ecf 01 - wf2 complaint with exhs a-e

UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

Joseph MOQUIN; for himself and on behalf of all others similarly situated;

) )

) CASE NO.: ____________ Plaintiff; ) ) v. ) VERIFIED COMPLAINT

Class Action ) WELLS FARGO BANK, NA d/b/a AMERICA’S SERVICING COMPANY;

) ) )

Defendant. ) )

INTRODUCTION

1. Plaintiff Joseph Moquin, through this statewide class action, seeks redress for

defendant’s practice of collecting defaulted mortgage debt by ignoring federal guidelines and

regulations applicable to their loans and instead offering them the “opportunity to retain [their]

homes” by signing up for inappropriate short-term forbearance agreements requiring oppressive

payments, under the guise that if they made the payments they would receive loan modifications.

2. After the plaintiff and class members fell behind on their payments, Wells Fargo

discussed their situation with them over the phone and requested current financial information.

It then sent each of them a forbearance-to-modification offer package “based on” its assessment.

3. The packages were designed to give them the false impression that Wells Fargo,

having assessed their situation, was willing to modify their loans provided they made several

large payments first and that its subsequent review showed their income and financial situation

had not changed in the meantime.

4. Defendant’s method of servicing defaulted mortgage loans was a creative way to

generate maximum servicing profits. But it was also a deceptive and unlawful way to do so.

Case 1:12-cv-00016 Document 1 Filed 01/12/12 of 49

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CLAIMS ASSERTED

5. Plaintiff asserts the following claims arising out of defendant’s conduct:

a. Count I. Violation of the federal Fair Debt Collection Practices Act.

b. Count II. Violation of NH’s Unfair Debt Collection Act.

c. Count III. Breach of Implied Covenant of Good Faith and Fair Dealing.

d. Count IV. Promissory Estoppel.

PARTIES

6. Plaintiff Joseph Moquin resides at 8 Draycoach Lane, Merrimack, NH 03054.

7. Defendant Wells Fargo Bank, NA is a national bank with its main office at 420

Montgomery Street, San Francisco, CA 94104. America’s Servicing Company (“ASC”) is a

division of Wells Fargo Home Mortgage Company, which itself is a division of Wells Fargo

Bank, NA. ASC does not service loans made or held by Wells Fargo. Instead, ASC is paid by

other creditors, to service their loans. Wells Fargo describes ASC thusly:1

1 See https://www.wellsfargo.com!mortgage/manage-accountlamericas-servicing-company. For instance,

ASC services plaintiff’s loan for HSBC Bank USA, NA, as Trustee for Citigroup Mortgage Loan Trust, Inc. Asset-Backed Pass Through Certificates Series 2005-SHL1 (“Citigroup”).


https://www.wellsfargo.com!mortgage/manage-accountlamericas-servicing-company�

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JURISDICTION AND VENUE

8. The Court has:

a. Diversity jurisdiction under 28 U.S.C. §1332, as the action is between

parties that are citizens of different states and the amount in controversy exceeds $75,000;2

b. Federal question jurisdiction under 28 U.S.C. §1331, as it presents a claim

under the Fair Debt Collection Practices Act (15 U.S.C. §1692, et seq.- the “FDCPA”); and

c. Supplemental jurisdiction under to 28 U.S.C. § 1367.

9. Moreover, this court has jurisdiction over this action pursuant to 28 U.S.C.

§1332(d), in that it is brought as a putative class action in which the matter in controversy

exceeds the sum or value of $5,000,000, exclusive of interest and costs, and at least one member

of the class of plaintiff is a citizen of a State different from any defendant.

10. Venue is proper in this Court pursuant to 28 U.S.C. §1391(b) inasmuch as the

unlawful practices are alleged to have been committed in this district, defendants regularly

conduct business in this district, and the named plaintiff resides in this district.

BACKGROUND

I. The Nation’s Mortgage Mess

11. Most home loans are no longer made and held by our local, trusted banks.

Instead, most are made by large national banks and their countless affiliates, and then graded,

batched, collateralized, pooled, securitized and swapped, by and between faceless funds and

trusts with names that sound more like serial numbers. These Wall Street creations then

outsource the loan “servicing” function to a “division” of one large national bank or another.

But the “servicer” of the loan is rarely a division of the same national bank that made the loan in

2 For diversity jurisdiction purposes, a national bank is a citizen of the state designated as its main office

on its organization certificate. Wachovia Bank, NA v. Schmidt, 546 U.S. 303, 306 (2006).


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the first place. So, through these “divisions”–which have been created mainly so that state

consumer credit laws will not apply to their conduct–the biggest national banks “service” each

others’ mortgage loans.

12. These national banks have also managed to free themselves from longstanding

barriers prohibiting their participation in the high-stakes, hardly-supervised financial services

industry. It is not news that, once freed, they swiftly pushed the envelope much further than any

of them would have dreamed possible—or considered right—a generation ago.

13. As a result of their cavalier risk-taking and their sharp lending practices, we are

living through a period of historic levels of foreclosures. The foreclosure rate in 2010 was more

than three times what it was in 1933, at the height of the Great Depression. The crisis has

impacted our entire country and most of the world. As the Chairman of the Federal Reserve

Board has noted, the crisis has threatened our national economy. Nor is the foreclosure crisis

anywhere near over.3

14. The conduct of these national banks led to an economic crisis, which led to an

unemployment crisis, which led to a loan default crisis. We are in the midst of this loan default

crisis now. Massive numbers of homeowners are having problems with their mortgage servicers.

Sadly (for them), deregulation of the financial services industry, court decisions preempting the

applicability of state consumer credit laws to the transactions engaged in by the big banks and

related entities, the strident repeal of various state consumer protection laws and the gutting of

others by the extraction of any express or implied private right of action, the downsizing of state

3 See Eric Tymoigne, “Securitization, Deregulation, Economic Stability, and Financial Crisis,” Working

Paper No. 573.2 at 9, Figure 30 available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1458413 (citing a Credit Suisse study showing monthly mortgage rate resets).


http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1458413�

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regulatory agencies– all of this has left these financially-strapped homeowners without an

effective means of protecting themselves from the rampant servicing abuses they now suffer at

the hands of these once-reputable national banks and their servicing “divisions.” It is a mess.

II. New Hampshire’s Mortgage Mess

15. We have a big mortgage mess here. The number of New Hampshire properties

with foreclosure filings in 2008 was 100% higher than in 2007 and 200% higher than in 2006 – a

doubling in only two years. More recently, 3,467 New Hampshire families received foreclosure

notices in 2009—nearly ten families a day—and in 2010 more than ten families received

foreclosure notices each day. NH Business Review, December 1, 2010.

16. Thousands of New Hampshire homeowners are behind in their monthly payments

and cannot locate a contact person at all, or on a consistent enough basis to engage in any

constructive loss mitigation discussions. Even those who can afford regular payments again

continue to live in constant dread of foreclosure, due to the servicer’s impenetrable maze.4

17. These borrowers have no legal recourse for their servicer’s unfair and deceptive

conduct through the courts. This is because a few years ago, our Legislature, under heavy

lobbying pressure from the banking industry, amended our state’s Consumer Protection Act

(RSA 358A- the “CPA”) such that borrowers who are being subjected to unfair and deceptive

conduct by these servicer “divisions” cannot seek legal redress for themselves. The Legislature

handed over exclusive authority to act under the CPA to the Banking Department.

4 In an October 13, 2010, the Banking Department issued a statement reading, in part, “Errors in the

foreclosure process of major mortgage servicers have been identified, said Deputy Commissioner Fleury. I am deeply concerned about these allegations and how they may impact borrowers in New Hampshire. . . .” At least 100 or more such homeowners are within the Subclass defined below.


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18. Thus, the Banking Department now has the exclusive authority to assert CPA

claims on behalf of borrowers victimized by the lenders and servicers that it regulates.

19. The Legislature reasoned that borrowers exposed to servicing abuses would

simply notify the Banking Department, and then it, apparently through the Attorney General’s

Office, would then assert the CPA claims on behalf of either the individual complainant, or on

behalf of him or her and also on behalf of all of the other New Hampshire borrowers who had

been subjected to the complained-of conduct. However, the Legislature neglected to give these

agencies the funding necessary to even begin to meet this mandate. As a result, all the Banking

Department can do to address this mortgage mess, given its untenable budget constraints, is to

advocate on behalf of just those few homeowners who actually knew to file a complaint with it.

But this is just a small portion of the state’s affected borrowers.

20. Moreover, the Banking Department only has the authority to assert CPA claims

for residents who have complain to it about the unfair and deceptive conduct of the banks that it

regulates– i.e., our state banks. The Legislature—perhaps unintentionally—stripped the Banking

Department of the authority to assert CPA claims for residents who have complained to it about

conduct engaged in by any of the large, out-of-state national banks through their servicing

divisions. Instead, the Banking Department can refer the New Hampshire resident’s complaint

to the OCC in Washington, DC. Upon information and belief, the OCC has yet to obtain redress

for any New Hampshire resident whose complaint was forwarded to it.

21. Of course, it is these large servicing divisions, and not our local banks, that are

causing nearly all of the trouble here. Thus, when it comes to mortgage servicing, New

Hampshire has gone and made itself the Wild West. And disarmed its sheriff, to boot.


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22. Caught in this pickle, perhaps the best the Banking Department can do is to sit

back and hope that New Hampshire borrowers stuck in this mortgage mess will eventually obtain

benefits from any deal that a group of out-of-state Attorneys General are trying to put together

with the voluntary “cooperation” of some of these large servicers. The problem is that this sort

of deal might release the meritorious civil claims of the state’s most vulnerable homeowners for

inadequate consideration.5

23. In any event, in the meantime, a substantial number of New Hampshire families—

most of whom are unknown to the Banking Department because they have not filed formal

complaints—are living each day under the continual specter of losing their homes.

III. The Government’s Efforts To Mitigate Losses Arising Out Of The Mortgage Mess

A. The Home Affordable Modification Program (“HAMP”)6

24. Congress passed the Emergency Economic Stabilization Act of 2008 on October

3, 2008 and amended it with the American Recovery and Reinvestment Act of 2009 on February

17, 2009 (together, the “Act”). 12 U.S.C.A. §5201 et. seq. (2009). The purpose of the Act is to

grant the Secretary of the Treasury the authority to restore liquidity and stability to the financial

system, and ensure that such authority is used in a manner that “protects home values” and

“preserves homeownership.”12 U.S.C.A. §5201.

5 See, “Top Law Enforcement Officials in Calif., Nevada to Share Info in Mortgage Fraud

Investigations,” available at http://www.washingtonpost.com/business/top-law-enforcement-officials-in-calif-nevada-to-share-info-in-mortgage-fraud-investigations/2011/12/06/gIQARJhHaO_story.html, last visited 12/10/11 (noting that talks between the major banks and the states have been “dragging on for more than a year” and that the Attorneys General for New York, Delaware, Nevada and Massachusetts have each “sued five major banks earlier this month [December, 2011] over deceptive foreclosure practices”). As of January, 2012, seven states had abandoned these widely-criticized “mortgage settlement” discussions. Whether a fair and reasonable nationwide settlement–or indeed any nationwide settlement–is still possible, is unclear. Powerful multinational financial corporations are generally reluctant to volunteer meaningful concessions unless they perceive their position as particularly perilous. These servicers don’t.

6 All of the class members’ loans are subject to the HARP policies and procedures.


http://www.washingtonpost.com/business/top-law-enforcement-officials-in-calif-nevada-to-share-info-in-mortgage-fraud-investigations/2011/12/06/gIQARJhHaO_story.html�

http://www.washingtonpost.com/business/top-law-enforcement-officials-in-calif-nevada-to-share-info-in-mortgage-fraud-investigations/2011/12/06/gIQARJhHaO_story.html�

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25. The Act grants the Secretary of the Treasury the authority to establish the

Troubled Asset Relief Program, or TARP. 12 U.S.C. § 5211. Under TARP, the Secretary may

purchase or make commitments to purchase troubled assets from financial institutions. Id.

Congress allocated up to $700 billion to the United States Department of the Treasury for TARP.

12 U.S.C. § 5225. In exercising its authority to administer TARP, the Act mandates that the

Secretary “shall” take into consideration the “need to help families keep their homes and to

stabilize communities.” 12 U.S.C. § 5213(3).

26. The Act further mandates, with regard to any assets acquired by the Secretary that

are backed by residential real estate, that the Secretary “shall implement a plan that seeks to

maximize assistance for homeowners” and use the Secretary’s authority over servicers to

encourage them to take advantage of programs to “minimize foreclosures.” 12 U.S.C.A. §5219.

27. The Act grants authority to the Secretary of the Treasury to use credit

enhancement and loan guarantees to “facilitate loan modifications to prevent avoidable

foreclosures,” id. [emphasis added], and imposes parallel mandates to implement plans to

maximize assistance to homeowners and to minimize foreclosures. 12 U.S.C.A. §5220.

28. On February 18, 2009, pursuant to their authority under the Act, the Treasury

Secretary and the Director of the Federal Housing Finance Agency announced the Making Home

Affordable program. The Making Home Affordable program consists of two subprograms. The

first subprogram relates to the creation of refinancing products for individuals with minimal or

negative equity in their home, and is now known as the Home Affordable Refinance Program, or

HARP. The second subprogram relates to the creation and implementation of a uniform loan

modification protocol, and is now know as the Home Affordable Modification Program, or

HAMP. It is this subprogram that is at issue in this case. HAMP is funded by the federal


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government, primarily with TARP funds. The Treasury Department has allocated at least $75

billion to HAMP, of which at least $50 billion is TARP money.

29. Under HAMP, the federal government incentivizes participating servicers to enter

into agreements with struggling homeowners that will make adjustments to existing mortgage

obligations in order to make the monthly payments more affordable. Servicers receive $1000

for each HAMP modification.

30. The industry entities that perform the actual interface with borrowers – including

such tasks as payment processing, escrow maintenance, loss mitigation and foreclosure – are

known as “servicers.” Servicers typically act as the agents of the entities that hold mortgage

loans. America’s Servicing Company is a servicer operated by Wells Fargo Bank, NA and its

actions described herein were undertaken as agents for the entities that hold mortgage loans.

31. Should a servicer elect to participate in HAMP, it executes a Servicer

Participation Agreement (“SPA”) with the federal government.

32. On April 13, 2009, Michael J. Heid of Wells Fargo executed an SPA, thereby

making Wells Fargo a participating servicer in HAMP. A copy of this SPA is attached and

incorporated as Exh . ibit A

33. The SPA executed by Mr. Heid incorporates all “guidelines,” “procedures,” and

“supplemental documentation, instructions, bulletins, frequently asked questions, letters,

directives, or other communications” issued by the Treasury, Fannie Mae or Freddie Mac in

connection with the duties of Participating Servicers. These documents together are known as

the “Program Documentation” (SPA 1.B.), and are incorporated by reference herein.

34. The SPA mandates that a Participating Servicer “shall perform” the activities

described in the Program Documentation “for all mortgage loans it services.” (SPA 1.A., 2.A.)


https://ecf.nhd.uscourts.gov/doc1/11711052726

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35. The Program Documentation requires Participating Servicers to evaluate all loans,

which are 60 or more days delinquent, for HAMP modifications. (SD 09-01 p. 4.) In addition, if

a borrower contacts a Participating Servicer regarding a HAMP modification, the Participating

Servicer must collect income and hardship information to determine if HAMP is appropriate for

the borrower.

36. A HAMP Modification consists of two stages. First, a Participating Servicer is

required to gather information and, if appropriate, offer the homeowner a Trial Period Plan

(“TPP”). The TPP consists of a three-month period in which the homeowner makes mortgage

payments based on a formula that uses the initial financial information provided.

37. Wells Fargo offers TPPs to eligible homeowners by way of a TPP Agreement,

which describes the homeowner’s duties and obligations under the plan and promises a

permanent HAMP modification for those homeowners that execute the agreement and fulfill the

documentation and payment requirements. If the homeowner executes the TPP Agreement,

complies with all documentation requirements and makes all three TPP monthly payments, the

second stage of the HAMP process is triggered, in which the homeowner is offered a permanent

modification.

38. Wells Fargo has routinely failed to live up to its end of the TPP Agreement and

offer permanent modifications to borrowers. In January 2010, the U.S. Treasury reported that

Wells Fargo’s parent company had 350,169 HAMP-eligible loans in its portfolio. Of these

loans, just 8,424 resulted in permanent modifications (approximately 2%) even though many

more homeowners had made the payments and submitted the documentation required by the TPP

Agreement. The Treasury Report is attached hereto as Exh . [See p. 5 for these numbers.] ibit B



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39. By failing to live up to the TPP Agreement and convert TPPs into permanent

modifications, Wells Fargo is not only leaving borrowers in limbo, wondering if their homes can

be saved; it is also preventing them from pursuing other avenues of resolution, including using

the money they are putting toward TPP payments to fund bankruptcy plans, relocation costs,

short sales or other means of curing their default.

B. The FHA’s Loss Mitigation Program7

40. In 1934, Congress created the Federal Housing Administration (“FHA”), which is

now the largest mortgage insurer in the world. In 1965, FHA became a part of the Department of

Housing and Urban Development (HUD)’s Office of Housing. FHA administers the Single

Family Housing Program, which provides mortgage insurance on loans to purchase new homes

or refinance existing homes.

41. The purpose of the FHA’s single family homeowner mortgage program is to make

it possible for many American families of modest means to own their own homes. The statutory

and regulatory scheme provides mortgage insurance and other incentives to lenders to finance

homeowner loans. In exchange for these valuable incentives, FHA lenders are required to make

numerous efforts to help borrowers who experience a default avoid foreclosure.

42. The FHA Insured Mortgage Program provides insurance to cover losses incurred

by the mortgagee in the event of default and foreclosure. A mortgagee which has a loss due to a

foreclosure can make a claim to HUD and become whole from insurance proceeds. Because of

these incentives and insurance, only mortgagees approved by HUD as “responsible and able to

service the mortgage properly” may originate or hold HUD-FHA mortgages. 12 U.S.C.

§1709(b). Wells Fargo is an FHA-approved mortgagee/servicer.

7 Some of the class members’ loans are subject to the FHA’s policies and procedures.


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43. The National Housing Act provides that “[up]on default or imminent default

. . . of any mortgage insured under this subchapter, mortgagees shall engage in loss mitigation

actions for the purpose of providing an alternative to foreclosure . . ..” 12 U.S.C. §1715u.

Pursuant to its authority under the National Housing Act, HUD has issued regulations,

handbooks, mortgagee letters, and other guidance in regard to servicing and foreclosing on

mortgages that the agency insures.

44. The comprehensive loss mitigation program to avoid foreclosure is called FHA’s

Loss Mitigation Program. HUD has issued regulations to ensure that the mortgagee takes steps

to avoid unnecessary foreclosures of HUD-FHA loans and loss to the government. 24 CFR

§§203.500 - 681. Under 24 CFR §203.501, a lender “must consider the comparative effects of

their elective servicing actions, and must take those appropriate actions which can reasonably be

expected to generate the smallest financial loss to the [Housing] Department.” The regulation

then lists the specific options that the lender must consider to minimize loss, which include, but

are not limited to, deeds in lieu of foreclosure, pre-foreclosure sales, partial claims, assumptions,

special forbearance, and recasting of mortgages.

45. 24 CFR §203.602 specifies the notices that a borrower must receive from the

lender if the borrower becomes delinquent on the mortgage loan. 24 CFR §203.604 provides

that, “[t]he mortgagee must have a face-to-face interview with the mortgagor, or make a

reasonable effort to arrange such a meeting, before three full monthly installments due on the

mortgage are unpaid.” The regulation describes actions that amount to a “reasonable effort.”

These actions include a certified letter to the borrower and one trip to the borrower’s home.

46. CFR §203.605 requires lenders to review the loss mitigation techniques listed in

24 CFR §203.501 on a periodic basis before the loan falls four months behind. §203.606 further


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provides that before initiating foreclosure, the lender must ensure that all servicing requirements

have been met. In addition to the regulations, HUD has promulgated handbooks on loss

mitigation, including HUD Handbook 4330.1, “Administration of Insured Home Mortgages.”8

47. Moreover, HUD issues mortgagee letters that address specific loan servicing

topics. Mortgagee Letter 2000-05 provides further details for servicers considering borrower

eligibility for loss mitigation. HUD described its rules for loan modifications in Mortgagee

Letter 2009-35, which amended its previous policy. The policy allows for reduction of interest

rate, and it does not exclude certain borrowers based on the number of months that they are

behind. Finally, through Mortgagee Letter 2009-23, HUD released its version of the Home

Affordable Modification Program (FHA-HAMP).

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48. HUD issued its FHA-HAMP guidelines pursuant to the “Helping Families Save

Their Homes Act of 2009.” P.L. 111-22 (May 20, 2009). The goal of the program is to provide

homeowners with a greater opportunity to reduce their mortgage payments to a sustainable level.

49. For homeowners who qualify, FHA-HAMP results in a monthly house payment

of 31% of the family’s gross income. According to the mortgagee letter, FHA-HAMP became a

mandatory loss mitigation tool for review on August 15, 2009.

50. In addition to their place in the relevant regulatory scheme, the regulations

promulgated by HUD are specifically acknowledged as affecting the construction and

interpretation of the FHA-insured Note and Mortgage uniform instruments, such as those signed

by the plaintiff. ¶6 of the FHA Note states that “[i]n many circumstances regulations issued by

the Secretary [of HUD] will limit Lender’s rights to require immediate payment in full in the 8 Available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh/4330.1. 9 HUD’s mortgage letters are available at http://www.hud.gov/offices/adm/hudclips/letters/mortgagee.


http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh/4330.1�

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee�

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case of payment defaults. This Note does not authorize acceleration when not permitted by HUD

regulations.” Exh is a copy of Mr. Moquin’s FHA Note. ¶9 of the FHA Mortgage states

that “[i]n many circumstances regulations issued by the Secretary [of HUD] will limit Lender’s

rights, in the case of payment defaults, to require immediate payment in full and foreclose if not

paid. This Security Instrument does not authorize acceleration or foreclosure if not permitted by

regulations of the Secretary.”

ibit C

Exh is a copy of Mr. Moquin’s FHA Mortgage. ibit D

51. The purpose of the above described regulatory scheme is to give financially

distressed homeowners with HUD-FHA loans an opportunity to avoid foreclosure and retain

their homes through loss mitigation initiatives.

52. HUD delegates to its approved mortgagee/servicers the authority for determining

whether a borrower is eligible for foreclosure alternatives. The servicers ascertain the

homeowner’s financial situation and collect the relevant documents, and then perform the

analysis pursuant to HUD’s rules and regulations.

53. Each year, HUD-approved mortgagee/servicers must affirm that they are

following the rules and regulations described above. They must state: “I certify that the lender

complied with and agreed to continue to comply with HUD-FHA regulations, handbooks,

Mortgagee Letters, Title I Letters, policies, and terms of any agreements entered into with the

Department.” See, Mortgagee Letter 2009-25 (at attachment).

54. Wells Fargo is a HUD-approved FHA mortgagee/servicer. By failing to comply

with its FHA obligations to assess and take appropriate action(s) most likely to mitigate losses

and avoid foreclosures, including offering loan modifications where most appropriate, Wells

Fargo is both a) leaving homeowners in limbo, wondering if their home can be saved; and b)

preventing homeowners from pursuing other avenues of resolution, including using the money




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they are sending in to comply with defendant’s misleading special forbearance plan (“SFA”

below) to fund bankruptcy plans, relocation costs, short sales or other means of curing their

default.

IV. Servicers Prefer Not To Provide Permanent Loan Modifications

55. As outlined above, the federal government’s response to these high rates of

default and foreclosure was to require these large “servicer” divisions to fully consider whether

they can modify, or restructure, the loans, to create a sustainable plan that allows the homeowner

to avoid foreclosure. However, its efforts have failed to promote modifications in sufficient

numbers to ease the crisis, and recent government data suggests that the number of loan

modifications in the country is declining, while serious delinquencies remain near all-time highs.

56. Indeed, when a borrower makes continued payments under a sustainable loan

modification, the lender can save money. However, it is the loan servicer, not the lender itself,

that decides what action to take when a borrower falls behind in payments. Because of the

servicer’s incentive structure, both foreclosures, as well as short-term forbearance plans like the

ones in issue here, continue to outpace sustainable loan modifications. This is because the

servicer will make much more money by either foreclosing or providing a short-term forbearance

plan that requires large monthly payments, than it will make by providing the borrower a

permanent loan modification.

57. A servicer who is blindly committed to its bottom line will string along the

distressed borrower for as long as possible, before ultimately deciding upon whether to foreclose

or provide a permanent modification. As one commentator recently explained:

For servicers, the true sweet spot lies in stretching out a delinquency without either a modification or a foreclosure. . . . [D]efault-related fees can add significantly to a servicer’s bottom line, and the longer a homeowner is in default, the larger those fees can be.


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The netherworld status between a foreclosure and a modification also boosts the monthly servicing fee . . . [and] foreclosure or modification, [but] not delinquency by itself, usually triggers loss recognition in the pool under the accounting rules. Waiting to foreclose or modify postpones the day of reckoning for a servicer. How long a delay in the foreclosure will be profitable depends on the interplay of the servicer’s ability to charge additional fees during the foreclosure, the servicer’s financing costs for advances, and the time limits for proceeding through foreclosure imposed by the investor contracts and credit rating agencies. If the servicer can juggle the time limits—perhaps by offering short-term workout agreements—the prospect of increased fees may outweigh interim interest costs. Once the servicer’s financing costs outweigh the incremental fees that can be extracted by maintaining a borrower in delinquency, the servicer will then choose the faster option– either a foreclosure or a modification.10

10 Diane E. Thompson, Foreclosing Modifications: How Servicer Incentives Discourage Loan

Modifications, 86 Wash. L. Rev. 755, 772 (2011) (footnotes omitted). Much of this section is derived from her article.


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FACTS CONCERNING THE PLAINTIFF AND HIS TRANSACTION

Plaintiff’s Loan

58. On June 16, 2001, Plaintiff Joseph Moquin borrowed $228,933 from

Homeowners Assistance Corp. (“Homeowners” below). The loan was used to purchase a single

family home in Merrimack, for he and his wife to reside in. The loan is evidenced by a 30-year

fixed rate note at 7% interest, with monthly payments of $702.48. Repayment of the note is

secured by a mortgage of even date which he and his wife gave to Homeowners.

59. Homeowners later assigned the loan to Wells Fargo Home Mortgage, Inc., which

in 2003 assigned it to HUD, which immediately assigned it to a Wall Street venture titled “SFJV-

2002-1, LLC,” which, in October, 2009 assigned it to Citigroup. ASC has been the loan servicer

at all times relevant to this action.11

Plaintiff’s Default

60. Mr. Moquin is capable, industrious and resourceful. Moreover, Mr. Moquin is

conservative when it comes to his family’s finances. Unlike many homeowners, he is not

“underwater” on his mortgage. Through the years, he never refinanced his original mortgage to

tap the equity he had built up in his home over the years.

61. Employment-wise, Mr. Moquin is a self-starter who prefers to be busy and

productive. In 2001, after many years in his chosen field, he and a partner started their own

technical consulting/staff augmentation company, which they operated successfully for several

years. In 2007, he had the opportunity to start a similar company. Although his new company

got off to a great start, the slowly-unfolding economic crisis—and the related falloff in hiring—

11 Wells Fargo, through its ASC division, likewise services all of the other class members’ loans for

Citigroup and various other mortgagees whose loan portfolios are nominally held by various trusts and other securitization-related entities and vehicles.


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managed to effectively suffocate his hiring-dependent company by the middle of 2008. His

income dropped all the way down from an average of over $100k in each of the several previous

years, to $0 in 2009. Though he continued to work tirelessly to ignite his business, the economy

was dead during that period.

62. Mr. Moquin acted diligently to find new employment. Toward the end of 2009,

Mr. Moquin began scrambling to land a paying job- any paying job. In around December,

2009, he gratefully accepted a job offer paying just $29k annually. Unfortunately, his new

employer was likewise affected by the economic crisis. In January, 2010, the company had to

ask Mr. Moquin to forego his modest salary altogether, and to work on the prospect of

commissions alone. Mr. Moquin, desirous of providing food and shelter to his family, again

scrambled to find employment.

63. Mr. Moquin is fully employed again. In February, 2010, he secured his current

position. He has been there for nearly two years now, and he earns enough to meet all of his

current obligations. There is absolutely no reason why Mr. Moquin should still be in danger of

losing his home—the home that he and his family have resided in, and that he has made the vast

majority of payments on—for more than ten years.

Defendant Strings The Plaintiff Along

64. As a borrower with a mortgage insured by the FHA, plaintiff Joseph Moquin is

intended to receive the benefits of federal regulations comprising FHA Loss Mitigation

Program. Among other things, this program sets out the foreclosure alternatives available to

borrowers, how often a lender must consider these options, and even the manner in which the

lender must contact the borrowers. These regulations are relevant in assessing the defendant’s

contractual performance under the FHA’s uniform documents (its note and mortgage forms).


19

65. Mr. Moquin is eligible for foreclosure alternatives under the FHA Loss Mitigation

Program and would be able to avoid foreclosure with appropriate assistance. However, Wells

Fargo did not and does not comply with federal regulations and contractual terms regarding

foreclosure alternatives. Wells Fargo has made and continues to make adverse and erroneous

decisions on these foreclosure alternatives, and as a result of its conduct Mr. Moquin has been

in a constant state of distress over whether he will be able to save his family’s home from

foreclosure and, if so, how.

66. As explained above, Mr. Moquin had no income during 2009. Nonetheless, he

made mortgage payments whenever he could, by withdrawing funds from the family’s savings

account, and by borrowing from relatives. However, by October he was behind by four months.

67. Mr. Moquin had heard about the Making Home Affordable Program, so in the fall

of 2009 he contacted the program. The specialist assigned to him told him that he qualified for

assistance and that he should let his lender know this. He promptly contacted defendant,

explained his situation and provided all of the financial information and documents it requested,

so that it could consider loss mitigation strategies.

–Defendant’s fi rst loss mitigation action

68. In about October, 2009, defendant sent Mr. Moquin a temporary loan

modification plan for him to sign, which provided for a lower interest rate and a lower monthly

payment. This plan is designed to show that the borrower is able to make somewhat reduced

monthly mortgage payment. If the borrower makes three of the new monthly payments on time,

he has successfully completed the temporary modification plan and he or she qualifies for a

permanent loan modification. This plan is appropriate for borrowers who have fallen behind

because, for example, they simply do not have enough income to make the regular monthly


20

payment, or because an unanticipated, non-recurring expense such as a large medical bill has

thrown off their monthly budget. But because it does require the borrower to make a monthly

payment for three consecutive months, a temporary modification plan is not appropriate for a

borrower who has fallen behind because he has become unemployed. This borrower cannot be

expected to make three consecutive monthly payments, even if the amount of the payment has

been somewhat reduced, until he obtains regular employment again.

69. Defendant sent plaintiff the temporary modification plan without first reviewing

his situation and choosing the appropriate action to take. Prior to taking any action, defendant

should have taken into account plaintiff’s temporary unemployment status. It should have

ascertained the circumstances and then chosen an appropriate loss mitigation tool. For example,

it could have simply suspended his regular monthly payment for a brief period of time while he

continued to actively pursue employment opportunities. This is the sort of action that the

regulators had in mind in crafting their loss mitigation programs. At bottom, its review and

evaluation for loss mitigation purposes was inadequate and incompetent.

70. Unsurprisingly, plaintiff did not successfully complete this initial temporary

modification plan. Moreover, because the plan called for a first payment date three months out,

by the time the plan had run its course it had the net result of causing plaintiff to be several

additional months behind on his monthly payments.

–Defendant’s second loss mitigation action

71. In phone discussions during the early months of 2010, Mr. Moquin let defendant

know that he had obtained employment again, and that therefore a loan modification would be an

appropriate action to resolve his default and thus avoid foreclosure. Though he was ideally

suited for this action, defendant instead promised Mr. Moquin that if he successfully completed a


21

temporary forbearance agreement, then at that point his loan would be reviewed for permanent

modification. The agreement called for four consecutive monthly payments commencing in

June, 2010, with each such payment being more than three times the amount of his regular

monthly payment (i.e., $2,132 per month, compared to $702 per month).

72. He was employed again and he wanted to get his loan back on track with the help

of a permanent loan modification. Relying upon defendant’s promise to review his loan for

modification if he successfully completed the agreement by making the four oversized payments,

he worked hard and sacrificed much to get it done. Mr. Moquin made each scheduled payment

on time. He fully believed he had shown his ability to make regular mortgage payments and that

he would soon receive the loan modification.

73. Having successfully performed his part of the agreement, he contacted defendant

to learn what would happen next. He was told that everything was all set and that his file was in

review for loan modification. He called back regular to see whether the review had occurred yet.

He also asked repeatedly whether he should continue making the regular monthly payments or

wait until the modified terms were in place. Defendant told him that any payments he made in

the interim would not be applied to the loan but would instead be “held in suspense.” Just the

same, he made the November and December payments.

74. In December, he phoned defendant and learned from a female employee that his

file had not been reviewed for modification. He explained that he had called at least half a dozen

times during the past couple of months and had always been told that his file was waiting to be

reviewed for the modification. She stated that she would send an internal email to the “point of

contact” and that he should then hear something.


22

75. In mid-January, 2011, he received a call from another woman at ASC. To his

surprise, she identified several kinds of information and documents that defendant needed from

him to complete its “review.” Defendant told to send her certain tax forms, historical bank

statements, pay stubs, and the like. He did so. After a few communications back and forth, and

after he had complied with all of her additional requests for information and materials, she told

him that she had everything she needed and that he would hear back from her soon.

76. In the following month—February, 2011—he received a phone message from a

male employee at ASC seeking clarification on a couple of minor points in his file. Mr. Moquin

promptly phoned him back and answered his various questions. At the end of their conversation,

the man assured him he now had everything he needed.

–Defendant’s third loss mitigation action

77. A couple of more weeks passed, and then he received a call from yet another ASC

employee, who wished to speak with him about his “modification.” But the employee did not

speak with him about a loan modification. Instead, much to Mr. Moquin’s surprise, the

employee spoke to him about another forbearance agreement.

78. Mr. Moquin explained that he had already successfully completed his forbearance

agreement and that his loan was supposed to be in review for permanent loan modification. The

employee wished to transfer the call to another employee. Mr. Moquin patiently recounted his

loan situation with this person as well. She reviewed his file over the phone with him and

confirmed that his understanding of the file status was correct. She said his file seemed to

contain all the explanations, financial information and documents necessary, and that she could

discern no error or problem with the earlier forbearance agreement which might explain why

ASC had not already approved the loan modification but was instead seeking yet another


23

forbearance agreement with him. She seemed informed and she was helpful; she concluded the

call by promising that she would refer his file “to the office of the president.”

79. Sometime later, Mr. Moquin received a call from an ASC employee named

Latasha Ferrell. He explained the situation, and she told him the reason ASC had dropped the

ball was that his file was not being “tracked” by the right department. She promised that now,

she would be responsible for seeing the loan modification process through to the end and now

there would be no confusion or black holes. He explained that he had already shown his ability

to afford the loan (which is the showing required for a permanent loan modification), and that his

loan file was already ready for its loan modification review. He shared his concern that this

seemingly botched procedure was taking so long that it was adversely affecting his credit rating.

80. Ms. Ferrell promised him that if he went along with her and completed this new

forbearance agreement, she herself would see his file all the way through to assure the review

occurred promptly so the loan modification could be signed off on. Exh is a copy of the

offer letter and the Special Forbearance Agreement.

ibit E

81. He received it in the mail. The offer letter read, in part:

Our goal is simple. We want to ensure that you have every opportunity to retain your home. Based on our telephone conversation and the financial information you provided, we would like to offer you a Special Forbearance Plan.

82. Enclosed with this offer letter was the Special Forbearance Agreement that he was

supposed to sign and return to ASC. It read, in part:

This plan is an agreement to temporarily accept reduced payments or maintain regular monthly payments during the plan specified below. Upon successful completion of the payments outlined in this plan, your loan will be reviewed for a Loan Modification.



24

83. Having read it, he believed it was consistent with HAMP guidelines and that if he

made the plan payments he would receive a loan modification so long as his income and

financial situation had not changed in the meantime. So he signed and returned it, and then he

made each scheduled payment on time even though the plan required him to make three monthly

mortgage payments that were each in amount that was double his regular mortgage payment.

84. Mr. Moquin then contacted Ms. Ferrell again. Understandably, she asked him

whether his income or financial situation had changed since he signed the agreement, and he was

glad to be able to assure her that everything continued to be fine. He felt confident he had passed

the test and that his loan modification was a certainty. She told him to sit tight and he would

hear back shortly. Believing his monthly payment obligation would recommence shortly upon

the modified terms, he sat back and waited for the final decision.

85. After a few more weeks, he attempted to reach Ms. Ferrell for a status update.

Unable to reach her, he called the defendant’s main number. The operator told him his point of

contact was not Ms. Ferrell, but was instead Tawanda Alexander. He was able to contact Ms.

Alexander, who assured him that she was his new point of contact and that she “would see it

through to the end.” She proceeded to identify several kinds of information and documents that

ASC still needed to complete the review. She told him to send her—yes—the very same tax

forms, historical bank statements, pay stubs, and the like that he had already been asked for and

had already sent in to the former “point of contact.”

86. Disillusioned and exhausted, he nonetheless complied with the request. For the

next several weeks, he repeatedly complied with additional requests for various sorts of

information and for additional documentation. He wanted to do all he could to help his lender

make his loan modification process a success.


25

–Defendant’s fourth loss mitigation action

87. But now, he has just received another letter from defendant, which is to introduce

him to yet another “home preservation specialist.” It begins:

88. Shortly after receiving this letter, Mr. Moquin decided that he himself could do no

more to move the loan modification process along. Fearful, again, of losing his home to

foreclosure for no good reason, he sought out legal representation.


26

FACTS COMMON TO ALL TRANSACTIONS

89. Defendant engaged in deceptive and unlawful conduct, and breached its

contractual covenant of good faith and fair dealing, in its default loan servicing transactions with

the plaintiff and class members, by a) sending them debt collection communications that, given

the circumstances, had a tendency to deceive them into believing that if they made the required

payments they would receive loan modifications provided their income and financial situation

had not changed; and by b) abusing its considerable discretion in addressing their loan defaults

by ignoring federal policies, procedures, guidelines and regulations applicable to their loans

under their specific circumstances and instead providing them with unsustainable and oppressive

short-term forbearance agreements, by making misleading statements to induce them to sign

these agreements (including its incorporation into the agreement of a contingency to its own

performance known only to it, namely, that the scope of its subsequent “review” might extend

well beyond a confirmation that their income and financial situation had not changed in the

meantime), and by c) its failure to perform in that it did not provide them with permanent loan

modifications after they had successfully completed their part of the deal and a review had

shown (or would have shown, had it been done) that their income and financial situation had not

changed in the meantime.

90. The plaintiff and all of the class members:

a. Have or had residential mortgage loans that are or were serviced by ASC.

b. Fell behind on their monthly payments by at least four months.

c. Federal policies, procedures, guidelines and regulations pertaining to the

servicing of defaulted residential mortgage loans, such as HAMP and/or FHA’s Loss Mitigation

Program imposed servicing obligations upon the defendant.


27

d. They received defendant’s cover letter and the enclosed forbearance

agreement, in a form substantially similar to that received by the plaintiff. [Exh , supra.] ibit E

91. Defendant’s offer letter and agreement contained statements that, both

individually and taken together, had a capacity to deceive the vulnerable borrowers who received

them into falsely believing that a) it was sent out consistent with federal policy under HAMP

aimed at achieving foreclosure avoidance through sustainable loan modification; and that b)

defendant, based upon its telephone conversation with them as well as its assessment of the

financial information they had sent in at its request, had decided to offer them a bona fide

opportunity to save their homes by enrolling in a standard plan that was designed to result in a

permanent loan modification for those who successfully completed it by making the required

payments and whose income and financial situation had not changed in the meantime according

to its subsequent review.

92. At the time it sent out the offer letter and agreement, defendant:

a. Intended the communication to mislead the recipients into believing:

i. That it had been sent to them under and/or consistent with the

well-publicized federal policies under HAMP including those aimed at foreclosure avoidance

through loan modification; and

ii. That defendant had decided, based upon its personal telephone

conversation with them as well as its assessment of the financial information that it had

requested of and received from them, to offer them an opportunity to save their homes by

enrolling in a plan designed to result in a permanent loan modification, and that those who took

the opportunity and successfully completed the plan by making the required payments would



28

receive loan modifications, provided that a subsequent review showed their income and financial

situation had not changed in the meantime.

b. Knew that its statement that:

Upon successful completion of the payments outlined in this plan, your loan will be reviewed for a Loan Modification.

i. Was ambiguous, as to the scope of its “review.”

ii. Would likely be read by the borrowers as inferring that if they

made all of the required payments under the plan, they would receive a Loan Modification so

long as the “review” afterwards showed that their income and financial situation had not changed

in the meantime, inasmuch as each also had been told that he or she was being offered the plan:

Based on our telephone conversation and the financial information you provided . . .

iii. Constituted a contingency to its own performance of the agreement

that was known to it alone, in that it alone knew that it might not provide a Loan Modification to

some or all of the recipients who successfully completed the plan even if its “review” showed

that their income and financial situation had not changed in the meantime.


29

Facts common to the Subclass members’ transactions12

93. Defendant failed to make good faith efforts to provide the loan servicing functions

owed to plaintiff and the Subclass members in connection with its review and retention of

documentation, including their loan modification applications; and, more specifically, by failing

to hire sufficient staff, by losing documents, repeatedly requesting documents it has already

received, giving conflicting and confusing instructions to borrowers, not responding to borrowers

inquiries, and making mistakes in processing documents.

94. Defendant failed to comply with the required federal HAMP and FHA loss

mitigation policies, procedures, guidelines and regulations applicable to the plaintiff’s and

Subclass members’ defaulted loans.

95. The defendant misled led the plaintiff and the Subclass members to:

a. Falsely believe that it had sent the offer package to them consistent with

federal policy under HAMP and/or FHA guidelines aimed at achieving foreclosure avoidance

through sustainable loan modification when, in fact, it sent it to them merely in an attempt to

collect debt that it otherwise might not have been able to collect from them.

b. Falsely believe, and justifiably expect, that if they successfully completed

the proffered plan by making all of the payments, they would be offered loan modifications

provided the subsequent review showed their income and financial situation had not changed

12 The plaintiff and all of the class members received the forbearance-to-modification package, consisting

of the cover letter and the enclosed agreement, so they were all subjected to defendant’s unlawful debt collection conduct. Accordingly, plaintiff asserts the federal and state unfair debt collection claims (Counts I and II, respectively) for himself and all of the other Class members as defined below. However, since only the Subclass members successfully completed the payments required by the agreement (yet did not receive loan modifications), plaintiff only asserts the claims for breach of the implied covenant of good faith and fair dealing, and for promissory estoppel (Counts III and IV, respectively), for himself and the other Subclass members as defined below.


30

(inasmuch as this is the most sensible interpretation of its “review” term, and the interpretation

most in accord with the federal government’s much-publicized loan modification and foreclosure

avoidance policies, procedures, guidelines and regulations).

96. Laboring under these false beliefs, plaintiff and the Subclass members signed the

agreements and successfully completed the onerous payments required by them.

97. Though the plaintiff and Subclass members successfully completed the plan, and

though nothing in defendant’s files indicates that a subsequent review had shown that their

income or financial situation had changed in the meantime, defendant failed to offer them loan

modifications.

98. In the case of the plaintiff and Subclass members, the most appropriate action,

and the action that defendant should have taken, at the times these borrowers successfully

completed their plan payments, was to provide them with permanent loan modifications. All of

them could have made the sustainable monthly payments that would be required of them in the

sort of loan modification agreement envisioned in the applicable federal guidelines, yet they have

yet to be offered the same. This is not right. For the servicer, Inertia is not an option.

DAMAGES

99. Plaintiffs have suffered actual and statutory damages as a result of defendant’s

conduct in disregarding applicable loss mitigation and foreclosure avoidance guidelines and

regulations and in making deceptive and misleading statements to induce them to enter into

agreements and make large payments on their defaulted debt.

100. Defendant has deprived the Subclass members of the benefit of the full set of

tools and strategies that the defendant was supposed to consider and use when borrowers like

them fell behind on their monthly payments; it has also deprived them of the opportunity to


31

pursue other strategies to save their homes, such as restructuring their debt under the bankruptcy

code; and of pursuing other strategies to deal with their default, such as selling their home.

101. All of the Subclass members have had to live with the daily trauma of the

imminent foreclosure and loss of one’s home, along with the consequent result of compromised

credit. All of them were also deprived of the money that they were falsely induced to send to

defendant, as well as of the opportunity to use this money instead to fund bankruptcy plans,

relocation costs, short sales or other means of curing their default. Finally, some have suffered

additional harm in the form of foreclosure activity against their homes.

CLASS ALLEGATIONS

102. Plaintiff brings this action on his own behalf and on behalf of a class, and a

subclass, of persons similarly situated, under Rules 23(a) and (b)(2) and (3) of the Federal Rules

of Civil Procedure. The class (“Class”) and subclass (“Subclass”) consist of:

The Class consists of all New Hampshire residential mortgage customers who have or had a residential mortgage that is currently being serviced or was previously serviced by defendant through its ASC division during the applicable statute of limitations (the “Class Period”); and received the above-described forbearance-to-modification package from ASC, consisting of the offer letter and special forbearance agreement in substantially the same form as is depicted in Exh , supra. ibit E

A Subclass exists, comprised of all Class members who then signed it and made all of its required payments on time, but were not thereafter offered a loan modification even though nothing in defendant’s loan files shows that they were not offered a loan modification because its review had shown that their income or financial situation had changed since it had sent them the offer letter and special forbearance agreement.

103. The Class is ascertainable, as the names and addresses of all Class and Subclass

members can be identified in business records maintained by defendant.



32

104. Plaintiff does not know the exact size or identities of the proposed Class and

Subclass, since such information is in the control of defendant. Plaintiff believes and alleges,

however, that the Class encompasses at least several hundred, and the Subclass encompasses

more than one hundred, homeowners geographically dispersed throughout New Hampshire.

Therefore, the proposed Class and Subclass members are each so numerous that joinder of all

members is impracticable.

105. Common questions of fact and law predominate over any questions affecting only

individual members including, but not limited to, the following:

a. Whether the offer letter and its enclosed agreement contained misleading

statements communicated in violation of:

b. The federal Fair Debt Collection Practices Act; and/or

c. The state Unfair Debt Collection Act;

d. Whether defendant’s practice of denying loan modifications, or offering

illusory modifications, on bases other than those set forth in the modification proposal and/or

defendant’s conduct with respect to offering these forbearance-to-modification agreements

and/or otherwise collecting debt constituted unlawful debt collection practices under the federal

FDCPA and/or New Hampshire’s Unfair Debt Collection Practices Act;

e. Whether defendant failed to comply with HAMP and FHA policies,

procedures, guidelines and regulations applicable to the loans and, if so, whether its failure to do

so constituted a breach of the implied covenant of good faith and fair dealing in that the plaintiff

and class members justifiably expected that it would do so and in that its failure to do so offends

community standards of decency, honesty and reasonableness;


33

f. Whether the special forbearance agreements were valid and binding

agreements;

g. Whether defendant had programs in place that constituted material

performance of the agreements;

h. Whether defendant had practices and procedures in place to reasonably

ensure it was prepared to perform all of its obligations under the agreements;

i. Whether defendant reviewed the loans of borrowers who successfully

completed the agreement for loan modification and, if so, how and why it did so;

j. Whether defendant applied criteria or conditions for loan modifications

other than those set forth in the agreements offered to homeowners who were behind in their

payments;

k. Whether defendant’s purported review of the loan after the borrower had

successfully completed the agreement:

i. Was subject to written or unwritten guidelines and/or involved the

assessment or application of written or unwritten criteria or conditions; and/or

ii. Was intended to assess or ascertain anything other than whether

the borrowers’ income or financial situation had changed;

l. Whether defendant had actual criteria for mortgage loan modifications

and, if so, what those criteria were;

m. Whether defendant had a practice of offering these agreements:


34

i. Without being prepared or committed to review the loans for

modification afterwards; and/or

ii. Without the intention of necessarily providing loan modifications

to the borrowers who successfully completed the agreements even if its subsequent review

showed their income and financial situation had not changed in the meantime;

n. Whether the parties’ agreement gave defendant the discretion to determine

the components, structure, nature, purpose, scope, parameters, guidelines, assessments, criteria,

conditions and/or qualifications of the “review” referred to in the agreement;

o. Whether defendant’s conduct in designing its “review” constituted an

abuse of its discretion due to its components, structure, nature, purpose, scope, parameters,

guidelines, assessments, criteria, conditions and/or qualifications, because it exceeded the

reasonable limits of its discretion in that it was inconsistent with the plaintiff’ and class

members’ justified expectations as well as community standards of decency, honesty and

reasonableness;

p. Whether defendant’s conduct in implementing its “review” constituted an

abuse of its discretion due to its components, structure, nature, purpose, scope, parameters,

guidelines, assessments, criteria, conditions and/or qualifications, because it exceeded the

reasonable limits of its discretion in that it was inconsistent with the plaintiff’ and class

members’ justified expectations as well as community standards of decency, honesty and

reasonableness;

q. Whether defendant’s conduct in denying loan modifications to borrowers

who successfully completed the agreement based upon its “review” constituted an abuse of its


35

discretion due to the review’s components, structure, nature, purpose, scope, parameters,

guidelines, assessments, criteria, conditions, qualifications, design, implementation, or manner of

application, because it exceeded the reasonable limits of its discretion in that it was inconsistent

with the plaintiff’ and class members’ justified expectations as well as community standards of

decency, honesty and reasonableness;

r. Whether the Court can order defendant to pay damages and what the

proper measure of damages is; and

s. Whether the Court can enter injunctive relief.

106. Plaintiff is a member of both the Class and the Subclass, and his claims are typical

of the claims of all of the other Class and Subclass members, and they do not conflict with the

interests of any other members of the Class or Subclass.

107. Plaintiff will fairly and adequately represent the interests of the Class. He is

committed to the vigorous prosecution of the Class claims and has retained attorneys who are

qualified to pursue this litigation and have substantial experience in consumer credit class action

claims.

108. A class action is superior to other methods for the fast and efficient adjudication

of this controversy and to avoid the risk of disparate and inconsistent rulings throughout the

state. A class action regarding the issues in this case does not create any problems of

manageability.


36

CAUSES OF ACTION

FDCPA

109. Plaintiff repeats and re-alleges every allegation above as if set forth herein in full.

110. Plaintiff brings this claim on his own behalf and on behalf of each member of the

Class described above.

111. Plaintiff and the Class members incurred a financial obligation (the “Debt”) to an

original creditor. The Debt arose from services provided by the original creditor which were

primarily for family, personal or household purposes and which meets the definition of a “Debt”

under 15 U.S.C. §1692a(5). The Debt was owned by either the original creditor, or by its

successors or assigns (the “Creditor”), and not by the defendant, during all times in which

defendant engaged in the conduct alleged herein.

112. Defendant, through its ASC division, was employed by the Creditor to collect the

Debt.

113. Defendant attempted to collect the Debt and, as such, engaged in

“Communications” as defined in 15 U.S.C. §1692a(2).

114. Defendant’s conduct violated 15 U.S.C. §1692d in that it engaged in behavior the

natural consequence of which was to harass, oppress, or abuse the plaintiff and Class members in

connection with the collection of a debt.

115. Defendant’s conduct violated 15 U.S.C. §1692e(10) in that defendant employed

false and deceptive means to collect a debt from the plaintiff and Class members.

116. Defendant has violated and continues to violate the FDCPA by its conduct in

collecting or attempting to collect a debt in an unfair, deceptive or unreasonable manner as


37

defined within the FDCPA. Its conduct is unfair, deceptive, oppressive, unconscionable, and

contrary to public policy and generally recognized standards applicable to the consumer lending

business. Its conduct in violation of the FDCPA includes, but is not limited to:

a. Collecting debt through a common scheme of inducing plaintiff and the

Class members to make a number of large monthly payments on their defaulted loans under the

false promise that if they did so they would be offered a loan modification provided a review

showed their income and financial situation had not changed.

b. Making material false representations or implications as to:

i. The character, extent or amount of the debt.

ii. The actions it would take upon the debtor’s successful completion

of a plan requiring it to make several payments on the debt.

c. Failing to offer plaintiff and the members of the Subclass loan

modifications based on its assessment of the phone calls it had with them together with the

financial information it requested and received from them (meaning the assessment upon which

it had purportedly offered them its forbearance-to-modification plan), their demonstration of a

willingness and ability to make consecutive monthly payments as evidenced by their successful

completion of the agreement, and the absence of any showing that their income and financial

situation had changed since then;

117. Failing to otherwise provide them with a bona fide opportunity to retain their

homes despite its unequivocal promise to do so contained in its offer letter and despite its

contractual duty to do so arising out of the federal guidelines specifying its mortgage servicing

obligations applicable to their defaulted loans. The foreclosure-to-modification agreement


38

neither represented in itself, nor otherwise provided, the plaintiff and the class members with a

meaningful opportunity to retain their homes.

d. Failing to perform loan servicing functions consistent with its

responsibilities to plaintiff and the class members;

e. Failing to properly hire, train and supervise agents and employees, and

enough of them, including, without limitation, its loss mitigation and collection personnel;

f. Routinely demanding information already in its files; and

g. Making inaccurate calculations and determinations of plaintiff’s and the

Class members’ eligibility for loan modifications.









payments and whose income and financial situation had not changed in the meantime.

119. Defendant violated the FDCPA in multiple ways and on numerous occasions.

120. The plaintiff and Class members have been injured by virtue of defendant’s

violations of the FDCPA. Said injuries include, but are not limited to:

a. Wrongful foreclosures.


39

b. Otherwise avoidable losses of homes to foreclosure.

c. Less favorable loan modifications.

d. Increased fees and other costs incurred to avoid or attempt to avoid later

foreclosure.

e. Loss of savings in fruitless attempts to secure loan modifications.

f. Loss of opportunities to secure other refinancing or loss mitigation

strategies.

g. Significant stress and emotional distress.

121. The plaintiff and class members are entitled to actual and statutory damages as a

result of its violations.

COUNT II

RSA 358–C — UNFAIR DEBT COLLECTION ACT



Class described above.

124. RSA 358–C (the “Unfair Debt Collection Act”) prohibits the collection of debt in

an unfair, deceptive or unreasonable manner. RSA 338C:2.

125. As the terms are defined in RSA 358–C:1:

a. Plaintiff and class members are “Consumers.”

b. Each of their loans is a “Consumer Credit Transaction.”


40

c. In the transactions between the defendants, on the one hand, and the

plaintiff and each of the class members, on the other hand:

i. The note and the mortgage constitute the “Credit,” and evidence

the “Debt.”

ii. The plaintiff and each class member is a “Debtor.”

iii. Defendant is the “Debt Collector.”

126. Defendant has violated and continues to violate the Unfair Debt Collection Act by

its conduct in collecting or attempting to collect a debt in an unfair, deceptive or unreasonable

manner as defined within the Unfair Debt Collection Act. Its conduct is unfair, deceptive,

oppressive, unconscionable, and contrary to public policy and generally recognized standards

applicable to the consumer lending business. Moreover, the foreclosure-to-modification

agreement neither represented in itself, nor otherwise provided, the plaintiff and the class

members with a meaningful opportunity to retain their homes.










41

payments and whose income and financial situation had not changed in the meantime according

to its subsequent review.

128. Defendant has violated New Hampshire’s Unfair Debt Collection Act by its

conduct in:

a. Collecting debt through a common scheme of inducing plaintiff and the

Class members to make a number of large monthly payments on their defaulted loans under the

false promise that if they did so they would be offered a loan modification provided a review

showed their income and financial situation had not changed.

b. Making material false representations or implications as to:

i. The character, extent or amount of the debt.

ii. The actions it would take upon the debtor’s successful completion

of a plan requiring it to make several payments on the debt.

c. Failing to offer plaintiff and the members of the Subclass loan

modifications based on its assessment of the phone calls it had with them together with the

financial information it requested and received from them (meaning the assessment upon which

it had purportedly offered them its forbearance-to-modification plan), their demonstration of a

willingness and ability to make consecutive monthly payments as evidenced by their successful

completion of the agreement, and the absence of any showing that their income and financial

situation had changed since then;

d. Failing to otherwise provide them the opportunity to retain their home

based on information previously provided to defendant and the plaintiff’s and Subclass


42

members’ demonstration of a willingness and ability to make consecutive monthly payments as

evidenced by their successful completion of the agreement.

e. Failing to perform loan servicing functions consistent with its

responsibilities to plaintiff and the class members;

f. Failing to properly hire, train and supervise agents and employees, and

enough of them, including, without limitation, its loss mitigation and collection personnel;

g. Routinely demanding information already in its files; and

h. Making inaccurate calculations and determinations of plaintiff’s and the

Subclass members’ eligibility for loan modifications.

129. The plaintiff and class members have been injured by virtue of defendant’s

violations of the Unfair Debt Collection Act. Said injuries include, but are not limited to:

a. Wrongful foreclosures.

b. Otherwise avoidable losses of homes to foreclosure.

c. Less favorable loan modifications.

d. Fees and costs incurred to avoid or attempt to avoid later foreclosure.

e. Loss of savings in fruitless attempts to secure loan modifications.

f. Loss of opportunities to secure other refinancing or loss mitigation

strategies.

g. Significant stress and emotional distress.

130. The plaintiff and class members are entitled to actual and statutory damages as a

result of defendant’s violations of New Hampshire’s Unfair Debt Collection Act.


43

COUNT III

BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING



Subclass described above.

133. Plaintiff and class members entered into an agreement with defendant whereby, in

exchange for the specified monthly payments, defendant agreed to put them into a forbearance-

to-modification program that would give them the opportunity to retain their home based on

information previously provided to defendant and the plaintiff’s and class members’

demonstration of a willingness and ability to make consecutive monthly payments.

134. In every contract or agreement, including those at issue here, there is an implied

promise of good faith and fair dealing, which means that each party will not do anything to

unfairly interfere with the right of any other party to receive the benefits of the contract. This

covenant of good faith applies in particular here, as defendant drafted an adhesive agreement

under which it ostensibly retained for itself the unfettered discretion to avoid its obligations

under the agreement by purportedly conditioning its performance on a purported “review” of the

loan. In this situation, the law reads a duty of good faith into defendant’s exercise of discretion

in order that the agreement should not be rendered illusory.

135. The parties’ agreement gave defendant full discretion to determine the structure,

nature, purpose, scope, parameters, guidelines, assessments, criteria, conditions, requirements

and/or qualifications of the “review” it would perform before offering loan modifications to

borrowers who had successfully completed the agreement by making the required payments.


44

136. Defendant abused its discretion in connection with its design, implementation,

completion, and/or assessment of its post-agreement “review.” The plaintiff and class members

had a) successfully completed the forbearance-to-modification plan, and b) a review would show

that their income and financial situation had not changed since defendant had offered them the

plan “[b]ased on our telephone conversation and the financial information you provided,” yet

defendant failed to offer them loan modifications. Therefore, defendant’s subsequent failure to

offer them loan modifications constitutes a breach of the implied covenant of good faith and fair

dealing, in that:

a. Plaintiff and the class members had the justifiable expectation that:

i. The offer letter and forbearance agreement that defendant mailed

to them based upon their telephone conversation and the financial information they had provided

at its request was consistent with and would reflect HAMP and/or FHA loan modification and

foreclosure avoidance guidelines;

ii. If they successfully completed the forbearance agreement by

making all of the required payments, they would be offered loan modifications provided its

subsequent review confirmed that their income and financial situation had not changed; and

b. To the extent that the defendant intended that its post-completion “review”

would go beyond simply confirming that the plaintiff’s and class members’ income and financial

situation had not changed, its intentions arose out of contingencies known only to it.

137. Defendant also violated its duty of good faith and fair dealing by failing to make

good faith efforts to provide the loan servicing functions owed to plaintiff and the class in

connection with their review and retention of documentation, including loan modification


45

applications and, more specifically, by failing to hire sufficient staff, by losing documents,

repeatedly requesting documents it has already received, giving conflicting and confusing

instructions to borrowers, not responding to borrowers inquiries, and making mistakes in

processing documents.

138. Defendant also violated its duty of good faith and fair dealing by failing to

comply with the federal HAMP and FHA policies, procedures, guidelines and regulations it was

obligated to comply with in connection with servicing the plaintiff’s and Subclass members’

defaulted loans, because the plaintiff and Subclass members were justified in expecting that it

would service their loans in manner that conformed with its federal obligations and its failure to

do so offended community standards of decency, honesty and reasonableness. Whereas these

borrowers could have continued, month after month, making the relatively-modest payments

required under a sustainable modification plan, defendant’s inappropriate and oppressive short-

term forbearance plans required them to make several very large, unsustainable payments. Some

of them who made all of the payments only to be told that there will be no loan modification for

them after all, have been completely demoralized and exhausted by this defendant; some who

relied upon the defendant’s forbearance-to-modification promise, but were not given a loan

modification afterwards, can only watch, dumbfounded, if and when their home is auctioned off

instead.

139. As a result of these failures to act in good faith and this absence of fair dealing,

defendant caused plaintiff and the Subclass members to suffer harm. By entering into and

making payments under the forbearance-to-modification agreement, plaintiff and the class

members forewent other remedies that might be pursued to save their homes, such as

restructuring their debt under the bankruptcy code, or pursuing other strategies to deal with their


46

defaults, such as selling their homes. In addition to the lost opportunity cost of pursuing other

means of dealing with their default, when a permanent modification is not offered at the close of

the three-month forbearance-to-modification agreement, the borrower’s eventual permanent

modification terms may be adversely affected and additional fees and charges may be applied.

Some members of the putative class also suffered additional harm in the form of foreclosure

and/or collection activity against their homes. Last, they have had to live with the daily trauma

of the imminent foreclosure and loss of one’s home, along with the consequent result of

compromised credit, which circumstances come well within the ambit of financial damage.

COUNT IV

PROMISSORY ESTOPPEL


141. Plaintiff brings this claim on his own behalf and on behalf of the Subclass

members.

142. Defendant, by way of its forbearance-to-modification agreements, made a

representation to plaintiff and the Subclass members that if they successfully completed making

the payments required by the agreements, they would be offered loan modifications provided

their income and financial situation had not changed in the meantime.

143. Defendant’s agreement was intended to induce plaintiff and the Subclass

members to rely on it by entering into the agreements and making the required payments.

144. Plaintiff and the members of the Subclass did rely on defendant’s representations,

by entering into the agreements and making the required payments.

145. Given the language in the forbearance-to-modification agreement, plaintiff’s and

class members’ reliance was reasonable.


47

146. Their reliance was to their detriment. Plaintiff and the Subclass members have

yet to receive the promised loan modifications. By entering into the agreements and making the

required payments, plaintiff and the Subclass members forewent other remedies that might be

pursued to save their homes, such as restructuring their debt under the bankruptcy code, or

pursuing other strategies to deal with their defaults, such as selling their homes. In addition to

the lost opportunity cost of pursuing other means of dealing with their default, when a permanent

modification is not offered at the close of the forbearance-to-modification agreement, the

borrower’s eventual loan modification terms may be adversely affected and additional fees and

charges may be incurred or applied. Plaintiff and Subclass members also suffered additional

harm in the form of improper fees and costs on their accounts and/or foreclosure/collection

activity against their homes. Last, they have had to live with the daily trauma of the imminent

foreclosure and loss of one’s home, along with the consequent result of compromised credit,

which circumstances come well within the ambit of financial damage.

REQUEST FOR INJUNCTIVE RELIEF

147. The injuries suffered by the plaintiff and the members of the class are capable of

repetition, yet may evade review, thereby making classwide injunctive relief appropriate.

148. Given its widespread failure to comply with HAMP and FHA rules and

regulations including those pertaining to loss mitigation, and given its misleading statements

intended to lure the plaintiff and class members into signing illusory forbearance-to-modification

plans so that it could collect large amounts of debt from them that it might not have collected

from them absent its ruse, defendant should be barred from conducting foreclosure sales and

from filing FHA insurance claims to recover any resultant losses.


48

PRAYER FOR RELIEF

WHEREFORE, the plaintiff respectfully requests the following relief for himself and the

Class and Subclass members:

A. Certify this case as a class action and appoint the named plaintiff to be class

representative and his counsel to be class counsel.

B. Award the requested injunctive relief.

C. Award actual and/or statutory damages to the plaintiff and class members, for

defendant’s violations of the respective federal and state unfair debt collection practices acts.

D. Award attorneys’ fees and costs for defendant’s violations of the respective

federal and state unfair debt collection practices acts; or, alternatively, award attorneys fees and

costs pursuant to RSA 361–C:2.

E. Find that an equitable obligation arose on the part of the defendant, to offer

sustainable loan modifications to the plaintiff and Subclass members, and order specific

performance of defendant’s equitable obligation to each of them, together with such other relief

as is required by equity.

JURY TRIAL DEMAND

Plaintiff Joseph Moquin demands a trial by jury on all issues so triable.


49

VERIFICATION

I certify under the penalties of perjury that I have read the Verified Complaint, that the

facts stated therein are true, and that no material facts have been omitted from it.

Signed under the penalties of perjury.

. s/ Joseph Moquin . Joseph Moquin

Dated: January 12, 2012

Respectfully submitted, s/ Edward K. O’Brien .. Edward K. O’Brien NH Bar No. 2866 O’BRIEN LAW FIRM, PC One Sundial Avenue, 5th Fl Manchester, NH 03103 (603) 672-3800 [email protected]

Dated: January 12, 2012


mailto:[email protected]�

EEXHIBIT A

Case 1:12-cv-00016 Document 1-1 Filed 01/12/12 Page 1 of 28

Case 4:10-cv-10311-FDS Document 10-1 Filed 06/25/10 Page 2 of 28Case 1:12-cv-00016 Document 1-1 Filed 01/12/12 Page 2 of 28

COMMITMENT TO PURCHASE FINANCIAL INSTRUMENT and

SERVICER PARTICIPATION AGREEMENT for the

HOME AFFORDABLE MODIFICATION PROGRAM under the

EMERGENCY ECONOMIC STABILIZATION ACT OF 2008

This Commitment to Purchase Financial Instrument and Servicer Participation Agreement (the "Commitment") is entered into as of the Effective Date, by and between Federal National Mortgage Association, a federally chartered corporation, as fmancial agent of the United States ("Fannie Mae"), and the undersigned party ("Servicer"). Capitalized tenus used, but not defined contextually, shall have the meanings ascribed to them in Section 12 below.

Recitals

WHEREAS, the U.S. Department oflhe Treasury (the "TreasUlY") has established a Home AffordableModificationProgram(the "Program") pursuant to section 101 and 109 of the Emergency Economic Stabilization Act of2008 (the "Act"), as section 109 of the Act has been amended by section 7002 of the American RecovelY and Reinvestment Act of2009;

WHEREAS, the Program includes loan modification and other foreclosure prevention scrvices;

WHEREAS, Fannie Mae has been designated by the TreasUlY as a financial agent of the United States in connection with the implementation of the Program;

WHEREAS, Fannie Mae will, in its capacity as a financial agent of the United States, fulfill the roles of administrator, record keeper and paying agent for the Program, and in conjunction therewith must standardize certain mortgage modification and foreclosure prevention practices and procedw'es as they relate to the Program, consistent with the Act and in accordance with the directives of, and guidance provided by, the Treasury;

WHEREAS, Federal Home Loan Mortgage Corporation ("Freddie Mac") has been designated by the Treaswy as a fmancial agent of the United States and will, in its capacity as a financial agent of the United States, fulfill a compliance role in connection with the Program; all references to Freddie Mac in the Agreement shall be in its capacity as compliance agent of the Program;

WHEREAS, all Fannie Mae and Freddie Mac approved servicers are being directed tlu'ough their respective servicing guides and bulletins to implement the Program with respect to mortgage loans owned, securitized, or guaranteed by Fannie Mae or Freddie Mae (the " GSE Loans"); accordingly, this Agreement does not apply to the GSE Loans;

WHEREAS, all other servicers, as well as Fannie Mae and Freddie Mac approved servicers, that wish to patticipate in the Program with respect to loans that are not GSE Loans (collectively, "Participating Servicers") must agree to certain terms and conditions relating to the respective roles and responsibilities of Program participants and other financial agents of the govemment; and

WHEREAS, ServiceI' wishes to participate in the Program as a Participating Servicer on the terms and subject to the conditions set forth herein.

Accordingly, in consideration of the representations, warranties, and mutual agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Fannie Mae and ServiceI' agree as follows.


Agreement

1. Services

A. Subject to Section IO.C., Servicer shall perform the loan modification and other foreclosme prevention services (collectively, the "Selvices") described in (i) the Financial Instrument attached hereto as Exhibit A (the "Financial Instrument"); (ii) the Program guidelines and procedures issued by the Treasmy, including, without limitation, the net present value assessment requirements of the Program (the "Program Guidelines"); and (iii) any supplemental documentation, instructions, bulletins,letters, directives, or other communications, including, but not limited to, business, continuity requirements, compliance requirements, perfOlmance requirements and related remedies, issued by the Treasury, Fannie Mae, or Freddie Mac in order to change, or further describe or clarify the scope of, the rights and duties of the Participating Servicers in connection with the Program (the "Supplemental Directives" and, together with the Program Guidelines, the "Program Documentation"). The Program Docwnentation will be available to all Participating Servicers at www.financialstability.gov. The Program Documentation, as the same may be modified or amended from time to time in accordance with Section 10 below, is hereby incorporated into the Commitment by this reference.

B. Servicer's representations and walTanlies, and acknowledgement of and agreement to fulfill or satisry certain duties and obligations, with respect to its p!Uticipation in the Program and under the Agreement are set forth in the Financial Instrument. Servicer's certification as to its continuing compliance with, and the truth and accuracy of, the representations and warranlies set forth in the Financial Instrument will be provided annually in theform attached hereto as Exhibit B (the "Armual Certification"), beginning on June I, 20 10 and again on June I of eacb year thereafter during the Term (as defined below).

C. The recitals set forth above are hereby incorporated herein by this reference.

2. Authority and Agreement to Participate In Program

A. Servicer shall perfonn the Services for all mortgage loans its selvices, whether it services such mortgage loans for its own account or for the account of anotber party, including any bolders of mortgage-backed securities (each such other party, an "Investor"). Servicer shall use reasonable effOlis to removc all prohibitions or impediments to its authority, and use reasonable effOlis to obtain all third party consents and waivers that arc required, by contract or law, in order to effcctuate any modification of a mortgage loan under tbe Program.

B. Notwithstanding subsection A., if (x) Servieer is unable to obtain all neeessmy consents and waivers for modifying a mortgage loan, or (y) the pooling and servicing agreement or other similar servicing contract governing Servicer's servicing of a mortgage loan prohibits Servicer from performing the Services for that mortgage loan, Servicer shall not be required to perfOlm tbe Services with respect to that mortgage loan and shall not receive all or any portion of the Purchase Price (as defined below) otherwise payable with respect to such loan.

C. Notwithstanding anything to the contrary contained herein, the Agreement docs not apply to GSE Loans. Servicers are directed to the servicing guides and bulletins issued by Farmie Mae and Freddie Mac, respectively, concerning the Program as applied to GSE Loans.

D. Servicer's perfonnance ofthe Selvices and implementation ofthe Program shall be subject to review by Freddie Mac and its agents and designees as more fully set forth in tbe Agreement.

3. Set Up; Prerequisite to Paymeut

Servicer will provide to Farmie Mae: (a) the set up information required by the Program Docwnentation and any ancillalY or administrative information requested by Fannie Mae in order to process Servicer's participation in the Program as a Participating Servicer 00 or before the Effective Date of the Commitmcnt; and (b) the data elements for each mortgage eligible for the Program

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as and when described in the Program Documentation and the Financial Instrument. Purchase Price payments will nbt be remitted pursuant to Section 4 with respect to any modified mortgage for which the required data elements have not been provided.

4. Agreement to Purchase Financial Instrument; Payment of Purchase Price

A. Fannie Mae, in its capacity as a financial agent of the United States, agrees to purchase, and Servicer agrees to sell to Fannie Mae, in such capacity, the Financial Instrument that is executed and delivered by ServiceI' to Fannie Mae in the form attached hereto as Exhibit A, in consideration for the payment by Fannie Mae, as agent, of the Purchase Price (defined below). The conditions precedent to the payment by Fannie Mae of the Purchase Price are: (a) the execution and delivery of the Commitment and the Financial Instrument by SClvicer to Fannie Mae; (b) the execution and delivery by Fannie Mae of the Commitment to Servicer; (c) the delivery of copies ofthe fully executed Commitment and Financial Iostrument to TreasUlY on the Effective Date; (d) the performance by Servicer ofthe Services described in the Agreement, in accordance with the terms and conditions thereof, to the reasonable satisfaction of Fannie Mae and Freddie Mac; and (e) the satisfaction by Servicer of such other obligations as are set forth in the Agreement.

B. Solely in its capacity as the financial agent ofthe United States, and subject to subsection C. below, Fannie Mae shall: (i) remit compensation payments to Servicer; (ii) remit incentive payments to ServiceI' for the account of ServiceI' and for the credit of b011'0wers under their respective mortgage loan obligations; and (iii) remit payments to Servicer for the account ofInvestors, in each case in accordance with the Program Documentation (all such payments, collectively, the "Purchase Price"); all payments remitted to Servicer for the credit of borrowers or for the account ofInvestors under the Program Documentation shall be applied by ServiceI' to the borrowcrs' respectivc mortgage loan obligations, or rcmitted by Scrvicer to Iovestors, as required by the Program Documentation. Fannie Mae shall have no liability to ServiceI' with respect to the payment ofthe Purchase Price, unless and until: (a) Servicer and all other interested parties have satisfied all pre-requisites set forth herein and in the Program Documentation relating to the Program payment structure, including, but not limited to, the delivery of all data elements required by Section 3 of this Commitment; and (b) the Treasury has provided funds to Fannie Mae for remittance to Servicer, together with written direction to remit the funds to Servicer in accordance with the Program Documentation.

C. The Purchase Price will be paid to Selvicer by Fannie Mae as the financial agent of the United States as and when described herein and in the Program Documentation in consideration for the execution and delivelY oftheFinanciai Iostrument by ServiceI' on or before the Effective Date of the Agreement, upon the satisfaction of the conditions precedent to payment described in subsections A. and B. above.

D. The valuc of the Agreement is limited to $2,873,000,000 (the "Program Participation Cap"). Accordingly, the aggregate Purchase Price payable to Servicer under the Agreement may not exceed the amount of the Program Palticipation Cap. For each loan modification that becomes effective, the aggregate remaining Purchase Price available to be paid to Servicer under the Agreement will be reduced by the maximum Purchase Price potentially payable with respect to that loan modification. Io the event the Purchase Price actually paid with respect to that loan modification is less than the maximum Purchase Price potentially payable, the aggregate remaining Purchase Price available to be paid to Servicer under the Agreement will be increased by the difference betwecn such amounts. Notwithstanding the forcgoing, no agreements with b011'0wers intended to result in ncw loan modifications will be effected under the Agreement, and no payments will be made with respect to any new loan modifications from and after the date on which the aggregate Purchase Price paid or payable to ServiceI' under the Agreement cquals the Program Participation Cap. Treasury may, from time to time in its sole discretion, adjust the amount of the Program Participation Cap. ServiceI' will be

notified of all adjustments to the Program Participation Cap in writing by Fannie Mae.

E. Servicer shall maintain complete and accurate records of, and supporting documentation for, the borrower payment, including, but not limited to, PITIA (principal, interest, taxes, insurance (including homeowner's insurance and hazard and flood insurance) and homeowner's association and/or condo fees), and delinquency info11'llation and data provided to Fannie Mae regarding each agreement relating to a trial modification period and each loan modification agreement executed under the Progrmn, which will be relied upon by Fannie Mae when calculating, as financial agent for the United States, the Purchase Price to be paid by the Treasmy through Fannie Mae or any other financial agent. Servicer agrees to provide Fannie Mae and Freddie Mac with documentation and

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other informalion wilb respect to any amounls paid by the Treasury as may bc reasonably requested by such pruties. In Ihecvent of ' a discrepancy or error in tbe amount ofthc Purchasc Price paid bereunder, at Frumie Mae's election, (x) ServiceI' sball remit to Fannie Mae the amOUllt of any overpaymcnt within thirty (30) days of receiving a refund request from Fannie Mae, or (y) Fannie Mae may immediately offset tbe amount ofthe overpaymcnt against other amounts due and payable to Servicer by Fannie Mae, as financial agent of the United States, upon written notice 10 Servicer. Servicer shall still be obligated 10 credit to the respective mortgage loan obligations of borrowers, and to the respective accounts ofInvestors, any portion of the Purchase Price to which tbey are entitled (if any) notwithstanding such offset unless otherwise directed by Fannie Mae.

F. At the election and upon the direction of the Treasury and with prior written notice to Servicer, Fannie Mae may deduct from any amount to bc paid to Servicer any amount that Servicer, Investor, or bon-ower is obligated to reimburse or pay to the United States government, provided, however, that any amount withheld under this subsection F. will be witWleld only from the amounts payable to, or for the account or credit of, the pruty which is liable for the obligation to the United States government.

G. In the event that the Agreement expires or is terminated pursuant to Section 5 01' Section 6, and subject to Fannie Mae's rights under Section 6, Fannie Mae shall, solely in its capacity as the financial agent of the United States, continue to remit all amounts that are properly payable pursuant to subsection A. above to Servicer in accordance with the Program Documentation until paid in full, provided, however, that Purchase Price payments will be made only with respect to qualifying mortgage loan modifications that were submitted by Selviccr and accepted by Fannie Mae for inclusion in the Program in accordance with the Program Documentation prior to the date of expiration or termination and that do not exceed the Program Participation Cap.

H. Notwithstanding anything to the contralY contained in subsection G. above, in the event that the Agreement is tenninated pursuant to Section 6 B. in connection with an Event of Default by Selvicer under Section 6 A., no compensation with respect to any loan will be paid to Serviccr for the account ofthe Servicer subsequent to ternrination; subject to Fannie Mae's rights under Section 6, Fannie Mae's only continuing obligations as financial agent of the United States subsequent to termination will be to remit payments to Servicer (or, at Fannie Mae's discretion, an alternative provider) for the account of borrowers and InvestOl~, as provided in the Agreement.

I. Notwithstanding anything to the contrary contained in subsection F. above, in the event that the Agreement is terminated pursuant to Section 6 C. in connection with an Event of Default by an Investor 01' a bOl1'ower under Section 6 A., no compensation with respect to any loan will be paid to Servicer for the credit or aecount of the defaulting party subsequent to termination; subject to Fannie Mae's rights under Section 6, Fannie Mae's only continuing obligations as financial agent of the United States subsequent to te.mination will be to remit payments to Servicer for the credit or account of non-defaulting parties as described in the Program DoclUncntation.

J. Notwithstanding anything to the contrary contained herein, Fannie Mae, in its capacity as the financial agent ofthe United States, may reduce the amounts payable to Servicer under Section 4.B., 01' obtain repayment of prior payments made under Section 4.B., in connection with an Event of Default by Servicer or in cOlmection with an evaluation of performance that includes any specific findings by Freddic Mac that Selvicer's performance under any peliol1'Oa1lce criteria established pursuant to the Program Documentation is materially insufficient; provided, however, Fannie Mae will seek to obtain repaymcnt of prior payments made under Scction 4.B. only with respect to loan modifications that are determined by Fannie Mae or Freddic Mac to have been impacted by, or that Fannie Mae or Freddie Mac believes may have been, or may be, impacted, by the Evcnt of Default or fmdings giving rise to this remedy. These remedies are not exclusive; they are available in addition to, and not in lieu of, any other remedies availablc to Fannie Mae at law or in equity.

K. Notwithstanding anything to tbe contrary contained herein, Fannie Mae, in its capacity as the fmancial agent oftbe United States, may reduce the amounts payable to ServiceI' for the credit 01' account of an Investor or a borrower under Section 4.B., or obtain repayment of prior payments made for the credit or account of such parties under Section 4.B., in cOOllcction with an Event of Default by an Investor or a borrower. Selvicer will reasonably cooperate with, and provide reasonable support and assistance to, Fannie Mae and Freddie Mac in conncction with their respective roles and, in Fannie Mae's case, in cOlmection with its efforts to obtain repayment of prior payments madc to InvestOl~ and borrowers as provided in this subsection. These remedies are not

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exclusive; 'they are available in addition to, and not in lieu of, any other remeUies available to Fannie Mae at law or in equity.

5. Term

A. Qualifying mOltgage loans may be submitted by Servicer and accepted by Fannie Mae as described in tbe Financial InSl1um .. ,t and the Program Documentation from and after the Effective Date until December 31, 2012 (the "Initial Term"), subjcct to Program extensions by the Treasury or earlier termination of the Agreement by Fannie Mae pursuant to the provisions hereof or suspension or termination oflhe Program by the Treasury, provided, however, no newqualirying mortgage loans may be submitted by Servicer or accepted by Fannie Mac from and after the date on which the Program Participation Cap is reached.

B. Servicer shall perfonn the Services described in the Program Documentation in accordance with the terms and conditions ofthe Agreement during the Initial Telm and any extensions thereof (the Initial Term, together with all extensions thereof, if any, the "Term"), and during such additional period as may be necessary to: (i) comply with all data collection, retention and reporting requirements specified in the Program Documentation during and for the periods set forth therein; and (ii) complete all Services that were initiated by Servicer, including, but not limited to, mortgage modifications and the completion of all documentation relating thereto, during the Term. Servicer agrees that it will work diligently to complete all Services as soon as reasonably possible after the end of the Telm or earlier termination.

'c. The Agreement may be terminatcd by Fannie Mae or Servicer prior to the end of the Term pursuant to Scction 6 below.

6. Defaults and Early Termination

A. The following constitute events of default under the Agreement (each, an "Event of Default" and, collectively, "Events of Default"):

(I) Serviccr fails to perform or comply with any of its material obligations under the Agreement, including, but not linuted to, circumstances in which Servicer fails to ensure that all eligibility criteria and other conditions precedent to modification specified in tbe Program Documentation are satisfied prior to effectuating modifications under the Program.

(2) Servicer: (a) ceases to do business as a going concem; (b) makes a general assignment for the benefit of, or enters into any arrangement witb creditors in lieu thereof; (c) admits in writing its inability to pay its debts as they become due; (d) files a voluntary petition under any bankruptcy or insolvency law or files a voluntary petition under the reorganization or arrangement provisions oflbe laws of lhe United States or any other jurisdiction; (e) authorizes, applies for or consents to the appointment of a trustee or liquidator of all or substantially all of its assets; (I) has any substantial part of its property subjected to a levy, seizure, assignment or sale for or by any creditor or govemmental agency; or (g) enters into an agreement or resolution to take any of the foregoing actions.

(3) ServiceI', any employee or contractor of Servicer, or any employee or contractor of Servicers' contractors, or any Investor or bOlTOwer, commits a grossly negligent, willful or intentional, or reckless act (including, but not limited to, fraud) in connection with the Program or lhe Agreement.

(4) Any representation, wan'anty, or covenant made by Servicer in the Agreement or any Annual Certification is or becomes materially false, misleading, incorrect, or incomplete.

(5) An evaluation of perfOlmance that includes any specific fmdings by Freddie Mac, in its sole discretion, that Servieer's performancc under any performance critcria established pursuant to the Program Documentation is materially insufficient, or any failure by Servicer to comply with any

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directive issued by Fannie Mac or Freddie Mac with respect to documehts or data requested, [mdings made, or remedies established, by Fannie Mae and/or Freddic Mac in conjunction with such performancc criteria or other Program requirements.

B. Fannie Mae may take any, all, or none of the following actions upon an Event of Default by Servicer under the Agreement:

(I) Fannie Mae may: (i) withhold some 01' all of the Servicer's portion of the Purchasc Price until, in Fannie Mae's determination, Service!' has cured the default; and (ii) choose to utilize altemative means of paying any portion of the Purchase Price f01' the credit or account of borrowers and Invcstors and delay paying such pOition pending adoption of such altemative means.

(2) Fannie Mae may: (i) reduce the amounts payable to Servicer under Section4.B; and/or (ii) require repayment of prior payments made to Servicer under Section 4.B, provided, however, Fannie Mae will seek to obtain repayment of prior payments made under Section 4.B. only with respect to loan modifications that are determined by Fannie Mae or Freddie Mac to have been impacted, or that Fannie Mae or Freddie Mac believes may have been, 01' may be, impacted, by the Event of Default giving rise to the remedy.

(3) Fannie Mae may require Servicer to submit to additional Program administrator oversight, including, but not limited to, additional compliance controls and quality control reviews.

(4) Fannie Mae may terminatc the Agreement and cease its performance hereunder as to some 01' all of the mortgage loans subject to the Agreement.

(5) Fannie Mae may require ServiceI' to submit to information and reporting with respect to its financial condition and ability to continue to meet its obligations under the Agreement.

C. Fannie Mae may take any, all, or none of the following actions upon an Event of Default involving an Investor or a bOll'Ower in connection with the Program:

(1) Fannie Mae may withhold all or any portion ofthe Purchase Price payable to, or for the credit or account of, the defaulting party until, in Fannie Mae's determination, the default has been cured or otherwise remedied to Fannie Mae's satisfaction.

(2) Fannie Mae may: (i) reduce the amounts payable to ServiceI' for the credit, or account of, the defaulting party under Section 4.B; and/or (ii) require repayment of prior payments made to the defaulting party under Section 4.B. ServiceI' will reasonably cooperate with, and provide reasonable support and assistance to, Fannie Mae and Freddie Mae in connection with their respective roles and, in Fannie Mae's case, in connection with its efforts to obtain repayment of prior payments made to Investors and borrowers as provided in this subsection.

(3) Fannie Mae may require Servicer to submit to additional Program administrator oversight, including, but not limited to, additional compliance controls and quality control reviews.

(4) Fannie Mae may cease its performance hereunder as to some or all of the mortgage loans subject to the Agreement that relate to the defaulting Investor or borrower.

D. In addition to the telruination rights set forth above, Fannie Mae may terminate the Agreement immediately upon written notice to Servicer:

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(I) at the direction of the Treasury;

(2) in the event of a merger, acquisition, or other change of control of Servicer;

(3) in the event that a receiver, liquidator, trustee, or other custodian is appointed for the Servicer; or

(4) in the event that a material term of thc Agreement is determined to be prohibited 01' unenforceable as referred to in Section II.C.

E. The Agreement will terminate automatically:

(1) in the event that the Financial Agency Agrcement, dated Februmy 18, 2009, by and between Fannie Mae and the Treasury is terminated; or

(2) upon the expiration or termination of the Program.

F. The remedies available to Falmie Mae upon an Event of Default under tbis Section are cumulative and not exclusive; further, these remedies are in addition to, and not in lieu of, any other remedies available to Fannie Mae at law or in equity.

G. If the event of termination of the Agreement under any circumstances, ServiceI' and Fannie Mae agree to cooperate with one another on an ongoing basis to ensure an effective and orderly transition or resolution of the Services, including the provision of any information, reporting, rccords and data required by Fannie Mae and Freddie Mac.

H. If an Event of Default under Section 6.A.1., Section 6.A.4., or Section 6.A.5. occurs and Fannie Mae determines, in its sole discretion, that the Event of Default is curable and elects to exercise its right to terminate the Agreement, Fannie Mae will provide written notice of the Event of Default to Servicer and the Agreement will terminate automatically thirty (30) days after Servicer's receipt of such notice, if the Event of Default is not cured by Servicer to the reasonable satisfaction of Fannie Mae prior to the end of such thirty (30) day period. If Fannie Mae determines, in its sole discretion, that an Event of Default under Section 6.A.I. , Section 6.AA, or Section 6.A. 5. is not curable, or if an Event of Default under Section 6.A.2. or Section 6.A.3. occurs, and Fannie Mae elects to exercise its right to tenninate the Agreement under Section 6.BA., Fannie Mae will provide written notice of termination to the Selvicer on or hefore the effective date of the tcnnination.

7. Disputes

Fannie Mae and Servicer agree that it is in their mutual interest to resolve disputes by agreement. If a dispute arises under the Agreement, the parties will use all reasonable efforts to promptly resolve the dispute by mutual agreement. If a dispute cannot be resolved informally by mutual agreement at the lowest possible level, the dispute shall be referred up the respective chain of command of each party in an attempt to resolve the matter. This will be done in an expeditious manner. Servicer shall continue diligent performance of the Services pending resolution of any dispute. Fannie Mae and Servicer reserve the right to pursue other legal or equitable rights they may have concerning any dispute. However, the parties agree to take all reasonable steps to resolve disputes internally before commencing legal proceedings.

8. Transfer or Assignment

A. Selvicer mus t provide written notice to Fannie Mae and Freddie Mac pursuant to Section 9 below of: (i) any transfers or assignments of mOltgage loans subject to this Agreement; and (ii) any other transfers or assignments of Servicer's rights and obligations under this Agrcement. Such notice must include payment instructions for payments to be made to the transferee or assignee ofthc mortgage loans subject to the notice (if applicable), and evidence ofthe assumption by such transferee or assignee of the mortgage loans 01' other rights and obligations that are transfcncd, in the form of Exhibit C (the "Assignment and

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Assumption Agrcement"). Servicer acknowledges that Fannie Mae will continue to remit payments to Servicer in accordance with Section 4.B. with respect to mortgage loans that have been assigned or transferred, and that Servicer will be liable for underpayments, overpayments and misdirected payments, unless and until such notice and an executed Assigmnent and Assumption Agreement are provided to Fannie Mae and Freddie Mac. Any purported transfer or assignment of mOitgage loans or other rights or obligations under the Agreement in violation of this Section is void.

B. Servicer shall notify Fannie Mae as soon as legally possible of any proposed merger, acquisition, or other change of control of Servicer, and of any financial and operational circumstances which may impair Servicer's ability to pClfOlTI1 its obligations under the Agreement.

9. Notices

All legal notices under the Agreement shall be in writing and referred to each party's point of contact identified below at the address listed below, or to such other point of contact at such other address as may be designated in writing by such patty. All such notices under the Agreement shall be considered received: (a) when personally delivered; (b) when delivered by commercial overnight courier with verification receipt; (c) when sent by confirmed facsimile; or (d) three (3) days after having been sent, postage prepaid, via certified mail, return receipt requested. Notices shall not be made or delivered in electronic fonn, except as provided in Section 12 B. below, provided, however, that the party giving the notice may send an e-mail to the party receiving the notice advising that party that a notice has bcen sent by means pelmitted under this Section.

To Servicer:

Wells Fargo Bank, N.A. I Home Campus Des Iowa 50328-000 I Attention:

With a copy to:

Wells Fargo Bank, N.A. I Home Campus Des Moines, Iowa 5U:32:~-lIUU Attention : ~~ (';()l~:l, Telephone: Facsimile:

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To FalUne Mac:

Fannie Mae 3900 Wisconsin Avenue, NW Washington, DC 20016 Attention: General Counsel Facsimile: email:

To Treasury:

Chief Office of Homeowners hip Preservation Office of Financial Stability Department of the Treasury 1500 Pennsylvania Avcnue, NW Washington, DC 20220 Facsimile: (202) 622-9219

To Freddie Mac:

FreddicMac 8100 Jones Branch Drive McLean, VA 22102 Attention: Vice President, Making Home Affordable -- Compliance Facsimile: (703) 903-2544 Email to:[email protected]

10. Modifications

A. Subject to Sections IO.B. and I O.C., modifications to the Agreement shall bc in writing and signed by Faonie Mae and Servicer.

B. Fannie Mae and the Treasury each reserve the right to unilaterally modify or supplement the terms and provisions of the Program Documentation that relate (as determined by Fannie Mae or the Treasmy, in their reasonable discretion) to the compliance and performance requirements of the Program, and related remedies established by Freddie Mac, andlor to technical, administrative, or procedural matters or compliance and reporting requirements that may impact the administration oftheProgram

C. Notwithstanding Sections I O.A. and 1O.B., any modification to the Program Documentation that materially impact the borrowcr eligibility requirements, the amount of payments of the Purchase Plice to be made to Participating Servicers, Investors and borrowers under the Program, or the rights, duties, or obligations ofPalticipating Servicers, Investors or borrowers in connection with the Program (each, a "Program Modification" and, collectively, the "Program Modifications") shall be effective only on a prospective basis; Participating Servicers will be afforded the opportunity to opt-out of the Program when Program Modifications at'e published with respect to some or all of the mortgage loans sougbt to be modified under the Program on or after the effective date of the Program Modification, at Servicer's discretion. Opt-out procedures, including, but not limited to, the time and process for notification of election to opt-out and the window for such election, will be set f0l1h in the Program Documentation describing the Program Modification, provided, however, that Servicer will be given at least thirty (30) days to elect to opt-out ofa Program Modification. For the avoidancc of doubt, during the period during which Servicer may elect to opt-out ofa Program Modification

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and after any such opt-out is elected by ServiceI', ServiceI' will continue to perform the Services described in the Financial Instrument and the Program Documentation (as the Program Documentation existed immediately prior to the publication of the Program modification prompting the opt-out) with respect to qualifying mortgage loan modifications that were submitted by ServiceI' and accepted by Fannie Mae prior to the opt-out.

11. Miscellaneous

A. The Agreement shall be govemed by and construed under Federal law and not the law of any state or locality, without referenee to or application of the conflicts of law principles. Any and all disputes between the parties that cannot be settled by mutual agreement shall be resolved solely and exclusively in the United States Federal courts located within the District of Columbia. Both parties consent to thc jurisdiction and venue of such courts and irrevocably waive any objections thereto.

B. The Agreement is not a Federal procuremcnt contract and is thcrefore not subject to the provisions ofthe Federal Property and Administrative Services Act (41 U.S.C. §§ 251-260), the Federal Acquisition Regulations (48 CFR Chapter I), or any other Federal procurement law.

C. Any provision of the Agreement that is determined to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffcctive to the extent of such prohibition or unenforceabilily without invalidating the remaining provisions ofthe Agreement, and no such prohibition or unenforceability in any jurisdiction shall invalidate such provision in any other jurisdiction.

D. Failure on the part of Fannie Mae to insist upon strict compliance with any of the terms hereof shall not be deemed a waiver, nor will any waiver hereunder at any time be deemed a waiver at any other time. No waiver will be valid unless in writing and signed by an authorized officer of Fannie Mae. No failure by Fannie Mae to exercise any right, remedy, or power hereunder will operate as a waiver thereof. The rights, remedies, and powers provided herein are cumulative and not exhaustive of any rights, remedies, and powers provided by law.

E. The Agreement shall inure to the benefit of and be binding upon the parties to the Agreement and their pelmitted successors-inintercst.

F. The Commitment and the Assignment and Assumption Agreement (if applicable) may be executed in two or more counterparts (and by different parties on separate counterparts), each of which shall be an original, but all of which together shall constitute one and thc same instrument.

G. The Commitment, together with the Financial Insl1llment, the Annual Certifications, the Assigrunent and Assumption Agreement (if applicable) and the Program Documentation, constitutes the entire agreement of the parties with respect to the subject matter hereof. In the event of a conflict between any of the foregoing documents and the Program Documentation, the Program Documentation shall prevail. In the event of a conflict between the Program Guidelines and the Supplemental Directives, the Program Guidelines shall prevail.

H. Any provisions ofthe Agreement (including all documents incorporated by reference thereto) that contemplate their continuing effectiveness, including, but not limited to, Sections 4, 5 B., 6 F., 6 G., 9, II and 12 ofthe Commitment, and Sections 2, 3, 5, 7, 8, 9 and 10 of the Financial Instrument, and any other provisions (or portions thcreof) in the Agreement that relate to, or may impact, the ability of Fannie Mae and Freddie Mac to fulfill their responsibilities as agents of the United States in connection with the Program, shall survive the expiration or termination of the Agreement.

12. Defined Terms; Incorporation by Reference

A. All references to the "Agreement" necessarily include, in all instances, the Commitment and all documents incolporated into the Commitment by reference, whcther or not so noted contextually, and all amendments and modifications thereto. Specific references

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throughout the Agreement to itldividual documents that are incorporated by reference into the Con'unitment are not inclusive of any other documents that are incorporated by reference, unless so notcd contextually.

B. The term "Effective Date" means the date on which Fannie Mae transmits a copy of the fully executed Commitment and Financial Instrument to Treasury and Selvicer with a completed cover sheet, in the form attached hereto as Exhibit D (the "Cover Sheet"). The Commitment and Financial Insllllment and accompanying Cover Sheet will be faxed, emailed, or made available through other electronic means to TreaslllY and Servicer in accordance with Section 9.

C. The Program Documentation and Exhibit A - Form of Financial Instrument, Exhibit B - Form of Annual Certification, Exhibit C - Form of Assigument and Assumption Agreement and Exhibit D - Form of Cover Sheet (in each casc, in form and, upon completion, in substance), including all amendments and modifications thereto, arc incorporated into this Commitment by this reference and given the same force and effect as though fully set forth herein.

[SIGNATURE PAGE FOLWWS; REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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I

In Wltnes8 Whereof, Servicer and Fannie Mae by their duly authorized officials hereby execute and deliver this Commitment to Purchase Financial Instrument and Servicer Participation Agreement as of the Effective Date.

SERVICER: Wells Fargo Home Mortgage, a division of Wells Fargo Bank, N.A.

BY: W~~ Name: Michael J. Reid Title: C D-President Date: q. n -ott

EXHIBITS

Exhibit A Form of Financial Instrument

Exhibit B Form of Annual Certification

By:V~~~~"!2~~::::'----Name: U S i~ t!eW-Title: 'V ic.e proti (kk Date: l:\- 11 -Q,\

Exhibit C Form of Assignment and Assumption Agreement

Exhibit 0 Form of Cover Sheet

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EXHIBIT A

FORM OF FINANCIAL INSTRUMENT


FINANCIAL INSTRUMENT

This Financial Instrument is delivered as provided in Section I of the Commitment to Purchase Financial Instrument and Servicer Partieipation Agreement (the "Commitment"), entered into as of the Effective Date, by and between Federal National Mortgage Association ("Fannie Mae"), a federally chartered corporation, acting as fmancial agent of the United States, and the lmdersigned party ("Servicer"). This Financial Instrument is effective as ofthe Effective Date. All of the capitalized terms that are used but not defined herein shall have the meanings ascr ibed to them in the Commitment.

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Servicer agrees as follows:

1. Purchase Price Consideration: Services. This Financial Instrument is being purchased by Fannie Mae pursuantto Section 4 of the Commitment in consideration for the payment by Fannie Mae, in its capacity as a fmancial agent ofthe United States, of various payments detailed in the Program Documentation and refen'ed to collectively in the Commitment as the "Pw'chase Price." The conditions precedent to the payment by Fannie Mae of the Purchase Price are: (a) the execution and delivery ofthis Financial Instrument and the Commitment by Servicerto Fannie Mae; (b) the execution and delivery by Fannie Mae of the Commitment to Servicer; (c) the delivery of copies of the fully executed Commitment and Financial [nsh'ument to TreasUlY on the Effective Date; (d) the performance by Servicer of the Services described in the Agreement; and (e) the satisfaction by Servicer of such other obligations as are set forth in the Agreement. Scrvicer shall perfOlm all Services in consideration for the Purchase Price in accordance with the terms and conditions of the Agreement, 10 the reasonable satisfaction of Fannie Mae and Freddie Mac.

2. Authority and Agreement to Palticipate in Program. Subject 10 the limitations set forth in Section 2 of the Agreement, Servicer shall use reasonable efforts to remove all prohibitions or impediments 10 its authority and to obtain all third patty consents and waivers that at'e required, by contract or law, in order to effectuate any loan modification under the Program.

3. Audits, Reporting and Data Retention.

(a) Freddie Mac, the Federal Housing Finance Agency and other patties designated by the TreasUlY or applicable law shall have the right during normal business hours to conduct unannounced, infolTIlll1 onsite visits and to conduct formal onsile and offsite physical, pel~onnel and infOlmation technology testing, security reviews, and audits ofServicer and to examine all books, records and data related to the Services provided and Purchase Price received in connection with the Program on thir ty (30) days ' prior written notice.

(b) Servicer will collect, record, retain and provide to Treasury, Fannie Mae and Freddie Mac all data, information and docUlllentation relating to the Program and bOlTOwers, loans and loan modifications implemented, or potentially eligible for modification, under the Program and any trials conducted in connection with the Program, as required by the Program Documentation. All such data, infOlmation and documentation must be provided to thc Treasury, Fannie Mae and Freddie Mac as, when and in the manner specified in the Program Documentation. In addition, Servicer shall provide copies of executed contracts and tapes of loan pools related to thc Program for review upon request.

(c) Servicer shall promptly take corrective and remedial actions associated with reporting and reviews as directed by Fannie Mae or Freddie Mac and provide to Fannie Mae and Freddie Mac such evidence of the effective implementation of corrective and remedial actions as Fannie Mae and Freddie Mac shall reasonably require. Freddie Mac may conduct additional reviews based on its findings and the conective actions taken by Selvicer.

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(d) In addition to any other ollligation to retain financial and accounting records that may be impoSed by Federal or state law, Servicer shall retain all infannation described in Section 3(b), and all data, books, reports, documents, audit logs and records, including electronic records, related to the performance of Services in connection with the Program. In addition, Serviccr shall maintain a copy of all computer systems and application software necessary to review and analyze these electronic records. Unless otherwiSe directed by Fannie Mae or Freddie Mac, Servicer shall retain these records for at least 7 years from the date the data or record was created, or for such longer period as may be required pursuant to applicable law. Fannie Mac or Freddie Mac may also notify Servicer from time to time of any additional record retention requirements resulting from litigation and regulatory investigations in which the Treasury or any agents of the United States may have an interest, and Servicer agrees to comply with these litigation and regulatOlY investigations requirements.

4. Internal Control Program.

(a) Servicer shall develop, enforce and review on a quarterly basis for effectiveness an internal control program designed to: (i) ensure effective deliveJy of Services in connection with the Program and compliance with the Program Documentation; (ii) effectively monitor and detect loan modification fraud; and (iii) effectively monitor compliance with applicable consumer protection and fair lending laws. The internal control program must include documentation ofthecontrol objectives for Program activities, the associated control techniques, and mechanisms for testing and validating the controls.

(b) Servicer shall provide Freddie Mac with access to all internal control reviews and reports that relate to Services under the Program performed by Servicer and its independent auditing film to enable Freddie Mac to fulfill its duties as a compliance agent ofthe United States; a copy ofthe reviews and reports will be provided to Fannie Mae for record keeping and other administrative plllpOSes.

5. Representations. WalTanties and Covenants. ServiceI' makes the following representations, wananties and covenants to Fannie Mae, Freddie Mac and the Treasury, the truth and accuracy of which aTe continuing obligations ofServicer. In the evenlthat any of the representations, warranties, or covenants made herein cease to be true and correct, Servicer agrees to notify Fannie Mae and Freddie Mac immediately.

(a) ServiceI' is established under the laws of the United States or any state, territory, orpassession of the United States or the District of Columbia, and has significant operations in the United States. ServiceI' has full corporate power and authority to enter into, execute, and deliver the Agreement and to perfOlm its obligations hereunder and has all licenses necessary to carry on its business as now being conducted and as contemplated by the Agreement.

(b) ServiceI' is in compliance with, and covenants that all Services will be pelfonned in compliance with, all applicable Federal, state and local laws, regulations, regulatOlY guidance, statutes, ordinances, codes and requirements, including, but not limited to, the Truth in Lending Act, 15 USC 160 I § et seq., the Home Ownership and Equity Protection Act, 15 USC § 1639, the Federal Trade Commission Act, 15 USC § 41 et seq., the Equal Credit Opportunity Act, 15 USC § 701 et seq., the Fair Credit Reporting Act, 15 USC § 1681 et seq., the Fair Housing Act and other Federal and state laws designed to prevent unfair, discriminatory or predatory lending practices and all applicable laws governing tenant rights. Subject to the following sentence, Servicer has obtained or made, or will obtain 01' make, all governmental approvals or registrations required under law and has obtained 01'

will obtain all consents necessary to authorize the perfolTllance of its obligations under the Program and the Agreement. The performance of Services under the Agreement will not conflict with, 01' be prohibited in any way by, any other agreement 01' statutory restriction by which Servicer is bound,

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provided, however, tbat Fannie Mae acRnowledges and agrccs tbat tbis representation and wananty is qualified solely by and to the extent of any contractual limitations established under applicable servicing contracts to which Servicer is subject. ServiceI' is not aware of any otber legal or fUlancial impediments to perfOiroing its obligations under the Program or the Agreement and shall promptly . notify Fannie Mae of any fmancial and/or operational impediments which may impair its ability to perform its obligatiOlis under the Program or the Agreement. Servicer is not delinquent on any Federal tax obligation or any other debt owed to tbe United States or collected by tbe United States for the bcnefit of others, excluding any debt or obligation that is being contested in good faith.

(c) Servicer covenants that: (i) it will perform its obligations in accordance with theAgrcement and will promptly provide sucb perfolroance repOiting as Fannie Mae may rcasonably require; (ii) all mortgage modifications and all trial period modifications will be offercd to borrowers, fully documented and serviced in accordance with the Program Documentation; and (iii) all data, collection infonnation and other information reported by Servicer to Fannie Mae and Freddie Mac under the Agreement, including, but not limited to, information that is relied upon by Fannie Mae or Freddie Mac in calculating the Purchase Price or in performing any compliance review will be true, complete and accurate in all material respects, and consistent with all relevant servicing records, as and when provided.

(d) Servicer covenants that it will: (i) perform the Services required under the Program Documcntation and tbe Agreement in accordance with the practices, higb professional standards of care, and degrce of attention used in a well-managed operation, and no less than that which the Servicer exercises for itself under similar circumstances; and (ii) use qualified individuals with suitable training, education, experience and skills to perform the Services. Servicer acknowledges that Program palticipation may require changes to, or the augmentation of, its systems, staiTmg and procedures, and covenants and agrees to take all actions necessary to ensure it bas the capacity to implement the Program in accordance with the Agreement.

(e) Servicer covenants that it will comply witb all regulations on conflicts of interest that arc applicable to Scrvicer in connection with the conduct of its business and all conflicts of interest and nondisclosure obligations and restrictions and related mitigation procedures set fortb in tbe Program Documentation (if any).

(I) ServiceI' acknowledges that the provision of false or misleading infonnation to Fannie Mae or Freddie Mac in connection with the Program or pursuant to the Agreement may constitute a violation of: (a) Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code; or (b) the civil False Claims Act (31 U.S.C. §§ 3729-3733). Servicer covenants to disclose to Fannie Mae and Freddie Mac any credible evidence, in connection with the Services, that a management official, employee, or contractor of ServiceI' has committed, or may have committed, a violation of the referenced statutes.

(g) Serviccr covenants to disclose to Fannie Mae and Freddie Mac any other facts or infonnation tbat the Treasury, Fannie Mae or Freddie Mac should reasonably expect to know about Servicer and its contractors to help protect the reputational interests of the Treasury, Fannie Mae and Freddie Mac in managing and monitoring the Program.

(h) Servicer covenants tbat it will timely inform Fannie Mae and Freddie Mac of any anticipated Event of Default.

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(i) Servicer acknowledges that Fannie Mae or Freddie Mac may be required to assist tlte Treasury with responses to the Privacy Act of 1974 (the "Privacy Act"), 5 USC § 552a, inquiries from borrowers and Freedom of Information Act, 5 USC § 552, inquiries from other parties, as well as fOimal inquiries from Congressional committees and members, the Goverrunent Accounting Office, Inspectors General and other government entities, as well as media and consumer advocacy group inquides about the Program and its effectiveness. Servicer covenants that it will respond promptly and accurately to all search requests made by Fannie Mae or Freddie Mac, comply with any related procedures which Fannie Mae or Freddie Mac may establish, and provide related training to employees and contractors. In connection with Privacy Act inquiries, Servicer covenants that it will provide updated and cOlTected infolTOation as appropriate about borrowers' records to ensure that any system of record maintained by Fannie Mae on behalf ofthe TreasUlY is accurate and complete.

(j) Set'vicer acknowledges that FaJUlie Mae is required to develop and implement customer service call centers to respond to borrowers' and other patties' inquiries regarding the Program, which may require additional support from Selvicer. Servicer covenants that it will provide such additional customer service call support as Fannie Mae reasonably determines is necess",y to support the Program.

(k) Servicer acknowledges that Fannie Mae and/or Freddie Mac are required to develop and implement practices to monitor and detect loan modification fraud and to monitor compliance with applicable consumer protection and fair lending laws. Servicer covenants that it will fully and promptly cooperate with Fannie Mae's inquides about loan modification fraud and legal compliance and comply with any anti-fraud and legal compliance procedures which Fannie Mae and/or Freddie Mac may require. Servicer covenants that it will develop and implement an internal control program to monitor and detect loan modification fraud and to monitor compliance with applicable consutner protection and fair lending laws, among other things, as provided in Section 4 of this Financial Instrument and acknowledges that the internal control program will be monitored, as provided in such Section.

(I) Servicer shall sign and deliver an Almual Celtification to Fannie Mae and Freddie Mac beginning on June I, 20 I 0 and again on June I of each year thereafter during the TelTO, in the foml attached as Exhibit B to the Agreement.

6. Use of Contractors. Servicer is responsible for the supervision and management of any contractor that assists in the performance of Services in connection with the Program. Servicer shall remove and replace any contractor that fails to perform. Servicer shall ensure that all of its contractors comply with the terms and provisions ofthe Agreement. Servicer shall be responsible for the acts or omissions of its contractors as if the acts or omissions were by the Servicer.

7. Data Rights.

(a) For purposes of this Section, the following definitions apply:

(i) "Data" means any recorded information, regardless ofform or the media on which it may be recorded, regarding any of the Services provided in connection with the Program.

(ii) "Limited Rights" means non-exclusive rights to, without limitation, use, copy, maintain, modify, enhance, disclose, reproduce, prepare derivative works, and dishibute, in any manner, for any purpose related to the administration, activities, review, or audit of, or public reporting regarding, the Program and to pelTOit others to do so in connection therewith.

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(iii) "NPI" means nonpublic pcrsonal infonnation, as defined nnder the GLB.

(iv) "GLB" means the Gramm-Leach-Bliley Act, 15 U.S.C. 6801-6809.

(b) Subject to S~ction 7(~) below, Treasury, Fannie Mae and Freddie Mac shall have Limited Rights, with respect to all Data pl'Oduced, developed, or obtained by Servicer or a contractor ofServicer in connection with the Program, pl'Ovided, however, that NPI will not be transferred by Fannie Mae in violation ofthe GLB and, provided, further, that Servicer acknowledges and agrees that any use of NPI by, the distribution ofNPI to, or the transfer ofNPI among, Federal, state and local goverument organizations and agencies docs not constitute a violation of the GLB for purposes of the Agreement. Ifrequested, such Data shall be made available to the Treasury, Fannie Mae, or Freddie Mac upon request, 01' as and when directed by the Program Documentation, in industry standard useable fOlmat.

(c) Servicer expressly consents to the publication of its name as a participant in the Program, and the use and publication of Servicer's Data, subject to applicable state and federal laws regarding confidentiality, in any form and on any media utilized by Treasury, Fannie Mae or Freddie Mac, including, but not limited to, on any website or web page hosted by Treasury, Fannie Mae, or Freddie Mac, in connection with the Program, provided that no Data placed in the public domain will: (i) contain the name, social security number, or street address of any borrower or other information that would allow the bon'ower to be identified; or, (ii) if presentcd in a form that links the Servicer with the Data, include infonnation othcr than program performance and participation related statistics such as the number of modifications, performance of modifications, characteristics of the modified loans, or program compensation or fees, with any information about any borrower limited to creditwOlthiness characteristics such as debt, income, and credit score. In any Data provided to an enforcement or supervisory agency with jurisdiction over the ServiceI', these limitations on boITower information do not apply.

8. Publicity and Disclosure.

(a) Servicer shall not make use of any Treasury name, symbol, emblem, program name, or product name, in any advertising, signage, promotional material, press release, Web page, publication, or media intelview, without the prior written consent of the Treasury.

(b) Servicer shall not publish, or cause to have published, or make public use of Fannie Mae's name, logos, trademarks, or any information about its relationship with Fannie Mae without the prior written pennission of Fannie Mae, which permission may be withdrawn at any time in Fannie Mae's sole discretion.

(c) Servicer shall not publish, or cause to have published, or make public use of Freddie Mae's name (Le., "Freddie Mac" or "Federal Home Loan Mortgage Corporation"), logos, trademarks, or any infonnation about its relationship with Freddie Mac without the prior written permission of Freddie Mae, which pennission may be withdrawn at any time in Freddie Mac's sole discretion.

9. Limitation of Liability. IN NO EVENT SHALL FANNIE MAE, THE TREASURY, OR FREDDIE MAC, OR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR AFFILIATES BE LIABLE TO SERVICER WITH RESPECT TO THE PROGRAM OR THE AGREEMENT, OR FOR ANY

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ACT OR OMISSION OCCURRING IN CONNECTION WITH THE FOREGOING, FOR ANY DAMAGES OF ANY KIND, INCLUDING, BUT NOT LIMITED TO DIRECT DAMAGES, INDIRECT DAMAGES, LOST PROFITS, LOSS OF BUSINESS, OR OTHER INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITNE DAMAG ES OF ANY NATURE OR UNDER ANY LEGAL THEORY WHATSOEVER, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF WHETHER OR NOT THE DAMAGES WERE REASONABLY FORESEEABLE; PROVIDED, HOWEVER, THAT THIS PROVISION SHALL NOT LIMIT FANNIE MAE'S OBLIGATION TO REMIT PURCHASE PRICE PAYMENTS TO SERVICER IN ITS CAPACITY AS FINANCIAL AGENT OF THE UNITED STATES IN ACCORDANCE WITH THE AGREEMENT.

10. Indemnification. Servicer shall indemnity, hold hanniess, and pay for the defense of Fannie Mae, the Treasury and Freddie Mac, and their respective officers, directors, employees, agents and affiliates against all claims, liabilities, costs, damages, judgments, suits, actions, losses and expenses, including reasonable attorneys' fees and costs of suit, arising out of or resulting from: (a) Servicer's breach of Section 5 (Representations, Warranties and Covenants) of this Financial Instrument; (b) Servicer's negligence, willful mIsconduct or failure to perfonn its obligations under the Agreement; or (c) anyinjuries to persons (including death) ordarnages to property caused by the negligent or willful acts or omissions ofServicer or its contractors. Servicer shall not settle any suit or claim regarding any of the foregoing without Fannie Mae's prior written consent if such settlement would be adverse to Fannie Mae's interest, or the interests of the Treasury or Freddie Mac. Servicer agrces to payor reimburse all costs that may be incuned by Fannie Mae and Freddie Mac in enforcing this indemnity, including attorneys' fees.

IN WITNESS WHEREOF, Servicer ~ereby executcs this Financial Instrument on the date set f0l1h below.

Wells Fargo Home Mortgage, a division of Wells Fargo Bank, N.A.

Date Co-President Wells Fargo Home Mortgage

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EXHIBITB

FORM OF ANNUAL CERTIFICATION


ANNUAL CERTIFICATION

This Annual Certification is delivered as provided, in Se~tion t .B. of the Commitment to Purchase Financial Instrument and Servicer Participation Agreement (the "Commitment"), effective as or'[lN$ERTj, by and between Federal National Mortgage Association ("Fannie Mac"), a rederally chartered corporation, acting as financial agent of the United States, and the undersigned party ("Servicer"). All terms used, but not defined herein, shall have the meanings ascribed to them in the Comnlitment.

Servicer hereby certifies, as oftl1\lSER'I'DATE ONwmCHc'IlRTIFICATiO'N IS GNtlNj, that:

1. Servicer is established under the laws of the United States or any state, territory, or possession of the United States or the District of Columbia, and has significant operations in the United Statcs. ServiceI' had full corporate power and authority to enter into, execute, and deliver the Agreement and to perform its obligations hereunder and has all licenses necessary to carryon its business as now being conducted and as contemplated by the Agn:emcnt.

2. ServiceI' is in compliance with, and certifies that all Services have been performcd in compliance with, all applicable Federal, state and local laws. regulations, regulatory guidance, statutes, ordinances. codes and requirements, including, but not limited to, the Truth in Lending Act, 15 USC 1601 § et seq., the Home Ownership and Equity Protection Act, J 5 USC § 1639, the Federal Trade Conunission Act, 15 USC § 41 et seq., the Equal Credit Opportunity Act, 15 USC § 70 J et seq., the Fair Credit Reporting Act, J 5 USC § 1681 et seq., the Fair Housing Act and other Federal and state laws designed to prevent unfuir, discriminatOl), or predatory lending practices nnd all applicable laws governing tcnant rights. Subject to the following sentence, Servicer has obtained 01' made all govcl'runental approvals 01' registrations required undcr law and has obtained all consents necessary to authorize the perfOimanceofits obligations under the Program and thc Agreement. The performance of Services under the Agreement has not conflicted with, or been prohibited in any way by, any other agreement or statutory restriction by which Servicer is bound, except to the extent of any contractual limitations undcr applicable scrvicing contracts to which Servicer is subject. Servicer is not aware of any other Icgal or financial impediments to performing its obligations under thc Program or thc Agreement and has promptly notified Fannie Mac of any financial and/or operational impediments which may impair its ability to perform its obligations under the Program or the Agreement. ServiceI' is not delinquent on any Federal tax obligation or any other debt owed to the United States or collected by the United States for the benefit of others, excluding any debts or obligations that are being contested in good fuith.

3. (i) Servicer has performed its obligations in accordance with the Agreement and has promptly provided such performance reporting as Fannie Mac and Freddie ,Mac have reasonabtyrequired; (ii) all mortgage modifications and all trial period modifications have been offered by Servicer to borrowers, fully documented and serviced by SClvicer in accordance with the Program Documentation; and (iii) all data, collcction infonnatioll and other information reported by Servicer to Fannie Mae and Freddie Mac under the Agreement. including, but not limited to, information that was relied upon by Fannie Mae and Freddie Mac in calcuJating the Purchase Price and in performing any compliance review, was true, complete and accuratc in all material respects, andconsistcntwith alt relevant servicing records. as and when provided.

4. Servicer has: (i) perfonned the Services required under the Agreement in accordance with the practices, high professional standards of care, and degree of attention used in a well-managed operation, and no less than that which the Servicerexel'cises for itself under similar circumstances; and (ii) used qualified individuals with suitable training, education, experience and skills to perfoml the Services. Servicer acknowledges that Program participation required changes to, or the augmentation of, its systems, staffing and procedures; Servicer took all actions neccssary to ensurc that it had the capacity to implement the Program in accordance with the Agreement.

5. ServiceI' has complied with all regulations on conflicts of interest that are applicable to Servieer in connection with the conduct o fits business and all conflicts ofinterest and non-disclosure obligations and restrictions and related mitigation procedures set forth in the Program Documentation (if any).

6. ServiceI' acknowledges that the provision offalse or misleading information to Fannie Mae or Freddie Mac in connection with the Program or pursuant to the Agreement may constitute a violation of. (a) Federal criminal law involving fraud. conflict of inter est, bribery, 01' gratuity violations found in Title 18 ofthe United States Code; or (b) the civil False Claims Act (3 J U.S.c. §§ 3729-3733). Servicer has disclosed to Fannie Mae and Freddie Mac any credible evidence, in connection with the Services, that a management

official, employee, 01' contractor ofServicer has committed, or may have committed, a violation of the referenced statutes.

- 2 -


7. Servicer has disclosed to Fannie Mae and Freddie Mac any other facts or information that the Treasury, Fannie Mae or Freddie Mac should reasonably expect to know about ServiceI' and its contractors to help protect the reputational interests of the Treasury, Fannie Mae and Freddie Mac in managing and monitoring the Program.

8. Servieer acknowledges that Fannie Mae and Freddie Mac may be required to assist the Treasury with responses to the Privacy Act of 1974 (the "Privacy Act"), 5 USC § 552a, inquiries from borrowers and Freedom oflnformation Act, 5 USC § 552, inquiries from other parties, as well as formal inquiries from Congressional committees and members, the Government Accounting Office, Inspectors General and other government entities, as well as media and consumer advocacy group inquiries about the Program and its effectiveness. Servicer has responded promptly and accurately to all search requests made by Fannie Mae and Freddie Mac, complied with any related procedures which Fannie Mae and Freddie Mac have established, and provided related training to employees and contractors. In connection with Privacy Act inquiries, Servicer has provided updated and corrected information as appropriate about borrowers' records to ensure that any system of record maintained by Fannie Mae on behalf ofthe Treasury is accurate and complete.

9. Servicer acknowledges that Fannie Mae is required to develop and implement customer service call centers to respond to borrowers' and other parties' inquiries regarding the Program, which may require additional support from Servicer. Servicer has provided such additional customer service call support as Fannie Mae has reasonably requested to support the Program.

10. Servicer acknowledges that Fannie Mae and/or Freddie Mac are required to develop and implement practices to monitol' and detect loan modification fi·aud and to monitor compliance with applicable consumer protection and fair lending laws. ServiceI' has fully and promptly cooperated with Fannie Mae's inquiries about loan modification fi·aud and legal compliance and has complied with any anti-fraud and legal compliance procedures which Fannie Mae and/or Freddie Mac have required. Servicer has developed and implemented an internal control program to monitor and detect loan modification fraud and to monitor compliance with applicable consumer protection and fair lending laws, among other things, as provided in Section 4 ofthe Financial Instrument.

In the event that any of the certifications made herein are discovered not to be true and correct, Servicer agrees to notifY Fannie Mae and Freddie Mac immediately.

tINSERT FUll LEGAL NAME OF SERVICERj:

[Name of Authorized Official] [Title of Authorized Official]

Date

- 3 -


EXHIBITC

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT


ASSIGNMENT AND ASSUMPTION AGREEMENT

1' ... h ... i .. S .. _ ...... A .... SS. igmnent and ASS.U .. m ... I'lion. A ... g. r .. ee. I~l.ent . (th .. C .... "A.SSig.JU.n. e.nta ... n d .. Assumption Agreem~n\"l.is. e .. nt~red. I.·~ .. to.a.s O.f .. :l. ~.)I~R. 11.,.· .. 1' BATEl by and between [INSERt .f'ULLLEGA"(:, NAMEOF.ASSIGNQRj (" Assignor") and (INSERT F.UJ;,LLEGAL NAMEO~ I\&SlONEEJ (" Assignee"). All terms used, but not defined, herein shall have the meanings ascribed to them in the Underlying Agreement (defmed below).

WHEREAS, Assignor and Federal National Mortgage Association, a federally cbru1ered corporation, as fmaneial agent of the United States ("Fannie Mae"), are pal1ies to a Commitment to Purchase Financial Instrument and Servicer Participation Agreement, a complete copy of which (including all exhibits, amendments and modifications thereto) is attached hereto and incorporated herein by this reference (the "Underlying Agreement");

WHEREAS, Assignor has agreed to assign to Assignee: (i) all of its rights and obligations under the Underlying Agreement with respect to the mortgage loans identified on the schedule attached hereto as Schedule I ("Schedule I") andlor(ii) acrtain otber rights and obligations under the Underlying Agreement that are identified on Schedule I; and

WHEREAS, Assignee has agreed to assume the mortgage loans and other rights and obligations under the Underlying Agreement identified on Schedule I.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the pal1ies hereto agree as follows:

I. Assignment. Assignor hereby assigns to Assignee all of Assignor's rights and obligations under the Underlying Agreement with respect to the mortgage 10alls identified on Schedule I and such other rights and obligations under the Underlying Agreement that are identified on Schedule I .

2. Assumption. Assignee hereby accepts the foregoing assignment and assumes all of the rights and obligations of Assignor under the Underlying Agreement with respect to the mortgage loans identified on Schedule 1 aIld such other rights and obligations under the Underlying Agreement tbat are identified on Scbedule I.

3. Effective Date. The date o~ ",hich tbe assignment and as~umption of rights aIld obligations under the Underlying AgreCDlent is effective is [INSERl'BFFECTIVE DA'rEOF ASSIGNMENT/A-SSUMPTIONj.

4. Successors. All futme transfers aIld assignments of the mortgage loans, rights and obligations transferred and assigned hereby are subject to the transfer and assignment provisions ofthe Underlying Agreement This Assignment and Assumption Agreement shall inure to the benefit of, aIld be binding upon, the permitted successors and assigns of the parties hereto.

5. Counterparts. This Assignment and Assumption Agreement may be executed in counterparts, each of which shall be an original, but all of which together constitute one and the same instrument.

- I -


IN WITNESS WHEREOF, Assignor and ASsignee, by their duly authorized officials, hereby execute and deliver this Assignment and Assumption Agreement, together with Schedule I, effective as of the date set forth in Section 3 above.

By: -----------------------------------Namc: ______ _______ ___ _ _ Titlc: _______ _ _ ____ ___ __ _ Date: ____ _ _ _________ _ __ _

- 2 -

ASSIGNEE: '!INSERT.FULt;.P~QAtNAME o~ IASSIQ~j

By: _____ _ ________ _

Name: ____ _________ _ _ Title: ____ _________ __ _ Date: _ ____ ___ ___ ____ _


SCHEDULEl

To

ASSIGNMENT AND ASSUMPTION AGREEMENT

- 3 -


EXHIBITD .

FORM OF COVER SHEET

EXHIBIT B

Trou

bled

Ass

ets

Rel

ief P

rogr

am (T

AR

P)

Mon

thly

105

(a) R

epor

t – J

anua

ry 2

010

Febr

uary

16,

201

0

Th

is re

port

to C

ongr

ess

is p

ursu

ant t

o S

ectio

n 10

5(a)

of t

he E

mer

genc

y E

cono

mic

Sta

biliz

atio

n A

ct o

f 200

8.

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

2 of

16

Mon

thly

105

(a) R

epor

t

J

anua

ry 2

010

Sect

ion

Page

Key

Dev

elop

men

ts ..

......

......

......

......

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......

......

......

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......

......

......

......

......

......

.... 2

Th

e P

resi

dent

’s B

udge

t for

Fis

cal Y

ear 2

011

TA

RP

Pro

gram

s

Initi

ativ

e fo

r C

omm

unity

Dev

elop

men

t F

inan

cial

Ins

titut

ions

Whe

re is

TA

RP

Mon

ey G

oing

? ...

......

......

......

......

......

......

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......

......

......

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......

.. 4

Prog

ram

Upd

ates

....

......

......

......

......

......

......

......

......

......

......

......

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......

......

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......

......

......

......

......

... 7

D

ivid

ends

and

Inte

rest

Rec

eive

d

C

apita

l Pur

chas

e P

rogr

am

B

ank

Lend

ing

and

Inte

rmed

iatio

n S

urve

ys

Te

rm A

sset

-Bac

ked

Loan

Fac

ility

Cer

tific

atio

n ...

......

......

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.. 13

App

endi

ces

App

endi

x 1

- Des

crip

tion

of T

AR

P Pr

ogra

ms

& H

ow T

reas

ury

Exer

cise

s Its

Vot

ing

Rig

hts

App

endi

x 2

- Leg

acy

Secu

ritie

s Pu

blic

-Priv

ate

Inve

stm

ent P

rogr

am Q

uart

erly

Rep

ort

App

endi

x 3

- Mak

ing

Hom

e A

fford

able

Ser

vice

r Per

form

ance

Rep

ort

App

endi

x 4

- Fin

anci

al S

tate

men

t

Not

e: T

his

repo

rt w

as p

ublis

hed

on F

ebru

ary

16, 2

010,

follo

win

g th

e cl

osur

e th

e fe

dera

l age

ncie

s in

Was

hing

ton

D.C

., du

e to

sev

ere

wea

ther

co

nditi

ons

from

Feb

ruar

y 8th

thro

ugh

Febr

uary

11th

.

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

3 of

16

Mon

thly

105

(a) R

epor

t

Jan

uary

201

0 2

Trea

sury

is p

leas

ed to

pre

sent

the

Offi

ce o

f Fin

anci

al S

tabi

lity’

s M

onth

ly 1

05(a

) Rep

ort f

or J

anua

ry 2

010.

The

Trou

bled

Ass

ets

Rel

ief P

rogr

am o

r TAR

P w

as e

stab

lishe

d by

Tre

asur

y pu

rsua

nt to

the

Em

erge

ncy

Eco

nom

ic S

tabi

lizat

ion

Act

of 2

008

or E

ES

A. T

his

law

was

ado

pted

on

Oct

ober

3, 2

008

in r

espo

nse

to t

he s

ever

e fin

anci

al c

risis

faci

ng o

ur c

ount

ry. T

o ca

rry

out

its d

utie

s,

Trea

sury

dev

elop

ed a

num

ber

of p

rogr

ams

unde

r TA

RP

to

stab

ilize

our

finan

cial

sys

tem

and

hou

sing

mar

ket,

whi

ch,

toge

ther

with

the

A

mer

ican

Rec

over

y an

d R

einv

estm

ent

Act

, la

id t

he f

inan

cial

fou

ndat

ion

for

econ

omic

rec

over

y.

In D

ecem

ber

2009

, the

Sec

reta

ry o

f th

e Tr

easu

ry c

ertif

ied

the

exte

nsio

n of

TAR

P a

utho

rity

until

Oct

ober

201

0 as

per

mitt

ed u

nder

the

law

. T

he S

ecre

tary

out

lined

a s

trate

gy f

or

goin

g fo

rwar

d th

at b

alan

ces

the

capa

city

to re

spon

d to

thre

ats

to th

e fin

anci

al s

yste

m th

at c

ould

und

erm

ine

econ

omic

reco

very

with

the

need

to

exe

rcis

e fis

cal d

isci

plin

e an

d re

duce

the

burd

en o

n ta

xpay

ers.

Thi

s st

rate

gy h

as fo

ur e

lem

ents

:

W

ind

dow

n m

any

exis

ting

prog

ram

s: T

he C

apita

l P

urch

ase

Pro

gram

, th

e Ta

rget

ed I

nves

tmen

t P

rogr

am a

nd t

he A

sset

Gua

rant

ee

Pro

gram

, – a

ll of

whi

ch s

ucce

eded

in h

elpi

ng to

sta

biliz

e th

e fin

anci

al s

yste

m –

are

clo

sed

and

expe

cted

to re

turn

a p

rofit

to ta

xpay

ers.

� In

the

Age

ncy

Fina

ncia

l R

epor

t fo

r Fi

scal

Yea

r 20

09 (

FY 2

009)

, th

e es

timat

ed c

ost

to T

reas

ury

was

$41

.6 b

illion

for

the

ap

prox

imat

ely

$365

billi

on e

xpen

ded

in F

Y 20

09 --

far l

ess

than

orig

inal

ly a

ntic

ipat

ed.

� $1

62 b

illion

of i

nves

tmen

ts in

larg

e ba

nks

has

been

repa

id.

This

repr

esen

ts tw

o-th

irds

of a

ll TA

RP

inve

stm

ents

in b

anks

.

N

ew c

omm

itmen

ts w

ill be

focu

sed

on th

ree

area

s:

i.

fore

clos

ure

miti

gatio

n an

d st

abiliz

atio

n of

the

hous

ing

mar

ket;

ii.

prov

isio

n of

cap

ital t

o sm

all a

nd c

omm

unity

ban

ks a

s a

sour

ce o

f cre

dit f

or s

mal

l bus

ines

ses;

and

iii.

su

ppor

t for

the

secu

ritiz

atio

n m

arke

ts u

nder

lyin

g th

ose

sect

ors.

Tr

easu

ry w

ill n

ot u

se r

emai

ning

TAR

P f

unds

unl

ess

nece

ssar

y to

res

pond

to

an i

mm

edia

te a

nd s

ubst

antia

l th

reat

to

the

econ

omy

stem

min

g fro

m fi

nanc

ial i

nsta

bilit

y.

M

anag

e ex

istin

g TA

RP

inve

stm

ents

in a

com

mer

cial

man

ner a

nd d

ispo

se o

f the

m a

s so

on a

s pr

actic

able

.

Key

Dev

elop

men

ts

The

Pres

iden

t’s B

udge

t

On

Febr

uary

1, 2

010,

the

Oba

ma

Adm

inis

tratio

n re

leas

ed th

e B

udge

t of t

he U

.S. G

over

nmen

t for

the

Fisc

al Y

ear 2

011

(FY2

011

Bud

get).

As

refle

cted

in th

e FY

2011

Bud

get f

or T

reas

ury:

Th

e pr

ojec

ted

cost

for

TAR

P h

as f

alle

n to

$11

7 bi

llion

from

the

pre

viou

s es

timat

e of

$34

1 bi

llion.

Th

is is

bas

ed o

n es

timat

ed t

otal

ex

pend

iture

s of

not

mor

e th

an $

550

billio

n, fa

r les

s th

an th

e $7

00 b

illion

orig

inal

ly a

utho

rized

.

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

4 of

16

Mon

thly

105

(a) R

epor

t

Jan

uary

201

0 3

Tr

easu

ry w

ill co

ntin

ue t

o as

sist

res

pons

ible

hom

eow

ners

avo

id f

orec

losu

re,

and

inte

nds

to t

rans

fer,

thro

ugh

legi

slat

ion,

$30

billi

on o

f fu

nds

from

TAR

P to

a n

ew p

rogr

am to

hel

p co

mm

unity

and

sm

alle

r ban

ks g

ive

smal

l bus

ines

ses

acce

ss to

affo

rdab

le c

redi

t.

This

follo

ws

the

Mid

-Ses

sion

Rev

iew

of t

he B

udge

t of t

he U

.S. G

over

nmen

t for

the

Fisc

al Y

ear

2010

, whi

ch r

emov

ed $

250

billio

n th

at h

ad

been

pre

viou

sly

plac

ed i

n re

serv

e fo

r ad

ditio

nal f

inan

cial

sta

biliz

atio

n ef

forts

, as

con

fiden

ce in

the

sta

bilit

y of

our

fin

anci

al m

arke

ts a

nd

inst

itutio

ns h

ad im

prov

ed d

ram

atic

ally

ove

r the

pas

t yea

r.

TAR

P Pr

ogra

ms

The

follo

win

g ke

y de

velo

pmen

ts to

ok p

lace

in J

anua

ry 2

010

unde

r the

TAR

P p

rogr

ams:

Th

e H

ome

Affo

rdab

le M

odifi

catio

n P

rogr

am (

HAM

P)

rele

ased

its

Dec

embe

r S

ervi

cer

Per

form

ance

Rep

ort.

Thr

ough

Dec

embe

r 20

09,

mor

e th

an 8

50,0

00 h

omeo

wne

rs h

ave

had

a m

edia

n pa

ymen

t re

duct

ion

exce

edin

g $5

00 (

incl

udin

g bo

rrow

ers

that

wer

e in

tria

l m

odifi

catio

n pe

riods

), an

d m

ore

than

110

,000

per

man

ent

mor

tgag

e m

odifi

catio

ns h

ave

been

app

rove

d.

Whi

le h

omeo

wne

rs r

ecei

ve

bene

fits

whe

n th

e tri

al m

odifi

catio

n st

arts

, Tre

asur

y pa

ys in

cent

ives

onl

y on

ce th

e pe

rman

ent m

odifi

catio

n st

arts

. To

dat

e, T

reas

ury

has

disb

urse

d ap

prox

imat

ely

$30

milli

on a

nd h

as c

omm

itted

mor

e th

an $

35 b

illion

(of

a t

otal

pot

entia

l allo

catio

n fro

m T

ARP

fund

s of

$50

bi

llion

) for

futu

re in

cent

ive

paym

ents

. (A

cop

y of

the

full

repo

rt is

incl

uded

as

App

endi

x 3.

)

� A

lso

in J

anua

ry, t

he fi

rst s

ervi

cer -

- Ban

k of

Am

eric

a --

com

mitt

ed to

par

ticip

ate

in th

e S

econ

d Li

en P

rogr

am u

nder

HA

MP

, and

upd

ated

gu

idan

ce w

as r

elea

sed

for

serv

icer

doc

umen

tatio

n re

quire

men

ts i

n or

der

to e

xped

ite c

onve

rsio

ns o

f cu

rrent

tria

l m

odifi

catio

ns t

o pe

rman

ent o

nes.

Thi

s gu

idan

ce a

lso

impl

emen

ted

an im

porta

nt p

rogr

am im

prov

emen

t for

futu

re tr

ial p

erio

d pl

ans

by re

quiri

ng s

ervi

cers

to

fully

val

idat

e bo

rrow

er fi

nanc

ial i

nfor

mat

ion

befo

re o

fferin

g a

trial

pla

n.

Tr

easu

ry r

elea

sed

a TA

RP

War

rant

Dis

posi

tion

Rep

ort

that

des

crib

es h

ow t

he t

axpa

yer

has

bene

fitte

d fro

m th

e w

arra

nts

rece

ived

by

Trea

sury

und

er t

he C

apita

l P

urch

ase

Pro

gram

(C

PP

). Th

e re

port,

whi

ch c

an b

e fo

und

at h

ttp://

ww

w.F

inan

cial

Stab

ility.

gov/

late

st/

pr_0

1202

010.

htm

l, sh

ows

that

:

� Ta

xpay

ers

have

rece

ived

mor

e th

an $

4 bi

llion

from

war

rant

s sa

les

in 3

4 ba

nks.

�

Trea

sury

stil

l hol

ds w

arra

nts

(or

shar

es r

ecei

ved

upon

exe

rcis

e of

war

rant

s at

the

time

of in

vest

men

t) in

mor

e th

an 6

00 b

anks

that

pa

rtici

pate

d in

the

CPP

. Tr

easu

ry w

ill se

ll th

e w

arra

nts

of 1

8 ba

nks

that

hav

e fu

lly re

paid

thei

r TAR

P as

sist

ance

in th

e ne

ar fu

ture

.

Tr

easu

ry r

elea

sed

the

initi

al q

uarte

rly r

epor

t on

the

Leg

acy

Sec

uriti

es P

ublic

-Priv

ate

Inve

stm

ent

Prog

ram

(“P

PIP

”). T

reas

ury

has

com

mitt

ed to

inve

st $

30 b

illion

in p

artn

ersh

ip w

ith p

rivat

e in

vest

ors

in o

rder

to h

elp

rest

art i

mpo

rtant

sec

uriti

zatio

n m

arke

ts.

The

repo

rt in

clud

es a

sum

mar

y of

PP

IP c

apita

l act

ivity

, por

tfolio

hol

ding

s an

d cu

rren

t pric

ing,

and

fund

per

form

ance

. (A

cop

y of

the

full

repo

rt is

in

clud

ed a

s A

ppen

dix

2.)

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

5 of

16

Mon

thly

105

(a) R

epor

t

Jan

uary

201

0 4

Initi

ativ

e fo

r Com

mun

ity D

evel

opm

ent F

inan

cial

Inst

itutio

ns

On

Febr

uary

3,

2010

, P

resi

dent

Oba

ma

anno

unce

d de

tails

of

the

new

TAR

P p

rogr

am t

o in

vest

low

er-c

ost

capi

tal

in C

omm

unity

D

evel

opm

ent

Fina

ncia

l Ins

titut

ions

(C

DFI

s),

whi

ch a

re b

anks

, th

rifts

and

cre

dit

unio

ns t

hat

func

tions

in m

arke

ts t

hat

are

unde

rser

ved

by

tradi

tiona

l fin

anci

al in

stitu

tions

. Th

ey ta

rget

mor

e th

an 6

0 pe

rcen

t of t

heir

smal

l bus

ines

s le

ndin

g an

d ot

her e

cono

mic

dev

elop

men

t act

iviti

es

to th

e co

untry

's h

arde

st-h

it co

mm

uniti

es.

Und

er th

is p

rogr

am:

C

DFI

s w

ill b

e el

igib

le to

rece

ive

capi

tal i

nves

tmen

ts o

f up

to 5

per

cent

of r

isk-

wei

ghte

d as

sets

, com

pare

d to

a li

mit

of u

p to

2 p

erce

nt a

s in

itial

ly o

utlin

ed in

Oct

ober

– s

igni

fican

tly in

crea

sing

the

pote

ntia

l im

pact

on

lend

ing

in lo

w-in

com

e co

mm

uniti

es.

C

DFI

s w

ould

pay

div

iden

ds to

Tre

asur

y at

a ra

te o

f 2 p

erce

nt, c

ompa

red

to th

e 5

perc

ent u

nder

the

CPP

.

C

onsi

sten

t w

ith t

he u

se o

f TA

RP

fund

s to

pro

mot

e fin

anci

al s

tabi

lity

and

prot

ect

the

taxp

ayer

, C

DFI

s w

ill ne

ed a

ppro

val

from

the

ir ba

nkin

g re

gula

tor

to p

artic

ipat

e in

thi

s pr

ogra

m.

In

case

s w

here

a C

DFI

mig

ht n

ot o

ther

wis

e be

app

rove

d by

its

regu

lato

r, it

will

be

elig

ible

to p

artic

ipat

e so

long

as

it ca

n ra

ise

enou

gh p

rivat

e ca

pita

l tha

t – w

hen

mat

ched

with

Tre

asur

y ca

pita

l up

to 5

per

cent

of r

isk-

wei

ghte

d as

sets

(RW

A) –

it c

an re

ach

viab

ility.

Whe

re is

TA

RP

Mon

ey G

oing

?

Alth

ough

TAR

P au

thor

ity h

as b

een

exte

nded

, Tre

asur

y ha

s no

tifie

d C

ongr

ess

that

it d

oes

not e

xpec

t to

use

mor

e th

an $

550

billio

n of

the

$700

billi

on a

utho

rized

for T

ARP.

Tr

easu

ry h

as u

sed

this

aut

horit

y to

mak

e in

vest

men

ts th

at h

ave

help

ed to

sta

biliz

e th

e fin

anci

al s

yste

m,

rest

ore

conf

iden

ce i

n th

e st

reng

th o

f ou

r fin

anci

al i

nstit

utio

ns,

rest

art

mar

kets

tha

t ar

e cr

itica

l to

fin

anci

ng A

mer

ican

hou

seho

lds

and

busi

ness

es,

and

prev

ent

avoi

dabl

e fo

recl

osur

es i

n th

e ho

usin

g m

arke

t an

d ke

ep p

eopl

e in

the

ir ho

mes

. A

s of

Jan

uary

31,

201

0,

appr

oxim

atel

y $5

45 b

illion

had

bee

n pl

anne

d fo

r TAR

P p

rogr

ams,

and

of t

hat a

mou

nt: 1

$4

84.7

3 bi

llion

has

been

com

mitt

ed to

spe

cific

inst

itutio

ns u

nder

sig

ned

cont

ract

s.

$3

76.0

3 bi

llion

has

been

pai

d ou

t by

Trea

sury

und

er th

ose

cont

ract

s.

A la

rge

part

of th

e to

tal i

nves

tmen

ts to

dat

e oc

curr

ed in

200

8 un

der t

he C

apita

l Pur

chas

e P

rogr

am.

The

com

mitm

ents

mad

e in

200

9 in

clud

e am

ount

s ex

tend

ed u

nder

the

Oba

ma

Adm

inis

tratio

n’s

Fina

ncia

l Sta

bilit

y P

lan.

Th

ese

incl

ude

fund

s co

mm

itted

und

er th

e H

ome

Affo

rdab

le

Mod

ifica

tion

Pro

gram

, th

e Le

gacy

Sec

uriti

es P

ublic

-Priv

ate

Inve

stm

ent

Pro

gram

, A

utom

otiv

e In

dust

ry F

inan

cing

Pro

gram

and

the

oth

er

prog

ram

s de

scrib

ed i

n th

is r

epor

t. T

axpa

yers

can

tra

ck p

rogr

ess

on a

ll of

the

fin

anci

al s

tabi

lity

prog

ram

s an

d in

vest

men

ts,

as w

ell a

s re

paym

ents

, on

Trea

sury

’s w

ebsi

te w

ww

.Fin

anci

alSt

abilit

y.go

v . S

peci

fical

ly, t

axpa

yers

can

look

at i

nves

tmen

ts w

ithin

two

busi

ness

day

s of

cl

osin

g in

the

TAR

P tr

ansa

ctio

n re

ports

at w

ww

.Fin

anci

alS

tabi

lity.

gov/

late

st/re

ports

andd

ocs.

htm

l .

1 See

foot

note

2 o

n pa

ge 5

.

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

6 of

16

Mon

thly

105

(a) R

epor

t

Jan

uary

201

0 5

Figu

re 1

sho

ws

the

plan

ned

TAR

P in

vest

men

t am

ount

s to

geth

er w

ith th

e to

tal f

unds

dis

burs

ed a

nd in

vest

men

ts th

at h

ave

been

rep

aid

by

prog

ram

as

of J

anua

ry 3

1, 2

010.

Fig

ure

2 sh

ows

the

plan

ned

TAR

P in

vest

men

ts b

y pr

ogra

m a

s of

Jan

uary

31,

201

0. P

leas

e se

e Ap

pend

ix

1 fo

r a d

escr

iptio

n of

the

prog

ram

s lis

ted

in th

e ch

arts

. Fi

gure

1: T

ARP

Sum

mar

y th

roug

h Ja

nuar

y 20

10 ($

bill

ions

) 2

Fi

gure

2:

Plan

ned

TAR

P In

vest

men

ts ($

bill

ions

) thr

ough

Jan

uary

201

0

2 In F

igur

e 1,

TA

RP

fund

s fo

r the

Hom

e A

fford

able

Mod

ifica

tion

Pro

gram

do

not i

nclu

de $

1.26

billi

on to

offs

et c

osts

of p

rogr

am c

hang

es fo

r the

“Hel

ping

Fam

ilies

Sav

e Th

eir

Hom

es A

ct o

f 200

9” ($

1.24

4 bi

llion

) or a

dmin

istra

tive

expe

nditu

res

rela

ting

to th

e S

peci

al In

spec

tor G

ener

al fo

r the

TA

RP

($15

milli

on).

Incl

udin

g th

e fo

rego

ing,

as

of

Janu

ary

31, 2

010,

tota

l TA

RP

com

mitm

ents

and

am

ount

s pa

id o

ut a

s ad

just

ed w

ere

$484

.73

billio

n an

d $3

76.0

3 bi

llion,

resp

ectiv

ely.

Plan

ned

Inve

stm

ents

Rep

aym

ents

Cap

ital P

urch

ase

Pro

gram

204.

89$

204.

89$

204.

89$

121.

94$

Targ

eted

Inve

stm

ent P

rogr

am40

.00

$

40.0

0$

40

.00

$

40.0

0$

A

sset

Gua

rant

ee P

rogr

am5.

00$

0

$

0

$

-

$

C

onsu

mer

and

Bus

ines

s Le

ndin

g In

itiat

ive60

.00

$

20.0

0$

0.

10$

-

$

Le

gacy

Sec

uriti

es P

ublic

-Priv

ate

Inve

stm

ent P

rogr

am30

.00

$

27.0

2$

4.

71$

0.

36$

A

IG69

.84

$

69.8

4$

45

.34

$

-$

Aut

o In

dust

ry F

inan

cing

Pro

gram

85.3

9$

84

.84

$

79.6

9$

3.

33$

H

ome

Affo

rdab

le M

odifi

catio

n P

rogr

am2

50.0

0$

36

.87

$

20.

03$

2

-$

T

otal

s$5

45.1

2$4

83.4

6$3

74.7

6$1

65.6

3

Tota

l D

isbu

rsed

/Out

lays

Com

mitm

ents

Capi

tal P

urch

ase

Prog

ram

Auto

Indu

stry

Fin

anci

ng P

rogr

am

AIG

Cons

umer

and

Bus

ines

s Le

ndin

g In

itiat

ive

Hom

e Af

ford

able

Mod

ifica

tion

Prog

ram

Targ

eted

Inve

stm

ent P

rogr

am

Lega

cy S

ecur

ities

Pub

lic-P

rivat

e In

vest

men

t Pro

gram

Asse

t Gua

rant

ee P

rogr

am

$205

$85

$70

$60$5

0

$40

$30

$5

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

7 of

16

Mon

thly

105

(a) R

epor

t

Jan

uary

201

0 6

Figu

re 3

sho

ws

the

amou

nt o

f TAR

P in

vest

men

ts b

y bo

th th

e am

ount

obl

igat

ed –

or c

omm

itted

for i

nves

tmen

t – a

nd th

e am

ount

dis

burs

ed

or a

ctua

lly p

aid

out,

over

eac

h m

onth

sin

ce in

cept

ion.

Figu

re 3

: Fun

ds c

omm

itted

and

pai

d ou

t und

er T

ARP

from

Oct

ober

200

8 th

roug

h Ja

nuar

y 20

10

-$60

$0$60

$120

$180

$240

$300

$360

$420

$480

$540

-$20$0$20

$40

$60

$80

$100

$120

$140

$160

$180

Oct

-08

Nov

-08

Dec

-08

1/1-

19/2

009

1/20

-31/

2009

Feb-

09M

ar-0

9A

pr-0

9M

ay-0

9Ju

n-09

Jul-0

9A

ug-0

9S

ep-0

9O

ct-0

9N

ov-0

9D

ec-0

9Ja

n-10

Billions

Am

ount

Com

mitt

ed to

Spe

cific

Inst

itutio

ns E

ach

Mon

th (L

eft S

cale

) A

mou

nt P

aid

Out

in E

ach

Mon

th (L

eft S

cale

)

Cum

ulat

ive

Am

ount

Com

mitt

ed to

Spe

cific

Inst

itutio

ns (R

ight

Sca

le)

Cum

ulat

ive

Am

ount

Pai

d O

ut (R

ight

Sca

le)

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

8 of

16

Mon

thly

105

(a) R

epor

t

Jan

uary

201

0 7

Prog

ram

Upd

ates

Div

iden

ds a

nd In

tere

st R

ecei

ved

Mos

t of t

he T

ARP

mon

ey h

as b

een

used

to m

ake

inve

stm

ents

in p

refe

rred

sto

ck o

r loa

ns o

f fin

anci

al in

stitu

tions

.

In

Jan

uary

, Tre

asur

y re

ceiv

ed $

105.

96 m

illion

in d

ivid

ends

and

inte

rest

from

TAR

P in

vest

men

ts.

S

ince

ince

ptio

n, T

reas

ury

has

rece

ived

$12

.99

billio

n in

tota

l div

iden

ds, i

nter

est a

nd fe

es.

Figu

re 4

sho

ws

the

amou

nt o

f div

iden

ds a

nd in

tere

st re

ceiv

ed b

y TA

RP

pro

gram

sin

ce in

cept

ion

and

in th

e m

onth

of J

anua

ry 2

010.

Figu

re 4

: Div

iden

ds a

nd In

tere

st re

ceiv

ed b

y TA

RP

thro

ugh

Janu

ary

2010

($ m

illio

ns)

Trea

sury

’s D

ivid

ends

and

Inte

rest

Rep

orts

for T

ARP

pro

gram

s ar

e av

aila

ble

at h

ttp://

ww

w.F

inan

cial

Stab

ility.

gov/

late

st/re

ports

andd

ocs.

htm

l.

Prog

ram

Sinc

e In

cept

ion

Capi

tal P

urch

ase

Prog

ram

(CPP

)D

ivide

nds

$8,2

83.8

1In

tere

st a

nd F

ees

$30.

62Au

tom

otiv

e In

dust

ry F

inan

cing

Pro

gram

(AIF

P)D

ivide

nds

$936

.11

Inte

rest

$455

.60

Asse

t Gua

rant

ee P

rogr

am (A

GP)

Divi

dend

s$2

76.6

9Ta

rget

ed In

vest

men

t Pro

gram

(TIP

)D

ivide

nds

$3,0

04.4

4Pu

blic

-Priv

ate

Inve

stm

ent P

rogr

am (P

PIP)

Divi

dend

s$1

.99

Inte

rest

$3.6

4TO

TAL

$12,

992.

90

CPP

$8,3

14.4

3 AI

FP$1

,391

.70

AGP

$276

.69

TIP

$3,0

04.4

4 PP

IP$1

.99

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

9 of

16

Mon

thly

105

(a) R

epor

t

Jan

uary

201

0 8

Cap

ital P

urch

ase

Prog

ram

A m

ajor

par

t of T

ARP

has

bee

n th

e C

apita

l Pur

chas

e P

rogr

am (C

PP

). U

nder

this

pro

gram

, Tre

asur

y in

vest

ed in

ban

ks a

nd o

ther

fina

ncia

l in

stitu

tions

to in

crea

se th

eir c

apita

l. B

anks

may

use

the

CP

P m

oney

in a

num

ber o

f way

s, in

clud

ing

shor

ing

up c

apita

l, in

vest

ing

in a

sset

s,

and

incr

easi

ng le

ndin

g. T

he C

PP

inve

stm

ent a

mou

nt w

as d

eter

min

ed b

y th

e si

ze o

f the

ban

k. T

he C

PP

inve

stm

ents

wer

e no

less

than

one

pe

rcen

t and

no

grea

ter t

han

thre

e pe

rcen

t (fiv

e pe

rcen

t for

sm

all b

anks

) of t

he re

cipi

ent’s

risk

-wei

ghte

d as

sets

.

The

CP

P r

emai

ned

open

thro

ugh

2009

for

inve

stm

ents

in s

mal

l ban

ks, w

ith te

rms

aim

ed a

t enc

oura

ging

par

ticip

atio

n by

sm

all c

omm

unity

ba

nks

that

are

qua

lifie

d fin

anci

al in

stitu

tions

(QFI

s) u

nder

CP

P te

rms.

The

last

app

licat

ion

dead

line

unde

r the

CPP

was

in N

ovem

ber 2

009

and

final

clo

sing

s oc

curre

d in

Dec

embe

r 200

9.

Det

ails

on

the

Cap

ital P

urch

ase

Prog

ram

are

ava

ilabl

e at

http

://w

ww

.Fin

anci

alSt

abilit

y.go

v/ro

adto

stab

ility/

capi

talp

urch

asep

rogr

am.h

tml .

CPP

Div

iden

ds a

nd R

epay

men

ts

Trea

sury

rece

ives

div

iden

d or

inte

rest

pay

men

ts o

n its

CP

P in

vest

men

ts.

Ban

ks p

artic

ipat

ing

in th

e C

PP

pay

Tre

asur

y a

divi

dend

rate

of 5

pe

rcen

t per

yea

r for

the

first

five

yea

rs a

nd 9

per

cent

per

yea

r the

reaf

ter,

mos

t on

a cu

mul

ativ

e ba

sis.

S-c

orpo

ratio

n ba

nks

pay

an in

tere

st

rate

of 7

.7 p

erce

nt p

er y

ear f

or th

e fir

st fi

ve y

ears

and

13.

8 pe

rcen

t the

reaf

ter.

58

of

the

bank

s th

at r

ecei

ved

inve

stm

ents

und

er C

PP

hav

e re

paid

Tre

asur

y in

ful

l. W

hen

a ba

nk r

epay

s, it

is a

lso

requ

ired

to p

ay a

ny

accr

ued

and

unpa

id d

ivid

ends

or i

nter

est.

Tre

asur

y co

ntin

ues

to w

ork

with

fede

ral b

anki

ng re

gula

tors

who

mus

t eva

luat

e re

ques

ts fr

om C

PP

parti

cipa

nts

inte

rest

ed in

repa

ying

Tre

asur

y’s

inve

stm

ent.

CPP

War

rant

s Tr

easu

ry a

lso

rece

ived

war

rant

s in

con

nect

ion

with

mos

t of i

ts C

PP in

vest

men

ts.

Com

mun

ity d

evel

opm

ent b

anks

wer

e no

t req

uire

d to

issu

e w

arra

nts.

Whe

n a

publ

icly

trad

ed b

ank

repa

ys T

reas

ury

for a

pre

ferr

ed s

tock

inve

stm

ent,

the

bank

has

the

right

to re

purc

hase

its

war

rant

s.

The

war

rant

s do

not

tra

de o

n an

y m

arke

t an

d do

not

hav

e ob

serv

able

mar

ket

pric

es.

If

the

bank

wis

hes

to r

epur

chas

e its

war

rant

s, a

n in

depe

nden

t val

uatio

n pr

oces

s is

use

d to

est

ablis

h fa

ir m

arke

t val

ue.

If an

inst

itutio

n ch

oose

s no

t to

repu

rcha

se it

s w

arra

nts,

Tre

asur

y is

en

title

d to

sel

l the

m.

Priv

atel

y he

ld b

anks

that

rece

ived

CP

P fu

nds

issu

ed T

reas

ury

a w

arra

nt fo

r add

ition

al s

hare

s of

pre

ferre

d st

ock,

whi

ch T

reas

ury

imm

edia

tely

ex

erci

sed.

Pro

ceed

s fro

m th

e re

purc

hase

s of

sha

res

acqu

ired

from

a w

arra

nt a

re in

clud

ed a

s ca

sh re

ceiv

ed fr

om s

ales

of w

arra

nts

in F

igur

e 5

belo

w.

Fi

gure

5 s

how

s th

e cu

mul

ativ

e C

PP

act

ivity

sin

ce p

rogr

am in

cept

ion.

Fig

ure

6 sh

ows

num

ber o

f ban

ks b

y in

vest

men

t am

ount

and

tota

l CPP

fu

nds

disb

urse

d by

inve

stm

ent a

mou

nt th

roug

h Ja

nuar

y.

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

10 o

f 16

Mon

thly

105

(a) R

epor

t

Jan

uary

201

0 9

Figu

re 5

: C

PP S

naps

hot s

ince

ince

ptio

n

Fi

gure

6:

Num

ber o

f ban

ks b

y in

vest

men

t am

ount

(lef

t) an

d to

tal C

PP fu

nds

disb

urse

d by

inve

stm

ent a

mou

nt (r

ight

)

Num

ber o

f Ins

titut

ions

:70

7*To

tal D

ivide

nds

$8.2

8 bi

llion

Am

ount

Inve

sted

:$2

04.9

bill

ion

Jan

uary

Div

iden

ds$0

.755

mill

ion

Larg

est I

nves

tmen

t:$2

5 bi

llion

Tota

l Int

eres

t$1

7.62

mill

ion

Sm

alle

st In

vest

men

t:$3

01,0

00To

tal F

ee In

com

e$1

3 m

illio

nTo

tal W

arra

nt In

com

e$4

.03

billi

on**

Num

ber o

f Ins

titut

ions

40Fu

ll R

epay

men

ts:

$121

.65

billi

on

R

epur

chas

e A

mou

nt$2

.92

billi

on**

N

umbe

r of I

nstit

utio

ns:

58

A

uctio

n A

mou

nt$1

.11

billi

onP

artia

l Rep

aym

ents

:$2

90.7

3 m

illio

nTo

tal I

ncom

e$1

2.34

bill

ion

N

umbe

r of I

nstit

utio

ns:

8To

tal A

mou

nt R

epai

d:$1

21.9

4 bi

llion

**In

clud

es p

roce

eds

from

exe

rcis

ed w

arra

nts

Repa

ymen

ts

CPP

Cum

ulat

ive

Inve

stm

ents

*Ban

ks in

48

stat

es, D

.C. a

nd P

uerto

Ric

o

Inco

me

to T

reas

ury

500

7253

5719

60

100

200

300

400

500

600

Less

than

$2

5 m

illio

n$2

5 m

illio

n -$

50

mill

ion

$50

mill

ion

-$10

0 m

illio

n

$100

m

illio

n -$

1 bi

llion

$1 b

illio

n -

$10

billi

on

$10

billi

on

and

up

$189

.5

$13.

3$2

.1$-

$20

$40

$60

$80

$100

$120

$140

$160

$180

$2

00

Larg

e (C

PP

in

vest

men

t of $

250

mill

ion

and

up)

Med

ium

(CP

P

inve

stm

ent $

12

mill

ion

- $25

0 m

illio

n)

Sm

all (

CP

P

inve

stm

ent $

12

mill

ion

and

less

)

Billi

ons

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

11 o

f 16

Mon

thly

105

(a) R

epor

t

Jan

uary

201

0 10

Ban

k Le

ndin

g an

d In

term

edia

tion

Surv

eys

Eac

h m

onth

, Tre

asur

y as

ks b

anks

par

ticip

atin

g in

the

CP

P to

pro

vide

info

rmat

ion

abou

t the

ir le

ndin

g ac

tiviti

es a

nd p

ublis

hes

the

resu

lts in

tw

o re

ports

des

crib

ed b

elow

. Th

ese

two

repo

rts a

re in

tend

ed to

hel

p th

e pu

blic

eas

ily a

sses

s th

e le

ndin

g an

d in

term

edia

tion

activ

ities

of

parti

cipa

ting

bank

s.

The

Mon

thly

Len

ding

and

Inte

rmed

iatio

n S

naps

hots

rep

ort g

athe

rs a

nd p

rovi

des

data

on

the

lend

ing

and

othe

r in

term

edia

tion

activ

ities

for

the

22 la

rges

t fin

anci

al in

stitu

tions

that

rece

ived

TAR

P in

vest

men

ts u

nder

the

CP

P.

On

Janu

ary

15, 2

010,

Tre

asur

y re

leas

ed th

e re

sults

of

its tw

elfth

sur

vey

of b

anks

’ act

iviti

es, i

nclu

ding

the

follo

win

g in

form

atio

n on

Nov

embe

r len

ding

:

Th

e ov

eral

l out

stan

ding

loan

bal

ance

(of

all

resp

onde

nts)

was

fla

t fro

m O

ctob

er to

Nov

embe

r at

the

top

22 p

artic

ipan

ts in

the

Cap

ital

Pur

chas

e P

rogr

am (

CP

P),

whi

le to

tal o

rigin

atio

ns o

f new

loan

s in

crea

sed

2 pe

rcen

t fro

m O

ctob

er to

Nov

embe

r. In

Nov

embe

r, th

e 22

su

rvey

ed i

nstit

utio

ns o

rigin

ated

app

roxi

mat

ely

$244

billi

on i

n ne

w l

oans

. To

tal

orig

inat

ions

of

loan

s by

all

resp

onde

nts

rose

in

four

ca

tego

ries

(mor

tgag

es, c

redi

t car

d lo

ans,

C&I

rene

wal

s of

exi

stin

g ac

coun

ts, a

nd C

&I n

ew c

omm

itmen

ts) a

nd fe

ll in

four

loan

cat

egor

ies

(HE

LOC

s, o

ther

con

sum

er le

ndin

g pr

oduc

ts, C

RE

rene

wal

s of

exi

stin

g ac

coun

ts, a

nd C

RE

new

com

mitm

ents

).

This

mon

thly

lend

ing

repo

rt pr

ovid

es d

ata

on c

onsu

mer

lend

ing,

com

mer

cial

lend

ing,

and

tota

l len

ding

for

all

CP

P p

artic

ipan

ts.

Fig

ure

7 su

mm

ariz

es to

tal l

oan

activ

ity a

mon

g al

l CP

P p

artic

ipan

ts.

Figu

re 7

: Sum

mar

y of

CPP

Mon

thly

Len

ding

Rep

ort D

ata

($ m

illio

ns)

Dat

eN

umbe

r of

Re

spon

dent

sTo

tal A

vera

ge

Cons

umer

Loa

nsTo

tal A

vera

ge

Com

mer

cial

Loa

nsTo

tal A

vera

ge

Loan

s

2/28

/200

951

9$2

,898

,031

$2,3

80,6

91$5

,278

,662

3/31

/200

955

3$2

,885

,662

$2,3

59,0

16$5

,244

,690

4/30

/200

954

1$2

,852

,650

$2,3

29,5

36$5

,182

,182

5/31

/200

961

2$2

,843

,527

$2,3

46,6

20$5

,190

,165

6/30

/200

960

4$2

,812

,225

$2,4

29,9

30$5

,242

,156

7/31

/200

960

4$2

,803

,284

$2,3

44,3

95$5

,147

,679

8/31

/200

964

9$2

,789

,108

$2,3

28,4

33$5

,117

,542

9/30

/200

965

2$2

,795

,012

$2,2

67,4

21$5

,062

,434

10/3

1/20

0965

5$2

,769

,129

$2,2

50,8

79$5

,020

,008

10/3

1/20

09 (A

djus

ted)

*64

2$2

,764

,929

$2,2

34,6

44$4

,999

,574

11/3

0/20

0964

4$2

,759

,874

$2,2

35,4

58$4

,995

,333

11/3

0/20

09 (A

djus

ted)

*64

2$2

,759

,675

$2,2

35,1

11$4

,994

,786

-0.1

9%0.

02%

-0.1

0%

All

CPP

Reci

pien

ts

Chan

ge (O

ct A

djus

ted

to N

ov A

djus

ted)

* Ad

just

ed to

incl

ude

only

inst

itut

ions

that

repo

rted

bot

h 10

/31/

09 d

ata

and

11/3

0/09

dat

a (u

sing

con

sist

ent r

epor

ting

m

etho

dolo

gy)

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

12 o

f 16

Mon

thly

105

(a) R

epor

t

Jan

uary

201

0 11

Term

Ass

et-B

acke

d Se

curit

ies

Loan

Fac

ility

Und

er th

e Te

rm A

sset

-Bac

ked

Secu

ritie

s Lo

an F

acili

ty (T

ALF)

, the

Fed

eral

Res

erve

Ban

k of

New

Yor

k m

akes

loan

s to

buy

ers

of a

sset

-ba

cked

sec

uriti

es in

ord

er t

o st

imul

ate

cons

umer

and

bus

ines

s le

ndin

g by

the

issu

ers

of t

hose

sec

uriti

es.

Trea

sury

use

s TA

RP

fun

ds t

o pr

ovid

e cr

edit

supp

ort f

or th

e TA

LF.

Th

e as

set-b

acke

d se

curit

ies

(AB

S) t

hat a

re e

ligib

le fo

r the

TAL

F m

ust b

e ba

cked

by

new

or r

ecen

tly o

rigin

ated

aut

o lo

ans,

stu

dent

loan

s,

cred

it ca

rd lo

ans,

equ

ipm

ent l

oans

, flo

orpl

an lo

ans,

insu

ranc

e pr

emiu

m lo

ans,

loan

s gu

aran

teed

by

the

Sm

all B

usin

ess

Adm

inis

tratio

n,

resi

dent

ial m

ortg

age

serv

icin

g ad

vanc

es, o

r com

mer

cial

mor

tgag

e lo

ans,

incl

udin

g le

gacy

loan

s.

Th

e m

arke

ts fo

r A

BS

are

an

impo

rtant

sou

rce

of c

redi

t for

con

sum

ers

and

busi

ness

es. T

hese

mar

kets

ess

entia

lly s

topp

ed fu

nctio

ning

du

ring

the

finan

cial

cris

is.

The

purp

ose

of T

ALF

is to

hel

p re

star

t the

se m

arke

ts a

nd h

elp

cons

umer

s an

d bu

sine

sses

obt

ain

cred

it.

Th

e fir

st T

ALF

subs

crip

tion

took

pla

ce o

n M

arch

19,

200

9 an

d th

ere

have

bee

n 18

mon

thly

AB

S a

nd c

omm

erci

al m

ortg

age-

back

ed

secu

ritie

s (C

MBS

) su

bscr

iptio

ns a

s of

Jan

uary

31,

201

0. A

tota

l of a

ppro

xim

atel

y $6

1.65

billi

on o

f TAL

F-el

igib

le le

gacy

and

new

ABS

an

d C

MB

S is

suan

ce h

as b

een

lent

aga

inst

.

In

Aug

ust 2

009,

Tre

asur

y an

d th

e FR

BNY

anno

unce

d th

e ex

tens

ion

of th

e TA

LF fo

r new

ly-is

sued

ABS

and

lega

cy C

MBS

thro

ugh

Mar

ch

31, 2

010.

In

addi

tion,

TAL

F w

ill m

ake

loan

s ag

ains

t new

ly is

sued

CM

BS

thro

ugh

June

30,

201

0. T

here

wer

e no

furth

er a

dditi

ons

to th

e ty

pes

of c

olla

tera

l elig

ible

for t

he T

ALF.

Figu

re 8

sho

ws

the

incr

ease

in is

suan

ce o

f con

sum

er A

BS s

ince

the

laun

ch o

f TAL

F in

Mar

ch 2

009.

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

13 o

f 16

Mon

thly

105

(a) R

epor

t

Jan

uary

201

0 12

Figu

re 8

: Tot

al C

onsu

mer

AB

S Is

suan

ce th

roug

h Ja

nuar

y 20

10

So

urce

: Mar

kets

Roo

m, U

.S. T

reas

ury

Dep

artm

ent a

nd M

arke

ts G

roup

, FR

BN

Y.

Det

ails

on

TALF

are

ava

ilabl

e at

http

://w

ww

.Fin

anci

alSt

abilit

y.go

v/ro

adto

stab

ility/

lend

ingi

nitia

tive.

htm

l

18.5

18.

2

8.2

8.1

3.6

0.4

0.5

1.9

1.3

1.6

2.0

5.2

1.2

5.8

2.0

0.1

4.4

4.3

6.6

0.3

6.8

8.3

2.9

13.6

16.5

12.6

9.1

16.8

6.6

6.0

3.8

1.5

0510152025

TALF

Issu

ance

Non

-TA

LF Is

suan

ce

$ Bl

ns

Cas

e 1:

10-c

v-00

604

Doc

umen

t 1-3

F

iled

12/2

8/10

P

age

14 o

f 16

Mon

thly

105

(a) R

epor

t

Jan

uary

201

0 13

Cer

tific

atio

n

As A

ssis

tant

Sec

reta

ry f

or F

inan

cial

Sta

bilit

y at

the

Uni

ted

Stat

es D

epar

tmen

t of

the

Tre

asur

y, I

am

the

offi

cial

with

del

egat

ed a

utho

rity

to

appr

ove

purc

hase

s of

trou

bled

ass

ets

unde

r the

Tro

uble

d As

sets

Rel

ief P

rogr

am.

I cer

tify

to th

e C

ongr

ess

that

eac

h de

cisi

on b

y m

y of

fice

to

appr

ove

purc

hase

s of

trou

bled

ass

ets

durin

g th

is re

porti

ng p

erio

d w

as b

ased

on

the

offic

e’s

eval

uatio

n of

the

fact

s an

d ci

rcum

stan

ces

of e

ach

prop

osed

inve

stm

ent,

incl

udin

g re

com

men

datio

ns f

rom

reg

ulat

ors,

in

orde

r to

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EXHIBIT C


File No: 01011054

Multistate NOTE

June 15, 2001 8 Draycoach Lane I Merrimack , NH 03054

[property Address]

1. PARTIES

FHA Case No.

341-0723384

"Borrower" means each person signing at the end of this Note, and the person's successors and assigns. "Lender" means Homeowners Assistance Corp.

and its successors, and assigns.

2. BORROWER'S PROMISE TO PAY; INTEREST In return for a loan received from Lender, Borrower promises to pay the principal sum of TWO HUNDRED

TWENTY-EIGHT THOUSAND NINE HUNDRED THIRTY-THREE & 00/100 Dollars (U .S. $ 228 I 933 . 00 ), plus interest, to the order of Lender. Interest will be charged on unpaid principal from the date of disbursement of the loan proceeds by Lender, at the rate of SEVEN & 00/100 per cent ( 7;.000 %) per year until the full amount of principal has been paid.

3. PROMISY;: TO PAY SECURED Borrower's promise to pay is secured by a mortgage, deed of trust or similar security instrument that is dated the same date

as this Note and called the "Security Instrument." That Security Instrument protects the Lender from losses which might result if Borrower defaults under this Note.

4. MANNER OF PAYMENT (A) Time

Borrower shall make a payment of principal and interest to Lender on the first day of each month beginning on Augus tOl, 2001 . Any principal and interest remaining on the first day of July I 2031 will be due on that date, which is called the maturity date.

(B) Place Payment shall be made at 165 South River Road Bedford , NH 03110

or at such other place as Lender may designate in writing.

(C) Amount Each monthly payment of principal and interest will be in the amount of $ 702. 4 8 . This amount will

be part of a larger monthly payment required by the Security Instrument, that shall be applied to principal, interest and other items in the order described in the Security Instrument.

(D) Allonge to this note for payment adjustments If an allonge providing for payment adjustments is executed by Borrower together with this Note, the covenants of

the allonge shall be incorporated into and shall amend and supplement the covenants of this Note as if the allonge were a part of this Note. [Check applicable box]

o Graduated Payment Allonge o Growing Equity Allonge

o Other

5. BORROWER'S RIGHT TO PREPAY Borrower has the right to pay the debt evidenced by this Note, in whole or in part, without charge or penalty, on the first

day of any month. Lender shall accept prepayment on other dates provided that borrower pays interest on' the amount prepaid for the remainder of the month to the extent required by Lender and permitted by regulations of the Secretary. If Borrower makes a partial payment there will be no changes in the due date or in the amount of the monthly payment unless lender agrees in writing to those changes. ",

Page 1 0/2 FHA Multistatc Fixed Rate Note-lO/95


6. BORROWER'S FAILURE TO PAY (A) Late Charge for Overdue Payments

If Lender has not received the full monthly payment required by the Security Instrument, as described in Paragraph 4(C) of this Note by the end of fifteen calender days after the payment is due, Lender may collect a late charge in the amount of four per cent ( 4 %) of the overdue amount of each payment.

(B) Default If Borrower defaults by failing to pay in full any monthly payment, then Lender may, except as limited by

regulations of the Secretary in the case of payment defaults, require immediate payment in full of the principal remaining due and all accrued interest. Lender may choose not to exercise this option without waiving its rights in the event of any subsequent de~ault. In many circumstances regulations issued by the Secretary will limit Lender's rights to require immediate payment in full in the case of payment of defaults. This Note does not authorize acceleration when not permitted by HUD regulations. As used in this Note, "Secretary" means the Secretary of Housing and Urban Development or his or her designee.

(C) Payment of Costs and Expenses If Lender has required immediate payment in full, as described above, Lender may require Borrower to pay costs and

expenses including reasonable and customary attorneys' fees for enforcing this Note. Such fees and costs shall bear interest from the date of disbursement at the same rate as the principal of this Note.

7. WAIVERS Borrower and any other person who has obligations under this Note waive the rights of presentment and notice of dishonor.

I

"Presentment" means the right to require Lender to demand payment of amounts due. "Notice of dishonor" means the right to require Lender to give notice to other persons that amounts due have not been paid.

8. GIVING OF NOTICES Unless applicable law requires a different method, any qotice that must be given to Borrower under this Note will be given

by delivering it or by mailing it by first class mail to Bo'rrower at the property address above or at a different address if Borrower has given Lender a notice of Borrower's different address.

Any notice that must be given to Lender under this Note will be given by first class mail to Lender at the address stated in Paragraph 4(B) or at a different address if Borrower is given notice that different address.

9. OBLIGATIONS OF PERSON UNDER THIS NOTE If more than one person signs this Note, each person is fully and personally obligated to keep all of the promises made in

. this Note, including the promise to pay the full amoWit owed. Any person who is a guarantor, surety or endorser of this Note is also obligated to do these things. Any person who takes over these obligations, including the obligations of guarantor, surety or endorser of this Note, is also obligated to keep all of the promises made in this Note. Lender may enforce its rights under this Note against each person individually or against all signatories together. Anyone person signing this Note may be required to pay all of the amounts under this Note.

BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this Note.

=--_-.---=----::-::-----...,-_____ =-,(Seal) Joseph E. Moquin -Borrower

(Seal) ---------------'-B..-orrower

Pay to the Order of Without Recourse

By: _________ __

'~.

Page 20/2

____________ (Seal) -=l3orrower

------------------~':~wer

Witness


EXHIBIT D


Return To: Homeowners Assistance Corp. 165 South River Road Bedford, NH 03110

01011054

_____________ [Space Above This Line For Recording Data] ______ ...,....-_____ _

State of New Hampshire MORTGAGE

FHA Case No: 341-0723384

THIS MORTGAGE ("Security Instrument") is given on June 15, 2001 The mortgagor is Joseph E. Moquin, and Joan M. Moquin, husband and wife

,

("Borrower" ). This Security Instrument is given to Homeowners Assistance Corp.

which is organized and existing under the laws of New Hampshire

and whose address is 165 South River Road, Bedford, NH 03110 (" Lender"). Borrower owes Lender the principal sum of

TWO HUNDRED TWENTY-EIGHT THOUSAND NINE HUNDRED THIRTY-THREE &00/100 i Dollars (U. S. $ 22 8 , 933 . 0 0 ). I

This debt is evidenced by Borrower's note dated the same date as this Security Instrument ("Note"), which provides for monthly payments, with the full debt, if not paid earlier, due and payable on July 01, 2031 .This Security Instrument secures to Lender: (a) the repayment of the debt evidenced by the Note, with interest, and all renewals, extensions and modifications of the Note; (b) the payment of all other sums, with interest, advanced under paragraph 7 to protect the security of this Security Instrument; and (c) the performance of Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower does hereby mortgage, grant and convey to Lender, with mortgage covenants, and with power of sale, the following described property located in Merrimack, Hillsborough CountY, New Hampshire:

SEE ATTACHED EXHIBIT A FOR COMPLETE LEGAL DESCRIPTION MADE A PART HEREOF.

which has the address of 8 Draycoach Lane, Merrimack, NH 03054 ("Property Address");

NEW HAMPSHIRE-Single Family-FNMAIFHLNC UNIFORM INSTRUMENT

New Hampshire FHA Mortgage Form - 04/96 ~. Page 1 of 6


TOGETHER WITH all the improvements now or hereafter erected on the property and all easements, rights, appurtenances, rents, royalties, mineral, oil and gas rights and profits, water rights and stock and all fixtures now or hereafter a part of the property. All replacements and additions shall also be covered by this Security Instrument. All of the foregoing is referred to in this Security Instrument as the "Property."

BORROWER COVENANTS that Borrower is lawfully seised of the estate hereby conveyed and has the right to mortgage, grant and convey the Property and that the Property is unencumbered, except for encumbrances of record. Borrower warrants and will defend generally the title to the Property against all claims and demands, subject to any encumbrances of record.

1. Payment of Principal, Interest and Late Charge. Borrower shall pay when due the principal of, end interest on, the debt evidenced by the Note and late charges due under the Note. ,

2. Monthly Payments of Taxes, Insurance and Other Charges. Borrower shall include in each monthly payment together with the principal and interest as set forth in the Note and any late charges, an installment of any (a) taxes and special assessments levied or to be levied against the Property, (b) leasehold payments or ground rents on the Property and (c), premiums for insurance required by paragraph 4. In any year in which the Lender must pay a mortgage insurance premium to the Secretary (or any year in which such premium would have been required if the Lender still held the Security Instrument), each monthly payment shall also include either: (i) an installment of the annual mortgage insurance premium to be paid by Lender to the Secretary, or (ii) a monthly charge instead of a mortgage insurance premium if this Security Instrument is held by the Secretary, in a reasonable amount to be determined by the Secretary. Except for the monthly charge by the Secretary, thes~ items are called "Escrow Items" and the sums paid to Lender are called "Escrow Funds." ,

Lender may, at any time, collect and hold amounts for Escrow Items in an aggregate amount not to exceed the maximum amount that may be required for Borrower's escrow account under the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. Section 2601 et seq. and implementing regulations, 24 CPR Part 3500, as they may be amended from time to time ("RESPA H), except that the cushion or reserve permitted by RESPA for unanticipated disbursements or disbursements before the Borrower's payments are available in the account may not be based on amounts due for the mortgage insurance premium. i

If the amounts held by Lender for Escrow Items exceed the amount permitted to be held by RESPA, Lender shall deal with the excess funds as required by RESPA if the amounts of funds held by Lender at any time are not sufficient to pay the Escrow Items when due, Lender may notify the Borrower and require Borrower to make up the shortage or deficiency as permitted by RESPA

The Escrow Funds are pledged as additional security for all sums secured by this Security Instrument. If Borrower tenders to Lender the full payment of all sums secured by this Security Instrument, Borrower's account shall be credited with the balance remaining for all installments for items (a), (b), and (c) and any mortgage insurance premium installment that Lender has not become obligated to pay to the Secretary, and Lender shall promptly refund any excess funds to Borrower. Immediately prior to a foreclosure sale of the Property or its acquisition by Lender, Borrower's account shall be credited with any balance remaining for all installments for items (a), (by and (c).

3. Application of Payments. All payments under paragraphs 1 and 2 shall be applied by Lender as follows:

First, to the mortgage insurance premium to .be paid by Lender to the Secretary or to the monthly charge by the Secretary instead of the monthly mortgage insurance premiuin;

Second, to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazard insurance premiums, as required;

Third. to interest due under the Note; Fourth, to amortization of the principal of the Note; Fifth, to late charges due under the Note.

4. Fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the Property whether now in existence or subsequently erected, against any hazards, casualties. and contingencies. including fire, for which Lender requires insurance. This insurance shall be maintained in the amounts and for the periods that Lender requires. Borrower shall also

New Hampshire FHA Mortgage Form - 04/96 Page 2 of6

t~.


insure all improvements on the Property whether now in existence or subsequently erected, against loss by floods to the extent, required by the Secretary. All insurance shall be carried with companies approved by Lender. The insurance policies and any renewals shall be held by Lender and shall include loss payable clauses in favor of, and in a form acceptlble to, Lender.

In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may make proof of loss if not made promptly by Borrower. Each insurance company concerned is hereby authorized and directed to make payment for such loss directly to Lender, instead of to Borrower and to Lender jointly All or any part of the insurance proceeds may be applied by Lender, at its option, either (a) to the reduction of the indebtedness under the Note and this Security Instrument, first to any delinquent amounts applied in the order in paragraph 3, and then to prepayment of principal, or (b) to the restoration or repair of the damaged Property. Any application of the proceeds to the principal shall not extend or postpone the due date of the monthly payments which are referred to in paragraph 2, or change the amount of such payments. Any excess insurance proceeds over an amount required to pay all outstlnding indebtedness under the Note and this Security Instrument shall be paid to the entity legally entitled thereto.

In the event of foreclosure of this Security Instrument or other transfer of title to the Property that extinguishes the indebtedness, all right, title and interest of Borrower in and to insurance policies in force shall pass to the purchaser.

5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application;Leaseholds. Borrower shall occupy, establish, and use the Property as Borrower's principal residence within sixty days after the execution of this Security Instrument and ' shall continue to occupy the Property as Borrower's principal residence for at least one year after the date of occupancy, unless the Secretary determines this requirement will cause undue hardship for Borrower, or unless extenuating circumstances exist which are beyond BOI'rower's control. Borrower shall notify Lenders of any extenuating circumstances. Borrower shall not commit waste or destroy damage or substantially change the Property or allow, the Property to deteriorate, reasonable wear and tear excepted. Lender may inspect the Property if the Property is vacant or abandoned or the loan is in default. Lender may take reasonable action to protect and preserve such vacant or abandoned Property. Borrower shall also be in default if Borrower, during the loan application process, gave materially false or inaccurate information or statements to Lender (or failed to provide Lender with any material information) in connection with the loan evidenced by the Note, including, but not limited to, represeJtations concerning Borrower's occupancy of the Property as a principal residence. If this Security Instrument is on a leasehold, Borrower shall comply with the provisions of the lease. If Borrower acquires fee title to the Property, the leasehold and fee title shall not be merged unless Lender agrees to the merger in writing.

6. Charges to Borrower and Protection of Lender's Rights in the Property. Borrower shall pay all governmentll or municipal charges, fines and impositions that are not included in paragraph 2. Borrower shall pay these obligations on time directly to the entity which is owed the payment. If failure to pay would adversely affect Lender's interest in the Property, upon Lender's request Borrower shall promptly furnish to Lender receipts evidencing these payments.

If Borrower fails to make these payments or the payments required by paragraph 2, or fails to perform any other covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Lender's rights in the Property (such as a proceeding in bankruptcy, for condemnation or to enforce laws or regulations), then Lender may do and pay whatever is necessary to protect the value of the Property and Lender's rights in the Property, including payment of taxes, hazard insurance and otller items mentioned in paragraph 2.

Any amounts disbursed by Lender under this paragraph shall become an additional debt of Borrower and be secured by this Security Instrument. These amounts shall bear interest from the date of disbursement, at the Note rate, and at the option of Lender, shall be immediately due and payable.

7. Condemnation. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of any part of the Property or for conveyance in place of condemnation, are hereby aSSigned and, shall be paid to Lender to the extent of the full amount of the indebtedness that remains unpaid under the Note and this Security Instrument. Lender shall apply such proceeds to the reduction of the indebtedness under the Note and this Security Instrument, first to any delinquent amounts applied in the order provided in paragraph 3, and then to prepayment of principal. Any application of the proceeds to the principal shall not extend or postpone the due date of the monthly payments, which are

New Hampshire FHA Mortgage Form - 04/96 '~ ,

Page 3 of6


referred to in paragraph 2, or change the amount of such payments. Any excess proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument shall be paid to the entity legally entitled thereto.

8. Fees. Lender may collect fees and charges authorized by the Secretary.

9. Grounds for Acceleration of Debt.

a) Default. Lender may, except as limited by regulations issued by the Secretary in the case of payment defaults, require immediate payment in full of all sums secured by this Security Instrument if: (i) Borrower defaults by failing to pay in full any monthly payment required by this Security Instrument prior to or on the due date of the next monthly payment, or (ii) Borrower defa,ults by failing, for a period of thirty days, to perform any other obligations contained in this Security Instrument.

(b) Sale Without Credit Approval. Lender shall, if permitted by applicable law and with the prior approval of the Secretary, require immediate payment in full of-all sums secured by this Security Instrument if: (i) All or part of the Property, or a beneficial interest in a trust owning all or part of the Property, is sold or otherwise transferred (other than by devise or descent) by the Borrower, and (ii) The Property is not occupied by the purchaser or grantee as his or her principal residence, or the purchaser or grantee does so occupy the Property but his or her credit has not been approved in accordance with the requirements of the Secretary.

(c) No Waiver. lr circumstances occur that would permit Lender to require immediate payment in full, but Lender does not require such payments, Lender'does not waive its rights with respect to subsequent events.

(d) Regulations of HUD Secretary. In many circumstances regulations issued by the Secretary will limit Lender's rights in the case of payment defaults to require immediate payment in full and foreclose if not paid. This Security Instrument does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary

(e) Mortgage Not Insured. Borrower agrees that should this Security Instrument and the Note secured thereby not be eligible for insurance under the National Housing Act within 60 days from the date hereof, Lender may, at its option and notwithstanding anything in paragraph 9, require immediate payment in full of all sums secured by this Security Instrument. A written statement of any authorized agent of the Secretary dated subsequent to 60 days from the date hereof, declining to insure this Security Instrument and the Note secured thereby, shall be deemed conclusive proof of such ineligibility. Notwithstanding the foregoing, this option may not be exercised by Lender when the unavailability of insurance is solely due to Lender's failure to remit a mortgage insurance premium to the Secretary.

10. Reinstatement. Borrower has a right to be reinstated if Lender has required immediate payment in full because of Borrower's failure to pay an amount due under the Note or this Security Instrument. This right applies even after foreclosure proceedings are instituted. To reinstate the Security Instrument, Borrower shall tender in a lump sum all amounts required to bring Borrower's account current including, to the extent they are obligations of Borrower under this Security Instrument, foreclosure costs and reasonable and customary atto'rneys' fees and expenses properly associated with the foreclosure proceeding. Upon reinstatement by Borrower, this Security Instrument and the obligations that it secures shall remain in effect as if Lender had not required immediate payment in full. However, Lender is not required to permit reinstatement if: (i) Lender has accepted reinstatement after the commencement of foreclosure proceedings within two years immediately preceding the commencement of a current foreclosure proceeding, (ii) reinstatement will preclude foreclosure on different grounds in the future, or (iii) reinstatement will adversely affect the priority of the lien created by this Security Instrument.

11. Borrower Not Released; Forbearance By Lender Not a Waiver. Extension of the time of payment or modification of amortization of the sums secured by this Security Instrument granted by Lender to any successor in interest of Borrower shall not operate to release the liability of the original Borrower or Borrower's successor in interest. Lender shall not be required to commence proceedings against any successor in interest or refuse to extend time for payment or otherwise modify amortization of the sums secured by this Security Instrument by reason of any demand made by the original Borrower or Borrower's successors in interest. Any forbearance by Lender in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy.

12. Successors and Assigns Bound; Joint and Several Liability; Co-Signers. The covenants and agreements of this Security Instrument shall bind and benefit the successors and assigns of Lender and Borrower, subject to the provisions of paragraph 9.b. Borrower's covenants and agreements shall be joint and several. Any Borrower who co-signs this Security Instrument but does not execute the Note: (a} is co-signing this Security Instrument only to mortgage, grant and convey that Borrower's interest in the Property under the terms of this Security Instrument; (b) is not personally obligated to pay the sums secured by this Security Instrument; and (c) agrees that Lender and any other Borrower may agree to extend, modify forbear or make any accommodations with regard to the terms of this Security Instrument or the Note without that Borrower's consent.



13. Notices. Any notice to Borrower provided for in this Security Instrument shall be given by delivering it or by mailing it by first class mail unless applicable law requires use of another method. The notice shall be directed to the Property Address or any other address Borrower designates by notice to Lender. Any notice to Lender shall be given by first class mail to Lender's address stated herein or any address Lender designates by notice to Borrower. Any notice provided for in this Security Instrument shall be deemed to have been given to Borrower or Lender when given as provided in this paragraph.

14. Governing Law; Severability. This Security Instrument shall be governed by federal law and the law of the jurisdiction in which the Property is located. In the event that any provision or clause of this Security Instrument or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Security Instrument or the Note which can be given effect without the conflicting provision. To this end the provisions of this Security Instrument and the Note are declared to be severable.

15. Borrower's Copy. Borrower shall be given one conformed copy of this Security Instrument. I

16. Hazardous Substances. Borrower shall not cause or permit the presence, use, disposal, storage, or release of any Hazardous Substances on or in the Property. Borrower shall not do, nor allow anyone else to do, anything affecting the Property that is in violation of any Environmental Law. The preceding two sentences shall not apply to the presence, use, or storage one the Property of small quantities of Hazardous Substances that are generally recognized to be appropriate to normal residential uses and to maintenance of the Property.

Borrower shall promptly give Lender written notice of any investigation, claim, demand, lawsuit or other action by any governmental or regulatory agency or private party involving the Property and any Hazardous Substance or Environmental Law of which Borrower has actual knowledge. If B~rrower learns, or is notified by any governmental or regulatory authority, that nay removal or other remediation of any Hazardous Substapces affecting the Property is necessary,. Borrower shall promptly take all necessary remedial actions in accordance with Environmental Law.

As used in this Paragraph 16, "Hazardous Substances" are those substances defined as toxic or hazardous substances by Environmental Law and the following substances: gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and herbicides, volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials. As used in this Paragraph 16, "Environmental Law" means federal laws and laws of the jurisdiction where the Property is locate~ that relate to health, safety, or environmental protection.

17. Assignment of Rents. Borrower unconditionally assigns ' and transfers to Lender all the rents and revenues of the Property. Borrower authorizes Lender or Lender's agents to collect the rents and revenues and hereby directs each tenant of the Property to pay the rents to Lender or Lender's agents. However, prior to Lender's notice to Borrower of Borrower's breach of any covenant or agreement in the Security Instrument, Borrower shall collect and receive all rents and revenues of the Property as trustee for the benefit of Lender and Borrower. This assignment of rents constitutes an absolute assignment and not an assignment for additional security only.

If Lender gives notice of breach to Borrower: {a} all rents received by Borrower shall be held by Borrower as trustee for benefit of Lender only, to be applied to the sums secured by the Security Instrument; (b) Lender shall be entitled to collect and receive all of the rents of the Property; and (c) each tenant of the Property shall pay all rents due and unpaid to Lender or Lender's agent on Lender's written d; mand to the tenant.

Borrower has not executed any prior assignment of the rents and has not and will not perform any act that would prevent Lender from exercising its rights under this paragraph 16.

Lender shall not be required to enter upon, take control of or maintain the Property before or after giving notice of breach to Borrower. However, Lender or a judicially appointed receiver may do so at any time there is a breach. Any application of rents shall not cure or waive any default or invalidate any other right or remedy of Lender. This assignment of rents of the Property shall terminate when the debt secured by the Security Instrument is paid in full.

NON·UNIFORM COVENANTS. Borrower and Lender further covenant and agree as follows:

18. Foreclosure Procedure. If Lender requires immediate payment in full under paragraph 9, Lender may invoke the STATUTORY POWER OF SALE and any other remedies permitted by applicable law Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this paragraph 17, including, but not limited to, reasonable attorneys' fees and costs of title evidence.

If Lender invokes the STATUTORY POWER OF SALE, Lender shall mail copies of a notice of sale in .the manner provided by applicable law to Borrower and other persons prescribed by applicable law Lender shall publish the notice. Of sale, and the Property shall be sold in the manner prescribed by applicable law. Lender shall deliver to the purchaser Lender's deed conveying indefeasible title to the Property, discharged of all rights of redemption by Borrower. Lender or its designee may purchase the Property at any sale. The proceeds of the sale shall be applied in the following order: (a) to all expenses of the sale, including, but not limited to, reasonable attorneys' fees; {b} to all sums secured by this Security Instrument; and (c) any excess to the person or persons legally entitled to it.

New Hampshire FHA Mortgage Fonn • 04/96 Page 5 of6


referred to in paragraph 2, or change the amount of such payments. Any excess proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument shall be paid to the entity legally entitled thereto.

8. Fees. Lender may collect fees and charges authorized by the Secretary.

9. Grounds for Acceleration of Debt.

a) Default. Lender may, except as limited by regulations issued by the Secretary in the case of payment defaults, require immediate payment in full of all sums secured by this Security Instrument if: (i) Borrower defaults by failing to pay in full any monthly payment required by this Security Instrument prior to or on the due date of the next monthly payment. or (ii) Borrower de~ults by failing. for a period of thirty days, to perform any other obligations contained in this Security Instrument.

(b) Sale Without Credit Approval. Lender shall, if permitted by applicable law and with the prior approval of the Secretary, require immediate payment in full of all sums secured by this Security Instrument if: (i) All or part of the Property, or a beneficial interest in a trust owning all or part of the Property, is sold or otherwise transferred (other than by devise or descent) by the Borrower, and (ii) The Property is not occupied by the purchaser or grantee as his or her principal residence, or the purchaser or grantee does so occupy the Property but his dr her credit has not been approved in accordance with the requirements of the Secretary.

(c) No Waiver. If circumstances occur that would permit Lender to require immediate payment in full, but Lender does not require such payments, Lender does not waive its rights with respect to subsequent events.

(d) Regulations of HUD Secretary. In many circumstances regulations issued by the Secretary will limit Lender's rights in the case of payment defaults to require immediate payment in full and foreclose if not paid. This Security Instrument does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary

(e) Mortgage Not Insured. Borrower agrees that should this Security Instrument and the Note secured thereby not be eligible for insurance under the National Housing Act within 60 days from the date hereof, Lender may, at its option and notwithstanding anything in paragraph 9. require immediate payment in full of all sums secured by this Security Instrument. A written statement of any authorized agent of the Secretary dated subsequent to 60 days from the date hereof, declining to insure this Security Instrument and the Note secured thereby, shall be deemed conclusive proof of such ineligibility. Notwithstanding the foregoing, this option may not be exercised by Lender when the unavailability of insurance is solely due to Lender's failure to remit a mortgage insurance premium to the Secretary.

10. Reinstatement. Borrower has a right to be reinstated if Lender has required immediate payment in full because of Borrower's failure to pay an amount due under the Note or this Security Instrument. This right applies even after foreclosure proceedings are instituted. To reinstate the Security Instrument, Borrower shall tender in a lump sum all amounts required to bring Borrower's account current including, to the extent they are obligations of Borrower under this Security Instrument, foreclosure costs and reasonable and customary attorneys' fees and expenses properly associated with the foreclosure proceeding. Upon reinstatement by Borrower, this Security Instrument and the obligations that it secures shall remain in effect as if Lender had not required immediate payment in full. However, Lender is not required to permit reinstatement if: (i) Lender has accepted reinstatement after the commencement of foreclosure proceedings within two years immediately preceding the commencement of a current foreclosure proceeding, (ii) reinstatement will preclude foreclosure on different grounds in the future, or (iii) reinstatement will adversely affect the priority of the lien created by this Security Instrument.

11. Borrower Not Released; Forbearance By Lender Not a Waiver. Extension of the time of payment or modification of amortization of the sums secured by this Security Instrument granted by Lender to any successor in interest of Borrower shall not operate to release the liability of the original Borrower or Borrower's successor in interest. Lender shall not be required to commence proceedings against any successor in interest or refuse to extend time for payment or otherwise modify amortization of the sums secured by this Security Instrument by reason of any demand made by the original Borrower or Borrower's successors in interest. Any forbearance by Lender in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy.

12. Successors and Assigns Bound; Joint and Several Liability; Co-Signers. The covenants and agreements of this Security Instrument shall bind and benefit the successors and assigns of Lender and Borrower. subject to the provisions of paragraph 9.b. Borrower's covenants and agreements shall be joint and several. Any Borrower who co-signs this Security Instrument but does not execute the Note: (a} is co-signing this Security Instrument only to mortgage, grant and convey that Borrower's interest in the Property under 'the terms of this Security Instrument; (b) is not personally obligated to pay the sums secur.ed by this Security Instrument; and (c) agrees that Lender and any other Borrower may agree to extend, modify forbear or make any accommodations with regard to the terms of this Security Instrument or the Note without that Borrower's consent.

New Hampshire FHA Mortgage Form - 04196 Page 4 of6


13. Notices. Any notice to Borrower provided for in this Security Instrument shall be given by delivering it or by mailing it by first class mail unless applicable law requires use of another method. The notice shall be directed to the Property Address or any other address Borrower designates by notice to Lender. Any notice to Lender shall be given by first class mail to Lender's address stated herein or any address Lender designates by notice to Borrower. Any notice provided for in this Security Instrument shall be deemed to have been given to Borrower or Lender when given as provided in this paragraph.

14. Governing Law; Severability. This Security Instrument shall be governed by federal law and the law of the jurisdiction in which the Property is located. In the event that any provision or clause of this Security Instrument or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Security Instrument or the Note which can be given effect without the conflicting provision. To this end the provisions of this Security Instrument and the Note are declared to be severable.

15. Borro~er's Copy. Borrower shall be given one conformed copy of this Security Instrument.

16. Hazardous Substances. Borrower shall not cause or permit the presence, use, disposal, storage, or release of any Hazardous Substances on or in the Property. Borrower shall not do, nor allow anyone else to do, anything affecting the Property that is in violation of any Environmental ulW. The preceding two sentences shall not apply to the presence, use, or storage one the Property of small quantities of Hazardous Substances that are generally recognized to be appropriate to normal residential uses and to maintenance of the Property.

Borrower shall promptly give Lender written notice of any investigation, claim, demand, lawsuit or other action by any governmental or regulatory agency' or private party involving the Property and any Hazardous Substance or Environmental Law of which Borrower has actual knowledge. If Borrower learns, or is notified by any governmental or regulatory authority, that nay removal or other remediation of any Hazardous Substances affecting the Property is necessary,. Borrower shall promptly take all necessary remedial actions in accordance with Environmental La~.

As used in this Paragraph 16, "Hazardous Substances" are those substances defined as toxic or hazardous substances by Environmental Law and the following substances: gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and herbicides, volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials. As used in this Paragraph 16, "Environmental Law" means federal laws and laws of the jurisdiction where the Property is locat~ that relate to health, safety, or environmental protection.

17. Assignment of Rents. Borrower unconditionally assigns I and transfers to Lender all the rents and revenues of the Property. Borrower authorizes Lender or Lender's agents to collect the rents and revenues and hereby directs each tenant of the Property to pay the rents to Lender or Lender'S agents. However, prior to Lender's notice to Borrower of Borrower's breach of any covenant or agreement in the Security Instrument, Borrower shall collect and receive all rents and revenues of the Property as trustee for the benefit of Lender and Borrower. This assignment of rents constitutes an absolute assignment and not an assignment for additional security only.

If Lender gives notice of breach to Borrower: {a} all rents received by Borrower shall be held by Borrower as trustee for benefit of Lender only, to be applied to the sums secured by the Security Instrument; (b) Lender shall be entitled to collect and receive all of the rents of the Property; and (c) each tenant of the Property shall pay all rents due and unpaid to Lender or Lender's agent on Lender's written demand to the tenant.

Borrower has not executed any prior assignment of tile rents and has not and will not perform any act that would prevent Lender from exercising its rights under this paragraph 16.

Lender shall not be required to enter upon, take control of or maintain the Property before or after giving notice of breach to Borrower. However, Lender or a judicially appointed receiver may do so at any time there is a breach. Any application of rents shall not cure or waive any default or invalidate any other right or remedy of Lender. This assignment of rents of the Property shall terminate when the debt secured by the Security Instrument is paid in full.

NON-UNIFORM COVENANTS. Borrower and Lender further covenant and agree as follows:

18. Foreclosure Procedure. If Lender requires immediate payment in full under paragraph 9, Lender may invoke the STATUTORY POWER OF SALE and any other remedies permitted by applicable law Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this paragraph 17, including, but not limited to, reasonable attorneys' fees and costs of title evidence.

If Lender invokes the STATUTORY POWER OF SALE, Lender shall mail copies of a notice of sale in the manner provided by applicable law to Borrower and other persons prescribed by applicable law Lender shall publish the notice. Of sale, and the Property shall be sold in the manner prescribed by applicable law ~ Lender shall deliver to the purchaser Lender's deed conveying indefeasible title to the Property, discharged of all rights of redemption by Borrower. Lender or its designee may purchase the Property at any sale. The proceeds of the sale shall be applied in the following order: (a) to all expenses of the sale, including, but not limited to, reasonable attorneys' fees; {b} to all sums secured by this Security Instrument; and (c) any excess to the person or persons legally entitled to it.



If the Lender's interest in this Security Instrument is held by the Secretary and the Secretary requires immediate payment in full under paragraph 9, the Secretary may invoke the nonjudicial power of sale provided in the Single Family Mortgage Foreclosure Act of 1994 ("Act") (12 U.S.C. 3751 et seq.) by requesting a foreclosure commissioner designated under the Act to commence foreclosure and to sell the Property as provided in the Act. Nothing in the preceding sentence shall deprive the Secretary of any rights otherwise available to a Lender under this paragraph 18 or applicable law.

19. Release. Upon payment of all sums secured by this Security Instrument, this Security Instrument shall become null and void. Lender shall discharge this Security Instrument without charge to Borrower. Borrower shall pay any recordation costs.

20. Waivers. Borrower waive.s all rights of homestead exemption in the Property and relinquishes all rights of curtesy and dower in the Property.

I

21. Riders to this Security Instrument. If one or more riders are executed by Borrower and recorded together with this Security Instrument, the covenants and agreements of each such rider shall be incorporated into and shall amend and supplement the covenants and agreements of this Security Instrument as if the rider(s) were a part of this Security Instrument. [Check applicable box(es)]

o D

Condonllnium Rider I

Planned Unit Development Rider

o o

Graduated Payment Rider

Growing Equity Rider

o Others [Specify]

BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument and in any rider(s) executed by Borrower and recorded with it. i

I

Signed, sealed and delivered in the presence of:

Witness to AD

STATE OF NEW HAMPSHIRE

_____________ ____ __ (Seal)

Joseph E. Moquin Borrower

___________________ (Seal)

Joan M Moquin Borrower

____________________ (Seal)

Borrower

____________________ (Seal)

Borrower

County ss: Hi 11 sborough

The foregoing instrument was acknowledged before me this June 15, 2001 (date)

by Joseph E. Moquin and Joan M Moquin (person acknowledging)

My Commission Expires:

Notary Public/Justice of the Peace

New Hampshire FHA Mortgage Form - 04/96 Page 6 of 6


File No: 01011054

Exhibit A - Mortgage

That certain parcel of land with the buildings thereon situated on Dray Coach Lane, Merrimack, Hillsborough County, New Hampshire, being shown on Lot 32 on a plan entitled "Subdivision ' Plan of Land Woodward Estates Merrimack, New Hampshire" dated January 31, 1979, by Thomas F. Moran, Inc . , recorded with Hillsborough County Registry of Deeds as Plan Number 12339, Drawer No. 23, and Contain 86,275 square feet of land according to said plan, being bounded and described as follows:

NORTHERLY by Draycoach Lane in three courses totaling 338.44 feet;

EASTERLY by Lot 33 on said plan 294.49 feet;

SOUTHERLY by land now or formerly of Robert A. Truman and William L. Parker in two courses 174.37 feet and 175.63 feet;

WESTERLY by land now or formerly of the Merrimack School District 271.80 feet;

Dennis P. Stevens and Judith Stevens retain a temporary construction easement for the completion of all roads or ways abutting the premises, said easement being for slopes, swales, or other work required by the Town of Merrimack, and shall be in existence until the roads or way are accepted by the Town.

Said premises are subject to an easement to New England Telephone and Telegraph Company of New Hampshire for the installation of utilities in the streets as set forth in an instrument dated August 10, 1981, recorded with said Deeds, Book 2865, Page 490.

Said premises are also subject to a Building Setback Line as shown on said plan.

Meaning and intending to describe and mortgage the same premises conveyed to the mortgagor(s) by deed of near or even date to be recorded herewith.

".


EXHIBIT E


ASC~_ Rdmn Mail Opcnlions

P.O. 80. 103811 Del Moines. lA 30306-0]88

February 22, 2011

Joseph E Moquin 8 Draycoach CT Merrimack NH 03054

Loan Number 106-1170006612 Due Date: 02 - 01-10

Thank you for contacting us regarding your financial hardship on the loan mentioned above. Our goal is simple. We want to ensure that you have every opportunity to retain your home. Based on our telephone conversation and the financial information you provide d, \"e would like to offer you a Special Forbearance Plan.

Cur rently, your loan is due for 13 installments, f r om February 01, 2010 through February 01, 2011. As agreed, you have promised to pay the amounts shown below by the dates indicated. Also enclosed are the terms and conditions of this forbearance. Please sign the enclosed ag reeme nt and ret u-rn it wi t h t he f irst ins t a l lment . This is not a waiver of the accrued or future payments that become due, but a period for you to determine how you will be able to resolve your financial hardship. Any payments received will be applied to the delinquent payments on the loan. During this Special Forbearance Agreement, payment s a re to b e mai l e d to :

America's Servicing Company MAC X7801-01H 3476 Stateview Blvd Fort Mill SC 29715

During this period, we are requesting that you maintain contact with our office in order to establish acceptable arrangements for bringing your loan current. If you need additional assistance, please call us at (800) 662 - 3806, Monday through Thursday, 8 AM to 11 PM; Friday, 8 AM to 10 PM; or Saturday, 9 AM to 3 PM, Eastern Time.

LC 00 4 00 8 F5 6

We a r e r e qui red by t h e Fai r De bt Collection Prac ti ces Ac t to inform you that if your loan is currently delinquent or in default, as your loan servicer, we will be attempting to collect a debt, and any information obtained will be used for that purpose. However, if you have received a discharge, and the loan was not reaffirmed in the bankruptcy case, we will only exercise our right as against the property and are not attempting any act to collect the discharge debt f r om you personally.


SPECIAL FORBEARANCE AGREEMENT - TERMS AND CONDITIONS

1. Currently, your loan is due for 13 installments, from February 01, 2010 through February 01, 2011. The indebtedness of the referenced loan is in default and in consideration of extending forbearance for a period of time, it is necessary that you indicate your understanding and acceptance of the terms of the forbearance agreement by immediately signing and returning this agreement.

~. Payments must be made strictly in accordance with the enclosed payment schedule and forbearance agreement conditions. This plan is an agreement to temporarily accept reduced payments or maintain r egular monthly payments during the plan specifi ed b e low. Upon suc cessful completion of the payments outlined in this plan, your loan will be reviewed for a Loan Modification. Based on investor approval, this may satisfy the remaining past due amount on your loan.

3. The lender is under no obligation to enter into any further agreement, and this forbearance shall not constitute a waiver of the lender's right to insist upon strict performance in the future.

4. All of the provisions of the note and security instrument, except as herein provided, shall remain in full force and effect. Any breach of any provision of this agreement or non- compliance with this agreement, shall render the forbearance null and void, and at the option of the lender without further notice to you may terminate this agreement. The lender, at its option, may institute foreclosure proceedings according to the terms of the note and security instrument without regard to this agreement. In the event of foreclosure, you may incur additional expenses of attorney's fees and foreclosure costs.

5. Each payment must be remitted according to the schedule below. PLAN DATE AMT PLAN DATE AMT 01 04/01/11 858.43 02 05/01/11 2,014.05 03 06/01/11 2,014.05 04 07/01/11 2,014.05

6. There is no "grace period" allowance in this agreement. All payments must be received on or before the agreed due date. If any payment is not received on or before the due date, the agreement will be void and the total delinquency, including fees, will be due immediately.

7. The total amount indicated on each payment of the payment schedule must be remitted. In the event the total amount due of each payment is not received, the Special Forbearance agreement will b e rendered null and void.

By signing this agreement I hereby consent to being contacte d concerning this loan at any cellular or mobile telephone number I may have. This includes text messages, at no cost to me, and telephone calls including the use of automated dialing systems to contact my cellular or mobile telephone.

Co- mortgagor Date

Loan Number 106/1170006612


ecf 01 - wf2 complaint with exhs a-e

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