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

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FILED: NEW YORK COUNTY CLERK 12/11/2012
NYSCEF DOC. NO. 3970

INDEX NO. 602825/2008 RECEIVED NYSCEF: 12/11/2012

EXHIBIT 70

In The Matter Of:
MBIA INSURANCE CORPORATION v. COUNTRYWIDE HOME LOANS, INC., et al
___________________________________________________

CYNTHIA SIMANTEL Vol. 3
August 24, 2012

_________________________________________________

CONTAINS HIGHLY CONFIDENTIAL INFORMATION

CONTAINS HIGHLY CONFIDENTIAL INFORMATION CYNTHIA SIMANTEL - 8/24/2012
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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ---------------------------------------x MBIA INSURANCE CORPORATION, Plaintiff, - against COUNTRYWIDE HOME LOANS, INC., COUNTRYWIDE SECURITIES CORP., COUNTRYWIDE FINANCIAL CORP., COUNTRYWIDE HOME LOANS SERVICING, LP and BANK OF AMERICA CORP., Defendants. -------------------------------------- x Index No. 08/60285

CONTAINS HIGHLY CONFIDENTIAL INFORMATION

VIDEOTAPED DEPOSITION OF: CYNTHIA SIMANTEL FRIDAY, AUGUST 24, 2012 9:08 A.M. VOLUME III (PAGES 866-1218) REPORTED BY: SUSAN NELSON C.S.R. No. 3202

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Videotaped deposition of CYNTHIA SIMANTEL, the witness, taken on behalf of the Plaintiff, commencing at 9:08 A.M., on FRIDAY, AUGUST 24, 2012, at 865 South Figueroa Street, Los Angeles, California, before SUSAN NELSON, C.S.R. No. 3202. APPEARANCES OF COUNSEL FOR PLAINTIFF: QUINN EMANUEL URQUHART & SULLIVAN, LLP BY: PETER CALAMARI, ESQ. 51 Madison Avenue 22nd Floor New York, New York 10010 (212) 849-7000 -- and -QUINN EMANUEL URQUHART & SULLIVAN, LLP BY: RENEE BELTRANENA BEA, ATTORNEY AT LAW 50 California Street 22nd Floor San Francisco, California 94111 (415) 875-6600

INDEX WITNESS EXAMINATION PAGE CYNTHIA SIMANTEL By Mr. Calamari 875 (P.M. Session) 1031 Highly Confidential Section Pages 1076 to 1090 EXHIBITS NO. PAGE DESCRIPTION Exhibit 751 1141 Origination Business Controls (CWMBIAGO0000113735-No Bates) (Confidential) (Previously Marked) Exhibit 4015 879 6/28/11 Deposition of Cynthia Simantel (CWMBIAG0000130303-3042) (Confidential) Exhibit 4016 881 2/25/11 Deposition of Cynthia Simantel (CWMBIAG0000110390-0519) (Confidential) Exhibit 4017 936 10/5/09 Emails, Attachment (CWMBIA0018627714-7735) (Highly Confidential)

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APPEARANCE OF COUNSEL (CONTINUED): FOR THE COUNTRYWIDE DEFENDANTS AND THE WITNESS: GUNSTER BY: AARON W. TANDY, ESQ. One Biscayne Tower 2 South Biscayne Boulevard Suite 3400 Miami, Florida 33131 (305) 376-6000 FOR DEFENDANT BANK OF AMERICA: O'MELVENY & MYERS LLP BY: TAD ALLAN, ESQ. 400 South Hope Street Los Angeles, California 90067-2899 (213) 430-6000 ALSO APPEARING: JAMES GABRIEL, VIDEOGRAPHER

EXHIBITS NO. PAGE DESCRIPTION Exhibit 4018 943 Countrywide Internal Repurchase Policy (CWMBIA0018538028-8036) (Highly Confidential) Exhibit 4019 945 May 2008, February 2009 Emails Repurchase Guidance Document (CWMBIA0018607415-7438) (Highly Confidential) Exhibit 4020 964 February 2009 Emails, Attachment (CWMBIA00185548919-9478) (Highly Confidential) Exhibit 4021 992 January 2009 Emails (CWMBIA0018540052-0057) (Highly Confidential) Exhibit 4022 1003 Investor Audit - Credit Loss Monolines (CWMBIA0018630449-0455) (Highly Confidential) Exhibit 4023 1010 Investor Audit - Monolines (CWMBIA0018631116-1142) (Highly Confidential)

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EXHIBITS NO. PAGE DESCRIPTION Exhibit 4024 1036 3/15/06 Document to Terry Wolfe (CWMBIA0009458890) (Confidential) Exhibit 4025 1049 7/15/08 Email, Repurchase Process Deck (CWMBIA0018536381-6395) (Highly Confidential) Exhibit 4026 1066 1/26/09 Email, Attachment (CWMBIA00185596183-6186) (Highly Confidential) Exhibit 4027 1076 4/9/10 Emails, Monoline Info (BACMBIAX0000430500-0534) (Highly Confidential) Exhibit 4028 1091 Repurchase Oversight Group (BACMBIAX0000427891-7913) (Confidential) Exhibit 4029 1098 10/27/08 Email, Reports, Disc (CWMBIA0018574938-No Bates) (Highly Confidential) Exhibit 4030 1102 3/2/09 Emails, Stats Report (CWMBIA0018610112-0114) (Highly Confidential)

EXHIBITS NO. PAGE DESCRIPTION Exhibit 4038 1178 12/21/09 Emails, 100 MBIA Final Review (BACMBIAX0000016370-6514) (Highly Confidential) Exhibit 4039 1195 January 2009 Emails, 1/9 Meeting (CWMBIA0018596053-6039) (Highly Confidential) Exhibit 4040 1196 November 2008 Emails (CWMBIA0018594433-4435) Exhibit 4041 1198 December 2008 Emails (CWMBIA0018595894-5904) (Highly Confidential) Exhibit 4042 1201 10/13/09 Email Monthly ROG Presentation (BACMBIAX0000429484-9518) (Confidential) Exhibit 4043 1207 11/10/09 Email Monthly ROG Presentation (BACMBIAX0000429635-9661) (Confidential)

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EXHIBITS NO. PAGE DESCRIPTION Exhibit 4031 1106 12/29/08 Emails (CWMBIA0018595925) (Highly Confidential) Exhibit 4032 1110 4/3/09 Email Stats Report, Disc (BACMBIAX0000015553-5554) (Highly Confidential) Exhibit 4033 1120 CMD Credit Risk Management (CWMBIAG0000103488-3500) (Confidential) Exhibit 4034 1127 March 2006 Emails SOP/SLA Data (CWMBIA001001648-1662) (Confidential) Exhibit 4035 1136 Summary Review: Quality Control (CWMBIAG0000106281-6292) (Confidential) Exhibit 4036 1153 Severely Unsatisfactory Analysis (BUTLER00000027-No Bates) (Confidential) Exhibit 4037 1158 9/16/08 Emails, Attachment, Disc (CWMBIAB0000006104-6105) (Highly Confidential)

LOS ANGELES, CALIFORNIA; FRIDAY, AUGUST 24, 2012; 9:08 A.M. THE VIDEOGRAPHER: Here begins Volume Number 3, videotape number 1, in the deposition of Cynthia Simantel. Today's date is August 24th, 2012. The time on the video monitor is 9:08 a.m. The video operator today is James Gabriel, a videographer contracted by Merrill Legal Solutions in Los Angeles through Merrill Legal Solutions in New York located at 225 Varick Street, Tenth Floor, New York, New York, 10014. Counsel, please voice-identify yourselves and state whom you represent. MR. CALAMARI: Peter Calamari -- excuse me -- Quinn Emanuel, representing MBIA. MS. BEA: Renee Bea, Quinn Emanuel, representing MBIA. MR. TANDY: Aaron Tandy, Gunster, representing the Countrywide defendants and the witness Ms. Simantel. MR. ALLAN: Tad Allan, O'Melveny & Myers, representing the Bank of America defendants. THE VIDEOGRAPHER: The court reporter today

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Q. And who is Kathryn Martin? A. She is the SVP claims management executive for the GSEs. Q. And can you tell me a little about her history? Was she employed by Bank of America prior to your assignment to her? MR. TANDY: Objection. MR. ALLAN: Mr. Calamari, may we have a stipulation that any objection made by Mr. Tandy will be joined in by Bank of America? MR. CALAMARI: Yes. MR. ALLAN: Thank you. THE WITNESS: She was with Bank of America prior to me reporting to her, but she was a Countrywide employee. BY MR. CALAMARI: Q. So she is a legacy Countrywide employee? A. She is, yes. Q. That moved over to Bank of America after the merger? MR. TANDY: Objection. THE WITNESS: She was a legacy Countrywide employee. And when Bank of America and Countrywide transitioned together, she became an employee of reps and warrants, stayed an employee of reps and

is Susan Nelson with Merrill Legal Solutions. Would 09:11:12 1 09:11:14 2 the reporter please swear in the witness. CYNTHIA SIMANTEL, having been first duly sworn, was examined and testified further as follows: THE VIDEOGRAPHER: Please begin. EXAMINATION (RESUMED) BY MR. CALAMARI: Q. Ms. Simantel, did you do anything to prepare for today's deposition since the last day of your deposition? A. I did meet with counsel yesterday. Q. And for how long did you meet? A. About three-and-a-half hours. Q. And that was yesterday? A. Yes. Q. And who was present at that meeting? A. Tad Allan and Aaron Tandy and myself. Q. No one else? A. No one else. Q. Did you review any testimony of any witnesses in the case?
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A. I did not. Q. Okay. Did you review any documents? A. I did look at a few documents. Q. Okay. And did any of those documents refresh your recollection about events in connection with this matter? A. No. Q. Since your prior deposition in this case, which was April 28th, 2011, has your employment changed in any way? A. No, it has not. Q. So you're still employed by Bank of America? A. I am, yes. Q. And have your responsibilities changed in any respect? A. No, they have not. Q. Has your title changed? A. It has not. Q. Do you still report to Mr. Schloessmann? A. That -- that has changed. My reporting structure has changed. Q. Okay. And in what way has that changed? A. John Dixon is now head of reps and warrants, and I report to Kathryn Martin, who reports to John Dixon.

warrants. BY MR. CALAMARI: Q. Of Bank of America? A. Yes. Under Bank of America, yes. Q. Okay. And you mentioned that she reports in turn to -- I already forgot his name. Who is that? A. John Dixon. Q. John Dixon. And can you tell me a little about Mr. Dixon's past employment? A. Mr. Dixon was a legacy Countrywide employee who then joined Bank of America. Q. And, again, that was at the time of -- of the merger? MR. TANDY: Objection. THE WITNESS: Right. He was Countrywide. And when we transitioned to Bank of America, he just stayed on with the company. BY MR. CALAMARI: Q. Okay. And in terms of people that report to you, has that changed in any way? A. Since February of -- no, it has not. Q. Okay. So the same people that you supervised since the last deposition on April 28th you still supervise?

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A. Yes, I do. Q. Let me ask you to look at a few quick documents. The first of these -- the first of these is a transcript of testimony given in Financial Guaranty Insurance versus Countrywide -- I can see I'm going to need my magnifying glass before this day is over. MR. TANDY: Countrywide Home Loans, Inc. MR. CALAMARI: Thank you. Is the first name on the caption. And let me mark that as Exhibit -what was the -MS. BEA: 4015. (The document referred to was marked as Exhibit 4015.) BY MR. CALAMARI: Q. Let me ask you to take a quick look at that document that's entitled "Videotaped Deposition of Cindy Simantel," dated February 25, 2011. And it consists of pages 1 through 87 of the document. MR. TANDY: Peter, I hate to interrupt you, I think the one that you're looking at is now 4016. The one the witness has in front of her, 4015, is the FGIC transcript which was taken on June 28th, 2011 and then -MR. CALAMARI: I've got the numbers

(The document referred to was marked as Exhibit 4016.) BY MR. CALAMARI: Q. So I'll ask you these questions in tandem. Do you recall giving depositions in the cases that these transcripts are from? A. Yes, I do. Q. And have you seen copies of these transcripts in the past? A. I have not. Q. So you've not had a chance to review these transcripts? A. No. Q. But you do recall giving the depositions? A. I do, yes. Q. Okay. And do you -- is there any reason to believe that anything you've said in these transcripts is false or incorrect? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. Okay. Did you testify truthfully, to the best of your ability? A. Yes. Q. And that would be true for both transcripts?

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backwards? MR. TANDY: You do. Not -- not a big deal but -MR. CALAMARI: No, that's always a big deal. So let's just be very careful and identify both documents for the record. MR. TANDY: Sure. MR. CALAMARI: First, 4015 is a transcript of testimony given in the case of Financial Guaranty Insurance v. Countrywide -MR. TANDY: Home Loans. MR. CALAMARI: -- Home Loans, Inc. And the date of that appears to be Tuesday, June 28th, 2013. Is that -MR. TANDY: No, 2011. MR. CALAMARI: 2011. Sorry. MR. TANDY: That'd be very interesting if it was -MR. CALAMARI: So would I -- so would I. So would I. That's why I was taken aback by that. And the second one is a transcript of testimony, and that's Exhibit 4016, given in the case of Syncora Guarantee versus Countrywide Home Loans. And that one is dated February 25th, 2011. And fortunately on that one I can read the caption.

A. Yes. Q. And is there anything that sticks out at you that after the deposition you said, oh, my goodness, I have to correct that? A. No. Q. But you have not had a chance to review these transcripts. Is that correct? A. That's correct. Q. Okay. MR. TANDY: And, Peter, I just want to make sure 'cause my copy had some highlights. Did you intend us to have the copies that have highlights? MS. BEA: No. MR. TANDY: Okay. Well -MR. CALAMARI: Mine does, too. THE WITNESS: Mine does, too. MR. TANDY: They all do. MR. CALAMARI: Okay. So we'll have to take those back. MR. TANDY: Okay. MR. CALAMARI: And we'll substitute nonhighlighted copies. And at least for the instant, I won't ask any more questions about these exhibits until we get it straightened out. MR. TANDY: I figured before you started to

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ask the questions, I should point that out. MR. CALAMARI: Okay. BY MR. CALAMARI: Q. Now -- now, the -- the merger of the Countrywide businesses with Bank of America businesses took place in two steps. Is that correct? MR. TANDY: Objection. THE WITNESS: I'm not clear on what you're asking me. BY MR. CALAMARI: Q. Okay. There was a -- a period where Bank of America had signed contracts to acquire -- to acquire Countrywide. And then there was a closing date. And after the closing date, the two entities actually came together. Do you recall that? MR. TANDY: Objection. THE WITNESS: I wasn't involved in any contract signing. I was aware that Bank of America was going to acquire Countrywide and we would transition under that umbrella. And I was aware of legal day one and that concept. BY MR. CALAMARI: Q. Okay. And -- and when you say that -- that Bank of America was going to acquire Countrywide,

merge the two departments until after legal day one. What we just talked about was how we both operated. We discussed what we thought were best practices. There were Bank of America and Countrywide teams that oversaw like operations that were talking about it as well. And so that was going on. But we didn't actually talk about how we were going to do it until after legal day one. Q. Okay. And then after legal day one, you -you made and then implemented plans to accomplish the merger of the departments. Is that right? MR. TANDY: Objection. THE WITNESS: After legal day one, we then started actively discussing how we were going to do it. We took information that we received from the operations teams that did overviews as well. We started introducing ourselves, talking, and, you know, we then started working on a plan to merge the operations as far as how we operated. It wasn't something that happened overnight. I mean, it was a process over months. BY MR. CALAMARI: Q. Okay. Now, I want to take you back to the period before the merger was announced, that is, the period prior to February of 2008.

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that -- that awareness became publicly known and known to you in or around February of 2008? A. I don't recall the exact date. I do recall that, you know, it became widely known. It was in the newspapers. Q. And that's how you learned about it, from the newspapers? A. No. I learned about it from my boss, my manager, about the same time that the newspapers came out. Q. And in terms of what you called "legal day one," was that July 1st, 2008? A. Yes. Q. And was there a period between February of 2008 and July 1st, 2008 that Bank of America and Countrywide worked together to discuss transition plans? A. I did have meetings with Bank of America associates to -- the areas that I was managing. I did meet with them to discuss how they operated. I met with their associates that managed those areas and we talked about, you know, merging the two teams. Q. Right. And then you made plans to effectuate that merger? A. We -- we did not make any plans really to

In that period, you were -- well, let me -let me say it differently. In that period, how were repurchase claims from investors or insurers processed? MR. TANDY: Objection. THE WITNESS: So prior to February of 2008? BY MR. CALAMARI: Q. Yes. A. We had started to make some changes in our process, starting about October of '07, in our repurchase process. And that was due to my manager, Rod Williams, announcing that he was going to leave the company. And because he was leaving the company, we had to start thinking about how we were going to handle repurchase claims with that change. We had a monthly meeting that we talked about repurchase claims and we knew we had to reassess the process. So we started working on that. But we -- I mean, we continued to process repurchase claims through the time that he left in a very similar manner. He actually left I believe about February of '08. Q. So I would like to focus and if -- if -- we need to focus on the period pre-October '07 before you started to change the plans. I just want to get

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a general description of how it was done pre-October '07. A. Okay. And how in-depth? I mean, just -you want me just to tell you how we handled the finalization or -Q. Well, I'll try to be more specific with my question. If an investor or a monoline insurer wanted to pursue a repurchase claim, how would they initiate that? MR. TANDY: Objection. THE WITNESS: Anyone that wanted to initiate a claim against Countrywide was required to send that claim in to us in writing. It had to be a written claim, and one -- and it had to also tell us what they were requesting, why they felt it was a breach, cite sections of the contract that they felt were breached. And once we received that, we would then start reviewing it. I had senior underwriters that were reviewing these loans. And they would assess the validity of the claim, make a determination whether or not they agreed or that they felt that the claim was not something that we should repurchase. And then they would go ahead and write an appeal on that.

initial requests came to the investor audit department. Q. Okay. And if the investor audit group decided to, in your words, appeal the repurchase, would that decision be implemented without further review within Countrywide? MR. TANDY: Objection. THE WITNESS: It -- the underwriters, senior underwriters had the ability to appeal loans on their own. They, you know, had the ability also to talk to their managers or senior managers. They, too, could get information from outside parties. But every appeal that went out did not go through, you know, committee review. BY MR. CALAMARI: Q. And if they decided to recommend repurchase of the loan, you said that that would go to a committee review? A. Just for the final -- it went to a committee review for the final sign-off and approval. Q. Okay. And what was the name of that committee? A. It was loss exposure group. It was actually a group. It was a working group. Q. Loss exposure group?

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If it was a claim that they felt should be repurchased, they discussed that with their manager. If they both agreed, then they prepared what we called a repurchase authorization. And that repurchase authorization was put into a meeting that we held once a month and we actually discussed them in those meetings. BY MR. CALAMARI: Q. And just to be clear, what group within Countrywide would that -- would that repurchase claim be funneled to? MR. TANDY: Objection. BY MR. CALAMARI: Q. What is the name of the group that handled the repurchase claims? A. During that time period, it was called "investor audit." Q. And was that the only group that would be the initial reviewer of repurchase claims? A. Investor audit was the initial repository we received the claims. I mean, that wouldn't -- didn't mean that we didn't reach out to other parties within the company. Our contract review departments, our servicing departments, our legal departments. I mean, we reached out to other parties. But the

A. Hm-hm. It was LERG, L-E-R-G. Q. Was that sometimes referred to as LERC, L-E-R-C? A. It was originally called LERC, loss exposure review committee, and then it became LERG because it changed from a committee to a working group. Q. Do you know when that change took place? A. I don't remember specifically. I mean, it was '06-'07 time frame. Q. And you were a member of first that committee and then that group? MR. TANDY: Objection. THE WITNESS: I was when -- after I had joined the investor audit department. BY MR. CALAMARI: Q. When did you join the investor audit department? A. June of 2003. Q. Okay. And at that point in time, you became a member of that committee, that is, LERC? A. Yes. Q. And did you remain on the committee at the time it changed its name to LERG? MR. TANDY: Objection. THE WITNESS: I did.

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BY MR. CALAMARI: Q. Okay. And you had written procedures that were used in dealing with the repurchase process? A. We had written policies and procedures within the department. Q. And those policies and procedures were available to the underwriters who were handling the specific review of the repurchase claims? A. Yes. Q. What kinds of information would you utilize to review the repurchase claims aside from the information provided by the investor or insurer? MR. TANDY: Objection. THE WITNESS: Every claim was different, so there wasn't a specific set of information that we used. We had to review what the claim was and, you know, access any necessary information in order to analyze that claim. So there wasn't anything set. It was based solely on what came in and what we needed to review. BY MR. CALAMARI: Q. Would you look at the contract with the investors? MR. TANDY: Objection. THE WITNESS: At one point in time, we were

announcement of the Bank of America transaction? MR. TANDY: Objection. THE WITNESS: I don't recall. BY MR. CALAMARI: Q. Did you also review the Countrywide technical manual? MR. TANDY: Objection. THE WITNESS: I mean, we had access to the Countrywide technical manual. But really when you're dealing with repurchases, you're dealing more with -I mean, that's kind of like processing. And you're not really dealing with processing per se, dealing with repurchases. BY MR. CALAMARI: Q. And did you review the applicable guidelines for a particular investment? MR. TANDY: Objection. THE WITNESS: We had access to the loan program guidelines. We would review guidelines in conjunction with the contracts and all the other facts that were necessary. BY MR. CALAMARI: Q. And did you also have access to quality control audits? A. Investor audit did not have access to the

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looking at contracts, but we did get a contract review department involved to actually review the contracts. We had legal helping us with the contracts. We weren't reviewing them on our own, but I did have copies of the contracts. BY MR. CALAMARI: Q. You say at one point in time, you had a contract review department that -- I'm sorry. You said at one point in time, you began to utilize a contract review department. Do you remember what that point in time was? A. Well, it -- we always used contract review employees that had that expertise and the legal department and -- from the time that I joined the investor audit department. But what we had a more formalized contract review department and that really came into play later on. I -- I don't know specifically the date, but -- when we started calling them specifically contract review, but we always used outside contract -- people that were knowledgeable in the contracts to help us. Q. And when you say you don't recall the date, can you give me the approximate time frame? A. I -- you know, I can't. I can't tell you. Q. Was it before the -- was it before the

quality control audits. Q. So one of the things you would -- so would you look -- strike that. Would you look at the results of an investor -- of a -- I'm sorry. Would you look at the results of a quality control audit of a loan that happened to be in the securitization that you were examining for a repurchase claim? MR. TANDY: Objection. THE WITNESS: Quality control had an internal process that wasn't -- they didn't know who the loans were going to be sold to. So our QC process was not in any way related to the repurchases. So the investor audit department didn't review quality control audits. They weren't -- you couldn't correlate them. The QC audits was a process that we developed internally, whereas investor audit was not. Very early on, back before we started looking at contracts and when we sold most of our loans to Fannie Mae, we did look at QC audits. But after we started selling loans to other parties, we already had different contracts and we had no idea who we were selling to, we stopped looking at the

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audits at all. BY MR. CALAMARI: Q. So even if the repurchase claim related to a loan that had been the subject of a quality control audit, you would not look at that quality control audit to assist you in analyzing the repurchase claim? MR. TANDY: Objection. THE WITNESS: I did not see it as being an assistance in any way in looking at the claim because they were two different ways of reviewing loans with different processes. BY MR. CALAMARI: Q. And are you saying you did not access the results of quality control audits in terms of reviewing repurchase claims? MR. TANDY: Objection. THE WITNESS: No, I did not. BY MR. CALAMARI: Q. And your -- is it -- are you also saying that your underwriters did not access quality control audits in determining repurchase claims? MR. TANDY: Objection. THE WITNESS: It was not part of our process, except as I indicated earlier on, and I

we don't need to re-mark it. MR. CALAMARI: Okay. BY MR. CALAMARI: Q. Quality control had a -- quality control had a severely unsatisfactory rating. Is that correct? MR. TANDY: Objection. THE WITNESS: Yes. BY MR. CALAMARI: Q. And they applied that loans [sic] to loans that for whatever reason quality control felt were not underwritten correctly. Is that correct? MR. TANDY: Objection. THE WITNESS: No. We had a definition for severe unsat. There was a ratings grid that we used that outlined sort of the thought process that we went through. And we did an assessment of that loan and, you know, made a determination based upon, you know, all the facts when we reviewed it. BY MR. CALAMARI: Q. Okay. And that process continued right up through the period of the Bank of America transaction? A. Yes. Q. So even though you were -- you were still selling -- you were now selling loans in great

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can't tell you the exact date we stopped doing it. But when we were selling most of our loans to Fannie Mae and Freddie Mac, we did look at them. And that was like '03-'04 time frames, I believe. BY MR. CALAMARI: Q. And when do you think you stopped doing that? A. I -- I can't tell you a specific date. I just know that we made the change on it because every loan was sold uniquely under different contracts. And our QC process was not looking at who we sold the loan to, what the contract was. It didn't take that into consideration. So it was like comparing apples to oranges. It wasn't relevant. Q. So you're saying that a loan that could be rated, for example, severely unsatisfactory, let's say because it was missing the mortgage note, would not be considered severely unsatisfactory in connection with a purchase by an investor? MR. TANDY: Objection. THE WITNESS: Well, I'm say- -- I can't really address that and answer that because, you know, this is kind of a hypothetical. I -- I'm not -- I can't answer that. MS. BEA: This has been previously marked so

numbers to investors, the quality control process continued? MR. TANDY: Objection. MR. CALAMARI: You're right. That's a bad question. I'll withdraw it. BY MR. CALAMARI: Q. Is it fair to say that the QC process of examining loans continued through February of 2008? A. Countrywide had a quality control process that was in existence and we continued to review loans that were originated, you know, in accordance with the QC guidelines, you know, up through February, yes. Q. Yes. And when you say you continued to review loans through February of 2008, that included loans that were sold to investors as opposed to government services? A. Yes. Our QC process was developed using the most restrictive guidelines. So because we used the most restrictive guidelines and loans that were sold to whole loan investors or into securities had much broader reps and warrants than the most restrictive, we were looking -- since we were being the most restrictive, we were looking at loans much harder than they would be by the investors.

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Q. Okay. And you were -- and those guidelines were written guidelines, were they not? MR. TANDY: Objection. THE WITNESS: The QC policies and procedures were written. BY MR. CALAMARI: Q. Correct. A. The guidelines we used were really the GSE reps and warrants guidelines. Q. Is that specified in the Q -- in the QC procedures? MR. TANDY: Objection. THE WITNESS: I don't know exactly how it's specified. I think it is that we talk about using the more restrictive guidelines of the GSEs. BY MR. CALAMARI: Q. Where did you talk about that? A. You know, I -- those documents I have not looked at in a very long time. I know that our process internally and we discussed in all of our meetings and everything that that's how we did it, and that's how we initiated our reviews. I mean, I was part of the department. I just can't tell you exactly where it's written down. Q. Is there -- was it written down at all?

THE WITNESS: I -- I actually don't recall high levels of severe unsats. But I don't recall ever making a statement even similar to that. BY MR. CALAMARI: Q. Okay. Is it also fair to say that there was a high level of correlation between loans that were repurchased -- I'm sorry. Let me strike that. From time to time, investors would put back loans that had been designated severely unsatisfactory. Is that correct? MR. TANDY: Objection. THE WITNESS: I -- I wouldn't be able to answer that. I -BY MR. CALAMARI: Q. You don't know if a loan that was rated severely unsatisfactory was ever put back? MR. TANDY: Objection. THE WITNESS: I -- you know, I don't know without looking at data. I mean, I -- I wouldn't be able to say definitively. BY MR. CALAMARI: Q. Okay. So if your -- if you have documents which refer to the fact that a putback request was a putback of the severely unsatisfactory loan, that that doesn't ring a bell to you? You just don't

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A. I -MR. TANDY: Objection. THE WITNESS: I can't tell you. BY MR. CALAMARI: Q. QC department went through internal audit reviews. Is that correct? A. Yes. Q. Did internal audit ever indicate that that was a measurement by which the QC department either was or should have been employed? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. Did you respond to internal audit -MR. TANDY: Objection. BY MR. CALAMARI: Q. -- from time to time? A. If internal audit came in and they had any questions, then absolutely. Q. And did you in any of those responses say, the reason we have high levels of severely unsatisfactory loans is that we're measuring to a government standard but we're not marketing to a government standard? MR. TANDY: Objection.

recall that ever happening? MR. TANDY: Objection. THE WITNESS: I -- I don't recall that. BY MR. CALAMARI: Q. Would you have expected that if severely unsatisfactory loans were put back, that they would have been repurchased? MR. TANDY: Objection. THE WITNESS: I mean, that's a hypothetical question, so it's very difficult for me to answer. But I would say no, I wouldn't expect it. BY MR. CALAMARI: Q. Did Countrywide expect that that would happen? MR. TANDY: Objection. THE WITNESS: I mean, I can't answer for Countrywide. BY MR. CALAMARI: Q. Now, you said that some changes were made between October '07 -- or let's strike that. You said that changes in how things would be done started to be made in October of '07. MR. TANDY: Objection. BY MR. CALAMARI: Q. Is that correct?

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A. No. We started to discuss changes because Rod Williams was going to leave and Rod was the chairman of the loss exposure review group. And with his departure, you know, we needed to talk about how we were going to handle repurchase approvals going forward. Q. Okay. And what did you discuss about how you would handle the purchases -- repurchases going forward? A. Well, we talked about the process that we wanted to use. Because Rod was the chair, there were other members on the committee that were what we called voting members. So, I mean, the decision, the interim decision was made that, after Rod left, I would take over as the chair making the final sign-off and that the other members would continue to be part of the meetings that we held. Q. Okay. And were there any other changes you discussed? A. Not during that time frame, no. Q. Did there come a later time frame when you discussed additional changes? A. We started -- I mean, after Rod left, I mean, a lot of discussions were going on because, you know, we had to figure out the processes.

MR. TANDY: Objection. THE WITNESS: No. I mean, I continued to handle the approvals of the repurchases. BY MR. CALAMARI: Q. And did you talk with people at Bank of America about proposed changes to the process and procedures? A. No. Q. Was there a transition committee set up to deal with the plan for transition of the two businesses? MR. TANDY: Objection. THE WITNESS: Well, I mean, I know that there were transition teams, but I was not part of those. I have no idea -BY MR. CALAMARI: Q. Okay. A. -- how they operated. Q. Did you report to someone that was a member of the transition team? A. No. Q. Do you know which transition team was responsible for the integration of quality control? MR. TANDY: Objection. THE WITNESS: No.

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Also, you know, volumes in repurchases were increasing and so we had to talk about that as well, because you couldn't do things necessarily the same way that we had in the past. So there started to be ongoing discussions about a process. It was an evolution that took place. Q. Were any changes implemented in the period of -- other than the one you mentioned, the Rod leaving and you taking over, were any changes implemented between October of 2007 and February of 2008? MR. TANDY: Objection. THE WITNESS: Not that I recall. BY MR. CALAMARI: Q. Okay. And in February of 2008 as we discussed before, the merger with Bank of America was announced and you began to participate in discussions with Bank of America people. Is that fair to say? A. Not in February, I don't believe. I think it was later. But I did start having meetings with them, yes. Q. And were any changes to the processes and procedures implemented during the period that you were having meetings with them?

BY MR. CALAMARI: Q. Do you know which transition was responsible for the integration of investor audit group? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. When do you recall any further changes being implemented to the processes by which the investor audit group processed repurchase agreements -repurchase claims? I'm sorry. A. There was a change as far as the management of the investor audit department. So once that change was being discussed, which was latter part of '08, you know, we started talking about how that might impact, you know, with the new manager. It was a legacy Countrywide manager that was coming over. But really what it was is more not a change in how we were going to handle repurchases, but we were looking at how we could facilitate them, you know, given the increase in volume. The process per se as far as how we reviewed them and handled them didn't really change through any of this. Q. So the investment auditor group remained in place throughout 2008? A. Yes.

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Q. And LERC or LERG, depending on which initials are used, remained in place throughout 2008? MR. TANDY: Objection. THE WITNESS: It -- the process remained in place. What happened is, instead of having a monthly meeting in Calabasas with Rod, I had a meeting with the voting members in my office and we went through loans. BY MR. CALAMARI: Q. Where was your office? A. It was in Westlake Village. And I held the meetings weekly instead of monthly. Q. And were records kept of those meetings? A. No, because it was a working group. Our records were the decisions that we made on the loans, our author- -- LERC -- what we called LERC authorizations. Q. Okay. Were there any other members of LERC or LERG during 2008? MR. TANDY: Objection. THE WITNESS: It wasn't -- it wasn't a committee, so, I mean, there weren't really members because it's not a committee. But the voting parties were still the same that they had been.

Q. And what was his title? A. Let's see. Well, at Countrywide, he was an executive vice president on credit risk management. And then Bank of America, I know the title was SVP, but I can't tell you exactly what the rest of it was. Q. Same person but different title? A. Right. Q. Who did he report to? A. Mark Miller. Q. And what was Mark Miller's role? A. He was a credit risk manager. Q. What's his background? A. I mean -- I mean, he was legacy Countrywide, had been there a very, very long time in credit-related fields, but I cannot tell you his background. Q. Now, after -- and you said there came a time when the investment audit group and the quality control group split? A. From underneath the same manager, yes. Q. Right. Who was the manager that the quality control group reported to? A. The -- after the split? Or -Q. Yes, after the split. A. That was Hans Rusli.

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BY MR. CALAMARI: Q. So informally they continued to operate in the same way that they operated previously formally? MR. TANDY: Objection. THE WITNESS: We did continue to have meetings and review loans just as we had in the past. It just wasn't, you know, the same kind of meeting that it had been. It was more -- done more often. BY MR. CALAMARI: Q. And you mentioned a change in management in this period. Can you tell me what that change was? A. There -- quality control and investor audit reported to the same manager. There was a decision to -- made to separate the two. And one -- quality control stayed with the manager, and the investor audit repurchase department went to a new manager. Q. And that was in 2008? A. No. The discussions started -- I don't believe it actually happened until early '09. Q. And who was the manager that they reported to when it was -- when they reported to the same manager? MR. TANDY: Objection. THE WITNESS: Hans Rusli. BY MR. CALAMARI:

Q. Okay. And who was the manager that the investment audit group reported to? A. Mike Schloessmann. Q. Okay. And Mr. Schloessmann, who did he report to? A. Oh, wow. You know, I'm sorry, I just -there's been a lot of changes. Q. Did -- did they ultimately -- was there some greater department that you were ultimately all part of, whether it was investment audit or quality control? MR. TANDY: Objection. THE WITNESS: We didn't -- I know they didn't report up through the same management structure. BY MR. CALAMARI: Q. That's pretty much what I'm asking. A. Yeah. No. Q. I'm trying to find out where those management structures led. A. I mean, Hans Rusli reported up through a different mana- -- senior manager up to Barbara Desoer at the bank once that happened -Q. Okay. A. -- once the merger happened. And --

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Q. And was that -A. -- Mike Schloessmann reported up to another manager -- oh, gosh, I can't recall. 'Cause there was an interim period before Terry Laughlin came, but -- and she -- and then he reported, but it was separate reporting lines. Q. Okay. And in terms of those separate reporting lines, did they have separate descriptors as to their group? Was one credit risk and another one something else, or you don't know? MR. TANDY: Objection. THE WITNESS: Yeah, you know, this was a time of a lot of changes as far as, you know, figuring out how -- you know, with the -- with the transition. So, I mean, I -- I cannot tell you. BY MR. CALAMARI: Q. After the legal day one, what you referred to as legal day one, were your repurchase groups -was the investment audit group combined with a similar group from legacy Bank of America? MR. TANDY: Objection. THE WITNESS: After legal day one, we then started to transition the two departments in together. Again, this was a time where there was, you

entities were fully combined, did they have a new name or did they just stay the investor audit department? MR. TANDY: Objection. THE WITNESS: They are now called -- they're call investor audit. BY MR. CALAMARI: Q. Still today? A. They were called -- they're now called claims management. Q. Okay. When did they start -- become claims management? A. Gosh. That's a -- that's fairly recent. Probably 2010, 2011. Q. And although I hate to jump ahead in time for one question, I can't resist. Is there a reason why it became -- why the name was changed to claims management? MR. TANDY: Objection. THE WITNESS: It was just felt to be more descriptive of what we were doing than investor audit people. When you say "investor audit," no one knew what you were talking about. BY MR. CALAMARI: Q. Okay. Back into the time frame we've been

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know, a lot of changes going on. At that point, at legal day one, I initially did not take on the repurchase department. I stayed in QC. Another manager took on the repurchase department. And so, you know, I wasn't really a party of it until later. So I don't know how much they did prior to me coming back into the repurchase department. BY MR. CALAMARI: Q. But throughout that period, you remained the -- the LERC person? MR. TANDY: Objection. THE WITNESS: Yeah. I was still involved in that department as well, and we were transitioning. And, yes, I remained the person that could do the approvals. BY MR. CALAMARI: Q. Okay. And was the new combined department given a new name? MR. TANDY: Objection. THE WITNESS: Not initially. I mean, it was -- you know, investor audit and the BAC repurchase department was the BAC repurchase department. BY MR. CALAMARI: Q. Okay. And eventually when those two

talking about. The combined department was located in Westlake Village? A. Yes. MR. ALLAN: Objection. MR. TANDY: Objection. MR. CALAMARI: I better rephrase the question because I just don't know if I made a mistake. BY MR. CALAMARI: Q. Where was the combined department located? MR. TANDY: Objection. THE WITNESS: Quality control and investor audit were -- for legacy Countrywide were in Westlake Village. The quality control departments for Bank of America were not located in that facility. BY MR. CALAMARI: Q. Once the entities were combined, where was the location of the department? MR. TANDY: Objection. THE WITNESS: We had various different locations. We -- we had the Westlake. We had Arizona. We had Brea. We had some in Pasadena. BY MR. CALAMARI: Q. So there was no one location that constituted the -- the -- if you will, the location

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of the investor audit group? MR. TANDY: Objection. THE WITNESS: I mean, we had associates in different buildings. It -BY MR. CALAMARI: Q. Where were most of the people located? MR. TANDY: Objection. THE WITNESS: The legacy Countrywide associates were predominantly in Westlake Village. BY MR. CALAMARI: Q. And where were the legacy Bank of America people located? A. The legacy repurchase department was located predominantly in Brea. And the legacy quality control was in Arizona. Q. Okay. And is that true today? A. No. Let me think here. I mean, we have more locations than we had then. I mean, it's -we've grown and we have other locations. We've got four -- there's other locations that have been added. Q. And was the Arizona location a former Countrywide location? A. It was both. Q. And do you have any recollection of, at the time the entities were combined, how many people were

was very involved in both departments. I -- I think it was like November, December where, you know, it was sort of decided there was going to be the formal split and I was going to go to one group. But through the tran- -- I continued, you know, working with QC. I mean, I still sit in QC meetings today. It's -BY MR. CALAMARI: Q. Okay. And that LERC committee continued to decide on the ultimate decision as to whether a re- -- a repurchase should be approved? MR. TANDY: Objection. THE WITNESS: It wasn't a committee. But these same parties, myself included, continued to review repurchases throughout that entire period of time. BY MR. CALAMARI: Q. But you didn't keep formal records of the meetings? MR. TANDY: Objection. THE WITNESS: No. They weren't a committee. They were a working group. BY MR. CALAMARI: Q. How was the -- the -- if you will, the decision to repurchase a loan recorded internally for

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employed in the -- the combined investor audit department? MR. TANDY: Objection. THE WITNESS: I -- I do not. BY MR. CALAMARI: Q. But it is clear that the combined department included employees from both former Countrywide and former Bank of America? MR. TANDY: Objection. THE WITNESS: There were associates that had been formerly employed by both of those legacy entities. BY MR. CALAMARI: Q. Now, what was your role when you resumed working in the repurchase department? A. I really went back into my former role of investor audit, just handling repurchases from all the different entities. Q. And did you have a title? A. I did. It was SVP audit director. Q. And do you recall when that was? That is, when you rejoined the investor audit department? MR. TANDY: Objection. THE WITNESS: Well, I never fully left because we were through transition. So, I mean, I

recordkeeping purposes? MR. TANDY: Objection. THE WITNESS: We had a database. It was called PAT. We recorded our approvals in PAT. Also, at that time, I had LERC authorization that I signed that went over to the wire department. BY MR. CALAMARI: Q. And when you say you recorded your decisions in PAT, did you literally do that from the room that you were sitting in meeting? Or was there somebody who was responsible for entering the information into PAT? MR. TANDY: Objection. THE WITNESS: It could be either way. We could do them during the meeting, just sit there and do them on our computers, or we could go after the meeting and put them in. There was only certain people that could, you know, enter data. But we could do it either way. BY MR. CALAMARI: Q. And those entries would still be in PAT today, I presume? MR. TANDY: Objection. THE WITNESS: Yes. BY MR. CALAMARI:

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Q. And if the decision was not to repurchase but rather to appeal the claim, how would that be reflected in the records? A. If we discussed a loan during a meeting and we determined that we didn't agree with the repurchase recommendation, we would send the loan back out to the underwriter and indicate in our comments that we didn't agree with the repurchase and give them guidance. Q. What was the repurchase oversight group? A. That was another group, you know, through this transition that came into play that was going to not make decisions on loans individually but would oversee the process, get reporting on what was being approved or, you know, in like data. So it was a group to oversee the repurchase process. Q. Let me just go back one question. You mentioned that you would "indicate in our comments we didn't agree with the repurchase and give them guidance." How would you give them guidance? MR. TANDY: Objection. THE WITNESS: We would explain to them why we didn't agree with their recommendation. BY MR. CALAMARI:

the reason why we think a loan needs to be appealed, I -- we put that in our appeal. I mean -BY MR. CALAMARI: Q. Was there information that you gathered about the appeal -- I'm sorry. Was there information that you gathered about the -- the loan that was the subject of the repurchase claim that you would not communicate to the claimant? MR. TANDY: Objection. THE WITNESS: I mean, that's pretty broadly hypothetical. I mean, I -- I'm not sure what you're asking me. I -- I just really don't know. BY MR. CALAMARI: Q. Would you say that you provided the claimant all of the reasons and supporting information that you gathered that supported your decision to appeal the claim? MR. TANDY: Objection. THE WITNESS: I mean, if -- if the informa- -- we didn't always share everything that we got as far as like confidential information. I mean, if you had something confidential, there was discussions on credit reports and things like that where people didn't want to share those, we would

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Q. Would -- would the information as to why you didn't agree with their recommendation be recorded in PAT? MR. TANDY: Objection. THE WITNESS: It could be. It may have been done via an email notification and then it would be in the appeal letter that was sent out. BY MR. CALAMARI: Q. Okay. Were there differences in the -- in the information that was recorded in PAT about your reasons for disagreement than the information that you would send out to the claimant? MR. TANDY: Objection. THE WITNESS: No. I mean, if we disagree with one, I mean, that would be the basis for our appeal. BY MR. CALAMARI: Q. Well, what I'm asking is whether there would be internal reasons for the decision that could be different from the reasons that were communicated to the claimant? MR. TANDY: Objection. THE WITNESS: I guess I'm a little confused on the question. I mean, you know, you have internal processes that you wouldn't give to a claimant. But

reference that document that we obtained information from a credit report. So, you know, if it was confidential documentation that we had, you know, we wouldn't share something like that. But if we were appealing a loan and we had a reason for an appeal, we're going to tell the requester why we don't agree with them. BY MR. CALAMARI: Q. And if there was information you gathered that might support the investor's position, even though you were going to appeal the loan, would you also communicate that information? MR. TANDY: Objection. THE WITNESS: I -- I don't think -- I mean, I guess I'm -- it's so hypothetical, but I don't recall an instance like that. BY MR. CALAMARI: Q. In other words, you don't recall ever gathering information that -- all right. Let me strike it. You don't recall ever -- ever gathering information that was both positive and negative in connection with the appeal -- strike it again. Let me try to rephrase this so that it can be understood by anybody.

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Do you recall, in handling a repurchase claim, you would do an investigation of the issues set forth in the claim? MR. TANDY: Objection. THE WITNESS: Part of our process in handling repurchases was to verify what an investor was telling us. BY MR. CALAMARI: Q. Okay. And did the information ever come back -- and did the results of your investigation ever include some information that might support the claim and some information that might suggest rejection of the claim? MR. TANDY: Objection. THE WITNESS: I mean, I think -- and, again, I mean, it's -- there's not a simple answer here because, you know, we also have to look. If an investor does not have a value rep and I had an appraisal that didn't support the value, that's not relevant to the claim. I mean, and I'm just using this as a hypothetical. I'm not saying that happened. So there are times where, because of the contract with the investor, the information isn't even relevant to the claim. So then I would not, you

to the claim, we would provide it. I -- I mean, I don't know what else to say. Q. And all you need to say is "yes" or "no." Even if that information did not support your position? MR. TANDY: Objection. THE WITNESS: See, you're trying to make it too simplistic. Because when I'm looking at a claim, I'm looking at the claim that comes in. I'm looking at what the claimant has come to me for. I'm looking at the contract. I'm looking at all the information. So when you say a hypothetical like this, I can't tell you what's relevant, what's not relevant. I don't have any idea what you're talking about me having. I just -- I -- it's just not something I can answer a "yes" or a "no" to. BY MR. CALAMARI: Q. Okay. And you can't answer "yes" or "no" to the question of whether you picked and choosed [sic] information to give back to the investor? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. No. Okay. And you can't answer the question "yes" or

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know, give them a copy of that. I mean, it's just -- it's so hypothetical, I'm just -- it's hard to answer something like that. You have to look at the contracts. You have to look at what the investor's requesting. You have to look at all the information before you know what's relevant to that claim. BY MR. CALAMARI: Q. Well, all I'm trying to find out is whether, after you looked at all the information that was relevant to the claim, did you pick and choose what you would provide to the investor? Or did you give the investor all information that was relevant to the claim? MR. TANDY: Objection. THE WITNESS: If we felt the information was relevant to the claim, I believe we would have provided it. BY MR. CALAMARI: Q. Okay. And you would not have withheld information that tended not to support your position. MR. TANDY: Objection. BY MR. CALAMARI: Q. Is that correct? A. If we believed that information is relevant

"no" as to whether you gave information that supported your decision but withheld information that did not support your decision? MR. TANDY: Objection. THE WITNESS: It seems kind of hard to me that you could have such diverse information. But -but no, I can't answer that. BY MR. CALAMARI: Q. You can't answer that "yes" or "no"? A. No, because it's -- I guess it's just -- I don't know how I could even have one that supports and one that doesn't. I mean, that just seems kind of -Q. Well, here's a hypothetical. You're trying to get information about the income, the income of a -- a particular borrower, and you get two pieces of information that's directly contradictory. And you make a decision that the piece of information that you have that supports your rejection of the claim is the more persuasive of the two pieces of information. Do you nonetheless give the investor both pieces of information? MR. TANDY: Objection. THE WITNESS: I mean, if you've got a full doc loan and you have income information, I don't

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know how you're going to have two different income documentations. I just -- I -- I'm just not seeing this. BY MR. CALAMARI: Q. You can't see that happening? A. No. If I send a verification to the employer and he sends me a verification back, he wouldn't send me two of them. Q. Well, what if you got a -- a statement from an employer that was contradictory to a pay stub -MR. TANDY: Objection. BY MR. CALAMARI: Q. -- that you received? MR. TANDY: Objection. THE WITNESS: If we had written documentation, our policy was to obtain written documentation back. I mean, we asked for the information in writing. BY MR. CALAMARI: Q. And I'm asking you, did it never occur in all of your work and in all of your investigations that you had contradictory pieces of information that came back? MR. TANDY: Objection. THE WITNESS: I mean, I'm not recalling

We were talking about the repurchase oversight group, and when was that formed? MR. TANDY: Objection. THE WITNESS: I can't tell you the exact date. I mean, I don't recall exactly. BY MR. CALAMARI: Q. Can you tell me the approximate time? A. I believe '09. Q. And can you describe again the function of the repurchase oversight group? MR. TANDY: Objection. THE WITNESS: That department was to oversee the repurchase process, you know, all aspects of it. You know, handle, you know, bulk repurchases. You know, interface with the investor audit department and investors. It was, you know, a group that oversaw the process. BY MR. CALAMARI: Q. And what was their role? Did -- what was their result -- role other than overseeing the process? MR. TANDY: Objection. THE WITNESS: I -- their -- I mean, I don't know. They had -- I don't know. I mean, they had jobs in addition to that, but I don't know what their

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that. BY MR. CALAMARI: Q. You can't recall any situation like that? MR. TANDY: Objection. THE WITNESS: No. I mean, not something that -- I mean, you can have an occupancy where one says that they live there and one said they didn't. But you have to look at the preponderance of evidence. I mean, I've seen that on Fannie Mae loans but -BY MR. CALAMARI: Q. Okay. Well, that -- that's a good example. What would you -- in that question, when you looked at the preponderance of evidence, what would you supply the investor? MR. TANDY: Objection. THE WITNESS: Typically it's the LexisNexis and we give them a copy of it. BY MR. CALAMARI: Q. Both pieces of information? A. It's on the same -MR. TANDY: Objection. THE WITNESS: -- pieces of information. BY MR. CALAMARI: Q. Okay. All right. We'll come back to this.

role is other than overseeing the process. BY MR. CALAMARI: Q. Did they -- did they have to approve repurchases? MR. TANDY: Objection. THE WITNESS: Not individual loan level repurchases, no. BY MR. CALAMARI: Q. Did they have to approve repurchases as a policy matter? MR. TANDY: Objection. THE WITNESS: Excuse me, that -- as a policy? BY MR. CALAMARI: Q. Yeah. MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. Did they set standards for repurchases? MR. TANDY: Objection. THE WITNESS: They could set standards as far as what we reque- -- required come in as part of the repurchase request. THE REPORTER: I'm sorry. I missed words. We could set standards --

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THE WITNESS: They could set standards for what we required to come in as part of the repurchase request, you know, the information that we required the investor to give us. BY MR. CALAMARI: Q. Did you have to report to them about the status of repurchases? MR. TANDY: Objection. THE WITNESS: A summary-type report. BY MR. CALAMARI: Q. And what form did the summary report take? A. It was a report that showed, you know, the repurchases that we had, the approvals, the re-sends, the in-process. It was just a summary of the status of the repurchases that were going through our system. Q. Did that go out on a monthly basis or a weekly basis? A. The ROG meeting was a monthly meeting. Q. And was it purely informational or was it also a necessary approval in order to effectuate repurchases? MR. ALLAN: Objection. THE WITNESS: They did not have to approve loan level repurchases, no. They could be done

the accounts to repay it? A. No. MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. You had limitless amounts of money to repay it? MR. TANDY: Objection. THE WITNESS: I would -- I was just never told I didn't have money for repurchases. BY MR. CALAMARI: Q. Okay. Does that group still exist? MR. TANDY: Objection. BY MR. CALAMARI: Q. By "that group," I mean the repurchase oversight group. A. No. Not in that format. Q. When did it dissolve? A. It didn't really dissolve. It just kind of -- things changed as far as, you know, the processes. New groups were put together with different kinds of oversight, different people are in them. I mean, there's still a group that oversees repurchases. I'm just not part of that group anymore. So I don't, you know, know exactly how it

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without any interaction with the committee. BY MR. CALAMARI: Q. Okay. And did they ever set standards for how many loans might be repurchased in any given period? MR. TANDY: Objection. THE WITNESS: No. I mean, we had what they called -- we had a limit that, if we reached that in a month, we just had to let them know so we could increase that limit just so they could keep track of how many we were approving. BY MR. CALAMARI: Q. What do you mean by "we had a limit that if we reached that"? What kind of limit did you have? MR. TANDY: Objection. THE WITNESS: It was just, you know, you set aside X amount of dollars for repurchases. And when you're going over that in a month for whatever reason, then we just notified them and then they increased the limit, just so they were aware that we were spending more. 'Cause you have to make sure the money in your accounts to pay us, so it had to be moved around. BY MR. CALAMARI: Q. Was it a problem in terms of having money in

operates. Q. What's the new group that oversees repurchases? A. I don't know. I -- I -- I cannot tell you. Q. What was the workout strategies group? A. Well, workout strategies was a group that was working with the investors. They knew the contracts. They were trying to help facilitate, you know, reaching resolutions on loans. Q. When you say "working with the investors," what does that mean? How are they working with the investors? MR. TANDY: Objection. THE WITNESS: I mean, they could be -- they would be maybe talking to them, you know, about the repurchases they had. You know, trying to help facilitate getting them resolved, getting responses back from them, making sure they had our responses. You know, trying to maybe take a group of loans and get decisions made on them. BY MR. CALAMARI: Q. So they -- they were kind of a liaison between the investment audit group and the investor who was presenting the claims? A. No.

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MR. TANDY: Objection. THE WITNESS: Not really a liaison. I mean, we worked together. But they were the ones that -they knew the contracts, they probably had relationships with the investors, knew people, you know, could try to help facilitate getting loans, you know, taking care of repurchased or appeals rescinded and just get them done. BY MR. CALAMARI: Q. Did they have regular meetings? A. I believe so, but I didn't attend those. Q. Were you a member of the repurchase oversight group? A. Let's see, was I a member? I know I attended the meetings. I don't know if they termed me a member. Q. Okay. And you said they had monthly meetings. Were there minutes of those meetings? MR. TANDY: Objection. THE WITNESS: No, it was a working group. BY MR. CALAMARI: Q. And back to the workout strategies group, do you recall when that was formed? A. No. I mean, I know it was '09 -- 2009-2010 when it was actually, you know, called workout

Q. Let me show you exhibit that has been marked 4017. It's a multidocument exhibit. It consists of a cover email from Nicole Hoffman dated October 5th, 2009, discussing a repurchase audit. And it's sent to several people, including yourself. And it's forwarding to you an attachment. Ask you first if you recognize the documents that are part of this exhibit? A. You know, I don't -- I don't recall this document. I mean, I'm on the email, but I -- I -Q. Let me ask you to turn to slide 8, which is the page that's Bates-stamped -- the last four digits are 7725. A. Okay. Q. And you see it says "Special Situations Group Overview"? A. Yes. Q. Does that refresh your recollection about a special situations group? A. No. Q. Okay. And let me ask you to read the first line as to the purpose of the special situations group and there's a bullet point under it. And you can just read that to yourself. Does that refresh your recollection about

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strategies and started moving into that format. I mean, we had people that worked with investors, I mean, at Countrywide. But it just, you know, kind of changes the titles in the way they functioned. Q. What was the special situations group? MR. TANDY: Objection. THE WITNESS: Special situations. I -- I don't recall a group being called that, or that I called anyone that. BY MR. CALAMARI: Q. That doesn't ring a bell as to the name of a group? A. I don't recall that being what I called someone. MR. CALAMARI: 4017. (The document referred to was marked as Exhibit 4017.) MR. TANDY: I just want to ask, this one has a marking on it. MS. BEA: I just put -- I just wrote 4017 on it. MR. TANDY: That's fine. I just didn't know if it was one you needed and it was marked particularly because it's -BY MR. CALAMARI:

the existence of a special situations group? A. No. I mean, I don't recall them ever existing at all. I mean, I think -Q. Okay. A. You know, again, this is during a transition time and you're working on processes, but I never recall having any such group or working with any such group. Q. Okay. And so -- but no reason to -- do you have any reason to believe that this group was never actually formed? MR. TANDY: Objection. THE WITNESS: I do in that -- like I said, we were going through a transition and we were working on processes. And I would think I would remember them if they were there and I worked with them, but I -- and I don't recall them at all. BY MR. CALAMARI: Q. Okay. You notice, if you -- the same document, if you look at slide 10. MR. ALLAN: Headed "Key Deliverables"? Is that your page? MR. CALAMARI: It is. I was just about to say headed "Key Deliverables." Thank you. BY MR. CALAMARI:

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Page 941
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Q. Do you see it says "Establish New Governance and Routines"? A. Yes. Q. Do you see that? By the way, the date of this document is August -- the date of the document we're looking at is August 12th, 2008. Is that right? A. Yes. Yes. Q. And you see under "Key Deliverables," you see the headline "Establish New Governance and Routines"? A. Yes. Q. And you see where it says "Kick off new LERG process"? A. Yes. Q. That's dated 8/13? A. Yes. Q. What was the new LERG process? MR. TANDY: Objection. THE WITNESS: I mean, this was pretty early on in the, you know, transition between the two companies. You know, because -- and, again, you know, Rod had left. Things had changed. You know, they were looking -- and a new manager was going to come in. They were looking at making changes.

BY MR. CALAMARI: Q. Did it occur in -- in the fall of 2008? MR. TANDY: Objection. THE WITNESS: I just can't give you a specific date. But I do recall working with their manager, I recall meeting with them. I just don't know exactly when we made the formal move. BY MR. CALAMARI: Q. You recall giving testimony to the SEC. Correct? A. Yes. Q. Do you recall when that was? A. When I did the SEC? Q. Yes. A. Not an exact date, no. Q. Was it a few years ago? A. I think so. Q. Would your memory have been better when you gave the SEC testimony? MR. TANDY: Objection. THE WITNESS: Well, it could have been closer to the time frame or, you know, I may have seen something that helped me, you know, a document as far as an org chart or something. So it's possible.

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I don't know what they're talking about specifically to this. And, you know, I -- I can't answer that. BY MR. CALAMARI: Q. Okay. You see under "Acquire Resources," it says "Combine BAC/CFC investor audit teams" and scheduled for 9/1? A. Yes. Q. Does that refresh your recollection about when the teams were combined? MR. TANDY: Objection. THE WITNESS: No, I mean, I would not say that's a definitive date. I mean, it's a target date. But I don't recall exactly when they started reporting to me. BY MR. CALAMARI: Q. But eventually they did? A. Yes, eventually. Q. And would that have been in this period generally? MR. TANDY: Objection. THE WITNESS: I -- I don't -- I don't know exactly when it was. I mean, I know it did occur at one point, but, I mean, it was a transition and it took a little time.

BY MR. CALAMARI: Q. Okay. Now at some point in 2008, the repurchase department worked to revise repurchase policies and procedures. Correct? MR. TANDY: Objection. THE WITNESS: We worked to -- once we merged, you know, transitioned in with Bank of America, they had certain formats that they wanted to see things in. And we did start working on making sure our procedures were in those -- their -- the kind of formats they liked. BY MR. CALAMARI: Q. Okay. How did they communicate the format they liked to you? A. They had a database, I believe. I mean, I didn't actually work on putting the policies and procedures in that format. Q. Somebody that worked for you did? A. No. Someone that was within workout strategies. We had an operations team and they worked on that. Q. Okay. Were there Bank of America people on the workout strategies team? A. Not that I recall. I recall them being Countrywide.

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MR. CALAMARI: Okay. Let's go to 11. MS. BEA: 4018. (The document referred to was marked as Exhibit 4018.) BY MR. CALAMARI: Q. Okay. I'm showing you a document entitled "Countrywide Internal Repurchase Policy." It was marked as Exhibit 4018, and it's Bates-stamped with a long Bates stamp number, but the last four digits are 8028 through 8038. MR. TANDY: No -THE WITNESS: 8036? MR. TANDY: -- I only have 8036. MR. CALAMARI: Let me see if I'm reading wrong or if I'm missing a page. You're correct. I have 8036. It just looked like an 8. As I said, on a break, I'll get my magnifying glass. MR. TANDY: I think we're due for a break soon, so. MR. CALAMARI: Whenever you want, that's fine with me. Although I -- let me just finish this document. MR. TANDY: Yeah, of course. BY MR. CALAMARI:

another document which will be marked as -- what are we up to? MR. TANDY: '19. MS. BEA: 4019. MR. CALAMARI: 4019? MR. TANDY: 4019. (The document referred to was marked as Exhibit 4019.) BY MR. CALAMARI: Q. 4019 is an email, or a cover email I should say, from Karen Jewett to you. And it's dated -- I'm sorry -- it's dated February 4th, 2009. It encloses an email dated May 29th, 2008 from the look of it. And the Bates stamp is, the last four digits, 7415 through -- through 7438. Did I get that one right? And beginning with Bates stamp 7417, there is a document entitled "Countrywide Home Loans, Investor Audit Procedures." Do you see that document? A. I do. Q. First, can you tell me in terms of the investment audit procedures, do you know when these procedures were operable? A. I don't. These -- these are pretty basic summary type, so I -- I don't know when this was

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Q. First, do you recognize this document? A. I mean, I've seen this format before. This is from enterprise risk management. And I see my name on this document, but I don't specifically recall this -- this one. I can tell that it's an enterprise risk management document. Q. What is "enterprise risk management"? A. They were a risk group within Countrywide Home Loans. They -- they were separate from internal audit, separate from QC, and they were another re- -in -- risk management oversight-type group. Q. And let me ask you to look at another document. I'll tell you what, why don't we -- why don't we take the break now and I'll just -MR. TANDY: Sure. THE VIDEOGRAPHER: This marks the end of tape number 1 in the deposition of Cynthia Simantel. Going off the record. The time is 10:39 a.m. (Recess taken.) THE VIDEOGRAPHER: This marks the beginning of tape number 2 in the deposition of Cynthia Simantel, Volume 3. Back on the record. The time is 10:55 a.m. MR. CALAMARI: Okay. Let me introduce

done. Q. Okay. Were these the procedures in effect in July 2008? MR. TANDY: Objection. THE WITNESS: I don't believe so. The procedures were more detailed than this. BY MR. CALAMARI: Q. So you think these were yet older procedures than July 2008? MR. TANDY: Objection. THE WITNESS: That, or a summary document. It's not a very specific procedure document. BY MR. CALAMARI: Q. Can you tell anything from the email that is on Bates stamp page 7415 as to when these procedures were operable? A. No. I -- I can't. No. I mean, the first email is from '08 and it's being forwarded to me in '09. I don't know what the purpose was of this going back and forth, so. Q. Okay. And you don't remember receiving this email? A. No. Q. Okay. If you'd turn back to Exhibit 4018. MR. TANDY: Not the Bates number. The

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Page 949
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actual exhibit. THE WITNESS: Okay. 4 -- 80 -MR. TANDY: Peter, if I may help the witness for a second? MR. CALAMARI: Yeah, sure. Feel free. MR. TANDY: He's talking about the actual document exhibit number which is -THE WITNESS: Oh. MR. TANDY: -- this exhibit right here. THE WITNESS: Okay. I was looking at the Bates stamp. Okay. MR. TANDY: You were, yes. THE WITNESS: Right. Thank you. BY MR. CALAMARI: Q. Do you recognize this document? A. No. I -- you know, I recognize the department, but I don't recognize this document. Q. Is this the kind of document you would have seen at the time it was prepared? MR. TANDY: Objection. THE WITNESS: I mean, I see my name on this, but this document -- enterprise risk management was one of our risk management teams. And they, you know, did recommendations and put out documents like this, like draft policies, that may never have been

I mean, to modify policies and procedures. So, I mean, they would have been modified since legal day one just as a matter of course. We always look to do that, you know, where necessary. BY MR. CALAMARI: Q. In connection with that work, did you have any discussions regarding potential representation and warranty exposure? MR. TANDY: Objection. THE WITNESS: In relationship to policies and procedures? BY MR. CALAMARI: Q. Yes. MR. TANDY: Objection. THE WITNESS: I mean, I don't recall anything specific to that. I mean, it's a terminology that's used, but I don't recall anything specific. BY MR. CALAMARI: Q. Do you recall ever participating in discussions regarding increasing exposure for representation and warranty liabilities? MR. TANDY: Objection. THE WITNESS: I have been in meetings where it's been discussed that repurchases are increasing,

Page 948
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implemented. So this could just be a draft document where it never went any further than that. BY MR. CALAMARI: Q. Okay. And, in any event, you don't recall this particular document? A. No. Q. Okay. Let's put these document -- and do you know if this document, that is, Exhibit Number 4018, is referring to the policies and procedures in Exhibit 4019? MR. TANDY: Objection. THE WITNESS: No, I don't think they would be related at all. BY MR. CALAMARI: Q. Okay. Was there an assessment done by Bank of America of the credit risk management repurchase policies and procedures after legal day one? A. I'm not aware of it. Q. Okay. Were the policies and procedures for the investment audit group modified after legal day one? MR. TANDY: Objection. THE WITNESS: I mean, we've been modifying our policies and procedures to enhance them and improve them. And I mean, that's an ongoing process,

which results in increasing exposure. BY MR. CALAMARI: Q. Did that become a consideration in connection with your ongoing review of policies and procedures for processing repurchase claims? MR. TANDY: Objection. THE WITNESS: I mean, the only thing that increasing volume of repurchases would have to do with is, looking for ways to -- I mean, increasing staffing, looking for ways to manage the repurchases in a more timely manner, you know, maybe increasing reporting so that we can provide more reporting to, you know, the investors and to other parties so that people had visibility because it's easier to manage, you know, a small amount of loans. But as it grows, I mean, you have to improve your processes or increase processes to handle that. BY MR. CALAMARI: Q. Do you recall any discussions about changing the policies and procedures in an effort to minimize the exposure? MR. TANDY: Objection. THE WITNESS: Not changing policies, procedures to minimize exposure. I mean, minimizing exposure -- I mean, part of the process of an

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Page 953
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investor audit or any kind of repurchase department, it's their job to make sure that they review loans, they appeal those that they should appeal, and that we repurchase those that we should repurchase. So when you're talking about minimizing losses, you're talking about not repurchasing loans that aren't valid breaches and only repurchasing those that are. And, you know, doing so on a timely manner, too, so that we keep the relationship. BY MR. CALAMARI: Q. Did you -- did you feel at any time in this period that you had been repurchasing loans previously that you should not have been repurchasing? MR. TANDY: Objection. THE WITNESS: I never felt like that. BY MR. CALAMARI: Q. So if that's the case, why would there be a need to change policies and procedures to ensure that you were not repurchasing loans that you should not have -- strike the question. Would you say it became more difficult over time to have a loan repurchased by Countrywide? MR. TANDY: Objection. THE WITNESS: No. I believe that what

Q. Yes, that's correct. A. When Countrywide and Bank of America were separate or after the transition? Q. After the transition. A. I mean, after the transition when, you know, Countrywide became, you know, under the Bank of America umbrella, we -- there were times where they weren't really loaned, they were redeployed where, you know, production volume was down or QC volume, you know, the -- so the number of loans going through QC would have been down. So employees could have been redeployed out of those areas into reps and warrants. Q. Did the -- the number of employees handling representation and warranty repurchase claims increase over time? MR. TANDY: Objection. THE WITNESS: Yes. I mean, volume of claims increased and the employees increased to handle them. BY MR. CALAMARI: Q. And some of those employees were Bank of America employees? MR. ALLAN: Objection. MR. TANDY: Join. THE WITNESS: They -- they may have been,

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happened is that investors started throwing loans at us that weren't really breaches to see if we would repurchase them, but I don't believe that we didn't repurchase valid claims. BY MR. CALAMARI: Q. Okay. And do you think that the procedures that were implemented over time made it more difficult for the investors to obtain approval of a repurchase? MR. TANDY: Objection. THE WITNESS: No. I -- I don't think so. I mean, it's not something -- the policies and procedures were internal documents in order for us to facilitate them and make sure people did them properly in our systems. But as far as what we expected of investors, we didn't change that. BY MR. CALAMARI: Q. Are you familiar with Bank of America employees being loaned to legacy Countrywide, Countrywide Home Loans, or Countrywide Financial Corporation, to assist in dealing with repurchases? MR. TANDY: Objection. THE WITNESS: Bank of America employees being loaned to Countrywide? BY MR. CALAMARI:

yes. BY MR. CALAMARI: Q. Do you know how many total employees were engaged in the group that was handling repurchase claims? MR. TANDY: Objection. THE WITNESS: At what point in time? I -- I mean, I can't give you an exact number. But, I mean, it -- as repurchase claims increased, I mean, the employees that were handling claims increased. BY MR. CALAMARI: Q. Well, do you have an estimate of how many employees it would have been in -- in the period of, say, November of 2008? A. Gosh, it would just -- no, I would be guessing. Q. Well, is there a rough number? Is it a hundred or is it a thousand? Is it -A. No, I mean, I would say less than a hundred. Q. And how many was there -- were there in -on legal day one? A. I don't -MR. TANDY: Objection. THE WITNESS: I can't answer. I have no idea.

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Page 957
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BY MR. CALAMARI: Q. Do you know how many there are today? A. No, I don't know a specific number. I know it's more than there was in 2008, but I don't have a number. Q. Again, do you have a rough number? Is it hundreds? Is it thousands? Is it -A. It's not thousands. It's definitely in the hundreds but -Q. Okay. Were you involved specifically with monoline repurchase claims? MR. TANDY: Objection. THE WITNESS: I did have some involvement with monolines, yes. BY MR. CALAMARI: Q. You were, in fact, head of the monoline team, were you not? MR. TANDY: Objection. THE WITNESS: For a -- for a period of time, yes. BY MR. CALAMARI: Q. What was that period of time? A. When the monolines first started coming in with claims, I was sort of in a -- I wasn't really in charge of the repurchase department. I was kind of a

THE WITNESS: I mean, those kind of -- those were the -- kind of the headers that we used for repurchase claims. BY MR. CALAMARI: Q. Did you have any involvement with what would be called outbound repurchases? That is, repurchases to correspondent lenders? A. Not for legacy Countrywide. The only involvement I had with outbound claims was legacy BAC had an outbound repurchase department that had been part of their repurchase department that rolled in up under me. Q. Okay. And you mentioned that you were involved with monolines, private investors, GSEs. Did that change over time or did you remain involved in those kinds of repurchase claims throughout the period from -- from 2008 through today? A. I -MR. TANDY: Objection. THE WITNESS: No, it did change. I was managing GSEs. Privates went over to Kathryn Martin. Shareef Abdou was managing the monolines. I took on all of the GSEs. Now, I'm handling negotiations with the GSEs and Kathryn Martin has the GSEs. So, I mean, there's been changes.

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liaison. I had actually taken over QC and they brought in another manager into the repurchase department. But I still maintained involvement. I didn't come back fully until, you know, like latter part of '08. Q. Okay. And at that point in time, did you become in charge of the monoline repurchase claims? A. I -MR. TANDY: Objection. THE WITNESS: I did. BY MR. CALAMARI: Q. Okay. And how long were you in charge of that group? A. Let's see. Probably until about mid 2010. Q. Okay. And were you also involved in private investor repurchase claims? A. Yes. Q. Excuse me? A. Yes. Q. And were you involved in GSE repurchase claims? A. Yes. Q. Were there any other kinds of repurchase claims that you were involved in? MR. TANDY: Objection.

BY MR. CALAMARI: Q. Okay. What was the process for monoline purchases, let's say starting in -- for monoline repurchases, let's say starting in -- in 2009? MR. TANDY: Objection. THE WITNESS: I mean, it was the same basic process as any other repurchase. I mean, one of the differences is we required requesters to send us a letter outlining the breach and the information. When we started receiving monoline repurchases, it typically came on a spreadsheet. The -- we were sending a lot back. We didn't really know what they were requesting us to repurchase. So, I mean, there was a -- the repurchases weren't coming in where we could really deal with them and understand what they were asking us for. So there was a lot of trying to get them to come to us with what were they citing as a breach and be specific. And they were using spreadsheets, whereas usually we had letters. So, you know, that was a more difficult process, trying to deal with, you know, fifty loans on a spreadsheet versus letters, because of the way we housed them in our systems. But as far as, you know, reviewing them, I

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Page 961
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mean, our process, once the claim was something that we could actually review, was the same as we would do with a private or a GSE. You know, go to the contracts, start looking at the claims, responding to the claims, you know, approving claims that we felt were valid. I mean, it was the same kind of process. BY MR. CALAMARI: Q. Did you install at some point in time a second tier review? MR. TANDY: Objection. THE WITNESS: A second tier review. Well, all repurchase approvals had a second tier review on them regardless of who the claimant was. So, I mean, if you're asking me that, I mean, that was something we always had. BY MR. CALAMARI: Q. Okay. Was there a -- in that case, was there a third level of approval necessary at some point in time? MR. TANDY: Objection. THE WITNESS: Specific to monolines? BY MR. CALAMARI: Q. Well, let's answer it specific to monolines first. A. I'm not recalling a third level of approval.

authority with regard to monoline repurchase requests? MR. TANDY: Objection. THE WITNESS: Not during the time that I was working on them. I mean, we held a meeting much like, you know, the meetings I had with my other managers to discuss repurchases and make decisions on them, you know, the same as I did on the privates or the GSEs. BY MR. CALAMARI: Q. And what was their -- what was -- did her team have a name? MR. TANDY: Objection. THE WITNESS: I'm sure it did. I just don't -- I don't remember. I just talked to Susan. BY MR. CALAMARI: Q. What was their role in the process? MR. TANDY: Objection. THE WITNESS: I mean, they had relationships with the monolines, so they -- I mean, I really viewed them as more of a workout strategies type relationship, you know, someone to help us with the monolines, talk about loans, get them resolved. Because they had contacts. BY MR. CALAMARI:

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Page 962
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I mean, it was the same kind of process that the underwriters reviewed them, the managers reviewed them, they came to me. It wasn't different. Q. When they came to you, were you the final sign-off? MR. TANDY: Objection. THE WITNESS: Well, up until any kind of legal action, yes. Once legal got involved, because, you know, of lawsuits and things, then no. Then we had other parties -- we had legal interaction with them, too. BY MR. CALAMARI: Q. In addition to legal, did you have any other business reviews? MR. TANDY: Objection. THE WITNESS: I did start working with a legacy BAC team that had experience with monolines. Because we really had never had monoline repurchases for -- before at Countrywide. BY MR. CALAMARI: Q. Who was on the legacy BAC team that had experience with monolines? A. Susan Welsh was my contact there. And then she had associates working for her. Q. And did her team become the final approval

Q. Did your -- oh, I shouldn't say "did your." Did the legacy Countrywide people not have contacts with monolines? MR. TANDY: Objection. THE WITNESS: In my department, we didn't. That doesn't mean that there weren't contacts within, you know, some of our sales groups or something. But within my department, I didn't have any contacts. BY MR. CALAMARI: Q. Did the process for processing monoline repurchase claims differ from the process of processing investor or GSE claims? MR. TANDY: Objection. THE WITNESS: No, not that I recall, other than just, you know, the way they came to us. BY MR. CALAMARI: Q. GSE repurchase requests were processed through investor audit. Isn't that right? A. Yes. Q. And monoline and investor claims first went through investor relations, didn't they? MR. TANDY: Objection. THE WITNESS: No. No. The investor relations was dual, looking at the contracts, but all claims regardless came into my team. I mean, they

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didn't go there and then get filtered over. It was just a matter of they were looking at the contracts for us on the privates or the monolines. BY MR. CALAMARI: Q. Did this slow down the process of processing a monoline repurchase? A. No. Because we were doing it in conjunction, dual, at the same time they were reviewing the contracts that we were reviewing the loans. No. Q. So you wouldn't say there were more obstacles built into the process for monoline and investor repurchases then GSE repurchases? MR. TANDY: Objection. THE WITNESS: No. I mean, the only difference was that we had contracts that we needed to review. Where with the GSEs, I mean, it's -- you know, we've got a standard. It's not separate contracts. I mean, there's some variances and things, so those would come into play. So, no, I mean, we had the same process. MR. CALAMARI: I think it's time. I know, we're all -MS. BEA: Should we mark 4020? THE WITNESS: Lots of paper.

A. Yes. Q. -- document and those pages that I just mentioned? A. Yes. Q. Do you recognize this document? A. I do. This is a policies and procedures document. This is what I was talking about, about the big document. Q. And was this document created on or about this time, or is this document -- was this document created on or about this time? A. I wish it had a date on it. But, I mean, we had this document. Now, it could have been enhanced. But we'd had policies and procedures in place I know since the time that I came in June of 2003. Q. Okay. And when you say the policies and procedures in place since June of 2003, was that a document -- this document is literally hundreds of pages. A. Hm-hm. Q. Is this new or was it always a hundreds-of-pages document? MR. TANDY: Objection. THE WITNESS: If -- it probably wasn't always hundreds of pages. Because when I first came

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Page 966
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MR. TANDY: That's my understanding. It's all one? MR. CALAMARI: Yeah. MS. BEA: Not even the largest binders that could accommodate that. MR. CALAMARI: Fortunately, we won't have a lot of questions about it. MR. TANDY: May I have you ship these back to me rather than carry them on the plane? I lightened my bags in anticipation, but -(The document referred to was marked as Exhibit 4020.) BY MR. CALAMARI: Q. I've placed in front of you a document that we've marked as Exhibit 4020. And it is Bates-stamped, and I'll just read the last four digits of the Bates-stamp again, 8919 through 9478. The cover email Bates-stamped 8919 is from Karen Jewett to Alice Carmack and that's dated 2/18/2009. And that attaches a series of emails to the CRM group and others. And attached to this at Bates stamp number 8922 is a document called "Credit Loss Mitigation Strategies, Policy and Procedure Manual." Do you see that --

into the repurchase department, we only -- we really only had Fannie Mae and Freddie Mac repurchases. We weren't even really getting any from privates. What -- soon -- you know, as you start seeing them, you have to increase the policies and procedures to deal with the different kind of requesters. BY MR. CALAMARI: Q. If you look at -- yeah, I'm just looking for something else. First, if you look at what's marked as Bates-stamped 8920, you'll notice that there's a heading that says: "The following are the new sections introduced." A. Okay. So updates. Q. And you see it has a -- a new section on compensating factors? MR. TANDY: Objection. BY MR. CALAMARI: Q. At the bottom of the page, you'll see there's a heading that says "Compensating Factors"? Well, actually, let me -- let me try it again. At the bottom of the page, it says: "The following are new sections

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Page 969
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introduced." Do you see that? A. Yes. Q. And one of them is listed as "Compensating factors." Do you see that? A. Yes. Q. Was that a new section introduced at this time? MR. TANDY: Objection. THE WITNESS: It was a section that was broken out for ease of reviewing. I mean, we have always had compensating factors in our policies and procedures. I mean, that's been there since I've been there. BY MR. CALAMARI: Q. In -- in the written policies? A. Absolutely. It just would have had its own section. It would have just been addressed in the overall policies and procedures. Q. Okay. And then underneath that, there's a heading named "Materiality"? A. Yes. Q. And it says -- again, under "The following new sections introduced," was that section always in

email which is Bates-stamped 8921, the bottom corner, there's a second heading that says: "Changes to the Existing Policy and Procedures." Is that right? A. Yes. Q. And if -- if the subject on compensating factors, materiality, and monoline had been part of the existing compen- -- existing policy and procedures, why wouldn't these have been included under the second heading in this document? MR. TANDY: Objection. THE WITNESS: These had their own sections already. So they're changes to existing sections in the manual. The policies and procedures for the compensating factors and materiality were part of the underwriting analysis, so they were lumped in into a section within the manual. This is giving them their own section. BY MR. CALAMARI: Q. And did -- and you don't think the document we showed you which we marked as Exhibit -- let me give you the right number as opposed to the wrong number -- 4018, is that a document that's referred to as existing policy and procedures?

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11:27:56 your policies and procedures? 11:27:58 A. Material- -- the addressing materiality has 11:28:00 always been part of our policies and procedures. 11:28:04 It's always been part of how we review claims. So 11:28:06 this is just breaking it out into its own section 11:28:06 rather than having it just kind of lumped in, in a 11:28:06 worksheet or some other -- making it easier to 11:28:11 reference it and being more specific. 11:28:16 Q. Okay. And there's a section named "Monoline," pages 299 to 331, which also is under the 11:28:20 11:28:24 new sections introduced. 11:28:27 Do you see that? 11:28:30 A. Yes. 11:28:34 MR. TANDY: Objection. 11:28:37 THE WITNESS: Yes, I do. 11:28:52 BY MR. CALAMARI: 11:28:59 Q. And was that something that was also in your 11:29:13 previous policies and procedures? 11:29:14 A. I -- without looking at a prior document, I 11:29:21 wouldn't nee- -- I wouldn't know how specific. I 11:29:25 mean, this is early '09 and we really hadn't gotten 11:29:28 tons of monoline requests. So, you know, it would become something that we would need to have a section 11:29:29 11:29:32 for, you know, specific in our manual. 11:29:36 Q. Now, you notice on the second page of this

MR. TANDY: Objection. THE WITNESS: I -- I have no -- I mean, this document is not a policy and procedure. And I'm not -- I don't know what they're referring to in this document. BY MR. CALAMARI: Q. Okay. So somewhere out there, there should be substantial policies and procedures that preceded this document that -- that preceded this document that constitutes Exhibit 4020? A. We updated our policies and procedures, so we would update existing policies and procedures. We didn't like archive them. So you're probably not going to find archived policies and procedures. Q. Let me ask you to look at what is page 305 of Exhibit 4020, and it's Bates-stamped, the last four digits of the Bates stamp 9226. A. Okay. Q. Do you see that? A. Yes. Q. Do you recognize that document? A. Yes, I've seen it. Q. What is it? A. This is just a letter telling requesters how we want to see their requests come into us. It's

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Page 973
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talking about a demand template. And that's for people that wouldn't use letters, that sent us Excel, so it would tell them kind of what we needed to know on these requests. It's just kind of explaining the communication process which is consistent. I mean, underwriter, then manager, then me. The requests have to come to us in writing. So it's just kind of telling them what we expect on a repurchase request, and then an escalation process. Q. Okay. And this letter is a letter intended for a monoline. Is that right? A. It's a draft for a monoline, but I mean -because they were the ones that predominantly sent us Excel spreadsheets. But if anyone sent us an Excel spreadsheet, a private label requester, I mean, we would still do the same thing. Q. And you'll notice that this letter starts off with the first words: "Countrywide Home Loans, Inc., CHL, has recently implemented certain changes to our loan repurchase process that we feel deliver sustainable improvements over the long term." A. I see --

You know, we were definitely trying to make the process for them easier, that we are trying to be -- to work with them. So, no, I do -- I do think it was an improvement because, you know, if you would have seen the way they came to us in the beginning, I mean, we were working very hard to try to get through these loans and try to get them so it's something that we could actually respond to. BY MR. CALAMARI: Q. Well, why was adding a third level of review something that improved the process for the monoline? MR. TANDY: Objection. THE WITNESS: Because we were doing spreadsheets. So the problem is you have appeals and approvals on the same spreadsheet. So you've got to look at -- the people that would make the decisions have to be looking at that spreadsheet. If you're dealing with a letter, it's different. But you've got a spreadsheet that houses both appeals and approvals, so it has to be looked at to make sure we agree with it. BY MR. CALAMARI: Q. Isn't it a fact that the first level of review could only make two decisions: Either to

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Q. Do you see that? A. I do. Q. Okay. And then below that, it says, under "Communication Process": "Repurchase requests will receive three levels of review prior to a response decision being made and communicated to you." Do you see that? A. Yes. Q. Did you consider that an improvement in the process? MR. TANDY: Objection. THE WITNESS: When we were getting monoline requests, they were coming in and they -- we were trying to work with them to make sure that they came in with all the information we needed, that they were complete, because they were just coming in incomplete, kind of half done on spreadsheets. So that's why we had the demand template. We wanted to make sure that we were communicating properly with them as far as what we were reviewing. Because, again, monolines were something we hadn't seen repurchase requests from before so we wanted the make sure that the contracts were looked at.

appeal the repurchase claim which, in essence, means reject it, or recommend that the repurchase claim be reviewed at the second level? MR. TANDY: Objection. THE WITNESS: Underwriters had the authority to appeal loans and recommend loans for approval. BY MR. CALAMARI: Q. But they did not have the authority to actually approve repurchases. Is that right? MR. TANDY: Objection. THE WITNESS: Not for any requester did they have that authority. I mean, that was -- very few people had that authority. BY MR. CALAMARI: Q. Right. They could only reject -- they could only reject or pass it to a higher level. Is that right? MR. TANDY: Objection. THE WITNESS: They could only appeal or recommend it for approval, that's correct. Yes. BY MR. CALAMARI: Q. And that higher level didn't review a rejection decision, did it? MR. TANDY: Objection. THE WITNESS: If it was on a spreadsheet and

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they were reviewing the loans before the spreadsheet went out, yes, they would. I mean, if you're dealing with a spreadsheet that has approval recommendations and appeal recommendations, you could be reviewing both. The underwriters absolutely could have their appeals reviewed if they wanted them reviewed. We just didn't have a mandatory policy that an underwriter have an appeal reviewed because, I mean, these were senior underwriters with a lot of experience. BY MR. CALAMARI: Q. I didn't quite understand that. You said, we didn't have a mandatory policy and you said, "if they wanted them reviewed." Is it clear that there would not be an automatic review by the second level of a decision by the first level to appeal a repurchase claim? MR. TANDY: Objection. THE WITNESS: No, it is not clear. If it's on a spreadsheet where you have approvals and appeals, that second-level person would be looking at both of those. BY MR. CALAMARI: Q. And -- and it would be part of that second-level person's responsibility to determine

look at." Was it their obligation to look at appeals as well as to look at recommendations to repurchase? MR. TANDY: Objection. THE WITNESS: As a manager, if somebody gives me something, I feel it's my obligation to review it. We had a process in place where underwriters had loans second-level appeal reviewed regardless of the requester. We also had a process in place where underwriters had been given the authority to issue an appeal on their own without a manager review. There was -- there was dual processes going on. So if it's a loan that as manager that has an appeal that they should be looking at, absolutely they're looking at it. You have an underwriter that's not released. BY MR. CALAMARI: Q. Was that a written policy? That is, was it written that the manager was required to look at appeal decisions as well as repurchase decisions? MR. TANDY: Objection. THE WITNESS: There is a document that addresses manager responsibilities. And if a manager has an underwriter that has not been released to do appeals on their own, they are required to review

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Page 978
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whether or not the decision to appeal was correct? A. If a second-level person reviews a loan, absolutely that's part of their responsibility. And they do, in fact, have -- managers do, in fact, review appeals for all different types of requesters and send them back to the underwriters and tell them that they are on the wrong course, that they should recommend approval or, you know, some other action. Q. Okay. And that was part of the process? A. It -- it is part of the process that's available for every requester. Q. Well, when you say it's "available," was it part of the process or did a requester have to request that particular treatment? MR. TANDY: Objection. THE WITNESS: You have to look at how the -what the process is. If someone is sending me a spreadsheet that has approvals and appeals on them, the person going through that spreadsheet will naturally look at approvals and appeals. If it is a separate letter, then it would not be something that the approver would be doing the second-level review on. BY MR. CALAMARI: Q. Again, you used the words "will naturally

them. BY MR. CALAMARI: Q. How many of your managers -- I'm sorry. How many of your underwriters did not -- had not been released to do appeals on their own? MR. TANDY: Objection. THE WITNESS: I can't give you a number. I mean, all new underwriters were not released. BY MR. CALAMARI: Q. A training period? A. Yes. MR. TANDY: Objection. BY MR. CALAMARI: Q. So during a training period, they couldn't do appeals on their own. And once the training period was completed, they could? MR. TANDY: Objection. THE WITNESS: Not always. I mean, some underwriters had longer periods. Some didn't get released. But if an underwriter was released to do their own appeals, they absolutely could issue an appeal on their own without manager review. They had -BY MR. CALAMARI: Q. And there was no requirement --

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A. No. Q. -- to have manager review? A. No. MR. TANDY: Objection. BY MR. CALAMARI: Q. And if a repurchase was submitted by letter, an appeal would not have been escalated at all to the next level. Is that right? MR. TANDY: Objection. THE WITNESS: It would depend. If the underwriter wasn't released or if the underwriter had a question, they could absolutely escalate it to their manager. So you cannot say it would always go out without a manager appeal, but they had the ability to do it, if they were released. BY MR. CALAMARI: Q. The manager had the ability to ask a que- -I'm sorry. The underwriter had an ability to ask a question if the underwriter made the decision to ask the question. Is that right? MR. TANDY: Objection. THE WITNESS: Yes. BY MR. CALAMARI: Q. Okay. And -- and people in training were

for all requesters. That second-level review was done on GSE loans. It was done on private loans. Every requester went through -- the underwriter had the ability to issue an appeal on their own if they were released. If it was an approval recommendation, their manager had to review it and make sure that they agreed with it before it came up for final approval. BY MR. CALAMARI: Q. All right. But that second review, the review that you said their manager did, that was not a process that existed before this policy was implemented, is it? MR. TANDY: Objection. THE WITNESS: Yes. It's a process that's always existed. I mean, it's not something new. BY MR. CALAMARI: Q. Okay. Then this letter is -- is not correct, and it's not describing recently implemented certain changes to our loan repurchase process. MR. TANDY: Objection. BY MR. CALAMARI: Q. Is that right? MR. TANDY: Objection. THE WITNESS: When it's talking about

Page 980
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Page 982
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not authorized to issue an appeal decision on their own? A. Correct. Q. But the regular process required only a second-level review of a decision to repurchase. Is that correct? MR. TANDY: Objection. THE WITNESS: That was the standard process. That in order for a loan to go to the committee and spend their time looking at it, a manager needed to approve it, yes. BY MR. CALAMARI: Q. Okay. And then there was a third-level review. Is that correct? MR. TANDY: Objection. THE WITNESS: That third-level review they're talking about in here is like my final sign-off on the approval. So it's not really -it -- so it is a review, but it's the final authorization. BY MR. CALAMARI: Q. Okay. So that's not the new review. The new review is the second-level review? MR. TANDY: Objection. THE WITNESS: No. That review is in place

recently implemented changes, it's talking about the demand template. It's not necessarily talking about -- it's telling the monolines how we're going to do business with them in order to facilitate their repurchase requests, because we were getting very haphazard requests in. And so we're trying to help them. So that's what they were talking about was recently implemented. Okay, this is going to help you guys. If you do this, we can look at your requests and actually respond to them. BY MR. CALAMARI: Q. And it's going to help you guys that we have these three levels of review. MR. TANDY: Objection. BY MR. CALAMARI: Q. Is that right? MR. TANDY: Objection. THE WITNESS: If we approve a loan, then you're going to get an approval and it's done, so yes. I mean, if the -- let's say you had an underwriter give an approval. It gets to me and I look at it and I say no. Wouldn't you rather know two weeks before that or three weeks before that then when it finally gets to me? So, yes, it's getting

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the decisions done. BY MR. CALAMARI: Q. Okay. Let me ask you to turn to page 331 of the document Exhibit 4020. Do I have the right -- do I have the right number? It doesn't look like it. I'm sorry. 301. A. Okay. So why is mine -- 306, 307. Q. I'll give you the Bates stamp if that helps. It's 49222 are the last five digits. A. All right. I got it. Q. Now, this is the beginning of the new section of the manual on monolines. Is that right? MR. TANDY: Objection. THE WITNESS: I don't know what the -- I mean, it shows 1/30 date here. I don't know how much of this is new. Because, again, like I said, we update our policies and procedures. BY MR. CALAMARI: Q. Well, what's listed as new in the letter we looked at which was on Bates stamp -- hold on -48920. Correct? MR. TANDY: Objection. THE WITNESS: It did say it was a new section, yes. BY MR. CALAMARI:

Q. So you expected that for the most part the only two decisions they would be making would be disagree, which would mean appeal, and have higher level review. MR. TANDY: Objection. BY MR. CALAMARI: Q. PMR. A. Recommending approval, yes. Q. Okay. Let me ask you to look at page 17. 317. I'm sorry. A. Okay. Q. If you'd look at the heading on the top of that section, that page -- and I should give you the Bates stamp, 49238 -- it says "Complete materiality field." And then it goes on to say: "For the most part, you will only select 'Not Material' if we agree with the finding but have determined that it is immaterial." A. Example, Patriot Act form, right. Q. Yeah. A. Yes. Q. Why would they, for the most part, select "not material"? MR. TANDY: Objection.

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Page 986
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Q. Okay. And let me ask you to turn to page 316. A. Okay. Q. And you see a heading there at the top of that page -- and 316 is Bates-stamped 49237. You see a heading that says: "Complete Finding Status, for the most part, you will only be using Disagree and PMR," meaning pending management review. Why was that? A. Disagrees for appeals. PMRs are for approval recommendations, which are the two recommendations that the underwriters make. Q. So those were the only two recommendations that the underwriter were entitled to make? A. Well, at -MR. TANDY: Objection. THE WITNESS: -- at initial. They could do a pending internal docs if we were waiting for a piece of documentation. The other findings available were cured and cleared. Those would be after the requester came back to us and rescinded the request. So those wouldn't be used until that point in time. BY MR. CALAMARI:

THE WITNESS: No, what they're saying is that you'll only use this "not material" field if we agree with the finding that it's not a material document. For example, the Patriot Act form doesn't impact the loan decision whatsoever, so it's not a document that would be necessary for an underwriting decision. So it's not deemed -- somebody comes to me and says, I want you to repurchase 'cause you're missing Patriot Act, that's not material to the loan decision. I wouldn't repurchase it for that. BY MR. CALAMARI: Q. Okay. And but what about if the -- if the underwriter felt it was material, what would the underwriter do? MR. TANDY: Objection. THE WITNESS: Well, if they felt it was material, then they would be recommending approval. BY MR. CALAMARI: Q. Okay. So that would be a separate slide? A. Yeah. But what they're talking about here is, they're only using the materiality field on these loans when they come to us with a finding that's valid but it's not relevant to the loan decision at all. It's not material to our decision to

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Page 989
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repurchase. Q. Okay. Then if you turn to page 327. A. Okay. Q. What was the purpose of this particular slide? A. I mean, it's just an instructional document for the underwriters explaining how to use the various fields within our database. Q. So, again, it says for the most part, you will: "For response type, you will only be using first appeal or PMR recommendation." MR. TANDY: Objection. THE WITNESS: Okay. Because -BY MR. CALAMARI: Q. Do you see that? A. Yes. This is where the underwriters were either recommending an appeal on the loan or recommending it for approval and this is the finding tab. So this is where they would put it in the database. Q. And they had no other options. Is that right? MR. TANDY: Objection.

drive. Q. Okay. And that include [sic] any of your underwriters? A. Yes. My underwriters had access to the share drive, yes. Q. Okay. And that included the training underwriters? A. Yes. Q. Okay. And that included anyone else? MR. TANDY: Objection. THE WITNESS: Well, the managers within the department had access to it. My manager would have had access to it. BY MR. CALAMARI: Q. Okay. And do you see on page 301 at the top there's an "Initial Instruction," and then it says: "Formal communication will be sent to individual monolines instructing them where to forward repurchase demands as well as provide them ongoing contacts for loan file reviews and executive discussions." Do you see that? A. Yes.

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Page 990
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THE WITNESS: Not for this particular appe- -- appeal, for the first appeal or for the PMR, no. BY MR. CALAMARI: Q. Let me ask you to go back to page 301 of this document. Now, this document was circulated to your entire team. Is that correct? MR. TANDY: Objection. THE WITNESS: I -- this document -BY MR. CALAMARI: Q. Let me -- let me rephrase the question. The document that constitutes Exhibit -MR. TANDY: 4020. MR. CALAMARI: Thank you. I just look -- I call it the monster. BY MR. CALAMARI: Q. -- Exhibit 4020, that's a document that was given to the -- the entire team of underwriters? A. Our policy and procedure document was on our share drive, so it was available to all associates within investor audit. Q. To -- to anybody? A. Well, investor audit. It's our -- it was our share drive. You had to have access to our share

Q. And then there's a section called "Redacted"? A. Yes. Q. Do you have any knowledge as to what was in that section? And don't tell me what was in it. Just -MR. TANDY: Objection. BY MR. CALAMARI: Q. -- tell me if you have any knowledge as to what was in it. A. No. MR. CALAMARI: I ought to call for the production of that full page as we sit here. It's obviously not a privileged communication. It was circulated throughout a large group of people with no particular instruction to keep it confidential. It was circulated to trainees, as well as people who were operating. It's part of an operating manual. It's clearly inappropriately redacted. Are you going to produce it? MR. TANDY: I'll take your request under advisement. MR. CALAMARI: Okay. And depending on what's in there, we may have to continue the deposition, although I would suspect not. But I'll

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reserve our right to -- to call for additional time with the witness if we don't get this document before the end of today. BY MR. CALAMARI: Q. What was the investigative group? A. Are you -- where are you seeing that? Q. Well, not in this -- I'm sorry. That question doesn't relate to this document. A. Oh, okay. Q. Did you ever hear of the investigative group? MR. TANDY: Objection. THE WITNESS: We -- I didn't -- don't recall a department called specifically "investigative." I mean, we had a fraud investigations group. And that's the one that I recall. MR. CALAMARI: Let me show you -- we're up to 25. MR. TANDY: 21. MR. CALAMARI: Show you a document Bates-stamped 40052 through 40057 and it consists of a cover email from Michael Arri to Karen Jewett and that cover email is dated 1/27/2009 that includes, as you read down the page, emails from you forwarded to Michael Arri.

Q. Now, is that your understanding of what the purpose of the investigative group was? MR. TANDY: Objection. THE WITNESS: My understanding of the investigative group was they were going to attempt to help us obtain documents and information in order to resolve claims. You know, I had a small group that was able to do this. But this was a group with more expertise that was going to go out and help try to get the documentation or the -- whatever we needed. BY MR. CALAMARI: Q. Okay. And was it that they were going to obtain documents for any loans or was it certain selected loans? MR. TANDY: Objection. THE WITNESS: Well, I had a team that worked on obtaining documents as well. This was a supplement to that team to help us. And we sent them, you know, certain loans out of the group. But I had a team that worked on doing investigations on every single loan that had missing docs or something that we needed to get outside. BY MR. CALAMARI: Q. How did the loans that were going to go to this special group get picked?

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(The document referred to was marked as Exhibit 4021.) BY MR. CALAMARI: Q. Do you see the document? A. I do. Q. Okay. And if you look at Bates stamp page 0052 -- I'm sorry -- 00055. No wonder I'm not finding it. As usual, my eyes are not as good as everybody else's. It has "Investigative Group Procedures." Do you see that? A. I do. Q. Do you see it has a statement "Purpose"? A. Yes. Q. Okay. And it says: "The purpose of the investigative group is to minimize repurchase exposure to Countrywide by supplementing the investigative capabilities of CRM and focusing specialized resources on claims with high potential losses and strategic importance." Do you see that? A. Yes.

MR. TANDY: Objection. THE WITNESS: They were loans where we hadn't been able to obtain documents. And so we were recommending them for approval but there was something that we might be able to obtain. You know, higher loss amounts. BY MR. CALAMARI: Q. If you look at "Loan Assignment," it says: "The specific criteria for assignment to this group includes (1), catch loss [sic] greater than or equal to 500,000." Do you see that? MR. TANDY: Objection. THE WITNESS: Yes. BY MR. CALAMARI: Q. What is "catch loss"? MR. TANDY: Objection. THE WITNESS: It's "calculated loss." BY MR. CALAMARI: Q. Oh. Well, again, my eyes let me down. What is calculated loss? A. We had a formula where we determined, based upon criteria, what we thought the loss would be on a loan.

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Q. And then you see the second criteria is: "Loan recommended for approval after underwriter and TL review." A. Yes. Q. Do you see that? A. Yes. Q. Why was that a criteria? MR. TANDY: Objection. THE WITNESS: Because it was a loan that we did not feel -- that we had not been able to obtain documents for. That we felt that the document was relevant to the loan decision. And we -- and since we hadn't been able to get it, we were going to send it to this group to see if they could help us out. BY MR. CALAMARI: Q. That was help you in finding a way to reject the loan. Correct? MR. TANDY: Objection. THE WITNESS: No. Help us in finding the missing document or information that we needed. That was their purpose. BY MR. CALAMARI: Q. Well, you wouldn't do it if the loan was already recommended not to be approved. Correct? MR. TANDY: Objection.

BY MR. CALAMARI: Q. Isn't it fair to say that you were only trying to reject the loan? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. That's not fair to say? A. No. Q. Even though you only used this group after an approval was recommended by the underwriter and the second-level review. Right? MR. TANDY: Objection. THE WITNESS: But loans were only recommended for approval if we're missing a relevant document that is material to the loan decision or we have a finding that we feel is a breach. When -- with this investigative review group, their purpose was to try to get documentation or information for us that we did not have that was relevant to the loan decision. A loan would only go through for approval if that was the case, if you didn't have a documentation that was pertinent to the loan decision. BY MR. CALAMARI: Q. Why wouldn't you use this group to

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THE WITNESS: If the loan was already recommended not to be approved, we either would have located the document or felt it wasn't material to the loan. BY MR. CALAMARI: Q. So you only used this group for loans that someone had already recommended approval. Is that right? MR. TANDY: Objection. THE WITNESS: We only used this group for loans where we had not ourselves been able to obtain the documentation. BY MR. CALAMARI: Q. Well, this doesn't say anything about obtaining documentation. This says we'll use this group if the loan is "recommended for approval after underwriter and TL review." Isn't that right? MR. TANDY: Objection. THE WITNESS: But it's an investigative group and that was their job, to go out and investigate and try to obtain information for us. These people were higher skill levels. They were people that had more experience. And we were trying to clear the loans. It wasn't -- and we hadn't done it in our department for whatever reason.

investigate for documents that might -- that might sustain the -- the decision to -- I'm sorry -- the repurchase claim? MR. TANDY: Objection. THE WITNESS: I had my own investigative team that verified information. This was a secondary level to -- on loans that we had not been able to get the information on. People with more skills. BY MR. CALAMARI: Q. Isn't it fair to say if you read from the purpose of this group, the purpose "is to minimize repurchase exposure to Countrywide." Isn't that right? MR. TANDY: Objection. THE WITNESS: Any repurchase group has the responsibility, in my opinion, to only repurchase those loans that are true and valid repurchase requests, thus minimizing losses. You increase losses when you repurchase loans you should never repurchase. I think that's the purpose of any repurchase-related department. BY MR. CALAMARI: Q. Okay. Now, it's fair to say that the information that this group would be looking for was not information in the loan file?

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MR. TANDY: Objection. THE WITNESS: It should -- it should not be in the loan file. BY MR. CALAMARI: Q. By definition, it would not be in the loan file because, if it was in the loan file, your group would have it. Isn't that correct? MR. TANDY: Objection. THE WITNESS: In theory. It wasn't -- may not be in the loan file that was in our imaging system. BY MR. CALAMARI: Q. Was there another loan file? A. We put all of our loan files on imaging. But, you know, there is the off chance sometimes that documents get stuck together when they're imaged. So the underwriter may have absolutely had that document at origination but for whatever reason it wasn't in my imaged file. Q. Okay. And that's in the case of a missing document. If it was missing information, then it would clearly not be in the loan file. Is that right? MR. TANDY: Objection. THE WITNESS: It shouldn't be.

through an investigation they do. They come back to you with it. Would have never hit on the radar. BY MR. CALAMARI: Q. I'm sorry. If the information is not in the loan file, are you saying it was still in front of the original loan originator? MR. TANDY: Objection. THE WITNESS: It may or may not have been. This is very -- this is, again, a kind of a hypothetical, because it depends on what the request is. It depends on what I'm looking for. It may have been something that the underwriter had. Just because it's not in my loan file doesn't mean they didn't have it. It's -- it would be guessing. BY MR. CALAMARI: Q. So what about if it was a document that was required to be in the loan file? MR. ALLAN: Objection. MR. TANDY: Objection. THE WITNESS: It could have been in the loan file -- like we're talking about with imaging, it could have been mis-imaged. So it wouldn't be something that the underwriter didn't have. BY MR. CALAMARI: Q. And why would your investigative team not be

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BY MR. CALAMARI: Q. And, therefore, if it was information that was not in the loan file, by definition it was not information that the underwriter made its initial -and when I say "the underwriter," the original loan underwriter, not our reunderwriter, if you will -- by definition was not information that the original loan underwriter had available to him or her at the time of the underwriting. Is that right? MR. TANDY: Objection. THE WITNESS: That may not be accurate. Because a lot of things that you look at through an investigative review are related to what an investor brings to you or a requester brings to you that may have not been anything the underwriter would have known at origination. It's something that they find out after the fact that they come to you on that wasn't even -- the underwriter wouldn't have been aware of it. And so then you need to go out and take a look at that information. I mean, not everything that a requester comes to you with is something that was part of that origination loan file. Or even should have been part of that origination loan file. It's something

able to find that document? MR. TANDY: Objection. THE WITNESS: It could be timing. It could be the fact that, because we were receiving more repurchase requests, that we made a conscious decision to have my team work on certain loans and have another team help out with other loans. Maybe they had the ability, the resources available to do it, to step in and help us. MR. CALAMARI: Okay. What time is it? It says 12:05. I would just as soon keeping going. We can have lunch any time starting now. Just let me know when you're going to want a break for lunch. MR. TANDY: It's up to the witness. It's up to you. THE WITNESS: I don't care. MR. TANDY: Okay. Shall we go for another half an hour or so? MR. CALAMARI: I would say so, yeah. MR. TANDY: That's fine. Why don't we plan to break at about 12:30, 12:35. MR. CALAMARI: Okay. MR. TANDY: I assume the lunch will keep, so. MR. CALAMARI: Yeah, I think so.

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Mark the next exhibit as -- let me mark another exhibit and that will be -MR. TANDY: -22. MS. BEA: 4022. MR. CALAMARI: -- 4022. It's a document that's Bates-stamped 0449 through 0455, is the last four digits. And it's entitled "Bank of America" and then in small letters underneath that, "Legacy Countrywide, Investor Audit - Credit Loss, Monolines." (The document referred to was marked as Exhibit 4022.) BY MR. CALAMARI: Q. Do you see that document? A. I do. Q. Have you seen this document before? A. I do not recall ever seeing this document. Q. Okay. Do you have any idea as to who would have issued this document? MR. TANDY: Objection. THE WITNESS: I do not. BY MR. CALAMARI: Q. Are you familiar with the use of the phrase "Bank of America legacy Countrywide" in connection with documents?

you -- because we did just update our policies and procedures, so I can't tell you for sure that that's what it's referencing. BY MR. CALAMARI: Q. Okay. And then it says: "This is the 2009-2010 job aid update." Were you aware of a 2008-2009 update? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. You mentioned before that there was a monoline repurchase team? A. The underwriters and managers that were specifically assigned to the monolines, yes. Q. How many people were on that team? A. I don't know. Q. You were the head of the team though? MR. TANDY: Objection. THE WITNESS: I wasn't the direct manager. Shareef Abdou was the direct manager. I was his manager. BY MR. CALAMARI: Q. Okay. But you don't have an idea how many people were on the team?

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MR. TANDY: Objection. THE WITNESS: I am not. BY MR. CALAMARI: Q. Let me ask you to refer to page 0451. And you see on the -- at the bottom of the page, there's the phrase "Policies & Procedures." And it says: "Enclosed is a section of the P&P for the monoline process. This is the 2009-2010 job aid update, the complete 2008 P&P is located in the share drive in the procedures folders [sic]." Do you see that? A. Yes. Q. Does -- can you tell from reading that what was referred to by "the complete 2008 P&P"? MR. TANDY: Objection. THE WITNESS: I mean, that looks to be our policies and procedures. BY MR. CALAMARI: Q. Which is the document that we marked as Exhibit 4020? MR. TANDY: Objection. THE WITNESS: I don't know the date on that document. It doesn't have a date, so I can't tell

MR. TANDY: Objection. THE WITNESS: I do not. BY MR. CALAMARI: Q. Was it more than ten? MR. TANDY: Objection. THE WITNESS: It would depend on the time frame. I mean, I would say yes, but I don't know specifically. BY MR. CALAMARI: Q. What is -- have you heard the term "AS-400"? A. Yes. Q. Were internal auditors given access to AS-400? A. Internal auditors or investor audit employees? Q. Investor audit employees. A. Yes. Q. Okay. And what is AS-400? A. Countrywide's servicing platform. Q. Okay. Is anything else on AS-400? MR. TANDY: Objection. THE WITNESS: Not that I can think of. It's all servicing related. BY MR. CALAMARI: Q. Were quality control findings on AS-400?

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12:15:19 MR. TANDY: Objection. 12:15:22 THE WITNESS: No. 12:15:25 BY MR. CALAMARI: 12:15:29 Q. Where were quality control findings stored? 12:15:30 A. Quality control's database, Loan Auditor. 12:15:30 Q. The what? 12:15:31 A. Loan Auditor. 12:15:31 Q. Who had access to Loan Auditor? 12:15:37 A. Quality control employees and managers. 12:15:55 Q. Anyone else? A. Countrywide Bank QC employees and managers. 12:15:57 12:16:00 Q. Anyone else? 12:16:02 A. The production division so they could do 12:16:05 their responses and their credit risk teams. 12:16:05 Q. Anybody else? 12:16:13 A. Not that I can think of off the top of my 12:16:17 head. 12:16:20 Q. You had access. Is that right? 12:16:31 A. Yes. 12:16:34 Q. Did people that work for you have access? 12:16:36 MR. TANDY: Objection. 12:16:38 THE WITNESS: Within my QC department. 12:16:39 BY MR. CALAMARI: 12:16:42 Q. And what about within your investor audit 12:17:22 department post legal day one?

like it houses guidelines that might relate to claims that come in from the monolines. Q. As well as your tech -MR. TANDY: Objection. BY MR. CALAMARI: Q. -- manual. Is that right? MR. TANDY: Objection. THE WITNESS: It says "CTM" there. BY MR. CALAMARI: Q. Where did you say policies and procedures for the invested -- investor audit group as it evolved be stored? A. In our share drives for policies and procedures. Q. That would be true even today? A. No. We now have our policies and procedures moved into a database. Q. There's a reference to "underwriting logs." Do you know what underwriting logs are? A. Well, what I have used underwriting logs for is where the underwriters keep track of the loans they're reviewing and the decisions that they're making. It's used to track underwriter production. MR. CALAMARI: Let's go to the next one. Let me ask you to look at an exhibit entitled

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A. No. MR. TANDY: Objection. BY MR. CALAMARI: Q. Is there something called a monoline share drive? MR. TANDY: Objection. THE WITNESS: All of our repurchase requests are housed in share drives that are specific to the requesters so that you can actually find something in there. There's the GSEs. There's the privates by requester. There's a monolines by monoline. BY MR. CALAMARI: Q. What is the monoline guidelines folder? A. I -- without look at the folder, I don't know what's in there specifically. Q. All right. Let me show you again, turn back to Exhibit 4022, page 0452. Do you see under "Monoline Guidelines"? A. Okay. MR. TANDY: Objection. BY MR. CALAMARI: Q. Does that help you? A. I mean, it looks like it just houses the guidelines and correspondent lending guidelines, our tech manuals, the loan program guide. So it looks

"Investor Audit" -- well, "Investor Audit Monolines." MS. BEA: It will be marked as Exhibit 4023. MR. CALAMARI: 4023. And it's -- at the bottom in the left-hand corner, it says "Revised 4/7/10." And the Bates numbers, the last four digits again, 1118 -- sorry -- 1116 through 1142. (The document referred to was marked as Exhibit 4023.) BY MR. CALAMARI: Q. Do you recognize this document? A. No, I don't. Q. This is not a document you would have seen in the course of your work? MR. TANDY: Objection. THE WITNESS: I don't recall seeing this document. BY MR. CALAMARI: Q. Were you the head of the monoline function in investor audit at the time of this document? MR. TANDY: Objection. THE WITNESS: I was Shareef Abdou's manager. He was my day-to-day manager. So, I mean, something like this would have been within the realm of his authority to prepare. So I -- I would not have

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needed to see it. BY MR. CALAMARI: Q. I see. Let me ask you -- if you turn to page 4 of the document, which is Bates-stamped 1119, you'll see a heading "Missing VOD or Assets." Do you see that? A. Yes. Q. What's a "VOD"? A. Verification of deposit. Q. And is it fair to say that if -- if the verification cannot be obtained, that the underwriter was instructed to either appeal or make a purchase -make a repurchase recommendation? MR. TANDY: Objection. THE WITNESS: Well, it says here that they are to make their recommendation based on specifics of the loan transaction. So, you know, they would be looking at the loan itself, which is what -- every loan was individually reviewed. So we would be looking to see, is it for reserves? Do you really need reserves? So you're make -- you're taking that all into consideration. But, yes, it would either be an appeal or it would be a PMR. BY MR. CALAMARI:

recommendation to repurchase. Is that right? MR. TANDY: Objection. THE WITNESS: It could be, under the right circumstances. BY MR. CALAMARI: Q. Okay. And just above that you see under "Stated Income," it says: "Use public records to review the borrower's employer. If available, note the size of the company, number of employees, number of locations, and licensing requirements (for self-employed borrowers.)" Do you see that? A. I do. Q. And those are all sources you would go to, to determine whether or not stated income was reasonable. MR. TANDY: Objection. BY MR. CALAMARI: Q. Is that right? MR. TANDY: Objection. THE WITNESS: I mean, for me, I -- I mean, this looks kind of simplistic as far as what we would

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Q. So a -- so pursuant to this guideline, if -if -- if under the right circumstances a VOD was missing, that would be a basis for making a PMR. Is that right? MR. TANDY: Objection. THE WITNESS: Depending on the circumstances of the loan file, yes. A missing asset verification could be a repurchase. BY MR. CALAMARI: Q. Okay. And let me ask you to turn to page 5 of the document. And you see it says "Missing VOE"? A. Yes. Q. And under item 8, it says: "If the verification of employment cannot be obtained by UW support, compose either an appeal response or a PMR recommendation, as appropriate." Do you see that? MR. TANDY: Objection. THE WITNESS: I do see it, yes. BY MR. CALAMARI: Q. And that would be the same -- under the right circumstances, a missing verification of employment could also be a justification for a

be doing because, I mean, it's broader than that. But you would look -- I mean, if you've got a self-employed borrower and you're determining reasonability, I mean, you could go and look at that information. Typically, what we did with income reasonability is, we looked at borrower's credit profile, length of time on the job, type of employment. Now, if you were kind on the fence with one where you thought, hey, you could kind of go either way, then you would look. I mean, if it's a very large company, you would probably expect a higher income, so then you could go and do that as well. BY MR. CALAMARI: Q. So you would look to these items, would you not, to determine whether stated income was reasonable. Is that right? A. In some cases, you could. But I -- I wouldn't do it in all cases of a self-employed borrower. I mean, a lot of self-employed borrowers don't have a company that's a storefront even. This is -- just looks to be maybe kind of a guidance-type document. Q. Things -- when you say "guidance-type

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Page 1017
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document," things to look at in determining whether or not stated income was reasonable? MR. TANDY: Objection. THE WITNESS: But this is a pretty limited -- because the other things I was talking about is length of time on the job, credit profile, assets, type of employment, and I don't see any of that addressed here. And we consider those things in -- when we're doing stated income reasonability. BY MR. CALAMARI: Q. Okay. You'd also look at things like the borrower's education level? MR. TANDY: Objection. THE WITNESS: Not -- well, really, I mean, you kind -- there are certain things you're going to need to stay away from a little bit. But you could look to see if they've been to college or if they have higher degrees. I can tell you that doesn't always mean anything. But it -- you know, you would look at that to see, you know, if he says he's an engineer and he's got 18 years of college, okay, he's probably somebody that has a lot of experience. BY MR. CALAMARI: Q. And, on the other hand, if he says he was an engineer but he is a high school dropout, you would

it's -- the underwriters make the determination really how far they need to go on a loan. BY MR. CALAMARI: Q. What is an historical AVM? MR. TANDY: Objection. THE WITNESS: "AVM" is an automated valuation method, so it would be running it retrospectively, historical. BY MR. CALAMARI: Q. And -- and the instructions indicate that if the AVM supports the value, it can be attached and cited in an appeal response. Is that right? MR. TANDY: Objection. THE WITNESS: That's what this says. BY MR. CALAMARI: Q. Okay. And that would be a valid indicator to your investment audit group of value. Is that right? MR. TANDY: Objection. THE WITNESS: You know, like I said, each file is individually looked at. And, I mean, really with the value issue, we really look at the origination appraiser -- the origination appraisal. So, you know, any of this stuff is just done as far as, you know, if we see something or -- and,

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Page 1018
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presume that something's wrong. Is that right? MR. TANDY: Object- -- objection. THE WITNESS: Not necessarily, because he could be an engineer and there's a lot of different kinds of engineer. So I would then -- I would be determining his reasonability based upon the type of employment that he had. BY MR. CALAMARI: Q. So you wouldn't view something like that as a flag for further investigation? MR. TANDY: Objection. THE WITNESS: Not necessarily. I would have to look at the entire loan file. It's really based on the specifics of each individual loan file what kind of investigative review or analysis you would do. BY MR. CALAMARI: Q. Turn to page 7 of the document. You see it's a heading "Value Not Supported"? A. Yes. Q. First, are your underwriters supposed to do all of these things or just any one of them? MR. TANDY: Objection. THE WITNESS: It's what -- the process is very specific to each individual loan. I mean,

again, it's the underwriter's specific, as they're looking at this, what they're going to do. But if an A- -- a retrospective AVM supports the value, it may be an indicator. But, again, you know, without looking at a loan file, I can't really tell you. BY MR. CALAMARI: Q. Okay. But you -- it is an element that you would consider sufficiently valid to support an appeal. Is that right? MR. TANDY: Objection. THE WITNESS: It could be. It would depend on the circumstances. BY MR. CALAMARI: Q. Okay. And what if the AVM doesn't support the value? MR. TANDY: Objection. THE WITNESS: Again, it's going to depend on the specific circumstances. BY MR. CALAMARI: Q. But if it didn't support the value, it could be a basis for supporting a recommendation to repurchase. Is that right? MR. TANDY: Objection. THE WITNESS: You know, again, without the

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loan files, I mean, it's very hard for me to say because you have to take everything into consideration when you're looking at these. You have to look at the retro AVMs. You have to look at all the data. You look at the location. I mean, there's a lot that you consider. So, you know, I can't say "yes" or "no" without looking at one. I mean, it's just -- it's too -BY MR. CALAMARI: Q. Well, it's just I'm struck with the dichotomy between you're saying if the AVM supports the value, it may be attached and cited in an appeal response. Is that right? A. Hm-hm. MR. TANDY: Objection. THE WITNESS: It -- I said it may be. But again, with values, I mean -- and, again, with the monolines, you know, one of the things that I do know is monolines didn't have value reps. So when you look at that, I mean, really I'm looking at it from that standpoint. So because of that, I mean, it might be approached a little differently than, you know, someone that did have one.

BY MR. CALAMARI: Q. What would "CRM-verified compensating factors" mean? MR. TANDY: Objection. THE WITNESS: Okay. This is talking about a loan that had an exception on it and it had an SLD or structured loan desk exception. And they take into consideration compensating factors. But also as part of our process, we independently assess compensating factors and look to see if we agree with the compensating factors that were cited. BY MR. CALAMARI: Q. And if you didn't agree with the compensating factors that were cited, what would you do? MR. TANDY: Objection. THE WITNESS: Okay. Well, says here "if the exception was reasonable." So what we're doing is we're assessing the reasonability of the exception. So in the event we did not feel that it was a valid exception, you know, we could decide that we want to repurchase it. It just depends. It's -- but it's an underwriter -- our independent assessment. BY MR. CALAMARI:

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But typically BP -- AVMs -- I mean, it depends on the area and that's why I said it could be, but it might not be. It depends on where the area is how much your data is. There's just so much that has to be taken into consideration. So it could be a grounds for repurchase. It could not be a grounds for repurchase. I don't know. BY MR. CALAMARI: Q. If you turn to page -Is this it? MS. BEA: It's 9. BY MR. CALAMARI: Q. Ah. If you turn to page 9. Do you see the heading "PAT - Response" at the bottom of the page? A. Yes. Q. The second bullet indicates that: "If the exception was reasonable, appeal based on CRM-verified compensating factors, (not origination compensating factors.)" Do you see that? MR. TANDY: Objection. THE WITNESS: I do see that.

Q. So even if there was no compensating factors listed for the exception, you might look for your own compensating factors? MR. TANDY: Objection. THE WITNESS: Part of our assessment as to whether or not a loan that has an exception is an acceptable exception is looking to see whether we agree with the exception or not. And that takes into consideration compensating factors. So the SLD may have not had a compensating factor. They may have felt for whatever reason they didn't need one. We may decide that, yeah, it's fine without a compensating factor. Or we may determine that, yeah, look, we had all these compensating factors. We had $300,000 in the bank. We had, you know, some great compensating factors. But we're doing our own independent assessment outside what SLD did. BY MR. CALAMARI: Q. Right. So -- so -- and that gets me back to the question that I asked. If -- if there were no compensating factors listed in support of the exception, you might still make an independent determination that, in your view, looking at the loan, potentially years later, there

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were sufficient compensating factors in order to justify an appeal. Is that right? MR. TANDY: Objection. THE WITNESS: Well, the fact I have an SLD exception, I mean, really our process allowed for that, so really that's enough to appeal a loan program. What we're doing is another assessment, another layer where we are saying, okay, we've got what we required, our guidelines allow for an SLD, but independent of that, we're making sure we agree with that exception. And if we agree with the exception, with or without compensating factors, we would appeal. And if we didn't, we wouldn't. BY MR. CALAMARI: Q. What's the difference between CRM and origination compensation factors? MR. TANDY: Objection. THE WITNESS: Origination compensation factors are those compensating factors cited by the originating branch or the structured loan desk. Credit risk management was the umbrella that investor audit was under, so that's our own independent assessment of what compensating factors

reasonable, then we would appeal. Okay? But we are assessing independently the reasonableness. If we felt that that was a terrible exception, that it should never have been made -BY MR. CALAMARI: Q. Right. A. -- we could repurchase that loan even though there was an exception in the file and even though our guidelines allowed for it. Q. Correct. But first you would check to see if you could find compensating factors even if you disagreed with the originating compensating factors. Isn't that right? MR. TANDY: Objection. THE WITNESS: You're not finding them. They're already in existence in the loan. It's just a matter of writing them down and saying they're in existence. I mean, they're not ones you create. They're -- they're there. They always were there. It's whether -BY MR. CALAMARI: Q. But we don't know whether they're ones you create or not unless you can point to them specifically. Isn't that right? MR. TANDY: Objection.

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were on that loan. BY MR. CALAMARI: Q. And where would -- what did you use to -- to give you guidance as to what the compensating factors should or should not be? MR. TANDY: Objection. THE WITNESS: Well, for one thing, I mean, underwriters kind of standardly know what compensating factors are. Also, in the manual we do have some guidelines as compensating factors are -Countrywide's guidelines had compensating factors that you could use. GSEs had compensating factors that you could use. I mean, there's kind of standardly industrywide known compensating factors. You don't always have to have compensating factors. But this is just us determining whether or not we agreed with the structured loan desk exception. This is a second check. BY MR. CALAMARI: Q. But you wouldn't reverse, would you, a decision that there were compensating factors. Is that right? MR. TANDY: Objection. THE WITNESS: What we're saying here is that, if we agree with the exception, if it was

THE WITNESS: What I'm saying by "creating," that loan file is what it is. And if it's -- if I say I've got job stability and ten years on the job, I've got ten years on the job. If I've got assets, I've got assets. BY MR. CALAMARI: Q. As long as it's in the loan file. Is that right? MR. TANDY: Objection. THE WITNESS: Or as long as I have the documentation, yeah. BY MR. CALAMARI: Q. Well, what do you mean by as long as you have the documentation? That documentation is in the loan file, isn't it? MR. TANDY: Objection. THE WITNESS: It may be documentation that I had to go get for -- because for whatever reason it was missing, but I have it available. BY MR. CALAMARI: Q. Yeah, which gets me back to my point. You could do a search for compensating factors even if the compensating factors weren't evident in the loan file. Is that right? MR. TANDY: Objection.

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THE WITNESS: No. I think you're kind of mis- -- honestly mischaracterizing how underwriting works or how we do compensating factors. In order to -- as an underwriter, if I'm looking at the loan and I write down my compensating factors, I could list them on my 1008 or my underwriting worksheet. And a 1008 is a transmittal form. On the structured loan desk exception, that structured loan desk underwriter could write down what they considered to be compensating factors, whatever they may be. Now, when I'm looking at the loan as it comes in for a repurchase, I'm going through and I'm independently saying, okay, these are the compensating factors that I see in this loan file. And they may or may not agree with theirs, but it's not created. It's there. I'm looking at it. It's not something that everybody didn't have available. They may not just have written down the same one, or I might not agree with them on a compensating factor. MR. CALAMARI: Okay. All right. This is probably as good a time as any for the lunch break. Oh, you have a question? Hold on. Let

Q. Okay. And what about the investigations group, did they actually go out and get information that may have not been in the original file? MR. TANDY: Objection. THE WITNESS: No. And, in fact, honestly the investigative group didn't last very long. You know, you -- this was -- as you guys kind -- this was a very big transition period and a lot of departments were done and then decided it didn't work out. And, quite honestly, I don't remember that group doing very much of anything for me, to be honest. You know, they got into other things. So it's -- but, no, they weren't going out and getting docs that weren't available. MR. CALAMARI: Okay. Let's break here for lunch and reassemble -- what -- at 1:15? MR. TANDY: Let's see, what time is it now? MR. CALAMARI: Yeah. MR. TANDY: Yeah, let's say about 35 minutes. Everybody, okay? THE VIDEOGRAPHER: This marks the end of tape number 2 in the deposition of Cynthia Simantel, Volume 3. Going off the record. The time is 12:39 p.m. (Whereupon at 12:39 P.M., the

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me -- we might have one more question. BY MR. CALAMARI: Q. Okay. Just to be clear, the compensating factors that your group might refer to in deciding whether or not to appeal a loan are compensating factors that are based on what was either in the original loan file or documents and information you obtained as part of your own investigation. Is that right? MR. TANDY: Objection. THE WITNESS: Not -- not exactly. When I'm talking about documents that might not have been in the loan file, I'm talking about where there was something missing from this loan file, but it was always there and I just got the copy of it. You know, I pulled it from -- back from the bank, say. So they always was available to the underwriter, but I'm just going through and loo- -I'm not adding compensating factors. I'm not going out and getting -- verifying additional assets or verifying additional jobs. I'm not doing that. I'm using what was available to the underwriter, but I'm just -- but I may have been missing it and I had to go get it. That's all I was trying to clarify. BY MR. CALAMARI:

videotaped deposition of CYNTHIA SIMANTEL was adjourned for noon recess.)

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13:23:12 13:23:14 13:23:19 13:23:21 THE VIDEOGRAPHER: This marks the beginning 13:23:22 13:23:28 of tape number 3 in the deposition of Cynthia 13:23:31 Simantel, Volume 3. Back on the record. The time is 13:23:34 1:22 p.m. 13:23:37 13:23:37 EXAMINATION (CONTINUED) 13:23:40 BY MR. CALAMARI: 13:23:45 Q. Ms. Simantel, how is an appraisal documented 13:23:48 in a loan file? 13:23:53 MR. TANDY: Objection. 13:23:56 THE WITNESS: Well, an appraisal is actually 13:23:59 a form. So are you talking the value documented 13:24:01 or -- I mean, because appraisal's actually a form. 13:24:04 It's called an appraisal form. 13:24:05 BY MR. CALAMARI: 13:24:15 Q. And it's a -- it's a form that's filled out 13:24:19 by a licensed appraiser. Correct? 13:24:24 A. An appraisal form is, yes. 13:24:28 Q. And does it matter that the appraiser is 13:24:31 actually licensed as opposed to an unlicensed 13:24:40 appraiser?

(Whereupon, at 1:21 P.M., the videotaped deposition of CYNTHIA SIMANTEL was reconvened.)

Q. Was there anything special done by Countrywide in the case of HELOCs? MR. TANDY: Objection. THE WITNESS: I wouldn't say there was anything special. I mean, Countrywide used AVMs for HELOCs. There was also a stated value program. There was various different products for valuation, you know, that were acceptable for HELOC products. BY MR. CALAMARI: Q. Well, what was the difference between the stated valuation and a HELOC AVM or property valuation? A. The HELOC AVM was actually run -- someone input the data and pulled a valuation. The stated value, the borrower stated a value that was input into our database. It was still run through the database, but it came out on the CLUES approval. Q. And what's a valuation update? A. An evaluation update was a product that LandSafe did where they actually updated the value. Usually a valuation update was done when an appraisal was over 120 days old. Q. And how is -- is a, say, an AVM or -- or a Countrywide HELOC property valuation or a stated

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MR. TANDY: Objection. THE WITNESS: There are appraisers that have what they call provisional licenses. They're trainees. So, I mean, the appraiser can be one of those types of appraisers and still sign an appraisal. But appraisers are licensed in some form. BY MR. CALAMARI: Q. Okay. And how is that different than an AVM? A. An AVM is an automated valuation model. And so what that does is that takes available data for a particular property and it analyzes the data. It's still an independent assessment of the value, but it's done through an electronic database. Q. Okay. And is that also different from a Countrywide property valuation? A. Countrywide property valuation. We had various different products that were ordered through LandSafe. I'm not sure which one you're specifically talking about. But it's still -- any kind of property valuation takes into consideration either, you know -- and especially the property on the point of comps or electronic database information. It could be a desk review. I mean, there's a lot of different formats.

value valuation different from an actual appraisal? A. The big difference is that, instead of using automated information that's available through public records, someone actually physically goes out to the property. They're still pulling comparable data from public records, but they're actually physically inspecting the property. Whereas an AVM-type product, the information is all coming from the database and the public record data. Q. So the appraiser looks at specific information about the property, including comparable sales and the like? A. Yes. MR. TANDY: Objection. THE WITNESS: On a property appraisal, he actually drives out to the property. And, yes, he would look at the property. He would go in it. He would measure it. He would drive by the comparables. Whereas an automated, it's pulling the information from public records and making adjustments based upon public record data. BY MR. CALAMARI: Q. And, again, the appraisal is done by a licensed appraiser. Is that right? A. Yes.

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Q. Whereas something like an AVM or stated value, they can be done by anybody running the database? MR. TANDY: Objection. THE WITNESS: Not really because, see, the data is public record data, so it's data that's already there. It's uploaded from the counties, the cities, the states. So it's public record data. So it's not something that anybody's inputting. The only thing anyone inputs into an AVM is like a property address so you pull the right property. They're not really inputting data. BY MR. CALAMARI: Q. Okay. Is it fair to say that between an appraisal, an AVM property valuation and stated value valuation, the appraisal is the most reliable indicator of the home's actual value? MR. TANDY: Objection. THE WITNESS: No, I wouldn't say that. I mean, automated valuation systems are very reliable. I mean, they've been tested. And you also take the element of personal opinion out of those as well. So, no, I wouldn't say that. BY MR. CALAMARI: Q. So you don't think it's valuable to have an

BY MR. CALAMARI: Q. This is a document entitled "Countrywide Correspondent Lending," dated Wednesday, March 15th, 2006, addressed to somebody named Terry Wolfe and Judy Warren. And it's Bates-stamped -- well, it's Bates-stamped 458890. Those are the last six digits. Would this be considered a variance letter? MR. TANDY: Objection. THE WITNESS: Or an accommodation letter. It's giving specific criteria to one of the correspondent lenders. BY MR. CALAMARI: Q. And is this the kind of document that's required to be in a loan file? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. So this is not a document that should be included in the loan file? MR. TANDY: Objection. THE WITNESS: No. I mean, a lot of loans do not have variance letters. There are a lot of lenders who do not have variance letters. A variance letter was on record, so you didn't have to have one in the particular loan file.

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actual appraisal where the appraiser actually visits the premises? MR. TANDY: Objection. THE WITNESS: I think it really depends. I don't discount the use of AVMs. I mean, they've been very reliable. So I think that it just -- it's definitely a reliable source of value indication. BY MR. CALAMARI: Q. And it would be equally -- yeah. Do you know what a variance letter is? A. In regards to? Q. Oh, you're asking me that question. A. Yeah, I don't know. Q. I'm sorry. I thought you were -A. In what context? Q. In the context of an application for a mortgage. A. I mean, there's different kinds of variance letters. I mean, there are guideline variance letters. Q. Let me show you a document. Maybe that'll help. MS. BEA: This will be marked as 4024. (The document referred to was marked as Exhibit 4024.)

BY MR. CALAMARI: Q. Okay. You see at the bottom letter, it says -- bottom of the letter there's a paragraph under the heading "Equities," but it comes out to the margin. It says: "All other CLH guide-" -- "all other CHL guidelines and standard pricing will apply." And then two sentences later, it says: "Please include a copy of this concession letter with the file submitted to CHL." Do you see that? A. That -- right. That was just to expedite processing. We had these variance letters. And so it would just take more time for somebody to look for it if they didn't. So that's why it says "please." It's just kind of like -- you know, it will expedite things for us if you do, but it wasn't mandatory. Q. Where would the variance letter be if it was not included in the file? MR. TANDY: Objection. THE WITNESS: Correspondent lending kept a list of variance letters. BY MR. CALAMARI:

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Q. Correspondent lending being the division within Countrywide? A. Yes. Q. And can you think of any reason why it would not be included in the loan file? MR. TANDY: Objection. THE WITNESS: I mean, for a correspondent -I mean, they're closing the loan. They have to go pull the variance letter out and stick it in the file. It's probably just not something they would think about all the time. And it's not something that we would have had an issue with. I mean, we'd of -- we have a copy of it. We know we have a variance with them. We would have just looked at it. BY MR. CALAMARI: Q. Okay. And when you say you have a copy of it, but you don't have a copy of it in the loan file as a matter of routine? MR. TANDY: Objection. THE WITNESS: We have master lists of variances. You don't really need a copy in the loan file. BY MR. CALAMARI: Q. Let me ask you to turn back to Exhibit 4023,

want to make a fuss, but I didn't ask her. I just asked her if I read it correctly. Is that an objectionable question? MR. TANDY: On a document she hasn't seen before, I believe it is. But, please. BY MR. CALAMARI: Q. And the answer is: "No, do not indicate the location of the missing document in the response. Respond 'CRM disagrees with this finding. The (blank) is attached.'" Do you see that? MR. TANDY: Objection. THE WITNESS: Yes. BY MR. CALAMARI: Q. And was that the policy of CRM at that time? MR. TANDY: Objection. THE WITNESS: It's -- it's not really relevant where we found the document. I mean, somebody that we're working with doesn't understand our systems or anything. So to say where we locate it isn't going to add any additional information to an appeal. So, I mean, it just would be fluff information that's not really relevant.

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which should be one exhibit back. Ask you to turn to page 23 of that document, which is Bates-stamped 31138 is the last five digits. A. Okay. Q. And if you look at the second question on the page, it says: "If the finding is missing documents and we are able to cure the finding, do we acknowledge where we found the missing document?" Do you see that question? A. Yes. MR. TANDY: Objection. BY MR. CALAMARI: Q. Did I read it correctly? MR. TANDY: Objection. MR. CALAMARI: Can you state the basis for that objection? MR. TANDY: Sure. She said she never saw this document before, Peter. So now you're asking her to interpret a document she said -MR. CALAMARI: I -- I didn't -MR. TANDY: -- she didn't see this before. THE WITNESS: I didn't ask -- not that I

I mean, if we had the document and we found it in our system or whatever, we've got it. BY MR. CALAMARI: Q. I didn't ask you that. I asked you if this was the policy. MR. TANDY: Objection. THE WITNESS: I don't know that that was the policy. I mean, I have not seen this document. I can tell you that when we've appealed loans, we do not state where we got the document just because it's not really relevant. It's -BY MR. CALAMARI: Q. And that's even in response to a question as to where you found the document. Isn't that right? MR. TANDY: Objection. THE WITNESS: I don't really recall being asked that question. I mean, if I've got a document and I give it to somebody, they usually don't ask me where I got it. BY MR. CALAMARI: Q. Is there any reason why you wouldn't acknowledge where you found a document? MR. TANDY: Objection. THE WITNESS: Just that it's not really relevant. I mean, if I tell you I found it in my

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iPortal system, you don't really know what that is. It's just -- it's not really helpful to the appeal. BY MR. CALAMARI: Q. And that's in your view? MR. TANDY: Objection. THE WITNESS: That's in my view, yes. BY MR. CALAMARI: Q. Isn't it important as to whether the document was in the original loan file or not? MR. TANDY: Objection. THE WITNESS: It's important that we have the document. And like we talked about before sometimes with imaging, documents were in the original loan file, the underwriter had them, but for whatever reason they weren't imaged -- if I'm able to obtain that document and I have it, it is my belief that the underwriter had it. Especially when they've referenced it. I wouldn't believe otherwise. BY MR. CALAMARI: Q. What if they didn't reference it? A. They underwrote the loan. They -- they did an underwriting review of the loan, so. Q. There was no loan. Isn't it fair to say that Countrywide wouldn't underwrite -A. That's not true.

Q. Regardless of where you found the document? MR. TANDY: Objection. THE WITNESS: I believe that the fact that I had to get it out of my iPortal system or get a copy from the bank is not relevant to the ultimate decision on the loan. It's not a breach. BY MR. CALAMARI: Q. When you're providing loan files to investors or other counterparties, isn't it important to provide them with complete files? MR. TANDY: Objection. THE WITNESS: You know, you do your best. But, you know, there's a lot of documents in those files and unfortunately sometimes those documents, for whatever reason, are not passed on. It's -- it unfortunately happens. BY MR. CALAMARI: Q. You wouldn't provide an incomplete loan file on purpose, would you? MR. TANDY: Objection. THE WITNESS: No. That was never an instruction that I gave to anyone. BY MR. CALAMARI: Q. If you look at the third question on the page, it says:

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13:40:03 13:40:06 all. 13:40:12 BY MR. CALAMARI: 13:40:15 Q. Okay. Well, but did you never find a 13:40:17 circumstance where there was a document that wasn't 13:40:21 in the original loan file that the underwriter never 13:40:21 had? 13:40:24 MR. TANDY: Objection. 13:40:29 THE WITNESS: You know, I would not say 13:40:31 never. But I would say that, you know, when we 13:40:33 appealed these loans, if we're able to get the 13:40:37 document, it was available. I mean, that's -- it was 13:40:39 there. 13:40:41 BY MR. CALAMARI: 13:40:43 Q. So it's your conclusion that even if you 13:40:43 found the document that was missing somewhere else, 13:40:47 you conclude it must have been in the original loan 13:40:50 file? 13:40:54 MR. TANDY: Objection. 13:40:55 THE WITNESS: What I conclude is that it was 13:40:57 either in the loan file or I have the document. It 13:41:01 supports the decision. It's not really a breach. I 13:41:05 mean, it's -- there's nothing wrong with that loan. 13:41:07 BY MR. CALAMARI: 13:41:09

MR. TANDY: Objection. THE WITNESS: I'm sorry. That's not true at

"If the finding is missing documents (e.g. VOR)" -Let me stop right there. What's "VOR"? A. Verification of rent. Q. Okay. So repeating: "Question: If the finding is missing documents (e.g. VOR) and we are unable to locate or obtain the document, is it acceptable to acknowledge 'the lack of the document' or state we are unable to locate the document?" Did I read that correctly? MR. TANDY: Objection. THE WITNESS: Yes. BY MR. CALAMARI: Q. And then it goes on to say: "Do we list just the compensating factors without acknowledging that the document is missing? "Answer: Do not use 'lack of document' or 'unable to locate document' in your response." Do you see that?

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A. I do. MR. TANDY: Objection. BY MR. CALAMARI: Q. Why wouldn't you inform an investor who asked -- or asked for a repurchase of a loan that certain documents could not be located? A. I don't know why this was written that way. I didn't write it. Q. That was not your practice? A. If I responded to a loan and I cannot find a document, I would acknowledge that I was missing the document or I wouldn't say anything about it. I mean, I think it's kind of done because it's sort of a given in the opinion of the person doing the response that, if we don't send it to you, we didn't have it, but -- and there was a lot of paper flying back and forth, so that could be why. But I don't -- I don't think it really matters if we say we did or we didn't. I mean, if we didn't send it to you, we don't have it. Q. And that's the conclusion you expected underwri- -- that you expected investors and monolines to reach? MR. TANDY: Objection. THE WITNESS: I didn't write this. I can't,

file could mean that there's a higher risk of default or it may have absolutely nothing to do with it. It depends on what the issue is. I mean, it's very much individual loan related. It's not something that you use globally or would assign to every single loan file. BY MR. CALAMARI: Q. Would you agree that a loan that is not properly underwritten poses a higher risk of default than a loan that is properly underwritten? MR. TANDY: Objection. THE WITNESS: Again, I think it's going to really depend on what you mean by not properly underwritten. It's very loan specific. I mean, if you've got a loan that's -- I mean, it's just -- it's -- it's very -- it's hypothetical when you're saying not properly underwritten. I mean, it would have to be very specific. There are times where I think it would have absolutely nothing to do with it. MS. BEA: This will be marked as Exhibit 4025. (The document referred to was marked as Exhibit 4025.) BY MR. CALAMARI:

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you know, surmise what they thought they would think. BY MR. CALAMARI: Q. This at least is labeled investment auditor -- investor audit monoline -- "Investor Audit - Monolines." Right? MR. TANDY: Objection. THE WITNESS: Yes. BY MR. CALAMARI: Q. Okay. And clearly if the document wasn't found, the presumption is that it wasn't in the loan file. Is that right? MR. TANDY: Objection. THE WITNESS: No. It was that we couldn't locate it for whatever reason. You know, if the file was imaged and it wasn't imaged properly, it could be missing and we couldn't locate it, didn't necessarily make that assumption that it wasn't there. Just that we could not at this point locate it. BY MR. CALAMARI: Q. Would you agree that a loan can pose a high risk of default if it's not properly underwritten? MR. TANDY: Objection. THE WITNESS: I don't think that that constitutes -- I mean, part of an analysis is looking at the overall loan file. And a mistake in a loan

Q. I'm showing you a document that's been marked as 4025. It's Bates-stamped numbers 36381 through 36396 -- 395. Sorry. Forgot to bring the magnifying glass. And the cover email is from Melissa Diokno. MR. TANDY: Diokno. BY MR. CALAMARI: Q. Diokno. And it's to Frank Aguilera. And it's dated July 15th, 2008. And you're shown as receiving a copy of this. A. Okay. Q. And this document is entitled -- or I should say if you turn to page number 1 of the attached document, which is Bates-stamped 36382, there's an Appendix A. And Appendix A is "General Guidelines for Submission of a Repurchase Request Or an Insurance Claim Denial." Do you see that? A. Yes. Q. Do you recognize this document? A. Yes. Q. Did you have a role in preparing it? A. No. Q. No? A. (Shakes head).

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Q. Okay. Who prepared it? A. Rod Williams. Q. I'm sorry. Who? A. Rod Williams. Q. And what was the purpose of preparing this document? A. I -MR. TANDY: Objection. THE WITNESS: This document was just to try to get all of the counterparties that we dealt with to submit re- -- claims or repurchases in a similar manner, kind of give them some guidance as far as how we, you know, were dealing with other counterparties on them, to get everybody more uniform. To get some consistency. BY MR. CALAMARI: Q. Okay. And this is dated as July 15, 2008. That's just shortly after legal day one. Were these intended to be new processes or procedures? A. The email's dated that date. This guidance document, repurchase guidelines document, was prior to that period. It was '06, I believe. But it was, you know, considerably before this. Q. Okay. And if you look on the guidelines, it says, guideline number 1:

"The foreclosures attributable to a material breach, of an applicable contractual obligation, which was caused by negligence or fraud on the part of the company" -Why was it important whether the breach was caused by negligence or fraud on the part of the company? MR. TANDY: Objection. THE WITNESS: That was referencing most of the contracts for -- that we had, it had best of knowledge fraud reps in them. And, you know, best of knowledge was tied to whether we as Countrywide knew about or were involved in the fraud. So that's what that's referencing. BY MR. CALAMARI: Q. Although this refers to a material breach of any contractual obligation, does it not? MR. TANDY: Objection. THE WITNESS: No. It's referencing -- you know, we're talking about, if we're involved in -- if anybody that worked for Countrywide was involved in the misrep or was -- you know, negligence, absolutely overlooked something that was staring them in the

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"The mortgage loan has been foreclosed." Was foreclosure of a mortgage a condition to a repurchase claim? MR. TANDY: Objection. THE WITNESS: No. This is a guidance doc. And one of the things we were looking at is materiality. And if a property's -- a loan's performing, then the likelihood of a cited breach being material was not the same as a property that had been foreclosed on. BY MR. CALAMARI: Q. What about if the loan was delinquent? A. Yeah, we accepted repurchase claims on delinquent loans. I mean, we -Q. You did accept -A. Absolutely. Q. -- claims on the delinquent loans? A. Absolutely. Q. Even if they had not defaulted? A. No. If they were in -- if you're delinquent, you're in default. I mean -Q. Okay. That's fair enough. Okay. And then if you read under paragraph 2, it says:

face, then we felt that that was something that we were responsible for. BY MR. CALAMARI: Q. And wouldn't you be responsible for a breach of a rep or warranty even if there was no negligence on the part of Countrywide? MR. TANDY: Objection. THE WITNESS: It would -- one of the things that we looked at is materiality. I mean, it's going to depend. It's -- you know, as far as what the cited breach is, if it's a true rep and warrant breach. I mean, it's just -- you know, it's so specific to the individual loans. We reviewed every loan individually, assessed it against the contract, expressed it against the reps and warrants. So it's not something that's any global -- you can put anything globally over it and make a determination and say "yes" or "no." BY MR. CALAMARI: Q. I'm just trying to find out if, whenever you did that review, one of the elements that you were looking for was whether or not Countrywide had been negligent in -- in overlooking the various items that constituted the breach?

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MR. TANDY: Objection. THE WITNESS: When we reviewed repurchase requests, we were reviewing the loans for the findings cited by the requesters. So if a requester cited a finding where they said that it looks like there was a misrep, then we would like to see if we thought Countrywide was involved in it. But if it was that they cited a finding for missing VOD, we didn't completely re-underwrite the file. BY MR. CALAMARI: Q. If there was a finding for missing VOD, or if you were cited for a finding from missing VOD, would you look to see if the missing VOD was caused by the negligence of Countrywide? MR. TANDY: Objection. THE WITNESS: I guess I don't see those as being really related. I mean, a missing VOD, you know, it could be a document that wasn't imaged properly. I mean, that's not really negligence on the part of Countrywide. I mean, it's -- goes through a scanner and it can get stuck in there. So, no, that's not the kind of thing we would call negligence. BY MR. CALAMARI: Q. But if it was missing because it was never

a misrepresented document. That, I consider negligence on the part of Countrywide. It's sitting there looking in their face and they missed it. That's what I'm talking about as far as negligence on the part of Countrywide. Not a missing document or something along those lines. BY MR. CALAMARI: Q. Okay. Let me ask you to turn back to Exhibit 4023, which was right here. And ask you to turn to page 22 of that exhibit, which is Bates-stamped 31137, is the last five digits. A. Okay. Q. And you see a question: "When is a finding considered material?" MR. TANDY: Objection. BY MR. CALAMARI: Q. Do you see under the heading "Materiality" there is a question: "When is a finding considered material?" Do you see that? MR. TANDY: Objection. THE WITNESS: Did you say 31117? BY MR. CALAMARI:

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obtained, would you consider that negligence? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. If the VOD was missing, is it possible that a recommendation to repurchase would be based on the fact that it was missing and no other factor? MR. TANDY: Objection. THE WITNESS: Again, that's very specific to each individual loan. It's -- I would -- I have to look at the loan files to make determinations how relevant any kind of finding is. I mean, every loan is on its own merit. BY MR. CALAMARI: Q. But, again, I'm just trying to find out if one of the things you're looking at in making that judgment is whether or not Countrywide was negligent in causing whatever the specific finding cited by the repurchase claimant was? MR. TANDY: Objection. THE WITNESS: When I'm looking at negligence on the part of Countrywide, you know, I'm looking that -- I had a document in the file. Maybe I have misrep and I have a document there and I look at that document and I can clearly tell it's not valid. It's

Q. I said 31137, although I've been known to -A. Okay. I'm getting -Q. -- misstate numbers. So it's page 22 of the document. A. Okay. This -- yeah, that's what I thought you said. And I thought you said 17, so I apologize. Q. You see the heading "Materiality"? A. Yes. Q. And then you see the question: "When is a finding considered material?" MR. TANDY: Objection. THE WITNESS: Yes. BY MR. CALAMARI: Q. Okay. And then below the two charts that are on the page -- I don't know if you call them charts or slides, but it says: "Other examples of immaterial findings include." Do you see that? A. Yes. Q. And it says: "Underwriting items (e.g. missing VOR.)" Do you see that?

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A. Yes. MR. TANDY: Objection. THE WITNESS: Yes, I do. BY MR. CALAMARI: Q. Is a missing VOR ever a material factor? MR. TANDY: Objection. THE WITNESS: It's -- it's very loan specific whether or not it would be considered material. BY MR. CALAMARI: Q. So if a borrower had a history of well documented late or missed payments on rent, that -that would be an important factor to consider. Is that right? MR. TANDY: Objection. THE WITNESS: Again, it's going to depend on what the loan program is, you know, what the credit requirements were. I mean, it's -- it's very loan specific. Whenever you assess the materiality of a document, you have to look at the individual loan file and assess it based upon what you're looking at. BY MR. CALAMARI: Q. Why does the policy manual say that that's an example of a immaterial finding then?

MR. TANDY: Objection. THE WITNESS: -- never. I wouldn't consider that material. I can't think of any time where I would have. BY MR. CALAMARI: Q. Okay. And even if the letter would have alerted the loan officer to a serious risk of default, it still wouldn't have been material, in your view? MR. TANDY: Objection. THE WITNESS: Letters of explanation were typically to address things like inquiries on credit reports and things like that. And it was a borrower writing it. And I just don't consider that a make-or-break-it type document. BY MR. CALAMARI: Q. Well, whether or not it's a make-or-break type document, couldn't it have been an important document? MR. TANDY: Objection. THE WITNESS: I have -- it -- in all my years of underwriting, I can tell you I don't think I've ever seen a case where I felt that it was relevant or -- to an ultimate loan decision. I don't.

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MR. TANDY: Objection. THE WITNESS: I didn't write this (indicating). I -- I can't answer that. BY MR. CALAMARI: Q. It's from your group, is it not? MR. TANDY: Objection. THE WITNESS: I don't know. I don't see who the author is. I mean, I -- I can't tell you. BY MR. CALAMARI: Q. So you would disagree with the notion that that's, by definition, immaterial item? MR. TANDY: Objection. THE WITNESS: No. I don't think any -these are just examples and it's just things to think about. Every loan file is unique and different. So whether it's material or not is based upon the individual loan file. It's just an example. BY MR. CALAMARI: Q. Well, just as an example, could a letter of explanation -- I'm sorry. Could a missing letter of explanation ever be a material -A. In my opinion -Q. -- omission? A. In my opinion --

BY MR. CALAMARI: Q. What about undisclosed mortgages, are they ever material? MR. TANDY: Objection. THE WITNESS: Undisclosed mortgages, I mean, if we have no knowledge of them, there would only be material if it was a loan -- the same loan officer, same branch. Countrywide loan officer did it, Countrywide branch, it's the same loan and didn't address it, that's material because that falls into the negligence and misrep on the part of Countrywide. But if they got a loan from somebody else and we had no knowledge of it, then, no, it's not. BY MR. CALAMARI: Q. Even if that contributed substantially to the layered risk? MR. TANDY: Objection. THE WITNESS: I would have no knowledge of that. I would have no way of knowing that. BY MR. CALAMARI: Q. What if you did know about it, would you ignore it? MR. TANDY: Objection. THE WITNESS: Me personally if I knew about it? No.

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Page 1065
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BY MR. CALAMARI: Q. Does your -- could any of these -- could any of these findings be material under the right circumstances? MR. TANDY: Objection. THE WITNESS: It's loan -- it's loan specific. I mean, I -- you know, that's kind of vague and broad. And I just -- you know, anything's possible, but you just have to look at circumstances. I can't answer that. BY MR. CALAMARI: Q. So it's fair to say that you look at the loan file and it is possible that one of these documents that are itemized here as immaterial examples, if they were missing, they could turn out to be material under the right circumstances? MR. TANDY: Objection. THE WITNESS: These are just examples of things this could be immaterial. This doesn't say that in every single instance these are immaterial. So that's why it's individually loan -- it's -- you have to look at the individual loan. BY MR. CALAMARI: Q. Right. They could be immaterial but they also could be material. You have to look at the

look at layered risk? MR. TANDY: Objection. THE WITNESS: Through the repurchase process, we're not doing a complete re-underwrite of the loan. We're addressing the finding specifically. So the -- what we go through would just depend on what the findings are. BY MR. CALAMARI: Q. Is it fair to say that -- when you say that you address the findings specifically, is it fair to say that even if you notice something in the loan file that would render the loan repurchaseable but the investor didn't cite that reason, you would not repurchase the loan? MR. TANDY: Objection. THE WITNESS: The underwriters in investor audit were instructed to address the findings specifically. So they weren't looking for anything else in the loan file. BY MR. CALAMARI: Q. So if there was something else in the loan file that came to their attention, they would not do anything about it? MR. TANDY: Objection. THE WITNESS: They weren't looking for it,

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Page 1066
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individual loan? A. You have to look at the individual loan files. Q. Okay. And then could a combination of these immaterial findings become a material -MR. TANDY: Objection. BY MR. CALAMARI: Q. -- issue? A. Again, it's -- it's the loan files. It's -it's so loan specific to determine whether or not something's material. Q. When you did your underwriting review for repurchase decisions, did you take into account layered risk? MR. TANDY: Objection. THE WITNESS: When we review loans for repurchase decisions, we look at the findings specifically that have been cited by the requester. So it's going to depend on what the finding is. It's not -- if they cite something that's related -- if they say there's layered risk, then absolutely we're going to look at that. BY MR. CALAMARI: Q. Okay. But if they just cite something -one of the elements of a layered risk, you wouldn't

so no. BY MR. CALAMARI: Q. Well, the fact that they weren't looking for something doesn't mean that they didn't see something. Is that right? MR. TANDY: Objection. THE WITNESS: I mean, they -- I guess they may have. MR. CALAMARI: Let's go to another exhibit, 32. MS. BEA: This will be marked as Exhibit 4026. (The document referred to was marked as Exhibit 4026.) BY MR. CALAMARI: Q. Giving you a document marked as Exhibit 4026. It's an email from you to Jennifer Downing. And it's Bates-stamped, last four digits, 6183 to 6186. And it consists of an email -- cover email, and a document entitled "Policy and Procedures, Compensating Factors." A. Okay. Q. Are you familiar with this document? A. I have seen it. Q. Did you prepare it?

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Page 1069
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A. You know, I'm not sure if I did it or one of my managers did it. Q. Would you have reviewed it before it was sent out? A. Yes. Q. And this was a draft of policies and procedures for inclusion in the investor audit policy and procedure manual? MR. TANDY: Objection. THE WITNESS: It appears to be an expansion of the "Compensating Factors" section of the manual. BY MR. CALAMARI: Q. And this would be applicable to all repurchase requests? A. It should be. It doesn't specifically indicate any particular program. Q. And you see that in the list of compensating factors on page 1 of the document that's next to the email of the policy document, you see one of the factors is "CLUES conditions met." Do you see that? A. Yes. Q. Why is it a compensating factor that CLUES conditions be met? A. I think it kind -- I -- to be honest with

hadn't really considered compensating fac- -- I mean, it's a black box. So it's looking at certain things. A CLUES-refer decision could be manually underwritten. There were CLUES refers that didn't even require SLD exceptions. I mean, there's a lot of different variations. BY MR. CALAMARI: Q. So I'm just trying to figure out what this policy meant. If the CLUES made a refer decision, it would mean that it had reached -- however CLUES works, it had reached a determination that the compensating factors, at least as presented to CLUES, were not sufficient for CLUES to simply approve the loan. Is that right? A. No. MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. What did that mean? A. I mean a CLUES refer could be for a lot of different reasons. It could be because you had an LTV exception and it needed to be looked at. It could be because the DTI was over the guidelines. It could be because CLUES -- CLUES is a database that had to be programmed. Guidelines were changing. The

Page 1068
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you, I think it's tying in with the "CLUES approval" with "conditions met." It's not separate. It's -see above it where it says "CLUES approval"? So it's a CLUES -- it's considered a valid CLUES approval because the CLUES conditions are met. Not just by the fact that the CLUES conditions are met. Q. In order to -- didn't CLUES take into account compensating factors when it made its first pass at the loan? MR. TANDY: Objection. THE WITNESS: CLUES was a database. It couldn't look at everything on a loan file, so it wouldn't have been able to analyze what an underwriter could maybe see. BY MR. CALAMARI: Q. And in that case, didn't CLUES in effect -I don't want to say reject the loan, but -- but not render an approval of the loan and issue a request that it be looked at by the strategic loan desk? MR. TANDY: Objection. THE WITNESS: No. No. CLUES -- on a CLUES approval, you could have a CLUES approval without any compensating factors and have a loan that met guidelines. You could have a CLUES approval with a loan that didn't exactly meet guidelines where CLUES

CLUES could be behind -- you know, because you can change guidelines and get them updated much more quickly than you can completely change a database. So it could be because of that. I mean, there's a lot of reasons why CLUES could refer loans that had nothing to with compensating factors or eligibility. Q. Was CLUES approval a compensating factor? A. Yeah. I mean, if a loan's CLUES approved, then, yes, I mean, we con- -- as long as the conditions were met, we considered that a valid approval and we didn't really think you needed to do anything else. And so I think that's kind of why it's considered a compensating factor. Q. So if the loan had CLUES approval, you would consider that a compensating factor even if you had a repurchase claim pointing out some defect in the loan? MR. TANDY: Objection. THE WITNESS: If I have a valid CLUES approval and then -- and then -- and, again, you've got to look at every loan individually. But a valid CLUES approval means that our database felt that that loan was acceptable. So everything that the database considered, it felt was acceptable.

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Page 1073
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BY MR. CALAMARI: Q. But weren't you required to have a valid CLUES approval in the first instance -MR. TANDY: Objection. BY MR. CALAMARI: Q. -- in order to issue the loan? THE WITNESS: No. MR. TANDY: Objection. THE WITNESS: No. We could manually underwrite loans. BY MR. CALAMARI: Q. I'm sorry. Say that again? A. We could manually underwrite loans. We did not have to have CLUES approvals. Q. So in assessing repurchase claims, you would seek to obtain a CLUES approval of loans that were originally manually underwritten without CLUES? Is that what you're saying? A. No. MR. TANDY: Objection. THE WITNESS: No. No. No. What I'm saying is that, if I had a loan that was a CLUES approval -BY MR. CALAMARI: Q. Okay.

technical manual requires underwriters to document compensating factors? MR. TANDY: Objection. THE WITNESS: I don't have a copy of the Countrywide technical manual in front of me. I mean, and, you know, there's a -- it addresses compensating factors, but you don't have to have compensating factors on every single loan. I mean, if you have a CLUES approval, there's no compensating factors. There are certain loans that there's nothing you really need because you don't have to necessarily write down your compensating factors. BY MR. CALAMARI: Q. Well, do you know if the Countrywide technical manual requires that for loans that are issued in reliance on compensating factors, compensating factors must be documented in the loan file? MR. TANDY: Objection. THE WITNESS: I -- I don't -- I can't answer that. I don't recall that. BY MR. CALAMARI: Q. Does that -- would that surprise you if that were the case?

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A. -- and my CLUES conditions were met -Q. Right. A. -- I considered there to be nothing wrong with that loan. My system had determined that it was an acceptable loan. So that -- so that's what I'm saying, as far as it being -Q. I understand that, but wasn't that something that was done when the loan was originated? A. Yes. MR. TANDY: Objection. THE WITNESS: Yes. I don't run retrospective CLUES. BY MR. CALAMARI: Q. So you just looked to see if the loan was CLUES approved in the first place? A. Correct. Q. And if that were the case, you would consider that a compensating factor? MR. TANDY: Objection. THE WITNESS: I mean, you can call it compensating factor. Really what I considered it is that that loan was a viable loan. There was -- this database looked at it. It made an approval. There didn't -- there was nothing wrong with that loan. Q. Now, isn't it true that the Countrywide

MR. TANDY: Objection. THE WITNESS: Well, I think it's an interpretation as far as documented. I mean, documented can either be written down or they could be visually available to an underwriter. I don't think it means necessarily that you have to be able to write it down. You could have the fact, when you go back and take a look at it, the borrower had six months' reserves, you only needed two, that's a compensating factor. I don't really need to write that down, I don't -- I don't feel. So I think you have to look at how you're talking about documented. BY MR. CALAMARI: Q. Were you aware in doing your work analyzing repurchases that compensating factors were itemized in loan files? MR. TANDY: Objection. THE WITNESS: I have seen times where an underwriter indicates compensating factors. I have seen times where they don't. I -- I've seen both instances. BY MR. CALAMARI: Q. And did you come -- did there come a point in time where you learned that the structured loan

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Page 1077
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desk was frequently not documenting compensating factors? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. You don't recall that? A. No. Q. Let me ask you to look at another document. (Pages 1076 through 1090 contain highly confidential material. The regular portion of this deposition continues on page 1091.) /// ///

30516. And you see near -- fourth bullet point in the second series of bullet points, do you see the words: "Compensating factors frequently not documented or apparent, despite CTM requirements." Do you see that? MR. TANDY: Objection. THE WITNESS: I see it. BY MR. CALAMARI: Q. Does that refresh your recollection about whether or not compensating factors had been frequently omitted? MR. TANDY: Objection. THE WITNESS: No. I mean, I reviewed a lot of loans in QC and compensating factors were there. So, no, it doesn't refresh my memory. I'm sorry. BY MR. CALAMARI: Q. Okay. So do you have any reason to disagree with that statement? MR. TANDY: Objection. THE WITNESS: I -- I don't know what they're writing this in the context of. I mean, I haven't seen it, I didn't write it, so I don't know whether I

Page 1076
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Page 1078
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MS. BEA: This will be marked as Exhibit 4027. (The document referred to was marked as Exhibit 4027.) BY MR. CALAMARI: Q. Document marked as Exhibit 4027. Bates numbers are 0500 to looks like 0534. And the cover email is from Michael Sands, dated April 9th, 2010 to George Ellison. And the enclosed document, which begins on Bates 30501, is entitled Country one -"Countrywide Monoline Dispute Resolution Strategy." Do you see that? A. Yes. Q. Have you seen this document before? A. No, not that I recall. Q. Can I ask you to turn to page 16. Page 16 of that document, which is -- this is going to be a tough one. Okay. And you see the heading "Emerging issues in dispute - SLD"? A. Yes. Q. "SLD" is the strategic loan desk? A. The structured loan desk. Q. The structured loan desk. Sorry. And I should say the Bates stamp on this is

would agree or disagree. I just -- I just know from my experience I saw compensating factors on SLD exceptions. BY MR. CALAMARI: Q. And did you see documentation of those compensating factors in your experience? A. Documented compensating factors doesn't mean documentation. It means it's written down, that they indicated it on a piece of paper. It doesn't mean there's something to support it. Q. But you did see pieces of paper where it was written down? A. I did, yes. Q. And they were in the loan file? A. Not always. We had access to the structured loan desk exception database and I could pull them directly out of there. Q. And what is the structured loan desk database? A. It was an exception processing database. Q. And that lists compensating factors that were applied for each loan on the structured loan desk? MR. TANDY: Objection. THE WITNESS: It could -- it was an approval

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form. And on that form they could list compensating factors. BY MR. CALAMARI: Q. And you would pull that when you were doing your re-underwriting? A. When I was doing the QC underwriting, yes. Q. And you see in that same bullet point that we were reading, "despite CTM requirements." Does that refresh your recollection as to whether or not the Countrywide technical manual required documentation of compensating factors? MR. TANDY: Objection. THE WITNESS: Well, no, because also I don't know when the time frames were that they're referencing. Because, see, the CTM was updated as well. So I'm not -- they could be talking about different time frames. I mean, I -- I don't know. I -- I don't know where it would have been if -- I know that the C- -- we had a CTM. I just don't recall this specific email. BY MR. CALAMARI: Q. Okay. And is it fair to say that you would expect to see the documents supporting the compensating factors in the loan file? MR. TANDY: Objection.

Q. But you would have to see the verification of employment document in the loan file, wouldn't you? MR. TANDY: Objection. THE WITNESS: It wouldn't necessarily have to be a verification of employment. I mean, it could be a ver- -- verbal verification. You know, there's various different documents that you could look at. BY MR. CALAMARI: Q. But you would still expect to see something in the loan file that justified the compensating factor, wouldn't you? MR. TANDY: Objection. THE WITNESS: You don't have a compensating factor unless something tells you there's a compensating factor. I mean, it's -- it's -- it's -it's something you have to see. So, yeah, I would see something in the loan file that would make me believe there's a compensating factor. BY MR. CALAMARI: Q. Right. Because if there was nothing in the loan file to make you believe there was a compensating factor, the presumption is there were no compensating factors. Is that right?

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THE WITNESS: No. Documented compensating factors can just be a list of compensating factors. It doesn't necessarily mean it's a piece of paper that's in a loan file. BY MR. CALAMARI: Q. Even if it's not listed separately? A. When I review my -MR. TANDY: Objection. THE WITNESS: When I review loan files, I look for the compensating factors. I don't expect that it's always written down separately. BY MR. CALAMARI: Q. Okay. But would some evidence in the loan file necessarily be there to show what the compensating factors are? MR. TANDY: Objection. THE WITNESS: As an underwriter, you have to interpret the compensating factors. If I've got verifications of employment that shows the borrower's been employed for ten years, it doesn't have to say on a piece of paper anywhere the borrower's been employed for ten years. I know that's a compensating factor. I can see it by looking at his employment records. BY MR. CALAMARI:

MR. TANDY: Objection. THE WITNESS: Not all loans need compensating factors. And if I don't have anything that I would consider a compensating factor, just because I might think I don't have anything I consider a compensating factor doesn't mean that the loan isn't acceptable because you don't always have to have compensating factors. BY MR. CALAMARI: Q. Well, I'm not talking about loans that don't require compensating factors. I'm talking about loans that are issued based on compensating factors. Would you expect those loans to have evidence in the loan file of the existence of the compensating factors? MR. TANDY: Objection. THE WITNESS: If I believe a loan file has a compensating factor, something in the loan file is going to make me believe that. I mean, it doesn't necessarily have to be a piece of paper, but there's something in there that's going to make me believe that. BY MR. CALAMARI: Q. And what in there, what types of things in there will make you believe that?

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MR. TANDY: Objection. THE WITNESS: It -- I mean, it's very -- it varies by loan. It could be a credit score of 780 and I need a 650. There's no extra documentation. It's just my credit report. It could be a verification of deposit shows I have $100,000 and I need $2,000. It's -- it's a lot of different things that you would use and it's just -- as an underwriter, underwriters look for those things. I mean, that's what they're trained to do. And so when I look at a loan file, I don't have to be told what to look at. I just kind of know what to look at. BY MR. CALAMARI: Q. How do you -- how do you as an underwriter balance those very things that you're talking about? Suppose the -- the credit score requirement was 650 and you saw that the credit score in the loan file was 652. Would that be a compensating factor? MR. TANDY: Objection. THE WITNESS: It -- it would depend on the loan file whether I would consider that a compensating factor or not. I might just consider it a wash. I mean, it's just -- it's -- it depends. It

BY MR. CALAMARI: Q. How do you explain what you did when you issue a loan in reliance on compensating factors? A. You just -MR. TANDY: Objection. THE WITNESS: I guess I'm just -compensating factors take a lot of different forms. And in order to determine what I did, I mean, I would have to have an exact loan that I'm looking at in order to tell you, okay, this is how I looked at it. BY MR. CALAMARI: Q. Okay. And then that's the best you can do as you sit here today. Is that right? MR. TANDY: Objection. THE WITNESS: Yes. BY MR. CALAMARI: Q. Okay. You see that last sentence on the page: "Monolines pressing for explanation, but shifting facts prevent clarity and weaken our ability to take firm stands on repurchase demands." Did you ever participate in any conversations relating to monolines requesting

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depends on what I'm looking at whether I -BY MR. CALAMARI: Q. Is it totally arbitrary for the underwriter? A. No, I -MR. TANDY: Objection. THE WITNESS: No, I wouldn't say it's arbitrary. It's just that, you know, underwriting is not an exact science. I mean, underwriting is a skill and you weigh everything in a loan file. You look at the whole picture and make a determination whether or not you think a loan is acceptable. You just take all the components in together. BY MR. CALAMARI: Q. And how do you give assurance to an investor that you'll do that in a manner that's compliant with the reps and warranties in the contract? MR. TANDY: Objection. THE WITNESS: We share with investors our guidelines. We share with investors our exception process. We give them access to everything that we do. I mean, they know how we look at loans. I mean that -- and we do look at loans in exactly the manner that we make representations to. So, I mean, that's how we tell them that this is what we do.

explanations about compensating factors? MR. TANDY: Objection. THE WITNESS: No, not that I -- not really a conversation. I mean, I think that we all -- all loans that we review, we review and we look at compensating factors in the event there's an exception. I mean, it's just part of our standard process. So, I mean, I would have had conversations about that. But I don't recall anything specific in monolines pressing for explanations. BY MR. CALAMARI: Q. So this doesn't ring a bell to you as a subject that was discussed at -- during your employment? MR. TANDY: Objection. THE WITNESS: No, not specifically, no. BY MR. CALAMARI: Q. Did you participate in discussions relating to the requirement of documenting compensating factors? MR. TANDY: Objection. THE WITNESS: No. I mean, nothing specific to that. I mean, we've always looked at compensating factors.

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BY MR. CALAMARI: Q. Did you participate in discussions as to how to judge whether compensating factors exist or not? MR. TANDY: Objection. THE WITNESS: I worked with my underwriters as far as that. We had guidance documents that we use. But, again, they're guidance documents. I mean, compensating factors is just a standard part of underwriting. BY MR. CALAMARI: Q. Okay. MR. TANDY: Peter, before you shift, I would like to mark a portion of the transcript highly confidential from the introduction of 4027 and mark 4027 as highly confidential. At the moment, I'm not asking to take the document back, but I do note that there's several places where it attorn- -- where it indicates it's attorney-client work product, so. MR. CALAMARI: Well, I'll object to it but I'll allow you to mark it for now and treat it as such. MR. TANDY: Okay. MR. ALLAN: Before you move on, let me state on the record for Bank of America that we are

make, though, is the time to raise these objections was when I first asked the questions but -MR. TANDY: Well, Peter, I did not -MR. CALAMARI: -- I think everyone's stated their positions and -MR. TANDY: I didn't want to interfere with your questioning. I don't believe that marking this portion as highly confidential interferes with -MR. CALAMARI: No. MR. TANDY: -- your examination. MR. CALAMARI: I have no objection to your marking it. I'm objecting to the designation. But I don't object to your marking it. MR. TANDY: Okay. MR. CALAMARI: Okay. THE REPORTER: Then do you want this portion of the transcript split out from the regular transcript as well? MR. TANDY: I think if we just mark it within the context of when Mr. Calamari started to use that exhibit to the end just now and the exhibit itself, I think that will be sufficient for our purposes. THE REPORTER: Thank you. MR. TANDY: Appreciate the courtesy, Peter.

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MR. CALAMARI: No, it's -- that's a subject of a motion that's going to be argued next week. (The deposition continues on page 1091 of the nonconfidential portion.) /// ///

14:32:51 1 provisionally moving to strike the testimony relating 14:32:54 2 to Exhibit 4027 pending our investigation as to the 3 privilege status of this document and the possibility 4 that we may seek clawback of the document. 5 MS. BEA: Okay. I'll just say that I'll 6 note for the record that this document was produced 7 by Bank of America pursuant to a cover letter that 8 expressly stated that this was being reviewed after 9 undertaking a re-review of the privilege on the 10 document and after redacting those portions that Bank 11 of America believed was privileged, so. 12 MR. ALLAN: Renee, do you have the cover 13 letter? Could I see that? 14 MS. BEA: I'm sure it's in our 15 correspondence file. 16 MR. ALLAN: If you could provide me with the 17 cover letter, that would be helpful during this 18 investigation. 19 MS. BEA: Ms. Reed would have it as well. 20 MR. CALAMARI: Yeah. Okay. Well, look, we 21 don't need to waste the witness's time. You've 22 stated your positions. We've stated our positions. 23 Let's -- let's keep going. And on a break you can do 24 any of that. 25 I guess the only other point I ought to

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MR. CALAMARI: Meanwhile, let's turn to the next document, which is, Renee, tab 41. MS. BEA: This will be marked Exhibit 4028. (The document referred to was marked as Exhibit 4028.) BY MR. CALAMARI: Q. I'll mark an exhibit. Bates stamps are 427891 to 427913. Document is entitled "Repurchase Oversight Group ('ROG')" and it's dated April 14th, 2009. And it's Exhibit 4028. Do you see this document? A. Yes. Q. And you testified earlier that you participated in repurchase oversight group meetings? A. Yes. Q. Let me ask you to turn to page -- well, the page that has slide 10. And, if I can, I'll try to find it. It's page 10 and the Bates stamp is 27900. A. Okay. Q. Do you have that page? A. I do. Q. Okay. And do you see up on top, it says "Policy Considerations"? A. Yes.

Q. When you say "others" -- do you recognize this particular document? A. I mean -- no. I mean, I've seen ROG preparations, but -Q. Okay. A. -- I don't remember, you know, each individual one of them. Q. Are they circulated routinely to the people who attend the meetings? MR. TANDY: Objection. THE WITNESS: They were given out during the meeting to those that attended. BY MR. CALAMARI: Q. Okay. Were they given out with any specific instructions? A. No. It was a working document that was being discussed during the meetings. Q. And was the documents -- were -- were -- did you ever use these documents with members of your team? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. Okay. Turn to page 10 again, "Policy Considerations," "Monoline strategy." And it says

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Q. And then underneath it, it says "Monoline strategy." A. Yes. Q. "Detail on slide 11." A. Yes. Q. Okay. Who was on the research oversight group? MR. TANDY: Objection. MR. CALAMARI: I'm sorry. Did I use the wrong name -MR. TANDY: Yes, you did. MR. CALAMARI: -- research oversight group? MR. TANDY: I think you mean "repurchase." MR. CALAMARI: Repurchase oversight group. THE WITNESS: Well, Michael Schloessmann was. BY MR. CALAMARI: Q. Who's Michael? A. He was my boss at the time. Q. Okay. A. He was the head of reps and warrants. Q. Who else? A. I was on it. Pavelma Ruska. Kathryn Martin. Gosh. Scott Kurzban. I'm sure there are others, but I just --

"Approval Matrix." You see that -- those words? A. Yes. Q. Can you read that whole thing? Basically 'cause I can't read the next few words. A. "Approval matrix/decisioning calibration (detail on slide 12)." Q. Okay. And what is an approval matrix? A. It was a document that was put together that gave different parties the ability to make approval decisions. Q. And that's the matrix that's contained on slide 12? A. I -- let me take a look at that and see what's on slide 12. Let's see, this is giving tiers out for approvals. So, yes, this was an approval matrix. Q. And you see that second bullet point on slide 10 under the words "what should" -- under the words "Approval Matrix" says: "What should the 'red face' standard be?" Do you see that? A. Yes. Q. What was the red face standard? A. This was something that the strategy team

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was working on to determine loans that had, you know, blatant issues with them. But really it was strategy that was making that determination. That's why they worked in conjunction with us. And I don't recall exactly what that ended up being because, again, this was a time where we were kind of going through transitions and, you know, I was kind of going to be moving into a different role. And I was really more focused in another area. So Shareef was really managing this piece of it. Q. Did you recall discussions about the red face standard? A. I do recall there being discussions about a red face standard. I just don't really recall specifics because I had Shareef really focusing on this. Q. Do you recall generally what the red face standard was? A. No. I mean, it was -- you know, we had general discussions about what we would call red face. But really I had Shareef working with strategy on that. Q. Well, you say you had general discussions about red face. What -- what do you recall about those general discussions?

THE VIDEOGRAPHER: This marks the end of tape number 3 in the deposition of Cynthia Simantel, Volume 3. Going off the record. The time is 2:43 p.m. (Recess taken.) THE VIDEOGRAPHER: This marks the beginning of tape number 4 in the deposition of Cynthia Simantel, Volume 3. Back on the record. The time is 2:52 p.m. MR. CALAMARI: Yeah, okay, I'll get started. BY MR. CALAMARI: Q. Were repurchase claims made by MBIA processed the same way as repurchase claims by other monolines? MR. TANDY: Objection. THE WITNESS: To the best of my recollection, other than the fact that we've talked about, about the spreadsheets and things, but yes. BY MR. CALAMARI: Q. Did the fact that MBIA had already initiated litigation impact how its repurchase claims were processed? MR. TANDY: Objection. THE WITNESS: I mean, from my standpoint, once litigation was initiated, we had legal

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A. That we would call loans -- that -- it was just kind of a term they were using for loans that we felt should be refer- -- purchased immediately. Q. In other words, loans that were so seriously defective, they should be immediately repurchased? MR. TANDY: Objection. THE WITNESS: Didn't really discuss seriously defective, but just loans that we felt were clearly bona fide rep and warrant breaches and should be repurchased. BY MR. CALAMARI: Q. And why the words "red face"? MR. TANDY: Objection. THE WITNESS: I -- I don't know why they chose that. It -- you know, it looks like strategy did that. I don't know why they chose to use those words. MR. CALAMARI: How are we doing on time? Whenever you're ready for a break. I'm going to keep going, but if you want to break. MR. TANDY: This would be a fine time to take a break. I could use a -MR. CALAMARI: Okay. MR. TANDY: -- stretch. MR. CALAMARI: Very good.

involvement dealing with repurchase claims. BY MR. CALAMARI: Q. Did you stop processing repurchase claims at that point? MR. TANDY: Objection. THE WITNESS: Not that I recall. MR. CALAMARI: Let's go to tab 22. Tab 22 is part of a spreadsheet. We can put the spreadsheet up if you need to see any piece of it. And the exhibit here is a selected piece of that spreadsheet. MS. BEA: This will be marked as 4029. (The document referred to was marked as Exhibit 4029.) BY MR. CALAMARI: Q. So let me show you what's been marked as Exhibit 4029, which is an email from you to Kevin Meyers, dated Monday, the 27th of October 2008. And it encloses a -- a report for Price Waterhouse and -and an excerpt from that report is attached to that email. Let me ask you to look at that excerpt. And if you want to see any other portion of it on the screen, we can put it up. MR. ALLAN: So what you're saying is, you

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took one page from the attachment and made it part of this exhibit? MR. CALAMARI: One page from the spreadsheet, which is the hard copy exhibit. MR. TANDY: All right. This is -- this page is from the Bates ending 74939. MS. BEA: Yes. MR. TANDY: And it's somewhere -- and it's somewhere in the spreadsheet. Correct? MR. CALAMARI: Correct. MS. BEA: I can pull it up right here. MR. TANDY: Okay. Which page of the spreadsheet is it, do you know? MS. BEA: It's tab number -- or tab marked "MBIA Notes." MR. TANDY: Okay. MS. BEA: "MBIA notes." MR. TANDY: Okay. BY MR. CALAMARI: Q. First of all, are you familiar with this spreadsheet? A. I mean, I don't recall the specific spreadsheet. Q. Is there any reason to doubt that you had a copy of it?

THE WITNESS: Well, what this says is, "talks are on hold." So that means we weren't having meetings with MBIA because we'd been having meetings with them to discuss loans. It didn't say that we stopped repur- -- you know, processing repurchase claims. And it just says that we have to check with legal about sending our responses out and about releasing files. So we just have to have legal involvement since litigation has been filed. It doesn't say we stopped reviewing claims. BY MR. CALAMARI: Q. Okay. It does say, though, that you stopped sending responses to MBIA. Is that correct? MR. TANDY: Objection. THE WITNESS: No. It says at the meeting on 10/8, and this date -- is dated 10/6, that we would talk about it. BY MR. CALAMARI: Q. Okay. And do you recall the outcome of that discussion? A. I do not. Q. Okay. And it says: "Files are not being released to MBIA until the issue is

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A. No. Q. You see at the top it says "MBIA has initiated litigation"? A. Yes. Q. And it says "All talks are on hold"? A. Yes. Q. "At the ROG meeting on 10/8 the issue of whether or not CRM can send responses to MBIA will be discussed. Those responses may need to be filtered through legal. Files are not being released to MBIA until the issue is discussed with legal." Do you see that? A. Yes. Q. Do you recall discussing this issue at the CRM meeting? A. I don't. Q. I should say, do you recall discussing this at the ROG meeting on October 8th? A. I do not. Q. Do you recall putting all of the processing of MBIA repurchase claims on hold? MR. TANDY: Objection.

discussed with legal." Do you see that? A. Yes. Q. Is there any reason why files weren't being released to MBIA other than your desire to discuss it with legal? MR. TANDY: Objection. THE WITNESS: I mean, anytime you have litigation and then you have to get legal involved, and so we wouldn't do anything without legal looking at what we were doing, making sure that, you know, everything was the way they wanted it to be. BY MR. CALAMARI: Q. You had a contractual obligation to MBIA to release those files, didn't you? MR. TANDY: Objection. THE WITNESS: I can't answer that. MR. CALAMARI: Let's go to tab 38. MS. BEA: This will be marked as Exhibit 4030. (The document referred to was marked as Exhibit 4030.) BY MR. CALAMARI: Q. Yeah, this is 4030. Let me show you what's been marked as

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Exhibit 4030. It's an email from Shareef Abdou to Hugo Monsanto with a copy to you. And it's dated March 2nd, 2009. Do you see that? Bates stamp is 10112. A. Okay. Q. It says -- well, let me ask you. Do you recall discussing the issue of whether you would favor Ambac in the processing of claims because Ambac was not in litigation? MR. TANDY: Objection. THE WITNESS: I don't recall that and I don't think it says that they would be favored, but just that they were going to maybe focus on them because we could actually maybe resolve them. But I don't recall that conversation. BY MR. CALAMARI: Q. And it says: "We currently have an even split of UWs" -What are UWs? A. Underwriters. Q. Okay. -- "on MBIA and Ambac, even though MBIA is over 90 days now." What does it mean that MBIA was over

BY MR. CALAMARI: Q. And then it says: "Susan feels that we should focus on Ambac since they are not in litigation." Do you recall Susan expressing that feeling? MR. TANDY: Objection. THE WITNESS: I do not. BY MR. CALAMARI: Q. Do you recall if anything happened as a result of this email? A. I do not. Q. The next one. MR. TANDY: Can I ask a question 'cause -and I apologize. This was handed at the same time. Is this the disc for something, Renee? MS. BEA: That was handed with -MR. TANDY: Okay. That -MS. BEA: -- 4029 and that's -- yeah, we're marking the native that we showed up on the screen -MR. TANDY: Okay. MS. BEA: -- so that the native is in the record as a document. MR. TANDY: And then that -- okay. THE REPORTER: So it should be attached to

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90 days? MR. TANDY: Objection. THE WITNESS: I'm not positive. I don't have a report to look at, so I would just be guessing. BY MR. CALAMARI: Q. Do you have an understanding as you sit here today about what was meant by the words "is over 90 days"? MR. TANDY: Objection. THE WITNESS: Typically when we talked about aging, we would talk about claim aging. But I do not know for certain. I don't have anything to look at. I'd have to have something to look at. BY MR. CALAMARI: Q. Is it fair to say that that probably refers to the -- the amount of time that has expired since MBIA has made repurchase claims to you? MR. TANDY: Objection. THE WITNESS: No. I think it's fair to say that there may be some claims that we've had in-house for 90 days, but not -- I mean, claims were consistently coming in, so there may be some over nine- -- at 90 days. I don't think it's fair to say that that's how long they've been sitting.

420 -- 4029? MR. TANDY: 4029, which I have just done, just for the record, 'cause it was hanging loose. MS. BEA: This will be attached as 4031. (The document referred to was marked as Exhibit 4031.) BY MR. CALAMARI: Q. 4031 is an exhibit Bates-stamped 5925 as to the last four digits. It's an email from Shareef Abdou to you dated December 29th, 2008. A. Yes. Q. And it encloses an email from you to Shareef in which you say -- I'm sorry -- an email from you to Shareef of the same date but earlier in the day. It says: "Shareef, what are we going to do with the 2,000 loans from MBIA given the fact that they have sued us? Are we reviewing them?" Do you see that? A. Yes. Q. Does that refresh your recollection about discussions on the issue of what to do about MBIA? A. It -MR. TANDY: Objection.

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THE WITNESS: It does not, no. BY MR. CALAMARI: Q. And Shareef's response is: "At a minimum, I think we will need to review some loans for sampling purposes." Do you see that? A. Yes, I do. Q. And do you -- do you have any reason to believe you didn't receive this email? A. No. I'm on it. Q. Yeah. And this is just a communication between you and Shareef. Is that right? A. Shareef managed the monolines, yes. Q. Right. There's nobody else copied on this email? A. Not that I see. Q. Can you think of any reason why a piece of this email would be redacted? MR. TANDY: Objection. THE WITNESS: I have no idea. I can't answer that. BY MR. CALAMARI: Q. But there could be information in this -- in that redacted portion that might jog your memory on

log and produced in full or in redacted form. Enclosed is a CD containing those documents." MR. TANDY: Doesn't change my request that that portion be -MR. CALAMARI: I understand your request. This is addressed -MR. ALLAN: I appreciate you providing a copy of that letter. BY MR. CALAMARI: Q. Are you aware of the repurchase rate on loans that MBIA put back to Countrywide? A. That's -- that's kind of vague. I mean, I -Q. You can't answer that question? A. No. I mean, I don't recall the repurchase rate. I -- yeah, I'm kind of lost there. Q. Okay. Well, I'm asking you -- and maybe I'll ask it more specifically. Do you have any sense of how the percentage number of loans put back by MBIA relates to the percentage number of loans repurchased by other monolines? MR. TANDY: Objection. THE WITNESS: No, I don't recall.

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these issues? MR. TANDY: Objection. THE WITNESS: I -- I have no idea. I mean, this was a long time ago. I -MR. CALAMARI: Okay. Well, we'd -- like with prior things, I call for the production of that document. I see no basis for redacting it. I can't see how it could possibly be privileged. And we'll deal with it at another time. MR. TANDY: I'll take your request under advisement. It will be in front of Justice Bradley. MR. CALAMARI: I'm going to interrupt just for a second. We had that discussion a while ago about privilege and the possibility that Exhibit 42- -- 4027 could be considered privileged raised by counsel for O'Melveny & Myers. We've now provided you with a copy of the letter dated August 3rd, 2012 that states: "As explained in my July 26, 2012 letter and my colleague's July 27, 2012 email, in the course of preparing BAC's repurchase-related privilege log, BAC determined that certain documents could be removed from the

BY MR. CALAMARI: Q. And do you have any sense of how it compared to investor repurchases? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. And, in fact, MBIA's repurchase requests have been consistently processed more slowly than others. Isn't that correct? MR. TANDY: Objection. THE WITNESS: Not that I'm aware of. MS. BEA: And this is another document we will -- we will be marking the native file, but we've provided the witness with an excerpt from that native file just to make it a little bit easier. This will be marked as Exhibit -- where are we at? 4032? MR. CALAMARI: Yes. (The document referred to was marked as Exhibit 4032.) BY MR. CALAMARI: Q. Okay. I'm showing you what's been marked as Exhibit 4032. As Ms. Bea just said, this is an excerpt from a spreadsheet. We have the entire spreadsheet here available for display on the screen.

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And -- and we'll also mark a disc with that spreadsheet. We've given you a copy of -- a hard copy, page or two, of that spreadsheet so you can answer questions relating to it. MR. TANDY: I just need to ask one question 'cause I have no problem about the marking. But are you going to provide the court reporter with an extra -- with extra copies of the discs so they can be included in the -- in the collection of -- of documents that are sent with the transcript to us? THE REPORTER: These are my copies right here that are being marked. MR. TANDY: No, I understand that. But what happens is -- Peter, I'm sorry to interrupt your deposition. MR. CALAMARI: No, that's all right. MR. TANDY: What happens is, we get an order which has the transcript and the set of exhibits. We don't rely on just what I've identified. We get the actual copies. So in order to get the disc, are you going to be provide -- all I'm just saying, is your office going to be providing the court reporter with extra copies of the disc or having the court reporter service make copies of those discs?

Q. Do you see -A. Yes. Q. -- it lists the aging status? A. Yes. Q. In increments of zero to 30 days, 31 to 60 days, 60 to 90 days, 90 to 120, 120 to 180 days, and 180 -- 180 -- 180 days plus? A. Yes. Q. And do you see that under the 120 to 180 days category MBIA has 1,543 loans? A. Yes. Q. And is it fair to say that that's -MR. TANDY: Objection. BY MR. CALAMARI: Q. -- the longest outstanding of any of the -A. Well, if you look at this, many of the demands were just received, so they wouldn't have started aging. I mean, you have to take this in context because, you know, very significant large numbers of demands are coming in. They're going to age. And that's why -- I mean, if you look at these others, I mean, they will age, too, because you just can't get through that many that quickly when you get hit with that kind of volume. So, I mean, I think it's just a -- to be

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MS. BEA: My understanding is in the past, the court reporter has made an exact copy of what has been marked -MR. TANDY: Okay. So that I can -MS. BEA: -- in the deposition and provided you with a -- a copy -MR. TANDY: Okay. MS. BEA: -- of the native as well. MR. TANDY: I -- first time that's happening when I'm at the depo. I just wanted to make sure. Thank you. MR. CALAMARI: That's not a problem. BY MR. CALAMARI: Q. And if you'd look at first -- the first page of the excerpt that I've given you, it's marked 1 of 5 in the bottom right-hand corner and it says "Monoline Repurchase Status." First, do you recognize this as a document that's generated by Bank of America? A. I -- I mean, I can't tell for sure who generated this, but I -- I mean, I've seen reports similar to this one, yes. Q. And if you look at -- if you look at under "Demand Aging as of March 27th, 2009." A. Okay.

honest with you, this is just the fact that, you know, MBIA probably sent theirs in, in a big bulk. Now they're aging through. These are -- those are new. I mean, they're -Q. Well, let me -- let me ask you if down below the -- down below the categories that show the aging, you have columns that deal with results. Some say "Review Appeals." Some say "Pending Approval." Do you see that? A. Yes. Q. Some say "Appealed." Some say "Approved"? A. Yes. Q. Is it fair to say that the others have significant numbers in those categories which would imply that their demands had come in earlier and have already been processed? MR. TANDY: Objection. THE WITNESS: No. Just based upon what I know about the claims that came in from MBIA, I would actually say this is probably more of a function of us having to try to get those claims some -- some weight that we could deal with. I mean, when we first started getting them, and for quite a period of time, we couldn't process the claims. We didn't really know what we are being

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asked to do. We -- they weren't really citing the breaches. They were -- they just weren't very good claims coming in. And so I think -- you can say that, you know, we've got 1,466 loans out on appeal. I mean, that's a significant number. So if you look at the volume that we've actually gotten through and got out, I mean, it's very large numbers. And so I think you've got to look at the volume that's coming in. You've got to take in consideration the quality -- quality of that volume that's coming in and trying to get through it. BY MR. CALAMARI: Q. Is it fair to say that, even though you had 1,466 loans on appeal for MBIA, you had appeals for FSA? A. Well, I mean, that's what the numbers say here. Q. And you had appeals for Assured? A. Yes. Q. So was the quality of the loan requests coming in from those entities worse than MBIA's? MR. TANDY: Objection. THE WITNESS: No. Where I'm talking about the quality is that's going to make it age longer

A. Yes. Q. And it has Assured, percent approved? Do you see that? A. Yes. Q. And FGIC, percent approved? A. Yes. Q. And FSA, looks like percent approved? A. Yes. Q. And MBIA, 2.4 percent approved? A. Yes. Q. Is that correct? A. Yes, that's what it says. Q. And as to the two with , is that -- which are lower than MBIA's, is that -that's Ambac and XL. Is it fair to say that those had not been completed processing yet? MR. TANDY: Objection. THE WITNESS: I mean, you can -- from this, you can show that there haven't been any loans approved yet. So I -- you know, and I wouldn't be able to tell from this report why. BY MR. CALAMARI: Q. Right. If you went back to -- to the chart on page 1, you can see that the -- Ambac's requests had not yet filtered up through the system. Is that

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before we can actually get a response out. If a quality repurchase request comes in and they clearly cite what they're asking us and they're clear on their findings, you can process those much quicker than ones where we had to go back and ask for them to make them clearer, for them to resubmit them. There was a process there. And that would have delayed our ability to get through the claims and even get appeals out or get them approved or anything. So that's why I'm just saying you can't just look at this and say that they weren't being processed as timely. There's very huge numbers that have been processed. I mean, we've got -- look at 881 in "Review Appeals." I mean, we've -- that's a lot of loans that we're looking at. So very large numbers are going through. BY MR. CALAMARI: Q. And in terms of approvals, if you look at what is page 3 of the excerpt that I've given you, you see at the -- that page has a title that says "Repurchase Status as of February 27th, 2009." Do you see that? A. Yes. Q. And it gives percent approveds?

right? MR. TANDY: Objection. THE WITNESS: They're pretty new requests. BY MR. CALAMARI: Q. Can you give any reason why MBIA's approval rate is so much lower than others? MR. TANDY: Objection. THE WITNESS: I mean, the only thing that I can infer from this is that the claims that we received were not valid rep and warrant breaches warranting approval. I mean -- I mean, that's all I could tell you. BY MR. CALAMARI: Q. If MBIA were to present loans today for repurchase, would they be processed and approved or rejected in good faith by -A. I mean, I -Q. -- Bank of America? A. I can't answer that. I'm not managing that area. Q. Was there ever a decision to stop processing MBIA's requests? MR. TANDY: Objection. THE WITNESS: You know, I don't recall that. BY MR. CALAMARI:

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Q. Have all of the loans that MBIA has submitted for repurchase been resolved on a final basis? MR. TANDY: Objection. THE WITNESS: I'm -- I'm not involved in that, so I can't answer that. BY MR. CALAMARI: Q. As of the time you became uninvolved in that, had they all been processed? A. Well, I mean, there was an ongoing pipeline and MBIA was not rescinding any loans. We were -- we were repurchasing loans. They weren't rescinding any so they couldn't have been finalized because we weren't going to repurchase loans we didn't believe were valid rep breaches. Q. I didn't quite understand that. Are you saying that you did respond on all loans that were submitted to you by MBIA? MR. TANDY: Objection. THE WITNESS: At the time that I stopped actively working in that area -- and so you have to kind of remember, even though I was managing it, I had Shareef actually directly managing it and I was involved in some other things -- I'm not aware of us not responding on loans and working on loans.

A. Yes. Q. Okay. And at this time Hans Rusli was not yet your supervisor? MR. TANDY: Objection. THE WITNESS: No. No, he was not. BY MR. CALAMARI: Q. What's the approximate time frame of this? MR. TANDY: Objection. THE WITNESS: I can't tell a date on this. BY MR. CALAMARI: Q. But it has information, does it not, about years 2005 and 2006? A. It does. Q. So it would imply that it is post 2006? MR. TANDY: Objection. THE WITNESS: No. I mean, it looks to me like it may be early '06. BY MR. CALAMARI: Q. At least past the first quarter. Right? A. I mean, it's got information for that. I mean, it would appear so, but I -- it's not dated. I have no idea. Q. And this document, on page Bates-stamped 497, says at the top in the right-hand corner "Severely Unsatisfactory Rating Defined."

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BY MR. CALAMARI: Q. Okay. MS. BEA: 4033. (The document referred to was marked as Exhibit 4033.) BY MR. CALAMARI: Q. I've given you a document that we've marked as Exhibit 4033. And it's a presentation entitled "Countrywide Home Loans, Consumer Markets Division Credit Risk Management." And it's Bates-stamped 039336 to 0- -- no? Looking at the wrong Bates stamp. Sorry. Start over. It's Bates-stamped, last six digits, 103488 through 103500. This is an introduction by Hans -- I'm sorry. It's a presentation entitled "Countrywide Home Loans, Consumer Markets Division Credit Risk Management." Do you see the document? A. Yes. Q. And then on page -- well, no number on the page, but on the next page of the document, which is 103489, you see it says "Introduction," and then it says "Hans Rusli, Executive Vice President, CMD Credit Risk Management."

Do you see that? A. Yes. Q. And it says, has a footnote start under "Corporate Quality Control" -- corporate quality control was your group. Is that right? MR. TANDY: Objection. THE WITNESS: I managed quality control, yes. BY MR. CALAMARI: Q. Yeah. Hans Rusli ultimately became your immediate supervisor. Is that right? A. Many years later, but yes. Q. Yeah. But ultimately he did. Right? A. Yes. Q. Yeah. Okay. And under "Corporate Quality Control," it says: "A loan rated severely unsatisfactory has critical underwriting or documentation errors or contains fraud. Loan approval is clearly not justified." Do you see that? MR. TANDY: Objection. THE WITNESS: Yes. BY MR. CALAMARI:

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Q. Is that a fair statement? MR. TANDY: Objection. THE WITNESS: I mean, this is his presentation. I mean, this is not my presentation. And I don't agree with the statement "loan approval is clearly not justified." I mean, that was not part of what we used in making a determination of severe unsat. BY MR. CALAMARI: Q. Were you -- or what was your level of employment at that time? MR. TANDY: Objection. THE WITNESS: You mean my title? BY MR. CALAMARI: Q. Yes. A. Well, not knowing when this exactly was done, I -- I don't know if I was an SVP or an EVP. Q. Okay. A. I don't know. Q. Well, when you say you don't know whether you were an SVP, this -- can we presume that this was done at least in the second quarter of 2006? MR. TANDY: Objection. THE WITNESS: I mean, that -- I wouldn't pre- -- I don't usually presume anything.

BY MR. CALAMARI: Q. Do you disagree with that? MR. TANDY: Objection. THE WITNESS: I mean, I don't disagree that those can be errors. I'm not disagreeing to that. BY MR. CALAMARI: Q. And you're saying that there could be other errors? MR. TANDY: Objection. THE WITNESS: I'm just saying that this is -- I mean, these underwriting errors could include missing documentation, incomplete, or fraudulent. But it's -- it's -- that's not all-inclusive and it is their definition. It's not mine. BY MR. CALAMARI: Q. What was your title in 2006? A. I -- I was an SVP and then I became an EVP at -Q. When? A. I don't remember the exact date. I think around mid '06, but I'm not positive. Q. Around mid '06. So not in the first quarter? MR. TANDY: Objection. THE WITNESS: I just guess I'm not getting

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So, I mean, I don't know. But, I mean, my boss who defined the rating for severe unsat was a managing director, which is higher than an EVP. So, I mean, I don't really know what the titles -- how that's getting to this, but this wasn't our definition. BY MR. CALAMARI: Q. And when you say it wasn't your definition, you think this definition is wrong? A. What I'm saying is "loan approval's clearly not justified," I could rate a loan as severe unsat, but I did not say that it was clearly not justified. It was an internal rating, so that was -- he made -- whoever wrote this made that determination for their own credit risk group. Q. It says: "Typical underwriting errors are: Critical pieces of documentation are missing, incomplete, or fraudulent." Would you agree with that? MR. TANDY: Objection. THE WITNESS: Well, I think they're talking about for themselves what they see within CM -consumer markets division as typical issues causing severe unsats.

what the relevance is because -- to this. I mean, Hans's definition that he's using internally has nothing to do with my title and my boss was an MDB which trumps an EVP anyway, so I don't know why that's relevant but -- but -BY MR. CALAMARI: Q. Well, it also says in point 2: "The documentation in the file does not support the underwriting decision." Do you agree with that? MR. TANDY: Objection. THE WITNESS: I -- I didn't write this. I mean, it's his. It's not mine. I -BY MR. CALAMARI: Q. I didn't ask you -A. You know -Q. -- if you wrote it. I asked you a simple question. Do you agree with it or do you disagree with it? MR. TANDY: Objection. THE WITNESS: This is what he is defining as severe unsat. This is not, if you look at my ratings grid, how I define severe unsat. That's what I'm

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saying. BY MR. CALAMARI: Q. I -- I heard you say that. I asked you if you agreed with this. MR. TANDY: Objection. THE WITNESS: I -- I don't know if I agree with this. I mean, this is a pretty broad statement to make and I would not rate a loan severe unsat necessarily because documentation is filed in support of the underwriting decision. I'm not -- I don't know what he's talking about here for certain, so I can't really agree or disagree. BY MR. CALAMARI: Q. Do you feel you accurately gave your view about severe unsatisfactory designations to the SEC? A. To the best of my knowl- -- yes. I mean, absolutely. I had a ratings grid. MS. BEA: This will be marked as 4034. (The document referred to was marked as Exhibit 4034.) BY MR. CALAMARI: Q. We've marked a document 4034. It's an email -- I'm looking at the right one now. Oh, I turned it upside down somehow. An email from somebody named Celeste

A. It is not. Q. It's a different group? A. Yes. Q. What's their role? A. Well, their -- Celeste was part of the quality assurance group within the wholesale lending division. So she would be, you know, responsible for quality and risk items within the W- -- wholesale lending division. Q. And she includes a document which begins on Bates-stamped -- Bates-stamped 1653 which is entitled "WLD Credit Risk & Quality Assurance (Prime) Corporate Quality Control Audit Procedures." Do you see that? A. Yes. Q. And on page 3 of that document, Bates-stamped -- 1655? MS. BEA: Yes. BY MR. CALAMARI: Q. -- there's a rating definitions chart? A. Yes. Q. And you see under "Severely Unsatisfactory" -A. Yes. Q. -- it says:

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Carmichael [sic] dated March 25th, 2006 to Joe Miller. Joe Miller was your boss? A. No. MR. TANDY: Objection. THE WITNESS: No, he wasn't. I never worked for Joe Miller. BY MR. CALAMARI: Q. Okay. And it's dated, as I said, March 25th, 2006. It's Bates-stamped number -Which is the Bates stamp? The black one? MS. BEA: Yeah. MR. CALAMARI: -- 1648 through 1661. MR. TANDY: No. 1662. MR. CALAMARI: 1662, correct. You can be sure that when it comes to Bates stamps, the chances are I'm wrong 80 percent of the time. BY MR. CALAMARI: Q. And the cover email talks about the update SOP and SLA data for the QCSUS process. Is that correct? A. For the quality assurance process. That was an internal division on QC, our quality assurance team. It wasn't part of mine. Q. Okay. This is also not part of your group?

"Severe underwriting risk with limited or no compensating factors. Also, loans with fraud. Will result in repurchase if/when investor becomes aware of issue"? MR. TANDY: Objection. BY MR. CALAMARI: Q. Did I read that correctly? A. Yes. Q. Do you agree with that statement? MR. TANDY: Objection. THE WITNESS: Well, this is our ratings grid. And, again, this ratings grid is based upon the reps and warrants with the GSEs because they're the most restrictive, so you have to remember that. It's not something -- not all contracts had fraud reps in them, blanket fraud reps. But in the event that this was a GSE loan, then yes. BY MR. CALAMARI: Q. Does this not apply to other loans? MR. TANDY: Objection. THE WITNESS: The piece that talks about fraud reps, fraud, if a loan does not have a fraud rep and it has a best of knowledge fraud rep and Countrywide was not involved in the fraud, then it

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would not be a rep and warrant breach. BY MR. CALAMARI: Q. What about the part that talks about "limited or no compensating factors"? MR. TANDY: Objection. THE WITNESS: I mean, that is -- part of the QC analysis is whether or not there were compensating factors on the loan. BY MR. CALAMARI: Q. Correct. And if there were not, it says it will result in repurchase when investor becomes aware of the issues. Is that right? MR. TANDY: Objection. THE WITNESS: Well, it talks about severe underwriting risks, so you're talking about a loan that has severe underwriting risk. So there would be high risk factors on it. There aren't any compensating factors whatsoever for the loan. So you're not -- you have to tie it together. You can't just say any loan that doesn't have compensating factors would be a repurchase because that's not what this is saying. BY MR. CALAMARI: Q. No, I don't say -- in any event, do you

Q. And -- okay. I accept that. And if you look at the bottom, the "Anticipated Financial Impact" column, the bottom under "Severely Unsatisfactory," it says: "Significantly higher servicing and post funding review costs. The probability of default is unacceptably high." Is that a true statement? MR. TANDY: Objection. THE WITNESS: Well, it is as it relates to our definition for anticipated financial impact. I mean, obviously if a loan defaults, there's going to be a lot higher costs associate -- associated with it and there are certain aspects that would cause a loan to have a higher probability of default. BY MR. CALAMARI: Q. Okay. And there's also a column called "High Risk." A. Yes. Q. Do you see that? A. Yes. Q. And what was -- what made the loans that fell into that category high risk? MR. TANDY: Objection.

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agree with what it's saying? MR. TANDY: Objection. THE WITNESS: For GSEs, yes. Again, you have to go to the contracts. And so I would have to look at contracts to determine -- because this is all based upon the GSE contracts, which are the most restrictive. BY MR. CALAMARI: Q. Well, you say that, but there's nothing in here that says anything about GSE contracts, is there? MR. TANDY: Objection. THE WITNESS: No, but what I'm saying is that our QC process was set up to be the most restrictive review of loans and it did not take into consideration who the investors were or the contracts that they had. And our repurchase process does. BY MR. CALAMARI: Q. Okay. And therefore this process applied to all loans. Is that right? MR. TANDY: Objection. THE WITNESS: This QC process applied to all QC audit loans. It had nothing to do with repurchase loans. BY MR. CALAMARI:

THE WITNESS: When we audited loans, we made a determination as far as how we felt the rating was taking into consideration the entire loan file. Again, it was done on an individual-loan-file basis. And so you would take a look at compensating factors, including LTVs and other iss- -- you know, other factors that were involved in the loan decision and make a determination whether you thought it was an acceptable risk, a doc defi, a high risk, or severe unsat. THE REPORTER: Whether you thought it was an acceptable or -THE WITNESS: Acceptable risk, documentation deficiency, high risk, or severely unsat. BY MR. CALAMARI: Q. So high risk by definition is not acceptable risk? MR. TANDY: Objection. THE WITNESS: No. I mean, high risk by definition is a loan that we felt had some issue within the underwriting of it, but we did not feel that it was a loan that was severe unsat. BY MR. CALAMARI: Q. Do you recall what Countrywide's SUS rate was in 2006 and 2007?

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A. No. Q. It was 8 percent, wasn't it? MR. TANDY: Objection. THE WITNESS: I don't recall that. BY MR. CALAMARI: Q. That doesn't ring a bell? A. No, it doesn't. Q. Do you recall if Countrywide Bank's SUS rate in 2006 and 2007 was 4 percent? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. You don't recall that either? A. No. MR. CALAMARI: Do you need a break? Okay. We need a quick moment to get something together. MR. TANDY: Okay. THE VIDEOGRAPHER: Going off the record. The time is 3:43 p.m. (Recess taken.) THE VIDEOGRAPHER: Back on the record. The time is 3:53 p.m. MS. BEA: This will be marked as 4035. And just so the record's clear, this was previously marked in what appears to be the SEC case.

remember. Q. Okay. Let me ask you about language that starts in the third paragraph -- that starts in the third paragraph, second sentence: "High risk and allowable performance" -- and the next word? MS. BEA: "Thresholds." BY MR. CALAMARI: Q. -- "thresholds remained unchanged. Both CHL and CWB set the benchmarks for SUS ratings at 4 percent. Over a period of almost two years, a level of final SUS ratings [sic] exceeded the benchmark by 100 percent have been consistently" -- oh, "exceeding the benchmark by 100 percent have been consistently identified for portfolio and HFS products." First, do you have any reason to think that that's not a true statement? MR. TANDY: Objection. THE WITNESS: I'm -- well, you know, they're talking about portfolio and HFS products which were bank products, not Countrywide Home Loan products.

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MR. CALAMARI: So we're going to separately 15:57:45 15:57:49 mark it. 15:57:51 MS. BEA: For purposes of this case, yes. 15:57:52 (The document referred to was 15:57:55 marked as Exhibit 4035.) 15:57:59 BY MR. CALAMARI: 15:58:04 Q. Okay. So I've put in front of you 15:58:04 document -- I should say Exhibit Number 4035, a document entitled "Summary Review: Quality Control." 15:58:05 And it's Bates-stamped 106281 through 106292 and ask 15:58:06 15:58:08 if you've ever seen this document before. 15:58:08 A. I do believe so, yes. I think. See, this 15:58:08 looks like maybe a bank document. I don't know if 15:58:08 they mention corporate QC in here. 15:58:09 Q. So you've never seen this document before? 15:58:13 A. I -- you know what? I just don't recall. I 15:58:14 mean, I -- yeah, I don't recall seeing it. 15:58:15 Q. Okay. Let me ask you to turn to page 3 of 15:58:16 12 of the document and the Bates stamp is 106283. 15:58:19 And you'll see a box at the bottom of the page 15:58:20 entitled "Area" and then "Status/Assessment." 15:58:21 A. Okay. 15:58:24 Q. Did you see this document at the SEC 15:58:27 deposition, by the way? 15:58:31 A. You know, I -- I honest- -- I just can't

So they're not referencing anything that we had. I mean, you know, that Countrywide Home Loans originated and sold. So I don't know what the bank SUSes were, but I don't recall ours at 8 percent or above and they are per- -- specifically referencing portfolio and HFC -MR. CALAMARI: Hm-hm. THE WITNESS: -- HFS loans which are not -those are bank loans -BY MR. CALAMARI: Q. Okay. A. -- sold by the bank. Q. So you think that that sentence "over a period of two years" doesn't refer to -A. Countrywide Home Loans. Q. -- Countrywide Home Loans? A. Yes. Q. So you think the rate at Countrywide Home Loans was not 8 percent? A. I do not recall it being 8 percent. Q. What do you recall it being? A. I mean, numbers that stick in my head are 2, 3. I mean, I -- I do not recall an 8 percent rate. Q. Now, HFS products are held-for-sale

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products? A. Yes. Q. But you think that those were only -- that only refers to held-for-sale products at the bank? MR. TANDY: Objection. THE WITNESS: Countrywide Home Loans -- I mean, bank -- loans that were held I believe were held at the bank. I don't think we held them on our books at Countrywide Home Loans. Or I don't recall doing that. And we didn't split our reviews out by this. I mean, this wasn't how my audits were done, which is another reason I just don't believe these are reflective of Countrywide Home Loan audit rates. BY MR. CALAMARI: Q. Okay. But you do agree that Countrywide Home Loans had held-for-sale products. Right? A. I wasn't in secondary. I never analyzed loans by portfolio held for -- any of that. Mine were done by execution or product types. I didn't audit based on this, so. Q. And so you don't know one way or another? A. No. Q. Okay. And you do know, though, that the benchmark was 4 percent. Is that right? MR. TANDY: Objection.

95 percent confidence level plus or minus 2 percent. So a statistically valid sample based upon that by our -- what we called our smart firm which were the people that pulled all of our samples. Q. Was it plus or minus 2 percent or plus or minus 5 percent? A. 2. Q. Okay. Now, do you have any idea how many of the loans in MBIA-wrapped securitizations were rated SUS during your quality control audits? MR. TANDY: Objection. THE WITNESS: No, I do not. MR. CALAMARI: Let's go to -MS. BEA: This will be what was previously marked in her last deposition as Exhibit 751 and attached to this for user friendly purposes for this deposition is an excerpt of the Excel spreadsheet. And here's a copy of the disc. (The document referred to was previously marked as Exhibit 751.) MR. TANDY: Okay. Do you have a copy of what you're going to -- you've excerpted out? Or you've got the -MS. BEA: We're not going to re-mark it. It's already in the record including the native, so.

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THE WITNESS: We did have a QC benchmark of 4 percent. BY MR. CALAMARI: Q. Right. And you -- and then when you targeted loans for review for SUS purposes, you were doing samples. Is that correct? MR. TANDY: Objection. THE WITNESS: We had several different methodologies. We had a random audit sample. We had targeted audits. We had divisional targeted audits. There were a lot of different ways we reviewed loans. BY MR. CALAMARI: Q. But you didn't review every loan that was issued by Countrywide. Is that -- is that right? A. No one could. MR. TANDY: Objection. THE WITNESS: No one could. BY MR. CALAMARI: Q. You did samples? A. We did a statistically valid random sampling. Q. And what was the size of the typical statistically valid random sampling? MR. TANDY: Objection. THE WITNESS: It was a sample done at

MR. CALAMARI: So you don't have copies you can give them to look at? MS. BEA: I just gave them copies. Oh, I'm sorry. MR. CALAMARI: Of the hard copy. MS. BEA: Sorry about that. MR. TANDY: That's okay. MR. ALLAN: You're not re-marking it. Is that correct? MS. BEA: Right. MR. CALAMARI: Right. We're going to refer to it as Exhibit 751. MR. TANDY: Okay. BY MR. CALAMARI: Q. Okay. And do you recognize this document? Or I should do a better job identifying it. It was previously marked as Exhibit 71 -- 751. It's Bates-stamped 113735 and there's a spreadsheet and a disc that goes with it. And then the excerpt has no Bates stamping on it, but it's entitled "Origination Business Controls: Credit Quality Control, MBIA Case - Ratings." Do you see that? A. Yes. Q. And it's dated April 14th, 2011?

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A. Yes. Q. Okay. And if you turn to the back page of this document, you'll see that the -- it lists the total of number of loans audited by QC -- the total of number of MBIA securitization loans audited by QC. Do you see that column, "Total Audit Number"? A. Yes. Q. And that number is, if I can read it correctly, 8,202? A. Yes. Q. Did I get that right? And that would represent the total number of loans that quality control audited that ended up in MBIA securitizations. Is that right? MR. TANDY: Objection. THE WITNESS: I mean, that's what this says. I didn't pull the report but -BY MR. CALAMARI: Q. And if you look at the bottom column, it says the total number of SUS rated loans and that number is 1,099. Is that correct? MR. TANDY: Objection. THE WITNESS: That's what it says. BY MR. CALAMARI: Q. And if I've done the math right, that's

Isn't that correct? A. For -MR. TANDY: Objection. THE WITNESS: -- underwriting reviews, not for procedural audits. Our 4 percent targeted SUS rate was based upon our full underwriting credit quality review of the loans, not on our procedural audits of the loans. BY MR. CALAMARI: Q. Okay. So you're saying that this is summarizing some different statistic. It's not summarizing SUS-rated loans? A. It's not summarizing SUS-rated loans for credit quality review, which is what the 4 percent was tied to. There are procedural audits in here. Q. And how would you determine the distinction between procedural audits and credit quality audits? A. Okay. Well, there's -- there's not just procedural audits. There's some targeted audits which an auditor included in. That 4 percent is statistically valid random sampling. You've got audits in here that are targeted audits. You have audits in here that are targeted branch audits which aren't part of that. You have early payment default loans which those loans have

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13 percent of the loans that MBIA wrapped were rated SUS by your quality control department. MR. TANDY: Objection. THE WITNESS: Well, but what you have -see, it's not that simplistic. BY MR. CALAMARI: Q. I'm just asking if that's correct? MR. TANDY: Objection. THE WITNESS: I wouldn't -- no, I wouldn't agree with that because -BY MR. CALAMARI: Q. Okay. A. -- these audits include procedural audits. They're not loan quality audits. There's a lot of procedural type audits in here. Targeted audits. Those audits have nothing to do with loan quality. They have to do with process audits that we were doing. So we may rate a loan SUS because a branch didn't cross a "T" properly. That doesn't have anything to do with the loan. There's a lot of audits in here that have absolutely nothing to do with the loans. I mean, hundreds and hundreds of them. Q. But your target ratings were 4 percent.

defaulted. You would expect to have high SUS rates. You have loans that are manufactured housing specific. You have special audits that we were doing on branches. You have the audit -- the QVDQ audit, which was nothing but a procedural audit to make sure form and a quality verification documentation checklist was completed properly. Q. And -- and isn't there a reason why you have those procedures? A. To -- this is to provide feedback to the branches. It doesn't have anything to do with loan quality. Absolutely nothing. It's just helping them monitor processes. The audits that really are related, the random audits, that's the -- those are audits that are part of the 4 percent. Q. So if we -- we could take the random audits and do the same mathematics for those. Is that right? Eliminating audits from this -A. Well, you've got -Q. Which audits should we take? MR. TANDY: Objection. BY MR. CALAMARI: Q. If we wanted to only take credit quality

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audits. A. Well, see, these show targeted -- I'd have to have like the project numbers to know whether they were -- what kind of targeteds they were. Because we had a lot of different kinds of audits that we did, where maybe we might do a focus-targeted audit where we're just looking at a specific item. I can tell you that random audits were the statistically valid sample. Other audits were done, they weren't statistically valid samples. Q. Which of these weren't done that were not statistically valid samples? A. I mean, targeted audits won't be. Early payment default audits wouldn't be. Q. Would a targeted HELOC audit be valid if it were -- if that's what the securitization in question consisted of, HELOCS? MR. TANDY: Objection. THE WITNESS: Well, the targeted HE- -- it would depend on what kind of targeted audit it was that I was doing. If I was doing a full underwriting random targeted audit, it could be. But if it was a target audit where I was looking at some focused item, it's -- it's not relevant.

THE WITNESS: I can't tell you, because I don't know the project numbers, exactly which one of these audits were maybe targeted focused audits or -I know that the QVDQ audits, the responsible lending audits were not random-type full audits. I know that the manufactured housing audits were, the Theresa Norden audit, or any of the QVDQ audits. Those are all procedural audits, the QVDQs. BY MR. CALAMARI: Q. What do you mean by it was not a random-type audit? A. A full underwriting random-type review. A lot of our targeted audits were focused on one thing. We may have just looked at one thing. That doesn't assess credit quality. Q. Okay. A. And that's why I can't tell from this. Q. Okay. But you would still rate that loan SUS? MR. TANDY: Objection. THE WITNESS: No, not from a credit quality standpoint. The targeted audits have different criteria where we established exactly what we wanted. It had nothing do with credit quality. You can't -- you

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When we're looking at that 4 percent, it's on our random audit sampling for a complete quality control underwriting review to determine loan credit quality, so. BY MR. CALAMARI: Q. What's a credit risk surveillance audit? A. That was a special targeted audit where we were watching -- monitoring our pipeline and looking for borrowers that maybe were trying to do fraud on us. Multiple applications, things like that. Q. So you don't agree that 13 percent of loans that you audited were rated -- that ended up in MBIA securitizations were rated SUS? MR. TANDY: Objection. THE WITNESS: I do not agree that 13 percent of the loans that were audited that ended up in MBIA's certifi- -- were SUSes as it related to credit quality. There may be some procedural audits in here that were -- that they're not part of credit quality at all. BY MR. CALAMARI: Q. And as you sit here, you can't identify which of those audits were the procedural audits that don't relate to credit quality? MR. TANDY: Objection.

can't compare it. BY MR. CALAMARI: Q. Well, that's what you're saying here today -A. Yeah. Q. -- but we'll -A. No, you can't. MR. TANDY: Objection. BY MR. CALAMARI: Q. -- let somebody else decide what you can and can't do. What's an exception audit? A. It was an audit that we performed on loans with exceptions. And, again, it could have been a targeted-type audit. I know it was a targeted audit, but exactly the scope of it, but -- I can't tell you from here. Q. Do you have any sense of how many SUS -- I'm sorry. What's an FSL audit? A. Full spectrum, one of our divisions. Q. What's that mean? A. Well, which one are you looking at here? The full spectrum targeted audits? Q. I'm just asking you what that is. What's a full spectrum audit?

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A. Well, full spectrum was one of our divisions. So it was an audit of loans that were originated by full spectrum division. Q. Got it. This category here listed as "Random," do you see that? A. Oh, where are my randoms? Q. Page -- well, these pages aren't numbered but it's -MR. TANDY: They appear to be in alphabetical order on the -MR. CALAMARI: Yeah. MR. TANDY: -- left-hand column, if that helps, Peter. MR. CALAMARI: And it's the next-to-last page of the notes, the third-from-last page of the exhibit. THE WITNESS: Okay. BY MR. CALAMARI: Q. Were those credit quality audits? A. Those -- yes. Those are credit quality audits. Q. And there's a category called "QVDG"? MR. TANDY: I think it's QVDQ. THE WITNESS: DQ. QVDQ.

THE WITNESS: I -- I can't -- I can't guess. THE REPORTER: Was 751 supposed to have a disc with it? MR. CALAMARI: No. MS. BEA: I think the original does. MR. CALAMARI: Yeah, we're not marking that today. THE REPORTER: Thank you. MS. BEA: This will be marked as 4036. (The document referred to was marked as Exhibit 4036.) BY MR. CALAMARI: Q. I'm showing you a document that we've marked as Exhibit -- a document marked as Exhibit 4036 and it's entitled "Severely Unsatisfactory Analysis." The Bates stamp is BUTLER 00027. And I will represent to you that this is a document prepared by an expert witness for MBIA and submitted in connection with work he has done. So I'm going to have to defer questioning on this until we find that. We may have to withdraw this for now because it's -- apparently the copies are missing pages. Let me -- let me do this so we can avoid having to go crazy. MS. BEA: (Inaudible.)

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BY MR. CALAMARI: Q. What are those? A. Those are the procedural quality verification documentation checklist audits. Q. Okay. Do you have a sense of how many of the SUS-rated loans MBIA has put back to Countrywide? A. No. MR. TANDY: Objection. THE WITNESS: No, I have no idea. BY MR. CALAMARI: Q. Do you have any idea of that number how many Countrywide agreed to repurchase? A. No. MR. TANDY: Objection. BY MR. CALAMARI: Q. Would you suspect that the percentage that Countrywide agreed to repurchase would be reasonably high? MR. TANDY: Objection. THE WITNESS: Given the fact that there's no correlation between an SUS rating and a repurchase request, I wouldn't venture a guess. BY MR. CALAMARI: Q. Okay. Could be anything? MR. TANDY: Objection.

MR. CALAMARI: Well, on a break, if we take one, you can look but -BY MR. CALAMARI: Q. Would it surprise you if I told you that, of MBIA's loans that were put back to Countrywide, 97 of them bore SUS ratings by quality control? MR. TANDY: Objection. THE WITNESS: I mean, I don't really have an opinion either way. BY MR. CALAMARI: Q. Okay. And if you accept my representation that 97 of them had an SUS rating, would it surprise you that only seven of those were repurchased by Countrywide? MR. TANDY: Objection. THE WITNESS: Given the fact that the SUS rating was internal and repurchases are based on reps and warrants and contracts, you know, I can't make a correlation between the two. So I -BY MR. CALAMARI: Q. So it doesn't surprise you that only 7 percent of the SUS-rated loans were repurchased? A. I mean, I really -- I -MR. TANDY: Objection. THE WITNESS: I can't really make an opinion

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either way. It's just -- it's not the same process. It's not the same criteria. You can -- I wouldn't compare them. MR. CALAMARI: Okay. All right. Let's go to the next one. This is -- what exhibit was this? This was 40- -- 4036? MR. TANDY: -37. MR. CALAMARI: -37. MR. TANDY: I'm sorry, Peter. The one that you just marked was 4036. I thought you were asking for the next number. MR. CALAMARI: Oh, okay. Yeah, no. I'm sorry. I thought you were -MR. TANDY: That's okay. BY MR. CALAMARI: Q. For the period we've been discussing, which is the period during which MBIA loans were presented for repurchase, you were responsible for the ultimate decision to repurchase. Is that correct? MR. TANDY: Objection. THE WITNESS: I had responsibility for making the final sign-off of approval on loans, you know, for a period of time. But I also had, you know, worked with strategies and then when legal got involved as well.

process in either deciding whether to reject a repurchase claim or approve one changed in any way? A. No. Absolutely not. Q. So you would have used the same process and procedures to make a decision on whether or not to approve any particular repurchase request, both before or after the litigation started? A. My process would have been the same for how I evaluated claims, yes. Q. Okay. And did anyone above you request that you change any particular decision with regard to a decision whether to repurchase or appeal a loan? A. No, not that I recall. Q. Okay. Let's go to tab 17. MS. BEA: We'll be marking as Exhibit 4037 a document with an attachment. The attachment is being marked in native format. And unfortunately this one is not printable, so we'll be looking at it -THE REPORTER: This one is not -MS. BEA: -- not printable, so we'll be looking at it natively on the projector screen. MR. CALAMARI: Okay. MR. TANDY: Now I need my glasses. MR. CALAMARI: Now I don't need my glasses. MR. TANDY: I do.

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BY MR. CALAMARI: Q. When you say "legal got involved in [sic] well," did legal get involved in the decision on whether or not to repurchase any particular MBIA loan? MR. TANDY: Objection. THE WITNESS: No, but it's just that when that legal process started, then, you know, things were changing as far as having legal review contracts, review things and so, you know, I just wasn't the sole -- just didn't repurchase loans. BY MR. CALAMARI: Q. Were there any changes in the procedures you applied once litigation commenced? MR. TANDY: Objection. THE WITNESS: No, not as far as how I was reviewing loans internally. But, you know, as we've looked at documents, I mean, there were discussions taking place as far as, you know, getting documents. So there was times where we were working on, okay, how are we going to deal with this. BY MR. CALAMARI: Q. Well, I don't want to have -- hear anything that had to do with your conversations with your attorneys. I want to know if your decision-making

MS. BEA: And, Ms. Simantel, at any point you need me to zoom in or navigate the spreadsheet with the pages, go ahead and let me know. (The document referred to was marked as Exhibit 4037.) BY MR. CALAMARI: Q. All right. First with regard to the document, there's a cover email. It's from Karen Jewett to Shareef Abdou. And that's dated September 16, 2008. And that forwards an email from you to Karen Jewett, dated also September 16th, 2008 earlier in the day. And your mail says: "Karen, see my comments in column CO repurchase recommended yes" -- well, I shouldn't say "yes" -- "Y/N." Then it goes on to say: "If I indicate N that doesn't mean we won't reconsider but I don't think the information I have is sufficient. We need to do a deeper dive on these. See if you agree on the Y loans and we will then get a presentation together for the ROG meeting tomorrow with

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Page 1161
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the loans we both agree on. Thanks." Do you remember this? MR. TANDY: Objection. THE WITNESS: I -- I don't. BY MR. CALAMARI: Q. Okay. Was it relatively a routine process as to the way you went over loans with Karen? MR. TANDY: Objection. THE WITNESS: I mean, if I had a spreadsheet, then yes, I would look at what they had indicated on the spreadsheet. I would send my comments back. And then I would have my managers take a look at them as well to see if we agreed, yes, because that was all part of the process where we talked about them. BY MR. CALAMARI: Q. Okay. And we're going to put that spreadsheet up and we've -- on the board. And I'm going to ask you to go to row 43 and look at loan number MS. BEA: Do you need me to zoom in on this? THE WITNESS: No, I can see it okay. BY MR. CALAMARI: Q. Okay. You can see that loan?

A. Yes. Q. Do you see that? A. Yes. Q. "GL" means guidelines? A. Yes. Q. And based on column CG, it appears that the underwriter determined that there was a guideline violation. Is that correct? MR. TANDY: Objection. THE WITNESS: It looks like whoever reviewed it said there was a guideline violation. BY MR. CALAMARI: Q. And then the final comments by the underwriter in column CJ -- I'm sorry. Let me first ask you to turn to column CH. Do you see that? A. Yes. MR. ALLAN: Is there a way to make that heading more readable? MS. BEA: I've highlighted it so that it can be seen in the -MR. CALAMARI: Up in the -MS. BEA: -- formula. MR. CALAMARI: You can see it up -- show him.

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Page 1162
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Now, it appears in column AW that that loan had only three payments made. Do you see that? A. Yes. Q. Okay. And in column AX where it says "120," is that because the loan is 120 days delinquent? A. I -- you know, I'm not sure what that column -- I'm not positive. Q. Okay. You don't know what that column -A. No, I don't re- -- not from what I've got there, I can't tell you. Q. Would it help if we scanned down the column for other loans? A. No. I just don't -- at the "FCL," what that means. I -Q. Could that mean foreclosure? MR. TANDY: Objection. THE WITNESS: I mean, I wouldn't want to speculate. I don't -- I don't know what that column means. BY MR. CALAMARI: Q. Okay. And column BB reflects the reason MBIA provided for why the loan was being put back. Is that right? A. Yes. Q. It reads "DTI exceeds GL"?

MS. BEA: See this? MR. ALLAN: Got it. Thank you. MS. BEA: And I'll continue to do that. BY MR. CALAMARI: Q. Okay. And based on column CH, it appears that the underwriter also concluded it was mater- -it was a material breach. Do you see that? A. Yes. Q. By the way, Karen Jewett, she was the underwriter in this case? MR. TANDY: Objection. THE WITNESS: I doubt that. She was the manager. BY MR. CALAMARI: Q. Okay. And then the final comment by the underwriter in column CJ reads, "PMR" -- and I trust that means -MS. BEA: Sorry. Let me get back down there. MR. CALAMARI: I'm sorry. You're not there yet? BY MR. CALAMARI: Q. "PMR - The DTI of 48 percent calculated at origination was not accurate and exceeded the maximum

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Page 1165
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allowable of 45 percent. No formal exception was approved. Additionally, the income documentation provided was not in accordance with guidelines and customary industry practices. Even though more than 25 percent of the borrower's income was commission, the borrower's tax returns were not obtained as required by the loan program guidelines. The borrower most likely would have made" -"would have had more business expenses on the tax returns and therefore the DTI would have been increased further. No verified reserves. Only two years in the pharmaceutical sales industry. Imprudent underwriting practice." Do you see that? A. Yes. Q. Did I read it correctly? A. Yes. Q. And then in column CO, you recommended that this loan not be repurchased. Is that correct?

some additional information needed to be to be done. BY MR. CALAMARI: Q. What additional information did you think you needed? MR. TANDY: Objection. THE WITNESS: I -- I don't recall. I mean, I would have been looking at a loan file and -- I have no idea from this. BY MR. CALAMARI: Q. In reading the comment as you sit here today, can you determine what it is that caught your eye about the -- the underwriter's note that you would want to look into? MR. TANDY: Objection. THE WITNESS: No, because, again, when I'm reviewing these, I'm looking at the loan file, so I have a lot more information in front of me. So, no, I cannot tell you. BY MR. CALAMARI: Q. This loan was not ultimately repurchased. Is that right? A. I don't know. MR. TANDY: Objection. BY MR. CALAMARI: Q. All right. Let's go to row 48, loan

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MR. TANDY: Objection. THE WITNESS: Well, that's what that column says, but I -- you know, I don't know for sure I input that, but it does say "N." BY MR. CALAMARI: Q. Did somebody else enter it? MR. TANDY: Objection. THE WITNESS: Well, I -- you know, I don't know. I mean, I'm just -- if this spreadsheet was attached to this email, one would think I did it, but -BY MR. CALAMARI: Q. Can you think of any reason why this loan would not have been recommended for repurchase? MR. TANDY: Objection. THE WITNESS: Well, I mean, in my email, I said I wanted additional information on some of these. So, I mean, that would probably be the reason. There's something in here. And, again, when I review these, I would be looking at the whole loan file as well, which I'm not doing now. So, you know, from this, I can't tell you exactly what I was thinking. But, you know, in my note I did say that -- you know, I wouldn't necessarily not reconsider, but I just thought that

It appears in column AW that this loan had only two payments made. Do you see that? A. Yes. Q. And in column AX where it says "F3," is that because the home is in foreclosure? MR. TANDY: Objection. THE WITNESS: I don't know. BY MR. CALAMARI: Q. You don't know? A. No, I don't. Q. And column BB reflects the reason MBIA provided for why the loan was being put back. Is that right? A. I -- yes. Q. It reads: "Assets, reserve" -- "reserves, funds to close." A. Yeah, "funds to close," yes. Q. And then if you look at column CG, it appears the underwriter determined there was a guideline violation. Is that right? A. Yes. Q. And based on column CH, it appears the underwriter also concluded it was a material breach?

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A. Yes. Q. Is this the same underwriter as the last underwriter or there's no way to tell? A. I -- no way to tell. Q. And the final comments in column CJ by the underwriter read: "Assets were not verified in accordance with loan program guidelines. An SLD exception was obtained and three months' PITI" -P-I-T-I -- "were required." What's PITI? A. Principal, interest, taxes, and insurance. The borrower's mortgage payment. Q. "However, the borrower only verified about 1,200 in reserves, which would cause the SLD exception to be void. It also appears the original sales price on the purchase contract was artificially raised 10,000" -- I'm sorry -- "10k in order to give the borrower 10k post closing. Provision was removed just prior to closing. However, it reflects the borrower's

looking at the loan files myself. BY MR. CALAMARI: Q. You had loan files in front of you? A. Yes. Q. But as you sit here today, you can't think of anything that would have triggered your request for more information? MR. TANDY: Objection. THE WITNESS: No. I mean, from what I'm reading, I had no idea what I was -- you know, what I was thinking back in '08. BY MR. CALAMARI: Q. Okay. And would it surprise you that this loan was not repurchased? MR. TANDY: Objection. THE WITNESS: I mean, I -- I wouldn't know. BY MR. CALAMARI: Q. Let me ask you to turn to the spreadsheet at row 50. Let's look at loan number . A. Okay. Q. Okay. And it appears this loan had 17 payments made. Do you see that? A. Yes. Q. And in column AX where it says "F3," again, you don't recall one way or another as to whether

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extremely limited cash position. The borrower only made two payments prior to default. The borrower's FICO was exactly 680 and his stated income was extraordinarily high for a small franchise owner." Did I read that correct? A. Yes. Q. And then in column CO, you recommended that this loan not be repurchased. Is that correct? A. Well, what I did is, I recommended that I wanted additional information on the loans. I didn't say that I wouldn't repurchase them. I said I -that I would reconsider them. But I felt that I needed some more information. And, again, I'm going to be looking at the loan files. So I can't tell from this what made me ask for some more information on them. Q. Okay. At the time you read the spreadsheet, you saw something in this disclosure that made you ask for more information. Is that right? MR. TANDY: Objection. THE WITNESS: No. I was looking at the loan files as well. When I was reviewing the loans, I was reviewing the underwriters' comments and I also was

that means the home is in foreclosure? A. No. MR. TANDY: Objection. BY MR. CALAMARI: Q. And column BB reflects the reason MBIA provided for why the loan was being put back. Is that right? A. Yes. MR. TANDY: Objection. BY MR. CALAMARI: Q. It reads, "Assets, reserves, funds to close"? A. Yes. Q. And based on column CG, it appears the underwriter determined there was a guideline violation. Do you see that? A. Yes. Q. And based on column CH, it appears that the underwriter also concluded it was a material breach? A. Yes. Q. And the final columns -- comments in column CJ by the underwriter reads: "Reserves were not verified in accordance with the SLD exception approval. The SLD exception

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Page 1173
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approval required six months' PITI for reserves because of layered risk, namely, 631 FICO score, maximum financing and no housing payment history because the borrower lived with his parents prior to purchasing the subject property. The borrower verified 558 in reserves which is less than one month's reserves. Even though 17 payments were made, it is imprudent underwriting. Had the borrower had six months' seasoned reserves to prove income level and ability to say the loan might have been in default at all. Without knowing the pay history at origination, it was unreasonable to make a FICO exception with no PITI reserves and thin credit profile. Only a credit card with 6,470 has the most weight and it was also maxed out." Do you see that? A. Well, it says "almost maxed out," but, yes,

THE WITNESS: Well, when I'm looking at these, I'm looking at the loan file. So I don't know what I would have seen in the loan file that caused me to want additional information. I don't just look at the underwriter comments. BY MR. CALAMARI: Q. So if I showed you the loan file, you could sit here and go through it and then figure it out? A. I might not be able to. I mean, this was many years ago that I did that. So I -- I don't know. Q. And both of the loans we just discussed were originally rejected before you got to this step. And MBIA's underwriters provided additional information in rebuttals. Is that right? MR. TANDY: Objection. THE WITNESS: I -- I don't know that. BY MR. CALAMARI: Q. Can you go to columns BJ and BR. MS. BEA: I'll just scroll through the comments. You can see what the headings are. MR. TANDY: Yeah, I can't -- I can't follow what you just put up, so, I'm sorry. 'Cause aren't we on -- weren't we on loan 50? So aren't we now on column 4?

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I do. Q. I didn't say "it was almost maxed out"? A. I thought you said "also maxed out." Q. Oh, okay. I'm sorry. And in column CO, you recommended that the loan not be repurchased? MR. TANDY: Objection. THE WITNESS: No. I recommended that I obtain additional information on it. I didn't say I wouldn't repurchase it. BY MR. CALAMARI: Q. But you don't recall as you sit here today what additional information you wanted? A. No. Q. And would it surprise you to know that this loan was also not repurchased? MR. TANDY: Objection. THE WITNESS: Yeah, I -- I wouldn't know. BY MR. CALAMARI: Q. What additional information -- well, let me strike that and say, looking at the underwriters' comments, is there anything that jumps out at you that you would want to get in terms of additional information? MR. TANDY: Objection.

MS. BEA: Let me go back up. MR. TANDY: Okay. MS. BEA: Loan 50 -- or row 50, rather. Loan BY MR. CALAMARI: Q. In any event, I'm only trying to ask whether you can see if these loans were originally rejected and then MBIA provided more information before you reached this decision? A. Okay. So it looks like we have an SLD exception and that's -THE REPORTER: I'm sorry. I'm not hearing you. THE WITNESS: It looks like we're saying we have an SLD exception which is one of the things. Now, they're rebutting saying that's not signed. SLD exceptions did not need to be signed. They were electronically transmitted. And that was one area that we had a lot of discussion on, that we didn't need them. So that wouldn't have been valid. Okay. Borrower's -- no mortgage history. Reserves are only required on re- -THE REPORTER: If you're -- I've got to hear you. THE WITNESS: Agreed. So it looks like that

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Page 1177
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they were agreeing with us on a response to them except for on the SLD exception. I mean, that's the only one they say they disagree on. And the SLD exceptions did not need to be signed. So since it didn't need to be signed, that wouldn't be a reason to repurchase a loan. And, again, I'm just looking at this, but that's what I'm seeing. BY MR. CALAMARI: Q. After that comment, your -- your underwriter observed that the SLD exception would be void. Is that right? MR. TANDY: Objection. THE WITNESS: Yeah, but that doesn't mean that they're right because SLD exceptions did not need to be signed. They were electronically transmitted from a database. They were not signed. BY MR. CALAMARI: Q. Let me go back to read your underwriter's comment: "However, the borrower only verified about 1,200 in reserves which would cause the SLD exception to be void." MR. TANDY: Objection. MS. BEA: You're on a different loan.

MR. TANDY: Objection. THE WITNESS: I mean, I don't know exactly sequentially when all of this happened. But that could -- just because they're saying that, then you could see -- I also saw comments in there about 401(k)s. I mean, there's a lot of different things that are going on here. So I -- I can't make a guess as to why I did what I did, you know, at this point in time. But I did say that I wanted additional information or research on it. So there was something in here that caused me to say, hey, you know what? Well, wait a minute, and to want to go further on it. BY MR. CALAMARI: Q. But as you sit here today, you don't know what that was? A. No, no. I do not. MR. TANDY: How are you able to see through those? Are those sunglasses? THE WITNESS: Yeah, they are, but -- but I didn't bring my glasses. I forgot them. And they're prescription sunglasses and I actually can see. MR. TANDY: Okay. MR. CALAMARI: Okay. We're read for the next number.

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Page 1178
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MR. CALAMARI: Oh, I'm on a different loan? I'm sorry. MS. BEA: Let me go up to that loan. MR. TANDY: Well, if you're going to do that, then I -MR. CALAMARI: I'm sorry. Then I'll strike the question. MR. TANDY: Okay. MR. CALAMARI: I read the wrong one. BY MR. CALAMARI: Q. Yeah, it says -- to read the correct comment of your underwriter: "Reserves were not verified in accordance with the SLD exception approval. The SLD exception approval required six months' PITI for reserves because of layered risk, namely, 631 FICO score, maximum financing, and no housing payment history." And it goes on to say because the borrower lived with his parents prior to purchasing the subject property. So your underwriter observed that the SLD exception would be void.

THE WITNESS: Pretty well. MR. TANDY: I didn't know whether it was light polarization or something else. THE WITNESS: No, no, no. No. They're my sunglasses and I forgot my regular glasses. You know when you have to leave the house at seven o'clock in the morning, things get forgotten. MR. TANDY: Understood. MR. CALAMARI: Okay. Let's go to another exhibit. We can take that one off. MS. BEA: This will be marked as 4038. (The document referred to was marked as Exhibit 4038.) MR. CALAMARI: This document closes in on the end. MR. TANDY: Okay. MR. CALAMARI: Not there, but we're still closing. BY MR. CALAMARI: Q. Okay. We've marked an Exhibit 4038. This is a -- it's Bates-stamped 16370 through 16514. And the cover page is an email from Abdou, Shareef sent Monday, December 21st, 2009 to several people, including yourself. And it encloses a PDF, it says "for

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tomorrow's call." And then there's an attached document and the title of the document is "MBIA Batch Report - All Data: Group of 100 Loans: 144 Pages"? Do you see that? A. Yes. Q. Now, first, what was the nature of the meeting tomorrow that you were referring to? MR. TANDY: Objection. THE WITNESS: I don't know. I mean, this is many years ago. So I don't know exactly what the nature of the meeting was. BY MR. CALAMARI: Q. Okay. It says: "The PDF for the MBIA call is attached." Do you recall the MBIA call? A. No. Q. Do you recall having meetings or discussions with regard to MBIA putback loans? MR. TANDY: Objection. THE WITNESS: I mean, I know that I had discussions, that we talked about MBIA loans because I had approval authority on them, so I recall that. But I don't recall this call. BY MR. CALAMARI:

Q. Okay. And do you know who attended these types of meetings? A. Well, I don't know for sure what kind of meeting this was. I mean, I can only look to see who was on the email. Q. Okay. Let's turn to page Bates stamp number 16391, loan number . Do you see that? A. Yes. Q. Do you have it? A. Yes, I do. Q. Okay. If you would go to finding number 2. Finding number 2 states that MBIA identified a missing VOR, noting a minimum one-year mortgage or rental payment history was not documented in the file. Do you see that? A. Yes. MR. TANDY: Objection. BY MR. CALAMARI: Q. And CRM's response was that it disagrees and that the loan was approved without the twelve-month history due to compensating factors, including credit score of 700 and ten years' established credit history with no lates.

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Q. It says, "Attachments: 100 MBIA Final Review." Is that just a random number, a hundred? Or did you take up loans in batches of a hundred? MR. TANDY: Objection. THE WITNESS: I don't recall batches of a hundred. I mean, that seems like a lot. So, no, I -- I don't recall a specific number. BY MR. CALAMARI: Q. And this document was sent to Debbie Minton, Cynthia Welsh -- I'm sorry -- Susan Welsh, Michael Sands. Is that right? A. Yes. Q. And are they all people that worked for you or with you? MR. TANDY: Objection. THE WITNESS: They worked with me as far as strategies on the monoline side. BY MR. CALAMARI: Q. And who is Scott Kapin? A. He was an underwriter that worked for Shareef. Q. Okay. Let's turn -- you don't remember the meeting, though. Is that right? A. No.

Do you see that? A. Yes. Q. Now, if you look to the end of the report, you see the underwriter's comments right at the bottom. And one of those comments reads: "2/4/09: Faye," F-a-y-e, "Miri," M-i-r-i, "obtained a VOR from Provence at Valencia which stated that they had no record of the borrower and obtained a VOR from The Colony Townhomes for 8/24/02 to 12/03 which stated that the borrower did rent there but did not make payments on time." Do you see that? A. No. Where are you reading that? Q. Okay. If you look on the back of the -that page on Bates-stamped page 16392, and if you look at the comments starting with the last paragraph, the last paragraph in that section. Do you see it there? A. Yes. Q. Want me to reread it again? A. No, I see it. Q. You've got it?

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Have you read that? A. Yes, I read it. Q. Doesn't that note contradict the notion that the borrower had no lates? MR. TANDY: Objection. THE WITNESS: Ten years -- well, the credit -- they're talking about the credit report here that there's ten years of credit history with no lates because they didn't have a VOR. So that's what they were referencing. And I don't see at what point in time they say that they got that information. BY MR. CALAMARI: Q. Isn't there a date given for when they obtained a VOR? A. No. Q. Does it say: "2/4/09: Faye Miri obtained a VOR from Provence at Valencia which stated that they had no record of the borrower and obtained a VOR from The Colony Townhomes for 8/24/02 to 12/03 which stated the borrower did rent there but did not make payments on time"?

MR. TANDY: Objection. THE WITNESS: No. No, absolutely not. That's not what I'm saying. What I'm saying is that you're just taking this comment and saying that it contradicts the previous comment. I'm saying it may not contradict it. And that this statement is just talking about the credit -- borrower's credit history, the credit score of 700, and no lates. And this is talking about the credit report. And that's -- they're saying that the underwriter made their decision not to require a VOR on this loan at the time of origination because the borrower had a strong credit score and had ten years of no lates whatsoever. They felt the credit history was sufficiently represented. BY MR. CALAMARI: Q. So this is one you would want more information on. Is that what you're saying? MR. TANDY: Objection. THE WITNESS: Well, what I'm saying is that this -- first, this appeal comment does not -- is not contradicted by this other comment because it's -they're not relating to the same thing. One's to the credit report. And just based on these comments, I

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A. I don't know for sure that that date ties into both of them because it seems a little odd that they'd be the same date. But there's a date of 2/4/09, yeah. Q. As you sit here today, does that contradict the statement that there were no lates? MR. TANDY: Objection. THE WITNESS: Oh, this "no lates" is addressing a credit score and the credit report. Ten years' established history without any lates. And when -- also with these VORs, a lot of times disgruntled landlords say things like that. So, I mean, you would research this further. I wouldn't just leave it at this because if some -- if you had a fight with your landlord, they'll say you have lates if they -- like fights over the deposits. I mean, there's lots of reasons. So without additional information, I wouldn't say that it does con- -- I would -- I would definitely look further into that. BY MR. CALAMARI: Q. So that's how you made decisions to disapprove loans that were put back by MBIA by just presuming information you received might be false? A. No.

would not make a final decision without finding out more information on that from the landlord. It doesn't give me time frames. It doesn't give me anything as far as lates. And -BY MR. CALAMARI: Q. It actually does give you a time frame. It says Colony Townhomes for 8/24/02 to 12/03. A. It doesn't say when the payments weren't made on time. That -- I do not know that. Q. I see. A. And I would ask that question. Q. I see. Let me ask you this. That was a compensating factor, was it not, the no lates? They relied on that as a compensating factor? MR. TANDY: Objection. THE WITNESS: No, I don't think -- I don't think they used it as a compensating factor. They just -- the underwriter didn't require a VOR at the time of origination because they had such a strong payment history. BY MR. CALAMARI: Q. If you look at finding numbered 2 of 8, could you read that. A. A minimum of -- do you want the appeal or the finding?

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Q. Yeah, could you read it into the record, the whole thing? I'm only asking you to do it -A. Okay. Q. -- because I can't. A. "A minimum of one-year mortgage or rental payment history was not documented in the file, missing VOR." Q. And then could you read the comment? A. "CRM disagrees with this finding. The underwriter approved the loan without 12-month housing history with compensating factors of a high credit score of 700 and ten years' established credit history with no lates." Q. So that was a compensating factor, wasn't it? A. What was? MR. TANDY: Objection. BY MR. CALAMARI: Q. The ten years of -A. Ten years of no -Q. -- established credit history with no lates. A. Well, I wouldn't -- I would not call that a

4:59 p.m. (Recess taken.) THE VIDEOGRAPHER: This marks the beginning of tape number 5 in the deposition of Cynthia Simantel, Volume 3. Back on the record. The time is 5:08 p.m. BY MR. CALAMARI: Q. Now, in looking at that document, you notice the VOR, which you obtained which did not verify the rent payments. Is there any reason why that document wouldn't have been supplied to MBIA? A. I mean, the -- you know, I don't know what would have been done on that. I mean, I don't see the comments as far as what we did. I don't know when they obtained that. I don't know if they'd already appealed the loan. Sometimes things come in considerably after. I don't have any -- enough information here to kind of give you any kind of an idea. Q. But it is clear to you from the information that is here that MBIA was not informed of the VOR that Countrywide had obtained. Is that right? MR. TANDY: Objection. THE WITNESS: No, it's -- it's not clear to me from this. And also, as I look at what I see in

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compensating factor. I would call that a reason for an exception because the borrower had a high credit score of 700. They had ten years of established history. With that kind of a credit history, the VOR could be felt not to bring anything else to the loan. You've got such a strong, perfect credit history. But it's really an exception reason. Q. So you don't -- you don't agree that the fact that they had a verification of rental that the borrower didn't make payments on time is -- is a factor that is inconsistent with an established credit history? MR. TANDY: Objection. THE WITNESS: I -- I just don't see them as the same thing. The one is going on the credit report, the other one is going on information on a VOR that was obtained that isn't fully explained. Q. Is the information that -THE VIDEOGRAPHER: Mr. Calamari, I'm sorry, we need to -MR. CALAMARI: Okay. Sorry. All right. We'll take a short break. THE VIDEOGRAPHER: This marks the end of tape number 4 in the deposition of Cynthia Simantel, Volume 3. Going off the record. The time is

here, I don't feel that they've done sufficient work on this either. BY MR. CALAMARI: Q. Would it surprise you if I told you that MBIA was never informed about this VOR? MR. TANDY: Objection. THE WITNESS: I -- I really don't -- I mean, I don't know how to answer that. I don't have an opinion on it. BY MR. CALAMARI: Q. Let's go to the page ending 16431, loan number . A. Okay. Q. If you look at finding number 1 of that loan, the initial finding by MBIA is that the VOR, verification of rent, for a minimum of one year was not documented and that the VOR in the file states that the borrower is not on the lease. Do you see that? A. Yes. Q. And CRM concurs with that finding, noting that, in addition, there are no canceled checks or bank statements confirming the twelve-month rental history. Is that correct? A. That's what it says, yes.

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Q. That's what that says. Is that right? A. Yes. Q. And no reason to believe that that's wrong, is there? MR. TANDY: Objection. THE WITNESS: I mean, I can only take what it says here. BY MR. CALAMARI: Q. Okay. And now if you look at finding number 3. MBIA's initial finding was based on unreasonable stated income. Do you see that? A. Yes. Q. And after an initial appeal, CRM concurs with this finding, citing in part the issues with the VOR. Is that correct? MR. TANDY: Objection. THE WITNESS: Yes. BY MR. CALAMARI: Q. Okay. And then at the bottom of the loan report, same place as the -- we looked at, at the other loan report at the very end on the second page, which is Bates-stamped 16432, it says that: "The VOR in the subject transaction file and the CLD loan file are the same. However, it

Q. Well, had you already approved this loan for repurchase, it wouldn't be being reviewed at this stage, would it have been? MR. TANDY: Objection. THE WITNESS: I -- I don't know what this meeting was for. We could be reviewing loans to approve. BY MR. CALAMARI: Q. So even with two CRM concurs with the findings, you can't definitively state that the loan would have been approved for repurchase? A. Not without doing a complete review of it. Q. Okay. So would it surprise you to hear that this loan was also not repurchased? MR. TANDY: Objection. THE WITNESS: I -- I don't have an opinion. BY MR. CALAMARI: Q. So if I gave you other examples drawn from these documents, is it fair to say that you could not give me a definitive response without looking at the loan files? MR. TANDY: Objection. THE WITNESS: I mean, whenever I make a final decision -- I mean, I'm looking at the loan files. I'm looking at all the information. I mean,

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appears the VOR in the CLD loan file [sic] may have been altered due to the document regarding the borrower not being on the lease is missing." Do you see that? A. Yes. Q. So in addition to the findings that CRM concurred with, there also appears to be facts suggesting that the VOR documentation may have been altered. Is that right? MR. TANDY: Objection. THE WITNESS: No. What this is saying is that a CLD file -- this is a WLD file. I don't think they're saying the VOR was altered. BY MR. CALAMARI: Q. So given what's here, would you have approved this loan for repurchase? MR. TANDY: Objection. THE WITNESS: You know, I always reviewed the loan files. I mean, so I would -- I would actually review it myself before I approved a loan. So, without doing that, I can't tell you, you know, definitively what I would do. BY MR. CALAMARI:

this is just a summary sheet. I wouldn't make my decision just solely based on this. BY MR. CALAMARI: Q. Okay. Let me ask you about a document called the playbook. What is the playbook? A. I mean, I've heard that term. I don't recall off the top of my head specifically what it is. Q. How did you hear that term? A. I have heard people mention that term before at Countrywide. Q. In what context did you hear the term mentioned? A. The people that I worked with talked about the playbook. Q. What did they say about it? MR. TANDY: Objection. THE WITNESS: I mean, I just remember them talking about it. I just don't remember any specifics on it. BY MR. CALAMARI: Q. Do you remember generally what it was for? A. No, I don't. Q. Did it deal with MBIA? A. I don't know.

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MR. CALAMARI: Let me show you an exhibit which looks like it's going to be 4039. MR. TANDY: Thank you. (The document referred to was marked as Exhibit 4039.) BY MR. CALAMARI: Q. That's an email from you to Hans Rusli? A. Yes. Q. And the subject is "Investor Audit 'Playbook.'" A. Yes. Q. Does that refresh your recollection about the playbook? A. Oh, gosh. No. I mean -- gosh, I just -- I really don't remember the playbook. It's just -Q. Well, if you look at the bottom email, which is an email from Jennifer Downing to Hans Rusli, it says: "The Playbook is a milestone for Investor Audit. Please email and let me know what you would like me to forward to them. I sent a draft to Internal Audit on 1/2. Thanks, Jennifer." Does that refresh your recollection about

is a document -- it's an email from you to Hans Rusli. It says -- the title of that email is "Insights from putbacks." Bates stamps are 4433 to 4435. And if you turn to page -- the second page of the document, which is 4434 Bates stamp, that's the carryover of an email from you to Hans Rusli saying: "I thought the playbook was the governing principal book on how we approach various counterparties and are four blocker by counterparty was to give a picture. Shareef is working on updating the monolon" -"monoline data. Joanie is tasked with the MI" -- and I assume that's "mortgage insurance" -- "color and we are working on GSEs also." A. Okay. Q. Does that refresh your recollection about the playbook? A. No. Q. Even though you wrote that it "was the governing principal book on how we approach various counterparties"?

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the playbook? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. Even though it was a milestone for investor audit? MR. TANDY: Objection. THE WITNESS: Well, they're talking about a milestone and it's from internal audit. It's something that looks like internal audit had asked us for. But, no, I real- -- I just don't remember the playbook. BY MR. CALAMARI: Q. So you don't know who drafted the playbook? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. But you didn't draft it? A. Not that I remember. MS. BEA: Next document will be marked as Exhibit 4040. (The document referred to was marked as Exhibit 4040.) BY MR. CALAMARI: Q. I've put in front of you Exhibit 4040, which

MR. TANDY: Objection. THE WITNESS: Yeah, I -- yeah, I don't recall the playbook. MS. BEA: 4041. (The document referred to was marked as Exhibit 4041.) BY MR. CALAMARI: Q. I've put in front of you Exhibit 4041. It's Bates-stamped, last four digits again, 5894 through 5904. The top email is an email from Jennifer Downing, dated December 27th, a Saturday -hard-working people -- to you, a copy to Hans Rusli. It starts off with: "Hello, below is where the playbook is so far. I scheduled a meeting with Sue and Joseph, and Sue created the below update from that discussion. Please review/revise, et cetera." Attached to this document at Bates-stamped 5895, is a document entitled "Bank of America, Investor Audit 'Playbook' Procedure." And it's indicating that it's a draft. And attached to that at Bates stamp 5899 is

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CONTAINS HIGHLY CONFIDENTIAL INFORMATION CYNTHIA SIMANTEL - 8/24/2012
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a document entitled "Bank of America, Investor Audit Playbook (Sample Template.)" And then it says on Bates-stamped 5 -- 5 -5896 and 5897. Did I read that right? MS. BEA: Yes. BY MR. CALAMARI: Q. And the top right-hand corner, submitted to Cindy Simantel for approval. Do any of these refresh your recollection about the playbook? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. You have no recollection as you sit here after seeing all of these documents? MR. TANDY: Objection. THE WITNESS: No, I don't. And when I'm looking at this, these are just the findings we have. So I -- they're findings that are in the PAT database that we use when claims come in. That's all -that's all these are, so I don't know -BY MR. CALAMARI: Q. Those are just templates. Is that right? MR. TANDY: Objection. THE WITNESS: Well, it says it's a template

Q. Okay. Did you have any understanding how the criteria were established by Bank of America to submit a repurchase claim? MR. TANDY: Objection. THE WITNESS: For outbound repurchases? BY MR. CALAMARI: Q. Yes. A. I mean, they reviewed -- they did the same we did. They reviewed the contracts, reread the guidelines. I don't recall anything different. Q. Do you know if the standards for an outbound repurchase claim were different from the standards that an inbound repurchase claim were judged? MR. TANDY: Objection. THE WITNESS: No. Both were judged based upon the contracts and the requirements of those contracts. BY MR. CALAMARI: Q. Do you know if the standards for different lenders were different? A. Not that I know of. MS. BEA: Mark this as Exhibit 4042. (The document referred to was marked as Exhibit 4042.) BY MR. CALAMARI:

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but these (indicating) doc- -- these items contained in the template, those are just findings. So I don't know -- they're in PAT. I don't know why they need to be in this. I -BY MR. CALAMARI: Q. Well, I'm a- -- that's exactly what I'm asking you. You -- you're shown as involved in all of this. A. Yeah, and these are just findings that we have. I don't recall why we were doing it in a playbook. I -Q. Okay. Okay. Let's change subjects. Did you have any involvement with outbound repurchase claims? A. I had an outbound team that, once we transitioned in with Bank of America, that did report to me for -- they were legacy Bank of America outbound. Q. Let's -- and those would be -- include claims to correspondent lenders? A. No. MR. TANDY: Objection. THE WITNESS: No. Correspondent lending claims did not come through there. BY MR. CALAMARI:

Q. This is a document dated -- oh, I'm sorry. Let me show you Exhibit 4042. It's Bates-stamped 429484 through 429518. Hearing no objection. And the cover document is an email from Brian Barnes, dated October 13th, 2009 to various people, including yourself. A. Yes. Q. Do you see that? A. Yes. MR. ALLAN: Before you begin to ask questions, may I have a moment to look at what appears to be an attorney-client privileged issue with respect to this document? MR. CALAMARI: Yes. MS. BEA: Sure. I think you'll find this document was produced with the same cover letter that you have. MR. TANDY: Yeah, that's what I was checking. MR. ALLAN: All right. You're correct about that. You may proceed. BY MR. CALAMARI: Q. If you look at the enclosure with the email and specifically to Bates-stamp page 9485, you'll see it's a repurchase oversight group report of some sort

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dated October 13th, 2009. Is that right? A. Yes. Q. And if you turn to slide 34, which is the last page of the document. Do you see the heading "Outbound Claims Review Criteria"? MR. ALLAN: Sorry. What page are you on now? MR. TANDY: The last page. MR. CALAMARI: The last page of the document. It's page 34. MR. ALLAN: Got it. Thank you. BY MR. CALAMARI: Q. And it's Bates stamp 518 are the last numbers. A. Okay. Q. Do you see that? A. Yes. Q. Now, first you see a distinction made between, if you look at the chart under -- I'm sorry. I'm struggling with this one just reading it. If you look under the chart under "New review criteria" -- well, first let me -- let me ask you to look, "Previous review criteria." Do you see that? A. Yes.

was, if a loan was 90 days delinquent, they would sample it and review it for a repurchase. Q. Right. A. In Countrywide Bank, if the loan was 60 days delinquent before 18 payments, they would pull it for review. Q. Okay. And then if you go into the next category, it says "New review criteria." And under "New review criteria," there are two different categories. One says "more inbound exposure." And the other one says "more outbound exposure." And do you see that? A. Yes. Q. And what's the basis for the distinction between repurchase claims in situations involving more inbound exposure and repurchase claims involving situations in which there's more outbound exposure? MR. TANDY: Objection. THE WITNESS: I -- I don't know. I mean, I wouldn't have set the policy. And I don't recall this. BY MR. CALAMARI: Q. You don't recall this? A. No. Q. Is it fair to say, though, that there are

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Q. And that's outbound claims review criteria. Is that right? A. That's what it says. Q. And it says for BANA: "Review all loans that go 90 days delinquent." Is that correct? A. Yes, that's what it says. Q. And for CW Bank, it says: "Review all loans to go to 60 days delinquent before 18 payments are made." A. Yes. Q. Do you see that? A. Yes. Q. And so those were the criteria by which, before this report took place, that BANA and CW Bank would decide whether or not to present an outbound claim. Is that right? A. Well, it appears to be sampling criteria. Not whether or not they would present a claim. Q. Okay. A. It's sampling criteria where -Q. And what were they sampling? A. Well, it appears as though BANA's process

different policies for situations where there's more inbound and outbound exposure? MR. TANDY: Objection. THE WITNESS: I don't know. I mean, this was a ROG meeting. I don't know what was -- I -- I do not recall what the process was. BY MR. CALAMARI: Q. You were copied on this email, though. Is that right? A. Yes. Q. And you attended this ROG meeting? A. I don't know. I mean, I was invited to ROGs. I didn't attend all of the ROG meetings. I just -- I recall absolutely nothing about this. Q. Is there somebody who you think might know more about this than you? A. Gosh, I mean, I don't know. I don't know who would remember this, to be honest, but -- I mean, I really don't know who you would want to ask about this. Q. Was there somebody who was responsible for outbound claims? A. At BANA or at Countrywide Bank? Q. At either place. A. What is the date on this? October of '09.

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I mean, probably the best person that -would maybe be Mike Schloessmann because he was the head of the ROG. Q. Okay. This was 4042. Okay. Let me go to tab 48. MS. BEA: This will be marked as Exhibit -MR. CALAMARI: Oh, I'm sorry. Tab's meaningless to you. MS. BEA: -- 4043. (The document referred to was marked as Exhibit 4043.) BY MR. CALAMARI: Q. What's been marked as Exhibit 4043 is Bates-stamped 9635 to 9 -- oh, boy. Can you give me that one? MR. TANDY: 661. MR. CALAMARI: 661. And the cover email is Brian Barnes, dated November 10th, 2009. It goes to a variety of people, including yourself. And attached to the cover email at Bates stamp number 86 -- I'm sorry -- 9636 is another repurchase oversight group report, dated November 10th, 2009. Do you see that? A. Yes. Q. If you turn to slide 17, which is

Q. So does that mean that Bank of America might seek a repurchase on a loan, receive payment for the repurchase but not repurchase the loan from a counterparty? A. No. Q. Okay. What does that mean, in your view? A. What it means is that the counterparty -this -- correspondent does not repurchase the loan. They send indemnification funds. And then in the event that the loan goes into default and there are losses, those funds are applied towards the loan. Q. What happens if the loan doesn't go into default? A. You know, I didn't manage the CLD process, so I -- I don't know. Q. Who did manage that process? A. Let's see. Let's see if I can remember who did that during this time frame. I -- you know, I -- I cannot recall who was doing it during this time frame. Q. Do you know whether Bank of America has received indemnification or whether Bank of America has received indemnification for any of the loans MBIA's put back? MR. TANDY: Objection.

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Bates-stamped number 9652, you see the heading "Policy Considerations & New Developments"? A. Yes. Yes. Yes. Am I -- talking too low, so. Q. And you see under the words "Current process" there are several bullet points? A. Yes. Q. And the fourth bullet point reads: "In lieu of repurchase, counterparties typically agree to indemnification and send funds to CLD to cover expected losses." Do you see that? A. Yes. MR. TANDY: Objection. THE WITNESS: Yes, I do. BY MR. CALAMARI: Q. And then the next bullet point says: "Funds received are kept internally and are not passed through to the end investor unless an inbound R&W claim is received and approved." Do you see that? A. Yes.

THE WITNESS: No, I do not. BY MR. CALAMARI: Q. You see under that bullet point, the next bullet point says: "Concerns exist about whether knowledge gained through CLD's QC process create an obligation for BAC to notify the end investor of potential issues and/or pass through indemnification proceeds collected." Do you see that? A. Yes. Q. Do you recall any discussion about that? MR. TANDY: Objection. THE WITNESS: I do not. BY MR. CALAMARI: Q. Do you know whether these concerns were ever addressed? A. I do not. Q. Do you know whether end investors were ever notified about the receipt of indemnification or proceeds? A. I do not. Q. Do you know if MBIA was ever notified about

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the receipt of potential indemnification or proceeds? A. I do not. MR. TANDY: Objection. BY MR. CALAMARI: Q. Do you know whether sellers have repurchased any of the loans MBIA put back? MR. TANDY: Objection. THE WITNESS: I do not. BY MR. CALAMARI: Q. Do you know whether there are any contractual provisions in the monolines contracts that would require notification? A. I do not. Q. At the bottom of the page, there's a reference to a "ROG approval limit." Do you see that? MR. TANDY: Objection. THE WITNESS: Yes. BY MR. CALAMARI: Q. What does that refer to? A. This is where we had an amount set at the beginning of the month and then we would go to ROG to notify them of a request to increase that. Because we had to have the funds in our repurchase accounts moved over and so they had to take care of that for

Q. Well, Countrywide has in fact repurchased loans from investors and from monolines. Is that right? MR. TANDY: Objection. THE WITNESS: Countrywide has repurchased loans, yes. BY MR. CALAMARI: Q. Okay. Do you know whether as a technical matter CFC or CHL repurchases the loans? MR. TANDY: Objection. THE WITNESS: No. BY MR. CALAMARI: Q. And where does it get the money that it uses to repurchase the loans? A. I don't know. MR. ALLAN: Objection. THE WITNESS: I do not know. BY MR. CALAMARI: Q. Who owns the loan once it's purchased? MR. TANDY: Objection. THE WITNESS: I don't know. BY MR. CALAMARI: Q. Is it CHL? MR. TANDY: Objection. THE WITNESS: I don't know.

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us. Q. Did you ever stop repurchases because there weren't sufficient funds in the account? A. No. Q. How is that time limit set? MR. TANDY: Objection. THE WITNESS: Pardon me? Time limit? BY MR. CALAMARI: Q. How is the cap set? MR. TANDY: Objection. THE WITNESS: The ROG committee, because they had the repurchase oversight, they had set, in the very beginning, a limit. And then they increased it. They just wanted to be notified. So then the voting members of ROG would be notified what we wanted to increase it to. There wasn't a stipulation we could increase it five times during the month. There weren't any stipulations on, you know, how many times or anything. It's just a matter of notifying them that we wanted to increase it. BY MR. CALAMARI: Q. What happens to a repurchased loan? A. What do you mean "what happens to a repurchased loan"?

BY MR. CALAMARI: Q. Do you have any idea what happens to the loan once it's repurchased? MR. TANDY: Objection. THE WITNESS: No, I do not. BY MR. CALAMARI: Q. Do you know who would be in charge of that area? A. I do not. Q. Do you know who would know? A. I do not. Q. CHL has issued its own repurchase requests to correspondent lenders. Is that right? A. The correspondent lending division has. Q. Where do the funds received from the corresponding lending -- from the correspondent lender go? MR. TANDY: Objection. THE WITNESS: I don't know. BY MR. CALAMARI: Q. Are you familiar about The Berkshire Group? A. I've heard of them, but I wouldn't say I'm familiar with them. Q. What was their role? A. I don't know.

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Page 1217
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Q. Were they retained to review MBIA's repurchase claims? MR. TANDY: Objection. THE WITNESS: I don't recall. BY MR. CALAMARI: Q. Did you ever work with them? A. I don't recall. Q. Were you involved in retaining them? MR. TANDY: Objection. THE WITNESS: Not that I recall. BY MR. CALAMARI: Q. Were you ever asked to provide information to them? A. Not that I recall. MR. CALAMARI: Okay. I'd like to take five minutes and then we can probably wrap up pretty quickly. MR. TANDY: We'll give you the room. THE VIDEOGRAPHER: Going off the record. The time is 5:47 p.m. (Recess taken.) THE VIDEOGRAPHER: Back on the record. The time is 5:55 p.m. MR. CALAMARI: Okay. I'm passing the witness.

STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss.

I, CYNTHIA SIMANTEL, hereby certify under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed this __________ day of _____________________, 2012, at _____________________________, California.

_________________________ CYNTHIA SIMANTEL

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MR. TANDY: We have no questions at this moment. MR. ALLAN: No questions. MR. TANDY: We'll read. MR. CALAMARI: We're done. THE VIDEOGRAPHER: This concludes the Volume 3 deposition of Cynthia Simantel. The number of tapes used was five. The original videotapes will be retained by Merrill Legal Solutions located at 20750 Ventura Boulevard, Suite 205, Woodland Hills, California, 91364. Going off the record. The time is 5:55 p.m. (Whereupon, at 5:55 P.M., the videotaped deposition of CYNTHIA SIMANTEL was adjourned.)

STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. I, SUSAN NELSON, C.S.R. 3202, in and for the State of California, do hereby certify: That, prior to being examined, the witness named in the foregoing deposition was by me duly sworn to testify the truth, the whole truth and nothing but the truth; That said deposition was taken down by me stenographically at the time and place therein named, and thereafter transcribed via computer-aided transcription under my direction, and the same is a true, correct and complete transcript of said proceedings; I further certify that I am not interested in the event of the action. Witness my hand this 27th day of August, 2012. ______________________________ Susan Nelson, C.S.R. No. 3202 Certified Shorthand Reporter State of California

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