out of bankruptcy and have the foreclosure restarted. I 0042 1 know that because that was one of my previous positions, 2 reviewing those. 3 Q. So this was an FHA loan? 4 A. Yes. 5 Q. And can you tell me the difference between an FHA loan 6 and a non-FHA loan? 7 A. Basically, it's just different guidelines. Every 8 investor has their own guidelines. FHA are our 9 government-insured loans through HUD, basically. That's 10 all the difference is. 11 Q. What kind of guidelines do they have that differ from 12 other -- 13 A. It all depends on what the start-up time is from, like, 14 a bankruptcy. Then you have to start up the 15 foreclosure, and also how many days you have to get -- 16 like on a foreclosure timeline, from the date that you 17 file the Complaint until you get service, judgment, 18 sale -- there are certain timelines that you have to get 19 all of those things done. 20 And then it depends on the investor, and I can't 21 recall off the top of my head what all of those dates 22 are for HUD. 23 Q. And the process that you were just describing was for a 24 judicial foreclosure? 25 A. Yes. 0043 1 Q. And do they have separate policies and procedures for 2 nonjudicial foreclosure proceedings? 3 A. Yes, they do. 4 Q. Are there other -- only if you know the answer to 5 this -- FHA guidelines regarding how a foreclosure is 6 supposed to be handled? 7 A. I'm not quite understanding your question. Can you 8 clarify it a little bit? 9 Q. Sure. My understanding, in general, is that FHA loans 10 have certain requirements regarding how foreclosures are 11 to be handled. There has to be certain notices provided 12 to the consumer and timelines, and things like that, 13 that are different than, say, other kinds of loans. 14 A. Yes. 15 Q. Is that your understanding as well? 16 A. Yes. 17 Q. Can you give me a general overview of what the FHA 18 guidelines are? 19 A. It's been a long time since I've done that, so I don't 20 know all of the different requirements, what notices 21 need to go out. 22 I just know mostly the -- if I really dig into my 23 brain hard, I can remember some of the timelines on when 24 things have to be started from the beginning of the 25 foreclosure -- there's certain milestones we call 0044 1 them -- until it's completed. 2 But I don't want to guess here, and I can't quite 3 recall. 4 Q. That's perfectly fine. So it seems to me that then the 5 note entries that go on from here basically just say, 6 you know: Go ahead and start the foreclosure. The 7 bankruptcy case is filed. 8 A. It's over, yes. 9 Q. Excuse me, yes. You're correct. I'm sorry. It's not 10 closed yet. 11 And the bankruptcy law firm, which was Shapiro & 12 Sutherland, was supposed to close their file, and 13 Professional Foreclosure is supposed to take over the 14 foreclosure process. Is that correct? 15 A. That's correct. 16 Q. And then there's work on a bid report. I see that on 17 the 28th. Can you tell me what a bid report is? 18 A. Basically what we would do is, we would provide outside 19 counsel with what is the minimum -- what is the maximum 20 bid that we are going to do at the foreclosure. Usually 21 it's the total amount owed, and, like, in a nonjudicial 22 one you have possible third parties bidding on the 23 property as well. 24 We want to make sure that our bid is covered to 25 the point -- is high enough that we get what we're owed 0045 1 on the loan, and if they want to go above that and 2 beyond that, that's -- I mean, if the third parties want 3 to go above and beyond that, that's all well and good. 4 Q. Okay. On Page 26 there's an entry on December 4th of 5 '05. 6 A. Okay, December 4th of '05. 7 Q. I see one indicating first that the file -- it looks 8 like it's being transferred to LOGS, but still seems to 9 also be using Professional Foreclosure. 10 A. Professional Foreclosure is a part of the LOGS network. 11 This looks like -- are you talking about the one that 12 begins with "LaLisea Brown: Please be advise" -- 13 Q. Yes. So Professional Foreclosure isn't separate from 14 LOGS. It's just part of the LOGS system? 15 A. Uh-huh. 16 Q. Is that a "yes"? 17 A. Yes. I mean it's -- I'm not exactly 100 percent 18 positive how it works here, but I think Professional 19 Foreclosures is in the same building as Shapiro & 20 Sutherland. 21 So if they have a different name from the 22 foreclosure side -- I don't know. They work hand in 23 hand, I know that for sure. And they're both under the 24 LOGS network. 25 Q. And then there's a note above that starting with "Kari 0046 1 Sheehan." 2 A. Okay. 3 Q. It says, "User changed date completed from 5/22/2003 to 4 incomplete. Reason: Entering correct date for NOD 5 filed." What does that mean? 6 A. Notice of Default. They -- the vendor uses a screen 7 called our FOR 3 that kind of tracks what steps need to 8 be done during the foreclosure process. 9 And what they're doing here is, they're changing 10 one of the dates on there because the Notice of Default 11 was actually -- they had to change the date that they 12 had listed for the Notice of Default being filed. They 13 had to change it from the "5/23" to "incomplete." It 14 hadn't been filed yet. I think that's what it's -- 15 yeah. 16 Q. And then the next sentence says, "This file was released 17 from BK on 8/10/05 and then there was a forced placed 18 insurance issued the client was researching before we 19 were advised to restart this foreclosure." Do you see 20 that? 21 A. Uh-huh. 22 Q. I can read the words, and I think I know what it means, 23 but do you know why that is being noted here? 24 A. I think this is a situation in which -- when there's 25 Relief from bankruptcy, I know that your client, the 0047 1 mortgagor, had called up and had disputed what the 2 payment amounts were. There was research going on into 3 what was going one with the escrow. 4 And I think what they're saying here is that they 5 could not start until that was actually completed. 6 That's why they were advised to restart this foreclosure 7 because of that ongoing research. 8 Q. And does it indicate on here that the research was 9 completed or -- it seems to me that it looks like it's 10 still ongoing, but I can't tell. 11 A. Well, obviously right here they're saying, you know: We 12 were advised -- we were advised to restart this 13 foreclosure. 14 So obviously as far as -- it appears that these 15 notes are saying that the research had been completed, 16 and that they're restarting the foreclosure action. 17 Q. And the entry up there, kind of at the top, the "NOTS 18 recorded - 11/21/2005" refers to the Notice of -- 19 A. Yes. 20 Q. Turning to Page 24 -- I'm assuming that all of these 21 entries on Page 25 appear to just be saying that it's in 22 delinquency status, correct? 23 A. Yes. 24 Q. I guess I can ask you, it has: Reason for delinquency 25 equals. And there is no entry for "reason." Is that 0048 1 correct? 2 A. Correct. These are system inputs done by our collection 3 department, and I'm not 100 percent sure exactly -- 4 what, like, a delinquency status 68 is, or why they 5 didn't put in a reason for the delinquency. 6 Q. So there's an entry here on 1/24/06 on Page 24. 7 A. Okay. 8 Q. [Reading] Insurance email received with payment 9 history. Manager sent reply to ERC re when 10 disbursements were made -- I realize that I'm adding to 11 that, but I'm interpreting what I think -- tell me if I 12 am wrong. 13 A. Oh, no. That's -- 14 Q. "I am contacting LPI to research ref - to see what term 15 ref was for -- vs." Tell me what that means. 16 A. Well, ERC, first off, is our Emergency Response -- 17 MR. PHELPS: Executive? 18 A. Executive Response -- 19 MR. PHELPS: Center. 20 A. Center. They changed the name a couple of times, but 21 ERC is basically where a lot of -- if there's a problem 22 with a mortgagor and they're not getting resolved -- 23 resolutions from various groups, they go to the ERC 24 group, which is a little higher, and they're the ones 25 that are jumping on to try to get these things resolved. 0049 1 Let's see. Disbursements were made -- "I am 2 contacting LPI." That is our Loss -- I think that's 3 part of the escrow to research what is going on with the 4 escrow -- with the hazard insurance. 5 LPI is -- oh, I can't recall off the top of my 6 head, but I know it has to do with hazard insurance. 7 Q. And it says it's researching "ref." What is that? 8 A. [No verbal response] 9 Q. It says, "to see what term ref was for." 10 A. I'm not -- I'm not sure. It has to do with the hazard 11 insurance, because I know LPI is used when we're doing 12 research into the hazard insurance issue. 13 And that's part of the -- obviously "insurance 14 email received," I mean, this is all in regards to the 15 hazard insurance. REF, again, I don't want to guess, 16 and I can't recall off the top of my head. 17 Q. Why don't we turn to Page 23, where there's a notation 18 the next day also regarding: Insurance email received, 19 insurance "I pulled docs from SAR -- I also sent email 20 to. . . research REF." Can you explain all of that to 21 me? 22 A. Well, obviously, the insurance person pulled docs from 23 our SAR -- our SAR system, it's one of the places we can 24 go to pull information that's stored, that's no longer 25 in our system, on the FS system. 0050 1 Then, obviously, she sent -- this person sent an 2 email off to LPI to research the hazard insurance to see 3 if the policy and the effective dates, reason for 4 cancellation -- "also sent email to A Witt" -- that 5 might be a person. "For copy of a wire with voucher 6 for -- 7 Q. It's probably "premium disbursement." 8 A. Premium disbursement on 6/2 of '98. 9 Q. And then up above that it seems that to me that there's 10 some message from someone that on 12/6/02 $523.00 was 11 refunded "due to replacement"? 12 A. Yes. You're looking at 1/27 of '06? 13 Q. Right. So am I understanding this to mean that 14 according to their records $523 was already refunded on 15 12/6/02 because replacement insurance was obtained? 16 A. Yeah. I remember reviewing this loan. 17 What happened was, we got a notice from Farmers 18 that there was an insurance policy out there, that the 19 mortgagor sent us a copy of the insurance application 20 or -- an application and a copy of the cover page from 21 that. 22 When we got that we immediately took our forced 23 placed insurance off, and we refunded her escrow account 24 the $523, which was our forced placed insurance 25 disbursement that we had made -- I forget exactly what 0051 1 date -- but in '02 for that insurance policy. 2 Q. All of the entries that I'm seeing on the next few pages 3 are regarding the process of the bid, how much the bid 4 is going to be. There's entries regarding continuation 5 of the foreclosure sale, the amount outstanding in 6 attorney fees. Am I seeing all of that correctly? 7 MR. PHELPS: Which pages are you referring 8 to? 9 A. She's kind of briefing over -- 10 Q. [By Ms. Huelsman] 23, 22, 21. 11 MR. PHELPS: Right, going down. 12 Q. [By Ms. Huelsman] Does that mean it's reversed 13 chronologically? 14 A. Yeah. And then there's a couple of times where you can 15 see that we postponed sales from 2/24 to 2/3. But, 16 yeah, everything is -- it's all the stuff that's being 17 communicated between the vendor and outside counsel, 18 what's going on with the foreclosure process. 19 Q. I'm on Page 19. 20 A. Okay. 21 Q. And there's an entry on March 2, 2006, and it says, 22 "Final foreclosure review completed prior to sale 23 submitted for further review." 24 A. Uh-huh. 25 Q. Can you tell me what that refers to? 0052 1 A. Actually, I can very well, because that was another part 2 of my job duties when I was in that section. 3 One of the things that we would do -- and A3I is 4 not me. I'm BI4. But this is another one of my 5 co-workers -- what we would do is, we would get notices 6 of what we have -- upcoming foreclosure sales. 7 And what we would do is, we would look at what 8 the vendor was doing and make sure there wasn't 9 something that jumped out at us as a red flag that: You 10 know what? This sale needs to be placed on hold, that, 11 you know -- if we see notification somewhere out there 12 that, you know -- say a mortgagor says that they're 13 going to file bankruptcy, we would go on Pacer and look 14 if they did. 15 And this was done usually about 48 hours before 16 the sale. 48 to 24 hours before the sale this review 17 was done. 18 And if we reviewed it and said there's something 19 going on that: You know what? It doesn't pass the 20 smell test. Then We would tell the vendor: Let's put 21 this on hold. 22 And if it passed the smell test, we would say: 23 Okay, you're free to go ahead and proceed with the 24 foreclosure. 25 This one, in particular, we had "submitted for 0053 1 further review." This is something that did not pass 2 our smell test. 3 And we said to the vendor: Hey, stop. Take a 4 look at this and make sure that you want to go to sale, 5 because there's issues going on here that you may want 6 to resolve before you go to sale. 7 Q. I'm just curious about that process, because you're 8 doing that review, and you're -- the person who is doing 9 that review is an employee of Washington Mutual, 10 correct? 11 A. Correct. 12 Q. So I'm just confused as to -- Washington Mutual is the 13 client. Why is it saying to the vendor, "Hey, maybe you 14 might want to stop"? 15 A. Well, there were times that we were having -- we were 16 having issues with the vendor because they were doing 17 foreclosure sales when they known [sic] or should have 18 known there was a bankruptcy filed or if there was some 19 kind of payment dispute going on, or we were getting 20 calls that weren't going to the foreclosure department, 21 but were going to, say, the ERC group. 22 So maybe the ERC didn't communicate with the 23 foreclosure department about what was going on. So 24 there were times that the vendor wasn't reviewing the 25 notes clearly enough to make sure that they should go to 0054 1 sale. 2 So we were having problems that way, and what we 3 did was: Let's try to fix this right now. We're going 4 to have a group that's just going to review these loans 5 before they go into sale to make sure that the vendor is 6 not missing anything and then we end up having to 7 reverse -- have sale reversals. 8 So this group was given the assigned duty to take 9 a look at all of these ones that are coming up for sale, 10 going back at least six months to twelve months, 11 depending on if things are looking harried, to figure 12 out: Is this something that we should make sure that 13 the vendor takes a closer look at, talks with their 14 outside counsel to see if they should go to sale or not? 15 Q. Again, that's still confusing me, because isn't 16 Washington Mutual the customer of the vendor? 17 A. Yes. 18 Q. Isn't Washington Mutual in this situation either the 19 owner of the note or the servicer? 20 A. Yes, we are. 21 Q. So why is it waiting for its vendor to make decisions? 22 It's the decision of Washington Mutual's, as the owner 23 of the note and/or the servicer. 24 A. Well, a lot of times what we're doing is, we're just 25 taking a look at this. We don't know whether or not the 0055 1 vendor is aware of this, and if they've already decided 2 that: You know, there's a payment history, but we've -- 3 or dispute. But we've already settled this with 4 counsel. We're sure we can prove our point. They're 5 going to move forward. 6 We're just looking at this to say: Okay, the 7 customer is disputing the payment amounts or is 8 disputing about whether payments were made or not made. 9 And we look through those notes, and we're 10 thinking: Okay, there is a dispute here. We need to 11 know -- well, not you, the trust. 12 So what we're doing is just reviewing to see if 13 there's anything that we thought they needed to make 14 sure it's already resolved, that they already knew 15 about, and that they can proceed with foreclosure. 16 Basically, they're the ones making all the calls 17 on the foreclosure, because they're the vendor. We've 18 assigned them the responsibility to do this work, and 19 we're just kind of reviewing it to make sure it's done 20 correctly. 21 Q. But isn't Washington Mutual the one providing the 22 information or the payment history to the vendor? 23 A. The vendor actually has access to our computer system, 24 to the FS system, just like we do. They can review 25 everything that we can. 0056 1 And they're the ones pulling all of this stuff 2 together, and they're the ones making all of the 3 recommendations on what is done, at what time, in the 4 foreclosure or bankruptcy process. 5 Q. Not Washington Mutual? 6 A. No. We hire them to do that work for us. 7 Q. Turn your attention to Page 17. 8 A. Okay. 9 Q. There's an entry for attorney fees: "Amount outstanding 10 $2,463.86." 11 A. Uh-huh. 12 Q. Do you know what those attorney fees are from? Is there 13 any way to tell? 14 A. If I -- I know I have it all documented on the pencil 15 ledger. I could give you a running balance of what all 16 of those fees and costs are from. 17 From looking at this and from what I recall from 18 the ledgers that I did, those are all foreclosure fees 19 and costs. 20 As I recall, after we took them out of 21 bankruptcy, all the fees and costs prior to that point 22 were paid, and there was not an outstanding balance once 23 they came out of bankruptcy. 24 Q. But then ultimately we have, on Page 9 of this exhibit 25 but also on Exhibit 1 that we looked at, an indication 0057 1 that those attorney fees of $725 and $1,772.90 were 2 refunded to Washington Mutual. 3 Can you tell us what this is, why they're noted 4 here as being due and owing, and then they're ultimately 5 refunded? 6 MR. PHELPS: I object to the question. It 7 mischaracterizes which of those fees -- it's not 8 clear whether those fees in that entry on Page 9 9 are exactly the same ones. They don't add up to 10 the same amount. 11 MS. HUELSMAN: You're right. They're a few 12 dollars less, about 30 bucks less. 13 Q. [By Ms. Huelsman] I don't know. I'm trying to figure 14 this out, because I see entries in here for these 15 attorneys' fees outstanding, and then I see credit being 16 given for it later, or given for a similar amount. 17 I can't tell exactly, and I'm trying to go back 18 through notes here and figure out why we received an 19 attorney refund. I don't really see that documented. 20 But the one thing I did want to clarify before 21 was why this loan was removed. By going back in the 22 notes, it did refresh my memory. This went to the 23 foreclosure sale, and it was bought by a third party. 24 Q. What did that have to do with attorneys' fees? 25 A. Nothing, but I said before that I thought the loan was 0058 1 paid off. It wasn't paid off. It went to a foreclosure 2 sale. 3 I just wanted to clarify that point a little 4 more. Again, I was thinking of the previous case. 5 I sorry, I really -- I'm trying to figure out why 6 we got a refund from the attorney, and I'm not seeing 7 anything in here to clarify that. 8 Q. Okay. Why don't you go ahead and clip those together. 9 A. [Witness complies.] All clipped. 10 Q. So now we're on to the next set of documents. 11 A. Is that the one with 54? 12 Q. Right. Tell me with these documents, what number they 13 go through, that should be together. 14 A. 54 through 95. 15 MS. HUELSMAN: So we'll mark that as 16 Exhibit 4. 17 [Exhibit No. 4 was marked.] 18 MR. PHELPS: I'm sorry, for some reason I 19 thought the last exhibit only went up to 34. 20 MS. HUELSMAN: Oh, it did. Did I put -- 21 MR. PHELPS: The last exhibit also included 22 35 through 53? 23 MS. HUELSMAN: No, it didn't. My bad. 24 THE WITNESS: Are we missing something 25 from -- 0059 1 MR. PHELPS: Did you mean the exhibit to 2 include those or -- 3 MS. HUELSMAN: No, because he told me no. 4 MR. PHELPS: So we're on 35, right? 5 MS. HUELSMAN: 35 becomes Exhibit 4. 35 6 through 53 becomes Exhibit 4. 7 Q. [By Ms. Huelsman] Is that correct, Eric? 8 A. I don't see Pages 35 through -- oh, I'm sorry. There 9 you go. 10 Yes, that would be 35 through 53. 11 MS. HUELSMAN: Thank you, Mark. 12 Q. [By Ms. Huelsman] And can you tell me what the 13 documents in Exhibit 4 represent? 14 A. This is a copy of our DLQH, which is delinquent history 15 notes, and it's a combination of -- well, it's the 16 payment history, again, just like the SCR 1 history. 17 I don't use this screen. I use the actual 18 History history screen, because I find it less 19 confusing, to tell you the truth. And that's exactly 20 what this is. 21 Q. The delinquency, the history of delinquency? 22 A. Yeah, basically if you really -- if you really kind of 23 worked it through, you would see how this matches up 24 with Exhibit 2, but I just -- personally I don't like 25 the format, and it's kind of confusing. 0060 1 Q. I see on the last few pages there, 51 through 53, some 2 entries for attorneys' fees and court costs and the 3 like. 4 A. Yes. "Winterizing," that's property pres that's going 5 on, securing property. 6 Q. Property preservation? Is that what you mean? 7 A. Yes. I see some indication about foreclosure fees and 8 costs. 9 Q. And then all of these entries for $999.99, those are the 10 results of -- as I think you described earlier -- that 11 the system won't allow you to put in more than $1,000? 12 A. Yes. In regards to fees, yes. 13 Q. So it looks like all of these entries for $999.99 were 14 categorized as corporate advances, sale proceeds, and/or 15 escrow advances. 16 A. Yes. 17 Q. Do you have an Exhibit 4 sticker on that? 18 A. Yes, I do. 19 Q. So now we're going to go to Pages 54 through 95, you 20 said? 21 A. Yes. 22 MS. HUELSMAN: This will be Exhibit 5. 23 [Exhibit No. 5 was marked.] 24 Q. [By Ms. Huelsman] Can you tell me what these records 25 are. 0061 1 A. This is stuff that we pulled off of microfiche regarding 2 the bankruptcies. There is information here regarding 3 the '97 and the '03 cases in this group of documents. 4 Q. And these are different from the other records that we 5 were looking at how? 6 A. This is specifically bankruptcy information. You have, 7 like, copies of bankruptcy-specific notes in here. You 8 have copy of a Claim that was filed. It at least gives 9 you some of the fees and stuff that were in there. 10 And then there's -- like I see the bankruptcy 11 notes itself. These are specific notes the bankruptcy 12 department would have put in. 13 Q. And you said these are were on microfiche -- 14 A. Yes. 15 Q. -- rather than actively in the computer system? 16 A. Yeah. Unfortunately what happens with our system, one 17 of the limitations are, you can only have history on 18 there for -- at least a lot of the claim information and 19 stuff -- for one bankruptcy at a time. 20 When you close out that bankruptcy workstation, 21 it gets microfiched and saved. But when you open it up 22 for a new bankruptcy, it wipes out all of the stuff that 23 was there previously except for the notes. 24 You can run notes all the way back from whenever 25 the first bankruptcy was, but a lot of this stuff, like 0062 1 the breakdown of what the Proof of Claim was or -- 2 there's a copy of what we call the BNK Age, which is a 3 history of payments being applied, if it's a 4 pre-petition, post-petition, where money was going, to 5 debtor's Suspense or money from debtor's Suspense. 6 So a lot of that -- that's all contained in this. 7 We just put it together as the bankruptcy information. 8 Q. Now, you looked at the files from Ms. Riehemann's loan, 9 correct? 10 A. Yes. 11 Q. So if I say something that doesn't sound familiar to you 12 or you need to refresh your recollection or whatever, 13 let me know. 14 A. Okay. 15 Q. I'm going to talk to you as if you kind of know what I'm 16 talking about, okay? 17 A. All right, sounds good. 18 Q. So she filed bankruptcy in March of '97, the first one? 19 A. Yeah, I believe it was March. I thought it was -- 20 Q. You can look on here. 21 A. March 3rd of '07, yes, is when it was set up. 22 Q. '97? 23 A. No, wait a minute. I was right. It was actually filed 24 on 1/30 of '97. We set this up in our bankruptcy 25 department on 3/3 of '97. 0063 1 Q. And it was a Chapter 13 bankruptcy, correct? 2 A. Correct. 3 Q. And it provided for payments to be made to Washington 4 Mutual or -- actually, the previous owner or servicer of 5 this loan, correct? 6 A. I think the actual Proof of Claim was filed by Norwest, 7 and then Norwest became Bank United, and then we took 8 them over. 9 Q. Correct. By "we" you mean WaMu? 10 A. Yes, sorry. 11 Q. I'm just making sure we're on the right page. 12 So this information that was entered into this 13 system of Washington Mutual, though, because they 14 weren't involved at the inception of this bankruptcy 15 filing, this information would have been entered in 16 after the fact? 17 A. Yes. 18 Q. Whenever Washington Mutual took over the servicing, 19 right? 20 A. Well, let me make sure. I think that's -- unless they 21 used the Fidelity System, we could have tracked that. 22 But we didn't take over servicing this loan until 23 '01, I believe it was. And we would not have set this 24 up. We entered this information after we got the loan 25 into our system. 0064 1 Q. But you were saying the loan information previously from 2 Norwest could have been in the Fidelity System from '97? 3 A. Yeah. Then it would have been an easy transfer over, 4 but I do know, because I looked at their payment 5 histories, they were not using the Fidelity System. 6 Q. Norwest, do you mean? 7 A. Yes. 8 Q. Do you know if Bank United was? 9 A. I don't know. I'm not 100 percent positive about 10 whether they were or were not. 11 Q. And in reviewing this document, I see indications on 12 here that the claim total was $6,195.04. It's on, 13 actually, Page 55. 14 A. Yes. The confirmed total was $6,195.04, according to 15 this printout. 16 I didn't really look at this printout when I did 17 my bankruptcy review. I used the actual -- I saw a copy 18 of the Proof of Claim itself. I believe that's the same 19 dollar amount, though, yes. 20 Q. It looks like this microfiche was created in April of 21 '02, correct? 22 A. [No verbal response] 23 Q. It looks like to me that it was done on 4/17/02. 24 A. Yeah, I believe that's what that means, yes. 25 Q. So looking on Page 56, it looks to me like this document 0065 1 indicates that "Paid-to-date," the amount paid to date, 2 was the $6,195.04. 3 A. Yes. 4 Q. It said it was paid -- 5 A. Right. 6 Q. -- through her Chapter 13 plan? 7 A. And I definitely know by reviewing the loan that the 8 pre-petition was paid by the trustee in full. 9 Q. Okay. So when Ms. Reihemann got out of the Chapter 13 10 and received her discharge -- I believe it was right at 11 the end of February '02 or the beginning of March of 12 '02 -- 13 A. Yes, February 20th of '02, if I can recall correctly. 14 Q. -- I believe you're right -- she had paid the entirety 15 of the claim? 16 A. The pre-petition claim, yes. 17 Q. And these records, are they indicating that she was in 18 arrears for current payments? 19 A. I don't -- let's see. Expected first plan payment 20 due -- I don't see it on here, but I do know from the 21 ledger that I did that she was, post-petition, 22 delinquent by, like, a month or two because of payment 23 changes that occurred post-petition. 24 Q. And what do you mean by "payment changes that occurred 25 post-petition"? 0066 1 A. Basically what happened on this account was, somewhere 2 between Norwest and Bank United, the mortgagor had 3 insurance with State Farm, I believe. 4 State Farm's policy got cancelled due to 5 something internal with State Farm. We have been trying 6 to research and trying to get a definitive answer from 7 State Farm, but from the person I have researching that 8 issue, Al Turbineau [phonetic] -- 9 MR. PHELPS: Turbeville. 10 THE WITNESS: I'm sorry. 11 MR. PHELPS: It's T-u-r-b-e-v-i-l-l-e. 12 THE WITNESS: Yes. People slaughter my last 13 name, so I slaughter theirs -- 14 MS. HUELSMAN: Mine too. We can't all be a 15 Phelps. 16 A. She has been trying to get a hold of them to find out 17 exactly why they cancelled that policy, but the only 18 answer she got from them so far was, it was an internal, 19 corporate decision for cancelling that policy. 20 When that policy was cancelled, Bank United had 21 tried to get a hold of the mortgagor to tell her: Look, 22 we have been notified that this policy has been 23 cancelled. Please provide us with new policies, or 24 we'll have to force place. 25 They didn't get a response. They went out and 0067 1 got forced placed insurance. Was that '99 -- we have 2 documents that says exactly when it was. 3 They got forced placed insurance. Bank United, 4 every year then, would send her notices when it was 5 coming time to renew the forced placed to say: We are 6 renewing your forced placed insurance. If you have 7 other insurance, please provide us documentation, 8 letting her know that forced placed insurance generally 9 is a lot more expensive than what she could get on her 10 own. 11 Then when the merger occurred between Bank United 12 and Washington Mutual, our policy was, we cancelled Bank 13 United's forced placed insurance. We gave the mortgagor 14 time by sending her notices that we don't have any 15 forced placed insurance -- we don't have any records of 16 insurance; to provide us copies of insurance or then we 17 would get forced placed. 18 And what ended up happening was in June of '01, I 19 believe we forced placed the insurance as well. 20 Well, all of this forced placed insurance changed 21 the amount that we needed for escrow to cover her bills, 22 to cover her taxes and insurance. 23 Bank United never adjusted her post-petition 24 payments. It wasn't until June of '01 that, when we got 25 the loan, we did an analysis. And we adjusted her 0068 1 payments from -- I think it was somewhere in the $460 2 range up to $627.77, I think, or somewhere in that 3 ballpark. 4 And that's what her payment became after that 5 point. She kept sending in the $460 amount. What ended 6 up happening was, payments would go into Suspense until 7 there was enough to make a post-petition payment. And 8 then that post-petition payment would be applied. 9 And that's how she fell further and further 10 delinquent, post-petition. It's due to, basically, an 11 escrow change due to the forced placed insurance. 12 MR. PHELPS: Let me interject. As Eric 13 said, we're trying to find out why State Farm 14 cancelled in the beginning, and I think -- we 15 hoped that we would actually have that here, the 16 documents from them -- 17 MS. HUELSMAN: I've tried as well. 18 MR. PHELPS: Well, they're now reacting to 19 us better, now that they fully understand that we 20 are in the position of Bank United. And I'm 21 hoping that in the next several days when I have 22 that, I will show you whatever it was -- 23 MS. HUELSMAN: That would be great, so we'll 24 all know -- 25 MR. PHELPS: -- what that reason was. 0069 1 MS. HUELSMAN: I tried dealing with the 2 agent, and you would think that would get you 3 somewhere, but nothing. 4 A. So that was a very long answer to -- 5 Q. [By Ms. Huelsman] No, no, that's fine. Was there any 6 claim made in the bankruptcy or any information given to 7 Ms. Riehemann's bankruptcy attorney regarding this 8 change in the post-petition amounts due? 9 A. Well, I know that an escrow analysis was sent out -- 10 when the new payment change came into effect, that was 11 sent to her. I believe that it would have been sent to 12 the debtor's attorney as well, because she's in a 13 bankruptcy and has local counsel representing her, or 14 has an attorney representing her. 15 Our policy -- that would be our policy back then. 16 Our policy now is to make sure that if they're in a 17 bankruptcy, not only does the debtor get a copy, but the 18 debtor's attorney and the trustee. 19 But at that time I -- I wasn't around at that 20 point, but I don't believe that was the policy back 21 then. 22 Q. And you said that the payments that Ms. Riehemann was 23 making were placed in a Suspense account; is that 24 correct? 25 A. Yeah. A lot of times the money would come in, and if it 0070 1 wasn't enough to make a full payment -- well, you've got 2 to remember, we're applying money contractually, so it 3 would go in -- it might -- if it was contractually 4 enough to make a contractual payment, a contractual 5 payment would be done. 6 But when you do the bankruptcy accounting, as you 7 will see in that spreadsheet there, it would go into 8 Suspense, the debtor's Suspense bucket until there was 9 enough to make a post-petition payment. 10 Q. And why is that? 11 A. Well, because if the money is not enough to make a 12 payment, let's say -- like in this case she's sending 13 in, say, $460 a month. The payment is $627. We're not 14 going to advance her one post-petition payment because 15 it's not enough to make that payment, $460 versus $627. 16 Q. And what provision in that contract allows Washington 17 Mutual to create a Suspense account and use it for that 18 purpose? 19 A. I believe it's in the Deed of Trust. I've never 20 actually been asked that question before, so -- 21 Q. Well, I'll be happy to get a copy of the Deed of Trust, 22 and we'll take a look at that. 23 And you just said a minute ago, too, that if 24 there was enough for a contractual payment that it would 25 be applied. 0071 1 A. Yes. 2 Q. Well, you just testified that she was making the 3 contractual payments, correct? $460 or whatever the 4 amount was, that was the contractual amount, correct? 5 A. Yes. Again, I would have to look, again, in the ledgers 6 that I prepared to know exactly when each payment came 7 in, how it was applied contractually versus bankruptcy; 8 but I believe that, yes, every payment that came in was 9 actually applied to whatever the next due was on the 10 loan contractually. 11 Q. Well, that's different than what you just said a minute 12 ago, because you said it was dumped into a Suspense 13 bucket. 14 A. Well, you've got to remember, we're talking about -- the 15 difference here really is -- we're comparing apples and 16 oranges. We're comparing how money is applied 17 contractually and how money is applied in bankruptcy. 18 When I was talking about money being put into 19 Suspense, bankruptcy-wise, this is how money should have 20 been applied during the bankruptcy, and it's how we 21 track things. 22 If we don't have enough money to make a 23 post-petition payment, it goes into our bankruptcy 24 Suspense, which would not -- it's not the contractual 25 Suspense bucket. It's just how we keep track of money, 0072 1 what's there, and what should be applied as a 2 post-petition payment versus what should be in the 3 Suspense bucket, post-petition-wise. 4 And, again, this is because of the -- we only 5 apply money contractually. We have to create, 6 basically, how money would be applied through our 7 spreadsheets and through the bankruptcy. The 8 workstation has a system of tracking that as well. 9 Q. So it's all treated differently because she's in 10 bankruptcy? 11 A. Yes. 12 Q. And under what provision in the contract is that 13 permitted? 14 A. I would imagine that would be under, again, the Deed of 15 Trust, regarding default. There's, I know, stuff in the 16 Deed of Trust about defaults, what's going on there. 17 I don't think they make a -- I don't think 18 anything is in there specifically that says, you know, 19 how money is applied versus how you track everything in 20 there, but that's just how we do things. 21 Q. We'll take a look at the Deed of Trust to see if it has 22 that language. 23 So I'm looking at this history. 24 A. Okay. 25 Q. And I'm looking at Pages 57 and 58. 0073 1 A. 57 and 58? Okay. 2 Q. And it looks like these -- these look like notes to me. 3 A. Yes, these are bankruptcy notes. 4 Q. And they don't start until December 22, '99? 5 A. Yes. And I would assume that's probably when, maybe, 6 Bank United got it, or they made a switch to the 7 Fidelity System, because this is all Fidelity notes. 8 Q. And I see right here on 12/27/99 we have a notation 9 regarding "Insufficient funds in trustees Suspense & 10 debtors Suspense to apply as a payment." 11 A. Okay. 12 Q. What does that mean? 13 A. Basically when somebody was reviewing this because, 14 yeah, [reading] received document, case active, transfer 15 of claim entered. 16 This is when Washington Mutual started reviewing 17 the loan before the actual merger was official. They 18 were reviewing the loan. They said there was 19 insufficient money in the trustee's Suspense and 20 debtor's Suspense to apply as a payment. 21 So there's not enough in the debtor's Suspense to 22 apply it to a post-petition payment, and there's not 23 enough in the trustee's Suspense to apply it as one of 24 the pre-petition payments. 25 They're reviewing, you know, how much money is on 0074 1 there for our claim for pre-petition and how much is 2 coming in post-petition. 3 Q. I see an entry here on the phone log for January 10, 4 2002. 5 A. Okay. 6 Q. It indicates that Ms. Riehemann was calling in, upset 7 about her mortgage payment going up, and the person who 8 takes those notes is indicating that information 9 regarding the change in her payments would have gone to 10 her bankruptcy attorney. Do you see that? 11 A. Yes. 12 Q. Is that accurate? 13 A. I believe it was the policy at the -- yes, that 14 information should have gone to her attorney, including 15 herself. 16 Q. So now it either goes to her, or her attorney, or both? 17 A. Both. That's what I meant, the attorney and including a 18 copy went to her as well. 19 Q. And there's no notation regarding that, correct? 20 A. No, I don't see that but, I mean, I can probably find a 21 copy of an escrow analysis that was done at that time. 22 And you can tell from the escrow analysis, it has her 23 address. I know that was specifically sent to her, and 24 we retained copies of those. 25 Q. I see a note here on March 1st, indicating that somebody 0075 1 pulled Pacer, and the Chapter 13 bankruptcy was 2 discharged. And it says, "Need ledger to correct all 3 payments made." What does that mean? 4 A. This, again, is part of the -- like I was explaining 5 before, when a bankruptcy has been discharged, part of 6 the process is to reconcile the loan. 7 What we do is, we pull a copies of the Pacer, we 8 pull copies of the histories and get copies of trustee 9 ledgers to make sure that we've received everything from 10 the trustee that -- and we do a spreadsheet, like I did, 11 to make sure that money was applied correctly and that 12 the loan is where it's supposed to be upon discharge. 13 Q. Is that what the entries after that refer to, the two on 14 March 13th and one March 21st, indicating -- it looks to 15 me like reviews are going on related to her account? 16 A. Uh-huh. 17 Q. And they're trying to get all of the monies applied 18 correctly? 19 A. Yes. 20 Q. It indicates on March 21st: Reviewed loan, debtor 21 delinquent two payments, reversing some money applied to 22 fees to clear MREC. What is that? 23 A. Obviously when they're doing this, they're doing this 24 review, they obviously saw that some money was applied 25 to fees that should not have been applied to fees, so 0076 1 they reversed this to bring the account where it's 2 supposed to be. 3 Exactly how much it is -- if they reversed that 4 money and made sure that those two payments were made, 5 I'm not positive, but this is an indication of the 6 research that's going on, and they're correcting any 7 errors that may have occurred during the bankruptcy. 8 Q. So it appears from this that what happened is, some of 9 monies that were paid either from Ms. Riehemann 10 personally or the Chapter 13 trustee were applied first 11 to fees, instead of to principal and interest, for 12 outstanding arrears, correct? 13 A. I wouldn't say first to fees, but if there was money 14 left -- let's say -- the hierarchy for applying the 15 payments would be to -- I believe it goes interest, then 16 principal, then escrow. 17 Then if there's money left over, they will go 18 down to the next level, which would be, like, late 19 charges or other fees. 20 So cashiering goes with that kind of hierarchy. 21 If they had extra money sitting around from a check that 22 came in, they would apply it to that hierarchy, and if 23 they misapplied something that they shouldn't have, 24 that's how we catch it when we do the reconciliation. 25 And we'll go back and we'll say: No, that 0077 1 shouldn't have been there. We'll reverse it and make 2 sure that it gets applied to where it's supposed to go. 3 Q. And I'm sure you recall reviewing this account also, 4 although it's not on here, that right before 5 Ms. Riehemann got her discharge, a Motion for Relief and 6 Stay was filed, correct? 7 A. Yes. If I recall correctly, it was. 8 Q. And the Order that was entered, I think, was within a 9 couple of days before the discharge order, correct? 10 A. Yes, I believe that's correct. 11 Q. And that was based upon the assertion that she was 12 delinquent, correct -- 13 A. Yes. 14 Q. -- in her post-petition payments? 15 A. Yes. 16 Q. And how was that corrected or identified in this payment 17 history? In other words, part of that would have been 18 incorrect, because, as we know here in March of '02, it 19 turns out some of her payments were not applied 20 correctly, because they had to be -- 21 A. Well, we don't know from this documentation whether or 22 not it was debtor money or trustee money. It might have 23 been trustee money that should have been applied to, 24 let's say, attorney fees and costs, but that they threw 25 it to extra late charges. 0078 1 I can't tell you exactly from this note whether 2 it was trustee money or debtor money. I do know from 3 what I recall of my ledger, when we filed the Motion for 4 Relief, I do believe she was post-petition delinquent at 5 the time that we filed our Motion for Relief. I would 6 have to examine my ledger to know that for sure. 7 Q. What is the reference here to "clear MREC"? What is 8 "MREC"? 9 A. That I'm not sure -- that's a vendor term that they're 10 using, and I'm not sure what MREC is. I'm trying to 11 think. Mortgagor? No. 12 Again, I'm not sure and I don't want to guess. 13 Q. So who is the vendor who is putting these mysterious 14 codes in here? 15 A. That would be -- we're using Shapiro & Sutherland, so my 16 guess would be that it was LOGS, slash, First American. 17 MR. PHELPS: Which one are you looking at? 18 Which code are you referring to? 19 MS. HUELSMAN: MREC. 20 THE WITNESS: On 3/21. 21 MR. PHELPS: And the date again? 22 MS. HUELSMAN: On March 21, 2002. 23 Q. [By Ms. Huelsman] "Reversing some money applied to fees 24 to clear MREC," and then it's got "CS," and I'm assuming 25 that the "CS" is the initials of the person that did the 0079 1 input. 2 A. Yes. 3 Q. I want to know what clearing the MREC refers to. 4 A. [No verbal response] 5 Q. I want to turn your attention to Page 59 of this. 6 A. Okay. 7 Q. It looks like we go further back in this system. 8 A. Oh, I know. It repeats here. I'm, like: Why am I 9 going from -- 59. 10 Q. So here it looks like we have some of the older entries 11 after this as well. 12 A. Okay. 13 Q. So there's notes in here dating back into '98 and '99, 14 indicating that Ms. Riehemann is calling in and 15 discussing the application of various payments. 16 A. Yes, I see notes here that, you know, she's sending in 17 payments. Yes. 18 Q. There seems to be references here to contacts also with 19 the trustee regarding its Motion to Dismiss, and then 20 Ms. Riehemann entered into a stipulation with them. Do 21 you see all of that? 22 A. Yes. 23 Q. There's an entry on October 1, '99, indicating that 24 someone received a call from Ms. Riehemann regarding her 25 insurance and escrow, and she was advised that they 0080 1 don't -- whoever this person is doesn't handle that, and 2 that she needs to contact somebody else regarding her 3 insurance. 4 A. Yes, I see that. 5 Q. Is there a reason why the person who is making the entry 6 on this system couldn't talk to Ms. Riehemann regarding 7 the escrow balance owed? 8 A. Well, escrow -- well, we have a specific department to 9 review escrow disputes and to explain what's going on 10 with escrow. This person -- and I can't tell from 11 just -- there's a code on -- I can try to see who this 12 person was -- 13 MR. PHELPS: Let's make sure -- this is 14 10/1/99? 15 MS. HUELSMAN: Right. 16 MR. PHELPS: It's Bank United. 17 A. Oh, I'm sorry. Yeah, you're right. That is Bank 18 United. 19 Yeah, I don't know who this person is, but I 20 would imagine, if Bank United was set up like Washington 21 Mutual, they have specific departments that would 22 respond to specific types of questions, and this person 23 that she called into was not in that department. 24 Q. [By Ms. Huelsman] On Page 61 -- 25 A. Okay. 0081 1 Q. -- there's also entries in here regarding 2 Ms. Riehemann's discussions regarding application of 3 payments and receiving money from Routh, which I will 4 tell you I know refers to Routh Crabtree, which is a law 5 firm that does quite a bit of work here in town. 6 And it was applied to the Suspense account, and, 7 you know, there was a payment that was not applied to 8 the account. And there's an indication of receiving a 9 copy of the check in June of '97, but it was not posted 10 to this account. 11 Do you see all of that? 12 A. Yes, I see -- which one do you want to tackle first? 13 Q. Can you tell me what any of this means and how it played 14 out? It looks to me like there's an indication that at 15 least one payment wasn't posted to the account, and I 16 didn't see any indication in any of our data reference 17 here that that was ever cleared up. 18 A. Well, I'm trying to remember now from my ledger -- I 19 think in '97 -- yeah, after she filed bankruptcy, it 20 took her a while to -- the mortgagor a while to start 21 making post-petition payments. 22 I believe a lot of this is -- a Motion for Relief 23 went out somewhere in '97 regarding delinquent 24 post-petition payments. I think on 12/3/97, "Signed and 25 faxed" declaration to the outside attorney, sent 0082 1 overnight, that was obviously something we prepared in 2 regards to that Motion for Relief. 3 12/18/97, let's see. Received call from debtor. 4 She stated she received a call from their attorney. 5 [Witness refers to document.] 6 Okay, she's calling in, disputing the fact that 7 she is twelve payments delinquent on this note. 8 Basically we read off -- this person at Bank United read 9 off what checks they had records of. 10 If there was something else that was sent to 11 Norwest that we didn't list out, that she was -- that 12 person had told her she sent in front and back copies of 13 the cashed checks so they could research where that 14 payment was applied. 15 1/8/98, obviously received a copy of Check No. 16 1542. It was cashed on such and such a date, but not 17 posted to this account. 18 So they received a front and back copy of the 19 check, and obviously there's some research going into 20 why that check doesn't appear on her loan history. 21 1/19/98, "Received check from Routh for 22 $1,229.29, applied" -- and then it talks about how they 23 applied some of that money. It went to a 12/97 payment. 24 "Applied $1,158.94 to Pos" -- post-petition payments. 25 Post-petition payments -- this is just talking 0083 1 about how that money was applied. I would have to look 2 at -- the pencil ledger will tell me specifically better 3 than this how that money was actually applied. 4 Q. Okay. 5 A. 1/30, obviously they needed a copy of the payoff, so 6 they sent out a payoff. And then on 1/30/98, here you 7 see that check copy that came in. We had -- they sent 8 it to somebody named Bonnie to research. Bonnie, I 9 assume, is somebody with Bank United. I could research 10 to find out where that money was applied. 11 Q. But I didn't see anything that indicates whether they 12 ever answered that question. Do you? 13 A. I would have to look further into the history here. 14 Okay, we are researching -- 1542 is the check they're 15 researching. I see on 2/2 of -- 16 MR. PHELPS: What page? 17 MS. HUELSMAN: It's Page 59 now. 18 A. Yes. The original receipt of that check is on Page 51. 19 And then on 59 I see a document -- a note on 2/2/98, 20 "Check #1542 dated 6/19/97 had Loan #6396175 written on 21 it. This is a 472 loan in the name of Perkins, which is 22 also the name on the check, address of that property is 23 1851 Westside Highway" in Washington. 24 [Reading] Tish will check with debtor to see if 25 they own that property as well. 0084 1 So I guess from the research here, they're 2 looking at this check, and they said: Well, this had 3 this loan number on it, and this is where it was 4 applied. 5 Now, do we know -- 6 Q. It looks to me like if you go up from that -- 7 A. Oh, okay. 8 Q. So if we move up now, it looks like then she mails 9 another check for $500 in February. 10 A. Can you give me the exact date you're looking at? 11 Q. 2/18/98. 12 A. 2/18/98? Okay. 13 Q. For $500? 14 A. Yes. 15 Q. And then the one above that, on 3/4/98, they finally 16 give her credit for that Check No. 1542, and it's 17 showing that it was applied to "clear out the APO" -- 18 which I don't know what that is. "The debtor is now 19 due" for February of '98. And so -- but then they're 20 generating a default letter to her. 21 A. Well, obviously from the previous Motion for Relief, 22 there must have been some kind of stipulated agreement, 23 and I don't have in front of me a copy of what that 24 agreement was. But there must have been some kind of 25 drop-dead clause that we see a lot of times, saying that 0085 1 they need to remain current. 2 So right now they're post-petition due for 2/98. 3 Here this note is made on 3/4/98. They would be in 4 default of that Consent Order, and a Notice of Default 5 would have been submitted regarding being in default of 6 that Consent Order. 7 Q. Even though clearly there's been a misapplication of 8 payments? 9 A. Well, it looks like, like you said, they gave them 10 credit for that check; and even with that check being 11 applied, they are still due for the 2/98 and now the 12 3/98 payments. 13 Again, if we look at the ledgers, I can clarify 14 that. 15 Q. Let's turn to Page 66. 16 A. 66? Okay. 17 Q. It looks like a ledger. It's called the Bankruptcy 18 History Ledger. 19 A. Yes. This is the computer-generated ledger. Basically 20 it would say what was post, what was pre. 21 Q. So it looks to me like on 4/14/98 -- it's probably Bank 22 United at this time -- received a payment of $1692.40? 23 A. Uh-huh. 24 Q. That was put to the trustee's Suspense account, and then 25 it was allocated among a bunch of fees, rather than 0086 1 applied to arrears of the principal and interest, 2 correct? 3 A. Yes. That's the way that Bank United applied that 4 money, yes. 5 Q. Is that a proper application of that money? 6 A. I would assume that they applied those -- and I would 7 have to look at the Proof of Claim -- that, yes, they 8 can apply first to fees and cost and then start applying 9 stuff to backdue payments. 10 So if these fees -- I would have to look again at 11 the Proof of Claim. If these fees are what we 12 alleged -- or that we put in our Proof of Claim, then 13 this would be a proper posting of that money. 14 Q. Under what provisions are fees paid first? 15 A. Well, it all depends -- 16 Q. The term of the contract? As part of the bankruptcy 17 code? As part of the Proof of Claim? What? 18 A. If it's not in the -- like I said, I don't believe it's 19 in the Deed of Trust or anything like that. It's 20 probably internal Bank United procedures, and as long as 21 things are being paid pre-petition first, payments or 22 fees, it doesn't make a difference, as long as it 23 completes -- this is what our total claim amount is that 24 we're getting paid off. 25 It's how we applied what we get pre-petition. It 0087 1 doesn't really make that big of a difference. It's 2 still pre-petition debt that was claimed in the Proof of 3 Claim. 4 Q. So I see lots of entries here for all kinds of Suspense 5 accounts: the trustee Suspense, the debtor's 6 Suspense -- 7 A. Uh-huh. 8 Q. And those are the Suspense accounts you were referring 9 to earlier -- 10 A. Yes. 11 Q. -- that we're going to look at the Deed of Trust and see 12 if there's any provisions for those accounts in the Deed 13 of Trust? 14 A. Yes. 15 MS. HUELSMAN: I don't think I have anything 16 else. I just want to make sure. Why don't we 17 take a break for a minute. 18 [A brief recess was taken.] 19 Q. [By Ms. Huelsman] So we're starting with Document 96. 20 A. Yes. 21 Q. And it goes through what number? 22 A. It is going to go through 112. 23 Q. I will paperclip. Through 112? 24 A. Yes. 25 [Exhibit No. 6 was marked.] 0088 1 A. [Referring to document] Yeah, these are all -- I mean, 2 like, 112 is Bank United notes, so I just put this all 3 together as consolidated notes. 4 Q. [By Ms. Huelsman] Okay. So this is Exhibit 6? 5 A. Yes. Just by way of background, how these notes are not 6 with the bankruptcy notes that we just went through, 7 when things go into microfiche, they will microfiche the 8 consolidated notes, which are your -- some of the 9 bankruptcy stuff, but also it's mostly a collection of a 10 department where they put notes on it that would not 11 show up in the bankruptcy notes. 12 This is -- and all the other areas, this is the 13 consolidated version of just that -- bankruptcy notes 14 are also microfiched separately. 15 Q. So what we have here is a bunch of notes regarding, 16 basically, the entire history of the account? 17 A. Yes. 18 Q. Correct? 19 A. Correct, at least up until 2/17 -- I'm sorry, 3/3/97. 20 Q. Through 10/5/05? 21 A. I have 10/5/05. Is that what you said? 22 Q. Yes. 23 A. Okay. I thought you said 3/5/05. 24 Q. No, I said "10." 25 A. Okay. 0089 1 Q. On Page 97 -- 2 A. [Referring to document] 97, okay. 3 Q. I see notes regarding this investigation of the 4 insurance issues. 5 A. Are you talking about 4/14/04 or -- 6 Q. Yes, and then below that on 3/18/04. 7 A. And 3/10. Okay, yes. 8 Q. So it looks like the oldest -- or I guess the most 9 recent one, actually, is the 4/14/04, and it's saying 10 that this person, whoever entered this, is requesting a 11 "purged history letter" to gain information on who 12 forced placed the insurance, who the carrier is, when 13 the coverage began. 14 A. And why. 15 Q. And why, but I don't see anything in the subsequent 16 notes indicating a resolution or that that information 17 was ever obtained. Am I missing something? 18 A. No, I don't see it in this set of notes unless it 19 occurred after 10/5/05. But, no, I don't see a 20 resolution. 21 Part of that may have been because this actually 22 became a litigated file, and I know Monica Traynor was 23 in the bankruptcy litigation area with Washington 24 Mutual; so that if we had, like, some kind of contested 25 thing from the bankruptcy or from foreclosure, it would 0090 1 go into a specialized group, and they would not put 2 notes in the system, because some of the information 3 they would have put in here may have been considered to 4 be privileged, working with outside counsel, working 5 with the legal department. 6 Q. I'm going to turn your attention to Page 102. 7 A. [Referring to document] 102? Okay, let me get over 8 there. Okay. 9 Q. There is a note on 2/5/02. 10 A. Okay. 11 Q. It says: Received discharge of debtor dated 08/08/01 12 for an 01 case number. 13 A. Oh, what you're looking at here -- if you look up at the 14 top left-corner, you will see that the account number 15 has been blocked out. This is for a different loan 16 number. 17 When they microfiche stuff, a lot of times it 18 contains -- because they just do -- I don't know how 19 exactly they do this, but they capture not only the loan 20 but other loans as well. So, like, when we -- when we 21 go through these and we see that that's a different 22 account number, we would block that out, which is what 23 we did. We blocked out the account number. 24 Q. So basically the information on 101 that's got the 25 blocked out stuff -- 0091 1 A. It's not -- not this -- 2 MR. PHELPS: And on 102. 3 Q. [By Ms. Huelsman] And the 102 is not hers? 4 A. Correct. 5 Q. And then back when it has her account number and 6 mortgager's name and Donald Galle and stuff -- 7 A. Yes. That's your client's account. 8 Q. It looks like the rest of the -- 9 A. I do see, like, on 108, there's some blacked out stuff 10 on the bottom of it. That's again, another account. 11 Q. I'm sorry, where? 12 A. Page 108. I was just looking for other cases where that 13 was there. And, again, 110, there's the same thing. 14 But maybe we can deal with that after -- address all of 15 those issues. 16 Q. And then the documents on 111 and 112? 17 A. Let's see. Yeah, again, you'll see there's two accounts 18 that are blocked out. Those are not your client's 19 account. 20 And on 112, the bottom section is not your 21 client. I want to make sure that there was nothing 22 before this date that we didn't block out. 23 On Page 101, on the bottom there, there's another 24 account that's blocked out. It's not your client's 25 account. 0092 1 Q. Yes, I've got that. 2 A. Okay. 3 Q. Pages 111 and 112 are just a different screen because it 4 was Bank United's formatting? 5 A. Yes. 6 Q. And it became part of WAMU's system, it looks like, on 7 September 28, 2000? 8 A. Yes, that's -- yeah. I think when they did this merger, 9 there was something they could map over from their 10 system to our system and some things they couldn't. How 11 all of that went, you'd have to have some technical 12 person tell you that. I don't know. 13 Q. So we're at Page 113? 14 A. Yes. 15 Q. And this document goes through -- 16 A. This document goes through 142. 17 MS. HUELSMAN: This will be Exhibit 7. 18 [Exhibit No. 7 was marked.] 19 Q. [By Ms. Huelsman] What is this document? 20 A. This is a copy of payment histories, starting at 1/13. 21 This is the year -- a year-end statement, basically for 22 the year of 2004. 23 And if you go to 115, it's the year 2003. 117, 24 it's the year 2002. Page 121, it's the year 2001. 126 25 is the year 2000. 0093 1 And then on 131 we're hitting Bank United stuff 2 for the year 1999, and then 137 is Bank United for '98. 3 Q. So these are summaries, essentially, year-end summaries, 4 for each of the years that -- 5 A. Yes. 6 Q. -- one of these entities had it? 7 A. Yeah. And it gives a description of everything that was 8 applied to the loan, what went out, what fees, and other 9 information. 10 Q. So it looks like it's probably duplicative of some of 11 the stuff we've gone through, and I would suppose that 12 your summary that you did will give me a better 13 understanding of the loan history; is that correct? 14 A. Yes. Unless you have been looking at these ledgers 15 forever, then you can kind of know what they mean. 16 Q. Kind of. 17 This is Exhibit 8, and, again, we'll probably go 18 through a number of these each individually, but I 19 wanted to make sure I understood what went with what. 20 Okay? 21 A. Sounds good. 22 Q. So it looks to me as if 143, 144, and 145 go together. 23 A. Yes. 24 Q. They are separate from 146? 25 A. Correct. It's a difference between June of '05 and June 0094 1 of '04. 2 MS. HUELSMAN: So this will be Exhibit 8, 3 143 to 145. 4 [Exhibit No 8 was marked.] 5 Q. [By Ms. Huelsman] Can you tell me what Exhibit 8 is? 6 A. This is a notice that the forced placed insurance is 7 being renewed. It lets her know that, you know, this is 8 what her insurance policy is from the forced placed 9 insurance. 10 And, you know, we urge her to contact an agent of 11 her choice to obtain an insurance at a more competitive 12 rate than would be the rate that we are getting for 13 forced placed insurance, which it appears that the 14 premium is $753 for the year of -- I would imagine this 15 goes from June of 2005 to June of 2006. Yes, it does. 16 Q. I'm going to just point you, though, to the first page. 17 A. Oh, okay. 18 Q. It appears to me to say on the face page of the letter 19 that it's $583. 20 A. Yeah. 21 Q. But I agree with you that on 144 the premium is listed 22 as -- 23 A. $753. 24 Q. Which is $583 plus this $170? 25 A. Right. If you subtract $753 from $170, you get the 0095 1 $583. 2 Q. Right, which is documented on 145. 3 A. Yes. 4 Q. Is there any indication on here that I'm missing that 5 shows that it was sent to the bankruptcy trustee and/or 6 Ms. Riehemann's attorney also, this letter? 7 A. No. I mean, at this time she's out of bankruptcy. We 8 wouldn't have sent it off to the bankruptcy attorney. 9 This is on June of '05. We took her out of bankruptcy 10 in June of '02, somewhere around then. 11 Q. I'm going to remind you that she filed a second 12 bankruptcy -- 13 A. Oh, that's right. Sorry. I don't see that on here, but 14 I do know the policy is that we would print out a copy 15 of this, and then they would send not only a copy to the 16 debtor; but they would also send a copy out to the 17 debtor's attorney and the trustee, is our policy. 18 Q. And where would I find that document? 19 A. I don't know if we keep copies of the things that we've 20 sent on to them, but that would be part of the 21 bankruptcy procedures that our vendors have been 22 notified to do. 23 Q. And in this case the vendor is Washington Mutual's 24 insurance company? 25 A. No, no, no. Well, this would be generated by an 0096 1 insurance company, but the bankruptcy department would 2 also make sure that the attorney and the trustee would 3 get a copy as well. 4 MS. HUELSMAN: I'm going to mark this one. 5 [Exhibit No. 9 was marked.] 6 Q. [By Ms. Huelsman] This is 146, and it looks to me like 7 it just goes to 148. 8 A. Yes, and 149. 9 [Discussion off the record.] 10 Q. [By Ms. Huelsman] And so the same questions regarding 11 this. 12 A. And the answers would probably basically be the same. 13 This is where we would have -- in '04 we let her know 14 that, you know, we are renewing the forced placed 15 insurance. You know, please -- if you want to get a 16 better rate, send us proof that you have insurance, and 17 we can basically cancel this. 18 And again, per our procedures, this would go to 19 not only the debtor but also to the debtor's attorney 20 and the trustee. 21 MS. HUELSMAN: Off the record for just one 22 second. 23 [Discussion off the record.] 24 MS. HUELSMAN: Back on the record. 25 Q. [By Ms. Huelsman] I'm going to turn your attention to 0097 1 Page 150. 2 A. Uh-huh. 3 Q. And it looks like 150 through 152 belong together. 4 A. Yes. 5 MS. HUELSMAN: Those would be Exhibit 10. 6 THE WITNESS: Yes. 7 [Exhibit No. 10 was marked.] 8 Q. [By Ms. Huelsman] And your answer is, then, the same 9 regarding these documents, that this letter should have 10 been sent to Ms. Reihemann's attorney and the Chapter 13 11 trustee? 12 A. Right. 13 Q. She was in a 13 by August of 2003? 14 A. Right. And when I came onboard in June of '03, I know 15 that this became an issue, and we made the policy with 16 our vendors to make sure that it goes to the attorney, 17 the trustee, and the debtor. 18 I don't know exactly when in '03 that that went 19 into effect. I assume this would have went -- but that 20 would have been before that policy change was made. 21 MR. PHELPS: There was not a bankruptcy 22 ongoing -- 23 MS. HUELSMAN: Oh, that's right. It was in 24 '04. 25 MR. PHELPS: So that's not an issue. 0098 1 Q. [By Ms. Huelsman] She was fighting about the payments 2 owed in '03 after coming out of the other one in '02, 3 because she didn't wind up filing until '04. 4 A. Okay. 5 Q. My bad. 6 A. Yeah. 7 Q. So this is Exhibit 10 and Exhibit 11, which is 153 8 to -- 9 A. 155. 10 Q. Right. 11 [Exhibit No. 11 was marked.] 12 MR. PHELPS: I would also point out that 13 Exhibit 9 is June 19. I believe she filed 14 bankruptcy in August of '04. 15 MS. HUELSMAN: Yes, okay. 16 A. So these two would have gone to the attorney and the 17 trustee in addition to the debtor. 18 153 through 155, just so I'm clear, we have 19 marked as Exhibit 11, correct? 20 Q. [By Ms. Huelsman] Correct. So now I assume your 21 answers would be the same, then, for Exhibit 11? 22 A. Yes. The fact that they're not in bankruptcy, it would 23 only go to the debtors. 24 [Discussion off the record.] 25 Q. [By Ms. Huelsman] Okay, so we're looking at 156. 0099 1 A. Okay. We're moving on? I have that out just in case 2 there's something else you needed to know. 3 Q. So 156 is just -- 4 MS. HUELSMAN: We'll mark that as 5 Exhibit 12. It's just one page. 6 [Exhibit No. 12 was marked.] 7 Q. [By Ms. Huelsman] So this letter is slightly different, 8 advising -- 9 A. Yes. 10 Q. -- them that the insurance has expired? 11 A. Yes. 12 Q. And this is '03? 13 A. Uh-huh. 14 Q. Now, my understanding from when we were looking at the 15 records before is that Washington Mutual and/or Bank 16 United have been contending or were contending since 17 well before 2003 that the hazard insurance policy has 18 lapsed? 19 A. Yes. 20 Q. And that's why there was the escrow overages, because 21 there's insurance force placed? 22 A. Correct. 23 Q. So if Washington Mutual was forced placing insurance, 24 how did that policy expire on June 1, '03? 25 A. What this letter is in reference to is, in November of 0100 1 '02, I believe -- maybe it was August of '02 -- the 2 debtor provided us a copy of an insurance policy they 3 got with Farmers. 4 And they sent us a copy of the application that 5 they did and a copy of the cover page of the policy. 6 What Washington Mutual's escrow did is, once they got 7 that, they turned around and cancelled the forced placed 8 insurance that was in place. 9 They credited the debtor's escrow account back 10 with the $523, which was the premium for the previous 11 forced placed insurance. 12 And then when that policy, that Farmers policy, 13 was to be renewed, they called up, and they found out 14 that that policy had been cancelled. And that's why 15 this notice went out. 16 [Exhibit No. 13 was marked.] 17 Q. [By Ms. Huelsman] 157 is just one page, also, in terms 18 of Exhibit 13. Can you tell me -- 19 A. Oh, this is a letter that our escrow department would 20 have sent out saying, basically: Thank you for 21 providing evidence of the insurance coverage that you 22 got. 23 And then, basically, it tells them, like I just 24 said: We cancelled the forced placed insurance, and we 25 credited them back a refund from the forced place 0101 1 insurance. 2 Q. And we can't tell how much that is because it's typed 3 over the printing in the letter? 4 A. Yeah. 5 MR. PHELPS: Not on that document, you can't 6 tell. 7 MS. HUELSMAN: Right. 8 A. I think actually the date that has been kind of crossed 9 over is the date that they cancelled it, which -- 10 Q. [By Ms. Huelsman] Yes, you're right. Yes. It does 11 look like a date. 12 A. There's a "2002" on the end, but -- 13 Q. Yes, and it does say "cancelled effective." 14 A. Yeah. 15 Q. I'm used to the overlaps that we have been seeing on the 16 dollar amounts on these letters. Somebody couldn't get 17 the printer lined up. 18 MS. HUELSMAN: So we'll mark 158 through 160 19 as Exhibit 14. 20 [Exhibit No. 14 was marked.] 21 Q. [By Ms. Huelsman] Your answers, I assume, are the same 22 that we have been talking about regarding forced placed 23 insurance for Exhibit 14? 24 A. Yes. This was the policy that was in effect until we 25 got notice of the Farmers insurance -- 0102 1 Q. Policy? 2 A. Yes. 3 MS. HUELSMAN: And 161 through 163 is 4 Exhibit 15. 5 [Exhibit No. 15 was marked.] 6 Q. [By Ms. Huelsman] Let's go ahead and review No. 16 as 7 well. 8 MS. HUELSMAN: Let's mark 154 to 165 as 9 Exhibit 16. 10 [Exhibit No. 16 was marked.] 11 Q. [By Ms. Huelsman] It appears that these two correlate. 12 A. Yes. 13 Q. So we have Exhibit 16 that's dated August 17, 2001, 14 indicating that -- again, they're saying somebody has 15 advised WaMu that her insurance policy has lapsed, and 16 then Exhibit 15 is indicating that forced placed 17 coverage was purchased. Is that correct? 18 A. Yes. 19 Q. Do you recall why this one occurred in 2001? 20 A. Yes. This is one -- what we did was, when the merger 21 took place, we cancelled the Bank United forced placed 22 insurance. We gave the mortgagor an opportunity to 23 provide evidence of her own insurance policy and the -- 24 well, that's what the 8/17 is. 25 You know, we don't -- that one has been 0103 1 cancelled. We don't have any evidence of a new policy. 2 You know, if we don't receive something, we're going to 3 have to force place the insurance, and that is what 9/16 4 is. 5 Exhibit 16, there's actually two different 6 letters here. There's one 8/17 and one 7/17. These are 7 the two letters that are referenced in Exhibit 15 -- 8 MR. PHELPS: Do we want to fix that? 9 A. Yes, do we want to fix that? 10 Q. [By Ms. Huelsman] Well, not -- as long as we have them 11 together -- 12 A. All right. I didn't know if you wanted to -- 13 Q. No, that's fine. I just didn't notice. 14 A. That's okay. 15 I don't know why I said that. 16 Q. So the 7/7 letter, which is part of Exhibit 16, was sent 17 first. 18 A. And then we followed up a month later -- 19 Q. -- with the August 17, 2001 letter. 20 A. If we have no response, then we have to go out and get 21 forced placed insurance. 22 MS. HUELSMAN: Let's mark this as 23 Exhibit 17, even though it has an exhibit sticker 24 down at the bottom. 25 [Exhibit No. 17 was marked.] 0104 1 Q. [By Ms. Huelsman] Can you tell me about this letter? 2 A. Let me see. I want to make sure that I've had a chance 3 to look this over. I think I've seen this before. 4 Okay. I think this is in regards to the Farmers 5 insurance, that she provided a copy of the policy and 6 the application back in July 29th of '02. 7 Q. So you think this letter is referring to the Farmers 8 insurance policy? 9 A. Yeah, that's what we -- I know in '02 we received a copy 10 of the Farmers insurance policy, and this is what -- 11 that's what it's referring to, I think. 12 Q. Well, I'm a little puzzled, because it seems to me that 13 it's talking about Washington Mutual's insurance, not 14 Farmers. 15 I mean, it says, "there are many benefits to 16 having" -- 17 A. Uh-huh, "a homeowner policy" -- 18 Q. -- "a homeowner policy with Washington Mutual Insurance 19 Services. These benefits include our licensed insurance 20 Customer Service Representatives. . . You will receive 21 your policy in approximately 30 days." 22 Why would Washington Mutual Insurance Services be 23 telling her this information if it was referring to a 24 homeowner's insurance policy through another insurance 25 company? 0105 1 A. I don't know. I mean, I do know that in '02 we did 2 receive a copy of the Farmers insurance policy. I don't 3 know -- I'm not in insurance personnel -- what the 4 relationship between Farmers and Washington Mutual is. 5 I do remember seeing from the application that 6 there were indications that Washington Mutual Insurance 7 Services was on the same form as the Farmers insurance 8 policy; but I don't know the relationship right now. 9 What I'm thinking is, there's some kind of 10 relationship between the two entities, almost like a 11 subsidiary or not, I don't know. I don't know the 12 answer to that. 13 MR. PHELPS: Can I interject something that 14 might clarify that a little bit? 15 MS. HUELSMAN: Sure. 16 MR. PHELPS: I think it may have been in an 17 exhibit here in your client's deposition, there's 18 a -- actually it's Document 0166. It's the 19 declaration page, Farmers Home Group. 20 And on that declaration page it shows 21 Farmers Home Group, the insurer. Your client is 22 the borrower -- or the insured, along with -- it 23 also has Washington Mutual Insurance Services 24 shown on the document. 25 MS. HUELSMAN: As the insurer? 0106 1 MR. PHELPS: Well, as the agent, the 2 insurance agent. 3 A. Sorry, I'm not an insurance person. I don't know what 4 their relationship is. 5 Q. [By Ms. Huelsman] It's not a trick question. 6 MR. PHELPS: Well, I think they were in some 7 sort of agency relationship with regards to 8 Farmers. 9 A. That was my guess. 10 MS. HUELSMAN: I'm going to mark these as 11 Exhibit 18. And I am just going to leave it all 12 together, just because that would be easier. 13 [Exhibit No. 18 was marked.] 14 Q. [By Ms. Huelsman] Exhibit 18 is a bunch of different 15 documents that were produced by Washington Mutual that 16 relate to the actual completed foreclosure of the 17 property in 2006. 18 A. Okay. 19 Q. And I'm going to give you a minute to go through them. 20 I'm not going to ask you about all of them, but just 21 scan through them. 22 Meanwhile, I'll run downstairs because I forgot 23 to go make copies of these documents that you just 24 produced to me this morning. So I'll go make copies of 25 those while you're taking a minute to look at those, 0107 1 okay? 2 A. Okay. Maybe grab more paperclips. 3 [A brief recess was taken.] 4 Q. [By Ms. Huelsman] So you've had a chance to look at 5 what we've marked as Exhibit 18? 6 A. Yes, I've glanced through it. 7 Q. So am I correct that these are basically the documents 8 that were created or generated in the course of 9 completing the foreclosure that eventually was completed 10 in 2006? 11 A. Yes. 12 Q. So No. 506 -- 13 A. Okay. 14 Q. -- can you just tell me what this is? It looks like 15 it's a two-paged print of a screen print. 16 A. This would be a fax that went out from our bankruptcy 17 vendor to our foreclosure attorney. Basically it has 18 the bankruptcy release. It gives you the date that it 19 went out. "Were payments applied during the Bankruptcy? 20 Yes." 21 It gives you kind of the HUD deadline to restart 22 the foreclosure, which is right above that, 11/8/05. 23 And it gives you basic account information, like the 24 unpaid principal balance, the escrow balance, when it 25 was contractually due for, the monthly payment amount, 0108 1 monthly late charge amount, current interest rate. 2 And, you know, there's a comment, "Proceed with 3 Foreclosure action." 4 [Interruption] 5 [Discussion off the record.] 6 Q. [By Ms. Huelsman] All right. So the emails that follow 7 it are back and forth between, it looks like, LOGS 8 people? 9 A. Uh-huh. 10 Q. Not WaMu people? 11 A. Yeah, and actually you can see here at this point 12 they're First American. 13 Q. Yes, but it shows you have the email of LOGS at that 14 point. 15 A. Yes. I think we were in the process of changing over. 16 Yeah. 17 Q. And then we have the email from Mr. Sutherland, who was 18 the outside counsel we've talked about, one of the LOGS 19 network through Shapiro & Sutherland. Then we have the 20 Order from the court. 21 Looking at 511 -- 22 A. 511, okay. 23 Q. -- can you tell me what that is? 24 A. Oh, it's out of order here, but this is part of the 25 Catapult system. What the vendor has is, they have a 0109 1 system where they can load documents onto -- they scan 2 things, and they have it to where they can email these 3 off to the foreclosure attorney. 4 This gives you kind of basic loan information -- 5 like if you start on Page 513, which is the first page 6 of this Catapult, you know, you'll see loan number, 7 debtor information, property address, the date the loan 8 was originated, what it is next due for, the escrow 9 balance, stuff like, you know, payment amounts. 10 And going onto the next date, you see more loan 11 information, like the maturity date, any appraisals that 12 would have been out there, what the value was, any 13 inspections for that value, the monthly escrow shortage, 14 who the processor that was that set this up, this 15 Danielle Shepstone. 16 It appears that they cut off her number, but -- 17 and then kind of a quasi-reinstatement for -- on Page 3, 18 of what it's due for. It's due for the 10/01/02 through 19 the 1/1/03, four payments at that dollar amount, and 20 then the one for 9 of '02 at that other dollar amount, 21 and then the late charge information. 22 Q. And it shows that the foreclosure is going to be in the 23 name of a secured creditor, which is Washington Mutual 24 Bank, F.A. 25 A. Yes. 0110 1 Q. And then I see on Page 513 that the investor is 2 identified as Lehman Brothers. 3 A. We're the secured creditor, the one that is doing the -- 4 that's servicing the loan. I believe Lehman Brothers -- 5 I haven't really looked at that, but I would assume that 6 that is an investor. 7 No, I thought the investor was the FHA. 8 Q. No, that just shows the loan type is FHA. 9 A. Yeah, that's the insurer, sorry. So, yeah, I believe 10 the investor is Lehman Brothers. That's what it says 11 here. I can't recall looking at exactly who the 12 investor was in the loan history. 13 Q. So Washington Mutual was the servicer, not the owner of 14 the loan? 15 A. Well, I think the servicer -- yes, I believe that's 16 right. 17 Q. Because the investor is the one that owns the loan, and 18 Lehman Brothers is identified with an investor number, 19 right? 20 A. Correct. 21 Q. And then we've got some invoices and some other -- title 22 insurance records -- 23 A. Yes, part of the process, obviously, would be to pull 24 the title and make sure the title is clean. 25 Q. There's the Notice of Trustee's Sale? 0111 1 A. Correct. 2 Q. Do you know why this foreclosure in Vancouver, 3 Washington, would have been handled by Professional 4 Foreclosure in Phoenix? 5 A. No, other than maybe Professional Foreclosure -- okay, 6 my recollection is that Professional Foreclosure has 7 offices in Phoenix, Arizona. They do business in Nevada 8 and Washington, if I -- I'm pulling back my memories 9 from my LOGS days. I believe that's correct. They have 10 multiple sites. 11 Q. Yes. On 535 there's a Vancouver, Washington, address. 12 A. Okay. 13 Q. Document 534, can you tell me what that is? 14 A. It's a Notice of Sale Checklist for, obviously, this 15 case here. The foreclosure department would kind of do 16 a review and make sure that all the steps were completed 17 when they needed to be completed. 18 That's why you see, like, the notice, and the 19 Notice of Default was mailed on such-and-such date. 20 It's posted on such-and-such date. Your first legal, 21 your publication date, sale date, sale time, sale 22 location, right on down. 23 It kind of speaks for itself. This is a 24 checklist to make sure that everything has been 25 completed. 0112 1 Q. And who is this prepared by? 2 A. I believe this is done by the vendor. Yeah, it has to 3 be done by the vendor now. Yeah, the vendor. 4 Q. And on 540, what is this? It looks like a screen print. 5 A. I have no clue. It's a screen print, but I can't quite 6 make out-- 7 Q. I think it says "Foreclosure Path." 8 A. Yeah, and I think I see "NOD posted, send NOS." 9 Q. It looks to me like it's the deadline for -- 10 A. Yeah, I think this -- 11 Q. -- the foreclosure process. 12 A. Yeah. We think this has to be a part of the timeline to 13 make sure everything is done timely, but it's hard to 14 read. I'm sorry. 15 Q. And now we have the Trustee's Sale Guarantee? 16 A. Uh-huh. 17 Q. We have the title insurance company, and then we also 18 have -- those are part of the title insurance. 19 A. So that's it. I was trying to look at those. It was, 20 like, straining my eyes. 21 Q. Now we'll go to the documents that you produced today. 22 MS. HUELSMAN: We're on No. 19. 23 [Exhibit No. 19 was marked.] 24 Q. [By Ms. Huelsman] Do we need to look at these all 25 together? 0113 1 A. No, we can look at them separately. 2 Q. I haven't had a chance to look at these, but can you 3 tell me what this document is? 4 A. No. 19 is what I call my master loan history. This 5 basically takes all of those payment histories that we 6 look at -- 7 Q. Let me stop you for a second. Did you create this 8 document personally? 9 A. Yes, I created this document personally. 10 Q. Okay, and so you're going to tell me how you created it 11 and what your sources of information were? 12 A. Okay. The first source of information, they are all of 13 the payment histories that you were provided. They're 14 in here, except I don't think you had '97. I think you 15 only went back to '98; but I had '97, which is where I 16 started. 17 How I start this up, is -- I mean, I'm obviously 18 just going from left to right. The first column at the 19 top, the "Process Date" is the date that some kind of 20 transaction occurred. 21 "Transaction Description" gives you a description 22 of what happened. If there was money received, I put 23 that in the "Funds Received" column, which is your third 24 column. 25 The next column over is your "Due Date." Why do 0114 1 I have two in there? What happened there? Oh, I'm 2 sorry. I double-printed it. 3 The next two columns over, which aren't listed, 4 are a calculation. It's basically principal plus 5 interest plus escrow, giving you your total dollar 6 amount. I forgot I put that up in the top column. It 7 looks like I duplicated it twice. 8 If you look on the next page, on the line dated 9 12/8/97, you see a payment applied there for 6 of '96. 10 When you look at those two columns, they're the same 11 amount. They're adding up your principal plus interest. 12 Q. Just a second. What date are you talking about? 13 A. I'm looking at the first payment I see on here is 14 12/8/97. 15 Q. Right. 16 A. You see that $460.95 came in. 17 Q. Right. 18 A. It was applied to the 6 of '96 contractual payment. And 19 then you see that these two columns have the same 20 number? 21 Q. Right. 22 A. That's adding up the principal, the interest, and the 23 escrow. What I must have done was, I must have put -- I 24 must have doubled the column there by mistake. 25 So these two columns are just a -- 0115 1 Q. A duplicate of each other? 2 A. Yeah. And, basically, as I said before, it's a 3 calculation of the principal plus interest plus escrow. 4 The next column over called "Running Principal 5 Balance" is just that. It's a running balance. It's a 6 calculation of the balance before it minuses any money 7 that was applied to the principal. And it's subtracted, 8 so you get a running balance of what the principal 9 balance is. 10 Interest is applied. That's what we applied, the 11 interest from the payment. "Escrow Applied" is the 12 amount we applied to escrow. "Escrow Disbursed" is the 13 amount that we would have disbursed out for, like, PMI, 14 hazard insurance or taxes. 15 And then the "Running Balance" is, again, a 16 calculation of what the principal -- what the running 17 balance was before minus anything that was applied -- I 18 mean, plus anything that was applied minus anything that 19 was disbursed. It's just a simple calculation that I do 20 to include that. 21 "Optional Insurance" is if there's some kind of 22 optional insurance, it would be noted there. "Trustee 23 Interest Payment," that's only in the case of a 13, if 24 there's some kind of interest we're getting on a Chapter 25 13, that is notated there. 0116 1 Your "Regular Suspense Transactions," this is 2 what is going into Suspense, what is going out of 3 Suspense. 4 Your "Running Suspense Balance," again it's a 5 calculation of what the balance was prior to it minus or 6 plus anything that would have occurred in the Suspense 7 transactions. 8 "Late Charge Transaction" again is if anything 9 was applied to late charges or anything was reimbursed 10 or waived. 11 The "Running Balance," again, it's a calculation, 12 just as are the other calculations. It's the amounts 13 above it minus anything or plus anything that would have 14 occurred in the transaction. 15 My "Other Fee Application" would be anything for, 16 like, property inspections, NSF, or anything else that's 17 notated in this field. 18 The "Other Fee Balance" is -- again, it's a 19 calculation, the same as the other calculations, done 20 the same way. 21 "Corporate advances" is for anything like 22 attorney fees or BPOs or stuff like that. And the 23 "Running Balance," again, is a calculation of what was 24 above it minus or plus anything that was applied that 25 month -- in that line item. 0117 1 Did that make sense? Did I go too fast? 2 Q. No, no, I think I understand it. My first question, 3 though, is: I've never seen any previous indications 4 regarding PMI being paid on this loan until I see this 5 spreadsheet. 6 A. Yeah, and the only thing I know is that when I looked at 7 these histories from '97, there is an indication that 8 there was PMI done at least for the year of -- well, no, 9 it goes into '98. 10 Q. Yes, which would make sense if it's an FHA loan, but I 11 just never saw any other -- 12 A. Yeah, we were disbursing PMI. 13 Q. PMI? 14 A. Yeah, primary mortgage insurance I guess is the full 15 technical name. 16 If you want, you can pull one of the histories 17 from the other documents you provided, and we can look 18 and I can show you where it is on the other history, the 19 full histories from our system. 20 Q. All right. So we have this starting in '97? 21 A. Yes. 22 Q. And we know that there were no payments being made 23 because Ms. Riehemann's former husband didn't make 24 payments. 25 A. Okay. I didn't know that, but okay. 0118 1 Q. So then we have -- so the only thing I see happening in 2 the early parts of '97 is -- at least until April -- is 3 escrow disbursements. 4 A. Yes, and fees being assessed. And you will see I do 5 note on here on 1/30/97 the bankruptcy was filed. The 6 case number, I put that in there. 7 Q. Right. 8 A. That's the part that's highlighted in yellow, or it was 9 in yellow on the Excel spreadsheet. 10 Q. So then the first payment that's actually made by 11 Ms. Riehemann is April 16th? 12 A. Correct. 13 Q. And that's $436.85? 14 A. Correct. 15 Q. So that is placed in Suspense? 16 A. Yes. 17 Q. And why is it placed in Suspense? 18 A. Because it wasn't enough to be applied to a contractual 19 payment amount, I believe. Yes, because the contractual 20 payment amount is $521.45, and it's not enough to be 21 applied contractually as a payment. 22 Q. You're saying that the principal and interest payment 23 was $521.85? 24 A. $521.45 -- the 2/1/96 payment was $521.45. This was not 25 enough to make that payment, so it went into Suspense. 0119 1 Q. So you think, though, that the principal -- when you say 2 the "contractual payment," you're referring only to 3 principal and interest? 4 A. No, principal, interest, and escrow. 5 Q. And you're contending that in '97 it was $521.85? 6 A. Well, I'm contending that the February of '96 payment 7 was $521.45. 8 Q. And where are you getting that from? 9 A. I'm looking at when we have our first payment applied 10 contractually. The first payment applied contractually 11 is in 10/10/97, and you can see that we applied the 12 2/1/96 payment -- the amount that was applied, totalled, 13 was $521.45, which is a calculation of the principal, 14 plus interest plus escrow. 15 Q. So then why did it drop, the one immediately following 16 it, by almost $100? 17 A. I don't know. That was with Bank United. All I can do 18 is what the payments -- how they were applied in her 19 payment histories. 20 I can't tell you why it dropped. I don't know. 21 It was Bank United or Norwest at that time. 22 Q. Couldn't it be that the payment was actually $436.85? 23 A. I don't know. If I can have the bankruptcy -- one of 24 the next ledgers is the bankruptcy ledger. I can tell 25 you exactly what we filed in our claim. 0120 1 MS. HUELSMAN: Okay, we'll mark it. 2 A. It would be -- it's the top one. It starts with the 3 bankruptcy on 1/30/97. 4 Is that the same one? No, it's a different one. 5 Q. [By Ms. Huelsman] That's what I'm looking for. This 6 says "Bankruptcy Information" on it. 7 MR. PHELPS: Is this another exhibit that 8 we're going to be using? 9 MS. HUELSMAN: Yes, I know, and that's why 10 I'm just trying to identify. 11 Q. [By Ms. Huelsman] Those are copies of the same thing? 12 A. Yeah. This is the one that starts with 1/30/97. This 13 is the bankruptcy accounting for the '97 -- 14 MR. PHELPS: Why don't we mark it and make 15 sure we're square here. 16 MS. HUELSMAN: That's fine. 17 THE WITNESS: I thought you gave me separate 18 copies here. 19 MR. PHELPS: Give it back, and let's make it 20 an exhibit. 21 THE WITNESS: Well, I was going to hand it 22 over to her to mark it. 23 MS. HUELSMAN: That's fine. I just want to 24 make sure that we all have the exact same thing. 25 THE WITNESS: That makes sense. 0121 1 MS. HUELSMAN: So we're marking this as 2 Exhibit 20. 3 [Exhibit No. 20 was marked.] 4 A. And at the top, kind of towards the center right, you'll 5 see a thing. It's called "Proof of Claim Break Down." 6 Q. [By Ms. Huelsman] Okay. 7 A. And I can see that the 2/1/96 payment in our Proof of 8 Claim was $521.45. Then in 3 of '96 the payment drops 9 down to the $436 figure. 10 Q. And you don't know why? 11 A. No, I don't. I mean, again, that was with -- Norwest I 12 believe is the one that filed the Proof of Claim, and 13 then it became Bank United sometime after that. 14 And, no, I don't. I don't have any copies of any 15 analysis or anything else that they may have done back 16 then. 17 Q. And then it changes again, according to your spreadsheet 18 here, Exhibit 19, in June, and it becomes $475.58? 19 A. Yes. 20 Q. And you don't know why it's supposedly changed? 21 A. No, I do not. 22 Q. And I see that, from the columns that you have, that 23 different amounts from three different payments were 24 applied to interest and to escrow balances each time? 25 A. Uh-huh. 0122 1 Q. Correct? 2 A. True. 3 Q. So even for the 2/1/96 payment it's different from the 4 3/1/96 payment, and then the 4/1/96 payment is different 5 from the 3/1/96, except for the escrow. The 5/1/96 the 6 amount of interest applied again changes, and the amount 7 of applied escrow changes. 8 A. That's correct. 9 Q. So even though these are supposed to be contractual 10 payments, as you said, for principal, interest, and 11 escrow, and then the actual amounts owed, they're being 12 applied differently each month, correct? 13 A. Yes. Some of this would be -- this is an ARM loan. I 14 know that for sure. And each month the principal and 15 interest can vary because of the ARM loan, how much goes 16 to the principal and how much goes to interest. 17 But you'll notice that other than the 5 of '96, 18 the escrow stays the same. Why they applied $75.57 to 19 escrow on that date I think has to do with because of a 20 difference in the interest. Obviously there was an ARM 21 change. 22 Q. Actually, no, sir. The amounts for escrow change. 23 A. Between 4 and 5, yes, but not between 3 and 4 -- 24 Q. Wait. Listen to me. 25 A. Oops, sorry. 0123 1 Q. And then going to 6/96, it changes again. 2 A. Yes. 3 Q. It stays the same for 7/96? 4 A. Uh-huh. 5 Q. And then it goes back and down again, 8, 9, and 10/96. 6 Back up again in November, December and January? 7 A. Yes. 8 Q. So it's changing every few months, the escrow amount? 9 A. Yes. That's what's going on here, yes. 10 Q. So why is the escrow amount changing every few months? 11 A. Again, I mean, this is done before -- this was done with 12 either Norwest or Bank United. I don't know the 13 complete answer to that, but I do know, if you look at 14 the Proof of Claim on the bankruptcy, you can see that 15 2/96 has a different amount. 3/96 has a different -- 16 the 3/96 and the 5/96 has another amount. 6 and 7 have 17 another amount. 8 through 10 have another amount, and 18 then the 11 and 1 have different amounts. Those were 19 all -- 20 Q. I'm aware of that. I mean, I can see it on here. But 21 the question is -- 22 A. Why? 23 Q. -- why? 24 A. Again, I don't know the answer. 25 Q. People's escrow account amounts owed for property taxes 0124 1 and interest don't change every couple of months. 2 A. Right, and I don't know the answer. That was before 3 Washington Mutual -- or even before Bank United, I 4 believe, was servicing the loan. 5 Q. Sure. But once you take over servicing -- "you" as in 6 Washington Mutual or Bank United -- don't you have to 7 verify that the information is correct previously, 8 because otherwise you're taking it over, and then you're 9 perpetuating bad information if it's been done badly 10 previously? 11 A. I would believe that was done. Now, I haven't seen any 12 documentation to give you an answer to that, so I don't 13 know that. But I do know that these were the amounts 14 that were claimed in the Proof of Claim. They weren't 15 objected to, and they were paid during the plan. 16 Q. So you're telling me that the Proof of Claim was amended 17 every couple of months to reflect these changing 18 amounts? 19 A. No. This Proof of Claim was filed as of -- I don't have 20 the exact date that it was filed, but this took into 21 effect what the arrears were from 2/96 through the date 22 of filing, which would have been in January of '97. 23 That's the payments that we've listed, those payment 24 amounts. 25 Why exactly it all changes there, I don't know, 0125 1 but that's what we listed in the Proof of Claim, and 2 that was what was filed with the Court and what was paid 3 by the trustee. 4 Q. That doesn't answer the question about why it was 5 calculated that way, though. 6 A. Like I said, I don't know the answer to that. 7 Q. But even after the '97 bankruptcy filing, I see the 8 amounts continuing to change. 9 A. In '97, are you talking -- 10 Q. All through '97, '98, the escrow amounts are changing 11 every few months. 12 A. Well, I see 2/97 and 3/97, the escrow amounts stay the 13 same. 4/97 it changes, but then in 5/97 it remains at 14 this -- 5 and 6 is the same amount. 15 7/97 it's at $97.31. That stays that way until 16 7/98, when it changes -- 17 Q. Once. 18 A. -- once, and then it goes back to the $97.31. 19 Q. And then it changes again in September? 20 A. Yes. 21 Q. And then it goes back again. Down, up. 22 A. Those are the ones that go up and then down. 23 Q. Down, up, down, up. And then it stays consistent for a 24 while again. 25 A. Correct. 0126 1 Q. Until March of 2000, and then it starts changing 2 again -- 3 A. March of 2000? 4 Q. -- for a couple of months, and then it goes back again. 5 A. Yeah, okay. 6 Q. I mean, this escrow amount is ever-changing. 7 A. Well, it was applied -- yeah, it's changing every so 8 often, and exactly why that is going on -- all that this 9 is showing is how the money was applied per the payment 10 histories. 11 I haven't actually looked at finding out why the 12 escrow amounts are changing or not changing. All I'm 13 doing is -- and what this is showing is how the money 14 was applied. 15 Q. Right. I'm trying to understand this, because your 16 testimony has been that this money goes into a Suspense 17 account until there's enough to make the payment, the 18 total "contractual payment," which is the phrasing 19 you've used, which is the principal, interest, and 20 escrow amount. 21 A. Right. 22 Q. So it's not -- I'm trying to understand how it is that 23 the escrow amount, which -- you know, that the amount 24 owing on that would change. Whether or not the payment 25 was applied to Suspense or not, it's ever-changing, when 0127 1 it really defies, you know, logic or common practices 2 because, you know, property taxes and insurance change 3 once a year. 4 A. Right. And, again, I mean, I don't know the answer to 5 that question: Why does it seem to fluctuate so much, 6 other than sometimes what we're trying to do is -- no, 7 strike that. 8 I really don't know the answer, why it keeps 9 fluctuating like that. 10 Q. So is it true maybe that payments are being applied to 11 the Suspense account when they may not represent the 12 true contractual amount owing? 13 A. Well, these aren't being pulled -- most of these 14 payments are not being pulled from Suspense. It's money 15 coming in and how it's being posted. I mean, there are 16 a few examples where we're pulling money from Suspense 17 and applying it as payments. 18 But in the majority of the payments, where a lot 19 of this is fluctuating, are from payments coming in 20 directly from the debtor, at least from what I'm seeing 21 by just looking at this page here. 22 Q. Even when I'm seeing -- like, for example, I'm on July 23 of 2001. 24 A. July of 2001, the next page over. Okay. 25 Q. So I see this payment here, July 24, '01, for $456.08 -- 0128 1 A. Uh-huh. 2 Q. -- and it's being applied to the 6/1/01 payment? 3 A. Correct. 4 Q. And then further down, the May payment gets returned for 5 NSF? 6 A. Yes. 7 Q. And then we have -- 8 A. Well, actually -- I'm sorry, let me clarify my answer. 9 This is a reversal of -- 10 Q. The May payment? 11 A. Not really the May payment. It's a reversal of the 12 June. I had the contractual date changed from being 13 next due for July. It gets reversed. It's next due for 14 June. 15 Do you see how I do that? Before -- it's 16 reversing the 7/24/01 payment. 17 Q. Actually, I don't know which payment you're reversing, 18 because it's the same amount. Whether it's 7/18 or 19 7/24, you're indicating with that 5/1/01 that it's 20 reversing that May payment, and then it's showing -- 21 A. No, no, no. That account shows what it's paid through, 22 what it's paid through. When we reversed that one 23 payment off, instead of being June for July, it's now 24 due for June, because we had to reverse one of the 25 previous payments off because it went NSF. 0129 1 Q. So on 8/23/01, then, you have an indication that there 2 is a contract payment from the Suspense account. 3 A. Yes. That's where we did pull one from Suspense. 4 Q. Well, when are you pulling one from Suspense and when 5 not? 6 A. Again, I mean, a lot of that is, the vendors are looking 7 at these loans and pulling money, or cashiering is 8 noticing that there's a large amount sitting in 9 Suspense. And what they will do is, they will -- they 10 get an audit report, saying: You have a lot of money 11 sitting in Suspense here. 12 They will contact the bankruptcy vendor to say: 13 Can we apply some of this money for -- can we apply some 14 of this money to the loan? 15 And obviously here we pulled money from Suspense, 16 because we had -- previously to that we had $1,063.96 in 17 Suspense, so they pulled one payment from Suspense to 18 apply as the contractual June 1st payment. 19 Q. But actually that was enough to make two contractual 20 payments? 21 A. Yes. 22 Q. But that didn't happen? 23 A. No. But, again, you've got to remember we're getting 24 debtor money and trustee money; so when the bankruptcy 25 department replied back to cashiering, they said: Yes, 0130 1 there's enough money post-petition to apply as a 2 payment, but the remainder is either post-petition money 3 or a combination of -- I mean, it's a combination of 4 either trustee payments and debtor's Suspense, so they 5 don't want to mess up that accounting by pulling the 6 whole thing to make another contractual payment. 7 Q. Well, I thought you said that there were two separate 8 Suspense accounts, one for the trustee Suspense and one 9 for the debtor's payments. 10 A. Right. When you do your bankruptcy accounting, yes, 11 there is. Remember, this is -- this is contractual 12 accounting. This is the only way money is applied to 13 the loan. We have to create the bankruptcy ledgers to 14 kind of differentiate between what is post and what's 15 pre. 16 Q. Well, you're busy paying yourself, at least, for a 17 property inspection fee. 18 A. Where do you see a property inspection -- 19 Q. In 8/8/01. 20 A. 8/8/01? No, that's being assessed. That's not being 21 paid. 22 Q. Where is it being assessed? 23 A. If you read the description on 8/8/01, "Property 24 Inspection Fee Assessed," not being -- not being paid. 25 I would say the "Property Inspection Fee Paid" or -- 0131 1 like here's an example on 7/18/01. First take 7/16/01. 2 You see "Late Charge Assessed"? That's where we're 3 assessing the late charge. On 7/18/01 we waived it. 4 I would make a notation if it was waived or paid, 5 that it was being waived or paid. 6 Q. And in the previous month we have another contractual 7 payment from the Suspense account. And then there's 8 another property fee assessed? 9 A. Yes. 10 Q. What you've got here is a continued increase in the 11 amount owing, without notification to the client. Where 12 is the client getting notified that she is being charged 13 property inspection fees that are thereby causing her an 14 outstanding amount owing to increase, which thereby 15 causes you to take her payments and stick them in a 16 Suspense account and not apply them to the principal and 17 interest? 18 A. The property inspection fees or late charges, or 19 anything like that, are not -- they're not changing her 20 payment amounts. They're not changing what she is due 21 for unless we are paying those. 22 If we're taking money from -- that should have 23 been applied as a payment to reimburse those, that would 24 be a mistake. Here all we're doing is, we're assessing 25 late charges and we're assessing property inspection 0132 1 fees, because the way the system is set up, if the loan 2 is in default, we're making sure that there's 3 actually -- somebody is still in the property. Yes, 4 somebody goes by and does a drive-by to make sure 5 they're there. They charge the $675 or whatever they 6 charge us to do that. 7 At the end of the bankruptcy and when it's 8 discharged, those fees are reviewed. Those fees should 9 be waived after -- it's part of the reconciliation, 10 because they should not be assessed during -- when the 11 plan is complete, they should not be assessed. They're 12 not owed. 13 But if the plan doesn't complete, we charge those 14 because we're making sure that our interest in the 15 property is covered, to make sure that they're still in 16 there, there's no vandalism going on, we don't have any 17 of those kind of situations going on. 18 Q. Well, why does the borrower have to pay them if they 19 don't complete their plan, but they don't have to pay 20 them if they do? What has one got to do with the other 21 if you're just making sure that the person is in the 22 property and no vandals are breaking in? 23 A. It's just part of our policy, that when we review the 24 loans, we waive any of these kind of fees that should 25 not be assessed. Usually if it comes out of bankruptcy 0133 1 and goes into foreclosure, it's not so much an issue 2 about the property inspections. They're still 3 delinquent, and it ends up going into foreclosure 4 because of the delinquent payments. 5 When we were talking, you know, just a little 6 while ago, about the $675 property inspection fee -- 7 Q. It's still added to the balance owing, correct? 8 A. It is added to the amount to -- it is added to the 9 amount to pay off the loan, yes. 10 Q. And isn't it true that the reason why they're being 11 waived in bankruptcy is because they've never been 12 approved by the Bankruptcy Court? 13 A. I believe what we do is -- yes, I believe that's 14 partially true. 15 MR. PHELPS: And I'll object. It's asking 16 for a legal conclusion. 17 THE WITNESS: Okay, that's true. 18 MS. HUELSMAN: Well, he's a lawyer and he's 19 evaluating these loans, so -- 20 THE WITNESS: But I'm not practicing. 21 MR. PHELPS: But he's not practicing. 22 MS. HUELSMAN: It looks like in my copy I'm 23 missing some pages. 24 MR. PHELPS: Which exhibit are we talking 25 about? 0134 1 MS. HUELSMAN: 19. I have 10/10/01 at the 2 bottom of the page, and then the next entry is 3 9/2/03. 4 THE WITNESS: You're right. I'm missing 5 that as well. It's probably because I have them 6 sitting right over here. 7 MS. HUELSMAN: So you've got two pages? 8 MR. PHELPS: Does that actually plug the 9 hole? 10 THE WITNESS: Yes, it does. 11 MS. HUELSMAN: It does plug the hole, so I'm 12 going to take a break for a second and go make 13 copies of these. 14 [A brief recess was taken.] 15 MS. HUELSMAN: We're back. 16 Q. [By Ms. Huelsman] So the line on 2/20/02 -- 17 A. 2/20/02? Okay. 18 Q. I see you have highlighted -- 19 A. Yes. 20 Q. And this says "Discharge of Debtor." Can you tell me 21 the status of the account, as of the discharge date? 22 A. As of the discharge date, the debtor is two months down. 23 They're due for the 1/01 -- 1/02, sorry, and the 2/02. 24 Q. And that's because, as we talked about, you contend that 25 she got behind because she wasn't paying enough escrow? 0135 1 A. Yes. And that she keeps -- your client is sending the 2 $456.08 amount, and the payment changed to $673.03 3 starting in November of '01. 4 Q. And I see over in the far right, the Running Outstanding 5 Corporate Account Balance of $950.78. 6 A. Yes. 7 Q. What is that amount? 8 A. That is -- the running balance of attorney fees and 9 costs that were assessed to the account. I'm trying to 10 figure out exactly where they are coming in. 11 Q. It starts in your analysis in 1/6/97, $633 outstanding. 12 A. Right. 13 Q. No explanation. And then they do nothing but increase. 14 A. Well, some of that was -- yeah, $633.09 had to be from 15 foreclosure fees and costs. 16 Up until that point then you can see that, you 17 know, Bank United was applying -- instead of them 18 putting them in another Fee Balance, which we have, they 19 were putting it to Corporate Advance. You can see a $25 20 property inspection -- property preservation fee. 21 And on 1/4/97 you can see another one. On 22 2/14/97 -- then you can see a bunch of attorney fees 23 being assessed for foreclosure on 3/7/97. 24 Q. Well, I thought that's what the $633.09 was for. 25 A. Those were some of the ones before '97, the beginning of 0136 1 the year of '97. These are fees and costs -- a lot of 2 times what happens is, the bankruptcy is filed. The 3 attorney will be told that you've got to put the 4 foreclosure on hold. 5 They send us the bills, whatever they have 6 outstanding, and those were applied on 3/7/97. This is 7 all of the foreclosure work they did up to that point. 8 Q. And I see this balance continuing to grow with some PPOs 9 continually added throughout the bankruptcy. 10 A. Property inspection fees, do you mean? 11 Q. Yes. 12 A. Property preservation fees? 13 Q. Yes. 14 A. Yes. 15 Q. I see some payments made from disbursal from the 16 bankruptcy trustee. 17 A. Yes. These were the amounts that we reimbursed from the 18 trustee, according to our Proof of Claim. And then you 19 can see on 5/14/98, bankruptcy fees being assessed, and 20 that's for the Motion for Relief that we filed. 21 Q. I see in March of '99 some kind of credit was given? 22 A. March of '99? Are we up to that point? March 22nd, 23 you're talking about? 24 Q. Yes. 25 A. Yeah, reimbursement of miscellaneous fees. 0137 1 Q. What was that from? 2 A. Monies coming out of Suspense and being applied to -- it 3 should have been applied to the Corporate Advance, but 4 they applied it to their other fee balance. This is, 5 again, with Bank United, which caused that balance to 6 go, unfortunately, negative, which it shouldn't have, 7 but that's what they did. 8 Q. And meanwhile for months they've got money that should 9 be applied to the Corporate account balance, which is 10 instead sitting as a credit in some other account? 11 A. Yes. 12 Q. Well, I guess, two accounts actually, the Other Fee 13 Balance and the Corporate Account Transaction accounts? 14 A. Correct. 15 Q. Meanwhile more -- so then you have, in July of '99, 16 you've got "Attorney Bankruptcy Fees Assessed" in the 17 amount of $7.25. 18 A. Yes. 19 Q. Are you telling me that bankruptcy fees were being 20 incurred in the amount of $7.25 each month, starting in 21 July of '99? 22 A. Those -- I would have to look, again, at the DDCH 23 balance, which I don't have in front of me, but I 24 believe those are for the -- that there was a notice 25 of -- there was something going on. I'm going to assume 0138 1 that was when we were filing the Notice of Default per 2 the Consent Order that was entered regarding the Motion 3 for Relief. 4 Strike that. I think those were property 5 inspection -- 6 Q. That's what they looked like to me. 7 A. Yeah, being mislabeled in our system, but I put it on 8 how it was applied per the system. 9 Q. So I'm looking at all of these property inspection fees 10 that were charged. And then they stop until July of 11 '01. And then they start again. 12 A. Uh-huh. 13 Q. Now, where is the waiver of those fees that occurred 14 after the discharge of the debtor? 15 A. You can look on 4/2/02. This is where they were doing 16 some of the reconciliation of the loan. You can see 17 that on 4/2 we waived NSF fees. We waive property 18 inspection fees. 19 Q. I only see $40.50 waived. And I'm sure if I went back 20 and totalled up all of those amounts that we just looked 21 at, that they would be more than $40.50. 22 A. Prior to that, do you see on 3/21 we reversed -- 23 reversal of the 3/22/99? This is where you had pointed 24 out, where we took money and we applied it to Other Fees 25 instead of the Corporate Advance. We reversed that, and 0139 1 we put it back into Suspense on 3/21/02. 2 That's where we changed the -- the Fee Balance 3 now goes to $55.50. That's what was left in there. We 4 waived the $15 and then the $40.50 in property 5 inspection fees to zero out that line item. 6 Q. Well, I know, but that still doesn't give her credit for 7 all of these property inspection fees that she was 8 charged. You testified a little bit ago that that's 9 what happens when you come out of a bankruptcy. 10 I can get a calculator, but I know it's more than 11 $40.50. 12 Q. No, I know, I'm sure you can. I mean, obviously, that's 13 the truth, but what happened here was, we took -- back 14 on 3/22/99 we took money that should have went to 15 attorney fees and costs, or should have been applied in 16 other ways, and we threw it to the Other Fees balance, 17 which caused it to go negative. So you saw that huge 18 negative amount, and then fees going positive when we 19 keep adding more property inspection fees. 20 Well, we reversed that out, and once we reversed 21 that misapplication out, it leaves the balance at 22 $55.50, and we ended up waiving all of that. 23 Q. Well, I know, but that money came from someplace, so it 24 should have been applied someplace else; but instead it 25 was applied to paying property inspection fees. 0140 1 A. Right. It was -- basically what happened is, on 2 3/22/99, we took that money, we threw it to property 3 inspection fees, which over-reimbursed the property 4 inspection fees, causing that to go negative. You see 5 that before that it's all negative? 6 What we did is, we reversed that application out, 7 and the only thing left over was the $55.50, which we 8 waived. 9 Q. And where did that money go? 10 A. That money went into Suspense. You can look over on 11 3/21/02, you can see it applied to the Suspense balance, 12 which brings it up to $725.38 from $303.05. 13 So that's how we waived all of the property 14 inspection fees, because we inadvertently 15 over-reimbursed them. 16 Q. Yes, and then you took it off back down here again on 17 4/22/02? 18 A. 4/22/02? Okay, reversed -- I'm sorry, I'm not exactly 19 seeing exactly what you're pointing at. 20 Q. On 4/22/02 you have highlighted -- 21 A. Late charges? 22 Q. No, Reversal of Escrow Reimbursement. 23 A. Right, and that's why it's highlighted. It's because 24 that is an error that I saw, where we took money out of 25 Suspense -- no, we took money out of escrow and put it 0141 1 into the Suspense balance. 2 And what they were doing is, they were 3 reconciling the loan to apply those as payments. They 4 applied it as -- I see the 2/02 being applied, and then 5 when a payment on 4/24/02 comes in at $456, it's 6 combined with what is in Suspense to make the 3 of '02 7 payment of $673.03. 8 Q. So by June 25th of '02, someone supposedly finally has 9 all the numbers figured out. 10 A. That's when the date is closed. That's when the 11 bankruptcy date actually closed. 12 I don't know if you're aware, bankruptcy 13 discharges the debtor. It does not discharge the 14 creditors. The creditors are discharged when the case 15 is closed. 16 Q. But that doesn't have any impact on you guys -- 17 A. Right. But, I mean, we make notes of that in our 18 system. We don't remove it from the bankruptcy 19 department until the case has actually been closed. We 20 are doing reconciliation prior to this, but it doesn't 21 leave the bankruptcy department until the case is 22 actually closed. 23 Q. Right. What I'm saying is, the numbers haven't been 24 straightened out, and no one knows accurately how much 25 she supposedly owes or doesn't owe until June 11, 2002, 0142 1 correct? 2 MR. PHELPS: June 11th? 3 MS. HUELSMAN: Yes, or June 25th, I guess. 4 June 25th. 5 A. I think the reconciliation was actually completed back 6 in the later part of April, maybe the early part of May, 7 when we reconciled the loan, had it due for whatever was 8 due, post-petition. And then after -- the money was 9 applied per the bankruptcy. This is where they were at 10 that time. 11 And then the delinquency that we have listed is 12 due to basically the payment changes of the forced 13 placed insurance. Instead of the $673 amount, we're 14 getting the $456.08 amount. 15 Q. [By Ms. Huelsman] What I'm asking you is, the records 16 here that I'm looking at don't show this loan being 17 correctly calculated as to what is owed, at least 18 according to what Washington Mutual says is owed, until 19 sometime at least in late April. 20 A. Yes. 21 Q. Then as Ms. Riehemann is continuing to make payments, 22 going forward, Washington Mutual continues to place her 23 payments into Suspense accounts? 24 A. Right, because they're not enough to make the 25 contractual payment amount. 0143 1 Q. One thing I forgot to get was the Deed of Trust, which I 2 will get when we're done so you can show me where in the 3 Deed of Trust you're permitted to do that. 4 I'm on the last page. 5 A. Okay. 6 Q. It indicates that the sale proceeds were $65,892.92 on 7 3/28/06. 8 A. Correct. 9 Q. And it shows that the sale proceeds were applied to the 10 principal and interest on 4/7/06 in the amount of 11 $55,881.16. Is that correct? 12 A. Yes, the principal, interest, and escrow. 13 Oh, I'm sorry. No, you are right, just principal 14 and interest. 15 Q. Yes. 16 A. Sorry, my bad. 17 Q. Then it shows -- let me match this up. The escrow 18 balance was supposedly negative, $5,404.40. 19 A. Uh-huh. 20 Q. And that that amount was applied from sale proceeds on 21 June 1, 2006? 22 A. Yes. What happened here exactly was, when the sale 23 proceeds came in on 3/28/06, they threw it first to 24 Corporate Advance, which over-reimbursed that by 25 $60,894. Then they reversed that out -- they reversed 0144 1 at least $55,881.16 and put that back into Suspense, 2 applied it to P&I, and then waived $753.53 in attorney 3 fees, and they reversed -- they reversed from Corporate 4 Advance the escrow amount that they had been applied to 5 escrow. 6 Q. So by these numbers, am I correct in understanding that 7 according to this sheet, Washington Mutual is contending 8 that it lost $2,497.90 on the sale of this property? 9 A. No, actually after the sale of the property, the 10 attorney that was -- that was -- remember that 11 documentation about how we got reimbursements from the 12 attorney for those dollar amounts? 13 Q. Yes. 14 A. So that balance is actually negative. We have 15 $2,497.90 -- 16 Q. Extra? 17 A. Extra sitting in our DDCH balance, because of the 18 attorney basically reimbursing something. Again, I 19 don't know exactly why they did that, but that's what 20 they did. 21 Q. Okay. And so where is that money now? 22 A. That money is still sitting in the -- if I remember 23 right, it's still sitting in the DDCH balance as a 24 surplus. 25 Q. And is there a reason why it wasn't ever disbursed to 0145 1 Ms. Riehemann as excess sale proceeds? 2 A. I have no idea why it wasn't done, no. 3 Q. Do you understand anything about the foreclosure 4 process? 5 A. I understand a lot of the basic stuff, yes. 6 Q. In general -- 7 A. If there's a surplus -- 8 Q. -- if there's money left over after the foreclosure sale 9 and when the lender receives the money, it pays itself 10 all the fees and costs and everything. 11 And then any amounts that are excess are suppose 12 to be deposited in the court registry, and everybody who 13 can make a claim on those funds can do so, if notice -- 14 A. Right. 15 Q. Is that your understanding of what normally happens in a 16 foreclosure? 17 A. Yes, that's my understanding of what normally happens. 18 Q. And that didn't happen here? 19 A. No, and the only reason why I can think of why it didn't 20 is because this was -- the attorney for some reason 21 basically was sending us money for things that we may 22 have overpaid him for or cutting his fees. I don't know 23 exactly happened there, but this was coming from our 24 attorney to us. 25 And maybe -- I don't know if that makes any 0146 1 difference at all in what has to be -- for the court 2 registry or not. I don't know that answer. 3 Q. But that money is still sitting there? 4 A. To my knowledge, yes. 5 MS. HUELSMAN: What I'm going to do is just 6 look at these quickly. I looked at them when we 7 had our quick break. 8 THE WITNESS: Okay. 9 MS. HUELSMAN: And what I'm actually going 10 to ask you because I was just given these and I 11 haven't had time to totally compare them to 12 everything else, if I have any questions in the 13 next day or so, can I just submit them to you by 14 email and we can have -- 15 MR. PHELPS: Yes, we'll -- 16 MS. HUELSMAN: That's the best thing I can 17 think to do to expedite this, because I obviously 18 don't have time to sit and compare these to 19 everything -- they're probably fine, but, you 20 know, I've got to go through and take the time -- 21 MR. PHELPS: That's fine. 22 MS. HUELSMAN: That's what I think would be 23 the most expeditious, and I can just submit them 24 to you as a written interrogatory and you can 25 respond if you think it's even necessary. 0147 1 MR. PHELPS: We'll work on the discovery 2 cutoff, and that way, you know, the issue -- 3 MS. HUELSMAN: I mean, I'll try and do it in 4 the next day or so, so that it's very quick. I'm 5 not trying to delay this, but I need to sit down 6 and compare, okay? 7 So we have this one as Exhibit 20, and this 8 is going to be Exhibit 21. 9 [Exhibit No. 21 was marked.] 10 Q. [By Ms. Huelsman] Can you tell me first -- we talked 11 briefly about Exhibit 20. Can you just tell me what it 12 is? 13 A. This is the bankruptcy accounting that I would do per 14 the bankruptcy. This showed the post-petition. The 15 pre-petition, I didn't break it out into how much went 16 to the arrears. I just kept track of how much of the 17 claim was actually paid, and at the end of this 18 bankruptcy you can see that the claim has been totally 19 paid. 20 What this shows, post-petition, basically 21 everything that was assessed after the bankruptcy was 22 filed; payments that came in and how they were applied 23 post-petition. 24 And, yeah, it's just payments. I don't even list 25 out the fees or anything, because we ended up waiving 0148 1 the majority of them, if not all of them. I can't 2 remember now. 3 This is basically what they would consider -- 4 what they would do to find out whether or not the debtor 5 is post-petition current. If they had to file a Motion 6 for Relief, they would just look at payments, what was 7 received and how they would have been applied, 8 post-petition. 9 Q. Okay, but, again, you created this document, right? 10 A. Yes, I did. 11 Q. And for purposes of this deposition? 12 A. Yes. 13 Q. So you took it from the information -- 14 A. On the loan history. 15 Q. So I think your testimony earlier this morning was that 16 this is the kind of process that you or somebody else 17 would go through in the case of a bankruptcy -- 18 A. Yes. 19 Q. -- creating what I think you called a "pencil ledger"? 20 A. Yes. 21 Q. For every loan that's in bankruptcy? 22 A. Yes. 23 Q. That's a lot of pencil ledgers? 24 A. Oh, yes, it is. 25 And just to clarify 20 is the '97 case, and then 0149 1 21 is the -- I knew it was filed on 8/28/03. 2 Q. Oh, you are right. Somehow I thought it was '04. 3 A. When you said that, I was like: I could swear it was in 4 '03. Unfortunately, there are so many loans, that they 5 start to blend together. 6 Q. Unfortunately I have the same problem. It does. 7 Again, I will take a look at these and compare 8 them to the other documentation that I have, but, in 9 general, I just want to look -- I didn't have any 10 particular question that we didn't already ask when 11 looking at the other spreadsheet. 12 A. Okay. 13 MS. HUELSMAN: Exhibit 22. 14 [Exhibit No. 22 was marked.] 15 Q. [By Ms. Huelsman] Can you tell me what this document 16 is? 17 A. That is what we call a bull's eye. We had our 18 credit-reporting area generate this for us, and they 19 gave it to you. It specifies how the loan has been 20 reported to the credit bureaus. 21 I can't even talk now. 22 Q. So it's not pulling Ms. Riehemann's credit, is it? 23 A. How the bull's eyes are generated, I don't believe so, 24 no. 25 Q. And so on the customer information there -- 0150 1 A. Okay. 2 Q. -- can you tell me what this "Washington Mutual - 3 Disputes" refer to? 4 A. We put a note on the credit bureau, that there is a 5 dispute involved, going on on this loan, and that's been 6 reported to the credit bureau, that there is a dispute 7 going on. 8 It wasn't something that the debtor sent to the 9 credit bureau, disputing it. It's us noting that there 10 is a dispute involved. 11 Q. But it shows in the "Account History" part of the 12 snapshot there on the first page, that the account is 13 also being disputed by the consumer? 14 A. That's us, again, saying that the consumer is disputing 15 it. It's not that they filed a -- it's a different name 16 for the -- it's a TRA. There's a name for when 17 they're -- if I'm disputing my credit, I can fill out a 18 form and send it out to the credit bureau. 19 And there's some kind of form you do there. I 20 forget the name of it; but this, again, is where we are 21 saying that the consumer is disputing what is going on, 22 and we're letting the credit bureaus know that there is 23 a dispute involved. 24 At least that's my understanding as it was 25 explained to me by the person who provided this to me. 0151 1 Q. And then on the next page -- 2 A. Uh-huh. 3 Q. -- is that more detail about the transaction? 4 A. Yes. 5 Q. And then the Late Payments record that are indicated 6 here, it shows one 30-day late, four 60-to-90 day 7 late -- 60-to-89 days late. And twelve payments that 8 were 90 or more days overdue. 9 A. Uh-huh. 10 Q. Yes? 11 A. Yes. 12 Q. And the next page -- 13 A. Okay. 14 Q. Okay, I'm sorry. By the way, too, I didn't clarify 15 this. On the second page of this document, that was a 16 Transunion report, correct? 17 A. Yes. 18 Q. The third page is an Experian report, correct -- 19 A. Correct. 20 Q. -- as distinct from Transunion? 21 A. Yes, it's another credit bureau. 22 Q. And the same thing, it indicates that the property has 23 been in foreclosure, and that the consumer is disputing 24 it? 25 A. Yeah. That's what we noted, that the consumer was 0152 1 disputing it. 2 Q. And let me then turn to the last page, which is the 3 Equifax snapshot. 4 A. Uh-huh. 5 Q. And it appears also -- it also indicates that at least 6 four payments are more than 120 days overdue? 7 A. Yes. 8 Q. And that there's been a foreclosure and that the 9 consumer disputes the information? 10 A. Yes. 11 MS. HUELSMAN: That's it. 12 THE WITNESS: That's it? 13 MS. HUELSMAN: And I will do that review 14 probably by tomorrow afternoon. I have got oral 15 arguments in the morning. 16 MR. PHELPS: We'll reserve signature. 17 MS. HUELSMAN: Off the record. 18 [The deposition concluded at 2:00 p.m.] 19 [Signature was reserved.] 20 21 22 23 24 25 0153 1 A F F I D A V I T 2 3 STATE OF WASHINGTON ) ) ss. 4 COUNTY OF _____________ ) 5 6 I have read my deposition, and the same is true and 7 accurate, save and except for changes and/or corrections, 8 if any, as indicated by me on the correction sheet hereof. 9 10 11 __________________________________ ERIC BOVEE 12 13 14 15 16 17 18 SUBSCRIBED AND SWORN TO before me this _____________ day 19 of _____________________, 2007. 20 21 ____________________________ 22 Notary Public in and for the State of ______________ 23 residing at _________________. Commission expires __________. 24 25 0154 1 C E R T I F I C A T E 2 STATE OF WASHINGTON ) ) ss. 3 COUNTY OF KING ) 4 I, J. Kay Corbett, a Notary Public in and for the 5 State of Washington, do hereby certify: 6 That the foregoing deposition was taken before me at the 7 time and place herein set forth; 8 That the witness was by me first duly sworn to testify 9 to tell the truth, the whole truth, and nothing but the truth; 10 That the testimony of the witness and all objections 11 made at the time of the examination were recorded 12 stenographically by me, and thereafter transcribed under my 13 direction; 14 That the foregoing transcript is a true record of the 15 testimony given by the witness and of all objections made at 16 the time of the examination, to the best of my ability. 17 I further certify that I am in no way related to any 18 party to this matter nor to any of counsel, nor do I have 19 any interest in the matter. 20 Witness my hand and seal this 20th day of August, 21 2007. 22 _________________________________ 23 J. KAY CORBETT, Notary Public in and for the State of Washington, 24 residing at Seattle. Commission expires April 13, 2011. 25 WA CSR No. CO-RB-JK-E560CBA 0155 1 C O R R E C T I O N S 2 Please make all corrections, changes, or clarifications to your testimony on this sheet, showing page and line number and 3 the nature of the change. If there are no changes, write "None" across the page. Sign this sheet and the affidavit 4 page before a Notary Public, and return the signed corrections and affidavit for filing with the Clerk of the Court. Please 5 return them to J. KAY CORBETT, 100 South King Street, Ste. 360, Seattle, WA 98104 6 ____________________________________________________________ 7 Page Line Correction and Reason 8 ___________________________________________________________ 9 ___________________________________________________________ 10 ___________________________________________________________ 11 ___________________________________________________________ 12 ___________________________________________________________ 13 ___________________________________________________________ 14 ___________________________________________________________ 15 ___________________________________________________________ 16 ___________________________________________________________ 17 ___________________________________________________________ 18 ___________________________________________________________ 19 ___________________________________________________________ 20 ___________________________________________________________ 21 ___________________________________________________________ 22 ___________________________________________________________ 23 ___________________________________________________________ 24 25 ______________________________ ERIC BOVEE 26 27 28 August 20, 2007 29 30 Mr. Mark J. Phelps 31 Washington Mutual Legal Dept. 1301 Second Avenue, Ste. 3501 32 Seattle, Washington 98101 33 RE: Riehemann v. Washington Mutual Bank 34 Dear Mr. Phelps, 35 Enclosed please find your copy of the transcript of the deposition of Eric Bovee. The affidavit and correction sheet 36 are attached to your copy. 37 I would appreciate your help in having the witness read and sign the deposition within thirty days, making necessary 38 changes, if any, on the correction sheet. 39 When the affidavit and correction sheet have been signed, please return them to me for filing with the original 40 transcript. 41 If you have any questions, please give me a call. Thank you very much for your help. 42 Sincerely, 43 44 45 J. Kay Corbett Court Reporter 46 Enclosures: Copy of Transcript 47 Original Affidavit Correction Page 48 cc: Melissa Huelsman 49 Clerk of the Court File 50 51