2 1 IN THE SUPERIOR COURT OF WASHINGTON 2 IN AND FOR THE COUNTY OF KING 3 4 5 CHERYL BUSBY AND JEFF BUSBY, ) ) 6 Plaintiffs, ) ) 7 vs. ) Case No. ) 05-2-17400-5 SEA 8 AMERIQUEST MORTGAGE COMPANY, ) ET AL., ) 9 ) Defendants. ) 10 ___________________________________) 11 12 13 Deposition of MICHAEL GIBSON, JR., 14 on behalf of the Plaintiffs, at 18400 Von Karman, 15 Suite 800, Irvine, California, commencing at 16 9:12 a.m., Thursday, November 15, 2007, before 17 Tracy L. Mafi, Certified Shorthand Reporter 18 No. 11850. 19 20 21 22 23 24 25 3 1 APPEARANCES OF COUNSEL: 2 3 For Plaintiffs: 4 MELISSA HUELSMAN, ESQ. LAW OFFICES OF MELISSA A. HUELSMAN, PS 5 705 Second Avenue Suite 501 6 Seattle, Washington 98104 (206) 447-0103 7 8 For Defendants: 9 DOUGLAS L. DAVIES, ESQ. FOSTER, PEPPER, PLLC 10 1111 Third Avenue Suite 3400 11 Seattle, Washington 98101-3299 (206) 447-6402 12 david@foster.com 13 Also Present: 14 KATIE CARDER, ESQ. 15 GAIL S. CASCIOLA 16 17 18 19 20 21 22 23 24 25 4 1 I N D E X 2 3 DEPONENT EXAMINED BY PAGE 4 MICHAEL GIBSON, JR. MS. HUELSMAN 6 5 6 7 EXHIBITS FOR IDENTIFICATION PAGE 8 For Plaintiffs: 9 1 - Uniform Residential 49 Loan Application 10 (5 pages) 11 2 - Truth In Lending Disclosure 72 Statement and Good Faith 12 Estimate (14 pages) 13 3 - Uniform Residential 75 14 Loan Application (5 pages) 15 4 - Document Request Letter 83 16 Dated September 26, 2002 (2 pages) 17 5 - Loan Approval Document 84 18 (1 page) 19 6 - Appraisal 97 (13 pages) 20 7 - Settlement Statement 100 21 (1 page) 22 8 - Settlement Statement 103 (1 page) 23 9 - Borrower's Acknowledgement of 105 24 Final Loan Terms (1 page) 25 5 1 INDEX CONTINUED 2 10 - Settlement Statement 107 (1 page) 3 11 - Truth In Lending Disclosure 110 4 Statement (1 page) 5 12 - Handwritten Note and 111 6 Business Card (2 pages) 7 13 - Adjustable Rate Rider 113 8 (3 pages) 9 14 - Deed of Trust 114 (16 pages) 10 15 - Adjustable Rate Note 116 11 (3 pages) 12 16 - Handwritten Note from 119 Cheryl Busby 13 (1 page) 14 15 16 17 18 19 20 21 22 23 24 25 6 1 IRVINE, CALIFORNIA; 2 THURSDAY, NOVEMBER 15, 2007; 9:12 A.M. 3 4 MICHAEL GIBSON, JR., 5 deponent, was sworn, examined 6 and testified as follows: 7 8 DEPOSITION OFFICER: Please raise your 9 right hand. 10 THE WITNESS: (Witness complies.) 11 DEPOSITION OFFICER: Do you solemnly state 12 that the testimony that you will give in this matter 13 shall be the truth, the whole truth, and nothing but 14 the truth, so help you God? 15 THE WITNESS: I do. 16 17 EXAMINATION 18 BY MS. HUELSMAN: 19 Q Good morning. 20 A Good morning. 21 Q My name is Melissa Huelsman. I'll be taking 22 your deposition today, and I understand that you're here 23 to provide me testimony on behalf of Ameriquest; is that 24 correct? 25 A Yes. 7 1 Q So I'm just going to go through a few 2 preliminary things, and then we'll get started. I'll 3 remind you that if you don't understand the question I'm 4 asking, don't guess. Ask me to clarify it. Ask me to 5 rephrase it. I'm not trying to trick you. I'm just 6 trying to get the answers to the question. 7 Okay? 8 A Okay. 9 Q And I assume that your attorneys have more than 10 capably prepared you for this deposition. Please give 11 an audible response to the question because "uh-huh" or 12 "huh-uh" cannot be transcribed correctly. 13 And we have to be certain not to talk over each 14 other. It's really common when people are just talking, 15 but in depositions, it makes her life miserable. 16 I also talk really fast, so I'm going to warn 17 you. I'll try to slow it down. And I'm not feeling 18 good, so I'll probably go slower. So if I do, just let 19 me know. But also, too, if I'm talking fast and you're 20 talking over me, it makes it really bad. 21 Okay? 22 A Okay. 23 Q And we'll clarify on the record the corporate 24 entities that we're talking about; but, in general, I'm 25 just going to say "Ameriquest," and I'll be referring to 8 1 the defendants in this case. But if you feel you need 2 to clarify that one particular corporate entity or the 3 other is doing something, please clarify. 4 Okay? 5 A Okay. 6 Q Because I know we have multiple corporate 7 participants in this. 8 Can you state your name for the record? 9 A Michael O. Gibson, Jr. 10 Q And can you spell your last name? 11 A G-i-b-s-o-n. 12 Q And what is your current position with 13 Ameriquest? 14 A My current title is president of Ameriquest 15 Mortgage Company. 16 Q And when did you obtain that position? 17 A November 1st, 2007. 18 Q Were you previously with Ameriquest in a 19 different capacity? 20 A Prior to that I was with ACC Capital Holdings. 21 Q Okay. Which is another Ameriquest-related 22 corporate entity; from what I understand, the parent 23 company? 24 A I believe so, yes. 25 Q Well, is it, or is it not? 9 1 A That's my general understanding, but I have not 2 seen our legal formation paperwork about how the 3 companies are structured. 4 Q But you're the president of Ameriquest? 5 A Correct. 6 Q I guess I'm just -- you don't know who your 7 corporate parent is? 8 A I'm not sure how to answer the question. 9 Q Well, why don't we get into what your job is as 10 president of Ameriquest. Can you describe it to me? 11 A My current position is essentially to assist in 12 winding down the operations of Ameriquest Mortgage. 13 Q Okay. I'm going to -- we'll get into this 14 more. I'm going to backtrack, and just start off 15 with -- why don't you give me your educational 16 background. 17 A I completed high school. Attended the 18 University of Illinois, Champaign-Urbana; did not 19 graduate from there, and currently completing my degree 20 at Biola University. 21 Q When do you anticipate completing? 22 A Sometime in 2008. 23 Q Okay. Why don't you give me your employment 24 history, starting with your first job, kind of after you 25 got out of high school. 10 1 A After college, I guess would be my first real 2 job. I started in real estate sales. And I don't 3 recall the name of the company, but I was a real estate 4 agent. 5 Q When did you graduate from high school? 6 A 1988. 7 Q So then you went directly from there to the 8 University of Indiana? 9 A University of Illinois. 10 Q I'm sorry. Illinois. I'm sorry. 11 And what years did you attend there? 12 A 1988 to 1993. 13 Q But you did not finish your degree? 14 A Correct. 15 Q What were you studying? 16 A I think my major was history, when I left. 17 Q So you started in real estate sales, you think, 18 in 1993? 19 A Correct. 20 Q So you were going to school full-time from 1988 21 to 1993? 22 A For most of that period of time, yes. 23 Q What were you doing during the time you weren't 24 going to school full-time? 25 A I had various jobs. Not working and not going 11 1 to school. Just intermittent times where I was not 2 attending schools. 3 Q Okay. So you started in real estate sales in 4 approximately 1993. And what kind of real estate sales? 5 A Residential. 6 Q And for whom were you working? 7 A I believe the name of the company was 8 Julie Davis Realty. 9 Q Was that in Illinois? 10 A In Springfield, Illinois. 11 Q Okay. And were you licensed as a real estate 12 agent or a real estate broker? 13 A Yes, I was licensed as a real estate agent. 14 Q And that was with the State of Illinois? 15 A Yes. 16 Q And how long did you have that job? 17 A Approximately a year. 18 Q 1994? 19 A Correct. 20 Q Okay. And during that time, you just sold -- 21 you either listed -- excuse me -- sold or represented 22 buyers in the purchase and sale of residential real 23 estate; is that correct? 24 A Essentially, yes. 25 Q What did you have to do to get your license? 12 1 A I had to take a course through, I guess, an 2 accredited training company, and then pass a test with 3 the State of Illinois. 4 Q All right. And what was your next job? 5 A My next job, I worked for a company called 6 Progreens of the Midwest. 7 Q And what kind of company was that? 8 A They offered an airification service to golf 9 courses. 10 Q Airification? 11 A Airification. 12 Q So is that a-i-r-i-f-i-c-a-t-i-o-n? 13 A To the best of my knowledge, yes. 14 Q I feel like I'm in a spelling bee, but I want 15 to understand it. 16 And putting some kind of air in the golf 17 courses? 18 A It helps the growth of grass, yes. It's a 19 service. 20 Q Airation? 21 A Yeah. 22 Q Okay. And so what did you do for Progreens of 23 the Midwest? 24 A I -- sales and oversaw the crew that was doing 25 the work. 13 1 Q Okay. And what was your job title? 2 A I don't recall. 3 Q And for how long did you work there? 4 A Approximately a year and a half. 5 Q So '94 to '96? 6 A End of '95, I would say. 7 Q Okay. And your next job? 8 A I worked for an office supply company called 9 Modern Business Systems. 10 Q And they also are located in Illinois? 11 A Correct. Crestwood, Illinois, I believe. 12 Q Okay. So that was 1996 to.... 13 A I was there probably eight months. So it was 14 late 1995 to the middle of 1996. 15 Q Okay. And what was your job title there? 16 A I was a salesperson. 17 Q And your next job? 18 A My next job was with Long Beach Mortgage 19 Company. 20 Q And was that here in California, or was that 21 also in Illinois? 22 A It was in Donors Grove, Illinois. 23 Q And what did you do for Long Beach? 24 A I was a loan origination officer. 25 Q For -- so the end of 1996 until when? 14 1 A In that position would have been basically July 2 of 1996 until probably October of 1996. 3 Q And what training did you receive for that job? 4 A I was trained by the manager of the branch. 5 And then I had, I guess what you would call on-the-job 6 training, with some senior account executives in the 7 branch. 8 Q Okay. And can you just describe to me briefly 9 what that training included; what kind of information 10 you received? 11 A I don't recall very clearly what type of 12 information I received. You know, I recall sitting with 13 other employees of the branch learning about their job 14 functions; how they accomplish those job functions. I 15 recall some training manuals, but I don't recall 16 specifically what they said or.... 17 Q And what was your job? What did you do as a 18 loan origination officer? 19 A My job was to solicit homeowners for 20 refinances. Basically, take their application. 21 Q So your only involvement in the process was 22 taking the application? 23 A Correct. 24 Q And then it was handed over to somebody else in 25 the branch? 15 1 A Correct. 2 Q All right. So when you left there in October 3 of '96, where did you next work? 4 A Same company. I then moved to an account 5 executive with the company. 6 Q Same branch office? 7 A Correct. 8 Q Okay. And what training then did you receive 9 as an account executive? 10 A I would say the same as before. I received 11 training from my manager, on-the-job work with other 12 account executives, and I recall some training manuals. 13 I recall a flip chart of some sort that we had 14 that helped us with training and discussion points, I 15 think. I vaguely recall. I don't remember exactly what 16 they said, but kind of same as the prior experience. 17 Q And what were your job duties then as an 18 account executive? 19 A I had the same duties as a loan origination 20 officer. I was originating applications for homeowners, 21 as well as then structuring loan proposals and working 22 with borrowers to put together a loan package for the 23 borrowers. 24 Q So in addition, then, to filling out -- helping 25 the borrowers fill out a loan application, you were 16 1 further involved in the loan process; is that correct? 2 A Yes, correct. 3 Q So what did you do? 4 A I think the biggest part would be taking the 5 information provided on the loan application, 6 determining if the homeowner qualified for a loan, 7 structuring -- if they did qualify for a loan, 8 structuring the loan, rate, payoffs -- you know, the 9 kind of characteristics of a loan that need to be put 10 together -- and then working with the borrower to come 11 up with a proposal that met their needs. 12 Q Okay. And how long were you in that position? 13 A I'd say approximately a year 'til about 14 September of '97. 15 Q Okay. And after that? 16 A After that, I was -- I continued with the 17 company as a senior account executive in the Carlsbad, 18 California office. 19 Q So you -- at that point you moved out to 20 California? 21 A Correct. 22 Q And what did you do as a senior account 23 executive? 24 A Essentially the same job functions as an 25 account executive, but I also added in handling the 17 1 training of new loan origination officers and account 2 executives, or part of that training for those new -- 3 for those associates. 4 Q But you were still actually doing the work of 5 an account executive as well? 6 A Yeah, I was still working on my own loans, but 7 then assisting those associates with those loans they 8 were working on. 9 Q So that was September '97 through when? 10 A I would say approximately February of 1998. 11 Q Okay. After that? 12 A I became the branch manager of the 13 West Los Angeles office for the same company. 14 Q And your role as a branch manager? 15 A I oversaw a staff of, say, approximately eight 16 to ten account executives, two to three loan origination 17 officers, two to three loan processors. Basically 18 oversaw the work and functions of each of those staff 19 members. 20 Q Okay. And were you actually handling loans 21 yourself anymore at that point? 22 A Not on a regular basis. I would occasionally 23 step in to assist, you know, if there was an issue or an 24 associate needed help; but I was not actively soliciting 25 or working with borrowers. 18 1 Q Okay. And you had that job until.... 2 A Until, I'd say, around June -- June of 1999. 3 Q Okay. 4 A And then I became branch manager of the Tustin, 5 California office. Same job, same duties. 6 Q Okay. And you held that job from June of '99 7 until.... 8 A Until July of 2000. 9 Q Okay. 10 A I left and went to Ames Home Loan, as a branch 11 manager. 12 Q Is there a reason why you left and went to Ames? 13 A Just felt like it was a better opportunity at 14 the time. 15 Q More money? 16 A That was, I guess, one factor. 17 Q Okay. And you were branch manager of what 18 office? 19 A The Orange, California office. 20 Q And did you have the same sort of duties with 21 Ames as you did with Long Beach -- 22 A Yeah. 23 Q -- as a branch manager? 24 A Yeah, correct. It was residential lending. So 25 same kind of basic setup. Processors or account 19 1 executives, loan originators. So, yeah, generally the 2 same functions. 3 Q Okay. And how long were you there? 4 A Until October of 2002. 5 Q And then you went to work for.... 6 A Then I went back to Ameriquest Mortgage 7 Company. 8 Q You said "back to Ameriquest?" 9 A Well, Long Beach Mortgage then -- I believe in 10 May of 1998 was -- I don't know the legal structure, but 11 it was basically split in half; the wholesale side of 12 the company. Long Beach was sold, I think, ultimately 13 with Washington Mutual, and the retail side of the 14 company stayed and became Ameriquest Mortgage. 15 Q All right. So that was October of 2002? 16 A Correct. 17 Q And what position then did you have? 18 A I was an area manager in the Alt-A lending 19 division. 20 Q Just one second. 21 And so how long did you have that position? 22 A I'd say I held that position approximately a 23 year. 24 Q So until about October of '03? 25 A Probably August of '03. 20 1 Q And what were your job duties as area manager 2 in the Alt-A lending division? 3 A I oversaw a team of, I'd say, approximately 20 4 to 25 associates. Similar responsibilities as a branch 5 manager, but I guess -- I suppose a little bigger team. 6 We were soliciting and producing residential loans. 7 Q Okay. So are you -- is it essentially what was 8 an in-house in the main office branch -- or, I mean, not 9 a branch, but I guess -- I forget what the phrasing is, 10 but it's different than an actual physical branch out of 11 the location; correct? 12 A Yeah, I think these were centers -- 13 Q There you go. Sorry. 14 A -- that they would call them, or what we would 15 call them at Ameriquest. 16 Q Right. 17 A So I was part of the national Alt-A lending 18 group. 19 Q Okay. And you guys were housed in Ameriquest. 20 One of their headquarters offices, essentially? 21 A We were at an Ameriquest office in 22 Orange County, yes. 23 Q And then, correct me if I'm wrong -- I'm just 24 going from past experience with them. So what you did 25 is you'd get calls in from all different parts of the 21 1 area that was assigned to you; correct? 2 A Yeah. We were actually the national group. So 3 we actually covered everywhere in the country that was 4 not covered by another center or branch. 5 Q And so, essentially, when people either 6 E-mailed or called in to apply and they weren't covered 7 by another area or branch, and they had an Alt-A -- they 8 were seeking an Alt-A product, they would be handled by 9 that team; is that correct? 10 A Correct. Although, we weren't limited to just 11 Alt-A products. We could also do the full range of 12 Ameriquest products as well; subprime and prime. And, 13 you know, all products were available to all groups. So 14 it was just more of a -- I guess what you would call a 15 marketing focus. 16 Q Did you handle your own marketing that came 17 out of your group? 18 A No, we didn't handle our own marketing. 19 Q And why don't you explain to me what "Alt-A" 20 is? 21 A Kind of the general understanding of Alt-A is 22 borrowers who kind of fall in a -- it depends, I guess, 23 on who you talk to, but in a credit or FICA range, you 24 know, 600- to 660-type FICA score, they're not 25 considered subprime, and they're not considered prime, 22 1 necessarily. It's kind of the betweener group. 2 Q And prime would be people with excellent credit 3 scores above 700; correct? 4 A Yeah, I think prime is generally 680 or 700 5 plus FICO scores. You know, excellent -- great to 6 excellent credit, yes. 7 Q And then subprime would be essentially kind of 8 about 620 or under? 9 A Correct. 10 Q All right. And was there a limitation on -- 11 could your area do re-fies only or purchase money only 12 or both? 13 A We could do both. Although, purchase was a 14 very small percentage of what we did. 15 Q Is there a reason for that? 16 A I think generally the reason is that wasn't a 17 marketing target for us with the purchase market. 18 Q All right. So that in August of '03 you 19 changed jobs? 20 A Yeah, we actually -- then our group became -- 21 I stayed as an area manager, but I became area manager 22 of the national lending group for Ameriquest Mortgage. 23 So it was not the Alt-A group anymore. It was actually 24 the -- I guess the full range of marketing and products 25 that the Ameriquest companies were doing. 23 1 Q Still operating out of the Ameriquest building 2 in Orange County, but handling -- 3 A Correct. 4 Q -- loans nationwide? 5 A Yeah, essentially just a different marketing 6 focus. Correct. 7 Q Okay. And how long did you hold that job? 8 A I'd say until around January of '04. 9 Q And then what job did you hold? 10 A I then became a manager in the customer 11 resolution group. 12 Q And what were your job responsibilities in that 13 group? 14 A I oversaw a team of people who worked with 15 borrowers, F.C. groups, and other parties on 16 origination-related complaints or issues. 17 Q Okay. Why don't you tell me specifically how 18 you worked on origination-related complaints or issues. 19 A Kind of just a general description is whether 20 by phone or by E-mail or regular mail, you know, a 21 borrower or another party would send in, you know, a 22 request, a complaint, that was related to the 23 origination of the loan. And we would then contact that 24 party, discuss what the issue was, research the issue, 25 and then work with either the party or other departments 24 1 within the company to resolve the issue. 2 Q Okay. So I take it that would be when it 3 didn't involve a lawsuit, but somebody either writing in 4 or calling in with a complaint; is that correct? 5 A Generally, yeah. 6 Q Did you also work on lawsuits? 7 A I guess I would characterize it to say that yes 8 we worked in conjunction with the legal department. You 9 know, when they were dealing with lawsuits, and there 10 was an origination issue where they needed either 11 assistance or they needed a refund done or a rewrite of 12 a loan or a modification of a loan, they would tell us, 13 you know, what needed to be done, and then we would 14 execute that for the legal department. 15 Q Okay. Now, did this have -- hang on a second. 16 I'm going to sneeze. Okay. Sorry. 17 Did this have a limitation on certain kinds of 18 loans, or was it any loan that had been made by 19 Ameriquest that it would come in to your group? 20 A Yeah. I mean, I think it could be any loan 21 that was made by Ameriquest. 22 Q Okay. Did this also involve any communication 23 with or work with the purchasers of the loans? 24 A No, it didn't. 25 Q Okay. And I guess I should say -- you 25 1 understand what I mean by that? That Ameriquest would 2 sell its loans. There's a purchaser. 3 A Correct. 4 Q So you said that sometimes you would work with, 5 like, the legal department on restructuring loans or 6 things like that? 7 A Correct. 8 Q So could you only do those restructurings when 9 Ameriquest still owned the loan, or did you also do it 10 when Ameriquest no longer owned the loan? 11 A Well, I guess I would say that there are many 12 different resolutions to an issue. So, actually, 13 restructuring -- or if you want to call it "rewriting" 14 into a new loan, in that particular instance where we 15 rewrite into a new loan, it did not matter who owned the 16 loan, whether Ameriquest or another party owned the 17 loan. 18 Q That's because you're making a new loan -- 19 A Correct. 20 Q -- correct? 21 A Correct. 22 Q But when you're restructuring, you're doing 23 something with the existing loan; correct? 24 A I think restructuring -- if we're talking about 25 modifying, modifying the terms of an existing loan? 26 1 Q Correct. 2 A Then there are cases where we would have to own 3 the loan in order to modify it, and there are guidelines 4 for when we can modify the loan that we do not own. 5 Q Okay. And -- so did you use those guidelines 6 for when Ameriquest did not own the loan? 7 A Yes. 8 Q Okay. But wouldn't that necessarily involve, 9 then, the owner of the loan? 10 A My knowledge of it, and just -- because I'm not 11 knowledgeable to the contracts and actually the verbiage 12 that goes into that, but we worked through the servicer. 13 The servicer would be representing, I think, the owner 14 of the loan. And we would work through the servicer to 15 assure that we're meeting the guidelines in order to 16 modify the loan. 17 Q And was the servicer always Ameriquest -- 18 excuse me -- A.M.C.? 19 A To the best of my knowledge, yes. 20 Q Did you ever work with any other servicers 21 besides A.M.C.? 22 A I don't recall working with any other servicers 23 to modify a loan, no. 24 Q And A.M.C. is just another Ameriquest corporate 25 entity; correct? Or Ameriquest-related, I guess, 27 1 corporate entity? 2 A It was part of the ACC Capital Holdings family, 3 correct. 4 Q So what time period -- you started in January 5 of '04 as the manager of the customer resolution group. 6 When did you leave that position? 7 A I held that position until, I think, May of 8 2005. 9 Q So during that -- I don't know -- roughly year 10 and a half that you were there, can you give me your 11 best estimate of how many complaints came in regarding 12 allegations that income information had been falsified? 13 A I don't think I can even guess as to what that 14 would be. 15 Q Well, was it fairly common, very rare? 16 A It would be -- I don't know if I could say. It 17 would have to be information that I would have to look 18 at to say. 19 Q Well, I'm going to have to push you. Your job 20 was to investigate complaints made by consumers; 21 correct? 22 A Correct. 23 Q Okay. So you have to have some sense of how 24 often you received allegations that income information 25 was falsified, otherwise -- I guess I can't -- you have 28 1 to have some sense of it. 2 MR. DAVIES: It calls for a lot of 3 speculation. I don't want him to guess. 4 MS. HUELSMAN: Well, I find it difficult to 5 believe that somebody can manage a group, whose job is 6 to do nothing by investigate consumer complaints, and he 7 has no sense of how often people complained about 8 falsification of income information. I find it 9 disingenuous that he doesn't recall. 10 THE WITNESS: Again, it would be a total 11 guess. We had -- you know, within our group, it wasn't 12 just complaints that we handled. So we had thousands of 13 calls. You know, hundreds of pieces of correspondence 14 on a monthly basis. It would be complete speculation 15 for me to try to put a number to, you know, things that 16 related to income and falsification of income. 17 I could say it was more than once. Less than a 18 million times. You know, I don't know -- 19 BY MS. HUELSMAN: 20 Q Okay. 21 A -- beyond that. 22 Q So what was the most common complaint? 23 A I think it changed overtime. 24 Q Okay. Well, in January '04 when you started, 25 what was the common complaint? 29 1 A I don't recall. 2 MS. HUELSMAN: If we're going to go down this 3 road, this is -- Doug, this is not -- I mean, he was 4 head of this department. These are directly related to 5 the issues in this case. 6 MR. DAVIES: He's dealing with hundreds of 7 issues a day. I mean, you can ask him. It seems it's 8 reasonable to ask him, you know, what are some of the 9 issues that came up, that you dealt with. 10 But, I mean, asking him to say what's the most 11 common, what's the next most common, what was the least 12 common -- I mean, I don't know that he can do that. 13 MS. HUELSMAN: I think he can. 14 MR. DAVIES: That calls for speculation. 15 MS. HUELSMAN: He was managing the department. 16 MR. DAVIES: I know. That makes it even 17 tougher. That calls for a lot of speculation. 18 MS. HUELSMAN: Okay. 19 MR. DAVIES: Why don't you just ask him: What 20 are some of the issues that came up? 21 MS. HUELSMAN: Well, I will, but he's evading 22 my questions. 23 BY MS. HUELSMAN: 24 Q Did you prepare reports every month? 25 A I did not personally prepare reports. 30 1 Q Did somebody in your department prepare reports 2 regarding the complaints that were made? 3 A Yes. 4 MS. HUELSMAN: Okay. Those would have been 5 included in my discovery request, so I assume those are 6 going to be produced to me after this deposition. 7 Correct? 8 MR. DAVIES: Yeah, we'll talk about it. 9 BY MS. HUELSMAN: 10 Q Who prepared those reports? 11 A I think it would depend over time. We had 12 different analysts, different supervisors and managers 13 who may be working on different issues and preparing 14 reports. 15 Q And you supervised all those people; correct? 16 A I was a manager. When I started, I was one of 17 three. So I didn't supervise everybody. 18 Q Who were the other managers? 19 A Casey Holt. 20 Q Is that C-a-s-e-y? 21 A I believe so, yeah. 22 Q H-o-l-t? 23 A Yeah. 24 Q And the other? 25 A And Andrea Martin, I think was her name. 31 1 Q So were you guys all working in the same 2 physical space, and each of you just supervised a 3 different body of people? 4 A Correct. 5 Q You weren't, like, doing shifts of -- you know, 6 over the same people, or anything like that? 7 A We each had our own teams; correct. 8 Q And did you have a geographical limitation on 9 your area? In other words, you had the west of the 10 United States or whatever? 11 A I don't recall that being the case. I think it 12 was just a random -- I don't know -- rotation, or what 13 you'd want to call it, as far as how issues were 14 distributed. 15 Q So a complaint came in, and it could just be 16 randomly distributed to one of the three groups? 17 A Correct. 18 Q Why don't you describe the process regarding 19 once a complaint came in. What happened with the 20 complaint? 21 A Again, some were complaints, some were issues, 22 some were requests. It would depend on what the party 23 was looking for. 24 But the basic process would be, you know, in 25 take of the information, whether it was a phone call, 32 1 and actually talking to the party that was calling, or 2 some kind of correspondence, actually reviewing that 3 correspondence. Those would lead into conversations 4 with that party to get more detail, more information 5 about the issue. 6 Then, essentially, if the issue was not 7 resolved in that first conversation, there would be some 8 sort of research done into the issue to look to verify, 9 you know, whether the request or allegation, or whatever 10 it may be, was accurate or not. 11 And then there would be resolution, you know, 12 to the issue; whether closure, whether action was taken 13 or not, whether another party might be involved within 14 the company. 15 Q What do you mean there would be a resolution 16 taken? What does that mean? 17 A Well, I mean, there would be resolution. So a 18 resolution could be that there's no issue, and we're 19 closing it. A resolution could be a refund of some 20 monies. It could be a rewrite of the loan. There were 21 multiple -- probably -- I don't know -- 30 to 40 types 22 of resolutions that can happen. 23 Q Okay. So did your team members all have a 24 computer that they worked off of? 25 A Yes. 33 1 Q Okay. So when a complaint came in, was it 2 physically delivered to your team, or did it come in 3 through like E-mail or an internal communication system 4 over the computer? 5 A It could be physically delivered. It could be 6 through the computer. It could be a phone call. 7 Q And each team member who was working on a 8 particular complaint, would they have to keep track of 9 whatever work they did on the complaint? 10 A Yes. 11 Q So there would be a computerized record of the 12 complaint process; is that correct? 13 A Yes. 14 Q Okay. And would there also be handwritten 15 notes or a paper file regarding the complaint process? 16 A I think at times there could have been a paper 17 file, but the requirement would be electronically 18 capturing the information in our system. 19 Q Okay. And was that a particular computer 20 system unique to that department? 21 A We've had a couple of systems over the time. 22 One would have been unique to that department. One was 23 more of an enterprise-wide system. 24 Q Can you tell me the two systems, please? 25 A The initial system when we started was called 34 1 QRTS. 2 Q And can you tell me what that stands for? 3 A I cannot. 4 Q And was that the system that was unique to your 5 unit? 6 A Correct. 7 Q Okay. And what information was entered into 8 the QRTS system? 9 A It would have been basic tracking information 10 and -- of the loan number, additional borrower 11 information, and then essentially it would have been 12 comments, and potentially documents that were captured 13 in there. 14 Q And was there a category in the system or a 15 place where somebody could keep track of what the nature 16 of the complaint was? 17 A I believe there was in that system, yes. 18 Q Do you recall -- did the categories have 19 specific labels, you know, pre-identified? 20 A I believe there were in QRTS, yeah. 21 Q Can you tell me your recollection of what those 22 categories were? 23 A I think there was, if I recall, between 80 and 24 120 categories. So, I mean, I don't know. I don't 25 think I could recall all of them. 35 1 Q Can you give me a couple that you do recall? 2 A "Borrower request" would be one issue. 3 "Escrow" would be an issue. "Appraisal" or "appraisal 4 issue." 5 I don't -- I'm not really recalling if that was 6 the exact terminology, but those were the -- I guess to 7 the best of my memory what they were. 8 Q So was there a category for somebody 9 complaining about income falsification? 10 A To my recollection, there was a category, I 11 think, that was just called "income" or "income 12 issues." And then there would have been a category that 13 was called "fraud." 14 Q And what kind of things would go into the 15 "fraud" category? 16 A I think anything that was alleged to be fraud. 17 Could be identity theft. It could be fraudulent 18 documentation. Issues like that. 19 Q Okay. And did the QRTS system then print 20 reports at the end of the month or whatever to 21 compile -- was the information compiled in some fashion? 22 A I think there were a handful of kind of 23 pre-determined reports that were in QRTS, and then I 24 think we at times did ad hoc reporting out of it as 25 well. 36 1 Q And what other people or departments within the 2 company received those reports? 3 A I don't know if I could say. Whatever reports 4 were generated went to my boss. I don't know where he 5 took them from there. 6 Q Okay. And who was your boss and his or her 7 title? 8 A Dan Sweeney. He was the vice president of 9 customer resolution. 10 Q And is that S-w-e-e-n-e-y? 11 A Correct. 12 Q And he was vice president of customer 13 relations, is that what you said? 14 A Customer resolution. 15 Q Sorry. 16 Okay. And were there manuals or procedures 17 that you had to follow in that unit, when people made 18 the complaint, about how to handle it, how to resolve 19 it? 20 A I would say initially when I started there, no, 21 because we were starting the department from scratch at 22 that time. But over time, yes, we developed policies 23 and procedures for the department. 24 MS. HUELSMAN: Okay. And those would have been 25 encompassed in my discovery request, and were not 37 1 produced to me. So I'm going to assume that they'll be 2 produced to me immediately. 3 MR. DAVIES: Well, what time period are you 4 talking about? At the time of the loan -- of the 5 Busbys' loan? 6 MS. HUELSMAN: Well, yes. But if this 7 department didn't exist, then it would be whatever 8 department would have handled the Busbys' complaint at 9 the time that they -- I understand -- 10 MR. DAVIES: The loan was in '02; right? 11 MS. HUELSMAN: Yeah, no, I know -- 12 MR. DAVIES: Was this group around in '02? 13 THE WITNESS: No. When I became manager there 14 in January of '04, that was the start of this group. 15 MR. DAVIES: So he wouldn't have had any 16 manuals. 17 BY MS. HUELSMAN: 18 Q Well, what department or part of the company 19 would have handled these types of complaints prior to 20 January of '04? 21 A To the best of my knowledge, it was the legal 22 department. 23 MS. HUELSMAN: Okay. Then I'm going to need 24 whatever -- we'll have to talk about that. 25 BY MS. HUELSMAN: 38 1 Q Okay. 2 A Could we possibly take a break? 3 Q Oh, sure. I forgot to tell you. Whenever you 4 want one, you can have one. 5 (Recess taken.) 6 BY MS. HUELSMAN: 7 Q Okay. So you were last working as manager in 8 the customer resolution group in May of '05; correct? 9 A Correct. 10 Q And what was your next job then? 11 A Director of customer resolution. 12 Q So it was May of '05 through.... 13 A Through September of '05. 14 Q As manager of -- sorry. What did you -- sorry. 15 A Director of customer resolution. 16 Q Thank you. 17 And what was your job description? 18 A It was essentially the same. It was just a 19 promotion in title. 20 Q So were you overseeing, then, the two people 21 you'd previously been co-managing with? 22 A By that point, they were no longer there. We 23 were just one team. One larger team. 24 Q All right. And then your next job? 25 A Vice president of business risk and customer 39 1 satisfaction. 2 Q Okay. V.P. of business risk and customer 3 satisfaction? 4 A Correct. 5 Q And what was the time period on that? 6 September '05 through.... 7 A May of '06. 8 Q And what was your job as -- what was your job 9 description as V.P. of business risk? 10 A I oversaw my previous group; the customer 11 resolution group. I also added in the quality assurance 12 groups. Kind of the -- what was headed under our 13 business risk, quality assurance, special audits, 14 investigations, production controls. 15 Q Okay. Sounds to me like this is basically 16 overseeing everybody who was doing kind of 17 investigations or taking a look at loan products before 18 and after the fact; is that correct? Or you tell me. 19 A I think that's -- that's a fairly accurate 20 description. There were additional groups beyond that 21 that were doing the same type of work; looking at 22 origination-related risk issues. 23 Q Okay. And I guess -- I didn't ask you, but 24 before you got into -- or when you got into the customer 25 resolution group and then your subsequent promotions, 40 1 did you receive any additional training? 2 A Yes, I did. 3 Q And what was that training? 4 A I would say generally that that training would 5 have been from outside sources. Outside the company. 6 M.B.A., Mortgage Bankers Association training, 7 conferences. More, I guess, outside sources. Since 8 customer resolution was new, so there was -- there 9 wasn't really anybody to train because we basically 10 built it from scratch. We built the policies and 11 procedures. We built the training within customer 12 resolution; myself and the other managers. 13 Q Okay. So would that be like kind of continuing 14 education kind of courses, seminars put on by industry 15 organizations, things like that? 16 A Yeah, I would say so. 17 Q Okay. Did you take any actual courses from an 18 institution? 19 A The Mortgage Bankers Association. They offer 20 credits for the courses that they give. So I did 21 receive some, I guess, Mortgage Bankers credits through 22 them. 23 I also took a week-long training at the Center 24 for Creative Leadership. So I guess that was another 25 organized training and graduation-type thing. 41 1 Q All right. So is there anything else you want 2 to describe to me about what your job as V.P. of 3 business risk involved, other than what we talked about 4 a minute ago? 5 A No, I don't think so. 6 Q And then your next job? 7 A Senior vice president of business controls. 8 Q And that was May of '06 through.... 9 A Through, I guess, November 1st of 2007. 10 Q Okay. And what were your job responsibilities 11 as senior V.P. of business controls? 12 A When I took that position, I maintained the 13 groups that I had previously had in customer resolution 14 and in business risk. And then I added the additional 15 business controls groups, the appraisal department, 16 investor relations, collateral, business control 17 support. I think those were the main departments that I 18 added. 19 Q Okay. And then what additional 20 responsibilities did you have? 21 A Again, I think it was just the oversight of the 22 added departments, and the -- basically the direct 23 oversight of the management of those departments. 24 Q And can you give me a general description of 25 what the business control group -- what those groups 42 1 do? I think I understand, but I want to make sure. 2 A I guess the -- I would describe them as the 3 departments that were overseeing origination from a risk 4 standpoint, either pre-funding or post-funding. 5 Q Okay. So they were overseeing, basically, the 6 entities or the parts of the company that were actually 7 making loans; correct? 8 A I would say they were overseeing the processes 9 and risk related to the production of loans. 10 Q Okay. And did you -- so you had that job until 11 just the beginning of this month; is that correct? 12 A Correct. 13 Q But Ameriquest quit making loans earlier this 14 year; is that correct? 15 A Yeah. We surrendered our licenses in September 16 of this year. 17 Q Okay. So the branches, though, shut down 18 earlier this year; is that correct? 19 A I believe the branches were closed in May of 20 2006. 21 Q Yeah. I'm sorry. You're correct. 22 Sorry. 23 And then -- so the only lending that's been 24 going on since May 2006 has been generated out of the 25 main office as the national group; is that correct? 43 1 A After May 2006, we had a lending center in 2 Sacramento. We had one in Chicago. And some operations 3 in Orange. 4 Q Okay. And so those were the only ones -- only 5 parts of the company making loans up until September of 6 '07; correct? 7 A Those were making loans through March of '07. 8 And then the Orange, California group was the only one 9 making loans between March of '07 and September -- or 10 really July of '07. 11 Q All right. So you were still performing your 12 duties, though, up until that point? 13 A Those that still applied to what we were doing, 14 along with additional duties that have kind of changed 15 day by day over the last year or so. 16 Q Okay. And so what additional duties are those? 17 A I really -- I'm asked to assist in kind of 18 anything related to the origination of loans. 19 Q Okay. So we're going to go back to where we 20 started, which is your current role now as president of 21 Ameriquest, which you assumed on November 1st '07; 22 correct? 23 A Correct. 24 Q And you said your job was to assist in winding 25 down operations; correct? 44 1 A Correct. 2 Q What does that encompass? 3 A Generally it is -- you know, my focus is on the 4 wind-down of Ameriquest Mortgage's operations in regards 5 to the origination of loans or the completion of the 6 loan process. So we focus on, for instance, collateral 7 and finalizing collateral which is a post-funding 8 process that has to be done. 9 Q And why don't you describe to me what you mean 10 by that. 11 A Essentially, post the funding of a loan, you 12 have to complete a loan package. You have to receive a 13 final title policy from your title company, and you have 14 to receive a recorded deed of trust or mortgage from 15 either your title company or from the county in which 16 the property is located. And those processes can take 17 up to 18 months or more to post the funding of the loan 18 depending on city, state, county, et cetera. 19 Q So that's all that Ameriquest is doing right 20 now is essentially waiting for title insurance policies 21 and recorded deeds of trust and mortgages to come in? 22 A Well, I would say we're proactively trying to 23 go out and get those things. We're also working on, 24 again, reviews of origination-related issues that our 25 servicer brings to us. 45 1 You know, Ameriquest as a whole, as well as -- 2 you know, not understand my direction, but also working 3 through whatever litigation is outstanding. But I 4 think, in general, that's what encompasses what we're 5 doing at this point. 6 Q Okay. So I just want to be clear. When people 7 make complaints, either through a lawsuit or just making 8 a complaint about a mortgage regarding the origination 9 of a loan with Ameriquest, that's still being handled by 10 you at Ameriquest? 11 A I would not say that we are handling the 12 complaints that are being made. We don't service loans 13 any longer, so we can't work on issues related to loans. 14 We have to direct borrowers to their servicer. 15 Q Okay. Well, then why are you doing reviews of 16 origination-related complaints brought to you by the 17 servicer? 18 A We have -- well, origination -- I don't think I 19 said "complaints." 20 Q Okay. 21 A If I did, I apologize. It was the wrong word. 22 You know, an example would be we have -- I 23 think, as you called it before, an investor/purchaser of 24 loans who may request a review of a loan by Ameriquest 25 for an issue. And we review the file and try to assist 46 1 with either the repurchase or the rebuttal of the 2 repurchase of that loan. 3 Q Okay. So you're dealing with 4 origination-related issues not necessarily generated by 5 the borrower, but pushed back from the investor; is that 6 correct? 7 A Generally, yes. 8 Q And those are all coming through the servicer, 9 which is A.M.C.? 10 A Or they come directly from the investor or the 11 trustee for the investor. 12 Q Okay. And any other parts of your job 13 description as president of Ameriquest? 14 A To the best of my knowledge, that's what I'm 15 tasked with doing right now. 16 Q How many people are you supervising? 17 A I supervise -- I believe it's 12 people right 18 now. 19 Q Is that the totality of the employees of 20 Ameriquest, or are there more? 21 A They are not -- the 12 people I supervise are 22 not employees of Ameriquest Mortgage. They're employees 23 of ACC Capital Holdings. I believe I'm the only 24 employee of Ameriquest Mortgage. 25 Q Who's paying these other people? 47 1 A They're employed by ACC Capital Holdings. 2 Q And you're the -- an employee of Ameriquest 3 still? 4 A I believe so, yes. 5 Q Okay. 6 A And maybe I can just clarify. 7 Q Sure. 8 A I don't know, technically. I am the president 9 of Ameriquest, but I'm also an employee of ACC Capital 10 Holdings. 11 Q Okay. What is your title with A.M.C.? 12 A I think it's senior vice president of business 13 controls. 14 Q Senior vice president of business controls? 15 A Correct. 16 Q Do you have any other titles? 17 A Not that I'm aware of. 18 Q Who is your supervisor at ACC Capital Holdings? 19 A I report to Josh Perttula. 20 Q Can you spell the last name, please? 21 A I think it's P-e-r-t-t-u-l-a. 22 Q And do you know what his title is? 23 A I believe he's chief operating officer, but I'm 24 not really sure what his title is. 25 Q Okay. So do you have any knowledge 48 1 regarding -- and this is where we're -- just tell me 2 "no" if you don't know, and we'll figure out what you 3 can testify to and you can't. 4 So do you have any knowledge or understanding 5 of the processes that would have been in place in 2002 6 and 2003 for complaints regarding the origination of a 7 loan? 8 A I do not have knowledge of the complaint 9 process in 2002 or 2003. 10 Q Okay. You said you thought it went to the 11 legal department, but that's as much as you know? 12 A Correct. 13 Q I'm going to follow up to one question I asked 14 you earlier. I forgot to do this. We talked about the 15 computer systems that were in place when you were in the 16 customer resolution group. 17 You said that there was the QRTS, which was 18 unique to that unit. And what was the other computer 19 system? 20 A TRACS. 21 Q And is that T-R -- 22 A T-R-A-C-S. 23 Q Do you know what that stands for? 24 A At one time I did, but I don't recall now. 25 Q So that was just the larger computer system 49 1 used by Ameriquest? 2 A TRACS, I would say, is the successor system to 3 QRTS and other systems that had been used within the 4 ACC C.H. enterprise. 5 Q Okay. And do you have any knowledge or 6 understanding about the process of originating a 7 mortgage loan or refinance loan in 2002, 2003? 8 A Yes. 9 Q So if I asked you questions about the Busbys 10 obtaining a loan, you can answer those questions? 11 A I believe so. 12 Q But the Busbys' loan was originated at a 13 branch; is that correct? 14 A That's correct. 15 Q So would that process be any different, other 16 than one having done out of the loan centers? 17 A Yeah, I believe the process would have been 18 slightly different in the branch at that time. 19 Q Okay. But you still feel you can answer my 20 questions anyway? 21 A Yes, I do. 22 Q Let's go through this. Let's mark these. 23 (Whereupon Plaintiffs' Exhibit 1 was marked 24 for identification by the deposition officer 25 and is attached hereto.) 50 1 BY MS. HUELSMAN: 2 Q Okay. So this is obviously a handwritten loan 3 application, but before we turn to it, I'm going to ask 4 you: What would the process have been when a borrower 5 sought to obtain a refinance loan at a branch in 2002? 6 A Well, I guess the initial step of the process 7 would have been contact between the branch and the 8 borrower, which could have been borrower initiated. It 9 could have been branch initiated. It could have been 10 initiated through a -- you know, a phone call, a Web 11 application; but somehow there would have been a 12 connection between the branch associate and borrower. 13 And I guess the initial part of that would have 14 been then a discussion of the wants or needs of the 15 borrower, and then potentially into a loan application. 16 Q Okay. So it's my understanding, then, that the 17 borrowers would come in and someone, whether it's a 18 borrower or loan officer, would fill out an application, 19 but then it was entered into the computer system; is 20 that correct? 21 A Yeah. At some point -- you know, we've had 22 different systems over time, but at some point the 23 information from the application would have been entered 24 into whatever our origination system at the time was. 25 Q Okay. Well -- and I'm going to have you focus 51 1 on 2002 and into 2003. 2 A Okay. 3 Q Since that's the time period of our complaint. 4 All right? 5 A Okay. 6 Q So in 2002, do you know what the computer 7 system would have been? 8 A I believe it would have been Empower. 9 Q And can you tell me how you spell that? 10 A E-m-p-o-w-e-r. 11 Q Okay. I didn't know if it was an acronym. 12 Okay. 13 Okay. So would it be the loan officer -- or 14 excuse me -- the loan originator or account executive 15 that would enter the information into the system? 16 A I'm not sure that during that time frame we 17 still had loan originators as a job function. That job 18 had been phased out -- 19 Q Okay. 20 A -- over time. So I would say most likely it 21 was the account executive who would have entered that 22 information. 23 Q And was that a system that was connected to 24 essentially the main Ameriquest system? So the computer 25 is at the branch, but the information would be sent to a 52 1 central location off-site? 2 A In my limited knowledge of I.T. and how the 3 systems work, Empower was the underwriting system used 4 by all branches and by corporate. So I assume somewhere 5 the data was stored at some corporate facility, yes. 6 Q But it wasn't just like on desktops at a 7 branch; it was connected? 8 A Yeah, it was connected to -- the information 9 you entered into the system at a branch could be viewed 10 by somebody at corporate, yes. 11 Q Okay. So a borrower would come in, the 12 information would get put into the system, and then what 13 would happen? 14 A The -- through the system, the application 15 would be entered. A credit report would be requested 16 and usually generated from our credit vendor. And then 17 with the information from the credit report and the 18 application, the account executive would try to make a 19 determination if the applicant qualified for one of our 20 loan products. 21 Q Okay. But wasn't that just computer-generated, 22 whether or not the person qualified? 23 A No, I wouldn't necessarily say it was computer 24 generated. I think there was computer assistance, 25 because the guidelines were programmed into the price 53 1 model of the computer. But you also had just verbal 2 information at this point. So you couldn't make a final 3 determination as to the qualification of an applicant. 4 Q Okay. I'm just trying to understand. So the 5 information is put in. They got their credit report. 6 And my understanding is this computer system comes back 7 with a proposed loan and terms. 8 Am I incorrect? 9 A In this time frame, I don't believe the 10 computer system was coming back with proposed terms or 11 information like that. I think in later systems, that 12 was the case. At this point the computer would come 13 back and say this is the credit score, this is the 14 credit information, this is also the application 15 information. And you would use the price model to 16 determine -- to help determine whether the borrower 17 would qualify for a loan or not. 18 Q So where was the price model? 19 A Within Empower. Within the computer system. 20 Q So the A.E. would go to some separate screen 21 that would give a price model? 22 A Correct. 23 Q And, I guess, what information would be on the 24 price model? 25 A It would be -- you know, there's a lot of 54 1 information in a price model. There's probably between 2 20 and 25 different characteristics that are captured. 3 Examples would be loan amounts, property value, credit 4 score, things like that. So, you know, you would be 5 entering in or drawing in from Empower those pieces of 6 information in the price model. 7 Q So the A.E. would be putting that information 8 into the pricing model in order to get it to -- 9 A Some would be put in. Some would be 10 automatically generated through Empower. 11 MS. HUELSMAN: So that's one of the computer 12 pieces of information I don't have that I want. 13 BY MS. HUELSMAN: 14 Q Okay. So the information would be put in, and 15 essentially the price model system within Empower would 16 then ultimately come up with, you know, loan amount and 17 interest rate, fees, et cetera; is that correct? 18 A Yeah. It would be -- you know, after entry of 19 all the information that was necessary, it would 20 generate an initial pricing of the loan, which the 21 account executive could -- then had some latitude to 22 change. 23 Q Okay. And how much latitude? 24 A I don't specifically recall in the policies and 25 procedures at the time, but they would have -- I think 55 1 most likely at that time be able to reduce the rate or 2 reduce the points or fees, but not to raise those. 3 They, also, I think, could have traded off points and 4 fees or prepayment penalty. 5 Q What were the limitations on their abilities 6 to change the rate or points and fees? 7 A Well, there would have been limitations, 8 federal or State regulations or guidelines, that were 9 programmed into the system that would allow them -- you 10 know, for instance, we didn't do Section 32-O. So you 11 couldn't go over the Section 32 thresholds. 12 There would also be limitations as to what the 13 pricing could be; how high the pricing could get to on a 14 particular loan. 15 Q And how was that determined? 16 A It was programmed into the pricing model in 17 Empower. 18 Q Right. But what was that based on? 19 A I don't know if I understand. 20 Q Well, my understanding is it was based on how 21 much profit they were going to make on the loan. They 22 got it sold, and that's what the calculation was -- 23 that's what the calculation was counting. And then you 24 guys come up with a number. You had a range that you 25 were allowed to have it be in based upon the profit. 56 1 A There was a revenue factor that was generated. 2 It really had nothing to do with the profit of the 3 loan. It had to do with the commissions that were paid 4 to the associates in the branch. 5 So, yeah, that was one of the, I guess, things 6 that would be kept, as to how much revenue you could 7 generate that then determined your overall commission. 8 Q And I guess I'm just confused, because I've 9 taken depositions before of Ameriquest people, and it 10 was explained to me that it was calculated based upon 11 the profit margin on the sale of the loan. 12 A No. My understanding has never been that the 13 revenue factor directly correlated to any profits that 14 was generated on a particular loan. 15 Loans are sold in pools. They're not sold 16 individually. So it's virtually impossible to say the 17 value of a particular loan. You know, loans are valued 18 in pools of characteristics and types. 19 So, you know, the revenue factor, I would 20 say -- I wouldn't say it has zero relation to the 21 ultimate potential profitability of a particular loan, 22 but it's not directly correlated to that. 23 Q So you're saying that Ameriquest didn't factor 24 in its potential profits on a loan when it determined 25 how much commission it would pay an account executive 57 1 and everyone who received commissions off of it? 2 A No, I didn't say. I think I just said there 3 wasn't a zero connection, but it was not direct 4 profitability of the loan. That was not a number, I 5 think, that could be determined at that point. 6 Q Well, were you involved in the process that 7 Ameriquest used to sell loans? 8 A At that time, I was not, no. 9 Q When did you -- I didn't -- when did you become 10 involved in that process? Because I didn't -- I didn't 11 see anything when you were describing your jobs to me 12 where you were involved in that process. 13 A In 2004, 2005, 2006, I think even into 2007, I 14 was part of the pricing committee, and I did oversee 15 investor relations. So I interacted quite a bit with 16 our capital markets group. 17 I did not directly oversee the sale of our 18 loans to our secondary markets, but I have had 19 interaction with capital markets either through a 20 pricing committee or through investor issues. 21 Q Okay. Do you have any other jobs you performed 22 for Ameriquest that we haven't discussed? 23 A Well, I mean, I was on various committees over 24 time. You know, being on the pricing committee was not 25 part of my job description ever, but it was something I 58 1 did. 2 Q Well, but you got paid for it as part of your 3 job; correct? Or were you doing that on a volunteer 4 basis? 5 A I apologize. You had asked me about kind of my 6 oversight, and that's what I did. I was asked to be on 7 the pricing committee. I was asked to be on the credit 8 committee at one point. I oversaw the credit committee 9 at one point. 10 You know, was that part of my day-to-day job? 11 Yes. I don't think those were ever part of my job 12 description per se. 13 Q Well, I want to be clear. I don't care what 14 your job description is. I want to know everything you 15 did when you were employed by Ameriquest. 16 Was there any other committees you were on, any 17 other tasks you undertook that we haven't discussed? 18 A I don't know if I could list all the tasks I've 19 ever done at Ameriquest. 20 Q In general. I'm not asking if you cleaned up 21 the kitchen one day. 22 A Like I said, I was a member of the credit 23 committee, and chairman of the credit committee at 24 certain points in time. 25 Q Let's stop there just for one second because I 59 1 want to know: What is the credit committee? 2 A The credit committee was the committee that 3 oversaw changes, additions, subtractions to underwriting 4 guidelines, to products, changes or deletions of 5 products. Basically issues related to the credit of our 6 loan portfolio or particular loans. 7 Q When did you hold that title? 8 A I would say -- the credit committee, I would 9 say from the beginning of 2006 until the beginning of 10 2007, as kind of chair or co-chair of the credit 11 committee. I was a member probably a year prior to 12 that. 13 Q So you were the chair from, basically, 2006 to 14 early 2007, and you were a member from 2005 to 2006? 15 A Correct. 16 Q All right. So I'm sorry. Were you starting to 17 tell me something else about the credit committee? 18 A I don't think so. 19 I think the other thing we talked about was the 20 pricing committee. I was a member of the pricing 21 committee from, I guess -- again, early 2006 until the 22 beginning of 2007. 23 Q So you were just a member of that group? 24 A Correct. 25 Q Okay. So when you were on the credit 60 1 committee, did you ever deal with issues relating to 2 allegations that Ameriquest account executives were 3 falsifying loan documentation or income information? 4 A No. 5 Q So when you were talking about underwriting 6 guidelines, things like that, that never came up? 7 A The credit committee, I think, was -- we would 8 have taken recommendations from other groups who may 9 have been generating information like that, but I don't 10 know if we were looking specifically at particular loans 11 or issues. We looked at guidelines that would enhance 12 or improve the product that we were producing. 13 Q Okay. So back when we were talking about the 14 pricing committee, you oversaw investor relations, I 15 think is what you said to me? 16 A Well, yes. Yeah, that's correct. It doesn't 17 have anything to do with the pricing committee. But, 18 yes, investor relations was one of the groups that was 19 part of the business controls. 20 Q Well, you said that to me when I was taking 21 notes on that, and that's what I put in there, so.... 22 A Okay. 23 Q What do you mean by "oversaw investor 24 relations"? 25 A As the senior vice president of business 61 1 controls, investor relations was one of the departments 2 that reported to me. 3 Q And what did Investor Relations do? 4 A They worked with, essentially, our investors 5 who were completing due diligence on loan pools that 6 they were purchasing from us. 7 Q So did the issue relating to allegations of 8 falsification of income documentation arise in that 9 context? 10 A I believe so, yeah. 11 Q How? 12 A I don't recall a specific issue, but I know 13 that, you know, over time the issue of a falsified 14 document would be raised by an investor as an issue with 15 a loan that they were reviewing. 16 Q Okay. Did you become aware that it became a 17 common allegation against Ameriquest account executives? 18 MR. DAVIES: Let me object. 19 MS. HUELSMAN: That's fine. You objected. 20 BY MS. HUELSMAN: 21 Q You may answer the question. 22 A I would say, you know, misrepresentation or 23 falsification of income -- I don't know the definition 24 or how to define "common," I guess; but it was an issue 25 that was raised, yes. 62 1 Q Well, you've been involved in a lot of the 2 complaints that have been made, legal and otherwise, for 3 the last several years against Ameriquest; correct? 4 A Correct. 5 Q I've seen a lot of them, and there's a lot of 6 them making accusations that account executives were 7 falsifying documentation. 8 Do you -- are you familiar with some of those 9 allegations? 10 A I'm familiar that, yes, that's an allegation 11 that has been made. 12 Q There were things about -- comments made about 13 things called the ART department where A.E.s would talk 14 about practicing falsifying people's signatures and 15 falsifying information and cutting and pasting. 16 Have you seen those allegations? 17 A I've read those articles, yes. 18 Q Okay. And you've seen statements made by 19 former employees talking about them doing that? 20 A Yes. 21 Q So when I talk about that, you know what I'm 22 talking about? 23 A Yeah, I know what you're talking about. 24 Q Okay. So when you were in these various and 25 assorted roles, did you do any investigation of those 63 1 allegations in those complaints? 2 A Yes. 3 Q Okay. Did you find there was any veracity to 4 them? 5 A I mean, if the question is, did I ever see a 6 falsified document that either an employer or borrower 7 falsified and we proved that, yes, I have. 8 Q I'm not asking about borrowers. I'm asking 9 about allegations made against account executives. 10 That's what I'm talking about. 11 Okay. So did part of your group investigate 12 these complaints -- these allegations that account 13 executives were regularly falsifying income 14 documentation? 15 MR. DAVIES: I'm going to object that -- he's 16 testifying. You're not testifying. 17 MS. HUELSMAN: I agree. 18 MR. DAVIES: So, I mean, you're asking -- your 19 question is confusing. Why don't you ask him a question 20 instead of testifying? 21 MS. HUELSMAN: Well, now you've just 22 testified. But I asked him a question. He can answer 23 it. 24 THE WITNESS: Can you repeat the question for 25 me? 64 1 (The record was read by the deposition 2 officer as follows: 3 "QUESTION: So did part of your group 4 investigate these complaints -- these 5 allegations that account executives were 6 regularly falsifying income documentation?") 7 THE WITNESS: We did investigations where the 8 accusation or allegation was the falsification of 9 documentation by an employee of Ameriquest, yes. 10 I do not know how to define "regularly" or what 11 that necessarily means. 12 BY MS. HUELSMAN: 13 Q Why don't you tell me how often you did it. 14 A Again, it would be pure speculation for me to 15 try to assign a number to that. 16 Q Well, are you capable of measuring a percentage 17 of how much of your work was involved in anything? 18 Because I can't seem to get you to give me any idea of a 19 measure of how much you were directing any of your 20 attention towards anything. 21 A Again, when it comes to this issue, out of the 22 thousands of issue types that we looked at and I dealt 23 with in my positions, it would be speculation for me to 24 assign a percentage or a number. 25 Q I'm asking you to give me your best estimate. 65 1 A I don't think I can do that. It would be a 2 guess. 3 Q So are you unable to categorize or give a 4 percentage to any of the work that you did, about how 5 much of your time was devoted to any particular thing, 6 or is it just this that you can't measure? 7 A Off the top of my head, I think it would be 8 hard for me to categorize any of those issue types. I 9 mean, any of the types of issues that we dealt with. 10 Q And you're president of Ameriquest? 11 A Correct. 12 Q All right. So in 2002, is there any other 13 committees you were on that we haven't talked about? 14 A Those are all that I can recall right now. 15 Q And what did the pricing committee do? 16 A Discussed the pricing parameters that were set 17 within the price model for our various products. 18 Q And so can you tell me what that means? 19 A We would -- there are -- within the pricing 20 that would be offered through our company, there have to 21 be, I guess, parameters set based on secondary markets, 22 what investors were willing to pay for loans. And so 23 those change daily, hourly. And so as the pricing 24 committee, we would look at that information and 25 determine where to set those particular parameters on 66 1 our loan products. 2 Q I thought you just said to me a few minutes ago 3 that was not measurable because these loans were pooled. 4 A What I said before was it's very difficult to 5 measure the particular profit of an individual loan 6 prior to the sale of that loan. 7 Q Wasn't that what you described to me that you 8 were trying to do in the pricing committee? 9 A We were not trying to price particular loans. 10 We were trying to set the pricing parameters for our 11 price model in order for all loans to be priced. 12 Q Right. But it's then the price model that 13 ultimately decides the cost on a particular loan; 14 correct? 15 A The price model, I guess, ultimately shows what 16 the rate and fees and other characteristics of the loan 17 are, which then once the sale of that loan in a pool of 18 loans is completed, then you could potentially try to 19 determine value of that individual loan. 20 Q Okay. But in order to set the pricing 21 parameters, you have to figure out in some kind of 22 anticipatory fashion what the profit is going to be on 23 each loan that's generated through each particular price 24 model; correct? 25 A I don't think we ever were looking at, you 67 1 know, determining the profitability of every particular 2 loan. We were looking from that pool standpoint of 3 loans; and, you know, what each individual 4 characteristic of a pool of loans would be worth to our 5 investors who were purchasing loans. 6 Q Right. And each pool is comprised of a whole 7 bunch of loans that are put together, and each one of 8 those has to have a certain profit on them, otherwise 9 you don't get the aggregate profit; correct? 10 A No. 11 Q "No"? 12 A Within a pool of loans, there are going to be 13 loans that are -- that lose money. So each loan is not 14 profitable that we produce, no. 15 Q That's not what I asked you. I said: Each 16 loan has to have a certain profit or loss that 17 ultimately gets to the aggregate profit; correct? 18 A I don't think we've -- you know, as a company, 19 we've ever gone there. It is so difficult to get down 20 to a certain loan, and we don't sell single loans. So 21 you can't say what the value of the loan is because we 22 don't sell single loans. 23 Q You're telling me nobody at Ameriquest has ever 24 calculated the potential profit on an individual loan? 25 A I don't know. I have not. 68 1 MS. HUELSMAN: We need to take a break. 2 (Recess taken.) 3 BY MS. HUELSMAN: 4 Q Okay. So we're back on the Empower system in 5 2002. 6 A Yes. 7 Q Okay. So the system would generate the 8 information. The A.E. would then go into the price 9 model and put information in, and ultimately try and 10 figure out what product he or she would offer the 11 borrower; is that correct? 12 A Generally, yes. 13 Q Okay. When would that not be the case? 14 A I say "generally" meaning that would have been 15 the normal policies and procedures. I can't verify that 16 that happened 100 percent of the times. 17 Q Well, right now I'm just asking you to talk 18 about generally what happened. I understand there's 19 also something odd that happens in the course of 20 business. 21 All right. And then how would that information 22 be conveyed to the borrower? 23 A I believe a couple ways. One could be a verbal 24 discussion, either in person or over the phone with the 25 borrower. As well, if that process had taken place 69 1 within the first 72 hours of the application, the 2 borrower would then receive RESPA documentation that 3 would reflect some of that information. 4 Q But that wasn't handled by the A.E.; correct? 5 A No. I believe that would have been a processor 6 function. 7 Q Okay. And that would have been in the form of 8 a good faith estimate and truth in lending disclosure 9 document, et cetera? 10 A Correct. 11 Q All right. So let's take a look at Exhibit 1. 12 Okay. This is a handwritten application. And I'm 13 assuming since you didn't personally get involved with 14 this loan, you have no idea who completed it; correct? 15 A Correct. 16 Q But it's signed on page 3 by Michael Thomas. 17 Do you see that? 18 A Yes, I do. 19 Q Okay. So that would have been an Ameriquest 20 account executive? 21 A That would have been the process with the 22 interviewer, who then signed. That would have been the 23 account executive. 24 Q Okay. And the (800) number that's written down 25 there, is that to go to Ameriquest's main office, or 70 1 would that have been a local phone number for the 2 Seattle office there on Third Avenue Northeast? 3 A I think the general practice would have been 4 the local phone number. I'm not sure if this is their 5 Seattle office's local phone number or not. 6 Q Okay. And so the information on this document 7 would have then been entered into the computer system; 8 correct? 9 A Yes. 10 Q The Empower system? 11 A Correct. 12 Q Okay. See at the top of the first page, upper 13 left-hand corner, it's got the amount listed there, and 14 an interest rate. 15 A Correct. 16 Q And then it's marked that it's an ARM in the 17 box a little more over to the right? 18 A Yes. 19 Q Who would have filled that information in? 20 A I would say that there's one of two parties 21 typically that would have filled that in. If it was a 22 phone transaction that was taking place, then the 23 account executive -- well, are you talking about -- I'm 24 sorry. Let me back up. Just that particular top line? 25 Q Exactly. 71 1 A Oh, okay. I think typically that would have 2 either been the account executive or the loan officer. 3 Q Usually borrowers wouldn't, you know -- 4 A Correct. 5 Q -- fill out the interest rate. 6 So where would the account executive get the 7 information for the interest rate, say, to fill in on an 8 application? 9 A My assumption would be from the price model. 10 Q But this is when they're taking an 11 application. So how could the price model be used 12 before the information is put into the computer system? 13 A I guess the assumption is that this information 14 is being entered there at that point and not a later 15 point. I think, in my experience, this top line of 16 information would not be entered at the initial 17 application, but would be entered at a later point in 18 time. 19 Q Okay. So even though the account executive 20 would then go put this information into the computer 21 system, he or she would come back and handwrite in on a 22 handwritten application? 23 A Potentially, yeah. 24 Q Why? 25 A To complete the information on the application. 72 1 He may not -- you know, not only that information, but 2 there may be other information that you don't get 3 completed the first time that you go through the 4 information. 5 Q Okay. I'll just note the date of the 6 signatures on here is October 2nd, 2002. (Indicating.) 7 A Okay. 8 Q Do you see that? 9 A Yes. 10 Q It looks like everybody's hand-dated that -- 11 A Correct. 12 Q -- next to all the signatures and initials 13 there. Okay. 14 MS. HUELSMAN: We can mark this as Exhibit 2. 15 (Whereupon Plaintiffs' Exhibit 2 was marked 16 for identification by the deposition officer 17 and is attached hereto.) 18 BY MS. HUELSMAN: 19 Q You guys marked all of the documents you 20 produced to me as "confidential," which I'm fine with 21 just because it's got their personal financial 22 information. But I want to clear that I'm not agreeing 23 to have this deposition be marked as confidential. 24 MR. DAVIES: Well, it's your clients' info, 25 so.... 73 1 MS. HUELSMAN: I think we can agree that if we 2 produce any exhibits that contain Social Security 3 numbers, that we can redact them. I think I took them 4 off the applications; but if I didn't, then I will do so. 5 MR. DAVIES: You took it off this one. 6 MS. HUELSMAN: Yeah, the application. 7 And let me check this. I don't think there was 8 anything in this document that had that. No, it 9 didn't. Okay. 10 BY MS. HUELSMAN: 11 Q Okay. So can you tell me what Exhibit 2 is? 12 A It would appear to be an initial RESPA package. 13 Q So this is the initial disclosures that have 14 to be made to a borrower within three days of making an 15 application; correct? 16 A Correct. 17 Q Okay. So the date I see in these documents is 18 September 26th, 2002. 19 A Correct. 20 Q Okay. So is the reasonable assumption that the 21 Busbys applied for a loan prior to September 26th, 2002 22 with Ameriquest? 23 A I would say either on or prior to. 24 Q On or prior to? 25 A Correct. 74 1 Q Okay. And would this document -- would these 2 documents -- I understand you said the processor 3 would -- the loan processor would have this process 4 started, but would the documents actually be printed 5 there in the branch, and then either given to the 6 borrower, or mailed out, or are those generated from 7 some other facility? 8 A I believe at this point in time they were 9 generated by a third party for us, but I'm not 10 100 percent certain -- 11 Q Okay. 12 A -- about the time frame. It could have been -- 13 if it was not that process, it would have been a process 14 where it was printed by the loan processor and then 15 mailed out. 16 Q Okay. 17 A But I believe we were using a third-party -- 18 Q Third-party vendor? 19 A -- vendor connected to Empower to do this at 20 this point. 21 Q Okay. So does that mean there should be 22 another application someplace that's either dated on or 23 before September 26th, 2002 that was submitted by the 24 Busbys? 25 A I don't know if I follow you, the question. 75 1 Q These documents are generated when a borrower 2 makes an application for a loan to Ameriquest; correct? 3 A Correct. 4 Q Okay. And since it had to have been done on or 5 before September 26th, 2002, so that this would be -- 6 this packet would be generated, shouldn't there have 7 been a loan application that's dated on or before 8 September 26th, 2002? 9 A Yes. It would seem logical that there's a loan 10 application that was taken prior to this time or at this 11 time. 12 MS. HUELSMAN: Okay. We'll go ahead and mark 13 this as Exhibit 3. 14 (Whereupon Plaintiffs' Exhibit 3 was marked 15 for identification by the deposition officer 16 and is attached hereto.) 17 BY MS. HUELSMAN: 18 Q So this is the printed loan application -- 19 A Correct. 20 Q -- or computer-generated, I guess I should 21 say -- that was in -- produced to us by Ameriquest; and 22 it's also signed by everybody on October 2nd, 2002. 23 Do you see that? 24 A I do. 25 Q Okay. So do you know of any other loan 76 1 application that I should have that's actually dated on 2 or before September 26th, 2002? 3 A Well, the printed application that is 4 Exhibit 3, is typically generated with the loan signing 5 package. 6 Q Okay. 7 A So it would be appropriate that this would have 8 been generated either on or around the time the loan was 9 signed, and then signed by the borrower. The prior 10 Exhibit 1, printed application was -- 11 Q Was hand-printed? 12 A Correct. 13 Q So we're not confused. 14 A -- hand-printed application, as you mentioned, 15 was signed by the loan officer and the borrowers, it 16 appears, on the 2nd; but I don't think that necessarily 17 implies that the information was completed on that day. 18 It could have been completed prior to that day; it just 19 wasn't signed by the parties until that date. 20 Q But it would have been input into the computer 21 system; correct? 22 A Correct. 23 Q On or before September 26th, 2002, so that this 24 package got generated -- 25 A Correct. 77 1 Q -- correct? 2 A Yes. 3 Q So we should be able to look in the information 4 in the computer system to ascertain when that 5 information was entered into the system; correct? 6 A Yes. 7 Q And that would be the date that RESPA becomes 8 triggered, and a loan application is submitted; correct? 9 A Correct. 10 Q So turn to -- the documents are stamped -- I'm 11 sorry -- on the RESPA packet. "69." 12 A Okay. 13 Q Do you see that? 14 A Yes. 15 Q Okay. So this is a good faith estimate, and it 16 shows an interest rate of 11 percent. And I compare 17 that to the 8 and a half percent that is on both of the 18 loan applications both handwritten and typed in. 19 A Okay. 20 Q Can you explain to me the difference in the 21 interest rate between the loan applications and the good 22 faith estimate? 23 A I don't know if I can explain in this 24 particular situation the difference. My general 25 assumption would be, you know, when you are initially 78 1 taking information to enter into the Empower system, 2 which triggers RESPA and the sending of this package, 3 there is no verification of information. 4 Most information at that point in time -- 5 there's a lot of, you know, verification that needs to 6 be completed. I guess, fluidity to some of the 7 information. You're estimating a value of the 8 property. You're getting a verbally estimated income 9 number from a borrower. Things like that. 10 So it is not at all uncommon for a good faith 11 estimate to have one set of loan terms, and then the 12 final loan terms to be different because of those 13 variables, or through negotiation, which may change one 14 to the other. 15 Q Right. But on the handwritten loan application 16 that was gone back in and filled in, you said. 17 Supposedly, you would presume, after somebody had looked 18 at the price; correct? 19 A Well, I think -- 20 Q The price model. I'm sorry. 21 A I think it would not have been uncommon for 22 that information in Section 1 of the handwritten 23 application to be completed just prior to the signing of 24 the loan when the final terms have been determined. 25 Q So somebody's going back and changing or 79 1 adding information into a handwritten application at 2 final? 3 A Correct. 4 Q Okay. So -- all right. And so, also, on this 5 good faith estimate we see the loan amount here is 6 entered in as $200,000 versus 281,250, which ultimately 7 ends up on the loan applications; correct? 8 A Yeah, I see that. 9 Q Okay. So shouldn't we have an application that 10 coincides with this good faith estimate; that they're 11 applying for a loan for $200,000 versus 281-; that 12 they've been talked to about a rate that's in the 13 11 percent range, rather than 8 and a half? 14 A I don't -- I mean, within our policies and 15 procedures, I don't think there's a requirement that the 16 application had -- that the URLA had to be completed, 17 the handwritten one, at the initial call with all the 18 full information. 19 I think it was very common for -- like I said, 20 in Section 1 for some of that information to be 21 completed or additional information to be added to that 22 handwritten application after the initial conversation 23 between the borrower and -- or the applicant and the 24 employee. So I don't find that unusual. I think it's a 25 pretty common practice. 80 1 Q Right. But what I'm looking for is the 2 application that in any way coincides with this good 3 faith estimate, and I don't have it here. 4 So do you know where it is? Is it in the 5 computer system? Is there another handwritten one? 6 A I don't -- I don't know where it is, and I 7 don't know if there is one. 8 Q Well, would it be in the computer system? 9 A I think the computer within Empower, you can 10 see -- you don't see an application. You can see the 11 data that was input initially. You can see the data as 12 it changes over time, and then through approvals. 13 Q So that's what we need is that information to 14 see how it was initially entered, and how it changed 15 over time; correct? 16 A Correct. 17 Q Okay. So that's what I need. 18 A I would just say: I think that, you know, the 19 RESPA information, the 200,000, the 11 percent is what 20 you're going to see as what was initially entered into 21 the system. But, yeah, you can see that input into 22 Empower. 23 Q Right. And that's what I'm looking for, and I 24 don't have that. 25 Okay. And then that would correlate to -- if 81 1 you want to flip back one page to 68. 2 A Okay. 3 Q The Truth in Lending Disclosure Statement. 4 A Yes. 5 Q It's got an APR of 11.864, which would coincide 6 with, you know, the 11 percent rate that we see on the 7 G.F.E.; correct? 8 A Right. 9 Q Now, we do see the payment schedule here. It 10 lists 359 payments at 1904, and then one final payment. 11 Do you see that? 12 A I do, yes. 13 Q This is an adjustable rate loan. So can you 14 tell me why it doesn't -- the disclosure doesn't show 15 the change -- the anticipated change in the payments? 16 A I think, without diving into this particular 17 loan -- but I think, in general, on an adjustable rate 18 loan when you see a payment schedule like this, when the 19 Truth in Lending is prepared, it is anticipating the 20 adjustments based on current market conditions. So you 21 know what current rates would be that would determine 22 the adjustments that were to be made. 23 In a case like this, what it tells me is that 24 the initial interest rate and the other features -- the 25 margin and index that were being used for this 82 1 adjustable rate -- at the time indicated that there 2 would be no adjustments, assuming that the market and 3 the indices stayed the same over time. 4 Q Okay. So I just want to be clear. Your 5 testimony is that this model is anticipating that their 6 payment would never change over the life of the loan? 7 A Other than the last payment. 8 Q Right. 9 A It shows it as one separate payment. But, yes, 10 based on the conditions at that current time, it's 11 indicating that there would be no change in payment. 12 Q Okay. And so where we would get the model upon 13 which this is calculated; the system that's determining 14 that over 30 years that the rate is never going to 15 change? 16 A I mean, you would need the variables from the 17 price model. 18 Q So I need that information, too, to be able to 19 ascertain why this got generated the way it did? 20 A Correct. 21 Q Okay. So that information is also in the 22 computer system; correct? 23 A In Empower, yes. Correct. 24 MS. HUELSMAN: Okay. I'll be needing that 25 information as well, Counsel. 83 1 BY MS. HUELSMAN: 2 Q Okay. And the rest of these forms are just the 3 forms that are required to be sent out. You know, 4 hazard insurance, and things like that; correct? 5 A It appears to be the typical RESPA package, yes. 6 Q Okay. 7 MS. HUELSMAN: This is Exhibit 4. 8 (Whereupon Plaintiffs' Exhibit 4 was marked 9 for identification by the deposition officer 10 and is attached hereto.) 11 BY MS. HUELSMAN: 12 Q Can you tell me what this letter and attachment 13 are? 14 A It appears to be, I guess, kind of an 15 introduction letter to an applicant at Ameriquest, and 16 then a checklist of potential documentation needed to 17 complete a loan application. 18 Q Okay. Is this a standard letter that goes out? 19 A I believe at that time, yes, it was. 20 Q Okay. And, again, I mean, when I'm talking 21 about this loan, I am talking about, you know, what was 22 going on at this time. I'm not trying to trip you up 23 and have you talk about stuff that's going on now. 24 Okay? 25 A All right. 84 1 Q So I notice that there isn't anything marked 2 on this checklist that's attached. 3 A Correct. 4 Q Can you tell me why this letter was sent if 5 there was nothing else that the Busbys needed to 6 provide? I guess, would this go out even if they don't 7 need to give anything else? 8 A I don't know. I don't know if this was an 9 automatically generated form, or if it had been sent by 10 the branch personnel. 11 Q And if I got the information from the computer 12 system, would I be better able to ascertain that? 13 A I believe in Empower you could determine 14 whether it was automatically generated or if an employee 15 had generated it. I believe you could -- 16 Q Clicked on something directly to generate it? 17 A Right. 18 MS. HUELSMAN: Exhibit 5. 19 (Whereupon Plaintiffs' Exhibit 5 was marked 20 for identification by the deposition officer 21 and is attached hereto.) 22 BY MS. HUELSMAN: 23 Q Are you familiar with this document? 24 A Yes, I am. 25 Q It's titled "Loan Approval" at the top? 85 1 A Correct. 2 Q Can you describe to me what this form is used 3 for? 4 A I guess I would describe this as a summary form 5 that is printed out of Empower detailing the terms of 6 the loan approval, and then inserted into a physical 7 file. 8 Q Okay. So this is -- this form is done after 9 kind of the end of the process? 10 A I think once you -- once a loan has been -- you 11 know, once an application has been entered and credit 12 has been pulled, you can generate this form at any point 13 in time. But it would -- for instance, if it was 14 generated prior to an approval, at the bottom part you 15 would see no names or dates under the "approval" 16 section. 17 Q Okay. 18 A So I think it's kind of a standard form that 19 can be generated at any time in the process. 20 Q Okay. Well, I see down here at the bottom we 21 have the "initial approval" category and the "last 22 approval" category. 23 A Uh-huh. 24 Q And both of them have entries dated 25 September 2nd, 2002? 86 1 A Yes. 2 Q Can you explain that to me, because that looks 3 to me like when the loan was signed? 4 A Yeah. I mean, it appears to be submitted by 5 Chelan Hunt, who I believe was the loan processor in 6 this branch, on the 2nd. And then it was a Level 3 7 approval by Christina Sosa. 8 So the initial approval and last approval being 9 the same date, I'm going to make the assumption that the 10 initial terms and underwriting was acceptable. And it 11 was approved at that point in time. I would say it's 12 not unusual for a loan to be approved and then signed on 13 the same day. 14 Q Okay. How could it be done so fast? 15 A Well, it's all -- the work is done within the 16 Empower system. So when the processor would, you 17 know -- it's not a technical term, but press the button 18 or click the button in Empower to submit a loan, it 19 would automatically send that information into the 20 approval queue of a corporate approver, who could then 21 potentially within seconds see that, go in, review the 22 file, approve it, and send the approval back. 23 And then once your loan is approved and all 24 conditions are cleared, you can print docs within 25 minutes -- 87 1 Q Okay. 2 A -- and be ready to sign. 3 Q Okay. And do you have to have your appraisal 4 back at that point, and your title insurance policy 5 ready to go? 6 A That would have been policy and procedure, yes. 7 Q Okay. So -- because you should kind of know 8 your universe at the point when someone is signing their 9 loan docs? 10 A Correct, yeah. 11 Q Yeah. 12 A Within Empower, within our underwriting 13 guidelines, those are two of the things that are 14 required. 15 Q And, you know, I didn't ask you this when we 16 first started, and I should have. It's one of my 17 standard questions. But did you review the Busbys' loan 18 file before you came here to testify today? 19 A I briefly reviewed it, yes. 20 Q So can you explain to me -- kind of in the 21 middle, I guess, bottom two-thirds of the page, it's got 22 the conditions. I see two conditions there. 23 "Outstanding checklist item," "Year to date profit and 24 loss and copy of business license." 25 Do you see those two entries? 88 1 A Yes, I do. 2 Q And it says that they were conditions that were 3 satisfied? 4 A Yes. 5 Q Okay. Nowhere in the loan file is there a 6 year-to-date profit and loss statement, nor is there a 7 copy of a business license. 8 Can you explain to me why those two items are 9 marked as being satisfied? 10 A I guess I cannot explain why that is if they 11 are not in the loan file. 12 Q When you reviewed the loan file, did you see 13 them? 14 A I do recall seeing those things when I reviewed 15 the loan file. 16 Q So who would have marked that these conditions 17 were satisfied, or made the entry? 18 A Typically the practice would have been the loan 19 processor would have been the one to satisfy those 20 conditions, if they were within their, I guess, approval 21 authority for that particular condition. And I believe 22 conditions such as those would have been generally 23 within a loan processor approval authority. 24 Q Okay. So if there is no year-to-date profit 25 and loss and no business license in the file, then the 89 1 processor who marked these two satisfied was falsifying 2 this record; correct? 3 A I don't know if I could assume what the 4 processor was thinking because -- just as a side to 5 this, being a stated income loan, as I see on the 6 document type at the top of the loan, there would be no 7 requirement on a stated income loan for a year-to-date 8 profit and loss statement. 9 Q Well, that's not what I asked you. It's got 10 conditions that are marked here on this. I didn't put 11 them in. My client didn't put them in. Somebody at 12 Ameriquest did. And it says that those are conditions 13 to making the loan, and it says that they're satisfied. 14 And since neither one of those documents are in 15 the file, this has got false information on it; correct? 16 A Again, they could have been in the file at some 17 point, and they're not in the file that I reviewed 18 yesterday. I don't know. I don't know the intent of 19 the processor at that point in time. 20 Q That's not what I'm asking you about, sir. 21 What I'm asking you is: If those documents do not exist 22 in the file, and at this point there's no evidence they 23 do, then this is incorrect, is it not? 24 MR. DAVIES: Well, I'm going to object. He 25 testified that they're not in the file now. And so I 90 1 think what he's trying to explain to you is that he 2 doesn't know whether they may have been presented to the 3 processor and been in the branch or not. He doesn't 4 know that. 5 BY MS. HUELSMAN: 6 Q So what other documents are missing out of this 7 file? 8 A I did not review the file to try to determine 9 what documents are missing. 10 Q Okay. Well, I'm going to request, then, that 11 somebody does, since you're contending that there may be 12 missing items. You can get back to me regarding what 13 else might be missing. 14 Normally if those documents are required to be 15 produced by a borrower, wouldn't copies be kept in the 16 file? 17 MR. DAVIES: I think it mischaracterizes his 18 testimony. He said they wouldn't have to produce those 19 for a stated income loan. 20 MS. HOLSMAN: Well, I think he was going to 21 answer the question, and you've now given him direction 22 for how to answer it. 23 BY MS. HUELSMAN: 24 Q But I want you to answer the question anyway. 25 A Can you repeat the question? 91 1 (The record was read by the deposition 2 officer as follows: 3 "QUESTION: Normally if those documents are 4 required to be produced by a borrower, wouldn't 5 copies be kept in the file?") 6 THE WITNESS: I think if -- being a condition 7 that was required within the system, it either needs to 8 be satisfied or waived. And if it says, as indicated 9 here, "satisfied," it would indicate to me that those 10 documents would have been required and in the file. 11 BY MS. HUELSMAN: 12 Q Okay. Because if we look at the loan 13 application, Exhibit 1, somebody bothered to keep a 14 photocopy of an alleged -- of a purported business card. 15 Do you see that? 16 A Yes, I do. 17 Q So wouldn't it be odd that you'd keep a copy of 18 a business card, but not copies of a profit and loss and 19 a business license? 20 A Not for a stated income loan. That would seem 21 to be a fairly normal practice. 22 Q To keep a copy of a business card but not a 23 profit and loss and a business license? 24 A On a stated income loan, I don't believe a 25 profit and loss or a business license are required. 92 1 Q Except that it was required on this loan. So 2 I'm not asking you what happens generally with a stated 3 income loan. I'm talking about this loan. And these 4 were conditions of this loan? 5 A I guess -- and maybe I'll try to answer with: 6 A stated income loan, those items I don't believe have 7 ever been required for the underwriting of a stated 8 income loan. 9 Q But they were required in this loan. 10 A I don't know why these conditions are there. 11 Q I don't care why. They're here, and they're a 12 condition. So irregardless if there was never any other 13 stated income loan made in the history of Ameriquest 14 that required these documents, this one did -- correct? 15 -- because it says so right here? 16 A This shows that the conditions are here. These 17 conditions do not override our underwriting guidelines. 18 Q Well, who would put these here, then? 19 A They're auto-generated by the system. 20 Q And somebody typed in "satisfied"; correct? 21 A Yes. 22 Q They didn't say, "Delete," "These aren't 23 necessary," "We don't need these." 24 They put "satisfied"; correct? 25 A That appears to be the case, correct. 93 1 Q Now, let's look at the rest of this document. 2 Go up to the Loan Summary category. 3 A Yes. 4 Q Okay. Do you see the revenue factor and 5 revenue amount over in the bottom right-hand corner? 6 A I do. 7 Q Okay. What does revenue factor represent? 8 A We discussed that a little bit before, I think, 9 with the price model. It's a number that's generated 10 within the pricing of a loan that an account executive 11 would use to determine their monthly compensation. 12 Q So this revenue amount -- this $12,307.50 -- 13 this represents how much the account executive is going 14 to earn in commission on this loan? 15 A No. It's a number that's used to -- maybe I 16 can back up. 17 Generally, over time, the account executives 18 were compensated on a monthly basis on a factor or a 19 percentage of their total revenue generated for a month. 20 Q But that's not what this says. This has got a 21 revenue amount of $12,307.50. What does that mean? 22 A I don't know if I quite understand the 23 question. 24 Q Well, I didn't make this entry here. This is 25 an Ameriquest entry. 94 1 A Yes. 2 Q Explain to me what it is. 3 A In the pricing model, when all the 4 characteristics have been either entered or gathered of 5 the loan, that pricing model generates the revenue 6 factor. 7 So in this case on this document, the revenue 8 factor is 104.376, I believe. That factor is then used 9 to determine the revenue amount. The way that works -- 10 I guess the simplest way to describe that is you 11 subtract 100 from that revenue factor. Take the 4.376, 12 make that a percentage, and multiply that times the loan 13 size. That gives you the revenue amount. 14 Q So that's profit on this loan; correct? 15 A No. 16 Q Okay. What is it used for? What is that 17 dollar amount used for? 18 A It is used to determine the compensation of the 19 account executives. 20 Q Okay. So who gets 12,207.50? 21 A Nobody. 22 Q Okay. How is it then broken down into meaning 23 cash in somebody's pocket? 24 A The -- and I don't know specifically at this 25 point in time the exact details of the commission plan 95 1 or commission plan for account executives. 2 But over time, it would have encompassed this 3 time. That amount, combined with the revenue generated 4 on any other loans that an account executive would have 5 made in that particular month, would be added together. 6 Say there was -- I mean, I can give you a hypothetical. 7 There were two loans, and both had the same revenue 8 amounts. So there's 24 and 600 -- 9 Q Right. 10 A -- and change in revenue. 11 That would -- if that was their total revenue 12 for the month, that would place them in a tier. Then, 13 say, maybe you get 5 percent of your revenue if you had 14 $24,000 in revenue. 15 So you would take the 5 percent, times the 16 24,000 -- $1200, whatever that might be -- and that 17 would be their commission for the month. 18 Q Okay. So I'm trying to understand how that can 19 be counted as the account executive's revenue, but it's 20 not a measure of profit? 21 A I think, as I was trying to describe before, 22 that it's virtually impossible to determine the value of 23 an individual loan, particularly prior to the sale of 24 that loan and completion of that loan. 25 So this is, I guess, you know, an attempt to 96 1 look at characteristics of the loan. Try to determine, 2 you know, streams of revenue that are generated from 3 that loan, and then apply that to the compensation of 4 the account executive. 5 Q But somebody somewhere is calculating and has a 6 formula to calculate this revenue factor and this 7 revenue amount, and it somehow correlates to profit; 8 correct? 9 A There's a very indirect link to profitability 10 to that number. And it's not zero, but it's not a very 11 high correlation. 12 Q All right. Go down to the conditions again 13 where it says, "Appraisal ordered." 14 A I don't know if I see that one. 15 Q It's in the middle of the conditions. 16 A Oh, okay. 17 Q Okay. So that indicates that the appraisal was 18 ordered, not that it was completed on the date of 19 signing; correct? 20 A That -- I'm sorry. Could you rephrase that 21 maybe? 22 Q It's indicating that the appraisal was ordered. 23 It's not indicating that it had been completed; is that 24 correct? 25 A That stip indicates that an appraisal has to be 97 1 ordered, and somebody needs to sign off on that. 2 Q And it says that it was satisfied -- 3 A Yes. 4 Q -- correct? 5 And this appears to be dated, as far as I can 6 tell, down here at the bottom in the far right, 7 10/10/2002 at 3:27 p.m.? 8 A Correct. 9 Q So at this point when this summary is being 10 done, that's when it was printed; correct? 11 A That would be my belief, yes. 12 Q Okay. And it appears that the conditions that 13 were being satisfied here were marked as being done on 14 10/10/2002; correct? 15 A It appears so, correct. 16 MS. HUELSMAN: Exhibit 6. 17 (Whereupon Plaintiffs' Exhibit 6 was marked 18 for identification by the deposition officer 19 and is attached hereto.) 20 BY MS. HUELSMAN: 21 Q Okay. Why don't you take a look at this 22 document. 23 A Okay. 24 Q So this appears to me to be the appraisal that 25 was done on the Busbys' home. 98 1 A Correct. 2 Q Does this seem correct to you? 3 A Yes. 4 Q Now, this document indicates it was ordered on 5 October 5th -- or completed on October 5th, 2002. 6 It's got a date on the front here of 7 October 15th, but the appraisal itself indicates that it 8 was done on October 5th, 2002. 9 Do you see that? 10 A Yes, I do. 11 Q Okay. So why was Ameriquest having the Busbys 12 sign loan documents on October 2nd when the appraisal 13 hadn't even been completed at that point? 14 A I don't know. 15 Q Well, you just testified a minute ago that an 16 appraisal would normally need to be done before people 17 sign loan documents. 18 A That would have been the policy and procedure. 19 Q Okay. So why was it ignored on this loan? 20 A I don't know. 21 Q Okay. I want to point you to page 128 down at 22 the bottom. 23 A Uh-huh. 24 Q That one indicates that the report wasn't even 25 signed until October 15th, 2002. Do you see that? 99 1 A Yes, I do. 2 Q Okay. So the appraisal wasn't done until 3 October 5th and wasn't signed until October 15th; 4 13 days after the Busbys signed. 5 You don't how that could occur? 6 A I guess I don't know why that occurred. 7 Q Okay. Who would have been overseeing this loan 8 or looking at it to make sure it complied with the 9 normal requirements to have an appraisal done before 10 people signed? 11 A It would have been the processor and the 12 account executive. 13 Q Who was overseeing them? 14 A Typically it would be a branch manager. 15 Q Okay. So in this case, it had to be the 16 account executive, the processor, and the branch manager 17 who were all violating Ameriquest's normal procedures to 18 have an appraisal done before loan signing; correct? 19 A I wouldn't say that's the case necessarily. 20 The branch manager does not look at every single loan 21 that goes through the branch. 22 Q So it would at least be the account executive 23 and the loan processor? 24 A They -- generally the account executive and the 25 loan processor would be involved in this part of the 100 1 process. 2 Q So they're the ones who had to violate the 3 procedures; correct? 4 A I don't know on this particular loan. 5 Q Well, who would have done it, if it wasn't 6 them? 7 A I'm just saying I don't know. Generally in the 8 process the loan processor and account executive would 9 be dealing with this part of the process. I don't know 10 on this particular loan who was doing what. 11 Q But it was in violation of Ameriquest's 12 policies; correct? 13 A It appears to be, yes. 14 MS. HUELSMAN: By the way, those were never 15 produced to me either despite those being requested. So 16 I want those polices and procedures manuals. 17 Exhibit 7. 18 (Whereupon Plaintiffs' Exhibit 7 was marked 19 for identification by the deposition officer 20 and is attached hereto.) 21 THE WITNESS: Can we take a break, maybe after 22 this one? 23 MS. HUELSMAN: No. That's fine. Any time you 24 want a break. 25 (Recess taken.) 101 1 BY MS. HUELSMAN: 2 Q Okay. So we were on Exhibit 7. 3 A Yes. 4 Q Can you tell me what this document is? 5 A It's a settlement statement generated by 6 Ameriquest in regards to the loan. 7 Q The Busbys' loan? 8 A Correct. 9 Q Now, it looks like it was dated October 22, 10 2002? 11 A Correct. 12 Q So that was when kind of the process was 13 completed? 14 A It would seem to be the case, yes. When the 15 loan was funded. 16 Q Okay. So 20 days after they signed, the loan 17 was funded? 18 A Seems to be the case, yes. 19 Q Was that standard for an Ameriquest loan in 20 2002, that kind of time frame between signing and 21 funding? 22 A I would say that's not standard. 23 Q What was the standard, then? Ballpark. 24 A I think the goal was to fund on the day after 25 the rescission. I think that it was standard at that 102 1 time, to the best of my recollection, would have 2 probably been eight to ten days beyond the signing. 3 Q Okay. All right. So do you think the delay on 4 this one could have been because the appraisal wasn't 5 done? 6 A That could have potentially been a reason. 7 Q And this describes the disbursement of funds; 8 where all the money went, essentially? 9 A Correct. 10 Q Okay. Down at the bottom I notice on this that 11 there's "Approved for funding by," and it's got a -- it 12 looks like Aida, A-i-d-a, Arrazola, A-r-r-a-z-o-l-a. 13 Do you see that? 14 A I do. 15 Q Do you know who that person is? 16 A I do not. 17 Q Would that have been somebody at the branch or 18 somebody at, you know, the main office? 19 A I believe that would have been one of our 20 funders at corporate. 21 Q Okay. 22 A But I'm not sure. 23 Q And is it normal for him or her -- I can't 24 really tell -- to have -- are they supposed to sign it? 25 A I don't think it was policy for them to sign 103 1 it. I think this was -- that their name was generated 2 on that -- on the form when it was printed out. 3 Q Okay. 4 MR. DAVIES: That's "Aida." 5 MS. HUELSMAN: That's what I said. 6 MR. DAVIES: You said "Aida." 7 MS. HUELSMAN: Oh. 8 MR. DAVIES: It's my mom's name. That's the 9 only reason I would pick that up. 10 MS. HUELSMAN: Okay. 11 MR. DAVIES: Like the opera. 12 MS. HUELSMAN: Okay. All right. I'll defer 13 to Mr. Davies' pronunciation. 14 Exhibit 8. 15 (Whereupon Plaintiffs' Exhibit 8 was marked 16 for identification by the deposition officer 17 and is attached hereto.) 18 BY MS. HUELSMAN: 19 Q And this is the version of the settlement 20 statement that was signed by the Busbys; is that 21 correct? 22 A Yes. 23 Q Okay. This one is dated up at the top 24 October 9th, 2002. Do you see that? 25 A I do. 104 1 Q So the Busbys' signature is not dated. So was 2 there any way to tell whether this was truly generated 3 on October 9th, or when it was signed, or any way to 4 determine if the Busbys were asked to come back into the 5 branch and sign again? 6 A I don't know if there's any way to determine 7 those things, other than that the form and the date are 8 not changeable things. So, I mean, the only thing I 9 could say with certainty was that this was signed either 10 on or after October 9th. 11 Q Okay. And we're going to get to it in a 12 minute, but Ameriquest has a one-week rescission 13 period -- correct? -- a right to rescind period? 14 A They did, correct. 15 Q So could it be that the Busbys were asked to 16 come back in on the 9th because it was seven days after 17 the signing on the 2nd? 18 A It could be. With the settlement statement, 19 it's fairly common to have -- changes of payoff may 20 change, interest may change, things like that. 21 So it's common to have the borrowers re-sign 22 one, or even more than once, the settlement statement 23 of, you know, until you get to the final figures. 24 Q Okay. Should there be one, though, that was 25 dated also October 2, 2002 that they should have signed 105 1 when they were signing their other documents on 2 October 2? 3 A I believe that would be part of the normal 4 signing package that is produced at the closing of a 5 loan, yes. 6 Q Okay. So if that wasn't in the loan file, that 7 would be another anomaly? 8 A I would say it would have been standard 9 practice to have that in the loan file after the 10 signing. 11 MS. HUELSMAN: Exhibit 9, please. 12 (Whereupon Plaintiffs' Exhibit 9 was marked 13 for identification by the deposition officer 14 and is attached hereto.) 15 BY MS. HUELSMAN: 16 Q And can you describe to me what this document 17 is? 18 A This is the borrower's acknowledgement of final 19 loan terms. So it basically is a document presented at 20 the closing to the borrower that shows the -- whatever 21 the original loan terms were that were input into the 22 system, and then what was the final loan terms were that 23 were approved for the borrower. 24 Q Okay. And this is -- this is an Ameriquest 25 created form; correct? In other words, this isn't like 106 1 a RESPA-required form or anything like that; right? 2 A No. Right. This is an Ameriquest internal 3 document. 4 Q So the information -- the initial information 5 is categorized here as "Original loan terms requested"; 6 correct? 7 A Yes. 8 Q But that doesn't necessarily mean that's what 9 the borrower requested; that's just what was initially 10 input into the system? 11 A The policy would be that those two things would 12 be the same thing. But, you know, what this reflects is 13 what was put into the system. 14 Q Well, yeah. How often does a borrower come in 15 and say, "Hi, I want a loan at 'X' percent"? 16 A I mean, I think it's fairly common, in my 17 personal experience as a loan officer; but it's not 18 every time. 19 Q And so you think a borrower would have come in 20 and said, "I would like my percent rate to be 11 percent 21 or 11.684 percent"? 22 A When I was a loan officer, I had borrowers who 23 came in and said, "I want this percentage rate," or 24 "This loan size," or whatever. But, again, it wasn't 25 everybody. It's just as much -- it would be equally 107 1 common for a borrower not to talk about any terms at 2 all. 3 Q Okay. So you could measure that as a 50/50? 4 A I don't know if I can assign a percentage. 5 It's just experience back in time. It's -- both are 6 common. 7 Q But if a borrower came in and asked for an 8 interest rate, wouldn't they normally ask for a low one, 9 not a high one? 10 A It depends on the time and what rates are -- 11 you know, available at the time. 12 Q Well, given that we can look at this one and 13 see that there was a rate available at 8.858 percent, if 14 they had come in and asked for a rate at 11.6, that 15 would actually be quite a significant difference upward; 16 correct? 17 A That would be higher, yes. 18 Q So, again, we need to look at the computer 19 system to know what was initially input, when; correct? 20 A Yes. 21 MS. HUELSMAN: All right. "10." 22 (Whereupon Plaintiffs' Exhibit 10 was 23 marked for identification by the deposition 24 officer and is attached hereto.) 25 BY MS. HUELSMAN: 108 1 Q Let's go back and look at this one in 2 conjunction with "7" and "8." 3 A Okay. 4 Q Okay. This -- Exhibit 10 looks to me like it's 5 similar to Exhibit 7. In other words, it has the same 6 entries on the right for the disbursements to others. 7 A Yes. 8 Q But it looks like it was also generated on 9 October 9th, 2002, rather than October 22nd, 2002. 10 A Yes. 11 Q Okay. So it's different than Exhibit 8, which 12 is generated on October 9th, 2002 and signed by the 13 Busbys; correct? 14 A It appears to be different, yes. 15 Q Okay. And on Exhibit 10, there's this fax 16 notation down here at the bottom, and then there's also 17 one at the top? 18 A Yes. 19 Q Can you -- it looks to me, in my interpretation 20 of these, that Ameriquest Seattle -- there's a header on 21 here -- or the one at the bottom is from Ameriquest 22 Seattle, because they're faxing it to A.M.C. Region 2 23 at -- on October 16th. A little discrepancy in the 24 times. One says 10:29 a.m. One says 10:12. But I 25 don't know. It says -- they both say "from." 109 1 Can you decipher for me who was faxing what to 2 whom? 3 A I don't think I can. I'm not sure what the 4 headers on this fax mean. 5 Q Okay. 6 A I would assume Ameriquest Seattle is the 7 Seattle branch of Ameriquest. 8 Q Right. Okay. 9 A I do not know what the other number is. I 10 would assume A.M.C. Region 2 would be the -- that would 11 have been -- the name applied to the operations group at 12 corporate funding and underwriting assigned to 13 Region 2. I do not recall if Seattle was part of 14 Region 2 or not. 15 Q Okay. So -- but this one, because it's got the 16 payoff amount, Exhibit 10, to the King County Treasury, 17 is more accurate than the ones the Busbys signed on or 18 after October 9th, 2002 because that one did not have 19 that amount entered in there; correct? 20 A Assuming that that was a bill that was payable 21 and that it appears ultimately it was funded that way, I 22 would say it would be accurate from that standpoint. 23 Q And it looks like it is, because if we go to 24 the Exhibit 7, which is the supposed final one, it shows 25 that the King County Treasurer did get paid? 110 1 A Correct. 2 MS. HUELSMAN: "11." 3 (Whereupon Plaintiffs' Exhibit 11 was 4 marked for identification by the deposition 5 officer and is attached hereto.) 6 BY MS. HUELSMAN: 7 Q So this is the final TILA disclosure statement? 8 A Correct. 9 Q So this should have reflected the correct 10 amount financed and annual percentage rate and the 11 payments -- the monthly payments on the loan; correct? 12 A Correct, yes. 13 Q Okay. And so, again, even though this is an 14 adjustable rate loan, I don't see any indication here on 15 the number of payments that the payment amounts are 16 going to change? 17 A Correct. 18 Q Is that so for the same reasons you testified 19 to earlier when we were looking at the initial 20 disclosures, that according to the model Ameriquest had, 21 that it did not anticipate the payments would change? 22 A Correct. 23 Q But the amount financed that's on this -- 24 A Yes. 25 Q -- it ultimately did change; correct? Because 111 1 the settlement statement amounts changed; is that 2 correct? 3 A I don't know. I would -- I'm not sure. 4 MS. HUELSMAN: Exhibit 12. 5 (Whereupon Plaintiffs' Exhibit 12 was 6 marked for identification by the deposition 7 officer and is attached hereto.) 8 BY MS. HUELSMAN: 9 Q Okay. Did you look at these two documents when 10 you were looking at the file? 11 A Yes. 12 Q So this appears to be a handwritten statement 13 by Mrs. Busby, as well as, again, another copy of the 14 supposed business card; correct? 15 A Correct. 16 Q And it looks, from these fax notations on the 17 business card page, that it was being faxed to and from 18 Seattle to A.M.C. Region 2, on that same October 16th, 19 2002? 20 A Yes. 21 Q There's a handwritten notation on the business 22 card page, and it says, "Stip No. 5." 23 A Yes. 24 Q Do you know what that refers to? 25 A I do not. 112 1 Q Would that be a reference to an underwriting 2 condition? 3 A I don't know in this particular case. The 4 verbiage "stip" generally applies to a underwriting 5 condition that needs to be satisfied. 6 Q And I'm happy to let you go back and look at 7 the underwriting conditions that we looked at. I didn't 8 see anything in there that was looking for a business 9 card. I saw a profit and loss statement and a business 10 license, but I don't see anything about a business 11 card. 12 Do you see something I don't? 13 A I don't. 14 Q And so would a photocopy of a business card 15 equate to a copy of a business license or the profit and 16 loss statement under Ameriquest's underwriting 17 standards? 18 A In -- on a stated income documentation loan -- 19 Q I'm going to interrupt you. Again, I'm not 20 asking you about stated income applications in general. 21 I'm talking about in this case. We have these 22 conditions. They are here in this loan. 23 And I'm asking you if according to underwriting 24 conditions, a business card would supplant -- when 25 there's a requirement for a profit and loss and a 113 1 business license, if a business card could supplant the 2 provision of those documents? 3 A No. 4 Q Thank you. 5 And do you know why a borrower would be asked 6 to handwrite a statement like this? 7 A It's a requirement of our underwriting. 8 Q That the borrower handwrite a note saying "this 9 is what I do"? 10 A I'm going to say it again. On a stated income 11 loan, it's a requirement that the borrower handwrite a 12 letter stating how much they make and where that income 13 comes from. 14 Q And that, again, comes from the underwriting 15 guidelines for a stated income loan; correct? 16 A Correct. 17 MS. HUELSMAN: Also which I've not been 18 required, so I'm going to expect those in my office as 19 well. 20 What number are we on? 21 DEPOSITION OFFICER: "13." 22 (Whereupon Plaintiffs' Exhibit 13 was 23 marked for identification by the deposition 24 officer and is attached hereto.) 25 BY MS. HUELSMAN: 114 1 Q That is the adjustable rate rider that would 2 have -- 3 A Yes. 4 Q -- gone along with the note and deed of trust 5 that we're going to look at in a minute; correct? 6 A Correct. 7 Q And even though Fidelity is listed as the 8 escrow agent in this transaction, the signing actually 9 took place in Ameriquest's office by Ameriquest 10 employees? 11 A I don't know. 12 Q Would the computer system be able to tell us 13 that? 14 A Where the signing actually took place? 15 Q Yes. 16 A I don't believe so. 17 Q Okay. 18 MS. HUELSMAN: Okay. Exhibit 14 is the deed of 19 trust. 20 (Whereupon Plaintiffs' Exhibit 14 was 21 marked for identification by the deposition 22 officer and is attached hereto.) 23 THE WITNESS: Yes. 24 BY MS. HUELSMAN: 25 Q And do you know if the notary on this, Shawn 115 1 Mindak, M-i-n-d-a-k -- Shawn is spelled S-h-a-w-n -- was 2 an Ameriquest employee? 3 A I don't know. 4 Q Okay. And this has a printout on the time -- 5 date and time on it. 10/2/02; 10:48. 6 Do you see that? 7 A Yes, I do. 8 Q So does that indicate when this document was 9 printed at Ameriquest's offices? 10 A Yes. That's my belief that that's what that 11 would indicate. 12 Q The internal computer-generated -- 13 A Yes. 14 Q -- timing? Okay. 15 A Yes. 16 MR. DAVIES: Weren't these all marked in 17 Mrs. Busby's deposition? 18 MS. HUELSMAN: Probably, but I'm not 19 correlating the -- 20 MR. DAVIES: Well, we'll have the same trial 21 exhibit with two different exhibit numbers is all. 22 MS. HUELSMAN: We don't have to use the ones 23 from the deposition. Anyway.... 24 MR. DAVIES: Well, they're the ones that are 25 authenticated. 116 1 MS. HUELSMAN: That's true, but I'm sure we 2 can just agree on that, as long as it's a copy of the 3 same document. 4 Exhibit 15. 5 (Whereupon Plaintiffs' Exhibit 15 was 6 marked for identification by the deposition 7 officer and is attached hereto.) 8 BY MS. HUELSMAN: 9 Q And this is just a photocopy of the actual 10 adjustable rate note, that appears to be signed, 11 initialed by the Busbys; and it appears also to have 12 been computer generated by Ameriquest on 10/2/02 at 13 10:48 a.m.; correct? 14 A That appears to be the case, yes. 15 Q And then all three of these documents have -- 16 the last three we looked at have a stamp on them that 17 somebody is signing off -- they're certifying that it's 18 a true and correct copy of the original. 19 Do you see those stamps? 20 A Yeah, I do. 21 Q Do you know who at Ameriquest or what 22 department, or whatever, would have stamped and verified 23 that? 24 A I think typically the practice would have been 25 the loan processor doing that. 117 1 Q Okay. And then once the -- I'm sorry. Once 2 the loan was signed, what then happened to it? 3 A A file would be put together to be sent to 4 corporate to the funding department so the loan could be 5 reviewed and funded. Certain documents would be -- 6 original documents would be sent to the title company. 7 Basically, the deed and riders were recorded. And then 8 there would be a collateral file built with the original 9 note and some other documentation that is used -- you 10 know, simplistically to say, that collateral file is 11 given to the owner of the file. So if someone purchases 12 that loan, that's what they keep of their ownership of 13 that loan. 14 Q And so they would be the ones that would have, 15 say, the original of Mrs. Busby's handwritten statement, 16 things like that? 17 A No. The collateral file is really the note and 18 the title policy and a few other documents. The 19 original -- for instance, the original income 20 documentation or letter written by the Busbys would be 21 in one of two places; either in the branch file that was 22 kept at the branch or in the corporate file. Probably 23 in the branch file. 24 Q And so once that branch there in Seattle closed 25 up, where did the files go? 118 1 A All the files were sent to our corporate 2 headquarters, essentially. 3 Q Okay. And that's where they would be now? 4 A Yes. 5 Q Okay. 6 A Well, I should say there or in storage. We 7 have storage facilities where we keep everything. 8 Q Okay. I was actually kind of assuming that. I 9 didn't think you probably had them stacked up in your 10 office. 11 A Just want to make sure. 12 Q At least they aren't in a dumpster outside 13 Atlanta. So that's good. 14 Okay. So we're going to discuss -- off the 15 record we kind of already talked about it -- getting 16 access to that. 17 But you would be able to assist us with getting 18 access to that actual physical file; correct? 19 A If we have possession of it, yes. 20 Q Would there be a reason why you wouldn't? 21 A Again, we -- you know, when the branches were 22 closed, they sent all documentation to us. But 23 retention laws don't stipulate that we have to retain 24 documents or files forever. 25 Q Okay. 119 1 A So they could have been destroyed. 2 Q So has there been destruction of files dating 3 back to 2002? 4 A I'm sure, yeah. Because it varies by state. 5 But some states it's six months that you have to retain 6 a file in a branch. So, yeah, I mean, files from 7 2002 -- I'm sure many files from 2002 have been 8 destroyed at this point, and some are being kept because 9 of the particular laws. 10 Q But either way, there would be a record of its 11 existence; and then if it was destroyed, a record that 12 it was destroyed or retained? 13 A It should be, yes. 14 Q Okay. So we'll check on that. 15 Exhibit 16. 16 (Whereupon Plaintiffs' Exhibit 16 was 17 marked for identification by the deposition 18 officer and is attached hereto.) 19 BY MS. HUELSMAN: 20 Q Okay. When you reviewed the file in 21 preparation for this deposition, did you take a look at 22 this document? 23 A No, I have not seen this document before. 24 Q Okay. Do you know who Jeff Reilly is? 25 A I do not. 120 1 Q Are you familiar with the phone number that's 2 listed here -- or fax number? (714) 347-5248. 3 A I am not familiar with that phone number. It 4 would seem to fall into -- we have a lot of phone 5 numbers at Ameriquest that start with 347, so it seems 6 to fall in, potentially, to the purview of phone numbers 7 that we have. 8 Q And this document is my client's writing to 9 someone at Ameriquest regarding their discussion 10 regarding their loan. 11 Do you know where this would have been 12 directed; where in the company it would have been 13 directed? And this -- this would have been sent in 14 probably late 2002, early 2003. 15 A I would assume at that point it would be 16 somewhere within the servicing company. 17 Q A.M.C.? 18 A Yeah, I believe that would have been A.M.C. at 19 the time. 20 Q Okay. So Mr. Reilly could be an employee of 21 A.M.C.? 22 A Yes, could be. 23 Q All right. I just want to take a few minutes 24 to -- tell me, how many times have you testified on 25 behalf of Ameriquest? In deposition, right now I'm 121 1 talking about. 2 A I guess this would be the fourth case. 3 Q And what were the other cases in which you 4 testified? 5 A I testified -- I'm not exactly sure of the 6 names, but Overton versus Ameriquest. 7 Q And that was out of New York; correct? 8 A I think the property -- I testified in Tulsa, 9 Oklahoma. But I think the property was in New York. 10 The borrower was from New York. 11 Q And there was a sanctions issue in that case; 12 correct? 13 A I don't know. 14 MR. DAVIES: I'll object. 15 MS. HUELSMAN: Well, my understanding is that 16 part of it was relating to the allegation that he 17 provided false testimony, so I'm entitled to ask the 18 question. 19 BY MS. HUELSMAN: 20 Q Do you recall being involved in that process? 21 A I'm not even sure. 22 Q There was a representation that you made a 23 deposition that there was no -- and I'm paraphrasing; 24 okay? -- that there was no record that Ameriquest kept 25 of ongoing litigation and the nature of the claims. 122 1 Do you recall those questions? 2 A I do not. 3 Q Did you testify about that? 4 A I don't recall. 5 Q Well, it was only about a year ago. 6 A I don't recall specific questions I testified 7 to. 8 MR. DAVIES: Do you have an order or anything 9 you could show him to help recollect his memory? 10 MS. HUELSMAN: I can get it. 11 MR. DAVIES: Okay. 12 MS. HUELSMAN: Usually I would anticipate 13 people would remember when they're accused of not 14 providing truthful testimony. 15 BY MS. HUELSMAN: 16 Q Does Ameriquest keep a log and a report that it 17 keeps regarding all litigation in which it's involved? 18 A I don't know. It would be a question for the 19 litigation group, I would assume. 20 Q Well, you're the president of the company, so 21 you should know. 22 MR. DAVIES: I'll object. Asked and answered. 23 BY MS. HUELSMAN: 24 Q So if you're the president of the company, why 25 don't you know what's going on with the company? 123 1 A Again, I would ask somebody in our litigation 2 group about how they track their information. 3 Q So you don't get any kind of reports regarding 4 what litigation is ongoing? 5 A No, I have not received any reports since I've 6 been the president of Ameriquest. 7 Q Well, you didn't get any reports when you were 8 the senior V.P. of business controls? 9 A Not from the legal department, no. 10 Q All right. What other cases have you testified 11 in? 12 A I testified in a case of Parker versus 13 Ameriquest. 14 Q Where was that? 15 A That was, I believe, in Orange County here. It 16 was an employee case. 17 Q An employee case? 18 A Yes. 19 Q Okay. And was that -- sorry. And when did you 20 provide that deposition testimony? 21 A I think that was around April or May of this 22 year. 23 Q So that was when you were senior vice president 24 of business controls? 25 A Correct. 124 1 Q All right. And the next case? 2 A I don't know the -- it's the multi-district. 3 Q The M.D.L.? 4 A The M.D.L. 5 Q And when did you provide that testimony? 6 A I -- "when" did you say? When? I'm sorry. 7 Q Uh-huh. 8 A I testified for two days in July, and then two 9 days again, I believe, in August. 10 Q And that was also in your capacity as senior 11 vice president of business controls? 12 A Yes. 13 Q Okay. And then this is the fourth case, or was 14 there another one in addition to this case? 15 A This is the fourth case. 16 Q And have you testified at trial on behalf of 17 Ameriquest? 18 A No, I have not. 19 Q Okay. And other than the depositions that you 20 described to me, have you ever had your deposition taken 21 previously? 22 A No. 23 Q I just want to review my notes. I believe that 24 will probably be it for you. 25 I'm sorry. You started telling me this morning 125 1 that you were uncertain of what Ameriquest Mortgage 2 Company's relationship is with ACC Capital Holdings and 3 the corporate structure; is that correct? 4 A Yes. 5 Q But then you said Josh Perttula is your 6 supervisor in your capacity as employee of ACC Capital 7 Holdings; correct? 8 A Correct. 9 Q But that's the extent of your knowledge 10 regarding the corporate structure of Ameriquest and 11 ACC Capital Holdings? 12 A I mean, I would say, as I was trying to say 13 before, I have a general understanding of the 14 relationships, but I'm not privy to the legal setup or 15 structure of the organizations and how they actually 16 work. 17 Q Okay. So when you get instructions to perform 18 your job duties, they come from Mr. Purttula? 19 A Correct. 20 Q If I'm saying it correctly. 21 Anybody else in the company? 22 A At this point, generally I get my instructions 23 from Mr. Purttula. 24 MS. HUELSMAN: Okay. That's all. 25 MR. DAVIES: Are you done with -- 126 1 MS. HUELSMAN: Him. 2 MR. DAVIES: -- all your topics? 3 MS. HUELSMAN: No. 4 MR. DAVIES: What else do you need? 5 MS. HUELSMAN: I want to review. Let me just 6 review. Okay. 7 (Recess taken.) 8 BY MS. HUELSMAN: 9 Q Are there any other officers of Ameriquest 10 Mortgage Company right now besides yourself? 11 A I don't believe so, no. 12 Q So you said, I think, earlier this morning that 13 Ameriquest gave up its licenses to generate loans a few 14 months ago? 15 A Correct, yeah. I think as of September 30th, 16 we surrendered all of our licenses. 17 Q In all of the states -- 18 A In all states. 19 Q -- in which you were licensed? 20 A Correct. 21 Q So at this point it's not originating any other 22 loans? 23 A Correct. 24 Q Okay. Have any of the government agencies 25 which had licensed Ameriquest taken any enforcement 127 1 action against Ameriquest in the last four years? 2 A I'm not sure. 3 Q Wasn't there a very large settlement with most 4 of the attorney generals of the United States? 5 A We entered into a settlement with the attorney 6 generals, yes. I don't know if that equivocates to an 7 enforcement action or not. 8 Q Were there any other individual enforcement 9 actions taken by any of the government agencies 10 regulating Ameriquest in the last four or five years? 11 A Could you just clarify maybe "enforcement 12 actions"? 13 Q Well, dictate action against you. "You" as in 14 Ameriquest. Saying you did something wrong. I'm just 15 trying to generalize. 16 MR. DAVIES: You know, that's a big question. 17 I mean, there are complaints filed with regulators all 18 the time. 19 MS. HUELSMAN: Right. But I'm not asking about 20 complaints. I'm asking about action taken against them. 21 MR. DAVIES: You understand that's a huge 22 question over four years. I mean, even with some 23 smaller companies. 24 MS. HUELSMAN: Well, at this point I'm just 25 asking if it did, and he can say "yes," and then we can 128 1 go from there. 2 MR. DAVIES: Okay. 3 THE WITNESS: I'm not aware if there were 4 actual actions taken by government agencies over the 5 last four years. 6 BY MS. HUELSMAN: 7 Q Okay. And so would there be a report or any 8 written documentation of those actions, if they happened? 9 A I'm not sure. I would assume that our general 10 counsel would probably be the person to ask that 11 question of. 12 Q Except that I don't get to ask the lawyers 13 questions, but I do get to ask the officers. 14 So do you have access to any of that 15 information as the president of Ameriquest? 16 A I'm sure I could get that information if I 17 wanted to. 18 Q So you have access to historical information? 19 I realize you just took over, but you have access to 20 information regarding what was happening with the 21 company when others were president of the company? 22 A I believe so, yes. 23 MS. HUELSMAN: We've already clarified that I 24 do not have any of the documentation yet regarding 25 manuals and policies and procedures for making a 129 1 mortgage loan in the state of Washington, and that's 2 going to be produced to me. 3 MR. DAVIES: For '02; right? 4 MS. HUELSMAN: Yes. For the relevant -- 5 MR. DAVIES: Sure. 6 MS. HUELSMAN: -- time period in which the 7 Busbys' loan was made. 8 BY MS. HUELSMAN: 9 Q And I wanted to -- is there any record in 10 Ameriquest's files of any investigation of the claims 11 made by the Busbys against it? 12 A I believe so, yes. 13 Q Okay. And obviously I don't want you to 14 discuss anything that's potentially privileged. Maybe 15 you don't know how to make that call, and you need to 16 consult with your lawyer, but would that be -- do you 17 know if that's been produced to me? 18 MR. DAVIES: I can tell you it hasn't because 19 it's privileged. 20 MS. HUELSMAN: The entirety of it is 21 privileged? 22 MR. DAVIES: Yeah. It went right to legal. 23 MS. HUELSMAN: Okay. And since you've 24 explained it to me, I -- where did the complaint come in 25 to; what company? Was it to A.M.C. or Ameriquest? 130 1 MR. DAVIES: Am I testifying here? 2 MS. HUELSMAN: Well, since you offered it up. 3 MR. DAVIES: It went in to Ameriquest. 4 BY MS. HUELSMAN: 5 Q Okay. And are there records regarding the sale 6 of the Busbys' loan to an investor? 7 A We have historical data on the sale of loans 8 and loan pools, so I would assume that would be 9 available. 10 Q I guess I should have asked the first question, 11 which was: Was the loan sold? 12 A I'm not aware. 13 Q Can you find out for me? 14 A I can, yes. 15 Q And I would want records regarding the sale of 16 the loan. That would have been encompassed with my 17 discovery requests. 18 Okay. I think that's it for now. I reserve 19 the right to ask additional questions of him or whoever 20 would be the appropriate person to testify about it. 21 I'm going to order it, and reserve signature. 22 Oh, no. Sorry. They have to reserve. I'm sure they're 23 going to reserve. 24 MS. CARDER: Can we get an E-transcript? 25 DEPOSITION OFFICER: Yes. An E-transcript 131 1 file comes on the CD-ROM, but you'll need to buy the 2 copy order. 3 MR. DAVIES: Can you E-mail it to us as well? 4 DEPOSITION OFFICER: Yes. 5 Just to verify, since I'm not familiar with 6 reserving signature in Washington, should I send the 7 original to your firm? 8 MS. CARDER: Yes. 9 (Deposition session concluded at 12:39 p.m.) 10 -oOo- 11 12 I have read the foregoing deposition transcript 13 and by signing hereafter, approve same. 14 15 Dated __________________. 16 __________________________ 17 (Signature of Deponent) 18 19 20 21 22 23 24 25 132 1 DEPOSITION OFFICER'S CERTIFICATE 2 3 STATE OF CALIFORNIA ) ) ss. 4 COUNTY OF ORANGE ) 5 6 I, Tracy L. Mafi, hereby certify: 7 I am a duly qualified Certified Shorthand 8 Reporter in the State of California, holder of 9 Certificate No. CSR 11850 issued by the Court Reporters 10 Board of California and which is in full force and 11 effect. (Bus. & Prof. Section 8016.) 12 I am not financially interested in this action 13 and am not a relative or employee of any attorney of the 14 parties, or of any of the parties. (Civ. Proc. Section 15 2025.320(a); 2025.540(a)) 16 I am authorized to administer oaths or 17 affirmations pursuant to California Code of Civil 18 Procedure, Section 2093(b), and prior to being examined, 19 the deponent was first duly sworn by me. (Civ. Proc. 20 Section 2025.320) 21 I am the deposition officer that 22 stenographically recorded the testimony in the foregoing 23 deposition and the foregoing transcript is a true record 24 of the testimony given. (Civ. Proc. Section 2025.540) 25 I have not, and shall not, offer or provide any 133 1 services or products to any party's attorney or third 2 party who is financing all or part of the action without 3 first offering same to all parties or their attorneys 4 attending the deposition and making same available at 5 the same time to all parties or their attorneys. (Civ. 6 Proc. Section 2025.320(b)) 7 I shall not provide any service or product 8 consisting of the deposition officer's notations or 9 comments regarding the demeanor of any witness, 10 attorney, or party present at the deposition to any 11 party or any party's attorney or third party who is 12 financing all or part of the action, nor shall I collect 13 any personal identifying information about the witness 14 as a service or product to be provided to any party or 15 third party who is financing all or part of the action. 16 (Civ. Proc. Section 2025.320(c)) 17 18 Dated: ____________, 2007. 19 20 ________________________ 21 22 23 24 25