assuredvflagstar--10.22transcript

In The Matter Of: ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 SOUTHERN DISTRICT REPORTERS 500 PEARL STREET NEW YORK, NY 10007 212 805-0330 Original File CAMRASSF.txt Min-U-Script® with Word Index ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS1 Trial Page 721 1 UNITFD STATFS DISTRICT CoURT SoUTHFRN DISTRICT oF NFW YoRK 2 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~x 3 ASSURFD GUARANTY MUNICIPAL CoRP. formerly known as Financial 4 Security Assurance, Inc., 5 Plaintiff, 6 v. 11 Civ. 2375 JSR 7 FLAGSTAR BANK, FSB, et al., 8 Defendants. 9 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~x 10 october 22, 2012 10:35 a.m. 11 Before: 12 HoN. JFD S. RAKoFF, 13 District Judge 14 15 APPFARANCFS 16 SUSMAN GoDFRFY LLP (NYC) 17 Attorneys for plaintiff BY: JACoB W. BUCHDAHL, Fsq. 18 ARUN SRINIVAS SUBRAMANIAN, Fsq. JoSFPH C. PoRTFRA, Fsq. 19 WARRFN T. BURNS, Fsq. of counsel 20 21 ARNoLD & PoRTFR LLP Attorneys for defendants 22 BY: VFRoNICA FLLFN RFNDoN, Fsq. MoNIQUF ANNF GAYLoR, Fsq. 23 STFWART DAVID AARoN, Fsq. SUSAN L. SHIN, Fsq. 24 of counsel 25 CAMJASS1 Trial Page 722 1 (Trial resumes) 2 (In open court) 3 THE COURT: BeIore we turn to the motions and the 4 Daubert question, I think plaintiII's counsel has a Iew 5 depositions snipets you wanted to play? 6 MR. BUCHDAHL: That's correct. We wanted to play a 7 deposition excerpt, excerpt Irom a deposition oI Jean Garrick, 8 a Flagstar corporate representative. 9 THE COURT: Go ahead. 10 MR. AARON: Flagstar objects to the playing oI this 11 excerpt, as we notiIied plaintiII's counsel. This witness is a 12 senior vice president in charge oI underwriting internal 13 control. 14 However, the purpose Ior which they seem to be 15 oIIering this exhibit is to put in evidence Irom a third party 16 Iirm retained to rely in order to check Ior compliance with 17 underwriting guidelines. It was a quality control process and, 18 your Honor, the exhibits that Assured seems to put in are -- 19 reIlect exactly what they're trying to do. 20 Mr. Buchdahl, does the Judge have those in Iront oI 21 him? 22 MR. BUCHDAHL: No. I can hand them up. 23 (Pause) 24 MR. AARON: Your Honor, I'll click to the transcript 25 excerpts are a series oI exhibits, the Iirst oI which is CAMJASS1 Trial Page 723 1 PlaintiII's Exhibit 131, which is a good example oI the reason 2 why we're objecting. PlaintiII's Exhibit 131 -- 3 THE COURT: Sorry, counsel. 4 MR. AARON: Sure. 5 (Pause) 6 THE COURT: I am there. 7 MR. AARON: PlaintiII's exhibit 131 is a memorandum 8 Irom Marni Scott Dubry and Jean Garrick at Flagstar 9 disseminated to Sharon Shrev December 28th, 2006. What it 10 talks about are 1762 loan Iiles reviewed by Wetzel Trough Ior 11 the second quarter. It talks about loan selection, Judge. 12 What you'll see, it has a breakdown oI how many diIIerent loans 13 that were comprised in the 1762, and the Iirst category oI 1302 14 consists oI conIirming HELOC seconds and SISA, S I S A loans. 15 The problem is those are all co-mingled, so when you 16 look at the Iindings, which is I think the reason why Assured 17 wants to put this is, they're set Iorth in the second paragraph 18 in the percentages. One cannot ascertain Irom this document 19 what number oI these were HELOCs, and more particularly, Judge, 20 what number oI these were HELOCs that were part oI this 21 securitization. 22 The same issue comes in with respect to PlaintiII's 23 Exhibit 132. The same issue comes in with respect to 24 PlaintiII's Exhibit 133. Those three exhibits have that issue, 25 and what you'll see iI your Honor looks through the CAMJASS1 Trial Page 724 1 designations, what Assured's counsel does basically is walks 2 the witness, Ms. Garrick, through these three memoranda. 3 The documents that come thereaIter, and I am talking 4 speciIically about PlaintiII's Exhibit 135 -- 5 THE COURT: Let's stop there. I am not sure I 6 understand your objection. I take it, though -- I haven't yet 7 heard the tape -- that the purpose oI this deposition or 8 purpose oI this proIIer is to Iind out what methodology 9 Flagstar Bank used in checking out loans, mortgage loans 10 generally, yes? 11 MR. AARON: I suppose we'll have to hear Irom Mr. 12 Buchdahl about that. My thought in terms oI why they were 13 oIIering it, Judge, was to put in what the percentage was oI 14 the so-called Iindings. For example, on the second paragraph 15 oI PlaintiII's 131 -- 16 THE COURT: Let me hear Irom plaintiII's counsel. 17 MR. BUCHDAHL: Your Honor, Flagstar did not do any 18 diligence on the actual loans that it placed into the 19 securitizations. In other words, at the time that it assembled 20 these securitization pools, it did not take any steps to 21 determine whether these 12,000 loans complied with its 22 representations, including that they were issued in conIormance 23 with underwriting guidelines and there was no Iraud. 24 What the testimony was Irom their witnesses, they 25 simply relied on their existing underwriting practices Min-U-Script® SOUTHERN DISTRICT REPORTERS (1) Pages 721 - 724 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS1 Trial Page 725 1 including their quality control practices. These documents 2 represent what we learned in discovery was the main quality 3 control check. They retained a third party Iirm, the Wetzel 4 Trout Iirm, who would review samples oI loans, and it is true 5 the HELOCs are intermingled. 6 We are not seeking to rely on these percentages Ior 7 anything other than to show just generally that Flagstar was 8 aware there were underwriting issues and there were problems 9 that were being revealed even at or beIore the time oI these 10 securitizations. I think counsel's argument, though well 11 taken, goes to weight and not admissibility. 12 THE COURT: I agree with that. So let's play it. 13 Now, there are markings here -- 14 MR. BUCHDAHL: Your Honor, those markings are parts we 15 are going to play. 16 THE COURT: Parts you're going to play? Okay. 17 MR. BUCHDAHL: It should be noted that counsel Ior 18 Flagstar did ask us to play some oI their redirect examination 19 oI this witness which we are also included in this tape, 20 although -- 21 THE COURT: How long is this altogether? 22 MR. BUCHDAHL: The whole thing is less than halI an 23 hour, your Honor. We are happy to submit it iI you don't want 24 to take the time in court. 25 THE COURT: I am going to take it on submission, so it CAMJASS1 Trial Page 726 1 is received. Anything else Irom plaintiII's counsel? 2 MR. BUCHDAHL: Your Honor, with that, we close subject 3 to reserving the right to call witnesses in rebuttal. 4 THE COURT: All right. Now let's hear -- 5 MS. RENDON: Thank your Honor. 6 I am going to argue the motion to exclude the 7 testimony oI Rebecca Walzak under Federal Rule oI Evidence 702, 8 and my partner Stewart Aaron is going to make motions to 9 exclude the expert testimony oI Joseph Mason and Dr. Lipshutz. 10 I understand what your Honor said, the gist oI that 11 argument is not going to be that he is not a sound 12 statistician, but that the assignment he was given was the 13 wrong project, how he was directed in his undertaking was 14 incorrect. 15 THE COURT: Ms. Walzak is clearly a critical witness, 16 so let's start with that. 17 MS. RENDON: Thank your Honor. I will step right over 18 here to the podium. 19 As I say, Flagstar renews its motion under Federal 20 Rule oI Evidence 702 to exclude the testimony oI Rebecca 21 Walzak. As your Honor knows, Rule 702 states that a witness 22 who is qualiIied as an expert by knowledge, Iield, training or 23 education may testiIy and Iorm an opinion or otherwise iI -- 24 and little C states the testimony is the product oI reliable 25 principles and methods, and little D says the expert has CAMJASS1 Trial Page 727 1 reliably applied the principles and methods to the Iacts oI the 2 case. 3 There are at least 7 reasons here why Ms. Walzak 4 should be excluded under this rule. First and Ioremost, 5 Ms. Walzak -- 6 THE COURT: Only 7? It must be a slow day. 7 MS. RENDON: I am grouping. There will be subparts to 8 my 7, your Honor. I am trying to be concise. 9 Ms. Walzak is not a neutral expert, your Honor. As 10 your Honor brought out in your own questioning oI the witness, 11 her CV demonstrates she is results-oriented and she is a 12 management person. She is not an objective underwriter who was 13 called in Ior her underwriting experience to give an objective 14 and neutral opinion. 15 THE COURT: However, I think, oI course, all oI my 16 comments are subject to hearing Irom plaintiII's counsel, but I 17 think there is something to that. 18 But to be Irank, I don't see how that distinguishes 19 her Irom every other expert I have ever heard in 17 years on 20 the Bench. The only diIIerence is that they were all proIess 21 to neutrality when their testimony shows they're all 22 result-oriented. They're hired because the party who hires an 23 expert knows Irom past practice usually where that expert is 24 going to come out. In the rare case where the expert seems to 25 be waIIling, they Iire the expert and get a new one. So I CAMJASS1 Trial Page 728 1 agree with you that she is probably result-oriented and that is 2 important in evaluating her testimony, but I don't think it is 3 a per se disqualiIication. 4 MS. RENDON: Your Honor, I do think that in the case 5 oI Ms. Walzak perhaps even more than other experts, we see her 6 trying to be results-oriented, not just on the Iace oI her CV. 7 I also think that the Iact that her opening salvo on 8 her CV is speaking in terms oI management and experience in 9 operations and risk management is a testament to what her 10 expertise actually is compared to what it should be Ior the 11 purposes oI trying to render the testimony she is rendering in 12 this case. 13 In other words, she is a management person. When you 14 look at what her experience is, and this is my number two, she 15 is not a qualiIied expert. When you go back and look at the 16 experience as set Iorth on her CV and as summarized in that 17 opening paragraph oI her CV, what you see is somebody who Ior 18 the past 30 years has Iocused on providing management 19 solutions, looking at things at an operational level, at a risk 20 management level, at cutting budgets, at working with how to 21 cut costs, how to advise at the 70,000 Ioot level. You don't 22 see a loan level underwriter. 23 THE COURT: But she did do that, as she testiIied, 24 over many years. So iI I understand your argument has to be 25 she hasn't done it recently enough to make her knowledgeable Min-U-Script® SOUTHERN DISTRICT REPORTERS (2) Pages 725 - 728 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS1 Trial Page 729 1 and balanced on these things? 2 MS. RENDON: I think that is exactly right, your 3 Honor. The last time Ms. Walzak underwrote a loan was 30 years 4 ago. There have been signiIicant changes in the world oI 5 underwriting. In the time period that is at issue in this 6 case, 2004, 2005, 2006, 2007, there was a big market Ior retail 7 mortgages, and Ms. Walzak, by having no experience in the 8 direct underwriting world during that period oI time, is 9 demonstrating that she is unqualiIied to understand what the 10 industry standards were and how guidelines were being 11 interpreted in that period. 12 In Iact, what we'll see -- and I'll talk a little bit 13 more about this under one oI my other points -- Ms. Walzak, to 14 assist her and her eight underwriters, had to rely upon a 15 survey that she conducted in 2007 which is culled out in her 16 report as the item she talked about as consulting with 20 17 industry experts. The reality is it was a paper survey, but it 18 Iacially demonstrated a lack oI industry standards. By Ms. 19 Walzak not being an underwriter in this period was not a 20 qualiIied period in how to decide how to resolve the 21 non-consensus you see in that survey. 22 THE COURT: I am no not totally clear why industry 23 standards is relevant here. The contract requires adherence to 24 Flagstar's guidelines. Remind me, do we have those in 25 evidence? CAMJASS1 Trial Page 730 1 MS. RENDON: We have them to enter into evidence. I 2 don't believe they were entered into evidence as oI this point, 3 your Honor. 4 THE COURT: That is a possible problem, diIIerent kind 5 oI problem Ior plaintiII. How am I supposed to determine 6 whether there has been adherence or dis-adherence to the 7 guidelines iI I haven't seen the guidelines? 8 II the guidelines are Flagstar's guidelines, what does 9 it matter what the industry guidelines are? 10 MS. RENDON: That is an interesting question that you 11 pose because Rebecca Walzak's testimony -- and its demonstrated 12 in her report -- is replete about a discussion about not just 13 noncompliance with Flagstar guidelines, but noncompliance with 14 what she claims is industry standards. It is Irom day one at 15 issue that I tried to nail down with her, when are you moving 16 Irom guidelines into the world oI industry standards because I 17 don't believe industry standards are relevant here. 18 Yet nonetheless, the only thing that Ms. Walzak 19 testiIied to with any speciIicity that she relied upon to give 20 her guidance and understanding how to approach the underwriting 21 assignment that she and her eight underwriters did here was 22 this deIective survey which purported to speak to industry 23 guidelines. So I think here we see a lot oI the issues in the 24 approach. 25 You didn't hear her discuss or articulate the speciIic CAMJASS1 Trial Page 731 1 guidelines oI Flagstar. You didn't hear her discuss or 2 articulate how the deIects Iell within those guidelines. All 3 you heard was some general discussion oII a chart and a couple 4 oI anecdotal stories about how she thought there was 5 noncompliance. You did not see a robust discussion when you 6 tried to get behind the methodology oI what she did and what 7 she relied upon in getting there. 8 That brings us to our third problem with Ms. Walzak. 9 With all due respect, and this is a phrase Irom the case law, 10 it is not designed to be a disrespectIul statement, she is what 11 case law talks as a basis Ior exclusion a talking head. She 12 hired a group oI people oII oI paper resumes that she has never 13 worked with previously, did not interview personally, and she 14 is parroting their purported Iindings. We see this same issue 15 with her purported Iraud reviewer's Digital Risk. 16 She is taking what they tell her and just relying upon 17 it wholesale without any evidence that she understood the 18 nature oI their work, the quality oI their work. She did not 19 give them written instruction and she did not apparently even 20 understand that they have the loan Iiles available to them 21 until her counsel told her at her deposition in this matter 22 that that was the case. 23 THE COURT: Now, she did, iI I recall correctly, 24 ultimately review each oI the Iiles, yes? 25 MS. RENDON: She claims that, your Honor, and she CAMJASS1 Trial Page 732 1 claimed that Ior the Iirst time in -- 2 THE COURT: Credibility can be taken into account in a 3 Daubert hearing but, nevertheless, the only evidence I heard 4 that disputed that was you questioned whether she could have 5 done it in the time she indicated she took to do it. That 6 would perhaps go to how thoroughly she did it. I don't know 7 that that would dispute that she didn't do it. 8 MS. RENDON: We can talk about that point and I will 9 come back to other testimony she gave us. 10 Ms. Walzak clearly -- 11 THE COURT: Forgive me Ior interrupting. 12 MS. RENDON: Sorry, your Honor? 13 THE COURT: Assuming that she did, in Iact, 14 meaningIully review each oI the Iiles to conIirm what her 15 people had told her, to conIirm what they had told her. 16 Wouldn't that eliminate the problem that you're raising that 17 she simply blindly relied on their analysis? 18 MS. RENDON: It would not, your Honor. 19 Ms. Walzak in testimony agreed at the very least she 20 relied upon the input she received Irom her group oI eight as 21 well as Digital Risk and in the case oI Clear Capital, she did 22 not even speak with them. She claims to have reviewed Ior the 23 Iirst time the loan Iiles. She never gave that testimony in 24 deposition and, in Iact, testimony that came in in her 25 testimony here today was that the only loan Iiles that she went Min-U-Script® SOUTHERN DISTRICT REPORTERS (3) Pages 729 - 732 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS1 Trial Page 733 1 back and looked at was when she was using her Exhibit B going 2 across that, seeing inconsistencies in the answers oI her 3 reviewer and she'd go back and take a look. 4 But let's say she did give testimony that that said 5 she looked at the 610 loan Iiles. She Iurther testiIied that 6 she would have only done so aIter the Iile review had 7 concluded. She testiIies that that Iile review took the 8 entirety oI the Iour weeks Irom October 15th to November 15th 9 when her Iirst report issued, meaning that there was no time 10 Ior her to do this analysis that I heard Ior the Iirst time in 11 court. 12 And even iI we assume somewhere in there that she 13 Iound, your Honor, 50 hours in that Iour-week period aIter the 14 Iile review is completed and she purportedly went into this 15 analysis stage, to have gone through the 610 loan Iiles, that 16 would have leIt an average oI Iive minutes, less than Iive 17 minutes per loan Iile, and by Ms. Walzak's testimony in this 18 Court room, Iive minutes per loan Iile is not suIIicient to 19 perIorm a meaningIul Iile review. 20 So with that testimony that it is not suIIicient to 21 perIorm a meaningIul Iile review, even iI one were to assume it 22 had occurred in her own analysis, it would not have been 23 suIIicient to have cured the level oI work and to have had the 24 knowledge base to have made the decision she claims to. 25 Let's say she even did that, your Honor. CAMJASS1 Trial Page 734 1 THE COURT: Let me interrupt you again. 2 MS. RENDON: Sure. 3 THE COURT: Let's assume Ior the sake oI argument that 4 she delegated all meaningIul Iile review to these Iirms without 5 any particular instructions other than do your thing, so to 6 speak, but that they did an acceptable job? Would she then not 7 be able to rely on it? 8 MS. RENDON: No, your Honor, I don't believe so 9 because actually I don't think we would know iI it was an 10 acceptable job or not. She doesn't know it. She can't testiIy 11 to it. She has eIIectively at that point, your Honor, trying 12 to get in -- and this comes back to the talking head concept, 13 and there is case law cited in our motion Ior this -- she has 14 eIIectively trying to rely wholesale on the actual testimony oI 15 unqualiIied, unknown individuals who have not demonstrated that 16 they've done a proper job or that they're even qualiIied to 17 have perIormed that job. 18 THE COURT: I must say, by the way, as an aside, I 19 have never actually encountered an opinion, although I am sure 20 there are such, reIerring to experts as talking heads. I have 21 heard many an attorney describe a judge in those terms, but 22 usually oII the record. 23 MS. RENDON: We are certainly not speaking oI your 24 Honor. Your Honor, I think also whether it was Ms. Walzak, her 25 eight reviewers, Digital Risk or Clear Capital with whom she CAMJASS1 Trial Page 735 1 never even bothered to speak in connection with this 2 engagement, Ms. Walzak here in this courtroom has never 3 articulated how she deIined material and what it means to 4 materially raise the risk proIile oI the loan. 5 What she talks about vaguely was -- 6 THE COURT: It is deIined in my opinion. 7 MS. RENDON: It is, your Honor, but then beyond saying 8 it materially raised the risk proIile, when one is to ask 9 Ms. Walzak what does that mean when you perIormed a loan Iile 10 review, how did you actually bring that concept, that principle 11 oI materially raising risk on a loan, on a loan into how do we 12 apply that to the Iacts here? How do we apply that to these 13 loan Iiles? 14 We did not hear her articulate any meaningIul basis 15 Ior that, and that is true whether it is her, her eight 16 reviewers, Digital Risk or Clear Capital. In Iact, she 17 testiIied she didn't even attempt in connection with her loan 18 Iile review Ior herselI or Ior anybody else to deliniate what 19 that meant. 20 What eIIectively she said is whether it is her or her 21 reviewers or Digital Risk or Clear Capital, she articulated a, 22 "I know it when I see it-type basis." That is not a reliable, 23 principled method that meets the Daubert standard that we can 24 go back and say can be veriIied or is acceptable within the 25 scientiIic or general more broader community. CAMJASS1 Trial Page 736 1 THE COURT: Just to get one thing out oI the way, I 2 don't think she purported to meet the standards or to even 3 attempted to meet the standards oI a scientist. She is, Ior 4 lack oI better term, Kumho Tire rather than Daubert. 5 MS. RENDON: I understand. I should speak in terms oI 6 that. Either way, what I am talking about approach, the know 7 it when I see it approach under either Daubert or Kumho Tire 8 would not be acceptable Ior her purposes oI saying that meets 9 the standard oI appropriate expert testimony. 10 What she actually testiIied to, it was that she 11 conceded that there are variations in guidelines that would not 12 necessarily result in material increase in risk. She said it 13 is a question oI severity. She said each loan Iile is unique 14 and tells its own story, and she said whether materiality 15 exists or doesn't is just a question oI underwriter discretion. 16 Under questions by your Honor, when your Honor asked 17 her a series oI questions, she could not identiIy a single 18 issue that on the Iace oI the Iile demonstrated a material 19 increase in the risk proIile. She did ultimately claim in one 20 sentence that she thought such issues were present without any 21 explanation as to what that meant, but she could not under 22 questioning by your Honor identiIy what proportion oI the loan 23 Iiles purportedly had such an issue. 24 She has Iacially Iailed to identiIy Ior the court or 25 Ior anybody else what standards she is operating on or how she Min-U-Script® SOUTHERN DISTRICT REPORTERS (4) Pages 733 - 736 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS1 Trial Page 737 1 is coming to her decisions. 2 THE COURT: Let me ask you a diIIerent question on 3 materiality. II a person seeking a mortgage misstates his or 4 her income, why isn't that material on its Iace, so to speak? 5 MS. RENDON: Because, your Honor, there are all levels 6 oI misstating income. In Iact, Ms. Walzak in her deposition 7 articulated this. There is more serious versions oI that and 8 less serious versions oI that. There is an innocent 9 misstatement. Your Honor talked about in questioning oI 10 Ms. Walzak, there is misstating by a little bit. There is 11 misstating by a lot oI bit. There is intentional versions oI 12 that. There are non-intentional versions oI that, and more 13 importantly, your Honor, there is also what is acceptable prooI 14 oI a misstatement. Here what we have is a Iailure in the Iirst 15 bucket to -- 16 THE COURT: Wasn't the methodology as it came out -- 17 well, I am sorry. Go ahead. Part oI the methodology was, to 18 use this let's call it Salary dot com or something like that? 19 MS. RENDON: Yes, Salary dot com. 20 THE COURT: Presumably that doesn't include judges' 21 salary because they would be involved in the use oI a 22 microscope. II the salary given was at a level that only 10 23 percent I think it was would have reached, or something like 24 that, because it is the other side oI the 90 percent cutoII, we 25 can talk about whether that is good methodology or bad CAMJASS1 Trial Page 738 1 methodology, but isn't that a consistent methodology Ior 2 addressing materiality? 3 MS. RENDON: To the extent that they were using Salary 4 dot com, I guess you might say it showed a consistency in 5 approach oI testing income. I will tell you it is an 6 inherently unreliable approach, your Honor, Ior the reasons 7 why -- 8 THE COURT: We'll get to that. 9 MS. RENDON: So on income, you might see now we are 10 talking about Digital Risk. Let's be clear. We have moved 11 Irom the world oI the underwriters who are operating with no 12 guidelines or any delineation as to how to approach their 13 underwriting, we have Ms. Walzak not articulating what's she 14 considered material underwriting errors, and now we have moved 15 into the world oI purported Iraud review oI Digital Risk. 16 THE COURT: You're right. Let's go back a second. 17 Although again I haven't seen the guidelines, I 18 thought I picked up Irom the testimony -- correct me iI I am 19 wrong -- that these were so-called stated income mortgages in 20 the sense that no one who -- it was the practice to not check 21 the income by asking Ior tax returns or pay stubs or checking 22 with the employer, et cetera. Am I right about that? 23 MS. RENDON: You're incorrect, your Honor, I don't 24 think Ior any Iault oI your Honor. This just goes to the 25 truncated presentation. CAMJASS1 Trial Page 739 1 THE COURT: It wouldn't be the Iirst time! 2 MS. RENDON: First oI all, while Ms. Walzak seems to 3 be under the belieI that all the loans in this case are 4 composed oI stated income, in Iact, it was only 40 percent 5 stated income portIolio. She does not seem to be aware oI that 6 Iact, but that is demonstratively true oI the oIIering 7 memorandum in this case. There was a whole bunch oI veriIied 8 income loans Ms. Walzak doesn't seem to be aware oI. 9 THE COURT: I presume that comes out in your case iI 10 we get to your case, right? 11 MS. RENDON: That's correct. We can put it in through 12 the Iace oI the oIIering documents which are designated. 13 THE COURT: What about the stated income? 14 MS. RENDON: Stated income, what you have is while the 15 borrower does stated income, what you did hear testimony oI, 16 although only on a truncated level, was in the Flagstar 17 underwriting guidelines and this also was in the protocol I put 18 into evidence that Ms. Walzak used. In Iact, Flagstar would 19 get a stated income loan Irom Mr. Aaron, but they would do 20 their own levels oI veriIication oI income and reasonableness 21 oI income in their underwriting process. 22 So while the borrower only had to state in the actual 23 guidelines, Flagstar would then be required to do their own 24 levels oI employing their underwriting discretion and taking 25 methods to determine themselves what they thought was CAMJASS1 Trial Page 740 1 reasonable or unreasonable. 2 THE COURT: But in practice did they, in Iact, ask Ior 3 pay stubs or income tax returns or anything like that? 4 MS. RENDON: They did do various exercises, your 5 Honor. I am not sure I could get you to the speciIic grid as 6 to which product required. 7 As you see when the underwriting guidelines come in, 8 they're about this thick Ior diIIerent stated income products, 9 yes. They would be running things like Lexis-Nexis. There 10 would be actual realtime reIerrals to Salary dot com, current 11 time to current time basis. 12 There would be requests sometimes Ior income tax 13 statements. There would be doing Ior selI-employed borrowers, 14 not just surIace on Lexis-Nexis, but going into their money 15 laundering database and looking Ior a whole bunch oI 16 inIormation about the borrower and where they're employed and 17 what their likely to make in that particular area. There was 18 resources that went down to go down into the state level, not 19 catching it just at the Lexis-Nexis, but going into the state 20 business division and corporate Iilings at the state level 21 through state databases. 22 There was a lot oI work that was done. In Iact, some 23 oI the issues that you'll see when Ms. Walzak's work is 24 dissected is there sometimes is a misunderstanding oI what 25 guidelines are applicable. I brought in one case in the Min-U-Script® SOUTHERN DISTRICT REPORTERS (5) Pages 737 - 740 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS1 Trial Page 741 1 income, your Honor, where Digital Risk ran one oI their 2 electronic databases and apparently ignored evidence in the 3 Iile as to borrower veriIication. 4 MR. BUCHDAHL: Objection. 5 MS. RENDON: All this demonstrates this kind oI, I'll 6 just say it as a lay person would, a messy approach, an 7 approach where there were no internal controls or quality 8 control over the process. There was not even awareness oI the 9 nature oI the loans. There was no control over the reviewers 10 themselves, over the Iraud reviewers and there wasn't even an 11 attempt to speak to the Iolks who are running the appraisal 12 review. 13 Ms. Walzak was getting inundated through this process 14 with inIormation she claims at this late date to have gone 15 through all the Iiles and at best she'd have Iive minutes per 16 Iile to have done so. She can't articulate a materiality 17 standard. She can't articulate to your Honor what is Iacial 18 issues and what we hear on direct is nothing more than seeing 19 charts where she says yes, I think that's my categories, those 20 are all the deIects, and we see even see it through my 21 questioning there is redundancy and double-counting going on in 22 those charts. 23 What we see as Iar as the work oI Digital Risk is not 24 just the Iact that they were using non-historic salary web 25 sites to test income, but that electronic exercise, which was CAMJASS1 Trial Page 742 1 an interesting exercise, your Honor, I have never done anything 2 like that beIore, what that electronic exercise also 3 demonstrated was that when you look at the Digital Risk Iiles, 4 they oIten don't include, even iI Ms. Walzak were to have 5 reviewed that, what inIormation they input. 6 It doesn't show you what they put in Ior their 7 particular inputs. It is mass. You just get the output oI 8 something that tells you two data points, but to get to that 9 point we saw that live, you would have had to have answered a 10 bunch oI questions. That is mass. That is not in their Iile. 11 Ms. Walzak agreed with me she had no idea what Digital 12 Risk input or didn't input in each one oI those Iiles, yet she 13 takes an output that purports to say on today's Salary dot com 14 database a borrower oI that proIile, but we have no idea what 15 proIile was entered wouldn't have made that much money. 16 II they go and take that and recalculate DTI and claim 17 borrower Iraud and they claimed missing red Ilags and each one 18 oI these things go down as diIIerent categories oI deIects in 19 Ms. Walzak's Iinding -- 20 THE COURT: I am going to interrupt you only because I 21 know we have considerably more oI your attack to cover, but I 22 think it would be helpIul to the court to hear what plaintiII 23 has to say about what you said so Iar. 24 MS. RENDON: I have one last point to make, your 25 Honor. At Clear Capital it is even more egregious on the CAMJASS1 Trial Page 743 1 valuations than just saying she never even wrote to them. I 2 walked through a series oI Fannie Mae discussion points about 3 the reliability oI using an automated valuation model today to 4 try to test the veracity oI appraisals historically done. Ms. 5 Walzak agreed with me that an ABM is only as good as the data 6 upon which it is drawn Irom, what public records is it 7 accessing. 8 What is the depth and breadth oI those records? Can 9 she actually generate? She agreed with me she was unIamiliar 10 with what the records were that that model was accessing. It 11 is yet another demonstration oI a sloppy process, your Honor. 12 Thank you. 13 THE COURT: All right. Let's hear Irom plaintiII's 14 counsel and go back Ior the other points that deIense counts. 15 MR. BUCHDAHL: I'll take them in order, your Honor. 16 With regard to the resume and whether this is a 17 neutral witness, this is a resume designed in her consulting 18 proIession to be hired by banks to help them minimize problems 19 with bad loans. It is results-oriented, the results trying to 20 alternatively minimize deIective loans being underwritten. It 21 does not apply to work she was doing here. 22 THE COURT: It was reIlective oI something that may 23 not go to admissibility, but it may, I will red Ilag it Ior 24 you. First, it did not in any sense exude the sense oI 25 proIessional restraint that one would expect in an expert, even CAMJASS1 Trial Page 744 1 an expert who is result-oriented. This was consistent with the 2 way she answered a huge number oI questions, many oI them put 3 by you, which was "absolutely." That was her term. 4 Now, I understand diIIerent people have diIIerent 5 manners oI speech, but there is an extraordinarily little in 6 this world that is absolutely X or Y, but then the need to make 7 reIinements seemed to not be part oI her usual approach. 8 So that was oI some concern to the court. 9 MR. BUCHDAHL: In terms oI that speciIically, I think 10 in some ways -- look, this entire question goes to the 11 reliability oI her methods. What we have seen here is that 12 deIendants are attacking the process because they can't attack 13 the results because what was striking about the 14 cross-examination is that they did not attempt to challenge a 15 single one oI her opinions. 16 Just to be clear about what her opinions were, her 17 opinions weren't about whether there was Iraud and her opinion 18 wasn't about whether the underwriting guidelines were violated. 19 Her opinions were more nuanced than that. They were did the 20 breaches oI the reps and warranties -- and there were two we 21 Iocused on -- did those breaches materially increase the risk. 22 The place where the court can see just how careIully 23 this witness approached that question is in the Iour loans that 24 she withdrew Irom her Iindings in-between her deposition and 25 now when she testiIied she went back through each one oI these Min-U-Script® SOUTHERN DISTRICT REPORTERS (6) Pages 741 - 744 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS1 Trial Page 745 1 loans to again be conIident that there was a material increase 2 in risk. What we saw in those Iour loans, again brought out by 3 deIendants, in one oI them the ABM, when they went back -- and, 4 counsel, let me just digress Ior one moment to talk about Clear 5 Capital and ABM. She didn't talk to Clear Capital and ABM, and 6 essentially all Digital Risk did was act as goIers to provide 7 her with additional data. 8 Because oI the methods she used is ultimately the 9 method any underwriter uses, it is the methods Flagstar's 10 underwriting guidelines dictate to an underwriter, under that 11 Flagstar's underwriting guidelines they use Salary dot com. 12 Flagstar's underwriting guidelines say use ABM. 13 THE COURT: How do I know all oI this when you haven't 14 given me the guidelines? 15 MR. BUCHDAHL: Because the witness testiIied to the 16 presence oI all the things in the guidelines. She testiIied 17 extensively what those guidelines say, how they have rules Ior 18 DTI and what they are, rules Ior assets and what they are, 19 rules Ior CLTV and what they are. She testiIied at length how 20 the guidelines addressed the various risk Iactors. She wasn't 21 cross-examined on any oI those. I would be happy to put in the 22 guidelines on a portion oI those. 23 THE COURT: Your case is closed. 24 MR. BUCHDAHL: That is true. The testimony in 25 evidence is unchallenged. CAMJASS1 Trial Page 746 1 THE COURT: Now this goes to a diIIerent point, but I 2 might as well Ilag it while it is on my mind. 3 This is a case in which you claim that Flagstar not 4 only materially but repeatedly and across the board to a very 5 high percentage violated their guidelines in representations 6 and warranties in connection with HELOC loans and HELOC 7 mortgages. Isn't an essential element oI that claim: 8 First, to present the court with the guidelines. Her 9 testimony is not the best evidence oI the guidelines. The 10 guidelines are the best evidence oI the guidelines; 11 Second, to the extent that she relies on work oI 12 Digital -- and what was the other company? 13 MR. BUCHDAHL: Clear Capital, your Honor. 14 THE COURT: Clear Capital? Thank you. We haven't 15 heard a single witness on the plaintiII's case Irom either 16 Digital or Clear Capital, have we? 17 MR. BUCHDAHL: No, we have not. 18 THE COURT: So my point is, and this may go to the 19 admissibility oI her testimony under 702 or otherwise, but it 20 also may be a problem Ior you generally is that I'm being asked 21 to let this case go Iorward and ultimately to decide on the 22 liability oI the deIendant at least in part, on what is the 23 testimony oI an expert as to what in substantial measure was 24 not presented directly to the court, but it was only presented 25 through the hearsay she was permitted to present. An expert CAMJASS1 Trial Page 747 1 can present hearsay, but it is troubling to me that where we 2 are getting so much indirect assertions and so little direct. 3 Go ahead. 4 MR. BUCHDAHL: On that point, your Honor, as you 5 noted, she is certainly permitted to testiIy about hearsay and 6 particularly where she used her own judgment and expertise to 7 not simply just repeat the hearsay, but make a conclusion Irom 8 it. 9 Again, your Honor, we heard Iindings based on the 10 Iacts gathered by Digital Risk, right. Essentially Digital 11 Risk, she testiIied, they would punch in a social security 12 number and print out what it revealed about their existing 13 debts or their credit check. They would send it to her, or in 14 the case oI Clear Capital, they would perIorm an ABM. They 15 would print out and send it to her. DeIendants have all that 16 inIormation. Again the reason why we met our burden oI showing 17 these things by a preponderance oI the evidence is: 18 First, because oI the unquestionable breadth oI these 19 representations; and 20 Second, iI any oI them had been wrong, iI any oI her 21 conclusions about a loan had been wrong, we would have heard 22 Irom deIense counsel to challenge her on that. 23 THE COURT: I will say something which I will raise 24 Ior deIense counsel to respond to. You will recall I took a 25 look at one oI the Iiles really at random because I asked CAMJASS1 Trial Page 748 1 originally Ior a diIIerent Iile, and I got that one. The Iile 2 I think on its Iace evidenced Iraud. Indeed, it was kind oI 3 shocking to me because it was Iraud by a policeman in Michigan 4 who apparently was happy to buy himselI a small mansion, by 5 representing that he was not a policeman, but rather the 6 president oI a purported Iinancial company. 7 To Ms. Walzak's credit, despite all evidence, indicia 8 oI Iraud that the court saw just Irom the very quick review oI 9 the Iile, she was much more careIul in saying in what respects 10 it Iailed to meet the guidelines. So I do think to that extent 11 she was put to the test here in open court and passed the test 12 on that Iile. So I raise that really not Ior you, but Ior your 13 adversary when she comes back. 14 MR. BUCHDAHL: II may may address that particular 15 Iile, I want to hand it up to you because the Iile you showed 16 her was a heavily redacted copy oI this, and one oI the 17 questions your Honor had about this was why didn't Digital Risk 18 simply call up this company to see iI it existed. 19 You will see the address given oI the borrower Ior his 20 current employment is Regional Financial Group, 250104 Groton, 21 Dearborn. I want to direct your attention to the last page oI 22 this where it shows the name and address oI the interviewer 23 and, in other words, this is the person who agreed to give the 24 borrower the loan and you can see what Regional Financial Group 25 is. It's the institution that issued the loan. So there Min-U-Script® SOUTHERN DISTRICT REPORTERS (7) Pages 745 - 748 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS1 Trial Page 749 1 wasn't actually any question that it existed because it was 2 serving as a mortgage broker Ior Flagstar. 3 The reason I bring this to your attention is because 4 this didn't come out -- 5 THE COURT: So this makes it even worse. So you're 6 saying -- you recall, with counsel's permission, I went on the 7 web and we Iound there was such a company was Regional 8 Financial Group, although we couldn't locate this particular 9 branch. What you're now saying is -- well, I am not sure where 10 you're getting this Irom. Where do you see it? 11 MR. BUCHDAHL: The last box on the third page, it says 12 to be completed by interviewer. It says this application was 13 taken -- 14 THE COURT: Yes, yes, yes, yes, okay, right. 15 MR. BUCHDAHL: Your Honor, one other thing about 16 this -- 17 THE COURT: So it turns out -- wow. The statute oI 18 limitations hadn't run, I wonder whether there is a good Iraud 19 case here against both the interviewer and the interviewee. 20 Maybe that is too harsh. 21 MR. BUCHDAHL: Your Honor, just in terms oI 22 methodology, it was pretty simple what Ms. Walzak did. She 23 had, as counsel pointed out, about six weeks to really complete 24 this process. It was a very small amount oI time. They 25 started their cross by saying she worked hundreds oI hours and CAMJASS1 Trial Page 750 1 got paid all oI this money, and then their attention Iocused 2 she didn't spend enough time on it. 3 Really, I just want to say this idea that this 50 4 hours was somehow what the witness stated she spent on this, 5 that is not how the testimony came in. The question that was 6 posed was iI you had 50 hours, would that have been enough 7 time? The witness said Iive minutes on a Iile is not enough 8 time. The witness didn't say that is all I spent. The witness 9 didn't say I spent 50 hours. That was a hypothetical by 10 counsel. 11 Going back to the methodology, essentially she had 12 underwriters who would Ilag problems; in other words, they 13 would say debt was too high in proportion to income or we have 14 looked at the income and it appears to be unreasonable, or the 15 CLTV ratio exceeds what Flagstar's guidelines were, and they 16 would send this back to Ms. Walzak and say here are the 17 problems we Iound. 18 Digital Risk in some ways did less analysis. Digital 19 Risk gathered data, here is what we Iound about this borrower 20 you should also consider. 21 That is why in terms oI whether this is suIIicient to 22 prove Iraud? No, as Ms. Walzak testiIied, she doesn't need to. 23 Your Honor asked deIense counsel a question. II they misstate 24 their income, shouldn't that on the Iace oI it breach this 25 representation? You asked a very similar question to CAMJASS1 Trial Page 751 1 Ms. Walzak, and she said well, not necessarily. I think again 2 that showed the careIul nature oI her approach. 3 (Continued on next page) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Camrass2 Page 752 1 Here's why. She pointed out that the guideline covers 2 errors or omissions or negligence or Iraud. The representation 3 made by Flagstar there would be none oI the above. Those are 4 all very diIIerent things. And a small misstatement oI income, 5 you couldn't say Ior sure that was Iraud, you couldn't say Ior 6 sure it was negligence. 7 That's why, when it came to income, the approach was 8 iI this greatly exceeded the 90th percentile on Salary.com or a 9 similar engine or, when available, Bureau oI Labor Statistics, 10 which does have historical data, iI it so exceeded the 90th 11 percentile that it raised a red Ilag, we would go back and 12 recalculate DTI. 13 Counsel says that there were redundancies in the 14 problems she identiIied. Sure there are. Most oI these Iiles 15 had multiple problems in them. This one we are looking at 16 right here has multiple problems in it. That is not a weakness 17 oI her approach, that is a strength oI her approach. 18 Again, they had the Digital Risk Iiles Ior a year. 19 Here is what we heard about on cross. Four PayScale.com 20 printouts in their view could result in a diIIerent number iI 21 you did it in 2012 instead oI a year ago. The Court had 22 already identiIied that as a weakness oI that approach, and 23 that goes to weight, not admissibility. Right? 24 THE COURT: She did say, as your adversary just 25 pointed out, that in order to determine materiality, you have Min-U-Script® SOUTHERN DISTRICT REPORTERS (8) Pages 749 - 752 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass2 Page 753 1 to look at the Iile as a whole. That may be true, in Iact it 2 has a certain common-sense appeal, but it does cast some doubt 3 on whether this lends itselI to an expert's opinion. 4 The notion is that it is highly subjective. II it's 5 highly subjective, how can it be the subject oI a consistent 6 methodology, which is a presupposition oI expert opinion as 7 opposed to nonexpert opinion? What about that? 8 MR. BUCHDAHL: RespectIully, your Honor, I don't 9 believe it is a subjective exercise. Here's why. Many oI the 10 underwriting rules are objective rules, a ratio oI DTI, a ratio 11 oI CLTV. Certainly iI there is an undisclosed debt, that 12 objectively exists. 13 The materiality question as your Honor deIined it is, 14 is it something that would have inIluenced Assured's view in 15 going into this? That's why our approach on direct examination 16 was to say here are the types oI problems we identiIied, here 17 are the occurrence oI those problems, and the whole spreadsheet 18 is in evidence. 19 THE COURT: I can't remember whether your Iirst 20 witness gave any testimony to this eIIect. II it's a subject 21 oI each individual Iile, don't you need someone Irom Assured 22 who would say, iI we had known that on Iile X, we would not 23 have entered into it, iI we had known that on Iile Y, we would 24 not have entered into it, as opposed to saying iI I had known 25 what your expert says, we would not have entered into it? Camrass2 Page 754 1 MR. BUCHDAHL: Your Honor, I believe the testimony was 2 iI I had known these representations and warranties -- the 3 testimony was these representations and warranties were a 4 critically important part. Here's why. Each one oI those, as 5 our witness explained, goes directly to risk, each one oI these 6 representations. As Ms. Walzak explained, iI you have too high 7 a DTI ratio, it makes a loan riskier. Too low a credit score, 8 a FICO score, makes the loan riskier. II the CLTV is too high, 9 and this is the point deIendants want to say is the most 10 important point, it makes the loan riskier. 11 I think the evidence in the record establishes that 12 these guide lines by themselves served to control risk. When 13 they are breached in the bad direction, which is all the ones 14 that we Iocused on here, the Court can conclude, simply based 15 on the existence oI these guidelines and the substantial amount 16 by which they were breached, that they did increase the risk. 17 So I don't think it is subjective to the extent that an Assured 18 witness has to go through loan by loan. 19 Look, our whole entire approach here is based on the 20 Iact that this is a sample and Irom this sample and the huge 21 problems we see here we can conclude that throughout the 12,000 22 loans there are abundant problems here. While each loan tells 23 its own story, I think there is a very clear story that emerges 24 oI lack oI attention to the most basic principles oI 25 underwriting in terms oI what was going on at Flagstar. Camrass2 Page 755 1 You would see time and time again the same problems. 2 They would blink at the same issues: Overstated income, 3 undisclosed debts, multiple credit inquiries that did not have 4 the required letter oI explanation, and other kinds oI problems 5 that Ms. Walzak identiIied. 6 So, Ms. Walzak, think about the scope oI her 7 testimony, cross and direct, over the course oI a week. 8 THE COURT: I remember. 9 MR. BUCHDAHL: We put approximately 20 loans into 10 evidence, 20 speciIic loans where Ms. Walzak testiIied about 11 her precise Iinding. She went unchallenged on any oI those 12 loans. She was not asked a single question about any oI those 13 loans on cross-examination. The reason Ior that is she can't 14 be challenged. The breaches were so bad, it's totally obvious. 15 She was then asked about the Iour loans on the bubble. 16 By "the bubble" I mean, she used the word "cusp." These are 17 the ones that at Iirst blush she said I think these do 18 materially increase risk. But when it came to appear in court 19 and stand behind the Iindings, she said, I'm going to take 20 these Iour back. 21 Problems, yes, but not so bad. An example oI one oI 22 them was the AVM. The appraisal in the Iile said $140,000, and 23 her AVM that Digital Risk had done, Clear Capital had done, 24 said $120,000. That is a substantial diIIerence, almost 15 25 percent. But Ms. Walzak said, look, I'm not going to say this Camrass2 Page 756 1 materially increases the risk, recognizing essentially that 2 there is a bluntness to some oI these instruments. 3 she was questioned about those Iour loans. You saw 4 some oI them. I think one oI them had a DTI that went up to 5 into the 50s. Most problems she testiIied to on direct were 6 where DTI had soared into the 80s or over 100 percent or closer 7 to 200 percent. That was the second group oI loans. 8 The Iirst group oI loans was the one I reviewed on 9 direct. The second one were these ones on the cusp that showed 10 kind oI where her margin was. That I think should give the 11 Court all the comIort it needs to say she wasn't simply 12 throwing a loan out and saying this is a breach iI there was 13 any kind oI problem. 14 She looked at those loans, they did have problems, 15 they did certainly not meet underwriting guidelines in various 16 respects, but she wasn't willing to say materiality. So, when 17 counsel said that Ms. Walzak never deIined materiality, you can 18 see it in the results. 19 There is a third group oI loans. Counsel did pick out 20 Iour or Iive loans to try to challenge her Iindings on and say 21 here is where you made a mistake. They could have done that 22 with 600 loans, but the Iact is they can't, because the 23 Iindings are good, your Honor. So they picked Iour. 24 They didn't challenge a single AVM, to say look at 25 these comps, these are terrible comparative properties. They Min-U-Script® SOUTHERN DISTRICT REPORTERS (9) Pages 753 - 756 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass2 Page 757 1 didn't challenge a single unclosed debt to say you claim this 2 was this person's debt, but look, the document shows it belongs 3 to someone else. They didn't challenge all kinds oI issues. 4 They challenged one, PayScale.com. Again, they 5 demonstrated that you can't get a diIIerent result in 2012. 6 But look at the loans they chose. This is one oI them. This 7 is one oI them. This is one oI the loans deIense counsel 8 selected to say you can't rely on her methodology because the 9 PayScale.com came back diIIerent. 10 What do we see here? In your Honor's words, blatant 11 Iraud on the Iace oI the Iile. II you look at the other 12 examples they used, those, too, had undisclosed debts: A 13 quarter oI a million dollars on another property, a thousand 14 dollars a month. 15 These were not good loans, your Honor. The reps were 16 exceedingly broad. The reason we are getting this very 17 sustained attack on the process is because the results can't be 18 challenged. 19 THE COURT: Let me hear Irom deIense counsel. 20 MS. RENDON: Thank you, your Honor. II only Mr. 21 Buchdahl could have been the testiIying expert, because he is 22 testiIying a lot more cleanly than anything we heard come out 23 oI Ms. Walzak's mouth. In reality, the representations and 24 warranties, there are 2 oI them, your Honor. There is a list 25 oI 72, but there are 2 that we are really talking about here. Camrass2 Page 758 1 One is that there is a purported material noncom- 2 pliance with Flagstar's underwriting guidelines. As your Honor 3 correctly points out, the best evidence oI that is by actually 4 putting in the underwriting guidelines and having Ms. Walzak 5 walk us cleanly through: Here is the underwriting guideline, 6 here is what was wrong with it, and here is why that is 7 material increase in risk proIile. We didn't hear that. 8 We heard 20 loans come in, anecdotal type stuII that 9 it is a soup, that each loan Iile is unique, and then a kind oI 10 yes, absolutely there is material breach on this. When you try 11 to break that down and understand what is behind that, what is 12 the principle, Ms. Walzak, that you are operating on in coming 13 to that decision and making that determination, you don't hear 14 anything. 15 Your Honor, what you were showed when you requested 16 loan Iiles, you got a loan Iile handed to you. It had a credit 17 report in there that your Honor questioned the witness about. 18 You, I think, were looking Ior clean lines. I don't want to be 19 presumptuous, this is my inIerence, but you, I think, looking 20 Ior some nice clean lines on how a law clerk or somebody else 21 could understand what is a Iacial deIiciency in a loan Iile, 22 said, as I look at this credit report, it shows some derogatory 23 credit on here, can I say that that is Iacially a material 24 breach oI the underwriting guidelines? 25 Ms. Walzak said, I don't know, I need to look at the Camrass2 Page 759 1 whole loan Iile. She was given the lunch break to go and take 2 a look at that loan Iile. What did she come back and tell your 3 Honor? No, your Honor, you can't use this as a basis to say 4 there is a clean cut breach oI underwriting. Why is that? 5 THE COURT: Because it was a something perIormed at a 6 later date. 7 MS. RENDON: Right. What she also said when you were 8 Iirst questioning her is because there are compensating 9 Iactors, your Honor, you can't just take a derogatory credit 10 report. You have to look at what assets does this borrower 11 have, what types oI reserves do they have, what is their level 12 oI income. 13 It's a soup, an underwriter discretion. She couldn't 14 answer nice clean lines about there is an underwriting 15 guideline here, it's been violated, and that led to something 16 else. We did not hear that testimony. What we heard was 17 anecdotal stuII coming Irom Ms. Walzak. 18 It's true that while I decided not to go in and take 19 testimony on each individual loan Iile, what I did see and 20 attack was the process. So how do we get there? How can I 21 draw some nice clean lines? What did I do? 22 I took the Iour loan Iiles that she withdrew. I asked 23 her, what's the principle underlying why these loans were 24 withdrawn? Do you know what I got at Iirst? Testimony that 25 explained to me why these loan Iiles had material breach. To Camrass2 Page 760 1 which I said, Ms. Walzak, do you understand you withdrew these 2 loans? Then she said, oh, yeah. 3 I asked her what were the principles. I should be 4 clear. OI the Iour loans, your Honor, three oI them were 5 Digital Risk Iiles. Three oI them involved purported Iindings 6 oI Iraud. Take a look at the comments that we put in on those 7 Iraud Iiles. There is strong language in those comments: This 8 is borrower misrepresentation, it is material, it represents a 9 deviation Irom the underwriting guidelines. 10 I asked Ms. Walzak, what's unique about these? Why 11 did you take these three Digital Risk back? Why didn't they 12 meet the mark? The answer I got: She only withdrew loan 13 Iiles, she couldn't remember the loan Iiles. She couldn't 14 recall why that Digital Risk Iinding was a poor one. 15 When I said, can I use that guideline, to go back to 16 what Mr. Buchdahl is testiIying, can I use that principle that 17 iI I see an income gap oI this versus that, can I take that and 18 apply that to the balance oI the loans as a nonmaterial income 19 diIIerential? No, I can't say that, I just don't recall this 20 loan Iile. That's what I heard. 21 Then I talked about the Clear Capital. One oI the 22 Iour was a Clear Capital. There was an AVM issue in there. I 23 said, what was wrong with the AVM, how come you didn't catch 24 these on their Iirst time out? Again I can't remember. Only 25 Iour loan Iiles, but I can't remember why I withdrew these. Min-U-Script® SOUTHERN DISTRICT REPORTERS (10) Pages 757 - 760 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass2 Page 761 1 So we didn't get satisIying testimony. We didn't get 2 any clear objective guidelines. We didn't hear any discussion 3 about why these were any diIIerent than all the other Digital 4 Risk Iiles that she looked at. And it leads to a complete lack 5 oI conIidence. 6 Ms. Walzak sitting up there can't testiIy. She just 7 doesn't know why Digital Risk came to a decision on one loan 8 versus why they came to a decision on a diIIerent loan. She is 9 relying upon hearsay. She is relying upon what people are 10 telling her. She has no personal knowledge or ability to sit 11 here and articulate clear principles on which we can operate 12 under that are relying and can be applied to the portIolio. 13 It is particularly scary that that is the case here. 14 We are being asked to extrapolate liability, your Honor, Irom 15 this sample all the way out into the world oI thousands oI loan 16 Iiles. We are supposed to rely upon this approach as though it 17 is valid across 16,000 loan Iiles and be thinking about paying 18 over a hundred million dollars based upon this testimony, when 19 it boils down to nothing more than an unarticulated principle 20 oI I-know-it-when-I-see-it: I think Digital Risk got it right 21 here, and I'm sure they did, absolutely they did, but I can't 22 tell you why they got it wrong in the Iour that I withdrew. 23 Also, and I want to make sure to cover this point, we 24 did not just see the issue with the PayScale.com, your Honor. 25 It goes to the impeachment. When your Honor talked about being Camrass2 Page 762 1 troubled by only have indirect testimony here, I want to be 2 clear, that exercise we did with PayScale.com not only 3 demonstrated the likely issue with the historic gap in picking 4 90th today Irom what 90th might have been yesterday. 5 It also, under Ms. Walzak's direction as to what were 6 the proper inputs oII oI what we saw oI the inIormation in the 7 loan Iile, demonstrated Digital Risk had made mistakes. They 8 had input that someone only had 3 years oI prior experience in 9 a proIession instead oI what the actual loan Iile that Ms. 10 Walzak said should have been the proper input was actually 10 11 years. 12 When you input the 10 years and then skipped past a 13 bunch oI screens that Ms. Walzak had no idea what Digital Risk 14 input or didn't input, because she had no control over their 15 process, it generated a much higher number. What that shows is 16 an unreliability, a scare Iactor, in relying upon Digital Risk 17 and their Iraud Iindings. When you see mistakes in this arena, 18 you have to query about mistakes in other arenas. You also 19 have to say, did we hear clear articulation by Ms. Walzak oI a 20 guideline being breached that led to something else? 21 Ms. Walzak, in the area oI undisclosed debt, Ireely 22 admitted that they were counting debts that were incurred by 23 the borrower aIter the closing oI the subject loans. She 24 didn't point to anything in the guidelines that says you're to 25 look at that. She didn't point to anything in the guidelines Camrass2 Page 763 1 that says you're supposed to look at that, because that's not 2 in the guidelines. In Iact, she agreed with me that in the 3 period oI time that these loan Iiles were being underwritten, 4 no originator would have looked at later undisclosed debt. 5 We see here an undisclosed debt, that's a Digital 6 Risk. We're supposed to take that category. When we come back 7 to the 20 loan Iiles that your Honor was presented with on 8 opening, do you know that not every category oI a purported 9 deIect was represent in those 20 loan Iiles? In other words, 10 iI we go back to the charts as to what the deIects purportedly 11 are on these loan Iiles, we did not even get direct testimony 12 as to each category on those charts. 13 Yet we are supposed to accept, Irom the 20 that she 14 decided to pick to talk to the Court about, that we should take 15 that without any discussion about the associated underwriting 16 guidelines, and not only accept the Iindings on that, but then 17 extrapolate that out to a whole body oI loans. It is just not 18 appropriate. 19 That is particularly true because Ms. Walzak agrees 20 with me. One oI her big categories on there is missing 21 documentation. Ms. Walzak agreed with me she engaged in a 22 noniterative process. She had no dialogue with Flagstar. She 23 had no ability to seek missing documentation. The normal 24 clearing oI exceptions that happens in this process typically 25 when it's a live process, a process, Ior instance, that Camrass2 Page 764 1 happened back on the due diligence -- 2 THE COURT: You say she had no contact or no dialogue 3 with Flagstar. How would she have been able to do that? She 4 would have had to contact counsel Iirst. Common experience 5 suggests that counsel would have told her to go Ily a kite. So 6 I don't know that it was realistic Ior her to go down that 7 road. 8 MS. RENDON: Your Honor, that may be the case and that 9 might be the Ioibles oI a lawsuit and maybe creative lawyering 10 could have come up with a solution. My point is as Iar as the 11 accuracy that results Irom that inability, even iI it is an 12 innocent inability, as your Honor is pointing out, it leads to 13 inaccuracies in Iindings. 14 It leads to a claim that we heard Ms. Walzak testiIy 15 on opening: This was terrible, these loan Iiles were bereIt oI 16 things I would have expected to see in there. Well, in the 17 normal process that occurs on this, you have an iterative 18 process, and she agreed, because oI the circumstances and the 19 context likely in which this is occurring, that didn't occur. 20 Your Honor, what we really have here -- I have a 21 6-year-old daughter. I think oI a child's game oI operator. I 22 tell Stewart something, he tells Kevin something, he tells 23 Susan something. By the time it goes through that many layers 24 oI someone passing something along, the message that I started 25 out with is completely garbled and inaccurate by the end. Min-U-Script® SOUTHERN DISTRICT REPORTERS (11) Pages 761 - 764 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass2 Page 765 1 THE COURT: That's the liIe oI the modern law Iirm. 2 MS. RENDON: What we see with Ms. Walzak is she had a 3 whole lot oI people working Ior her and she didn't have a good 4 process. She didn't have a consistent approach. She herselI 5 did not have a standard as to materiality that she was 6 operating under. She was relying upon unreliable hearsay oI 7 unqualiIied and undisclosed experts in this case, the people 8 who actually did the work. Under the Federal Rules oI 9 Evidence, it is not qualiIied testimony, and we would ask that 10 it be struck, your Honor. 11 THE COURT: Thank you very much. Let me hear Iinally 12 Irom plaintiII's counsel. 13 MR. BUCHDAHL: Thank you, your Honor. A couple oI 14 problems with the way deIendants are presenting this. When 15 they talk about the Iour withdrawn loans, counsel is talking 16 about why didn't Digital Risk get this right and Digital Risk 17 get this wrong. Digital Risk wasn't getting things right or 18 wrong. Digital Risk was presenting her with data. That is how 19 the underwriting process works. 20 THE COURT: Some oI the data, though, iI I recall 21 correctly, represented the exercise oI their judgment. Yes? 22 It wasn't all statistical. 23 MR. BUCHDAHL: I don't believe that is the case in 24 terms oI Digital Risk's judgment. What is in the Digital Risk 25 Iiles is printouts Irom databases on the computer. That's Camrass2 Page 766 1 what's there. 2 THE COURT: II you have one handy, let me see the 3 Digital Risk printout on any given loan. 4 MR. BUCHDAHL: Your Honor, while they are getting 5 that, it may be that there are occasional expressions oI 6 Digital Risk opinion in there, but it never went to the 7 ultimate conclusion the expert presented, which is did this 8 materially increase the risk. That is her opinion across the 9 board. 10 Second, they talk about whether or not there is a 11 speciIic guideline check to undisclosed debts. One oI the reps 12 said, we're not going to breach our underwriting guidelines. 13 But there is another rep that says there's not going to be any 14 omission on the part oI any person in this Iile. II someone is 15 sitting there saying, I have another loan that's going to close 16 in two weeks Ior a quarter oI a million dollars on another 17 property you don't know about, even iI it hasn't closed yet, 18 that's unquestionably a material omission. 19 This line they are trying to draw Irom what should 20 have been beIore and should have been aIter, they are trying to 21 compress these misrepresentations into a tiny little category 22 relating to underwriting guidelines. They are vastly broader 23 than that. 24 The reason why in some cases Ms. Walzak said here's 25 how it breached the DTI rule Irom these underwriting guidelines Camrass2 Page 767 1 and in other cases she didn't mention a speciIic guideline is 2 because the other one is Iar broader than the guideline rep: 3 No error, omission, Iraud, or negligence on the part oI any 4 person. Whether it's the interviewer, whether it's the 5 applicant, whether it's the underwriter, whether it's Flagstar 6 itselI, it doesn't matter. 7 II a loan deIaults, like this police detective's 8 deIaulted, iI a loan deIaults and there was a problem in that 9 Iile, as Mr. Brewer testiIied on day one, that's not Assured's 10 risk. Flagstar took that risk. 11 THE COURT: I don't think it is quite strict liability 12 in the sense you're talking about in that, again, there has to 13 be materiality. 14 MR. BUCHDAHL: That is absolutely true, it has to 15 materially increase the risk. But any time it does that, what 16 is strict about it is that it triggers a contractual remedy oI 17 repurchase. So any loans going bad, really any loans at all 18 need to be repurchased, but particularly those that are 19 deIaulting, iI it was material, it materially increased the 20 risk to Assured, that's on them. Error, omission, Iraud, or 21 negligence is a heck oI a lot broader than simply the 22 underwriting guidelines. 23 They talk about missing documents. I don't want to 24 spend a lot oI time on that. But when we request Irom an 25 adversary in a lawsuit all the loan Iiles, they can't really Camrass2 Page 768 1 give us the loan Iile six weeks beIore our expert report is due 2 and then criticize us in court a year later and say, there 3 might have been other documents we didn't give you, why didn't 4 you ask Ior those. That can't be how this process works. That 5 would be a game oI gotcha that no one would countenance. 6 Again, what the people working Ior Ms. Walzak did -- I 7 would invite the Court, beIore making any decision here, to see 8 what their underwriting expert did also. What you will learn 9 is that it was the same process. This is how underwriting 10 experts work. 11 II you move up in the world oI underwriting, you don't 12 still sit there with the loans. You manage people, you review 13 their work, you see iI they are missing things, you do quality 14 control. That's what their expert does Ior a living, that's 15 what our expert does Ior a living. The Iirst-line 16 underwriters, that's an entry level position. 17 Leaving that aside, they Ilagged problems, income 18 problems, debt problems, valuation problems oI property. 19 Digital Risk provided them with more data. Ms. Walzak had to 20 decide were these material problems. 21 When they say, hey, your PayScale.com methodology 22 isn't that reliable, because someone who has been running a 23 Iinancial company Ior a number oI years makes a heck oI a lot 24 more money than you said, they are the ones who are not looking 25 at the rest oI the Iile. Our expert did. Our expert noticed Min-U-Script® SOUTHERN DISTRICT REPORTERS (12) Pages 765 - 768 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass2 Page 769 1 the problems in this Iile independent oI this. 2 One Iinal thing about this methodology. It is 3 standard underwriting methodology and everyone would agree with 4 that. It is in the actual guidelines. It is how all oI these 5 experts proceeded. The people who were helping Ms. Walzak 6 didn't make any determinations about whether a loan materially 7 breached a rep. Those are Ms. Walzak's Iindings. 8 They had an opportunity to cross her on any one oI 9 those loans, and they never did. They never said to her, Ms. 10 Walzak, we're going to show you something you relied upon. 11 Having seen this and seen this error, do you withdrew your 12 Iinding? Didn't happen once, including with these problems 13 they say they Iound in PayScale. 14 Again, your Honor, this is a big law Iirm who have had 15 these Iiles Ior a year. In 610 Iiles they Iound one place 16 where they say we inputted the wrong number to PayScale.com. 17 One, one error in 610 loans aIter having these Iiles Ior a 18 year. II anything, this process, and it always is, cross- 19 examination is always the best check on this, which is why this 20 ultimately doesn't go to admissibility, it goes to weight. 21 THE COURT: All right. BeIore I hear anything more, I 22 saw a Iile wending its way to plaintiII's desk. Maybe I can 23 take a look at that Ior a moment. 24 MS. RENDON: Your Honor, may I? There were some 25 statements that I want to make sure we have clarity on the Camrass2 Page 770 1 record about. 2 MR. BUCHDAHL: Can I? 3 THE COURT: Yes. 4 MR. BUCHDAHL: In conclusion -- 5 THE COURT: Don't conclude yet. Let me take a quick 6 look at this. 7 I don't understand what's been given to me here. What 8 I was looking Ior was the analysis on a given loan by Digital 9 Risk. The question was whether that was just data or whether 10 it included interpretive or subjective comments. The Iirst 11 Iile I was given was 500485979. I see some input Irom Clear 12 Capital. I'm not clear where there is any input Irom Digital 13 Risk on that one. 14 MR. BUCHDAHL: Your Honor, I'm sorry. My 15 understanding was that the two Iolders, and someone correct me 16 iI I'm wrong, the two Iolders I handed you, one was the Clear 17 Capital and one was the Digital Risk. 18 THE COURT: Let me look at the other one. 19 MR. BUCHDAHL: To the same loan. 20 THE COURT: The second Iile is labeled 500529094, so 21 it doesn't sound like it's the same loan. 22 MR. BUCHDAHL: It's one example oI a Clear Capital, 23 one example oI a Digital Risk, your Honor. 24 THE COURT: I don't know whether these are 25 representative or not. I'll leave that to deIense counsel to Camrass2 Page 771 1 check out over the next break. In 500485979, where the input 2 is Irom Clear Capital, it is essentially data. There is some 3 number crunching, but not any interpretation. In the second 4 one, 500529094, there actually is both input Irom Clear Capital 5 again and number crunching and some documentation supplied by 6 maybe Digital Risk. 7 I still don't see in either oI those the kinds oI 8 analysis that I have seen in other exhibits Irom Digital Risk. 9 MR. BUCHDAHL: Your Honor, I don't want to overstate 10 it, because there is one place where Digital Risk provided 11 narrative, and some oI that is reIlected in the spreadsheet 12 itselI. When I said there are no Iindings, the Iindings would 13 inIorm her in writing there is this existing undisclosed debt 14 oI whatever magnitude that would accompany their package that 15 they had here. 16 So I guess there is some level, although I think it is 17 minimal, some level oI subjectivity to what they chose to Ilag 18 to her. They didn't give her an unadorned Iile and let her 19 pick through and Iind things. The same way the underwriters 20 Ilagged things Ior her, Digital Risk Ilagged things Ior her. 21 That's how it was assembled. 22 THE COURT: I think I understand what that situation 23 is. Let me hear Irom deIense counsel in surrebuttal. 24 MS. RENDON: I think we are on sursurrebuttal, your 25 Honor. I want to expound on what I think we were just hearing Camrass2 Page 772 1 coming Irom Mr. Buchdahl, because that is my understanding. 2 As you can see -- and I don't have the particular 3 Digital Risk Iile, but I'm conIident because I have seen many 4 oI them -- what you see is that they gave a loan Iile to Ms. 5 Walzak -- a Digital Risk Iile I should say, not a loan Iile, to 6 Ms. Walzak. It had selected out oI it. They are thin. They 7 are much thinner than the loan Iiles themselves. 8 The judgment, your Honor, that you see coming Irom 9 them is where they are pointing to a big line, undisclosed, 10 undisclosed, where they are putting in one piece oI paper that 11 says PayScale, let me do the math Ior you, Ms. Walzak. They 12 don't show what they input into that. They just give the 13 output oI that and say there you go, that's why there's a DTI. 14 Then they do the DTI purported miscalculation, or recalculation 15 I should say. Then they give a written report to Ms. Walzak, 16 which is cut and paste and put into the Iindings on Ms. 17 Walzak's Exhibit B. 18 When you read, and I don't have this particular loan 19 Iile to do that, but when you read the comments in here, what 20 you see is the Digital Risk commentary, the written component, 21 oI what they Iound Irom their purported Iraud review. What Ms. 22 Walzak claims is she reviewed Digital Risk's Iindings. 23 But the best she had was a Digital Risk Iolder that 24 does knowledge more than what your Honor sees up there, it has 25 the one piece oI paper, saying this is our Iinding. It doesn't Min-U-Script® SOUTHERN DISTRICT REPORTERS (13) Pages 769 - 772 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass2 Page 773 1 show how they got there through all the steps, so that Ms. 2 Walzak could reveriIy and understand their process. That's the 3 problem. 4 it is true I didn't go through every Digital Risk Iile 5 I could have to show that there were mistakes being made, 6 probably innocent. I'm not necessarily saying Digital Risk 7 went out to do something inappropriate, but there were mistakes 8 made. There were improper inputs, there were discretionary 9 inputs that had to happen, all to generate these Iindings. 10 And nothing in those Digital Risk Iolders allows Ms. 11 Walzak to get behind that. What she has is a nice big arrow 12 that says pick this undisclosed debt, pick that, here is the 13 income Iraud. Then you see that regurgitated on her Exhibit B. 14 That is the same thing we hear happened with her eight 15 underwriters. What she claims is that she used this guidance. 16 Mr. Buchdahl said in his statements that it was Ms. Walzak who 17 made that ultimate Iinding. 18 Actually, when I cross-examined Ms. Walzak on that 19 U126 question, the big question, the double-negative question, 20 which is Ior some reason written conIusingly in the 21 double-negative, we had to ask her about whether or not her 22 underwriters would have been conIused by that question. She 23 agrees she was taking input Irom them, she was seeing what 24 their comments were, how they Iilled out that big question, and 25 she was using that as guidance. Camrass2 Page 774 1 What Ms. Walzak was getting Irom a whole bunch oI 2 Iolks was their input, and then she says she put her imprimatur 3 by agreeing on it. But I think your Honor asked her, or I 4 asked her, I think it was your Honor, how oIten did you 5 disagree? How oIten did you come to a unique Iinding that was 6 separate Irom the Iinding that was being Ied to you? And she 7 said basically never. 8 I think that is telling here. It demonstrates here 9 that there is a lack oI process, a lack oI appropriate reliance 10 on hearsay, an inability to articulate what is underlying the 11 results, an inability to articulate clear, concise standards oI 12 materiality. Then you just have this Exhibit P, which is this 13 amalgamation oI all these diIIerent people's inputs and Ms. 14 Walzak claiming, yeah, but I knew what 126 was. 15 Your Honor, with all due respect, this is a good 16 example oI expert testimony that should be excluded. Thank 17 you. 18 MR. BUCHDAHL: Very brieIly, your Honor. 19 THE COURT: Go ahead. 20 MR. BUCHDAHL: The Court asked the witness very 21 directly, U126, the ultimate question, your opinion or someone 22 else's? She said, my opinion. 23 I want to point out one other question. You said, 24 wouldn't it have been a good check to know iI they were getting 25 this right iI the question was conIusing? Guess what. Maybe Camrass2 Page 775 1 it did conIuse the underwriters. It didn't conIuse Ms. Walzak. 2 She had to know what the right answer to that question was to 3 support her Iinding on every loan, and she did. 4 Ultimately, again, she was not challenged on a single 5 Iinding that a misrepresentation was material or in Iact that 6 there were misrepresentations. Because they can't attack the 7 results, they are just going to attack the process. 8 Everything they have said, your Honor goes to weight 9 under the case law, everything they have said. There is no 10 reason to strike this witness on methodology. Sure there could 11 be a mistake in the Digital Risk process, absolutely. It may 12 go to weight, but none oI this goes to the admissibility oI 13 this expert testimony. 14 THE COURT: I'm glad we have reached the point now 15 where both counsel haven't Ielt the need to inject some passion 16 into their argument. 17 Let's hear now Irom Mr. Aaron on the other challenges. 18 MR. AARON: Thank you, your Honor. Stewart Aaron on 19 behalI oI Flagstar. I'm going to speak to a couple oI issues 20 here. It is actually Iour issues. I don't know why I said a 21 couple, Judge. Sampling, Lipshutz, Mason, and 52(c). 22 With respect to sampling, iI your Honor recalls, we 23 had submitted an in limine motion on this issue. 24 THE COURT: Yes. 25 MR. AARON: Back when, and your Honor reserved on it. Camrass2 Page 776 1 THE COURT: I think the word is "punted," but yes. 2 MR. AARON: Yes. While statistical sampling and 3 extrapolation may work as a method oI prooI in certain cases, 4 what the record here shows and the testimony by the experts 5 here has shown is it really isn't a reliable technique to 6 ascertain either liability or damages in cases involving 7 breaches oI representations and warranties concerning 8 residential mortgage loan Iiles. 9 More speciIically, this plaintiII has not demonstrated 10 that extrapolation based on sampling is appropriate in the 11 context oI this case. Let me explain to you why. I'm going to 12 give you citations to the trial record to the extent it will be 13 helpIul. 14 Ms. Walzak testiIied that each loan Iile is unique and 15 individual in nature. That's at pages 556/lines 5 to 9 and 16 613/lines 10 to 12. Ms. Walzak Iurther testiIied that 17 determination oI whether any material breach existed in a loan 18 Iile boiled down to circumstances present in an individual Iile 19 and that each Iile must be evaluated individually. That's at 20 page 555/lines 22 to 25, page 558/lines 2 to 14. 21 Ms. Walzak testiIied that whether a breach is present 22 in a loan Iile is never, her word, a binary decision. Page 23 556/lines 18 to 22. Rather, whether a breach was material 24 depended on whether or not a breach existed -- excuse me -- did 25 not depend on that but rather depended on the serious nature or Min-U-Script® SOUTHERN DISTRICT REPORTERS (14) Pages 773 - 776 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass2 Page 777 1 the severity oI breach. Page 555/lines 14 to 21. 2 What did Dr. Lipshutz have to say? We are not 3 challenging him because he is not a great expert. Dr. Lipshutz 4 sounded like a very knowledgeable person in the Iield oI 5 statistics. Has a lot oI degrees, has a lot oI great things to 6 say. What he said was that he had understood that his client, 7 quote, was going to make a binary decision on each loan whether 8 or not that loan's underwriting comported with the 9 representations and warranties. Page 257/lines 2 to 12. 10 What he Iurther said was the calculation oI sample 11 size depends on what's being measured, whether or not it's a 12 binary decision, iI your Honor recalls that. Page 279/line 17 13 to 280/line 7. What he said was that the sample size required 14 iI it's not a binary decision could be larger, could be 15 smaller, but you calculate the sample in a diIIerent way. 16 THE COURT: I want to go back and take a look Iirst at 17 Ms. Walzak's reIerence to binary. I'm not sure we are talking 18 about the same meaning there. I understand his meaning, it's 19 either yes or no. She basically was ultimately doing a yes or 20 no on each oI those loans. Let me see iI I can Iind it. 21 MR. AARON: It's page 556/lines 18 to 22. 22 May I please have the transcript. 23 THE COURT: I got it. 556. 24 MR. AARON: Your Honor, I'm reIerring to page 556, 25 starting at line 10. Camrass2 Page 778 1 THE COURT: Yes. I see her testimony, and it's along 2 the lines you indicated, but I don't think she is using 3 "binary" in the same sense that he was. Ultimately, what she 4 did was make no decision as to whether there had been a 5 material breach or not. 6 MR. AARON: Your Honor, what I think she did in that 7 process was exercise subjective judgment oI severity. I 8 believe her testimony Iairly read said -- 9 THE COURT: I agree with that. She is conIirming, and 10 we talked about this a Iew minutes ago, that it's not a bright- 11 line rule type situation. You have to look at the whole Iile, 12 and then you can make a determination. What he is talking 13 about, I think, is that you needed a sample size that would be 14 big enough to be extrapolatable, iI there is such a word, where 15 ultimately you were dealing with a yes/no situation. 16 And she is ultimately dealing with a yes/no. The Iact 17 that it is subjective rather than objective goes to whether 18 that is a proper methodology, what your colleague and I just 19 discussed and plaintiII's counsel. But I don't know that it 20 goes to sample size, or you need to tell me why it goes to 21 sample size. 22 MR. AARON: Your Honor, what I'm stating is according 23 to Dr. Lipshutz' testimony, iI an expert is trying to 24 determine, like Ms. Walzak, what the severity is oI certain 25 violations, the number oI violations, Ior example, as opposed Camrass2 Page 779 1 to just saying was there a material breach oI representation, 2 yes or no, iI it's severity, it's a diIIerent calculation. 3 What Dr. Lipshutz was saying, and I believe we have in 4 evidence his declaration in opposition to the motion in limine, 5 there is a very complex Iormula that I went on the Internet and 6 plugging the numbers in and it spat out. It is a very complex 7 Iormula. What he is saying is it's a diIIerent Iormula. The 8 sample size may be smaller, it may be larger, but my point is, 9 Judge, that Dr. Lipshutz wasn't told the right thing here. 10 THE COURT: Again, I'm not sure I Iully Iollow what 11 you are saying. I thought what he was saying was this. For 12 example, iI you had a sample oI mortgages and you divided them 13 into three categories -- no breach, breach, and material 14 breach -- then you wanted to extrapolate those three categories 15 to the Iull Iield, you would need a larger sample than you 16 would need iI you just were going to go no breach versus 17 material breach. I understand that completely. 18 The point you're now making seems to me to be a 19 totally diIIerent one. What you are saying is that by its very 20 nature a subjective determination does not lend itselI to 21 extrapolation regardless oI the size oI the sample unless the 22 sample is 99.9 percent, because there are too many ways to skew 23 the whole process. II that's right, it's only because her 24 methodology is Ilawed to begin with. So I really think this is 25 subsumed in your colleague's argument. Camrass2 Page 780 1 MR. AARON: I'll make two quick points. You are 2 absolutely right, your Honor. One oI the things I'm saying is 3 this is such a subjective inquiry, it can't be extrapolated 4 onto the entire population Irom this sample. That's the Iirst 5 thing I'm saying. 6 The second thing I'm saying, it's a very minor point 7 and I will move on, is what Dr. Lipshutz testiIied on pages 279 8 and 280 oI the trial transcript is it depends how you calculate 9 the sample size, it depends on what it is you're trying to 10 measure. 11 My understanding oI his testimony on those pages is iI 12 I knew that what you are trying to measure is what the severity 13 was oI breaches as opposed to whether or not there was a 14 material breach yes or no, I would have calculated the sample 15 size diIIerently. The sample size may have been larger, the 16 sample size may have been smaller. I'm just commenting on that 17 Dr. Lipshutz would tell you that the methodology is diIIerent. 18 THE COURT: I take the point, although I think, Irom 19 the little I remember Irom my college statistics course, the 20 sample size would be larger, it wouldn't be smaller under those 21 circumstances. 22 MR. AARON: Your Honor, moving on, even iI Dr. 23 Lipshutz's opinions are properly applied here, the sample size 24 is properly applied here, the damages claims that Dr. Mason 25 puts Iorth are not proper. The Iirst reason Ior that is what Min-U-Script® SOUTHERN DISTRICT REPORTERS (15) Pages 777 - 780 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass2 Page 781 1 your Honor brought at the beginning oI the question oI Dr. 2 Mason, and this goes exactly Ior what Ms. Rendon was talking 3 about, that his opinions are premised on Ms. Walzak's. So iI 4 Ms. Walzak is excluded, Dr. Mason should be excluded. 5 Additionally, because oI the testimony oI Dr. Lipshutz 6 with respect to sample size, the damages calculations that were 7 utilized by Dr. Mason are unreliable. What Dr. Lipshutz 8 testiIied that in order to be 95 percent conIident that the 9 portion oI any property being measured in the samples was known 10 within plus or minus 5 percent, the sample size had to be 371 11 Ior the 2005-1 pool and 358 Ior the 2006-2 pool. II your Honor 12 recalls, he rounded up to 400. 13 Dr. Lipshutz also testiIied that a sample size oI 50 14 or even 80 would not be adequate to estimate a proportion at a 15 90 percent conIidence level within that same conIidence 16 interval, that margin oI error oI plus or minus 5 percent. Yet 17 when calculating damages based on the January 2009 Irustration 18 date, which is the date that plaintiII chose to measure the 19 time, the sample sizes were in the same ranges that Dr. Mason 20 talked about. 21 Ms. Gaylor, iI I could have up the 2006-2 spreadsheet. 22 Your Honor, this is the very exhibit that I showed. 23 It's Exhibit AYM in evidence. 24 II your Honor looks in the upper leIt-hand corner oI 25 loan count, there are 400 loans in the sample Ior 2006-2. Camrass2 Page 782 1 Under Dr. Mason's spreadsheet, iI you look at adverse loan 2 count, iI you look down where it says 47, that was the number 3 oI loans as oI January 2009 that had been charged oII. What 4 the plaintiII said was that they were basing their damages here 5 on charged-oII loans. 6 The reason they are basing damages on charged-oII 7 loans is not because they are trying to give us the beneIit oI 8 the doubt, but rather because that is the only place where they 9 are damaged on charged-oII loans. What Dr. Mason does, he then 10 calculates a percentage oI what the principal balance is oI 11 those charged-oII loans, that's the 3,841,200, as compared to 12 what the principal balance was oI the 37 charged-oII loans that 13 purportedly had deIects. 14 II your Honor recalls, I had a spreadsheet that was a 15 demonstrative Ior the 2006-2 time Irame that we called A that 16 had shown that there were about 12 loans that were improperly 17 listed as charged oII. That 47 count drops to 35. In essence, 18 what's happening here is that Dr. Mason is extrapolating Irom 19 35 charged-oII loans to thousands oI loans. In the 2006-2 20 population there were a total oI 5,112 loans. What is 21 happening is that Ior 35 loans we are extrapolating onto 5,000 22 loans. 23 It is even worse in the 2005 pool. Ms. Gaylor or Ed, 24 iI you could pull that up. You need to go to the bottom right, 25 iI this is the correct exhibit. Camrass2 Page 783 1 This is DeIendant's BBK in evidence. Again there is a 2 loan count oI 400 in column V, the January 2009 Irustration 3 date. There are 37 loans that have charged oII. What Dr. 4 Mason does is he looks at 34 oI those that supposedly had 5 breaches out oI those 37, and again he looks at what the 6 principal balances were, the original principal balances, and 7 that's how he arrives. He divides the adverse breach balance 8 by the adverse balance and comes up with the 87.59 percent. 9 Again, one oI the problems that he has in addition to 10 this deIicient methodology is I put beIore him DeIendant's 11 Exhibit B, where I calculated that there were about 15 or so 12 loans that were improperly included there. 13 The long and the short oI it, Judge, is under Dr. 14 Lipshutz's, their own statistical expert's, opinion, the sample 15 sizes here just aren't adequate to extrapolate to the size oI 16 the pools. In the 2005-1 pool the population is 10,025. 17 The real prooI oI this I think came out on redirect. 18 What happened on redirect, iI your Honor recalls, is that by 19 removing the number oI loans or reducing the number oI loans 20 that were charged oII, what his counsel brought out was that 21 the adverse breach rate actually went up. 22 Applying that to the current circumstance, your Honor, 23 what Assured would have you believe is that by taking loans out 24 oI this sample, the amount oI damages that my client is 25 supposed to pay is more. There plainly is a Iailure oI prooI Camrass2 Page 784 1 as to damages here, your Honor. 2 What Rule 52(c) is Ior, as your Honor is well aware, 3 it's the Rule 60 Ior bench trials. There really has been a 4 Iailure oI prooI here, Judge. As you pointed out, the 5 plaintiII did not oIIer the Flagstar underwriting guidelines 6 into evidence. Without the underwriting guidelines, there's no 7 way that your Honor can properly assess whether the guidelines 8 were met or weren't met. 9 What else? How many underwriting loan Iiles are in 10 evidence? I heard Mr. Buchdahl say there were 20. He, oI 11 course, picked out that in Ms. Walzak's report there were ten 12 really bad ones and then there is one that we have all been 13 Iocusing on. What they are asking your Honor to do at this 14 stage oI the case is Irom one loan, one loan, they want to 15 extrapolate onto 16,000 and hit my client Ior $111 million 16 worth oI damages. There's been a Iailure oI prooI, and we are 17 entitled to judgment under Rule 52(c). 18 Thank you, Judge. 19 THE COURT: Thank you. 20 Let me hear Irom plaintiII's counsel. 21 MR. BUCHDAHL: Your Honor, it's telling that 22 deIendants have no expert in statistics here, because no expert 23 in statistics would ever agree with counsel's argument. It's 24 also telling that they had no expert oI their own to run a 25 repurchase model, because no expert in that Iield would agree Min-U-Script® SOUTHERN DISTRICT REPORTERS (16) Pages 781 - 784 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass2 Page 785 1 with what he is saying about that. 2 Here is why that he is saying about sample size makes 3 no sense at all. I'll start with the testimony oI the expert 4 on this. I believe you have page 288. II you don't, we can 5 get it Ior you. The date was October 12. 6 THE COURT: While we are getting that, let me take 7 this opportunity to return the two loan Iiles. 288? 8 MR. BUCHDAHL: 288, your Honor. In our copy it's 9 right at the top oI the page, redirect examination. Because it 10 was very clear what Mr. Aaron was trying to do on cross, the 11 very Iirst question on redirect was the Iollowing. 12 "Q. First oI all, iI 50 oI the 400 loans in one oI the random 13 samples you selected exhibited a particular characteristic, 14 would you expect that proportion oI the sample to carry over to 15 the broader population oI the loans in the pool? 16 "A. Absolutely." I apologize that he used that word, too. 17 "Absolutely. That's the purpose oI constructing a random 18 sample." 19 OI course that's the purpose oI conducting a random 20 sample. II you were to listen to Mr. Aaron, here's what would 21 happen. You would say, how many people do I need to poll to 22 Iigure out who is Ior Romney and who is Ior Obama. You would 23 tell me let's use 500. How many are Ior Obama? Maybe these 24 days it's 251. Then he'd say, well, guess what, your sample 25 size isn't big enough, because you have 251, you don't have Camrass2 Page 786 1 500. You could never stop this kind oI analysis, which is why 2 no statistician would ever endorse it. 3 Look at what Dr. Mason did. II you can put that chart 4 back up that he was looking at here Irom the spreadsheet. You 5 can use 06 or 05. This will work. 6 What counsel Ior the deIense is Iocusing on is this 7 number, 47. That's the number oI loans that we said deIaulted. 8 It turns out that it included a Iew that were merely very 9 delinquent in this pool. He says you're using 47 out oI 400. 10 Sure, that's how many deIaulted by January oI 2009. 11 (Continued on next page) 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CAMJASS3 Trial Page 787 1 But Irankly, your Honor, it doesn't matter because iI 2 you want to move to here or here, you can see that these, it is 3 consistent that this number is very high number. II you back 4 up the process and just look at the initial deIect rate because 5 again these representations were Ialse at the time oI closing, 6 you've got a 75.56 percent average deIect rate right at the 7 time oI closing. 8 THE COURT: Well, this may be totally wrong, but since 9 I mentioned it has been a Iew years since I had statistics, but 10 I basically agree with you with this caveat: 11 II you have a random sample in a binary situation and 12 your Iormula tells you that you need 400 to make it a valid 13 sample to a 95 percent conIidence level -- all presupposing, by 14 the way, it is the kind oI situation that Iits a bell curve, 15 which is really the underlying assumption oI all oI this which 16 may or may not be true, we are assuming that is true, you can 17 always challenge that here -- then you can Iairly say iI X 18 number oI the 400 had characteristics oI Y, then we can Iairly 19 extrapolate to the entire 12,000 or whatever and say that same 20 percentage will have characteristics oI Y, with the caveat that 21 the conIidence level may change, and I don't recall either side 22 asking Dr. Lipshutz about to what degree the conIidence level 23 would change in respect to this calculation oI damages. So I 24 think it may be neither here nor there, but that is at least my 25 rough recollection oI something I thought that was repressed. CAMJASS3 Trial Page 788 1 MR. BUCHDAHL: I want to say two things, and I will 2 sit down: One, our burden is Iar short oI 95 percent 3 conIidence on this. It is a preponderance oI the evidence. We 4 have met that burden Ior sure. 5 Second -- 6 THE COURT: That is an apples or oranges comparison, 7 but go ahead. Go ahead, go ahead. Go ahead with what else you 8 had. 9 MR. BUCHDAHL: My next point, one oI the things Dr. 10 Mason talked about and testiIied to, and to the extent this 11 moves during the deIense case, we can bring him back Ior 12 rebuttal, but one oI the important parts oI his testimony is 13 these percentages Iar exceeded the amount necessary Ior Assured 14 to get Iull reimbursement. 15 That is obviously a critical part oI understanding 16 this because as he testiIied, as had they repurchased these 17 loans appropriately, there would have been excess, 18 over-collateralization developing in the trust that would have 19 prevented Assured Irom taking its claims and these numbers were 20 well in excess oI the number necessary Ior that. 21 Look, the testimony has shown that Assured paid $90 22 million in claims, and with interest we get to $111 million in 23 combination oI contractual and statutory interest. The 24 evidence has shown grievous substantial problems in these loan 25 Iiles. There is no Iailure oI prooI that a speciIic, Min-U-Script® SOUTHERN DISTRICT REPORTERS (17) Pages 785 - 788 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS3 Trial Page 789 1 respectIully, that the speciIic underwriting guidelines are not 2 in evidence because every -- and they're undisputed what the 3 nature oI those guidelines are -- but critically, it would be 4 very, very diIIicult to have an underwriting error that 5 wouldn't also run aIoul oI the more broad representations that 6 there is no error, omission, negligence or Iraud just by their 7 very nature. 8 We have proved our case on liability with the use oI 9 this sample and we submit we proved our case on damages. 10 You'll hear no expert testimony to rebut anything Irom our 11 statistician or our damages expert along these Iields. 12 THE COURT: All right. Let me hear on rebuttal Irom 13 Mr. Aaron. 14 MR. AARON: Your Honor, I promise my rebuttal will be 15 short and very accurate, as I am reading Irom the testimony oI 16 Dr. Lipshutz. First oI all, Page 270 line 11 -- 17 THE COURT: Hold on. 270, did you say? 18 MR. AARON: Yes, Page 270 line 11. 19 THE COURT: Hang on. 20 "Q Is it Iair to say iI the sample in size in this case were 21 50, in your expert opinion would that be an adequate sample? 22 "A A sample oI 50 Ior the purpose oI determining the 23 proportion within the sample would not enable you to estimate 24 that proportion plus or minus 5 percent with a conIidence oI 95 25 percent. It doesn't mean you can't make an estimate. As a CAMJASS3 Trial Page 790 1 general proposition, you can make estimates using small 2 numbers, but the certainty goes down as the item sample goes 3 down. 4 "Q Does the margin oI error go up in that circumstance as 5 well? 6 "A It depends on how you have built it and depends on what you 7 mean by margin oI error. The sample that I built said that at 8 95 percent conIidence level, the margin or error is plus or 9 minus 5 percent. 10 "Q With respect to a sample size oI 80, would that be adequate 11 with respect to the pools at issue in this case? 12 "A It would not produce an estimate with the same statistical 13 properties. The level oI certainty would be lower." 14 THE COURT: I'll stop there. I think that is actually 15 what I was just saying myselI. 16 MR. AARON: Exactly. The second point I would like to 17 make, Judge, on Page 292 line 5 oI Dr. Lipshutz's recross, a 18 critical point here which I neglected to make earlier, Judge, 19 is that Dr. Mason -- excuse me -- Dr. Lipshutz, who is their 20 statistics expert, did not touch Dr. Mason's analysis. The 21 question I asked him at Page 292 line 5 is: 22 "Q Am I correct you did not look at as part oI your evaluation 23 the samples that Dr. Mason used to calculate his damages, the 24 sub-examples? 25 "A That's correct." CAMJASS3 Trial Page 791 1 Dr. Mason's analysis is not statistically valid and 2 their own statistician made no eIIort to even testiIy or render 3 an opinion with respect to Dr. Mason's analysis. That is all I 4 have, Judge. 5 THE COURT: All right. 6 MR. BUCHDAHL: Very brieIly: First, the testimony he 7 read was asking Dr. Lipshutz would you have less conIidence iI 8 the overall sample was 50, not what about let's look at a 9 proportion that is 50. I think that was pretty clear. II you 10 look at Page 473, now we are on October 15th, Page 473 starting 11 at line 5. 12 BY THE COURT: 13 "Q Am I correct you would be basing your damages calculations 14 on less than 45? Isn't that right? 15 "A No. 16 "Q Am I correct you would be basing your damages calculations 17 on less than 45 oI 400 loans. Isn't that right? 18 "A No. 19 "Q The percentage is based upon 45 oI 400 loans, is it not? 20 "A Exactly. The percentage is based on 45 oI 400 loans. I am 21 basing my observations on 400 loans that were sampled." 22 MR. BUCHDAHL: II I may, your Honor? 23 THE COURT: Yes. 24 MR. BUCHDAHL: I think Dr. Mason's testimony right 25 there shows his grasp oI the statistical principle at play CAMJASS3 Trial Page 792 1 here. It is a 400 loan sample he was working with, and he 2 understood that, which is why he very plainly rejected this 3 notion he is basing his damages calculation simply on 45 loans. 4 That is what that "no" answer means in line 7. 5 THE COURT: I am sorry. To me it is ambiguous because 6 back on line 5: 7 "Q Am I correct you would be basing your damages calculations 8 on less than 45 oI 400 loans? Isn't that right? 9 "A No. 10 "Q The percentage is based upon 45 oI 400 loans, is it not? 11 "A Exactly. The percentage is based on 45 oI 400 loans. I am 12 basing my own observations on 400 loans that were sampled." 13 So I took the "no" to mean no, it wasn't less than 45, 14 it was 45. 15 MR. BUCHDAHL: The number on the board was 37. I will 16 say this: We submitted directly on this point aIIirmations by 17 both Dr. Mason and Dr. Lipshutz, explaining what they're saying 18 is wrong and one oI those was certainly introduced into 19 evidence. 20 For Daubert purposes, the court certainly can consider 21 either oI those aIIirmations in considering whether Ior 22 reliability purposes this testimony should come in. I think 23 those aIIirmations leave zero doubt on this point. 24 THE COURT: I agree with you that Ior Daubert 25 purposes, I can consider those aIIirmations Irom both sides, so Min-U-Script® SOUTHERN DISTRICT REPORTERS (18) Pages 789 - 792 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS3 Trial Page 793 1 I will do that. 2 Now, let's discuss scheduling. I am going to be at 3 lunch Irom 1:00 to 2:00, so we do have a Iew minutes now. I am 4 inclined to think, at the risk oI once again ducking what is a 5 very interesting but complicated set oI issues, that I will 6 reserve on all oI these till the close oI the case. This is a 7 luxury the court is given in a Bench trial, but as the 8 discussion has indicated, there are, Ior example, things I want 9 to now look at in those aIIirmations that I haven't looked at 10 since the time oI the motions in limine. I also want to go and 11 look at the testimony again more careIully in light oI all this 12 discussion. 13 So I am neither denying or granting any oI the 14 motions. They will all be reserved till the end oI the case. 15 That means, by the way, I point out to deIense counsel that the 16 motion will be assessed as oI the state oI the record now. I 17 will also perhaps reassess it as oI the state oI the record at 18 the close oI all the evidence. You don't lose your right to 19 have it assessed as oI the state oI the record now. 20 Now, I had promised you would we would go to 7:00 21 o'clock today. I know you're all so eager to have that happen. 22 You will be very disappointed to learn that as I expected over 23 the break, other matters have come up which I will take at 24 5:00. We'll go to 5:00, but now any other matter interrupting, 25 but we won't go to 7:00. CAMJASS3 Trial Page 794 1 PlaintiII's counsel, I really didn't give plaintiII's 2 counsel the opportunity to say anything Iurther iI you wanted 3 to on the issue we discussed at the sidebar. II you want to, 4 you can come to the sidebar. II you don't, I consider it past 5 history. 6 MR. BUCHDAHL: I would love to say just one thing. 7 THE COURT: Come to the sidebar with counsel and the 8 Court Reporter. 9 MS. RENDON: Your Honor, there is one thing that we 10 wanted to be clear about the Mason aIIirmation that had been 11 raised previously that we would like to have on the record 12 beIore we adjourn. 13 THE COURT: Go ahead. 14 MR. AARON: Ms. Rendon accurately points out to me the 15 declaration Dr. Mason submitted in opposition to the in limine 16 motion includes some opinions that were not in his original 17 opinion. 18 THE COURT: Those are not being received. 19 MR. AARON: Thank your Honor. 20 (By Order oI the Court, the Sidebar conIerence is 21 sealed) 22 (In open court). 23 THE COURT: All right. We will reconvene -- 24 MR. BUCHDAHL: II we are just going to break, I will 25 wait. CAMJASS3 Trial Page 795 1 MS. RENDON: I have just one last housekeeping matter 2 only because it aIIects our timing as to our witnesses. We had 3 indicated that one oI the witnesses that we planned on 4 presenting was approximately three hours oI a videotape 5 deposition oI a Iormer Assured employee. II the court were to 6 simply just take that by transcript, that would aIIect our 7 timing as to our lineup, so I wanted to understand. 8 THE COURT: I originally thought we would have the 9 luxury oI having these matters played in open court, but unless 10 there are objections that need to be dealt with, I am perIectly 11 happy to just take the transcript and read it over at my 12 excessive leisure between midnight and 2:00 am. 13 MR. BUCHDAHL: I don't want to discourage you Irom 14 receiving the transcript. I do want to say when we received 15 renewed designations Ior this witness, approximately 50 oI 16 those designations in our view concern the topic oI loss 17 modeling, and so again iI we are not going to spend the time in 18 court, the objection in some ways is oI less consequence. You 19 have already heard about this. Your can hear as much as you 20 want on your own time. 21 THE COURT: Are the objections stated in the margin oI 22 the transcript? 23 MR. BUCHDAHL: They likely are not. 24 THE COURT: Here is -- 25 MS. RENDON: They are. CAMJASS3 Trial Page 796 1 MR. BUCHDAHL: They are, your Honor. 2 THE COURT: Then I will just rule on them as I read 3 them. 4 MS. RENDON: II I may, though, the words "loss 5 modeling" will appear in some oI those. It is coming in not 6 Ior the purposes that we have discussed previously. Those are 7 actually designed -- the loss modeling discussed in this 8 portion oI the transcript, iI I may, just to respond to the 9 objection, is because it shows the depth and breadth oI the 10 analysis that was done on the collateral; speciIically, the 11 access model which is discussed by Mr. Stiehl takes inIormation 12 oII the loan data tape and then stratiIies all the data oII 13 that loan data tape. 14 The ultimate purpose is to run a loss expectancy 15 number. The reason we were designating these portions oI the 16 transcript and associated exhibits is because it shows you the 17 depth and the breadth by which Assured came to understand all 18 the stratiIications oI data and all the attributes oI the 19 underlying collateral on a loan-by-loan basis as well as at a 20 transaction basis. 21 So we were not trying to get this in Ior the purposes 22 oI the type oI discussion we were having with Mr. Brewer, but 23 to demonstrate, in Iact, the depth and level oI understanding 24 oI the speciIic collateral and the attributes oI the collateral 25 going in. I want to be clear there was a diIIerent purpose in Min-U-Script® SOUTHERN DISTRICT REPORTERS (19) Pages 793 - 796 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS3 Trial Page 797 1 our minds Ior designating this component. 2 THE COURT: Here is what I think when hearing all oI 3 this, and I see your adversary wants to respond as well. Let 4 me do this. BeIore the end oI the trial I will read the 5 deposition with the objections, but I won't yet rule on the 6 objections. I will then hear oral argument oI this global 7 nature on the objections and then rule on it. 8 MS. RENDON: Thank your Honor. 9 THE COURT: Someone needs to give me the transcript 10 some time beIore the end oI today. 11 MS. RENDON: Yes. There is a second witness we will 12 get you as well, Mr. Williams, we said we would be putting in 13 by transcript as well. 14 THE COURT: Very good. 15 MR. BUCHDAHL: Since he wasn't going to testiIy today, 16 I haven't made my objections yet. 17 THE COURT: Then you need to mark up the -- 18 MR. BUCHDAHL: We'll do that tonight Ior sure. 19 THE COURT: Now, we will sit today till 5:00 o'clock. 20 We will sit a more or less Iull day tomorrow. There may be one 21 or two interruptions. I am working on that now. We will not 22 sit at all on Wednesday. I have the Gupta sentence in the 23 aIternoon, and I have some other matters I can only do in the 24 morning. 25 Now, I don't know iI it will be over by then or not. CAMJASS3 Trial Page 798 1 Now that we have dealt with the transcripts, what is deIense 2 counsel's view oI how many days you'll likely be? 3 MS. RENDON: Your Honor, in order to answer that, we 4 need to go back to our witness list. 5 MR. BUCHDAHL: On the subject oI the Iirst witnesses, 6 very brieIly, Mr. Jursek is identiIied as someone who knew 7 about Iollowing subject: The securitization process associated 8 with the Flagstar Home Equity Trust, data questions and 9 economics. It is unclear to me how they could get two hours oI 10 direct testimony that is relevant to this case Irom this 11 witness, and so aIter the break iI we could get a proIIer oI 12 why this witness has relevant evidence, I think we can 13 streamline the case Iurther. 14 THE COURT: Well, I don't know. I think let's get 15 going with him and see how it goes. All right. See you at 16 2:00 o'clock. 17 (Luncheon recess) 18 (Continued on next page) 19 20 21 22 23 24 25 CAMJASS3 Trial Page 799 1 AFTERNOON SESSION 2 2:15 pm 3 (Trial resumes) 4 (In open court) 5 THE COURT: Please be seated. 6 All right. Please call your -- 7 MS. RENDON: BeIore we call the witness, may I do one 8 small housekeeping matter because it makes a diIIerence in the 9 order oI our witnesses. 10 THE COURT: Yes. 11 MS. RENDON: In trying to keep the case as concise as 12 we can and maybe even try to Iinish it this week, we have 13 reconsidered and spoke brieIly with opposing counsel as Iar as 14 we had intended originally oI calling David Beard live. We do 15 have a videotaped deposition oI him and we would propose 16 putting him, submitting him through videotape deposition. I 17 want to make sure that is agreeable subject to, oI course, 18 providing our designations and giving appropriate opportunity 19 Ior objection. We would like to put him in that way which 20 would cut down on the live testimony that needs to be heard in 21 Iront oI the court. 22 MR. BUCHDAHL: No objection. 23 THE COURT: Very good. 24 MS. RENDON: Thank your Honor. 25 THE COURT: Please call your next witness. CAMJASS3 Trial Page 800 1 MS. SHIN: Your Honor, we call Stan Jursek. 2 STANLEY D. JURSEK, 3 called as a witness by the DeIendant, 4 having been duly sworn, testiIied as Iollows: 5 DIRECT EXAMINATION 6 BY MS. SHIN: 7 Q. Good aIternoon, Mr. Jursek. 8 Are you an employee oI Flagstar? 9 A. Yes, I am. 10 Q. What is your current role in Flagstar? 11 A. I am the executive vice president, treasurer oI Flagstar 12 Bank and the head oI Flagstar Capital Markets Corporation. 13 Q. How long have you been in this role? 14 A. Just over 10 years at Flagstar altogether. I have been the 15 treasurer Ior two years or so and the head oI Capital Markets 16 Ior about two months. 17 Q. Please describe your educational background. 18 A. I have a bachelors degree in economics Irom the University 19 oI Michigan and a masters in business administration and 20 Iinance Irom Michigan State University. 21 Q. Can you describe your proIessional background Irom the time 22 you received your masters. 23 A. Only one other job, that was at Michigan National 24 Corporation, a wholly owned subsidiary oI National Australia 25 Bank. There was I director oI the local treasury operations Min-U-Script® SOUTHERN DISTRICT REPORTERS (20) Pages 797 - 800 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 camjass1 Jursek - direct Page 801 1 and head oI North American Asset Liability Management. 2 Q. How long were you there? 3 A. I was there 18 years. 4 Q. When did you join Flagstar, Mr. Jursek? 5 A. 2002. 6 Q. What was your role when you Iirst joined? 7 A. I was the asset liability manager. 8 Q. Can you describe your role at Flagstar during the 2005-2006 9 period. 10 A. Yes, I would have been the asset liability manager still. 11 At that time-Irame I dealt with issues such as balance 12 sheet structure, interest rate, risk management, hedging, those 13 types oI activities. 14 Q. What department were you in, Mr. Jursek? 15 A. I was in the asset liability management department within 16 the Capital Markets Group. 17 Q. Were you the head oI that department? 18 A. Yes, I was. 19 Q. Mr. Jursek, is your role an accounting role? 20 A. No. I do have a lot oI interaction with the accounting 21 department. I would describe mine as more oI a Iinancial 22 analyst role that supports many oI the accounting activities 23 that take place, but it is clearly not an accounting role. 24 Q. Do you have any underwriting experience? 25 A. No, I do not. camjass1 Jursek - direct Page 802 1 Q. What was your role, iI any, in the 2005-1 HELOC 2 securitization at issue in this case? 3 A. I had several roles with that structure. The Iirst role 4 dealt with data management. I had several analysts in my 5 department that were very skilled at ad hoc queries and 6 securing data, and we worked very closely with JP Morgan in the 7 development oI the data tape Ior the transaction. 8 Q. Did you have any other roles with respect to the 2005-1 -- 9 A. Yes, once the transaction was structured and began to take 10 shape, I was also responsible Ior the Iinancial analysis oI it, 11 determining the economic beneIit to Flagstar Ior the 12 transaction and, you know, generating the accounting entries 13 that support it, the deal. 14 Q. We'll come back to discuss that a bit more in a Iew 15 minutes, but let's step back a minute. 16 Mr. Jursek, what is Flagstar Bank? 17 A. Flagstar is a nationally chartered Iederal savings bank. 18 We were a savings and loan at the time. 19 Q. Is it a regional bank? 20 A. Very much a regional bank. At this time we have banking 21 oIIices just in Michigan. 22 Q. How many banking oIIices in Michigan do you have? 23 A. My recollection is about a hundred, right around a hundred. 24 Q. Do you have retail banking branches anywhere other than 25 Michigan? camjass1 Jursek - direct Page 803 1 A. No, we do not. 2 Q. What is Flagstar's core business? 3 A. Flagstar's core business would have to be mortgage 4 originations and in particular agency mortgage loan 5 originations. 6 Q. What is agency originations? 7 A. Those would be underwriting mortgages that conIorm to the 8 guidelines set Iorth by Fannie Mae, Freddie Mac, Ginny Mae, the 9 government agencies that basically guarantee mortgages. 10 Q. Are those reIerred commonly as government sponsored 11 entities? 12 A. Yes, they are eIIectively agencies oI the United States 13 Government now. 14 Q. GSEs? 15 A. Yes, GSE. 16 Q. How do these agency or GSE loans get -- 17 MR. BUCHDAHL: Objection; relevance. 18 THE COURT: Sustained. 19 MS. SHIN: Your Honor, iI I may, this is a relevant 20 background inIormation to the core business oI Flagstar. This 21 is the Iirst time Flagstar has ever done an agency origination. 22 To the extent that the securitizations done are relevant, I 23 would like the witness to testiIy -- 24 THE COURT: You need to Iirst move the microphone 25 closer to you. Let me just look. camjass1 Jursek - direct Page 804 1 MS. RENDON: Your Honor, iI I may also just chime in? 2 In Mr. Buchdahl's opening statement, he reIerenced the 3 Iact that Flagstar perIormed so many hundreds oI millions or 4 more in agency, Fannie, Freddie securitizations presumably as 5 demonstrative oI their sophistication in the world oI 6 securitizing residential mortgages, and I think this line oI 7 questioning will go to the Iact that these transactions at 8 issue are non-agency and there is not an analogy to be drawn. 9 MR. BUCHDAHL: To the extent that I said something 10 irrelevant in a part oI this case that is not evidence, I would 11 withdraw it. This is not the experience in securitizations 12 that are diIIerent Irom this one and has no relevance to this 13 case, your Honor. 14 THE COURT: I agree. Sustained. 15 MS. RENDON: Thank you. 16 BY MS. SHIN: 17 Q. Mr. Jursek, had Flagstar had any experience with non-agency 18 loan securitizations prior to the 2005 -- 19 MR. BUCHDAHL: Objection. 20 Q. -- securitization? 21 THE COURT: Overruled. 22 A. No. 23 BY MS. SHIN: 24 Q. What is a non-agency loan securitization? 25 A. A non-agency loan securitization involves originating loans Min-U-Script® SOUTHERN DISTRICT REPORTERS (21) Pages 801 - 804 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 camjass1 Jursek - direct Page 805 1 and structuring your own securities out oI those loans. You 2 have to provide your own credit support in the Iorm oI rating 3 agencies and in some cases insurance companies and perIorm your 4 own due diligence exercises. Basically it is creating your own 5 securities. 6 Q. BeIore the 2005-1 securitization, had Flagstar ever worked 7 with a Monoline insurer in connection with a securitization? 8 MR. BUCHDAHL: Objection, leading. 9 THE COURT: Overruled. 10 A. Not that I'm aware oI, no. 11 BY MS. SHIN: 12 Q. Had it ever dealt with a rating agency as part oI a 13 securitization? 14 A. No. 15 Q. Had it ever dealt with due diligence as a part oI a 16 securitization? 17 A. No. 18 Q. Given Flagstar's lack oI experience in this area, did 19 Flagstar have assistance? 20 MR. BUCHDAHL: Objection; argument. 21 MS. SHIN: I can rephrase, your Honor. 22 THE COURT: All right. 23 BY MS. SHIN: 24 Q. Did Flagstar have assistance in the securitization? 25 A. Yes, we enlisted the help oI JP Morgan Securities to camjass1 Jursek - direct Page 806 1 eIIectively help us through the process. Again it was our 2 Iirst transaction and we needed somebody to, Ior lack oI a 3 better word, hold our hands through the transaction. 4 Q. What did JP Morgan do? 5 A. All encompassing Irom working with data tapes, determining 6 which loans qualiIied Ior the securitization, working as the 7 main go-between the Monoline Insurance Company and Flagstar and 8 the go-between the rating agencies and Flagstar. They pretty 9 much orchestrated the entire transaction Ior us. 10 Q. Did you deal directly with JP Morgan? 11 A. Yes, I did. 12 Q. Did you have a contact with at JP Morgan? 13 A. Yes, I did. My contact was Paul white. 14 Q. Let's turn to your roles with respect to the 15 securitizations at issue here. You mentioned that component oI 16 your role was assessing the economic implications. What do you 17 mean by that? 18 A. As the securitization was executed, we had to determine 19 just what the accounting entries that were associated with it 20 were, what the impact on Flagstar's Iinancial statements, 21 balance sheet and income statement would be, and calculating 22 those interests that we retained oI the securitization. 23 Q. What were those interests? 24 A. Commonly reIerred to as a residual interest, it is 25 eIIectively the net cash Ilow leIt over aIter all oI the other camjass1 Jursek - direct Page 807 1 participants in the securitization have been satisIied. You 2 might say almost an equity interest in the securitization. 3 Q. Does equity interest mean that Flagstar invested equity 4 into the securitization? 5 MR. BUCHDAHL: Objection. 6 THE COURT: Ground? 7 MR. BUCHDAHL: Again leading, your Honor. 8 THE COURT: No. I'll allow it. 9 A. Flagstar didn't directly inject equity. It was kind oI a 10 byproduct oI the structure. There were more loans sold into 11 the securitization than notes issued. That created an 12 over-collateralization. There was over a building oI the 13 over-collateralization over time. 14 All oI these things were contained in the 15 securitization until search conditions were met and only aIter 16 that point Flagstar got any oI the beneIits oI the 17 securitization. There was a Iair amount oI cash that was 18 actually trapped in the securitization until the end, and that 19 eIIectively represents our equity injection into this 20 structure. 21 Q. What was Flagstar's compensation Ior the loan contribution? 22 A. We didn't receive any compensation up Iront. Again the 23 compensation was going to be this residual interest that we 24 retained and would ultimately have received cash Ior this 25 residual interest as the securitization wound down. camjass1 Jursek - direct Page 808 1 Q. What is the signiIicance, iI any, oI Flagstar's maintaining 2 an equity ownership oI the securitizations? 3 A. Again I think there were several. Probably the most 4 signiIicant Irom the rating agencies and other participants was 5 it really demonstrated that Flagstar had skin in the game and 6 again we weren't going to receive any cash out oI the 7 transaction unless it perIormed in accordance with 8 expectations. 9 Q. What do you mean by skin in the game, Mr. Jursek? 10 A. Again our interests in the securitization were behind other 11 participants in it, and again iI there were losses to be taken 12 in the securitization, Flagstar would be the Iirst entity to 13 take those losses. Again it showed we had an economic interest 14 in that securitization perIorming. 15 Q. Did Flagstar's equity participation diIIer in the 2006-2 16 securitization? 17 A. No. It was eIIectively the same. Some oI the 18 over-collateralization levels diIIered, but it was still the 19 same basic concept. 20 Q. Who was charged with valuing the residual interest in the 21 2005-1 deal? 22 A. My department was. 23 Q. Is it the same Ior 2006-2? 24 A. Yes, it was. 25 Q. Who was responsible Ior building the economic model to Min-U-Script® SOUTHERN DISTRICT REPORTERS (22) Pages 805 - 808 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 camjass1 Jursek - direct Page 809 1 value that residual interest? 2 A. My department did or was responsible Ior it. I relied 3 heavily on JP Morgan in the construction oI the model. I would 4 characterize it as working alongside oI them to develop the 5 model. By the time the transaction closed, it was something 6 that was turned over Irom my group to use going Iorward. 7 Q. What makes up the residual interest? 8 A. When you think about the structure oI a securitization, you 9 have the collateral, which in this case are the HELOC loans, 10 and there is cash coming into the transaction Irom that 11 collateral, be it interest and principal payments, and then 12 there is the notes that are issued that are using the 13 collateral as security. 14 In this case, we had publicly issued notes and you 15 have the incoming cash Ilows Irom the collateral, you have the 16 outgoing cash Ilows Irom the note holders, the payments to the 17 note holders. 18 You have payments to the trustee, to the loan 19 servicer, to the Monoline insurer. At the end oI all those 20 cash Ilows there was either a net positive cash or net negative 21 cash, and that positive or negative cash would have been 22 commonly reIerred to as the residual interest. 23 Q. Can you describe the structure oI the 2005-1 transaction as 24 it relates to the order oI interest? 25 A. Again as I stated, Flagstar was at the very bottom oI the camjass1 Jursek - direct Page 810 1 order. It is commonly reIerred to as the waterIall in the 2 transaction. At the top oI the waterIall, those are the people 3 that get paid Iirst based on a prioritization. That would be 4 the externally-issued securities and interest and principal on 5 those securities. 6 Second would have been participants in the structure 7 such as the trustee and the loan servicer. Ultimately any 8 claims Irom the insurer, contributions would have been paid 9 oII. Again Flagstar was at the very bottom oI that waterIall 10 or prioritization. 11 Q. What does that mean, to be at the bottom oI the waterIall? 12 A. Basically that means as long as there is any outstanding 13 amounts due anybody, be it the Monoline insurer, be it the 14 trustee. Flagstar would not receive any cash out oI the deal. 15 Q. Did Flagstar have an interest in these securitizations 16 perIorming? 17 A. Absolutely. We had that eIIective equity injection in it, 18 and that was at risk Irom the start oI the transaction. 19 Q. Other than the residual interest, did Flagstar have any 20 other ownership interest in securitizations? 21 A. There is another ownership interest commonly reIerred to as 22 transIeror's interest that we ended up as a result oI the 23 structure as well. 24 Q. What is a transIeror's interest? 25 A. TransIeror's interest is a mechanism that allows the trust camjass1 Jursek - direct Page 811 1 to eIIectively wind down over time. Once it has reached a 2 certain period oI time or to the extent negative perIormance 3 has been reached and certain thresholds oI negative perIormance 4 was reached, it enters into what is called the rapid 5 amortization period. 6 When it enters into that rapid amortization period, 7 all cash Ilows Ior new draw that are Iunded on the HELOCs are 8 Iunded by Flagstar, and all payments oI principal go directly 9 to the note holders. It eIIectively Iorces the amortization oI 10 the securitization structure and brings it to a close as 11 expediently as possible. 12 Q. Was rapid amortization declined in this case? 13 A. Yes, it was, it was because oI credit events that caused 14 the rapid amortization to be cleared. 15 Q. What was the purpose oI the transIeror's interest, 16 Mr. Jursek? 17 A. Again, two diIIerent purposes. I think one is the orderly 18 dissolution oI the structure over time. The second is that it 19 adds an element oI additional credit support primarily on 20 behalI oI the Monoline Insurance Company. That wrapped the 21 deal. 22 Q. What happens when Flagstar starts Iunding all the draw? 23 A. EIIectively there becomes a dual ownership oI the 24 collateral, with Flagstar owning a pro rata portion oI the 25 collateral in the deal. We participate in the perIormance oI camjass1 Jursek - direct Page 812 1 that collateral, sharing in the interest receipts and losses on 2 a pari passu basis, but again that receipt oI the principal 3 will only be realized by Flagstar to the extent everybody else 4 has been satisIied in the waterIall. 5 Q. When did Flagstar start calculating or valuing the 6 transIeror's interest in the two deals? 7 A. It would have been right aIter the rapid amortization event 8 was declared. I believe it was in early 2008 Ior the 2005-1 9 and I believe late 2007 Ior the 2006-2 deal. 10 Q. Mr. Jursek, how is the transIeror's interest valued? 11 A. It is valued very similarly to the residual interest. 12 Again it is a net present value oI the cash Ilows, and 13 any cash Ilows that are leIt over at the end oI the deal 14 represent interest that Flagstar has, and it is expressed as a 15 net present value concept, very much like residual. 16 Q. Are there critical assumptions taken to come to that 17 valuation? 18 A. Yes, eIIectively the same critical assumptions, you know, 19 that go into the residual would aIIect the value oI the 20 transIeror's interest. There is going to be an interest rate 21 assumption, there is going to be a prepayment assumption. 22 There is going to be a loss Iorecast. All oI those Iactors are 23 going to impact the transIeror's interest. 24 MS. SHIN: Your Honor, may I approach? 25 THE COURT: Yes. Min-U-Script® SOUTHERN DISTRICT REPORTERS (23) Pages 809 - 812 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 camjass1 Jursek - direct Page 813 1 (Pause) 2 BY MS. SHIN: 3 Q. Mr. Jursek, do you recognize this document? 4 A. Yes, I do. 5 Q. What is it? 6 A. It is Flagstar's 10-q. 7 Q. What date? 8 A. This would have been Ior the June 2012 Iiling period. 9 Q. Is this the most recent 10-q available at this time. 10 A. At this time, yes. 11 Q. Is this a publicly-Iiled document? 12 A. Yes, it is. 13 MS. SHIN: I move to admit this exhibit into evidence. 14 MR. BUCHDAHL: Subject to a showing oI relevance, your 15 Honor, no objection. 16 THE COURT: Received, subject to connection. 17 (DeIendant's Exhibit BAS received in evidence) 18 BY MS. SHIN: 19 Q. Mr. Jursek, can you turn to the tab page in this document. 20 A. Yes. 21 Q. This I believe is Page 57. Do you see at the bottom where 22 it says, "transIeror's interest"? 23 A. Yes. 24 Q. Are you there, Mr. Jursek? 25 A. Yes, I am. camjass1 Jursek - direct Page 814 1 Q. Would you read the last Iew sentences under, "TransIeror's 2 interests" in the record. 3 A. "Under the terms oI the HELOC securitization, the trusts 4 have purchased and were initially obligated to pay Ior any 5 subsequent additional draw on the lines oI credit transIerred 6 to the trust. Upon entering a rapid amortization period, the 7 company becomes obligated to Iund the purchase oI those 8 additional balances as they arise in change Ior a beneIicial 9 interest in the trust (transIeror's interest) the company must 10 continue to Iund required purchase oI additional draw by the 11 trust Ior as long as the securitizations remains active. The 12 table below identiIies the draw conclusions Ior each oI the 13 HELOC securitizations trusts as well as the Iair value oI the 14 transIeror's interest." 15 Q. Mr. Jursek, did you have any hand in the preparation oI 16 this table? 17 A. Yes, I did. 18 Q. To date, how much has Flagstar Iunded in draw Ior the 19 2005-1 trust? 20 A. Just under $36 million. 21 Q. That is as oI June 30, 2012? 22 A. Correct. 23 Q. What is the additional balance increase amount? 24 A. Again as I described the transaction earlier, Flagstar 25 participates in the perIormance oI those, oI the collateral on camjass1 Jursek - direct Page 815 1 a pari passu basis, so the diIIerence between the total draw 2 that have been contributed and the additional balance increase 3 amount is the eIIective pro rata share oI the losses on the 4 collateral that Flagstar absorbed. That is eIIectively the 5 Iace value oI the transIeror's interest is the $25.9 million. 6 Q. What is the Iair value oI the transIeror's interest? 7 A. At this date, the Iair value is $7.66 million. 8 Q. Why is the Iair value less than the additional balance 9 increased amount? 10 A. Several Iactors: One is again it is the net present value 11 oI all the cash Ilow on the transIeror's interests that are 12 expected to be around at the end oI the deal. 13 There are expected credit losses that are going to be 14 absorbed by that $25.9 million, and that $7.6 million 15 represents the amount that is going to be the present value oI 16 the amount that is expected to be leIt at the end oI the 17 transaction. 18 Q. How much credit support is there currently in the 2005-1 19 trust? 20 A. Currently there is $25.9 million oI additional credit 21 support. 22 Q. How much has Flagstar Iunded in draw Ior the 2006-2 trust 23 as oI June 30, 2012? 24 A. $51.2 million, $51.3 million. 25 Q. What is the amount oI the additional balance increase camjass1 Jursek - direct Page 816 1 amount? 2 A. $28.8 million. 3 Q. So the amount oI loss, iI you subtract 51.2 by 28.8 is? 4 A. That would be our pro rata share oI the losses we paid on 5 the deal so Iar. 6 Q. Is there any book Iair amount Ior transIeror's interest Ior 7 2006-2? 8 A. Not at this time. That was all written oII. 9 Q. What does the 28.8 million additional balance increase 10 amount, basic amount represent Ior the 2006-2 trust? 11 A. That is eIIective credit support that is in the deal at 12 this time. 13 Q. Does that mean that any amounts that are still in the 14 account at the end will be turned over to Assured? 15 A. Yes, Flagstar would IorIeit any dollars that are still 16 active in that account. 17 Q. Altogether, how much has Flagstar contributed in draw 18 Iundings in addition to the initial over-collateralization we 19 just talked about? 20 A. It looks to be a little over $86 million. 21 Q. Just so we're clear, how is the transIeror's interest 22 diIIerent Irom Flagstar's residual equity interest? 23 A. It's diIIerent in that we receive interim interest payments 24 on our pro rata share oI the collateral. It is similar in that 25 the return oI the principal is still subordinated to everybody Min-U-Script® SOUTHERN DISTRICT REPORTERS (24) Pages 813 - 816 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 camjass1 Jursek - direct Page 817 1 else in the trust just as it is at the bottom oI the waterIall 2 Irom the principal perspective. 3 Q. You mentioned pro rata share. Who are the other owners oI 4 the securitization trust? 5 A. Flagstar is the only owner oI the securitization trust. 6 Q. What is Flagstar's share? 7 A. Our share is going to be 23 to 25 percent oI the underlying 8 collateral. When I am reIerring to pro rata share, I am 9 reIerring to the share oI the collateral, basically the trust 10 and Flagstar now shares that collateral. 11 Q. Is that pro rata share growing? 12 A. Yes, the rapid amortization is going to a mandate that all 13 principal payments go to the beneIit oI the note holders and 14 all draw are Iunded by Flagstar. Ultimately Flagstar's 15 ownership in the collateral pool will approach a hundred 16 percent as the deal winds down. 17 Q. What, iI any, is the signiIicance oI Flagstar booking an 18 asset Ior the transIeror's interest Ior 2005-1? 19 A. For the 2005-1, the Iact that there's any positive value 20 that we're carrying on our books implies that all the other 21 parties in the securitization have been made whole Ior that 22 deal. 23 Q. Is Flagstar's transIeror's interest valuation report in the 24 10-K? 25 A. It is. camjass1 Jursek - direct Page 818 1 Q. As we have seen, it is reported in the 10-q's? 2 A. Correct. 3 Q. It is booked as an asset Ior 2005-1? 4 A. Yes, it is. 5 Q. Is the transIeror's interest valuation Ior 2005-1 trust 6 audited? 7 A. Yes, it is. 8 Q. Who audited the transIeror's interest valuation? 9 A. Our external auditors. 10 Q. Mr. Jursek, how, iI at all, were you involved in the loan 11 selection process Ior the trusts at issue in this litigation? 12 A. My department, as I said, played a large role in the 13 initial working with data. We were basically the primary 14 go-between JP Morgan and Flagstar as it relates to the raw 15 data. We were trying to make sure that loans that were in the 16 securitization qualiIied as securitization candidates and that 17 we had eIIective data Ior all oI those loans that were in the 18 transaction as well. 19 MR. BUCHDAHL: II I may, we got a lot oI objections 20 during our Iirst witness based on lack oI personal knowledge 21 because we put on the head oI the department, and argument was 22 made that he wasn't personally involved in some oI these things 23 that he wanted to testiIy about. 24 Mr. Jursek's testiIied that he is the head oI the 25 department responsible Ior a number oI things, including the camjass1 Jursek - direct Page 819 1 valuation oI these transIeror's interest and that he is the 2 head oI the department that was responsible Ior loan selection, 3 but I haven't seen any Ioundation suggesting he was personally 4 involved in these things. So I would object to some oI the 5 testimony we have already heard and this new line oI 6 questioning based on lack oI personal knowledge subject to us 7 hearing something diIIerent about the value oI these things. 8 MS. SHIN: I can ask him iI he was personally 9 involved. 10 THE COURT: BeIore you get to that, Iirst, whatever 11 objections were made previously were made in terms oI the 12 speciIic questions raised and may or may not carry over here. 13 Second, I think in the normal course really we don't 14 need a lengthy speaking objection oI that sort and it is enough 15 to say, "Objection. Lack oI personal knowledge." 16 Sustained. Put another question. 17 BY MS. SHIN: 18 Q. Can you describe your personal involvement, iI any, in the 19 loan selection process? 20 A. As I stated, I actually do have Iairly extensive sequel 21 coding abilities and worked with our analysts in the 22 development oI this data tape. Again it was a departmental 23 project that I was ultimately responsible Ior and we did 24 assemble that data tape, eIIectively provided, provided the 25 Iirst cut oI data to JP Morgan, and that included virtually our camjass1 Jursek - direct Page 820 1 entire HELOC population. Again their Iirst goal was to whittle 2 it down to the appropriate loans that would make appropriate 3 securitization candidates. 4 MR. BUCHDAHL: Objection, your Honor. 5 THE COURT: Overruled. 6 BY MS. SHIN: 7 Q. How long did that loan selection process take, Mr. Jursek? 8 A. It was a very extensive time-Irame that we worked with JP 9 Morgan. I recollect it taking at least a year, over twelve 10 months worth oI back and Iorth by the time we Iinally made it 11 to the end oI the securitization process. 12 Q. Why did it take so long? 13 A. Again as we identiIied earlier, this was Flagstar's Iirst 14 non-agency securitization. There were signiIicant issues as 15 Iar as data availability, and it wasn't data that, the type oI 16 data needed to support the securitization, wasn't the type oI 17 data we routinely stored. We had to assemble it and search it 18 out and basically make sure all the data existed. 19 Q. You mentioned early there was a whittling down or 20 qualiIying process? 21 A. Right. 22 Q. Would you take us through that whittling down process. 23 A. Right. As I stated, we gave JP Morgan virtually our entire 24 set oI home equity loans at the time. We really weren't aware 25 oI what would qualiIy as good securitization candidates and Min-U-Script® SOUTHERN DISTRICT REPORTERS (25) Pages 817 - 820 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 camjass1 Jursek - direct Page 821 1 went through the process oI knocking loans out oI the 2 securitization over the next period. 3 Q. The Iirst step was to show JP Morgan the entire inventory 4 oI HELOCs? 5 A. Correct. 6 Q. Were there any economic beneIits to Flagstar to cherry-pick 7 loans to keep on its book or to sell? 8 MR. BUCHDAHL: Objection, your Honor. 9 THE COURT: Sustained. 10 BY MS. SHIN: 11 Q. How was this whittling process done? 12 MR. BUCHDAHL: Objection, your Honor; lack oI personal 13 knowledge. 14 THE COURT: I think given his answer to the earlier 15 aspects, it seems that he has extensive personal knowledge oI 16 virtually every aspect oI this, so I will allow it. You may 17 cross iI you think there are aspects oI that he doesn't have 18 personal knowledge oI, but I will allow it Ior now. You may 19 answer. 20 THE WITNESS: Would you repeat the question. 21 BY MS. SHIN: 22 Q. How was this whittling-down process done? 23 A. Okay. Loans that were clearly not candidates Ior 24 securitization were removed, again examples would be loans that 25 had delinquency, current delinquency status or some sort oI camjass1 Jursek - direct Page 822 1 history oI delinquency. We also had several loans, batch oI 2 loans that were not underwritten using our automated 3 underwriting system. 4 Again those were Ielt not to be appropriate 5 securitization candidates. 6 THE COURT: Now actually now I do want to Iollow up 7 when I hear that on plaintiII's objection. 8 Who is making these determinations? 9 THE WITNESS: This would have been JP Morgan. 10 THE COURT: Do you know the basis on which they were 11 making it? 12 THE WITNESS: Just discussing the content oI the data 13 and going back and Iorth discussions on the data content. 14 THE COURT: With whom? 15 THE WITNESS: Primarily my department and myselI and 16 my analysts and JP Morgan, analysts at JP Morgan. 17 THE COURT: Are you talking to JP Morgan or are you 18 talking to your Iolks, who are talking to JP Morgan? 19 THE WITNESS: Both took place, a lot oI discussions 20 between myselI and JP Morgan, a lot with my analysts. 21 THE COURT: Give me an example oI the kind oI 22 discussions you had with JP Morgan. 23 THE WITNESS: We were in constant communication. They 24 would ask questions about the data tape, what the loans 25 represented, identiIying, Ior instance, what is a delinquent camjass1 Jursek - direct Page 823 1 loan, how do we identiIy a delinquent loan and having that type 2 oI discussion, what about that type identiIied delinquency. Is 3 there something that identiIies past delinquencies loans, those 4 were very typical conversations. 5 THE COURT: With some caution as to how much weight I 6 may give to is, I will allow it. Continue. 7 BY MS. SHIN: 8 Q. Mr. Jursek, you gave JP Morgan a loan tape? 9 A. Correct. 10 Q. Did you give JP Morgan a loan tape? 11 A. Yes, we did. 12 Q. What inIormation was on that initial loan tape? 13 A. There would have been, in my recollection, 50 to 75 Iields 14 oI inIormation, inIormation about the borrower, name, address, 15 items such as collateral value, debt burden that the borrower 16 would have, Iactors such as loan-to-value, all the basic 17 inIormation that would be required to make an underwriting 18 decision was eIIectively on that tape. 19 Q. Was income on that tape? 20 A. Yes it was. 21 Q. DTI? 22 A. Yes, it was. 23 Q. Assets? 24 A. Yes. 25 Q. Any co-borrowers? camjass1 Jursek - direct Page 824 1 A. II there were co-borrowers, yes. 2 Q. Credit scores? 3 A. Yes, there would have been. 4 Q. Were Flagstar's underwriting deadlines provided to JP 5 Morgan? 6 A. Yes, they were. 7 Q. Were they provided to anyone else? 8 A. They would have been provided to all oI the constituencies 9 oI the securitizations. They would have been provided to the 10 rating agencies, to JP Morgan, the Monoline insurer, all oI 11 those parties would have had access. 12 Q. Sticking with JP Morgan, what do you understand JP Morgan 13 did with the loan tape? 14 MR. BUCHDAHL: Objection; relevance. 15 THE COURT: The objection is relevance? 16 MR. BUCHDAHL: I have a back-up, too, your Honor. 17 THE COURT: Let me hear your back-up. 18 MR. BUCHDAHL: The back-up is this witness would not 19 have a personal knowledge what JP Morgan did review. I believe 20 there is no relevance what JP Morgan did with the loan tape. 21 THE COURT: The question, however, was not directed on 22 when JP Morgan did with the loan tape, which would be 23 objectionable on grounds oI hearsay also. 24 MR. BUCHDAHL: RespectIully, your Honor, I believe 25 that was the question. Min-U-Script® SOUTHERN DISTRICT REPORTERS (26) Pages 821 - 824 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 camjass1 Jursek - direct Page 825 1 THE COURT: No, it wasn't. The question was do you 2 have an understanding oI what JP Morgan did? Was that not the 3 question? 4 "What do you understand JP Morgan did with the loan 5 tape?" 6 So the question is, is his understanding oI relevance 7 at issue in this case which is why I hesitated, respectIully. 8 I think the objection is sustained. 9 BY MS. SHIN: 10 Q. What do you understand JP Morgan had instead oI data 11 validation edits? 12 MR. BUCHDAHL: Objection, your Honor. 13 THE COURT: Sustained. 14 BY MS. SHIN: 15 Q. What did JP Morgan want to know Irom you, Mr. Jursek? 16 MR. BUCHDAHL: Objection, your Honor. 17 THE COURT: Ground? 18 MR. BUCHDAHL: Lack oI personal knowledge as to what 19 JP Morgan wanted to know. 20 THE COURT: Well, yes. I think it is really an 21 objection as to Iorm, but sustained. 22 BY MS. SHIN: 23 Q. Was there an internal data validation process requirement? 24 A. We did a Iair amount within my department, trying to 25 identiIy data deIiciencies, data gaps. Again we worked very camjass1 Jursek - direct Page 826 1 closely with JP Morgan all through that process as Iar as what 2 types oI internal calculations should be consistent. 3 An example would be collateral value, iI you identiIy 4 the collateral and then the loan amount and then recalculate 5 loan-to-value and make sure that the data was internally 6 consistent, and we spent a lot oI time going through those 7 types oI processes. 8 THE COURT: I am sorry. I am missing something. 9 These were mortgage loans, yes? 10 THE WITNESS: Second mortgage home equity loans. 11 THE COURT: Yes. That is a subset oI mortgage loans? 12 THE WITNESS: Yes. 13 THE COURT: And as I understand it, you, Flagstar, had 14 not been involved in those loans previously or Flagstar had not 15 been involved in securitizing those loans previously or what? 16 What was the reason? What was it that Flagstar had 17 not been involved in that caused Flagstar to -- 18 THE WITNESS: Flagstar had not been involved in the 19 securitization oI those loans historically. 20 THE COURT: And you had Iamiliarity? Had Flagstar, to 21 your knowledge, had Iamiliarity to those loans in other 22 respects? 23 THE WITNESS: Yes, we did originate loans and invested 24 in them directly on our balance sheet, just not through 25 securitizations. camjass1 Jursek - direct Page 827 1 THE COURT: The loans that were going to be made here, 2 iI someone applied Ior a mortgage loan that was going to be 3 used as a securitization, to whom would they apply? 4 THE WITNESS: The same channels that our regular, 5 more -- 6 THE COURT: No. To Flagstar? 7 THE WITNESS: To Flagstar, correct. 8 THE COURT: And Flagstar Ior that purpose would treat 9 them the same as they had historically treated other such 10 loans? 11 THE WITNESS: Correct. 12 THE COURT: The special Iurther aspects oI 13 securitization had nothing to do with who would qualiIy Ior 14 such a loan, did it? 15 THE WITNESS: It wouldn't impact the qualiIication. 16 It would impact the data that was required to support 17 it. Again data that was required to support a securitization 18 had to be in particular Iormats and particular availability. 19 It wasn't uncommon Ior there to be a diIIerence between the 20 type oI data that supported the decision to put it on our 21 balance sheet and -- 22 THE COURT: Would someone who would not qualiIy to get 23 a HELOC loan Irom Flagstar in the ordinary course qualiIy iI it 24 was connected to a securitization? 25 THE WITNESS: I think it would more likely be the camjass1 Jursek - direct Page 828 1 other way around. 2 THE COURT: They would have to be higher standards? 3 THE WITNESS: Typically. 4 THE COURT: All right. So with respect to the 5 standards that would have to be met in the normal course, 6 Iorget about securitization or HELOC loan, are you Iamiliar 7 with those standards? 8 THE WITNESS: Yes. 9 THE COURT: Did you in your career ever, were you ever 10 at the level where you gave or where you were the person at the 11 intake? 12 THE WITNESS: No. 13 THE COURT: No? So your Iamiliarity is through having 14 supervised others or through the company being Iamiliar with 15 company guidelines and policies, or what? 16 THE WITNESS: Being Iamiliar with company guidelines 17 and policies. 18 THE COURT: Let's take the case, there were loans 19 where I think they're called stated income loans. Are you 20 Iamiliar with those? 21 THE WITNESS: Generally, yes. 22 THE COURT: Well, tell me what those, as you 23 understand it, what those were? 24 THE WITNESS: What stated income loans are? 25 Stated income loans would be loans that were by the Min-U-Script® SOUTHERN DISTRICT REPORTERS (27) Pages 825 - 828 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 camjass1 Jursek - direct Page 829 1 borrower. It basically represented what their income was. 2 THE COURT: The borrower would come in and tell you. 3 The loan oIIicer would have them Iill out the Iorm and sign it 4 and that his or her income was X, right? 5 THE WITNESS: That is my understanding. 6 (Continued on next page) 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Camrass4 Jursek - direct Page 830 1 THE COURT: Why is that diIIerent Irom any other 2 mortgage loan? 3 THE WITNESS: Stated income versus nonstated income is 4 the question? 5 THE COURT: Yes. 6 THE WITNESS: My understanding is that in a nonstated 7 income, the income is actually veriIied as part oI the under- 8 writing process. 9 THE COURT: Here it wasn't veriIied? 10 THE WITNESS: No, I'm not saying that at all. Again, 11 I wasn't part oI the -- 12 THE COURT: I'm asking, what is the diIIerence between 13 the two? II you don't know, you don't know. I'm asking what 14 is the diIIerence between -- 15 THE WITNESS: I told you generic -- 16 THE COURT: -- between a stated loan and a nonstated 17 loan? 18 MS. RENDON: Your Honor, iI I may? 19 THE COURT: No, you may not. 20 What is the diIIerence between a stated loan and a 21 nonstated loan? 22 THE WITNESS: The nonstated loan would have the income 23 veriIied as part oI the underwriting process. 24 THE COURT: And the stated loan would not have it 25 veriIied? Camrass4 Jursek - direct Page 831 1 THE WITNESS: It would not be explicitly veriIied. 2 THE COURT: II someone came in and said, I'm making 3 $50,000 a month, in the normal course no action would be taken 4 to veriIy that? 5 THE WITNESS: I guess I'm not an expert on the 6 underwriting practices. I do know that they all went through 7 our underwriting process and our normal underwriting engine. I 8 don't know what the underwriting department would do. 9 THE COURT: Your expertise or your Iamiliarity is with 10 what would happen, what additional requirements there might be, 11 iI these were to qualiIy Ior part oI a securitization, yes? 12 THE WITNESS: I knew that they were approved by our 13 automated underwriting system. The details oI that approval 14 I'm not really -- 15 THE COURT: Now I'm talking about what it is that you 16 do know, which is what? What is it? II they were going to 17 part oI a securitization, I think you told me there might be 18 additional steps. 19 MS. RENDON: Yes. They would have had to have been 20 approved by our automated underwriting system. 21 THE COURT: I understand that. Then what happens? 22 THE WITNESS: Then they would show up on the list oI 23 potential loans that were candidates Ior securitization. 24 THE COURT: Then what? Is anything else required? 25 THE WITNESS: That started the whole process as Iar as Camrass4 Jursek - direct Page 832 1 the date oI validation and the data edits. It basically 2 started that whole process. 3 THE COURT: What do you mean by data valuation data 4 editing? 5 THE WITNESS: Data validation. That's making sure 6 that we had all the data assembled and in a Iormat that was 7 appropriate to pass on to rating agencies. 8 THE COURT: Data you already had Irom your normal 9 review? 10 THE WITNESS: Data that we would have had in our 11 normal review, data that wasn't always readily available in the 12 Iorm and the location where you might expect it to be. 13 THE COURT: What would be an example oI the latter? 14 THE WITNESS: An example oI the latter would have been 15 I know there were some loans that were underwritten that had an 16 approval, but the details on income were not evident in the 17 Iirst data that was pulled Irom our data warehouse, and we had 18 to go back to the actual underwriting system to Iind the 19 appropriate income Iield. 20 THE COURT: Meaning you didn't add data, you just went 21 back and Iound data already existing and added it, is that 22 right? 23 THE WITNESS: Yes. It would have been diIIerent 24 sources. We started with the data warehouse, which was -- 25 THE COURT: I'm having a tremendous problem. This is Min-U-Script® SOUTHERN DISTRICT REPORTERS (28) Pages 829 - 832 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass4 Jursek - direct Page 833 1 all very vague in your description. Forgive me. It's not your 2 Iault. It is the Iault perhaps oI my questions. You have a 3 HELOC loan that has been approved Ior origination. 4 THE WITNESS: Right. 5 THE COURT: Now it's being considered Ior inclusion in 6 a pool used Ior securitization, yes? 7 THE WITNESS: Correct. 8 THE COURT: You Iind that some oI the data that you 9 need is not in the immediate printout, in the immediate 10 computerization Iorm that is given to the securitization 11 people? 12 THE WITNESS: Correct. We have diIIerent systems. 13 One is a loan servicing system. The other would be a loan 14 origination system. The primary source oI the original data 15 was the loan servicing system, as these loans were all on the 16 loan servicing system. What we did Iind was that there was at 17 times data that wasn't on the loan servicing system. We had to 18 look elsewhere Ior it. 19 THE COURT: That's what I'm having trouble with. When 20 you say you have to look elsewhere, do you mean elsewhere in 21 the data you already had within the bank or do you mean going 22 outside the bank? 23 THE WITNESS: Data that was already existing in the 24 bank. DiIIerent systems that don't eIIectively talk to each 25 other is what it amounts to. Camrass4 Jursek - direct Page 834 1 THE COURT: Now I understand. Now my question is, 2 what is the relevance oI this testimony? 3 MS. SHIN: The relevance is that there were a number 4 oI versions oI the loan tape that took over a whole year oI 5 time up through the close oI the transactions, and through that 6 period loans came out, loans were eliminated. Mr. Jursek is 7 just testiIying about that process. 8 THE COURT: I don't see the relevance oI that process. 9 The allegation here is that in the origination oI these loans 10 the guidelines were not Iollowed or there were errors, 11 omissions, etc. This process that he has just described didn't 12 include any new data, didn't include any new checks. 13 It just meant, as he I think, in a way that even this 14 dumb judge understands now, it meant taking data Irom one 15 database and putting it in a Iorm that was usable in another 16 database. But the loan origination process didn't change, the 17 validity oI the loans so Iar as the data known to the bank 18 didn't change. So what is the relevance? 19 MS. SHIN: I guess there are a couple oI things. The 20 implication Irom Matt Roslin's testimony was that Flagstar was 21 originating these loans to sell them or dump them and that it 22 carelessly put mortgages into these trusts without regard to 23 quality or process. Mr. Jursek's testimony reIers to a process 24 where there was careIul analysis and selection. 25 THE COURT: The analysis and selection was only as Camrass4 Jursek - direct Page 835 1 good or not as good as the data originally obtained. Again, 2 you can maybe convince me otherwise, but as I understand it, 3 the situation is this. Our loan originators obtained whatever 4 data they obtained. II you then take that data and you 5 transIorm it, you massage it, you put it into diIIerent 6 categories, you make selections based on aspects oI the data, 7 none oI that says anything about whether the original data 8 obtained was in accordance with the guidelines and/or had clear 9 errors, omissions, etc. I'm still Iailing to see the point oI 10 this. 11 MS. RENDON: Your Honor, iI I may. I think this is 12 one oI the bricks in the building that we are building. Mr. 13 Jursek is speaking Irom Flagstar's point oI view as to how the 14 data tape was constructed, that it contained 60 to 70 diIIerent 15 data points, I believe his testimony was, all oI the items that 16 would go into the underwriting oI a loan. 17 What you will see in the deposition testimony that's 18 been designated Ior your Honor is that that very same loan data 19 tape was provided to Assured, what Assured did with that loan 20 data tape was put it into their Access model. This was the 21 modeling that I was talking about beIore that Mr. Stiehl is 22 going to testiIy to that your Honor will see. 23 What you will see is that Assured ran loan-by-loan 24 analyses on that inIormation, that they also did stratiIi- 25 cations on portIoliowide bases, and that they did so so they Camrass4 Jursek - direct Page 836 1 could understand the nature oI the collateral and the quality 2 oI the collateral that was coming into the securitization Ior 3 determining whether or not they deemed it too risky a 4 transaction Ior them to insure or a proper transaction Ior them 5 to insure within their risk parameters. 6 THE COURT: First oI all, that arguably is closer to 7 the mark than what I am hearing Irom this witness, but I'm not 8 sure even that is relevant. 9 MS. RENDON: II I may just say one more sentence that 10 might help your Honor? 11 THE COURT: Yes. 12 MS. RENDON: One oI the things that you will also hear 13 testiIied to by both Mr. Beard and Mr. Stiehl and Mr. Williams 14 is that part oI the due diligence that was perIormed at the 15 loan level originally by Clayton & Bohan to third-party 16 diligence Iirms was that not only did they reunderwrite to 17 Flagstar's underwriting guidelines, not only did they grade it 18 to FSA's or Assured's grading system, part oI their assignment 19 was also Ior the loans they sampled, which was a random 20 representative sample, to go back and check the inIormation on 21 a loan Iile basis to the loan data tape to ensure that there 22 was accuracy in the inIormation on the loan data tape, to help 23 give Assured conIidence that the inIormation that they were 24 reading and reviewing and coming to understand about the 25 quality oI the collateral could be inIerred Irom the loan data Min-U-Script® SOUTHERN DISTRICT REPORTERS (29) Pages 833 - 836 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass4 Jursek - direct Page 837 1 tape, at least based upon the sample compared to the integrity 2 oI the data. 3 I think part oI what Mr. Jursek is doing is Irom 4 Flagstar's perspective, and we have gotten I think kind oI 5 stuck in how the data was pulled, testiIying to the depth oI 6 the inIormation and the Iact that the data tape came Irom 7 Flagstar and went over to Assured as part oI this process oI 8 demonstrating how Assured did come to understand the 9 collateral, approve the collateral, and it was demonstrative oI 10 being within their risk parameters. 11 THE COURT: II you enter into a contract that requires 12 the other side to do certain things, namely, adhere to its 13 guidelines, and also allocates risk iI it turns out through no 14 one's Iault that someone lied to obtain a mortgage, you bear 15 the risk, not us, does the Iact that you then undertake some 16 due diligence beIore you enter into the contract mean that you 17 waive your right to assert that the contract was breached iI 18 you later discover that either the guidelines were Iollowed or 19 that, through no one's Iault, the loans were procured through 20 Ialse statements? 21 MS. RENDON: We did make some argument along those 22 lines. I understand your Honor denied that on summary 23 judgment. I think at this point the reason why this evidence 24 is coming in is Ior a wholly diIIerent purpose. It is 25 probative oI whether or not the collateral was compliant Irom Camrass4 Jursek - direct Page 838 1 day one. 2 In other words, now we're talking about was this loan 3 collateral-compliant with underwriting guidelines, was it 4 violative oI underwriting guidelines, was it within the risk 5 parameters oI Assured at the date oI the timing oI the closing 6 oI the transaction. 7 What all this demonstrates is that Assured's own due 8 diligence and the length and look that it gave was oriented 9 towards Iiguring out that exact question and the time period 10 that even Ms. Walzak says is the relevant time period. 11 THE COURT: Even assuming Ior the sake oI argument Ior 12 the moment that that was relevant, what does this witness add 13 to that? 14 MS. RENDON: Your Honor, what he testiIied to earlier 15 in his testimony on a diIIerent subject, I'll come back to that 16 iI you want. On this particular he is simply talking about the 17 construction oI the loan data tape, which was one Iorm oI how 18 Assured came to understand the collateral and whether or not it 19 was compliant with underwriting guidelines, with their risk 20 parameters, and their own review oI the collateral. 21 I do think that the Iact that it came back aIter the 22 data integrity itselI was conIirmed through their due 23 diligence, that Iile-level review oI integrity oI data, it 24 would demonstrate that the issue oI these loans was not that 25 there were these pervasive breaches that Assured is now Camrass4 Jursek - direct Page 839 1 claiming is the case, rather that there was this third Iorce 2 that occurred called the economy that caused these loans to go 3 sour. The Iact that there was this in-depth look and the Iact 4 that there were no issues Iound through that in-depth look 5 would be demonstrative oI the quality oI the collateral. 6 THE COURT: Let me hear Irom plaintiII's counsel. 7 MR. BUCHDAHL: Your Honor, I'm going to begin with 8 that last part, because that goes squarely against the summary 9 judgment ruling. What they say is now what caused these losses 10 is that the economy went south. That couldn't be Iarther Irom 11 what we need to prove, and it has also already been rejected by 12 the Court. 13 What we need to prove is that they are obligated under 14 the contract to repurchase loans because those loans breached 15 the representations and warranties. It's not loss causation 16 the way they are talking about. That's already been rejected, 17 as I understand it, pretty squarely in the Court's opinion. 18 THE COURT: I must admit that I contributed to a 19 little conIusion there with some oI my comments last week. But 20 I think that is correct, what you say. II, because oI 21 noncompliance with the guidelines or other things covered by 22 the representations and warranty, Assured would have rejected 23 these loans, then the Iact that the loans ultimately went south 24 Ior some other hypothetical reason is neither here nor there. 25 I said that in the summary judgment and I reaIIirm it here. Camrass4 Jursek - direct Page 840 1 I apologize iI I have somewhat complicated the issue 2 by some comments. It was the eloquence oI deIense counsel that 3 took me away Irom the straightIorwardness oI this issue. 4 However, what she is saying now, as I understand it, 5 and it may be more than this but it is at least this, is that 6 all the steps that were taken by way oI due diligence by 7 Assured and the people they hired to do it, while not passing 8 the risk, there is circumstantial evidence that Flagstar was 9 doing what its guidelines required, and thereIore it is 10 probative on that issue. Then, this poor witness on the stand, 11 who has had to sit through this endless colloquy, is being 12 oIIered basically to Iill in one oI the steps so you can see 13 how the people who did the due diligence got what they got. 14 MR. BUCHDAHL: Right. 15 THE COURT: Go ahead. 16 MR. BUCHDAHL: There are two aspects to this that 17 counsel shrewdly blended together, but they are actually quite 18 separate. This witness was talking about the construction oI a 19 loan tape, which, as counsel pointed out, is a brick in what we 20 regard as the irrelevant house oI the loss model. The loan 21 tapes are one Iunction. 22 Assured took the loan tape and literally ran it 23 through its computer and it spit out an expected loss Iigure, 24 which we already covered last week, and the Court said what 25 Assured's computer said was an expected loss is not relevant to Min-U-Script® SOUTHERN DISTRICT REPORTERS (30) Pages 837 - 840 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass4 Jursek - direct Page 841 1 this case. That is the sole use oI the loan tape. 2 I'll just add that the only thing this witness has 3 conIirmed on that score is essentially garbage in/garbage out. 4 All oI these numbers came Irom Flagstar. More importantly, 5 look at how they got them. II they were to check the data 6 integrity, Ior example, oI our police sergeant Irom Detroit, 7 what they would make sure is that the loan tape said $30,000 oI 8 monthly income Irom Regional Financial Group. 9 THE COURT: Yes, that was the point that I was making 10 a minute ago. Garbage in/garbage out is, oI course, a more 11 traditional way oI expressing it. Even a talking head might 12 use that phrase. 13 MS. RENDON: Your Honor, iI I may respond to that? 14 THE COURT: Yes. 15 MR. BUCHDAHL: I'm not quite through. 16 THE COURT: Go ahead, plaintiII's counsel. 17 MR. BUCHDAHL: That's one step, which is the 18 construction oI the loan tape. Counsel has also brought up the 19 Iile-level due diligence, which we also believe is irrelevant 20 but Ior which there is a diIIerent argument along the lines 21 that you pointed out Ior why it might arguably be probative oI 22 one thing or another, even though we didn't conduct that 23 diligence and even though the results oI it were plainly 24 inadequate. 25 But this witness is talking about the construction oI Camrass4 Jursek - direct Page 842 1 a loan tape. A lot oI the testimony they want to submit by 2 deposition is talking about the use oI that loan tape in a loss 3 modeling program. That Ior these purposes I think is 4 irrelevant. I'm going to wait and see how the due diligence 5 evidence is presented by counsel beIore I object to that, but 6 this I think is independent oI it and irrelevant. 7 MS. RENDON: Your Honor, iI I may. I understand Mr. 8 Buchdahl is trying to call these loss modeling and then say 9 let's put it over there in a bucket. It's not that easy. I do 10 wish at this point that we were playing some oI the videotape I 11 talked to the Court about, because I think it would demonstrate 12 the evidence I'm articulating now to you. 13 The reality is that Flagstar pulled Irom its loan 14 Iiles and Irom its servicing Iiles inIormation. They created 15 an extensive loan data tape that had 70 Iields oI data and 16 everything you want to know Ior purposes oI underwriting a 17 guideline. 18 In its own due diligence process, FSA determined, by 19 choosing random representative samples -- they had a 20 third-party diligence Iirm go back and conIirm the integrity oI 21 the data on that loan data tape Irom what's in the Iile. Then 22 they ran loan stratiIication data. Mr. Buchdahl characterized 23 it as spitting out a loan expectancy model. It wasn't that at 24 all. 25 Mr. Stiehl will show you by walk-through. There are Camrass4 Jursek - direct Page 843 1 extensive printouts oI all diIIerent kinds oI loan data on a 2 speciIic loan-by-loan basis oI geographic inIormation, CLTV 3 inIormation, debt-to-income inIormation, all diIIerent types oI 4 understanding and extrapolating Irom that. 5 Ultimately, it was used Ior a purpose oI loss 6 expectancy, but that wasn't so much the Iocus. It's 7 demonstrating the depth at which FSA got its hands down deep 8 into this collateral, was vetting it speciIically because this 9 was Flagstar's Iirst and second transactions in this arena, and 10 they were making sure Irom a risk perspective it was the type 11 oI collateral that they wanted to insure. This is coming out 12 oI the mouth oI David Beard, the head oI the underwriting team. 13 THE COURT: To move things along, what does this 14 witness have to oIIer beyond what we have heard so Iar that 15 bears on anything? 16 MS. RENDON: Your Honor, I agree with you we probably 17 can move Iorward in his testimony that we have a loan data tape 18 that has that type oI data stratiIication, and that it was 19 utilized by JPMorgan Chase and Flagstar to determine the 20 quality oI the collateral Ior submission into the 21 securitization. 22 I think that is really what we were presenting him Ior 23 separate and distinct Irom him talking about the manner in 24 which Flagstar had skin in the game in this transaction Irom 25 day one so they would care about the quality oI the collateral Camrass4 Jursek - direct Page 844 1 that was going in. They kept an equity interest and weren't 2 paid anything up Iront Ior the securitization, which is not 3 typical in a securitization. 4 They didn't make anything on sales sale. They 5 maintained an equity piece Ior perIormance oI the 6 securitization, showing their own belieI in the quality oI the 7 collateral. So this is not a typical type case, a typical type 8 oI securitization. It is demonstrative oI good collateral 9 going in. 10 Then, to the extent there are issues that are being 11 raised today, one has to question what caused it. We can put 12 that aside iI your Honor doesn't want to hear about it. I 13 think to the extent that the due diligence demonstrates the 14 quality oI the collateral and also the determinations oI risk 15 and materiality that FSA was taking -- 16 THE COURT: I'm going to, at least Ior the moment, 17 accept that second area as being a relevant one. Then I think 18 this Iellow really should be no more than Iive more minutes 19 max, because I don't see what else I need to know Irom what has 20 just been proIIered. 21 BY MS. SHIN: 22 Q. Mr. Jursek, did you have any conversations or back-and- 23 Iorth about the contents oI the loan tape with FSA? 24 A. Yes. I had discussions with Dave Beard and his team on 25 that topic. Min-U-Script® SOUTHERN DISTRICT REPORTERS (31) Pages 841 - 844 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass4 Jursek - direct Page 845 1 Q. What Iorm did those conversations take? 2 A. They were a variety. Email. They could have been direct 3 conversations. There was any number oI Iorms that discussed 4 the data tape with him. 5 MS. SHIN: Your Honor, may I approach? 6 THE COURT: Yes. 7 MR. BUCHDAHL: We object to this exhibit, your Honor. 8 THE COURT: Ground? 9 MR. BUCHDAHL: Hearsay. 10 THE COURT: Let me take a look. 11 What about the hearsay objection? 12 MS. SHIN: Mr. Jursek is copied on this, and he can 13 testiIy as to what was going on during this process. 14 THE COURT: What does that have to do with the hearsay 15 rule? 16 MS. SHIN: It is also a business record, your Honor. 17 THE COURT: II you can qualiIy it as a business 18 record, that would be the only way I think you could get it in. 19 BY MS. SHIN: 20 Q. Mr. Jursek, was this document prepared in the ordinary 21 course oI business? 22 A. Yes. 23 Q. Was it part oI the ordinary course oI business to prepare 24 this document? 25 A. Yes. Camrass4 Jursek - direct Page 846 1 Q. Was it prepared at or about the time oI the events in 2 question? 3 A. Yes, it would have been. 4 MS. SHIN: I oIIer this exhibit, your Honor. 5 MR. BUCHDAHL: Your Honor, we object. This witness 6 has already talked about the Iact that they had never done this 7 process beIore, it was a completely new process. This is just 8 oII-the-cuII questions back and Iorth, including their own 9 selI-serving prior statement. We don't believe this counts as 10 a business record, and we object as hearsay. 11 Q. BeIore we get to the document, Mr. Jursek -- 12 MS. SHIN: I apologize. Withdrawn. 13 THE COURT: Do I understand that, as is typical oI 14 emails, the Iirst chronological item in these two emails is the 15 one at the bottom? 16 THE WITNESS: Correct. 17 THE COURT: You received these and these were 18 questions put to you by Mr. Beard? This is the Iirst email on 19 October 10, 2005, at 10:25 a.m. This is being oIIered to, 20 what, show questions that were put to you? Counsel, is that 21 the purpose oI the lower email? 22 MS. SHIN: That is one oI my purposes, yes. 23 THE COURT: You ought to recognize a leading question 24 when you get one. That clearly cannot be hearsay. 25 MR. BUCHDAHL: It is an admission, your Honor. We Camrass4 Jursek - direct Page 847 1 don't object to that part. 2 THE COURT: Then there is your response. The Iirst 3 part oI the response is nonsubstantive, near as I can tell, the 4 Iirst paragraph. "Perhaps JeII and I can give you a quick call 5 to discuss tomorrow morning what is/does the availability oI 6 your end look like," thus showing that, like all emails, this 7 one avoids the rules oI grammar. Then there is, "Here is a 8 chart," but that is not being oIIered as part oI the exhibit, 9 correct? 10 MS. SHIN: No, it is not. 11 THE COURT: We are down to the last sentence, assuming 12 this were admissible, "There are no other expenses in the cost 13 basis provided you are correct that no FSA 91 deIerrals took 14 place." What is the relevance oI that? 15 MS. SHIN: This is just going to the level oI detail 16 typical oI FSA's inquiries about the loan tapes, your Honor. 17 Mr. Jursek will testiIy as to a series oI these types oI 18 conversations with FSA with regard to the loan tapes as the 19 versions came through over time. 20 THE COURT: I think this is an ordinary business 21 record, but I don't see its relevance. But since we are 22 spending too much time on this as it is, I will receive 23 Exhibit 54. 24 Just so the record is clear, the Iirst email, the 25 earlier one, is not a hearsay problem. The second one is not a Camrass4 Jursek - direct Page 848 1 hearsay problem in part oI it because it is not asserting a 2 Iact or it's asserting at best a speculation that they can give 3 them a quick call at some Iuture time. 4 The chart I'm not going to pay any attention to, 5 because it is not included. 6 We are down to "There are no other expenses in the 7 cost basis provided you are correct that no FSA 91 deIerrals 8 took place." Assuming arguendo that that is relevant, its 9 marginal beneIit in advancing the Court's assessment oI the 10 situation approaches zero, but I'll receive it. 11 (PlaintiII's Exhibit 54 received in evidence) 12 BY MS. SHIN: 13 Q. Mr. Jursek, I just handed you an exhibit. PlaintiII's 14 Exhibit 54 bears the Bates number AGM04596930 to 31. Do you 15 recognize this document? 16 THE COURT: I'm sorry. Is this a diIIerent document? 17 MS. SHIN: No, it is the same document. 18 THE COURT: Why are you asking him that, since it is 19 already received? 20 MS. SHIN: I'm sorry. 21 Q. Who is Mr. Beard? 22 A. Mr. Beard would have been at FSA. He was one oI the people 23 that we dealt with in the securitization process. 24 Q. Who is Mr. George Stiehl? 25 A. My understanding is that George was on Dave's team, he Min-U-Script® SOUTHERN DISTRICT REPORTERS (32) Pages 845 - 848 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass4 Jursek - direct Page 849 1 reported to him. 2 Q. Who is JeIIrey Dykstra? 3 A. JeII was an analyst that reported to me during the time 4 Irame oI the securitization. He was one oI the analysts that I 5 reIerred to as having data-gathering skills. 6 Q. Mr. Paul White? 7 A. Paul White was our securitization representative at 8 JPMorgan. 9 Q. I direct your attention to Mr. Beard's email, the bottom oI 10 the second page -- or the top oI the second page. Will you 11 please read the email to Mr. Beard into the record. 12 A. "Thanks Ior sending the loan-level basis. That is very 13 helpIul. Open items: 14 "(1) Were the loans that appeared by Iirst lien HELOC 15 actually Iirsts or seconds? I would like to conIirm that they 16 are Iirst, since the cash Ilow provided to S&P indicated that 17 there were Iirst in the pool." 18 "(2) Any luck getting cumulative loss data on the 19 2001 originations? Is there delinquency data and prepayment 20 that corresponds to the vintage cum loss already provided?" 21 "(3) Please conIirm that the cost basis provided on 22 the tape reIlects the cash premium paid to the broker or 23 correspondent. Is there any other expense paid by Flagstar 24 included in the calculation? There appears to be no FSA 91 25 amount in the basis Iigure." Camrass4 Jursek - direct Page 850 1 Q. You don't have to read it into the record, but what was 2 your response to Mr. Beard? 3 A. My response suggested that we had the inIormation regarding 4 the Iirst position. 5 THE COURT: Wait a minute. The Iirst question was, 6 "Were the loans that appeared by Iirst lien HELOC actually 7 Iirsts or seconds?" Am I right that you did not yourselI 8 answer that question in your response? Correct? 9 THE WITNESS: In this response we did not. 10 THE COURT: The second question was, "Any luck getting 11 cumulative loss data on the 2001 originations? Is there 12 delinquency data and prepayment that corresponds to the vintage 13 cum loss already provided?" That you responded to indirectly 14 through the chart, right? 15 THE WITNESS: Correct. 16 THE COURT: Which is not in evidence. 17 The third question was, "Please conIirm that the cost 18 base provided on the tape reIlects the cash premium paid to the 19 broker or correspondents. Is there any other expense paid by 20 Flagstar included in the calculation? There appears to be no 21 FSA 91 amount in the basis Iigure." 22 That you did respond to in the Iinal paragraph oI your 23 response, correct? 24 THE WITNESS: Yes. 25 THE COURT: Very good. Camrass4 Jursek - direct Page 851 1 BY MS. SHIN: 2 Q. Did you have a Iollow-up phonecall. 3 A. Yes, we did. 4 Q. How oIten did you have conversations with representatives 5 at FSA oI this nature? 6 A. I don't recollect the exact number, but they were very 7 Irequent all through the process between Mr. Beard and JeIIrey 8 or myselI, multiple a week I would recollect. 9 Q. What do you mean by Irequent? 10 A. Several per week would be typical. 11 Q. Was this a level oI detail typical oI FSA's inquiries about 12 the loan tapes? 13 A. Yes. They took a very thorough interest in the loan tape, 14 wanted to get into virtually every Iield, and had questions 15 throughout the time Irame in a tremendous amount oI detail. 16 Q. Were there any other steps involved in the loan selection 17 process? 18 A. Yes. We kept through the process oI Iilling data gaps and 19 trying to identiIy loans that we couldn't get complete data in. 20 Again, I think our goal -- our goal was to make sure that by 21 the time we prepared the Iinal collateral tape, it was not a 22 case oI having garbage in there. It was a very solid data tape 23 by the time it reached the Iinal collateral tape. II we 24 couldn't Iind the appropriate data Ior the loans, they would 25 have been removed Irom the collateral tape beIore it was sent Camrass4 Jursek - direct Page 852 1 on to the other parties oI the securitization. 2 MS. SHIN: Thank you, Mr. Jursek. That's all I have. 3 THE COURT: Cross-examination. 4 MR. BUCHDAHL: Your Honor, I think I can cut this way 5 down iI we can take a Iive-minute break beIore I begin. 6 THE COURT: All right, take a Iive-minute break. 7 (Recess) 8 (Continued on next page) 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Min-U-Script® SOUTHERN DISTRICT REPORTERS (33) Pages 849 - 852 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS5 Jursek - cross Page 853 1 THE COURT: Please be seated. All right, 2 cross-examination 3 CROSS EXAMINATION 4 BY MR. BUCHDAHL: 5 Q. Good aIternoon, Mr. Jursek. 6 I want to ask you a couple oI questions about the data 7 integrity process you described earlier. The purpose oI this 8 was to make sure the inIormation on the loan tape that Flagstar 9 provided to JP Morgan was accurate, correct? 10 A. The ultimate purpose was to make sure that the data that 11 was on the collateral tape was accurate, so not just the data 12 that we provided to JP Morgan, the ultimate data that went to 13 support the transaction. It is an evolutionary process. 14 Q. Sure, but you wanted the loan tape to reIlect accurate 15 inIormation, correct? 16 A. Correct. 17 Q. That inIormation ultimately was Iirst collected by Flagstar 18 underwriting process, correct? 19 A. Correct. 20 Q. The underwriting loan Iiles would be the best source oI the 21 inIormation that is reIlected on that loan tape, correct? 22 A. Correct. 23 Q. Now, in the year-long process that resulted in the creation 24 oI this loan tape, Flagstar never pulled the loan Iiles that 25 had that inIormation, correct? CAMJASS5 Jursek - cross Page 854 1 A. Actually, we went back to the underwriting system and 2 pulled data Irom the underwriting system which was a 3 representation oI the loan Iiles, so we did go back to the 4 underwriting system. 5 Q. You went back to your system, but you didn't go back to the 6 loan Iiles themselves, correct? 7 A. Correct. 8 Q. You relied on an underwriting system which may or may not 9 have reIlected what was in the loan Iiles, correct? 10 A. By the time the transaction closed, we were conIident that 11 it did. 12 Q. Why were you conIident? 13 A. It passed a lot oI internal data edits, data validation 14 routines and we were satisIied it was accurate. 15 Q. You never actually checked the loan Iiles themselves 16 against the tape, Iair? 17 A. That's Iair. 18 Q. Even though you had the opportunity because you had the 19 loans Iiles, correct? 20 A. We would have had the theoretical ability, yes. 21 Q. It wasn't theoretical. You had the practical ability to 22 pull the loan Iiles had you been interested in what they said, 23 correct? 24 MS. SHIN: Objection; argumentative. 25 THE COURT: No. I will disregard the tone, but the CAMJASS5 Jursek - cross Page 855 1 question will stand. 2 BY MR. BUCHDAHL: 3 Q. It was a practical ability to pull those loan Iiles, 4 correct? 5 A. Yes, it would have been. 6 Q. Let's look at one more question about that process. 7 II there had been an error in the underwriting oI a 8 loan; in other words, let's say income had been erroneously 9 recorded on a loan application, that error would have been 10 Iound its way onto the loan tape, correct? 11 MS. SHIN: Objection; speculative. 12 THE COURT: Overruled. 13 A. It would have been Iound its way on to the loan tape and 14 been subject to the due diligence exercise, yes. 15 BY MR. BUCHDAHL: 16 Q. When you say the due diligence exercise, you're not talking 17 about any due diligence exercise perIormed by Flagstar, 18 correct? 19 A. Correct. 20 Q. II the due diligence exercise involved checking what was on 21 the loan tape against what was in the mortgage loan Iile, iI 22 those two numbers matched, it wouldn't reveal that error, 23 correct? 24 MS. SHIN: Objection. 25 THE COURT: Ground? CAMJASS5 Jursek - cross Page 856 1 MS. SHIN: Calls Ior speculation. 2 THE COURT: First oI all, I don't think so because 3 what it is asking Ior is the operation oI his process and how 4 it operates. 5 Second oI all, this witness has indicated a Iair 6 degree oI Iamiliarity with how this process operated; and 7 Thirdly, it is implicit in my previous overruling oI 8 your objection two minutes ago that I was going to overrule 9 this one. Go ahead. 10 THE WITNESS: Would you repeat the question. 11 BY MR. BUCHDAHL: 12 Q. Sure. The due diligence exercise, as you understand it, in 13 part included checking the loan Iiles against the data tape, 14 correct? 15 A. Correct. 16 Q. That exercise would not reveal an error iI the income 17 recorded in the loan Iile was the same as the income recorded 18 on the data tape, correct? 19 A. Correct. 20 Q. Let's look at DeIendant's Exhibit BAS that you were handed 21 by your counsel. Do you have that in Iront oI you, sir? 22 A. Which one is that? 23 Q. That is your 10-q? 24 A. Yes. 25 Q. Could you please turn to the pages that were tabbed by your Min-U-Script® SOUTHERN DISTRICT REPORTERS (34) Pages 853 - 856 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS5 Jursek - cross Page 857 1 counsel. 2 A. Okay. 3 Q. Let's look at the second page that has a table with two 4 columns, one entitled June 30th oI 2012 and one entitled 5 December 31st oI 2011. Do you see that, sir? 6 A. Correct. 7 Q. What that table reIlects is Flagstar's assumptions about 8 the economics oI this deal as oI those two dates, correct? 9 A. As it relates to the transIeror's interest, correct. 10 You're looking at the second page, correct? 11 Q. I am. We don't see any change in the transIeror's interest 12 as projected by Flagstar in the 2006 transaction in the 13 six-month period, correct? 14 A. Correct. 15 Q. Because it was zero in both instances, correct? 16 And that zero value reIlects Flagstar's projections 17 that it would recover no money whatsoever on the 2006 deal, 18 correct? 19 A. Correct. 20 Q. And at a minimum, that assumption includes the underlying 21 assumption that Assured would not be reimbursed Ior the claims 22 against Assured, correct? 23 A. It does imply that, yes. 24 Q. Now let's turn to 2005. First oI all, you didn't create 25 this model yourselI, did you? CAMJASS5 Jursek - cross Page 858 1 A. No, I did not. 2 Q. You didn't personally choose the assumptions that went into 3 this model to value the transIeror's interest Ior the 2004-2005 4 transaction? 5 A. At this point in time, yes, they would have been our 6 assumptions. 7 Q. I am talking about you, Mr. Jursek. You didn't create the 8 model, correct? 9 A. I didn't create the model. The assumptions are developed 10 within my department. They're approved at our management 11 committees, and the Iramework that we use to develop those 12 assumptions -- 13 Q. Are you saying you're Iamiliar with all those assumptions? 14 A. Yes, I am. 15 Q. You said there was an interest rate assumption built into 16 this model. What are you assuming the interest rate would be? 17 A. We are using the current prime rate and the current LIBOR 18 rate held constant. 19 Q. What are you assuming with regard to continued deIaults in 20 this securitization? 21 A. We are using a loss curve generated out oI a model called 22 loan perIormance risk model. It is a collateral level 23 evaluation oI Iuture loss examinations. 24 Q. You didn't do this, correct? Somebody in your department 25 did? CAMJASS5 Jursek - cross Page 859 1 A. Yes. 2 Q. Look at the Iigure Ior December 31, 2011. What was your 3 projected transIeror's interest as oI that time? 4 A. 9.5 million. 5 Q. And six months later Ior the same deal your projection Ior 6 your transIeror's interest had gone down by more than 20 7 percent, correct? 8 A. Correct. 9 Q. That is just in the last six months, Iair? 10 You don't know whether that is going to continue to go 11 down or go back up because it is just a projection, correct? 12 A. It is a projection based on current inIormation and current 13 collateral perIormance. It is our best best estimate oI the 14 current situation. 15 Q. Given your Iamiliarity with this model, how do you explain 16 the Iact that your transIeror's interest went down by 20 17 percent in the last six months? 18 A. Collateral perIormance, live expectations, second-lien 19 products. 20 Q. It lagged your expectations, correct? Your expectations 21 were wrong? 22 A. Correct. 23 Q. Now, when you initially entered into the 2005 and 2006 24 securitizations, you had projections as to what the residual 25 interest would be worth, correct? CAMJASS5 Jursek - cross Page 860 1 A. Correct. 2 Q. What was your projection as to what the residual interest 3 Ior 2005 was at the time you entered? 4 A. I believe it was just a little bit under $20 million. 5 Q. $20 million? 6 Today zero, correct? 7 A. Correct. 8 Q. So that was $20 million you thought you might make, but now 9 you realize you're not going to make, correct? 10 A. Correct. 11 Q. That was based on an assumption at the time that the losses 12 experienced by the portIolio would only be 1.25 percent, 13 correct? 14 A. Correct. 15 Q. Now, you said beIore that this was your Flagstar's only 16 economic interest in this transaction. But, in Iact, Flagstar 17 had other ways oI making money Irom this transaction as well, 18 correct? 19 A. Such as? 20 Q. Such as servicing Iees, correct? 21 A. Correct, we were the servicer oI the loans. 22 Q. You were continuing to wean Iees Irom these loans Ior the 23 duration oI the time you act as servicer, correct? 24 A. I don't know the details oI the servicing arrangement, but 25 I would assume so. Min-U-Script® SOUTHERN DISTRICT REPORTERS (35) Pages 857 - 860 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS5 Jursek - cross Page 861 1 Q. What, iI any, economic consequence was there Ior Flagstar 2 Ior having sold these loans into the trust in the Iirst 3 instance? 4 A. The economic consequence, we received an accounting gain on 5 sale but no cash beneIit Ior that transaction. 6 Q. It was -- I interrupted you. 7 A. We recorded an accounting gain on sale but received no cash 8 beneIits Irom the sale oI the loans into the securitization. 9 Q. What was your accounting gain on sale into the loans in the 10 2005 securitization? 11 A. My recollection is in the 12 million or 15 million, 12 somewhere in that range. 13 Q. Now let's turn to 2006. What was your initial projection 14 oI what Flagstar's residual interest would be in the 2006 15 securitization? 16 A. A similar size, although a little bit less. I recollect 17 the 15 million or so range. 18 Q. Just like the 2005 securitization, Flagstar's current 19 valuation oI its residual interest Ior 2006 is currently zero, 20 correct? 21 A. Correct. 22 Q. Now, you were aware, sir, that in entering into these 23 transactions, Flagstar was making certain representations and 24 warranties to Assured Guaranty, correct? 25 A. Correct. CAMJASS5 Jursek - cross Page 862 1 Q. The Iact is Flagstar took absolutely no steps to conIirm at 2 the time oI these deals that those representations and 3 warranties were accurate, correct? 4 A. I really can't address that. I wasn't in the underwriting 5 area responsible Ior that aspect oI it. This was more oI an 6 accounting and Iinancial analysis exercise. 7 MR. BUCHDAHL: I would like to turn to the witness's 8 deposition at pages 134 and 135. 9 THE COURT: All right. 10 MR. BUCHDAHL: I will give you the line numbers in one 11 second. With permission, I would like to read into the record 12 Page 134 Line 10 to Page 135 line 9. 13 MS. SHIN: Objection. 14 THE COURT: Hold on a minute. 15 (Pause) 16 THE COURT: The objection is sustained. First oI all, 17 it is not inconsistent. Second oI all, the objections to the 18 Iorm remain at the time are also sustained. 19 MR. BUCHDAHL: May I oIIer the testimony as an 20 admission, your Honor? 21 THE COURT: Not iI the objection to Iorm is sustained. 22 MR. BUCHDAHL: Very well. 23 BY MR. BUCHDAHL: 24 Q. Mr. Jursek, at the time that these transactions were 25 entered into, you knew that credit had been an issue at CAMJASS5 Jursek - cross Page 863 1 Flagstar, correct? 2 A. I guess I know credit is always an issue at a bank. It is 3 our business underwriting loans, accepting credit. That is the 4 typical banker's interest. 5 Q. You would agree that Flagstar had been very concerned about 6 its underwriting practices, correct? 7 MS. SHIN: Objection; vague. 8 THE COURT: Sustained. 9 MR. BUCHDAHL: Nothing Iurther, your Honor. 10 THE COURT: Any redirect? 11 MS. SHIN: No, your Honor. 12 THE COURT: Thank you very much. You may step down. 13 (Witness excused) 14 THE COURT: Please call your next witness. 15 MS. RENDON: Your Honor, we call Marni Scott to the 16 stand. 17 MARNI SCOTT, 18 called as a witness by the DeIendant, 19 having been duly sworn, testiIied as Iollows: 20 DIRECT EXAMINATION 21 BY MS. RENDON: 22 Q. Good aIternoon, Ms. Scott. I am going to ask you some 23 questions. 24 What company are you currently employed Ior, ma'am? 25 A. Flagstar Bank. CAMJASS5 Scott - direct Page 864 1 Q. What is your title at that company? 2 A. Executive vice president oI mortgage credit operations. 3 Q. Functionally, what are your responsibilities at Flagstar at 4 this time? 5 A. At this time, I manage the Iront end origination operations 6 which would comprise underwriting, closing, post-closing. 7 Q. How long have you been at Flagstar Bank? 8 A. Since the Spring oI 2004. 9 Q. What are your current job responsibilities, Iocusing on 10 underwriting and origination? 11 A. My current job responsibilities would comprise all oI the 12 underwriting staII and underwriting management reporting 13 ultimately into myselI as well as credit policy setting. 14 Q. Is it Iair to say you're the head oI underwriting? 15 A. Yes, I am. 16 Q. How long have you had that role, ma'am? 17 A. Since the summer oI 2005. 18 Q. Let's talk a little bit -- we are going to come back to as 19 the head oI underwriting, we'll talk a little bit more. 20 BeIore we do that, let's talk about your underwriting 21 experience historically how is it that you have underwriting 22 experience? 23 A. I started in the industry in 1990. By 1991 I was acting or 24 operating as an apprentice underwriter, training with senior 25 underwriters in Southern CaliIornia as well as going through Min-U-Script® SOUTHERN DISTRICT REPORTERS (36) Pages 861 - 864 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS5 Scott - direct Page 865 1 underwriter training classes at the time, and then became aIter 2 a year or two an assistant underwriting manager Ior an 3 underwriting center. 4 Q. Where did you work prior to Flagstar where you received 5 this training? 6 A. GE Capital Mortgage Insurance. 7 Q. What type oI training did you receive as assistant loan 8 underwriter and as a loan underwriter? 9 A. As I described, the training is largely apprentice, 10 loan-by-loan level review, having your work rereviewed by 11 others, by others as well as there are classroom training 12 sessions such as appraisal analysis, income calculation Ior 13 qualiIication, selI-employed tax returns. Various course work 14 as well would be completed. 15 Q. Why did you come to Flagstar in 2004? 16 A. I had been at GE Ior approximately 14 years, and I held 17 many positions Irom risk manager to regional underwriting 18 manager. I was head, national underwriting manager towards the 19 end oI my time there in Chicago, and with Iamily ties to 20 Michigan, Ielt that Flagstar would be a good Iit. 21 They were known in the industry as a conservative 22 entity plus they had top, top technology, state oI the art 23 technology that really could help leverage the process. 24 Q. Let's break your answer down a little bit iI I can, ma'am. 25 So you came to Flagstar in 2004. Is that correct? CAMJASS5 Scott - direct Page 866 1 MR. PORTERA: Objection; leading. 2 MS. RENDON: It is just a Ioundational question, your 3 Honor. 4 THE COURT: I'll allow it. 5 THE WITNESS: Yes. 6 BY MS. RENDON: 7 Q. You said that Flagstar was a good Iit Ior you when you 8 started, and you were describing the underwriting culture at 9 Flagstar. Can you describe Ior us when you came to Flagstar 10 what the underwriting culture was? And I am Iocusing on credit 11 policy. 12 A. From the president down, there was extensive responsibility 13 and authority that the credit leaders, my hiring manager at the 14 time, Linda Terrasi, that we had, and so there was not only 15 invested in the technology Irom a quality consistency 16 establishment, but also the culture was such that there really 17 wasn't a sales trumping ops type culture. 18 Q. You talked about a willingness by management to invest 19 capital to increase the quality oI originations. Can you give 20 us an example oI how Flagstar did that around this time period, 21 2004, 2005, 2006? 22 A. In 2004 as an example, they had already Iully integrated 23 with various ABM tools. As time was passing, we were 24 integrating various processes around reveriIication oI 25 deposits, employment, income, Lexis-Nexis was a type tool, CAMJASS5 Scott - direct Page 867 1 their anti-money laundering portal was a tool that all oI the 2 underwriters had as access to so we could train and letter 3 acknowledge around that. That are some oI the processes. 4 Q. By the summer oI 2005, what was your responsibility at 5 Flagstar? 6 A. As oI that summer, the underwriting, the conventional 7 underwriting regents, the Iirst line, Fannie Mae, Freddie Mac, 8 as well as second-lien, HELOC term seconds would be 9 underwriting by the staII reporting to myselI. 10 Q. When did Flagstar get into underwriting HELOCs, ma'am? 11 A. Early in 2004 they started originating an underwriting 12 through the retail mortgage Iunction HELOCs. 13 Q. Can you describe HELOCs Ior us as a product. 14 A. HELOC is a home equity line oI credit and so it is 15 typically a second-lien position, loan amount that can be drawn 16 down or up or I guess paid down or drawn up in terms oI the 17 overall balance, and it is attached to the property. You're 18 typically paying prime plus a margin on the outstanding 19 principal balance. 20 Q. Are there any, in your experience in underwriting HELOCs, 21 are there any peculiar risks, Ms. Scott, associated with that 22 loan product? 23 A. Well, the main risks would certainly be that most oI the 24 time the liens are in second position and so as such, there is 25 high CLTVs, limited equity established and so certainly as CAMJASS5 Scott - direct Page 868 1 price Iluctuations would take place, you would be overly 2 exposed when you're into high CLTV-type transactions. 3 Q. What do you mean when price Iluctuations take place? 4 A. Over time economies strengthen and weaken, housing industry 5 strengthens and weakens, and so with price Ialls, you would be 6 exposed much more Irom a deIault Irequency as well as deIault 7 severity standpoint with high CLTVs. 8 Q. What do you mean by you would be exposed in terms oI 9 deIault Irequency? 10 MR. PORTERA: I object on relevance grounds. 11 THE COURT: I'll allow it. 12 BY MS. RENDON: 13 Q. You can answer. 14 A. Having also been in high LTV lending in the Iirst 14 years 15 oI my career, you have very limited equity Irom the borrower 16 into the property and so couple that with being a second-lien 17 transaction, you're ending up with what could be an economic 18 downturn, higher deIault Irequency as borrowers experience 19 economic issues and limited equity in the properties. 20 Q. What was Flagstar's underwriting philosophy with regard to 21 the originations oI HELOCs? 22 A. Flagstar was originating them to be put on the balance 23 sheet and so as we would meet with the underwriters, talk about 24 training, we were talking about the overall risk protection Ior 25 Flagstar Bank with being an asset on balance sheet, so Min-U-Script® SOUTHERN DISTRICT REPORTERS (37) Pages 865 - 868 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS5 Scott - direct Page 869 1 relatively conservative. 2 Q. Relative to other lenders in the market, where would you 3 say Flagstar Iell as Iar as the conservatism oI its 4 underwriting guidelines? 5 MR. PORTERA: Objection; relevance. 6 THE COURT: Sustained. 7 BY MS. RENDON: 8 Q. Are you Iamiliar with the underwriting guidelines oI 9 Flagstar that were in place Ior HELOCs in the time period 2004 10 to 2006, ma'am? 11 A. In a general sense, yes. 12 Q. Can you describe Ior me characteristics about those 13 underwriting guidelines that you think deIine Flagstar's 14 philosophy towards underwriting? 15 A. The FICO Iloors would as much as the product descriptions 16 would allow down to 620 is the lowest. It was only at lower 17 CLTV type-caps and the vast, vast majority oI the loans were 18 above 660 Irom a FICO standpoint, and then we also were limited 19 in terms oI second home, investor, occupancy, in terms oI lower 20 CLTV caps or limitations, altogether limitations on three to 21 Iour unit properties. 22 THE COURT: Who creates these guidelines? 23 THE WITNESS: The credit risk committee at the bank. 24 THE COURT: Not your department? 25 THE WITNESS: I would be a member oI that credit risk CAMJASS5 Scott - direct Page 870 1 committee, yes. 2 THE COURT: So why are you only generally Iamiliar 3 with those guidelines? 4 THE WITNESS: Well, the guidelines change 5 approximately every three to Iour to six months, so iI I were 6 asked a very, very speciIic question, I would want to review 7 the actual product description to answer the question. 8 THE COURT: Go ahead, counsel. 9 MS. RENDON: Okay. 10 BY MS. RENDON: 11 Q. You described, Ms. Scott, there being what I think you 12 called FICO Iloors and caps. What is the signiIicance, in your 13 mind, oI only extending high CLTV loans to FICOs above 660, 660 14 or above? 15 A. The question is what is the signiIicance? 16 Q. Yes. In other words, in having -- let me rephrase. 17 THE COURT: I think the witness is objecting as vague 18 and ambiguous. I sustain her objection. 19 BY MS. RENDON: 20 Q. Let me break that down. 21 I believe you indicated, Ms. Scott, that Flagstar's 22 underwriting guidelines had FICO Iloors, is that correct, Ior 23 HELOC products? 24 A. Yes, they did. 25 Q. You indicated within that FICO Iloor Flagstar would CAMJASS5 Scott - direct Page 871 1 generally only extend high CLTV HELOCs to borrowers who had 2 FICO oI 660 greater. Is that correct? 3 A. Yes. 4 Q. By writing the underwriting guidelines -- what was the 5 purpose oI creating or Iashioning the underwriting guidelines 6 in that way? 7 A. There's a Iairly drastic deterioration in overall deIault 8 Irequency once you get into the bands, 660 to 640, 640 to 620, 9 certainly 600 and below. 10 Q. Were the HELOCs involved in these transactions extended to 11 sub-prime borrowers, ma'am? 12 A. No. 13 Q. Did Flagstar do business with sub-prime borrowers in this 14 period 2004 to 2007? 15 A. No. 16 Q. Why not? 17 A. Our president or I guess starting with our president had a 18 philosophy that sub-prime was not at all part oI the industry 19 that we wanted to enter into. We didn't think it was good Ior 20 the bank or the consumer. 21 Q. Through which channels did Flagstar originate HELOCs? 22 A. Predominantly through the retail channel to -- well, 23 exclusively through the retail channel to start and then I 24 believe by the Fall oI 2004 we started expanding to the broker 25 and correspondent channel. CAMJASS5 Scott - direct Page 872 1 Q. Why did Flagstar start originating HELOCs in 2004 only in 2 the retail channel? 3 MR. PORTERA: Objection; relevance. 4 THE COURT: No. I'll allow it. 5 BY MS. RENDON: 6 Q. You can answer. 7 A. We started with the retail because we were starting just in 8 Michigan, and then Michigan and in Indiana so we could get the 9 state-speciIic documentation, the closing, closing documents, 10 settlement documentation and state-level requirements in place 11 and then we started expanding out to additional states and then 12 later added the other origination channels. 13 Q. We probably should break this down a little bit. When we 14 talk about originating through diIIerent channels, what does 15 that mean, Ms. Scott? 16 A. Basically there are three origination channels in the U.S. 17 Retail would be through a loan oIIicer who is an 18 employee oI the bank. The broker channel would have a loan 19 oIIicer and processer that would be an employee oI the broker, 20 whereby Flagstar would be wiring the Iunds to the closing. 21 A correspondent channel is where the correspondent has 22 their own Iunds, so it can be a credit union, a bank, warehouse 23 line, Iunctionally the loan oIIicer and processer and employee 24 oI the correspondent. 25 Q. You said in 2004 Flagstar started originating HELOCs in Min-U-Script® SOUTHERN DISTRICT REPORTERS (38) Pages 869 - 872 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS5 Scott - direct Page 873 1 retail and gradually extended originations to the broker and 2 correspondent channels, correct? 3 A. Yes. 4 Q. In that process oI extending -- well, when Flagstar 5 extended originations to brokers and correspondents, who 6 actually underwrote the loans? 7 A. Flagstar, the staII reporting to myselI. 8 Q. Explain Ior me what it means then to originate a loan by a 9 broker, Ior instance, would have Flagstar underwrite the loan? 10 A. The originator has the loan oIIicer, so the person who's 11 having contact with the consumer as well as the processor would 12 also have contact with the consumer, and so on the 13 broker-correspondent channels, those two employees, are 14 employees oI the broker correspondent, but otherwise the 15 underwriting Ior all three channels was handled by Flagstar. 16 Q. What iI I asked, would that process be the same iI it was a 17 correspondent that was originating the loan Ior Flagstar? 18 A. Yes. 19 Q. In other words, Flagstar still did the underwriting oI that 20 loan, correct? 21 A. Yes. 22 MR. PORTERA: Objection; leading. 23 THE COURT: No. I think that was just a necessary 24 clariIication. 25 BY MS. RENDON: CAMJASS5 Scott - direct Page 874 1 Q. When Flagstar extended originations to brokers and 2 correspondents, what, iI any, due diligence occurred prior to 3 permitting a broker or correspondent to originate a loan? 4 A. We have centralized department in the the headquarters that 5 would be reviewing various credentials and documentation Ior 6 any broker correspondent that is applying to deliver and do 7 business with Flagstar. 8 We would have an on-site review, but also looking at 9 the Iinancials, the credit would be pulled Ior all oI the 10 owners, the Iinancials Ior the owners, licensing. Negative 11 news Irom various sources would be reviewed as well. 12 Q. Was there ever a period where a site visit would occur to a 13 broker or correspondent? 14 A. Yes. Yes, we have employees out in the Iield that would be 15 physically reviewing business with the broker correspondent. 16 Q. Why did Flagstar as part oI the due diligence it perIormed 17 on originating brokers and correspondents review their 18 Iinancials? 19 A. Certain we wanted to make sure that they were Iinancially 20 sound, so we would have net worth requirements plus be 21 reviewing the resumes and length oI, length oI time the entity 22 was in business. 23 Q. I believe you indicated that credit, a credit check was 24 perIormed on the owners oI brokers and correspondents. Is that 25 correct? CAMJASS5 Scott - direct Page 875 1 A. Yes. 2 Q. Why was that perIormed by Flagstar? 3 A. To make sure people we were doing with business were 4 reputable and repaying their own debts since they would be 5 working with consumers. 6 Q. You indicated that one oI the steps oI the due diligence 7 Flagstar perIormed on its originating brokers and 8 correspondents was checking the licensing oI the brokers and 9 correspondents. Why did Flagstar do that? 10 A. We certainly would want to assure they were licensed 11 properly in each state that they were operating in. We would 12 then, within the technology platIorm we have, every broker 13 correspondent is tracked by state Ior licensing and would 14 expire as any license was expiring. 15 Q. You Iurther indicated that Flagstar had a database on 16 negative news, I think you called it MARI. Is that correct? 17 A. Yes. 18 Q. What was it? What did Flagstar do with MARI and why? 19 You can break that into two questions iI the court 20 preIers. 21 A. It is, I think it is Mortgage Asset Resolutions, but in any 22 case it is a consortium database that lenders, states, various 23 other government entities would report into iI there were 24 individual loans that had predominantly Iraud on them. 25 And so the negative news was around either Iraud CAMJASS5 Scott - direct Page 876 1 within the appraisal, Iraud within the origination, and so we 2 would certainly track that and not be doing business with 3 entities that had negative news tracks. 4 Q. Why did Flagstar perIorm all oI this due diligence on the 5 brokers and correspondents with whom it permitted to original 6 HELOCs? 7 A. We certainly want to know who we're doing business with and 8 be looking to assure we are doing business with entities with 9 integrity and history oI conducting business that way. 10 Q. I believe it is your testimony, regardless oI whether it 11 was through retail, broker or correspondent channels, it was 12 always Flagstar that underwrote the HELOCs, correct? 13 A. Yes. 14 Q. Let's talk about that underwriting process, Ms. Scott. Who 15 actually underwrote Flagstar's HELOCs? 16 A. The Flagstar underwriters. 17 Q. Can you describe Ior me, is this a staII that worked Ior 18 you? 19 A. Yes, we're all in 4 West in the headquarters, one wing, one 20 Iloor. 21 Q. That sounds like the West Wing. Can you describe Ior us -- 22 A. The underwriters are there who also have Ior time zone 23 coverage, underwriters in Dallas and underwriters in Bellevue, 24 Washington. 25 Q. How big a staII, in Iocusing on the time period 2004 Min-U-Script® SOUTHERN DISTRICT REPORTERS (39) Pages 873 - 876 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS5 Scott - direct Page 877 1 through 2006, ma'am, how big a staII oI underwriters was 2 underwriting HELOCs in that period oI time? 3 A. Approximately 50 to 60 underwriters. 4 Q. You indicated that the vast majority oI those underwriters 5 were located in Michigan. Is that correct? 6 A. Yes. 7 Q. What was the import oI that, ma'am? 8 A. From an overall training, quality, consistency, we 9 certainly wanted to make sure that all oI the underwriters were 10 co-located, or our headquarters has an auditorium Iacility and 11 so we would conduct training there as well as Iacilitate 12 training out in the other centers at the same time. 13 Q. You mentioned consistency I believe is one aspect oI your 14 last answer. Is that correct? 15 A. Yes. 16 Q. What do you mean about greater consistency in underwriting? 17 A. As much as the underwriters, each group oI underwriters 18 would have a manager, an assistant manager literally co-located 19 next to each other but covering diIIerent geographies oI the 20 country so as to better analyze appraisals, but we would have 21 routine staII meetings, whether it be with the managers, 22 managers with all oI their underwriters just to bring Iorth 23 more consistency or heightened consistency in the process. 24 Q. What resources were available to this staII oI underwriters 25 who were underwriting HELOCs during this period oI time iI they CAMJASS5 Scott - direct Page 878 1 had a question? 2 A. Well, they were physically located with their managers, so 3 managers typically are spending 50 to 60 percent oI their time 4 with their staII in addition to customers, any outside entities 5 that were doing business with, they would routinely be talking 6 through loans. 7 Q. In the time period oI 2004 through 2006, what was the level 8 oI the staII oI underwriters' experience who were underwriting 9 HELOCs? 10 A. The minimum is typically three years, but the average would 11 have been closer to eight to nine years. Some oI the 12 underwriters would have had 20 to 30 years underwriting 13 experience. 14 Q. I want to back up. I believe earlier you indicated that 15 your staII oI underwriters who are underwriting HELOCs in this 16 time period, 2004 through 2006, received training, correct? 17 A. Yes. 18 Q. What kind oI training did these underwriters receive? 19 A. We would routinely have reIresher training, so around 20 appraisal, selI-employed, income analysis, income calculation. 21 We would also have training on any Iraud prevention, 22 Iraud detection tools that either processes that we currently 23 had, but that also had -- we're also introducing to the staII. 24 Q. I want to break that down iI I can, ma'am. 25 You said that one oI the Iorms oI training that these CAMJASS5 Scott - direct Page 879 1 underwriters received who are underwriting HELOCs in this time 2 period, 2004 to 2006, receive related to appraisal training. 3 Is that correct? 4 A. Yes. 5 Q. Please describe Ior me what type oI appraisal training your 6 HELOC underwriters received in this time period? 7 A. The appraisal training generally comprises not only 8 analysis oI the diIIerent appraisal Iorms, oI which there is 9 one Ior single Iamily, there is one Ior condo, one Ior 10 multiunit, but would also then go through case studies in 11 talking about challenging appraisals Ior analysis and 12 decisioning. 13 Q. Describe Ior me what you mean by that, you go through case 14 studies on appraisals Ior analysis and decision? 15 A. We have a chieI appraiser as well as staII appraisers so 16 they would have examples over time they would have accumulated 17 as they were in discussions with management or underwriters, so 18 they would use those as case studies, plus we would have 19 outside entities. At times the mortgage insurance companies 20 would provide training and they have their own case studies. 21 Q. In training your underwriters in this regard, what were you 22 hoping to achieve? What was it you were trying to teach your 23 underwriters? 24 A. How to assess whether you have a credible report, has the 25 appraiser completed a credible report, is the value supported CAMJASS5 Scott - direct Page 880 1 in what the appraiser has arrived at, and iI there is any 2 additional inIormation that we need, how to determine what that 3 additional inIormation is, so we would also talk about the 4 ABMs, automated valuation models that are providing other sales 5 in the property area. 6 So the underwriter would be assessing the report, 7 assessing other tools and potentially working with the 8 appraiser to gather additional inIormation and/or ultimately 9 approving or declining a transaction based on the appraisal. 10 Q. We'll come back to Flagstar's use oI ABMs later on, but I 11 want to stay Iocused on training iI I can Ior a moment. 12 A. Okay. 13 Q. Was one purpose in providing appraisal training to help 14 your appraisers detect any type oI potential appraisal Iraud? 15 A. Yes, that was part oI the training. 16 Q. Describe that Ior me, ma'am. 17 A. As we're reviewing the case studies, we certainly would 18 either have training Iocused exclusively on Iraud prevention or 19 as part oI the appraisal training, a segment oI the training 20 would be around appraisers, potentially using comparable sales 21 that were not the best choice in order to potentially inIlate a 22 property value and such. 23 Q. You mentioned a second type oI training to include training 24 around selI-employment. Is that correct? 25 A. Yes. Min-U-Script® SOUTHERN DISTRICT REPORTERS (40) Pages 877 - 880 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS5 Scott - direct Page 881 1 Q. Describe Ior me, when you say training and selI-employment, 2 that is a general phrase. Can you describe Ior me what you 3 mean by that? 4 A. Approximately 15 percent oI the consumers are deemed 5 selI-employed, meaning they own 25 percent or greater oI their 6 business, and so tax returns would be required. 7 So there was a three to Iour hour session that would 8 be conducted just on the Schedules A through E oI the tax 9 returns, and then another training session speciIic to 10 corporations, S Corp. and partnership analysis Ior appropriate 11 qualiIying income. 12 Q. Let's break that latter down, that latter component Ior -- 13 excuse me. II you could, break down that latter component oI 14 your answer Ior me. When you say corporate, the S Corp., what 15 type oI training you were conducting there? 16 A. Amongst individuals who Iile tax returns where an 17 underwriter would need to be reviewing those tax returns Ior 18 income analysis, we would require review oI the S Corp. tax 19 return, the corporation or the partnership returns and there 20 are instances where you can or cannot use various income as 21 being report through those, through those returns. 22 THE COURT: What is a stated income loan? 23 THE WITNESS: A stated income loan exists Ior both 24 wage earners as well as selI-employed, so W-2 and selI-employed 25 where the consumer is stating an amount oI income and there is CAMJASS5 Scott - direct Page 882 1 not veriIication oI the pay stubs or tax returns. 2 THE COURT: Why not? 3 THE WITNESS: That was a program that existed in the 4 marketplace and was part oI the segment. Typically they would 5 have higher FICO scores associated with them. 6 THE COURT: So Flagstar entered into that program, 7 yes? 8 THE WITNESS: It was actually a smaller part oI what 9 we originated certainly relative to the industry but, yes, a 10 portion oI our volume was stated income. 11 THE COURT: Was that part oI your conservative 12 approach? 13 THE WITNESS: We did have higher FICOs, we did have 14 more limited occupancy and CLTV combinations, so while we did 15 allow it, it had actually been a part oI Fannie Mae, Freddie 16 Mac guidelines which is a core Iundamental oI what we model 17 some oI our guidelines oII oII since the mid-'90s, there was a 18 10 or 11 year history oI it. 19 THE COURT: So take me through this. II someone says 20 on their application I make $10,000 a month, and no one asks 21 Ior income tax, no one asks Ior pay stubs, does someone call 22 the employer? 23 THE WITNESS: Yes, they do. 24 THE COURT: In each and every case? 25 THE WITNESS: Yes. CAMJASS5 Scott - direct Page 883 1 THE COURT: All right. So let me show you what is 2 part oI a loan Iile. This is just the application and it's got 3 a bunch oI Bates stamps, which are really thrilling, but the 4 one I'll use is Walzak 021270128 and 0129. This is the 5 document handed up by plaintiII's counsel earlier today. Let 6 me show it to you. Take a minute to review it iI you will. 7 (Pause) 8 THE COURT: So you'll notice that the -- let's go to 9 the last page Ior a moment. You'll see that it says at the 10 very bottom, the interviewer's name and the interviewer's 11 employer is Regional Financial Group, Inc. Do you see that? 12 THE WITNESS: Yes, I do. 13 THE COURT: Does that mean that was not a Flagstar 14 person, was it? 15 THE WITNESS: No. The originator worked Ior Regional 16 Financial Group, which would have been a broker correspondent. 17 THE COURT: This would have been a broker used by 18 Flagstar? 19 THE WITNESS: The broker was using Flagstar. 20 THE COURT: The broker was using Flagstar? 21 So, and the broker was an employee oI Regional 22 Financial Group, Inc. Do you see that? 23 THE WITNESS: Yes, I do. 24 THE COURT: Am I right that this, iI I understood your 25 testimony earlier, this loan application would eventually be CAMJASS5 Scott - direct Page 884 1 reviewed by Flagstar? 2 THE WITNESS: Yes. 3 THE COURT: Turn to the Iirst page. Don't mention the 4 borrower's name because Ior privacy reasons we are not, not 5 mentioning that. You'll see that the borrower is described as 6 Regional Financial Group, Inc. 7 Do you see that? 8 THE WITNESS: Yes, I do. 9 THE COURT: And speciIically the application says that 10 this person is the president oI Regional Financial Group, Inc. 11 and has been so Ior Iive years, et cetera. 12 Do you see that? 13 THE WITNESS: Yes, I do. 14 THE COURT: How can that be? Isn't that on its Iace 15 preposterous? 16 THE WITNESS: No. I don't understand. 17 THE WITNESS: Do you want to tell what you I think? 18 THE COURT: You, the person seeking the loan, is the 19 president oI Regional Financial Group. 20 THE WITNESS: What the underwriter process would have 21 been, should have been would be to either through Lexis-Nexis 22 or other internet tools to determine iI Regional Financial 23 Group is that entity, number one, in business. 24 THE COURT: It must be iI you're using it as the 25 interviewing agency, yes? Min-U-Script® SOUTHERN DISTRICT REPORTERS (41) Pages 881 - 884 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 CAMJASS5 Scott - direct Page 885 1 THE WITNESS: We can likely conclude they were in 2 business, and then Irom various corporation websites we should 3 have determined that the person who is the borrower was the 4 president. 5 THE COURT: Okay. Now, so that's what should have 6 happened. Now, iI that didn't happen, that would have been a 7 violation oI your guidelines? 8 THE WITNESS: OI the process around conIirming that 9 this individual had that job title, yes. 10 THE COURT: By the way, just aside Irom everything 11 else, would there not have been some question, in taking this 12 literally, an employee oI Regional Financial Group, Mr. GeoII 13 Berry, processing the loan application oI the president, the 14 purported president oI this company? 15 THE WITNESS: No. We allow Ior loan oIIicers within 16 the same entity just as we would do our own employee loans. 17 THE COURT: Now, the evidence beIore the court 18 indicates that iI the check that you described should have been 19 made, had been made, it would have been discovered that this 20 person was a local policeman. 21 So the person taking this inIormation, Mr. GeoII 22 Berry, assuming that is a real person, would have surely known 23 that the person making the application wasn't the president oI 24 this company? 25 THE WITNESS: What sort oI evidence was there around CAMJASS5 Scott - direct Page 886 1 who the president was? 2 THE COURT: The president, I assure you, was not this 3 gentleman, but the company is based in a city at least a 4 thousand miles away, and they have local oIIices. This, Irom 5 all the evidence beIore the court, this gentleman was and still 6 is until his retirement about a month ago a Detroit police 7 oIIicer. 8 My question is not that. My question goes back to, it 9 appears to me, and this is why I am raising this, this may be 10 an extreme case, the situation is perIect, it appears to me 11 even the most modest checking oI the sort you say should have 12 been done would have revealed this to be a patently Iraudulent 13 application? 14 THE WITNESS: I would have have to look at it. He 15 could have two positions. 16 THE COURT: You think, you think that a Detroit police 17 oIIicer would also be the president oI a substantial Iinancial, 18 Regional Financial Group you were doing business with that had 19 oIIices in numerous states, that that was sort oI his sideline, 20 he came home at 7:00 and as soon as he had dinner, he turned 21 his attention to being the president oI a major Iinancial 22 group? Is that what you think? 23 THE WITNESS: I would have to look at the inIormation. 24 (Continued on next page) 25 Camrass6 Scott - direct Page 887 1 THE COURT: Do you think that is even remotely 2 plausible? 3 THE WITNESS: Probably not making this amount oI 4 income. 5 MS. RENDON: Your Honor, may I approach the witness? 6 THE COURT: Yes. But then we are going to have to end 7 Ior today and continue tomorrow. 8 BY MS. RENDON: 9 Q. Ms. Scott, are you Iamiliar with loan servicing Iiles Irom 10 Flagstar? 11 A. Yes. I don't manage servicing, but I've looked at 12 collection records beIore. 13 Q. Do you agree with me that this is the loan servicing report 14 Ior the loan application that his Honor was just looking at? 15 And we are looking at DeIendant's Exhibit BBB 0001. 16 A. You want me to conIirm that this is the same loan? 17 Q. II you can Irom the Iace oI the application. I certainly 18 will represent to the Court that is my understanding. It's Ior 19 loan ending in 23960. 20 THE COURT: II plaintiII's counsel agrees, we will 21 receive it. I'm not sure it is Iair to put it in Iront oI this 22 witness, who has not seen it beIore this moment, I don't 23 suppose. 24 MS. RENDON: I'm just going to ask, iI I may, and 25 we'll see -- Camrass6 Scott - direct Page 888 1 THE COURT: Let's see iI it's in evidence. 2 MS. RENDON: I'd like to admit it into evidence. 3 MR. PORTERA: Your Honor, we object on hearsay 4 grounds, that they qualiIied it as a business record. 5 THE COURT: You don't think this qualiIies as a 6 business record? You don't think this is about as classic a 7 business record as one can ever have in court? Is that your 8 position? 9 MR. PORTERA: No, your Honor. I think it probably is 10 a business record. 11 THE COURT: Good. Received. 12 (DeIendant's Exhibit BBB received in evidence) 13 Q. May I ask the witness to turn to Flagstar 01-00326942. 14 SpeciIically, I'm going to ask that the witness look at the 15 entry on March 2, 2009, at 1559. 16 THE COURT: Sorry two thousand -- 17 MS. RENDON: Nine. March 2nd. 18 THE COURT: This is a loan Irom 2005, is it not? 19 MS. RENDON: Yes, your Honor. But these are the 20 servicing collection notes Ior that very same loan. This is 21 reIlective oI a notation Irom March 2, 2009 at 1559. 22 THE COURT: Hold on a minute. March -- what was the 23 date? 24 MS. RENDON: March 2, 2009. 25 THE COURT: At 1559. Min-U-Script® SOUTHERN DISTRICT REPORTERS (42) Pages 885 - 888 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass6 Scott - direct Page 889 1 Q. It says there, "Phone 1 rings, then Iax tone, SBNP number 2 sign IDM hardship letter, customer not working, was mortgage 3 broker and police sergeant oIIicer with no pay," and then there 4 is a worksheet and a large number there aIter, no other number. 5 As someone Iamiliar with reading servicing and collection 6 notes, what do you understand this servicing note to be 7 stating? 8 A. It's stating that within our documentation we had a 9 hardship letter. Typically, it's a handwritten letter Irom a 10 consumer. That was indicating that he was not working, he was 11 a mortgage broker and a police sergeant, he is now oII with no 12 pay. Then that number is his home residence telephone number. 13 THE COURT: Counsel, I'm not sure I understand the 14 relevance. This is Iour years later. 15 MS. RENDON: Your Honor, I think it is a statement by 16 the exact borrower on the loan that we are talking about 17 conIirming that he in Iact held two positions, both as a police 18 oIIicer and a mortgage broker. 19 THE COURT: Yes. As I indicated previously, Irom 20 everything I've seen, I'm really seriously wondering whether I 21 need to reIer this matter to the U.S. Attorney's oIIice in 22 Michigan Ior prosecution. But I understand that that is not 23 your or Flagstar's job. I don't see anything here, and I 24 appreciate your putting this beIore me, indicating that there 25 was any check oI the kind you're talking about or the witness Camrass6 Scott - direct Page 890 1 was talking about done at the time the loan was approved. 2 MS. RENDON: Your Honor, I'm not going to ask Ms. 3 Scott to speak to that, because I don't believe she is 4 qualiIied to speak to the speciIic loan Iile. But we will have 5 testimony later in the case on this speciIic loan Iile. 6 THE COURT: Would that appear in the normal course on 7 this printout, iI there had been a check done? 8 MS. RENDON: Not in the servicing record, your Honor. 9 It would have been in the underwriting Iile. II you're asking 10 about a check at the time oI the closing oI the loan -- 11 THE COURT: Yes, which is when the witness indicated 12 the check would be made, right? 13 THE WITNESS: Right. We would have checked our own 14 online. We track all oI our customers in our database. So we 15 would have had Regional Financial Group. 16 THE COURT: Does that appear here? 17 MS. RENDON: On the servicing record is your question, 18 your Honor? 19 THE COURT: Yes. 20 THE WITNESS: No. This is the servicing record and 21 this is the loan app. But within Flagstar's database, since 22 this was a broker customer oI ours, we would track all oI the 23 oIIicers within our own database. It's not on either oI these 24 two sheets oI paper. 25 THE COURT: While we have this, this is in reverse Camrass6 Scott - direct Page 891 1 chronological order, yes? 2 MS. RENDON: That's correct, your Honor. 3 THE COURT: Turning to three pages Irom the back, the 4 one that begins 2008-10-16, at 2008-09-22 it says, "No call per 5 history." What does that mean? This is directed to the 6 witness. II you know. 7 THE WITNESS: Which line? 8 THE COURT: 2008-09-22. 9 THE WITNESS: The month they are logging when the 10 HELOC statement is sent out. It looks like just a generic 11 comment that they haven't contacted the borrower yet. 12 THE COURT: II you go down earlier, because remember 13 this is in reverse order, at 2008-02-21, February 21, it 14 says -- I'm sorry. Go down to 2008-02-21. There are several 15 entries. The Iirst one is at 1232, "Could not locate via 16 wp.com." What does that mean? 17 THE WITNESS: I don't know. It would be shorthand Ior 18 something in servicing. I assume it means white pages. 19 THE COURT: Meaning they couldn't Iind the phone 20 number through the white pages? 21 THE WITNESS: Correct. 22 THE COURT: OI course, they had a phone number on the 23 application, so that suggests, does it not, that that phone 24 number wasn't working? 25 THE WITNESS: Right. Either not answering, people Camrass6 Scott - direct Page 892 1 have switched to cell phones. 2 THE COURT: Whatever. Then it says in the next entry 3 going up, "Called phone numbers Irom other accounts being 4 checked Ior trouble." There are two phone numbers listed 5 there. "General POE VM," what does that mean? 6 THE WITNESS: I don't know what POE stands Ior. VM 7 would be voicemail, "no message leIt." 8 THE COURT: "No message leIt." Another phone called 9 and leIt voicemail, adding still another one. This all 10 suggests that there was some problem, right? 11 THE WITNESS: Yes. 12 THE COURT: For making all these calls. 13 THE WITNESS: Yes. 14 THE COURT: Then there was on 2008-02-23, "Called 15 phone number, child answered, no message leIt." I'm sure that 16 must have been the executive vice president oI the loan company 17 that this man was the president oI. Then, on 2008-09-16 at -- 18 THE WITNESS: "Talked to Iemale, borrower not there, 19 leIt message." 20 THE COURT: Thank you. Something is going on here, is 21 it Iair to assume, given all these calls in February through 22 the summer oI 2008, right? 23 THE WITNESS: Yes. 24 THE COURT: Going over to the bottom oI the next page, 25 it says at 2008-10-22, "Complete K. Smith 1. Has payment been Min-U-Script® SOUTHERN DISTRICT REPORTERS (43) Pages 889 - 892 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 Camrass6 Scott - direct Page 893 1 received?" What's K. Smith 1? 2 THE WITNESS: It's got to be somebody's login, likely 3 another employee at Flagstar. 4 THE COURT: I'm glad to know it's not Kate Smith come 5 back Irom the grave. All right. I should cease being 6 Iacetious. Has payment been received? What is meant by that? 7 THE WITNESS: Two lines down it says, "Talked to 8 borrower. Payment Ior October was supposed to be made online 9 via Flagstar.com." I assume this is Iollowing up to conIirm he 10 did that. 11 THE COURT: I'm beginning to get this. 2008-11-18 12 "Phone number number 1 leIt message," is that what that means? 13 THE WITNESS: Yes. 14 THE COURT: Finally, a hardship letter was received. 15 This was on 2008, January 14th, yes? Received on January 5th. 16 Do you see the entry? 17 THE WITNESS: Yes, I do. 18 THE COURT: The eIIect oI that is to say he's giving a 19 reason why he can't pay, yes? 20 THE WITNESS: Reason plus describing at times what 21 options, meaning Iorbearant loss mitigation options. 22 THE COURT: What, iI anything, is done to check the 23 accuracy oI the statements made in a hardship letter? 24 THE WITNESS: Are you asking me is anything done to 25 check it? Camrass6 Scott - direct Page 894 1 THE COURT: What is your normal practice? 2 THE WITNESS: It changed over time. Flagstar as well 3 as the industry changed. Probably at this point in time, most 4 oI it was whatever the borrower said you went with, and you 5 would get some handwritten Iinancial Iigures and then at times 6 get paystubs. 7 THE COURT: As reIlected in the entry that your 8 counsel brought your attention to on March 2, 2009, on the next 9 page, is it not likely that when he said he was not working, 10 was a mortgage broker and a police sergeant but he's now oII 11 with no pay, that that was just accepted at this time on its 12 Iace? 13 THE WITNESS: Yes, it was. 14 MS. RENDON: Do you want me to continue, your Honor? 15 THE COURT: I cannot tell you how much I would love to 16 go on, but I think it is enough Ior today. We will reconvene 17 tomorrow at 10 o'clock. 18 MR. AARON: Your Honor, would you permit a quick 19 scheduling question? 20 THE COURT: Yes. 21 MR. AARON: How late tomorrow does your Honor 22 anticipate sitting? 23 THE COURT: 5 o'clock. 24 MR. AARON: On Thursday do you have a sense yet, or 25 not yet? Camrass6 Scott - direct Page 895 1 THE COURT: I think probably 5 o'clock, but let me 2 look. My boss tells me maybe 4:00. 3 MR. BUCHDAHL: Your Honor, just one last thing. Given 4 that there has been some shuIIling with the deposition, iI we 5 could get an order oI witnesses Ior tomorrow Irom deIense 6 counsel? 7 THE COURT: Yes. And you're going to give me the 8 marked up other depositions tomorrow. 9 MR. BUCHDAHL: Correct. I mean the order oI live 10 witnesses. 11 THE COURT: What is the order tomorrow? 12 MS. RENDON: We are going to Iinish with Ms. Scott and 13 then proceed to two oI our experts, JeII Nielsen and then John 14 Griggs. 15 THE COURT: Thanks a lot. 16 (Adjourned to 10:00 a.m., October 23, 2012) 17 18 19 20 21 22 23 24 25 Page 896 1 INDFX oF FXAMINATIoN 2 Fxamination of: Page 3 STANLFY D. JURSFK 800 4 Direct By Ms. Shin . . . . . . . . . . . 800 Cross By Mr. Buchdahl . . . . . . . . . . 853 5 6 MARNI SCoTT 7 Direct By Ms. Rendon . . . . . . . . . . 863 8 9 PLAINTIFF FXHIBITS 10 Fxhibit No. Received 11 54 . . . . . . . . . . . . . . . . . . . . 848 12 13 DFFFNDANT FXHIBITS 14 Fxhibit No. Received 15 BAS . . . . . . . . . . . . . . . . . . . . 813 16 BBB . . . . . . . . . . . . . . . . . . . . 888 17 18 19 20 21 22 23 24 25 Min-U-Script® SOUTHERN DISTRICT REPORTERS (44) Pages 893 - 896 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 $ $10,000 (1) 882:20 $111 (2) 784:15;788:22 $120,000 (1) 755:24 $140,000 (1) 755:22 $20 (3) 860:4,5,8 $25.9 (3) 815:5,14,20 $28.8 (1) 816:2 $30,000 (1) 841:7 $36 (1) 814:20 $50,000 (1) 831:3 $51.2 (1) 815:24 $51.3 (1) 815:24 $7.6 (1) 815:14 $7.66 (1) 815:7 $86 (1) 816:20 $90 (1) 788:21 A AARON (29) 722:10,24;723:4,7; 724:11;726:8;739:19; 775:17,18,18,25;776:2; 777:21,24;778:6,22; 780:1,22;785:10,20; 789:13,14,18;790:16; 794:14,19;894:18,21, 24 abilities (1) 819:21 ability (5) 761:10;763:23; 854:20,21;855:3 able (2) 734:7;764:3 ABM (7) 743:5;745:3,5,5,12; 747:14;866:23 ABMs (2) 880:4,10 above (4) 752:3;869:18; 870:13,14 absolutely (11) 744:3,6;758:10; 761:21;767:14;775:11; 780:2;785:16,17; 810:17;862:1 absorbed (2) 815:4,14 abundant (1) 754:22 accept (3) 763:13,16;844:17 acceptable (5) 734:6,10;735:24; 736:8;737:13 accepted (1) 894:11 accepting (1) 863:3 access (4) 796:11;824:11; 835:20;867:2 accessing (2) 743:7,10 accompany (1) 771:14 accordance (2) 808:7;835:8 according (1) 778:22 account (3) 732:2;816:14,16 accounting (10) 801:19,20,22,23; 802:12;806:19;861:4, 7,9;862:6 accounts (1) 892:3 accumulated (1) 879:16 accuracy (3) 764:11;836:22; 893:23 accurate (6) 789:15;853:9,11,14; 854:14;862:3 accurately (1) 794:14 achieve (1) 879:22 acknowledge (1) 867:3 across (4) 733:2;746:4;761:17; 766:8 act (2) 745:6;860:23 acting (1) 864:23 action (1) 831:3 active (2) 814:11;816:16 activities (2) 801:13,22 actual (8) 724:18;734:14; 739:22;740:10;762:9; 769:4;832:18;870:7 actually (29) 728:10;734:9,19; 735:10;736:10;743:9; 749:1;758:3;762:10; 765:8;771:4;773:18; 775:20;783:21;790:14; 796:7;807:18;819:20; 822:6;830:7;840:17; 849:15;850:6;854:1, 15;873:6;876:15; 882:8,15 ad (1) 802:5 add (3) 832:20;838:12;841:2 added (2) 832:21;872:12 adding (1) 892:9 addition (3) 783:9;816:18;878:4 additional (17) 745:7;811:19;814:5, 8,10,23;815:2,8,20,25; 816:9;831:10,18; 872:11;880:2,3,8 Additionally (1) 781:5 address (5) 748:14,19,22; 823:14;862:4 addressed (1) 745:20 addressing (1) 738:2 adds (1) 811:19 adequate (4) 781:14;783:15; 789:21;790:10 adhere (1) 837:12 adherence (2) 729:23;730:6 adjourn (1) 794:12 Adjourned (1) 895:16 administration (1) 800:19 admissibility (6) 725:11;743:23; 746:19;752:23;769:20; 775:12 admissible (1) 847:12 admission (2) 846:25;862:20 admit (3) 813:13;839:18;888:2 admitted (1) 762:22 advancing (1) 848:9 adversary (4) 748:13;752:24; 767:25;797:3 adverse (4) 782:1;783:7,8,21 advise (1) 728:21 affect (2) 795:6;812:19 affects (1) 795:2 affirmation (1) 794:10 affirmations (5) 792:16,21,23,25; 793:9 afoul (1) 789:5 afternoon (5) 797:23;799:1;800:7; 853:5;863:22 again (49) 734:1;738:17;745:1, 2;747:9,16;751:1; 752:18;755:1;757:4; 760:24;767:12;768:6; 769:14;771:5;775:4; 779:10;783:1,5,9; 787:5;793:4,11; 795:17;806:1;807:7, 22;808:3,6,10,11,13; 809:25;810:9;811:17; 812:2,12;814:24; 815:10;819:22;820:1, 13;821:24;822:4; 825:25;827:17;830:10; 835:1;851:20 against (6) 749:19;839:8; 854:16;855:21;856:13; 857:22 agencies (7) 803:9,12;805:3; 806:8;808:4;824:10; 832:7 agency (7) 803:4,6,16,21;804:4; 805:12;884:25 AGM04596930 (1) 848:14 ago (6) 729:4;752:21; 778:10;841:10;856:8; 886:6 agree (12) 725:12;728:1;769:3; 778:9;784:23,25; 787:10;792:24;804:14; 843:16;863:5;887:13 agreeable (1) 799:17 agreed (8) 732:19;742:11; 743:5,9;748:23;763:2, 21;764:18 agreeing (1) 774:3 agrees (3) 763:19;773:23; 887:20 ahead (13) 722:9;737:17;747:3; 774:19;788:7,7,7,7; 794:13;840:15;841:16; 856:9;870:8 allegation (1) 834:9 allocates (1) 837:13 allow (10) 807:8;821:16,18; 823:6;866:4;868:11; 869:16;872:4;882:15; 885:15 allows (2) 773:10;810:25 almost (2) 755:24;807:2 along (6) 764:24;778:1; 789:11;837:21;841:20; 843:13 alongside (1) 809:4 alternatively (1) 743:20 although (8) 725:20;734:19; 738:17;739:16;749:8; 771:16;780:18;861:16 altogether (4) 725:21;800:14; 816:17;869:20 always (6) 769:18,19;787:17; 832:11;863:2;876:12 amalgamation (1) 774:13 ambiguous (2) 792:5;870:18 American (1) 801:1 Amongst (1) 881:16 amortization (8) 811:5,6,9,12,14; 812:7;814:6;817:12 amount (24) 749:24;754:15; 783:24;788:13;807:17; 814:23;815:3,9,15,16, Min-U-Script® SOUTHERN DISTRICT REPORTERS (1) $10,000 - amount ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 25;816:1,3,6,10,10; 825:24;826:4;849:25; 850:21;851:15;867:15; 881:25;887:3 amounts (3) 810:13;816:13; 833:25 analogy (1) 804:8 analyses (1) 835:24 analysis (23) 732:17;733:10,15, 22;750:18;770:8; 771:8;786:1;790:20; 791:1,3;796:10; 802:10;834:24,25; 862:6;865:12;878:20; 879:8,11,14;881:10,18 analyst (2) 801:22;849:3 analysts (6) 802:4;819:21; 822:16,16,20;849:4 analyze (1) 877:20 and/or (2) 835:8;880:8 anecdotal (3) 731:4;758:8;759:17 answered (3) 742:9;744:2;892:15 anticipate (1) 894:22 anti-money (1) 867:1 apologize (3) 785:16;840:1;846:12 app (1) 890:21 apparently (3) 731:19;741:2;748:4 appeal (1) 753:2 appear (4) 755:18;796:5;890:6, 16 appeared (2) 849:14;850:6 appears (5) 750:14;849:24; 850:20;886:9,10 apples (1) 788:6 applicable (1) 740:25 applicant (1) 767:5 application (12) 749:12;855:9; 882:20;883:2,25; 884:9;885:13,23; 886:13;887:14,17; 891:23 applied (5) 727:1;761:12; 780:23,24;827:2 apply (5) 735:12,12;743:21; 760:18;827:3 Applying (2) 783:22;874:6 appraisal (13) 741:11;755:22; 865:12;876:1;878:20; 879:2,5,7,8;880:9,13, 14,19 appraisals (4) 743:4;877:20; 879:11,14 appraiser (4) 879:15,25;880:1,8 appraisers (3) 879:15;880:14,20 appreciate (1) 889:24 apprentice (2) 864:24;865:9 approach (24) 730:20,24;736:6,7; 738:5,6,12;741:6,7; 744:7;751:2;752:7,17, 17,22;753:15;754:19; 761:16;765:4;812:24; 817:15;845:5;882:12; 887:5 approached (1) 744:23 approaches (1) 848:10 appropriate (12) 736:9;763:18;774:9; 776:10;799:18;820:2, 2;822:4;832:7,19; 851:24;881:10 appropriately (1) 788:17 approval (2) 831:13;832:16 approve (1) 837:9 approved (5) 831:12,20;833:3; 858:10;890:1 approving (1) 880:9 approximately (7) 755:9;795:4,15; 865:16;870:5;877:3; 881:4 area (6) 740:17;762:21; 805:18;844:17;862:5; 880:5 arena (2) 762:17;843:9 arenas (1) 762:18 arguably (2) 836:6;841:21 argue (1) 726:6 arguendo (1) 848:8 argument (13) 725:10;726:11; 728:24;734:3;775:16; 779:25;784:23;797:6; 805:20;818:21;837:21; 838:11;841:20 argumentative (1) 854:24 arise (1) 814:8 around (12) 802:23;815:12; 828:1;866:20,24; 867:3;875:25;878:19; 880:20,24;885:8,25 arrangement (1) 860:24 arrived (1) 880:1 arrives (1) 783:7 arrow (1) 773:11 art (1) 865:22 articulate (8) 730:25;731:2; 735:14;741:16,17; 761:11;774:10,11 articulated (3) 735:3,21;737:7 articulating (2) 738:13;842:12 articulation (1) 762:19 ascertain (2) 723:18;776:6 aside (4) 734:18;768:17; 844:12;885:10 aspect (3) 821:16;862:5;877:13 aspects (5) 821:15,17;827:12; 835:6;840:16 assemble (2) 819:24;820:17 assembled (3) 724:19;771:21;832:6 assert (1) 837:17 asserting (2) 848:1,2 assertions (1) 747:2 assess (2) 784:7;879:24 assessed (2) 793:16,19 assessing (3) 806:16;880:6,7 assessment (1) 848:9 Asset (8) 801:1,7,10,15; 817:18;818:3;868:25; 875:21 assets (3) 745:18;759:10; 823:23 assignment (3) 726:12;730:21; 836:18 assist (1) 729:14 assistance (2) 805:19,24 assistant (3) 865:2,7;877:18 associated (6) 763:15;796:16; 798:7;806:19;867:21; 882:5 assume (7) 733:12,21;734:3; 860:25;891:18;892:21; 893:9 Assuming (8) 732:13;787:16; 838:11;847:11;848:8; 858:16,19;885:22 assumption (7) 787:15;812:21,21; 857:20,21;858:15; 860:11 assumptions (8) 812:16,18;857:7; 858:2,6,9,12,13 assure (3) 875:10;876:8;886:2 Assured (27) 722:18;723:16; 753:21;754:17;767:20; 783:23;788:13,19,21; 795:5;796:17;816:14; 835:19,19,23;836:23; 837:7,8;838:5,18,25; 839:22;840:7,22; 857:21,22;861:24 Assured's (6) 724:1;753:14;767:9; 836:18;838:7;840:25 attached (1) 867:17 attack (6) 742:21;744:12; 757:17;759:20;775:6,7 attacking (1) 744:12 attempt (3) 735:17;741:11; 744:14 attempted (1) 736:3 attention (8) 748:21;749:3;750:1; 754:24;848:4;849:9; 886:21;894:8 attorney (1) 734:21 Attorney's (1) 889:21 attributes (2) 796:18,24 audited (2) 818:6,8 auditorium (1) 877:10 auditors (1) 818:9 Australia (1) 800:24 authority (1) 866:13 automated (5) 743:3;822:2;831:13, 20;880:4 availability (3) 820:15;827:18;847:5 available (5) 731:20;752:9;813:9; 832:11;877:24 average (3) 733:16;787:6;878:10 AVM (5) 755:22,23;756:24; 760:22,23 avoids (1) 847:7 aware (7) 725:8;739:5,8;784:2; 805:10;820:24;861:22 awareness (1) 741:8 away (2) 840:3;886:4 AYM (1) 781:23 B bachelors (1) 800:18 back (51) 728:15;732:9;733:1, 3;734:12;735:24; 738:16;743:14;744:25; 745:3;748:13;750:11, 16;752:11;755:20; 757:9;759:2;760:11, 15;763:6,10;764:1; Min-U-Script® SOUTHERN DISTRICT REPORTERS (2) amounts - back ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 775:25;777:16;786:4; 787:3;788:11;792:6; 798:4;802:14,15; 820:10;822:13;832:18, 21;836:20;838:15,21; 842:20;846:8;854:1,3, 5,5;859:11;864:18; 878:14;880:10;886:8; 891:3;893:5 back-and- (1) 844:22 background (3) 800:17,21;803:20 back-up (3) 824:16,17,18 bad (7) 737:25;743:19; 754:13;755:14,21; 767:17;784:12 balance (18) 760:18;782:10,12; 783:7,8;801:11; 806:21;814:23;815:2, 8,25;816:9;826:24; 827:21;867:17,19; 868:22,25 balanced (1) 729:1 balances (3) 783:6,6;814:8 bands (1) 871:8 Bank (19) 724:9;800:12,25; 802:16,17,19,20; 833:21,22,24;834:17; 863:2,25;864:7; 868:25;869:23;871:20; 872:18,22 banker's (1) 863:4 banking (3) 802:20,22,24 banks (1) 743:18 BAS (2) 813:17;856:20 base (2) 733:24;850:18 based (19) 747:9;754:14,19; 761:18;776:10;781:17; 791:19,20;792:10,11; 810:3;818:20;819:6; 835:6;837:1;859:12; 860:11;880:9;886:3 bases (1) 835:25 basic (4) 754:24;808:19; 816:10;823:16 basically (14) 724:1;774:7;777:19; 787:10;803:9;805:4; 810:12;817:9;818:13; 820:18;829:1;832:1; 840:12;872:16 basing (8) 782:4,6;791:13,16, 21;792:3,7,12 basis (18) 731:11;735:14,22; 740:11;759:3;796:19, 20;812:2;815:1; 822:10;836:21;843:2; 847:13;848:7;849:12, 21,25;850:21 batch (1) 822:1 Bates (2) 848:14;883:3 BBB (2) 887:15;888:12 BBK (1) 783:1 bear (1) 837:14 Beard (10) 799:14;836:13; 843:12;844:24;846:18; 848:21,22;849:11; 850:2;851:7 Beard's (1) 849:9 bears (2) 843:15;848:14 became (1) 865:1 becomes (2) 811:23;814:7 began (1) 802:9 begin (3) 779:24;839:7;852:5 beginning (2) 781:1;893:11 begins (1) 891:4 behalf (2) 775:19;811:20 behind (5) 731:6;755:19; 758:11;773:11;808:10 belief (2) 739:3;844:6 bell (1) 787:14 Bellevue (1) 876:23 belongs (1) 757:2 below (2) 814:12;871:9 Bench (3) 727:20;784:3;793:7 beneficial (1) 814:8 benefit (5) 782:7;802:11; 817:13;848:9;861:5 benefits (3) 807:16;821:6;861:8 bereft (1) 764:15 Berry (2) 885:13,22 best (11) 741:15;746:9,10; 758:3;769:19;772:23; 848:2;853:20;859:13, 13;880:21 better (3) 736:4;806:3;877:20 beyond (2) 735:7;843:14 big (11) 729:6;763:20; 769:14;772:9;773:11, 19,24;778:14;785:25; 876:25;877:1 binary (7) 776:22;777:7,12,14, 17;778:3;787:11 bit (10) 729:12;737:10,11; 802:14;860:4;861:16; 864:18,19;865:24; 872:13 blatant (1) 757:10 blended (1) 840:17 blindly (1) 732:17 blink (1) 755:2 bluntness (1) 756:2 blush (1) 755:17 board (3) 746:4;766:9;792:15 body (1) 763:17 Bohan (1) 836:15 boiled (1) 776:18 boils (1) 761:19 book (2) 816:6;821:7 booked (1) 818:3 booking (1) 817:17 books (1) 817:20 borrower (24) 739:15,22;740:16; 741:3;742:14,17; 748:19,24;750:19; 759:10;760:8;762:23; 823:14,15;829:1,2; 868:15;884:5;885:3; 889:16;891:11;892:18; 893:8;894:4 borrowers (5) 740:13;868:18; 871:1,11,13 borrower's (1) 884:4 boss (1) 895:2 both (10) 749:19;771:4; 775:15;792:17,25; 822:19;836:13;857:15; 881:23;889:17 bothered (1) 735:1 bottom (10) 782:24;809:25; 810:9,11;813:21; 817:1;846:15;849:9; 883:10;892:24 box (1) 749:11 branch (1) 749:9 branches (1) 802:24 breach (22) 750:24;756:12; 758:10,24;759:4,25; 766:12;776:17,21,23, 24;777:1;778:5;779:1, 13,13,14,16,17;780:14; 783:7,21 breached (7) 754:13,16;762:20; 766:25;769:7;837:17; 839:14 breaches (7) 744:20,21;755:14; 776:7;780:13;783:5; 838:25 breadth (4) 743:8;747:18;796:9, 17 break (15) 758:11;759:1;771:1; 793:23;794:24;798:11; 852:5,6;865:24; 870:20;872:13;875:19; 878:24;881:12,13 breakdown (1) 723:12 Brewer (2) 767:9;796:22 brick (1) 840:19 bricks (1) 835:12 briefly (4) 774:18;791:6;798:6; 799:13 bright- (1) 778:10 bring (4) 735:10;749:3; 788:11;877:22 brings (2) 731:8;811:10 broad (2) 757:16;789:5 broader (5) 735:25;766:22; 767:2,21;785:15 broker (25) 749:2;849:22; 850:19;871:24;872:18, 19;873:1,9,14;874:3,6, 13,15;875:12;876:11; 883:16,17,19,20,21; 889:3,11,18;890:22; 894:10 broker-correspondent (1) 873:13 brokers (7) 873:5;874:1,17,24; 875:7,8;876:5 brought (7) 727:10;740:25; 745:2;781:1;783:20; 841:18;894:8 bubble (2) 755:15,16 BUCHDAHL (101) 722:6,20,22;724:12, 17;725:14,17,22; 726:2;741:4;743:15; 744:9;745:15,24; 746:13,17;747:4; 748:14;749:11,15,21; 753:8;754:1;755:9; 757:21;760:16;765:13, 23;766:4;767:14; 770:2,4,14,19,22; 771:9;772:1;773:16; 774:18,20;784:10,21; 785:8;788:1,9;791:6, 22,24;792:15;794:6, 24;795:13,23;796:1; 797:15,18;798:5; 799:22;803:17;804:9, 19;805:8,20;807:5,7; 813:14;818:19;820:4; 821:8,12;824:14,16,18, 24;825:12,16,18; 839:7;840:14,16; 841:15,17;842:8,22; 845:7,9;846:5,25; 852:4;853:4;855:2,15; 856:11;862:7,10,19,22, Min-U-Script® SOUTHERN DISTRICT REPORTERS (3) back-and- - BUCHDAHL ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 23;863:9;895:3,9 Buchdahl's (1) 804:2 bucket (2) 737:15;842:9 budgets (1) 728:20 building (4) 807:12;808:25; 835:12,12 built (3) 790:6,7;858:15 bunch (6) 739:7;740:15; 742:10;762:13;774:1; 883:3 burden (4) 747:16;788:2,4; 823:15 Bureau (1) 752:9 business (30) 740:20;800:19; 803:2,3,20;845:16,17, 21,23;846:10;847:20; 863:3;871:13;874:7, 15,22;875:3;876:2,7,8, 9;878:5;881:6;884:23; 885:2;886:18;888:4,6, 7,10 buy (1) 748:4 byproduct (1) 807:10 C calculate (3) 777:15;780:8;790:23 calculated (2) 780:14;783:11 calculates (1) 782:10 calculating (3) 781:17;806:21;812:5 calculation (8) 777:10;779:2; 787:23;792:3;849:24; 850:20;865:12;878:20 calculations (5) 781:6;791:13,16; 792:7;826:2 California (1) 864:25 call (14) 726:3;737:18; 748:18;799:6,7,25; 800:1;842:8;847:4; 848:3;863:14,15; 882:21;891:4 called (13) 727:13;782:15; 800:3;811:4;828:19; 839:2;858:21;863:18; 870:12;875:16;892:3, 8,14 calling (1) 799:14 Calls (3) 856:1;892:12,21 came (20) 732:24;737:16; 750:5;752:7;755:18; 757:9;761:7,8;783:17; 796:17;831:2;834:6; 837:6;838:18,21; 841:4;847:19;865:25; 866:9;886:20 can (82) 722:22;732:2,8; 735:23,24;737:25; 739:11;743:8;744:22; 747:1;748:24;753:5; 754:14,21;756:17; 758:23;759:20;760:15, 16,17;761:11,12; 769:22;770:2;772:2; 777:20;778:12;784:7; 785:4;786:3,5;787:2, 16,17,18;788:11; 790:1;792:20,25; 794:4;795:19;797:23; 798:12;799:12;800:21; 801:8;805:21;809:23; 813:19;819:8,18; 835:2;840:12;843:17; 844:11;845:12,17; 847:3,4;848:2;852:4,5; 865:24;866:9,19; 867:13,15;868:13; 869:12;872:6,22; 875:19;876:17,21; 878:24;880:11;881:2, 20;884:14;885:1; 887:17;888:7 candidates (6) 818:16;820:3,25; 821:23;822:5;831:23 Capital (24) 732:21;734:25; 735:16,21;742:25; 745:5,5;746:13,14,16; 747:14;755:23;760:21, 22;770:12,17,22;771:2, 4;800:12,15;801:16; 865:6;866:19 caps (2) 869:20;870:12 care (1) 843:25 career (2) 828:9;868:15 careful (3) 748:9;751:2;834:24 carefully (2) 744:22;793:11 carelessly (1) 834:22 carry (2) 785:14;819:12 carrying (1) 817:20 case (59) 727:2,24;728:4,12; 729:6;731:9,11,22; 732:21;734:13;739:3, 7,9,10;740:25;745:23; 746:3,15,21;747:14; 749:19;761:13;764:8; 765:7,23;775:9; 776:11;784:14;788:11; 789:8,9,20;790:11; 793:6,14;798:10,13; 799:11;802:2;804:10, 13;809:9,14;811:12; 825:7;828:18;839:1; 841:1;844:7;851:22; 875:22;879:10,13,18, 20;880:17;882:24; 886:10;890:5 cases (5) 766:24;767:1;776:3, 6;805:3 cash (21) 806:25;807:17,24; 808:6;809:10,15,16,20, 20,21,21;810:14; 811:7;812:12,13; 815:11;849:16,22; 850:18;861:5,7 cast (1) 753:2 catch (1) 760:23 catching (1) 740:19 categories (6) 741:19;742:18; 763:20;779:13,14; 835:6 category (5) 723:13;763:6,8,12; 766:21 cations (1) 835:25 causation (1) 839:15 caused (5) 811:13;826:17; 839:2,9;844:11 caution (1) 823:5 caveat (2) 787:10,20 cease (1) 893:5 cell (1) 892:1 center (1) 865:3 centers (1) 877:12 centralized (1) 874:4 certain (8) 753:2;776:3;778:24; 811:2,3;837:12; 861:23;874:19 certainly (16) 734:23;747:5; 753:11;756:15;792:18, 20;867:23,25;871:9; 875:10;876:2,7;877:9; 880:17;882:9;887:17 certainty (2) 790:2,13 cetera (2) 738:22;884:11 challenge (7) 744:14;747:22; 756:20,24;757:1,3; 787:17 challenged (4) 755:14;757:4,18; 775:4 challenges (1) 775:17 challenging (2) 777:3;879:11 change (7) 787:21,23;814:8; 834:16,18;857:11; 870:4 changed (2) 894:2,3 changes (1) 729:4 channel (6) 871:22,23,25;872:2, 18,21 channels (9) 827:4;871:21; 872:12,14,16;873:2,13, 15;876:11 characteristic (1) 785:13 characteristics (3) 787:18,20;869:12 characterize (1) 809:4 characterized (1) 842:22 charge (1) 722:12 charged (5) 782:3,17;783:3,20; 808:20 charged-off (6) 782:5,6,9,11,12,19 chart (5) 731:3;786:3;847:8; 848:4;850:14 chartered (1) 802:17 charts (4) 741:19,22;763:10,12 Chase (1) 843:19 check (18) 722:16;725:3; 738:20;747:13;766:11; 769:19;771:1;774:24; 836:20;841:5;874:23; 885:18;889:25;890:7, 10,12;893:22,25 checked (3) 854:15;890:13;892:4 checking (6) 724:9;738:21; 855:20;856:13;875:8; 886:11 checks (1) 834:12 cherry-pick (1) 821:6 Chicago (1) 865:19 chief (1) 879:15 child (1) 892:15 child's (1) 764:21 chime (1) 804:1 choice (1) 880:21 choose (1) 858:2 choosing (1) 842:19 chose (3) 757:6;771:17;781:18 chronological (2) 846:14;891:1 circumstance (2) 783:22;790:4 circumstances (3) 764:18;776:18; 780:21 circumstantial (1) 840:8 citations (1) 776:12 cited (1) 734:13 city (1) 886:3 claim (6) 736:19;742:16; 746:3,7;757:1;764:14 claimed (2) 732:1;742:17 claiming (2) 774:14;839:1 Min-U-Script® SOUTHERN DISTRICT REPORTERS (4) Buchdahl's - claiming ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 claims (12) 730:14;731:25; 732:22;733:24;741:14; 772:22;773:15;780:24; 788:19,22;810:8; 857:21 clarification (1) 873:24 clarity (1) 769:25 classes (1) 865:1 classic (1) 888:6 classroom (1) 865:11 Clayton (1) 836:15 clean (5) 758:18,20;759:4,14, 21 cleanly (2) 757:22;758:5 clear (37) 729:22;732:21; 734:25;735:16,21; 738:10;742:25;744:16; 745:4,5;746:13,14,16; 747:14;754:23;755:23; 760:4,21,22;761:2,11; 762:2,19;770:11,12,16, 22;771:2,4;774:11; 785:10;791:9;794:10; 796:25;816:21;835:8; 847:24 cleared (1) 811:14 clearing (1) 763:24 clearly (5) 726:15;732:10; 801:23;821:23;846:24 clerk (1) 758:20 click (1) 722:24 client (3) 777:6;783:24;784:15 close (6) 726:2;766:15;793:6, 18;811:10;834:5 closed (4) 745:23;766:17; 809:5;854:10 closely (2) 802:6;826:1 closer (4) 756:6;803:25;836:6; 878:11 closing (9) 762:23;787:5,7; 838:5;864:6;872:9,9, 20;890:10 CLTV (10) 745:19;750:15; 753:11;754:8;843:2; 869:17,20;870:13; 871:1;882:14 CLTVs (2) 867:25;868:7 CLTV-type (1) 868:2 co-borrowers (2) 823:25;824:1 coding (1) 819:21 collateral (44) 796:10,19,24,24; 809:9,11,13,15;811:24, 25;812:1;814:25; 815:4;816:24;817:8,9, 10,15;823:15;826:3,4; 836:1,2,25;837:9,9,25; 838:18,20;839:5; 843:8,11,20,25;844:7, 8,14;851:21,23,25; 853:11;858:22;859:13, 18 collateral-compliant (1) 838:3 colleague (1) 778:18 colleague's (1) 779:25 collected (1) 853:17 collection (3) 887:12;888:20;889:5 college (1) 780:19 colloquy (1) 840:11 co-located (2) 877:10,18 column (1) 783:2 columns (1) 857:4 com (6) 737:18,19;738:4; 740:10;742:13;745:11 combination (1) 788:23 combinations (1) 882:14 comfort (1) 756:11 coming (11) 737:1;758:12; 759:17;772:1,8;796:5; 809:10;836:2,24; 837:24;843:11 co-mingled (1) 723:15 comment (1) 891:11 commentary (1) 772:20 commenting (1) 780:16 comments (8) 727:16;760:6,7; 770:10;772:19;773:24; 839:19;840:2 committee (2) 869:23;870:1 committees (1) 858:11 Common (1) 764:4 commonly (5) 803:10;806:24; 809:22;810:1,21 common-sense (1) 753:2 communication (1) 822:23 community (1) 735:25 companies (2) 805:3;879:19 company (18) 746:12;748:6,18; 749:7;768:23;806:7; 811:20;814:7,9; 828:14,15,16;863:24; 864:1;885:14,24; 886:3;892:16 comparable (1) 880:20 comparative (1) 756:25 compared (3) 728:10;782:11;837:1 comparison (1) 788:6 compensating (1) 759:8 compensation (3) 807:21,22,23 complete (4) 749:23;761:4; 851:19;892:25 completed (4) 733:14;749:12; 865:14;879:25 completely (3) 764:25;779:17;846:7 complex (2) 779:5,6 compliance (1) 722:16 compliant (2) 837:25;838:19 complicated (2) 793:5;840:1 complied (1) 724:21 component (5) 772:20;797:1; 806:15;881:12,13 comported (1) 777:8 composed (1) 739:4 compress (1) 766:21 comprise (2) 864:6,11 comprised (1) 723:13 comprises (1) 879:7 comps (1) 756:25 computer (3) 765:25;840:23,25 computerization (1) 833:10 conceded (1) 736:11 concept (4) 734:12;735:10; 808:19;812:15 concern (2) 744:8;795:16 concerned (1) 863:5 concerning (1) 776:7 concise (3) 727:8;774:11;799:11 conclude (4) 754:14,21;770:5; 885:1 concluded (1) 733:7 conclusion (3) 747:7;766:7;770:4 conclusions (2) 747:21;814:12 conditions (1) 807:15 condo (1) 879:9 conduct (2) 841:22;877:11 conducted (2) 729:15;881:8 conducting (3) 785:19;876:9;881:15 conference (1) 794:20 confidence (11) 761:5;781:15,15; 787:13,21,22;788:3; 789:24;790:8;791:7; 836:23 confident (5) 745:1;772:3;781:8; 854:10,12 confirm (9) 732:14,15;842:20; 849:15,21;850:17; 862:1;887:16;893:9 confirmed (2) 838:22;841:3 confirming (4) 723:14;778:9;885:8; 889:17 conform (1) 803:7 conformance (1) 724:22 confuse (2) 775:1,1 confused (1) 773:22 confusing (1) 774:25 confusingly (1) 773:20 confusion (1) 839:19 connected (1) 827:24 connection (5) 735:1,17;746:6; 805:7;813:16 consequence (3) 795:18;861:1,4 conservatism (1) 869:3 conservative (3) 865:21;869:1;882:11 consider (4) 750:20;792:20,25; 794:4 considerably (1) 742:21 considered (2) 738:14;833:5 considering (1) 792:21 consistency (7) 738:4;866:15;877:8, 13,16,23,23 consistent (7) 738:1;744:1;753:5; 765:4;787:3;826:2,6 consists (1) 723:14 consortium (1) 875:22 constant (2) 822:23;858:18 constituencies (1) 824:8 constructed (1) 835:14 constructing (1) 785:17 construction (5) 809:3;838:17; 840:18;841:18,25 Min-U-Script® SOUTHERN DISTRICT REPORTERS (5) claims - construction ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 consulting (2) 729:16;743:17 consumer (5) 871:20;873:11,12; 881:25;889:10 consumers (2) 875:5;881:4 contact (6) 764:2,4;806:12,13; 873:11,12 contacted (1) 891:11 contained (2) 807:14;835:14 content (2) 822:12,13 contents (1) 844:23 context (2) 764:19;776:11 continue (5) 814:10;823:6; 859:10;887:7;894:14 Continued (7) 751:3;786:11; 798:18;829:6;852:8; 858:19;886:24 continuing (1) 860:22 contract (5) 729:23;837:11,16, 17;839:14 contractual (2) 767:16;788:23 contributed (3) 815:2;816:17;839:18 contribution (1) 807:21 contributions (1) 810:8 control (9) 722:13,17;725:1,3; 741:8,9;754:12; 762:14;768:14 controls (1) 741:7 conventional (1) 867:6 conversations (6) 823:4;844:22;845:1, 3;847:18;851:4 convince (1) 835:2 copied (1) 845:12 copy (2) 748:16;785:8 core (4) 803:2,3,20;882:16 corner (1) 781:24 Corp (3) 881:10,14,18 corporate (3) 722:8;740:20;881:14 Corporation (4) 800:12,24;881:19; 885:2 corporations (1) 881:10 correctly (3) 731:23;758:3;765:21 correspondent (15) 849:23;871:25; 872:21,21,24;873:2,14, 17;874:3,6,13,15; 875:13;876:11;883:16 correspondents (8) 850:19;873:5;874:2, 17,24;875:8,9;876:5 corresponds (2) 849:20;850:12 cost (4) 847:12;848:7; 849:21;850:17 costs (1) 728:21 counsel (53) 722:4,11;723:3; 724:1,16;725:17; 726:1;727:16;731:21; 743:14;745:4;747:22, 24;749:23;750:10,23; 752:13;756:17,19; 757:7,19;764:4,5; 765:12,15;770:25; 771:23;775:15;778:19; 783:20;784:20;786:6; 793:15;794:1,2,7; 799:13;839:6;840:2, 17,19;841:16,18; 842:5;846:20;856:21; 857:1;870:8;883:5; 887:20;889:13;894:8; 895:6 counsel's (4) 725:10;749:6; 784:23;798:2 count (4) 781:25;782:2,17; 783:2 countenance (1) 768:5 counting (1) 762:22 country (1) 877:20 counts (2) 743:14;846:9 couple (7) 731:3;765:13; 775:19,21;834:19; 853:6;868:16 course (16) 727:15;755:7; 780:19;784:11;785:19; 799:17;819:13;827:23; 828:5;831:3;841:10; 845:21,23;865:13; 890:6;891:22 court (328) 722:2,3,9;723:3,6; 724:5,16;725:12,16,21, 24,25;726:4,15;727:6, 15;728:23;729:22; 730:4;731:23;732:2, 11,13;733:11,18;734:1, 3,18;735:6;736:1,24; 737:2,16,20;738:8,16; 739:1,9,13;740:2; 742:20,22;743:13,22; 744:8,22;745:13,23; 746:1,8,14,18,24; 747:23;748:8,11; 749:5,14,17;752:21,24; 753:19;754:14;755:8, 18;756:11;757:19; 759:5;763:14;764:2; 765:1,11,20;766:2; 767:11;768:2,7; 769:21;770:3,5,18,20, 24;771:22;774:19,20; 775:14,24;776:1; 777:16,23;778:1,9; 779:10;780:18;784:19; 785:6;787:8;788:6; 789:12,17,19;790:14; 791:5,12,23;792:5,20, 24;793:7;794:7,8,13, 18,20,22,23;795:5,8,9, 18,21,24;796:2;797:2, 9,14,17,19;798:14; 799:4,5,10,21,23,25; 803:18,24;804:14,21; 805:9,22;807:6,8; 812:25;813:16;819:10; 820:5;821:9,14;822:6, 10,14,17,21;823:5; 824:15,17,21;825:1,13, 17,20;826:8,11,13,20; 827:1,6,8,12,22;828:2, 4,9,13,18,22;829:2; 830:1,5,9,12,16,19,24; 831:2,9,15,21,24; 832:3,8,13,20,25; 833:5,8,19;834:1,8,25; 836:6,11;837:11; 838:11;839:6,12,18; 840:15,24;841:9,14,16; 842:11;843:13;844:16; 845:6,8,10,14,17; 846:13,17,23;847:2,11, 20;848:16,18;850:5,10, 16,25;852:3,6;853:1; 854:25;855:12,25; 856:2;862:9,14,16,21; 863:8,10,12,14;866:4; 868:11;869:6,22,24; 870:2,8,17;872:4; 873:23;875:19;881:22; 882:2,6,11,19,24; 883:1,8,13,17,20,24; 884:3,9,14,18,24; 885:5,10,17,17;886:2, 5,16;887:1,6,18,20; 888:1,5,7,11,16,18,22, 25;889:13,19;890:6,11, 16,19,25;891:3,8,12, 19,22;892:2,8,12,14, 20,24;893:4,11,14,18, 22;894:1,7,15,20,23; 895:1,7,11,15 courtroom (1) 735:2 Court's (2) 839:17;848:9 cover (2) 742:21;761:23 coverage (1) 876:23 covered (2) 839:21;840:24 covering (1) 877:19 covers (1) 752:1 create (3) 857:24;858:7,9 created (2) 807:11;842:14 creates (1) 869:22 creating (2) 805:4;871:5 creation (1) 853:23 creative (1) 764:9 credentials (1) 874:5 Credibility (1) 732:2 credible (2) 879:24,25 credit (31) 747:13;748:7;754:7; 755:3;758:16,22,23; 759:9;805:2;811:13, 19;814:5;815:13,18, 20;816:11;824:2; 862:25;863:2,3;864:2, 13;866:10,13;867:14; 869:23,25;872:22; 874:9,23,23 critical (5) 726:15;788:15; 790:18;812:16,18 critically (2) 754:4;789:3 criticize (1) 768:2 cross (7) 749:25;752:19; 755:7;769:8;785:10; 821:17;853:3 cross- (1) 769:18 cross-examination (4) 744:14;755:13; 852:3;853:2 cross-examined (2) 745:21;773:18 crunching (2) 771:3,5 culled (1) 729:15 culture (4) 866:8,10,16,17 cum (2) 849:20;850:13 cumulative (2) 849:18;850:11 cured (1) 733:23 current (14) 740:10,11;748:20; 783:22;800:10;821:25; 858:17,17;859:12,12, 14;861:18;864:9,11 currently (5) 815:18,20;861:19; 863:24;878:22 curve (2) 787:14;858:21 cusp (2) 755:16;756:9 customer (2) 889:2;890:22 customers (2) 878:4;890:14 cut (6) 728:21;759:4; 772:16;799:20;819:25; 852:4 cutoff (1) 737:24 cutting (1) 728:20 CV (5) 727:11;728:6,8,16, 17 D Dallas (1) 876:23 damaged (1) 782:9 damages (17) 776:6;780:24;781:6, 17;782:4,6;783:24; 784:1,16;787:23; 789:9,11;790:23; 791:13,16;792:3,7 data (107) Min-U-Script® SOUTHERN DISTRICT REPORTERS (6) consulting - data ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 742:8;743:5;745:7; 750:19;752:10;765:18, 20;768:19;770:9; 771:2;796:12,12,13,18; 798:8;802:4,6,7;806:5; 818:13,15,17;819:22, 24,25;820:15,15,16,17, 18;822:12,13,24; 825:10,23,25,25;826:5; 827:16,17,20;832:1,3, 3,5,6,8,10,11,17,17,20, 21,24;833:8,14,17,21, 23;834:12,14,17;835:1, 4,4,6,7,14,15,18,20; 836:21,22,25;837:2,5, 6;838:17,22,23;841:5; 842:15,15,21,21,22; 843:1,17,18;845:4; 849:18,19;850:11,12; 851:18,19,22,24;853:6, 10,11,12;854:2,13,13; 856:13,18 database (9) 740:15;742:14; 834:15,16;875:15,22; 890:14,21,23 databases (3) 740:21;741:2;765:25 data-gathering (1) 849:5 date (12) 741:14;759:6; 781:18,18;783:3; 785:5;813:7;814:18; 815:7;832:1;838:5; 888:23 dates (1) 857:8 Daubert (7) 722:4;732:3;735:23; 736:4,7;792:20,24 daughter (1) 764:21 Dave (1) 844:24 Dave's (1) 848:25 David (2) 799:14;843:12 day (6) 727:6;730:14;767:9; 797:20;838:1;843:25 days (2) 785:24;798:2 deadlines (1) 824:4 deal (16) 802:13;806:10; 808:21;810:14;811:21, 25;812:9,13;815:12; 816:5,11;817:16,22; 857:8,17;859:5 dealing (2) 778:15,16 deals (2) 812:6;862:2 dealt (7) 795:10;798:1; 801:11;802:4;805:12, 15;848:23 Dearborn (1) 748:21 debt (11) 750:13;753:11; 757:1,2;762:21;763:4, 5;768:18;771:13; 773:12;823:15 debts (6) 747:13;755:3; 757:12;762:22;766:11; 875:4 debt-to-income (1) 843:3 December (3) 723:9;857:5;859:2 decide (3) 729:20;746:21; 768:20 decided (2) 759:18;763:14 decision (13) 733:24;758:13; 761:7,8;768:7;776:22; 777:7,12,14;778:4; 823:18;827:20;879:14 decisioning (1) 879:12 decisions (1) 737:1 declaration (2) 779:4;794:15 declared (1) 812:8 declined (1) 811:12 declining (1) 880:9 deemed (2) 836:3;881:4 deep (1) 843:7 default (5) 868:6,6,9,18;871:7 defaulted (3) 767:8;786:7,10 defaulting (1) 767:19 defaults (3) 767:7,8;858:19 defect (3) 763:9;787:4,6 defective (2) 730:22;743:20 defects (5) 731:2;741:20; 742:18;763:10;782:13 defendant (3) 746:22;800:3;863:18 defendants (6) 744:12;745:3; 747:15;754:9;765:14; 784:22 Defendant's (6) 783:1,10;813:17; 856:20;887:15;888:12 defense (14) 743:14;747:22,24; 750:23;757:7,19; 770:25;771:23;786:6; 788:11;793:15;798:1; 840:2;895:5 deferrals (2) 847:13;848:7 deficiencies (1) 825:25 deficiency (1) 758:21 deficient (1) 783:10 define (1) 869:13 defined (4) 735:3,6;753:13; 756:17 degree (3) 787:22;800:18;856:6 degrees (1) 777:5 delegated (1) 734:4 delineation (1) 738:12 deliniate (1) 735:18 delinquencies (1) 823:3 delinquency (6) 821:25,25;822:1; 823:2;849:19;850:12 delinquent (3) 786:9;822:25;823:1 deliver (1) 874:6 demonstrate (3) 796:23;838:24; 842:11 demonstrated (10) 729:18;730:11; 734:15;736:18;742:3; 757:5;762:3,7;776:9; 808:5 demonstrates (5) 727:11;741:5;774:8; 838:7;844:13 demonstrating (3) 729:9;837:8;843:7 demonstration (1) 743:11 demonstrative (5) 782:15;804:5;837:9; 839:5;844:8 demonstratively (1) 739:6 denied (1) 837:22 denying (1) 793:13 department (18) 801:14,15,17,21; 802:5;808:22;809:2; 818:12,21,25;819:2; 822:15;825:24;831:8; 858:10,24;869:24; 874:4 departmental (1) 819:22 depend (1) 776:25 depended (2) 776:24,25 depends (5) 777:11;780:8,9; 790:6,6 deposition (15) 722:7,7;724:7; 731:21;732:24;737:6; 744:24;795:5;797:5; 799:15,16;835:17; 842:2;862:8;895:4 depositions (2) 722:5;895:8 deposits (1) 866:25 depth (6) 743:8;796:9,17,23; 837:5;843:7 derogatory (2) 758:22;759:9 describe (17) 734:21;800:17,21; 801:8,21;809:23; 819:18;866:9;867:13; 869:12;876:17,21; 879:5,13;880:16; 881:1,2 described (7) 814:24;834:11; 853:7;865:9;870:11; 884:5;885:18 describing (2) 866:8;893:20 description (2) 833:1;870:7 descriptions (1) 869:15 designated (2) 739:12;835:18 designating (2) 796:15;797:1 designations (4) 724:1;795:15,16; 799:18 designed (3) 731:10;743:17;796:7 desk (1) 769:22 despite (1) 748:7 detail (3) 847:15;851:11,15 details (3) 831:13;832:16; 860:24 detect (1) 880:14 detection (1) 878:22 detective's (1) 767:7 deterioration (1) 871:7 determination (4) 758:13;776:17; 778:12;779:20 determinations (3) 769:6;822:8;844:14 determine (9) 724:21;730:5; 739:25;752:25;778:24; 806:18;843:19;880:2; 884:22 determined (2) 842:18;885:3 determining (4) 789:22;802:11; 806:5;836:3 Detroit (3) 841:6;886:6,16 develop (2) 809:4;858:11 developed (1) 858:9 developing (1) 788:18 development (2) 802:7;819:22 deviation (1) 760:9 dialogue (2) 763:22;764:2 dictate (1) 745:10 differ (1) 808:15 differed (1) 808:18 difference (8) 727:20;755:24; 799:8;815:1;827:19; 830:12,14,20 different (42) 723:12;730:4;737:2; 740:8;742:18;744:4,4; 746:1;748:1;752:4,20; 757:5,9;761:3,8; Min-U-Script® SOUTHERN DISTRICT REPORTERS (7) database - different ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 774:13;777:15;779:2, 7,19;780:17;796:25; 804:12;811:17;816:22, 23;819:7;830:1; 832:23;833:12,24; 835:5,14;837:24; 838:15;841:20;843:1, 3;848:16;872:14; 877:19;879:8 differential (1) 760:19 differently (1) 780:15 difficult (1) 789:4 Digital (57) 731:15;732:21; 734:25;735:16,21; 738:10,15;741:1,23; 742:3,11;745:6; 746:12,16;747:10,10; 748:17;750:18,18; 752:18;755:23;760:5, 11,14;761:3,7,20; 762:7,13,16;763:5; 765:16,16,17,18,24,24; 766:3,6;768:19;770:8, 12,17,23;771:6,8,10, 20;772:3,5,20,22,23; 773:4,6,10;775:11 digress (1) 745:4 diligence (26) 724:18;764:1;805:4, 15;836:14,16;837:16; 838:8,23;840:6,13; 841:19,23;842:4,18,20; 844:13;855:14,16,17, 20;856:12;874:2,16; 875:6;876:4 dinner (1) 886:20 direct (14) 729:8;741:18;747:2; 748:21;753:15;755:7; 756:5,9;763:11; 798:10;800:5;845:2; 849:9;863:20 directed (3) 726:13;824:21;891:5 direction (2) 754:13;762:5 directly (8) 746:24;754:5; 774:21;792:16;806:10; 807:9;811:8;826:24 director (1) 800:25 dis-adherence (1) 730:6 disagree (1) 774:5 disappointed (1) 793:22 discourage (1) 795:13 discover (1) 837:18 discovered (1) 885:19 discovery (1) 725:2 discretion (3) 736:15;739:24; 759:13 discretionary (1) 773:8 discuss (5) 730:25;731:1;793:2; 802:14;847:5 discussed (6) 778:19;794:3;796:6, 7,11;845:3 discussing (1) 822:12 discussion (10) 730:12;731:3,5; 743:2;761:2;763:15; 793:8,12;796:22;823:2 discussions (5) 822:13,19,22; 844:24;879:17 dispute (1) 732:7 disputed (1) 732:4 disqualification (1) 728:3 disregard (1) 854:25 disrespectful (1) 731:10 dissected (1) 740:24 disseminated (1) 723:9 dissolution (1) 811:18 distinct (1) 843:23 distinguishes (1) 727:18 divided (1) 779:12 divides (1) 783:7 division (1) 740:20 document (12) 723:18;757:2;813:3, 11,19;845:20,24; 846:11;848:15,16,17; 883:5 documentation (7) 763:21,23;771:5; 872:9,10;874:5;889:8 documents (6) 724:3;725:1;739:12; 767:23;768:3;872:9 dollars (5) 757:13,14;761:18; 766:16;816:15 done (22) 728:25;732:5;733:6; 734:16;740:22;741:16; 742:1;743:4;755:23, 23;756:21;796:10; 803:21,22;821:11,22; 846:6;886:12;890:1,7; 893:22,24 dot (6) 737:18,19;738:4; 740:10;742:13;745:11 double-counting (1) 741:21 double-negative (2) 773:19,21 doubt (3) 753:2;782:8;792:23 down (40) 730:15;740:18,18; 742:18;758:11;761:19; 764:6;776:18;782:2; 788:2;790:2,3;799:20; 807:25;811:1;817:16; 820:2,19,22;843:7; 847:11;848:6;852:5; 859:6,11,16;863:12; 865:24;866:12;867:16, 16;869:16;870:20; 872:13;878:24;881:12, 13;891:12,14;893:7 downturn (1) 868:18 Dr (38) 726:9;777:2,3; 778:23;779:3,9;780:7, 17,22,24;781:1,4,5,7,7, 13,19;782:1,9,18; 783:3,13;786:3; 787:22;788:9;789:16; 790:17,19,19,20,23; 791:1,3,7,24;792:17, 17;794:15 drastic (1) 871:7 draw (12) 759:21;766:19; 811:7,22;814:5,10,12, 18;815:1,22;816:17; 817:14 drawn (4) 743:6;804:8;867:15, 16 drops (1) 782:17 DTI (11) 742:16;745:18; 752:12;753:10;754:7; 756:4,6;766:25; 772:13,14;823:21 dual (1) 811:23 Dubry (1) 723:8 ducking (1) 793:4 due (26) 731:9;764:1;768:1; 774:15;805:4,15; 810:13;836:14;837:16; 838:7,22;840:6,13; 841:19;842:4,18; 844:13;855:14,16,17, 20;856:12;874:2,16; 875:6;876:4 duly (2) 800:4;863:19 dumb (1) 834:14 dump (1) 834:21 duration (1) 860:23 during (7) 729:8;788:11;801:8; 818:20;845:13;849:3; 877:25 Dykstra (1) 849:2 E eager (1) 793:21 earlier (11) 790:18;814:24; 820:13;821:14;838:14; 847:25;853:7;878:14; 883:5,25;891:12 early (3) 812:8;820:19;867:11 earners (1) 881:24 easy (1) 842:9 economic (10) 802:11;806:16; 808:13,25;821:6; 860:16;861:1,4; 868:17,19 economics (3) 798:9;800:18;857:8 economies (1) 868:4 economy (2) 839:2,10 Ed (1) 782:23 editing (1) 832:4 edits (3) 825:11;832:1;854:13 education (1) 726:23 educational (1) 800:17 effect (2) 753:20;893:18 effective (4) 810:17;815:3; 816:11;818:17 effectively (16) 734:11,14;735:20; 803:12;806:1,25; 807:19;808:17;811:1, 9,23;812:18;815:4; 819:24;823:18;833:24 effort (1) 791:2 egregious (1) 742:25 eight (7) 729:14;730:21; 732:20;734:25;735:15; 773:14;878:11 Either (16) 736:6,7;746:15; 771:7;776:6;777:19; 787:21;792:21;809:20; 837:18;875:25;878:22; 880:18;884:21;890:23; 891:25 electronic (3) 741:2,25;742:2 element (2) 746:7;811:19 eliminate (1) 732:16 eliminated (1) 834:6 eloquence (1) 840:2 else (15) 726:1;735:18; 736:25;757:3;758:20; 759:16;762:20;784:9; 788:7;812:3;817:1; 824:7;831:24;844:19; 885:11 else's (1) 774:22 elsewhere (3) 833:18,20,20 Email (6) 845:2;846:18,21; 847:24;849:9,11 emails (3) 846:14,14;847:6 emerges (1) 754:23 employed (2) 740:16;863:24 employee (9) 795:5;800:8;872:18, Min-U-Script® SOUTHERN DISTRICT REPORTERS (8) differential - employee ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 19,23;883:21;885:12, 16;893:3 employees (3) 873:13,14;874:14 employer (3) 738:22;882:22; 883:11 employing (1) 739:24 employment (2) 748:20;866:25 enable (1) 789:23 encompassing (1) 806:5 encountered (1) 734:19 end (15) 764:25;793:14; 797:4,10;807:18; 809:19;812:13;815:12, 16;816:14;820:11; 847:6;864:5;865:19; 887:6 ended (1) 810:22 ending (2) 868:17;887:19 endless (1) 840:11 endorse (1) 786:2 engaged (1) 763:21 engagement (1) 735:2 engine (2) 752:9;831:7 enlisted (1) 805:25 enough (8) 728:25;750:2,6,7; 778:14;785:25;819:14; 894:16 ensure (1) 836:21 enter (4) 730:1;837:11,16; 871:19 entered (9) 730:2;742:15; 753:23,24,25;859:23; 860:3;862:25;882:6 entering (2) 814:6;861:22 enters (2) 811:4,6 entire (8) 744:10;754:19; 780:4;787:19;806:9; 820:1,23;821:3 entirety (1) 733:8 entities (6) 803:11;875:23; 876:3,8;878:4;879:19 entitled (3) 784:17;857:4,4 entity (5) 808:12;865:22; 874:21;884:23;885:16 entries (3) 802:12;806:19; 891:15 entry (5) 768:16;888:15; 892:2;893:16;894:7 Equity (18) 798:8;807:2,3,3,9, 19;808:2,15;810:17; 816:22;820:24;826:10; 844:1,5;867:14,25; 868:15,19 erroneously (1) 855:8 error (14) 767:3,20;769:11,17; 781:16;789:4,6;790:4, 7,8;855:7,9,22;856:16 errors (4) 738:14;752:2; 834:10;835:9 essence (1) 782:17 essential (1) 746:7 essentially (6) 745:6;747:10; 750:11;756:1;771:2; 841:3 established (1) 867:25 establishes (1) 754:11 establishment (1) 866:16 estimate (5) 781:14;789:23,25; 790:12;859:13 estimates (1) 790:1 et (2) 738:22;884:11 etc (2) 834:11;835:9 evaluated (1) 776:19 evaluating (1) 728:2 evaluation (2) 790:22;858:23 even (37) 725:9;728:5;731:19; 732:22;733:12,21,25; 734:16;735:1,17; 736:2;741:8,10,20; 742:4,25;743:1,25; 749:5;763:11;764:11; 766:17;780:22;781:14; 782:23;791:2;799:12; 834:13;836:8;838:10, 11;841:11,22,23; 854:18;886:11;887:1 event (1) 812:7 events (2) 811:13;846:1 eventually (1) 883:25 everybody (2) 812:3;816:25 everyone (1) 769:3 evidence (46) 722:15;726:7,20; 729:25;730:1,2; 731:17;732:3;739:18; 741:2;745:25;746:9, 10;747:17;748:7; 753:18;754:11;755:10; 758:3;765:9;779:4; 781:23;783:1;784:6, 10;788:3,24;789:2; 792:19;793:18;798:12; 804:10;813:13,17; 837:23;840:8;842:5, 12;848:11;850:16; 885:17,25;886:5; 888:1,2,12 evidenced (1) 748:2 evident (1) 832:16 evolutionary (1) 853:13 exact (3) 838:9;851:6;889:16 exactly (6) 722:19;729:2;781:2; 790:16;791:20;792:11 examination (7) 725:18;753:15; 769:19;785:9;800:5; 853:3;863:20 examinations (1) 858:23 example (16) 723:1;724:14; 755:21;770:22,23; 774:16;778:25;779:12; 793:8;822:21;826:3; 832:13,14;841:6; 866:20,22 examples (3) 757:12;821:24; 879:16 exceeded (3) 752:8,10;788:13 exceedingly (1) 757:16 exceeds (1) 750:15 exceptions (1) 763:24 excerpt (3) 722:7,7,11 excerpts (1) 722:25 excess (2) 788:17,20 excessive (1) 795:12 exclude (3) 726:6,9,20 excluded (4) 727:4;774:16;781:4, 4 exclusion (1) 731:11 exclusively (2) 871:23;880:18 excuse (3) 776:24;790:19; 881:13 excused (1) 863:13 executed (1) 806:18 executive (3) 800:11;864:2;892:16 exercise (14) 741:25;742:1,2; 753:9;762:2;765:21; 778:7;855:14,16,17,20; 856:12,16;862:6 exercises (2) 740:4;805:4 exhibit (27) 722:15;723:1,2,7,23, 24;724:4;733:1; 772:17;773:13;774:12; 781:22,23;782:25; 783:11;813:13,17; 845:7;846:4;847:8,23; 848:11,13,14;856:20; 887:15;888:12 exhibited (1) 785:13 exhibits (5) 722:18,25;723:24; 771:8;796:16 existed (6) 748:18;749:1; 776:17,24;820:18; 882:3 existence (1) 754:15 existing (5) 724:25;747:12; 771:13;832:21;833:23 exists (3) 736:15;753:12; 881:23 expanding (2) 871:24;872:11 expect (3) 743:25;785:14; 832:12 expectancy (3) 796:14;842:23;843:6 expectations (4) 808:8;859:18,20,20 expected (7) 764:16;793:22; 815:12,13,16;840:23, 25 expediently (1) 811:11 expense (2) 849:23;850:19 expenses (2) 847:12;848:6 experience (17) 727:13;728:8,14,16; 729:7;762:8;764:4; 801:24;804:11,17; 805:18;864:21,22; 867:20;868:18;878:8, 13 experienced (1) 860:12 expert (39) 726:9,22,25;727:9, 19,23,23,24,25;728:15; 736:9;743:25;744:1; 746:23,25;753:6,25; 757:21;766:7;768:1,8, 14,15,25,25;774:16; 775:13;777:3;778:23; 784:22,22,24,25;785:3; 789:10,11,21;790:20; 831:5 expertise (3) 728:10;747:6;831:9 experts (8) 728:5;729:17; 734:20;765:7;768:10; 769:5;776:4;895:13 expert's (2) 753:3;783:14 expire (1) 875:14 expiring (1) 875:14 explain (3) 776:11;859:15;873:8 explained (3) 754:5,6;759:25 explaining (1) 792:17 explanation (2) 736:21;755:4 explicitly (1) 831:1 exposed (3) Min-U-Script® SOUTHERN DISTRICT REPORTERS (9) employees - exposed ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 868:2,6,8 expound (1) 771:25 expressed (1) 812:14 expressing (1) 841:11 expressions (1) 766:5 extend (1) 871:1 extended (4) 871:10;873:1,5; 874:1 extending (2) 870:13;873:4 extensive (6) 819:20;820:8; 821:15;842:15;843:1; 866:12 extensively (1) 745:17 extent (12) 738:3;746:11; 748:10;754:17;776:12; 788:10;803:22;804:9; 811:2;812:3;844:10,13 external (1) 818:9 externally-issued (1) 810:4 extraordinarily (1) 744:5 extrapolatable (1) 778:14 extrapolate (6) 761:14;763:17; 779:14;783:15;784:15; 787:19 extrapolated (1) 780:3 extrapolating (3) 782:18,21;843:4 extrapolation (3) 776:3,10;779:21 extreme (1) 886:10 exude (1) 743:24 F face (11) 728:6;736:18;737:4; 739:12;748:2;750:24; 757:11;815:5;884:14; 887:17;894:12 facetious (1) 893:6 facial (2) 741:17;758:21 facially (3) 729:18;736:24; 758:23 facilitate (1) 877:11 facility (1) 877:10 fact (34) 728:7;729:12; 732:13,24;735:16; 737:6;739:4,6,18; 740:2,22;741:24; 753:1;754:20;756:22; 763:2;775:5;778:16; 796:23;804:3,7; 817:19;837:6,15; 838:21;839:3,3,23; 846:6;848:2;859:16; 860:16;862:1;889:17 factor (1) 762:16 factors (5) 745:20;759:9; 812:22;815:10;823:16 facts (3) 727:1;735:12;747:10 failed (2) 736:24;748:10 failing (1) 835:9 failure (5) 737:14;783:25; 784:4,16;788:25 fair (15) 789:20;807:17; 814:13;815:6,7,8; 816:6;825:24;854:16, 17;856:5;859:9; 864:14;887:21;892:21 fairly (5) 778:8;787:17,18; 819:20;871:7 Fall (1) 871:24 falls (1) 868:5 false (2) 787:5;837:20 familiar (9) 828:6,14,16,20; 858:13;869:8;870:2; 887:9;889:5 familiarity (6) 826:20,21;828:13; 831:9;856:6;859:15 family (2) 865:19;879:9 Fannie (5) 743:2;803:8;804:4; 867:7;882:15 far (14) 741:23;742:23; 764:10;767:2;788:2, 13;799:13;816:5; 820:15;826:1;831:25; 834:17;843:14;869:3 farther (1) 839:10 fashioning (1) 871:5 fault (5) 738:24;833:2,2; 837:14,19 fax (1) 889:1 February (2) 891:13;892:21 fed (1) 774:6 Federal (4) 726:7,19;765:8; 802:17 fees (2) 860:20,22 fell (2) 731:2;869:3 fellow (1) 844:18 felt (3) 775:15;822:4;865:20 female (1) 892:18 few (7) 722:4;778:10;786:8; 787:9;793:3;802:14; 814:1 FICO (8) 754:8;869:15,18; 870:12,22,25;871:2; 882:5 FICOs (2) 870:13;882:13 field (7) 726:22;777:4; 779:15;784:25;832:19; 851:14;874:14 fields (3) 789:11;823:13; 842:15 figure (5) 785:22;840:23; 849:25;850:21;859:2 figures (1) 894:5 figuring (1) 838:9 file (67) 733:6,7,14,17,18,19, 21;734:4;735:9,18; 736:13,18;741:3,16; 742:10;748:1,1,9,12, 15,15;750:7;753:1,21, 22,23;755:22;757:11; 758:9,16,21;759:1,2, 19;760:20;762:7,9; 766:14;767:9;768:1, 25;769:1,22;770:11, 20;771:18;772:3,4,5,5, 19;773:4;776:14,18,18, 19,22;778:11;836:21; 842:21;855:21;856:17; 881:16;883:2;890:4,5, 9 file-level (2) 838:23;841:19 files (55) 723:10;731:20,24; 732:14,23,25;733:5,15; 735:13;736:23;741:15; 742:3,12;747:25; 752:14,18;758:16; 759:22,25;760:5,7,13, 13,25;761:4,16,17; 763:3,7,9,11;764:15; 765:25;767:25;769:15, 15,17;772:7;776:8; 784:9;785:7;788:25; 842:14,14;853:20,24; 854:3,6,9,15,19,22; 855:3;856:13;887:9 filing (1) 813:8 filings (1) 740:20 fill (2) 829:3;840:12 filled (1) 773:24 filling (1) 851:18 final (4) 769:2;850:22; 851:21,23 finally (3) 765:11;820:10; 893:14 finance (1) 800:20 financial (23) 748:6,20,24;749:8; 768:23;801:21;802:10; 806:20;841:8;862:6; 883:11,16,22;884:6,10, 19,22;885:12;886:17, 18,21;890:15;894:5 financially (1) 874:19 financials (3) 874:9,10,18 find (8) 724:8;771:19; 777:20;832:18;833:8, 16;851:24;891:19 finding (10) 742:19;755:11; 760:14;769:12;772:25; 773:17;774:5,6;775:3, 5 findings (18) 723:16;724:14; 731:14;744:24;747:9; 755:19;756:20,23; 760:5;762:17;763:16; 764:13;769:7;771:12, 12;772:16,22;773:9 finish (2) 799:12;895:12 fire (1) 727:25 firm (6) 722:16;725:3,4; 765:1;769:14;842:20 firms (2) 734:4;836:16 first (65) 722:25;723:13; 727:4;732:1,23;733:9, 10;737:14;739:1,2; 743:24;746:8;747:18; 753:19;755:17;756:8; 759:8,24;760:24; 764:4;770:10;777:16; 780:4,25;785:11,12; 789:16;791:6;798:5; 801:6;802:3;803:21, 24;806:2;808:12; 810:3;818:20;819:10, 25;820:1,13;821:3; 832:17;836:6;843:9; 846:14,18;847:2,4,24; 849:14,16,17;850:4,5, 6;853:17;856:2; 857:24;861:2;862:16; 867:7;868:14;884:3; 891:15 first-line (1) 768:15 firsts (2) 849:15;850:7 fit (2) 865:20;866:7 fits (1) 787:14 five (8) 733:16,16,18; 741:15;750:7;756:20; 844:18;884:11 five-minute (2) 852:5,6 flag (5) 743:23;746:2; 750:12;752:11;771:17 flagged (3) 768:17;771:20,20 flags (1) 742:17 Flagstar (151) 722:8,10;723:8; 724:9,17;725:7,18; 726:19;730:13;731:1; 739:16,18,23;746:3; 749:2;752:3;754:25; 763:22;764:3;767:5, 10;775:19;784:5; Min-U-Script® SOUTHERN DISTRICT REPORTERS (10) expound - Flagstar ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 798:8;800:8,10,11,12, 14;801:4,8;802:11,16, 17;803:20,21;804:3, 17;805:6,19,24;806:7, 8;807:3,9,16;808:5,12; 809:25;810:9,14,15,19; 811:8,22,24;812:3,5, 14;814:18,24;815:4, 22;816:15,17;817:5,10, 14,17;818:14;821:6; 826:13,14,16,17,18,20; 827:6,7,8,23;834:20; 837:7;840:8;841:4; 842:13;843:19,24; 849:23;850:20;853:8, 17,24;855:17;857:12; 860:16;861:1,23; 862:1;863:1,5,25; 864:3,7;865:4,15,20, 25;866:7,9,9,20;867:5, 10;868:22,25;869:3,9; 870:25;871:13,21; 872:1,20,25;873:4,7,9, 15,17,19;874:1,7,16; 875:2,7,9,15,18;876:4, 12,16;882:6;883:13,18, 19,20;884:1;887:10; 888:13;893:3;894:2 Flagstarcom (1) 893:9 Flagstar's (37) 729:24;730:8;745:9, 11,12;750:15;758:2; 803:2,3;805:18; 806:20;807:21;808:1, 15;813:6;816:22; 817:6,14,23;820:13; 824:4;835:13;836:17; 837:4;843:9;857:7,16; 860:15;861:14,18; 868:20;869:13;870:21; 876:15;880:10;889:23; 890:21 flawed (1) 779:24 floor (2) 870:25;876:20 floors (3) 869:15;870:12,22 flow (3) 806:25;815:11; 849:16 flows (6) 809:15,16,20;811:7; 812:12,13 fluctuations (2) 868:1,3 fly (1) 764:5 focus (1) 843:6 focused (6) 728:18;744:21; 750:1;754:14;880:11, 18 focusing (5) 784:13;786:6;864:9; 866:10;876:25 foibles (1) 764:9 folder (1) 772:23 folders (3) 770:15,16;773:10 folks (3) 741:11;774:2;822:18 follow (2) 779:10;822:6 followed (2) 834:10;837:18 following (3) 785:11;798:7;893:9 follows (2) 800:4;863:19 follow-up (1) 851:2 foot (1) 728:21 forbearant (1) 893:21 force (1) 839:1 forces (1) 811:9 forecast (1) 812:22 foremost (1) 727:4 forfeit (1) 816:15 forget (1) 828:6 Forgive (2) 732:11;833:1 form (11) 726:23;805:2; 825:21;829:3;832:12; 833:10;834:15;838:17; 845:1;862:18,21 format (1) 832:6 formats (1) 827:18 former (1) 795:5 forms (3) 845:3;878:25;879:8 formula (4) 779:5,7,7;787:12 forth (9) 723:17;728:16; 780:25;803:8;820:10; 822:13;844:23;846:8; 877:22 forward (3) 746:21;809:6;843:17 found (11) 733:13;749:7; 750:17,19;769:13,15; 772:21;832:21;839:4; 855:10,13 foundation (1) 819:3 foundational (1) 866:2 four (20) 733:8;744:23;745:2; 752:19;755:15,20; 756:3,20,23;759:22; 760:4,22,25;761:22; 765:15;775:20;869:21; 870:5;881:7;889:14 four-week (1) 733:13 frame (3) 782:15;849:4;851:15 framework (1) 858:11 frank (1) 727:18 frankly (1) 787:1 fraud (29) 724:23;731:15; 738:15;741:10;742:17; 744:17;748:2,3,8; 749:18;750:22;752:2, 5;757:11;760:6,7; 762:17;767:3,20; 772:21;773:13;789:6; 875:24,25;876:1; 878:21,22;880:14,18 fraudulent (1) 886:12 Freddie (4) 803:8;804:4;867:7; 882:15 freely (1) 762:21 frequency (4) 868:6,9,18;871:8 frequent (2) 851:7,9 front (7) 722:20;799:21; 807:22;844:2;856:21; 864:5;887:21 frustration (2) 781:17;783:2 FSA (11) 842:18;843:7; 844:15,23;847:13,18; 848:7,22;849:24; 850:21;851:5 FSA's (3) 836:18;847:16; 851:11 full (3) 779:15;788:14; 797:20 fully (2) 779:10;866:22 function (2) 840:21;867:12 Functionally (2) 864:3;872:23 fund (2) 814:7,10 fundamental (1) 882:16 funded (5) 811:7,8;814:18; 815:22;817:14 funding (1) 811:22 fundings (1) 816:18 funds (2) 872:20,22 further (8) 733:5;776:16; 777:10;794:2;798:13; 827:12;863:9;875:15 future (2) 848:3;858:23 G gain (3) 861:4,7,9 game (5) 764:21;768:5;808:5, 9;843:24 gap (2) 760:17;762:3 gaps (2) 825:25;851:18 garbage (3) 841:3,10;851:22 garbled (1) 764:25 Garrick (3) 722:7;723:8;724:2 gather (1) 880:8 gathered (2) 747:10;750:19 gave (8) 732:9,23;753:20; 772:4;820:23;823:8; 828:10;838:8 Gaylor (2) 781:21;782:23 GE (2) 865:6,16 general (6) 731:3;735:25;790:1; 869:11;881:2;892:5 generally (7) 724:10;725:7; 746:20;828:21;870:2; 871:1;879:7 generate (2) 743:9;773:9 generated (2) 762:15;858:21 generating (1) 802:12 generic (2) 830:15;891:10 gentleman (2) 886:3,5 Geoff (2) 885:12,21 geographic (1) 843:2 geographies (1) 877:19 George (2) 848:24,25 Ginny (1) 803:8 gist (1) 726:10 given (16) 726:12;737:22; 745:14;748:19;759:1; 766:3;770:7,8,11; 793:7;805:18;821:14; 833:10;859:15;892:21; 895:3 giving (2) 799:18;893:18 glad (2) 775:14;893:4 global (1) 797:6 goal (3) 820:1;851:20,20 go-between (3) 806:7,8;818:14 goes (20) 725:11;738:24; 744:10;746:1;752:23; 754:5;761:25;764:23; 769:20;775:8,12; 778:17,20,20;781:2; 790:2,2;798:15;839:8; 886:8 gofers (1) 745:6 good (23) 723:1;737:25;743:5; 749:18;756:23;757:15; 765:3;774:15,24; 797:14;799:23;800:7; 820:25;835:1,1;844:8; 850:25;853:5;863:22; 865:20;866:7;871:19; 888:11 gotcha (1) 768:5 government (4) 803:9,10,13;875:23 grade (1) Min-U-Script® SOUTHERN DISTRICT REPORTERS (11) Flagstarcom - grade ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 836:17 grading (1) 836:18 gradually (1) 873:1 grammar (1) 847:7 granting (1) 793:13 grasp (1) 791:25 grave (1) 893:5 great (2) 777:3,5 greater (3) 871:2;877:16;881:5 greatly (1) 752:8 grid (1) 740:5 grievous (1) 788:24 Griggs (1) 895:14 Groton (1) 748:20 Ground (4) 807:6;825:17;845:8; 855:25 grounds (3) 824:23;868:10;888:4 group (23) 731:12;732:20; 748:20,24;749:8; 756:7,8,19;801:16; 809:6;841:8;877:17; 883:11,16,22;884:6,10, 19,23;885:12;886:18, 22;890:15 grouping (1) 727:7 growing (1) 817:11 GSE (2) 803:15,16 GSEs (1) 803:14 guarantee (1) 803:9 Guaranty (1) 861:24 guess (9) 738:4;771:16; 774:25;785:24;831:5; 834:19;863:2;867:16; 871:17 guidance (3) 730:20;773:15,25 guide (1) 754:12 guideline (9) 752:1;758:5;759:15; 760:15;762:20;766:11; 767:1,2;842:17 guidelines (83) 722:17;724:23; 729:10,24;730:7,7,8,8, 9,13,16,23;731:1,2; 736:11;738:12,17; 739:17,23;740:7,25; 744:18;745:10,11,12, 14,16,17,20,22;746:5, 8,9,10,10;748:10; 750:15;754:15;756:15; 758:2,4,24;760:9; 761:2;762:24,25; 763:2,16;766:12,22,25; 767:22;769:4;784:5,6, 7;789:1,3;803:8; 828:15,16;834:10; 835:8;836:17;837:13, 18;838:3,4,19;839:21; 840:9;869:4,8,13,22; 870:3,4,22;871:4,5; 882:16,17;885:7 Gupta (1) 797:22 H half (1) 725:22 hand (3) 722:22;748:15; 814:15 handed (5) 758:16;770:16; 848:13;856:20;883:5 handled (1) 873:15 hands (2) 806:3;843:7 handwritten (2) 889:9;894:5 handy (1) 766:2 Hang (1) 789:19 happen (6) 769:12;773:9; 785:21;793:21;831:10; 885:6 happened (4) 764:1;773:14; 783:18;885:6 happening (2) 782:18,21 happens (3) 763:24;811:22; 831:21 happy (4) 725:23;745:21; 748:4;795:11 hardship (4) 889:2,9;893:14,23 harsh (1) 749:20 head (14) 731:11;734:12; 800:12,15;801:1,17; 818:21,24;819:2; 841:11;843:12;864:14, 19;865:18 headquarters (3) 874:4;876:19;877:10 heads (1) 734:20 hear (31) 724:11,16;726:4; 730:25;731:1;735:14; 739:15;741:18;742:22; 743:13;757:19;758:7, 13;759:16;761:2; 762:19;765:11;769:21; 771:23;773:14;775:17; 784:20;789:10,12; 795:19;797:6;822:7; 824:17;836:12;839:6; 844:12 heard (20) 724:7;727:19;731:3; 732:3;733:10;734:21; 746:15;747:9,21; 752:19;757:22;758:8; 759:16;760:20;764:14; 784:10;795:19;799:20; 819:5;843:14 hearing (6) 727:16;732:3; 771:25;797:2;819:7; 836:7 hearsay (16) 746:25;747:1,5,7; 761:9;765:6;774:10; 824:23;845:9,11,14; 846:10,24;847:25; 848:1;888:3 heavily (2) 748:16;809:3 heck (2) 767:21;768:23 hedging (1) 801:12 heightened (1) 877:23 held (3) 858:18;865:16; 889:17 HELOC (18) 723:14;746:6,6; 802:1;809:9;814:3,13; 820:1;827:23;828:6; 833:3;849:14;850:6; 867:8,14;870:23; 879:6;891:10 HELOCs (24) 723:19,20;725:5; 811:7;821:4;867:10, 12,13,20;868:21; 869:9;871:1,10,21; 872:1,25;876:6,12,15; 877:2,25;878:9,15; 879:1 help (7) 743:18;805:25; 806:1;836:10,22; 865:23;880:13 helpful (3) 742:22;776:13; 849:13 helping (1) 769:5 Here's (5) 752:1;753:9;754:4; 766:24;785:20 herself (2) 735:18;765:4 hesitated (1) 825:7 hey (1) 768:21 high (11) 746:5;750:13;754:6, 8;787:3;867:25;868:2, 7,14;870:13;871:1 higher (5) 762:15;828:2; 868:18;882:5,13 highly (2) 753:4,5 himself (1) 748:4 hired (4) 727:22;731:12; 743:18;840:7 hires (1) 727:22 hiring (1) 866:13 historic (1) 762:3 historical (1) 752:10 historically (4) 743:4;826:19;827:9; 864:21 history (5) 794:5;822:1;876:9; 882:18;891:5 hit (1) 784:15 hoc (1) 802:5 Hold (4) 789:17;806:3; 862:14;888:22 holders (4) 809:16,17;811:9; 817:13 Home (7) 798:8;820:24; 826:10;867:14;869:19; 886:20;889:12 Honor (172) 722:18,24;723:25; 724:17;725:14,23; 726:2,5,10,17,21; 727:8,9,10;728:4; 729:3;730:3;731:25; 732:12,18;733:13,25; 734:8,11,24,24;735:7; 736:16,16,22;737:5,9, 13;738:6,23,24;740:5; 741:1,17;742:1,25; 743:11,15;746:13; 747:4,9;748:17; 749:15,21;750:23; 753:8,13;754:1; 756:23;757:15,20,24; 758:2,15,17;759:3,3,9; 760:4;761:14,24,25; 763:7;764:8,12,20; 765:10,13;766:4; 769:14,24;770:14,23; 771:9,25;772:8,24; 774:3,4,15,18;775:8, 18,22,25;777:12,24; 778:6,22;780:2,22; 781:1,11,22,24;782:14; 783:18,22;784:1,2,7, 13,21;785:8;787:1; 789:14;791:22;794:9, 19;796:1;797:8;798:3; 799:24;800:1;803:19; 804:1,13;805:21; 807:7;812:24;813:15; 820:4;821:8,12; 824:16,24;825:12,16; 830:18;835:11,18,22; 836:10;837:22;838:14; 839:7;841:13;842:7; 843:16;844:12;845:5, 7,16;846:4,5,25; 847:16;852:4;862:20; 863:9,11,15;866:3; 887:5,14;888:3,9,19; 889:15;890:2,8,18; 891:2;894:14,18,21; 895:3 Honor's (1) 757:10 hoping (1) 879:22 hour (2) 725:23;881:7 hours (7) 733:13;749:25; 750:4,6,9;795:4;798:9 house (1) 840:20 housekeeping (2) 795:1;799:8 housing (1) 868:4 Min-U-Script® SOUTHERN DISTRICT REPORTERS (12) grading - housing ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 huge (2) 744:2;754:20 hundred (4) 761:18;802:23,23; 817:15 hundreds (2) 749:25;804:3 hypothetical (2) 750:9;839:24 I idea (4) 742:11,14;750:3; 762:13 identified (7) 752:14,22;753:16; 755:5;798:6;820:13; 823:2 identifies (2) 814:12;823:3 identify (7) 736:17,22,24;823:1; 825:25;826:3;851:19 identifying (1) 822:25 IDM (1) 889:2 ignored (1) 741:2 I-know-it-when-I-see-it (1) 761:20 immediate (2) 833:9,9 impact (4) 806:20;812:23; 827:15,16 impeachment (1) 761:25 implication (1) 834:20 implications (1) 806:16 implicit (1) 856:7 implies (1) 817:20 imply (1) 857:23 import (1) 877:7 important (4) 728:2;754:4,10; 788:12 importantly (2) 737:13;841:4 imprimatur (1) 774:2 improper (1) 773:8 improperly (2) 782:16;783:12 in/garbage (2) 841:3,10 inability (4) 764:11,12;774:10,11 inaccuracies (1) 764:13 inaccurate (1) 764:25 inadequate (1) 841:24 inappropriate (1) 773:7 in-between (1) 744:24 Inc (4) 883:11,22;884:6,10 inclined (1) 793:4 include (5) 737:20;742:4; 834:12,12;880:23 included (9) 725:19;770:10; 783:12;786:8;819:25; 848:5;849:24;850:20; 856:13 includes (2) 794:16;857:20 including (5) 724:22;725:1; 769:12;818:25;846:8 inclusion (1) 833:5 income (62) 737:4,6;738:5,9,19, 21;739:4,5,8,13,14,15, 19,20,21;740:3,8,12; 741:1,25;750:13,14,24; 752:4,7;755:2;759:12; 760:17,18;768:17; 773:13;806:21;823:19; 828:19,24,25;829:1,4; 830:3,3,7,7,22;832:16, 19;841:8;855:8; 856:16,17;865:12; 866:25;878:20,20; 881:11,18,20,22,23,25; 882:10,21;887:4 incoming (1) 809:15 inconsistencies (1) 733:2 inconsistent (1) 862:17 incorrect (2) 726:14;738:23 increase (14) 736:12,19;744:21; 745:1;754:16;755:18; 758:7;766:8;767:15; 814:23;815:2,25; 816:9;866:19 increased (2) 767:19;815:9 increases (1) 756:1 incurred (1) 762:22 Indeed (1) 748:2 independent (2) 769:1;842:6 in-depth (2) 839:3,4 Indiana (1) 872:8 indicated (15) 732:5;778:2;793:8; 795:3;849:16;856:5; 870:21,25;874:23; 875:6,15;877:4; 878:14;889:19;890:11 indicates (1) 885:18 indicating (2) 889:10,24 indicia (1) 748:7 indirect (2) 747:2;762:1 indirectly (1) 850:13 individual (6) 753:21;759:19; 776:15,18;875:24; 885:9 individually (1) 776:19 individuals (2) 734:15;881:16 industry (15) 729:10,17,18,22; 730:9,14,16,17,22; 864:23;865:21;868:4; 871:18;882:9;894:3 inference (1) 758:19 inferred (1) 836:25 inflate (1) 880:21 influenced (1) 753:14 inform (1) 771:13 information (32) 740:16;741:14; 742:5;747:16;762:6; 796:11;803:20;823:12, 14,14,17;835:24; 836:20,22,23;837:6; 842:14;843:2,3,3; 850:3;853:8,15,17,21, 25;859:12;880:2,3,8; 885:21;886:23 inherently (1) 738:6 initial (5) 787:4;816:18; 818:13;823:12;861:13 initially (2) 814:4;859:23 inject (2) 775:15;807:9 injection (2) 807:19;810:17 innocent (3) 737:8;764:12;773:6 input (16) 732:20;742:5,12,12; 762:8,10,12,14,14; 770:11,12;771:1,4; 772:12;773:23;774:2 inputs (5) 742:7;762:6;773:8,9; 774:13 inputted (1) 769:16 inquiries (3) 755:3;847:16;851:11 inquiry (1) 780:3 instance (4) 763:25;822:25; 861:3;873:9 instances (2) 857:15;881:20 instead (3) 752:21;762:9;825:10 institution (1) 748:25 instruction (1) 731:19 instructions (1) 734:5 instruments (1) 756:2 insurance (5) 805:3;806:7;811:20; 865:6;879:19 insure (3) 836:4,5;843:11 insurer (5) 805:7;809:19;810:8, 13;824:10 intake (1) 828:11 integrated (1) 866:22 integrating (1) 866:24 integrity (7) 837:1;838:22,23; 841:6;842:20;853:7; 876:9 intended (1) 799:14 intentional (1) 737:11 interaction (1) 801:20 interest (63) 788:22,23;801:12; 806:24;807:2,3,23,25; 808:13,20;809:1,7,11, 22,24;810:4,15,19,20, 21,22,24,25;811:15; 812:1,6,10,11,14,20,20, 23;813:22;814:9,9,14; 815:5,6;816:6,21,22, 23;817:18,23;818:5,8; 819:1;844:1;851:13; 857:9,11;858:3,15,16; 859:3,6,16,25;860:2, 16;861:14,19;863:4 interested (1) 854:22 interesting (3) 730:10;742:1;793:5 interests (5) 806:22,23;808:10; 814:2;815:11 interim (1) 816:23 intermingled (1) 725:5 internal (5) 722:12;741:7; 825:23;826:2;854:13 internally (1) 826:5 Internet (2) 779:5;884:22 interpretation (1) 771:3 interpreted (1) 729:11 interpretive (1) 770:10 interrupt (2) 734:1;742:20 interrupted (1) 861:6 interrupting (2) 732:11;793:24 interruptions (1) 797:21 interval (1) 781:16 interview (1) 731:13 interviewee (1) 749:19 interviewer (4) 748:22;749:12,19; 767:4 interviewer's (2) 883:10,10 interviewing (1) 884:25 into (66) 724:18;730:1,2,16; 732:2;733:14;735:11; Min-U-Script® SOUTHERN DISTRICT REPORTERS (13) huge - into ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 738:15;739:18;740:14, 18,19;753:15,23,24,25; 755:9;756:5,6;761:15; 766:21;772:12,16; 775:16;779:13;784:6; 792:18;807:4,10,19; 809:10;811:4,6; 812:19;813:13;834:22; 835:5,16,20;836:2; 837:11,16;843:8,20; 849:11;850:1;851:14; 858:2,15;859:23; 861:2,8,9,22;862:11, 25;864:13;867:10; 868:2,16;871:8,19; 875:19,23;882:6;888:2 introduced (1) 792:18 introducing (1) 878:23 inundated (1) 741:13 inventory (1) 821:3 invest (1) 866:18 invested (3) 807:3;826:23;866:15 investor (1) 869:19 invite (1) 768:7 involved (13) 737:21;760:5; 818:10,22;819:4,9; 826:14,15,17,18; 851:16;855:20;871:10 involvement (1) 819:18 involves (1) 804:25 involving (1) 776:6 irrelevant (5) 804:10;840:20; 841:19;842:4,6 is/does (1) 847:5 issue (25) 723:22,23,24;729:5; 730:15;731:14;736:18, 23;760:22;761:24; 762:3;775:23;790:11; 794:3;802:2;804:8; 806:15;818:11;825:7; 838:24;840:1,3,10; 862:25;863:2 issued (6) 724:22;733:9; 748:25;807:11;809:12, 14 issues (15) 725:8;730:23; 736:20;740:23;741:18; 755:2;757:3;775:19, 20;793:5;801:11; 820:14;839:4;844:10; 868:19 item (3) 729:16;790:2;846:14 items (3) 823:15;835:15; 849:13 iterative (1) 764:17 it-type (1) 735:22 1 1anuary (6) 781:17;782:3;783:2; 786:10;893:15,15 1ean (2) 722:7;723:8 1eff (3) 847:4;849:3;895:13 1effrey (2) 849:2;851:7 job (9) 734:6,10,16,17; 800:23;864:9,11; 885:9;889:23 1ohn (1) 895:13 join (1) 801:4 joined (1) 801:6 1oseph (1) 726:9 1P (35) 802:6;805:25;806:4, 10,12;809:3;818:14; 819:25;820:8,23; 821:3;822:9,16,16,17, 18,20,22;823:8,10; 824:4,10,12,12,19,20, 22;825:2,4,10,15,19; 826:1;853:9,12 1PMorgan (2) 843:19;849:8 1udge (14) 722:20;723:11,19; 724:13;734:21;775:21; 779:9;783:13;784:4, 18;790:17,18;791:4; 834:14 judges' (1) 737:20 judgment (9) 747:6;765:21,24; 772:8;778:7;784:17; 837:23;839:9,25 1une (4) 813:8;814:21; 815:23;857:4 1ursek (33) 798:6;800:1,2,7; 801:4,14,19;802:16; 804:17;808:9;811:16; 812:10;813:3,19,24; 814:15;818:10;820:7; 823:8;825:15;834:6; 835:13;837:3;844:22; 845:12,20;846:11; 847:17;848:13;852:2; 853:5;858:7;862:24 1ursek's (2) 818:24;834:23 K Kate (1) 893:4 keep (2) 799:11;821:7 kept (2) 844:1;851:18 Kevin (1) 764:22 kind (13) 730:4;741:5;748:2; 756:10,13;758:9; 786:1;787:14;807:9; 822:21;837:4;878:18; 889:25 kinds (4) 755:4;757:3;771:7; 843:1 kite (1) 764:5 knew (5) 774:14;780:12; 798:6;831:12;862:25 knocking (1) 821:1 knowledge (13) 726:22;733:24; 761:10;772:24;818:20; 819:6,15;821:13,15,18; 824:19;825:18;826:21 knowledgeable (2) 728:25;777:4 known (8) 753:22,23,24;754:2; 781:9;834:17;865:21; 885:22 knows (2) 726:21;727:23 Kumho (2) 736:4,7 L labeled (1) 770:20 Labor (1) 752:9 lack (13) 729:18;736:4; 754:24;761:4;774:9,9; 805:18;806:2;818:20; 819:6,15;821:12; 825:18 lagged (1) 859:20 language (1) 760:7 large (2) 818:12;889:4 largely (1) 865:9 larger (5) 777:14;779:8,15; 780:15,20 last (15) 729:3;742:24; 748:21;749:11;795:1; 814:1;839:8,19; 840:24;847:11;859:9, 17;877:14;883:9;895:3 late (3) 741:14;812:9;894:21 later (9) 759:6;763:4;768:2; 837:18;859:5;872:12; 880:10;889:14;890:5 latter (5) 832:13,14;881:12, 12,13 laundering (2) 740:15;867:1 law (7) 731:9,11;734:13; 758:20;765:1;769:14; 775:9 lawsuit (2) 764:9;767:25 lawyering (1) 764:9 lay (1) 741:6 layers (1) 764:23 leaders (1) 866:13 leading (5) 805:8;807:7;846:23; 866:1;873:22 leads (3) 761:4;764:12,14 learn (2) 768:8;793:22 learned (1) 725:2 least (9) 727:3;732:19; 746:22;787:24;820:9; 837:1;840:5;844:16; 886:3 leave (2) 770:25;792:23 Leaving (1) 768:17 led (2) 759:15;762:20 left (10) 733:16;806:25; 812:13;815:16;892:7, 8,9,15,19;893:12 left-hand (1) 781:24 leisure (1) 795:12 lend (1) 779:20 lenders (2) 869:2;875:22 lending (1) 868:14 lends (1) 753:3 length (4) 745:19;838:8; 874:21,21 lengthy (1) 819:14 less (13) 725:22;733:16; 737:8;750:18;791:7, 14,17;792:8,13; 795:18;797:20;815:8; 861:16 letter (7) 755:4;867:2;889:2,9, 9;893:14,23 level (27) 728:19,20,21,22; 733:23;737:22;739:16; 740:18,20;759:11; 768:16;771:16,17; 781:15;787:13,21,22; 790:8,13;796:23; 828:10;836:15;847:15; 851:11;858:22;865:10; 878:7 levels (4) 737:5;739:20,24; 808:18 leverage (1) 865:23 Lexis-Nexis (5) 740:9,14,19;866:25; 884:21 liability (9) 746:22;761:14; 767:11;776:6;789:8; 801:1,7,10,15 LIBOR (1) 858:17 license (1) 875:14 licensed (1) 875:10 Min-U-Script® SOUTHERN DISTRICT REPORTERS (14) introduced - licensed ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 licensing (3) 874:10;875:8,13 lied (1) 837:14 lien (2) 849:14;850:6 liens (1) 867:24 life (1) 765:1 light (1) 793:11 likely (9) 740:17;762:3; 764:19;795:23;798:2; 827:25;885:1;893:2; 894:9 limine (4) 775:23;779:4; 793:10;794:15 limitations (3) 749:18;869:20,20 limited (5) 867:25;868:15,19; 869:18;882:14 Linda (1) 866:14 line (20) 766:19;772:9; 777:25;778:11;789:16, 18;790:17,21;791:11; 792:4,6;804:6;819:5; 862:10,12,12;867:7,14; 872:23;891:7 lines (10) 754:12;758:18,20; 759:14,21;778:2; 814:5;837:22;841:20; 893:7 lineup (1) 795:7 Lipshutz (16) 726:9;775:21;777:2, 3;779:3,9;780:7,17; 781:5,7,13;787:22; 789:16;790:19;791:7; 792:17 Lipshutz' (1) 778:23 Lipshutz's (3) 780:23;783:14; 790:17 list (3) 757:24;798:4;831:22 listed (2) 782:17;892:4 listen (1) 785:20 literally (3) 840:22;877:18; 885:12 litigation (1) 818:11 little (16) 726:24,25;729:12; 737:10;744:5;747:2; 766:21;780:19;816:20; 839:19;860:4;861:16; 864:18,19;865:24; 872:13 live (6) 742:9;763:25; 799:14,20;859:18; 895:9 living (2) 768:14,15 loan (214) 723:10,11;728:22; 729:3;731:20;732:23, 25;733:5,15,17,18; 735:4,9,11,11,13,17; 736:13,22;739:19; 747:21;748:24,25; 754:7,8,10,18,18,22; 756:12;758:9,16,16,21; 759:1,2,19,22,25; 760:12,13,20,25;761:7, 8,15,17;762:7,9;763:3, 7,9,11;764:15;766:3, 15;767:7,8,25;768:1; 769:6;770:8,19,21; 772:4,5,7,18;775:3; 776:8,14,17,22;777:7; 781:25;782:1;783:2; 784:9,14,14;785:7; 788:24;792:1;796:12, 13;802:18;803:4; 804:18,24,25;807:21; 809:18;810:7;818:10; 819:2,19;820:7;823:1, 1,8,10,12;824:13,20, 22;825:4;826:4;827:2, 14,23;828:6;829:3; 830:2,16,17,20,21,22, 24;833:3,13,13,15,16, 17;834:4,16;835:3,16, 18,19;836:15,21,21,22, 25;838:2,17;840:19,20, 22;841:1,7,18;842:1,2, 13,15,21,22,23;843:1, 17;844:23;847:16,18; 851:12,13,16;853:8,14, 20,21,24,24;854:3,6,9, 15,22;855:3,8,9,10,13, 21,21;856:13,17; 858:22;865:7,8; 867:15,22;872:17,18, 23;873:8,9,10,17,20; 874:3;881:22,23; 883:2,25;884:18; 885:13,15;887:9,13,14, 16,19;888:18,20; 889:16;890:1,4,5,10, 21;892:16 loan-by-loan (4) 796:19;835:23; 843:2;865:10 loan-level (1) 849:12 loans (143) 723:12,14;724:9,9, 18,21;725:4;739:3,8; 741:9;743:19,20; 744:23;745:1,2;746:6; 754:22;755:9,10,12,13, 15;756:3,7,8,14,19,20, 22;757:6,7,15;758:8; 759:23;760:2,4,18; 762:23;763:17;765:15; 767:17,17;768:12; 769:9,17;777:20; 781:25;782:3,5,7,9,11, 12,16,19,19,20,21,22; 783:3,12,19,19,23; 785:12,15;786:7; 788:17;791:17,19,20, 21;792:3,8,10,11,12; 803:16;804:25;805:1; 806:6;807:10;809:9; 818:15,17;820:2,24; 821:1,7,23,24;822:1,2, 24;823:3;826:9,10,11, 14,15,19,21,23;827:1, 10;828:18,19,24,25,25; 831:23;832:15;833:15; 834:6,6,9,17,21; 836:19;837:19;838:24; 839:2,14,14,23,23; 849:14;850:6;851:19, 24;854:19;860:21,22; 861:2,8,9;863:3; 869:17;870:13;873:6; 875:24;878:6;885:16 loan's (1) 777:8 loan-to-value (2) 823:16;826:5 local (3) 800:25;885:20;886:4 locate (2) 749:8;891:15 located (2) 877:5;878:2 location (1) 832:12 logging (1) 891:9 login (1) 893:2 long (10) 725:21;783:13; 800:13;801:2;810:12; 814:11;820:7,12; 864:7,16 look (53) 723:16;728:14,15; 733:3;742:3;744:10; 747:25;753:1;754:19; 755:25;756:24;757:2, 6,11;758:22,25;759:2, 10;760:6;762:25; 763:1;769:23;770:6, 18;777:16;778:11; 782:1,2;786:3;787:4; 788:21;790:22;791:8, 10;793:9,11;803:25; 833:18,20;838:8; 839:3,4;841:5;845:10; 847:6;855:6;856:20; 857:3;859:2;886:14, 23;888:14;895:2 looked (8) 733:1,5;750:14; 756:14;761:4;763:4; 793:9;887:11 looking (13) 728:19;740:15; 752:15;758:18,19; 768:24;770:8;786:4; 857:10;874:8;876:8; 887:14,15 looks (6) 723:25;781:24; 783:4,5;816:20;891:10 lose (1) 793:18 loss (20) 795:16;796:4,7,14; 812:22;816:3;839:15; 840:20,23,25;842:2,8; 843:5;849:18,20; 850:11,13;858:21,23; 893:21 losses (8) 808:11,13;812:1; 815:3,13;816:4;839:9; 860:11 lot (18) 730:23;737:11; 740:22;757:22;765:3; 767:21,24;768:23; 777:5,5;801:20; 818:19;822:19,20; 826:6;842:1;854:13; 895:15 love (2) 794:6;894:15 low (1) 754:7 lower (4) 790:13;846:21; 869:16,19 lowest (1) 869:16 LTV (1) 868:14 luck (2) 849:18;850:10 lunch (2) 759:1;793:3 Luncheon (1) 798:17 luxury (2) 793:7;795:9 M ma'am (10) 863:24;864:16; 865:24;867:10;869:10; 871:11;877:1,7; 878:24;880:16 Mac (3) 803:8;867:7;882:16 Mae (5) 743:2;803:8,8;867:7; 882:15 magnitude (1) 771:14 main (3) 725:2;806:7;867:23 maintained (1) 844:5 maintaining (1) 808:1 major (1) 886:21 majority (2) 869:17;877:4 makes (8) 749:5;754:7,8,10; 768:23;785:2;799:8; 809:7 making (14) 758:13;768:7; 779:18;822:8,11; 831:2;832:5;841:9; 843:10;860:17;861:23; 885:23;887:3;892:12 man (1) 892:17 manage (3) 768:12;864:5;887:11 management (14) 727:12;728:8,9,13, 18,20;801:1,12,15; 802:4;858:10;864:12; 866:18;879:17 manager (9) 801:7,10;865:2,17, 18,18;866:13;877:18, 18 managers (4) 877:21,22;878:2,3 mandate (1) 817:12 manner (1) 843:23 manners (1) 744:5 mansion (1) 748:4 many (17) 723:12;728:24; 734:21;744:2;753:9; Min-U-Script® SOUTHERN DISTRICT REPORTERS (15) licensing - many ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 764:23;772:3;779:22; 784:9;785:21,23; 786:10;798:2;801:22; 802:22;804:3;865:17 March (6) 888:15,17,21,22,24; 894:8 margin (7) 756:10;781:16; 790:4,7,8;795:21; 867:18 marginal (1) 848:9 MARI (2) 875:16,18 mark (3) 760:12;797:17;836:7 marked (1) 895:8 market (2) 729:6;869:2 marketplace (1) 882:4 Markets (3) 800:12,15;801:16 markings (2) 725:13,14 Marni (3) 723:8;863:15,17 Mason (17) 726:9;775:21; 780:24;781:2,4,7,19; 782:9,18;783:4;786:3; 788:10;790:19,23; 792:17;794:10,15 Mason's (5) 782:1;790:20;791:1, 3,24 mass (2) 742:7,10 massage (1) 835:5 masters (2) 800:19,22 matched (1) 855:22 material (23) 735:3;736:12,18; 737:4;738:14;745:1; 758:1,7,10,23;759:25; 760:8;766:18;767:19; 768:20;775:5;776:17, 23;778:5;779:1,13,17; 780:14 materiality (12) 736:14;737:3;738:2; 741:16;752:25;753:13; 756:16,17;765:5; 767:13;774:12;844:15 materially (11) 735:4,8,11;744:21; 746:4;755:18;756:1; 766:8;767:15,19;769:6 math (1) 772:11 Matt (1) 834:20 matter (8) 730:9;731:21;767:6; 787:1;793:24;795:1; 799:8;889:21 matters (3) 793:23;795:9;797:23 max (1) 844:19 may (53) 726:23;743:22,23; 746:18,20;748:14,14; 753:1;764:8;766:5; 769:24;775:11;776:3; 777:22;779:8,8; 780:15,16;787:8,16,16, 21,24;791:22;796:4,8; 797:20;799:7;803:19; 804:1;812:24;818:19; 819:12,12;821:16,18; 823:6;830:18,19; 835:11;836:9;840:5; 841:13;842:7;845:5; 854:8,8;862:19; 863:12;886:9;887:5, 24;888:13 Maybe (9) 749:20;764:9; 769:22;771:6;774:25; 785:23;799:12;835:2; 895:2 mean (26) 735:9;755:16; 789:25;790:7;792:13; 806:17;807:3;808:9; 810:11;816:13;832:3; 833:20,21;837:16; 851:9;868:3,8;872:15; 877:16;879:13;881:3; 883:13;891:5,16; 892:5;895:9 meaning (7) 733:9;777:18,18; 832:20;881:5;891:19; 893:21 meaningful (4) 733:19,21;734:4; 735:14 meaningfully (1) 732:14 means (7) 735:3;792:4;793:15; 810:12;873:8;891:18; 893:12 meant (5) 735:19;736:21; 834:13,14;893:6 measure (4) 746:23;780:10,12; 781:18 measured (2) 777:11;781:9 mechanism (1) 810:25 meet (6) 736:2,3;748:10; 756:15;760:12;868:23 meetings (1) 877:21 meets (2) 735:23;736:8 member (1) 869:25 memoranda (1) 724:2 memorandum (2) 723:7;739:7 mention (2) 767:1;884:3 mentioned (6) 787:9;806:15;817:3; 820:19;877:13;880:23 mentioning (1) 884:5 merely (1) 786:8 message (6) 764:24;892:7,8,15, 19;893:12 messy (1) 741:6 met (6) 747:16;784:8,8; 788:4;807:15;828:5 method (3) 735:23;745:9;776:3 methodology (19) 724:8;731:6;737:16, 17,25;738:1,1;749:22; 750:11;753:6;757:8; 768:21;769:2,3; 775:10;778:18;779:24; 780:17;783:10 methods (6) 726:25;727:1; 739:25;744:11;745:8,9 Michigan (12) 748:3;800:19,20,23; 802:21,22,25;865:20; 872:8,8;877:5;889:22 microphone (1) 803:24 microscope (1) 737:22 mid-'90s (1) 882:17 midnight (1) 795:12 might (14) 738:4,9;746:2;762:4; 764:9;768:3;807:2; 831:10,17;832:12; 836:10;841:11,21; 860:8 miles (1) 886:4 million (24) 757:13;761:18; 766:16;784:15;788:22, 22;814:20;815:5,7,14, 14,20,24,24;816:2,9, 20;859:4;860:4,5,8; 861:11,11,17 millions (1) 804:3 mind (2) 746:2;870:13 minds (1) 797:1 mine (1) 801:21 minimal (1) 771:17 minimize (2) 743:18,20 minimum (2) 857:20;878:10 minor (1) 780:6 minus (4) 781:10,16;789:24; 790:9 minute (6) 802:15;841:10; 850:5;862:14;883:6; 888:22 minutes (10) 733:16,17,18; 741:15;750:7;778:10; 793:3;802:15;844:18; 856:8 miscalculation (1) 772:14 misrepresentation (2) 760:8;775:5 misrepresentations (2) 766:21;775:6 missing (6) 742:17;763:20,23; 767:23;768:13;826:8 misstate (1) 750:23 misstatement (3) 737:9,14;752:4 misstates (1) 737:3 misstating (3) 737:6,10,11 mistake (2) 756:21;775:11 mistakes (5) 762:7,17,18;773:5,7 misunderstanding (1) 740:24 mitigation (1) 893:21 model (19) 743:3,10;784:25; 796:11;808:25;809:3, 5;835:20;840:20; 842:23;857:25;858:3, 8,9,16,21,22;859:15; 882:16 modeling (6) 795:17;796:5,7; 835:21;842:3,8 models (1) 880:4 modern (1) 765:1 modest (1) 886:11 moment (7) 745:4;769:23; 838:12;844:16;880:11; 883:9;887:22 money (6) 740:14;742:15; 750:1;768:24;857:17; 860:17 Monoline (6) 805:7;806:7;809:19; 810:13;811:20;824:10 month (5) 757:14;831:3; 882:20;886:6;891:9 monthly (1) 841:8 months (6) 800:16;820:10; 859:5,9,17;870:5 more (41) 723:19;728:5; 729:13;735:25;737:7, 12;741:18;742:21,25; 744:19;748:9;757:22; 761:19;768:19,24; 769:21;772:24;776:9; 783:25;789:5;793:11; 797:20;801:21;802:14; 804:4;807:10;827:5, 25;836:9;840:5;841:4, 10;844:18,18;855:6; 859:6;862:5;864:19; 868:6;877:23;882:14 Morgan (35) 802:6;805:25;806:4, 10,12;809:3;818:14; 819:25;820:9,23; 821:3;822:9,16,16,17, 18,20,22;823:8,10; 824:5,10,12,12,19,20, 22;825:2,4,10,15,19; 826:1;853:9,12 morning (2) 797:24;847:5 mortgage (22) 724:9;737:3;749:2; 776:8;803:3,4;826:9, Min-U-Script® SOUTHERN DISTRICT REPORTERS (16) March - mortgage ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 10,11;827:2;830:2; 837:14;855:21;864:2; 865:6;867:12;875:21; 879:19;889:2,11,18; 894:10 mortgages (8) 729:7;738:19;746:7; 779:12;803:7,9;804:6; 834:22 Most (9) 752:14;754:9,24; 756:5;808:3;813:9; 867:23;886:11;894:3 motion (7) 726:6,19;734:13; 775:23;779:4;793:16; 794:16 motions (4) 722:3;726:8;793:10, 14 mouth (2) 757:23;843:12 move (7) 768:11;780:7;787:2; 803:24;813:13;843:13, 17 moved (2) 738:10,14 moves (1) 788:11 moving (2) 730:15;780:22 much (22) 742:15;747:2;748:9; 762:15;765:11;772:7; 795:19;802:20;806:9; 812:15;814:18;815:18, 22;816:17;823:5; 843:6;847:22;863:12; 868:6;869:15;877:17; 894:15 multiple (4) 752:15,16;755:3; 851:8 multiunit (1) 879:10 must (7) 727:6;734:18; 776:19;814:9;839:18; 884:24;892:16 myself (7) 790:15;822:15,20; 851:8;864:13;867:9; 873:7 N nail (1) 730:15 name (4) 748:22;823:14; 883:10;884:4 namely (1) 837:12 narrative (1) 771:11 National (3) 800:23,24;865:18 nationally (1) 802:17 nature (11) 731:18;741:9;751:2; 776:15,25;779:20; 789:3,7;797:7;836:1; 851:5 near (1) 847:3 necessarily (3) 736:12;751:1;773:6 necessary (3) 788:13,20;873:23 need (24) 744:6;750:22; 753:21;758:25;767:18; 775:15;778:20;779:15, 16;782:24;785:21; 787:12;795:10;797:17; 798:4;803:24;819:14; 833:9;839:11,13; 844:19;880:2;881:17; 889:21 needed (3) 778:13;806:2;820:16 needs (3) 756:11;797:9;799:20 negative (8) 809:20,21;811:2,3; 874:10;875:16,25; 876:3 neglected (1) 790:18 negligence (5) 752:2,6;767:3,21; 789:6 neither (3) 787:24;793:13; 839:24 net (7) 806:25;809:20,20; 812:12,15;815:10; 874:20 neutral (3) 727:9,14;743:17 neutrality (1) 727:21 nevertheless (1) 732:3 new (6) 727:25;811:7;819:5; 834:12,12;846:7 news (4) 874:11;875:16,25; 876:3 next (15) 751:3;771:1;786:11; 788:9;798:18;799:25; 821:2;829:6;852:8; 863:14;877:19;886:24; 892:2,24;894:8 nice (4) 758:20;759:14,21; 773:11 Nielsen (1) 895:13 nine (2) 878:11;888:17 non-agency (5) 804:8,17,24,25; 820:14 noncom- (1) 758:1 noncompliance (4) 730:13,13;731:5; 839:21 non-consensus (1) 729:21 none (3) 752:3;775:12;835:7 nonetheless (1) 730:18 nonexpert (1) 753:7 non-historic (1) 741:24 non-intentional (1) 737:12 noniterative (1) 763:22 nonmaterial (1) 760:18 nonstated (5) 830:3,6,16,21,22 nonsubstantive (1) 847:3 nor (2) 787:24;839:24 normal (10) 763:23;764:17; 819:13;828:5;831:3,7; 832:8,11;890:6;894:1 North (1) 801:1 notation (1) 888:21 note (5) 809:16,17;811:9; 817:13;889:6 noted (2) 725:17;747:5 notes (5) 807:11;809:12,14; 888:20;889:6 notice (1) 883:8 noticed (1) 768:25 notified (1) 722:11 notion (2) 753:4;792:3 November (1) 733:8 nuanced (1) 744:19 number (40) 723:19,20;728:14; 744:2;747:12;752:20; 762:15;768:23;769:16; 771:3,5;778:25;782:2; 783:19,19;786:7,7; 787:3,3,18;788:20; 792:15;796:15;818:25; 834:3;845:3;848:14; 851:6;884:23;889:1,4, 4,12,12;891:20,22,24; 892:15;893:12,12 numbers (8) 779:6;788:19;790:2; 841:4;855:22;862:10; 892:3,4 numerous (1) 886:19 O Obama (2) 785:22,23 object (8) 819:4;842:5;845:7; 846:5,10;847:1; 868:10;888:3 objecting (2) 723:2;870:17 objection (38) 724:6;741:4;795:18; 796:9;799:19,22; 803:17;804:19;805:8, 20;807:5;813:15; 819:14,15;820:4; 821:8,12;822:7; 824:14,15;825:8,12,16, 21;845:11;854:24; 855:11,24;856:8; 862:13,16,21;863:7; 866:1;869:5;870:18; 872:3;873:22 objectionable (1) 824:23 objections (9) 795:10,21;797:5,6,7, 16;818:19;819:11; 862:17 objective (5) 727:12,13;753:10; 761:2;778:17 objectively (1) 753:12 objects (1) 722:10 obligated (3) 814:4,7;839:13 observations (2) 791:21;792:12 obtain (1) 837:14 obtained (4) 835:1,3,4,8 obvious (1) 755:14 obviously (1) 788:15 occasional (1) 766:5 occupancy (2) 869:19;882:14 occur (2) 764:19;874:12 occurred (3) 733:22;839:2;874:2 occurrence (1) 753:17 occurring (1) 764:19 occurs (1) 764:17 o'clock (6) 793:21;797:19; 798:16;894:17,23; 895:1 October (6) 733:8;785:5;791:10; 846:19;893:8;895:16 off (16) 731:3,12;734:22; 762:6;782:3,17;783:3, 20;796:12,12;810:9; 816:8;882:17,17; 889:11;894:10 offer (4) 784:5;843:14;846:4; 862:19 offered (3) 840:12;846:19;847:8 offering (4) 722:15;724:13; 739:6,12 office (1) 889:21 officer (9) 829:3;872:17,19,23; 873:10;886:7,17; 889:3,18 officers (2) 885:15;890:23 offices (4) 802:21,22;886:4,19 off-the-cuff (1) 846:8 often (4) 742:4;774:4,5;851:4 omission (5) 766:14,18;767:3,20; 789:6 omissions (3) 752:2;834:11;835:9 Min-U-Script® SOUTHERN DISTRICT REPORTERS (17) mortgages - omissions ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 once (5) 769:12;793:4;802:9; 811:1;871:8 One (127) 723:18;727:25; 729:13;730:14;733:21; 735:8;736:1,19; 738:20;740:25;741:1; 742:12,17,24;743:25; 744:15,25;745:3,4; 747:25;748:1,16; 749:15;752:15;754:4, 5;755:21;756:4,8,9; 757:4,6,7,7;758:1; 760:14,21;761:7; 763:20;766:2,11; 767:2,9;768:5;769:2,8, 15,17,17;770:13,16,17, 18,22,23;771:4,10; 772:10,25;774:23; 779:19;780:2;783:9; 784:12,14,14;785:12; 788:2,9,12;792:18; 794:6,9;795:1,3; 797:20;799:7;800:23; 804:12;811:17;815:10; 833:13;834:14;835:12; 836:9,12;838:1,17; 840:12,21;841:17,22; 843:25;844:11,17; 846:15,22,24;847:7,25, 25;848:22;849:4; 855:6;856:9,22;857:4, 4;862:10;875:6; 876:19,19;877:13; 878:25;879:9,9,9; 880:13;882:20,21; 883:4;884:23;888:7; 891:4,15;892:9;895:3 ones (5) 754:13;755:17; 756:9;768:24;784:12 one's (2) 837:14,19 online (2) 890:14;893:8 Only (43) 727:6,20;730:18; 732:3,25;733:6; 737:22;739:4,16,22; 742:20;743:5;746:4, 24;757:20;760:12,24; 762:1,2,8;763:16; 779:23;782:8;795:2; 797:23;800:23;807:15; 812:3;817:5;834:25; 836:16,17;841:2; 845:18;860:12,15; 866:14;869:16;870:2, 13;871:1;872:1;879:7 on-site (1) 874:8 onto (4) 780:4;782:21; 784:15;855:10 open (6) 722:2;748:11; 794:22;795:9;799:4; 849:13 opening (5) 728:7,17;763:8; 764:15;804:2 operate (1) 761:11 operated (1) 856:6 operates (1) 856:4 operating (6) 736:25;738:11; 758:12;765:6;864:24; 875:11 operation (1) 856:3 operational (1) 728:19 operations (4) 728:9;800:25;864:2, 5 operator (1) 764:21 opinion (17) 726:23;727:14; 734:19;735:6;744:17; 753:3,6,7;766:6,8; 774:21,22;783:14; 789:21;791:3;794:17; 839:17 opinions (7) 744:15,16,17,19; 780:23;781:3;794:16 opportunity (5) 769:8;785:7;794:2; 799:18;854:18 opposed (4) 753:7,24;778:25; 780:13 opposing (1) 799:13 opposition (2) 779:4;794:15 ops (1) 866:17 options (2) 893:21,21 oral (1) 797:6 oranges (1) 788:6 orchestrated (1) 806:9 order (15) 722:16;743:15; 752:25;781:8;794:20; 798:3;799:9;809:24; 810:1;880:21;891:1, 13;895:5,9,11 orderly (1) 811:17 ordinary (4) 827:23;845:20,23; 847:20 oriented (1) 838:8 original (5) 783:6;794:16; 833:14;835:7;876:5 originally (5) 748:1;795:8;799:14; 835:1;836:15 originate (4) 826:23;871:21; 873:8;874:3 originated (1) 882:9 originating (10) 804:25;834:21; 867:11;868:22;872:1, 14,25;873:17;874:17; 875:7 origination (10) 803:21;833:3,14; 834:9,16;864:5,10; 872:12,16;876:1 originations (10) 803:4,5,6;849:19; 850:11;866:19;868:21; 873:1,5;874:1 originator (3) 763:4;873:10;883:15 originators (1) 835:3 others (3) 828:14;865:11,11 otherwise (4) 726:23;746:19; 835:2;873:14 ought (1) 846:23 ours (1) 890:22 out (63) 724:8,9;727:10,24; 729:15;736:1;737:16; 739:9;745:2;747:12, 15;749:4,17,23;752:1, 25;756:12,19;757:22; 758:3;760:24;761:15; 763:17;764:12,25; 771:1;772:6;773:7,24; 774:23;779:6;783:5, 17,20,23;784:4,11; 785:22;786:8,9; 793:15;794:14;805:1; 808:6;810:14;820:18; 821:1;829:3;834:6; 837:13;838:9;840:19, 23;841:3,10,21; 842:23;843:11;858:21; 872:11;874:14;877:12; 891:10 outgoing (1) 809:16 output (3) 742:7,13;772:13 outside (3) 833:22;878:4;879:19 outstanding (2) 810:12;867:18 over (35) 726:17;728:24; 741:8,9,10;755:7; 756:6;761:18;762:14; 771:1;785:14;793:22; 795:11;797:25;800:14; 806:25;807:12,13; 809:6;811:1,18; 812:13;816:14,20; 819:12;820:9;821:2; 834:4;837:7;842:9; 847:19;868:4;879:16; 892:24;894:2 overall (5) 791:8;867:17; 868:24;871:7;877:8 over-collateralization (5) 788:18;807:12,13; 808:18;816:18 overly (1) 868:1 overrule (1) 856:8 Overruled (4) 804:21;805:9;820:5; 855:12 overruling (1) 856:7 overstate (1) 771:9 Overstated (1) 755:2 own (28) 727:10;733:22; 736:14;739:20,23; 747:6;754:23;783:14; 784:24;791:2;792:12; 795:20;805:1,2,4,4; 838:7,20;842:18; 844:6;846:8;872:22; 875:4;879:20;881:5; 885:16;890:13,23 owned (1) 800:24 owner (1) 817:5 owners (4) 817:3;874:10,10,24 ownership (5) 808:2;810:20,21; 811:23;817:15 owning (1) 811:24 P package (1) 771:14 page (36) 748:21;749:11; 751:3;776:20,20,22; 777:1,9,12,21,24; 785:4,9;786:11; 789:16,18;790:17,21; 791:10,10;798:18; 813:19,21;829:6; 849:10,10;852:8; 857:3,10;862:12,12; 883:9;884:3;886:24; 892:24;894:9 pages (8) 776:15;780:7,11; 856:25;862:8;891:3, 18,20 paid (11) 750:1;788:21;810:3, 8;816:4;844:2;849:22, 23;850:18,19;867:16 paper (5) 729:17;731:12; 772:10,25;890:24 paragraph (5) 723:17;724:14; 728:17;847:4;850:22 parameters (4) 836:5;837:10;838:5, 20 pari (2) 812:2;815:1 parroting (1) 731:14 part (37) 723:20;737:17; 744:7;746:22;754:4; 766:14;767:3;788:15; 790:22;804:10;805:12, 15;830:7,11,23;831:11, 17;836:14,18;837:3,7; 839:8;845:23;847:1,3, 8;848:1;856:13; 871:18;874:16;880:15, 19;882:4,8,11,15;883:2 participants (4) 807:1;808:4,11; 810:6 participate (1) 811:25 participates (1) 814:25 participation (1) 808:15 particular (12) 734:5;740:17;742:7; 748:14;749:8;772:2, 18;785:13;803:4; 827:18,18;838:16 Min-U-Script® SOUTHERN DISTRICT REPORTERS (18) once - particular ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 particularly (5) 723:19;747:6; 761:13;763:19;767:18 parties (3) 817:21;824:11;852:1 partner (1) 726:8 partnership (2) 881:10,19 parts (3) 725:14,16;788:12 party (3) 722:15;725:3;727:22 pass (1) 832:7 passed (2) 748:11;854:13 passing (3) 764:24;840:7;866:23 passion (1) 775:15 passu (2) 812:2;815:1 past (5) 727:23;728:18; 762:12;794:4;823:3 paste (1) 772:16 patently (1) 886:12 Paul (3) 806:13;849:6,7 Pause (5) 722:23;723:5;813:1; 862:15;883:7 pay (11) 738:21;740:3; 783:25;814:4;848:4; 882:1,21;889:3,12; 893:19;894:11 paying (2) 761:17;867:18 payment (3) 892:25;893:6,8 payments (6) 809:11,16,18;811:8; 816:23;817:13 PayScale (2) 769:13;772:11 PayScalecom (7) 752:19;757:4,9; 761:24;762:2;768:21; 769:16 paystubs (1) 894:6 peculiar (1) 867:21 people (17) 731:12;732:15; 744:4;761:9;765:3,7; 768:6,12;769:5; 785:21;810:2;833:11; 840:7,13;848:22; 875:3;891:25 people's (1) 774:13 per (6) 728:3;733:17,18; 741:15;851:10;891:4 percent (27) 737:23,24;739:4; 755:25;756:6,7; 779:22;781:8,10,15,16; 783:8;787:6,13;788:2; 789:24,25;790:8,9; 817:7,16;859:7,17; 860:12;878:3;881:4,5 percentage (8) 724:13;746:5; 782:10;787:20;791:19, 20;792:10,11 percentages (3) 723:18;725:6;788:13 percentile (2) 752:8,11 perfect (1) 886:10 perfectly (1) 795:10 perform (5) 733:19,21;747:14; 805:3;876:4 performance (8) 811:2,3,25;814:25; 844:5;858:22;859:13, 18 performed (11) 734:17;735:9;759:5; 804:3;808:7;836:14; 855:17;874:16,24; 875:2,7 performing (2) 808:14;810:16 perhaps (5) 728:5;732:6;793:17; 833:2;847:4 period (29) 729:5,8,11,19,20; 733:13;763:3;801:9; 811:2,5,6;813:8;814:6; 821:2;834:6;838:9,10; 857:13;866:20;869:9; 871:14;874:12;876:25; 877:2,25;878:7,16; 879:2,6 permission (2) 749:6;862:11 permit (1) 894:18 permitted (3) 746:25;747:5;876:5 permitting (1) 874:3 person (18) 727:12;728:13; 737:3;741:6;748:23; 766:14;767:4;777:4; 828:10;873:10;883:14; 884:10,18;885:3,20,21, 22,23 personal (10) 761:10;818:20; 819:6,15,18;821:12,15, 18;824:19;825:18 personally (5) 731:13;818:22; 819:3,8;858:2 person's (1) 757:2 perspective (3) 817:2;837:4;843:10 pervasive (1) 838:25 philosophy (3) 868:20;869:14; 871:18 Phone (9) 889:1;891:19,22,23; 892:3,4,8,15;893:12 phonecall (1) 851:2 phones (1) 892:1 phrase (3) 731:9;841:12;881:2 physically (2) 874:15;878:2 pick (5) 756:19;763:14; 771:19;773:12,12 picked (3) 738:18;756:23; 784:11 picking (1) 762:3 piece (3) 772:10,25;844:5 place (12) 744:22;769:15; 771:10;782:8;801:23; 822:19;847:14;848:8; 868:1,3;869:9;872:10 placed (1) 724:18 plainly (3) 783:25;792:2;841:23 plaintiff (6) 730:5;742:22;776:9; 781:18;782:4;784:5 plaintiff's (27) 722:4,11;723:1,2,7, 22,24;724:4,15,16; 726:1;727:16;743:13; 746:15;765:12;769:22; 778:19;784:20;794:1, 1;822:7;839:6;841:16; 848:11,13;883:5; 887:20 planned (1) 795:3 platform (1) 875:12 plausible (1) 887:2 play (7) 722:5,6;725:12,15, 16,18;791:25 played (2) 795:9;818:12 playing (2) 722:10;842:10 please (12) 777:22;799:5,6,25; 800:17;849:11,21; 850:17;853:1;856:25; 863:14;879:5 pliance (1) 758:2 plugging (1) 779:6 plus (9) 781:10,16;789:24; 790:8;865:22;867:18; 874:20;879:18;893:20 pm (1) 799:2 podium (1) 726:18 POE (2) 892:5,6 point (34) 730:2;732:8;734:11; 742:9,24;746:1,18; 747:4;754:9,10; 761:23;762:24,25; 764:10;774:23;775:14; 779:8,18;780:6,18; 788:9;790:16,18; 792:16,23;793:15; 807:16;835:9,13; 837:23;841:9;842:10; 858:5;894:3 pointed (6) 749:23;752:1,25; 784:4;840:19;841:21 pointing (2) 764:12;772:9 points (8) 729:13;742:8;743:2, 14;758:3;780:1; 794:14;835:15 police (8) 767:7;841:6;886:6, 16;889:3,11,17;894:10 policeman (3) 748:3,5;885:20 policies (2) 828:15,17 policy (2) 864:13;866:11 poll (1) 785:21 pool (9) 781:11,11;782:23; 783:16;785:15;786:9; 817:15;833:6;849:17 pools (3) 724:20;783:16; 790:11 poor (2) 760:14;840:10 population (5) 780:4;782:20; 783:16;785:15;820:1 portal (1) 867:1 PORTERA (7) 866:1;868:10;869:5; 872:3;873:22;888:3,9 portfolio (3) 739:5;761:12;860:12 portfoliowide (1) 835:25 portion (5) 745:22;781:9;796:8; 811:24;882:10 portions (1) 796:15 pose (1) 730:11 posed (1) 750:6 position (5) 768:16;850:4; 867:15,24;888:8 positions (3) 865:17;886:15; 889:17 positive (3) 809:20,21;817:19 possible (2) 730:4;811:11 post-closing (1) 864:6 potential (2) 831:23;880:14 potentially (3) 880:7,20,21 practical (2) 854:21;855:3 practice (4) 727:23;738:20; 740:2;894:1 practices (4) 724:25;725:1;831:6; 863:6 precise (1) 755:11 Predominantly (2) 871:22;875:24 prefers (1) 875:20 premised (1) 781:3 premium (2) Min-U-Script® SOUTHERN DISTRICT REPORTERS (19) particularly - premium ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 849:22;850:18 preparation (1) 814:15 prepare (1) 845:23 prepared (3) 845:20;846:1;851:21 prepayment (3) 812:21;849:19; 850:12 preponderance (2) 747:17;788:3 preposterous (1) 884:15 presence (1) 745:16 present (10) 736:20;746:8,25; 747:1;776:18,21; 812:12,15;815:10,15 presentation (1) 738:25 presented (5) 746:24,24;763:7; 766:7;842:5 presenting (4) 765:14,18;795:4; 843:22 president (19) 722:12;748:6; 800:11;864:2;866:12; 871:17,17;884:10,19; 885:4,13,14,23;886:1, 2,17,21;892:16,17 Presumably (2) 737:20;804:4 presume (1) 739:9 presumptuous (1) 758:19 presupposing (1) 787:13 presupposition (1) 753:6 pretty (4) 749:22;791:9;806:8; 839:17 prevented (1) 788:19 prevention (2) 878:21;880:18 previous (1) 856:7 previously (7) 731:13;794:11; 796:6;819:11;826:14, 15;889:19 price (3) 868:1,3,5 primarily (2) 811:19;822:15 primary (2) 818:13;833:14 prime (2) 858:17;867:18 principal (12) 782:10,12;783:6,6; 809:11;810:4;811:8; 812:2;816:25;817:2, 13;867:19 principle (6) 735:10;758:12; 759:23;760:16;761:19; 791:25 principled (1) 735:23 principles (5) 726:25;727:1; 754:24;760:3;761:11 print (2) 747:12,15 printout (3) 766:3;833:9;890:7 printouts (3) 752:20;765:25;843:1 prior (5) 762:8;804:18;846:9; 865:4;874:2 prioritization (2) 810:3,10 privacy (1) 884:4 pro (7) 811:24;815:3;816:4, 24;817:3,8,11 probably (9) 728:1;773:6;808:3; 843:16;872:13;887:3; 888:9;894:3;895:1 probative (3) 837:25;840:10; 841:21 problem (13) 723:15;730:4,5; 731:8;732:16;746:20; 756:13;767:8;773:3; 832:25;847:25;848:1; 892:10 problems (26) 725:8;743:18; 750:12,17;752:14,15, 16;753:16,17;754:21, 22;755:1,4,21;756:5, 14;765:14;768:17,18, 18,18,20;769:1,12; 783:9;788:24 proceed (1) 895:13 proceeded (1) 769:5 process (75) 722:17;739:21; 741:8,13;743:11; 744:12;749:24;757:17; 759:20;762:15;763:22, 24,25,25;764:17,18; 765:4,19;768:4,9; 769:18;773:2;774:9; 775:7,11;778:7; 779:23;787:4;798:7; 806:1;818:11;819:19; 820:7,11,20,22;821:1, 11,22;825:23;826:1; 830:8,23;831:7,25; 832:2;834:7,8,11,16, 23,23;837:7;842:18; 845:13;846:7,7; 848:23;851:7,17,18; 853:7,13,18,23;855:6; 856:3,6;865:23;873:4, 16;876:14;877:23; 884:20;885:8 processer (2) 872:19,23 processes (4) 826:7;866:24;867:3; 878:22 processing (1) 885:13 processor (1) 873:11 procured (1) 837:19 produce (1) 790:12 product (6) 726:24;740:6; 867:13,22;869:15; 870:7 products (3) 740:8;859:19;870:23 profess (1) 727:20 profession (2) 743:18;762:9 professional (2) 743:25;800:21 proffer (2) 724:8;798:11 proffered (1) 844:20 profile (6) 735:4,8;736:19; 742:14,15;758:7 program (3) 842:3;882:3,6 project (2) 726:13;819:23 projected (2) 857:12;859:3 projection (5) 859:5,11,12;860:2; 861:13 projections (2) 857:16;859:24 promise (1) 789:14 promised (1) 793:20 proof (7) 737:13;776:3; 783:17,25;784:4,16; 788:25 proper (6) 734:16;762:6,10; 778:18;780:25;836:4 properly (4) 780:23,24;784:7; 875:11 properties (4) 756:25;790:13; 868:19;869:21 property (8) 757:13;766:17; 768:18;781:9;867:17; 868:16;880:5,22 proportion (7) 736:22;750:13; 781:14;785:14;789:23, 24;791:9 propose (1) 799:15 proposition (1) 790:1 prosecution (1) 889:22 protection (1) 868:24 protocol (1) 739:17 prove (3) 750:22;839:11,13 proved (2) 789:8,9 provide (3) 745:6;805:2;879:20 provided (18) 768:19;771:10; 819:24,24;824:4,7,8,9; 835:19;847:13;848:7; 849:16,20,21;850:13, 18;853:9,12 providing (4) 728:18;799:18; 880:4,13 public (1) 743:6 publicly (1) 809:14 publicly-filed (1) 813:11 pull (3) 782:24;854:22;855:3 pulled (6) 832:17;837:5; 842:13;853:24;854:2; 874:9 punch (1) 747:11 punted (1) 776:1 purchase (2) 814:7,10 purchased (1) 814:4 purported (12) 730:22;731:14,15; 736:2;738:15;748:6; 758:1;760:5;763:8; 772:14,21;885:14 purportedly (4) 733:14;736:23; 763:10;782:13 purports (1) 742:13 purpose (17) 722:14;724:7,8; 785:17,19;789:22; 796:14,25;811:15; 827:8;837:24;843:5; 846:21;853:7,10; 871:5;880:13 purposes (11) 728:11;736:8; 792:20,22,25;796:6,21; 811:17;842:3,16; 846:22 put (29) 722:15,18;723:17; 724:13;739:11,17; 742:6;744:2;745:21; 748:11;755:9;760:6; 772:16;774:2;783:10; 786:3;799:19;818:21; 819:16;827:20;834:22; 835:5,20;842:9; 844:11;846:18,20; 868:22;887:21 puts (1) 780:25 putting (6) 758:4;772:10; 797:12;799:16;834:15; 889:24 Q qualification (2) 827:15;865:13 qualified (9) 726:22;728:15; 729:20;734:16;765:9; 806:6;818:16;888:4; 890:4 qualifies (1) 888:5 qualify (6) 820:25;827:13,22, 23;831:11;845:17 qualifying (2) 820:20;881:11 quality (17) 722:17;725:1,2; 731:18;741:7;768:13; 834:23;836:1,25; Min-U-Script® SOUTHERN DISTRICT REPORTERS (20) preparation - quality ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 839:5;843:20,25; 844:6,14;866:15,19; 877:8 quarter (3) 723:11;757:13; 766:16 queries (1) 802:5 query (1) 762:18 quick (6) 748:8;770:5;780:1; 847:4;848:3;894:18 quite (3) 767:11;840:17; 841:15 quote (1) 777:7 R raise (3) 735:4;747:23;748:12 raised (5) 735:8;752:11; 794:11;819:12;844:11 raising (3) 732:16;735:11;886:9 ran (4) 741:1;835:23; 840:22;842:22 random (7) 747:25;785:12,17, 19;787:11;836:19; 842:19 range (2) 861:12,17 ranges (1) 781:19 rapid (7) 811:4,6,12,14;812:7; 814:6;817:12 rare (1) 727:24 rata (7) 811:24;815:3;816:4, 24;817:3,8,11 rate (9) 783:21;787:4,6; 801:12;812:20;858:15, 16,17,18 rather (7) 736:4;748:5;776:23, 25;778:17;782:8;839:1 rating (6) 805:2,12;806:8; 808:4;824:10;832:7 ratio (4) 750:15;753:10,10; 754:7 raw (1) 818:14 reached (6) 737:23;775:14; 811:1,3,4;851:23 read (11) 772:18,19;778:8; 791:7;795:11;796:2; 797:4;814:1;849:11; 850:1;862:11 readily (1) 832:11 reading (3) 789:15;836:24;889:5 reaffirm (1) 839:25 real (2) 783:17;885:22 realistic (1) 764:6 reality (3) 729:17;757:23; 842:13 realize (1) 860:9 realized (1) 812:3 really (26) 747:25;748:12; 749:23;750:3;757:25; 764:20;767:17,25; 776:5;779:24;784:3, 12;787:15;794:1; 808:5;819:13;820:24; 825:20;831:14;843:22; 844:18;862:4;865:23; 866:16;883:3;889:20 realtime (1) 740:10 reason (17) 723:1,16;747:16; 749:3;755:13;757:16; 766:24;773:20;775:10; 780:25;782:6;796:15; 826:16;837:23;839:24; 893:19,20 reasonable (1) 740:1 reasonableness (1) 739:20 reasons (3) 727:3;738:6;884:4 reassess (1) 793:17 Rebecca (3) 726:7,20;730:11 rebut (1) 789:10 rebuttal (4) 726:3;788:12; 789:12,14 recalculate (3) 742:16;752:12;826:4 recalculation (1) 772:14 recall (7) 731:23;747:24; 749:6;760:14,19; 765:20;787:21 recalls (5) 775:22;777:12; 781:12;782:14;783:18 receipt (1) 812:2 receipts (1) 812:1 receive (10) 807:22;808:6; 810:14;816:23;847:22; 848:10;865:7;878:18; 879:2;887:21 received (23) 726:1;732:20; 794:18;795:14;800:22; 807:24;813:16,17; 846:17;848:11,19; 861:4,7;865:4;878:16; 879:1,6;888:11,12; 893:1,6,14,15 receiving (1) 795:14 recent (1) 813:9 recently (1) 728:25 recess (2) 798:17;852:7 recognize (3) 813:3;846:23;848:15 recognizing (1) 756:1 recollect (4) 820:9;851:6,8; 861:16 recollection (4) 787:25;802:23; 823:13;861:11 reconsidered (1) 799:13 reconvene (2) 794:23;894:16 record (25) 734:22;754:11; 770:1;776:4,12; 793:16,17,19;794:11; 814:2;845:16,18; 846:10;847:21,24; 849:11;850:1;862:11; 888:4,6,7,10;890:8,17, 20 recorded (4) 855:9;856:17,17; 861:7 records (4) 743:6,8,10;887:12 recover (1) 857:17 recross (1) 790:17 red (3) 742:17;743:23; 752:11 redacted (1) 748:16 redirect (6) 725:18;783:17,18; 785:9,11;863:10 reducing (1) 783:19 redundancies (1) 752:13 redundancy (1) 741:21 refer (1) 889:21 reference (1) 777:17 referenced (1) 804:2 referrals (1) 740:10 referred (6) 803:10;806:24; 809:22;810:1,21;849:5 referring (4) 734:20;777:24; 817:8,9 refers (1) 834:23 refinements (1) 744:7 reflect (2) 722:19;853:14 reflected (4) 771:11;853:21; 854:9;894:7 reflective (2) 743:22;888:21 reflects (4) 849:22;850:18; 857:7,16 refresher (1) 878:19 regard (7) 743:16;834:22; 840:20;847:18;858:19; 868:20;879:21 regarding (1) 850:3 regardless (2) 779:21;876:10 regents (1) 867:7 Regional (17) 748:20,24;749:7; 802:19,20;841:8; 865:17;883:11,15,21; 884:6,10,19,22;885:12; 886:18;890:15 regular (1) 827:4 regurgitated (1) 773:13 reimbursed (1) 857:21 reimbursement (1) 788:14 rejected (4) 792:2;839:11,16,22 related (1) 879:2 relates (3) 809:24;818:14;857:9 relating (1) 766:22 Relative (2) 869:2;882:9 relatively (1) 869:1 relevance (17) 803:17;804:12; 813:14;824:14,15,20; 825:6;834:2,3,8,18; 847:14,21;868:10; 869:5;872:3;889:14 relevant (12) 729:23;730:17; 798:10,12;803:19,22; 836:8;838:10,12; 840:25;844:17;848:8 reliability (3) 743:3;744:11;792:22 reliable (4) 726:24;735:22; 768:22;776:5 reliably (1) 727:1 reliance (1) 774:9 relied (8) 724:25;730:19; 731:7;732:17,20; 769:10;809:2;854:8 relies (1) 746:11 rely (7) 722:16;725:6; 729:14;734:7,14; 757:8;761:16 relying (6) 731:16;761:9,9,12; 762:16;765:6 remain (1) 862:18 remains (1) 814:11 remedy (1) 767:16 remember (7) 753:19;755:8; 760:13,24,25;780:19; 891:12 Remind (1) 729:24 remotely (1) Min-U-Script® SOUTHERN DISTRICT REPORTERS (21) quarter - remotely ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 887:1 removed (2) 821:24;851:25 removing (1) 783:19 render (2) 728:11;791:2 rendering (1) 728:11 RENDON (82) 726:5,17;727:7; 728:4;729:2;730:1,10; 731:25;732:8,12,18; 734:2,8,23;735:7; 736:5;737:5,19;738:3, 9,23;739:2,11,14; 740:4;741:5;742:24; 757:20;759:7;764:8; 765:2;769:24;771:24; 781:2;794:9,14;795:1, 25;796:4;797:8,11; 798:3;799:7,11,24; 804:1,15;830:18; 831:19;835:11;836:9, 12;837:21;838:14; 841:13;842:7;843:16; 863:15,21;866:2,6; 868:12;869:7;870:9, 10,19;872:5;873:25; 887:5,8,24;888:2,17, 19,24;889:15;890:2,8, 17;891:2;894:14; 895:12 renewed (1) 795:15 renews (1) 726:19 rep (3) 766:13;767:2;769:7 repaying (1) 875:4 repeat (3) 747:7;821:20;856:10 repeatedly (1) 746:4 rephrase (2) 805:21;870:16 replete (1) 730:12 report (16) 729:16;730:12; 733:9;758:17,22; 759:10;768:1;772:15; 784:11;817:23;875:23; 879:24,25;880:6; 881:21;887:13 reported (3) 818:1;849:1,3 Reporter (1) 794:8 reporting (3) 864:12;867:9;873:7 represent (5) 725:2;763:9;812:14; 816:10;887:18 representation (4) 750:25;752:2;779:1; 854:3 representations (15) 724:22;746:5; 747:19;754:2,3,6; 757:23;776:7;777:9; 787:5;789:5;839:15, 22;861:23;862:2 representative (5) 722:8;770:25; 836:20;842:19;849:7 representatives (1) 851:4 represented (3) 765:21;822:25;829:1 representing (1) 748:5 represents (3) 760:8;807:19;815:15 repressed (1) 787:25 reps (3) 744:20;757:15; 766:11 repurchase (3) 767:17;784:25; 839:14 repurchased (2) 767:18;788:16 reputable (1) 875:4 request (1) 767:24 requested (1) 758:15 requests (1) 740:12 require (1) 881:18 required (11) 739:23;740:6;755:4; 777:13;814:10;823:17; 827:16,17;831:24; 840:9;881:6 requirement (1) 825:23 requirements (3) 831:10;872:10; 874:20 requires (2) 729:23;837:11 rereviewed (1) 865:10 reserve (1) 793:6 reserved (2) 775:25;793:14 reserves (1) 759:11 reserving (1) 726:3 residence (1) 889:12 residential (2) 776:8;804:6 residual (16) 806:24;807:23,25; 808:20;809:1,7,22; 810:19;812:11,15,19; 816:22;859:24;860:2; 861:14,19 Resolutions (1) 875:21 resolve (1) 729:20 resources (2) 740:18;877:24 respect (13) 723:22,23;731:9; 774:15;775:22;781:6; 787:23;790:10,11; 791:3;802:8;806:14; 828:4 Respectfully (4) 753:8;789:1;824:24; 825:7 respects (3) 748:9;756:16;826:22 respond (5) 747:24;796:8;797:3; 841:13;850:22 responded (1) 850:13 response (7) 847:2,3;850:2,3,8,9, 23 responsibilities (3) 864:3,9,11 responsibility (2) 866:12;867:4 responsible (7) 802:10;808:25; 809:2;818:25;819:2, 23;862:5 rest (1) 768:25 restraint (1) 743:25 result (4) 736:12;752:20; 757:5;810:22 resulted (1) 853:23 result-oriented (3) 727:22;728:1;744:1 results (8) 743:19;744:13; 756:18;757:17;764:11; 774:11;775:7;841:23 results-oriented (3) 727:11;728:6;743:19 resume (2) 743:16,17 resumes (4) 722:1;731:12;799:3; 874:21 retail (10) 729:6;802:24; 867:12;871:22,23; 872:2,7,17;873:1; 876:11 retained (4) 722:16;725:3; 806:22;807:24 retirement (1) 886:6 return (3) 785:7;816:25;881:19 returns (10) 738:21;740:3; 865:13;881:6,9,16,17, 19,21;882:1 reunderwrite (1) 836:16 reveal (2) 855:22;856:16 revealed (3) 725:9;747:12;886:12 reverification (1) 866:24 reverify (1) 773:2 reverse (2) 890:25;891:13 review (27) 725:4;731:24; 732:14;733:6,7,14,19, 21;734:4;735:10,18; 738:15;741:12;748:8; 768:12;772:21;824:19; 832:9,11;838:20,23; 865:10;870:6;874:8, 17;881:18;883:6 reviewed (7) 723:10;732:22; 742:5;756:8;772:22; 874:11;884:1 reviewer (1) 733:3 reviewers (5) 734:25;735:16,21; 741:9,10 reviewer's (1) 731:15 reviewing (6) 836:24;874:5,15,21; 880:17;881:17 right (59) 726:3,4,17;729:2; 738:16,22;739:10; 743:13;747:10;749:14; 752:16,23;759:7; 761:20;765:16,17; 769:21;774:25;775:2; 779:9,23;780:2; 782:24;785:9;787:6; 789:12;791:5,14,17,24; 792:8;793:18;794:23; 798:15;799:6;802:23; 805:22;812:7;820:21, 23;828:4;829:4; 832:22;833:4;837:17; 840:14;850:7,14; 852:6;853:1;862:9; 883:1,24;890:12,13; 891:25;892:10,22; 893:5 rings (1) 889:1 risk (91) 728:9,19;731:15; 732:21;734:25;735:4, 8,11,16,21;736:12,19; 738:10,15;741:1,23; 742:3,12;744:21; 745:2,6,20;747:10,11; 748:17;750:18,19; 752:18;754:5,12,16; 755:18,23;756:1; 758:7;760:5,11,14; 761:4,7,20;762:7,13, 16;763:6;765:16,16,17, 18,24;766:3,6,8; 767:10,10,15,20; 768:19;770:9,13,17,23; 771:6,8,10,20;772:3,5, 20,23;773:4,6,10; 775:11;793:4;801:12; 810:18;836:5;837:10, 13,15;838:4,19;840:8; 843:10;844:14;858:22; 865:17;868:24;869:23, 25 riskier (3) 754:7,8,10 risks (2) 867:21,23 Risk's (2) 765:24;772:22 risky (1) 836:3 road (1) 764:7 robust (1) 731:5 role (13) 800:10,13;801:6,8, 19,19,22,23;802:1,3; 806:16;818:12;864:16 roles (3) 802:3,8;806:14 Romney (1) 785:22 room (1) 733:18 Roslin's (1) 834:20 rough (1) 787:25 Min-U-Script® SOUTHERN DISTRICT REPORTERS (22) removed - rough ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 rounded (1) 781:12 routine (1) 877:21 routinely (3) 820:17;878:5,19 routines (1) 854:14 Rule (13) 726:7,20,21;727:4; 766:25;778:11;784:2, 3,17;796:2;797:5,7; 845:15 rules (7) 745:17,18,19; 753:10,10;765:8;847:7 ruling (1) 839:9 run (4) 749:18;784:24; 789:5;796:14 running (3) 740:9;741:11;768:22 S S&P (1) 849:16 sake (2) 734:3;838:11 Salary (9) 737:18,19,21,22; 738:3;740:10;741:24; 742:13;745:11 Salarycom (1) 752:8 sale (5) 844:4;861:5,7,8,9 sales (4) 844:4;866:17;880:4, 20 salvo (1) 728:7 same (31) 723:22,23;731:14; 755:1,2;768:9;770:19, 21;771:19;773:14; 777:18;778:3;781:15, 19;787:19;790:12; 808:17,19,23;812:18; 827:4,9;835:18; 848:17;856:17;859:5; 873:16;877:12;885:16; 887:16;888:20 sample (47) 754:20,20;761:15; 777:10,13,15;778:13, 20,21;779:8,12,15,21, 22;780:4,9,14,15,16, 20,23;781:6,10,13,19, 25;783:14,24;785:2,14, 18,20,24;787:11,13; 789:9,20,21,22,23; 790:2,7,10;791:8; 792:1;836:20;837:1 sampled (3) 791:21;792:12; 836:19 samples (5) 725:4;781:9;785:13; 790:23;842:19 Sampling (4) 775:21,22;776:2,10 satisfied (3) 807:1;812:4;854:14 satisfying (1) 761:1 savings (2) 802:17,18 saw (6) 742:9;745:2;748:8; 756:3;762:6;769:22 saying (28) 735:7;736:8;743:1; 748:9;749:6,9,25; 753:24;756:12;766:15; 772:25;773:6;779:1,3, 7,11,11,19;780:2,5,6; 785:1,2;790:15; 792:17;830:10;840:4; 858:13 SBNP (1) 889:1 scare (1) 762:16 scary (1) 761:13 Schedules (1) 881:8 scheduling (2) 793:2;894:19 scientific (1) 735:25 scientist (1) 736:3 scope (1) 755:6 score (3) 754:7,8;841:3 scores (2) 824:2;882:5 Scott (12) 723:8;863:15,17,22; 867:21;870:11,21; 872:15;876:14;887:9; 890:3;895:12 screens (1) 762:13 se (1) 728:3 sealed (1) 794:21 search (2) 807:15;820:17 seated (2) 799:5;853:1 second (33) 723:11,17;724:14; 738:16;746:11;747:20; 756:7,9;766:10; 770:20;771:3;780:6; 788:5;790:16;797:11; 810:6;811:18;819:13; 826:10;843:9;844:17; 847:25;849:10,10; 850:10;856:5;857:3, 10;862:11,17;867:24; 869:19;880:23 second-lien (4) 859:18;867:8,15; 868:16 seconds (4) 723:14;849:15; 850:7;867:8 securing (1) 802:6 securities (5) 805:1,5,25;810:4,5 securitization (69) 723:21;724:20; 798:7;802:2;804:20, 24,25;805:6,7,13,16, 24;806:6,18,22;807:1, 2,4,11,15,17,18,25; 808:10,12,14,16;809:8; 811:10;814:3;817:4,5, 21;818:16,16;820:3,11, 14,16,25;821:2,24; 822:5;826:19;827:3, 13,17,24;828:6;831:11, 17,23;833:6,10;836:2; 843:21;844:2,3,6,8; 848:23;849:4,7;852:1; 858:20;861:8,10,15,18 securitizations (15) 724:19;725:10; 803:22;804:4,11,18; 806:15;808:2;810:15, 20;814:11,13;824:9; 826:25;859:24 securitizing (2) 804:6;826:15 security (2) 747:11;809:13 seeing (3) 733:2;741:18;773:23 seek (1) 763:23 seeking (3) 725:6;737:3;884:18 seem (3) 722:14;739:5,8 seemed (1) 744:7 seems (5) 722:18;727:24; 739:2;779:18;821:15 sees (1) 772:24 segment (2) 880:19;882:4 selected (3) 757:8;772:6;785:13 selection (8) 723:11;818:11; 819:2,19;820:7; 834:24,25;851:16 selections (1) 835:6 self-employed (6) 740:13;865:13; 878:20;881:5,24,24 self-employment (2) 880:24;881:1 self-serving (1) 846:9 sell (2) 821:7;834:21 send (3) 747:13,15;750:16 sending (1) 849:12 senior (2) 722:12;864:24 sense (8) 738:20;743:24,24; 767:12;778:3;785:3; 869:11;894:24 sent (2) 851:25;891:10 sentence (4) 736:20;797:22; 836:9;847:11 sentences (1) 814:1 separate (3) 774:6;840:18;843:23 sequel (1) 819:20 sergeant (4) 841:6;889:3,11; 894:10 series (4) 722:25;736:17; 743:2;847:17 serious (3) 737:7,8;776:25 seriously (1) 889:20 served (1) 754:12 servicer (4) 809:19;810:7; 860:21,23 servicing (17) 833:13,15,16,17; 842:14;860:20,24; 887:9,11,13;888:20; 889:5,6;890:8,17,20; 891:18 serving (1) 749:2 SESSION (3) 799:1;881:7,9 sessions (1) 865:12 set (5) 723:17;728:16; 793:5;803:8;820:24 setting (1) 864:13 settlement (1) 872:10 several (7) 802:3,4;808:3; 815:10;822:1;851:10; 891:14 severity (7) 736:13;777:1;778:7, 24;779:2;780:12;868:7 shape (1) 802:10 share (9) 815:3;816:4,24; 817:3,6,7,8,9,11 shares (1) 817:10 sharing (1) 812:1 Sharon (1) 723:9 sheet (6) 801:12;806:21; 826:24;827:21;868:23, 25 sheets (1) 890:24 SHIN (45) 800:1,6;803:19; 804:16,23;805:11,21, 23;812:24;813:2,13, 18;819:8,17;820:6; 821:10,21;823:7; 825:9,14,22;834:3,19; 844:21;845:5,12,16,19; 846:4,12,22;847:10,15; 848:12,17,20;851:1; 852:2;854:24;855:11, 24;856:1;862:13; 863:7,11 shocking (1) 748:3 short (3) 783:13;788:2;789:15 shorthand (1) 891:17 show (12) 725:7;742:6;769:10; 772:12;773:1,5;821:3; 831:22;842:25;846:20; 883:1,6 showed (7) 738:4;748:15;751:2; 756:9;758:15;781:22; 808:13 Min-U-Script® SOUTHERN DISTRICT REPORTERS (23) rounded - showed ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 showing (4) 747:16;813:14; 844:6;847:6 shown (4) 776:5;782:16; 788:21,24 shows (9) 727:21;748:22; 757:2;758:22;762:15; 776:4;791:25;796:9,16 Shrev (1) 723:9 shrewdly (1) 840:17 shuffling (1) 895:4 side (3) 737:24;787:21; 837:12 sidebar (4) 794:3,4,7,20 sideline (1) 886:19 sides (1) 792:25 sign (2) 829:3;889:2 significance (4) 808:1;817:17; 870:12,15 significant (3) 729:4;808:4;820:14 similar (4) 750:25;752:9; 816:24;861:16 similarly (1) 812:11 simple (1) 749:22 simply (10) 724:25;732:17; 747:7;748:18;754:14; 756:11;767:21;792:3; 795:6;838:16 single (8) 736:17;744:15; 746:15;755:12;756:24; 757:1;775:4;879:9 SISA (1) 723:14 sit (7) 761:10;768:12; 788:2;797:19,20,22; 840:11 site (1) 874:12 sites (1) 741:25 sitting (3) 761:6;766:15;894:22 situation (9) 771:22;778:11,15; 787:11,14;835:3; 848:10;859:14;886:10 six (6) 749:23;768:1;859:5, 9,17;870:5 six-month (1) 857:13 size (22) 777:11,13;778:13, 20,21;779:8,21;780:9, 15,15,16,20,23;781:6, 10,13;783:15;785:2, 25;789:20;790:10; 861:16 sizes (2) 781:19;783:15 skew (1) 779:22 skilled (1) 802:5 skills (1) 849:5 skin (3) 808:5,9;843:24 skipped (1) 762:12 sloppy (1) 743:11 slow (1) 727:6 small (5) 748:4;749:24;752:4; 790:1;799:8 smaller (5) 777:15;779:8; 780:16,20;882:8 Smith (3) 892:25;893:1,4 snipets (1) 722:5 soared (1) 756:6 so-called (2) 724:14;738:19 social (1) 747:11 sold (2) 807:10;861:2 sole (1) 841:1 solid (1) 851:22 solution (1) 764:10 solutions (1) 728:19 somebody (4) 728:17;758:20; 806:2;858:24 somebody's (1) 893:2 somehow (1) 750:4 someone (17) 753:21;757:3;762:8; 764:24;766:14;768:22; 770:15;774:21;797:9; 798:6;827:2,22;831:2; 837:14;882:19,21; 889:5 sometimes (2) 740:12,24 somewhat (1) 840:1 somewhere (2) 733:12;861:12 soon (1) 886:20 sophistication (1) 804:5 Sorry (10) 723:3;732:12; 737:17;770:14;792:5; 826:8;848:16,20; 888:16;891:14 sort (5) 819:14;821:25; 885:25;886:11,19 sound (3) 726:11;770:21; 874:20 sounded (1) 777:4 sounds (1) 876:21 soup (2) 758:9;759:13 sour (1) 839:3 source (2) 833:14;853:20 sources (2) 832:24;874:11 south (2) 839:10,23 Southern (1) 864:25 spat (1) 779:6 speak (10) 730:22;732:22; 734:6;735:1;736:5; 737:4;741:11;775:19; 890:3,4 speaking (4) 728:8;734:23; 819:14;835:13 special (1) 827:12 specific (14) 730:25;740:5; 755:10;766:11;767:1; 788:25;789:1;796:24; 819:12;843:2;870:6; 881:9;890:4,5 specifically (7) 724:4;744:9;776:9; 796:10;843:8;884:9; 888:14 specificity (1) 730:19 speculation (2) 848:2;856:1 speculative (1) 855:11 speech (1) 744:5 spend (3) 750:2;767:24;795:17 spending (2) 847:22;878:3 spent (4) 750:4,8,9;826:6 spit (1) 840:23 spitting (1) 842:23 spoke (1) 799:13 sponsored (1) 803:10 spreadsheet (6) 753:17;771:11; 781:21;782:1,14;786:4 Spring (1) 864:8 squarely (2) 839:8,17 staff (13) 864:12;867:9;873:7; 876:17,25;877:1,21,24; 878:4,8,15,23;879:15 stage (2) 733:15;784:14 stamps (1) 883:3 Stan (1) 800:1 stand (4) 755:19;840:10; 855:1;863:16 standard (5) 735:23;736:9; 741:17;765:5;769:3 standards (13) 729:10,18,23; 730:14,16,17;736:2,3, 25;774:11;828:2,5,7 standpoint (2) 868:7;869:18 stands (1) 892:6 STANLEY (1) 800:2 start (6) 726:16;785:3; 810:18;812:5;871:23; 872:1 started (12) 749:25;764:24; 831:25;832:2,24; 864:23;866:8;867:11; 871:24;872:7,11,25 starting (4) 777:25;791:10; 871:17;872:7 starts (1) 811:22 state (12) 739:22;740:18,19, 20,21;793:16,17,19; 800:20;865:22;875:11, 13 stated (23) 738:19;739:4,5,13, 14,15,19;740:8;750:4; 795:21;809:25;819:20; 820:23;828:19,24,25; 830:3,16,20,24;881:22, 23;882:10 state-level (1) 872:10 statement (6) 731:10;804:2; 806:21;846:9;889:15; 891:10 statements (6) 740:13;769:25; 773:16;806:20;837:20; 893:23 states (6) 726:21,24;803:12; 872:11;875:22;886:19 state-specific (1) 872:9 stating (4) 778:22;881:25; 889:7,8 statistical (5) 765:22;776:2; 783:14;790:12;791:25 statistically (1) 791:1 statistician (4) 726:12;786:2; 789:11;791:2 Statistics (7) 752:9;777:5;780:19; 784:22,23;787:9; 790:20 status (1) 821:25 statute (1) 749:17 statutory (1) 788:23 stay (1) 880:11 step (5) 726:17;802:15; 821:3;841:17;863:12 steps (8) 724:20;773:1; Min-U-Script® SOUTHERN DISTRICT REPORTERS (24) showing - steps ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 831:18;840:6,12; 851:16;862:1;875:6 Stewart (3) 726:8;764:22;775:18 Sticking (1) 824:12 Stiehl (5) 796:11;835:21; 836:13;842:25;848:24 still (11) 768:12;771:7; 801:10;808:18;816:13, 15,25;835:9;873:19; 886:5;892:9 stop (3) 724:5;786:1;790:14 stored (1) 820:17 stories (1) 731:4 story (3) 736:14;754:23,23 straightforwardness (1) 840:3 stratifi- (1) 835:24 stratification (2) 842:22;843:18 stratifications (1) 796:18 stratifies (1) 796:12 streamline (1) 798:13 strength (1) 752:17 strengthen (1) 868:4 strengthens (1) 868:5 strict (2) 767:11,16 strike (1) 775:10 striking (1) 744:13 strong (1) 760:7 struck (1) 765:10 structure (10) 801:12;802:3; 807:10,20;809:8,23; 810:6,23;811:10,18 structured (1) 802:9 structuring (1) 805:1 stubs (4) 738:21;740:3;882:1, 21 stuck (1) 837:5 studies (5) 879:10,14,18,20; 880:17 stuff (2) 758:8;759:17 sub-examples (1) 790:24 subject (13) 726:2;727:16;753:5, 20;762:23;798:5,7; 799:17;813:14,16; 819:6;838:15;855:14 subjective (9) 753:4,5,9;754:17; 770:10;778:7,17; 779:20;780:3 subjectivity (1) 771:17 submission (2) 725:25;843:20 submit (3) 725:23;789:9;842:1 submitted (3) 775:23;792:16; 794:15 submitting (1) 799:16 subordinated (1) 816:25 subparts (1) 727:7 sub-prime (3) 871:11,13,18 subsequent (1) 814:5 subset (1) 826:11 subsidiary (1) 800:24 substantial (5) 746:23;754:15; 755:24;788:24;886:17 subsumed (1) 779:25 subtract (1) 816:3 sufficient (4) 733:18,20,23;750:21 suggested (1) 850:3 suggesting (1) 819:3 suggests (3) 764:5;891:23;892:10 summarized (1) 728:16 summary (3) 837:22;839:8,25 summer (4) 864:17;867:4,6; 892:22 supervised (1) 828:14 supplied (1) 771:5 support (11) 775:3;802:13;805:2; 811:19;815:18,21; 816:11;820:16;827:16, 17;853:13 supported (2) 827:20;879:25 supports (1) 801:22 suppose (2) 724:11;887:23 supposed (7) 730:5;761:16;763:1, 6,13;783:25;893:8 supposedly (1) 783:4 Sure (37) 723:4;724:5;734:2, 19;740:5;749:9;752:5, 6,14;761:21,23; 769:25;775:10;777:17; 779:10;786:10;788:4; 797:18;799:17;818:15; 820:18;826:5;832:5; 836:8;841:7;843:10; 851:20;853:8,10,14; 856:12;874:19;875:3; 877:9;887:21;889:13; 892:15 surely (1) 885:22 surface (1) 740:14 surrebuttal (1) 771:23 sursurrebuttal (1) 771:24 survey (4) 729:15,17,21;730:22 Susan (1) 764:23 sustain (1) 870:18 sustained (13) 757:17;803:18; 804:14;819:16;821:9; 825:8,13,21;862:16,18, 21;863:8;869:6 switched (1) 892:1 sworn (2) 800:4;863:19 system (15) 822:3;831:13,20; 832:18;833:13,14,15, 16,17;836:18;854:1,2, 4,5,8 systems (2) 833:12,24 T tab (1) 813:19 tabbed (1) 856:25 table (4) 814:12,16;857:3,7 talk (17) 729:12;732:8; 737:25;745:4,5; 763:14;765:15;766:10; 767:23;833:24;864:18, 19,20;868:23;872:14; 876:14;880:3 talked (13) 729:16;737:9; 760:21;761:25;778:10; 781:20;788:10;816:19; 842:11;846:6;866:18; 892:18;893:7 talking (33) 724:3;731:11; 734:12,20;736:6; 738:10;757:25;765:15; 767:12;777:17;778:12; 781:2;822:17,18,18; 831:15;835:21;838:2, 16;839:16;840:18; 841:11,25;842:2; 843:23;855:16;858:7; 868:24;878:5;879:11; 889:16,25;890:1 talks (4) 723:10,11;731:11; 735:5 tape (56) 724:7;725:19; 796:12,13;802:7; 819:22,24;822:24; 823:8,10,12,18,19; 824:13,20,22;825:5; 834:4;835:14,19,20; 836:21,22;837:1,6; 838:17;840:19,22; 841:1,7,18;842:1,2,15, 21;843:17;844:23; 845:4;849:22;850:18; 851:13,21,22,23,25; 853:8,11,14,21,24; 854:16;855:10,13,21; 856:13,18 tapes (5) 806:5;840:21; 847:16,18;851:12 tax (11) 738:21;740:3,12; 865:13;881:6,8,16,17, 18;882:1,21 teach (1) 879:22 team (3) 843:12;844:24; 848:25 technique (1) 776:5 technology (4) 865:22,23;866:15; 875:12 telephone (1) 889:12 telling (4) 761:10;774:8; 784:21,24 tells (7) 736:14;742:8; 754:22;764:22,22; 787:12;895:2 ten (1) 784:11 term (3) 736:4;744:3;867:8 terms (15) 724:12;728:8; 734:21;736:5;744:9; 749:21;750:21;754:25; 765:24;814:3;819:11; 867:16;868:8;869:19, 19 Terrasi (1) 866:14 terrible (2) 756:25;764:15 test (4) 741:25;743:4; 748:11,11 testament (1) 728:9 testified (27) 728:23;730:19; 733:5;735:17;736:10; 744:25;745:15,16,19; 747:11;750:22;755:10; 756:5;767:9;776:14, 16,21;780:7;781:8,13; 788:10,16;800:4; 818:24;836:13;838:14; 863:19 testifies (1) 733:7 testify (12) 726:23;734:10; 747:5;761:6;764:14; 791:2;797:15;803:23; 818:23;835:22;845:13; 847:17 testifying (5) 757:21,22;760:16; 834:7;837:5 testimony (70) 724:24;726:7,9,20, 24;727:21;728:2,11; 730:11;732:9,19,23,24, 25;733:4,17,20; 734:14;736:9;738:18; Min-U-Script® SOUTHERN DISTRICT REPORTERS (25) Stewart - testimony ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 739:15;745:24;746:9, 19,23;750:5;753:20; 754:1,3;755:7;759:16, 19,24;761:1,18;762:1; 763:11;765:9;774:16; 775:13;776:4;778:1,8, 23;780:11;781:5; 785:3;788:12,21; 789:10,15;791:6,24; 792:22;793:11;798:10; 799:20;819:5;834:2, 20,23;835:15,17; 838:15;842:1;843:17; 862:19;876:10;883:25; 890:5 testing (1) 738:5 Thanks (2) 849:12;895:15 theoretical (2) 854:20,21 thereafter (1) 724:3 therefore (1) 840:9 thick (1) 740:8 thin (1) 772:6 thinking (1) 761:17 thinner (1) 772:7 third (7) 722:15;725:3;731:8; 749:11;756:19;839:1; 850:17 Thirdly (1) 856:7 third-party (2) 836:15;842:20 thorough (1) 851:13 thoroughly (1) 732:6 though (8) 724:6;725:10; 761:16;765:20;796:4; 841:22,23;854:18 thought (9) 724:12;731:4; 736:20;738:18;739:25; 779:11;787:25;795:8; 860:8 thousand (3) 757:13;886:4;888:16 thousands (2) 761:15;782:19 three (15) 723:24;724:2;760:4, 5,11;779:13,14;795:4; 869:20;870:5;872:16; 873:15;878:10;881:7; 891:3 thresholds (1) 811:3 thrilling (1) 883:3 throughout (2) 754:21;851:15 throwing (1) 756:12 Thursday (1) 894:24 thus (1) 847:6 ties (1) 865:19 till (3) 793:6,14;797:19 time! (1) 739:1 time-frame (2) 801:11;820:8 times (4) 833:17;879:19; 893:20;894:5 timing (3) 795:2,7;838:5 tiny (1) 766:21 Tire (2) 736:4,7 title (2) 864:1;885:9 today (12) 732:25;743:3;762:4; 793:21;797:10,15,19; 844:11;860:6;883:5; 887:7;894:16 today's (1) 742:13 together (1) 840:17 told (7) 731:21;732:15,15; 764:5;779:9;830:15; 831:17 tomorrow (8) 797:20;847:5;887:7; 894:17,21;895:5,8,11 tone (2) 854:25;889:1 tonight (1) 797:18 took (14) 732:5;733:7;747:24; 759:22;767:10;792:13; 822:19;834:4;840:3, 22;847:13;848:8; 851:13;862:1 tool (2) 866:25;867:1 tools (4) 866:23;878:22; 880:7;884:22 top (5) 785:9;810:2;849:10; 865:22,22 topic (2) 795:16;844:25 total (2) 782:20;815:1 totally (4) 729:22;755:14; 779:19;787:8 touch (1) 790:20 towards (3) 838:9;865:18;869:14 track (3) 876:2;890:14,22 tracked (1) 875:13 tracks (1) 876:3 traditional (1) 841:11 train (1) 867:2 training (32) 726:22;864:24; 865:1,5,7,9,11;868:24; 877:8,11,12;878:16,18, 19,21,25;879:2,5,7,20, 21;880:11,13,15,18,19, 19,23,23;881:1,9,15 transaction (29) 796:20;802:7,9,12; 806:2,3,9;808:7;809:5, 10,23;810:2,18; 814:24;815:17;818:18; 836:4,4;838:6;843:24; 853:13;854:10;857:12; 858:4;860:16,17; 861:5;868:17;880:9 transactions (7) 804:7;834:5;843:9; 861:23;862:24;868:2; 871:10 transcript (11) 722:24;777:22; 780:8;795:6,11,14,22; 796:8,16;797:9,13 transcripts (1) 798:1 transferor's (28) 810:22,24,25; 811:15;812:6,10,20,23; 813:22;814:1,9,14; 815:5,6,11;816:6,21; 817:18,23;818:5,8; 819:1;857:9,11;858:3; 859:3,6,16 transferred (1) 814:5 transform (1) 835:5 trapped (1) 807:18 treasurer (2) 800:11,15 treasury (1) 800:25 treat (1) 827:8 treated (1) 827:9 tremendous (2) 832:25;851:15 Trial (6) 722:1;776:12;780:8; 793:7;797:4;799:3 trials (1) 784:3 tried (2) 730:15;731:6 triggers (1) 767:16 trouble (2) 833:19;892:4 troubled (1) 762:1 troubling (1) 747:1 Trough (1) 723:10 Trout (1) 725:4 true (11) 725:4;735:15;739:6; 745:24;753:1;759:18; 763:19;767:14;773:4; 787:16,16 trumping (1) 866:17 truncated (2) 738:25;739:16 trust (16) 788:18;798:8; 810:25;814:6,9,11,19; 815:19,22;816:10; 817:1,4,5,9;818:5; 861:2 trustee (3) 809:18;810:7,14 trusts (4) 814:3,13;818:11; 834:22 try (4) 743:4;756:20; 758:10;799:12 trying (21) 722:19;727:8;728:6, 11;734:11,14;743:19; 766:19,20;778:23; 780:9,12;782:7; 785:10;796:21;799:11; 818:15;825:24;842:8; 851:19;879:22 turn (9) 722:3;806:14; 813:19;856:25;857:24; 861:13;862:7;884:3; 888:13 turned (3) 809:6;816:14;886:20 Turning (1) 891:3 turns (3) 749:17;786:8;837:13 twelve (1) 820:9 two (32) 728:14;742:8; 744:20;766:16;770:15, 16;780:1;785:7;788:1; 797:21;798:9;800:15, 16;811:17;812:6; 830:13;840:16;846:14; 855:22;856:8;857:3,8; 865:2;873:13;875:19; 886:15;888:16;889:17; 890:24;892:4;893:7; 895:13 type (19) 758:8;778:11; 796:22;820:15,16; 823:1,2;827:20; 843:10,18;844:7,7; 865:7;866:17,25; 879:5;880:14,23; 881:15 type-caps (1) 869:17 types (7) 753:16;759:11; 801:13;826:2,7;843:3; 847:17 typical (9) 823:4;844:3,7,7; 846:13;847:16;851:10, 11;863:4 typically (8) 763:24;828:3; 867:15,18;878:3,10; 882:4;889:9 U U126 (2) 773:19;774:21 ultimate (6) 766:7;773:17; 774:21;796:14;853:10, 12 ultimately (19) 731:24;736:19; 745:8;746:21;769:20; 775:4;777:19;778:3, 15,16;807:24;810:7; 817:14;819:23;839:23; 843:5;853:17;864:13; 880:8 unadorned (1) Min-U-Script® SOUTHERN DISTRICT REPORTERS (26) testing - unadorned ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 771:18 unarticulated (1) 761:19 unchallenged (2) 745:25;755:11 unclear (1) 798:9 unclosed (1) 757:1 uncommon (1) 827:19 under (24) 726:7,19;727:4; 729:13;736:7,16,21; 739:3;745:10;746:19; 761:12;762:5;765:6,8; 775:9;780:20;782:1; 783:13;784:17;814:1, 3,20;839:13;860:4 under- (1) 830:7 underlying (6) 759:23;774:10; 787:15;796:19;817:7; 857:20 understands (1) 834:14 understood (4) 731:17;777:6;792:2; 883:24 undertake (1) 837:15 undertaking (1) 726:13 underwrite (1) 873:9 underwriter (15) 727:12;728:22; 729:19;736:15;745:9, 10;759:13;767:5; 864:24;865:1,8,8; 880:6;881:17;884:20 underwriters (32) 729:14;730:21; 738:11;750:12;768:16; 771:19;773:15,22; 775:1;864:25;867:2; 868:23;876:16,22,23, 23;877:1,3,4,9,17,17, 22,24;878:12,15,18; 879:1,6,17,21,23 underwriters' (1) 878:8 underwriting (114) 722:12,17;724:23, 25;725:8;727:13; 729:5,8;730:20; 738:13,14;739:17,21, 24;740:7;744:18; 745:10,11,12;753:10; 754:25;756:15;758:2, 4,5,24;759:4,14;760:9; 763:15;765:19;766:12, 22,25;767:22;768:8,9, 11;769:3;777:8;784:5, 6,9;789:1,4;801:24; 803:7;822:3;823:17; 824:4;830:23;831:6,7, 7,8,13,20;832:18; 835:16;836:17;838:3, 4,19;842:16;843:12; 853:18,20;854:1,2,4,8; 855:7;862:4;863:3,6; 864:6,10,12,12,14,19, 20,21;865:2,3,17,18; 866:8,10;867:6,7,9,10, 11,20;868:20;869:4,8, 13,14;870:22;871:4,5; 873:15,19;876:14; 877:2,16,25;878:8,12, 15;879:1;890:9 underwritten (4) 743:20;763:3;822:2; 832:15 underwrote (4) 729:3;873:6;876:12, 15 undisclosed (12) 753:11;755:3; 757:12;762:21;763:4, 5;765:7;766:11; 771:13;772:9,10; 773:12 undisputed (1) 789:2 unfamiliar (1) 743:9 union (1) 872:22 unique (5) 736:13;758:9; 760:10;774:5;776:14 unit (1) 869:21 United (1) 803:12 University (2) 800:18,20 unknown (1) 734:15 unless (3) 779:21;795:9;808:7 unqualified (3) 729:9;734:15;765:7 unquestionable (1) 747:18 unquestionably (1) 766:18 unreasonable (2) 740:1;750:14 unreliability (1) 762:16 unreliable (3) 738:6;765:6;781:7 up (36) 722:22;738:18; 748:15,18;756:4; 761:6;764:10;768:11; 772:24;781:12,21; 782:24;783:8,21; 786:4;787:4;790:4; 793:23;797:17;807:22; 809:7;810:22;822:6; 831:22;834:5;841:18; 844:2;859:11;867:16, 16;868:17;878:14; 883:5;892:3;893:9; 895:8 upon (17) 729:14;730:19; 731:7,16;732:20; 743:6;761:9,9,16,18; 762:16;765:6;769:10; 791:19;792:10;814:6; 837:1 upper (1) 781:24 usable (1) 834:15 use (19) 737:18,21;745:11, 12;759:3;760:15,16; 785:23;786:5;789:8; 809:6;841:1,12;842:2; 858:11;879:18;880:10; 881:20;883:4 used (13) 724:9;739:18;745:8; 747:6;755:16;757:12; 773:15;785:16;790:23; 827:3;833:6;843:5; 883:17 uses (1) 745:9 using (16) 733:1;738:3;741:24; 743:3;773:25;778:2; 786:9;790:1;809:12; 822:2;858:17,21; 880:20;883:19,20; 884:24 usual (1) 744:7 usually (2) 727:23;734:22 utilized (2) 781:7;843:19 V vague (3) 833:1;863:7;870:17 vaguely (1) 735:5 valid (3) 761:17;787:12;791:1 validation (5) 825:11,23;832:1,5; 854:13 validity (1) 834:17 valuation (10) 743:3;768:18; 812:17;817:23;818:5, 8;819:1;832:3;861:19; 880:4 valuations (1) 743:1 value (19) 809:1;812:12,15,19; 814:13;815:5,6,7,8,10, 15;817:19;819:7; 823:15;826:3;857:16; 858:3;879:25;880:22 valued (2) 812:10,11 valuing (2) 808:20;812:5 variations (1) 736:11 variety (1) 845:2 various (11) 740:4;745:20; 756:15;865:13;866:23, 24;874:5,11;875:22; 881:20;885:2 vast (3) 869:17,17;877:4 vastly (1) 766:22 veracity (1) 743:4 verification (3) 739:20;741:3;882:1 verified (7) 735:24;739:7;830:7, 9,23,25;831:1 verify (1) 831:4 versions (6) 737:7,8,11,12;834:4; 847:19 versus (4) 760:17;761:8; 779:16;830:3 vetting (1) 843:8 via (2) 891:15;893:9 vice (4) 722:12;800:11; 864:2;892:16 videotape (3) 795:4;799:16;842:10 videotaped (1) 799:15 view (5) 752:20;753:14; 795:16;798:2;835:13 vintage (2) 849:20;850:12 violated (3) 744:18;746:5;759:15 violation (1) 885:7 violations (2) 778:25,25 violative (1) 838:4 virtually (4) 819:25;820:23; 821:16;851:14 visit (1) 874:12 VM (2) 892:5,6 voicemail (2) 892:7,9 volume (1) 882:10 W W-2 (1) 881:24 waffling (1) 727:25 wage (1) 881:24 wait (3) 794:25;842:4;850:5 waive (1) 837:17 walk (1) 758:5 walked (1) 743:2 walks (1) 724:1 walk-through (1) 842:25 Walzak (77) 726:7,15,21;727:3,5, 9;728:5;729:3,7,13,19; 730:18;731:8;732:10, 19;734:24;735:2,9; 737:6,10;738:13; 739:2,8,18;741:13; 742:4,11;743:5; 749:22;750:16,22; 751:1;754:6;755:5,6, 10,25;756:17;758:4,12, 25;759:17;760:1,10; 761:6;762:10,13,19,21; 763:19,21;764:14; 765:2;766:24;768:6, 19;769:5,10;772:5,6, 11,15,22;773:2,11,16, 18;774:1,14;775:1; 776:14,16,21;778:24; 781:4;838:10;883:4 Walzak's (12) 730:11;733:17; 740:23;742:19;748:7; Min-U-Script® SOUTHERN DISTRICT REPORTERS (27) unarticulated - Walzak's ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 757:23;762:5;769:7; 772:17;777:17;781:3; 784:11 wants (2) 723:17;797:3 warehouse (3) 832:17,24;872:22 warranties (10) 744:20;746:6;754:2, 3;757:24;776:7;777:9; 839:15;861:24;862:3 warranty (1) 839:22 Washington (1) 876:24 waterfall (6) 810:1,2,9,11;812:4; 817:1 way (25) 734:18;736:1,6; 744:2;761:15;765:14; 769:22;771:19;777:15; 784:7;787:14;793:15; 799:19;828:1;834:13; 839:16;840:6;841:11; 845:18;852:4;855:10, 13;871:6;876:9;885:10 ways (5) 744:10;750:18; 779:22;795:18;860:17 weaken (1) 868:4 weakens (1) 868:5 weakness (2) 752:16,22 wean (1) 860:22 web (2) 741:24;749:7 websites (1) 885:2 Wednesday (1) 797:22 week (6) 755:7;799:12; 839:19;840:24;851:8, 10 weeks (4) 733:8;749:23; 766:16;768:1 weight (6) 725:11;752:23; 769:20;775:8,12;823:5 wending (1) 769:22 weren't (5) 744:17;784:8;808:6; 820:24;844:1 West (2) 876:19,21 Wetzel (2) 723:10;725:3 what's (9) 738:13;759:23; 760:10;766:1;770:7; 777:11;782:18;842:21; 893:1 whatsoever (1) 857:17 whereby (1) 872:20 white (5) 806:13;849:6,7; 891:18,20 whittle (1) 820:1 whittling (3) 820:19,22;821:11 whittling-down (1) 821:22 whole (16) 725:22;739:7; 740:15;753:1,17; 754:19;759:1;763:17; 765:3;774:1;778:11; 779:23;817:21;831:25; 832:2;834:4 wholesale (2) 731:17;734:14 wholly (2) 800:24;837:24 who's (1) 873:10 Williams (2) 797:12;836:13 willing (1) 756:16 willingness (1) 866:18 wind (1) 811:1 winds (1) 817:16 wing (2) 876:19,21 wiring (1) 872:20 wish (1) 842:10 withdraw (1) 804:11 withdrawn (3) 759:24;765:15; 846:12 withdrew (7) 744:24;759:22; 760:1,12,25;761:22; 769:11 within (20) 731:2;735:24; 781:10,15;789:23; 801:15;825:24;833:21; 836:5;837:10;838:4; 858:10;870:25;875:12; 876:1,1;885:15;889:8; 890:21,23 without (6) 731:17;734:4; 736:20;763:15;784:6; 834:22 witness (143) 722:11;724:2; 725:19;726:15,21; 727:10;743:17;744:23; 745:15;746:15;750:4, 7,8,8;753:20;754:5,18; 758:17;774:20;775:10; 795:15;797:11;798:4, 11,12;799:7,25;800:3; 803:23;818:20;821:20; 822:9,12,15,19,23; 824:18;826:10,12,18, 23;827:4,7,11,15,25; 828:3,8,12,16,21,24; 829:5;830:3,6,10,15, 22;831:1,5,12,22,25; 832:5,10,14,23;833:4, 7,12,23;836:7;838:12; 840:10,18;841:2,25; 843:14;846:5,16; 850:9,15,24;856:5,10; 863:13,14,18;866:5; 869:23,25;870:4,17; 881:23;882:3,8,13,23, 25;883:12,15,19,23; 884:2,8,13,16,17,20; 885:1,8,15,25;886:14, 23;887:3,5,22;888:13, 14;889:25;890:11,13, 20;891:6,7,9,17,21,25; 892:6,11,13,18,23; 893:2,7,13,17,20,24; 894:2,13 witnesses (8) 724:24;726:3;795:2, 3;798:5;799:9;895:5, 10 witness's (1) 862:7 wonder (1) 749:18 wondering (1) 889:20 word (6) 755:16;776:1,22; 778:14;785:16;806:3 words (11) 724:19;728:13; 748:23;750:12;757:10; 763:9;796:4;838:2; 855:8;870:16;873:19 work (16) 731:18,18;733:23; 740:22,23;741:23; 743:21;746:11;765:8; 768:10,13;776:3; 786:5;865:4,10,13 worked (9) 731:13;749:25; 802:6;805:6;819:21; 820:8;825:25;876:17; 883:15 working (15) 728:20;765:3;768:6; 792:1;797:21;806:5,6; 809:4;818:13;875:5; 880:7;889:2,10; 891:24;894:9 works (2) 765:19;768:4 worksheet (1) 889:4 world (9) 729:4,8;730:16; 738:11,15;744:6; 761:15;768:11;804:5 worse (2) 749:5;782:23 worth (4) 784:16;820:10; 859:25;874:20 wound (1) 807:25 wow (1) 749:17 wpcom (1) 891:16 wrapped (1) 811:20 writing (3) 771:13;830:8;871:4 written (5) 731:19;772:15,20; 773:20;816:8 wrong (14) 726:13;738:19; 747:20,21;758:6; 760:23;761:22;765:17, 18;769:16;770:16; 787:8;792:18;859:21 wrote (1) 743:1 Y year (9) 752:18,21;768:2; 769:15,18;820:9; 834:4;865:2;882:18 year-long (1) 853:23 years (19) 727:19;728:18,24; 729:3;762:8,11,12; 768:23;787:9;800:14, 15;801:3;865:16; 868:14;878:10,11,12; 884:11;889:14 yes/no (2) 778:15,16 yesterday (1) 762:4 Z zero (6) 792:23;848:10; 857:15,16;860:6; 861:19 zone (1) 876:22 0 0001 (1) 887:15 01-00326942 (1) 888:13 0129 (1) 883:4 021270128 (1) 883:4 05 (1) 786:5 06 (1) 786:5 1 1 (5) 849:14;889:1; 892:25;893:1,12 1.25 (1) 860:12 1:00 (1) 793:3 10 (10) 737:22;762:10,12; 776:16;777:25;800:14; 846:19;862:12;882:18; 894:17 10,025 (1) 783:16 10:00 (1) 895:16 10:25 (1) 846:19 100 (1) 756:6 10-K (1) 817:24 10-q (3) 813:6,9;856:23 10-q's (1) 818:1 11 (3) 789:16,18;882:18 12 (5) 776:16;777:9; 782:16;785:5;861:11 12,000 (3) 724:21;754:21; 787:19 1232 (1) Min-U-Script® SOUTHERN DISTRICT REPORTERS (28) wants - 1232 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 891:15 126 (1) 774:14 1302 (1) 723:13 131 (4) 723:1,2,7;724:15 132 (1) 723:23 133 (1) 723:24 134 (2) 862:8,12 135 (3) 724:4;862:8,12 14 (4) 776:20;777:1; 865:16;868:14 14th (1) 893:15 15 (5) 755:24;783:11; 861:11,17;881:4 1559 (3) 888:15,21,25 15th (3) 733:8,8;791:10 16,000 (2) 761:17;784:15 17 (2) 727:19;777:12 1762 (2) 723:10,13 18 (3) 776:23;777:21;801:3 1990 (1) 864:23 1991 (1) 864:23 2 2 (9) 757:24,25;776:20; 777:9;849:18;888:15, 21,24;894:8 2:00 (3) 793:3;795:12;798:16 2:15 (1) 799:2 20 (11) 729:16;755:9,10; 758:8;763:7,9,13; 784:10;859:6,16; 878:12 200 (1) 756:7 2001 (2) 849:19;850:11 2002 (1) 801:5 2004 (16) 729:6;864:8;865:15, 25;866:21,22;867:11; 869:9;871:14,24; 872:1,25;876:25; 878:7,16;879:2 2004-2005 (1) 858:3 2005 (13) 729:6;782:23; 804:18;846:19;857:24; 859:23;860:3;861:10, 18;864:17;866:21; 867:4;888:18 2005-1 (14) 781:11;783:16; 802:1,8;805:6;808:21; 809:23;812:8;814:19; 815:18;817:18,19; 818:3,5 2005-2006 (1) 801:8 2006 (14) 723:9;729:6;857:12, 17;859:23;861:13,14, 19;866:21;869:10; 877:1;878:7,16;879:2 2006-2 (11) 781:11,21,25; 782:15,19;808:15,23; 812:9;815:22;816:7,10 2007 (4) 729:6,15;812:9; 871:14 2008 (3) 812:8;892:22;893:15 2008-02-21 (2) 891:13,14 2008-02-23 (1) 892:14 2008-09-16 (1) 892:17 2008-09-22 (2) 891:4,8 2008-10-16 (1) 891:4 2008-10-22 (1) 892:25 2008-11-18 (1) 893:11 2009 (8) 781:17;782:3;783:2; 786:10;888:15,21,24; 894:8 2011 (2) 857:5;859:2 2012 (7) 752:21;757:5;813:8; 814:21;815:23;857:4; 895:16 21 (2) 777:1;891:13 22 (3) 776:20,23;777:21 23 (2) 817:7;895:16 23960 (1) 887:19 25 (3) 776:20;817:7;881:5 250104 (1) 748:20 251 (2) 785:24,25 257/lines (1) 777:9 270 (3) 789:16,17,18 279 (1) 780:7 279/line (1) 777:12 28.8 (2) 816:3,9 280 (1) 780:8 280/line (1) 777:13 288 (3) 785:4,7,8 28th (1) 723:9 292 (2) 790:17,21 2nd (1) 888:17 3 3 (2) 762:8;849:21 3,841,200 (1) 782:11 30 (5) 728:18;729:3; 814:21;815:23;878:12 30th (1) 857:4 31 (2) 848:14;859:2 31st (1) 857:5 34 (1) 783:4 35 (3) 782:17,19,21 358 (1) 781:11 37 (4) 782:12;783:3,5; 792:15 371 (1) 781:10 4 4 (1) 876:19 4:00 (1) 895:2 40 (1) 739:4 400 (16) 781:12,25;783:2; 785:12;786:9;787:12, 18;791:17,19,20,21; 792:1,8,10,11,12 45 (10) 791:14,17,19,20; 792:3,8,10,11,13,14 47 (4) 782:2,17;786:7,9 473 (2) 791:10,10 5 5 (11) 776:15;781:10,16; 789:24;790:9,17,21; 791:11;792:6;894:23; 895:1 5,000 (1) 782:21 5,112 (1) 782:20 5:00 (3) 793:24,24;797:19 50 (14) 733:13;750:3,6,9; 781:13;785:12;789:21, 22;791:8,9;795:15; 823:13;877:3;878:3 500 (2) 785:23;786:1 500485979 (2) 770:11;771:1 500529094 (2) 770:20;771:4 50s (1) 756:5 51.2 (1) 816:3 52c (3) 775:21;784:2,17 54 (3) 847:23;848:11,14 555/lines (2) 776:20;777:1 556 (2) 777:23,24 556/lines (3) 776:15,23;777:21 558/lines (1) 776:20 57 (1) 813:21 5th (1) 893:15 6 60 (4) 784:3;835:14;877:3; 878:3 600 (2) 756:22;871:9 610 (4) 733:5,15;769:15,17 613/lines (1) 776:16 620 (2) 869:16;871:8 640 (2) 871:8,8 660 (5) 869:18;870:13,13; 871:2,8 6-year-old (1) 764:21 7 7 (5) 727:3,6,8;777:13; 792:4 7:00 (3) 793:20,25;886:20 70 (2) 835:14;842:15 70,000 (1) 728:21 702 (4) 726:7,20,21;746:19 72 (1) 757:25 75 (1) 823:13 75.56 (1) 787:6 8 80 (2) 781:14;790:10 80s (1) 756:6 87.59 (1) 783:8 9 9 (2) 776:15;862:12 9.5 (1) 859:4 90 (2) 737:24;781:15 90th (4) 752:8,10;762:4,4 91 (4) 847:13;848:7; Min-U-Script® SOUTHERN DISTRICT REPORTERS (29) 126 - 91 ASSURED GUARANTY MUNICIPAL CORP. v FLAGSTAR BANK, FSB, et al., October 22, 2012 849:24;850:21 95 (5) 781:8;787:13;788:2; 789:24;790:8 99.9 (1) 779:22 Min-U-Script® SOUTHERN DISTRICT REPORTERS (30) 95 - 99.9