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ConsumerFinance GroupStatement ofqualifications

Last updated:January, 2012

ConsumerFinance GroupStatement ofqualifications

This proposal does not constitute a contract to perform services. Final acceptance of this engagement by PricewaterhouseCoopers is contingent upon

successful completion of PricewaterhouseCoopers' acceptance procedures. Any engagement arising out of this proposal will be subject to the execution

of our formal engagement contract, including our standard terms and conditions and fees and billing rates established therein.

Table of Contents

Summary of qualifications and experience ....................................................................................................... 3

Our clients ..........................................................................................................................................................13

Thought leadership ............................................................................................................................................14

Conferences and events .................................................................................................................................... 20

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Summary of qualifications andexperience

A leader amongprofessional servicesfirmsPwC's Consumer Finance Group (CFG) has over170 professionals across the country dedicated toassisting clients in the consumer finance sector.Our focus is on mortgage banking, auto finance,credit cards, and other forms of consumer credit.We are at the forefront of the industry, workingto anticipate, understand and resolve emergingindustry opportunities and issues.

Our clients consistently turn to us for help inareas such as: Strategy, Loan Production,Servicing, Capital Markets, ManagementReporting, Customer Experience and RiskManagement.Our detailed subject matterknowledge and regular communication withindustry leaders (including regulators) allows usto pioneer solutions to current industry issuesand harvest opportunities to optimize processefficiency. We work with our clients in thefollowing areas:

Default RiskManagement

ServicingAdvanceManagement

Collections andLoss MitigationStrategyImplementation

LoanServicingProfitability

CustomerProfitabilityandSegmentation

Shared Servicesand CostManagement

RegulatoryCompliance

Asset QualityManagement &OriginationControls

ManagementReporting

CustomerRetention/CustomerExperience

MHA/QualityAssuranceProgramAnalysis

Credit RiskManagement

MortgageForeclosureStrategies

Auto FinanceDealer ProcessReviews

Creation &analysis ofclient-specificmodeling

Accountingand Auditing

Mergers andAcquisitions

PricingStrategies

To serve leading organizations, we havedeveloped deep and meaningful knowledge ineach of these areas. By investing in our people,our industry relationships, and our commitmentto thought leadership, we have developed aspecialty competence that allows us to leadmarket innovation and quickly adapt tochanging market trends. In addition to our coreservices, we also leverage specialized skills frombroader PwC resources in key areas such asinformation technology, securitizations,regulatory matters and other areas that arecritical to our clients' needs.

Recognizing PwC’s position in the industry,regulators, industry associations and accountingrule-makers often seek advice from theprofessionals of the CFG practice. This not onlyallows PwC to anticipate issues and trends, butto help shape them as well, and offer clients aunique perspective that others may lack.

We are in anunprecedented time ofchangeNo industry better exemplifies this than theconsumer finance industry. Given thecontinuing regulatory changes, and thesignificant changes in customer and competitordynamics, our clients need a partner who canmake sense of all this information, stay abreastof developments, develop a plan to takeadvantage of emerging opportunities, andidentify ways to address significant issues.

PwC has become that group.With our team ofsubject matter specialists, we have represented

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our clients in strategizing and navigating someof the most high-profile economic events of ourday. Using mortgage foreclosures as anexample, PwC advised 10 of the 14 recentConsent Orders sent out by regulators in April2011. So when you hire the PwC ConsumerFinance Group, you're hiring more than aperson or a team. You're hiring decades ofexperience in industry best-practice. As anindustry leader, PwC will keep you updated onthe latest news and trends, empowering you tomake informed decisions..

We are at a unique point in the traditional cyclewhere core servicing, default and productionneeds are driving mortgage company strategiesand investments. Interest rates are at extremelows with the Fed not likely increasing rates forat least the next two years. With investmentreturns low on fixed income loans, autofinancing, refinancing, and credit cardexpenditure is becoming more important in theday-to-day survival of the consumer. We arealso witnessing the emergence of a “new normal”market where innovation and risk managementmatter more than ever.

As a result, we see the next several months as animportant transition period for the industrywhere:

Focus will remain on managing lossesand responding to regulator pressure

New operational standards willpenetrate large and small lenders

Information and ability to react quicklywill separate peers, and

Industry participants will refocus onways to grow – increasing competition,separating themselves from peers andbeginning to rebuild their businessestoward profitable and sustainable

growth strategies. In short, volumebased strategies will not survive.

PwC's Consumer Finance Group focuses on allthese asset classes, with a commitment,dedication, and persistence of being leaders ofour industry.

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Meeting the industry's ongoing challenges byharvesting opportunities and developing innovativesolutionsIn the current environment, PwC is expertly and efficiently moving to stay abreast of market issues,facilitate client discussions, and streamline processes to mitigate risks. Experienced, focusedprofessionals can help you: improve your operations by benchmarking your practices, develop innovative,strategic solutions to your business opportunities, optimize your profitability, enhance your riskmanagement, and help you create a sustainable competitive advantage.

While the future is uncertain, there are key elements of the business strategy that will drive successregardless of how the future looks. Some of these are illustrated in the diagram below.

Below are examples of how the four quadrants of strategic change, illustrated above, help optimize value:-

▼ Opportunities/ Issues

▼How PwC adds value ▼Impact ▼ Examples of workdone

Operational Performance

OperationalExcellenceBattered by a weakeconomy, consumerfinance companiesare increasinglyfocused onefficiency andquality inanticipation of afundamentallyaltered financiallandscape requiring

To improve efficiency andquality of operations, PwCworks collaboratively withclients in the followingareas:

Performancediagnostics andbenchmarking

Process analysis andre-design

Process andtechnology alignment

Key performance

Sustainable costreduction in loanorigination andservicingoperations

Reduction inprocess defectsand re-work

Improved agilityin responding tochanges

Morecomprehensive

Fulfillment operatingmodel design

Servicing and defaultoperations review

Risk-based changecontrol programdesign

Third-party vendormanagement programdesign

Sub-servicer selectionand transfer

Operations capability

Optimizing value

Customer value

Operationalperformance

Customer profitability

Customer Experience

Retention &crosssell

Cash flowmanagement

Channelmanagement

Servicingperformance

Asset management

Financialperformance

Price/value Hedging

Buy/sell/hold

Best execution

Expected/actual return

Attributionanalysis

Servicing profitability

Risk, Compliance and Governance

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leaner operations. metrics development Shared services

design andimplementation

view of operationsperformance

model development Performance

dashboarddevelopment

RegulatoryComplianceFaced with rapidlyescalatingregulatorypressures,organizations needto strengthen theirregulatorycompliancefunctions andremain ready torespond to evolvingsupervisoryexpectations.

Complianceprograms havetaken on newprominence in lightof the bankingregulator horizontalreviews, foreclosureconsent orders androllout of theConsumerFinancialProtection Bureau("CFPB").

PwC has assistedorganizations incomprehensivelyevaluating their regulatorycompliance functions tomeet the new paradigm.

We have advised clients onthe optimal organizationalstructure for regulatorycompliance, the adequacyof resources, and how totransform compliance intoa business-criticalfunction. We have workedwith clients to enhancetheir policy & procedures,controls, changemanagement, riskassessment, compliancetesting, key risk indicatorreporting and trainingprograms.

We regularly helporganizations respond toand remediate exceptionsand Matters RequiringAttention ("MRA") arisingfrom internal and externalexaminations.

Our team also specializesin conducting servicingcompliance attestationsfor servicers subject toRegulation AB, USAP, andHUD requirements for allasset classes includingresidential mortgage,commercial mortgage,reverse mortgage, auto,and credit card.

Improved exampreparedness

Sustainableprocesses tomaintain compliancewith evolvingregulatoryrequirements

Enhancedcompliancemonitoring toprevent and/ordetect controlbreakdowns

Embedding a strongcompliance andcontrols culturethroughout theorganization

Improved servicingpolicies, proceduresand controls

Enhanced peoplethrough developmentof training programsand capacity analysis

Timely andtransparentcommunication ofservicing complianceattestation testingresults

Development andimplementation of acomprehensivecompliance program

Foreclosure consentorder advisoryprojects addressingcompliance,operational control,change management,third partymanagement,managementinformation systemsand foreclosurepractices

Assessment andremediation projectsto supportimprovement ofservicing, foreclosure,managementreporting, and otheroperational areas

Readiness reviews forupcoming regulatoryexamination,including the MakingHome AffordableProgram

Regulation AB, USAP,HUD servicingcomplianceattestations

Strategies andapproaches to manageand monitorcompliance withrecently announcedgovernment programs(e.g. HASP, MHAP,HAFA, UP, TALF,TARP, HUD)

RiskManagementProcesses withinthe Consumer

With the recentidentification of high-profile process weaknesseswithin Consumer Finance

More robust riskassessment andmitigation practicesreducing, and more

Enterprise RiskManagementAssessment

Evaluation and

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Finance industryare typicallycomplex with alarge volume ofregulatory,guarantor, andinvestorrequirements. Thiscomplex operatingenvironmentgenerates a widerange of riskswhich, wheninappropriatelymanaged, can resultin significantreputational andfinancial harm toindustryparticipants.

operations, we are focusedon assisting industryparticipants by: Executing more

robust riskassessments

Benchmarkingexisting riskmanagementactivities to leadingindustry practice

Performing analysisfor inclusion andcompliance withRegulatoryrequirements

Developing QualityAssurance andQuality Controltesting programs thatensure coverage of allkey risks in theproduct lifecycle

clearly defining, theresidual risk to theorganization.

Improvedtransparency andclarity ofManagementReporting toempower seniormanagers to optimizethe timing andquality of theiractions

More effective andefficient testingstrategies focusedupon the key driversof risk withinorganizations

Implementation ofQuality Assuranceand/or QualityControl functions

ManagementReporting analysisincluding dashboardand KRI development

Peer Benchmarking,Gap Analysis, andRecommendationIssuance of ExistingRisk ManagementPractices

StrategyDevelopmentDevelop corporateand business unitstrategy thatincorporates bestpractices, industryknowledge, currentaffairs, andmanagementdirection.

PwC can acceleratebusiness strategydevelopment by usingproven methodologies,tools, and specialistresources who havestrategy backgrounds withsignificant experience inthe consumer financeindustry.This support could rangefrom focused strategicadvice and insight in aparticular area to runninga strategy program for thebusiness as a whole.Linking the strategy to aframework to deliveractionable change is a keydifferentiator for PwC inthis area.

Our deep knowledge of theconsumer finance industryenables us to provideadditional perspective onthe implications ofregulatory and industrychanges such as Dodd

Clearer articulationof strategy forconsumer financewith a prioritizedtransformation planwhich provides theroadmap to make thestrategy actionable

Not only will thishelp ensure thatthere is agreement onthe longer-termvision for thebusiness across allkey stakeholders, butit will also provideimproved directionfor staff in a period ofunprecedentedchange.

Assessment ofstrategic positioningincluding market andcompetitor assessment

Value managementassessment

Future environmentalchange impactanalysis

Scenario modelingand strategy playbook

Defining strategicvision and the case forchange

Development of futurebusiness design andtarget operating model

Business casedevelopment

Development oftransformationgovernance andchange portfoliomanagementcapabilities

Development of thetransformation planwith structuredprioritization of

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Frank and ServicerCompensation Reform.

change initiatives Cost transformation

strategies for effectivedownsizing

M&A strategy Strategic planning

process design andsupport withexecution

Balance scorecard andvalue driver design

ServicerSurveillanceWith the increasedscrutinysurrounding theever-evolvingindustry practicesof servicing assets,servicers areconstantly lookingfor ways to improvedata & processintegrity throughthe effectivemonitoring of allaspects of thebusiness.

Leveraging our expertisein the mortgage industry,PwC can assist indeveloping servicingmonitoring procedures aswell as perform deep divereviews in specific areas.These areas include, butare not limited to:

Vendor Monitoring Loss Mitigation,

including LoanModifications,Bankruptcy,Collections, ShortSales, Deed in Lieu

Foreclosures Investor Reporting Advances Custodial Documents Government

programs, such asHAMP, HAFA, UP,2MP, TALF.

Improved monitoringof key areas of focuswithin servicing

Enhanced monitoringto prevent and/ordetect control failures

Improved vendormonitoringcapabilities to allowservicers to managethe relationship andworkflows with thevendor moreeffectively

Respond toregulatory, investor,and other third-partyrequests on thequality of theservicing of theirrespect assets

Development ofvendor scorecards thataddress variousaspects of therelationship includingthe specificrequirements in theServicing LevelAgreements, laws andregulations

Detail review of loanfiles for compliancewith foreclosure laws

Analysis of thecorporate advancepolicies andprocedures todetermine thecollectability ofadvances as well ascash management

Analysis of currentservicer practices toprogram requirementsto identify gaps

Customer Value

Core ServicingWith theunprecedentednature of themortgage markets,and continuingreview ofregulations,servicers need tostay abreast of howthese issues affectthem. Industrychanges continue toput significant

Utilizing strong industryknowledge andexperience, PwC:

Provides a uniqueperspective on theissues servicers facein today's climate

Couples thatexperience withanalytical, processand projectmanagementsolutions tailored to

PwC uses our uniqueperspective to deliverpractical solutions totoday's challenges. PwC'ssolutions:

Improve efficiencies Leverage economies

of scale to developand implementleading industrypractices

Provide structuredapproaches to

Development ofpolicies & procedures

Identification of keyperformance metrics,risks, and controls

Enhanced productionand servicingmanagementreporting

Servicing profitabilityanalysis

Project managementover strategic

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pressure on people,process, andtechnology. Areactive approach isjust not sustainableover the long-term.

the needs of theservicer

servicer's challenges Strike a balance

between respondingto current needs andbuilding for thefuture.

initiatives.

CustomerExperienceWith an increasingfocus onorganizations beingmore customer-centric, how wemanage theirrequirements andfeedback isbecoming moreparamount.

PwC has helped consumerlending organizations inthe development andimplementation of theircustomer experiencestrategy. We offersolutions that helpcompanies gain greaterinsight into customers'wants and needs, helpingthem to improve customerloyalty and increasecustomer revenue.

Enhancing the customerexperience can translateinto:

Incrementalrevenues comingfrom retention rateimprovements,

Greater receptivenessto additional productand servicesofferings, and

new customers thatare attracted basedon positiveexperiences thatexisting customersare sharing throughsocial mediaapplications.

Complaint handlingprocess improvement

Implementation of avoice of the customer(VOC) program

Development ofcustomer experiencedashboard

Development ofcustomersegmentation andlifetime value analytics

Analysis of customerretention and cross-selling efforts

Customer journeymap development

Financial Performance

Pricing Analyticsand StrategiesThere is a growingconcern that ascompetitionincreases, marginswill begin todeteriorate. Therewill be lesstolerance forpricinginefficiencies.These pressureswill force manyinstitutions tocontinue to lowermargins, ratherthan apply a moretactical andresponsive strategy.

With the recent emphasison capacity management,we encourage lenders tofocus their efforts ondeveloping a sustainablepricing strategy through:

Benchmarkingpricing strategiesagainst marketpeers

Governancedefinition

Developing &implementingpricing modelsand analyticsdesign

Managementreporting

Revenueoptimizationstrategies

Our intention is tobetter align to themarket forces toincrease profitabilityand prioritizerevenue developmentefforts.

Provide guidance onmore effectivegovernance over arevenue generatingprocess.

Provide insight intoascertaining theeffectiveness of aprice strategy.

Reduce revenueleakage.

Cost transformationprojects

Creating demand-based pricing modelsto maximize profit perloan

Price model businessrequirementsdocumentation

Design and developkey performanceindicator metrics

Secondary marketingperformancediagnostics

Price and hedge modelvalidation

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AccountingAdvisoryNew accountingstandards orchanges to existingones consistentlyalter the reportingenvironment fororganizations.This, coupled withnew transactions orsuddenly increasingvolumes oftransactions,requires robustaccounting policiesand processes.

PwC offers:

A broadperspective acrossconsumer financeaccountingpractices;

A deepunderstanding ofconsumer financebusiness issues;and

A thoroughunderstanding ofthe latestdevelopments andareas of focus ofstandard-settersand regulators.

Clients gainconfidence thataccounting policiesand practices willwithstand regulatoryand investorscrutiny.

Performed post-merger due diligenceand integrationanalysis of accountingpolicies andoperations

Implementedaccounting for FDICIndemnificationAgreements

Developed accountingpolicies and processesfor acquired impairedloans

Analyzed theaccounting for losseson repurchased loans,troubled debtrestructures, andcredit impairment

CostTransformationLenders haveexperienced anescalation in costsresulting fromregulatory demandsand also reducedmanagement focuson this area as theyrespond to thesignificant changesfacing the industry.

A structured approachto cost transformationthat leverages triedand tested costmethodologiescombined with an in-depth knowledge ofthe mortgage business

Detailedunderstanding ofwhere broader valueleakage occurs withinmortgage banks.

Rapid identification ofopportunities andapproaches toimmediately dampencost base increases.

Collaborativeidentification of costimprovementopportunitiesbalanced withindependent challengeby industry SMEs.

Improved efficienciesand reduced costbase

Reducedorganizationalcomplexity

Improvedeffectiveness

Capacity release forpotentialreinvestment withinthe business

Business casedevelopment andprogram design

Structured approachto strategic costmanagement todeliver sustainablechange in the costbase

Opportunityassessment andprioritization

Functional costbenchmarking

Independent benefittracking

Delivery of processperformanceimprovement

Development of costfocused culture todeliver ongoingbenefits

Modeling &AnalyticsModels need actualand perceivedintegrity to providevalue to an

We do independent third-party validation of models,ensuring regulatorycompliance and riskmitigation. We bringindustry perspective and

Models areincreasingly drivingdecisions andinstitutions do nottypically have well-established model

NPV Model Validation Model creation and

validation of modelssuch as:– Loan Modification– NPV models,

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organization. As theuse of themincreases, so doesthe regulatoryscrutiny of thesemodels, making itmore importantthan ever tovalidate and buildsound models.

knowledge of industrytrends.

PwC implements industryleading practicetechniques to streamlinewhat would take in-houseteams a lot longer todevelop.

validation teams. Wecan help bridge thisgap immediately.

At clients where PwChas built models (eg:NPV loanmodificationmodels), we helpdrive businessdecisions based onanalytics rather thanintuition. This helpscontrol risk bothfrom a complianceand credit riskperspective.

– Loan Loss Reservemodels,

– TDR reservemodels, DistressedAsset Valuationmodels,

– RepurchaseReserve models

Risk analysis

TechnologySolutionsTechnology isconstantlychanging, providingopportunities forcompetitors tobecome morecompetitive byincreasingefficiencies,decreasing costs,and increasingearnings. We haveadapted newrequirements,advancements intechnology, to LoanOriginationSystems, ServicingSystems,ProprietaryServicingProfitabilityEngines,AccountingSystems, andFinancial models.

With a uniquecombination of mortgageexpertise paired withtechnology skills, PwCdelivers value across arange of services/solutions:-

Writing businessand technicalrequirements

Managing small-to-large systemimplementationsor releases (fromdevelopment totesting toproduction)

Implementingcustom datawarehouses andreportingsolutions

Building complexanalytics &financial models

Clearer ROI metricswith value-addedreporting to bettermanage risk, pricing,and profits/ revenueoptimizationopportunities

Potential forsignificantimprovements in thequality of technologyimplementations

Cost-savinginitiatives

Reporting andchallenging dataissues overcome

Streamlinedprocesses

ALIAS - FDICreporting tool

Loan originationsystemimplementation,including moreaggressive qualityassurance monitoring

Servicing profitabilityassessment tool:maximizingprofitability on MSR's

Mortgage servicingP&L analysis

Serving system anddata warehouseimplementations andsubsequent releases

Default managementreporting

Accounting models(e.g. allowance,repurchase reserves,FDIC reporting, etc).

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Asset Management

DefaultManagementThe currenteconomicenvironment hasput upwardpressure ondelinquency andlosses. We havenavigated thesedifficult times withour clients todesign solutions tomitigate againstportfolioperformancedownturns whilebecoming moreefficient.

Analyze processes, designactionable changepropositions, andimplement approvedchanges in all areas of thedefault management life-cycle. Key competenciesinclude: Pre-collectionrisk analytics, differentialtreatments, early and latecollections, homeretention liquidations andrecovery. Clients realizevalue from our ability tocompare their operationsagainst our understandingof leading industrypractices, identifyingcompliance gaps,opportunities forimprovements, and keyareas of risk.

Improved portfolioperformance results

Improved borrowexperiences

Reduced servicingcosts

Remediation ofcompliance gaps

Process improvementand re-engineering

Improved riskmanagement anddecision making

Strengthening ofoverall defaultoperations

Liquidation ModelAnalysis andDevelopment

Loss Mitigation RiskAssessment

Loss MitigationProcess Analysis

Default ManagementStrategy

Capacity ModelAnalysis andDevelopment

Consent OrderImplementationSupport

Change ControlAnalysis andDevelopment

Foreclosure ProcessAnalysis and RiskAssessment

Risk Scoring anddifferential treatments

Dialer optimizations Recovery strategies

Loan Origination& FulfillmentClients need a wayto optimize loanoriginationprocesses from anoperational andcomplianceperspective.

PwC can assess loanorigination and fulfillmentoperations, define a futurestate and implementstrategies to enhanceoperations andprofitability. Frommarketing and new clientacquisition, to creditapplication andfulfillment, we assess eachstage and ensurecompliance with state,federal, and local laws.PwC also evaluates vendormanagement for third-party service providersfrom credit, appraisal,title/closing, etc.

Reduced repurchaserisk for loanspurchased by outsideinvestors.

Potential reductionin compliance issuesand headlinereputation risk.

Reduced credit lossesby implementing theproper controls andlines of defense.

Enhancedcompetitiveness byoptimizingthroughput andimproving cycletimes

Strategic initiatives Business process

improvement Structural realignment Process Automation Potential fraud

detection andprevention

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Our clients

In addition to our US clients we also serveclients on a global basis in countries such as:Canada, United Kingdom, Greece, China,Ireland, and Australia. Our US clients includemost major banks and financial servicesinstitutions, which we service in either an auditor advisory capacity. A summary of our USrelationships includes:

Mortgage banking 8 of the top 10 residential mortgage

originators 10 of the top 20 residential mortgage

originators 9 of the top 10 residential mortgage

servicers 13 of the top 20 residential mortgage

servicers Working with multiple GSE's.

Automotive finance 6 of the top 20 Automotive Finance

Companies

Timeshare Relationships with 3 of the largest

operators of vacation ownership resorts.

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Thought leadership

Our Consumer Finance Group plays animportant role in shaping the ideas that affectthe consumer finance industry. In today’senvironment, staying abreast of industrystandards and trends is crucial, and stayingaware of changes in the marketplace enables usto provide the most current and applicableadvice to our clients. Our professionalsconsistently share insight through publications,technical whitepapers, and conferencepresentations.

Point of ViewChange within the consumer finance industry isswift and with this change comes a need tounderstand its impacts. Our “Point of View”documents were launched in 2008 to summarizeemerging issues and identify the expectedimpact of the specified topic.

Asset Management

Prepare now tomanage REO (realestate owned)inventory growth

Now is the time to startstrengthening your REOinfrastructure to controlcosts and optimize returnsagainst a predicted surgein REO properties.

How to avoid the highcost of consumercredit

Consumer Credit losseshave devastated businessesglobally, costing hundredsof billions per year.Because the slow economicrecovery brings the threatof continued losses,companies should respondboldly with a flexible anddynamic collectionsprogram.

Customer Experience

Enhancing thecustomer experience inconsumer lending

By enhancing the customerexperience, lenders canopen the door for:increased customer loyaltyand retention, moreopportunities for cross-selling, and new customers- all of which cancontribute to greaterprofitability and a betterbrand in the marketplace.

Getting to Know You:Building a Customer-Centric BusinessModel for Retail Banks

Insights into how leadingbanks are improving theircompetitiveness andprofitability by shifting to amore customer-centricmodel.

Risk Management

Transformingcollections andloss mitigation

This whitepaper expressesa point of view on whatcompanies can do toensure a successfulintegration. Today’seconomic climate forcesmortgage servicers torethink their collectionsand loss mitigationstrategies. The traditionalapproach to collectionsuses inconsistent practicesand outdated policies. It isno longer effective inallowing servicers torecover debt.

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The Dodd-Frank WallStreet Reform andConsumer ProtectionAct: Mortgage industryconsiderations

On July 21, 2010, whenPresident Obama signedthe Dodd-Frank WallStreet Reform andConsumer Protection Actof 2010 ("Dodd-Frank" orthe "Act"), the largest setof financial regulatoryreforms since the GreatDepression became law.The sweeping legislationwill significantly impactevery aspect of thefinancial services sector —and the mortgage industryis no exception. Indeed,perceived by many as theepicenter of the kinds ofpractices and abuses thatled the nation into therecent financial crisis, theorigination and servicingbusinesses are lodgedsquarely in the cross-hairsof Dodd-Frank.

How to achievetomorrow's winningmortgage servicingmodel: Place a ruthlessfocus on risk andquality

Servicers should adapttheir operating model soquality and riskmanagement permeate allaspects of their business.Risk management willbecome increasinglyimportant not only forservicers to survive, butto thrive.As the economy begins itsslow recovery, consumerfinance companies nowface a new businesslandscape. To helpnavigate this challengingand sometimes unfamiliarroad, PwC is publishing aseries of papers that willexplore important topicsaffecting the industry nowand in the future.

Too Good to Fail:Defining the New GoldStandard for RiskManagement inFinancial Services

The rapid changes takingplace in the financialservices industry havesignificant implications forhow financial servicesorganizations govern andmanage risk. There is aneed and an opportunity tore-examine and enhancemost organizations’strategies, processes, andinfrastructures formeasuring performanceand analyzing risk.

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Risky Business: WhyManaging the Risks ofEvolving BusinessModels Is the Key toAvoiding the NextFinancial Crisis

As we remain highlyfocused on the key issuesand opportunities that ourclients are facing in thepost-financial crisis world,PwC shares itsinvolvement. We havedone numerous post-crisisreviews of riskmanagement at some ofthe world’s best knownfinancial institutions.

Cure for the CommonCulture: BuildingEffective Risk Culturesat FinancialInstitutions

In its recently releasedfinal report, the NationalCommission on the Causesof the Financial andEconomic Crisis concludedthat the crisis of 2007-09was caused partly by afailure of riskmanagement, with ignoredwarnings, unaskedquestions, andmismanaged risk. Inresponse to this failure, theDodd-Frank Act and otherlegislative and regulatoryinitiatives imposed newrisk management andoversight requirements.Meeting the newregulatory expectationsmeans not only applyingaccepted notions of riskmitigation, compliance,and control but alsoinstilling a corporateculture in which the rightpeople do the right thing atthe right time.

Financial Performance

Cost Elimination

Our Cost Eliminationdocument describes thecurrent cost challenges inthe FinancialServices industry andapproaches to deliver asustainable improvementin your organizations costsbase. Based on tried andtested approaches thisdocument highlights thekey lessons learned basedon our support in costreduction exercises in USand European banks andlenders.

Breaking the Ice: UsingTransparency to Thawthe SecuritizationMarket

Market conditions anddemand, legislativereform, and innovationallowed the securitizationindustry to evolve from itsinfancy into a mainstay ofthe financial markets inless than three decades.With growth andinnovation, however, camedecreased transparency,perceived declines inquality, and increased risk.The result: a dramaticdecrease in newsecuritization transactions.Although continuing toplay a key role in globalmarkets, the securitizationmarket continues to facechallenges as it recovers.

New supervisoryguidance on model riskmanagement:Overview, analysis,and next steps

It has been over ten yearssince federal regulatorsissued the first guidance tothe banking industry on

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managing model riskthrough independentvalidation. In thoseintervening years,thinking has emergedin the industry and theregulatory agencies aroundmodel risk management,and the regulators haveobserved wide variationsin how banks have beeninterpreting andimplementing theiroriginal guidance. On Ap4, 2011, the Office of theComptroller of theCurrency and the FederalReserve jointly releasednew supervisory guidanceon model riskmanagement that, formany in the industry, willrepresent a significantlyhigher set of expectationsto meet.

Ready, Set, Change:How to Prepare for theUpcomingTransformations toFinancial InstrumentAccounting

In "Ready, Set, Change:How to Prepare for theUpcomingTransformations toFinancial InstrumentAccounting", we discussthe accounting changescurrentlconsideration by the FASBand IASB. Both Boards'models would essentiallyrewrite the entire financialinstrument accountingframework, and wouldrequire many consumerfinance companies to makesignificant changes to theiraccounting processes,systems, and reporting.

managing model riskthrough independentvalidation. In thoseintervening years, newthinking has emerged both

the industry and theregulatory agencies aroundmodel risk management,and the regulators haveobserved wide variationsin how banks have beeninterpreting andimplementing theiroriginal guidance. On April4, 2011, the Office of theComptroller of theCurrency and the FederalReserve jointly releasednew supervisory guidanceon model riskmanagement that, formany in the industry, willrepresent a significantlyhigher set of expectationsto meet.

Ready, Set, Change:How to Prepare for theUpcomingTransformations toFinancial InstrumentAccounting

In "Ready, Set, Change:How to Prepare for theUpcomingTransformations toFinancial InstrumentAccounting", we discussthe accounting changescurrently underconsideration by the FASBand IASB. Both Boards'models would essentiallyrewrite the entire financialinstrument accountingframework, and wouldrequire many consumerfinance companies to makesignificant changes to theiraccounting processes,

tems, and reporting.

Auto Finance

When Service TrumpsPrice: How To RealizeGreater Returns ByRamping Up DealerService

The publication is directedat automotive financelenders and explores howthey can develop a serviceoriented originationsinfrastructure to delivervaluetheir dealers withoutcompeting on rate.

A lease on the future:Securing a competitiveedge with automotiveleasing options.

Automotive leasing hasbecome popular again.Approximately 1.7vehicles were leased byconsumers in 2010, andthat number is expected toexceed 2.3 million by theend of 2011 and approach2.5 million in 2012.1Leasing favorsmanufacturers and autodealers because of thereduced cycle time to get acustomer bacdealership. It favorsconsumers since it allowsthem to get more car fortheir money. As a result,lenders are weighing thepros and cons of leasingprograms and whether aleasing platform is rightfor them.

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When Service TrumpsPrice: How To RealizeGreater Returns ByRamping Up DealerService

The publication is directedat automotive financelenders and explores howthey can develop a service-oriented originationsinfrastructure to delivervalue-added service totheir dealers withoutcompeting on rate.

A lease on the future:Securing a competitiveedge with automotiveleasing options.

Automotive leasing hasbecome popular again.Approximately 1.7 millionvehicles were leased byconsumers in 2010, andthat number is expected toexceed 2.3 million by theend of 2011 and approach2.5 million in 2012.1Leasing favorsmanufacturers and autodealers because of thereduced cycle time to get acustomer back into thedealership. It favorsconsumers since it allowsthem to get more car fortheir money. As a result,lenders are weighing thepros and cons of leasingprograms and whether aleasing platform is rightfor them.

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Auto Finance: Changesin GAAP for autofinance companies andNon-prime autounderwriting: evolvingfor a changing market

The whitepaper, "Changesin GAAP for auto financecompanies", examines therecent modifications toStatement of FinancialAccounting Standards 166and 167, and how yourorganization can prepareto meet the challenges theybring.

Other regulatorypapers

PwC continuallypublishes its view ofchanges in theregulation andgovernance of theindustry includingHASP, HERA, XBRL.

These and more publications are available onour website:http://www.pwc.com/consumerfinance.

Regular Publications

Consumer finance update

Our semi-annual journaloffers readers insightfularticles on issues affectingthe mortgage, studentlending, credit card, autofinance and retail bankingindustries. The most recentissue includes:

Tomorrow’s capital marketenvironment: Private-labelsecuritization when thedust settles

Process considerations of successfulintegrations for consumerfinance companies

Servicing loans and managing default inthe new business environment

Managing servicing advances in thecurrent environment

Effective servicer oversight: A strategyfor lowering credit costs

The future of consumer finance loanaccounting and economic analysis

Rebuilding toward the future: Aconsumer finance view on managing risk

Impairment and fair value modelrisk management

Credit card reward programs:Understanding your model risk

Warehouse lending: Moving forward Looking forward to a covered bond

market

Trends and Perspectives

This semi-regular reporttakes a closer look at thebusiness issues facing theconsumer finance industryand shares observations onhow to meet thosechallenges. The latest issuefocuses on customerretention and highlightssome of the traditional trends in customerretention and provides perspectives onalternative approaches.

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SurveysOur experience and relationships with ourclients means that we are able to provide currentcomparative information from the leadingconsumer finance companies. Many of oursurveys are developed to provide companiesinsight into peer practices and performancemetrics, and to understand how operations andrisk practices might develop over the next fewyears. They are designed to highlight what someof the top tier companies are doing, providingbest practices that their peers might consider inmanaging their own risk. A sampling of recentsurveys includes:

Mortgage Servicing Rights Survey

The suite of PwC Mortgage Servicing Rights("MSRs") Surveys have been widely utilized bythe mortgage industry for nearly 10 years.Targeted to large/mid-sized servicers ofresidential mortgage loans, the surveys covervarious aspects of MSR valuation including keyassumptions, initial capitalization, and MSRmultiples.

The surveys are performed on a quarterly basis.

Survey of Loan Repurchase Practices

Launched in ‘04 due to high number of clientinquiries on unexpected increases in loanrepurchases fromagencies and privateinvestors.

Our mostrecentsurvey,completed in September 2011, coversmore than six of the top ten originators.

The survey covers financial andoperational aspects of the repurchaseprocess including organizational andaccounting issues.

Survey of industry loan loss andforeclosure reservesand practices indefault operations

Launched in 2001 andpublished annually toparticipating peers.

Ten participants who represent over3.3 trillion of servicing and 25 millionloans

Survey covers financial and operationalaspects of loan servicing and defaultmanagement issues

Other surveys include:

Post Closing, Underwriting, Non-prime default,Non Agency Loan Valuation, InitialCapitalization, Broker and Correspondent, andHome Equity Delinquency Survey.

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Conferences and events

As knowledgeable professionals, our advice isoften solicited by consumer finance executives.One of our objectives in serving the consumerfinance industry has always been to share ourdetailed knowledge of the issues. We frequentlygo on the road to discuss current industry hottopics and participate in numerous conferencesand industry events as sponsors and/orspeakers.

Recent examples ofconference presentationsgiven by PwC teammembers include:"QA/QC Overview: Latest policies andregulations"September 13-15, 2011, MBA's Quality Assuranceand Residential Underwriting Conference, NewOrleans, LA

"Mortgage Banking Update"AICPA National Conference on Banks & SavingsInstitutionsSeptember 12, 2011, Washington, D.C.

Panel DiscussionMBAs National Fraud Issues ConferenceMarch 27-30, 2011, Hollywood - Ft. Lauderdale,FL

"Consumer Underwriting - Evolving For AChanging Market"AFSA 2011 Vehicle Finance Conference andExpositionFebruary 2-4, 2011, San Francisco, CA

"Financial Instruments Project andRegulation AB Changes"Accounting, Tax and Financial ManagementConferenceNovember 17-19, 2010, New Orleans, LA

" Mortgage Banking Update"AICPA National Conference on Banks & SavingsInstitutionsSeptember 15, 2010, Washington, D.C.

Panel DiscussionMBA’s National Fraud Issues ConferenceApril 24–28, 2010, Chicago, IL

“Loan Repurchases”MBA’s Loan Repurchases WorkshopMarch 9,2010, Dallas, TX

“Loan Repurchases” and “XBRL”MBA’s Accounting, Tax and Financial AnalysisConferenceNovember 11-13, 2009, Dallas, TX

“Loan Modification & GovernmentProgram in the Mortgage Industry” and“The Mortgage Industry TransformationPost Crisis–A Discussion on the Future State of Industry”FICG ForumOctober 20, 2009, New York, NY9

PwC Consumer Finance Group ChairedEvent2009 PICPA Financial Institutions ConferenceSeptember 14-15, 2009, Hershey, PA

Recent examples of roundtables and otherevents include:

PwC Mortgage Bank Risk Managementand Internal Audit Director Roundtable

PwC Executive Forum on Multiculturaland Emerging Markets Lending

PwC Executive Round Table onCustomer Retention

PwC Consumer Finance ExecutiveRound Table on Fraud

PwC Mortgage Banking InternalAudit Roundtable

Recent examples ofpublished articles

Brunet, Carlos & Beyer, John. " REO bythe Numbers: Improving DispositionStrategies in a Challenging MarketEnvironment" ServicingManagement November 2011

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Ramsey, Greg. "Key Moment Nears for'Single Point of Contact'" NationalMortgage News, September 22, 2011

Pollini, Peter. " Banks' Best CustomerMay Be the Stranger Who Just WalkedOut the Door, Says PwC US"PRNewswire NEW YORK, July 13,2011

Touhey, Martin. “Feeling the Pinch? GetAhead of Advances.” ServicingManagement May 2009: 15-18

Hernandez, Roberto. “BoostingProfitability Requires Long-TermStrategizing.” Servicing ManagementJune 2009: 9-12

Kowalak, John. “When It Comes ToCosts, Don’t Forget the Here and Now.”Servicing Management October2009: 8-11

Visit pwc.com/consumer finance for further details regarding the documents discussedin this publication.

Consumer Finance GroupPartners

Consumer FinanceLead Partner

Sam May [email protected]

Sam May has over 15 years of experience in the financial services industry, andhas had extensive experience in providing both auditing and consulting advice oncurrent accounting issues, regulatory developments and actions. This includessuch areas as structured finance securitization, derivative and guaranteeaccounting, as well as mortgage operations and regulatory reform.

Recently Sam has had significant involvement in the finance and operationalintegration of several troubled banking institutions. Sam is currently assistingseveral banks and private equity firms with pre and post-bid FDIC- assisted banktransactions.

Group Partners

Tom Kelly [email protected]

Tom is the lead engagement partner for the FHLB Chicago and Des Moinesengagements as well as an engagement partner on the FHLB system. Tom isbased in Chicago, Illinois. Tom has approximately 14 years of diversifiedexperience and has managed numerous audit examinations at global financialinstitutions, mortgage banking companies, and specialty finance companies.Tom primarily focuses on the accounting and auditing for derivatives, hedgeaccounting, mortgage loans and complex capital markets transactions. Morerecently, Tom has been working closely with his clients in helping themimplement new fair value standard accounting standards.

Group Partners

Fred Kelso [email protected]

Fred has focused his 16 years of experience on addressing the accounting, financeand operational issues facing leading consumer, commercial and investmentbanking companies. During this time he has provided extensive advice onaccounting and operational issues relating to commercial and consumer loanaccounting and valuation, structured finance products and derivatives.

Most recently Fred has concentrated on advising on the operational andaccounting challenges resulting from the default management issues faced bynational residential mortgage servicers and issues faced by entities that havecompleted large banking acquisitions.

John Kowalak [email protected]

John has 15 years of experience managing audit examinations and advisoryprojects at financial institutions, mortgage banking enterprises and financecompanies. He has significant experience with accounting, valuation, and riskmanagement activities surrounding credit risk, mortgage servicing rights, loanservicing and secondary marketing activities. He has recently worked withcompanies to help them navigate through the challenges of the credit crises,including regulatory examination responses, acquisitions of failed bank, riskmanagement of loan portfolios, strategies to manage repurchase exposures andimplementation of loss mitigation programs.

Alan Lee [email protected]

Alan has over 20 years experience providing business advisory and accounting-related services to banks, mortgage banks, housing finance enterprises and thegovernment. Alan is a member of the Firm's consulting practice that provideshousing finance strategy and financial analysis-related consulting serviceshelping companies assess the impact of housing reform initiatives such as GSEfuture state, QRM, Basel III mortgage implications, servicing compensationreform and national servicing standards. Alan also specializes in mortgageservicing asset valuation, risk management, and evaluating economic returns ofthe servicing, origination and asset management functions. Alan regularlyinteracts with clients, regulators and the Firm's National Office on mattersrelating to housing finance, fair value measurement, valuation of illiquid assets,derivatives and hedging activities, and mortgage securitization and tradingactivities.

Jonathan Odom [email protected]

Jonathan has over 15 years experience providing business advisory and assuranceservices to banks, mortgage banks, government sponsored housing financeenterprises and the government. Jonathan is part of PwC's consulting practicefocused on advising on the implications of the numerous housing finance reforminitiatives to originators, servicers, guarantors, public policy, investors andconsumers. Jonathan has significant experience in capital marketstrading/hedging activities, mortgage servicing rights, credit risk, complexvaluations, mortgage related securitization activities, risk management, loan

Group Partners

servicing and loss mitigation/foreclosure activities. Jonathan has an MBA fromthe University of Chicago and worked in investment banking for over 3 yearsprior to rejoining PwC.

Keith Olson [email protected]

Keith is a partner in the Consumer Finance Group Practice and has over 20 yearsof mortgage banking and other consumer financial services experience. He hasdeveloped a diversified range of financial services experience, including businessadvisory, audit and risk management services to various banks, thrifts, bankaffiliated mortgage companies and the GSE's. Keith has managed projects andspecialized in providing operational risk and performance assessments, riskmanagement and valuation modeling as well as interest rate and credit riskmanagement around consumer asset classes including residential mortgage andcredit cards. His experience also includes internal control assessments, FDICIAassistance, policy and procedure development, internal audit assistance, creditloss forecasting, and risk management of secondary marketing, capital marketsactivities and mortgage servicing rights.

Peter Pollini [email protected]

Peter has nearly 20 years of banking and financial services experience managingprojects and providing specialized strategic and operational advisory services.These have related to servicing operations, loan origination, customer retention,loan pricing, operational efficiency and controls, capital markets and financialoperations in the mortgage, student, card, home equity and auto industries.

Michael Stork [email protected]

Michael is a partner with over 20 years experience in providing audit andadvisory services to consumer finance, mortgage banking and commercial/retailbanking enterprises.

Michael has been responsible for providing external audit, attest (e.g., SAS 70engagements, agreed-upon procedures, etc.), internal audit, financial advisoryand risk management solutions to his clients. In addition, Michael has providedhis clients with controls-focused reviews with all aspects of key governance withinthe banking industry including the review of the risk management andgovernance - both internally and externally - around all types of lending activities(origination, funding, servicing, etc.), securities/investment transaction activities,and the related accounting implications.

Michael has also been involved with various advisory projects across multiplebanking institutions that have recently completed FDIC-assisted bank acquisitiontransactions and/or are responding to various regulatory matters surroundingmortgage banking activities.

Group Partners

Martin Touhey [email protected]

Martin has worked in Canada, the United States, Australia, Ireland and Greece.His 15 years of experience in the financial services industry includes businessstrategy assessment, financial modeling, process improvement (includinganalysis and re-design), activity based costing, risk analysis and riskmanagement, customer and product profitability analysis and managementreporting design. Martin has worked with clients on all aspects of the lendingprocess including Originations, Underwriting, Risk Management, Fulfillment andServicing. He has worked across origination channels including retail, broker,correspondent and direct channels.

He has extensive experience in consumer loan servicing with a focus on DefaultManagement. He is also a recognized subject matter specialist in the area ofEconomic Value Analysis and its related concepts and has worked with severallarge retail loan servicers to help them optimize cash flows from their servicingassets.

Brian Williamson [email protected]

Brian is a partner in the Consumer Finance Group Practice and has over 20 yearsof diverse experience providing audit and consulting services to global financialinstitutions and mortgage banking companies. Brian has a diversified range offinancial services experience, including audit and business advisory services inthe areas of mortgage servicing rights, loan servicing, and internal controlassessments. Brian has served as an audit engagement partner for some of PwC'stop tier clients. Brian is based in Boston, Massachusetts.

pwc.com/consumerfinance

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