Wells Fargo VP Declaration in Hamp Litigation

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS WILFREDO and ODALID BOSQUE, VERA VICENTE MEEK, JENNIFER WILLIAMS, JENNIFER RYAN and GARY VOLTAIRE, and PAUL MONTERO, on behalf of themselves and all others similarly situated Plaintiffs, v. WELLS FARGO BANK, N.A. d/b/a WELLS FARGO HOME MORTGAGE d/b/a AMERICA’S SERVICING COMPANY, Defendant. DECLARATION OF BEN WINDUST I, Ben Windust, Senior Vice President, Wells Fargo Bank, N.A., do hereby declare under oath as follows based on my personal knowledge, except where indicated, and on my review and familiarity with the business records of Wells Fargo Bank, N.A. (“Wells Fargo”): 1. I am Senior Vice President, Servicing/Default Operations, at Wells Fargo in Des Moines, Iowa. I have been in this position for two years. I am responsible for risk management and industry/client relations for the Default Servicing business group. Prior to becoming Senior Vice President, Servicing/Default Operations, I was Senior Vice President of Customer Service Operations and my responsibilities included managing Wells Fargo’s customer service operations for mortgage servicing. I have been employed by Wells Fargo since 1998. 2. In my current capacity as Senior Vice President, Servicing/Default Operations, I review data and reports regarding Wells Fargo’s performance under the U.S. Treasury’s Home Affordable Modification Program (“HAMP”). I am also responsible for operational risk management, industry and client relations, and community housing assistance programs. I am C.A. NO. 10-10311

BOS-1434538 v2

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familiar with Wells Fargo’s policies and practices regarding implementation of the HAMP program. I am also familiar with Wells Fargo’s policies and practices with respect to the referral of loans to foreclosure, including in connection with borrowers who are (or have been) participating in HAMP. 3. Wells Fargo is the nation’s largest mortgage lender, and the second largest home

loan servicer. Approximately 80% of the home loans in Wells Fargo’s servicing portfolio are serviced for other investors such as Fannie Mae, Freddie Mac, Ginnie Mae, or private securities. The remaining 20% are loans Wells Fargo owns. 4. Wells Fargo has long practiced responsible lending and servicing principles, including never having originated negative amortizing or Option ARM loans. Because of the product choices Wells Fargo made, its disciplined underwriting, and the manner in which Wells Fargo approaches foreclosure prevention, Wells Fargo’s delinquency and foreclosure rates in the second quarter of 2010 were 75% of the industry average. Approximately 92% of our first- and second-mortgage customers were current in their payments as of the second quarter of 2010 and less than 2% of our owner-occupied servicing portfolio had gone to a foreclosure sale over the last twelve months. 5. From January 2009 through September 30, 2010, Wells Fargo has provided homeowners with 556,868 active trial or completed modifications. Approximately 88% of the modifications provided by Wells Fargo were made outside of HAMP. Wells Fargo has also assisted more than 100,000 unemployed customers with short-term forbearance modifications. 6. Wells Fargo considers itself a leader in the challenge to find solutions for borrowers

negatively affected by the recent economic downturn. Wells Fargo’s focus has been to do everything reasonably possible to prevent foreclosure for people facing financial hardships who –2–

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are willing to manage their overall debt and who can afford to be in their homes once their home payments are reduced. HAMP’s Stated Trial Plans 7. On February 18, 2009, the Obama Administration announced the creation of the Making Home Affordable (“MHA”) Program, which included as one of its several components the HAMP program for loans held by Freddie Mac and Fannie Mae (“GSE loans”). As expressed by the U.S. Treasury, HAMP encourages loan servicers to modify eligible first-lien mortgages for homeowners in default or imminent default so that monthly payments will be reduced to affordable levels (not more than 31% of the borrower’s monthly gross income). 8. Monetary incentives are paid to servicers for permanent modifications that become effective under the program. In particular, Wells Fargo receives a one-time payment of $1,000 for each completed permanent modification under HAMP. Wells Fargo will receive an additional $500 if the loan was current but under risk of imminent default prior to the trial period plan. Wells Fargo will also receive, on an annual basis, a “pay-for-success” fee of up to $1,000 for three years if the borrower stays less than 90 days delinquent on the modified loan. Borrowers and investors are also eligible for incentive payments through the HAMP program. Incentives are only paid after the loan has been permanently modified. 9. In April 2009, HAMP was extended to servicers of non-GSE loans, such as loans held privately by servicers, securitization trusts, or investors. Participation in HAMP as to non-GSE loans is voluntary, and a servicer that chooses to participate in HAMP as to such loans is required to execute a Servicer Participation Agreement (“SPA”) with Fannie Mae as agent for

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the United States. On April 13, 2009, Wells Fargo was one of the first major servicers to execute an SPA with the U.S. Treasury. (Wells Fargo executed an Amended SPA on March 16, 2010.)1 10. Not all loans serviced by Wells Fargo are eligible for consideration under HAMP, and the participating servicer is not required to modify every HAMP-eligible loan. HAMP guidelines outline the manner in which servicers are to determine borrower eligibility for a permanent modification. See, e.g., HAMP Supplemental Directive (“SD”) 09-01 at 2-12. 11. Several months after the HAMP program was initiated, the U.S. Treasury expressed frustration to Wells Fargo and other servicers based on the relatively low numbers of borrowers who were being placed on HAMP trial plans (or trial period plans (TPPs) or “starts”). Government policy as expressed to participating servicers, including Wells Fargo, was to get borrowers on trial plans with limited discussion as to whether the borrowers would ultimately qualify for a permanent modification. In other words, we were directed to get borrowers on trial plans first, and determine final qualification for a permanent modification thereafter. 12. Accordingly, to reach an Administration-established goal of 500,000 trial starts by November 2009, the Treasury Department encouraged servicers in July 2009 to place customers into HAMP trial modifications before the customer had provided the servicer with all the documentation necessary for the servicer to verify the accuracy of the customer’s income and other eligibility criteria 13. Wells Fargo had not previously supported this approach for loans covered by the Treasury program because we were concerned about the potential outcomes. These types of trial plans are referred to as “stated” trial plans, and they were not a guarantee that the borrower
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Wells Fargo’s SPA and Amended SPA are available publicly at: http://www.financialstability.gov/docs/HAMP/Wells%20Fargo%20Bank%20Servicer%20Participation%20Agreem ent.pdf and http://www.financialstability.gov/docs/HAMP/093010wellsfargobanknaSPA(incltransmittal)-r.pdf.

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would receive a permanent modification if they simply made the three or more scheduled payments set forth in the TPP. 14. Before a customer could obtain a stated trial plan, they were screened to determine if they satisfied the following HAMP baseline eligibility requirements: (1) the property must be owner-occupied and it must be the borrower’s primary residence; (2) the property must be a single-family residence with a maximum unpaid principal balance of not more than $729,750; (3) the loan must have been originated on or before January 1, 2009; (4) the borrower must verbally state a qualifying hardship ; and (5) the first-lien mortgage payment must be more than 31% of the homeowner’s stated gross monthly income. To be placed on a stated trial plan (prior to June 1, 2010 under HAMP guidelines), a borrower needed to provide only verbal confirmation that they met these requirements; they were required to provide documentation to verify the accuracy of the eligibility criteria during the trial period. The documentation that the borrower is required to provide to Wells Fargo, pursuant to HAMP guidance (see SD 09-01), includes financial information establishing the source of his or her hardship, signed and completed requests for tax return transcripts (or the most recent Federal income tax return, including all schedules and forms), and income verification documentation showing, for example, employment and rental income. (Wells Fargo is required by HAMP guidance to maintain documentation of its HAMP activities with respect to each borrower screened and it must provide such documentation to Freddie Mac, the U.S. Treasury’s compliance agent, upon request.) 15. Once the documentation is received, Wells Fargo will determine whether a borrower is eligible for a permanent HAMP modification. Wells Fargo first capitalizes interest and fees by adding them to the outstanding principal balance of the mortgage. Wells Fargo then applies a –5–

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series of steps known as the “waterfall” in an effort to obtain an affordable monthly payment for the borrower (31% or less of their gross monthly income). First, we will reduce the interest rate to as low as 2%. Next, if necessary, we will extend the loan term to 40 years. Finally, if necessary, we will forebear repayment of a portion of the principal until the loan is paid off and will waive interest on the deferred amount. See SD 09-01 at 8-10.2 16. If application of the waterfall does not produce an affordable payment, the loan does not qualify for a permanent HAMP modification under HAMP guidelines. If application of the waterfall does produce an affordable payment, Wells Fargo performs a “net present value” (“NPV”) test through a Treasury-approved model to determine whether the modification is in the best interest of the investor. Generally speaking, the NPV test compares the expected cash flows from a modified loan to the same loan with no modification, based on certain assumptions. If the expected investor cash flow with a modification is greater than the expected cash flow without a modification, Wells Fargo is required to modify the loan. If the NPV test produces a “negative” result (that is, losses from foreclosure are less than losses from modification), Wells Fargo is not obligated to modify the loan. See SD 09-01 at 5. 17. Whether a borrower is eligible for a permanent modification under HAMP also depends on whether there are investor restrictions that apply to the loan. Pooling and Servicing Agreements (“PSAs”) set forth Wells Fargo’s contractual obligations, as servicer, for loans in privately-issued mortgage backed securities. Some of these agreements restrict Wells Fargo from offering HAMP modifications and some restrict any form of permanent loan modification.
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The servicer may also forgive principal, but it is not required to do so. Through 2009 and into the first half of 2010, Wells Fargo completed approximately 60,000 HAMP and non-HAMP modifications that involved principal forgiveness, with a total reduction of principal of more than $3.2 billion. Principal forgiveness, however, is not an across-the-board solution. Payment affordability is the key component to a successful modification. –6–

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As of April 31, 2010, nearly 15% of privately-securitized loans that were serviced by Wells Fargo required investor approval before a permanent modification could be offered. Approximately 45% of privately-securitized loans serviced by Wells Fargo required investor approval and the applicable PSA contained limitations on what loan terms could be modified. 7% of privately-securitized loans serviced by Wells Fargo could not be permanently modified under any circumstances. Wells Fargo made an effort to avoid placing borrowers in HAMP trial plans if their loans were covered by restrictive PSAs. The Conversion To Verified Trial Plans 18. Trial period plans were originally intended to last 90 days. However, statistics provided by the U.S. Treasury have shown that, through June 2010, approximately 46% of active trial plans for all participants were more than six months old. See Making Home Affordable Program, Servicer Performance Report Through June 2010 attached to this declaration as Exhibit 1 (also available at http://www.financialstability.gov/docs/June%20MHA%20Public%20FINAL%20072010.pdf) (“June 2010 Servicer Performance Report”). These are commonly referred to as “aged” trial plans. Government statistics also show that the TPPs for a significant number of borrowers placed on stated trial plans were cancelled and thus were not converted into a permanent modification. See id. 19. On January 28, 2010, the Treasury Department reversed its policy on stated trial plans because significant numbers of trial plans were not being converted to permanent modifications. See HAMP Supplemental Directive 10-01 (“SD 10-01”), effective June 1, 2010. The policy had caused numerous customers to be placed on trial plans by servicers, including Wells Fargo – giving them the expectation that they would get a permanent HAMP modification – when, in –7–

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fact, the customers ultimately did not qualify for a permanent modification. The primary reasons that customers were canceled out of HAMP trial modifications include the following: (1) the customer’s current payment was already below 31%; (2) the customer was unresponsive and/or unable or unwilling to provide Wells Fargo with all necessary documentation; (3) HAMP program guidelines, when applied to the customer’s loan, were unable to achieve a debt-toincome ratio of 31%; (4) the customer was not imminently in default; and (5) the customer’s loan failed the NPV test. Accordingly, on January 28, 2010, the U.S. Treasury issued SD 10-01, which signaled a major program change by requiring that servicers verify borrower eligibility for a permanent modification prior to offering a trial loan modification. 20. As stated above, a stated trial plan was never intended to be a guarantee by Wells Fargo, or to the best of my knowledge the U.S. Treasury, that the borrower would qualify for a permanent modification. This is borne out by HAMP guidance, Treasury policy3 encouraging servicers to place borrowers on stated TPPs, and the statistics showing how many borrowers who obtained stated trial plans from Wells Fargo (and the major servicers) actually obtained permanent modifications. 21. As of the June 2010 Servicer Performance Report, Wells Fargo’s percentage of aged trial plans nationally was 42%. At the same time, the average percentage of aged trials for all servicers was 46%. For more information on the aged HAMP trial population, see June 2010 Servicer Performance Report.

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The Congressional Oversight Panel’s Report states that “[SD 10-01] followed Treasury’s initial decision to allow servicers to offer trial period plans based on stated or verified income so that the program could reach a larger number of borrowers in the shortest amount of time in order to stem the flood of foreclosures that many saw coming. This was part of a general decision to roll out HAMP very quickly.” See the Congressional Oversight Panel’s April Oversight Report: Evaluating Progress on TARP Foreclosure Mitigation Programs, at 12 (Apr. 14, 2010), Dckt. 173.

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22. As of June 2010, 43% of trial plans started under HAMP by Wells Fargo have been cancelled and not converted into permanent modifications. Statistics provided by the U.S. Treasury show that, as of June 30, 2010, approximately 41% of trial plans started under HAMP by all participating servicers have been cancelled and not converted into permanent modifications. See Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), Quarterly Report to Congress, July 21, 2010 at 59. (The SIGTARP report is publicly-available at http://www.sigtarp.gov/reports/congress/2010/July2010_Quarterly_Report_to_Congress.pdf). 23. The government’s policy of getting borrowers into stated trial plans for temporary payment relief caused more problems for all servicers, including Wells Fargo, than it solved. Wells Fargo came to the conclusion in early 2010 that it would only place a borrower on a trial plan if it could verify their eligibility for a permanent modification prior to placing the borrower on a trial plan. These trial plans are referred to as “verified” trial plans. As of March 1, 2010, Wells Fargo changed its policy ahead of the Treasury and began issuing trial plans only after fully verifying that the borrower was eligible for a permanent modification. 24. In order to get more borrowers who had been placed in stated trial plans into permanent modifications, in November 2009, the Treasury Department launched a conversion campaign. Each of the major servicers, including Wells Fargo, were required to submit a conversion action plan that included strategies including having people knock on doors to collect missing documentation from borrowers and developing call scripts to include a description of the incentives available to borrowers after they complete a trial period. 25. During the conversion campaign, the number of borrowers moved each month into permanent modifications by Wells Fargo increased from November 2009 through January 2010. –9–

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However, converting stated trial plans into permanent modifications continues to be a challenge even though the numbers of borrowers who remain on aged stated trial plans has substantially shrunk and will soon disappear. 26. Significantly, for loans referred to foreclosure prior to the initiation of a HAMP trial plan, homeowners whose loans remain active in HAMP (regardless of the age of the trial plan) with Wells Fargo will not be subject to a foreclosure sale while they are awaiting a decision from Wells Fargo as to whether their loans are eligible for permanent modification. It is Wells Fargo’s policy not to initiate a referral to foreclosure or complete a foreclosure sale for borrowers who are participating in a HAMP trial plan while they are awaiting a decision from Wells Fargo as to eligibility for a permanent modification. 27. To ensure Wells Fargo is materially in compliance with the spirit and requirements of the Treasury directives, we complete a quality assurance review of all owner-occupied loans thirty (30) days prior to scheduled foreclosure sale dates. This review is designed to validate that all loss mitigation options have been exhausted and that borrower outreach programs have been executed. Any loan determined to have not met the test criteria are referred back to the home preservation team for remediation. Additionally, Wells Fargo performs a quality assurance review of loans referred to foreclosure to ensure we have made all required borrower contacts and solicitations, we validate that correct income and expense information has been captured, we validate that there is evidence that retention or liquidation (short sale/deed in lieu) have been offered and that the loan was not actively being reviewed for a workout solution at the time of referral. 28. For quality assurance purposes, Wells Fargo developed a peer review process for loans that are reviewed for HAMP eligibility. Once financial data is received from the borrower – 10 –

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and Wells Fargo’s employees perform calculations to determine the borrower’s overall monthly income and expenses, Wells Fargo will submit those calculations to peer review to ensure that the information that Wells Fargo is relying upon is correct. Currently, peer review is performed on five loans per Home Preservation Specialist per month. Up until several months ago, peer review was performed on every HAMP loan. 29. In addition to peer review, certain loans receive a second level review, which may be performed by the investor. Like the peer review process, the second level review is another step that is taken for certain loans to assure that Wells Fargo’s determination that a particular loan does not satisfy HAMP’s eligibility requirements is correct. Second level reviews are performed for any loan that is declined for a HAMP modification and, also, if the borrower is self-employed or the circumstances of the borrower’s income is particularly complex. 30. Cancellation of a stated trial plan by Wells Fargo, however, does not lead inexorably to foreclosure. The June 2010 HAMP Servicer Performance Report (Exhibit 1) shows various outcomes for the numerous borrowers who were in a HAMP trial modification with Wells Fargo that was cancelled (due to, for example, trial plan payment default, insufficient documentation, or borrower ineligibility). Some of those borrowers have brought their loans current, entered into an alternative modification from Wells Fargo, entered into a payment plan or paid off their loan, or engaged in a short sale or deed in lieu of foreclosure. A very small percentage of Wells Fargo’s borrowers (1,774 out of 86,607 nationally) had their home sold in foreclosure after their HAMP trial modification was cancelled. 31. When a foreclosure sale occurs everyone loses, the customer, the investor, the servicer, and the public. Accordingly, Wells Fargo’s focus from the beginning has been on doing everything reasonably possible to prevent foreclosure. The unfortunate reality is, and – 11 –

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Treasury itself recognizes that, not every borrower can be helped and some borrowers are in homes that they simply cannot afford, even with substantially reduced payments. In those cases, which represent a very small percentage of the loans serviced by Wells Fargo, there is no reasonable foreclosure prevention option. Wells Fargo’s Massachusetts Customers 32. Through the first half of 2010, 91% of Wells Fargo’s servicing customers in Massachusetts remain current on their mortgage payments. From 2009 through the first half of 2010, in Massachusetts, Wells Fargo provided its customers more than 7,400 trial or permanent modifications, which was an increase on a monthly basis of over 250% from 2008. Of the modifications that it has provided to Massachusetts borrowers in 2009 through the first half of 2010, over 83% resulted in payment reductions, which increases the probability that borrowers will sustain their payments, which, in turn, lowers re-default rates and foreclosures. 33. In the first half of 2010, Wells Fargo completed foreclosures on 1.7% of its customers in Massachusetts. Of those foreclosures, 35% were on non-owner occupied property or Wells Fargo was never able to make contact with the borrower despite persistent, repeated attempts. Of the 6% of our Massachusetts customers who are seriously delinquent, nearly 51%, or 4,110, are actively engaged with us to find a workout solution or are currently in a trial program. Of the remaining borrowers, 26% were actively engaged with us but did not follow through, 10% have been contacted by Wells Fargo but have not provided their financial information, and 13% are non-owner occupied, vacant or we have been unable to contact them. 34. Wells Fargo is continuing to work to resolve permanent HAMP eligibility for its Massachusetts borrowers who were placed on stated trial plans, that is, trial plans provided by Wells Fargo before March 1, 2010. I understand that plaintiffs are asking the Court to – 12 –

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provisionally certify a class of Wells Fargo’s borrowers in Massachusetts who entered into a HAMP TPP, who made the payments identified in their plan, but to whom Wells Fargo did not send a written denial of eligibility for HAMP prior to the Modification Effective Date4 in the TPP and to whom Wells Fargo also did not send a permanent HAMP modification agreement. 35. Under my supervision, members of Wells Fargo’s Servicing Data & Analytics department have reviewed Wells Fargo’s data for its Massachusetts customers to determine how many borrowers may fall within plaintiffs’ provisional class definition. I have been informed of the following data: as of October 12, 2010, Wells Fargo had 93 Massachusetts customers who Wells considers in “active” stated trial plans. In other words, those borrowers received their HAMP TPP from Wells Fargo before March 1, 2010. Of those 93 borrowers, Wells Fargo has determined that 58 are eligible for a permanent modification and therefore those borrowers are at varying stages of having their modifications finalized. The remaining 35 borrowers are in stated trial plans, but have not yet been determined eligible for a permanent modification or been denied a modification. Of those 35, 17 borrowers are in bankruptcy and their eligibility determination has been delayed due to the bankruptcy process. Accordingly, there are 18 borrowers in Massachusetts, who are not in bankruptcy, on aged stated trial plans whose

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The form TPP that Wells Fargo used for its customers that entered into the HAMP program on stated trial plans was provided to Wells Fargo by the U.S. Treasury. Wells Fargo did not draft the language in the form TPP; it simply fills in the blanks as appropriate. Each TPP has a “Modification Effective Date.” The Modification Effective Date is the date on which a borrower’s permanent modification becomes effective and, according to the MHA Handbook (section 9.1), occurs “when: (i) the borrower has satisfied all of the requirements of the TPP Notice, (ii) the borrower and the servicer have executed the Modification Agreement, (iii) the servicer has returned a fully executed copy of the Modification Agreement to the borrower, and (iv) the Modification Effective Date provided in the Modification Agreement has occurred.” The Modification Effective Date is also defined in the MHA Handbook as “the due date for the first payment under the permanent modification.” Section 6.3.3. A sample form TPP used by Wells Fargo prior to March 1, 2010 is attached hereto as Exhibit 2. – 13 –

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eligibility determination for a permanent modification has not yet been made by Wells Fargo. The reasons why they are in that category can only be determined by a file-by-file review but it is likely that Wells Fargo is awaiting documentation from some borrowers and that other borrowers are awaiting a decision from Wells Fargo or the applicable investor for their loan. Wells Fargo will not proceed with a foreclosure sale as to any of those borrowers while they are awaiting a decision on HAMP. 36. I understand that plaintiffs have defined their putative, provisional class as including borrowers who may have been denied a permanent HAMP modification but did not receive their denial before the Modification Effective Date stated in the TPP. Accordingly, it appears that plaintiffs intend to include borrowers in their provisional class who – like hundreds of thousands of other borrowers whose loans have been serviced by Wells Fargo and other servicers, were in aged trial plans and did not receive a HAMP denial until after they completed the trial payment schedule set forth in their TPP. 37. Wells Fargo cannot determine the date upon which a borrower in a stated trial plan received a denial notice from Wells Fargo without performing a file-by-file review of the borrower’s servicing records. Moreover, Well Fargo cannot determine the Modification Effective Date for any borrower if that borrower was determined ineligible for a permanent modification. See footnote 4 above. 38. Again, as stated above, there are numerous reasons why borrowers may not have converted to a permanent modification from a stated TPP, including, for example, missed or late TPP payments, failure to provide documentation that verifies their income and expenses, a mortgage payment that is below 31% of their monthly income, their home no longer serving as their principal residence, or investor restrictions prohibiting a permanent modification. – 14 –

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Accordingly, while Wells Fargo – as stated above – can determine the numbers of Massachusetts borrowers who are still active in HAMP and who have not yet received a denial or a permanent modification, it cannot determine the number of borrowers who did not receive their denial letter on or before their “Modification Effective Date.” The number of Massachusetts borrowers who were on stated TPPs and who have already received a HAMP denial letter, regardless of when they received the denial letter, is approximately 2,600. Of this group of borrowers, the majority are working with Wells Fargo to find an alternative modification, 25% are now current (many with the assistance of Wells Fargo), 2% are in bankruptcy and 3% have completed a foreclosure sale. Wells Fargo’s Implementation of HAMP 39. Wells Fargo has in place Responsible Servicing Practices, which the company has lived by for many years and formalized in 2007, long before HAMP was created. The principles underlying Wells Fargo’s Responsible Servicing Practices include to: (1) approach every interaction from the customer’s point of view, (2) provide clear and timely information to consumers, (3) provide tools, products, services and information that can help our customers manage their credit; and (4) do all we can to help keep people in their homes whenever possible. Wells Fargo works everyday to achieve these principles and our team members are held accountable for these principles. 40. As with any large scale customer service operation, Wells Fargo recognizes that mistakes are occasionally made and customers are sometimes provided with information or requests that are not accurate. The demands and pressures of the mortgage crisis coupled with the numerous government programs, like HAMP, designed to help borrowers, but which are complex and frequently changing, has caused all of the major servicers to dramatically ramp up – 15 –

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their operations, hire quantities of new employees, and develop new procedures and programs (and frequently adjust them) at an extremely rapid rate. 41. Since the initiation of HAMP, Wells Fargo has worked aggressively with the government to implement the program. We have continuously taken steps to improve service levels for Wells Fargo customers facing financial hardships. The average inventory of borrowers seeking assistance has increased approximately 160% from the first half of 2009 to the first half of 2010. To handle this increase in borrowers seeking assistance, Wells Fargo has trained an additional 10,900 U.S.-based home retention staff for a total of more than 18,000 team members. Since the beginning of 2009 alone, staffing peaked at an approximate 150% increase to Wells Fargo’s home retention staff on top of increased usage of outsourced collections and document collection resources. This has required the development of new processes to rapidly onboard, train, and retrain people to manage the evolving, complex guidelines inherent in home retention programs. 42. We have further enhanced our support systems and our training and re-training to aid our service representatives in appropriately communicating modification programs and guidelines that have continually changed and expanded to help more borrowers. Wells Fargo’s training program is comprehensive, and it includes traditional classroom-type training as well as practical training from our most seasoned representatives. We actively rotate our representatives so that they are working at the appropriate level in light of the skills that they have. Wells Fargo also performs internal quality assurance, including recording and listening to phone calls, to ensure that our team members communicate appropriately and consistently with our customers. 43. We have also improved how we obtain the extensive documentation the government requires for HAMP from borrowers, and we continue to work to ensure all documents are – 16 –

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processed in a timely manner. For example, Wells Fargo has streamlined the receipt, imaging, and processing of the required documents. According to recent Treasury statistics, for all calls into the Home Preservation Foundation HAMP Hotline through April 2010, less than 0.5% of the Wells Fargo calls were complaints stating that Wells Fargo lost the caller’s paperwork. 44. Earlier this year, Wells Fargo transitioned to assigning one person to manage one loan modification from beginning to end. This improved process has been in place since the end of June 2010 and we hope that it is beginning to have a positive impact on our customers’ experiences. In addition, we have been working with other industry collaborators, such as investors and appraisers, to institute a 5-day credit decision turn-around for customers in need who provide the information necessary to quickly finalize a decision. 45. Wells Fargo also has a dedicated phone line for Congressional staff members and case workers to use in the event that their constituents, who are Wells Fargo customers, have issues that require resolution. 46. Notably, the June 2010 Servicer Performance Report reflects that, of the four major servicers, Wells Fargo had the lowest servicer complaint rate to the Homeowner’s HOPE Hotline from the beginning of the program through May 2010. Similarly, of the four major servicers, Wells Fargo had the second lowest answer time for homeowner calls. Finally, Wells Fargo had the shortest response time of the four major servicers for responding to third-party escalations. 47. We understand the frustration some borrowers feel in getting clear, timely communications from us as HAMP guidelines and the requirements for the various modification programs have continued to change. Wells Fargo holds itself to a high level of accountability for improving communication and providing the highest possible level of service to each of our customers. Wells Fargo is continuing to seek ways to improve the process to address the – 17 –

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constant challenges facing our customers and our investors, and we continually seek to implement improvements to the process as they are developed. We also have met with staff at the U.S. Treasury on numerous occasions to discuss the challenges presented by HAMP and we have offered suggestions and opportunities to make the HAMP program more effective. HAMP Alternatives 48. While HAMP has been an important option for borrowers, HAMP will not help all borrowers, in Massachusetts or elsewhere, find payment relief. For the customers who are ineligible for HAMP, Wells Fargo also provides customized loan modifications. 49. Since the beginning of 2009 through the first half of 2010, 85% of the modifications that Wells Fargo initiated or completed were done outside of HAMP. We believe this is primarily associated with our strong loan origination underwriting guidelines because many of the borrowers seeking assistance already have payment-to-income percentages below 31%, the targeted payment ratio established by the HAMP program. Since 2009 through the first half of 2010, at the same time that Wells Fargo was providing HAMP modifications to eligible borrowers, we provided 3,633 non-HAMP modifications to Massachusetts borrowers. 50. The crisis of unemployment and under-employment has placed limits on what servicers, including Wells Fargo, can do to help borrowers attain an affordable mortgage payment. Wells Fargo has offered forbearance programs where appropriate and we have done all we can to place borrowers in permanent modifications once the borrower becomes fully employed again. 51. Under certain circumstances, Wells Fargo has placed borrowers on non-HAMP (or “alternative”) modifications. As the June 2010 Servicer Performance Report reflects, since the HAMP program was initiated, Wells Fargo has worked with 56,821 borrowers who were – 18 –

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cancelled from HAMP by finding alternative modifications. Wells Fargo receives no financial incentive from the U.S. Treasury for placing borrowers on non-HAMP modifications. It generally does so to provide a greater array of solutions to borrowers otherwise facing foreclosure. Wells Fargo’s relatively lower percentage of aged trial plans, as well as the substantial number of borrowers who Wells Fargo has placed in alternative modifications reflects Wells Fargo’s commitment and capabilities for helping borrowers stay in their homes and avoid foreclosure. The Wyatt Report 52. I am familiar with the claims made by plaintiffs in the above-captioned action, and I have reviewed the Expert Report of Christopher Wyatt, which I understand was filed with the Court on September 15, 2010. To my knowledge, Mr. Wyatt has never worked for Wells Fargo, including in its capacity as a mortgage loan servicer, and he does not have first-hand or personal knowledge of Wells Fargo’s operations, particularly with respect to HAMP compliance. 53. Mr. Wyatt makes a number of statements regarding Wells Fargo’s HAMP activities that are not accurate. First, Mr. Wyatt states that the putative class members in this case were all determined eligible for a permanent HAMP modification by Wells Fargo “because they received a TPP.” Wyatt Report at 5. As stated above, however, Wells Fargo placed thousands of borrowers on stated trial plans prior to March 1, 2010 where Wells Fargo did not yet have sufficient information to determine the borrower’s final eligibility for a permanent modification. Accordingly, it is not correct to state, as Mr. Wyatt does, that any borrower who received a trial plan from Wells Fargo was determined to have met all HAMP eligibility requirements. All that can be said about the borrowers’ receipt of a trial plan, prior to March 1, 2010, is that the borrowers satisfied Wells Fargo’s initial screening, as set forth in paragraph 14 above. – 19 –

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54. To support his opinion that Wells Fargo “failed to timely convert eligible homeowners in an active Trial Period Plan into a permanent loan modification,” Mr. Wyatt references (at page 15 of his report) comments made in August 2009 by Bill Merrill, Senior Vice President of Wells Fargo, to the California Mortgage Bankers Association (“CMBA”). The apparent source for Mr. Wyatt’s testimony regarding Mr. Merrill is at www.mortgageorb.com (October 14, 2009). See Wyatt Report at 15 & n. 23. Mr. Wyatt’s rendition of the description of Mr. Merrill’s comments to the CMBA is not accurate as is apparent from a review of the reported article. 55. In particular, Mr. Merrill accurately commented that Wells Fargo had retained six Sigma consultants in order to assist Wells Fargo in facing the numerous challenges presented by the structure of the HAMP program. The consultants found, and Mr. Merrill observed, that the HAMP process itself – as of August 2009 – was the challenge, not, as Mr. Wyatt recounts, the particular conduct of Wells Fargo. Specifically, the article that Mr. Wyatt references states: Bill Merrill, senior vice president of Wells Fargo’s default servicing operations, noted at the CMBA conference that return rates on pre-approved modification packages have been particularly difficult to manage because servicers aren’t always in control of the process. Six Sigma experts, brought in by the bank as consultants, “were going crazy” when they reviewed the typical loan modification process and found servicers only looked at a file for 45 minutes in a 30-day time period. And while the package sits with the borrower for the better part of a month, outreach campaigns - which include phone calls and letters - ratchet up costs. “It’s a very broken process in the sense that you move quick, stop. Move quick, stop,” Merrill said, pointing out that investors and insurance companies have to sign off on packages. “The time we actually touch the files is pretty limited when you look at just one file.” 56. Neither the statements made by Mr. Merrill as recounted at www.mortgageorb.com nor anything else relied upon by Mr. Wyatt supports his conclusions that Wells Fargo has failed – 20 –

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to convert borrowers to permanent HAMP modifications in violation of its obligations under HAMP TPP agreements, and that Wells Fargo’s alleged failure “is directly caused by inadequate staffing and procedures.” In fact, as discussed at length above, Wells Fargo has diligently and aggressively worked to implement and comply with the HAMP program. I am not aware of any information in my position at Wells Fargo that would support Mr. Wyatt’s conclusion that Wells Fargo borrowers, as individuals or as a class, have been inappropriately denied permanent HAMP modifications due to “inadequate staffing and procedures.” Foreclosure moratorium 57. It is my understanding that plaintiffs seek a foreclosure moratorium for loans that Wells Fargo is reviewing but for which Wells Fargo has not yet determined eligibility for a permanent HAMP modification and for loans that Wells Fargo has reviewed for a HAMP permanent modification but for which the borrower did not receive a HAMP denial letter before their Modification Effective Date. 58. As previously mentioned, any borrower who is in an extended HAMP trial plan is not referred to foreclosure or allowed to proceed to foreclosure sale until such time as the HAMP evaluation is completed. In cases where a permanent HAMP modification is denied due to a negative NPV result, the borrower is provided a 30-day period to contest the NPV results. Additionally, Wells also reviews borrowers for any available alternative modifications before denying the borrower additional assistance. 59. Moreover, as discussed above, the foreclosures that plaintiffs seek to halt would only occur in the small percentage of cases where Wells Fargo has carefully determined that the loan is not eligible for either a HAMP or non-HAMP modification nor would the loan have qualified for another pre-foreclosure work out, such as a deed in lieu of foreclosure or short sale. – 21 –

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60. In light of Wells Fargo’s extensive and proven efforts to keep every borrower out of foreclosure whenever another alternative is present, Wells Fargo strongly believes that the foreclosure moratorium that plaintiffs ask this Court to impose on Wells Fargo as to the small number of borrowers in Massachusetts for whom Wells Fargo is already committed to placing in either a HAMP modification or an alternative workout solution would be burdensome and inappropriate. Wells Fargo believes that forced moratoriums should only be mandated in very limited circumstances, which are not present here. 61. Wells Fargo has made extensive, credible efforts to modify the loans of its customers in Massachusetts and nationally, and the results establish why a foreclosure moratorium, for any limited purpose, is not appropriate in this case. Wells Fargo believes that its loan workout processes are some of the most robust in the country and Wells Fargo is committed to continuing to work with Massachusetts borrowers to place every struggling homeowner in a loan modification or other workout option short of foreclosure whenever possible.

– 22 –

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EXHIBIT 1

Making Home Affordable Program
Servicer Performance Report Through June 2010

Report Highlights
More Than 50,000 New Permanent Modifications in June
• Total number of permanent modifications increases nearly 15%, with growth in permanent modifications averaging more than 50,000 per month over the last six months. • Homeowners in permanent modifications are experiencing a median payment reduction of 36%, more than $500 per month. • Homeowners in permanent modifications are guaranteed lower payments for five years, then fixed terms at today’s low rates for the life of the loan.

Inside:
HAMP Program Snapshot Characteristics of Permanent  Modifications Servicer Activity Disposition Path of Homeowners  Canceled From HAMP Trials Disposition Path  of Homeowners Ineligible  for HAMP Trials Selected Outreach Measures Implementation of Program  Updates Homeowner Experience 2 3 4 5

Servicers Continue to Work Through Aged Trial Population
• Cancellations continue to rise as servicers comply with Treasury guidance to make decisions on aged trials. Of the newly canceled trials this month, more than 60% had been in trial six months or longer. • Servicers are still completing their reviews of nearly 166,000 active trials lasting six months or more. • Approximately 45% of homeowners in canceled trials entered an alternative modification, based on survey data from the eight largest HAMP participants. Fewer than 2% of homeowners in canceled trials went to foreclosure sale. • The most common causes of cancellations include incomplete documentation, missed trial payments, or mortgage payments already less than 31% of the homeowner’s income.

6 7 7 8 9 10 10 11 12 1

New This Month: Performance of Permanent Modifications
• For permanent modifications at six months, fewer than 6% are 60+ days delinquent. • For permanent modifications, the default rate – loans 90+ days delinquent – is fewer than 2% at the time they are six months old. • Fewer than 3% of homeowners in permanent modifications at nine months have defaulted on their HAMP modification. • For homeowners in permanent modifications at nine months, fewer than 8% are 60 days past due.

HAMP Activity by State HAMP Activity by Metropolitan  Area Modifications by Investor Type List of Non‐GSE Participants Definitions of  Compliance Activities

New This Month: Servicer Engagement
• Servicers have shared timetables for participating in the Home Affordable Foreclosure Alternatives Program and the HAMP Second Lien Modification Program (2MP). • Call center metrics and time to resolve escalated cases are reported for the eight largest participating servicers.

Making Home Affordable Program
Servicer Performance Report Through June 2010

HAMP Activity: All Servicers
Total
Eligible Delinquent Loans1
HAMP Eligibility
1,400,000 1,200,000 1,000,000

HAMP Trials Started (Cumulative)
1,282,912 1,267,759 1,244,597

3,125,198 1,623,584 1,528,563 1,282,912 38,728 520,814

1,200,077 1,132,451 1,047,188

Eligible Delinquent Borrowers2 Trial Plan Offers Extended3 All Trials Started
Trial Modifications

954,723 837,446

800,000 600,000
429,321 564,172

723,191

Trials Reported Since May 2010 Report4 Trial Modifications Canceled Active Trials All Permanent Modifications Started Permanent Modifications Begun Since  May 2010 Report Permanent Modifications Canceled5 Active Permanent Modifications

400,000
284,209

200,000
55,041

164,696

0

364,077 398,021 51,205
500,000

May  June and  Prior

July

Aug

Sep

Oct

Nov

Dec

Jan  2010

Feb

Mar

Apr

May June

Source: HAMP system of record. Note: Servicers may enter new trial modifications anytime before the loan converts to a permanent modification.

Permanent Modifications

Permanent Modifications Started (Cumulative)

8,823
400,000
398,021 346,816

389,198
300,000
230,801 299,092

1 Estimated eligible 60+ day delinquent loans as reported by servicers as of May 31, 2010, include conventional loans: 

in foreclosure and bankruptcy. with a current unpaid principal balance less than $729,750 on a one‐unit property, $934,200 on a two‐unit property, $1,129,250 on a  three‐unit property and $1,403,400 on a four‐unit property. on a property that was owner‐occupied at origination. originated on or before January 1, 2009. Estimated eligible 60+ day delinquent loans exclude:  FHA and VA loans. loans that are current or less than 60 days delinquent, which may be eligible for HAMP if a borrower is in imminent default. For servicers enrolling after April 1, 2010 that did not participate in the 60+ day delinquency survey, the delinquency count is from the  servicer registration form.   2 The estimated eligible 60+ day delinquent borrowers are those in HAMP‐eligible loans, minus estimated exclusions of loans on vacant  properties, loans with borrower debt‐to‐income ratio below 31%, loans that fail the NPV test, properties no longer owner‐occupied,  manufactured housing loans with title/chattel issues that exclude them from HAMP, and loans where the investor pooling and service  agreements preclude modification. Exclusions for DTI and NPV results are estimated using market analytics. 3 As reported in the weekly servicer survey through July 1, 2010. 4 Servicers may enter new trial modifications anytime before the loan converts to a permanent modification.  5 Includes 195 loans paid off.

200,000
117,302

170,207

100,000
4,742 15,649 31,424

66,938

0 Sep and  Oct Earlier Nov Dec Jan Feb Mar Apr May June

Source: HAMP system of record.

2

Making Home Affordable Program
Servicer Performance Report Through June 2010

Modification Characteristics
• Lower monthly mortgage payments for homeowners in active trial and permanent modifications yield a cumulative reduction of nearly $3.2 billion. • The median savings for borrowers in permanent modifications is $510.19 per month, or 36% of the median before-modification payment. • 76.8% of homeowners in permanent modifications were 60 days delinquent or more at trial entry; the remainder were up to 59 days late or in imminent default.

Permanent Modifications by Modification Step
Interest Rate Reduction Term Extension Principal Forbearance
1

100% 56.3% 29.1%

Performance of Permanent Modifications
Delinquency: Months After Conversion to Permanent
3 6 90+ Days*
4.4% 1.5% 1.3% 1.4%

9 90+ Days*
2.3% 1.6% -1.7%

Modification Became Permanent in:
Q3 2009 Q4 2009 Q1 2010 ALL

#
3,643 44,615 126,527 174,785

60+ Days*
10.5% 5.4% 4.1% 4.5%

#
4,152 46,510 -50,662

60+ Days*
7.8% 5.8% -5.9%

#
4,151 --4,151

60+ Days*
7.7% --7.7%

90+ Days*
2.4% --2.4%

* The 60+ day delinquent population includes the 90+ day delinquent population. This table highlights the number of permanent modifications that were delinquent at the end of 3 months, 6 months and 9 months. Does not include permanent modifications that have been paid off. A HAMP permanent modification is canceled for nonpayment if it is more than 90 days delinquent.

Select Median Characteristics of Permanent Modifications
Before Modification 44.8% 79.9% $1,422.16 After Modification 31.0% 63.7% $837.92 Median Decrease ‐13.8 pct pts ‐14.4 pct pts ‐$510.19

Predominant Hardship Reasons for Permanent Modifications
Loss of Income Excessive  Obligation Illness of Principal  Borrower 2.9%
1

60.2% 10.8%
1

Loan Characteristic Front-End Debt-to-Income Ratio1 Back-End Debt-to-Income Ratio2 Median Monthly Payment3

0%
1

20%

40%

60%

80%

Includes borrowers who are employed but have faced a reduction in hours and/or wages as well as those who have lost their jobs. Note: Does not include 17.5% of permanent modifications reported as Other.

Ratio of housing expenses (principal and interest on the first mortgage, taxes, insurance and homeowners association and/or condo fees) to monthly gross income. Ratio of total monthly debt payments (including principal and interest on the first mortgage, taxes, insurance, homeowners association and/or condo fees, plus payments on installment debts, junior liens, alimony, car lease payments and investment property payments) to monthly gross income. Borrowers who have a back-end debt-to-income ratio of greater than 55% are required to seek housing counseling under program guidelines. 3 Principal and interest payment on the first mortgage.
2

3

Making Home Affordable Program
Servicer Performance Report Through June 2010

HAMP Modification Activity by Servicer
Estimated Eligible 60+ Day Delinquent Borrowers1 Trial Plan Offers Extended2 100% All HAMP Trials Active Trial Started3 Modifications3 Permanent Modifications3

Conversion Rate1
89% 80% 77%
75%

Servicer

American Home Mortgage Servicing Inc Aurora Loan Services, LLC Bank of America, NA4 Carrington Mortgage Services LLC CitiMortgage, Inc. GMAC Mortgage, Inc. Green Tree Servicing LLC HomEq Servicing J.P. Morgan Chase Bank, Litton Loan Servicing LP Nationstar Mortgage LLC Ocwen Financial Corp. Inc. OneWest Bank PNC Mortgage6 Saxon Mortgage Services, Inc. Select Portfolio Servicing US Bank NA Wachovia Mortgage, FSB7 Wells Fargo Bank, NA8 Other SPA servicers9 Other GSE Servicers10 NA5

51,745 39,253 469,905 5,180 143,074 20,459 6,912 16,089 233,180 52,675 20,018 35,099 50,402 20,824 27,204 19,899 16,302 30,957 179,421 15,043 169,943

24,274 47,640 405,861 3,611 155,955 57,244 7,290 6,669 256,775 36,902 25,667 25,615 60,068 21,964 44,909 61,379 13,581 14,888 243,504 14,767 NA

19,906 44,099 311,801 2,933 146,857 46,917 6,144 5,479 202,831 34,564 22,007 26,511 43,605 17,890 35,231 37,745 10,482 11,320 175,564 12,727 68,299

9,494 7,263 121,369 710 27,965 6,083 2,133 1,450 63,259 4,640 5,495 6,333 18,949 3,960 4,752 4,984 2,523 7,599 30,949 4,145 30,022

9,504 12,562 72,232 2,019 40,813 27,505 2,347 3,793 54,722 8,116 8,265 16,004 14,700 2,502 10,535 14,807 5,732 3,594 44,628 6,207 28,611
1 2

71%

Trial Evaluation : Verified Income                 Stated Income2
66% 62% 60% 57% 47% 45% 44% 41% 37% 35% 31% 29% 28% 27% 26% 25% 14%

50%

25%

Trial Length at  Conversion  3.2    4.6    3.0    3.0   3.3    3.1    3.9    3.7   3.5    3.6    3.6    5.4    4.0    6.3   4.4    7.5    4.5    4.9    5.4  (months): 

0%

3.4   3.3   

As measured against trials eligible to convert – those three months in trial, or four months if the borrower was in imminent default. Per program guidelines, all servicers must be using verified income before starting trial modifications by June 1. These servicers initiated trials prior to the June 1 required  deadline using stated income information.  •Other SPA and Other GSE servicers represent a mix of verified and stated income trial starts.  Permanent modifications transferred among servicers are credited to the originating servicer.

Aged Trials1 as Share of Active Trials
80%
72% 68% 66% 65% 58% 56% 43% 42%

166,000 active trials were initiated at least six months ago. The servicers with the largest portion of the oldest trials are Bank of America and J.P. Morgan Chase, who account for 53% of the volume.

60%

Total
1 Estimated

1,623,584

1,528,563

1,282,912

364,077

389,198

40%

eligible 60+ day delinquent borrowers as reported by servicers as of May 31, 2010, include those in conventional loans: in foreclosure and bankruptcy. with a current unpaid principal balance less than $729,750 on a one-unit property, $934,200 on a two-unit property, $1,129,250 on a three-unit property and $1,403,400 on a four-unit property. on a property that was owner-occupied at origination. originated prior to January 1, 2009. Estimated eligible 60+ day delinquent borrowers excludes: Those in FHA and VA loans. Those in loans that are current or less than 60 days delinquent, which may be eligible for HAMP if a borrower is in imminent default. Those borrowers with debt-to-income ratios less than 31% or a negative NPV test, Owners of vacant properties or properties otherwise excluded (see footnotes of page 7 for further explanation). Exclusions for DTI and NPV are estimated using market analytics. For servicers enrolling after April 1, 2010 that did not participate in the

60+ day delinquency survey, the delinquency count is from the servicer registration form. 2 As reported in the weekly servicer survey through July 1, 2010. 3 Active trial and permanent modifications as reported into the HAMP system of record by servicers. Subject to adjustment based on servicer reconciliation of historic loan files. 4 Bank of America, NA includes Bank of America, NA, BAC Home Loans Servicing LP, Home Loan Services and Wilshire Credit Corporation. 5 J.P. Morgan Chase Bank, NA includes EMC Mortgage Corporation. 6 Formerly National City Bank. 7 Wachovia Mortgage, FSB consists of Pick-a-Payment loans. 8 Wells Fargo Bank, NA includes a portion of the loans previously included in Wachovia Mortgage, FSB. 9 Other SPA servicers are entities with less than 5,000 estimated eligible 60+ day delinquent borrowers that have signed participation agreements with Treasury and Fannie Mae. A full list of participating servicers is in the Appendix. 10 Includes servicers of loans owned or guaranteed by Fannie Mae and Freddie Mac.

36% 35% 34% 33% 32% 31%

28% 23% 17% 11% 10% 7%

20%

0%

1 Active

trials initiated at least six months ago. Note: Excludes Wachovia Mortgage, FSB at 0%.

4

Making Home Affordable Program
Servicer Performance Report Through June 2010

Disposition Path Homeowners in Canceled HAMP Trial Modifications Through May 2010 (8 Largest Servicers) 1
Homeowners Whose HAMP Trial Modification Was Canceled in the Process of:

The most common causes  of trial cancellations are: • Missing documentation • Trial plan default  • Ineligible borrower: debt‐ to‐income ratio is already  below 31%

Servicer American Home  Mortgage Servicing Inc.  Bank of America, NA4 CitiMortgage Inc. GMAC Mortgage Inc.  JP Morgan Chase Bank  NA5 Litton Loan Servicing LP OneWest Bank Wells Fargo Bank NA6

Action  Borrower Pending2 Bankruptcy Current 60 69,653 16,863 1,053 9 2,154 6,232 202 26 3,009 7,471 877

Short Sale/ Total Alternative  Payment  Deed in  Foreclosure  Foreclosure (As of May  Modification Plan3 Loan Payoff Lieu Starts Completions 2010) 16 20,564 30,145 4,310 8 761 1,063 226 1 392 232 239 0 1,248 1,017 223 6 2,440 5,286 651 3 192 509 275 129 100,413 68,818 8,056

12,462

205

712

31,973

58

246

903

10,927

1,119

58,605

2,726 1,816

334 174

1,286 173

8,259 2,785

363 40

61 8

591 360

1,814 883

218 350

15,652 6,589

6,229

435

6,592

56,821

544

1,699

3,903

8,610

1,774

86,607

TOTAL  (These 8 Servicers)

110,862 32.1%

9,745 2.8%

20,146 5.8%

154,873 44.9%

3,063 0.9%

2,878 0.8%

8,245 2.4%

30,617 8.9%

4,440 1.3%

344,869 100%

Note: Data is as reported by servicers for actions completed through May 31, 2010. 1 As defined by cap amount. 2 Trial loans that have been canceled, but no further action has yet been taken. 3 An arrangement with the borrower and servicer that does not involve a formal loan modification. 4 Bank of America, NA includes Bank of America, NA, BAC Home Loans Servicing LP, Home Loan Services and Wilshire Credit Corporation. 5 J.P. Morgan Chase Bank, NA includes EMC Mortgage Corporation. 6 Wells Fargo Bank, NA includes a portion of the loans previously included in Wachovia Mortgage, FSB. Excludes Wachovia Mortgage FSB Pick-a-Payment Loans. Note: Excludes cancellations pending data corrections. 

5

Making Home Affordable Program
Servicer Performance Report Through June 2010

Disposition Path Homeowners Not Accepted for HAMP Trial Modifications Through May 2010 (8 Largest Servicers) 1
Homeowners Not Accepted for a HAMP Trial Modification in the Process of:

The most common causes  of trials not accepted are: • Ineligible borrower: debt‐ to‐income ratio is already  below 31% • Missing documentation • Imminent default not  evidenced by borrower

Servicer American Home  Mortgage Servicing Inc.  Bank of America, NA4 CitiMortgage Inc. GMAC Mortgage Inc.  JP Morgan Chase Bank  NA5 Litton Loan Servicing LP OneWest Bank Wells Fargo Bank NA6

Action  Borrower Pending2 Bankruptcy Current 1,209 29,070 33,881 13,076 529 2,264 8,282 2,721 2,096 1,922 8,912 15,664

Short Sale/ Total Alternative  Payment  Deed in  Foreclosure  Foreclosure (As of May  Modification Plan3 Loan Payoff Lieu Starts Completions 2010) 12,851 8,729 24,316 25,653 395 690 4,165 3,411 313 265 13,470 3,221 1,116 8,768 1,382 2,536 2,463 13,588 11,414 8,043 18 1,097 4,068 3,223 20,990 66,393 109,890 77,548

16,467

537

43,401

32,504

110

400

908

4,765

446

99,538

7,806 7,530

3,009 1,331

6,856 4,562

8,432 3,844

1,273 509

174 102

2,651 2,284

6,894 3,338

1,274 3,839

38,369 27,339

12,657

1,021

18,951

41,334

1,676

2,630

3,236

12,119

4,886

98,510

TOTAL  (These 8 Servicers)

121,696 22.6%

19,694 3.7%

102,364 19.0%

157,663 29.3%

12,229 2.3%

20,575 3.8%

22,881 4.2%

62,624 11.6%

18,851 3.5%

538,577 100%

Note: Data is as reported by servicers for actions completed through May 31, 2010. 1 As defined by cap amount. 2 Homeowners who were not approved for a HAMP trial modification, but no further action has yet been taken. 3 An arrangement with the borrower and servicer that does not involve a formal loan modification. 4 Bank of America, NA includes Bank of America, NA, BAC Home Loans Servicing LP, Home Loan Services and Wilshire Credit Corporation. 5 J.P. Morgan Chase Bank, NA includes EMC Mortgage Corporation. 6 Wells Fargo Bank, NA includes a portion of the loans previously included in Wachovia Mortgage, FSB. Excludes Wachovia Mortgage FSB Pick-a-Payment Loans.

6

Making Home Affordable Program
Servicer Performance Report Through June 2010

Selected Outreach Measures
Events Hosted Nationally by Treasury and Partners (cumulative) Homeowners Attending Treasury-Sponsored Events (cumulative) Servicer Solicitation of Borrowers (cumulative)1 Page views on MakingHomeAffordable.gov (June 2010) Page views on MakingHomeAffordable.gov (cumulative) Percentage to Goal of 3-4 Million Modification Offers by 20122 40 41,103 5,032,530 4,602,051 89,967,960 38-51%

Call Center Volume
Cumulative Total Number of Calls Taken at 1-888-995HOPE (since program inception) June

1,273,021

107,784

Borrowers Receiving Free Housing Assistance Through the Homeowner’s HOPETM Hotline

636,815

45,580

1 Source: survey data provided by servicers. Servicers are encouraged by HAMP to solicit information from borrowers 60+ days delinquent, regardless of eligibility for a HAMP modification. 2 In 2009, Treasury set a goal of offering help to 3-4 million borrowers through the end of 2012.

Implementation of Program Updates (8 Largest Servicers)1
Home Affordable Foreclosure Alternatives (HAFA) 3 Offers Initiated Operationally Ready4                             To Homeowners
Source: Homeowner’s HOPETM Hotline.

Servicer American Home Mortgage  Servicing, Inc.  Bank of America, NA6 CitiMortgage Inc. GMAC Mortgage Inc.  JP Morgan Chase Bank NA8 Litton Loan Servicing LP OneWest Bank Wells Fargo Bank NA9
1 As

Began Verified Income Trials2 At Signup (7/09) 4/10 3/10 4/107 4/10 4/10 4/10 3/10

Second Lien Modification Program (2MP)5 Offers Initiated Operationally Ready To Homeowners Not Participating 4/10 10/10 Not Participating 5/10 Not Participating Not Participating 7/10 N/A 4/10 10/10 N/A 5/10 N/A N/A 7/10

4/10 4/10 6/10 4/10 4/10 4/10 5/10 4/10
6 Bank

5/10 4/10 6/10 6/10 5/10 4/10 5/10 4/10

defined by cap amount. 2 Per Supplemental Directive 10-01, all servicers were required to start trials using verified income documentation at trial start by June 1, 2010. Servicers had the option to use verified income at any time. 3 HAFA guidelines enable short-sale and deed-in-lieu transactions for borrowers at risk of foreclosure. 4 Operationally ready means that servicers have implemented the program as outlined in Supplemental Directive 09-09. Dates after May 31, 2010 are estimated. 5 Treasury’s Second Lien Modification Program was revised in March 2010. Servicers participating in HAMP are not required to sign up for Revised 2MP.

of America, NA includes Bank of America, NA, BAC Home Loans Servicing LP, Home Loan Services and Wilshire Credit Corporation. 7 Prior to April 2010, GMAC operated a program where most documents were provided at trial start, but some supporting documents could be produced during the trial period. 8 J.P. Morgan Chase Bank, NA includes EMC Mortgage Corporation. 9 Wells Fargo Bank, NA includes a portion of the loans previously included in Wachovia Mortgage, FSB. Excludes Wachovia Mortgage FSB Pick-aPayment Loans. Wachovia Mortgage FSB began verified income trials at signup in July 2009.

7

Making Home Affordable Program
Servicer Performance Report Through June 2010

Homeowner Experience (8 Largest Servicers)* Average Speed to Answer Homeowner Calls (May)
60 50 40
Seconds

Servicer Complaint Rate to Homeowner’s HOPETM Hotline (Program to Date, Through June)
Program to date, there have been 598,486 calls to the Homeowner’s HOPETM Hotline regarding a specific servicer, of which 3.9% included complaints. Below shows specific complaint rates, adjusted for volume: 6%
% of Calls for Specific Servicer That Are Complaints

Homeowner’s HOPETM Hotline Average for May: 2.8 Seconds

5%

Program to Date Average: 3.9%

30 20 10 0
Bank of  America NA Litton JP Morgan  Chase NA GMAC OneWest Am. Home  Servicing Wells Fargo CitiMortgage

4%

3%

2%
Litton

Source: Survey data through May 31, 2010, from servicers on call volume to loss mitigation lines.

Source: Homeowner’s HOPETM Hotline. Note: Complaint rate is the share of a specific servicer’s call volume that are complaints (i.e., for all calls about Litton, 5.3% included complaints.)

JP Morgan  Chase NA

OneWest

Am. Home  Servicing

Bank of  America NA

GMAC

CitiMortgage

Wells Fargo

Call Abandon Rate (May)
5%

Servicer Time to Resolve Third-Party Escalations (Program to Date, Through June)
40

4%

3%

Calendar Days

Homeowner’s HOPETM Hotline Average for May: 1.8%

Target: 25 Calendar Days
30

20

2%

10
1%

0
0%
Bank of  America Litton JP Morgan  Chase NA GMAC Am. Home  Servicing Wells Fargo OneWest CitiMortgage
JP Morgan  Chase NA Bank of  America NA OneWest CitiMortgage Am. Home  Servicing Wells Fargo GMAC Litton

Source: Survey data through May 31, 2010, from servicers on call volume to loss mitigation lines. *As defined by cap amount.

Resolved:        755 Cases (PTD)

1,038            208             330               139             766               277              234

Source: HAMP Solutions Center. Target of 25 calendar days includes an estimated 5 days processing by HAMP Solutions Center.

8

Making Home Affordable Program
Servicer Performance Report Through June 2010

HAMP Activity by State
State AK AL AR AZ CA CO CT DC DE FL GA HI IA ID IL IN KS KY LA MA MD ME MI MN MO MS Active Permanent Trials Modifications Total 161 2,319 946 16,816 82,341 4,870 4,489 705 1,107 45,725 14,175 1,349 1,015 1,378 18,841 3,470 957 1,433 2,079 8,128 11,702 919 11,362 5,650 4,046 1,277 170 2,380 993 20,652 85,814 5,656 5,147 634 1,286 47,029 14,471 1,454 1,028 1,505 20,725 3,987 982 1,546 1,983 9,857 13,210 1,134 13,547 7,783 4,411 1,498 331 4,699 1,939 37,468 % of Total 0.0% 0.6% 0.3% 5.0% State MT NC ND NE NH NJ NM NV NY OH OK OR PA RI SC SD TN TX UT VA VT WA WI WV WY Other* Active Permanent Trials Modifications Total 504 7,231 87 467 1,555 11,739 1,302 9,664 17,472 7,702 1,044 4,017 7,746 1,611 3,544 173 3,878 12,025 3,186 9,191 263 7,110 3,421 536 204 1,145 418 7,574 71 548 1,874 12,727 1,252 10,498 15,882 8,769 943 4,389 8,180 2,060 3,868 143 4,227 9,752 3,612 9,938 327 7,721 3,977 632 191 743 922 14,805 158 1,015 3,429 24,466 2,554 20,162 33,354 16,471 1,987 8,406 15,926 3,671 7,412 316 8,105 21,777 6,798 19,129 590 14,831 7,398 1,168 395 1,888 % of Total 0.1% 2.0% 0.0% 0.1% 0.5% 3.2% 0.3% 2.7% 4.4%

Modification Activity by State

168,155 22.3% 10,526 9,636 1,339 2,393 92,754 28,646 2,803 2,043 2,883 39,566 7,457 1,939 2,979 4,062 17,985 24,912 2,053 24,909 13,433 8,457 2,775 1.4% 1.3% 0.2% 0.3% 12.3% 3.8% 0.4% 0.3% 0.4% 5.3% 1.0% 0.3% 0.4% 0.5% 2.4% 3.3% 0.3% 3.3% 1.8% 1.1% 0.4%

HAMP Modifications

2.2% 0.3% 1.1% 2.1% 0.5% 1.0% 0.0% 1.1% 2.9% 0.9% 2.5% 0.1% 2.0% 1.0% 0.2% 0.1% 0.3%
Source: Mortgage Bankers Association. Data is as of 1st Quarter 2010. Note: Includes active trial and permanent modifications from the official HAMP system of record.

5,000 and lower 5,001 – 10,000 10,001 – 20,000

20,001 – 35,000 35,001 and higher

Mortgage Delinquency Rates by State

60+ Day Delinquency Rate 5.0% and lower 5.01% - 10.0% 10.01% - 15.0% 15.01% - 20.0% 20.01% and higher

* Includes Guam, Puerto Rico and the U.S. Virgin Islands.

9

Making Home Affordable Program
Servicer Performance Report Through June 2010

15 Metropolitan Areas With Highest HAMP Activity
Active Trials 24,783 22,974 18,150 17,417 18,241 13,850 12,628 11,448 8,027 7,170 7,282 5,701 5,904 5,624 6,471 Total Permanent HAMP Modifications Activity 24,063 22,365 20,004 20,722 17,380 17,116 13,917 11,771 8,608 8,169 7,848 7,019 6,522 6,638 5,590 48,846 45,339 38,154 38,139 35,621 30,966 26,545 23,219 16,635 15,339 15,130 12,720 12,426 12,262 12,061 % of All HAMP Activity 6.5% 6.0% 5.1% 5.1% 4.7% 4.1% 3.5% 3.1% 2.2% 2.0% 2.0% 1.7% 1.6% 1.6%
1 Bank

Modifications by Investor Type (Large Servicers)

Metropolitan Statistical Area Los Angeles-Long Beach-Santa Ana, CA New York-Northern New JerseyLong Island, NY-NJ-PA Chicago-Naperville-Joliet, IL-IN-WI Riverside-San Bernardino-Ontario, CA Miami-Fort Lauderdale-Pompano Beach, FL Phoenix-Mesa-Scottsdale, AZ Washington-Arlington-Alexandria, DC-VA-MD-WV Atlanta-Sandy Springs-Marietta, GA Las Vegas-Paradise, NV Detroit-Warren-Livonia, MI Orlando-Kissimmee, FL Boston-Cambridge-Quincy, MA-NH Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Sacramento-Arden-ArcadeRoseville, CA San Francisco-Oakland-Fremont, CA

Servicer Bank of America, NA1 NA2

GSE 127,908 54,462 53,599 46,991 16,979 20,272 5,679 11,397 450 1,127 1,200 9,628 1,151 142 5,361 5,680 2 4,207 -60,743 426,978

Private Portfolio 56,313 46,290 16,361 4,473 14,249 7,729 16,286 8,185 16,790 17,871 13,173 4,127 11,605 145 21 192 5,025 264 2,729 3,470 245,298 9,380 17,229 5,617 17,314 2,421 5,587 372 243 2,551 -914 5 -10,906 2,873 590 216 9 -4,772 80,999

Total 193,601 117,981 75,577 68,778 33,649 33,588 22,337 19,825 19,791 18,998 15,287 13,760 12,756 11,193 8,255 6,462 5,243 4,480 2,729 68,985 753,275

JP Morgan Chase CitiMortgage, Inc. OneWest Bank

Wells Fargo Bank, NA 3

GMAC Mortgage, Inc. Ocwen Financial Corporation, Inc. Aurora Loan Services, LLC Select Portfolio Servicing American Home Mortgage Servicing Inc Saxon Mortgage Services Inc. Nationstar Mortgage LLC Litton Loan Servicing LP Wachovia Mortgage, FSB4 US Bank NA PNC Mortgage5 HomEq Servicing Green Tree Servicing LLC Carrington Mortgage Services LLC Remainder of HAMP Servicers Total

1.6%

A complete list of HAMP activity for all MSAs is available at http://www.financialstability.gov/docs/MSA%20HAMP%20Data%20June%202010.pdf

of America, NA includes Bank of America, NA, BAC Home Loans Servicing LP, Home Loans Services and Wilshire Credit Corporation. Morgan Chase Bank, NA includes EMC Mortgage Corporation. 3 Wells Fargo Bank, NA includes a portion of the loans previously included in Wachovia Mortgage, FSB. 4 Wachovia Mortgage, FSB consists of Wachovia Mortgage FSB Pick-a-Payment loans. 5 Formerly National City Bank.
2 J.P.

Note: Figures reflect active trials and permanent modifications.

10

Making Home Affordable Program
Servicer Performance Report Through June 2010

Appendix A: Non-GSE Participants in HAMP
Allstate Mortgage Loans & Investments, Inc. American Eagle Federal Credit Union American Home Mortgage Servicing, Inc AMS Servicing, LLC Aurora Financial Group, Inc. Aurora Loan Services, LLC Bank of America, N.A.1 Bank United Bay Federal Credit Union Bay Gulf Credit Union Bayview Loan Servicing, LLC Carrington Mortgage Services, LLC CCO Mortgage Central Florida Educators Federal Credit Union Central Jersey Federal Credit Union Chase Home Finance, LLC CitiMortgage, Inc. Citizens 1st National Bank Citizens First Wholesale Mortgage Company Community Bank & Trust Company CUC Mortgage Corporation DuPage Credit Union Eaton National Bank & Trust Co Farmers State Bank Fidelity Homestead Savings Bank First Bank First Keystone Bank First National Bank of Grant Park Franklin Credit Management Corporation Fresno County Federal Credit Union Glass City Federal Credit Union GMAC Mortgage, Inc. Golden Plains Credit Union Grafton Suburban Credit Union Great Lakes Credit Union
1

Greater Nevada Mortgage Services Green Tree Servicing LLC Hartford Savings Bank Hillsdale County National Bank HomEq Servicing HomeStar Bank & Financial Services Horicon Bank Horizon Bank, NA Iberiabank IBM Southeast Employees' Federal Credit Union IC Federal Credit Union Idaho Housing and Finance Association iServe Residential Lending LLC iServe Servicing Inc. J.P.Morgan Chase Bank, NA2 Lake City Bank Lake National Bank Litton Loan Servicing Los Alamos National Bank Marix Servicing, LLC Metropolitan National Bank Midwest Bank & Trust Co.  Mission Federal Credit Union MorEquity, Inc. Mortgage Center, LLC Mortgage Clearing Corporation National City Bank Nationstar Mortgage LLC Navy Federal Credit Union Oakland Municipal Credit Union Ocwen Financial Corporation, Inc. OneWest Bank ORNL Federal Credit Union Park View Federal Savings Bank PennyMac Loan Services, LLC

PNC Bank, National Association Purdue Employees Federal Credit Union QLending, Inc. Quantum Servicing Corporation Residential Credit Solutions RG Mortgage Corporation Roebling Bank RoundPoint Mortgage Servicing Corporation Saxon Mortgage Services, Inc. Schools Financial Credit Union SEFCU Select Portfolio Servicing Servis One Inc., dba BSI Financial Services, Inc. ShoreBank Silver State Schools Credit Union Sound Community Bank Specialized Loan Servicing, LLC Spirit of Alaska Federal Credit Union Stanford Federal Credit Union Sterling Savings Bank Technology Credit Union Tempe Schools Credit Union The Golden 1 Credit Union U.S. Bank National Association United Bank of Georgia United Bank Mortgage Corporation Urban Trust Bank Vantium Capital, Inc. Verity Credit Union Vist Financial Corp. Wells Fargo Bank, NA3 Wealthbridge Mortgage Corp.  Wescom Central Credit Union Yadkin Valley Bank

Bank of America, NA includes Bank of America, NA, BAC Home Loans Servicing LP, Home Loan Services and Wilshire Credit Corporation. 2 J.P. Morgan Chase Bank, NA includes EMC Mortgage Corporation. 3 Wells Fargo Bank, NA includes Wachovia Mortgage FSB and Wachovia Bank NA.

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Making Home Affordable Program
Servicer Performance Report Through June 2010

Appendix B: Description of Compliance Activities
Note: Servicer‐specific compliance data will be reported  quarterly. Description of Compliance Activities Freddie Mac, serving as Compliance Agent for Treasury’s  Home Affordable Modification Program (HAMP), has  created a separate division known as Making Home  Affordable ‐ Compliance (MHA‐C).  Using a risk‐based  approach, MHA‐C conducts a number of different types of  compliance activities to assess servicer compliance with  HAMP guidelines, as described below. On Site Reviews:  Readiness & Governance – A review  performed by MHA‐C to assess the servicer’s preparedness  for complying with new/future HAMP requirements, or to  research a trend or potential implementation risk.  Reviews  are performed as needed, determined by frequency of new  program additions. NPV – A review conducted by MHA‐C to determine the  servicer’s adherence to the HAMP NPV guidelines.  For  those servicers that have elected to recode the NPV model  into their own systems (recoders), the testing process is  designed to ensure the servicer’s NPV model is accurately  calculating NPV and that the model usage is consistent with  directives.  At a minimum, recoders are subject to quarterly  off‐site testing and semi‐annual for on‐site reviews.  For  servicers using the Treasury NPV Web Portal, reviews of  data submissions are performed on a monthly basis. On Site Reviews:  Implementation – A review conducted by  MHA‐C covering the servicer’s overall execution of the  HAMP program.  Areas covered include, among other  things, solicitation, eligibility, underwriting, document  management, payment processing, reporting, and  governance.  Reviews are performed at a minimum for  larger servicers on a semi‐annual schedule and for smaller  servicers on an annual schedule. Loan File Review – A review performed by MHA‐C of a  servicer’s non‐performing loan portfolio primarily to assess  completeness of relevant documentation and appropriate  loan modification decisioning.  This includes reviews of  loans which have successfully converted to a permanent  modification to ensure they meet the HAMP guidelines, as  well as loans that have not been offered HAMP  modifications to ensure that the exclusion was appropriate  (“Second Look”).  Larger servicers are on an alternating  permanent modifications and Second Look monthly loan  file review cycle.  These Loan File reviews consist of a  statistical sample (typically 100‐ 150 loan files per larger  servicer).  Smaller servicers are also statistically sampled on  a quarterly or semi‐annual cycle. Incentive Payments – A review performed by MHA‐C to  determine the accuracy and validity of borrower and  investor incentive payments, and to assess whether  borrower payments are appropriately allocated to  borrowers’ loan principal in accordance with HAMP  guidelines. They are performed at a minimum annually on  the top 21 servicers. Areas of Compliance Focus Based on the results of MHA‐C’s reviews to date and  anticipated risks to the program, HAMP compliance efforts  will remain focused on the following general areas: Borrower Solicitation – Servicers are required to solicit  eligible borrowers without delay and not conduct  foreclosure proceedings until such borrowers are  appropriately considered for HAMP.  It is critical that  servicers not take actions that would lead to borrowers  becoming displaced from their home without being given  proper consideration for a loan modification or other  foreclosure alternative.  Servicers should ensure that their  operating protocols identify all populations of eligible  borrowers. Servicers should ensure that their operating  procedures meet or exceed the minimum requirements of  Supplemental Directive 10‐02 related to borrower  solicitation and contact.  Underwriting Documentation – Servicers must retain a  complete and consistent set of documentation for all loans  considered for HAMP, including evidence supporting  borrower income.  In addition, appropriate documentation  must support all decisions (e.g., denials, permanent  modifications, etc.) made by the servicer.  Servicers’ quality  assurance departments are required, and expected, to play  an active role in the ongoing evaluation of the servicers’  underwriting process and related documentation. NPV model usage – Servicers are required to utilize net  present value (NPV) models that produce valid and  accurate results.  In order to eliminate adverse borrower  outcomes from negative NPV results, servicers must hold  required inputs constant between NPV tests.  Servicers  should regularly test their recoded NPV models against the  Treasury NPV Portal to identify any anomalous or  inaccurate results. Document processing and control – Servicers must have  policies and procedures that clearly describe document  acquisition, tracking, and retention practices.  Any  potential for misplaced or lost documents should  immediately be addressed so that timely decisions can be  made for borrowers eligible for assistance under HAMP.  In  addition, servicers should ensure that proper training and  education is provided for all parties involved in the  document management life cycle, including those with  responsibility for the servicers’ document management  technology. IR2 Data Maintenance – Servicers are required to report  timely and accurate information to the Program  Administrator’s IR2 data base.  This information serves not  only to measure HAMP’s progress, but also as the  authoritative source for incentive payments due to  borrowers, servicers, and investors.  Servicers should be  conducting ongoing reviews of their reported data and be  prepared to explain circumstances where data is either  inconsistent or missing. Governance – Servicers should ensure that a sound  governance process exists for HAMP.  An appropriate  governance model begins with senior executive  accountability and extends to formal policies and  procedures for HAMP‐related activities, including the  development of comprehensive fraud prevention, fair  lending, and quality assurance programs.

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Case 4:10-cv-10311-FDS Document 43

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Exhibit 2

Case 4:10-cv-10311-FDS Document 43

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Case 4:10-cv-10311-FDS Document 43

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Case 4:10-cv-10311-FDS Document 43

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