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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

FEDERAL HOUSING FINANCE AGENCY,etc.,

Plaintiffs,

v.

ALLY FINANCIAL INC. f/k/a GMAC, LLC.,et al.,

Defendants.

Case No. 11 Civ. 7010 (DLC)

ECF Case

In re:

RESIDENTIAL CAPITAL, LLC, et al.,

Debtors.

Chapter 11 Case No. 12-12020 (MG)

(Jointly Administered)

DECLARATION OF KANCHANA WANGKEO LEUNG INSUPPORT OF RESPONSE OF THE FEDERAL HOUSING FINANCE AGENCY TOTHE DISTRICT COURT’S PROPOSED PRODUCTION ORDER FOR LOAN FILES

I, Kanchana Wangkeo Leung, hereby declare, pursuant to 28 U.S.C. § 1746, that the

following is true and correct to the best of my knowledge, information and belief:

1. I am a member of the law firm of Kasowitz, Benson, Torres & Friedman LLP,

counsel for the Federal Housing Finance Agency (“FHFA”), as Conservator for the Federal

Home Loan Mortgage Corporation.

2. I make this declaration in support of the Response of the Federal Housing Finance

Agency to the District Court’s Proposed Production Order for Loan Files (the “Response”).1

3. In July of 2010, FHFA served a subpoena upon Residential Funding Company,

1 Capitalized Terms used but not defined herein shall have the meanings assigned to them in the Response.

12-12020-mg Doc 1920 Filed 10/22/12 Entered 10/22/12 21:41:42 Main Document Pg 1 of 5

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1212020121022000000000075

Docket #1920 Date Filed: 10/22/2012

2

LLC (“RFC”)2, a subsidiary of Ally Financial Inc. (“AFI”), GMAC Mortgage Group, Inc.

(“GMACM” and with AFI, “Ally”) and Residential Capital, LLC (“ResCap”), seeking

production of loan files underlying certain Certificates, including the loan files (“Loan Files”)

that are the subject of FHFA’s proposed sample and the District Court’s proposed production

order. RFC failed to comply with the subpoena.

4. In response to the Debtors’ objection to FHFA’s July 17 Application for Loan

Files, FHFA narrowed its request to the sample of Loan Files that FHFA’s expert would select

for reunderwriting. Prior to the September 11, 2012 hearing before the Bankruptcy Court, FHFA

estimated this number to be around 2,500; however, since FHFA still lacked sufficient loan

tapes, FHFA was unable to identify the precise loans (or number) at that time. By agreement

with ResCap, FHFA subsequently received loan tapes and originator information from ResCap

and was able to select a sample. On October 10, 2012, FHFA served on defendants the Expert

Report of Charles D. Cowan, Ph.D. Regarding the Selection of Statistically Valid Random

Samples of Mortgage Loans for Fifteen FHFA Actions, and identified the sample of 2,100 loans

FHFA intends to re-underwrite in this action.

5. Annexed hereto as Exhibit A is a true and correct copy of the transcript of the

conference held before the Honorable Denise L. Cote in the United States District Court for the

Southern District of New York (the “District Court”) on October 15, 2012.

6. Annexed hereto as Exhibit B is a true and correct copy of the FHFA news release

dated July 12, 2010, entitled, FHFA Issues Subpoenas for PLS Documents.

7. Annexed hereto as Exhibit C is a true and correct copy of the FHFA Conservator

2 The subpoena was issued to RFC in its capacity as servicer of the loans backing the Certificates. RFC wasoriginally sued in its capacity as the sponsor of the 21 Securitizations at issue in this action.


3

Subpoena to RFC, dated July 8, 2010.3

8. Annexed hereto as Exhibit D is a true and correct copy of the Responses and

Objections by Defendants Ally Financial Inc. and GMAC Mortgage Group LLP to Plaintiff’s

Third Request for the Production of Documents.

9. Annexed hereto as Exhibit E is a true and correct copy of the transcript of the

hearing held before the Honorable Martin Glenn in the United States Bankruptcy Court for the

Southern District of New York on September 11, 2012.

10. Annexed hereto as Exhibit F is a true and correct copy of the transcript of the

hearing held before the Honorable Denise L. Cote in the United States District Court for the

Southern District of New York on July 17, 2012.

11. Annexed hereto as Exhibit G is a true and correct copy of the Shared Services

Agreement, in the form annexed to the Declaration of Mary Fahy Woehr (the “Woehr

Declaration”) [Bankr. Docket No. 1295, Exhibit 1], filed in support of the Debtors’

Supplemental Brief in Support of its Objection to Motion of the Federal Housing Finance Agency

for Relief from the Automatic Stay (the “Debtors’ Supplemental Brief”) [Bankr. Docket No.

1295].

12. Annexed hereto as Exhibit H is a true and correct copy of the Record Services

Statement of Work, in the form annexed to the Supplemental Mongelluzzo Declaration [Bankr.

Docket No. 1295, Exhibit 2] filed in support of the Debtors’ Supplemental Brief.

13. Annexed hereto as Exhibit I is a true and correct copy of the Supplemental

Mongelluzzo Declaration (the “Supplemental Mongelluzzo Declaration”) [Bankr. Docket No.

1295], filed in support of the Debtors’ Supplemental Brief.

3 Due to the size of the exhibit to the subpoena (an Excel spreadsheet), it is not practicable to include it withthis filing. FHFA will provide an electronic copy to the Court upon request.


4

14. Annexed hereto as Exhibit J is a true and correct copy of the Legal Services

Statement of Work, in the form annexed to the Woehr Declaration filed in support of the

Debtors’ Supplemental Brief.

15. Annexed hereto as Exhibit K is a true and correct copy of the Declaration of John

G. Mongelluzzo [Bankr. Docket No. 1023, Exhibit 2] filed in support of the Debtors’ Objection

to Motion of the Federal Housing Finance Agency for Relief from the Automatic Stay [Bankr.

Docket No. 1023].

16. Annexed hereto as Exhibit L is a true and correct copy of the Debtors’ Motion

for Interim and Final Orders Under Bankruptcy Code Sections 105(a) and 363(b) Authorizing

Residential Capital, LLC to Enter Into a Shared Services Agreement with Ally Financial Inc.

Nunc Pro Tunc to the Petition Date for the Continued Receipt and Provision of Shared Services

Necessary for the Operation of the Debtors’ Businesses (the “Shared Services Motion”) [Bankr.

Docket No. 41].

17. Annexed hereto as Exhibit M is a true and correct copy of the Summary of the

Statements of Work, in the form annexed to the Shared Services Motion [Docket No. 41, Exhibit

B].

18. Annexed hereto as Exhibit N is a true and correct copy of the email dated August

9, 2012, from Ray C. Schrock to Daniel A. Fliman, Richard M. Cieri, Stephen E. Hessler,

Andrew K. Glenn and Kanchana W. Leung.

19. Annexed hereto as Exhibit O is a true and correct copy of the email dated

September 4, 2012, from Andrew K. Glenn to Daniel A. Fliman, Richard M. Cieri, Stephen E.

Hessler, Ray C. Schrock and Kanchana W. Leung.


11 UNITED STATES DISTRICT COURT1 SOUTHERN DISTRICT OF NEW YORK2 ------------------------------------x 11 CV 5201 (DLC)2 11 CV 6188 (DLC)3 FEDERAL HOUSING FINANCE AGENCY, 11 CV 6189 (DLC)3 11 CV 6190 (DLC)4 Plaintiff, 11 CV 6192 (DLC)4 11 CV 6193 (DLC)5 v. 11 CV 6195 (DLC)5 11 CV 6196 (DLC)6 JPMORGAN CHASE & CO., INC., et al., 11 CV 6198 (DLC)6 11 CV 6200 (DLC)7 Defendants; 11 CV 6201 (DLC)7 11 CV 6202 (DLC)8 11 CV 6739 (DLC)8 11 CV 6203 (DLC)9 And other FHFA cases. 11 CV 6739 (DLC)9 11 CV 7010 (DLC)

10 11 CV 7048 (DLC)10 ------------------------------------x1111 New York, N.Y.12 October 15, 201212 2:30 p.m.1313 Before:1414 HON. DENISE COTE,1515 District Judge16171819202122232425

SOUTHERN DISTRICT REPORTERS, P.C.(212) 805-0300Docu

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12-12020-mg Doc 1920-1 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit A Pg 1 of 96

21 APPEARANCES12 QUINN EMANUEL URQUHART & SULLIVAN LLP2 Attorneys for Plaintiff3 Federal Housing Finance Agency3 BY: PHILIPPE Z. SELENDY, ESQ.4 MANISHA M. SHETH, ESQ.4 CHRISTINE H. CHUNG, ESQ.5 SASCHA RAND, ESQ.5 JULIA GUARAGNA BESKIN, ESQ.6 ADAM M. ABENSOHN, ESQ.67 FEDERAL HOUSING FINANCE AGENCY7 BY: STEPHEN E. HART, ESQ.8 Managing Associate General Counsel89 KASOWITZ BENSON TORRES & FRIEDMAN LLP9 Attorneys for Plaintiff

10 Federal Housing Finance Agency10 BY: KANCHANA WANGKEO LEUNG, ESQ.11 CHRISTOPHER P. JOHNSON, ESQ.11 MICHAEL HANIN, ESQ.12 ANDREW K. GLENN, ESQ.1213 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP13 Attorneys for Defendants UBS Americas Inc.,14 SG Americas, Inc., and14 affiliated entities and individuals15 BY: ROBERT A. FUMERTON, ESQ.15 JAY B. KASNER, ESQ.16 SCOTT D. MUSOFF, ESQ.16 JOSEPH N. SACCA, ESQ.1717 SPEARS & IMES LLP18 Attorneys for Defendants UBS Americas Inc.,18 BY: DAVID SPEARS, ESQ.19 MONICA P. FOLCH, ESQ.1920 SULLIVAN & CROMWELL LLP20 Attorneys for Defendant JP Morgan Chase21 and affiliated entities, and certain individuals21 BY: PENNY SHANE, ESQ.22 SHARON L. NELLES, ESQ.22 JONATHAN M. SEDLAK, ESQ.232425

SOUTHERN DISTRICT REPORTERS, P.C.(212) 805-0300

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31 APPEARANCES (Cont'd)12 SULLIVAN & CROMWELL LLP2 Attorneys for Defendant Goldman Sachs3 and affiliated entities and individuals3 BY: RICHARD H. KLAPPER, ESQ.4 THEODORE EDELMAN, ESQ.4 W. RUDOLPH KLEYSTEUBER IV, ESQ.5 BRADLEY A. HARSCH, ESQ.56 SULLIVAN & CROMWELL LLP6 Attorneys for Defendant Barclays Bank7 and affiliated entities and individuals7 BY: DAVID H. BRAFF, ESQ.8 BRIAN T. FRAWLEY, ESQ.89 SULLIVAN & CROMWELL LLP9 Attorneys for Defendant First Horizon,

10 Nomura Holding, and affiliated entities10 BY: BRUCE E. CLARK, ESQ.11 AMANDA F. DAVIDOFF, ESQ.1112 PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP12 Attorneys for Defendant Citigroup13 and affiliated entities and individuals13 BY: SUSANNA M. BUERGEL, ESQ.14 CAITLIN E. GRUSAUSKAS, ESQ.14 BRUCE BIRENBOIM, ESQ.1515 CRAVATH, SWAINE & MOORE LLP16 Attorneys for Defendant Credit Suisse16 and affiliated entities and individuals17 BY: RICHARD W. CLARY, ESQ.17 LAUREN A. MOSKOWITZ, ESQ.1818 DEWEY PEGNO & KRAMARSY LLP19 Attorneys for for Credit Suisse19 BY: KEARA A. BERGIN, ESQ.2020 SIMPSON THACHER & BARTLETT LLP21 Attorneys for Defendants RBS Securities,21 Deutsche Bank, and affiliated entities22 BY: DAVID J. WOLL, ESQ.22 THOMAS C. RICE, ESQ.232425


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41 APPEARANCES (Cont'd)12 MAYER BROWN LLP2 Attorneys for Defendant HSBC North America Holdings3 and affiliated entities and individuals3 BY: JOHN M. CONLON, ESQ.4 MICHAEL O. WARE, ESQ.4 ALLISON J. ZOLOT, ESQ.5 JENNIFER M. ROSA, ESQ.56 MAYER BROWN LLP6 Attorneys for Defendants Ally Financial7 and GMAC Mortgage Group, Inc.7 BY: REGINALD R. GOEKE, ESQ.8 MICHAEL O. WARE, ESQ.8 CATHERINE A. BERNARD, ESQ.99 KIRKLAND & ELLIS LLP

10 Attorneys for Defendant Ally Securities10 BY: ROBERT J. KOPECKY, ESQ.1111 WILLIAMS & CONNOLLY, LLP12 Attorneys for Defendants Bank of America Corporation,12 Merrill Lynch, and affiliated entities13 BY: BETH A. STEWART, ESQ.13 EDWARD J. BENNETT, ESQ.14 LAUREN K. COLLOGAN, ESQ.1415 DAVIS POLK & WARDWELL LLP15 Attorneys for Defendant Morgan Stanley16 and affiliated entities and individuals16 BY: JAMES P. ROUHANDEH, ESQ.17 BRIAN S. WEINSTEIN, ESQ.17 DANIEL J. SCHWARTZ, ESQ.1818 WEIL, GOTSHAL & MANGES LLP19 Attorneys for Defendant General Electric19 and affiliated entities20 BY: GREG A. DANILOW, ESQ.20 VERNON S. BRODERICK, ESQ.21 SETH GOODCHILD, ESQ.2122 RICHARDS KIBBE & ORBE, LLP22 Attorneys for Numerous Individual Defendants23 BY: DANIEL ZINMAN, ESQ.2324 ALLEN & OVERY LLP24 Attorneys for Defendant Molinaro25 BY: JOSEPHINE A. CHEATHAM, ESQ.25


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51 APPEARANCES (Cont'd)12 GREENBERG TRAURIG, LLP2 Attorneys for Defendant Mayer3 BY: RONALD D. LEFTON, ESQ.34 MORRISON & FOERSTER LLP4 Attorneys for Defendants Marano & Nierenberg5 BY: JOEL C. HAIMS, ESQ.56 SNR DENTON US LLP6 Attorneys for Defendant Perkins7 BY: PATRICK E. FITZMAURICE, ESQ.78 KRAMER LEVIN NAFTALIS & FRANKEL, LLP8 Attorneys for Defendant Verschleiser9 BY: DANI R. JAMES, ESQ.9

1011 (In open court)12 THE CLERK: In the matter of Federal Housing Finance13 Agency v. UBS Americas Inc. and others, and other FHFA cases,14 for plaintiff Federal Housing Finance Agency, are you ready to15 proceed?16 MR. SELENDY: Yes, we are. Thank you.17 THE CLERK: Please state your name for the record.18 MR. SELENDY: Philippe Selendy, Quinn Emanuel, for19 FHFA.20 MS. CHUNG: Christine Chung with Quinn Emanuel for21 FHFA. Good afternoon, your Honor.22 MS. SHETH: Good afternoon. Manisha Sheth for FHFA.23 MR. RAND: Good afternoon, your Honor. Sascha Rand,24 Quinn Emanuel, for FHFA.25 MR. ABENSOHN: Good afternoon, your Honor, Adam


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61 Abensohn for FHFA.2 MR. HART: Good afternoon, your Honor. Steve Hart3 with FHFA.4 MS. LEUNG: Good afternoon, your Honor. Kanchana5 Leung with Kasowitz Benson for FHFA.6 MR. GLENN: Andrew Glenn, Kasowitz Benson, on behalf7 of FHFA.8 MR. JOHNSON: Christopher Johnson from Kasowitz Benson8 for FHFA.9

10 MR. HANIN: Michael Hanin, Kasowitz Benson, for FHFA.11 THE CLERK: Counsel, just to make sure your names are12 included on the appearance sheet.13 THE COURT: One minute, Ms. Rojas.14 THE CLERK: For defendants UBS Americas Inc. and SG15 America, please state your name for the record.16 MR. KASNER: Your Honor, good afternoon. Jay Kasner,17 Robert Fumerton, and Scott Musoff from Skadden Arps.18 MR. SPEARS: And, your Honor, David Spears and Monica19 Folch are working with Skadden Arps on behalf of UBS on these20 matters.21 THE CLERK: For defendant JP Morgan Chase & Co.22 MS. SHANE: Good afternoon, your Honor. Penny Shane,23 Sullivan & Cromwell, with Sharon Nelles and Jonathan Sedlak,24 also from Sullivan & Cromwell.25 THE CLERK: For defendant Goldman Sachs.


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71 MR. KLAPPER: Good afternoon, your Honor. Richard2 Klapper from Sullivan & Cromwell, along with my partner,3 Theodore Edelman.4 THE CLERK: For defendant Barclays Bank.5 MR. BRAFF: Good afternoon. David Braff from Sullivan6 & Cromwell with Brian Frawley, also of Sullivan & Cromwell.7 THE CLERK: For defendants First Horizon National8 Corp. and Nomura Holding America.9 MR. CLARK: Good afternoon, your Honor. Bruce Clark

10 and Amanda Davidoff, Sullivan & Cromwell.11 THE CLERK: For defendant Citigroup Global.12 MR. BIRENBOIM: Good afternoon, your Honor. Bruce13 Birenboim, Susanna Buergel, and Caitlin Grusauskas from Paul14 Weiss for the Citigroup defendants.15 THE CLERK: For defendant Credit Suisse Securities.16 MR. CLARY: Good afternoon, your Honor. Richard Clary17 and Lauren Moskowitz from Cravath Swaine & Moore.18 MS. BERGIN: Keara Bergin, Dewey Pegno & Kramarsky,19 also for Credit Suisse.20 THE CLERK: For defendant RBS Securities and Deutsche21 Bank.22 MR. WOLL: Good afternoon, your Honor. David Woll and23 Tom Rice from Simpson Thacher.24 THE CLERK: For defendant HSBC North America Holdings.25 MR. CONLON: Good afternoon, your Honor. John Conlon


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81 and Michael Ware of Mayer Brown.2 THE CLERK: For defendants Ally Financial and GMAC3 Mortgage Group.4 MR. GOEKE: Good afternoon, your Honor. Reginald5 Goeke, Michael Ware, and Catherine Bernard of Mayer Brown.6 THE CLERK: For defendant Ally Securities LLC.7 MR. KOPECKY: Good afternoon, your Honor. Robert8 Kopecky, Kirkland Ellis.9 THE CLERK: For defendants Bank of America and Merrill

10 Lynch.11 MS. STEWART: Good afternoon, your Honor. Beth12 Stewart from William & Connolly, and with me today are Ted13 Bennett and Lauren Collogan.14 THE CLERK: For defendants Morgan Stanley.15 MR. ROUHANDEH: Good afternoon, your Honor. Jim16 Rouhandeh, Brian Weinstein, and Daniel Schwartz from Davis17 Polk.18 THE CLERK: For defendants General Electric.19 MR. DANILOW: Good afternoon, your Honor. Greg20 Danilow, Vernon Broderick, and Seth Goodchild from Weil21 Gotshal.22 THE CLERK: For the individual defendants including23 George C. Carp.24 MR. ZINMAN: Good afternoon, your Honor. Daniel25 Zinman from Richards Kibbe & Orbe.


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91 THE CLERK: For the individual defendant Jeffrey2 Mayer.3 MR. LEFTON: Ronald Lefton from Greenberg Traurig.4 THE CLERK: For the defendant individual Samuel5 Molinaro Jr.6 MS. CHEATHAM: Good afternoon, your Honor. Josephine7 Cheatham from Allen & Overy.8 THE CLERK: For the individual defendants Thomas9 Marano.

10 MR. HAIMS: Good afternoon, your Honor. Bill Haims,11 Morrison & Foerster.12 THE CLERK: For the defendant individual Matthew13 Perkins.14 MR. MORRIS: Good afternoon, your Honor. Patrick15 Fitzmaurice, SNR Denton.16 THE CLERK: And for the individual defendant Jeffrey17 Verschleiser.18 MR. JAMES: Good afternoon, your Honor. Dani James19 from Kramer Levin.20 THE COURT: Thank you.21 Welcome, everyone. And I appreciate your cooperation22 in being here on such short notice. It just seemed to me,23 given the letters I received late last week, that it would be24 impossible for me to work through all the items that were25 raised by that exchange of correspondence through a telephone


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101 conference, or at least difficult to accomplish.2 So let me tell you what I have on our agenda today,3 and counsel may have additional issues. I want to address the4 issues raised to those three sets of letters. I want to talk5 about the Daubert motion practice. I want to see if we can fit6 in some summary judgment motion schedule dates in the UBS case.7 I want to talk about the coordination in the RBS case, Royal8 Bank of Scotland, with the Connecticut action. I want to9 address the ResCap loan file production issue. I want to talk

10 about the schedule for reports by the plaintiff and the11 defendants on reunderwriting in the UBS action and potentially12 in other actions.13 I want to talk about loan file production from true14 third parties. This comes up, obviously, in the sets of the15 three letters, but whether we're moving towards the point where16 motions to compel are necessary or appropriate with respect to17 any of those subpoenas that have been issued.18 Good. So that's my list, and I want to thank counsel19 for the reports that you exchanged this morning. I haven't20 looked at them in detail, but I did look at them a bit.21 I thought we might start by talking about some of the22 issues raised in the letters. The plaintiff's letter was23 labeled "Loan File Production." The first specific issue it24 raised was loan numbers for loans that were reviewed as part of25 the defendants' due diligence and are referred to by the


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111 plaintiff with the term "due diligence samples." And I think2 there were least five issues raised in that letter and its3 responsive letter.4 For many of the issues that came to me through these5 three sets of letters, the defendants indicated there was a6 need for further opportunity to meet and confer, and I issued7 an order requiring the parties to do that. So for some of the8 issues raised in this first set of letters, I realize you may9 have made some progress and the issues may be a little

10 different now than was presented to me. So why don't I take a11 report with respect to these issues and then we'll resolve12 hopefully any outstanding disputes.13 MR. SELENDY: OK. Your Honor, Philippe Selendy for14 FHFA. Would you like me to address all the issues in that15 letter or just focus on the due diligence question?16 THE COURT: Well, so many of these issues are17 interrelated. Whatever you think is the most efficient way to18 do it.19 MR. SELENDY: OK. Well, I can report that progress20 has been made on some of the issues. In particular, as your21 Honor will recall, we had sought to request defendants to22 prioritize the production of loans that fall within the samples23 designated by Dr.~Cowan. And it is my understanding that the24 defendants, notwithstanding the submission originally from UBS,25 they have now agreed to prioritize those samples. And I think


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121 that is an agreement that efforts will be made to secure the2 production from third parties of loans in the sample population3 and to ensure prioritization from defendants themselves.4 That's not the case with respect to the defendants'5 due diligence files. And so your Honor is clear, those are the6 files that we understand defendants assert they reviewed not7 for the purposes of a full underwriting but for various tests,8 whether it was sent out to third parties or otherwise, in the9 course of underwriting the transactions. And we have sought to

10 request defendants to, first of all, identify what those loans11 are out of the populations of the securitizations, and secondly12 to similarly prioritize the production.13 In the letter that came in from Skadden Arps on14 October 11, they asserted that we had never raised this issue15 before. But your Honor will see from Exhibit 2 to our letter,16 this very issue was stated, among other times, in the September17 5th letter that we presented to them, asking them to prioritize18 due diligence files and also, in footnote 1, page 2 of that19 exhibit, to identify the loan numbers of those loans so that20 the population is clear.21 The reason for this is that we understand defendants22 are intending to rely upon that population as a key part of23 their defense of adequate underwriting, and just as with the24 sample populations that we have selected for purposes of25 demonstrating representativeness across all populations, we


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131 would like the opportunity to be able to reunderwrite those2 loans and determine whether in fact they demonstrated3 compliance with the various representations or not. So we are4 at an impasse on that point.5 THE COURT: Let me interrupt, sorry, and ask a6 question. Is it helpful to think about loan files as falling7 within three categories: loan files that the defendants possess8 as defendants, loan files that the defendants possess as third9 parties, and loan files that true third parties possess?

10 With respect to the first two categories, I think the11 report I got suggests that all the loan files that defendants12 have, either as parties or as third parties, have already been13 produced or will be produced shortly. And I want to put aside14 for one moment the 100,000 files for JP Morgan Chase in15 Louisiana. Let's just put those aside. They're a separate16 issue.17 So with respect to true third parties which have -- I18 don't know, I'm getting slightly different numbers -- but maybe19 half a million loan files in the possession of true third20 parties -- and these are people who have subpoenas, many of21 them which require production be complete in August, not every22 one, but many. But let's talk about one of those true third23 parties. And I'm glad we have some people who are deeply24 involved in loan production pursuant to subpoena in this25 courtroom. I wonder if it really makes sense to prioritize


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141 production of loan files, either the FHFA samples or the due2 diligence loans. It seemed to me that some of the subpoenas3 that were served, and the fundamental argument presented by4 FHFA, was that besides requesting loan files, the subpoenas5 requested, for instance, e-discovery, communications with FHFA6 or concerning FHFA. And if a party receiving the subpoena had7 many tasks to perform besides production of loan files, they8 may be delayed in their production because they had to, in9 their mind, fulfill all those tasks. I don't know the answer

10 to this question, but if we ultimately are going to want all11 the loan files from a party and all their underwriting12 guidelines, don't we want to prioritize the loan files and13 underwriting guidelines, and the rest of the issues, about14 electronic discovery, e-mail searches, about relevant15 communications, that could come in a second production, as16 opposed to having piecemeal production and searching for and17 production of loan files? I hope my question is clear enough.18 MR. SELENDY: OK. So let me take the last issue that19 you raised first, your Honor. We do agree, the most important20 category of information from third parties will be the loan21 files as well as the guidelines that relate to those loans.22 And it does make sense to prioritize them as a category. We23 had, for example, issues with defendants seeking single24 family-related information from those third parties and25 increasing the burden on frankly irrelevant areas or areas that


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151 this Court already ruled were not appropriate for discovery. I2 think we've reached some agreement on curtailing that, as well3 as, I believe, on prioritization of loan files and guidelines.4 And that is critical.5 To date, in fact, we have had limited reports of what6 information has come from the third parties until this morning.7 We had understood that only 14 of these third parties had8 actually produced loan files.9 In the joint letter that was submitted this morning,

10 it looks as if a much greater volume has been produced, but11 that has not yet made it across to us.12 THE COURT: Excuse me one second. (Pause)13 MR. SELENDY: OK. Just to continue, there is, we14 understand, for certain of these third-party entities -- and15 this is based on our own communications with originators and16 others -- there are burden issues such as it may be simpler to17 produce on a timely basis a subset of all the loan files. I18 think that varies according to how the files are maintained.19 And we have made efforts to identify both the specific loans in20 the samples and the categories of due diligence to the extent21 that will facilitate a faster production.22 So I think, in answer to your question, it may vary23 entity by entity as to whether, for that entity, it is an24 easier pathway to produce all the loan files and guidelines or25 to sort within them and produce a subset.


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161 In terms of the requirements for us in ultimately2 getting to the reunderwriting of loans, the most important3 category of those in the samples and the due diligence4 populations.5 THE COURT: I ordered on September 4 that the parties6 meet and confer at least every two weeks on the status of loan7 file production. Have you been having those meetings on that8 regular basis?9 MR. SELENDY: That's why I referred your Honor to the

10 September 5th letter in which we requested the biweekly11 meetings of defendants. The stay then came in the way of that.12 And no defendant was willing to meet with us during the13 pendency of the stay. We have resumed discussions with14 defendants in this regard. And we remain very willing to15 identify any mechanism to simplify the collection of files.16 To date, our concern is that notwithstanding the17 volume of subpoenas that defendants have served, a very small18 percentage of those files have actually made their way back to19 FHFA. It's an immediate concern, a pressing one. We can't20 satisfy the strict deadlines that we have here for trials, much21 less the reunderwriting, unless those files come in. And22 that's why we sought the assistance of the Court.23 THE COURT: OK. So you just got this report at 10 or24 so this morning. I don't expect you to have analyzed it with25 care, much less met and conferred with the defendants about it.


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171 I'll hear from defense counsel in a moment, but assuming that2 defendants agree that with respect to any third-party subpoenas3 that have been served they are willing to prioritize the4 production of loan files and underwriting guidelines even if5 they have sought additional categories of information, and for6 institutions that have received subpoenas where they would find7 it possible to prioritize further the production of the FHFA8 samples and the due diligence samples, that the defendants are9 willing to make that request as well, and that the parties will

10 regularly, the plaintiff and defendants will regularly confer11 about the status of those productions, and if any party thinks12 that someone is not sufficiently focused on the need to get13 these materials, the loans and underwriting guidelines,14 produced, that they discuss with each other whether or not it15 is now ripe for a motion to compel and whether or not they have16 agreement on that they will feel free to come to me and talk17 about whether it is now ripe for a motion to compel. Obviously18 if the subpoenaed is someone that I have control of within the19 Southern District of New York, that simplifies it. That's one.20 I'll hear from the defendants if we have agreement on that.21 But that sounds like it would meet the requirements of the22 plaintiff.23 MR. SELENDY: Your Honor, depending upon the timing --24 and just to give your Honor some perspective of that -- as of25 today, if we look at the numbers, in the, for example, in the


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181 Goldman Sachs deals in the supporting loan groups, there are2 82,000 loan files. I believe to date we received 547 loan3 files. If we look at Credit Suisse, there are 100 --4 THE COURT: I'm sorry. You're looking at Exhibit A to5 the defendants' report.6 MR. SELENDY: Yes, that's correct.7 THE COURT: And so what did you just say?8 MR. SELENDY: I said if you look at Goldman Sachs, for9 example, 547 loan files have been produced, out of 82,000 loan

10 files in the supporting loan groups. If you look at Credit11 Suisse, they've only --12 THE COURT: Wait one minute. OK. Well --13 MR. SELENDY: My point is that the timing of this is14 critical, and if in fact efforts are made and agreements are15 reached with third parties to produce files within a matter of16 weeks as opposed to months or several months, that is very17 useful to us. We've not been a part of the discussion between18 defendants and those third parties, and we are looking for that19 confirmation.20 It also matters how those files are produced. To date21 defendants have not been willing to, for example, Bates-stamp22 the productions, even by electronic file, a single Bates number23 for the whole file. Nor have they been willing, for the most24 part, to identify which loans correspond to which25 securitizations so they can be readily tracked and processed by


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191 us. When you're dealing with volumes in the hundreds of2 millions, it's essential to do that. And in fact FHFA has done3 that for its entire production.4 THE COURT: Excuse me, counsel. Could you be seated.5 MS. STEWART: Sorry, your Honor.6 MR. SELENDY: So it needs to be done as part of a7 comprehensive effort in which there's a timely production8 properly categorized, Bates-stamped, and made just as FHFA has9 made that production to defendants. If we have agreement from

10 defendants on that, then I think that would address this part11 as to the sampling, although we still have due diligence files.12 THE COURT: Mr. Selendy, I outlined -- and I hope the13 defendants are going to agree to it, but I will give them an14 opportunity to be heard. So the issue is whether or not, right15 now, the plaintiff agrees, OK. So I understand you to be16 agreeing with what I outlined.17 MR. SELENDY: That's correct.18 THE COURT: OK. And so this is going to put a burden19 on the plaintiff to be in daily communication with defense20 counsel, now you have this report, identifying where the21 problems lie with what I'll call these true third parties22 talking about what's being done, whether more needs to be done,23 including applications to this Court. OK.24 You moved on to another topic, which was fine, which25 was the Bates-stamping and, as I think you described it, the


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201 manifests. And you saw in today's submission of October 15th2 the defendants' report on loan file production. Their position3 with respect to the manifests, which was that you had, sadly,4 only a draft stipulation, which I take it was never finalized,5 but no agreement with respect to, as I understand it from the6 defendants' report today, no agreement with respect to the form7 in which these loan files would be produced other than what8 might be reflected in this, I guess the latest draft was9 October 5th.

10 So as I understand it, you now want, in addition to11 what the parties had agreed to as of October 5th,12 identification by loan, by securitization, and with Bates13 numbers.14 MR. SELENDY: Yes, your Honor. And to be clear, it15 has been our understanding throughout that all parties would16 produce loan files in a way that identified to which17 securitizations they corresponded, and to indicate in the18 production where the loan file begins and ends. That's not19 something that can be determined if you have, for example, 5020 million pages. You can't determine which pages correspond to21 which loan files and which loan files go to which22 securitizations in all instances. Sometimes there are23 inconsistencies between the same pages for the same loan file.24 Sometimes they're missing pages. And sometimes we can't25 identify which securitization a loan ultimately went into.


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211 So that's information that is available to defendants2 and should be made part of the production.3 THE COURT: OK. Well, let's talk about that. Again,4 looking at loan files in these three categories: loan files5 that a defendant is producing as a defendant, loan files where6 the defendant is producing as a third party but from its own7 files or those of its affiliates, and loan files produced from8 true third parties pursuant to subpoena. Now, are you9 representing to me that you had agreement with the defendants

10 with respect to these production issues for any of those three11 categories?12 MR. SELENDY: Clearly we did not. We were operating13 under an understanding that loan files would be produced as I14 have outlined, and clearly we have not had agreement. And15 that, as we have looked at the production and as we have16 requested these steps, we've been rebuffed, and it's perfectly17 apparent there is no agreement on that.18 THE COURT: OK. So with respect to productions from19 true third parties who have not yet made a production, it seems20 to me, since by and large these are the defendants' subpoenas,21 to the extent that they could request production in a certain22 way that would not burden the producing party, that's something23 you can talk about with the defendants. With respect to the24 production by the defendants themselves of loan files that are25 under their custody and control, either as parties or as third


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221 parties, it seems to me that's a different conversation. It2 seems to me that everybody is going to need to have3 Bates-stamped copies, at least of the file, so people can refer4 to it and manage it. And did you have a meet-and-confer about5 this and have you exhausted that process?6 MR. SELENDY: My colleague, Ms. Sheth, will address7 the meet-and-confer.8 MS. SHETH: Yes, your Honor. With regard to the party9 production of loan file documents, the answer is yes. And that

10 was the extensive negotiations that occurred with regard to the11 draft loan files stipulation or the discovery. And part of12 that discussion involved whether or not those files should be13 Bates-stamped, whether there should be a beginning and an end14 Bates number that identified the beginning and end of each15 Bates number, and also various either metadata or field data16 that would accompany the loan file production so that we could17 identify among other things the securitization. But18 unfortunately that was never resolved and the discussions of19 that loan file stipulation have gone on many months without20 resolution.21 THE COURT: So you have no agreement with the22 defendants with respect -- have you exhausted the23 meet-and-confer process with respect to this issue, for all24 three categories of loan files?25 MS. SHETH: I don't believe that we have with regard


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231 to the parties' productions. I know that there were still2 ongoing communications on that front. As to the third-party3 production, that has been as a separate carve-out from the loan4 file stipulation.5 THE COURT: And have you exhausted that6 meet-and-confer process?7 MS. SHETH: No, your Honor, we have not.8 THE COURT: OK. So this issue is not ripe for me9 today. I would like you to exhaust that meet-and-confer

10 process this week. And I'll get you some time. I'm available11 hopefully on Thursday for any unresolved issue on that score.12 MR. SELENDY: Thank you, your Honor.13 THE COURT: I'm not sure I have a sufficient14 understanding of what the status is from the plaintiff's point15 of view of the identification of the due diligence loans by16 loan number. Has that been involved in a meet-and-confer17 process?18 MR. SELENDY: I believe it has, your Honor. My19 understanding is that defendants have not agreed to identify20 the loan numbers of the due diligence samples or to make a21 prioritized production. There may be one or two exceptions,22 but in general that is the case.23 THE COURT: OK. Let's turn to -- well, let's put24 aside, then, on this -- I think the last issue I haven't heard25 from plaintiffs on is the hundred thousand files in Louisiana.


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241 And we'll just address those separately.2 So who wants to be heard first among the defendants on3 the issues I've just discussed with plaintiff's counsel?4 Ms. Shane.5 MS. SHANE: Thank you very much, your Honor. Penny6 Shane. The status of meet-and-confer discussions on these7 topics, I think your Honor had rightly perceived, was unduly8 truncated and there is ground to be covered still with respect9 to production. And it is very helpful to think about the

10 issues and the categories your Honor described, where loan11 files are being produced as party, as non-party, and then as12 true non-parties, because JPM is producing both as parties and13 as non-parties and has had some dealings with true non-parties.14 We do have a sense of the practicalities that your Honor has15 started touching on with respect to whether prioritizing16 certain loan numbers out of other loan numbers actually saves17 anybody anything in the way of time, and the meet-and-confer18 discussions that we've been having with the plaintiffs have19 helped to bring everybody along on that topic, the need to be20 practical. And so we have reached a very helpful, I think,21 agreement that we are fleshing out still about outreach to22 non-parties in ways that will take account of their practical23 constraints. In responding to the subpoenas, if loan file24 numbers can be prioritized by them in way that saves them time25 and trouble, we're more than happy to do that. We're more than


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251 happy to do that with respect to the samples that FHFA recently2 provided to us. For most defendants those sample numbers came3 in last week. So it's a list that is fairly fresh for all of4 us, but we're pleased to attach it to a communication to true5 non-parties and suggest to them that if it would be helpful for6 them to focus theirs, we're more than pleased to have them do7 that as well. And that agreement would be one that I think8 would resolve many of the issues before your Honor.9 With respect to the due diligence loan numbers, it is

10 far more complicated, again simply as a practical matter.11 While Mr. Selendy sites to a September 5 letter in which12 plaintiff put some priority on the due diligence samples as a13 production matter, and we responded immediately by trying to14 gather those together, generating a list of those loan numbers15 is a different exercise. True, the documents will be16 sufficient to show it, and the documents are rapidly being17 assembled by many of us. And different defendants are18 differently situated, your Honor, with respect to the level of19 difficulty associated with extracting those numbers. I know it20 sounds easy. But depending on whether the due diligence files21 resided and how they did or didn't match up to the actual22 supporting loans of the securitization, there was not always23 perfect matching. The extraction process is one that can be a24 challenge. Some defendants may be better situated, and others25 will need to do what is essentially an extraction from


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261 documents to be produced. I know of no defendant that isn't2 planning promptly to complete its production of the documents3 sufficient to generate an assessment of what those loan file4 numbers would be and to work with plaintiff in attaching those5 as well to a communication to the two non-parties indicating,6 because plaintiff would like to see them first, that if they7 can prioritize practically speaking and it won't slow them down8 to have these numbers in hand in making priorities, that also9 is fine with defendants.

10 So we have very little in the way of disagreement with11 respect to communications of non-parties and how to speed them12 along. What is remaining is an underlying disagreement about13 who has the task of extracting due diligence loan file numbers14 from documents that are being shared with FHFA, where some15 judgment may be required about what that final universe looks16 like.17 THE COURT: So are defendants not planning to have a18 due diligence defense in these cases?19 MS. SHANE: We are, your Honor.20 THE COURT: So you are actually going to want to know21 what you did with respect to your due diligence.22 MS. SHANE: Absolutely, your Honor. And we intend to23 collect all loan files, as we have all along. So the24 prioritization again, we're perfectly pleased to join in it and25 we're pleased to have this set receive that level of attention,


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271 if it makes sense for the non-parties. We are in no way2 resisting that. It's only a question of getting the3 information collected and out through those non-parties.4 THE COURT: So it seems to me then that the defendant5 should have the burden of identifying by loan number the files6 on which their due diligence defense is going to rely. So I'll7 just ask you to pull that into your meet-and-confer process,8 the date by which you can get, individually each defendant can9 get those numbers to the plaintiffs.

10 And, again, counsel, I'm here. You have to do the11 meet-and-confer work. You have to bring issues to my12 attention. I can't do more than that. If there is an13 individual defendant in one of these cases that is not relying14 on a due diligence defense, then that's just fine. I won't15 impose that burden on them, and just tell the plaintiff that16 and they can make a decision whether or not they will extract17 the files and otherwise pursue a showing at trial with respect18 to the due diligence defense.19 So I take it, Ms. Shane, you are in agreement with the20 plaintiff that the meet-and-confer process with respect to21 Bates-stamping and manifests and identifying which loan belongs22 in which securitization, that that meet-and-confer process is23 not exhausted yet.24 MS. SHANE: I think there could still be benefit to25 our meeting and conferring further with each other on those


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281 topics, especially trying to keep it straight, which are the2 ones that pertain to true non-parties productions and whether3 the parties then have an obligation to do something to those4 non-parties' productions, as opposed to the ones that have to5 do with the ways that the parties are producing.6 Your Honor, with respect to that latter category, it7 has not been identified to us which defendants are not8 producing in accordance with the agreement that's nearly an9 agreement that we all have been relying on and seeking to

10 produce pursuant to with respect to our own production. We11 have asked plaintiff, Who is not providing you with the linkage12 information as contemplated by the agreement? It seems to have13 taken on a new name or a new life form in recent letters. But14 for JPM at least and to our knowledge other defendants, we have15 been relying on the specifications that plaintiffs put out16 there and we negotiated in what has been produced in thousands17 of loan files all of this time, in accordance with what we18 understood to be our obligations, and we understand that other19 defendants have too. We have asked the question, who is not20 doing it, where is the dispute coming from. And we have not21 received an answer to that.22 THE COURT: Well, what I understood Ms. Sheth to be23 saying is -- and Mr. Selendy too -- is that actually there has24 been no agreement and this is a new request for more detailed25 specification. And that request for additional information on


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291 the files needs to be the subject of a meet-and confer process.2 Did I misunderstand you, Ms. Sheth?3 MS. SHETH: No, your Honor. I think your Honor is4 correct. I think the distinction is between party productions5 of loan files versus third-party productions of loan files.6 THE COURT: Sorry. I think there are three7 categories. So just so I'm clear -- I'm sure you all8 understand what you're talking about. But to assist me, what9 distinction are you making?

10 MS. SHETH: As to the loan file stipulation, that was11 intend to govern party production, so the defendants' and12 FHFA's production of loan files.13 THE COURT: Defendants as defendants or defendants as14 defendants and as third parties?15 MS. SHETH: I don't know if that was actually16 specified in this stipulation with that level of specificity.17 THE COURT: OK. So you have no quarrel with the way18 the defendants have produced their loan files either as19 defendants or as third-party producers?20 MS. SHETH: Based on the information that we have at21 present, that is correct. There was one issue --22 THE COURT: So the request you have is that the23 defendants make requests of the third parties, the true third24 parties, for production in a particular way that would be of25 assistance to you.


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301 MS. SHETH: That is correct. And FHFA has done the2 same with regard to the third-party production it has received.3 THE COURT: OK. And that is what you're going to have4 a meet-and-confer with the defendants about.5 MS. SHETH: Yes, your Honor.6 THE COURT: And obviously that request would have to7 be framed in a way that would not be overly burdensome on these8 true third parties.9 MS. SHETH: That is correct, your Honor.

10 THE COURT: So if there is a way they can produce the11 documents with minimal burden but in a way that would greatly12 assist you folks, all the parties in this litigation, you want13 defendants to make that request of the true third parties.14 MS. SHETH: That is correct, your Honor.15 THE COURT: OK. So you'll meet and confer with the16 defendants about that. You'll have agreement or not.17 MS. SHETH: Yes. And there is one issue I can take18 off the table, which was our dispute about JP Morgan's19 hard-copy loan origination files. We have met and conferred20 about that issue and we understand that JP Morgan has agreed to21 image those files, so that is no longer an issue.22 THE COURT: Ah, Louisiana. Good.23 So with respect to the letters which I call the due24 diligence samples letters, because that's the first items25 raised, I think everything is resolved, either by agreement by


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311 the parties or by my ruling today except for one issue, which2 is going to be subject to a further meet-and-confer, and that3 is the request that the plaintiffs would like the defendants to4 make of true third parties about the way they should make5 production of their loan files. They're going to meet and6 confer about that. If you can't resolve it, you'll come back7 to me.8 MS. SHANE: Your Honor, if I may, defendants offered9 already and renew the offer to make the request of third

10 parties that they go ahead and Bates-stamp their productions as11 a way of resolving this dispute. Defendants have no problem12 with including that request in its communications to third13 parties.14 THE COURT: Great. So you'll meet and confer. If you15 have agreement, that's off the table and I never need to hear16 about this again.17 MS. SHANE: Thank you.18 THE COURT: I thought the next set of letters we might19 turn to.20 MR. FUMERTON: Your Honor.21 THE COURT: I'm sorry.22 MR. FUMERTON: Robert Fumerton on behalf of UBS.23 THE COURT: Yes, Mr. Fumerton.24 MR. FUMERTON: If I may raise one issue before we25 leave the loan file set of letters.


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321 THE COURT: Yes.2 MR. FUMERTON: Defendants have affirmatively requested3 that the Court order the plaintiff here to bear its equitable4 share of the costs associated with obtaining loan files from5 third parties. As your Honor may recall, back in December of6 last year, we informed the Court that many defendants,7 including my client, UBS, simply do not maintain loan files in8 the ordinary course of business. Literally a few short weeks9 after the motion to dismiss was decided, defendants, including

10 the UBS defendants, went out and subpoenaed servicers,11 trustees, originators of these loan files. We served a12 comprehensive set of requests back in June. And that's the13 reason why we've been able to obtain in the UBS action or will14 be obtaining by October 22nd the vast majority of loan files.15 Since early June, we've asked plaintiff to participate16 in this process. No one can dispute here that plaintiff is17 seeking all of the loan files. They have served a document18 request for all the loan files. This morning they provided19 your Honor a chart of 379 subpoenas for loan files that they20 have served. We ask plaintiff to participate in this process21 and let's share the costs. Plaintiff refused to do so. Again,22 after your Honor ordered the parties to meet and confer this23 past week end on Friday we again raised the issue. Plaintiff24 refused.25 Plaintiff offers two justifications for refusing to


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331 participate in the production of materials it claims it needs2 to prosecute its claims here. One is sheer delay. Plaintiff3 told us, look, unlike defendants that served their third-party4 subpoenas right away, plaintiff waited until August to serve a5 single subpoena. And the chart they served this morning, they6 served 200 subpoenas just last week, months after defendants7 served these subpoenas. So plaintiff's reaction is, look,8 because defendants were diligent in prosecuting these9 subpoenas, because defendants went first, defendants should

10 bear the full cost. We have a tremendous difficulty explaining11 to our client why defendants are bearing this burden all by12 themselves. Plaintiff is the party that has the burden of13 proof here. Plaintiff is requesting these loan files.14 THE COURT: Mr. Fumerton, I have great confidence in15 you. I think you could explain that to your clients, since it16 was their strategy that has gotten us to this point.17 MR. FUMERTON: As your Honor recognized in the June18 13th conference, plaintiff reserved the right to seek loan19 files outside of the sample from the very beginning and20 plaintiff --21 THE COURT: And why did they do that?22 MR. FUMERTON: Why did plaintiff reserve that right?23 THE COURT: Yes .24 MR. FUMERTON: Presumably because they weren't25 confident enough to rely on a more limited subset.


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341 THE COURT: Well, you weren't, as I remember the state2 of play here, the plaintiff proposed to the defendants that we3 have a sample of files that we all agree that this case, all4 these cases would rise or fall based on the sample of files.5 They wanted to talk to you about a protocol for creating the6 sample and get agreement on that. They wanted that sample7 universe to govern basically all the decisions in this case and8 substantially reduce the burden of discovery. And as I9 remember it, the defendants were unable or unwilling to do so

10 for reasons that I accepted.11 Based on the fact that the defendants required12 production of all loan files so they could go into the entire13 universe of loan files in this case, over a million, over I14 think a million point 1, the plaintiffs came back and said,15 well, look, if we're going to meet a case in which the16 defendants are picking out loans from hither and yon beyond our17 sample, we of course reserve the right to similarly go beyond18 our sample.19 Now, that seemed eminently reasonable to me as well.20 So your clients made a decision. And I'm not saying it's the21 wrong one. But it was an expensive one. They made a very22 expensive decision here about how to litigate these cases.23 Absolutely within their rights. And as a result, in the June24 13th conference, I caved. I had made my request clear in our25 prior conferences that I wanted the parties to agree on some


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351 sampling protocol and some percentage, small percentage of2 loans on which these cases could be litigated. But I3 acknowledged the defendants' right not to reach that agreement.4 Therefore, we are in this very expensive, burdensome5 document production, which has enormous ramifications for your6 clients, the defendants, the plaintiff, and now third parties.7 And the defendants will bear the cost of that.8 MR. FUMERTON: Your Honor, if I may respond. From the9 initial proposal on sampling, plaintiff reserved the right to

10 go outside or redraw a sample. In the UBS case alone, it has11 doubled its sample from the summer, the initial sample it had12 proposed.13 Your Honor, plaintiff refuses even to participate in14 the cost sharing for the loan files as part of their sample.15 Even accepting your Honor's premise that the defendants are16 somehow to blame here, how can defendants bear the cost of the17 loan files in plaintiff's own sample which plaintiff claims it18 needs to prosecute its claims?19 What defense is requesting, your Honor, is the20 opportunity to brief this issue. We have reached out to21 plaintiff, met and conferred with them. They agreed on a22 briefing schedule. We could brief them at the end of the week.23 THE COURT: I don't need a brief on this. And I24 think, as I understood those early discussions, the plaintiff25 was reserving the right since when we were having these


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361 discussions was in the spring to keep modifying their protocol2 until they were comfortable that they have properly designed3 their sample. And they were willing to rely on their initial4 numbers that they gave to me as estimates because they wanted5 further time to work with their expert.6 So, counsel, we don't need a brief. I appreciate the7 briefing you've given me, everyone, on the motions to dismiss.8 I'm enjoying working through those motions. If I feel I need9 to have briefs on anything, I'll make sure to tell you.

10 MR. FUMERTON: And your Honor, just for clarification,11 that will then apply also to the loan files in plaintiff's own12 sample; defendants have to bear the cost of guesting those loan13 files as well?14 THE COURT: Yes, Mr. Fumerton.15 MR. FUMERTON: Thank you, your Honor.16 THE COURT: Thank you.17 OK. The protective order.18 So the series of letters that I've labeled the19 protective order, the plaintiff has labeled -- I'm sure this is20 helpful to you that I've renamed it -- "Defendants' Improper21 Third-Party Requests," and it ends with a request by FHFA for a22 protective order.23 So I personally thought this was very related to the24 discussion we just had about prioritization. And in my view if25 we prioritize the production of the loan files and the


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371 underwriting guidelines, then we're doing what we really need2 to do for this litigation, for everybody, the plaintiff and3 defendants. And if the defendants want additional discovery4 from third parties, those third parties have a right to come in5 here and seek protective orders. If they do, I'll hear them,6 give everybody an opportunity to be heard. But the rulings I7 made with respect to production between the parties before me8 were in the context of those issues as they arose, not binding9 or preventing someone from seeking third-party discovery.

10 So I'll let the plaintiffs be heard here, but I think11 that pretty much -- so long as we're able to prioritize the12 production of loan files and underwriting guidelines from the13 third parties, the fact that the defendants are seeking14 additional documents which may slow down and delay production,15 I think, is an issue I don't need to concern myself with right16 now.17 Do the plaintiffs want to be heard about anything in18 that letter?19 MS. SHETH: Yes, your Honor. Manisha Sheth on behalf20 of FHFA. We actually did meet and confer with the defendants21 on this precise issue over the course of Friday as well as this22 past weekend. And we're happy to report that as a result of23 that meet-and-confer process, we have reached an agreement with24 defendants to narrow the scope of their subpoena and decline to25 enforce certain of the requests in the subpoena which we found


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381 to be very broad in relating to the single-family side. What2 we did on, I believe it was Saturday, we identified a specific3 request in the originator subpoenas. As your Honor will4 recall, the defendants issued subpoenas to various categories5 of third parties. One of those categories was originators.6 Another was credit-rating agencies, due-diligence firms. There7 were also some law firms and consultants involved as well.8 As to the originator subpoenas, we have reached an9 agreement that certain requests, namely, requests 1 through 5

10 and request no. 9 of the form originator subpoena, will be11 included as is, subject to a few modifications as to the term12 securitization, and remaining subpoena requests 6, 7, and 813 will not be pursued for enforcement by the defendants.14 In addition, defendants have agreed to provide a15 letter to the third parties notifying them of that agreement.16 In addition, as part of that letter, the defendants17 have agreed to request the third parties to prioritize the loan18 files as well as underwriting guidelines over these custodial19 or e-mail-type documents.20 We have recently also reached an agreement as to21 timing this morning where defendants have agreed that the22 production of loan files by the third parties and underwriting23 guidelines should be a rolling production to commence October24 29 and to be completed by November 16. So that will help us in25 our reunderwriting review of those documents.


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391 THE COURT: I'm sorry. Which files are being produced2 over that roughly two-week period?3 MS. SHETH: The loan files and the underwriting4 guidelines.5 THE COURT: From?6 MS. SHETH: For the FHFA samples.7 THE COURT: From?8 MS. SHETH: From third parties.9 THE COURT: From the true third parties.

10 MS. SHETH: From the true third parties, correct.11 THE COURT: Nice.12 MS. SHETH: In addition, what we thought would also13 make sense is if the parties were to draft a proposed14 stipulation order for the Court's approval. And we are looking15 on that. We should have something exchanged today or tomorrow,16 and submit that for the Court's approval so that that can also17 go to the third parties so that they receive comfort as to the18 subpoena, the modified subpoena.19 That is the process as to the originator subpoenas.20 As to the credit-rating agency subpoenas, due diligence21 subpoenas, and other remaining subpoenas, we will engage in a22 similar process using the same principles.23 THE COURT: Great. So from the plaintiff's point of24 view, is there anything else you need to bring to my attention25 for the series of letters which I've labeled the protective


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401 order letters?2 MS. SHETH: No, your Honor.3 THE COURT: Do the defendants have anything they wish4 to raise with respect to the protective order letters.5 MS. STEWART: Yes, your Honor. I just want to clarify6 something. First of all, apologies for standing earlier.7 THE COURT: Your name?8 MS. STEWART: Beth Stewart from Williams & Connolly.9 I realize I'm tall and probably needlessly distracted you.

10 In any event, what Ms. Sheth has said is basically11 correct. We have had a long and fruitful weekend of working12 together. We appreciate your Honor's comments about how the13 prior rulings had effect or not on the scope of discovery we14 are entitled to. But one thing I just wanted to clarify is a15 letter we had proposed to send and which I think Ms. Sheth16 agreed would tell third parties that if they cannot confirm to17 us by a certain date, which I think was October 25, that they18 will be unable to produce loan files and underwriting19 guidelines by a second date, which I think our most recent20 discussion was that day November 15, but Ms. Sheth will please21 correct me if I'm wrong, then we reserve the right to enforce22 decision with the Court.23 So I just didn't want to be overrepresented that all24 these parties have as of now committed to make that production25 by the 16th. It's rather that we share plaintiff's goal of


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411 making sure there is a prompt and orderly production of all of2 the remaining third-party discovery. And we wanted to have in3 place with them a schedule so that they would be aware of what4 we expected of them and what steps we might take otherwise.5 THE COURT: Thank you.6 MS. STEWART: Thank you.7 THE COURT: Can I ask you --8 MS. STEWART: Yes, ma'am.9 THE COURT: As far as you know, did any defendant

10 during the period of the stay tell third parties not to keep11 working on these issues?12 MS. STEWART: What defendants did -- and plaintiff was13 aware, I think plaintiff actually did the same thing, we14 provided notice to all third parties that a stay had been15 entered. We did not tell them what they should do about them,16 but we did provide them notice that the stay had been lifted17 once the stay had been lifted, and I believe plaintiff did the18 exact same thing that we did.19 THE COURT: Thank you so much.20 Let's move to the third set of letters. I've labeled21 these "Compel Discovery From 12 Defendants."22 So I think I need to ask you if you've made progress23 in narrowing the issues in dispute as a result of the24 meet-and-confer process.25 MS. CHUNG: Good afternoon, your Honor. Christine


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421 Chung for FHFA. Your Honor, the issues that are live and on2 which the parties have reached an impasse are, first, to3 identify the letters. So what we call the post-closing4 originator search date range issue, there is a slight wrinkle5 in that JP Morgan is somewhat differently situated. So I think6 they're on the side now. But we have revisited this issue7 during a lengthy meet-and-confer on Friday and I think it's8 fair to say that we have an impasse on this as to most9 defendants if not all.

10 The second issue identified in the letter is the issue11 of the date ranges and how they're being run in the pre-closing12 period. This is all related to how the originator terms are13 being served in the pre-closing period. That issue is also at14 an impasse.15 THE COURT: I'm sorry. I thought you were just16 addressing that issue. So what is the distinction between the17 two issues?18 MS. CHUNG: In both cases, your Honor, it involves the19 extent to which the originator terms, the originator searches,20 so searches about references to originators, particularly21 departures from the guidelines etc., repurchase requests,22 basically they're originator base searches, so you will be23 looking in the e-mails for mentions of originators with24 specific reference to the purchasing guidelines. The two25 different issues, one is the extent to which the defendants are


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431 running those searches in the post-closing period, so2 effectively since 2007.3 The second issued is that some of the defendants are4 limiting their date ranges for those searches even in the5 pre-closing period. Your Honor, colloquially we've called it6 amongst the parties "the bubble issue" because the defendants7 are using a four-month window. They're applying a four-month8 window around each securitization and searching in the9 pre-closing period on a per-securitization basis only the

10 originators who were involved in that securitization. So those11 are the two different -- the originator term is common to both.12 They're both date range issues. But one is pre-closing, one is13 post-closing. On those I think it's safe to say we have14 impasse.15 On the last issue, which was raised in our letter,16 which was the searches that the requests, the document requests17 that we made for, in the first instance, deposition18 transcripts, witness statements, things that were previously19 produced in government investigations or other RMBS litigation,20 I think what I would describe there is, I'm reluctant to say21 that there is an impasse. We have been talking about this22 issue for a very long time and came up at the conference the23 last time we were here with a version of this. I don't think24 we're at a stage where there is agreement, but I think that25 it's not something that is ripe for the Court at this time.


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441 But I welcome different views.2 THE COURT: Ms. Chung, couple questions. Have the3 plaintiffs sought and been given lists of litigations and4 investigations regarding private-label securitizations?5 MS. CHUNG: Your Honor, we have. And in fact, there6 is one easy list that we referred the defendants to in the last7 meet-and-confer, which is that the complaints themselves, as8 your Honor knows, contain many references to PLS litigation,9 RMBS litigation, government investigations, CIC reports, SEC

10 investigations that we have already identified that in our11 view, in the complaints, are relevant because we have alleged12 systematic violations of the underwriting guidelines. We asked13 the defendants on Friday to start with that as the starting14 point and say, identify if you have claims -- and some of them15 have had claims -- that these litigations are simply not16 relevant, then can you identify which ones you're claiming are17 relevant and not relevant. And we haven't heard back on that.18 But that is a very obvious starting point.19 To answer your Honor's -- a different thing that you20 might be referring to, your Honor, we also had proposed at one21 point, FHFA, to -- because this issue has been under discussion22 for a very long time -- to try to jump-start it, we offered,23 could we at least exchange lists, because they've made similar24 requests of FHFA, of which litigations each party believes that25 they think are in play in response to these document requests.


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451 And effectively there, your Honor, we had at least -- I'm going2 to limit my comment, I think, to UBS. There are some others3 who have taken dispute along the way, but I think it's most4 crystallized with UBS. Their view was, if your list is going5 to exclude single-family information, then we're not going to6 have reciprocal agreement. And it's ultimately in our7 position, your Honor, and this will be consistent with what8 Mr. Schirtzer told you last time, if there is an investigation9 out there involving GSE that is partly single-family and partly

10 private-label securitization, we're willing to consider that11 investigation in play and would be willing to consider perusing12 documents from that production. But it seemed that we were at13 an impasse with UBS because they're of a view that we should14 still be producing even things that were wholly single family.15 From our side, we feel that the list idea did not16 work, that we've made very clear from the very moment we filed17 the cases which litigations we thought were relevant to this18 suit. And it is now, you know, months of meet-and-confers19 later, and as I say I don't want to back away from the idea20 that I think there could be more discussions, but I also don't21 want to lead the Court to believe that things are in a22 different place than they are.23 THE COURT: So, Ms. Chung, do I understand that there24 was a formal written document demand for the list of the25 litigations and investigations?


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461 MS. CHUNG: No, your Honor. No. No. There was no2 document requests for lists. We made the document requests for3 the documents.4 THE COURT: OK. And you have not gotten a list.5 MS. CHUNG: What we did ask for is for them to take6 the lists that would be the cases and investigation of our7 complaints and to list back to us, well, which ones do you8 think are not in play here, because we thought maybe that would9 get us a little bit down the road.

10 THE COURT: Do you feel that the plaintiff -- when I11 was thinking about this, it just seemed to me -- and I12 understand, a document request is for the documents, not for a13 party to create a list that doesn't otherwise exist. But it14 just seemed to me, in terms of making any dispute concrete and15 seeing whether or not the parties could reach agreement about,16 yes, we all agree that a production with respect to this17 universe is appropriate, we have a dispute about these other18 cases, that it would be helpful to have a list of litigations,19 a list of investigations, and start production with respect to20 those who have agreement about.21 MS. CHUNG: As part of the meet-and-confer process,22 your Honor, we did ask to exchange those lists. We have done23 that. And not only was there a single-family issue; at24 different points we had heard, well, we're not going to25 consider something a relevant investigation or civil litigation


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471 if it doesn't involve the very same securitizations at issue in2 that case. That's another issue at which we have impasse. We3 would never adopt that view.4 But that being said, the last idea that was exchanged5 was indeed maybe a variation of what your Honor is pursuing6 here, which is, can we at least look at the complaint and7 figure out which ones you agree and don't agree with because8 then maybe it will crystallize what the areas of disagreement9 are.

10 THE COURT: OK. Is there someone from the defense11 side that would like to address this issue?12 Mr. Fumerton.13 MR. FUMERTON: Your Honor, I could address the latter14 issue in terms of the regulatory investigations in other15 proceedings. We are in the process of meeting and conferring16 with the plaintiff. We're hopeful we can reach an agreement.17 We had the discussions as of late Friday. Plaintiff indicated18 it was focused on the exchange of testimony, both written and19 oral testimony, that had been given in other RMBS actions.20 It's important to stress, defendants are situated very21 differently here, have different views. Speaking on behalf of22 UBS only, I hope you do think it's a productive idea to have an23 exchange of testimony from actions, RMBS actions and actions24 relating to allegations in the complaint. We'll meet and25 confer with plaintiff and hope we can reach an agreement on


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481 that issue.2 THE COURT: Thank you.3 MR. FUMERTON: Thank you, your Honor.4 THE COURT: Any other defense counsel wish to be5 heard?6 Ms. Shane.7 MS. SHANE: I would only underscore what Mr. Fumerton8 said, which is that this is a very defendant-specific issue,9 and for JPM, over the course of the weekend, it looked to us as

10 if we have an agreement governing testimony with the plaintiff,11 and so we don't think that it would be accurate to think that12 these folks can't resolve these issues. We have experience13 that they have.14 THE COURT: Ms. Shane, are you making a distinction,15 when you say testimony, between deposition transcripts,16 affidavits, and declarations, or are you including all three17 categories?18 MS. SHANE: The way that the parties have been talking19 about testimony has included witness statements, which would20 appear to me to potentially include those that had previously21 been written down, but we have not used the vocabulary your22 Honor used. I'm sure we will hash that out once we get back to23 the document and what we've agreed.24 THE COURT: And Ms. Shane, has there been any25 distinction in these discussions between litigation that's been


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491 filed in court and therefore part of the public database, so to2 speak, and investigations that may not yet be public? Was that3 then a subject of discussion?4 MS. SHANE: The issue has arisen, yes, your Honor, and5 it does raise very different kinds of issues for different6 defendants. But it has come up in our discussions with7 plaintiffs well as well. And Ms. Chung indicated, the focus at8 this time, because it does look like there's a substantial9 likelihood of agreement, has been on the proceedings, whether

10 regulatory or litigation-oriented, that plaintiff already has11 identified in their complaint as relevant ones, and that we can12 all at least get out of the way as ones where we can reach13 agreement by ourselves.14 THE COURT: OK.15 MS. CHUNG: Could I make a proposal, your Honor?16 THE COURT: Yes, Ms. Chung.17 MS. CHUNG: I did want to clarify one thing, which is,18 we certainly intended our requests to apply to the different19 categories that your Honor identifies, the deposition20 transcripts, etc., etc. We also specifically raised with the21 defendants throughout the meet-and-confers that, to us, any22 deposition testimony should include exhibits, that that would23 be considered part of the deposition.24 I think on this issue, as on the first issue we25 discussed -- and you know this, your Honor, that's one of our


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501 overriding considerations, is the overall time schedule. We've2 been talking about this issue for a very long time. I think it3 would be useful if we were -- maybe I'm volunteering for4 something -- I think we should be reporting to the Court, as we5 are in the first issue, in short order on whether we have been6 able to make progress.7 THE COURT: Yes. Well, I have Thursday afternoon8 free. So I think we have to get this issue with respect to9 prior cases and investigations teed up for Thursday. Hopefully

10 the meet-and-confer process between the parties will mean it11 doesn't have to be on the agenda for Thursday afternoon. But I12 think it has to be defendant by defendant, since some13 defendants may have no quarrel with the production or have14 concerns about certain aspects of it.15 So I'm going to need a chart from plaintiff's counsel16 about where the problems lie defendant by defendant. I think17 that the parties need to produce to each other, to the extent18 they've made requests for documents from each other -- and I19 understand the defendants have made requests from the20 plaintiff. I think it's almost impossible to get our hands21 around this without a list of the lawsuits or regulatory22 actions that have been filed and are part of the public record,23 and there shouldn't be any problem with creating such a list24 since it is a matter of public record.25 With respect to investigations that are not a matter


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511 of public record, I think that should be a subject of the2 meet-and-confer process. There may be less need for that if we3 have fulsome discovery with respect to actions that are filed4 and publicly available.5 So I'm going to expect with respect to these prior6 cases and investigations that the meet-and-confer process will7 continue this week and to the extent there isn't agreement with8 any particular plaintiff and defendant, of the plaintiff with9 any particular defendant, I'll get a schedule or list from FHFA

10 and they will be on the agenda for Thursday afternoon.11 Which defense counsel wants to address the issue about12 the date ranges?13 MR. WOLL: Your Honor, David Woll. I'll do that if I14 may. As defense counsel noted, FHFA has raised this issue in15 12 of the 16 cases. As I understand there are meet-and-confers16 with the other four cases with this issue still being17 discussed. In fact we were meeting and conferring with FHFA in18 the 12 cases when the letters to the Court were sent. And as19 counsel also pointed out, there are two timing issues. One is20 the request for e-mails up to the date of the complaint, and21 the other one is the bubble issue.22 So firstly with respect to the e-mails up to the date23 of the complaint: Prior to raising the requests to the Court24 that all custodians, all e-mails for all custodians be searched25 up to the date of the complaint, FHFA had not requested that


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521 from any of the defendants. What FHFA had requested was that2 defendants consider providing e-mails or searching for e-mails3 for limited groups of custodians who had post-securitization4 responsibility, which was a part of the negotiations to be5 hammered out, and in fact some defendants have agreed to6 provide post-securitization e-mails up to the date of the7 complaint for some groups of custodians. Deutsche Bank, for8 instance, has agreed to provide e-mails with respect to9 repurchase claims, which counsel mentioned was one of the

10 things that they were interested in. Other counsel have either11 agreed to provide either e-mails or search central files for12 those types of documents. But the request that all custodians13 and all e-mails up to the date of the complaint be searched and14 produced was made for the first time in the October 9th letter15 to your Honor. That in fact is not even what FHFA itself is16 doing. As FHFA noted in that letter, it has certain custodians17 which it believed had post-securitization responsibilities.18 And for those custodians, about half of the custodians it said19 in the letter, it is doing searches up to the date of the20 complaint, but not for the rest of the FHFA custodians. So as21 the record currently stands, FHFA is asking defendants to do22 something that it has not agreed to do itself.23 THE COURT: Do I understand correctly, then, that some24 of the defendants have agreed to custodian searches up until25 the date of the complaint -- I guess that's September 2,


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531 2011 -- who had post-securitization responsibilities, and other2 defendants have not?3 MR. WOLL: Correct, your Honor. And this is, again,4 this is a defendant-by-defendant specific issue, and when5 plaintiff in their letter requested leave to brief this as a6 motion to compel, I think the defendants envisioned that each7 of them have particular issues to raise in response to the8 negotiations that have gone on with the plaintiff in that9 particular situation. Deutsche Bank, for instance, as I said,

10 on the repurchase point, has designated people who were11 involved in that activity, that they had such people, and is12 providing e-mails for that category. Not everybody has people13 involved in the activities that the plaintiff has designated.14 So I think there are two problems with the plaintiff's15 request. First of all, there is no need to search for e-mails16 that postdate the transactions at issue by as many as five17 years. The documents that plaintiff is searching for are18 likely not going to be relevant at all to the issue in dispute.19 And if I can identify the four things that FHFA mentions in its20 letter that it wants these e-mails for and then talk about them21 a little bit, one of them is repurchase requests. As I said,22 some defendants have already agreed to provide information23 about that. The other issue that they identify is24 securitization and loan performance, i.e. downgrades, defaults,25 delinquencies, and delinquency. Well, that's all a matter of


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541 either public record or easily accessible record. I don't2 think FHFA would tell you that they don't have access to3 information about the performance of the securitization or that4 they can't through Intex or APS or some other system get access5 to performance information on securitizations or loans. So the6 parties don't have to greatly expand the scope of their e-mail7 production. And I assume if this were done it would be done on8 a reciprocal basis so that all the FHFA custodians and all the9 defendant custodians would have to be searched for this

10 additional five-year period, which would generate obviously11 millions of additional e-mails. I don't think we have to go12 through that exercise just to figure out how the transaction13 was performed because I think there are other more readily14 accessible sources of that.15 The other category that FHFA identified in its letter16 to the Court were poor underwriting practices. First of all,17 the issuance so far as the claims against defendant are18 concerned is not whether the originators underwriting practices19 were poor, but, rather, the extent to which the loans and the20 securitizations departed from underwriting guidelines with the21 disclosures concerning LPDs and owner occupancies assistance.22 By contrast, I would note that HFA's knowledge post23 securitization is a lot more relevant to this case due to the24 statute of limitations on this issue if not other things.25 But insofar as information to be derived from the


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551 defendants' e-mails is concerned, the question of whether loans2 complied with the underwriting guidelines or representations3 can be deduced by looking at the contemporaneous e-mails around4 the transaction. There's no need to go searching far and wide5 for years after the transaction to see if there's some e-mail6 where somebody in 2009 said, you know, I remember back in 20067 this originator wasn't complying with this particular guideline8 in place at the time. Is it possible that a potentially9 relevant e-mail could be found if we looked at all the e-mails

10 for that five-year period? Sure. Is it worth it? We submit,11 no.12 And obviously with respect to the fraud issues, or13 those who have fraud claims against them, anything that14 happened after the transaction is completely irrelevant to15 dates' state of mind vis-a-vis the fraud issue.16 The other thing that the plaintiffs say they need the17 information for is defendants' retrospective realizations of18 risks created by poor underwriting practices. Frankly I'm not19 exactly sure what that means. But, again, to the extent it20 means that defendants' knowledge post securitization is somehow21 relevant to their state of mind at the time of the22 transactions, that's just simply not the case.23 So if I may, let me just talk about the bubble issue24 next.25 THE COURT: Well --


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561 MR. WOLL: Well --2 THE COURT: Or not. I just want to make sure,3 Mr. Woll, that I've captured what you've just told me.4 MR. WOLL: Yes.5 THE COURT: For those defendants who agreed to what,6 we'll call it the five-year search, for custodians who have7 post-securitization responsibilities, are you saying that you8 want to further limit the search of those custodians on these9 four topics? Or -- I'm not quite sure how these four topics

10 intersect with those custodians.11 MR. WOLL: Again, each defendant is situated12 differently. But what we did on the repurchase issue was, we13 agreed that there are certain individuals who were identified14 in repurchase activities. Your Honor knows what the repurchase15 claims are. So what we propose to do is to run terms designed16 to obtain information about those repurchase claims. We know17 what loans and what securitization repurchase claims were made18 for. So we have terms doe signed to identify documents19 relating to repurchase claims.20 I think other defendants may have agreed to do21 something after 2007 for some custodians, maybe not all the way22 up to the date of the complaint. It really varies defendant by23 defendant, so I don't want to misrepresent it.24 THE COURT: So even for defendants who have agreed25 that certain custodians who have post-securitization


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571 responsibilities, that their e-mails may be searched for this2 five-year period, even in those circumstances, they're asking3 that the searches be narrowed to what they believe are relevant4 topics.5 MR. WOLL: Well, your Honor, again, just speaking for6 Deutsche Bank, what we did, because these were repurchase7 custodians, is, we thought it made sense to look for repurchase8 documents. If plaintiff prefers instead we do the originator9 search term for those custodians, I think frankly the

10 repurchase search terms are going to pull up as many if not11 more than the originator search terms for these particular12 individuals. But I don't know that. I have to run that test.13 But it's not a limiting exercise that we were doing. It was14 more a question of trying to focus in on what people actually15 did and what information we were trying to get from them.16 THE COURT: As I hear this, one of your concerns --17 this should be a concern, no doubt is a concern -- on behalf of18 plaintiff and all defendants -- is that you would get an19 extraordinary volume of e-mail with the burden of searching20 that if you extend the search for all custodians who are21 relevant during the period of the securitizations and move it22 forward five years.23 MR. WOLL: Yes, your Honor.24 THE COURT: So if we had an identification of a subset25 of custodians and did a narrow search, or somewhat narrow


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581 search, of a reduced group of custodians for the five-year2 period, could that be the basis of an agreement, do you think?3 I know you can't speak on behalf of anyone else but your4 client.5 MR. WOLL: Your Honor, I think it could. We reached6 agreement with respect to the repurchase issue. We didn't hear7 back from plaintiff specifically with respect to other8 custodians on our list that they thought this would make sense9 with. But the concept that there are limited categories of

10 relevant information post securitization we agree with, as I11 imagine other defendants do too. It's doing the12 across-the-board all-custodian thing that we think is just13 frankly abnormal.14 THE COURT: I interrupted you. You wanted to go on to15 something else.16 MR. WOLL: Your Honor, I'm sorry, I was just going to17 talk about this bubble issue that counsel mentioned, which is18 that some defendants -- and Deutsche Bank is one -- for the19 period from 2005 to 2007 when the securitizations were being20 done, have taken what we've been calling the bubble approach so21 that for each securitization a period of three months before22 the securitization until one month after the securitization has23 been searched, all custodians' e-mail have been searched for24 that period. And the idea behind that search is that25 originators who were involved in those securitizations, e-mails


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591 relating to those originators and whether the specific loans2 underlying those securitizations complied with underlying3 writing guidelines, etc., that that search would capture those4 e-mails.5 Now, in practice what happens with an originator that6 hasn't been involved in multiple securitizations is, over the7 course of that period, their e-mails would be captured over a8 much larger period of time. So, for instance, we have one9 originator that, for example, American Home, where the bubble

10 overlaps because they were involved in so many securitizations.11 So essentially e-mails for the entire period from July '05 to12 August '07 are provided that mention American home.13 So as I said, it's designed to capture e-mails that14 relate to securitization, including e-mails that focus on this15 specific issue of whether the loans at issue complied with the16 guidelines.17 We all know that these guidelines changed on a very18 frequent basis and that a comment about what allegation19 originator is doing in 2007 is not necessarily relevant to20 whether that originator's loans complied with guidelines in21 2005.22 So that's why we thought the approach made sense. It23 would get at the relevant documents and frankly would allow us24 to complete the e-mail review that we need to complete on a25 fairly compressed schedule, especially those of us who have


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601 relatively big case. We have 42 securitizations in our case.2 We told the plaintiff that we were doing this back on3 June 11. And since then there have been at least three or four4 letters exchanged where Deutsche Bank at least says this is5 what we're doing and defendant and the plaintiff says, we know6 that you're doing this. And then they raised other issues.7 But, again, they didn't raise this bubble issue until they8 wrote to the Court.9 THE COURT: And I didn't even see it in the letter.

10 So...11 MR. WOLL: OK. See, they snuck it right in there.12 So, your Honor, we think the bubble approach for our documents13 gets at the relevant documents. Again, is it possible that14 some relevant document might be missed with the bubble15 approach? It's possible. But we doesn't think it's, frankly,16 very likely. And we think that, given the inordinate amount of17 documents that all the defendants are going to be producing,18 FHFA is going to have more than enough relevant documents to19 look at. So far, the defendants have searched e-mails from20 over 600 custodians and collectively produced over 2.4 million21 documents comprised of over 33 million pains. It's a lot to22 read. We're producing a lot of documents. And we took the23 approach that we've taken and some of the other bubble24 defendants have taken.25 THE COURT: And Mr. Woll, those numbers that you just


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611 gave me, are you talking about the defendants collectively?2 MR. WOLL: Yes.3 THE COURT: Thank you.4 MR. WOLL: I'm sorry, your Honor. Excluding loan5 files.6 THE COURT: So Ms. Chung, is it helpful to think about7 the post-closing period for a reduced number of custodians,8 searches during the five-year period for a limited number of9 custodians of each institution?

10 MS. CHUNG: Your Honor, we did propose that along the11 way. We would like to argue this, your Honor, with your12 permission. I want to address particularly two things that13 your Honor just heard. One, these are really the most14 important documents in the case. It was later in the time15 period, especially after the mortgage crisis hit, that people16 began talking about -- and saw public and privately that the17 performance was failing -- that people began writing e-mails18 about what the problems in origination process had been. So I19 think it's exactly understating the importance of this category20 of documents to say, well, it's limited to these subsets so21 this is really not a big deal, you have enough documents. So I22 want to address the relevant particularly, but also what your23 Honor had proposed, which is, doesn't it seem logical that some24 subset would do. And I embrace that, your Honor. The letter25 that they attach as Exhibit B to their letter to your Honor was


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621 a proposal that we made in July saying, here's a proposal from2 us, since we've been talking about time frames, we don't seem3 to be making much progress, let's consider a post-closing world4 and a pre-closing world. And in the three months since then,5 your Honor, what's happened is, FHFA has 111 custodians, and6 our post-closing world is 66 custodians. We are now reviewing7 2.8 million documents just in the post-closing period. And8 why? Because I can't stand in front of your Honor and say that9 it's not relevant. It's relevant. You've heard them make the

10 arguments about GSEs came to these realizations. We need to11 know what they know. Well, we agree with that. So we're12 searching seriously in this post-closing period. Their13 numbers, when Mr. Woll says, well, we have subsets, seven of14 the defendants have nominated one or zero custodians in the15 time period. So whatever searches they're doing, they're16 reaching -- and their custodian numbers overall are much lower17 than ours, with the exception of JP Morgan and UBS -- I want to18 be careful to make some distinctions. They have significant19 numbers of custodians. But we're talking about almost all20 defendants have less than 50 custodians to begin with. And the21 range of post-closing custodians they're searching is from 0 to22 15.23 So, your Honor, when we proposed that we could think24 about, let's think about this, let's split the world, and then25 we had multiple meet-and-confers about what that world would


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631 look like, what we found is, we're getting dribs and drabs on2 specific topics, exactly the ones Mr. Woll mentioned. So3 repurchases, some, not all defendants have agreed to nominate4 repurchase custodians. This is critical information, because5 as the banks got repurchased and evaluated them -- so these are6 loans that are being put back because somebody realizes there7 is something wrong with them -- when they write e-mails about8 those repurchases or they're applying standards about whether9 the guidelines meet them and what they are going to agree

10 that's a properly repurchased loan, that is a whole -- that's11 everything on what they believe the guidelines mean. And so,12 yes, we're looking for that information.13 And we're getting from some defendants, we'll give you14 one or two people on that. We don't have a good way to get15 behind what the nominations are. But we've also had defendants16 tell us, we don't have anybody who did any of these things, we17 don't have anybody who did monitoring of the performance, not18 just the public monitoring but the reaction to the public19 monitoring -- gee, do you see what that bond is doing, that's20 something that we never expected would happen, what do we think21 is going on. And we know from the media reports and22 allegations in the complaint that what's going on there is, you23 will see e-mail traffic of people saying, well, we knew that24 they were doing things they shouldn't be doing.25 But I want to be clear, it's not just about knowledge


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641 of falsity. All of this information goes to falsity.2 Departures from the underwriting guidelines are the heart of3 the case. And the search terms that we're talking about are4 things like the name of the underwriter, plus "abandon," plus5 "departure," plus "guidelines." So if you're not running that6 search any time past 2007, which is what half of the defendants7 are doing, then it's giving FHFA a null set. OK. In that8 period, the meaning of a repurchase -- repurchase didn't start9 going seriously until 2009. So saying that you're going to do

10 your searches up to 2007 or 2008 is offering FHFA exactly zero.11 It's a false offer.12 So, your Honor, what we have done is, in this long13 process, I think -- and this is why I started with, I agree14 that some of the defendants are -- they're not all perfectly15 situated, but I think also there's just not a meeting of the16 minds on this idea that -- we're not talking about one or two17 people. You have to seriously go and look at who worked on18 repurchases. Not a single defendant has offered anything on19 this category that Mr. Wilson can understand, which is the20 retrospective reviews.21 Another thing that happened after the mortgage crisis22 hit is that all these banks, the GSEs, everybody, took a step23 back and many of their risk committees, the very highest24 echelons of these banks and entities said, why did this go25 wrong, where did we abandon our risk policies, and anybody who


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651 was in these litigations knows that the parties on all sides2 have these reports. These may not be ordinary custodians.3 This is not going to be the trader. This is going to be some4 special theater or the highest people who were looking at risk5 in the institution. And so it takes some diligence to figure6 out who these people are. And what we found in our7 meet-and-confers was that diligence was not being exercised.8 When we are told there's nobody in the post-closing period that9 is relevant, that is very, very difficult for us to accept even

10 if it's also hard for to us attack.11 And so, your Honor, I think what we ultimately12 defaulted to, because we just found that we were not making13 headway on this, is, OK -- no one is saying, by the way, during14 these meet-and-confers, nobody said this was not relevant. I15 think we all understand it's relevant. What we're hearing is,16 it's burdensome, OK. So as I explained, FHFA has taken on the17 burden. Our view is, only one or two defendants gave us18 figures on burden. Those figures are AA. I mean, when19 somebody tells me, I got 2 million hits, well, you know, we got20 2 million hits, but that means there are relevant things. It21 may take a while to go through it, but it's there. So our22 option was, you know what, if this is where we are, run the23 terms, run the terms on everybody. If certain people are24 completely irrelevant, you won't have any hits on them. So25 that shouldn't be the issue. And this is the way that we're


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661 going to find what is some very, very meaty information that is2 highly relevant to the case.3 Given that we proposed this idea of the pre-closing4 and post-closing world, I think, your Honor, certainly one5 thing that we had a lot of problems with, in addition -- it6 sort of layers onto this problem -- is, we've made many7 requests. FHFA two months ago supplied a list of defendants of8 all 111 custodians, what their title is, what their department9 is, what their role is. And you can imagine that many of these

10 meet-and-confers in order to test the adequacy of the custodian11 list and to test the adequacy of the custodian list for the12 post-closing period, we're seeking information about what these13 people did. We asked the defendants for reciprocal14 information. And in many cases we didn't get it. I had a15 demonstrative, which unfortunately I can't show your Honor, but16 what we depict is, we sent Credit Suisse, for example -- we17 were on a meet-and-confer and they said, you know, well, what18 information do you want, so what information don't you have.19 We actually made a chart with 30 rows or so with all the20 custodians, the name -- we filled in what we had. And we left21 question marks in the boxes we didn't have. And we asked for a22 limited description of the role so we would see what these23 people are doing. And what we got back was a partial amount of24 that list in which the last column had been deleted, the25 description of what the person does.


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671 OK. That in a nutshell is kind of the problem that2 we've been having in probing the adequacy of the post-closing3 period. I want to be clear, the number that we have just don't4 add up. There is not a way that you don't have a single person5 in the organization, just one person. But if we were to go to6 one system where we are denominating people, then I think at a7 minimum what FHFA would need is more information to tell what8 the list is because we have applied that backup route and it9 also has not really worked.

10 I'm kind of reluctant to hand around a demonstrative11 because they came in during the period and defendants haven't12 had a chance to see them. But I think that describes kind of13 where we've been.14 I would like to just answer -- the negotiating history15 obviously is relevant. The defense has raised it. And as I16 say, I raised the idea that we originally proposed pre- and17 post-closing world. We did raise with the defendants, I just18 want to answer this, certainly in the meet-and-confers that I19 was involved in, we raised with the defendants that we were20 producing, because of this law enforcement negotiation for lack21 of progress, that they just run all the custodian terms for22 everybody. And that is indeed, for example, in the instance23 where we got numbers back on what the number of hits would be,24 that is what the defendant did to try to demonstrate this, and25 this is going to return a lot of documents, maybe not a


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681 shocking proposition to begin with. But it's not true that2 this was first raised with defendants in the letter.3 Your Honor, I just would say a few things about the4 data so that your Honor has the full picture. We have a few5 defendants who have offered a few repurchase custodians, which6 is not adequate. We have some defendants who have offered7 nobody. We have no defendant who has offered any custodian on8 these retrospective reviews. And on performance or monitoring9 of performance, I would say, I think maybe half of defendants

10 have offered between zero and eight people on this topic.11 THE COURT: Mr. Woll.12 MR. WOLL: Can I just be heard on a couple of things,13 your Honor. First of all, on the repurchase documents, I just14 wanted to mention this, FHFA has taken the position that all of15 its internal repurchase documents are privileged, so they're16 not going to be producing, as I understand it, any internal17 repurchase documents. And just as a point of clarification,18 repurchase claims involve lots of things. They don't just19 involve the purchase and underwriting guidelines. And so there20 could be repurchase documents that we come up with that have21 nothing do with underwriting guidelines.22 In terms of relevance and the argument that it's not23 just the state of mind but it's compliance with guidelines,24 this information after the fact, well, the whole point of this25 sample that the plaintiff has proposed where this


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691 reunderwriting exercise has been discussed is, that's going to2 be a lot of focus on loans to determine whether they in fact3 complied with underwriting guidelines or not. So, again, to do4 a huge e-mail review to see if somebody said something three5 years after fact about compliance with the date of the6 transaction I don't think is a particularly efficient way to7 go.8 And then finally, just with respect to details about9 the custodians, as far as I know, and I could stand to be

10 corrected, I don't think we got detailed information about the11 FHFA custodians in terms of which ones they've decided have had12 post-securitization responsibilities or how they made that13 decision.14 THE COURT: Thank you.15 So to the extent that -- most of these cases are16 non-fraud cases. There are only six of the 16, I think, that17 have fraud claims in them. And even the fraud claims, of18 course, are enormously impacted by the Section 11 claims, the19 straight misrepresentation claims. And statements that the20 defendants make which the plaintiffs would argue would be21 admissions that there was a noncompliance with underwriting22 guidelines or underwriting practices would take some of the23 disputes potentially off the table here. So I can certainly24 understand the importance of having a meaty production for the25 post-closing period.


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701 And with respect to these four categories of topics2 outlined in the plaintiff's letters and which Mr. Woll3 addressed, it seems to me each of them is an appropriate ground4 for post-closing discovery. It remains unclear to me, though,5 whether we need all custodians searched. But I think the6 burden would be on the defendants to make a showing that a more7 limited search would be sufficiently productive. It seems to8 me if executives, people with management responsibilities,9 people who are members of special committees and make reports

10 for the institution with fact finding about what happened, in a11 way that could be binding on the defendants at trial or12 certainly highly relevant to a jury's analysis of the defenses13 that are being put forward at trial, they have to be searched.14 So if a defendant doesn't want all the custodians searched for15 the five-year period, then I think they have a responsibility16 to create a custodian list that identifies the custodians by17 title and role and with a sufficiently detailed description of18 their jobs and responsibilities to make a showing that a search19 of their e-mails for the post-closing period won't be likely to20 produce or isn't sufficiently likely to produce productive21 materials.22 It seems to me in the post-closing period what we're23 talking about would be -- and, Ms. Chung, I'm happy to hear24 from you on this -- but I think what we're talking about in the25 post-closing period is people with a high-enough responsibility


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711 within the organization that their knowledge and observations2 about these historical practices bear some weight, and that3 some of the more junior-level people, that would have highly4 relevant information during the periods of securitizations5 themselves, their stray comments or thoughts might be of less6 interest or importance in the post-closing period. One could7 argue the other way. But I think that defendants need to get8 to the plaintiff by the close of business tomorrow a list of9 their custodians by title and role and indicating which

10 custodians they do not believe there should a search for for11 the post-closing period, so that there can be an adequate12 meet-and-confer on that topic on Wednesday between the parties13 and so Thursday afternoon I can address any areas of14 disagreement.15 With respect to the bubble --16 MS. CHUNG: Your Honor, I didn't really address that.17 I don't know -- I could do it briefly.18 THE COURT: Ms. Chung.19 MS. CHUNG: It is a version of the same argument20 because -- on this one I want to be clear, there's a clear21 split in defendants. I want to give credit; a lot of22 defendants are not using this bubble approach. For FHFA it was23 never an issue because on our side, and one of the reasons --24 it was funny when you said I didn't see it in the letter. On25 our side we don't have a bubble because we just ran all our


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721 custodians pre-period for all deals and all originator terms.2 Most of our employees worked on the same deal so it didn't make3 a difference. So our eye was not really on the idea that you4 would ever try to separate the originator terms by deal. And5 so when defendants started doing that, and there's been some6 the movement in it but now I think it's clear there's sort of7 two camps. One camp is searching it all the way through. And8 another camp has said, no, we're always going to associate an9 the individual originator with the deal that they were welded

10 to. And the problem with that, your Honor, again, is the11 arbitrary cutoff of relevance. It may be, you know, there are,12 for example, there is an example in the -- I think it's Merrill13 Lynch, where during the time period the deals are being done --14 that's information that comes about in different RBS case15 that's public because there has been motion practice about it,16 so, oh, gee, this originator, looks a little weird, let's start17 doing some quality control on this. OK. If that kind of thing18 happens and they're looking for quality control in the19 origination of the loans, that's not going to happen in a20 four-month window. So that's the logic, that it's just -- I21 think it's hard to say that it's burdensome if the plaintiffs22 are doing it and then there's this kind of arbitrary three23 months before, one month after that we don't think bears any24 relation to the relevance of the documents.25 THE COURT: Ms. Chung, with respect to that division


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731 between pre-closing and post-closing, where is that line drawn,2 in your view?3 MS. CHUNG: In terms of what, your Honor?4 THE COURT: An individual defendant.5 MS. CHUNG: Well, I guess the distinction we drew,6 your Honor, is, we're not insisting -- we put the bubbles7 around what we've been calling the deal terms. So there have8 been two sets of searches. One is geared off of the actual9 securitization names and the CUSIPs and things like that. That

10 to us is debatable. Frankly, we could have asked this as well,11 I think, but we didn't. We said, OK, if you want to run the12 deal terms in bubbles, that makes some sense because you expect13 there to be higher volume about the deal when it's being14 arranged. But to us the originator information is not like15 that. There can be e-mail chatter about the originators and16 their practices and perhaps the falsity of their17 representations in the offering materials to the extent they're18 talking about departures from the guidelines at any point in19 time. And so I guess what I'm saying is, much of the argument20 for us is the same.21 THE COURT: But then you made the proposal of a pre-22 and post-closing search and a distinction between the two. For23 any individual defendant, what is the demarcation for it?24 MS. CHUNG: Your Honor, it depended on what duties25 they had. So we were saying -- it's not unlike what your Honor


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741 was just saying. If you can give us enough information that2 they only would have had e-mail traffic in an earlier period,3 so this might be people who are doing the arranging of the4 deal, so all they're doing is picking the loans that are going5 to go into the deal, that could have some logic to it, there's6 no need to go up to the date of the complaint from7 post-closing. But that was exactly the kind of information8 that we found it difficult to get.9 I think the key thing was what your Honor identified,

10 which is -- because I think most of the defendants have already11 staked out the position that if they're on the custodian list12 and they haven't already been designated by them as a13 post-closing custodian, that those people do not have duties14 that would implicate those fewer areas.15 I think what we're -- so we're very interested in the16 first part of what your Honor ordered, which is, can you17 identify people in these four buckets who -- have you18 identified those people, if they are the higher-level people19 that's fine -- who did have responsibility for these things. I20 think that's really what we've been missing.21 THE COURT: Do you agree that with respect to that22 five-year period -- I'll call it the post-closing period --23 that what is most important to the plaintiff are things that24 could be thought of as admissions, that they are basically25 things that were said to, heard by, or articulated by people in


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751 managerial or executive positions with respect the2 organization?3 MS. CHUNG: Yes. Your Honor, I think we could make a4 broader argument. It depends. For example, on repurchases,5 many of these entities had, when repurchases started coming in6 in big volumes, they would form committees where there would be7 standards set. There would even be things like, you know, I've8 seen a policy that said to employees, if you can find ways to9 turn down these repurchases, you'll get incentive-based pay.

10 So there can be a range of things that e-mail traffic11 and -- you know, it can be at a committee level. It can be at12 the executives' level. I understand what your Honor is saying13 about having the importance to bind the company. But I think14 in many ways -- I mean, this is an argument defendants have15 made -- that, you know, you're an employee and you're there and16 that's still relevant information if you're talking about the17 business and the aspects of the business that are relevant to18 the case.19 But I hasten to say, I think that a big issue has been20 for us so far just identifying any people that relate to those21 four buckets. That's what the big hurdle has been so far.22 THE COURT: Mr. Woll.23 MR. WOLL: Yes. Your Honor, I just wanted to add that24 you instructed defendants to provide information about their25 custodians and ones that are not appropriate for post-


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761 securitization search, and I would ask that the plaintiffs be2 asked to do the same thing.3 THE COURT: I thought Ms. Chung gave you a chart like4 that. She was describing what she provided, FHFA provided to5 the defendants, with title and duties. Did I misunderstand6 you, Ms. Chung?7 MS. CHUNG: No, your Honor. I have copies. Yes, we8 have turned over a full list of our 111 custodians with their9 functions and the time frames to the defense.

10 MR. WOLL: And the defendants did too, at least11 Deutsche Bank, we provided a list of custodians and what their12 titles were. But if we are to justify why people should not be13 subject to a post-securitization search, that's additional14 information we would ask the plaintiffs also to provide,15 because understandably the title may not tell the whole story16 and since that's what we've been provided, it doesn't17 necessarily show why they're not doing it on the other half of18 their custodians.19 THE COURT: Ms. Chung.20 MS. CHUNG: Your Honor, I don't think we're similarly21 situated on this. On defensive discovery, there have been22 enormous amounts of discussion about our custodians and we23 have, as a result of that, designated 111 people. And we have24 provided the information about who they are and what they do25 and the time periods. It's this information we haven't been


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771 able to get from defendants. But more fundamentally, we have2 put forward literally scores of people, and the issue that3 we're having on their side is, it's not being reciprocated. I4 think seriously -- I've been a part of these conversations --5 we have said a lot of things, including in meet-and-confers, to6 drill down on who the people are and why they're being added or7 not.8 THE COURT: So, Mr. Woll, I am happy if you don't9 reach agreement with the plaintiffs and we're together again on

10 Thursday afternoon, I am happy to look at the chart you gave to11 the plaintiffs in the past all those custodian identifications,12 and am happy to look at the chart you will produce tomorrow by13 5 for the plaintiffs and be able to observe whether or not the14 information you gave in the past was really fulsome enough. So15 I'd be happy to look at it now if you have a copy, but there is16 no expectation you would have brought it to court.17 MR. WOLL: I'm not sure I do, your Honor.18 THE COURT: Yes.19 MR. WOLL: And with respect to the plaintiffs, can you20 also look at their chart and see whether it provides21 information?22 THE COURT: I'd be happy to. I'd be happy to.23 Everybody should bring their charts.24 MR. WOLL: Thank you.25 THE COURT: So on this third letter, I think nothing


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781 is resolved. I think everything remains open to a2 meet-and-confer process this week. And it's on the agenda for3 Thursday.4 MS. SHANE: Your Honor, I'm sorry, if I may just a5 moment confirm that our understanding, which we had with the6 plaintiff before we came here and which I believe was mentioned7 at the start of this conversation, is that this JPM defendant8 and the plaintiff had an agreement resolving this issue as to9 JPM.

10 MS. CHUNG: Yes, your Honor. We set aside JP -- I11 think I did in this conversation.12 MS. SHANE: Thank you.13 THE COURT: Thank you.14 MR. HANIN: Excuse me, your Honor. Michael Hanin on15 behalf of FHFA. With respect to the four cases that were not16 the subject of the letter you received last week, we had not --17 THE COURT: What four cases?18 MR. HANIN: Well, the letter you received from FHFA19 related to 12 of the 16 cases coordinated before you. We20 suspect that in the four cases that our firm is handling, we21 would continue to meet and confer on the very same issues that22 the other 12 defendants were dealing with. And we actually had23 meet-and-confers on each of those cases scheduled for tomorrow24 and Wednesday. And so I just wanted to make sure of two25 things: one, that we would also receive from the defendants the


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791 same list of custodians who they believe are appropriate for2 post-securitization searches by 5 p.m. tomorrow, and, two, that3 with your Honor's permission, we could in the course of these4 meet-and-confers, in which we have requested all the same5 searches that FHFA requested in all of the cases, get on the6 same timetable such that to the extent there are any7 outstanding issues by the close of business Wednesday we can8 address them with your Honor on Thursday.9 THE COURT: Yes.

10 MR. HANIN: Thank you.11 THE COURT: Sadly I thought there were four cases that12 were moving along without any need for intervention. OK.13 Let's talk about the RBS litigation.14 Thank you very much for your submissions to Judge15 Thompson and myself. And, Mr. Woll, I'm glad you're here.16 MR. WOLL: And I'm glad my partner, Tom Rice, is here.17 THE COURT: I had spoken with Judge Thompson months18 ago and again last week and again today, and I'm very aware19 that he is the judge responsible for the Royal Bank of Scotland20 case filed in Connecticut. And I have enough on my plate and21 that's just fine. But I think what I have in mind with respect22 to the coordination order is something that is, I think, pretty23 common in litigation across districts. And it's agreements24 along these lines, that no deponent will be deposed twice, that25 documents produced in the litigation before me will be produced


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801 in Connecticut and vice versa to the extent that that's2 relevant. So I expect that that's extraordinarily standard and3 desired by one and all. I may be wrong about that. So I think4 the next layer of issues potentially for agreement or5 disagreement is whether or not the 20-deposition limit that's6 imposed in the 16 actions here, of all defendants vis-a-vis7 FHFA and FHFA vis-a-vis any corporate family, whether or not8 that will be deemed to be imposed with respect to the9 Connecticut litigation as well. And of course Judge Thompson

10 will speak for himself. But RBS, at least one of the11 defendants in the RBS family who is a defendant in the12 Connecticut litigation is present before me in four cases, and13 I think two or three of those are fraud cases, not that they're14 defendants on fraud counts, but -- I have my chart. But15 anyway, so it's my understanding that Judge Thompson believes16 that that 20-deposition limit should apply with equal force to17 the Connecticut action. Therefore Royal Bank of Scotland, that18 family of corporations, will be involved in taking the no more19 than 20 depositions of the FHFA that binds all the defendants20 before me. And similarly, the plaintiff and any co-defendants21 should expect a 20-deposition limit of the Royal Bank of22 Scotland family of companies, whether they are named in the23 four actions here or the Connecticut action. So Royal Bank of24 Scotland, as a family of companies, is only going to face 2025 depositions, whether those depositions are taken as part of my


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811 four cases or the Connecticut case.2 Now, with respect to the Connecticut action, I think3 Judge Thompson would like to treat this -- and again, he will4 speak for himself as presumptive and give Royal Bank of5 Scotland and FHFA an opportunity to be further heard before him6 if and when they feel they feel there is a need for relief.7 But of course that applies here as well.8 So with respect to the plaintiff's proposal that we be9 scheduling a trial date in the Royal Bank of Scotland case, I

10 think I will leave summary judgment practice and trial dates to11 Judge Thompson and it doesn't need to be part of a coordination12 order.13 Similarly with respect to document production in the14 Connecticut case and a substantial complete date or a cutoff15 with fact and expert discovery, I think Judge Thompson and I16 will meet and confer about that more. But I think17 fundamentally that's for Judge Thompson to decide. The issue18 is to what extent it will impact the management jointly of19 these 17 cases.20 So I hope that gives you enough -- I wanted to respond21 as promptly as I could on behalf of both of us since you are22 before me today and it does affect your life going forward,23 because that means that Royal Bank of Scotland is going to have24 to be prepared to begin deposition discovery of FHFA in January25 of this year. It of course knows that for my four cases, but


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821 it has to know that for the Connecticut case as well.2 I think that there should be continuing consultation3 between the plaintiff and the RBS defendants, indeed all the4 defendants in the Connecticut case, document production issues5 and the scheduling of the RBS depositions. Those do connect6 with issues before me, but I don't want to say anything7 further. I think Judge Thompson and I would like joint8 proposals on that detail. So what I would like is a proposed9 coordination order that provides for no deponent being deposed

10 twice, documents produced in one of the 17 litigations being11 produced in all, the 20-deposition limit being deposed. And I12 think then the other things which are customary in coordination13 orders -- and I don't understand there is any dispute about14 it -- which is signing on the confidentiality agreement and the15 other stipulations that have governed document production and16 otherwise helped you all manage your lives in this case that17 are customary.18 Mr. Rice.19 MR. RICE: Yes, your Honor. If I may just approach.20 THE COURT: Sure.21 MR. RICE: Thank you. And I don't propose to speak22 very long, your Honor. I just don't want to speak from the23 back of the room.24 THE COURT: Sure.25 MR. RICE: First of all, thank you, your Honor. And


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831 just to be clear, first, we do appreciate your Honor's efforts2 here and we appreciate your communicating what Judge Thompson's3 view of the case is. We have asked Judge Thompson today in a4 letter to him when we sent him a courtesy copy of the papers we5 filed Friday, we asked him to please set a conference as soon6 as possible so we can talk to him about these issues. We want7 to proceed in a way that's sensible but that protects my8 client's rights at the same time. And I'm concerned, your9 Honor, that some of the things you've said today are perfectly

10 fine and some of them really are a problem in terms of the11 substantive rights of the RBS defendants and the Connecticut12 defendants.13 Sure, documents produced in all cases and depositions14 taken in all cases can be used in all cases, there's no15 question about that. We have no issue with that. We would16 like, if it were feasible, to have a rule that says deponents17 are only taken once in a case. The problem with that is, given18 where we are now, the RBS defendants on the 68 securitizations19 that are at issue in Connecticut will not be ready to take20 depositions in the first half of next year, which is when all21 the depositions of the FHFA witnesses are going to take place,22 so that we're going to have an issue there and we're going to23 have a problem there. And I hope your Honor will understand24 that. I hope equally that Judge Thompson will understand that.25 And we would like to try to get before him on that.


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841 And frankly, your Honor, I'd like to try to get before2 him on that before we come to --3 THE COURT: Before January.4 MR. RICE: Well before January, your Honor, and5 certainly before your Honor and Judge Thompson enter any kind6 of coordination order. I think certainly my client has a right7 to be heard in Connecticut where the plaintiff brought this8 case, where the case is going to be tried. We have no, no9 interest in trying to duplicate things. But what your Honor

10 has outlined causes huge and, I would submit, with all respect,11 unfair issues for the RBS clients.12 THE COURT: So, Mr. Rice, could I get your cooperation13 to this degree; would you draft with FHFA a proposed14 coordination order that reaches agreement where you can and has15 competing paragraphs where there is no agreement so we can make16 the differences concrete in one document and/or -- yes, that's17 my request. Would you be able to do that.18 MR. RICE: First of all, your Honor, I think you will19 always be able to count on me to cooperate, and, yes, of course20 we'll do that. We'll certainly work with them on that. I21 think having a competing order already gives us a basis to come22 up with something. There are a couple of areas at least in23 which we agree. There is obviously much about which we don't24 agree at this point.25 THE COURT: OK. So I take it, though -- there are


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851 some things that I could say with respect to the 20-deposition2 limit. But I very much appreciate that you have a separate3 right to be heard before Judge Thompson. And I certainly won't4 be entering any order before he has an opportunity to grant5 your request for a conference before him and before he is ready6 to sign. So I don't want to put any party in the uncomfortable7 position of wondering who is the person you should be obeying.8 MR. RICE: Thank you.9 THE COURT: So I think Judge Thompson and I agreed

10 from our very first conversation that we would try to work11 cooperatively with each other. But I do want to be very12 respectful of his independent role over that 17-defendant case.13 MR. RICE: Thank you very much, your Honor.14 THE COURT: Yes.15 MR. ABENSOHN: Your Honor -- I apologize.16 THE COURT: Counsel.17 MR. ABENSOHN: Yes, your Honor. Adam Abensohn for18 FHFA. And I'll be brief because we do certainly respect that19 Judge Thompson will ultimately draw out the issues in the RBS20 case.21 THE COURT: In one of the five RBS cases.22 MR. ABENSOHN: In one of the five RBS case, yes, of23 course, your Honor.24 The only thing I would say with respect to defendants'25 opportunity to be heard by Judge Thompson is, to a large


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861 extent, they have been heard by Judge Thompson, who ordered two2 months ago that discovery begin, quote/unquote, promptly. So3 much of the complaint we hear today from RBS, in my view, is4 self-created. My understanding is that they've got to begin5 document collection, they've got to begin document production.6 They have yet to begin any of the process despite this order7 outstanding for two months. And our concern frankly is that8 they are trying to create a scenario that makes it impossible9 to get coordinated, that makes it impossible to spare witnesses

10 multiple depositions. And that is then what we are trying to11 prevent. And again I understand your Honor's guidance and will12 proceed on that basis.13 THE COURT: And when did you serve the document14 demands in the Connecticut RBS case?15 MR. ABENSOHN: I believe the document demands went out16 the day after the exchange of initial disclosures, so that17 would have been, I think, on the order of a week to two weeks18 ago.19 THE COURT: Thank you.20 MR. ABENSOHN: Thank you.21 MR. RICE: With your Honor's permission, I just can't22 leave some of this unchallenged.23 THE COURT: I thought I asked the right questions.24 MR. RICE: You did, your Honor, and I appreciate is.25 But there's something else your Honor doesn't know. We were


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871 before Judge Thompson in January of last year on a conference2 that talked about discovery in these cases. Mr. Abensohn was3 there. There wasn't a hint at that time that they were going4 to seek to somehow cram us into a schedule that was here,5 absolutely unfair, your Honor. And again, we'll be heard6 before Judge Thompson.7 THE COURT: Good.8 I think we can move on.9 MR. ABENSOHN: OK. Thank you, your Honor.

10 THE COURT: Thank you so much.11 I don't need to take much time. You can write me a12 letter. I think we still have two dates in the UBS summary13 judgment motion practice that you were going to meet and confer14 about, and I'd love to get those down. So if you could just15 send me a letter with those two dates.16 The issue about the Daubert challenges, I would like17 the defendants, other than UBS, to advise the plaintiff by18 October 19 whether or not they were they are making any Daubert19 motion at this time to challenge the Cowan report. If not, as20 was true in the UBS case, their right to make a Daubert motion21 to challenge his report is waived to the extent it could have22 been made at this time. So it is without prejudice to filing a23 Daubert motion on additional opinions that may be expressed by24 the plaintiff's expert.25 Obviously this early Daubert motion practice has been


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881 necessitated by the enormity of the task that confronts all of2 us. It's not just the plaintiffs who will be doing a3 reunderwriting analysis of the sample. I have no doubt that4 the defendants will be doing that as well. And the defendants5 will be deciding whether or not they want to make a6 counterproposal or look at additional files of everything.7 Unless we have devastating e-mails that come in as straight8 admissions with respect to the Section 11 violations, an9 enormous amount of work by the plaintiff and defendants is

10 going to be driven by the plaintiff's protocol for choosing11 this sample and by the identification of the individual loan12 files. All of you need to know now whether this sampling13 protocol is so fatally flawed that it should be stricken on14 Daubert grounds. You all have the right, of course, to make15 any arguments to a jury about weight at any time. That16 wouldn't be appropriate for a Daubert motion. And of course17 you can't make a Daubert motion with respect to something you18 don't have. So to the extent that there are additional19 opinions and expert reports, you have all your rights to make20 additional Daubert challenges at that time.21 So by October 19th you'll advise the plaintiff in22 writing whether or not you're making a Daubert challenge. And23 if you do, here is the briefing schedule: Motion by the24 defendants October 26, opposition November 9, reply November25 16. Two courtesy copies to the Court.


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891 Counsel.2 MS. DAVIDOFF: Your Honor, Amanda Davidoff from3 Sullivan & Cromwell. We certainly agree that we can't make a4 Daubert challenge based on information that we don't have yet.5 And speaking on behalf of the nine UBS defendant, we did6 receive our Cowan report last week. What's missing from that7 report -- that report includes a general methodology, it8 includes a list of about 44,000 loan members that are included9 in the sample plaintiffs said they drew. What's missing is all

10 of the data one would need to evaluate whether the sample was11 reliably drawn based on the methodology that plaintiff has12 presented.13 Now, it's quite a complicated process to adequately14 draw a sample based on general methodology. It's not take the15 loan tapes, close your machine, the sample pops out. The loan16 tape have to be processed. Dr. Cowan's report says that he17 divided them into four side by side. That's probably a lot of18 calculation, copying and pasting Excel charts. And Dr.~Cowan19 had to choose a number generator. That's going to usually20 generate a number between 0 and 1, a series of random numbers21 between 0 and 1. You need a computer program that maps those22 random numbers onto the loan numbers. Dr. Cowan says that he23 did a number of tests of representativeness. We don't have any24 of the backup data for those. And then of course overall, we25 do not have any discussion and information of how many times


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901 they did this process, whether this was something they did once2 and took a sample or whether it's something they did a thousand3 times and took a thousand samples.4 So we would submit, your Honor, a couple things in5 response to their proposal. We are more than happy to make a6 determination of whether we're going to make a Daubert motion7 on a relatively expedited basis. But that can't be done until8 we have this backup information. We've asked for it, not only9 what's automatically required under the rules; it's also the

10 subject of a document request. We also asked for it in11 response to the motions letter that we got from the plaintiff12 last week.13 So I would say that probably October 19 is too soon to14 make a determination about whether the defendants are going to15 make a Daubert motion. Plaintiffs have had these loans tapes.16 Your Honor's order had an outside date of June 8 for getting17 the loan tapes. There was a lot of back-and-forth on what the18 right loan tape was for each securitization. Plaintiffs19 themselves have said that they had to supplement the loan tapes20 with data for logic. Defendants certainly had a right to21 evaluate how that was done. They took from June until October22 to give us our sample numbers. And the samples are, you know,23 there are still a lot of numbers. There were 44,000 loans,24 there were a hundred loans for each securitization. It's going25 to take our experts some time to crunch those numbers once we


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911 get the data that we need to evaluate a response to this2 proposal.3 Presumably, if that's the kind of early Daubert motion4 your Honor has in mind in order to vet these numbers -- of5 course let UBS speak for themselves. They may want the same6 discovery. I'm not aware of whether they got it or not. But I7 don't think we can make a decision by October 19, given that8 it's October 15 and we don't have this data.9 I also don't realistically think we could put in a

10 motion on such a short time frame. It's just so many loans and11 there's some expert work to be done with these calculations.12 That's why it has taken such a long time to do.13 THE COURT: Thank you so much.14 MS. DAVIDOFF: Thank you.15 THE COURT: The next topic will be the schedule for16 the reports on reunderwriting. As I understand it, to do the17 reunderwriting, the plaintiff needs the sample loan files. So18 for any particular case, the reunderwriting process requires19 that sample set to be complete. And I had proposed, I believe,20 at the July 31st conference the following schedule -- and just21 proposed -- that two months after the plaintiff has the sample22 loan files for a particular case and the underwriting23 guidelines, that it would identify for the defendants the24 results of its reunderwriting process to identify with some25 specificity what it contended the individual misrepresentations


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921 or failings were. And I proposed that the defendants would2 then respond within six weeks.3 So I just want to remind counsel of that discussion4 that we had on July 31 and ask you to fold that into your5 meet-and-confer process and come up with a schedule so we don't6 lose track of that. Thank you.7 And I think that takes me to the last issue on my8 list, which is ResCap. I have not had an opportunity to read9 the entirety of Judge Glenn's decision. But I have read

10 selected portions of it. And believe me, I will read it all11 with great interest as soon as I can. But I think I got the12 gist of it. And so I'd like to give counsel before me, who13 wish to be heard on this issue, and -- is it Mr. Goeke?14 MR. GOEKE: Yes, your Honor.15 THE COURT: Thank you. I'm so glad you're here.16 Anyone who wants to be heard on this issue, I want to give them17 an opportunity.18 So what I'm thinking is ordering the production of, I19 think it's 2100 files, loan files now that FHFA has identified20 and requiring Ally to pay ResCap for that production. The21 issue is whether I allow defendants to identify any additional22 files beyond the 2100 and fold that in to my order. For23 instance, if the defendants could this week identify 500 or a24 thousand additional files that they would like ResCap to25 produce, I'd be happy to fold that in as well, if you think


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931 that the set of 2100 is too small.2 So that's going to be my proposal. And Mr. Goeke, you3 may wish to oppose that.4 MR. GOEKE: Yes, your Honor.5 THE COURT: I'll take any submission on Wednesday.6 The FHFA I'll take any submission on Friday. And Mr. Goeke,7 any reply on Monday.8 MR. GOEKE: Thank you, your Honor.9 THE COURT: Thank you.

10 So, counsel, two and a half hours later, it's 511 o'clock. And by the way, I want to thank everybody for always12 being so prompt. It's greatly appreciated.13 Mr. Goeke.14 MR. GOEKE: Your Honor, I'm sorry to interrupt you.15 May I just ask, if we are to address this on Wednesday, on what16 authority are you actually ruling that we should be providing17 the information given that Ally does not have any control over18 this information? Is it under the shared services agreement or19 is it for some other reason? Just so we can be addressing the20 correct issue before your Honor.21 THE COURT: I think you should assume that I'm going22 to act with every piece of authority I have at my command. And23 so that you should feel free to give me any and every argument24 why I should not order this.25 MR. GOEKE: Thank you, your Honor.


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941 THE COURT: Thank you.2 MS. CHUNG: Your Honor, did you have some time in mind3 for the Thursday?4 THE COURT: 2 o'clock.5 MS. SHANE: Your Honor, is that in person or6 telephonic?7 THE COURT: Well, it actually will depend upon the8 length of the agenda. I think this would have been impossible9 to do by phone. So either Ms. Shane and Mr. Kasner, the two of

10 you together, and Mr. Selendy, if you would notify my chambers11 Thursday morning of the agenda items that have not been12 resolved through the meet-and-confer process and your13 recommendation, hopefully joint, as to whether or not this can14 be done by phone or -- I have to say, anything longer than 4515 minutes we're going to do in court. If we're down to one or16 two issues, fine. But for me to give everybody a chance to be17 heard and reflect on these and give you a ruling and perhaps to18 look at charts -- I'm so anxious to see Mr. Woll's charts and19 FHFA's charts -- document custodians, some of this, depending20 on what the issue is, it may of necessity be an in-person21 conference.22 MR. KASNER: Your Honor, Jay Kasner. Good afternoon,23 your Honor. Just as a hypertechnical housekeeping matter, I24 will be in the Second Circuit Thursday morning. I will ask25 Mr. Fumerton to take responsibility and Ms. Shane for


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951 contacting chambers if that's acceptable to the Court.2 THE COURT: Thank you. Is it a case I know about?3 MR. KASNER: Your Honor, it is a case I'm not certain4 you know about but it will be of interest to the Court. It5 involves an application of the same decision that your Honor6 discussed at our very first conference.7 THE COURT: Thank you all.8 o0o9

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FEDERAL HOUSING FINANCE AGENCY

NEWS RELEASE

For Immediate Release Contact: Corinne Russell (202) 414-6921 July 12, 2010 Stefanie Mullin (202) 414-6376

FHFA Issues Subpoenas for PLS Documents

Washington, DC – FHFA, as Conservator of Fannie Mae and Freddie Mac (the Enterprises), has issued 64 subpoenas to various entities, seeking documents related to private-label mortgage-backed securities (PLS) in which the two Enterprises invested. The documents will enable the FHFA to determine whether PLS issuers and others are liable to the Enterprises for certain losses they have suffered on PLS. If so, the Conservator expects to recoup funds, which would be used to offset payments made to the Enterprises by the U.S. Treasury. Fannie Mae and Freddie Mac share the critical mission of providing liquidity and stability to the Nation’s secondary mortgage market. On September 6, 2008, FHFA placed both Enterprises into conservatorship with the purpose of preserving and conserving Enterprise assets. Before and during conservatorship, the Enterprises sought to assess and enforce their rights as investors in PLS, in an effort to recoup losses suffered in connection with their portfolios. Specifically, the Enterprises have attempted to determine whether misrepresentations, breaches of warranties or other acts or omissions by PLS counterparties would require repurchase of loans underlying the PLS by the counterparties and whether other remedies might be appropriate. However, difficulty in obtaining the loan documents has presented a challenge to the Enterprises’ efforts. FHFA has therefore issued these subpoenas for various loan files and transaction documents pertaining to loans securing the PLS to trustees and servicers controlling or holding that documentation.

“FHFA is taking this action consistent with our responsibilities as Conservator of each Enterprise,” said FHFA Acting Director Edward J. DeMarco. “By obtaining these documents we can assess whether contractual violations or other breaches have taken place leading to losses for the Enterprises and thus taxpayers. If so, we will then make decisions regarding appropriate actions.” Congress provided FHFA with broad subpoena authority in the Housing and Economic Recovery Act of 2008. FHFA anticipates full compliance with the subpoenas but is prepared to take appropriate action to ensure compliance, if necessary. Following are questions and answers that provide additional information.

###

The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.

These government-sponsored enterprises provide more than $5.9 trillion in funding for the U.S. mortgage markets and financial institutions.

12-12020-mg Doc 1920-2 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit B Pg 1 of 3

Questions & Answers on FHFA Subpoenas

1. What is the authority to request this information?

The Housing and Economic Recovery Act of 2008 at Title 12, United States Code §§ 4617 and 4588, provides that the Conservator may issue subpoenas to carry out its duties.

2. How many subpoenas were issued?

The Conservator has issued 64 subpoenas to various entities in connection with carrying out its duty to preserve and conserve Enterprise assets.

3. What is the purpose of the subpoena(s)?

The subpoenas were issued to obtain loan files and other transaction documents pertaining to private-label mortgage-backed securities (PLS). The information will be analyzed to determine whether losses sustained by the Enterprises on the PLS are the legal responsibility of others.

4. Have the documents underlying all the PLS owned by the Enterprises been subpoenaed?

No. Documents have been subpoenaed only in connection with PLS that the Conservator currently intends to examine, which are not all of the PLS owned by the Enterprises.

5. Why are the subpoenas being issued now?

For many months the Enterprises have been working to obtain the documents necessary to determine whether loans and/or the servicing of loans underlying the PLS meet required standards, and to assess any claims arising from the failure of the loans or their servicing to meet those standards. FHFA now is utilizing an authority given to it by Congress for the purpose of preserving and conserving assets as the Enterprises’ Conservator.

6. Why are all the subpoenas being issued at once?

As a matter of both fairness and completeness, it makes sense that PLS counterparties involved with the Enterprises receive subpoenas at the same time.

7. What if a subpoenaed company refuses to provide information in

response to its subpoena?

The Conservator will consider its legal options in such a case. Congress has granted the Conservator broad powers to enforce its subpoenas.

(more)


2

8. Who is the target of the Conservator’s Investigation?

No entity is “targeted.” This is a financial inquiry, not an investigation or a lawsuit. The Conservator seeks the information to determine whether losses sustained by the Enterprises are the legal responsibility of others and to ensure that the obligations of the various parties involved have been met.

9. What companies are you subpoenaing?

The Conservator does not publicly release the identities of subpoenaed parties in connection with its inquiries.

10. Does the Conservator therefore intend to bring lawsuits once it has

obtained the subpoenaed information?

It would be premature to speculate as to what the Conservator will do with the information received because the documents must first be inventoried, classified and analyzed.

11. How many documents are you seeking?

While there is no way to presently determine the number of loan and transaction documents that will be received, the Conservator anticipates that a significant number of documents will be provided.

12. What types of loan documents do you seek?

The Conservator is seeking the contents of loan files, which include documents used in the underwriting process, such as loan applications and property appraisals.

13. How long will the companies have to produce the documents?

The subpoenas provide thirty days after receipt for production of the documents.

14. Might other Conservator subpoenas be issued in the future? Why? Possibly. These subpoenas are part of an ongoing inquiry by the Conservator, which may continue beyond the scope of the present subpoenas. Based upon developments in connection with information obtained with these subpoenas, other subpoenas may be issued.


12-12020-mg Doc 1920-3 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit C Pg 1 of 10

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK-------------------------------------------------------------------- x

FEDERAL HOUSING FINANCE AGENCY, ASCONSERVATOR FOR THE FEDERALNATIONAL MORTGAGE ASSOCIATION ANDTHE FEDERAL HOME LOAN MORTGAGECORPORATION,

Plaintiff,-v-.

ALLY FINANCIAL INC. f/k/a GMAC LLC, et al.,

Defendants.

::::::::::::::

11 Civ. 7010 (DLC)

ECF Case

-------------------------------------------------------------------- x

RESPONSES AND OBJECTIONS BY DEFENDANTSALLY FINANCIAL INC. AND GMAC MORTGAGE GROUP, INC.

TO PLAINTIFF’S THIRD REQUEST FOR THE PRODUCTION OF DOCUMENTS

Pursuant to Rules 26 and 34 of the Federal Rules of Civil Procedure, the Local Rules of

the United States District Court for the Southern District of New York, and any other applicable

rules, Defendants Ally Financial Inc. (“AFI”) and GMAC Mortgage Group, Inc. (“GMACM

Group”) submit these responses and objections to Plaintiff FHFA’s Third Request for the

Production of Documents, dated June 20, 2012 (the “Requests”).

PRELIMINARY STATEMENT

1. These responses and objections (the “Responses”) are based upon AFI’s and

GMACM Group’s present knowledge, information, and belief, and upon documents currently in

the possession, custody or control of AFI and GMACM Group as a result of a reasonable search.

Pursuant to Rule 26(e) of the Federal Rules of Civil Procedure, AFI and GMACM Group reserve

12-12020-mg Doc 1920-4 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit D Pg 1 of 6

2

the right to alter or supplement these responses upon subsequent discovery of additional

documents or evidence of any additional facts.

2. AFI’s and GMACM Group’s failure to object to a Request on any particular

ground does not constitute a waiver of their right to object on that ground or any additional

ground at any time. The reference in any of the Responses to another Response is intended to

include and to fully incorporate all of the qualifications, explanations, and objections stated in

the referenced Response.

3. AFI’s and GMACM Group’s response to a Request shall not be construed as an

admission of the truth or relevancy of any statement or characterization in that Requests.

4. AFI’s and GMACM Group’s response to a Request shall not be construed as an

admission that the Request calls for information that is relevant to the claims and defenses in this

action. AFI’s and GMACM Group reserve the right to challenge the competency, relevance,

materiality, and admissibility of any document produced in response to these Interrogatories at

trial of this or any other action, or at any subsequent proceeding in this or any other action.

5. AFI’s and GMACM Group’s failure to object to a Request on a particular ground

shall not be construed as a waiver of its right to object to that Request on that ground or any

additional ground at any time.

6. AFI’s and GMACM Group’s statement that they will produce documents in

response to a Request does not constitute an admission that such documents exist or that either

AFI or GMACM Group actually has such documents in its possession, custody, or control.

7. If AFI or GMACM Group states that it will produce documents in response to a

Request, and Plaintiff refuses to produce documents in response to an analogous request, AFI


3

and GMACM Group reserve the right to withhold production until such time as a mutual

agreement is reached or an order issued resolving the matter.

8. AFI and GMACM Group are willing to meet and confer with Plaintiff regarding

these Responses.

GENERAL OBJECTIONS

1. AFI and GMACM Group incorporate by reference the General Objections set

forth in AFI’s and GMACM Group’s Responses and Objections to Plaintiff FHFA’s First Set of

Requests for the Production of Documents dated June 18, 2012 (the “First Responses”) and

AFI’s and GMACM Group’s Responses and Objections to Plaintiff FHFA’s Second Set of

Requests for the Production of Documents dated July 5, 2012 (the “Second Responses”). These

General Objections set forth in the First Responses and the Second Responses apply to the

Requests generally and to each Definition, Instruction and Specific Request included in the

Requests; and, unless otherwise stated, shall have the same force and effect as if set forth in full

in response to each Definition, Instruction and Specific Request.

2. AFI and GMACM Group further object to these Requests to the extent that they

purport to require AFI and GMACM Group to search for and produce documents, whether in the

form of ESI or hard copy, prior to AFI/GMACM Group’s and Plaintiff’s reaching agreement on

an appropriate cost-sharing arrangement.

3. AFI and GMACM Group further object to these Requests to the extent that they

assume loan-level or deal-level involvement on the part of AFI and GMACM Group with respect

to the mortgage loans and securitizations at issue in this action. AFI and GMACM Group had no

such involvement, as is demonstrated by the fact that Plaintiff has sued AFI and GMACM Group

exclusively in a control person capacity.


4

OBJECTIONS TO DEFINITIONS

1. AFI and GMACM Group incorporate by reference the Definitions and Objections

to Definitions set forth in the First Responses and the Second Responses.

SPECIFIC OBJECTIONS

Subject to and without waiving the General Objections and Objections to Definitions,

which are incorporated by reference into each response set below, AFI and GMACM Group

respond and object as follows:

Document Request No. 1

All Loan Origination Files and Loan Servicing Files relating to Mortgage Loans.

RESPONSE TO REQUEST NO. 1

AFI and GMACM Group object to Request No. 1 as overly broad and unduly

burdensome to the extent that it seeks documents not within AFI’s and GMACM Group’s

possession, custody, and control. Absent cost-shifting, AFI and GMACM Group further object

to Request No. 1 as unduly burdensome. AFI and GMACM Group also object to Request No. 1

as overly broad, unduly burdensome, and neither seeking information relevant to the claims in

this action nor reasonably calculated to lead to the discovery of admissible evidence to the extent

that it seeks the production of loan files for mortgage loans that are not within the supporting

loan groups of the specific Certificates that FHFA alleges in the Amended Complaint to have

purchased. See Am. Compl. ¶ 47 & Table 1. AFI and GMACM Group further object to Request

No. 1 as overly broad, unduly burdensome, and neither seeking information relevant to the

claims in this action nor reasonably calculated to lead to the discovery of admissible evidence to

the extent that it seeks production of Loan Servicing Files. AFI and GMACM Group also object

to Request No. 1 as unduly burdensome to the extent that it seeks the production of loan


5

origination and servicing files already within FHFA’s possession, custody, and control.

According to the Amended Complaint and FHFA’s counsel, FHFA already is in possession of

loan origination and/or servicing files for 235 loans in the RALI 2006-QO8 and RALI 2007-QH5

securitizations. See Am. Compl. ¶ 126.

Subject to and without waiving these objections and the General Objections, AFI and

GMACM Group state that as both the Court and counsel for FHFA acknowledged during the

July 17, 2012 hearing in this matter, the loan files relevant to this action are in the possession of

Residential Capital LLC (together with its direct subsidiaries, the “ResCap Debtors”). See, e.g.,

Tr. 19:11 22:12-14. AFI and GMACM Group do not have any such files in their possession,

custody, or control.

Dated: July 20, 2012MAYER BROWN, LLP

/s/ Reginald GoekeReginald Goeke ([email protected])MAYER BROWN LLP1999 K Street, NWWashington, DC 20006

Richard A. Spehr ([email protected])Michael O. Ware ([email protected])MAYER BROWN LLP1675 BroadwayNew York, NY 10019

Attorneys for Defendants Ally Financial Inc. andGMAC Mortgage Group, Inc.


702698301

CERTIFICATE OF SERVICE

I hereby certify that on July 20, 2012, a true and correct copy of the Responses and

Objections of Defendants Ally Financial Inc. and GMAC Mortgage Group, Inc. to Plaintiff’s

Third Request for the Production of Documents was served by e-mail on counsel for Plaintiff

Federal Housing Finance Agency.

/s/ Reginald GoekeReginald Goeke


In Re:RESIDENTIAL CAPITAL, LLC, et al. v.

Case No. 12-12020-mg

P.M. SESSION ONLY

September 11, 2012

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To purchase copies of this transcript, please contact us by phone or email

Min-U-Script® with Word Index

12-12020-mg Doc 1920-5 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit E Pg 1 of 98

eScribers, LLC | (973) [email protected] | www.escribers.net

1

1

2 UNITED STATES BANKRUPTCY COURT

3 SOUTHERN DISTRICT OF NEW YORK

4 Case No. 12-12020-mg

5 - - - - - - - - - - - - - - - - - - - - -x

6 In the Matter of:

7

8 RESIDENTIAL CAPITAL, LLC, et al.,

9

10 Debtors.

11

12 - - - - - - - - - - - - - - - - - - - - -x

13

14 United States Bankruptcy Court

15 One Bowling Green

16 New York, New York

17

18 September 11, 2012

19 2:04 PM

20

21 B E F O R E:

22 HON. MARTIN GLENN

23 U.S. BANKRUPTCY JUDGE

24

25



2

1 Doc.#810, 859, 861 Evidentiary Hearing Regarding (I) Motion of

2 the Federal Housing Finance Agency Pursuant to the July 11,

3 2012 Order of the Honorable Denise L. Cote Seeking Limited

4 Discovery from the Debtors and, if Necessary to that Purpose,

5 Relief from the Automatic Stay and (II) Supplement to July 17,

6 2012 Motion of the Federal Housing Finance Agency Pursuant to

7 the July 11, 2012 Order of the Honorable Denise L. Cote Seeking

8 Limited Discovery from the Debtors and, if Necessary to that

9 Purpose, Relief from the Automatic Stay. (CC: document(s)

10 1295, 1296, 1297)

11

12

13

14

15

16

17

18

19

20 Transcribed by: Ellen S. Kolman

21 eScribers, LLC

22 700 West 192nd Street, Suite #607

23 New York, NY 10040

24 (973)406-2250

25 [email protected]



3

1

2 A P P E A R A N C E S :

3 MORRISON & FOERSTER LLP

4 Attorneys for Debtors

5 1290 Avenue of the Americas


7

8 BY: JOEL C. HAIMS, ESQ.

9 JONATHAN C. ROTHBERG, ESQ.

10

11

12 KRAMER LEVIN NAFTALIS & FRANKEL LLP

13 Attorneys for Official Creditors' Committee

14 1177 Avenue of the Americas


16

17 BY: ELISE S. FREJKA, ESQ.

18

19

20 CRAVATH, SWAINE & MOORE LLP

21 Attorneys for Credit Suisse First Boston

22 825 Eighth Avenue


24

25 BY: LAUREN A. MOSKOWITZ, ESQ.



4

1

2 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP

3 Attorneys for FHFA

4 1633 Broadway


6

7 BY: KANGHANA WANGKEO LEUNG, ESQ.

8 ANDREW K. GLENN, ESQ.

9 DANIEL A. FLIMAN, ESQ.

10

11

12 KIRKLAND & ELLIS LLP

13 Attorneys for Ally Financial Inc. and Ally Bank

14 655 Fifteenth Street, N.W.

15 Washington, DC 20005

16

17 BY: JUDSON D. BROWN, ESQ.

18

19

20 MAYER BROWN LLP

21 Attorneys for Ally Financial, Inc.

22 1999 K Street, N.W.

23 Washington, DC 20006

24

25 BY: REGINALD R. GOEKE, ESQ.



5

1

2 MAYER BROWN LLP

3 Attorneys for Ally Financial, Inc.

4 1675 Broadway


6

7 BY: MICHAEL O. WARE, ESQ.

8

9

10 MCKOOL SMITH

11 Attorneys for Freddie Mac

12 600 Travis Street

13 Suite 7000

14 Houston, TX 77002

15

16 BY: PAUL MOAK, ESQ. (TELEPHONICALLY)

17

18

19

20

21

22

23

24

25



RESIDENTIAL CAPITAL, LLC, et al. 6

1 P R O C E E D I N G S

2 THE COURT: Please be seated. All right. We're here

3 in Residential Capital LLC, number 12-12020. Mr. Glenn?

4 MR. GLENN: Good afternoon, Your Honor. Andrew Glenn,

5 Kasowitz Benson Torres & Friedman along with Kanchana Leung and

6 Daniel Fliman on behalf of the Federal Housing Finance Agency

7 acting as conservator for Freddie Mac and Fannie Mae.

8 Your Honor, we're here pursuant to the adjourned

9 motion that we filed. We understand that the other parties to

10 the proceeding before Judge Cote have also filed a separate

11 motion seeking additional information.

12 Before we proceed, I wanted to bring one update to

13 Your Honor's attention; it was a late breaking development

14 solely from our end. We have consulted with our sampling

15 experts in this case, and we are prepared further to cut our

16 request at this point in time by half to 2,500 loan files to be

17 selected by the expert after the conclusion of these

18 proceedings. Otherwise, we'll be guided by Your Honor in terms

19 of how you want to proceed today given the argument that we

20 presented in the last hearing.

21 THE COURT: Let me ask you this. Are you introducing

22 any evidence as part of your affirmative case?

23 MR. GLENN: No, Your Honor. We have the transmittal

24 declarations and that's all.

25 THE COURT: What do you mean by the transmittal




1 declarations?

2 MR. GLENN: The declarations of Ms. Leung, my partner.

3 THE COURT: All right. Do you want to -- I think

4 what -- if you're going to offer anything in evidence, you

5 ought to do that. Let me ask you, are you going to cross-

6 examine the declarants that ResCap has proffered?

7 MR. GLENN: I don't believe so, Your Honor.

8 THE COURT: Okay. Because this is an evidentiary

9 hearing, if there are -- if there's anything you wish to

10 introduce in evidence, offer it now, okay, including, if you're

11 offering your partner's declaration. Identify it specifically

12 for the record, indicate the nature of the offer, et cetera.

13 Okay?

14 MR. GLENN: We offer the two declarations of Kanchana

15 Wangkeo Leung. One was submitted as part of our application

16 and the other one was a supplement affidavit in our reply

17 briefing.

18 THE COURT: Can you identify those by ECF document? I

19 mean the debtors have put everything together in a binder. Do

20 you have that --

21 MR. GLENN: I believe I have that --

22 THE COURT: It looks like you've got it. It's just I

23 want to be clear what is part of the record before me on which

24 I'm going to rule.

25 MR. GLENN: Docket number 808 and 1296.




1 THE COURT: All right. Are there any objections to

2 those two declarations? Mr. Haims?

3 MR. HAIMS: No, Your Honor.

4 THE COURT: All right. The two Leung declarations at

5 ECF docket numbers 808 and 1296 are admitted in evidence.

6 (Declaration and supplemental declaration of Kanchana Wangkeo

7 Leung was hereby received into evidence as of this date.)

8 THE COURT: All right. Do you rest at this point?

9 MR. GLENN: Well, on the evidence, Your Honor --

10 THE COURT: Yes.

11 MR. GLENN: -- yes, we rest.

12 THE COURT: Okay. All right. Mr. Haims, are you

13 going to -- I think you ought to start by offering in evidence

14 whatever you're going to proffer.

15 MR. HAIMS: Your Honor, I'd like to start by -- before

16 I just do the evidence, just to say that Your Honor has been

17 clear that the automatic stay applies to third party discovery.

18 And Your Honor also stated that anyone --

19 THE COURT: I was not. I think you misstate what I

20 said. We'll deal with it. I think that the Kasowitz firm

21 accurately collected -- I asked a question whether the use of

22 the term "process" in 362(a) applied to subpoenas -- third

23 party subpoenas. And I may have pondered whether -- you know,

24 why didn't it. But I asked that that issue be addressed in

25 briefs. Kasowitz addressed it and your brief just simply




1 recites the Court has already determined that 362(a) applies.

2 I did no such thing. I asked a question based on the language

3 of the statute. I asked that it be addressed. You chose in

4 your brief to address it by saying the Court's already decided

5 it. Kasowitz addressed it by addressing the substance of it.

6 I have not decided whether 362(a) applies to subpoenas served

7 in other litigation.

8 MR. HAIMS: Okay, Your Honor. So I will offer into

9 evidence the following declarations. We have the first the

10 declaration of Jeffrey Lipps, which is document number 1023 --

11 1023.

12 THE COURT: Dash -- I'm sorry?

13 MR. HAIMS: Dash 1.

14 THE COURT: Dash 1. Okay. Go ahead. Anything else?

15 I'll take them as --

16 MR. HAIMS: Take -- oh, I'm sorry.

17 THE COURT: Mr. Glenn, are you going to object to any

18 of these declarations?

19 MR. GLENN: Your Honor, I think we have one general

20 subject matter. After all the affidavits are proffered, we

21 would like to address those.

22 THE COURT: That's fine.

23 MR. GLENN: Thank you.

24 THE COURT: All right. Go ahead, Mr. Haims.

25 MR. HAIMS: There's the declaration of John G.




1 Mongelluzzo, which is document 1023-2, which was filed on

2 August 7th, 2012.

3 THE COURT: Okay.

4 MR. HAIMS: There's the declaration of John G.

5 Mongelluzzo, which is document number 1295-2, filed on August

6 28th, 2012. There's the declaration of Mary Fahy Woehr, which

7 is document number 1295-1, filed on August 28th, 2012. And the

8 declaration of Philip Marc Scheipe, document number 1299, filed

9 on August 28th, 2012. Those are the declarations.

10 THE COURT: All right. Mr. --

11 MR. HAIMS: We also submitted --

12 THE COURT: No. Go ahead. I'm sorry.

13 MR. HAIMS: -- a binder of exhibits.

14 THE COURT: Yes, but let me deal with the declarations

15 first.

16 MR. HAIMS: Okay.

17 THE COURT: Okay.

18 MR. HAIMS: Sure.

19 THE COURT: Go ahead, Mr. Glenn. You have objections?

20 MR. GLENN: Your Honor, Ms. Leung will handle that.

21 THE COURT: Okay. Ms. Leung?

22 MS. LEUNG: Kanchana Leung of Kasowitz Benson.

23 THE COURT: You're going to have to speak into the

24 microphone.

25 MR. GLENN: You can sit here.




1 THE COURT: Okay? I want to be sure we have a clear

2 transcript.

3 MS. LEUNG: Kanchana Leung of Kasowitz Benson. As to

4 the declarations, we object to the paragraphs in portions of

5 the Mongelluzzo, Woehr and Scheipe declarations that purport to

6 speak as to the intent of the parties when they negotiated and

7 entered into the shared services agreement. There has been no

8 argument by any party that the agreement is ambiguous and that

9 there is a need for any parol evidence as to intent. And so,

10 we would, as a general subject matter objection, object to all

11 those paragraphs and ask that those be stricken and not

12 considered.

13 THE COURT: Okay. Mr. Haims, you want to address

14 that?

15 MR. HAIMS: Your Honor, we agree that the language

16 says what it says, and is clear in what it says, and that it

17 doesn't provide, as we said, for these productions. However,

18 to the extent that it doesn't and intent is an issue, we

19 respectfully disagree and think that intent is certainly an

20 issue here. And the intent -- to the extent that Your Honor is

21 construing the language, the case law is pretty clear that you

22 could look at intent to see how the specific language is to be

23 construed. Both parties here, Mr. Scheipe, on one side, and

24 the ResCap defendants on the other -- the ResCap declarants on

25 the other side, have testified as to what their intent was in




1 their negotiations in drafting the agreement. We think it's

2 clear --

3 THE COURT: But if the language --

4 MR. HAIMS: We think it's clear, but if you're going

5 to get --

6 THE COURT: Let me ask this. Under New York -- New

7 York law governs, correct?

8 MR. HAIMS: Correct.

9 THE COURT: If under New York law the language of a

10 contract is clear and unambiguous, parol evidence is not

11 admissible for purposes of determining the meaning of a

12 contract. Do you agree with that?

13 MR. HAIMS: I agree with that.

14 THE COURT: All right. Here's what I'm going to do.

15 I'm going to -- all the declarations are admitted into

16 evidence. The Court is reserving decision about the objection

17 from Ms. Leung with respect to the statements of intent. I

18 have not fully resolved, in my own mind, this issue of whether

19 the agreement is clear and unambiguous and therefore parol

20 evidence should not be considered. If parol is admissible, I

21 think it's fair to say this is the only evidence that's been

22 offered with respect to -- that would be parol evidence, but I

23 haven't decided that. So I'm going to reserve decision on the

24 admissibility of testimony with respect to the supposed intent

25 of the parties. Okay.




1 (Declaration of Jeffrey A. Lipps in support of debtors'

2 objection to motion of the Federal Housing Finance Agency for

3 relief from the automatic stay was hereby received into

4 evidence as of this date.)

5 (Declaration and supplemental declaration of John G.

6 Mongelluzzo in support of AFI's submission regarding the shared

7 services agreement was hereby received into evidence as of this

8 date.)

9 (Declaration of Mary Fahy Woehr in support of debtors'

10 objection to motion of the Federal Housing Finance Agency for

11 relief from the automatic stay was hereby received into


13 (Declaration of Philip Marc Scheipe in support of AFI's

14 submission regarding the shared services agreement was hereby

15 received into evidence as of this date.)

16 THE COURT: You want to address your --

17 MR. HAIMS: Yeah.

18 THE COURT: -- exhibits?

19 MR. HAIMS: Yeah. We have an exhibit binder --

20 THE COURT: Yes.

21 MR. HAIMS: -- which was submitted. It has --

22 THE COURT: I have that here.

23 MR. HAIMS: -- certain exhibits listed as Exhibits 1

24 through 8. And I'm happy to move them in as one or --

25 THE COURT: Well, let's --




1 MR. HAIMS: -- take them through, whatever is --

2 THE COURT: -- do it that way. Offer them all and

3 then I'll --

4 MR. HAIMS: I'll offer this binder in evidence.

5 THE COURT: Okay. All right. The debtors' have

6 offered and have presented to the Court an exhibit binder with

7 exhibits premarked as Exhibits 1 through 8 and have now offered

8 them in evidence. Mr. Glenn or Ms. Leung, do you have any

9 exhibits?

10 MR. HAIMS: These are all the exhibits that were

11 attached to our declarations.

12 MR. GLENN: No objection.

13 MR. HAIMS: There's no new --

14 THE COURT: All right. So the documents marked as

15 Exhibits 1 through 8, Debtors' Exhibits 1 through 8, are

16 admitted in evidence for purposes of the hearing.

17 (Debtors' Exhibits 1 through 8 were hereby received into


19 MR. HAIMS: And we have no further evidence, Your

20 Honor.

21 THE COURT: All right. You rest?

22 MR. HAIMS: We rest.

23 THE COURT: You responded that you do rest?

24 MR. HAIMS: Yes, Your Honor.

25 THE COURT: Okay. All right. Just to be clear, Mr.




1 Glenn, do you wish to cross-examine any of the declarants?

2 MR. GLENN: No, Your Honor.

3 THE COURT: All right. Do you have any rebuttal

4 evidence you wish to offer?

5 MR. GLENN: We do not, Your Honor.

6 THE COURT: All right. You rest as well?

7 MR. GLENN: We do.

8 THE COURT: All right. Now let me hear argument then.

9 Go ahead, Mr. Glenn.

10 MR. GLENN: Thank you, Your Honor. I don't want to

11 take the Court's time on issues that I know the Court has

12 examined closely and that we talked about last time that we

13 briefed on a supplemental basis. I think the Court is in a

14 difficult situation in this case, because it is a very unique

15 case and the Court is being asked to decide a legal question

16 that could have far-reaching ramifications beyond this very

17 unique case. And that is, does the automatic stay apply to

18 third party discovery.

19 We don't think it does for all the reasons we've set

20 forth in our papers. We have addressed the Johns-Manville

21 case. We've talked about all the other cases around the

22 country that go our way. I think as a general rule --

23 THE COURT: Well, let me ask you, Hillsborough

24 Holdings which you rely on --

25 MR. GLENN: Yes.




1 THE COURT: Judge Paskay's decision in Florida --

2 MR. GLENN: Yes.

3 THE COURT: Manville. Both of those cases involved

4 issues of discovery -- efforts to take discovery from employees

5 of the debtors in those cases, not from the debtors themselves.

6 And in this case, in its present posture, the issue is whether

7 discovery from the debtors should be permitted.

8 MR. GLENN: That's correct.

9 THE COURT: So you had pointed out -- at the last

10 hearing when I raised the issue about Manville, you said there

11 was an adversary pending, that you can't get an injunction

12 without an adversary proceeding, 105 -- your argument that 105

13 can't apply against FHFA. But the issues in those cases where

14 discovery -- I mean, I don't have before me a subpoena from

15 FHFA for present or former officers or employees of any of the

16 debtors. I have a subpoena for production of documents by the

17 debtors themselves. Do you agree with that?

18 MR. GLENN: Yes.

19 THE COURT: I haven't found any decisions at all that

20 address the issue of the power of a bankruptcy court to

21 regulate or limit discovery from the debtor in connection with

22 third party actions. Are you aware of any?

23 MR. GLENN: Under 362 --

24 THE COURT: Let me just --

25 MR. GLENN: -- the answer is no.




1 THE COURT: Let's put 362 -- my question is really

2 more -- let's assume that I agree with the Ninth Circuit BAP.

3 There really isn't much law on this point.


5 THE COURT: Okay. But let's assume I agree with the

6 Ninth Circuit BAP that 362(a) doesn't apply to third party

7 discovery from the debtor. You did brief it. You addressed

8 the legislative history and the wording in 362(a) itself. But

9 what I've been pondering is whether 105 provides the Court with

10 authority not to enjoin FHFA, but to extend the protection of

11 362(a) to discovery from the debtor. And it seemed to me in

12 thinking it through that doing so doesn't require an adversary

13 proceeding. It doesn't require an injunction. It is an order

14 -- it would be an order affecting the administration of the

15 case, affecting property of the estate. You may dispute around

16 the margins on this but the estimate of the cost of

17 complying -- the only evidence I have before me with respect to

18 an estimate of the cost of the debtor to comply is probably

19 over a million dollars. There are ranges that are given, and I

20 understand that. I don't want to get into quibbling about the

21 exact dollars from --

22 MR. GLENN: I would dispute that, Your Honor, insofar

23 as our application is concerned. The other application is a

24 different story.

25 THE COURT: Well --




1 MR. GLENN: And I just want to make that clear

2 because --

3 THE COURT: Well, you've just reduced --

4 MR. GLENN: -- we're being punished for trying to be

5 reasonable in this case. So our application, the way we do the

6 math, Your Honor, just to be perfectly clear, 2,500 loan files

7 times approximately, give or take, twenty-five dollars.

8 THE COURT: Well, for the third party cost to retrieve

9 the files from the vendor --

10 MR. GLENN: Correct.

11 THE COURT: -- no lawyer in his right mind would

12 ever -- you would never produce documents that your office

13 hadn't screened for privilege or any other protection for here

14 issues of confidential borrower information. I mean, you just

15 wouldn't do that.

16 MR. GLENN: Ms. Leung is probably more qualified to

17 handle that, but as I understand it, there is no privileged

18 information in these loan files. The loan files --

19 THE COURT: What about personally identifiable

20 information?

21 MR. GLENN: That there is and that can be addressed,

22 and has been addressed, through a standard confidentiality

23 agreement with all the other defendants. I just don't see that

24 as -- it's an issue, but I don't think that's a cost issue.

25 I didn't mean to sidetrack, Your Honor, so much.




1 THE COURT: No.

2 MR. GLENN: I just wanted to make my position --

3 THE COURT: No. But here's --

4 MR. GLENN: -- clear.

5 THE COURT: Look, the non-Ally underwriters have said

6 we need all 43,000 loan files. And I understand that Judge

7 Cote said if you think you need it, you apply for it. Well,

8 they've now filed a motion.

9 The issue that I framed was whether 105 provides a

10 source of authority for the Court. I'm going to very -- I want

11 to be careful about -- this is not selected accidentally --

12 regulate discovery in a third party action. And I say

13 "regulate" because to the extent that a debtor or these debtors

14 were to argue to me that no discovery now, no discovery ever

15 from the debtors in connection with third party actions, I

16 think that's an unsupportable position to take.

17 I start with a 350 year old maxim that the public has

18 a right to every man's evidence. It's a proposition that has

19 been repeatedly relied upon by the U.S. Supreme Court, by the

20 circuit courts including the Second Circuit. And what the

21 courts have roughly said is that to limit that, if by statute

22 or if there is some privilege issue, it has to be a well

23 established privilege. And the issue in my mind is about

24 regulating it. Can the bankruptcy court, charged with

25 overseeing these Chapter 11 cases, regulate discovery? When do




1 you want the documents?

2 MR. GLENN: We want them as soon as we can get them.

3 I believe something in the order of sixty days would work, like

4 six -- about sixty days.

5 THE COURT: So over the next sixty days in this case,

6 there is an enormous amount of activity that's at the very core

7 of Chapter 11 bankruptcy proceedings. There is an auction

8 scheduled, I think, for October 23rd. There are twenty some

9 odd parties that have signed nondisclosure agreements that are

10 engaged in due diligence. If you or one of your colleagues was

11 here this morning, you know that there was extensive colloquy

12 about a contested hearing scheduled for November 5th for which

13 expedited discovery is underway and arguments that the debtor

14 hasn't fully complied with its obligations to produce

15 everything it was required to produce. So there's expedited

16 discovery ongoing for a very important hearing currently

17 scheduled for November 5th, whether it happens then or at a

18 later date, remains to be seen, but it'll happen soon. There's

19 an examiner's investigation going on.

20 There is -- what I think -- you can respond to this if

21 you'd like. I mean -- and I invite you to. With everything

22 that's going on in this case, the debtor has more than its

23 hands full over the next sixty days just to do what it is

24 required to do to move this Chapter 11 case forward. And

25 diverting -- at this time, diverting the resources -- let's put




1 who pays for it aside. Okay? Just diverting the people and --

2 you know, there was an argument this morning about the

3 creditors' committee has asked for 1,500 loan files for their

4 sampling expert. And there was a dispute as to whether all

5 1,500 were supposed to be produced before today, whether

6 they've now been produced or not, but that's just -- I give

7 that just as an example. There's an enormous amount of work

8 being done. And are you telling me the bankruptcy judge can't

9 say you, FHFA, you can't get your discovery now because of

10 everything that's going on and has to happen in this case very

11 soon. I'm not telling you, FHFA, that you're not going to be

12 entitled to discovery from the debtors. But I, as the judge

13 responsible for this Chapter 11, am telling you you're not

14 getting it now. You're saying that's beyond my power to do.

15 MR. GLENN: Let me start on a more general level, and

16 I'll try to finish there. I think Your Honor posited the

17 question, the more general question, how can the Court regulate

18 discovery -- third party discovery in a complex -- an important

19 Chapter 11 case, such as this, such that that discovery doesn't

20 derail the fundamental purpose of Chapter 11. And I think

21 there are plenty of cases out there that stand for that

22 proposition. And I think that would be underpinning of Your

23 Honor's decision with respect to the other defendants granting

24 the Section 105 injunction dealing with potential

25 indemnification obligations, discovery, collateral estoppel,




1 res judicata. Those are all the concerns that are appropriate

2 for a Section 105 injunction. And I think that they can be

3 used to limit discovery in appropriate cases and including the

4 asbestos cases are a great example of that. Manville -- that

5 was the central holding in Manville that apart from the bona

6 fides and the merits of the litigation itself, the avalanche of

7 that litigation, including discovery obligations, would

8 restrict, if not eliminate, the company's ability to

9 reorganize. I think Your Honor has that general power and I

10 think that that power is well documented in a long string of

11 cases.

12 In this case, however -- and that's where I want to go

13 back to the beginning of what I said. I think that the case

14 has far reaching ramifications if FHFA were not involved. We

15 happen to be in the unique circumstance of being the

16 beneficiaries of this provision of --

17 THE COURT: Well, you're not exercising police power.

18 MR. GLENN: No, no. But what Judge Cote held and what

19 the Second Circuit held in Colonial Realty is that Congress,

20 for the decision -- for the reasons that we've cited in our

21 papers and in the legislative history of HERA going back to

22 FIRREA has decided that FHFA's work is so important that

23 Congress did not want that work restricted by Courts outside of

24 what HERA is litigating in the Courts in which he is reporting.

25 THE COURT: So you say that that gives FHFA a free




1 pass. If you decided that you wanted discovery that was going

2 to cost twenty million dollars, I would have no power to

3 regulate or restrict it. That's your view, correct?

4 MR. GLENN: Under HERA, I think the answer is yes.

5 THE COURT: No. Tell me is there any source of

6 authority that I have, in your view, that would permit me to

7 restrict discovery sought from the debtors in this case by FHFA

8 if the uncontroverted evidence established that the cost was

9 twenty million dollars, and it would derail a whole series of

10 matters that are currently scheduled over the next three or

11 four months?

12 MR. GLENN: I don't think Your Honor has to reach that

13 question because of what we've done.

14 THE COURT: Well, I want you to answer that question.

15 MR. GLENN: I'm going to. The answer is no. Your

16 Honor does not have that power.

17 THE COURT: Okay.

18 MR. GLENN: And I'm not here to make any value

19 judgments on that. I'm not here to say it's right or wrong. I

20 think that as a matter of statutory interpretation, starting

21 with Colonial Realty and Judge Cote's opinion the --

22 THE COURT: Even though -- let's assume I agree with

23 you that under Colonial Realty, I can't -- I couldn't -- I

24 mean, the reference was withdrawn with respect to FHFA so it's

25 not an issue for me, as far as I'm concerned. I know it's




1 being appealed, but that's -- it's just not my issue. And what

2 I'm really asking is not an injunction against FHFA. It is an

3 order that says, in substance, that 362(a) is hereby extended

4 so that discovery in third party actions may not be obtained

5 from the debtors absent further order of the bankruptcy court.

6 It is not specific to FHFA or FDIC. You know, there are 1900

7 plus actions pending around the country; more than that.

8 Thousands of actions pending around the country. The debtors

9 have, and they cited this, at least one stipulation where it

10 was fairly limited discovery. They stipulated, and they

11 agreed.

12 And so, again, I start with the proposition I'm not --

13 they don't get a free pass on discovery in third party actions.

14 Okay. The question is scope, context, timing, burden --

15 burden, I don't mean necessarily the dollars in costs. Those

16 are among the factors that it would seem to me -- and you said

17 I can't take any of that into account if you decided you wanted

18 twenty million dollars. If it was going to cost twenty million

19 dollars to comply, tough luck. Do it.

20 MR. GLENN: Your Honor, I think we have to divide the

21 two questions of cost and authority.

22 THE COURT: No. That's why I asked you a

23 hypothetical.

24 MR. GLENN: Okay. Your Honor, I think the solution to

25 the problem Your Honor identified is to either in this court or




1 the court in which the matter is presiding for the cost issue

2 to be resolved separately from the legal entitlement to the

3 documents.

4 THE COURT: So you would agree that I could resolve

5 the cost issue and decide that FHFA would only be permitted its

6 discovery if it posts a bond for the estimate of costs in

7 complying and those -- and as soon as that is quantified

8 precisely that those costs will be paid. Do you agree I have

9 the authority to do that?

10 MR. GLENN: I'm not going to concede that Your Honor

11 has that authority, but I will concede that that's an

12 appropriate consideration --

13 THE COURT: Well, either I have the --

14 MR. GLENN: -- that either this Court --

15 THE COURT: -- authority or I don't.

16 MR. GLENN: I --

17 THE COURT: What is your position?

18 MR. GLENN: I think that my personal view, and we can

19 go into this further separately, is that the Court --

20 THE COURT: No. We're going to do it here now. I

21 always love to talk to you, Mr. Glenn, but --

22 MR. GLENN: Well, I know.

23 THE COURT: People will think we're related --

24 MR. GLENN: Ms. Leung will go into --

25 THE COURT: -- or something.




1 MR. GLENN: Ms. Leung will go into the control issue

2 and where we think the cost should end up. It's a -- I think

3 that the Court -- if we had a subpoena, a normal subpoena, the

4 Court who --

5 THE COURT: You do have a normal subpoena.

6 MR. GLENN: Well, the court out of which the subpoena

7 is issued would have the authority to determine who should pay

8 for the cost.

9 THE COURT: Okay. But let's just focus on that for a

10 minute, okay? And Rule 45 specifically --

11 MR. GLENN: Yes.

12 THE COURT: -- talks about the Court that's issuing

13 the subpoena. And so, that's not this Court; it's the district

14 court, right?


16 THE COURT: Okay. With all respect to Judge Cote, or

17 any other district judge, or any of the state judges around the

18 country, or federal judges around the country that have these

19 matters, I mean, they're not really -- first off, it's not

20 their job to worry about whether these Chapter 11 cases proceed

21 expeditiously in the ordinary course. They have to worry about

22 their specific litigation. One could call it a parochial

23 interest. I think it's certainly an appropriate interest for

24 the judges. In federal court, you know, Judge Cote could

25 address the issue of cost, but that doesn't address the issue




1 from a standpoint of a debtor whether it's a Chapter 7, or 13,

2 or 11 debtor. That's a particular interest of the bankruptcy

3 court.


5 THE COURT: And again, it would seem to me that when I

6 ticked off potential factors to consider, context -- you know,

7 scope, context, timing, burden, expense, those are all things

8 that a bankruptcy judge should consider. I don't know which

9 way -- the balance they come out differently in different

10 cases.

11 Just let me back up for a second. You didn't -- I

12 take it you resolved the issue about the loan tapes and

13 origination information?

14 MR. GLENN: We did, subject to an issue about the

15 confidentiality agreement.

16 THE COURT: Okay.

17 MR. GLENN: But I'm not here to --

18 THE COURT: You're going to -- right.

19 MR. GLENN: -- to deal with that, Your Honor.

20 THE COURT: Okay.

21 MR. GLENN: I think that there are a couple things I'd

22 like to observe, because we're talking both in terms of general

23 policy considerations, Your Honor, and issues -- practical

24 issues with this dispute. I think that the issue of who should

25 pay for this discovery in this dispute --




1 THE COURT: I'll get to who pays.

2 MR. GLENN: Okay. Okay.

3 THE COURT: I'll get to who pays.

4 MR. GLENN: I think that if our request were

5 unreasonable, that the scope was an issue, that the cost was an

6 issue, that the timing of production was an issue, that those

7 are practical issues that the Court has -- certainly has some

8 input on just like any other Court would --

9 THE COURT: How are --

10 MR. GLENN: -- that was --

11 THE COURT: What's the source of my authority for

12 input on that?

13 MR. GLENN: Well, you would have jurisdiction to rule

14 on those issues in the first instance.

15 THE COURT: Under what authority?

16 MR. GLENN: Under Rule 45.

17 THE COURT: I don't. I mean, Rule 45 -- it

18 specifically says the Court that issued the subpoena --

19 MR. GLENN: Well, in this case, Your Honor, the

20 district court has deferred to you. And that's what I was

21 getting to on cost. The Court wanted to hear your concerns

22 about the cost and whether this would derail the company's

23 reorganization. The Court did make those comments. I believe

24 it's in the transcript that she did want to hear from you on

25 that. And she cited the Johns-Manville case as a circumstance




1 where those were considered.

2 THE COURT: Let me ask you another hypothetical.

3 Let's assume not only that it was going to cost ten million

4 dollars for the debtor to comply, and we'll deal with the issue

5 of cost, you want the stuff -- you say -- let's say a district

6 judge, and this is not what Judge Cote has done, let's say the

7 district judge orders that this be produced -- the judge who

8 issues the subpoena says produce it within forty-five days.

9 And the bankruptcy judge who's got the case, not this case,

10 concludes that, you know, producing -- requiring the debtor to

11 produce documents at a cost of ten million dollars in the next

12 forty-five days guarantees this case is derailed and converts

13 to a Chapter 7 liquidation. The bankruptcy judge has no

14 authority to do anything about it?

15 MR. GLENN: In our --

16 THE COURT: Yeah.

17 MR. GLENN: -- particular circumstance --

18 THE COURT: FHFA is the plaintiff or FDIC and says,

19 got to produce this document within forty-five days. It's

20 going to cost ten million dollars. And the debtor comes in

21 with uncontroverted evidence that complying with that subpoena

22 would result in conversion of the case to Chapter 7

23 liquidation. Bankruptcy has no power -- the bankruptcy court

24 has no power to do anything about it.

25 MR. GLENN: It's funny, Your Honor. If I were here




1 about nine months ago when I represented Borders, I might have

2 a different viewpoint of that --

3 THE COURT: Really?

4 MR. GLENN: -- case. Yes. But what I have to say is,

5 I have to start from the text of HERA. And the text of HERA

6 says that no court can issue any order enjoining or limiting

7 FHFA's activities. So I think we have to draw the line between

8 what is a regulatory -- a discovery burden weighing exercise

9 versus what is -- a court throwing down the gauntlet and

10 saying, no, I'm not infringing -- you don't get it, and I'm not

11 infringing on FHFA.

12 THE COURT: You don't get it now.

13 MR. GLENN: You don't get -- well, that question

14 straddles the line between --

15 THE COURT: Does it?

16 MR. GLENN: -- those two -- it does, Your Honor,

17 because if Your Honor said that it's going to -- you're going

18 to delay the debtors from producing documents for a year, and

19 we have a written discovery deadline of the end of the year.

20 THE COURT: You haven't even had to have motion

21 practice in your case. I understand. Judge Cote issued an

22 order.

23 MR. GLENN: I am subject to an order. My client is

24 subject to an order today for written discovery to end at the

25 end of this year. Whether -- if the Court said you can't get




1 the documents, whether Judge Cote would default FHFA because it

2 couldn't proceed with its case at that point in time, I would

3 hope --

4 THE COURT: You know, I look with --

5 MR. GLENN: -- I would hope that she would --

6 THE COURT: I look with interest --

7 MR. GLENN: -- be flexible about that.

8 THE COURT: -- on -- I think you cited what I refer to

9 as Winnick I, Judge Lynch's decision in the district court.

10 There's also a Winnick II which is an interesting case. I

11 mean, in that Luzzano case that I had called to your attention,

12 I discussed both Winnick I and Winnick II. Winnick I, Judge

13 Lynch said you've got to produce this discovery. In Winnick

14 II, which was -- Citibank had the documents. It wasn't a party

15 to the case, and they claimed it was too burdensome. And I

16 guess Judge Lynch agreed. And so, Citibank was relieved of the

17 obligation to produce any of the documents, but Judge Lynch had

18 decided that the plaintiffs, as assignees of the claim they

19 were prosecuting, were obligated to do it. It leaves -- I

20 mean, I guess the judge could default the defendant, but that

21 was one of the twists in the Winnick case.

22 But let's say I'm not going to just stay it for a

23 year. I mean there's an auction at the end of October.

24 There's an RMBS settlement hearing scheduled for November 5th

25 which may or may not hold to November 5th. There are a whole




1 slew of things sort of between now and January that are going

2 to happen in this case where if, based on the uncontroverted

3 evidence and the record in the Chapter 11 cases, I was to

4 conclude that the debtors having to comply now with the

5 subpoena would be seriously prejudiced. It would threaten to

6 derail an important Chapter 11 case and consequently -- look,

7 what I did with respect to the 105 injunction, it runs to

8 October 31. They may come back and say they need it extended

9 for some period or not, but it isn't going to get extended

10 indefinitely. It was not an injunction. You know, and I said

11 in the one that was contested and went to decision, you know,

12 parties are free to take discovery from AFI, but not from the

13 debtors while the stay is in place.

14 So --

15 MR. GLENN: Your Honor --

16 THE COURT: I mean, I see that -- yeah. You want to

17 go the outlier the other way. Judge Cote's ordered, you know,

18 a year discovery cutoff for fact discovery, and, you know, it

19 may be you got to wait three or four months before the debtor

20 has to comply. I don't know what the appropriate period is.

21 MR. GLENN: Those are very difficult questions.

22 THE COURT: That's why I'm asking them, yes.

23 MR. GLENN: And I'm obviously -- I understand that.

24 And I'm doing my best to help the Court. But ultimately, Your

25 Honor has to decide this case based on the record before Your




1 Honor. And I would point Your Honor to the Mongelluzzo

2 declarations, and I hope I haven't slaughtered that name. But

3 what is conspicuously absent from both of those declarations,

4 and it's interesting to look at the progression between the

5 two. The first one spoke to the situation before the last

6 hearing when it was up in the air exactly how much FHFA --

7 THE COURT: Well, it was 105,000 files.

8 MR. GLENN: Correct. Correct. So if Your Honor goes

9 to the supplemental Mongelluzzo declaration and goes back and

10 forth between the two, there's absolutely nothing in those

11 declarations that says that complying with our request, I

12 should say, with FHFA's request is going to somehow derail --

13 THE COURT: Well, time out.

14 MR. GLENN: -- this reorganization.

15 THE COURT: Wait a second. I mean, you say that the

16 statute prevents me from doing anything to regulate the

17 discovery by FHFA. What does it do with respect to the

18 defendants' -- the nondebtor defendants in your case, to their

19 subpoena?

20 MR. GLENN: I have no idea ,and I will leave it to

21 them to argue that.

22 THE COURT: I see. So, you know, they can't -- I

23 could say you can't get it, but FHFA I can't stop them. They

24 only want, now, 2,500, you want 43,000.

25 MR. GLENN: We don't think they want it. We think




1 that, putting aside the burden on the debtors, the process

2 here, Your Honor, is the loan files in this litigation

3 effectively have to be re-underwritten. Data's collected, a

4 person who has the capabilities of a loan officer who can

5 determine whether the loan is worthy and meets the underwriting

6 guidelines, has to reexamine them.

7 THE COURT: I think I know the answer to this

8 question, but did you and your experts seek to meet and confer

9 with the defendants' counsel to see whether the experts could

10 agree on an appropriate sampling methodology? I'm sure the

11 answer is you did and they said no, they want all 43,000 files.

12 Do I have that roughly right?

13 MR. GLENN: Not with respect to this in particular,

14 but globally there are many, many securitizations. And if Your

15 Honor were to look at the entire record of all the loan files

16 at issue and all the securitizations in dispute the number is

17 staggering, and we just don't think it's possible, not only

18 within Judge Cote's schedule, but with any reasonable schedule

19 to undertake this process.

20 So there are broader issues at play in the litigation.

21 We're trying to be reasonable. We're trying to work with the

22 Court and work with the debtor to obtain a sample size that

23 achieves our objectives with being able to prove our case with

24 minimizing and hopefully eliminating the burden on the company.

25 Some of their vendors are FHFA's vendors and there are




1 pricing and other potential efficiencies that we can take

2 advantage of. I think today the question Your Honor has to

3 decide is do we have the legal entitlement to these documents

4 and who should bear the cost.

5 THE COURT: Let me ask you this specifically. Do I

6 have the authority, under Section 105, to extend to the debtors

7 protection against discovery in any action, absent further

8 order of the Court?

9 MR. GLENN: A blanket?

10 THE COURT: Yes. It would -- in words or in substance

11 it would say that in light of the large number of lawsuits

12 pending around the country, from which discovery may

13 potentially be requested or is responsive, and in light of the

14 burden and expense to the debtors of complying with discovery,

15 in order to regulate discovery in aid of administration of

16 these Chapter 11 cases, the Court extends the protection of

17 362(a) to any subpoena or other request for production of

18 documents, from the debtors.

19 MR. GLENN: Not as against FHFA, certainly, because of

20 the reasons we've articulated. But --

21 THE COURT: Well, but that's not an injunction against

22 FHFA. It is saying in the administration of this case, and I'm

23 not saying FHFA can't get that stay lifted on conditions, but

24 it is not an injunction -- it's not an injunction against FHFA

25 proceeding with its action. It is because, I'll just use the




1 hypothetical to make it easy, I know you say that the costs,

2 particularly when you get down to 2,500 loan files is

3 substantially less, if the burden and expense to the debtor of

4 complying with discovery, it will require use of property of

5 the estate. It will affect the administration of the case, the

6 effective administration of the case, and in aid of that power

7 the Court, using 105, extends the stay, subject to further

8 order of the Court, to any discovery from the debtors.

9 That doesn't seem to me to require a 105, an

10 injunction. It's not an injunction of any outside activity.

11 In Hillsboro Holding it was depositions of present and

12 former --

13 MR. GLENN: Senior officers, right.

14 THE COURT: -- officer or employees. In Manville it

15 was, again, discovery from -- at least that decision -- Judge

16 Bryant's decision was discovery of officers and directors.

17 I understand your argument that, and I subscribe to

18 the law, that to get an injunction against any outside

19 activity, if you will, it's got to be done by adversary

20 proceeding under 7001. But 105 is utilized other than in the

21 injunction context. Just the words of the statute 105(a), "The

22 Court may issue any order, process or judgment that is

23 necessary and appropriate to carry out the provisions of this

24 title."

25 Well, the provisions of this title are intended, under




1 541, to marshal and protect the assets and the property of the

2 estate in Chapter 11 dealing with administration of the case.

3 The kind of order that I'm asking you about is designed

4 specifically not to extend powers beyond what the Code does,

5 but to apply the powers that the Code already contains to a

6 context that's slightly different.

7 MR. GLENN: I think the answer is no, Your Honor,

8 unfortunately. I think that --

9 THE COURT: Let me just say, I haven't found any cases

10 one way or the other.

11 MR. GLENN: I was going to say, I haven't heard of a

12 case that says that. I think that Rule 7001 doesn't just say

13 injunction, it says other equitable relief.

14 THE COURT: Against a third -- against some party.

15 MR. GLENN: Yes.

16 THE COURT: So if I -- look, it isn't even on -- the

17 debtors sought an injunction against FHFA, Judge Cote withdrew

18 the reference, she made a determination, no stay. I'm not

19 making any effort to second guess that.

20 MR. GLENN: I think that those are the types of

21 matters that probably have a practical solution, because what

22 Your Honor is saying that the -- given what Your Honor has

23 either taken judicial notice of or seen in a first day hearing,

24 seen in other similar complex cases, Your Honor could establish

25 guidelines that before a party can come in and get this kind of




1 discovery they would have to prove that that is not going to

2 derail the reorganization, cost -- have a cost that's

3 prohibitive or other matters so that it would be more of a

4 controlling the docket type of approach to solve a practical

5 problem. But as a blanket matter to issue an order that has

6 either a direct or indirect effect of enjoining third parties,

7 I don't think Your Honor could do that without an adversary

8 proceeding.

9 THE COURT: Address the expense issue.

10 MR. GLENN: I'm sorry?

11 THE COURT: Address the expense issue.

12 MR. GLENN: Your Honor, what I would like to do for

13 that is cede the podium to Ms. Leung on the control issue,

14 which I think is the issue which is the major issue of expense.

15 THE COURT: Okay. Fine.


17 MR. HAIMS: Your Honor, before she does if I could

18 make one quick, just, note.

19 THE COURT: I can't hear you, Mr. Haims.

20 MR. HAIMS: Oh, I'm sorry.

21 Before she starts I just want to make one quick point.

22 We just got an e-mail that the Second Circuit has stayed the

23 FHFA case, has issued an order today, and that it's going to be

24 pending full briefing on the motion for a stay, which is going

25 to be heard on September 25th. I just wanted to bring that to




1 your -- we just got an e-mail, and I wanted to bring that to

2 the Court's attention.

3 THE COURT: Okay. All right. Thank you. We'll

4 continue on though. Go ahead, Ms. Leung.

5 Can I -- let me just before -- the application that I

6 understood was before the Second Circuit was in the UBS case.

7 MR. HAIMS: The application was by UBS for all of the

8 FHFA cases.

9 THE COURT: For all of them? Okay. All right. Go

10 ahead, Ms. Leung.

11 MS. LEUNG: And I just wanted to address that briefly.

12 As we set forth in our letter response yesterday,

13 regardless of the UBS appeal, this case was still go forward.

14 THE COURT: Just pull the microphone a little closer.

15 MS. LEUNG: This case would still go forward, because

16 there are fraud and aiding and abetting fraud claims again --

17 THE COURT: Not if the Second Circuit stays it, it

18 won't.

19 MS. LEUNG: Right. But that's not an issue that --

20 the legal issue that's before the Court. So --

21 THE COURT: No, I -- it may be that the issue before

22 the Second Circuit is a narrower one, but if they stay the case

23 the case is stayed, but we'll see what they order.

24 Go ahead.

25 MS. LEUNG: Okay. Before I get to the control issue I




1 do want to clarify something for the record. Before Your Honor

2 was speaking in terms of Rule 45 subpoenas. In fact there is

3 not a Rule 45 subpoena against the debtors. There may be some

4 confusion because several years ago, I believe in 2010, FHFA

5 issued a number of subpoenas to different servicers including

6 RFC and GMAC Mortgage LLC, which does cover loan files. So

7 there is an outstanding subpoena to the debtors, but it wasn't

8 in the context of the litigation, and it wasn't issued out of

9 the district court as part of the litigation.

10 THE COURT: So you're telling me there's no

11 outstanding -- I mean, they're not a party to your action,

12 correct?

13 MS. LEUNG: Correct.

14 THE COURT: And therefore, in order to take discovery

15 from them you have to proceed by Rule 45?

16 MS. LEUNG: Well, not exactly, Your Honor. We are in

17 an odd procedural posture because of the way that we got here,

18 and I think we've been very clear that FHFA's position is that

19 Ally has control over the loan files and various other

20 documents. Ally should be producing those documents as part of

21 party discovery, whether or not it's actually in the possession

22 or custody of the debtors, and that Ally should bear the costs

23 of that production as a party. And our understanding is that

24 Judge Cote wanted you to decide the bankruptcy issues in the

25 first instance, but we've always tried to get these documents




1 through party discovery, not third party discovery.

2 THE COURT: Okay.

3 MS. LEUNG: And the papers that were submitted by the

4 debtors don't -- or Ally, don't undercut that position at all

5 and that only confirms our position, as set forth in our

6 papers, that Ally does have control over the loan files.

7 As Your Honor correctly seized upon the last time we

8 were here, the relevant legal issue is whether Ally has access

9 or the ability to obtain the documents and the shared services

10 agreement is clear on that front.

11 The record services statement of work is clear on its

12 face that it covers litigation requests, and it's also clear

13 that it covers loan files. In fact, in paragraph 28 of the

14 Mongelluzzo supplemental declaration, the debtors concede that

15 as part of records services they provide loan files to Ally

16 upon request.

17 It's also clear, on the face of the agreement --

18 THE COURT: They just didn't think that 5,000, 2,500,

19 104,000, 42 -- 43,000 would have to be produced at one time?

20 MS. LEUNG: Maybe, maybe not. I can't speak to that.

21 But it is clear, on the face of the agreement, that ResCap does

22 not have discretion to turn down a request. In Section 6(b) it

23 says "During the term of the statement of work ResCap will

24 provide all services under the terms and conditions of the

25 statement of work." And ResCap argues that despite the plain




1 words of the statement of work that other provisions of the

2 agreement support their conclusion that they're not required to

3 produce the loan files. For example, they argue that the

4 timeframe for responding to requests is a day turnaround and if

5 the parties had contemplated a request for thousands of loan

6 files, that that would make no sense.

7 But in fact ResCap bargained for more time to complete

8 services and for more staffing in Section 7(a)(5) of that

9 statement --

10 THE COURT: Give me that section again?

11 MS. LEUNG: 7(a)(5) --

12 THE COURT: Uh-huh.

13 MS. LEUNG: -- of the statement of work under

14 performance standards it says, "Any references to established

15 timelines herein refers to Exhibit D. ResCap may change such

16 established timelines and will provide AFI with an updated

17 Exhibit D. To the extent there are material changes in

18 ResCap's established timelines, ResCap and AFI shall work

19 towards establishing mutually agreeable timelines."

20 In addition, in Section 7(b)(1), Remediation

21 Processes, it provides for additional staffing. It says, "If

22 ResCap reasonably determines that there is inadequate staffing

23 or staffing that lacks necessary training or skills to meet the

24 service level agreements set forth in Section 7(a), AFI agrees

25 to work reasonably with ResCap to address any such deficiencies




1 in staffing or skill sets."

2 So the agreement, on its face, provides for

3 contingencies such as large order requests for documents. So

4 their -- the provisions they cite that say -- that they argue

5 undercut a plain reading of the statement of work, we think

6 don't support that reading, in fact quite the opposite that

7 they bargained for and gave themselves maximum flexibility for

8 things -- for unforeseen circumstances like a large request for

9 loan files. We think that that's clear on its face.

10 As for the fee structure, the parties -- ResCap and, I

11 think, Ally also concedes that the agreement provides for Ally

12 to pay for services. So even though there's a basis --

13 THE COURT: I had some question whether they're

14 limited to that 50,000 dollars for document production services

15 versus potentially millions that it's going to cost to do it.

16 MS. LEUNG: But I think the debtors clearly -- I think

17 the agreement clearly states that the pass-through costs would

18 be absorbed by Ally. So it appears that most of these pass-

19 through costs would be the costs of the vendor to retrieve the

20 documents and not actually ResCap costs or personnel time or

21 labor in terms of identifying the loan files. That most of

22 that cost is actually in the retrieval.

23 THE COURT: Is there anything in the shared services

24 agreement or the statements of work that -- let's assume that

25 AFI requested ResCap to produce 43,000 loan files, is there




1 anything in the shared services agreement or the statement of

2 work that addresses how quickly ResCap would have to comply

3 with the request?

4 MS. LEUNG: Other than what I just read into the

5 record, not that I'm aware. It just gives them flexibility to

6 do it in more time then what's in Exhibit D.

7 THE COURT: Okay. So that, for example, if Judge Cote

8 ordered Ally to produce 43,000 loan files and this Court

9 determined that yes they should produce it over a different

10 timeline, beginning ninety days from now when things settle

11 down in the case and setting out reasonable parameters as to

12 when it should be done, is there anything in the shared

13 services agreement or the statements of work that would limit

14 this Court's ability to set out that timetable?

15 MS. LEUNG: Not that I'm aware.

16 THE COURT: Okay.

17 MS. LEUNG: Also, for the shared services agreement we

18 have pointed out the legal services statement of work and the

19 reason we think that that also supports ResCap's obligation to

20 provide loan files, is it shows that ResCap is required to

21 facilitate access to documents and --

22 THE COURT: Let me put it -- let me just stop you

23 there; I'll let you go on. I've actually read these pretty

24 carefully.

25 MS. LEUNG: Okay.




1 THE COURT: I think you have the much stronger side of

2 the argument on the point of whether -- I don't think you

3 can -- I mean, it's -- I don't think I can order Ally to

4 request the documents; I think Judge Cote could. I don't think

5 if I said produce them under these documents that ResCap would,

6 as a result of my order that they produce them, would trigger

7 the response -- the obligation of Ally to pay for it.

8 I think if -- I mean, I approved the entry into the

9 shared services agreement. I believe I can, therefore -- it

10 was presented to me by AFI and the debtors and I approved it

11 and I believe I can have the power to interpret it. If Judge

12 Cote ordered them to it and they -- and she directed them to

13 forward that request to the debtors, I think she could

14 certainly deal with, to the extent necessary, the cost issue.

15 I think if she ordered them to do it, I think, since I approved

16 this agreement I could interpret it, hypothetically, as saying

17 okay you've got to do it, Ally's got to pay for it under these

18 sections.

19 But I'm -- you can gather from my colloquy with Mr.

20 Glenn that my focus isn't so much whether documents have to be

21 produced but when they have to be produced and who bears the

22 cost of having to do it. Those are -- you know, I haven't

23 decided any of this at this point but those are my principal

24 concerns.

25 I just -- they're in court several times a week and we




1 have this very, very full docket, all front-loaded in this case

2 between now and the end of this year. It may spill over into

3 early next year. There'll be stuff that obviously goes on

4 after that but we are jam-packed with very time-intensive

5 things that are going on, such that having to comply in the

6 next sixty days with -- you say, well, you're only asking for

7 2,500 now; the other side in your cases want 43,000, a much

8 heavier burden from it.

9 The task of complying -- I don't think one side should

10 get its discovery and the other side get shut out. So it's as

11 much an issue -- what's the scope of the request, what's the

12 context in which it's being asked, what's the timing, what's

13 the burden, what's the expense, those are the things that I'm

14 focused on.

15 I'll let Mr. Haims address the issue. I'm not -- I'm

16 taking this under submission today. I think you've got the

17 much stronger side of the argument about what this shared

18 services agreement requires ResCap to do if AFI asks for it.

19 That request hasn't been made yet. And Judge Cote could order

20 AFI to request the documents from ResCap.

21 I think the issue that the debtors have raised and

22 Ally -- AFI raised it in their filing here, I don't care who

23 owns the stuff. It doesn't make any difference who owns this

24 data or the documents. That's a red herring issue as far as

25 I'm concerned.




1 MS. LEUNG: Well, we agree with that. I think that

2 where it would be helpful is for -- an interpretation of this

3 agreement would be helpful to the district court because of

4 AFI's position that they can't ask or do anything or take

5 copies of the documents, for some reason, because of the

6 bankruptcy stay. That is the position that they have set forth

7 in terms of objecting to our document requests and in the

8 district court, that the automatic stay prevents them from

9 getting copies of these documents.

10 So we have stated very clearly we think that the

11 shared services agreement is a method by which they can request

12 the documents that Your Honor has already ruled on that.

13 THE COURT: Well, I know Mr. Glenn disagrees with my

14 view that 105 is a potential -- I'm not deciding it yet -- the

15 potential source of power for the Court to say no discovery

16 absent further order of this Court from the debtors. The

17 shared service agreement, not to the contrary withstanding, and

18 even though that agreement was entered into post-petition,

19 approved post-petition, I think I would still, under my

20 analysis, have the ability to regulate AFI's discovery from the

21 debtors as well.

22 Again, none of this is to say that -- I mean, I've

23 said it already. Okay. Anything else?

24 MS. LEUNG: Well, to the extent that the stay does

25 apply, Your Honor already did rule on that issue when you




1 approved the shared services agreement. There is a -- I don't

2 have it in front of me but there is a paragraph in that order

3 that says that the stay is lifted to the extent necessary to

4 fulfill the shared services agreement.

5 So to the extent that it does apply --

6 THE COURT: So you'd say I would have -- your view is

7 I would have no -- if ResCap said look, we've got twenty-seven

8 similar lawsuits pending against us, Ally says we've got

9 twenty-seven similar lawsuits pending us around the country.

10 It involves not 43,000 loan files; it involves 105,000 or

11 200,000 loan files, every loan file that ResCap has control

12 of -- possession of -- let's put control aside -- we need them

13 and we need them in the next sixty days, you don't think I

14 would have the power to say not so fast?

15 MS. LEUNG: Well, I'm out of my element when it comes

16 to bankruptcy law, but I believe that Your Honor ruled on the

17 basis of Section 105 as to discovery in those cases and that

18 does not apply to FHFA.

19 THE COURT: Until October 31st. Well, it's -- okay.

20 Thank you, Ms. Leung.

21 MS. LEUNG: Thank you.

22 THE COURT: Mr. Haims?

23 Let me raise a couple other questions with you, while

24 you come up.

25 MR. HAIMS: Oh, sure.




1 THE COURT: I'll listen to your argument. I mean, I

2 thought -- I was not particularly taken by the factual showing

3 that you made as to the -- your vendors don't have to provide

4 more than 1,500 files a month and it's going to take thirteen

5 months or thirteen years or you figure it out to provide it. I

6 mean, you're -- the showing you made is without additional cost

7 they wouldn't produce more -- there is no judge that I know who

8 would give you several years -- let's assume that they could

9 take discovery, okay? There's no judge I know who would say

10 okay, it may take you a year or two to produce the documents

11 because your vendor is only under contract to do 1,500 a month

12 without additional expense. So that's unpersuasive.

13 I mean, you seem to have acknowledged, but not really

14 addressed, that you have the ability to request much more

15 expedited but costly service. The issue of who pays for it is

16 a different issue, okay. How quickly -- tell me this, Mr.

17 Haims, if you had to produce 43,000 loan files and somebody

18 else was going to pay for it, so cost is not an issue, how

19 quickly could you produce them?

20 MR. HAIMS: As we say in the papers -- in the

21 documents, it's going to be nine months.

22 Now, we don't control --

23 THE COURT: Mr. Haims, I can't believe that. I

24 just --

25 MR. HAIMS: We don't control the vendors. We can ask




1 the vendors. You're right, that we -- there's additional --

2 THE COURT: Oh, they'll be more than happy to provide

3 expedited service at a substantial cost.

4 MR. HAIMS: Well, but there are lots of other

5 productions going on at the same time. So this is not the only

6 -- this is not a standalone production. Things are different,

7 for example, when the MBIA case was done several years ago --

8 THE COURT: Why was it different?

9 MR. HAIMS: This was pre-bankruptcy. We didn't have

10 all of the other loan file pulls that we were doing now, the

11 governmental reviews, the committee reviews, the due diligence

12 on the sales, none of that. So we haven't gotten the list of

13 loan files. We don't know where those loan files are. We

14 don't know in how many warehouses they're housed in. We don't

15 know in what states. We don't know whether east coast, west.

16 We don't know any of that at this point in time.

17 THE COURT: Okay. And tell me this --

18 MR. HAIMS: So it's hard to say --

19 THE COURT: -- if FHFA gives you a list -- let's put

20 FHFA aside. The other defendants in the FHFA cases give you a

21 list of 43,000 loan files, what do the debtors have to do to

22 determine where the files are?

23 MR. HAIMS: The debtors have to run those 43,000 loan

24 numbers through fourteen databases, find out -- that will pull

25 up where those loan files --




1 THE COURT: How long is it going to take to do that?

2 MR. HAIMS: What we estimate, it's going to be about a

3 day of processing for each database. These are batch --

4 THE COURT: How many databases are there?

5 MR. HAIMS: Fourteen.

6 THE COURT: Okay.

7 MR. HAIMS: And then --

8 THE COURT: They can't be run simultaneously in

9 fourteen databases?

10 MR. HAIMS: Mr. Mongelluzzo can talk better than I can

11 about that. But the answer -- I understand the answer is --

12 THE COURT: Do you know the answer to that?

13 MR. HAIMS: I understand the answer to that is no.

14 THE COURT: Why not? Is he here?

15 MR. HAIMS: He is here.

16 THE COURT: Ask him the question.

17 MR. HAIMS: Sure.

18 THE COURT: I want to know how long -- if you -- for

19 43,000 loan files can searches of four databases --

20 MR. MONGELLUZZO: Fourteen.

21 MR. HAIMS: Fourteen.

22 THE COURT: -- fourteen databases, can they be run

23 simultaneously?

24 MR. MONGELLUZZO: There's two issues, Your Honor. One

25 is that we would -- they -- some of the loans are in some




1 databases and some are in others. So until you exclude it from

2 the first database you don't move to the second. It's just the

3 way the IT batching process works, and I'm not an IT expert so

4 I can't explain to you why we have those system constraints.

5 We're dealing with multiple systems that are legacy systems.

6 So whenever we've had to do large searches like this, i.e. the

7 MBIA case, it basically takes us three to four weeks to go

8 through all of that processing and do all the reconciliation

9 till we can finally tell you exactly where everything is.

10 THE COURT: Okay. Thank you. Thank you very much.

11 So let's say it takes two weeks to figure out where

12 the loan files are. Then what does it take to get them back?

13 MR. HAIMS: You've got to ask the vendors.

14 THE COURT: Okay.

15 MR. HAIMS: The vendor's got to pull them.

16 THE COURT: And do you have -- I mean, vendors -- my

17 experience is that the vendors have -- you have a contract, and

18 I understand it limits the number that they have to do. But

19 they've got a cost sheet, and my recollection is the cost --

20 the more quickly you need it, the greater the cost. And so if

21 after you identify the location in your fourteen databases,

22 where the location of those files are, I don't know how many

23 vendors we're talking about.

24 MR. HAIMS: Primarily two --

25 THE COURT: Okay.




1 MR. HAIMS: -- but it could be more.

2 THE COURT: Your two vendors, if you told them we need

3 all of those files in a month, they would quote you a cost for

4 providing the expedited service of getting those files. Mr.

5 Glenn said, what, sixty days, was that the period you were --

6 MR. GLENN: Yes.

7 THE COURT: Okay. If you said we need the 43,000

8 files in sixty days, your two -- Iron Mountain is one of them?

9 MR. HAIMS: Yes.

10 THE COURT: And who's the other?

11 MR. HAIMS: Kenwood, I believe.

12 THE COURT: Okay. Iron Mountain will give you a quote

13 for retrieving, I don't know, whatever the number is that's

14 with them and it'll be quantified as a dollar amount and it'll

15 be expensive, but they'll give you a quote. It won't take nine

16 months to do it. Am I right or wrong?

17 MR. HAIMS: Assuming they're doing nothing else, and

18 again these are not necess -- this has never been done, as I

19 understand here, so with -- by the debtors.

20 THE COURT: Oh, really?

21 MR. HAIMS: By the debtors.

22 THE COURT: Oh, well by the debtors.

23 MR. HAIMS: By the debtors.

24 THE COURT: Do you know how often --

25 MR. HAIMS: Yeah.




1 THE COURT: -- Iron Mountain is one of the main

2 document --

3 MR. HAIMS: Agreed.

4 THE COURT: -- retention -- multiple facilities in the

5 country and how often in complex litigation they're getting

6 requests? They love it because they can charge an arm and a

7 leg for doing it.

8 MR. HAIMS: I mean, again, Mr. Mongelluzzo could

9 probably just talk about it better. Sure. You're going to pay

10 them whatever you want to drop everything else. These are not

11 only our vendors, our documents are stored with other servicers

12 and other companies. Could they do it quicker? I would assume

13 so. For any price someone will do something quicker.

14 THE COURT: Okay. So I am directing the debtors to

15 obtain a quote from their vendors for retrieving 43,000 loan

16 files sixty days -- within sixty days after the vendors get the

17 request. Okay. You say it's going to take you two weeks to do

18 it, to identify where they are, I don't know, you can probably

19 make some rough allocation how many Iron Mountain has and how

20 many your other vendor has, you can approximate it. But I want

21 to see what the cost is for doing that. Okay. I don't want to

22 find out it's going to take nine months because it's not. It

23 isn't going to happen.

24 I can tell you, if I rule for FHFA and this matter

25 goes back to Judge Cote, do you think she's going to give you




1 nine months to produce the documents? I don't think so.

2 MR. HAIMS: Okay, Your Honor. We will do that. When

3 would you like that?

4 THE COURT: Within a week.

5 MR. HAIMS: Okay. Can I just confirm with my client?

6 THE COURT: Yeah. In other words, I'm not asking you

7 to figure out where the loan files are now, I'm not asking you

8 to run the fourteen databases. What I'm asking for you is to

9 get quotes from your two vendors of what the cost would be of

10 retrieving files within a sixty-day period after you identify

11 them.

12 MR. HAIMS: Can I consult before I agree with it?

13 THE COURT: Yes, go ahead. Yeah.

14 MR. HAIMS: Okay.

15 (Pause)

16 MR. HAIMS: Mr. Mongelluzzo raises two concerns. One

17 is, he doesn't know whether they would do it and get us a quote

18 within a week. But more importantly, he thinks they're going

19 to come back and say unless we know where the files are, we

20 can't -- because there are multiple locations, unless we know

21 how many files we have and where they're located we can't do

22 it. We can ask them.

23 THE COURT: How many locations? Do you decide where

24 the files go?

25 MR. HAIMS: My understanding is no. But we could ask




1 them for that information, Your Honor.

2 THE COURT: Okay. I want you to ask them.

3 MR. HAIMS: Okay. We will do that.

4 THE COURT: And I want a written response.

5 All right. Go ahead. You have a reply that you want

6 to make?

7 MR. HAIMS: Yeah. So I don't think that the anti-

8 injunction provision is applicable here. We are not saying --

9 THE COURT: 105 is not an anti-injunction -- is not an

10 injunction.

11 MR. HAIMS: No, no. I'm sorry, the hearing anti-

12 injunction provision.

13 THE COURT: Okay.

14 MR. HAIMS: We have not said no discovery ever. We

15 haven't said that for anybody, in fact for -- we've given some

16 discovery to some parties, and what we're saying -- we're not

17 asking this Court for an injunction enjoining their case.

18 Their case, to the extent the Second Circuit allows it to go

19 forward, is going to go forward -- is going forward and is not

20 going to be impeded other than the deadline for document

21 production in that one case will slip. Other than that, the

22 case itself is not being impeded.

23 This is no different, I submit, to the order from

24 Judge Cote at the outset of the case, as I understand, staying

25 certain parts of the Ally case pending a decision on the motion




1 to dismiss in the UBS case. And I don't think it's any

2 different than Judge Cote issuing an order putting the Ally

3 case in tranche 4 for trial three years down the road versus --

4 behind the UBS --

5 THE COURT: Yes, but Judge Cote gets to decide that,

6 not me.

7 MR. HAIMS: Agreed. But the FHFA --

8 THE COURT: Put it this way, if -- for example, if I

9 ruled that FHFA can't get the discovery for six months, just

10 hypothetically, and Judge Cote says that's all well and good; I

11 order that they produce all the documents in sixty days; if

12 they don't I'm going to enter their default. That's, kind of,

13 like Winnick II (ph.). Do you know what -- have you read

14 Winnick II?

15 MR. HAIMS: No. But -- I suspect --

16 THE COURT: I mean, I don't have any control over what

17 Judge Cote does with respect to Ally; that's for her to decide.

18 MR. HAIMS: Agree, Your Honor. What we're saying here

19 is that I disagree with Mr. Glenn's position that you are

20 powerless to not grant their motion here because of --

21 THE COURT: I want to see him argue that in the next

22 case he comes in.

23 MR. HAIMS: -- because of the anti-injunction

24 provision. Because we haven't said -- we are not asking you

25 here to enjoin their case. They have hundreds of subpoenas,




1 they and the underwriter defendants, to get the same loan

2 files. They already have hundreds of thousands of loan files;

3 they may even have some of these.

4 THE COURT: Let me stop you a second. Are you

5 suggesting that somebody other than the debtors have these loan

6 files?

7 MR. HAIMS: It's certainly possible that other debtors

8 have -- that people other than the debtors have copies of these

9 loan files. Yeah, that's correct.

10 THE COURT: Other than speculating about it, do you

11 have any --

12 MR. HAIMS: No, because we don't know -- I don't have

13 a list of the loan files they're looking for.

14 THE COURT: Well, do you know what the 43,000 loan

15 files that the non-Ally underwriters are talking about?

16 MR. HAIMS: Do I have a list of those? No, Your

17 Honor.

18 THE COURT: Have you made any effort to ascertain what

19 loan files they're talking about? They're specific

20 securitizations, right?

21 MR. HAIMS: Uh-huh. Uh-huh.

22 THE COURT: You don't need them to tell you what the

23 loans are that are in those securitization trusts?

24 MR. HAIMS: To find the loan files, Your Honor. The

25 loan files --




1 THE COURT: Not to find the loan files.

2 MR. HAIMS: The record -- again, Mr. Mongelluzzo is in

3 charge of records. The files are not stored or sorted even by

4 securitization. So is it possible that there are loans in the

5 securitization that we no longer have the files for? Sure.

6 THE COURT: It's pure speculation.

7 MR. HAIMS: Pure speculation, sure. But all of this

8 is until we see what the loans actually are that want.

9 THE COURT: Okay. You know, under Rule 45 or even

10 Rule 34, one of the factors for the Court to consider is

11 whether the documents could be obtained more easily from

12 another party.

13 MR. HAIMS: Uh-huh.

14 THE COURT: That's for Ally to argue with Judge Cote.

15 All right. Go ahead.

16 MR. HAIMS: So we don't think the anti-injunction

17 provision has any bearing on this issue.

18 Secondly, to say that this is only limited to 2,500

19 now or 5,000 is --

20 THE COURT: All they're asking for is 2,500.

21 MR. HAIMS: In their motion papers they specifically

22 reserve the right to ask for all 43,000. They've -- in

23 communication with Judge Cote, and this is part of our

24 exhibits, have asked for -- said that they're going to be

25 asking for all e-mails and they're going to be asking for all




1 of the documents. That dispute has already been teed up before

2 Judge Cote and they specifically said they're going to -- they

3 want those documents from the debtors.

4 THE COURT: Do you have all of Ally's e-mail files?

5 MR. HAIMS: There are custodians in the case. There

6 are, I think, thirty -- from the communications that we've

7 read, there are thirty some-odd custodians in the case from

8 which they want documents.

9 THE COURT: You know, I've got enough problems with

10 this current one.

11 MR. HAIMS: Right.

12 THE COURT: When the next one comes before me I'll

13 deal with that.

14 MR. HAIMS: Well, but to say that this is limited only

15 2,500 I don't think is the case. And I think we have to look

16 to see what's -- whether the granting of these 2,500 leads to

17 the next 43,000 and the next e-mail and when the other --

18 THE COURT: Well, that's why I ask --

19 MR. HAIMS: -- twenty-seven cases --

20 THE COURT: That's why I asked Mr. Glenn just assume

21 that complying with discovery is going to cost ten million

22 dollars and tank the case if it has to be done within a

23 schedule, he adheres to his absolutist position that I have no

24 power to alter that.

25 MR. HAIMS: I disagree with that position. And then,




1 I guess, the last --

2 THE COURT: That wasn't quite what he said. Close.

3 Close.

4 MR. HAIMS: And then the last provision -- the last

5 point I would just make is on the shared services agreement.

6 We have not taken the position that Ally, if they asked for

7 documents under the shared service agreement for the loan

8 files, they couldn't get them.

9 What we've taken the position is that would be an

10 additional service that would have to be negotiated. There's a

11 specific provision in the agreement that says if it's a service

12 not covered by the agreement, the parties could sit down and

13 negotiate --

14 THE COURT: Producing loan files is covered by the

15 agreement, isn't it?

16 MR. HAIMS: Well --

17 THE COURT: Yes or no?

18 MR. HAIMS: Producing small numbers of loan files --

19 THE COURT: Does it say that?

20 MR. HAIMS: -- in the ordinary course of business.

21 THE COURT: Does it say that? Does it say small

22 numbers of loan files in the ordinary course of business?

23 MR. HAIMS: Well we think, and that's why we put in

24 the --

25 THE COURT: No. Just say it: does it say that?




1 MR. HAIMS: Does it specifically say?

2 THE COURT: Yeah.

3 MR. HAIMS: It says -- no.

4 THE COURT: Okay. Just go over the fee structure

5 because I was a little unclear about -- are you capped at

6 50,000 dollars a month?

7 MR. HAIMS: For the fixed monthly costs, it's capped

8 at 50,000 dollars for the record services, yes. And that's for

9 pulling the loan files and all of the other enumerated records.

10 THE COURT: You pass through any third party costs?

11 MR. HAIMS: Third party costs, correct.

12 THE COURT: So if Iron Mountain charged three million

13 dollars, that would be a pass-through cost --

14 MR. HAIMS: That's correct.

15 THE COURT: -- under the shared services agreement?

16 MR. HAIMS: Correct. The 50,000, as I understand it,

17 deals with the time of the in-house employees to pull those

18 files.

19 THE COURT: And if Morrison & Foerster put thirty

20 paralegals and twenty lawyers the task of reviewing those files

21 before they were produced, that would be passed-along cost?

22 MR. HAIMS: That's correct.

23 So what we're saying is there is provision in this

24 agreement; this is just not covered by it.

25 THE COURT: Does Ally disagree with what you and I




1 just said?

2 MR. HAIMS: I'd let Ally speak to themselves on that

3 one.

4 THE COURT: Okay. All right. Anything else before I

5 hear from Ally's counsel?


7 THE COURT: Thank you, Mr. Haims.

8 MR. BROWN: Your Honor, I'll take that as my cue.

9 Judson Brown from Kirkland & Ellis on behalf of Ally.

10 And I just want to address, for a moment, the record services

11 statement of work that you've been discussing with FHFA and the

12 debtors' counsel here.

13 It's our view that that statement of work is clear and

14 does not cover a request for the loan files at issue here, and

15 let me read a provision from that --

16 THE COURT: Go ahead.

17 MR. BROWN: -- statement of work for you.

18 In section 7(a), Your Honor, the final paragraph of

19 that section of the statement of work, the third sentence reads

20 as follows: "In addition, any deliverables in this statement

21 of work must be consistent with historical practice and

22 services provided must be delivered with the same standard of

23 care, diligence, priority and frequency with which the services

24 were provided immediately prior to the date hereof."

25 THE COURT: Let me ask you this, as AFI been a




1 defendant in any litigation in the past involving any loans?

2 MR. BROWN: Other than the FHFA lawsuit, Your Honor?

3 THE COURT: Yes.

4 MR. BROWN: Has AFI?

5 THE COURT: Yes.

6 MR. BROWN: Sure.

7 THE COURT: Okay. And in any of those litigations,

8 prior into the entry into the shared services agreement, did

9 you request production of loan files from the debtors?

10 MR. BROWN: Pursuant to this statement --

11 THE COURT: No.

12 MR. BROWN: -- of work or generically?

13 THE COURT: No, no, no, generic. Did you -- in other

14 words, you acknowledged that AFI has been a defendant in

15 lawsuits involving mortgage loans and underwriting loans and

16 all that, correct?

17 MR. BROWN: AFI has been a defendant in those types of

18 lawsuits.

19 THE COURT: And in any of those lawsuits, before the

20 shared services agreement was entered into, did AFI request

21 that any of the now debtors pull the loan files for them to

22 review?

23 MR. BROWN: For AFI?

24 THE COURT: Yes.

25 MR. BROWN: No, Your Honor.




1 THE COURT: Never?

2 MR. BROWN: No, Your Honor. This record services

3 statement of work, Your Honor, is meant to cover loan files for

4 Ally Bank, not for AFI. Separate and different. And

5 historically the request for those loan files has been small in

6 nature, nothing like the ones --

7 THE COURT: I don't want to know whether they're small

8 in nature because until the litigation bomb exploded on the

9 mortgage servicing and origination business, of course they

10 were small in number. But that changed; changed before this

11 bankruptcy.

12 MR. BROWN: Right. But just to track the language of

13 this record service, consistent with historical practice,

14 Ally -- AFI has never made a request of this sort. And so at

15 best, Your Honor --

16 THE COURT: Yeah, but the statement of work

17 specifically covers -- I don't have the words open in front of

18 me but basically is litigation support.

19 MR. BROWN: At best, Your Honor, this statement of

20 work is ambiguous. What this discussion reveals is this

21 statement of work, at best, is ambiguous as to what it covers

22 and thus the testimony that the debtors have offered, from the

23 various witnesses, particularly to the intent behind the shared

24 services agreement and this statement of work would thus be

25 relevant for Your Honor to consider.




1 THE COURT: You know, at the point where -- how many

2 lawsuits was AFI a defendant in involving origination or

3 servicing of loans at the time these debtors filed their

4 Chapter 11 petitions?

5 MR. BROWN: Your Honor, off the top of my head I don't

6 know that number for you right now.

7 THE COURT: Quite a few?

8 MR. BROWN: Your Honor, honestly I just don't know the

9 number.

10 THE COURT: Mr. Haims, I'm only able to listen to one

11 at a time, okay?

12 And you're saying AFI didn't get any document requests

13 in any of those litigations before?

14 MR. BROWN: No, and let me explain that Your Honor.

15 It's not the case that AFI was sued individually and ResCap

16 wasn't a defendant. In those --

17 THE COURT: Oh, I know they were defendants. I know

18 you were all in that same pot.

19 MR. BROWN: And so AFI didn't have to make a request

20 to ResCap for any loan files and it never did so. ResCap was

21 in the case of the defendant and it was asked to produce those

22 loan files. And so there is no historical practice to track

23 the language of this statement of work where AFI requests loan

24 files from the debtors.

25 Your Honor, I only wanted to address this --




1 THE COURT: Okay. That's fine.

2 MR. BROWN: -- particular statement of work. Do you

3 have anything else that I could answer?

4 THE COURT: No, I don't. I don't. Thank you very

5 much.

6 MR. BROWN: Thank you, Your Honor.

7 THE COURT: Mr. Haims, you wanted to be heard again?

8 MR. HAIMS: Thank you, Your Honor. I just wanted to

9 clarify that in historical precedent the -- ResCap was a

10 defendant in all those cases. In the MBIA case it was ResCap

11 who made the production itself, not at the direction of Ally or

12 to Ally or at its direction.

13 THE COURT: All right. Anybody else wish to be heard?

14 MS. MOSKOWITZ: Yes, Your Honor.

15 THE COURT: Come on up.

16 MS. MOSKOWITZ: Thank you.

17 Lauren Moskowitz, I represent Credit Suisse and I'm

18 here on behalf of the non-Ally underwriter defendants.

19 If it's appropriate for this motion, I didn't know if

20 you were setting it aside separately.

21 THE COURT: Well, I'm going to hear your motion when

22 it's on the calendar, which isn't today. But I'll -- you did

23 file in connection with this motion so I'll certainly hear you.

24 MS. MOSKOWITZ: Okay. Thank you.

25 With respect to the number of loan files at issue we,




1 as Your Honor knows from our submission, do not agree that the

2 appropriate number if 5,000, let alone the 2,500.

3 THE COURT: All right. So let me ask you this,

4 though, let's assume -- you want 43,000 loan files. Let's just

5 assume, hypothetically, that the cost of producing 43,000 loan

6 files is five million dollars. Are your clients ready,

7 willing, I know they're able but -- are they ready to advance

8 the funds against an accounting after the documents are

9 provided?

10 MS. MOSKOWITZ: Your Honor, the non-Ally underwriter

11 defendants are willing to discuss cost sharing.

12 THE COURT: No, I didn't ask whether they're willing

13 to discuss. If the Court were to order on an appropriate

14 timetable that ResCap provide all 43,000 files, are your

15 clients prepared to pay the debtors' costs, direct and indirect

16 costs, including the vendors' costs, the attorneys' time in

17 reviewing -- in producing the files, all of that costs, subject

18 to review by the Court, are they prepared to pay that cost?

19 MS. MOSKOWITZ: If FHFA is contributing and the

20 other -- all defendants are contributing, yes, Your Honor, we

21 are.

22 THE COURT: Well, Mr. Glenn only wants 2,500 files,

23 you want 43,000 and Judge Cote ordered if you want more go to

24 the bankruptcy court. So you'll soon be here asking for 43,000

25 files. Mr. Glenn, for now, is asking for 2,500. He has --




1 well, and what I wanted -- so if -- the factors that I talked

2 about earlier, including cost, are factors that the Court

3 considered, I mean even under Rule 45, which I don't -- it

4 might provide guidance to me but I didn't issue a subpoena, I

5 mean when I say I this Court didn't issue a subpoena. But one

6 of the subsections of Rule 45 deals with cost. I guess it's

7 Rule 45(b)(3)(C)(ii), (C) is specifying conditions as an

8 alternative. In the circumstances described in Rule

9 45(c)(3)(B) "The Court may, instead of quashing or modifying

10 the subpoena, order appearance or production under specified

11 conditions if the party served," and then "(ii) ensures that

12 the subpoenaed person will be reasonably compensated."

13 Now I don't think that applies, by its terms, to what

14 I have but let's assume it provides guidance to me in deciding

15 what to -- if I were to decide that 105 allows me to regulate

16 discovery from the debtors, I look to that subsection as

17 providing guidance. My specific question is, are you prepared

18 to pay the costs of the 43,000 files you want.

19 MS. MOSKOWITZ: We are prepared to share reasonable

20 costs among the defendants. Yes, Your Honor.

21 THE COURT: All right.

22 MS. MOSKOWITZ: With respect to how those should be

23 shared, however, we disagree that FHFA should be responsible

24 only for the 2,500. We're happy to talk to Judge Cote about

25 that if that's the appropriate forum to discuss allocation.




1 But we disagree with the position they're taking here today,

2 with the constant reduction in the files so that they can, I

3 think the language was, one -- so that they could do what they

4 needed to do to carry their burden, but leave no room for what

5 we need to do to carry our burden and defend against the claims

6 that they've brought. Our due process concerns are of

7 paramount concern here given that what they're effectively

8 requesting is what they want for their case but let us wait or

9 perhaps not get at all what we need for our defenses.

10 THE COURT: And that wasn't -- my question is let's --

11 I mean, timing, as I've explained, is a factor. But -- and

12 I -- you heard my expressions of skepticism about nine months

13 to produce the files. But if the debtors are required to

14 provide them, I think someone else should be paying the cost,

15 okay. It may -- it would undoubtedly take longer to produce

16 43,000 files than 2,500 files, but assuming a reasonable

17 timeframe and all that, I come back -- one thing I didn't raise

18 with Ms. Leung or with Mr. Glenn is I didn't ask whether FHFA,

19 in order to get this discovery, is prepared to agree to waive

20 any claim it wishes to file in these bankruptcy proceedings

21 because certainly the production of documents, you may need

22 them to prosecute your actions against the other defendants,

23 but I don't think there's any mistake about the fact that you

24 want them to substantiate a claim to file in the bankruptcy

25 cases against the debtors.




1 In granting the 105 injunction in the one case that

2 went to decision, I believe I identified the risk of issue

3 preclusion as an appropriate -- and the cases identify that as

4 an appropriate consideration. I don't have the 105 issue about

5 enjoining prosecution of the AFI -- the case against AFI is not

6 before me, but it does, certainly, in deciding scope context,

7 context includes whether a party wishes to -- that's seeking

8 discovery today say I need it for this other action, but do

9 they intend to use that information in the claims allowance

10 process before the Court?

11 You, on behalf of the non-Ally underwriters indicate

12 in your papers your claims for indemnification. So the same

13 factor comes into account, you want to be able to use whatever

14 information you get, not only to defend the actions -- the

15 action -- the actions before Judge Cote, but also to bolster a

16 claim that you would assert against the debtors in this case.

17 MS. MOSKOWITZ: No, Your Honor. I think the

18 indemnification is for the underwriters' legal fees and any

19 ultimate liability that they suffer. And so, to the extent

20 that we need these files to defend ourselves, we're actually

21 protecting the assets of the estate to some extent because

22 anything --

23 THE COURT: Are you entitled -- if there's a judgment

24 in the securities against your clients are you entitled to

25 indemnification?




1 MS. MOSKOWITZ: Yes, Your Honor, and we have filed a

2 proof of claim in this court.

3 THE COURT: These are 33 Act claims against your

4 client?

5 MS. MOSKOWITZ: As well as state Blue Sky Law claims

6 as well.

7 THE COURT: Okay. Well, I'm not going to reach that

8 now. But, I mean, when I'm talk about context, the context is

9 important, is the party who's seeking the discovery from the

10 debtor or the debtors' defendants in the actions before the

11 bankruptcy, have the parties seeking discovery indicated their

12 belief that they have a claim against the debtors that are

13 likely to be asserted in the claims allowance process? Those

14 are all, it seems to me, to be factors that go to the context

15 in which the discovery request rises.

16 But with all that said, I think whether the party is a

17 plaintiff or a defendant in an action outside of the bankruptcy

18 court it's entitled to the evidence to prosecute or defend the

19 claims. Timing becomes -- and burden and expense become a big

20 issue.

21 MS. MOSKOWITZ: Yes, Your Honor. And that is -- that

22 is appropriate for Your Honor to consider, and we're willing to

23 work with the debtors as well in working out a schedule.

24 We also would like to get these files sooner rather

25 than later, of course, because we are subject to the same




1 timing as the FHFA is in the case that's pending in front of

2 Judge Cote.

3 THE COURT: Okay. Thank you.

4 MS. MOSKOWITZ: Thank you, Your Honor.

5 THE COURT: Anybody else want to be heard?

6 MS. FREJKA: Good afternoon, Your Honor. Elise

7 Frejka, Kramer, Levin, Naftalis & Frankel appearing on behalf

8 of the committee.

9 The committee wants to echo most of the comments of

10 the Court regarding the cost, the distraction, and the timing.

11 We support the debtors in this position and feel that expedited

12 discovery, at this critical time in the case, will distract the

13 debtors from the current, very important deadlines that are

14 ahead in the coming months.

15 The committee also feels that the cost should not be

16 borne by the debtors. That these loan file expenses should be

17 borne by the defendants along the lines as just suggested.

18 THE COURT: Well, it may be -- I mean, it -- I mean,

19 Judge Cote could well decide the expenses should be borne by

20 Ally. Usually the -- by AFI, because usually with our system

21 is -- the issue for third party discovery is more acute about

22 expenses, but ordinarily the party bears its own costs for

23 discovery.

24 MS. FREJKA: And we -- the committee is aware of the

25 cost, and I think that it's probably some place between where




1 the two parties are suggesting the number is, but it does have

2 the ability to ever expand as requests expand and the committee

3 just wants to be sensitive to what those costs are and where

4 they should be allocated and passed through under the shared

5 services agreement.

6 THE COURT: Well, other than this Court deciding that

7 under the agreement that it approved that -- if the Court were

8 to decide that AFI is -- if AFI, either because it's ordered to

9 by the district court or it decides, for its own defense, it

10 needs it, requests 43,000 loan files, that the cost -- that

11 they bear the pass-through costs for providing it and perhaps

12 more than the 50,000 a month or not. And it may be appropriate

13 for this Court to decide that the one thing that's clear is

14 that the debtors shouldn't bear the cost, that under the shared

15 services agreement AFI is potentially responsible for the cost.

16 But the issue of whether AFI or FHFA, I have trouble with that

17 all the time, FHFA or the other underwriter defendants should

18 bear the cost that does seem to me to be for Judge Cote to

19 decide, not for me to decide. This is discovery in an action

20 pending before her not before me.

21 MS. FREJKA: I don't think we disagree with that. I

22 think we just raise the issue of the cost to the estate --

23 THE COURT: Okay.

24 MS. FREJKA: -- as well as the timing. And I think

25 that you've reached those same points.




1 THE COURT: I've addressed them, let's put it that

2 way.

3 MS. FREJKA: You've well addressed them.

4 THE COURT: I haven't decided them, but I've addressed

5 those issues.

6 MS. FREJKA: Yes, you have. Thank you.

7 THE COURT: Thank you, Ms. Frejka. Anybody else wish

8 to be heard? You want the last word, Mr. Haims?

9 MR. HAIMS: Your Honor, just two quick --

10 THE COURT: Okay.

11 MR. HAIMS: One is on the schedule for the additional

12 submission. Just as I was sitting here I remembered that next

13 week is Rosh Hashanah, I will not be in Monday and Tuesday.

14 THE COURT: I won't either.

15 MR. HAIMS: So if we could have it past that date,

16 Wednesday or Thursday when I get back.

17 THE COURT: I thought Friday, a week from -- I'm

18 talking about the end of next week, by Friday of next week.

19 MR. HAIMS: Thank you, Your Honor.

20 And lastly, I think we had heard from the underwriters

21 as to whether they are going to assert their claim against the

22 debtors, and I don't know if we've ever heard from FHFA whether

23 they intend to do it as well.

24 THE COURT: I'm going to be surprised, but go ahead,

25 Mr. Glenn.




1 MR. GLENN: Your Honor, we're not prepared to waive

2 our claims and --

3 THE COURT: I didn't expect you to.

4 MR. GLENN: -- in the claims allowance process the

5 irony is that we could then issue a subpoena under the rule --

6 the 7000 rules and get it as party discovery ironically.

7 THE COURT: No, it would be a contested matter under

8 9014 and the discovery rules, subject to the way the Court

9 would regulate it, would apply. But, of course, in the claims

10 allowance process estimation of a claim can be a much more

11 truncated and expedited proceeding than a district court

12 action.


14 THE COURT: So it wouldn't necessarily -- and look,

15 the completion of the litigation before Judge Cote, as

16 efficient as she is, will be, you know, with appeals is a time

17 consuming process. I think that the estimation process is

18 designed to deal with the situation where you can't really,

19 finally quantify a claim in the time needed to resolve a case.

20 Those issues aren't before me, but one shouldn't assume that

21 the same discovery, the same process applies in the claims

22 allowance process as would apply in the district court for any

23 action.

24 MR. GLENN: To answer the Court's question, the answer

25 is no. We're not preparing to waive our claim.




1 THE COURT: I didn't expect you would.


3 THE COURT: Thank you.

4 All right. Anybody else wish to be heard?

5 MS. MOSKOWITZ: Your Honor, just one procedural

6 question for you, something Your Honor said just raised a

7 question in my mind. We did make our submission on behalf of

8 the non-Ally underwriter defendants according to Your Honor's

9 schedule for supplemental submissions --

10 THE COURT: Right.

11 MS. MOSKOWITZ: -- on FHFA.

12 THE COURT: You did.

13 MS. MOSKOWITZ: So to the extent that Your Honor is

14 taking evidence, we would move for admission of the exhibits

15 submitted.

16 THE COURT: Well, you have a separate motion pending

17 so we'll wait till we get to your motion.

18 MS. MOSKOWITZ: Is that scheduled for some separate --

19 THE COURT: I don't know. Is it on the calendar, Mr.

20 Haims?

21 MR. HAIMS: I think it's actually noticed for today.

22 MS. MOSKOWITZ: That's what I thought.

23 THE COURT: It is? I'm sorry.

24 MR. HAIMS: I think in their notice they noticed it

25 for the same day.




1 THE COURT: I'm sorry.

2 MS. MOSKOWITZ: I'm sorry; that's what I thought. So

3 I was just confused.

4 THE COURT: I apologize.

5 MS. MOSKOWITZ: So if --

6 THE COURT: I read everything, but I just -- I don't

7 focus, sometimes, on those little details.

8 MS. MOSKOWITZ: Right.

9 THE COURT: What is it that you're offering in

10 evidence?

11 MS. MOSKOWITZ: Your Honor, we would offer the

12 submission, which is docket number 1293 and the exhibits

13 submitted thereto, which are docket numbers 1293-1 through -9,

14 which it would include the affidavits, or declarations rather,

15 of two experts, Professor Arnold Barnett and Professor Chris

16 James, which are respectively 1293-9 and 1293-8, as well as the

17 underwriter or the defendants' submission, across all actions,

18 to the court on June 6th, which was 1293 --

19 THE COURT: When you say submissions I'm only

20 interested in the evidence.

21 MS. MOSKOWITZ: The evidence are those two exhibits

22 that were submitted in support that I just cited to Your Honor.

23 THE COURT: 1293-8 and 1293-9?

24 MS. MOSKOWITZ: Yes, Your Honor.

25 THE COURT: Are there any objections to those




1 declarations?


3 THE COURT: Mr. Glenn?

4 MR. GLENN: We're not a party to that motion. I don't

5 believe that motion is directed to us.

6 THE COURT: Okay.

7 MR. GLENN: We're not taking any position on any of --

8 anything in their pleadings.

9 THE COURT: Okay. All right. So the two declarations

10 that are ECF docket number 1293-8 and 1293-9 are admitted into

11 evidence for purposes of this hearing.

12 (Declaration of Professor Arnold Barnett was hereby received

13 into evidence as Credit Suisse's Exhibit 1293-8, as of this

14 date.)

15 (Declaration of Professor Chris James was hereby received into

16 evidence as Credit Suisse's Exhibit 1293-9, as of this date.)

17 MS. MOSKOWITZ: Thank you, Your Honor.

18 THE COURT: I'm going to take the matter under

19 submission. I do -- I am working on this but I want to see the

20 specific additional information that I requested that the

21 debtors provide with respect to the cost of producing within

22 sixty days the approximately 43,000 loan files. Okay?

23 UNIDENTIFIED SPEAKER: Yes, Your Honor.

24 THE COURT: All right. We're adjourned. Thank you

25 very much.




1 MS. MOSKOWITZ: Thank you.

2 (Whereupon these proceedings were concluded at 3:51 PM)

3

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81

1

2 I N D E X

3 E X H I B I T S

4 DEBTORS' DESCRIPTION ID. EVID.

5 Declaration and supplemental 8

6 declaration of Kanchana Wangkeo

7 Leung in support of FHFA's motion

8 seeking limited discovery from the

9 debtors and relief from the

10 automatic stay

11 Declaration of Jeffrey A. Lipps 13

12 in support of debtors' objection

13 to FHFA's motion for relief from the

14 automatic stay

15 Declaration and supplemental 13

16 declaration of John G. Mongelluzzo

17 in support of debtors' objection

18 to FHFA's motion for relief from the

19 automatic stay

20 Declaration of Mary Fahy Woehr in

21 support of debtors' objection to

22 FHFA's motion for relief from the

23 automatic stay

24 Declaration of Philip Marc Scheipe 13

25 in support of AFI's submission



82

1 regarding the shared services agreement

2 I N D E X

3 E X H I B I T S (cont'd)

4 DEBTOR'S DESCRIPTION ID. EVID.

5 Debtor's Exhibits 1 through 8 14

6

7 CREDIT DESCRIPTION ID. EVID.

8 SUISSE'S

9 1293-8 Declaration of Prof. Arnold Barnett 46

10 1293-9 Declaration of Prof. Chris James 46

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83

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2 C E R T I F I C A T I O N

3

4 I, Ellen S. Kolman, certify that the foregoing transcript is a

5 true and accurate record of the proceedings.

6

7

8

9 ______________________________________

10 ELLEN S.KOLMAN

11 AAERT Certified Electronic Transcriber CET**D 568

12

13 eScribers

14 700 West 192nd Street, Suite #607


16

17 Date: September 12, 2012

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RESIDENTIAL CAPITAL, LLC, et al. v.Case No. 12-12020-mg

P.M. SESSION ONLYSeptember 11, 2012

A

abetting (1) 39:16ability (6) 22:8;41:9;44:14; 47:20;49:14;74:2able (4) 34:23;66:10;68:7; 71:13absent (4) 24:5;33:3;35:7; 47:16absolutely (1) 33:10absolutist (1) 60:23absorbed (1) 43:18access (2) 41:8;44:21accidentally (1) 19:11according (1) 77:8account (2) 24:17;71:13accounting (1) 68:8accurately (1) 8:21achieves (1) 34:23acknowledged (2) 49:13;64:14across (1) 78:17Act (1) 72:3acting (1) 6:7action (10) 19:12;35:7,25; 40:11;71:8,15;72:17; 74:19;76:12,23actions (11) 16:22;19:15;24:4, 7,8,13;70:22;71:14, 15;72:10;78:17activities (1) 30:7activity (3) 20:6;36:10,19actually (7) 40:21;43:20,22; 44:23;59:8;71:20; 77:21acute (1) 73:21addition (2) 42:20;63:20additional (8)

6:11;42:21;49:6, 12;50:1;61:10;75:11; 79:20address (14) 9:4,21;11:13; 13:16;16:20;26:25, 25;38:9,11;39:11; 42:25;46:15;63:10; 66:25addressed (12) 8:24,25;9:3,5; 15:20;17:7;18:21,22; 49:14;75:1,3,4addresses (1) 44:2addressing (1) 9:5adheres (1) 60:23adjourned (2) 6:8;79:24administration (6) 17:14;35:15,22; 36:5,6;37:2admissibility (1) 12:24admissible (2) 12:11,20admission (1) 77:14admitted (4) 8:5;12:15;14:16; 79:10advance (1) 68:7advantage (1) 35:2adversary (5) 16:11,12;17:12; 36:19;38:7affect (1) 36:5affecting (2) 17:14,15affidavit (1) 7:16affidavits (2) 9:20;78:14affirmative (1) 6:22AFI (29) 32:12;42:16,18,24; 43:25;45:10;46:18, 20,22;63:25;64:4,14, 17,20,23;65:4,14; 66:2,12,15,19,23; 71:5,5;73:20;74:8,8, 15,16AFI's (4) 13:6,13;47:4,20afternoon (2) 6:4;73:6again (10)

24:12;27:5;36:15; 39:16;42:10;47:22; 53:18;54:8;59:2;67:7against (22) 16:13;24:2;35:7, 19,21,24;36:18; 37:14,14,17;40:3; 48:8;68:8;70:5,22, 25;71:5,16,24;72:3, 12;75:21Agency (3) 6:6;13:2,10ago (3) 30:1;40:4;50:7agree (15) 11:15;12:12,13; 16:17;17:2,5;23:22; 25:4,8;34:10;47:1; 55:12;57:18;68:1; 70:19agreeable (1) 42:19agreed (4) 24:11;31:16;54:3; 57:7agreement (41) 11:7,8;12:1,19; 13:7,14;18:23;27:15; 41:10,17,21;42:2; 43:2,11,17,24;44:1, 13,17;45:9,16;46:18; 47:3,11,17,18;48:1,4; 61:5,7,11,12,15; 62:15,24;64:8,20; 65:24;74:5,7,15agreements (2) 20:9;42:24agrees (1) 42:24ahead (14) 9:14,24;10:12,19; 15:9;39:4,10,24; 55:13;56:5;59:15; 63:16;73:14;75:24aid (2) 35:15;36:6aiding (1) 39:16air (1) 33:6allocated (1) 74:4allocation (2) 54:19;69:25allowance (5) 71:9;72:13;76:4, 10,22allows (2) 56:18;69:15Ally (32) 4:13,13,21;5:3; 40:19,20,22;41:4,6,8, 15;43:11,11,18;44:8;

45:3,7;46:22;48:8; 56:25;57:2,17;59:14; 61:6;62:25;63:2,9; 65:4,14;67:11,12; 73:20Ally's (3) 45:17;60:4;63:5alone (1) 68:2along (2) 6:5;73:17alter (1) 60:24alternative (1) 69:8always (2) 25:21;40:25ambiguous (3) 11:8;65:20,21among (2) 24:16;69:20amount (3) 20:6;21:7;53:14analysis (1) 47:20ANDREW (2) 4:8;6:4anti- (2) 56:7,11anti-injunction (3) 56:9;57:23;59:16apart (1) 22:5apologize (1) 78:4appeal (1) 39:13appealed (1) 24:1appeals (1) 76:16appearance (1) 69:10appearing (1) 73:7appears (1) 43:18applicable (1) 56:8application (6) 7:15;17:23,23; 18:5;39:5,7applied (1) 8:22applies (5) 8:17;9:1,6;69:13; 76:21apply (10) 15:17;16:13;17:6; 19:7;37:5;47:25; 48:5,18;76:9,22approach (1) 38:4

appropriate (15) 22:1,3;25:12; 26:23;32:20;34:10; 36:23;67:19;68:2,13; 69:25;71:3,4;72:22; 74:12approved (6) 45:8,10,15;47:19; 48:1;74:7approximate (1) 54:20approximately (2) 18:7;79:22argue (6) 19:14;33:21;42:3; 43:4;57:21;59:14argues (1) 41:25argument (9) 6:19;11:8;15:8; 16:12;21:2;36:17; 45:2;46:17;49:1arguments (1) 20:13arm (1) 54:6Arnold (2) 78:15;79:12around (8) 15:21;17:15;24:7, 8;26:17,18;35:12; 48:9articulated (1) 35:20asbestos (1) 22:4ascertain (1) 58:18aside (5) 21:1;34:1;48:12; 50:20;67:20assert (2) 71:16;75:21asserted (1) 72:13assets (2) 37:1;71:21assignees (1) 31:18assume (12) 17:2,5;23:22;29:3; 43:24;49:8;54:12; 60:20;68:4,5;69:14; 76:20Assuming (2) 53:17;70:16attached (1) 14:11attention (3) 6:13;31:11;39:2Attorneys (5) 4:3,13,21;5:3,11attorneys' (1)

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(1) abetting - attorneys'




68:16auction (2) 20:7;31:23August (4) 10:2,5,7,9authority (12) 17:10;19:10;23:6; 24:21;25:9,11,15; 26:7;28:11,15;29:14; 35:6automatic (5) 8:17;13:3,11; 15:17;47:8avalanche (1) 22:6aware (4) 16:22;44:5,15; 73:24

B

back (10) 22:13,21;27:11; 32:8;33:9;52:12; 54:25;55:19;70:17; 75:16balance (1) 27:9Bank (2) 4:13;65:4bankruptcy (20) 16:20;19:24;20:7; 21:8;24:5;27:2,8; 29:9,13,23,23;40:24; 47:6;48:16;65:11; 68:24;70:20,24; 72:11,17BAP (2) 17:2,6bargained (2) 42:7;43:7Barnett (2) 78:15;79:12based (3) 9:2;32:2,25basically (2) 52:7;65:18basis (3) 15:13;43:12;48:17batch (1) 51:3batching (1) 52:3bear (5) 35:4;40:22;74:11, 14,18bearing (1) 59:17bears (2) 45:21;73:22become (1) 72:19becomes (1)

72:19beginning (2) 22:13;44:10behalf (6) 6:6;63:9;67:18; 71:11;73:7;77:7behind (2) 57:4;65:23belief (1) 72:12beneficiaries (1) 22:16BENSON (4) 4:2;6:5;10:22;11:3best (4) 32:24;65:15,19,21better (2) 51:10;54:9beyond (3) 15:16;21:14;37:4big (1) 72:19binder (5) 7:19;10:13;13:19; 14:4,6blanket (2) 35:9;38:5Blue (1) 72:5bolster (1) 71:15bomb (1) 65:8bona (1) 22:5bond (1) 25:6Borders (1) 30:1borne (3) 73:16,17,19borrower (1) 18:14Both (5) 11:23;16:3;27:22; 31:12;33:3breaking (1) 6:13brief (3) 8:25;9:4;17:7briefed (1) 15:13briefing (2) 7:17;38:24briefly (1) 39:11briefs (1) 8:25bring (3) 6:12;38:25;39:1broader (1) 34:20Broadway (2)

4:4;5:4brought (1) 70:6BROWN (23) 4:17,20;5:2;63:8,9, 17;64:2,4,6,10,12,17, 23,25;65:2,12,19; 66:5,8,14,19;67:2,6Bryant's (1) 36:16burden (13) 24:14,15;27:7; 30:8;34:1,24;35:14; 36:3;46:8,13;70:4,5; 72:19burdensome (1) 31:15business (3) 61:20,22;65:9

C

calendar (2) 67:22;77:19call (1) 26:22called (1) 31:11Can (35) 7:18;10:25;18:21; 19:24;20:2,20;21:17; 22:2;25:18;30:6; 34:4;35:1;37:25; 39:5;45:3,3,9,11,19; 47:11;49:25;51:10, 10,19,22;52:9;54:6, 18,20,24;55:5,12,22; 70:2;76:10capabilities (1) 34:4Capital (1) 6:3capped (2) 62:5,7care (2) 46:22;63:23careful (1) 19:11carefully (1) 44:24carry (3) 36:23;70:4,5case (75) 6:15,22;11:21; 15:14,15,17,21;16:6; 17:15;18:5;20:5,22, 24;21:10,19;22:12, 13;23:7;28:19,25; 29:9,9,12,22;30:4,21; 31:2,10,11,15,21; 32:2,6,25;33:18; 34:23;35:22;36:5,6; 37:2,12;38:23;39:6,

13,15,22,23;44:11; 46:1;50:7;52:7; 56:17,18,21,22,24, 25;57:1,3,22,25;60:5, 7,15,22;66:15,21; 67:10;70:8;71:1,5, 16;73:1,12;76:19cases (23) 15:21;16:3,5,13; 19:25;21:21;22:3,4, 11;26:20;27:10;32:3; 35:16;37:9,24;39:8; 46:7;48:17;50:20; 60:19;67:10;70:25; 71:3cede (1) 38:13central (1) 22:5certain (2) 13:23;56:25certainly (9) 11:19;26:23;28:7; 35:19;45:14;58:7; 67:23;70:21;71:6cetera (1) 7:12change (1) 42:15changed (2) 65:10,10changes (1) 42:17Chapter (15) 19:25;20:7,24; 21:13,19,20;26:20; 27:1;29:13,22;32:3, 6;35:16;37:2;66:4charge (2) 54:6;59:3charged (2) 19:24;62:12chose (1) 9:3Chris (2) 78:15;79:15Circuit (10) 17:2,6;19:20,20; 22:19;38:22;39:6,17, 22;56:18circumstance (3) 22:15;28:25;29:17circumstances (2) 43:8;69:8cite (1) 43:4cited (5) 22:20;24:9;28:25; 31:8;78:22Citibank (2) 31:14,16claim (10) 31:18;70:20,24;

71:16;72:2,12;75:21; 76:10,19,25claimed (1) 31:15claims (12) 39:16;70:5;71:9, 12;72:3,5,13,19;76:2, 4,9,21clarify (2) 40:1;67:9clear (22) 7:23;8:17;11:1,16, 21;12:2,4,10,19; 14:25;18:1,6;19:4; 40:18;41:10,11,12, 17,21;43:9;63:13; 74:13clearly (3) 43:16,17;47:10client (3) 30:23;55:5;72:4clients (3) 68:6,15;71:24Close (2) 61:2,3closely (1) 15:12closer (1) 39:14coast (1) 50:15Code (2) 37:4,5collateral (1) 21:25colleagues (1) 20:10collected (2) 8:21;34:3colloquy (2) 20:11;45:19Colonial (3) 22:19;23:21,23coming (1) 73:14comments (2) 28:23;73:9committee (7) 21:3;50:11;73:8,9, 15,24;74:2communication (1) 59:23communications (1) 60:6companies (1) 54:12company (1) 34:24company's (2) 22:8;28:22compensated (1) 69:12complete (1)


(2) auction - complete




42:7completion (1) 76:15complex (3) 21:18;37:24;54:5complied (1) 20:14comply (7) 17:18;24:19;29:4; 32:4,20;44:2;46:5complying (8) 17:17;25:7;29:21; 33:11;35:14;36:4; 46:9;60:21concede (3) 25:10,11;41:14concedes (1) 43:11concern (1) 70:7concerned (3) 17:23;23:25;46:25concerns (5) 22:1;28:21;45:24; 55:16;70:6conclude (1) 32:4concluded (1) 80:2concludes (1) 29:10conclusion (2) 6:17;42:2conditions (4) 35:23;41:24;69:7, 11confer (1) 34:8confidential (1) 18:14confidentiality (2) 18:22;27:15confirm (1) 55:5confirms (1) 41:5confused (1) 78:3confusion (1) 40:4Congress (2) 22:19,23connection (3) 16:21;19:15;67:23consequently (1) 32:6conservator (1) 6:7consider (5) 27:6,8;59:10; 65:25;72:22consideration (2) 25:12;71:4

considerations (1) 27:23considered (4) 11:12;12:20;29:1; 69:3consistent (2) 63:21;65:13conspicuously (1) 33:3constant (1) 70:2constraints (1) 52:4construed (1) 11:23construing (1) 11:21consult (1) 55:12consulted (1) 6:14consuming (1) 76:17contains (1) 37:5contemplated (1) 42:5contested (3) 20:12;32:11;76:7context (12) 24:14;27:6,7; 36:21;37:6;40:8; 46:12;71:6,7;72:8,8, 14contingencies (1) 43:3continue (1) 39:4contract (4) 12:10,12;49:11; 52:17contrary (1) 47:17contributing (2) 68:19,20control (10) 26:1;38:13;39:25; 40:19;41:6;48:11,12; 49:22,25;57:16controlling (1) 38:4conversion (1) 29:22converts (1) 29:12copies (3) 47:5,9;58:8core (1) 20:6correctly (1) 41:7cost (54) 17:16,18;18:8,24;

23:2,8;24:18,21;25:1, 5;26:2,8,25;28:5,21, 22;29:3,5,11,20;35:4; 38:2,2;43:15,22; 45:14,22;49:6,18; 50:3;52:19,19,20; 53:3;54:21;55:9; 60:21;62:13,21;68:5, 11,18;69:2,6;70:14; 73:10,15,25;74:10, 14,15,18,22;79:21costly (1) 49:15costs (21) 24:15;25:6,8;36:1; 40:22;43:17,19,19, 20;62:7,10,11;68:15, 16,16,17;69:18,20; 73:22;74:3,11Cote (30) 6:10;19:7;22:18; 26:16,24;29:6;30:21; 31:1;37:17;40:24; 44:7;45:4,12;46:19; 54:25;56:24;57:2,5, 10,17;59:14,23;60:2; 68:23;69:24;71:15; 73:2,19;74:18;76:15Cote's (3) 23:21;32:17;34:18counsel (3) 34:9;63:5,12country (8) 15:22;24:7,8; 26:18,18;35:12;48:9; 54:5couple (2) 27:21;48:23course (6) 26:21;61:20,22; 65:9;72:25;76:9COURT (346) 6:2,21,25;7:3,8,18, 22;8:1,4,8,10,12,19; 9:1,12,14,17,22,24; 10:3,10,12,14,17,19, 21,23;11:1,13;12:3,6, 9,14,16;13:16,18,20, 22,25;14:2,5,6,14,21, 23,25;15:3,6,8,11,13, 15,23;16:1,3,9,19,20, 24;17:1,5,9,25;18:3, 8,11,19;19:1,3,5,10, 19,24;20:5;21:17; 22:17,25;23:5,14,17, 22;24:5,22,25;25:1,4, 13,14,15,17,19,20,23, 25;26:3,4,5,6,9,12,12, 13,14,16,24;27:3,5, 16,18,20;28:1,3,7,8,9, 11,15,17,18,20,21,23; 29:2,16,18,23;30:3,6, 9,12,15,20,25;31:4,6,

8,9;32:16,22,24;33:7, 13,15,22;34:7,22; 35:5,8,10,16,21;36:7, 8,14,22;37:9,14,16; 38:9,11,15,19;39:3,9, 14,17,20,21;40:9,10, 14;41:2,18;42:10,12; 43:13,23;44:7,8,16, 22;45:1,25;47:3,8,13, 15,16;48:6,19,22; 49:1,23;50:2,8,17,19; 51:1,4,6,8,12,14,16, 18,22;52:10,14,16, 25;53:2,7,10,12,20, 22,24;54:1,4,14;55:4, 6,13,23;56:2,4,9,13, 17;57:5,8,16,21;58:4, 10,14,18,22;59:1,6,9, 10,14,20;60:4,9,12, 18,20;61:2,14,17,19, 21,25;62:2,4,10,12, 15,19,25;63:4,7,16, 25;64:3,5,7,11,13,19, 24;65:1,7,16;66:1,7, 10,17;67:1,4,7,13,15, 21;68:3,12,13,18,22, 24;69:2,5,9,21;70:10; 71:10,23;72:2,3,7,18; 73:3,5,10,18;74:6,6, 7,9,13,23;75:1,4,7,10, 14,17,24;76:3,7,8,11, 14,22;77:1,3,10,12, 16,19,23;78:1,4,6,9, 18,19,23,25;79:3,6,9, 18,24courts (4) 19:20,21;22:23,24Court's (5) 9:4;15:11;39:2; 44:14;76:24cover (3) 40:6;63:14;65:3covered (3) 61:12,14;62:24covers (4) 41:12,13;65:17,21Credit (3) 67:17;79:13,16creditors' (1) 21:3critical (1) 73:12cross- (1) 7:5cross-examine (1) 15:1cue (1) 63:8current (2) 60:10;73:13currently (2) 20:16;23:10custodians (2)

60:5,7custody (1) 40:22cut (1) 6:15cutoff (1) 32:18

D

DANIEL (2) 4:9;6:6Dash (3) 9:12,13,14data (1) 46:24database (2) 51:3;52:2databases (8) 50:24;51:4,9,19, 22;52:1,21;55:8Data's (1) 34:3date (11) 8:7;13:4,8,12,15; 14:18;20:18;63:24; 75:15;79:14,16day (4) 37:23;42:4;51:3; 77:25days (16) 20:3,4,5,23;29:8, 12,19;44:10;46:6; 48:13;53:5,8;54:16, 16;57:11;79:22DC (2) 4:15,23deadline (2) 30:19;56:20deadlines (1) 73:13deal (7) 8:20;10:14;27:19; 29:4;45:14;60:13; 76:18dealing (3) 21:24;37:2;52:5deals (2) 62:17;69:6debtor (16) 16:21;17:7,11,18; 19:13;20:13,22;27:1, 2;29:4,10,20;32:19; 34:22;36:3;72:10debtors (60) 7:19;16:5,5,7,16, 17;19:13,15;21:12; 23:7;24:5,8;30:18; 32:4,13;34:1;35:6,14, 18;36:8;37:17;40:3, 7,22;41:4,14;43:16; 45:10,13;46:21; 47:16,21;50:21,23;


(3) completion - debtors




53:19,21,22,23; 54:14;58:5,7,8;60:3; 64:9,21;65:22;66:3, 24;69:16;70:13,25; 71:16;72:12,23; 73:11,13,16;74:14; 75:22;79:21debtors' (8) 13:1,9;14:5,15,17; 63:12;68:15;72:10decide (14) 15:15;25:5;32:25; 35:3;40:24;55:23; 57:5,17;69:15;73:19; 74:8,13,19,19decided (9) 9:4,6;12:23;22:22; 23:1;24:17;31:18; 45:23;75:4decides (1) 74:9deciding (4) 47:14;69:14;71:6; 74:6decision (11) 12:16,23;16:1; 21:23;22:20;31:9; 32:11;36:15,16; 56:25;71:2decisions (1) 16:19declarants (3) 7:6;11:24;15:1declaration (17) 7:11;8:6,6;9:10,25; 10:4,6,8;13:1,5,5,9, 13;33:9;41:14;79:12, 15declarations (20) 6:24;7:1,2,14;8:2, 4;9:9,18;10:9,14; 11:4,5;12:15;14:11; 33:2,3,11;78:14;79:1, 9default (3) 31:1,20;57:12defend (4) 70:5;71:14,20; 72:18defendant (9) 31:20;64:1,14,17; 66:2,16,21;67:10; 72:17defendants (16) 11:24;18:23;21:23; 33:18;50:20;58:1; 66:17;67:18;68:11, 20;69:20;70:22; 72:10;73:17;74:17; 77:8defendants' (3) 33:18;34:9;78:17defense (1)

74:9defenses (1) 70:9deferred (1) 28:20deficiencies (1) 42:25delay (1) 30:18deliverables (1) 63:20delivered (1) 63:22depositions (1) 36:11derail (6) 21:20;23:9;28:22; 32:6;33:12;38:2derailed (1) 29:12described (1) 69:8designed (2) 37:3;76:18despite (1) 41:25details (1) 78:7determination (1) 37:18determine (3) 26:7;34:5;50:22determined (2) 9:1;44:9determines (1) 42:22determining (1) 12:11development (1) 6:13difference (1) 46:23different (12) 17:24;27:9;30:2; 37:6;40:5;44:9; 49:16;50:6,8;56:23; 57:2;65:4differently (1) 27:9difficult (2) 15:14;32:21diligence (3) 20:10;50:11;63:23direct (2) 38:6;68:15directed (2) 45:12;79:5directing (1) 54:14direction (2) 67:11,12directors (1) 36:16

disagree (7) 11:19;57:19;60:25; 62:25;69:23;70:1; 74:21disagrees (1) 47:13discovery (73) 8:17;15:18;16:4,4, 7,14,21;17:7,11; 19:12,14,14,25; 20:13,16;21:9,12,18, 18,19,25;22:3,7;23:1, 7;24:4,10,13;25:6; 27:25;30:8,19,24; 31:13;32:12,18,18; 33:17;35:7,12,14,15; 36:4,8,15,16;38:1; 40:14,21;41:1,1; 46:10;47:15,20; 48:17;49:9;56:14,16; 57:9;60:21;69:16; 70:19;71:8;72:9,11, 15;73:12,21,23; 74:19;76:6,8,21discretion (1) 41:22discuss (3) 68:11,13;69:25discussed (1) 31:12discussing (1) 63:11discussion (1) 65:20dismiss (1) 57:1dispute (7) 17:15,22;21:4; 27:24,25;34:16;60:1distract (1) 73:12distraction (1) 73:10district (12) 26:13,17;28:20; 29:5,7;31:9;40:9; 47:3,8;74:9;76:11,22diverting (3) 20:25,25;21:1divide (1) 24:20Docket (7) 7:25;8:5;38:4; 46:1;78:12,13;79:10document (12) 7:18;9:10;10:1,5,7, 8;29:19;43:14;47:7; 54:2;56:20;66:12documented (1) 22:10documents (39) 14:14;16:16;18:12; 20:1;25:3;29:11;

30:18;31:1,14,17; 35:3,18;40:20,20,25; 41:9;43:3,20;44:21; 45:4,5,20;46:20,24; 47:5,9,12;49:10,21; 54:11;55:1;57:11; 59:11;60:1,3,8;61:7; 68:8;70:21dollar (1) 53:14dollars (17) 17:19,21;18:7; 23:2,9;24:15,18,19; 29:4,11,20;43:14; 60:22;62:6,8,13;68:6done (8) 21:8;23:13;29:6; 36:19;44:12;50:7; 53:18;60:22down (6) 30:9;36:2;41:22; 44:11;57:3;61:12drafting (1) 12:1draw (1) 30:7drop (1) 54:10due (3) 20:10;50:11;70:6During (1) 41:23

E

earlier (1) 69:2early (1) 46:3easily (1) 59:11east (1) 50:15easy (1) 36:1ECF (3) 7:18;8:5;79:10echo (1) 73:9effect (1) 38:6effective (1) 36:6effectively (2) 34:3;70:7efficiencies (1) 35:1efficient (1) 76:16effort (2) 37:19;58:18efforts (1) 16:4

either (7) 24:25;25:13,14; 37:23;38:6;74:8; 75:14element (1) 48:15eliminate (1) 22:8eliminating (1) 34:24Elise (1) 73:6ELLIS (2) 4:12;63:9else (12) 9:14;47:23;49:18; 53:17;54:10;63:4; 67:3,13;70:14;73:5; 75:7;77:4e-mail (4) 38:22;39:1;60:4,17e-mails (1) 59:25employees (4) 16:4,15;36:14; 62:17end (8) 6:14;26:2;30:19, 24,25;31:23;46:2; 75:18engaged (1) 20:10enjoin (2) 17:10;57:25enjoining (4) 30:6;38:6;56:17; 71:5enormous (2) 20:6;21:7enough (1) 60:9ensures (1) 69:11enter (1) 57:12entered (3) 11:7;47:18;64:20entire (1) 34:15entitled (4) 21:12;71:23,24; 72:18entitlement (2) 25:2;35:3entry (2) 45:8;64:8enumerated (1) 62:9equitable (1) 37:13ESQ (7) 4:7,8,9,17,25;5:7, 16


(4) debtors' - ESQ




establish (1) 37:24established (5) 19:23;23:8;42:14, 16,18establishing (1) 42:19estate (5) 17:15;36:5;37:2; 71:21;74:22estimate (4) 17:16,18;25:6;51:2estimation (2) 76:10,17estoppel (1) 21:25et (1) 7:12Even (9) 23:22;30:20;37:16; 43:12;47:18;58:3; 59:3,9;69:3evidence (38) 6:22;7:4,10;8:5,7, 9,13,16;9:9;11:9; 12:10,16,20,21,22; 13:4,7,12,15;14:4,8, 16,18,19;15:4;17:17; 19:18;23:8;29:21; 32:3;72:18;77:14; 78:10,20,21;79:11, 13,16evidentiary (1) 7:8exact (1) 17:21exactly (3) 33:6;40:16;52:9examine (1) 7:6examined (1) 15:12examiner's (1) 20:19example (6) 21:7;22:4;42:3; 44:7;50:7;57:8exclude (1) 52:1exercise (1) 30:8exercising (1) 22:17exhibit (7) 13:19;14:6;42:15, 17;44:6;79:13,16exhibits (15) 10:13;13:18,23,23; 14:7,7,9,10,15,15,17; 59:24;77:14;78:12, 21expand (2) 74:2,2

expect (2) 76:3;77:1expedited (7) 20:13,15;49:15; 50:3;53:4;73:11; 76:11expeditiously (1) 26:21expense (9) 27:7;35:14;36:3; 38:9,11,14;46:13; 49:12;72:19expenses (3) 73:16,19,22expensive (1) 53:15experience (1) 52:17expert (3) 6:17;21:4;52:3experts (4) 6:15;34:8,9;78:15explain (2) 52:4;66:14explained (1) 70:11exploded (1) 65:8expressions (1) 70:12extend (3) 17:10;35:6;37:4extended (3) 24:3;32:8,9extends (2) 35:16;36:7extensive (1) 20:11extent (12) 11:18,20;19:13; 42:17;45:14;47:24; 48:3,5;56:18;71:19, 21;77:13

F

face (5) 41:12,17,21;43:2,9facilitate (1) 44:21facilities (1) 54:4fact (7) 32:18;40:2;41:13; 42:7;43:6;56:15; 70:23factor (2) 70:11;71:13factors (6) 24:16;27:6;59:10; 69:1,2;72:14factual (1) 49:2

Fahy (2) 10:6;13:9fair (1) 12:21fairly (1) 24:10Fannie (1) 6:7far (3) 22:14;23:25;46:24far-reaching (1) 15:16fast (1) 48:14FDIC (2) 24:6;29:18Federal (5) 6:6;13:2,10;26:18, 24fee (2) 43:10;62:4feel (1) 73:11feels (1) 73:15fees (1) 71:18few (1) 66:7FHFA (44) 4:3;16:13,15; 17:10;21:9,11;22:14, 25;23:7,24;24:2,6; 25:5;29:18;30:11; 31:1;33:6,17,23; 35:19,22,23,24; 37:17;38:23;39:8; 40:4;48:18;50:19,20, 20;54:24;57:7,9; 63:11;64:2;68:19; 69:23;70:18;73:1; 74:16,17;75:22; 77:11FHFA's (5) 22:22;30:7;33:12; 34:25;40:18fides (1) 22:6Fifteenth (1) 4:14figure (3) 49:5;52:11;55:7file (6) 48:11;50:10;67:23; 70:20,24;73:16filed (9) 6:9,10;10:1,5,7,8; 19:8;66:3;72:1files (89) 6:16;18:6,9,18,18; 19:6;21:3;33:7;34:2, 11,15;36:2;40:6,19; 41:6,13,15;42:3,6;

43:9,21,25;44:8,20; 48:10,11;49:4,17; 50:13,13,21,22,25; 51:19;52:12,22;53:3, 4,8;54:16;55:7,10,19, 21,24;58:2,2,6,9,13, 15,19,24,25;59:1,3,5; 60:4;61:8,14,18,22; 62:9,18,20;63:14; 64:9,21;65:3,5;66:20, 22,24;67:25;68:4,6, 14,17,22,25;69:18; 70:2,13,16,16;71:20; 72:24;74:10;79:22filing (1) 46:22final (1) 63:18finally (2) 52:9;76:19Finance (3) 6:6;13:2,10Financial (3) 4:13,21;5:3find (4) 50:24;54:22;58:24; 59:1fine (3) 9:22;38:15;67:1finish (1) 21:16firm (1) 8:20FIRREA (1) 22:22first (8) 9:9;10:15;26:19; 28:14;33:5;37:23; 40:25;52:2five (1) 68:6fixed (1) 62:7flexibility (2) 43:7;44:5flexible (1) 31:7FLIMAN (2) 4:9;6:6Florida (1) 16:1focus (3) 26:9;45:20;78:7focused (1) 46:14Foerster (1) 62:19following (1) 9:9follows (1) 63:20former (2) 16:15;36:12

forth (6) 15:20;33:10;39:12; 41:5;42:24;47:6forty-five (3) 29:8,12,19forum (1) 69:25forward (7) 20:24;39:13,15; 45:13;56:19,19,19found (2) 16:19;37:9four (4) 23:11;32:19;51:19; 52:7fourteen (8) 50:24;51:5,9,20,21, 22;52:21;55:8framed (1) 19:9Frankel (1) 73:7fraud (2) 39:16,16Freddie (2) 5:11;6:7free (3) 22:25;24:13;32:12FREJKA (8) 73:6,7,24;74:21, 24;75:3,6,7frequency (1) 63:23Friday (2) 75:17,18FRIEDMAN (2) 4:2;6:5front (4) 41:10;48:2;65:17; 73:1front-loaded (1) 46:1fulfill (1) 48:4full (3) 20:23;38:24;46:1fully (2) 12:18;20:14fundamental (1) 21:20funds (1) 68:8funny (1) 29:25further (7) 6:15;14:19;24:5; 25:19;35:7;36:7; 47:16

G

gather (1) 45:19


(5) establish - gather




gauntlet (1) 30:9gave (1) 43:7general (7) 9:19;11:10;15:22; 21:15,17;22:9;27:22generic (1) 64:13generically (1) 64:12gets (1) 57:5given (5) 6:19;17:19;37:22; 56:15;70:7gives (3) 22:25;44:5;50:19GLENN (116) 4:8;6:3,4,4,23;7:2, 7,14,21,25;8:9,11; 9:17,19,23;10:19,20, 25;14:8,12;15:1,2,5, 7,9,10,25;16:2,8,18, 23,25;17:4,22;18:1,4, 10,16,21;19:2,4;20:2; 21:15;22:18;23:4,12, 15,18;24:20,24; 25:10,14,16,18,21,22, 24;26:1,6,11,15;27:4, 14,17,19,21;28:2,4, 10,13,16,19;29:15, 17,25;30:4,13,16,23; 31:5,7;32:15,21,23; 33:8,14,20,25;34:13; 35:9,19;36:13;37:7, 11,15,20;38:10,12, 16;45:20;47:13;53:5, 6;60:20;68:22,25; 70:18;75:25;76:1,4, 13,24;77:2;79:3,4,7Glenn's (1) 57:19globally (1) 34:14GMAC (1) 40:6GOEKE (1) 4:25goes (4) 33:8,9;46:3;54:25Good (3) 6:4;57:10;73:6governmental (1) 50:11governs (1) 12:7grant (1) 57:20granting (3) 21:23;60:16;71:1great (1) 22:4

greater (1) 52:20guarantees (1) 29:12guess (5) 31:16,20;37:19; 61:1;69:6guidance (3) 69:4,14,17guided (1) 6:18guidelines (2) 34:6;37:25

H

Haims (121) 8:2,3,12,15;9:8,13, 16,24,25;10:4,11,13, 16,18;11:13,15;12:4, 8,13;13:17,19,21,23; 14:1,4,10,13,19,22, 24;38:17,19,20;39:7; 46:15;48:22,25; 49:17,20,23,25;50:4, 9,18,23;51:2,5,7,10, 13,15,17,21;52:13, 15,24;53:1,9,11,17, 21,23,25;54:3,8;55:2, 5,12,14,16,25;56:3,7, 11,14;57:7,15,18,23; 58:7,12,16,21,24; 59:2,7,13,16,21;60:5, 11,14,19,25;61:4,16, 18,20,23;62:1,3,7,11, 14,16,22;63:2,6,7; 66:10;67:7,8;75:8,9, 11,15,19;77:20,21, 24;79:2half (1) 6:16handle (2) 10:20;18:17hands (1) 20:23happen (5) 20:18;21:10;22:15; 32:2;54:23happens (1) 20:17happy (3) 13:24;50:2;69:24hard (1) 50:18Hashanah (1) 75:13head (1) 66:5hear (7) 15:8;28:21,24; 38:19;63:5;67:21,23heard (10) 37:11;38:25;67:7,

13;70:12;73:5;75:8, 20,22;77:4hearing (11) 6:20;7:9;14:16; 16:10;20:12,16; 31:24;33:6;37:23; 56:11;79:11heavier (1) 46:8held (2) 22:18,19help (1) 32:24helpful (2) 47:2,3HERA (5) 22:21,24;23:4; 30:5,5hereby (9) 8:7;13:3,7,11,14; 14:17;24:3;79:12,15herein (1) 42:15hereof (1) 63:24Here's (2) 12:14;19:3herring (1) 46:24Hillsboro (1) 36:11Hillsborough (1) 15:23historical (4) 63:21;65:13;66:22; 67:9historically (1) 65:5history (2) 17:8;22:21hold (1) 31:25holding (2) 22:5;36:11Holdings (1) 15:24honestly (1) 66:8Honor (103) 6:4,8,18,23;7:7; 8:3,9,15,16,18;9:8, 19;10:20;11:15,20; 14:20,24;15:2,5,10; 17:22;18:6,25;21:16; 22:9;23:12,16;24:20, 24,25;25:10;27:19, 23;28:19;29:25; 30:16,17;32:15,25; 33:1,1,8;34:2,15; 35:2;37:7,22,22,24; 38:7,12,17;40:1,16; 41:7;47:12,25;48:16; 51:24;55:2;56:1;

57:18;58:17,24;63:6, 8,18;64:2,25;65:2,3, 15,19,25;66:5,8,14, 25;67:6,8,14;68:1,10, 20;69:20;71:17;72:1, 21,22;73:4,6;75:9,19; 76:1;77:5,6,13;78:11, 22,24;79:2,17,23Honor's (3) 6:13;21:23;77:8hope (3) 31:3,5;33:2hopefully (1) 34:24housed (1) 50:14Housing (3) 6:6;13:2,10Houston (1) 5:14hundreds (2) 57:25;58:2hypothetical (3) 24:23;29:2;36:1hypothetically (3) 45:16;57:10;68:5

I

idea (1) 33:20identifiable (1) 18:19identified (2) 24:25;71:2Identify (6) 7:11,18;52:21; 54:18;55:10;71:3identifying (1) 43:21ie (1) 52:6II (6) 31:10,12,14;57:13, 14;69:11immediately (1) 63:24impeded (2) 56:20,22important (6) 20:16;21:18;22:22; 32:6;72:9;73:13importantly (1) 55:18inadequate (1) 42:22Inc (3) 4:13,21;5:3include (1) 78:14includes (1) 71:7including (7)

7:10;19:20;22:3,7; 40:5;68:16;69:2indefinitely (1) 32:10indemnification (4) 21:25;71:12,18,25indicate (2) 7:12;71:11indicated (1) 72:11indirect (2) 38:6;68:15individually (1) 66:15information (9) 6:11;18:14,18,20; 27:13;56:1;71:9,14; 79:20infringing (2) 30:10,11in-house (1) 62:17injunction (21) 16:11;17:13;21:24; 22:2;24:2;32:7,10; 35:21,24,24;36:10, 10,18,21;37:13,17; 56:8,10,12,17;71:1input (2) 28:8,12insofar (1) 17:22instance (2) 28:14;40:25instead (1) 69:9intend (2) 71:9;75:23intended (1) 36:25intent (10) 11:6,9,18,19,20,22, 25;12:17,24;65:23interest (4) 26:23,23;27:2;31:6interested (1) 78:20interesting (2) 31:10;33:4interpret (2) 45:11,16interpretation (2) 23:20;47:2into (26) 8:7;9:8;10:23; 11:7;12:15;13:3,7,11, 15;14:17;17:20; 24:17;25:19,24;26:1; 44:4;45:8;46:2; 47:18;64:8,8,20; 71:13;79:10,13,15introduce (1) 7:10


(6) gauntlet - introduce




introducing (1) 6:21investigation (1) 20:19invite (1) 20:21involved (2) 16:3;22:14involves (2) 48:10,10involving (3) 64:1,15;66:2Iron (5) 53:8,12;54:1,19; 62:12ironically (1) 76:6irony (1) 76:5issue (61) 8:24;11:18,20; 12:18;16:6,10,20; 18:24,24;19:9,22,23; 23:25;24:1;25:1,5; 26:1,25,25;27:12,14, 24;28:5,6,6;29:4; 30:6;34:16;36:22; 38:5,9,11,13,14,14; 39:19,20,21,25;41:8; 45:14;46:11,15,21, 24;47:25;49:15,16, 18;59:17;63:14; 67:25;69:4,5;71:2,4; 72:20;73:21;74:16, 22;76:5issued (6) 26:7;28:18;30:21; 38:23;40:5,8issues (14) 15:11;16:4,13; 18:14;27:23,24;28:7, 14;29:8;34:20;40:24; 51:24;75:5;76:20issuing (2) 26:12;57:2

J

James (2) 78:16;79:15jam-packed (1) 46:4January (1) 32:1Jeffrey (2) 9:10;13:1job (1) 26:20John (3) 9:25;10:4;13:5Johns-Manville (2) 15:20;28:25Judge (51)

6:10;16:1;19:6; 21:8,12;22:18;23:21; 26:16,17,24;27:8; 29:6,6,7,7,9,13; 30:21;31:1,9,12,16, 17,20;32:17;34:18; 36:15;37:17;40:24; 44:7;45:4,11;46:19; 49:7,9;54:25;56:24; 57:2,5,10,17;59:14, 23;60:2;68:23;69:24; 71:15;73:2,19;74:18; 76:15judges (3) 26:17,18,24judgment (2) 36:22;71:23judgments (1) 23:19judicata (1) 22:1judicial (1) 37:23JUDSON (2) 4:17;63:9June (1) 78:18jurisdiction (1) 28:13

K

Kanchana (5) 6:5;7:14;8:6; 10:22;11:3KANGHANA (1) 4:7KASOWITZ (7) 4:2;6:5;8:20,25; 9:5;10:22;11:3Kenwood (1) 53:11kind (3) 37:3,25;57:12KIRKLAND (2) 4:12;63:9knows (1) 68:1Kramer (1) 73:7

L

labor (1) 43:21lacks (1) 42:23language (9) 9:2;11:15,21,22; 12:3,9;65:12;66:23; 70:3large (4) 35:11;43:3,8;52:6

last (9) 6:20;15:12;16:9; 33:5;41:7;61:1,4,4; 75:8lastly (1) 75:20late (1) 6:13later (2) 20:18;72:25Lauren (1) 67:17law (7) 11:21;12:7,9;17:3; 36:18;48:16;72:5lawsuit (1) 64:2lawsuits (7) 35:11;48:8,9; 64:15,18,19;66:2lawyer (1) 18:11lawyers (1) 62:20leads (1) 60:16least (2) 24:9;36:15leave (2) 33:20;70:4leaves (1) 31:19leg (1) 54:7legacy (1) 52:5legal (7) 15:15;25:2;35:3; 39:20;41:8;44:18; 71:18legislative (2) 17:8;22:21less (1) 36:3letter (1) 39:12LEUNG (41) 4:7;6:5;7:2,15;8:4, 7;10:20,21,22,22; 11:3,3;12:17;14:8; 18:16;25:24;26:1; 38:13;39:4,10,11,15, 19,25;40:13,16;41:3, 20;42:11,13;43:16; 44:4,15,17,25;47:1, 24;48:15,20,21;70:18level (2) 21:15;42:24Levin (1) 73:7liability (1) 71:19lifted (2)

35:23;48:3light (2) 35:11,13likely (1) 72:13limit (4) 16:21;19:21;22:3; 44:13limited (4) 24:10;43:14;59:18; 60:14limiting (1) 30:6limits (1) 52:18line (2) 30:7,14lines (1) 73:17Lipps (2) 9:10;13:1liquidation (2) 29:13,23list (5) 50:12,19,21;58:13, 16listed (1) 13:23listen (2) 49:1;66:10litigating (1) 22:24litigation (14) 9:7;22:6,7;26:22; 34:2,20;40:8,9; 41:12;54:5;64:1; 65:8,18;76:15litigations (2) 64:7;66:13little (3) 39:14;62:5;78:7LLC (2) 6:3;40:6LLP (4) 4:2,12,20;5:2loan (67) 6:16;18:6,18,18; 19:6;21:3;27:12; 34:2,4,5,15;36:2; 40:6,19;41:6,13,15; 42:3,5;43:9,21,25; 44:8,20;48:10,11,11; 49:17;50:10,13,13, 21,23,25;51:19; 52:12;54:15;55:7; 58:1,2,5,9,13,14,19, 24,25;59:1;61:7,14, 18,22;62:9;63:14; 64:9,21;65:3,5;66:20, 22,23;67:25;68:4,5; 73:16;74:10;79:22loans (8) 51:25;58:23;59:4,

8;64:1,15,15;66:3located (1) 55:21location (2) 52:21,22locations (2) 55:20,23long (3) 22:10;51:1,18longer (2) 59:5;70:15look (12) 11:22;19:5;31:4,6; 32:6;33:4;34:15; 37:16;48:7;60:15; 69:16;76:14looking (1) 58:13looks (1) 7:22lots (1) 50:4love (2) 25:21;54:6luck (1) 24:19Luzzano (1) 31:11Lynch (3) 31:13,16,17Lynch's (1) 31:9

M

Mac (2) 5:11;6:7Mae (1) 6:7main (1) 54:1major (1) 38:14making (1) 37:19man's (1) 19:18Manville (5) 16:3,10;22:4,5; 36:14many (10) 34:14,14;50:14; 51:4;52:22;54:19,20; 55:21,23;66:1Marc (2) 10:8;13:13margins (1) 17:16marked (1) 14:14marshal (1) 37:1Mary (2)


(7) introducing - Mary




10:6;13:9material (1) 42:17math (1) 18:6matter (8) 9:20;11:10;23:20; 25:1;38:5;54:24; 76:7;79:18matters (4) 23:10;26:19;37:21; 38:3maxim (1) 19:17maximum (1) 43:7may (20) 8:23;17:15;24:4; 31:25,25;32:8,19; 35:12;36:22;39:21; 40:3;42:15;46:2; 49:10;58:3;69:9; 70:15,21;73:18; 74:12Maybe (2) 41:20,20MAYER (2) 4:20;5:2MBIA (3) 50:7;52:7;67:10MCKOOL (1) 5:10mean (31) 6:25;7:19;16:14; 18:14,25;20:21; 23:24;24:15;26:19; 28:17;31:11,20,23; 32:16;33:15;40:11; 45:3,8;47:22;49:1,6, 13;52:16;54:8;57:16; 69:3,5;70:11;72:8; 73:18,18meaning (1) 12:11meant (1) 65:3meet (2) 34:8;42:23meets (1) 34:5merits (1) 22:6method (1) 47:11methodology (1) 34:10MICHAEL (1) 5:7microphone (2) 10:24;39:14might (2) 30:1;69:4million (11)

17:19;23:2,9; 24:18,18;29:3,11,20; 60:21;62:12;68:6millions (1) 43:15mind (4) 12:18;18:11;19:23; 77:7minimizing (1) 34:24minute (1) 26:10misstate (1) 8:19mistake (1) 70:23MOAK (1) 5:16modifying (1) 69:9moment (1) 63:10Monday (1) 75:13Mongelluzzo (13) 10:1,5;11:5;13:6; 33:1,9;41:14;51:10, 20,24;54:8;55:16; 59:2month (5) 49:4,11;53:3;62:6; 74:12monthly (1) 62:7months (11) 23:11;30:1;32:19; 49:5,21;53:16;54:22; 55:1;57:9;70:12; 73:14more (22) 17:2;18:16;20:22; 21:15,17;24:7;38:3; 42:7,8;44:6;49:4,7, 14;50:2;52:20;53:1; 55:18;59:11;68:23; 73:21;74:12;76:10morning (2) 20:11;21:2Morrison (1) 62:19Mortgage (3) 40:6;64:15;65:9MOSKOWITZ (26) 67:14,16,17,24; 68:10,19;69:19,22; 71:17;72:1,5,21; 73:4;77:5,11,13,18, 22;78:2,5,8,11,21,24; 79:17;80:1most (3) 43:18,21;73:9motion (17) 6:9,11;13:2,10;

19:8;30:20;38:24; 56:25;57:20;59:21; 67:19,21,23;77:16, 17;79:4,5Mountain (5) 53:8,12;54:1,19; 62:12move (4) 13:24;20:24;52:2; 77:14much (13) 17:3;18:25;33:6; 45:1,20;46:7,11,17; 49:14;52:10;67:5; 76:10;79:25multiple (3) 52:5;54:4;55:20must (2) 63:21,22mutually (1) 42:19

N

Naftalis (1) 73:7name (1) 33:2narrower (1) 39:22nature (3) 7:12;65:6,8necess (1) 53:18necessarily (2) 24:15;76:14necessary (4) 36:23;42:23;45:14; 48:3need (15) 11:9;19:6,7;32:8; 48:12,13;52:20;53:2, 7;58:22;70:5,9,21; 71:8,20needed (2) 70:4;76:19needs (1) 74:10negotiate (1) 61:13negotiated (2) 11:6;61:10negotiations (1) 12:1New (6) 4:5;5:5;12:6,6,9; 14:13next (14) 20:5,23;23:10; 29:11;46:3,6;48:13; 57:21;60:12,17,17; 75:12,18,18nine (6)

30:1;49:21;53:15; 54:22;55:1;70:12ninety (1) 44:10Ninth (2) 17:2,6non-Ally (6) 19:5;58:15;67:18; 68:10;71:11;77:8nondebtor (1) 33:18nondisclosure (1) 20:9none (2) 47:22;50:12normal (2) 26:3,5note (1) 38:18notice (2) 37:23;77:24noticed (2) 77:21,24November (4) 20:12,17;31:24,25number (19) 6:3;7:25;9:10;10:5, 7,8;34:16;35:11; 40:5;52:18;53:13; 65:10;66:6,9;67:25; 68:2;74:1;78:12; 79:10numbers (5) 8:5;50:24;61:18, 22;78:13NW (2) 4:14,22NY (2) 4:5;5:5

O

object (3) 9:17;11:4,10objecting (1) 47:7objection (5) 11:10;12:16;13:2, 10;14:12objections (3) 8:1;10:19;78:25objectives (1) 34:23obligated (1) 31:19obligation (3) 31:17;44:19;45:7obligations (3) 20:14;21:25;22:7observe (1) 27:22obtain (3) 34:22;41:9;54:15

obtained (2) 24:4;59:11obviously (2) 32:23;46:3October (4) 20:8;31:23;32:8; 48:19odd (2) 20:9;40:17off (3) 26:19;27:6;66:5offer (9) 7:4,10,12,14;9:8; 14:2,4;15:4;78:11offered (4) 12:22;14:6,7;65:22offering (3) 7:11;8:13;78:9office (1) 18:12officer (2) 34:4;36:14officers (3) 16:15;36:13,16often (2) 53:24;54:5old (1) 19:17one (36) 6:12;7:15,16;9:19; 11:23;13:24;20:10; 24:9;26:22;31:21; 32:11;33:5;37:10; 38:18,21;39:22; 41:19;46:9;51:24; 53:8;54:1;55:16; 56:21;59:10;60:10, 12;63:3;66:10;69:5; 70:3,17;71:1;74:13; 75:11;76:20;77:5ones (1) 65:6ongoing (1) 20:16only (19) 12:21;17:17;25:5; 29:3;33:24;34:17; 41:5;46:6;49:11; 50:5;54:11;59:18; 60:14;66:10,25; 68:22;69:24;71:14; 78:19open (1) 65:17opinion (1) 23:21opposite (1) 43:6order (30) 17:13,14;20:3; 24:3,5;30:6,22,23,24; 35:8,15;36:8,22; 37:3;38:5,23;39:23;


(8) material - order




40:14;43:3;45:3,6; 46:19;47:16;48:2; 56:23;57:2,11;68:13; 69:10;70:19ordered (6) 32:17;44:8;45:12, 15;68:23;74:8orders (1) 29:7ordinarily (1) 73:22ordinary (3) 26:21;61:20,22origination (3) 27:13;65:9;66:2others (1) 52:1Otherwise (1) 6:18ought (2) 7:5;8:13ourselves (1) 71:20out (18) 16:9;21:21;26:6; 27:9;33:13;36:23; 40:8;44:11,14,18; 46:10;48:15;49:5; 50:24;52:11;54:22; 55:7;72:23outlier (1) 32:17outset (1) 56:24outside (4) 22:23;36:10,18; 72:17outstanding (2) 40:7,11over (10) 17:19;20:5,23; 23:10;40:19;41:6; 44:9;46:2;57:16;62:4overseeing (1) 19:25own (3) 12:18;73:22;74:9owns (2) 46:23,23

P

paid (1) 25:8papers (7) 15:20;22:21;41:3, 6;49:20;59:21;71:12paragraph (3) 41:13;48:2;63:18paragraphs (2) 11:4,11paralegals (1) 62:20

parameters (1) 44:11paramount (1) 70:7parochial (1) 26:22parol (5) 11:9;12:10,19,20, 22part (7) 6:22;7:15,23;40:9, 20;41:15;59:23particular (4) 27:2;29:17;34:13; 67:2particularly (3) 36:2;49:2;65:23parties (13) 6:9;11:6,23;12:25; 20:9;32:12;38:6; 42:5;43:10;56:16; 61:12;72:11;74:1partner (1) 7:2partner's (1) 7:11parts (1) 56:25party (31) 8:17,23;11:8; 15:18;16:22;17:6; 18:8;19:12,15;21:18; 24:4,13;31:14;37:14, 25;40:11,21,23;41:1, 1;59:12;62:10,11; 69:11;71:7;72:9,16; 73:21,22;76:6;79:4Paskay's (1) 16:1pass (3) 23:1;24:13;62:10pass- (1) 43:18passed (1) 74:4passed-along (1) 62:21pass-through (3) 43:17;62:13;74:11past (2) 64:1;75:15PAUL (1) 5:16Pause (1) 55:15pay (10) 26:7;27:25;43:12; 45:7,17;49:18;54:9; 68:15,18;69:18paying (1) 70:14pays (4) 21:1;28:1,3;49:15

pending (11) 16:11;24:7,8; 35:12;38:24;48:8,9; 56:25;73:1;74:20; 77:16people (3) 21:1;25:23;58:8perfectly (1) 18:6performance (1) 42:14perhaps (2) 70:9;74:11period (4) 32:9,20;53:5;55:10permit (1) 23:6permitted (2) 16:7;25:5person (2) 34:4;69:12personal (1) 25:18personally (1) 18:19personnel (1) 43:20petitions (1) 66:4ph (1) 57:13Philip (2) 10:8;13:13place (2) 32:13;73:25plain (2) 41:25;43:5plaintiff (2) 29:18;72:17plaintiffs (1) 31:18play (1) 34:20pleadings (1) 79:8Please (1) 6:2plenty (1) 21:21plus (1) 24:7PM (1) 80:2podium (1) 38:13point (11) 6:16;8:8;17:3; 31:2;33:1;38:21; 45:2,23;50:16;61:5; 66:1pointed (2) 16:9;44:18points (1)

74:25police (1) 22:17policy (1) 27:23pondered (1) 8:23pondering (1) 17:9portions (1) 11:4posited (1) 21:16position (16) 19:2,16;25:17; 40:18;41:4,5;47:4,6; 57:19;60:23,25;61:6, 9;70:1;73:11;79:7possession (2) 40:21;48:12possible (3) 34:17;58:7;59:4post-petition (2) 47:18,19posts (1) 25:6posture (2) 16:6;40:17pot (1) 66:18potential (5) 21:24;27:6;35:1; 47:14,15potentially (3) 35:13;43:15;74:15power (14) 16:20;21:14;22:9, 10,17;23:2,16;29:23, 24;36:6;45:11;47:15; 48:14;60:24powerless (1) 57:20powers (2) 37:4,5practical (4) 27:23;28:7;37:21; 38:4practice (4) 30:21;63:21;65:13; 66:22pre-bankruptcy (1) 50:9precedent (1) 67:9precisely (1) 25:8preclusion (1) 71:3prejudiced (1) 32:5premarked (1) 14:7prepared (7)

6:15;68:15,18; 69:17,19;70:19;76:1preparing (1) 76:25present (3) 16:6,15;36:11presented (3) 6:20;14:6;45:10presiding (1) 25:1pretty (2) 11:21;44:23prevents (2) 33:16;47:8price (1) 54:13pricing (1) 35:1Primarily (1) 52:24principal (1) 45:23prior (2) 63:24;64:8priority (1) 63:23privilege (3) 18:13;19:22,23privileged (1) 18:17probably (6) 17:18;18:16;37:21; 54:9,18;73:25problem (2) 24:25;38:5problems (1) 60:9procedural (2) 40:17;77:5proceed (5) 6:12,19;26:20; 31:2;40:15proceeding (7) 6:10;16:12;17:13; 35:25;36:20;38:8; 76:11proceedings (4) 6:18;20:7;70:20; 80:2process (14) 8:22;34:1,19; 36:22;52:3;70:6; 71:10;72:13;76:4,10, 17,17,21,22Processes (1) 42:21processing (2) 51:3;52:8produce (23) 18:12;20:14,15; 29:8,11,19;31:13,17; 42:3;43:25;44:8,9; 45:5,6;49:7,10,17,19;


(9) ordered - produce




55:1;57:11;66:21; 70:13,15produced (7) 21:5,6;29:7;41:19; 45:21,21;62:21producing (8) 29:10;30:18;40:20; 61:14,18;68:5,17; 79:21production (11) 16:16;28:6;35:17; 40:23;43:14;50:6; 56:21;64:9;67:11; 69:10;70:21productions (2) 11:17;50:5Professor (4) 78:15,15;79:12,15proffer (1) 8:14proffered (2) 7:6;9:20progression (1) 33:4prohibitive (1) 38:3proof (1) 72:2property (3) 17:15;36:4;37:1proposition (3) 19:18;21:22;24:12prosecute (2) 70:22;72:18prosecuting (1) 31:19prosecution (1) 71:5protect (1) 37:1protecting (1) 71:21protection (4) 17:10;18:13;35:7, 16prove (2) 34:23;38:1provide (12) 11:17;41:15,24; 42:16;44:20;49:3,5; 50:2;68:14;69:4; 70:14;79:21provided (3) 63:22,24;68:9provides (6) 17:9;19:9;42:21; 43:2,11;69:14providing (3) 53:4;69:17;74:11provision (9) 22:16;56:8,12; 57:24;59:17;61:4,11; 62:23;63:15

provisions (4) 36:23,25;42:1;43:4public (1) 19:17pull (5) 39:14;50:24;52:15; 62:17;64:21pulling (1) 62:9pulls (1) 50:10punished (1) 18:4pure (2) 59:6,7purport (1) 11:5purpose (1) 21:20purposes (3) 12:11;14:16;79:11pursuant (2) 6:8;64:10put (10) 7:19;17:1;20:25; 44:22;48:12;50:19; 57:8;61:23;62:19; 75:1putting (2) 34:1;57:2

Q

qualified (1) 18:16quantified (2) 25:7;53:14quantify (1) 76:19quashing (1) 69:9quibbling (1) 17:20quick (3) 38:18,21;75:9quicker (2) 54:12,13quickly (4) 44:2;49:16,19; 52:20quite (3) 43:6;61:2;66:7quote (5) 53:3,12,15;54:15; 55:17quotes (1) 55:9

R

raise (3) 48:23;70:17;74:22raised (4)

16:10;46:21,22; 77:6raises (1) 55:16ramifications (2) 15:16;22:14ranges (1) 17:19rather (2) 72:24;78:14reach (2) 23:12;72:7reached (1) 74:25reaching (1) 22:14read (6) 44:4,23;57:13; 60:7;63:15;78:6reading (2) 43:5,6reads (1) 63:19ready (2) 68:6,7really (8) 17:1,3;24:2;26:19; 30:3;49:13;53:20; 76:18Realty (3) 22:19;23:21,23reason (2) 44:19;47:5reasonable (6) 18:5;34:18,21; 44:11;69:19;70:16reasonably (3) 42:22,25;69:12reasons (3) 15:19;22:20;35:20rebuttal (1) 15:3received (8) 8:7;13:3,7,11,15; 14:17;79:12,15recites (1) 9:1recollection (1) 52:19reconciliation (1) 52:8record (13) 7:12,23;32:3,25; 34:15;40:1;41:11; 44:5;59:2;62:8; 63:10;65:2,13records (3) 41:15;59:3;62:9red (1) 46:24reduced (1) 18:3reduction (1)

70:2reexamine (1) 34:6refer (1) 31:8reference (2) 23:24;37:18references (1) 42:14refers (1) 42:15regarding (3) 13:6,14;73:10regardless (1) 39:13REGINALD (1) 4:25regulate (11) 16:21;19:12,13,25; 21:17;23:3;33:16; 35:15;47:20;69:15; 76:9regulating (1) 19:24regulatory (1) 30:8related (1) 25:23relevant (2) 41:8;65:25relied (1) 19:19relief (3) 13:3,11;37:13relieved (1) 31:16rely (1) 15:24remains (1) 20:18Remediation (1) 42:20remembered (1) 75:12reorganization (3) 28:23;33:14;38:2reorganize (1) 22:9repeatedly (1) 19:19reply (2) 7:16;56:5reporting (1) 22:24represent (1) 67:17represented (1) 30:1request (25) 6:16;28:4;33:11, 12;35:17;41:16,22; 42:5;43:8;44:3;45:4, 13;46:11,19,20;

47:11;49:14;54:17; 63:14;64:9,20;65:5, 14;66:19;72:15requested (3) 35:13;43:25;79:20requesting (1) 70:8requests (9) 41:12;42:4;43:3; 47:7;54:6;66:12,23; 74:2,10require (4) 17:12,13;36:4,9required (5) 20:15,24;42:2; 44:20;70:13requires (1) 46:18requiring (1) 29:10res (1) 22:1ResCap (27) 7:6;11:24,24; 41:21,23,25;42:7,15, 18,22,25;43:10,20, 25;44:2,20;45:5; 46:18,20;48:7,11; 66:15,20,20;67:9,10; 68:14ResCap's (2) 42:18;44:19reserve (2) 12:23;59:22reserving (1) 12:16Residential (1) 6:3resolve (2) 25:4;76:19resolved (3) 12:18;25:2;27:12resources (1) 20:25respect (14) 12:17,22,24;17:17; 21:23;23:24;26:16; 32:7;33:17;34:13; 57:17;67:25;69:22; 79:21respectfully (1) 11:19respectively (1) 78:16respond (1) 20:20responded (1) 14:23responding (1) 42:4response (3) 39:12;45:7;56:4responsible (3)


(10) produced - responsible




21:13;69:23;74:15responsive (1) 35:13rest (6) 8:8,11;14:21,22, 23;15:6restrict (3) 22:8;23:3,7restricted (1) 22:23result (2) 29:22;45:6retention (1) 54:4retrieval (1) 43:22retrieve (2) 18:8;43:19retrieving (3) 53:13;54:15;55:10re-underwritten (1) 34:3reveals (1) 65:20review (2) 64:22;68:18reviewing (2) 62:20;68:17reviews (2) 50:11,11RFC (1) 40:6right (44) 6:2;7:3;8:1,4,8,12; 9:24;10:10;12:14; 14:5,14,21,25;15:3,6, 8;18:11;19:18;23:19; 26:14;27:18;34:12; 36:13;39:3,9,19; 50:1;53:16;56:5; 58:20;59:15,22; 60:11;63:4;65:12; 66:6;67:13;68:3; 69:21;77:4,10;78:8; 79:9,24rises (1) 72:15risk (1) 71:2RMBS (1) 31:24road (1) 57:3room (1) 70:4Rosh (1) 75:13rough (1) 54:19roughly (2) 19:21;34:12rule (19) 7:24;15:22;26:10;

28:13,16,17;37:12; 40:2,3,15;47:25; 54:24;59:9,10;69:3,6, 7,8;76:5ruled (3) 47:12;48:16;57:9rules (2) 76:6,8run (4) 50:23;51:8,22;55:8runs (1) 32:7

S

sales (1) 50:12same (10) 50:5;58:1;63:22; 66:18;71:12;72:25; 74:25;76:21,21; 77:25sample (1) 34:22sampling (3) 6:14;21:4;34:10saying (12) 9:4;21:14;30:10; 35:22,23;37:22; 45:16;56:8,16;57:18; 62:23;66:12schedule (6) 34:18,18;60:23; 72:23;75:11;77:9scheduled (6) 20:8,12,17;23:10; 31:24;77:18Scheipe (4) 10:8;11:5,23;13:13scope (5) 24:14;27:7;28:5; 46:11;71:6screened (1) 18:13searches (2) 51:19;52:6seated (1) 6:2Second (12) 19:20;22:19;27:11; 33:15;37:19;38:22; 39:6,17,22;52:2; 56:18;58:4Secondly (1) 59:18Section (11) 21:24;22:2;35:6; 41:22;42:8,10,20,24; 48:17;63:18,19sections (1) 45:18securities (1) 71:24

securitization (3) 58:23;59:4,5securitizations (3) 34:14,16;58:20seek (1) 34:8seeking (4) 6:11;71:7;72:9,11seem (5) 24:16;27:5;36:9; 49:13;74:18seemed (1) 17:11seems (1) 72:14seized (1) 41:7selected (2) 6:17;19:11Senior (1) 36:13sense (1) 42:6sensitive (1) 74:3sentence (1) 63:19separate (4) 6:10;65:4;77:16,18separately (3) 25:2,19;67:20September (1) 38:25series (1) 23:9seriously (1) 32:5served (2) 9:6;69:11service (9) 42:24;47:17;49:15; 50:3;53:4;61:7,10, 11;65:13servicers (2) 40:5;54:11services (32) 11:7;13:7,14;41:9, 11,15,24;42:8;43:12, 14,23;44:1,13,17,18; 45:9;46:18;47:11; 48:1,4;61:5;62:8,15; 63:10,22,23;64:8,20; 65:2,24;74:5,15servicing (2) 65:9;66:3set (6) 15:19;39:12;41:5; 42:24;44:14;47:6sets (1) 43:1setting (2) 44:11;67:20settle (1)

44:10settlement (1) 31:24several (4) 40:4;45:25;49:8; 50:7shall (1) 42:18share (1) 69:19shared (23) 11:7;13:6,14;41:9; 43:23;44:1,12,17; 45:9;46:17;47:11,17; 48:1,4;61:5,7;62:15; 64:8,20;65:23;69:23; 74:4,14sharing (1) 68:11sheet (1) 52:19showing (2) 49:2,6shows (1) 44:20shut (1) 46:10side (7) 11:23,25;45:1; 46:7,9,10,17sidetrack (1) 18:25signed (1) 20:9similar (3) 37:24;48:8,9simply (1) 8:25simultaneously (2) 51:8,23sit (2) 10:25;61:12sitting (1) 75:12situation (3) 15:14;33:5;76:18six (2) 20:4;57:9sixty (12) 20:3,4,5,23;46:6; 48:13;53:5,8;54:16, 16;57:11;79:22sixty-day (1) 55:10size (1) 34:22skepticism (1) 70:12skill (1) 43:1skills (1) 42:23Sky (1)

72:5slaughtered (1) 33:2slew (1) 32:1slightly (1) 37:6slip (1) 56:21small (5) 61:18,21;65:5,7,10SMITH (1) 5:10solely (1) 6:14solution (2) 24:24;37:21solve (1) 38:4somebody (2) 49:17;58:5somehow (1) 33:12some-odd (1) 60:7someone (2) 54:13;70:14sometimes (1) 78:7soon (5) 20:2,18;21:11; 25:7;68:24sooner (1) 72:24sorry (9) 9:12,16;10:12; 38:10,20;56:11; 77:23;78:1,2sort (2) 32:1;65:14sorted (1) 59:3sought (2) 23:7;37:17source (4) 19:10;23:5;28:11; 47:15speak (4) 10:23;11:6;41:20; 63:2SPEAKER (1) 79:23speaking (1) 40:2specific (7) 11:22;24:6;26:22; 58:19;61:11;69:17; 79:20specifically (9) 7:11;26:10;28:18; 35:5;37:4;59:21; 60:2;62:1;65:17specified (1)


(11) responsive - specified




69:10specifying (1) 69:7speculating (1) 58:10speculation (2) 59:6,7spill (1) 46:2spoke (1) 33:5staffing (5) 42:8,21,22,23;43:1staggering (1) 34:17stand (1) 21:21standalone (1) 50:6standard (2) 18:22;63:22standards (1) 42:14standpoint (1) 27:1start (6) 8:13,15;19:17; 21:15;24:12;30:5starting (1) 23:20starts (1) 38:21state (2) 26:17;72:5stated (2) 8:18;47:10statement (22) 41:11,23,25;42:1,9, 13;43:5;44:1,18; 63:11,13,17,19,20; 64:10;65:3,16,19,21, 24;66:23;67:2statements (3) 12:17;43:24;44:13states (2) 43:17;50:15statute (4) 9:3;19:21;33:16; 36:21statutory (1) 23:20stay (15) 8:17;13:3,11; 15:17;31:22;32:13; 35:23;36:7;37:18; 38:24;39:22;47:6,8, 24;48:3stayed (2) 38:22;39:23staying (1) 56:24stays (1) 39:17

still (3) 39:13,15;47:19stipulated (1) 24:10stipulation (1) 24:9stop (3) 33:23;44:22;58:4stored (2) 54:11;59:3story (1) 17:24straddles (1) 30:14Street (3) 4:14,22;5:12stricken (1) 11:11string (1) 22:10stronger (2) 45:1;46:17structure (2) 43:10;62:4stuff (3) 29:5;46:3,23subject (9) 9:20;11:10;27:14; 30:23,24;36:7;68:17; 72:25;76:8submission (9) 13:6,14;46:16; 68:1;75:12;77:7; 78:12,17;79:19submissions (2) 77:9;78:19submit (1) 56:23submitted (7) 7:15;10:11;13:21; 41:3;77:15;78:13,22subpoena (19) 16:14,16;26:3,3,5, 6,13;28:18;29:8,21; 32:5;33:19;35:17; 40:3,7;69:4,5,10;76:5subpoenaed (1) 69:12subpoenas (6) 8:22,23;9:6;40:2,5; 57:25subscribe (1) 36:17subsection (1) 69:16subsections (1) 69:6substance (3) 9:5;24:3;35:10substantial (1) 50:3substantially (1) 36:3

substantiate (1) 70:24sued (1) 66:15suffer (1) 71:19suggested (1) 73:17suggesting (2) 58:5;74:1Suisse (1) 67:17Suisse's (2) 79:13,16Suite (1) 5:13supplement (1) 7:16supplemental (6) 8:6;13:5;15:13; 33:9;41:14;77:9support (9) 13:1,6,9,13;42:2; 43:6;65:18;73:11; 78:22supports (1) 44:19supposed (2) 12:24;21:5Supreme (1) 19:19Sure (9) 10:18;11:1;34:10; 48:25;51:17;54:9; 59:5,7;64:6surprised (1) 75:24suspect (1) 57:15system (2) 52:4;73:20systems (2) 52:5,5

T

talk (5) 25:21;51:10;54:9; 69:24;72:8talked (3) 15:12,21;69:1talking (5) 27:22;52:23;58:15, 19;75:18talks (1) 26:12tank (1) 60:22tapes (1) 27:12task (2) 46:9;62:20teed (1)

60:1TELEPHONICALLY (1) 5:16telling (4) 21:8,11,13;40:10ten (4) 29:3,11,20;60:21term (2) 8:22;41:23terms (7) 6:18;27:22;40:2; 41:24;43:21;47:7; 69:13testified (1) 11:25testimony (2) 12:24;65:22therefore (3) 12:19;40:14;45:9There'll (1) 46:3thereto (1) 78:13thinking (1) 17:12third (18) 8:17,22;15:18; 16:22;17:6;18:8; 19:12,15;21:18;24:4, 13;37:14;38:6;41:1; 62:10,11;63:19; 73:21thirteen (2) 49:4,5thirty (3) 60:6,7;62:19though (5) 23:22;39:4;43:12; 47:18;68:4thought (4) 49:2;75:17;77:22; 78:2Thousands (3) 24:8;42:5;58:2threaten (1) 32:5three (5) 23:10;32:19;52:7; 57:3;62:12throwing (1) 30:9Thursday (1) 75:16thus (2) 65:22,24ticked (1) 27:6till (2) 52:9;77:17timeframe (2) 42:4;70:17time-intensive (1) 46:4

timeline (1) 44:10timelines (4) 42:15,16,18,19times (2) 18:7;45:25timetable (2) 44:14;68:14timing (9) 24:14;27:7;28:6; 46:12;70:11;72:19; 73:1,10;74:24title (2) 36:24,25today (10) 6:19;21:5;30:24; 35:2;38:23;46:16; 67:22;70:1;71:8; 77:21together (1) 7:19told (1) 53:2top (1) 66:5TORRES (2) 4:2;6:5tough (1) 24:19towards (1) 42:19track (2) 65:12;66:22training (1) 42:23tranche (1) 57:3transcript (2) 11:2;28:24transmittal (2) 6:23,25Travis (1) 5:12trial (1) 57:3tried (1) 40:25trigger (1) 45:6trouble (1) 74:16truncated (1) 76:11trusts (1) 58:23try (1) 21:16trying (3) 18:4;34:21,21Tuesday (1) 75:13turn (1) 41:22


(12) specifying - turn




turnaround (1) 42:4twenty (6) 20:8;23:2,9;24:18, 18;62:20twenty-five (1) 18:7twenty-seven (3) 48:7,9;60:19twists (1) 31:21two (21) 7:14;8:2,4;24:21; 30:16;33:5,10;49:10; 51:24;52:11,24;53:2, 8;54:17;55:9,16; 74:1;75:9;78:15,21; 79:9TX (1) 5:14type (1) 38:4types (2) 37:20;64:17

U

UBS (5) 39:6,7,13;57:1,4ultimate (1) 71:19ultimately (1) 32:24unambiguous (2) 12:10,19unclear (1) 62:5uncontroverted (3) 23:8;29:21;32:2Under (28) 12:6,9;16:23;23:4, 23;28:15,16;35:6; 36:20,25;41:24; 42:13;45:5,17;46:16; 47:19;49:11;59:9; 61:7;62:15;69:3,10; 74:4,7,14;76:5,7; 79:18undercut (2) 41:4;43:5underpinning (1) 21:22understood (1) 39:6undertake (1) 34:19underway (1) 20:13underwriter (6) 58:1;67:18;68:10; 74:17;77:8;78:17underwriters (4) 19:5;58:15;71:11;

75:20underwriters' (1) 71:18underwriting (2) 34:5;64:15undoubtedly (1) 70:15unforeseen (1) 43:8unfortunately (1) 37:8UNIDENTIFIED (1) 79:23unique (3) 15:14,17;22:15unless (2) 55:19,20unpersuasive (1) 49:12unreasonable (1) 28:5unsupportable (1) 19:16up (7) 26:2;27:11;33:6; 48:24;50:25;60:1; 67:15update (1) 6:12updated (1) 42:16upon (3) 19:19;41:7,16use (5) 8:21;35:25;36:4; 71:9,13used (1) 22:3using (1) 36:7Usually (2) 73:20,20utilized (1) 36:20

V

value (1) 23:18various (2) 40:19;65:23vendor (4) 18:9;43:19;49:11; 54:20vendors (14) 34:25,25;49:3,25; 50:1;52:13,16,17,23; 53:2;54:11,15,16; 55:9vendors' (1) 68:16vendor's (1) 52:15

versus (3) 30:9;43:15;57:3view (6) 23:3,6;25:18; 47:14;48:6;63:13viewpoint (1) 30:2

W

wait (4) 32:19;33:15;70:8; 77:17waive (3) 70:19;76:1,25WANGKEO (3) 4:7;7:15;8:6wants (3) 68:22;73:9;74:3WARE (1) 5:7warehouses (1) 50:14Washington (2) 4:15,23way (11) 14:2;15:22;18:5; 27:9;32:17;37:10; 40:17;52:3;57:8; 75:2;76:8Wednesday (1) 75:16week (7) 45:25;55:4,18; 75:13,17,18,18weeks (3) 52:7,11;54:17weighing (1) 30:8west (1) 50:15What's (8) 28:11;44:6;46:11, 11,12,12,13;60:16whenever (1) 52:6Whereupon (1) 80:2whole (2) 23:9;31:25who's (3) 29:9;53:10;72:9willing (4) 68:7,11,12;72:22Winnick (9) 31:9,10,12,12,12, 13,21;57:13,14wish (6) 7:9;15:1,4;67:13; 75:7;77:4wishes (2) 70:20;71:7withdrawn (1)

23:24withdrew (1) 37:17within (9) 29:8,19;34:18; 54:16;55:4,10,18; 60:22;79:21without (4) 16:12;38:7;49:6,12withstanding (1) 47:17witnesses (1) 65:23Woehr (3) 10:6;11:5;13:9word (1) 75:8wording (1) 17:8words (6) 35:10;36:21;42:1; 55:6;64:14;65:17work (32) 20:3;21:7;22:22, 23;34:21,22;41:11, 23,25;42:1,13,18,25; 43:5,24;44:2,13,18; 63:11,13,17,19,21; 64:12;65:3,16,20,21, 24;66:23;67:2;72:23working (2) 72:23;79:19works (1) 52:3worry (2) 26:20,21worthy (1) 34:5written (3) 30:19,24;56:4wrong (2) 23:19;53:16

Y

year (9) 19:17;30:18,19,25; 31:23;32:18;46:2,3; 49:10years (5) 40:4;49:5,8;50:7; 57:3yesterday (1) 39:12York (5) 4:5;5:5;12:6,7,9

1

1 (7) 9:13,14;13:23; 14:7,15,15,171,500 (4)

21:3,5;49:4,1110019 (2) 4:5;5:51023 (2) 9:10,111023-2 (1) 10:1104,000 (1) 41:19105 (17) 16:12,12;17:9; 19:9;21:24;22:2; 32:7;35:6;36:7,9,20; 47:14;48:17;56:9; 69:15;71:1,4105,000 (2) 33:7;48:10105a (1) 36:2111 (13) 19:25;20:7,24; 21:13,19,20;26:20; 27:2;32:3,6;35:16; 37:2;66:412-12020 (1) 6:31293 (2) 78:12,181293-1 (1) 78:131293-8 (4) 78:16,23;79:10,131293-9 (4) 78:16,23;79:10,161295-1 (1) 10:71295-2 (1) 10:51296 (2) 7:25;8:51299 (1) 10:813 (1) 27:11633 (1) 4:41675 (1) 5:41900 (1) 24:61999 (1) 4:22

2

2,500 (15) 6:16;18:6;33:24; 36:2;41:18;46:7; 59:18,20;60:15,16; 68:2,22,25;69:24; 70:16200,000 (1) 48:11


(13) turnaround - 200,000




20005 (1) 4:1520006 (1) 4:232010 (1) 40:42012 (4) 10:2,6,7,923rd (1) 20:825th (1) 38:2528 (1) 41:1328th (3) 10:6,7,9

3

3:51 (1) 80:231 (1) 32:831st (1) 48:1933 (1) 72:334 (1) 59:10350 (1) 19:17362 (2) 16:23;17:1362a (8) 8:22;9:1,6;17:6,8, 11;24:3;35:17

4

4 (1) 57:342 (1) 41:1943,000 (26) 19:6;33:24;34:11; 41:19;43:25;44:8; 46:7;48:10;49:17; 50:21,23;51:19;53:7; 54:15;58:14;59:22; 60:17;68:4,5,14,23, 24;69:18;70:16; 74:10;79:2245 (9) 26:10;28:16,17; 40:2,3,15;59:9;69:3,645b3Cii (1) 69:745c3B (1) 69:9

5

5,000 (3)

41:18;59:19;68:250,000 (5) 43:14;62:6,8,16; 74:12541 (1) 37:15th (4) 20:12,17;31:24,25

6

600 (1) 5:12655 (1) 4:146b (1) 41:226th (1) 78:18

7

7 (3) 27:1;29:13,227000 (2) 5:13;76:67001 (2) 36:20;37:1277002 (1) 5:147a (2) 42:24;63:187a5 (2) 42:8,117b1 (1) 42:207th (1) 10:2

8

8 (5) 13:24;14:7,15,15, 17808 (2) 7:25;8:5

9

9 (1) 78:139014 (1) 76:8


(14) 20005 - 9014


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1 UNITED STATES DISTRICT COURT1 SOUTHERN DISTRICT OF NEW YORK2 ------------------------------x23 RESIDENTIAL CAPITAL, LLC, et3 al.,,44 Plaintiffs,55 v. 12 CV 5116(DLC)66 FEDERAL HOUSING FINANCE7 AGENCY,78 Defendant.89 ------------------------------x9 New York, N.Y.

10 July 17, 201210 3:30 p.m.1111 Before:1212 HON. DENISE L. COTE,1313 District Judge1414 APPEARANCES1515 MORRISON & FOERSTER, LLP16 Attorneys for Plaintiff ResCap16 BY: JAMIE LEVITT17 JONATHAN C. ROTHBERG1818 KASOWITZ BENSON TORRES & FRIEDMAN, LLP19 Attorneys for Defendant FHFA19 BY: ANDREW GLENN20 KANCHANA W. LEUNG2121 MAYER BROWN, LLP22 Attorneys for Ally Financial, Inc. and GMAC22 BY: REGINALD GOEKE23 MICHAEL WARE2425


12-12020-mg Doc 1920-6 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit F Pg 1 of 28

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1 Appearances (Cont'd)22 CARPENTER LIPPS & LELAND LLP3 KIRKLAND & ELLIS, LLP3 Attorneys for Ally Securities, LLC4 BY: JEFFREY A. LIPPS4 JUDSON D. BROWN55 SULLIVAN & CROMWELL, LLP6 Attorneys for JP Morgan Chase & Co.6 BY: PENNY SHANE7 SHARON NELLES78 CRAVATH, SWAINE & MOORE, LLP8 Attorneys for Credit Suisse Securities (USA) LLC9 BY: ANDREW BOSSE9

10 SKADDEN ARPS SLATE MEAGHER & FLOM, LLP10 Attorneys for UBS Americas, Inc.11 BY: JOSEPH SACCA11 ALEXANDER C. DRYLEWSKI1212 SULLIVAN & CROMWELL, LLP13 Attorneys for Goldman Sachs & Co.13 BY: W. RUDOLPH KLEYSTEUBER, IV141516171819202122232425



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1 (In open court; case called)2 THE DEPUTY CLERK: Residential Capital, LLC, et al.,3 v. Federal Housing Finance Agency.4 For ResCap.5 MS. LEVITT: Your Honor, Jamie Levitt form Morrison &6 Foerster on behalf of the plaintiff debtors.7 THE COURT: Are you accompanied by someone?8 MS. LEVITT: I am. John Rothberg also from Morrison &9 Foerster.

10 THE COURT: For FHFA?11 MR. GLENN: Good afternoon, your Honor. Andrew Glenn,12 Kawowitz Benson Torres & Friedman. I am joined by Kanchana13 Leung.14 THE COURT: For Ally Financial and related entities?15 MR. WARE: Good afternoon, your Honor. Reginald Goeke16 and Michael Ware here for Ally Financial, Inc.17 THE COURT: For Ally Securities?18 MR. LIPPS: Jeff Lipps, Carpenter Lipps & Leland,19 together with Judson Brown of Kirkland & Ellis.20 THE COURT: Thank you.21 Is there anyone from JP Morgan Chase?22 MS. SHANE: Yes, your Honor. Forgive us for sitting23 in the back Penny Shane and Sharon Nelles from Sullivan &24 Cromwell.25 THE COURT: Credit Suisse?



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1 MR. BOSSE: Andrew Bosse from Cravath Swaine & Moore2 representing Credit Suisse.3 THE COURT: UBS?4 MR. SACCA: Joseph Sacca from Skadden Arps for UBS,5 and with me is Alexander Drylewski.6 THE COURT: For Goldman Sachs?7 MR. KLEYSTEUBER: Good afternoon, your Honor. Rudolph8 Kleystuber of Sullivan Cromwell.9 THE COURT: Does anyone else wish to place their

10 appearance on the record?11 Thank you.12 I am going to ask counsel please if you speak this13 afternoon to identify yourself for the record by name first so14 that the record is clear.15 Let me describe for the record what papers I have16 reviewed in connection with today's proceeding. I have a17 notice of debtors' motion to extend the automatic stay or in18 the alternative for injunctive relief. I think that was19 initially dated May 25th. I have a declaration from Mr. Lipps20 that was entered on the record July 6th. I have the FHFA21 memorandum of law in opposition to the motion to extend the22 automatic stay. I believe that is dated June 28th. I have a23 reply from the debtors of July 6th and I have two letters. I24 have a letter from Morrison & Foerster of July 13th and a25 letter from Kawowitz Benson of July 17th.



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1 MS. LEVITT: Your Honor, if I may interrupt. There2 was also a supplemental declaration for Mr. Lipps. I believe3 it was submitted on July 10th.4 THE COURT: I have a supplemental declaration from5 Mr. Lipps from July 6th.6 MS. LEVITT: Yes, your Honor. Dated July 6th.7 THE COURT: Thank you so much.8 I think there are three issues as I see it that are9 important to address. One is the effect of the anti-injunction

10 provision of HERA, the Housing and Economic Recovery Act. The11 other is an alternative argument pursuant to Section 105. And12 the third issue is the extent to which particular documents13 other than loan tapes are critical at this point of the14 litigation pending before me, 11 CV 7010, and potentially the15 other 15 actions identification of those documents and what16 should be our next steps, if any, to obtain those documents.17 I have a number of questions for the parties. I have18 read these materials. I thought I would begin by giving you a19 ruling with respect to the anti-injunction provision of HERA20 unless there is anybody who wishes briefly to address that21 issue.22 Is there anyone who wishes to add to the submissions23 they already made on papers?24 Hearing no one, let me give you my ruling.25 Currently before the Court is a motion by ResCap and



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1 related debtor entities to enjoin FHFA from pursuing certain2 litigation against ResCap's non-debtor corporate affiliates,3 including the Ally defendants -- Ally Financial, Ally4 Securities, and GMACM Group.5 The automatic stay provision of the bankruptcy court6 can be found at 11, U.S.C., section 360(a) and it generally7 applies for proceedings against the debtor. I will let counsel8 look at each of the eight provisions that have more or less9 relevance to the issues I need to address this afternoon, but

10 repeatedly those provisions with respect to the automatic stay11 contained in the Bankruptcy Code talk about property of the12 estate and the claims against the debtor.13 I am persuaded that the anti-injunction provision of14 HERA deprives this Court of jurisdiction to grant the relief15 that ResCap seeks. The relevant provision which can be found16 at 12, U.S.C., Section 4617(f) states: "Except as provided in17 this section or at the request of the director, no court may18 take any action to restrain or affect the exercise of powers or19 functions of the agency as a conservator or a receiver."20 Although, there is no appellate authority construing this21 section, HERS' anti-injunction provision is modeled on a nearly22 identical provision of the statute we refer to as FIRREA, which23 is relevant here, governs actions taken by the FDIC as24 conservator for insolvent financial institutions.25 Courts of Appeals that have considered FIRREAH's



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1 anti-injunction provision, which is codified at 12, U.S.C.,2 Section 1821, have concluded that it "effects a sweeping ouster3 of courts' power to grant equitable remedies. Freeman v. FDIC,4 56 F.3d at 1399. Thus, in Freeman, the DC Circuit affirmed the5 dismissal on jurisdictional grounds of a suit by two homeowners6 seeking to prevent the FDIC as receiver for a failed bank from7 foreclosing on their home. Judge Wald, writing for a unanimous8 panel, read the anti-injunction provision broadly concluding9 that it precluded not only an action to enjoin the FDIC from

10 prosecuting foreclosure proceedings, but also efforts to obtain11 other equitable relief against the agency, such as rescission12 or declaration of rights. Other courts have followed suit,13 suggesting that a would-be plaintiff could avoid the14 anti-injunction provision only by showing that the agency15 action at issue was ultra vires. Gross v. Bell Sav., 974 F.2d16 403, 407.17 The Second Circuit has examined the FIRREA provision18 on two different occasions in Volges, 32 F.3d 50 (2d Cir 1994),19 the Second Circuit concluded that FIRREAH strips the district20 court's jurisdiction over a mortgage debtor to enjoin the21 Resolution Trust Corporation, a predecessor entity to the FDIC,22 from auctioning off the mortgages Judge Walker writing for the23 Court, described the anti-injunction provision as "broad and24 unequivocal" to the point that it precludes not only efforts to25 maintain the status quo but also equitable relief intended to



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1 remedy clear-cut violations of law. The holding was influenced2 not only by the statutory language, but also by the Court's3 observation o the "anti-injunction provision is a direct4 manifestation of Congress's intent to prevent courts from5 interfering with the RTC in the exercise of its statutory6 powers" as "part of a broader scheme to allow the RTC7 expeditiously to wind up the affairs of defunct savings and8 loan institutions without judicial interference." 32 F.3d at9 52.

10 FIRREA's anti-injunction provision was also at issue11 In re Colonial Realty Co., 980 F.2d 125. There the Court of12 Appeals affirmed an order of the bankruptcy court that enjoined13 the FDIC, acting as receiver for several failed banks, from14 prosecuting an action to recover assets alleged to have been15 fraudulently conveyed by the debtor to certain third parties.16 The bankruptcy court had concluded that the fraudulent17 conveyance claims were the property of the bankruptcy estate18 and the thus subject of the automatic stay provision of the19 Bankruptcy Code. On appeal, the FDIC argus that the bankruptcy20 courts order violated FIRREA'S anti-injunction provision. The21 Second Circuit rejected this argument concluding that the22 bankruptcy court's injunction order was redundant in light of23 its conclusion that the claims were governed by the automatic24 stay and that the automatic stay itself does not violate25 FIRREAH's anti-injunction provision because it is statutorily,



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1 rather than judicially, imposed.2 The teaching of these cases is that HERA's3 anti-injunction provision must be construed broadly to preclude4 judicial action of any kind that could impair the FHFA's5 ability to carry out its statutorily mandated function.6 Apparently recognizing that the anti-injunction provision7 forecloses this Court from directly enjoining FHFA from8 pursuing litigation against Ally, ResCap's reply brief9 relegates its injunction argument to a single page.

10 As for whether the anti-injunction provision precludes11 an extension of the bankruptcy stay, ResCap tries to use12 Colonial Realty to its advantage, noting that in that case13 "neither debtors nor the bankruptcy trustee were named" in the14 action that they bankruptcy court successfully enjoined. But15 this argument overlooks the fact that in Colonial the16 bankruptcy court concluded that the fraudulent conveyance17 claims being pressed by the FDIC were themselves the property18 of the bankruptcy estate and therefore encompassed within the19 automatic stay. That argument is not available to ResCap here,20 as it impliedly acknowledges in arguing that the bankruptcy21 stay must be "extended" rather than merely enforced.22 There is no dispute that the stay that ResCap seeks23 cannot be obtained through mere application of the statutory24 automatic stay provided in Section 362. After all, the FHFA25 lawsuit is no longer proceeding against the debtors, and even



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1 if it were, ResCap is requesting an extension of the stay to2 non-debtor -- its affiliates, the Ally entities. I am sorry.3 Alley entity who are defendants. Such an extension may only be4 obtained through a court's exercise of its equitable powers5 through Section 105 of the Bankruptcy Code as recently. As6 last week, Judge Glenn extended bankruptcy stay to Ally and7 other RMBS litigation affecting ResCap pursuant to Section 105.8 Thus the anti-injunction provision in HERA bars the relief9 ResCap seeks here.

10 Despite this ruling, I am inclined also to rule in the11 alternative under Section 105, and I would like to ask the12 parties to fill in some facts here. In its 105 argument,13 ResCap emphasizes several points including the fact that the14 stay request would only govern a period of document production15 in the litigation pending before this Court and of course the16 briefing and the motion to dismiss. As I understand it a17 confirmation order is due before the bankruptcy court under the18 present schedule on October 31. So at that date theoretically19 the bankruptcy court would know more about what was happening20 with the reorganization.21 ResCap makes four arguments, not all which I fully22 understand. The first argument has to do with the effect of23 collateral estoppel. Now, I don't think that argument is24 pressed as much in the reply papers when it was dealing solely25 with this litigation before me as opposed to the many other



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1 lawsuits that have adversary proceedings addressed before Judge2 Glenn, but I wanted to give ResCap an opportunity, if it3 wishes, to address this argument. ResCap is no longer a4 defendant in the litigation before me, 11 CV 7010. So I do not5 understand that the collateral estoppel or res judicata6 arguments or anything else that makes of that nature could have7 much weight.8 It was interesting that I did not have a request by9 the Ally defendants to postpone a carve-out of the briefing on

10 the motion to dismiss, which they filed last Friday. I would11 be happy to defer briefing on that motion to dismiss so it12 wouldn't have the burden of an immediate decision once its13 reply papers are in.14 In any event, not seeing an immediate desire to15 further address the collateral estoppel argument, I will move16 on to the next one.17 MS. LEVITT: Your Honor, are you inviting me to give18 my position now? I was waiting for end. I am happy to give19 you our position now if you would like.20 THE COURT: Sure.21 MS. LEVITT: Your Honor, the claims against the Ally22 non-debtor entities here are based on the same nucleus of facts23 of the claims that would be against the debtors in the24 bankruptcy or another proceeding in which they are parties.25 The liability as I understand it for the Ally defendants is



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1 derivative for liability ResCap and we do believe that if this2 case were to proceed, first on substantive issues, there would3 be collateral estoppel, res judicata law of the case findings4 that could be determined here against the Ally parties that5 would necessarily implicate ResCap. That is the first point.6 THE COURT: I don't understand how any court, when you7 are not a party to the litigation and did not have an8 opportunity to defend yourself or argue your position, could9 apply collateral estoppel against you.

10 MS. LEVITT: Your Honor, we would certainly argue that11 they shouldn't; but it is a risk that we take in having this12 case move forward in creating case law and law of the case and13 collateral estoppel arguments for parties who would come14 against us, either in the bankruptcy or with respect to other15 cases.16 THE COURT: Have there been any claims filed against17 ResCap out of the securitizations that are at issue at 11 CV18 7010 as of today?19 MS. LEVITT: The exact securitizations, no, but I20 think many of the securitizations would have the same issues21 and claims made against them. You are correct, your Honor,22 there are different securitizations.23 THE COURT: So I don't find that there is any strength24 to this argument regarding prejudice from the doctrine of25 collateral estoppel. To the extent that I rule on any party's



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1 motion to dismiss and conduct an analysis that is persuasive to2 some other court on a related issue that is to run every day of3 the week.4 Let's turn then to the document discovery issues. I5 understand that there are 21 securitizations that are involved6 in 11 CV 7010 and an argument that those 21 securitizations7 involve 105,000 mortgaged loan files.8 Some basic questions so I understand this argument9 better: Are there 105,000 mortgaged loan files in these 21

10 securitizations for what we call the supporting loan groups?11 MR. GLENN: Yes, your Honor. There are 105,000 loans12 at issue in the 21 securitizations.13 THE COURT: FHFA. Sometimes the securitizations14 included several tranches and the FHFA did not participate in15 each tranche. Therefore, those tranches in which the FHFA16 participated are called the supporting loan group files. Is17 the 105,000 figure for the supporting loan groups or for the18 tranches or the securitizations whether or not the FHFA19 participated?20 MS. LEVITT: Your Honor, I defer to counsel who have21 been more closely involved in the underlying matter. My22 understanding is that 105,000 loans are at issue in the FHFA23 CASE.24 MR. LIPPS: Your Honor, if I understand what you are25 asking, you are asking whether or not FHFA's tranche that it



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1 bought is supported by the 105,000 loans. I think that the2 105,000 is the entire loan pool in each of those3 securitizations. So I don't think it is slivered the way4 you've just indicated. So there will be fewer loans properly5 supporting the loan groups where FHFA invested.6 THE COURT: So some subset of the 105,000 will form7 the supporting loan groups for the litigation in 11 CV 7010 and8 we don't know what percentage that is?9 MR. LIPPS: I think that is right, your Honor. I

10 don't know what percentage it is and I think the 105,000 was11 the entire of all tranches for each of those securitizations.12 THE COURT: Thank you.13 Next question: Are the loan files electronically14 available, or are they only available in paper form?15 MS. LEVITT: I am going to defer to Mr. Lipps because16 I don't want to misspeak before the Court.17 MR. LIPPS: Your Honor, there are some combination of18 that. The practices of RFC had some loan files being scanned.19 And when I say "loan file," it is not the entire loan file. It20 maybe the legal file, as opposed to the credit file. So there21 are some loan files that are completely available in all22 information in electronic form. There are some loan files that23 are available in partial electronic and partial paper. And24 then this are many, many, many loan files out of the 105,00025 that would be in paper file and offsite storage facilities



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1 throughout the Minneapolis/St. Paul area.2 THE COURT: There is argument by counsel in their3 papers about a stocking horse agreement and I am not sure that4 I understand the impact of the Ally Financial stocking horse5 agreement on any of this litigation. It is my understanding6 that pursuant to that agreement, Ally Financial may be buying7 the legacy portfolio, which would contain the loans at issue in8 11 CV 7010, but whether it does or doesn't make that purchase,9 I am not sure how that is supposed to impact our analysis.

10 Is there anyone who wishes to speak to that?11 MS. LEVITT: Your Honor, only to say that our position12 is there is no relevance to that stocking horse bid. First of13 all, it is unclear who will end up being the successful14 purchaser of the legacy files. Also, my understanding is Judge15 Glenn found that had no relevance to this analysis.16 THE COURT: That is Ms. Levitt again.17 MS. LEVITT: Yes. I apologize, your Honor.18 MR. BROWN: Your Honor, if I may, Judson Brown of19 Kirkland & Ellis. So the record is straight, your Honor, Ally20 Financial, had been the stocking horse bidder for that legacy21 portfolio; but as I understand it, the bankruptcy proceedings22 at Ally Financial isn't currently the stocking horse bidder.23 MS. LEVITT: That's correct, your Honor. There is24 another potential purchaser is the stocking horse, but we don't25 know how that will turn out.



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1 THE COURT: There is another question that I had. The2 loan files -- and we don't know the number, but it is a3 knowable number, something less than 105,000 apparently -- are4 you going to be essential to the prosecution of the litigation5 in 11 CV 7010. It is my judgment that they are also essential6 to the prosecution of the 16 cases before me for reasons I7 discussed in last week's telephone call because there are seven8 non-affiliate defendants who are in 11 CV 7010 and one or more9 of the remaining 15 actions and the 16 actions are moving

10 forward in a coordinated fashion with an understanding -- well,11 it is hope that through coordinated discovery, there will be12 efficiencies for the party and ultimately savings for all13 concerned.14 The first parties to be deposed beginning in January15 are FHFA, which would need access to all the documentation that16 was important, certainly at a minimum the loan files, and UBS17 who is a defendant in 11 7010 and three other cases before me18 and a case in California that is related. So those depositions19 will begin in January.20 It is my understanding, and nobody has argued to me21 the contrary, that when a debtor is in bankruptcy proceedings,22 it is not immune from discovery and whether it is in bankruptcy23 or emerges some day from bankruptcy with its assets, in this24 instance the loan files retained by it or some other entity,25 whoever has those loan files is going to have to produce them.



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1 Therefore, in the restructuring process or the reorganization2 process that is ongoing before the bankruptcy court, I would3 understand that all the parties, including any potential4 bidders for assets, would be evaluating the burdens of5 participating in the inevitable discovery.6 Now, Mr. Lipps in his affidavits has describe some of7 the costs associated with the production of material. He has a8 figure that on average it takes $25 per file to produce a loan9 file. I assume that number is influenced by how many of the

10 documents or loan files are entirely electronic and how many11 are composite and how many arn't electronic at all. Again, we12 don't know the number of loan files in our supporting loan13 books here.14 So it seems to me that when it comes down to the15 arguments with respect to indemnification for defense costs or16 wasting insurance policies that those arguments have to be17 weighed in the context of understanding that this discovery is18 going to occur and there will be a cost to participation in19 this discovery and that the cost is affecting the economics of20 the restructuring, whether or not the documents are produced21 today or in the future.22 Ms. Levitt.23 MS. LEVITT: Your Honor, there are two things that I24 need to address with respect to your Honor's question or25 position. One, it is our understanding that the debtors will



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1 not be required to do discovery during the bankruptcy due to2 the automatic stay. I know your Honor has directed the FHFA to3 Judge Glenn to determine that; but from statements he has made4 in the hearings, I don't believe he will allow discovery to be5 taken from the debtor. So if the documents are in their6 possession, custody and control with respect to the loan case7 as we contend, then that discovery will be stayed by the8 automatic stay.9 THE COURT: Well, the automatic stay does not require

10 that there be no discovery of a debtor. That is a separate11 issue, a separate legal doctrine. And whether or not someone12 is in bankruptcy, a bankruptcy court may or may not -- and I13 will address this later with respect to the standard -- permit14 them to produce discovery materials. But the automatic stay15 under the bankruptcy statute does not prevent by itself16 discovery being taken of a debtor in third party litigation.17 MS. LEVITT: You are, correct, your Honor. My point18 was based on his ruling in the Western and Southern case and19 what he said on record, our belief is because Judge Glenn20 extended the stay to third-party, to non-debtor affiliates in21 that case and based on reasoning for it, which in large part22 was the discovery burdens, the cost of the estate and its23 creditors through indemnification, through the wasting24 insurance policy and then the enormous costs on the time and25 focus of the employee of the debtor who need to be focused on



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1 these very important asset sales and on the restructuring for2 the benefit of the estate that we don't beleive Judge Glenn is3 going to order discovery. Putting that aside those were the4 factors that the Court looked at, which are the same that we're5 asking the Court to look at here, which is the very short6 discovery stay we're asking for here, perhaps three months --7 THE COURT: I don't think you are responding to my8 question, and I am sorry if I wasn't clear enough, and I did9 read Judge Glenn's ruling. Thank you, counsel, for submitting

10 it to me.11 My question is different. ResCap has the loan files.12 They are going to have to be produced some day. There is going13 to be a cost associated with the production of those loan14 files, whether it is today or next year. Isn't that cost of15 production already part of the financial analysis in the16 restructuring events before the bankruptcy court?17 MS. LEVITT: Your Honor, I am a little bit out of my18 depth here in terms what is at issue in the bankruptcy. I19 don't beleive, and I could be wrong here, that the bankruptcy20 and the district creditors are taking into account the costs of21 this third-party discovery and the indemnification obligations,22 I don't know that, your Honor. What I can tell you is from the23 bankruptcy court's perspective anything that will disrupt or24 delay consummation of the plan and the employee's focus on25 getting that plan done as opposed to dealing with



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1 extraordinarily burdensome discovery in another case, as well2 as the time to prepare for depositions or whatever might occur,3 that I believe the bankruptcy court would find that to be not a4 good use of resources both monetary and time. It will have an5 effect on the ultimate recovery to creditors. But, your Honor,6 I apologize that I cannot tell you how that factors in at this7 point other than to repeat what I think was probably not8 responsive but which is that this short delay while on the flip9 side allowing debtors to consummate this reorganization, we

10 submit is reasonable in terms of the overall management of this11 case.12 THE COURT: Mr. Glenn, I am focusing now on the loan13 tapes and the loan files. Is there anything immediately14 critical in terms of discovery from ResCap beyond those two15 items?16 MR. GLENN: I am going to defer to Ms. Leung on that17 point who is handling the.18 MS. LEUNG: First of all, I think that it is difficult19 for us to answer that question because we don't have any20 transparency into what Ally has versus what the debtors have.21 Your Honor has seen the objections that have been interposed by22 Ally Financial and Ally Securities for document requests. I23 think it was one of the exhibits to the motion where they24 object to the document requests on the grounds that it is in25 the possession of debtors or its property estate subject to the



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1 automatic stat. We don't really have transparency into that2 and so it is difficult for us to when we're talking to them to3 know in terms of should they be searching the custodial files4 for ResCap or should they be searching the files or e-mails of5 employees of ResCap. We're not really sure because we don't6 have any, like I said, transparency or window into Ally and7 ResCap.8 So one solution might be to have a 30(b)(6) deposition9 so that we can get that clarity in terms of what does Ally have

10 versus what does the debtors have, how much access does Ally11 have over ResCap's files. As you know it is our position that12 Ally does have access to all of ResCap's and the debtor's files13 and personnel by virtue of, among other things, the shared14 services agreement. We think that is a relevant legal15 question, not whether the debtors have title to certain16 documents but whether they have access to it. We do need other17 types of documents, but it is difficult for us to say that it18 is in the possession of the debtors and we need it right now19 because we don't know what one entity possesses versus what20 another entity possesses. That is the first point.21 I know your Honor didn't ask this, but I do want to22 address the issue of the loan files, because that has come up23 in terms of how burdensome the discovery is going to be. At24 the outset plaintiff has always been willing to talk to Ally25 and all the other defendants about limiting the burden of



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1 producing loan files. That was the purpose of trying to get2 out our sample protocols early and try to limit the universe of3 loan files that would have to be produced. That is still a4 conversation that we're willing to have with Ally and the5 debtors in terms of minimizing the number of loan files that we6 need to reproduce and the burden to them, whether there are7 other ways we can reduce burden by, for example, getting copies8 of what is already being produced in the bankruptcy litigation9 that might overlap with the discovery that we're looking for.

10 So we're certainly open to having that conversation with the11 debtors and with Ally and Ally Securities.12 So I can't point to anything immediately besides the13 loan tapes and the loan files that we need that would be in the14 possession of debtors, but I would like to reserve on that15 because like I said we just don't know enough.16 THE COURT: I am not going to give you a ruling on the17 shared services agreement argument until there has been an18 application to Judge Glenn for production of documents, and it19 has not been fruitful to make that application.20 So I don't have an answer on the question that I21 posed, which stems from this fact: Whether or not ResCap is a22 defendant in any litigation, it is holding in its physical23 possession documents which are critical to litigation and they24 include at least the loan files. There will be a cost in25 production of those loan files. There will be a cost of being



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1 a witness in the various lawsuits that have arisen out of2 ResCap's business, whether it is a defendant or not in those3 litigations. That is known. That is not unknown. Everyone4 knows that ResCap or any restructured entity is going to have5 some litigation to deal with in the future, whether it is a6 defendant or not, because it possesses critical documents.7 So it seems to me the arguments about the wasting8 insurance policies and even the indemnification arguments,9 indemnification for defense costs are impacted, both of those

10 arguments, by that financial reality.11 So I have already ruled that the stay cannot be12 extended because of the anti-injunction bar to the13 defendants. I personally don't find the Section 105 analysis14 very strong either. I don't need to reach it because I15 wouldn't have jurisdiction to extend the stay, but I don't find16 that ResCap has made a strong enough showing even if it were17 within my jurisdiction to consider the Section 105 argument.18 The critical thing that has to happen right now, and19 it is important that it happen right now, is production of the20 loan tapes and the loan files. I don't see that there is any21 risk of prejudice to a debtor on collateral estoppel or res22 judicata grounds. The cost is hard to quantify now because we23 don't know how many loans are part of the supporting loan24 groups. We don't know how many of those loans are25 electronically available, but that is an expense that is going



24C7h6resc

1 to have to be borne at some point no matter what. It is not an2 expense that is going away.3 I don't think production of either the loan files or4 the loan tapes is something that is going to involve management5 of ResCap. These are ministerial duties, clerical duties to6 gather these documents. I don't see how they would be7 interfering in any way with the involvement of management in8 making judgments or negotiating a restructuring.9 I want FHFA to go in the first instance to Judge

10 Glenn. I have already told you to do that with respect to the11 loan tapes. I want you to do that with respect to the loan12 files as well. I have read his decision of July 10th with13 respect to Western and Southern Life Insurance and I think that14 decision is quite distinguishable and not terribly predictive15 of what is going to happen with your application here.16 In the Ohio case, the Western and Southern Life17 Insurance case, as I understand it there were five18 securitizations that were at issue out of about 61 or so. Here19 every securitization in this lawsuit is at issue and cannot20 proceed without production of the loan files and the loan21 tapes. Here there are seven non-affiliated defendants against22 whom this litigation will continue no matter what happens with23 ResCap, and it is not a defendant, or the Ally defendants.24 It is important that document discovery proceed25 quickly so that counsel and their experts have an opportunity



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1 to review the documents and prepare for the January2 depositions. As I mentioned, the FHFA and UBS depositions3 begin in January and both are parties to 11 CV 7010.4 I notice with some interest the discussion the page5 133 of the transcript of Judge Glenn's decision in which he6 pointed out that when the parties hold an indirect direct claim7 against a non-debtor for violating the federal securities laws,8 there is no compelling basis by which a court must extend the9 automatic stay. There are claims here, direct claims, against

10 Ally and the Ally entities. I also emphasize the point I have11 already made that these documents are going to have to be12 produced and knowledge of that expense will affect the13 organization whether or not that expense is incurred today or14 later.15 I have no showing that there is any significant16 participation of any individual critical to the reorganization17 in the production of the loan files or the loan tapes. Again,18 we're talking about a period in which the only thing that has19 happened is production of documents. I want to underscore that20 this issue isn't confined to the impact production of these21 critical documents will have just on 11 CV 7010. That is one22 of 16 cases before me. The seven non-Ally underwriter23 defendants are involved in a number of lawsuits. It is24 important that there be access to these entities, to all the25 loan files that there being sued upon so that their witnesses



26C7h6resc

1 can be prepared with respect to the entire universe of issues2 that they are going to face and that depositions occur just3 once. The depositions will begin in January. It is too late4 to wait to produce those documents until later this fall.5 With respect to the law about discovery of a debtor,6 during the bankruptcy process, of course this is something that7 the Ninth Circuit has spoken of in the Miller case, 262 BR8 4909, as the Ninth Circuit noted at page 505, information is9 information, and when it is in the possession of a debtor, it

10 is discoverable. More recently Judge Dolinger permitted11 depositions to occur of a debtor's employees in the Signature12 Bank case, 2008 WL 4126248, noting that the automatic13 litigation stay in Section 362 does not prevent discovery in a14 current lawsuit even if the depositions in question unearth15 information that may be relevant to the bank's state claims16 against a debtor.17 I know the parties are familiar with the Johns18 Manville case from 1984, which can be found in 40 BR 219. But19 even there the test is, as articulated in that court, one of20 significant interference with a debtor's reorganization21 efforts. For all the reasons I have already described, I don't22 think that the limited production of loan tapes and loan files23 can meet that test, but I want FHFA to go to Judge Glenn in the24 first instance and if need be you can come back to me. If you25 need a 30(b)(6) deposition of Ally, go ahead and schedule it.



27C7h6resc

1 Take it next week if you need. Time's a wastin. We need to2 get all the critical documents produced so that they can be3 analyzed before depositions begin in January.4 Ms. Levitt, is there anything you wish to add?5 MS. LEVITT: No, your Honor. Thank you.6 THE COURT: Mr. Glenn?7 MR. GLENN: Just by way of update, your Honor. We're8 filing the motion for Judge Glenn today. That motion will9 include only the loan tapes consistent with the last court

10 conference. We'll supplement that motion to include the loan11 files hopefully with and next 24 to 48 hours.12 THE COURT: Thank you.13 MR. GLENN: Thank you.14 THE COURT: Is it Mr. Goeke?15 MR. GOEKE: Yes, your Honor. Nothing further.16 THE COURT: Mr. Lipps.17 MR. LIPPS: Nothing further, your Honor.18 THE COURT: Does anyone else wish to add anything or19 be heard?20 Not hearing anyone, thank you so much.21 o0o22232425



EXECUTION VERSION

ny-1040886

Shared Services Agreement

by and between

Ally Financial Inc. and

Residential Capital, LLC

Effective as of May ___, 2012


12-12020-mg Doc 1295-1 Filed 08/28/12 Entered 08/28/12 16:48:53 Exhibit 1: Woehr Declaration Pg 9 of 78

12-12020-mg Doc 1920-7 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit G Pg 1 of 66

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1. DEFINITIONS. ................................................................................................................ 1

1.1 Definitions. ........................................................................................................... 1 2. TERM AND RENEWAL .................................................................................................. 4

2.1 Initial Term. ......................................................................................................... 4 2.2 Renewal. ............................................................................................................... 4

3. SERVICES. ....................................................................................................................... 5

3.1 Services. ................................................................................................................. 5 3.2 Additional Services. ............................................................................................. 6 3.3 Changes to Services/Change Control Procedures.................................................. 6 3.4 Recipients’ Obligations. ....................................................................................... 7 3.5 Required Consents. ................................................................................................ 7 3.6 Security Level; Additional Security Measures. ................................................... 8

4. USE OF AFFILIATES AND SUBCONTRACTORS. .................................................. 8

4.1 Affiliates and Subcontractors................................................................................. 8 4.2 Compliance. ......................................................................................................... 9

5. RELATIONSHIP MANAGEMENT. ............................................................................... 9

5.1 Relationship Managers. ........................................................................................ 9 5.2 Governance Model. .............................................................................................. 9 5.3 Reports. . ............................................................................................................... 9 5.4 Regulatory Review. ............................................................................................ 10 5.5 Books and Records; Audit. ................................................................................ 10 5.6 Books and Records; Audit. .................................................................................. 10 5.7 Informal Dispute Resolution Procedures. .......................................................... 10 5.8 Continued Performance. .................................................................................... 10

6. FACILITIES. .................................................................................................................. 11

6.1 Use of Recipient Facilities. .................................................................................. 11 6.2 Supplier Facilities and Systems. .......................................................................... 12 6.3 Physical Security for Facilities. ......................................................................... 12

7. INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS................................ 12

7.1 Ownership of Pre-Existing Intellectual Property. .............................................. 12 7.2 Development of Intellectual Property. . .............................................................. 12 7.3 Limited License to Use Supplier Work Processes and Software. ...................... 13 7.4 No Implied Licenses. ......................................................................................... 13

8. RECIPIENT DATA. ....................................................................................................... 13

8.1 Definition. . ......................................................................................................... 13 8.2 Ownership. ......................................................................................................... 13 8.3 Data Security. ..................................................................................................... 14

9. CONFIDENTIALITY..................................................................................................... 14

9.1 Obligations. ........................................................................................................ 14 9.2 Excluded Information .......................................................................................... 14 9.3 Compelled Disclosure. ....................................................................................... 15 9.4 Return of Information. ....................................................................................... 15 9.5 Exception. .......................................................................................................... 15




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9.6 Obligations........................................................................................................... 15 9.7 Loss of Confidential Information. ...................................................................... 16 9.8 No Implied Rights. ............................................................................................. 16

10. COMPENSATION.......................................................................................................... 16

10.1 General. .............................................................................................................. 16 10.2 Taxes. ................................................................................................................. 16 10.3 Invoicing and Payment. . .................................................................................... 16

11. REPRESENTATIONS AND WARRANTIES. .............................................................. 17

11.1 Services. ............................................................................................................. 17 11.2 Maintenance. ...................................................................................................... 17 11.3 Authorization. .................................................................................................... 17 11.4 Viruses. .............................................................................................................. 17 11.5 Disclaimer. . ........................................................................................................ 17

12. INSURANCE. ................................................................................................................. 17

12.1 Insurance. ........................................................................................................... 17 12.2 Risk of Loss. ...................................................................................................... 18

13. INDEMNIFICATION AND LIMITATIONS ON LIABILITY. ................................... 18

13.1 Indemnification. ................................................................................................... 18 13.2 Limitations on Liability. ...................................................................................... 21 13.3 Indemnification and Limitations on Liability Relating to Negligence and

Strict Liability. ................................................................................................... 22 13.4 Exclusive Remedy. ............................................................................................ 23 13.5 Insurance. . .......................................................................................................... 23

14. TERMINATION. ............................................................................................................ 23

14.1 Termination. ....................................................................................................... 23 14.2 Termination Following Sale. ............................................................................. 24 14.3 Election of Terminating Party. ........................................................................... 24 14.4 Survival. ............................................................................................................. 24 14.5 Rights Upon Termination or Expiration; Sale. .................................................... 24 14.6 Dedicated Assets. . .............................................................................................. 25 14.7 Transition Services Agreement. ......................................................................... 25

15. FULLY INTEGRATED AGREEMENT. ..................................................................... 25

16. GENERAL....................................................................................................................... 26

16.1 Acknowledgement. ............................................................................................ 26 16.2 Binding Effect; No Assignment. ........................................................................ 26 16.3 Counterparts. ...................................................................................................... 27 16.4 Entire Agreement. ............................................................................................. 27 16.5 Force Majeure. ..................................................................................................... 27 16.6 Further Assurances. ............................................................................................ 28 16.7 Governing Law; Jurisdiction and Forum; Waiver Of Jury Trial. ........................ 28 16.8 Headings. ........................................................................................................... 28 16.9 Independent Contractors. ................................................................................... 28




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16.10 Notices. .............................................................................................................. 28 16.11 Public Announcements. ..................................................................................... 29 16.12 Amendments and Waivers. . ............................................................................... 29 16.13 Severability. ....................................................................................................... 30 16.14 No Third Party Beneficiaries. ............................................................................ 30 16.15 Order of Precedence............................................................................................. 30




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SCHEDULES

Schedule A-1 Parent Services Schedule A-2 Reverse Services Schedule A-3 Planned IT Projects Schedule B Governance Model Schedule C Pricing Methodology Schedule C-1 Pricing for Parent Services Schedule C-2 Pricing for Reverse Services Schedule D-1 List of AFI Recipients and Supported Facilities Schedule D-2 List of ResCap Recipients and Supported Facilities Schedule E Form of Supplement




ny-1040886

SHARED SERVICES AGREEMENT

This Shared Services Agreement (this “Agreement”) is entered into on this __ day of May , 2012 and effective as of the date this Agreement is approved by the Bankruptcy Court (the “Effective Date”) by and between Residential Capital, LLC, a Delaware limited liability company (“ResCap”) and Ally Financial Inc., a Delaware Corporation (“AFI”).

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows.

1. DEFINITIONS.

1.1 Definitions. As used in this Agreement, the following terms have the following meanings:

“Additional Services” has the meaning set forth in Section 3.2.

“Affiliate” means, with respect to any specified Person, (a) those other Persons with respect to which such specified Person directly or indirectly owns or controls more than 50% of the voting equity securities of such other Person, (b) those other Persons that directly or indirectly own or control more than 50% of the voting equity securities of such specified Person, and (c) as to the Persons identified in the preceding clauses (a) and (b), those Persons that directly or indirectly own or control more than 50% of the voting equity securities of such identified Persons; provided, however, that, for purposes of this Agreement: (a) ResCap and its direct and indirect Subsidiaries shall not be deemed to be Affiliates of AFI; and (b) only the direct and indirect Subsidiaries of ResCap shall be deemed to be the Affiliates of ResCap.

“Bankruptcy Court” means the bankruptcy court in which the chapter 11 case(s) of ResCap and/or its Subsidiaries are pending.

“Bankruptcy Code” means title 11 of the United States Code.

“Buyer” means one or more purchasers of all or substantially all of the assets of ResCap and certain of its Subsidiaries pursuant to the Sale.

“Change” means any change or modification in the Services, or the schedule for performing such Services.

“Charges” has the meaning set forth in Schedule C.

“Claim” has the meaning set forth in Section 13.1(d)(1).

“Claim Notice” has the meaning set forth in Section 13.1(d)(1).

“Completion” has the meaning set forth in Section 14.3(c)(3).

“Confidential Information” has the meaning set forth in Section 9.1.

“Customized Services” has the meaning set forth in Section 3.3(a).

“Damages” has the meaning set forth in Section 13.1(a).

“Dedicated Assets” means any Supplier’s third party contracts, Supplier Equipment, Supplier




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Personnel and Supplier Software primarily dedicated to providing Services to Recipient.

“Equipment” means computer and telecommunications equipment (without regard to the entity owning or leasing such equipment) including: (a) servers, personal computers, and associated attachments, accessories, peripheral devices, printers, cabling and other equipment; and (b) private branch exchanges, multiplexors, modems, CSUs/DSUs, hubs, bridges, routers, switches and other telecommunications equipment.

“Force Majeure Event” has the meaning set forth in Section 16.5(a).

“Functional Service Areas” means the categories of Parent Services or Reverse Services that are set forth under Schedule C-1 or Schedule C-2, as applicable

“Governmental Authority” means any government or political subdivision, board, commission or other instrumentality thereof, whether federal, state, local or foreign.

“Include” and its derivatives means including without limitation. This term is as defined whether or not capitalized in this Agreement.

“Indemnified Parties” has the meaning set forth Section 13.1(a).

“Indemnifying Party” has the meaning set forth Section 13.1(d).

“Initial Term” has the meaning set forth in Section 2.1.

“Intellectual Property” or “IP” means any of the following, whether subsisting now or in the future anywhere in the world: (a) patents and pending patent applications; (b) trademarks, service marks, trade names and trade dress, and associated goodwill and rights of publicity and all rights associated therewith; (c) copyrights, including copyrights in works of authorship and computer Software; (d) confidential and proprietary information, including trade secrets and proprietary algorithms; (e) data base rights; (f) design rights and rights in designs; (g) rights in domain names; (h) rights in know-how; (i) all other intellectual property rights subsisting now or in the future, anywhere in the world; and (j) registrations, right to register and pending applications for registration of the foregoing, renewals, extensions, continuations, divisions or reissues thereof now or hereafter in force throughout the world (including rights in any of the foregoing); and (k) any and all causes of action arising from or related to any of the foregoing.

“Intellectual Property Rights” means any and all common law, statutory and other rights in Intellectual Property honored and/or enforceable under any Laws.

“Law” means any applicable order, writ, injunction, decree, judgment, ruling, statute, law, rule or regulation of any federal, state, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, court or tribunal or any arbitrator or arbitral body.

“New Developments” means new Systems implemented by Supplier that are substantially different from the existing Systems, including major replacements to existing Systems and any directly related major replacements to work processes, policies and procedures implemented by Supplier.

“Parent Services” has the meaning set forth in Section 3.1(a).

“Parties” means AFI and ResCap.

“Person” means any individual, partnership, firm, corporation, association, joint venture, limited




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liability company, trust or other entity, or any governmental entity.

“Plan” means ResCap’s and certain of its Subsidiaries’ chapter 11 plan(s) of reorganization or liquidation under the Bankruptcy Code.

“Planned IT Projects” has the meaning set forth in Section 3.1(g).

“Pre-Existing Intellectual Property” has the meaning set forth in Section 7.1.

“Recipient” (i) in the case of Parent Services means ResCap and its Affiliates listed on Schedule D-1, and (ii) in the case of Reverse Services means AFI and its Affiliates listed on Schedule D-2.

“Recipient Data” has the meaning set forth in Section 8.1.

“Recipient Equipment” means all Equipment owned or leased by a Recipient and used in connection with the Services.

“Recipient Facilities” has the meaning set forth in Section 6.1(a).

“Recipient Software” means all Software owned by, or provided under license to, Recipient and used in connection with the Services (and all modifications, replacements, upgrades, enhancements, documentation, materials and media relating to the foregoing).

“Recipient System” means an interconnected grouping of Recipient Equipment and/or Recipient Software used in connection with the Services, and all additions, modifications, substitutions, upgrades or enhancements thereto.

“Relationship Manager” has the meaning set forth in Section 5.1.

“Required Consents” means the consents, if any, required from third parties in connection with Supplier’s provision, and Recipient’s receipt, of the Services.

“Reverse Services” has the meaning set forth in Section 3.1(a).

“Sale” means a sale of all or substantially all of the assets of ResCap and/or certain of its Subsidiaries pursuant to the Plan or section 363 of the Bankruptcy Code.

“Services” means all or any of Parent Services, Reverse Services, Customized Services, Termination Assistance Services, provided by a Supplier, as applicable given the context.

“Software” means programs and programming (including the supporting documentation, media, on-line help facilities and tutorials).

“Statement(s) of Work” means the mutually agreed internal documents that set forth the Services in respect of the Functional Service Areas that are identified in Schedule A-1 or Schedule A-2, as applicable.

“Subcontractors” means Supplier’s contractors or other agents of Supplier that perform a portion of the Services.

“Subsidiaries” means, with respect to any specified Person, those other Persons with respect to which such specified Person directly or indirectly owns or controls more than 50% of the voting equity securities of such other Person.

“Supplement” has the meaning set forth in Section 3.2.

“Supplier” means (i) in the case of Parent Services, AFI and any AFI Affiliates that provide




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such Services, and (ii) in the case of Reverse Services, ResCap, and any ResCap Affiliates that provide such Services. For purposes of clarity, all references to “Supplier” refer only to the Party that is acting as the “Supplier” with respect to the Equipment, Software and other applicable responsibilities for the Services being performed by such Party in its capacity as the “Supplier”.

“Supplier Equipment” means Equipment owned or leased by the Party that in its capacity as the “Supplier” hereunder, or an Affiliate or Subcontractor of such Party, and used in connection with the Services.

“Supplier Facilities” has the meaning given in Section 6.2.

“Supplier Personnel” means those employees, representatives, contractors, Subcontractors and agents of the Party that is acting in its capacity as the “Supplier” hereunder, who perform any Services under this Agreement.

“Supplier Software” means all software programs and programming owned by, or provided under license to, the Party that is acting in its capacity as the “Supplier” and used to provide the Services (and all modifications, replacements, upgrades, enhancements, documentation, materials and media relating to the foregoing).

“Supplier System” means an interconnected grouping of Supplier Equipment and/or Supplier Software used in connection with the Services, and all additions, modifications, substitutions, upgrades or enhancements thereto.

“Systems” means Recipient Systems and Supplier Systems or any of them.

“Term” has the meaning set forth in Section 2.2.

“Termination Assistance Services” has the meaning set forth in Section 14.5(a).

“Termination Service Periods” has the meaning set forth in Section 14.5(a).

“Third Party Claim” has the meaning set forth in Section 13.1(d)(1).

“Third Party Claim Notice” has the meaning set forth in Section 13.1(d)(1).

“Transition Services Agreement” has the meaning set forth in Section 14.5(a).

2. TERM AND RENEWAL

2.1 Initial Term. The initial term of this Agreement begins on the Effective Date and continues through and until midnight Eastern Time on the one (1) year anniversary of the date on which ResCap and certain of its Subsidiaries file voluntary petitions (“Petitions”) for relief under Chapter 11 of the Bankruptcy Code, as amended (the “Initial Term”), unless earlier terminated or extended in accordance with the terms of this Agreement and except for any Service that has been terminated in accordance with the terms of this Agreement.

2.2 Renewal. The Initial Term will be automatically extended for additional periods of one (1) year each unless either Party provides to the other Party written notice of nonrenewal at least three (3) month prior to the expiration of the then-current Term. The Initial Term as extended by any such additional period(s) (if any) shall be referred to as the “Term”.




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3. SERVICES.

3.1 Services.

(a) Performance. AFI will provide the Services within each of the Functional Service Areas listed in Schedule A-1 (the “Parent Services”), and ResCap will provide the Services within each of the Functional Service Areas listed in Schedule A-2 (the “Reverse Services”), in each case beginning on the Effective Date. Services provided by a Supplier under this Agreement may be provided by that Supplier directly or through any of its Affiliates and/or Subcontractors at Supplier’s discretion. A Supplier will not be relieved of any of its obligations under this Agreement as a result of the provision of Services by any of Supplier’s Subsidiaries or other Supplier Personnel pursuant to this Section 3.1(a). Supplier agrees that it will not enter into any new Subcontracting arrangement that would involve the transfer to a Subcontractor or another third party of Recipient’s personal information, without the prior written consent of the other Party. The Supplier Personnel providing Services will at all times be qualified to provide the Services assigned to them.

(b) Recipients and Facilities. Supplier will provide the Services to Recipient at the Recipient Facilities for which such Services are provided as of the Effective Date or, with respect to any particular Services, such other locations as may be specifically identified in Schedule D-1 or Schedule D-2 with respect to such Services. Supplier will negotiate in good faith to provide Services in support of any new Recipient or additional Recipient Facility, but shall not be obligated to provide Services to new Recipients or additional Recipient Facilities unless the pricing and terms for such new Recipients or facilities has been agreed upon by the Parties.

(c) Service Standards. Supplier will perform or cause to be performed the Services referenced in the applicable Statement(s) of Work, to Recipient (i) with reasonable skill, care and diligence; and (ii) performed in substantially the same manner (including historic levels of service, historical usage levels and geographic provisioning) that such Services were generally performed by Supplier for Recipient immediately prior to the Effective Date and thereafter in substantially the same manner (including historic levels of service, historical usage levels and geographic provisioning) as Supplier generally performs such Services for its own businesses in accordance with its then-current processes and procedures (except to the extent such Services differ because of the need to follow legal corporate formalities and to keep Recipient Data separate from Supplier data, or as may be mutually agreed through the Parties’ change control principles pursuant to Sections 3.2 and 3.3). In no event will Supplier be required to make any customization to the Services (or Supplier’s associated Systems or processes) that are unique to Recipient, except for customizations that are expressly agreed upon in accordance with Sections 3.2 and 3.3. Each Party acting in its capacity as Recipient shall, and such Party shall cause all of its Affiliates that are Recipients to, comply with any applicable terms and conditions of third party contracts used by Supplier in connection with the Services.

(d) Implied Services. If any services, functions or responsibilities performed by Supplier for Recipient as of the Effective Date are not specifically described in this Agreement but are necessary for Supplier to perform or provide the Services described in this




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Agreement in accordance with Section 3.1(c), such services, functions or responsibilities shall be deemed to be included within the scope of the Services to the same extent and in the same manner as if specifically described in this Agreement, except to the extent otherwise specified in this Agreement and excluding all services, functions and responsibilities of Recipient under this Agreement (including any services, functions or responsibilities not specifically described in this Agreement but are necessary for Recipient to perform or provide such services, functions and responsibilities described in this Agreement). Except as otherwise expressly provided in this Agreement, as between the Parties, Supplier shall be responsible for providing the facilities, personnel and other resources as necessary to provide the Services consistent with the requirements of Section 3.1(c).

(e) Not a Requirements Contract. This Agreement will not be construed as a requirements contract and will not be interpreted to prevent Recipient from obtaining from third parties, or providing itself, any or all of the Services or similar services.

(f) Dedicated Assets. Upon the reasonable request of either Party, the Parties will work together in good faith to identify the Dedicated Assets, and with respect to Supplier Personnel that are Dedicated Assets, on a Service-by-Service basis: (i) the number of individuals providing such Service; (ii) the title of each such individual providing such Service (e.g., senior accountant, deputy general counsel, human resources manager, etc.); and (iii) the amount of time that each such individual spends providing such Service on a full-time equivalent (FTE) basis (e.g., 0.4 FTE).

(g) Planned IT Projects. Schedule A-3 to this Agreement sets forth a list of IT projects that are planned or ongoing as of the Effective Date (the “Planned IT Projects”). ResCap acknowledges and agrees that (i) the Services will be modified during the Term by and in accordance with each Planned IT Project, and (ii) the Planned IT Projects are necessary for the maintenance, upgrade, safety, or security of the AFI environment. ResCap will pay to AFI the portion of each Planned IT Project as applicable to Recipient, in accordance with Schedule A-3 so long as ResCap or its Affiliates continue to receive Services that are based on or involve the use of AFI’s IT environment. ResCap will provide to AFI cooperation and assistance as necessary or reasonably requested by AFI to allow AFI to implement each Planned IT Project.

3.2 Additional Services. A Party may, from time to time during the Term, upon at least ninety (90) days prior written notice to the other Party, request that the other Party provide additional services, functions and responsibilities not within the scope of the Services provided by the performing Party ("Additional Services"). Any such Additional Services will be provided under supplements to Schedule A-1 or Schedule A-2, as applicable entered into by the Parties (“Supplements”) for the charges set forth therein and mutually agreed upon. Supplements shall be in the form of Schedule E. During the ninety (90) day period after the Effective Date, the Parties will work together to define a process reasonably satisfactory to the Parties that will be used to (a) submit and prioritize requests for Additional Services and (b) create and execute Supplements for Additional Services.

3.3 Changes to Services/Change Control Procedures.




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(a) Customized Services. Supplier shall only provide Services customized for Recipient (“Customized Services”) in accordance with this Section 3.3, and shall not otherwise be required to make customizations to the Services or Supplier Systems.

(b) Changes Requested by Recipients. Recipient from time to time, upon at least thirty (30) days notice may require that the Supplier decrease or reasonably increase the Services provided to Recipient and the Charges shall be modified in accordance with the procedures set forth in Exhibit C. A Party may, from time to time during the Term, upon at least ninety (90) days prior written notice to the other Party, request that the other Party provide Customized Services. If the Parties mutually agree on the provision of Customized Services, such request for Customized Services and such Customized Services will be provided under Supplements to Schedule A-1 or Schedule A-2, as applicable. Before Supplier is required to provide any Customized Services, the Parties shall jointly agree on the applicable Charges for any agreed Customized Services, including any Charges that may be required to equitably compensate Supplier for any additional costs it may reasonably incur in connection with any changes to the Services.

(c) Changes Required by Applicable Law. If Customized Services are necessary in order to comply with applicable Laws or changes to Supplier’s third party contracts, Supplier will provide such Customized Services unless (i) such Customized Services require a material change to a Supplier System, or the implementation of a new Supplier System, or (ii) providing such Customized Services is not practicable given the then-current characteristics of the Supplier Systems, and the use thereof for Supplier and its Affiliates, and subject to the Parties jointly agreeing on the applicable Charges for such Customized Services. Any such Customized Services will be provided under Supplements to Schedule A-1 or Schedule A-2, as applicable. The Parties will negotiate in good faith in order to promptly agree on the applicable charges for any such necessary Customized Services. If providing such Customized Services is not practicable given the Supplier Systems, Recipient may purchase such services from a third party, provided that the Parties must agree on (A) the activities required to transition the affected Services from Supplier to such third party, (B) the impact on the remaining Services, and (C) the Charges associated with removing such Services and (D) the Charges for the remaining Services.

3.4 Recipients’ Obligations. Supplier’s failure to perform its obligations under this Agreement will be excused (and any rights of the Recipient arising as a consequence of such failure will not be exercised by the Recipient) if and to the extent such Supplier non-performance is caused by (a) the wrongful or tortuous actions of Recipient or a third party contractor performing obligations on behalf of Recipient under this Agreement, or (b) the failure of Recipient or such a third party contractor to perform such Recipient’s obligations under this Agreement. Recipient will be responsible for any additional costs incurred by Supplier in connection with providing the Services as a result of any such failure. Supplier will use commercially reasonable efforts to perform its obligations notwithstanding such failure, provided that Recipient works with Supplier through the Relationship Managers to remedy the failure.

3.5 Required Consents.




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(a) Responsibility. Each Party will be responsible for obtaining any Required Consents required under its own third party contracts pertaining to any Software, Equipment, Systems or other materials or associated services required in connection with the Services under this Agreement. Such responsibility shall include the administrative activities necessary to obtain the Required Consents and payment of the fees and/or expenses associated with obtaining the Required Consents. In the event of a pending Sale or upon termination of any Service(s) or this Agreement, the Parties will cooperate in order to determine and obtain any Required Consents necessary in order to transition any Software, Equipment, Systems or other materials to the other Party and/or the Buyer(s).

(b) Contingent Arrangements. If, despite using commercially reasonable efforts, either Party is unable to obtain a Required Consent for which it is responsible under Section 3.5(a), such Party will use commercially reasonable efforts to obtain a replacement license, product or right, as applicable. If such replacement cannot be obtained using commercially reasonable efforts, the Parties will work together in good faith to develop a mutually acceptable alternative arrangement that is sufficient to enable Supplier to provide, and Recipient to receive the Services without such Required Consent. The Party responsible for obtaining the Required Consent will be financially responsible for the costs of such alternative arrangement. If the Parties can not reach a resolution under Section 3.5, either Party may require that the affected Services be discontinued in which case the Charges for Services will be equitably adjusted to account for such discontinuation.

3.6 Security Level; Additional Security Measures. Supplier may take physical or information security measures (a) that affect the manner in which the Services are provided to maintain Supplier’s current level (or, if greater, an industry-standard level) of physical and electronic security (including data security and data privacy) during the Term and (b) that address any new security-related issues, including compliance with applicable law and governmental orders related to security and issues in connection with new technologies or threats. Supplier shall provide Recipient reasonable, prior written notice of any such physical or information security measures that are material to Supplier’s delivery of the Services. Recipient shall provide all assistance reasonably requested by Supplier in connection with such security measures. Recipient shall pay to Supplier increased Charges for the applicable Services that may be required to equitably compensate Supplier for any additional costs it may reasonably incur in connection with such security measures with respect to the Services provided to Recipient under this Agreement.

4. USE OF AFFILIATES AND SUBCONTRACTORS.

4.1 Affiliates and Subcontractors.

(a) Use of Affiliates and Subcontractors. Subject to Section 3.1(a), Supplier will have the right to use Affiliates and Subcontractors to assist Supplier in the provision of the Services. Supplier shall adhere to Supplier’s then-current “Third Party Vendor Management” policies when engaging Subcontractors to perform Services under this Agreement. In respect of any material Services for which Supplier desires to engage a Subcontractor, Supplier shall seek and obtain Recipient’s approval of such Subcontractor, which approval Recipient shall not unreasonably withhold or delay; provided, however, that




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all Subcontractors engaged or otherwise performing services for Supplier as of the Effective Date are hereby deemed approved by Recipient.

(b) Supplier Responsibility for Affiliates and Subcontractors. Supplier shall remain responsible for the Services performed by its Affiliates and Subcontractors to the same extent as if such Services were performed by such Supplier. In the event that Supplier’s subcontractor(s) fails to perform their obligations for which Supplier is utilizing them under this Agreement, Supplier will not be responsible or liable for such failure. However, Supplier will exercise any rights that it may have under its contract with the Subcontractor to cause the Subcontractor to resolve or cure any such failure within a reasonable time period, taking into consideration the circumstances of such failure, the nature of the services and the impact that such failure has on the Recipient. If such failure is not resolved or cured within a reasonable time period, Supplier will exercise any rights that it may have under its contract with the Subcontractor in the same manner that Supplier responds to such failure with respect to the services such Subcontractor provides for Supplier or Supplier’s Affiliates businesses, taking into consideration the circumstances of such failure, the nature of the services and the impact that such failure has on the Recipient. Supplier shall be Recipient’s sole point of contact regarding the Services, including with respect to payment. In addition, each Party, in its capacity as Supplier, will monitor and manage (including any necessary audits as to data privacy and security) its Subcontractors being used to perform Services for Recipient in compliance with Supplier’s third party vendor management policies and procedures throughout the Term and any renewal or extension of the Agreement.

4.2 Compliance. Supplier will cause its employees and agents as well as the employees of its Affiliates and Subcontractors while at Recipient Facilities, to comply with the personnel, operational, safety and security procedures, policies, rules and regulations applicable to Recipient employees and agents and the Recipient Facilities, of which they have been given notice in advance by Recipient.

5. RELATIONSHIP MANAGEMENT.

5.1 Relationship Managers. Each Party will appoint an individual (each, a “Relationship Manager”) who, from the Effective Date until replaced by the appointing Party, will serve as that Party’s representative under this Agreement. Each Relationship Manager will (a) have overall responsibility for managing and coordinating the performance of the appointing Party’s obligations under this Agreement, and (b) be authorized to act for and on behalf of the appointing Party concerning all matters relating to this Agreement. Neither Party will reassign a Relationship Manager, unless it provides at least ten (10) days prior written notice to the other Party. If a Relationship Manager ceases to be employed by the Party that appointed it or is reassigned by such Party, such Party will promptly appoint a new Relationship Manager and provide written notice to the other Party of the new Relationship Manager so appointed.

5.2 Governance Model. The Parties will conduct meetings and manage interactions in accordance with the governance model described in Schedule B.




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5.3 Reports. Each Party will provide to the other Party the reports described in the applicable Statement of Work, in the format and at the frequencies specified therein. In addition, ResCap will provide AFI access to such information and reports in their possession and control about ResCap and its direct and indirect Affiliates as AFI requests from time to time for regulatory reporting, audit, risk management, compliance, corporate governance, bank and/or bank holding company supervision and/or examination, and or other business purposes.

5.4 Regulatory Review. Each Party will notify the other promptly of any formal request or order by a governmental agency or regulator or any internal or external audit examination or request to examine records regarding Recipient that are maintained by Supplier or to audit Supplier’s performance of the Services. Supplier will cooperate with any such examination or audit. Recipient will reimburse Supplier for the actual and reasonable out-of-pocket costs Supplier incurs in connection with that examination or audit.

5.5 Books and Records; Audit. Each Party acting in its capacity as a Supplier will, and will cause its Affiliates providing Services hereunder to, keep books of account and other records, in reasonable detail and in accordance with generally accepted accounting principles, consistently applied, as to the Charges for providing the Services to Recipient pursuant to this Agreement, and shall make such books of account and other records available to Recipient (and to any Governmental Authority that desires to audit Recipient) for inspection during normal business hours in a non-disruptive manner so as not to disrupt Supplier’s business operations during the Term and for twenty-four (24) months thereafter for the purpose of performing audits and inspections of Supplier, related to the Services performed under this Agreement to: verify the accuracy of Charges and invoices.

5.6 Each Party acting in its capacity as a Supplier shall, and will cause its Affiliates providing Services hereunder to, use commercially reasonable efforts to provide to such auditors, inspectors, regulators, and representatives, at Recipient's sole cost and expense, such assistance as they reasonably require. Recipient’s auditors and other representatives shall comply with Supplier’s security and confidentiality policies, procedures and requirements. All such inspections or audits may be performed only by an independent third party auditing firm of national standing that has a written agreement with Recipient in which such third party agrees (i) to confidentiality obligations no less protective of Supplier than Recipient’s confidentiality obligations under this Agreement and (ii) not to share with Recipient the Supplier information provided in connection with such inspection or audit, other than the findings and conclusions of the audit report.

5.7 Informal Dispute Resolution Procedures. The informal dispute resolution procedures applicable to disputes under or in connection with this Agreement are set forth in Schedule B.

5.8 Continued Performance. Each Party agrees that it will, unless otherwise directed by the other Party, continue performing its obligations under this Agreement while any dispute is being resolved until this Agreement expires or is terminated in accordance with its terms, provided, however, that in the case of a dispute with regards to a Party’s alleged failure to pay amounts in excess of two (2) times the average monthly Charges for the Services provided




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hereunder to such Party or its Affiliates, Supplier may suspend its performance of the Services until the earlier of such dispute is resolved or this Agreement is terminated; provided, further, that if Recipient pays such disputed amounts, (a) Supplier will continue to perform its obligations under this Agreement and (b) such payment will not constitute a waiver of any claims Recipient may have with respect to such disputed amounts.

6. FACILITIES.

6.1 Use of Recipient Facilities.

(a) General. Except as expressly set forth otherwise in any applicable Statement(s) of Work, each Party will, and will cause its Affiliates to, acting in its capacity as “Recipient”, provide to Supplier, at no charge, the space, office furnishings, janitorial service, telephone service, utilities (including air conditioning) and office-related equipment, supplies, and duplicating services at Recipient’s premises that Supplier may reasonably need to provide the Services (collectively, the “Recipient Facilities”). In addition, each Party will, and will cause its Affiliates to, acting in its capacity as “Recipient” provide necessary storage space for backup data files related to the Services and will provide additional storage space that may be required by any change in retention schedules required by Recipient. Supplier’s employees will have reasonable access to the Recipient Facilities twenty-four hours a day, seven days a week; provided, however, that in times of emergency, turnaround or significant maintenance or construction activity, access may be restricted or denied if not required in connection with such emergency, turnaround, maintenance or construction. In such an event, Supplier will be excused from its performance of the Services to the extent Supplier is unable to provide the Services in accordance with the requirements of this Agreement as a result of such restricted access.

(b) Relocation. If Recipient contemplates or makes a final decision to alter or relocate any of the Recipient Facilities or if a Change of Control is pending that will require Supplier to relocate any of its personnel or Equipment from any Recipient Facility and the alteration or relocation could reasonably be expected to impact the Services (including the cost to perform, timing, ability to perform or level of performance) then Recipient will provide Supplier with sufficient advance notice of that fact to allow Supplier a reasonable amount of time to prepare for and implement the alteration or relocation as it impacts Supplier. The Parties acknowledge that in the case of a Change of Control it is likely that personnel and Equipment of each Party will be required to be relocated from the other Party’s facilities. The Parties will work together in good faith for a planned and orderly process for such relocation, timed as much as possible to coincide with the scheduled completion of migration of all Services provided by each of them for the other from such facility, and each Party will bear its own relocation costs and expenses. Before requiring Supplier to relocate from any Recipient Facilities, the Parties will agree on any adjustments to (i) the Services that may be required as a result of the alteration or relocation, and (ii) Supplier’s Charges that may be required to equitably compensate Supplier for any additional costs it may reasonably incur in connection with the alteration or relocation.

(c) Supplier’s Obligations. Supplier will (i) keep the Recipient Facilities in good order, and (ii) not commit waste or damage to those facilities or use those facilities for




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any purpose other than providing the Services (and appropriate incidental use for internal Supplier administrative tasks unrelated to other customer accounts or Supplier marketing efforts).

(d) Access to Recipient Systems. Supplier will limit its, and will require that all Supplier Personnel who have access to Recipient Systems will limit their, access to those portions of such Recipient Systems for which they are authorized in connection with the Services. Supplier will limit such access to those Supplier Personnel who are needed in order to provide the Services. Supplier will cooperate with Recipient in the investigation of any apparent unauthorized access by Supplier Personnel to the Recipient Systems.

6.2 Supplier Facilities and Systems.

(a) Supplier Facilities. Supplier may perform the Services in such facilities maintained by or for Supplier or its Affiliates or Subcontractors (collectively, “Supplier Facilities”) as Supplier reasonably deems appropriate, so long as appropriate security procedures have been implemented and are being observed at the Supplier Facilities. While at Supplier Facilities, each Party will, and will cause its and its Affiliates’ personnel to, in its capacity as “Recipient”, comply with Supplier’s reasonable security requirements and other relevant policies of which they have been given notice.

(b) Access to Supplier Systems. Each Party in its capacity as Recipient will limit its, and will require that all Recipient personnel who have access to Supplier’s computer or electronic data storage systems to, limit their, access to those portions of such systems for which they are authorized in connection with their receipt and use of the Services. Each Party in its capacity as Recipient will (i) limit such access to those Recipient personnel who are authorized to use the Services, (ii) subject to Recipient’s record retention policy, make available, upon Supplier’s request, to Supplier a written list of the names of each individual who has been granted such access, and (iii) adhere to Supplier’s security rules and procedures for use of Supplier’s systems. All user identification numbers and passwords disclosed to the Recipients to permit Recipient personnel to access the Supplier systems will be deemed to be, and will be treated as, Supplier’s Confidential Information. Recipient will cooperate with Supplier in the investigation of any apparent unauthorized access by Recipient personnel to Supplier’s systems.

6.3 Physical Security for Facilities. Supplier will be responsible for all security procedures at any Supplier Facilities. Each Party as Recipient will provide all necessary security personnel and security equipment at the Recipient Facilities. While at the Recipient Facilities, each Party as Supplier will cause all Supplier Personnel to comply with Recipient’s physical security procedures, as made known to Supplier’s Relationship Manager.

7. INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

7.1 Ownership of Pre-Existing Intellectual Property. Except as expressly provided in Section 7.2, and 7.3, nothing in this Agreement shall grant or transfer any rights, title or interests in any Intellectual Property invented or created before or after the Effective Date by




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or on behalf of a Party and/or its Affiliates or otherwise controlled by or licensed to such Party and/or its Affiliates (the "Pre-Existing Intellectual Property"). A Party’s use of the other Party’s Pre-Existing Intellectual Property shall not modify the ownership rights set forth above.

7.2 Development of Intellectual Property. Subject to Section 8, as between the Parties (and without affecting Recipient’s right, title and interest in and to Recipient Data or any Confidential Information of Recipient), all Intellectual Property developed or acquired by or for Supplier or any of its Affiliates in connection with providing the Services shall be owned by Supplier. Any services that rely on New Developments are outside the scope of the Services under this Agreement and therefore would have to be separately negotiated and agreed upon by the Parties.

7.3 Limited License to Use Supplier Work Processes and Software. Supplier grants to Recipient a limited, non-exclusive, non-assignable license, with the right for Recipient to grant sublicenses to its Affiliates, to use the work processes and Software owned by Supplier and/or its Affiliates that are provided to Recipient in connection with the Services solely to the extent necessary for Recipient to receive Services, and perform its responsibilities under this Agreement during the Term. THE SUPPLIER WORK PROCESSES AND SOFTWARE AND ALL DELIVERABLES ARE PROVIDED BY SUPPLIER ON AN AS-IS BASIS. SUPPLIER EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO SUCH WORK PROCESSES AND SOFTWARE AND DELIVERABLES.

7.4 No Implied Licenses. Except as expressly specified in this Agreement, nothing in this Agreement will be deemed to grant to one Party, by implication, estoppel or otherwise, license rights, ownership rights or any other Intellectual Property Rights in any work processes, Software or other materials, data or information owned by the other Party or any Affiliate of the other Party.

8. RECIPIENT DATA.

8.1 Definition. The term “Recipient Data” means (i) any data or information of Recipient or its respective vendors, customers or other business partners that is provided to or obtained by Supplier in the performance of its obligations under this Agreement, including data and information regarding Recipient’s businesses, customers, operations, facilities, products, consumer markets, assets and finances in whatever form or format including in the form of any analysis or compilation of such data, and (ii) any data or information collected or processed in connection with the Services, even if such data or information is contained in reports, documentation, compilations or analyses provided to Recipient as part of the Services. For the avoidance of doubt, Supplier retains ownership of data pertaining to its performance of Services, including data pertaining to the volume and quality of the Services.

8.2 Ownership. As between Recipient and Supplier, Recipient owns and will continue to own all right, title and interest in and to all Recipient Data. To the extent that




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Recipient Data is embedded or incorporated into reports and other documentation, analyses, compilations and other materials (including code or software) owned or licensed by Supplier (“Supplier Materials”) and provided to and for use by Recipient as part of the Services, Supplier will not be deemed to have assigned or transferred any of its right, title or interest in or to any underlying Intellectual Property Rights thereto. Supplier hereby grants to Recipient a perpetual, irrevocable, royalty free, transferable (to a Buyer of all or substantially all of the core business of Recipient) license to use, reproduce, display and perform (whether publicly or otherwise) and modify (and have others exercise such rights on behalf of Recipient (or Buyer)) such Supplier Materials solely as necessary for Recipient’s (or Buyer’s) use in the ordinary course of its mortgage related business. Recipient’s (or Buyer’s) use (including, without limitation, the use by any third party on behalf of Recipient (or Buyer)) of the Supplier Materials is subject to the confidentiality obligations set forth below in Section 9 and any third party restrictions imposed on any Supplier Materials of which Supplier makes Recipient aware. Additionally, Recipient's ownership of the Recipient Data reflected in Supplier Materials shall not serve to transfer or otherwise affect any of Supplier's right, title and/or interest in and/or to any of underlying Intellectual Property Rights in any Supplier Materials. Supplier may not use Recipient Data for any purpose except: (x) to provide the Services; (y) as required by AFI as the parent of ResCap to meet its financial and regulatory reporting requirements; or (z) as otherwise permitted under this Agreement, nor may Supplier sell, assign, lease or otherwise dispose of or commercially exploit Recipient Data. Supplier acknowledges that Recipient is not restricted from using or disseminating Recipient Data in the format in which it is provided by Supplier or any different format.

8.3 Data Security. Supplier will establish and maintain safeguards against the destruction, loss or alteration of Recipient Data in its possession that are no less rigorous than those for Supplier’s operations. If Recipient reasonably requests additional safeguards for Recipient Data, Supplier will provide those additional safeguards as Additional Services under a new Supplement subject to Sections 3.2 and 3.3. Recipient has established backup security for data and keeps backup data files in its possession. If Recipient chooses to establish additional backup security and backup data files, it may do so, except that if such activities increase Supplier’s cost of providing the Services or require Additional Services or Customized Services, such activities will be subject to Sections 3.2 and 3.3. In all instances, Recipient will ensure that Supplier will have access to the backup data files as Supplier reasonably needs to provide the Services.

9. CONFIDENTIALITY.

9.1 Obligations. Each Party will retain the other Party’s non-public, proprietary and confidential information with the same degree of care as it uses to avoid unauthorized use, disclosure, publication or dissemination of its own confidential information of a similar nature (“Confidential Information”) in confidence and not disclose the same to any third party nor use the same, except as expressly permitted in this Section 9. As used in this Agreement, “Confidential Information” shall include all non-public information, in any form, furnished or made available directly or indirectly by one Party to the other that is (a) marked confidential, restricted, proprietary and/or with a similar designation and/or (b) provided under circumstances reasonably indicating that it is confidential, restricted and/or proprietary. The terms and conditions of this Agreement shall be deemed Confidential Information. In the case




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of either Party, Confidential Information also shall include, whether or not designated “Confidential Information”, (i) Software, materials and other Intellectual Property owned by the disclosing Party, and (ii) all non-public information concerning the operations, affairs and businesses of a Party or its Affiliates, the financial affairs of a Party or its Affiliates, and the relations of a Party or its Affiliates with its customers, employees and service providers (including customer lists, customer information, account information and consumer markets).

9.2 Excluded Information. Excepted from the obligations of confidence and non-use under this Section 9 is that information which:

(a) the receiving Party is legally required to disclose, which disclosure shall be made in accordance with the below provisions of Section 9.3;

(b) is independently developed by the receiving Party without reference to Confidential Information of the disclosing Party;

(c) was, at the time of disclosure to it, in the public domain;

(d) after disclosure to it, is published or otherwise becomes part of the public domain through no fault of the receiving Party;

(e) was in the possession of the receiving Party at the time of disclosure to it;

(f) was received after disclosure to it from a third party who had a lawful right to disclose such information to it without any obligation to restrict its further use or disclosure.

9.3 Compelled Disclosure. Notwithstanding the provisions of this Section 9, if the receiving Party becomes legally compelled to disclose any of the disclosing Party’s Confidential Information, the receiving Party will promptly advise the disclosing Party of such legal requirement to disclose Confidential Information in order that the disclosing Party may seek a protective order, may interpose an objection to such disclosure, take action to assure confidential handling of the Confidential Information, or take such other action as it deems appropriate to protect the Confidential Information in the circumstances. The receiving Party will disclose only that portion of the disclosing Party’s Confidential Information that it is legally required to disclose.

9.4 Return of Information. Except for Confidential Information for which a continuing license is granted to the receiving Party under this Agreement, upon written request by the disclosing Party or upon Termination or conclusion of the Agreement, all of the disclosing Party’s Confidential Information in whatever form will be returned to the disclosing Party or destroyed by the Receiving Party and certified as such to the Disclosing Party, without retaining copies thereof, except that any instances of such Confidential Information in an archived form that are commercially impractical to return may be retained so long as the receiving Party does not access or make use of such Confidential Information after receipt of the written request for return from the disclosing Party.

9.5 Exception. Notwithstanding anything else in this Section 9, Supplier will have a




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right to disclose Recipient’s Confidential Information to third parties to the extent reasonably necessary for Supplier to accomplish its responsibilities contemplated hereunder or for Supplier to comply with its obligations under applicable law, including its reporting obligations under applicable law, and, in the case of AFI, to use Confidential Information of ResCap to operate AFI’s business, consistent with the manner such Confidential Information was used by AFI prior to the Effective Date; provided, however, that such disclosure to third parties will be made under confidentiality terms and conditions that are no less favorable to Recipient than the provisions of this Section 9 or, if less favorable, that are consistent with Recipient’s customary practice for the nature of the third party receiving Recipient’s Confidential Information.

9.6 Obligations.

(a) Each Party's Confidential Information shall remain the property of that Party except as expressly provided otherwise by the other provisions of this Agreement. Except as otherwise provided in this Agreement, each Party shall each use at least the same degree of care, but in any event no less than a reasonable degree of care, to prevent disclosing to third parties the Confidential Information of the other as it employs to avoid unauthorized disclosure, publication or dissemination of its own information of a similar nature.

(b) In the event of any disclosure or loss of any Confidential Information of the disclosing Party, the receiving Party shall notify the disclosing Party promptly upon become aware thereof.

9.7 Loss of Confidential Information. In the event of any disclosure or loss of any Confidential Information of the disclosing Party due to the fault of the receiving Party, the receiving Party shall promptly, at its own expense: (a) notify the disclosing Party in writing; and (b) cooperate in all reasonable respects with the disclosing Party to minimize the violation and any damage resulting therefrom.

9.8 No Implied Rights. Nothing contained in this Section 9 shall be construed as obligating a Party to disclose its Confidential Information to the other Party, or as granting to or conferring on a Party, expressly or impliedly, any rights or license to the Confidential Information of the other Party.

10. COMPENSATION.

10.1 General. ResCap will pay to AFI the Charges as set forth in Schedule C-1a and elsewhere in Schedule C, and AFI will pay to ResCap the Charges as set forth in Schedule C-2a and elsewhere in Schedule C. Supplier will provide Recipient with estimated invoices (with information linking the Services delivered to the invoice amounts) on a monthly basis on or before the last day of each calendar month for all Services performed by Supplier and all related Charges incurred by Recipient during that month. The last business day of the calendar month is the cut-off for delivered Services and related Charges to be invoiced in the next calendar month. The estimated charges will be adjusted to actual charged by the last day of the following month. Recipient will pay the estimated and adjusted actual invoices within




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45 days of the receipt of an invoice from Supplier. Any payment by Recipient is without prejudice of its right to contest the accuracy of any Charges.

10.2 Taxes. In addition to the prices determined pursuant to Schedule C, each Party will pay, and hold the other Party harmless against, all goods and services, sales, use, excise and other taxes, and other fees or assessments imposed by law in connection with the provision of the Services by the other Party, other than taxes measured by the other Party’s net income. The Parties will cooperate with each other and use commercially reasonable efforts to assist the other in entering into such arrangements as the other may reasonably request in order to minimize, to the extent lawful and feasible, the payment or assessment of any taxes relating to the transactions contemplated by this Agreement; provided, however, that nothing in this Section 10.2 will obligate Supplier to cooperate with, or assist, Recipient in any arrangement proposed by Recipient that would, in Supplier’s sole discretion, have a detrimental effect on Supplier or any of Supplier’s Affiliates.

10.3 Invoicing and Payment. Supplier will invoice Recipient in accordance with Schedule C. Payments for amounts past due will bear interest calculated on a per annum basis from the due date to the date of actual payment at a fluctuating interest rate equal at all times to the prime rate of interest announced publicly from time to time by Citibank, N.A. plus two percent (2%), but in no case higher than the maximum rate permitted by Law. Each Party will make payments under this Agreement by electronic funds transfer in accordance with payment instructions provided by the other Party in its capacity as Supplier from time to time.

11. REPRESENTATIONS AND WARRANTIES.

11.1 Services. Supplier represents and warrants to Recipient that it will use the level of care in providing the Services required by Section 3.1(c), or with respect to Services that are dedicated to Recipient (i.e., where Supplier does not provide similar services to itself or its Affiliates), Supplier will provide such Services using commercially reasonable efforts and in a workmanlike manner, and in accordance with commercially reasonable practices.

11.2 Maintenance. Supplier represents and warrants to Recipient that it shall provide for the maintenance of the Supplier Systems, Supplier Equipment and Supplier Software in the same manner that such functions were generally performed by Supplier for Recipient immediately prior to the effective Date and thereafter in a manner consistent with the standard of performance required by Section 3.1(c), for such items to generally operate in accordance with the manner in which they operated in the past or in the manner in which they operate in the future in support of Supplier and its Affiliates.

11.3 Authorization. Each Party represents and warrants to the other Party that, subject to approval of this Agreement by the Bankruptcy Court: (a) it has the requisite corporate power and authority to enter into this Agreement and to carry out the transactions contemplated by this Agreement; and (b) the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by the requisite corporate action on the part of such Party.

11.4 Viruses. Each Party represents and warrants to the other Party that it shall use the




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same efforts that it uses with respect to its own users and Systems, to avoid computer viruses from being introduced into the Systems of the other Party under this Agreement or the Systems that such Party is using to perform Services hereunder.

11.5 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 11, NONE OF SUPPLIER, ITS AFFILIATES OR ANY OF THEIR RESPECTIVE REPRESENTATIVES MAKE OR HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE SERVICES, INCLUDING WITH RESPECT TO (A) MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE, (B) THE USE OF THE SERVICE BY RECIPIENT AFTER THE RECEIPT THEREOF, OR (C) THE PROBABLE SUCCESS OR PROFITABILITY OF RECIPIENT’S OR ANY OF RECIPIENT’S BUSINESS AFTER THE RECEIPT OF THE SERVICES.

12. INSURANCE.

12.1 Insurance. At all times during the Term and any extension hereof, unless and until the effective date of the Plan, ResCap, its Affiliates, and all of their respective directors, officers and employees will be covered under AFI’s existing policies of insurance. Upon and following the effective date of the Plan, (i) both Parties will procure and maintain in full force and effect their own insurance policies at their own expense and for their own benefit, as determined by each party independently, but consistent with any and all applicable federal, state and local laws or regulations, and (ii) AFI will use commercially reasonable efforts to continue to renew its current blended directors and officers liability and fiduciary liability insurance program (the “Current Program”), for a period of six years following the effective date of the Plan (the “Run Off Period”), on substantially the same terms and conditions as the Current Program and including prior acts coverage with respect to claims arising from acts or omissions that occurred prior to the Effective Date; provided that if AFI is unable to continue the Current Program for the entire Run Off Period despite its commercially reasonable efforts it shall promptly notify the Debtors and use best efforts to obtain run off coverage for the balance of the Run Off Period.

12.2 Risk of Loss. Supplier will be responsible for the risk of loss of, or damage to, any property of Recipient at a Supplier facility, unless and to the extent that such loss or damage was caused by the acts or omissions of Recipient and/or Recipient’s Affiliates, and/or its and/or their employees, agents and/or Subcontractors. Recipient will be responsible for the risk of loss of, or damage to, any property of Supplier at a Recipient facility unless and to the extent that such loss or damage was caused by the acts or omissions of Supplier and/or Supplier’s Affiliates, and/or its and/or their employees, agents and/or Subcontractors. The risk of loss of, or damage to, property in transit will remain with the Party arranging the shipment.

13. INDEMNIFICATION AND LIMITATIONS ON LIABILITY.

13.1 Indemnification.

(a) Recipient Indemnification. Recipient will indemnify, hold harmless and defend Supplier and its Affiliates and their respective directors, officers and employees




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(“Indemnified Parties”), from and against any and all liabilities, damages, penalties, judgments, assessments, losses, costs and expenses in any case, whether arising under strict liability or otherwise (including reasonable outside attorneys’ fees) (collectively, “Damages”) suffered or otherwise incurred due to a Third Party Claim arising from or out of or relating to this Agreement, including the performance (or failure to perform) by Supplier of its obligations under this Agreement; provided, however, that to the extent and in the proportion Damages also arise out of or relate to the gross negligence or willful misconduct of any Indemnified Party, then the indemnity under this Section 13.1(a) will not apply.

(b) Indemnification by Supplier. Supplier will indemnify, hold harmless and defend the Recipient Indemnified Parties from and against any and all Damages suffered or otherwise incurred due to a Third Party Claim to the extent arising from or out of or relating to the gross negligence or willful misconduct of any Supplier Parties; provided, however, that to the extent and in the proportion Damages also arise from or out of or relate to the performance (or failure to perform) by Recipient of its obligations under this Agreement, then Supplier’s indemnity under this Section 13.1(b) will not apply.

(c) Infringement.

(1) Indemnity. Supplier will indemnify, hold harmless and defend the Recipient Indemnified Parties, and Recipient will indemnify, hold harmless and defend the Supplier Indemnified Parties, from and against any and all Damages due to a Third Party Claim to the extent that the claim alleges that any information or materials provided by the Indemnifying Party to the Indemnified Party under this Agreement infringes or misappropriates any Intellectual Property Right of such third party in any country in which Services are performed or received under this Agreement.

(2) Exclusions. Neither Party shall have any obligation or liability to the other Party to the extent any infringement or misappropriation is caused by:

(i) modifications to any such information or materials made by the other Party, its Affiliates, or its third party contractors;

(ii) any combination of the allegedly infringing information or materials with items not provided by the Indemnifying Party , unless such combination was approved or directed in writing by the Indemnifying Party;

(iii) a breach of this Agreement by the other Party;

(iv) the failure of the other Party to use corrections or modifications provided by the Indemnifying Party offering equivalent features and functionality to the extent the Indemnifying Party notified the other Party that the failure to do so could result in infringement liability;

(v) the content provided by the other Party and not resulting from the Indemnifying Party’s modification of that content without the other Party’s approval; or




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(vi) third party Software, except to the extent that such infringement or misappropriation arises from the failure of the Indemnifying Party to obtain the necessary licenses or to abide by the limitations of the applicable third party Software licenses.

(3) Third Party Software Indemnities. As specified in Section13.1(c)(2)(vi), the foregoing infringement indemnification does not apply to third party Software. With respect to third party Software provided by Supplier or its Subcontractors pursuant to this Agreement, Supplier and its Subcontractors shall use commercially reasonable efforts to obtain intellectual property indemnification for Recipient (or obtain intellectual property indemnification for itself and enforce such indemnification on behalf of Recipient) from the suppliers of such Software comparable to the intellectual property indemnification generally available in the industry for the same Software products. With respect to third party Software provided by Recipient pursuant to this Agreement, Recipient shall use commercially reasonable efforts to obtain intellectual property indemnification for Supplier and its Affiliates (or obtain intellectual property indemnification for itself and enforce such indemnification on behalf of the Supplier and its Affiliates) from the suppliers of such Software comparable to the intellectual property indemnification generally available in the industry for the same Software products.

(d) Indemnification Procedure. The Party making a claim for indemnification under this Section 13.1 is referred to as the “Indemnified Party” and the Party or other Persons against whom such claims are asserted under this Section 13 are referred to as the “Indemnifying Party.” All claims by any Indemnified Party under this Section 13 will be asserted and resolved as follows:

(1) In the event that any right, demand, claim, action and cause of action, assertion, notice of claim or assertion, complaint, litigation, suit, proceeding, formal investigation, inquiry, audit or review of any nature, civil, criminal, regulatory, administrative or otherwise, or any grievance or arbitration (each, a “Claim”) is asserted or instituted in writing by any person or entity other than the Parties or their Affiliates that could give rise to Damages for which an Indemnifying Party could be liable to an Indemnified Party under this Agreement (such Claim, a “Third Party Claim”), the Indemnified Party will promptly send to the Indemnifying Party a written notice specifying the nature of such Third Party Claim, together with all information reasonably available to the Indemnified Party with respect to such Third Party Claim (a “Third Party Claim Notice”); provided, however, that a delay in notifying the Indemnifying Party will not relieve the Indemnifying Party of its obligations under this Agreement, except to the extent that such failure will have caused actual prejudice to the Indemnifying Party.

(2) In the event of a Third Party Claim, the Indemnifying Party will have ten (10) business days after receipt of the Third Party Claim Notice relating to such Third Party Claim to elect to undertake, conduct and control, through counsel of its own choosing (provided that such counsel is reasonably acceptable to the Indemnified Party) and at its own expense, the settlement or defense of such Third Party Claim (in which case the Indemnifying Party will not thereafter be responsible for the fees and expenses of any separate counsel retained by any Indemnified Party except as set forth below). Notwithstanding an Indemnifying Party’s election to appoint counsel to represent an Indemnified Party in connection with a Third Party Claim, an Indemnified Party will have the right to employ separate counsel, and the Indemnifying Party will bear the reasonable fees, costs and expenses of such separate counsel if




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(i) the use of counsel chosen by the Indemnifying Party to represent the Indemnified Party would present such counsel with a conflict of interest, or (ii) the Indemnifying Party will not have employed counsel to represent the Indemnified Party within a reasonable time after notice of the institution of such Third Party Claim. If the Indemnifying Party elects to undertake such defense, it will promptly assume and hold such Indemnified Party harmless from and against the full amount of any Damages resulting from such Third Party Claim to the extent provided herein. If the Indemnifying Party elects to undertake such defense, (x) the Indemnified Party agrees to cooperate with the Indemnifying Party and its counsel in contesting such Third Party Claim, and, if appropriate and related to such Third Party Claim, the Indemnifying Party and the Indemnified Party will reasonably cooperate with each other in connection with defending such Third Party Claim, and (y) such Third Party Claim may not be settled or compromised by the Indemnifying Party without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed; provided, however, that in the event any Indemnified Party settles or compromises or consents to the entry of any judgment with respect to any Third Party Claim without the prior written consent of the Indemnifying Party, such Indemnified Party will be deemed to have waived all rights against the Indemnifying Party for indemnification under this Section 13. If the Indemnifying Party does not undertake the defense of such Third Party Claim, the Indemnified Party will have the right to contest, settle, compromise or consent to the entry of any judgment with respect to such Third Party Claim, and, in doing so, will not thereby waive any right to recourse therefor pursuant to this Agreement; provided, however, that at any time during the course of the matter the Indemnifying Party may assume the defense of such Third Party Claim by written notice of the same to the Indemnified Party.

(3) In the event of a Third Party Claim, from and after the delivery of a Claim Notice under this Agreement, at the request of the Indemnifying Party, the Indemnified Party will grant the Indemnifying Party and its representatives all reasonable access to the books, records and properties of such Indemnified Party to the extent reasonably related to the matters to which the Claim Notice relates. All such access will be granted during normal business hours and will be granted under conditions that will not unreasonably interfere with the businesses and operations of such Indemnified Party. The Indemnifying Party will not, and will cause its representatives not to, use (except in connection with such Claim Notice or such Third Party Claim) or disclose to any third person or entity other than the Indemnifying Party’s representatives (except as may be required by Law) any information obtained pursuant to this Section 13.1(c)(3), which is designated by the Indemnified Party as (or provided under circumstances in reasonably indicating that it is) confidential.

13.2 Limitations on Liability.

(a) Subject to the specific provisions and limitations of this Section 13.2, it is the intent of the Parties that each Party will be liable to the other Party for all Damages incurred by the non-breaching Party arising out of the breach of or failure to perform any of the breaching Party’s agreements, covenants or obligations under this Agreement. If a Party has a Claim for such Damages, it will promptly send to the breaching Party a written notice specifying the nature of such Claim, together with all information reasonably available to such non-breaching Party with respect to such Claim (a “Claim Notice”); provided, however, that a delay in notifying the breaching Party will not relieve the breaching Party of its obligations under this Agreement, except to the extent that such failure will have caused




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actual prejudice to the breaching Party. In the event of such a Claim, the breaching Party will notify the non-breaching Party within 45 days of receipt of a Claim Notice whether or not the breaching Party disputes such Claim.

(b) The total aggregate liability of Supplier under or in connection with this Agreement, regardless of the form of the action or the theory of the recovery, will be limited to:

(1) With respect to Damages arising out of or relating to the failure by Supplier to meet the standards set forth in Section 11.1, subject to Section 13.2(b)(2), at Recipient’s option, which option Recipient shall exercise in its reasonable discretion after reasonably consulting with Supplier and after exhausting the escalation process set forth in Schedule B, the replacement of (if applicable) or re-performance of, or repayment of the price paid for, such Service; provided, however, that if Recipient requests the replacement of or re-performance of such Service, Supplier shall, instead have the option of refunding to Recipient the price paid for such Service in those instances where re-performance or replacement of the Services cannot, in Supplier’s good faith opinion be completed in a commercially reasonable manner. In the limited instances where Supplier determines that Supplier cannot replace or re-perform the Services in a commercially reasonable manner, Recipient shall have the option to terminate those specific Services from the Agreement without cost to Supplier other than the refund for the Services not performed in accordance with the Agreement discussed above. In any such limited instance, Recipient may elect to terminate and no longer have any obligation to pay for those specific Services under the Agreement, and Supplier’s obligation will be limited to the refund discussed above and any reasonable cooperation requested by Recipient in the transition of the terminated services to Recipient or a third party.

(2) With respect to indemnity Claims under Section 13.1 or other Claims arising out of or relating to the gross negligence or willful misconduct of Supplier, the fees actually received by Supplier from Recipient for Services during the twelve (12) months preceding the last act or omission giving rise to such Claims or, in the event such last act or omission occurs during the first twelve (12) months following the date hereof, an amount equal to twelve (12) times the fees paid for Services in the month preceding such last act or omission;

(3) With respect to all other Damages under or in connection with this Agreement, the fees actually received by Supplier from Recipient for Services during the twelve (12) months preceding the last act or omission giving rise to such Damages or, in the event such last act or omission occurs during the first twelve (12) months following the date hereof, an amount equal to twelve (12) times the fees paid for Services in the month preceding such last act or omission.

(c) Each Party will use its commercially reasonable efforts to mitigate Damages for which it seeks recourse hereunder, including by promptly pursuing recovery under available insurance policies, provided, however, that the failure of such Party to successfully mitigate such Damages will not affect such Party’s right to seek recourse with respect to such Damages so long as such Party will have used its commercially reasonable efforts to mitigate.

(d) Any amounts payable under Article 13 will be calculated after giving effect to any proceeds received from insurance policies covering the Damages.




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(e) IN NO EVENT SHALL EITHER PARTY, ITS AFFILIATES OR ANY

OF ITS OR THEIR DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS BE RESPONSIBLE OR LIABLE TO THE OTHER PARTY OR ITS AFFILIATES FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, OR PUNITIVE DAMAGES, OR FOR ANY LOSS OF PROFITS, LOSS OF REVENUE, LOSS RESULTING FROM INTERRUPTION OF BUSINESS OR LOSS OF USE OR DATA, EVEN IF THAT PARTY, ITS AFFILIATES OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY OF ANY KIND, UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY, ARISING OUT OF OR RELATING IN ANY WAY TO THIS AGREEMENT OR ITS IMPLEMENTATION.

13.3 Indemnification and Limitations on Liability Relating to Negligence and Strict Liability. ALL INDEMNITIES AND LIMITATIONS ON LIABILITY CONTAINED IN THIS SECTION 13

WILL APPLY WHETHER OR NOT THE INDEMNITEE OR PARTY CLAIMING DAMAGES WAS OR IS CLAIMED TO BE PASSIVELY, CONCURRENTLY OR ACTIVELY NEGLIGENT, AND REGARDLESS OF WHETHER LIABILITY WITHOUT FAULT IS IMPOSED OR SOUGHT TO BE IMPOSED ON SUCH INDEMNITEE OR PARTY.

13.4 Exclusive Remedy. Neither Party will have any remedy arising out of or relating to the breach of this Agreement other than the indemnification remedies set forth in Section 13.1

and Claims for direct damages referred to in Section 13.2, in each case subject to the limitations and exclusions set forth in this Section 13.

13.5 Insurance. From and after the completion of a Sale, each Party will cause its insurers to waive their rights of subrogation against the other Party with respect to any Claim.

14. TERMINATION.

14.1 Termination. Without limiting the rights of the Parties under any other provision of this Agreement, any Service to be provided under this Agreement may be terminated as follows:

(a) by either Party acting in its capacity as “Supplier”, upon written notice to the other Party if, after Recipient fails to pay the Charges for such Service when due in accordance with this Agreement, the terminating Party sends to the other Party an initial notice of such failure and the other Party fails to pay such Charges within forty-five (45) days of receipt of such initial notice; or

(b) by either Party acting in its capacity as “Supplier”, upon written notice to the other Party if, following a material breach by Recipient of this Agreement other than a payment default, the terminating Party sends to the other Party a notice of such material breach and the other Party fails to cure such material breach within 30 days; provided

however, that if cure cannot reasonably be accomplished within such 30-day period, this Agreement may not be terminated by reason of such breach for so long as the other Party




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commences a cure within such 30-day period and pursues such cure diligently to completion and such completion occurs within 90 days of such written notice; or

(c) by either Party acting in its capacity as “Recipient”, upon written notice to the other Party if, following a material breach by Supplier of this Agreement, the terminating Party sends to the other Party an initial notice of such material breach and the other Party fails to cure such material breach within 30 days of receipt of such initial notice; provided, however, that if cure cannot reasonably be accomplished within such 30-day period, this Agreement may not be terminated by reason of such breach for so long as the other Party commences a cure within such 30-day period and pursues such cure diligently to completion and such completion occurs within 90 days of such written notice;

(d) by either Party acting in its capacity as “Recipient”, upon at least ninety (90) days prior written notice to the other Party; or

(e) otherwise upon mutual agreement of the Parties.

14.2 Termination Following Sale. Upon the final approval by the Bankruptcy Court of a Sale, either Party in its capacity as a Supplier may within 14 days of such final approval elect to terminate the provision of the Services that such Party is required to provide to the other Party under this Agreement, effective upon the closing of such Sale. In the event of such termination, Recipient will provide Supplier with notice of any Termination Assistance Services required by Recipient within twenty-one (21) days after receipt of such notice.

14.3 Election of Terminating Party. In connection with any termination pursuant to this Section 14, the Party exercising such termination rights may elect to continue to receive the Services (other than Services so terminated) that the other Party provides to it.

14.4 Survival. Any provision of this Agreement which contemplates performance or observance subsequent to any termination or expiration of this Agreement will survive any termination or expiration of this Agreement and continue in full force and effect including, but not limited to, the following: Sections 8.2 (Ownership), 9 (Confidentiality), 10 (Compensation), 11 (Representations and Warranties), 12 (Insurance), 13 (Indemnification and Limitations on Liability), 14.4 (Survival), 14.5 (Rights Upon Termination or Expiration; Sale), 16.3 (Counterparts), 16.5 (Force Majeure), 16.6 (Further Assurances), 16.7 (Governing Law; Jurisdiction and Forum; Waiver of Jury Trial), 16.8 (Headings), 16.11 (Public Announcements), and 16.13 (Severability).

14.5 Rights Upon Termination or Expiration; Sale.

(a) Termination or Expiration. Commencing six (6) months prior to expiration of the Term or any extension thereof, or upon either Party receiving any notice of termination from the other Party pursuant to the above provisions of Section 14:

(1) At Recipient’s option, Supplier will provide to Recipient the termination assistance reasonably requested by Recipient to allow the Services to continue, and to facilitate the orderly transfer of responsibility for performance of the Services, including any migration of Recipient Data, to Recipient (collectively, “Termination Assistance Services”),




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for a period of up to six (6) months (or, with respect to information technology Services, eighteen (18) months) after the effective date of such termination of Services or expiration of the Term (the “Termination Services Periods”); provided however, that, if mutually agreed upon in writing by the Parties (including with respect to adjustments in Charges), the Termination Service Periods may be extended until the effective date of the Plan.

(2) The Termination Assistance Services to be provided during the Termination Services Periods may include, as and if reasonably required by Recipient, the following, among other Services: (i) developing, together with Recipient, a plan for the orderly transition of the performance of the Services, including the migration of Recipient Data from Supplier to Recipient or to a third party designated by Recipient; (ii) providing reasonable training for personnel of Recipient in the performance of the Services then being transitioned to Recipient or the third party designated by Recipient, to the extent Services are being assumed by that third party; and (iii) providing cooperation to Recipient to facilitate the transition of the performance of the Services to Recipient or to a third party designated by Recipient, in accordance with a mutually agreed upon transition plan for the applicable Services. If Supplier provides any access to Supplier facilities, Systems or resources in connection with the execution of such plan, Recipient will, and will cause its personnel and any third parties having such access to, comply with Supplier’s security and confidentiality requirements. Notwithstanding the foregoing, Supplier shall not be required to grant access to or share any of Supplier’s proprietary information, data or technology with any third party.

(b) Charges. ResCap will pay to AFI Charges for the Services described in Section 14.5(a) as provided in Schedule C, including during the Termination Services Periods. AFI will pay to ResCap Charges for the Services described in Section 14.5(a) as provided in Schedule C, including during the Termination Services Periods. In the event of any termination of Services by Supplier for cause, if approved by the Bankruptcy Court, Charges for the related Termination Assistance Services will be paid by Recipient monthly in advance.

14.6 Dedicated Assets. Upon the approval by the Bankruptcy Court of any Sale or as otherwise mutually agreed between the Parties to facilitate a Sale, AFI and ResCap each agree to promptly enter into good faith negotiations with the Buyer(s) in such Sale to agree on which, if any, Dedicated Assets are to be transferred to Recipient, an Affiliate of Recipient, or such Buyer(s), in connection with such Sale, and the terms and conditions of such transfer (including pricing and allocation of responsibility with respect to obtaining and paying for the associated Required Consents). Notwithstanding the allocation of responsibility for Required Consents in Section 3.5, except as otherwise agreed upon by the Parties, Recipient shall reimburse Supplier for any actual costs, losses, transfer fees or termination penalties incurred by Supplier in connection with the transfer or assignment to Recipient, an Affiliate of Recipient or such Buyer(s) of any Dedicated Assets. Supplier shall use good faith efforts to mitigate such costs including, to the extent feasible, by not entering into (or extending) during the Term such Supplier contracts that contain transfer fees or early termination penalties without the written consent of Recipient. For the avoidance of doubt, while each Party agrees to negotiate in good faith with respect to the transfer of Dedicated Assets, neither Party shall be obligated to transfer any Dedicated Assets, except as otherwise mutually agreed upon in writing by the Parties.




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14.7 Transition Services Agreement. Upon the approval by the Bankruptcy Court of any Sale or as otherwise mutually agreed between the Parties to facilitate a Sale, AFI and ResCap each agree to promptly enter into good faith negotiations with the Buyer(s) in such Sale for an agreement pursuant to which AFI, ResCap and/or the Buyer(s) would provide or receive, as applicable, reasonable specified transition services in connection with such Sale (the “Transition Services Agreement”). The services to be provided to the Buyer and the terms relating to the transition of certain Services are to be addressed in the Transition Services Agreement. For the avoidance of doubt, while AFI agrees to negotiate in good faith with ResCap and/or a Buyer with respect to entering into a Transition Services Agreement, AFI is not obligated to provide services to a Buyer or after a Sale, other than Termination Assistance Services as contemplated in Section 14.5(a)(2) unless otherwise agreed by AFI.

15. FULLY INTEGRATED AGREEMENT. The following provisions of this Section 15 are subject to the other provisions set forth in this Agreement relating to Recipient’s right to increase the amount of, decrease the amount of and/or terminate any Service provided to Recipient by and/or on behalf of Supplier.

15.1 Each of the Parties represents, warrants, covenants, and agrees that this Agreement including the exhibits and schedules thereto comprise a single, unitary, indivisible, and non-severable agreement governing the operational arrangements between Supplier and its Affiliates on the one hand and Recipient and its Affiliates on the other hand. Although various schedules in this Agreement describe different services, all of the Services covered by this Agreement are highly integrated and interdependent, such that removal of any of the services would impair the delivery, value or usability of the remaining services. Accordingly, the description of those Services and the associated terms in separate documents, including separate Charges for the Services, does not signify that each constitutes a separate agreement; instead, such treatment is intended solely to facilitate articulation of the terms and conditions of the overall single, unitary and indivisible transaction. The use of expressions “single”, “unitary”, “indivisible”, and “non-severable” to describe this Agreement is not merely for convenient reference. It is the conscious choice and express intent of the Parties to enter into a single, unitary, indivisible and non-severable transaction. Each of the Parties agrees that from an economic point of view this Agreement including all exhibits and schedules thereto reflect one indivisible and non-severable economic bargain between Supplier and Recipient, all other provisions of this Agreement and the provisions of each exhibit and schedule thereto, including such schedules and exhibits that may be executed following the Effective Date, have been negotiated and agreed to collectively as a single, composite, inseparable transaction, and that any one component of the transaction would not have been entered into other than as a part of the overall transaction. Except as expressly provided in this Agreement or any exhibit or schedule thereto for specific isolated purposes (and in such cases only to the extent expressly so stated, it otherwise being presumed that this paragraph is applicable), (i) all provisions of this Agreement including all exhibits and schedules thereto, including definitions, commencement and expiration dates, monetary provisions, use provisions, breach, default, setoff, recoupment, enforcement and termination provisions, and assignment, are integral to the entire transaction and are not severable; (ii) the economic terms of the transaction would have been substantially different had separate transactions been acceptable




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to the Parties; and (iii) the provisions of this Agreement including all exhibits and schedules thereto will at all times be construed, interpreted and applied such that the intention of all Parties to effect a unitary, indivisible transaction will be preserved and maintained.

15.2 Without limiting the foregoing Section 15.1, the Parties further agree that for all purposes, including any transfer, assignment, rescission, assumption, or rejection of this Agreement under Section 365 of the Bankruptcy Code or any amendment or successor section thereof, or otherwise, this Agreement including all exhibits and schedules thereto constitutes one indivisible, integrated and non-severable agreement dealing with and covering one legal and economic unit which must be transferred, assigned, rescinded, assumed, or rejected (as applicable) as a whole with respect to all (and not less than all) of the obligations covered under this Agreement including all exhibits and schedules thereto.

15.3 The terms and provisions of this Agreement govern the provision of all Services under this Agreement. 16. GENERAL.

16.1 Acknowledgement. The Parties acknowledge that the terms and conditions of this Agreement have been the subject of active and complete negotiations, and that this Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring either Party by virtue of the authorship of any provision of this Agreement.

16.2 Binding Effect; No Assignment. This Agreement is binding upon and inures to the benefit of the Parties and their respective successors, permitted assigns and legal representatives. This Agreement is not assignable by either Party without the prior written consent of the other Party, and any other purported assignment will be null and void.

16.3 Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which will be considered one and the same agreement, and will become effective when one or more counterparts have been signed by each of the Parties and delivered (including by facsimile) to the other Parties.

16.4 Entire Agreement. This Agreement, including the Schedules hereto, which are each hereby incorporated herein and made a part hereof, contains the entire agreement between the Parties with respect to the subject matter hereof. While purchase orders, invoices or similar routine documents may be used to implement or administer provisions of this Agreement, any provisions of such documents that add to, vary, modify or are at conflict with the provisions of this Agreement will be deemed deleted and will have no force or effect on either Party’s rights or obligations under this Agreement.

16.5 Force Majeure.

(a) “Force Majeure Event” means any event beyond the reasonable control of the Party affected that significantly interferes with the performance by such Party of its obligations under this Agreement, including acts of God, strikes, lockouts or industrial disputes or disturbances, civil disturbances, arrests or restraint from rulers or people,




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interruptions by government or court orders or present and future valid orders of any regulatory body having proper jurisdiction (other than any such interruption arising from the failure by the Party claiming force majeure to comply with any applicable regulation or to obtain and comply with any required permit), acts of the public enemy, wars, riots, blockades, insurrections, inability to secure labor or secure materials upon terms deemed practicable by the Party affected (including by reason of allocations, voluntary or involuntary, promulgated by authorized governmental agencies), epidemics, landslides, lightning, earthquakes, fire, storm, floods, washouts, explosions, breakage or accident to machinery.

(b) If a Force Majeure Event is claimed by either Party, the Party making such claim will orally notify the other Party as soon as reasonably possible after the occurrence of such Force Majeure Event and, in addition, will provide the other Party with written notice of such Force Majeure Event within five (5) days after the occurrence of such Force Majeure Event.

(c) Except for a Party's obligations to make payments hereunder (including those obligations of Section 10.3 hereof), neither Party hereto will be liable for any nonperformance or delay in performance of the terms of this Agreement when such failure is due to a Force Majeure Event and the Charges payable by Recipient shall be equitably adjusted such that Recipient is not be obligated to pay any Charges for any Services to the extent not performed due to a Force Majeure Event. If either Party relies on the occurrence of a Force Majeure Event as a basis for being excused from performance of its obligations hereunder, such Party relying on the Force Majeure Event will (i) provide an estimate of the expected duration of the Force Majeure Event and its probable impact on performance of such Party’s obligations hereunder and (ii) provide prompt notice to the other Party of the cessation of the Force Majeure Event.

(d) Upon the occurrence of a Force Majeure Event, the same will, so far as possible, be remedied as expeditiously as possible using commercially reasonable efforts. It is understood and agreed that nothing in this Section 16.5(d) will require the settlement of strikes, lockouts or industrial disputes or disturbances by acceding to the demands of any opposing party therein when such course is inadvisable in the discretion of the Party having the difficulty.

16.6 Further Assurances. Each Party covenants and agrees that, subsequent to the execution and delivery of this Agreement and without any additional consideration, each Party will execute and deliver any further legal instruments and perform any acts that are or may become necessary to effectuate the purposes of this Agreement.

16.7 Governing Law; Jurisdiction and Forum; Waiver Of Jury Trial.

(a) This Agreement will be governed by and construed in accordance with the laws of the State of New York without reference to the choice of law principles thereof.

(b) Each Party irrevocably submits to the jurisdiction of the Bankruptcy Court in any action arising out of or relating to this Agreement, and hereby irrevocably agrees that




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all claims in respect of such action may be heard and determined in the Bankruptcy Court. Each Party hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Parties further agree, to the extent permitted by law, that final and unappealable judgment against any of them in any proceeding contemplated above will be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified copy of which will be conclusive evidence of the fact and amount of such judgment.

(c) Each Party waives, to the fullest extent permitted by Law, any right it may have to a trial by jury in respect of any action, suit or proceeding arising out of or relating to this Agreement. Each Party certifies that it has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications set forth above in this Section 16.7.

16.8 Headings. The Section headings contained in this Agreement are inserted for convenience of reference only and do not affect the meaning or interpretation of this Agreement. All references to Sections contained herein mean Sections of this Agreement unless otherwise stated and except in the Schedules hereto, wherein references to Sections mean Sections of such Schedule unless otherwise stated.

16.9 Independent Contractors. Supplier is an independent contractor, with all of the attendant rights and liabilities of an independent contractor, and not an agent or employee of Recipient. Any provision in this Agreement, or any action by Recipient, that may appear to give Recipient the right to direct or control Supplier in performing under this Agreement means that Supplier will follow the desires of Recipient in results only.

16.10 Notices. All notices and other communications to be given to any Party hereunder are sufficiently given for all purposes hereunder if in writing and delivered by hand, courier or overnight delivery service or three days after being mailed by certified or registered mail, return receipt requested, with appropriate postage prepaid, or when received in the form of a facsimile or e-mail transmission and will be directed to the physical address, facsimile number or e-mail address set forth below (or at such other address or facsimile number as such Party will designate by like notice):

IF TO AFI:

Ally Financial Inc. 200 Renaissance Center, MC 200-B09-B-11 Detroit, Michigan 48265 Attention: Chief Financial Officer E-Mail Address: [email protected]

With a copy to: Ally Financial Inc. Legal Staff 200 Renaissance Center, MC 200-B09-B-11




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Detroit, Michigan 48265 Attention: IT Counsel E-mail address: [email protected] IF TO RESCAP:

Residential Capital, LLC 1100 Virginia Drive Fort Washington, PA 19034 Attention: James Whitlinger E-Mail Address.: [email protected]

With a copy to: Residential Capital, LLC 1100 Virginia Drive Fort Washington, PA 19034 Attention: Tammy Hamzehpour E-mail Address: [email protected]

16.11 Public Announcements. Except as otherwise required by law, each of AFI

and ResCap will consult with the other and obtain the prior written consent of the other before issuing, or permitting any agent or Affiliate to issue, any press releases or otherwise making, or permitting any agent or Affiliate to make, any public statements with respect to this Agreement or the transactions contemplated hereby; provided, however, that the prior written consent of the other Party is not required hereunder with respect to any press release, public announcement or communication that is substantially similar to a press release, public announcement or communication previously issued with the prior written consent of the other Party.

16.12 Amendments and Waivers. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by both Parties. The Parties may, only by an instrument in writing, waive compliance by the other Party with any term or provision of this Agreement on the part of such other Party to be performed or complied with. The waiver by either Party of a breach of any term or provision of this Agreement will not be construed as a waiver of any subsequent breach. Except as otherwise expressly provided herein, no failure to exercise, delay in exercising or single or partial exercise of any right, power or remedy by either Party, and no course of dealing between the Parties, will constitute a waiver of any such right, power or remedy.

16.13 Severability. If any provision of this Agreement is held invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions of this Agreement will not be affected thereby, and there will be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.

16.14 No Third Party Beneficiaries. This Agreement is entered into solely between, and, except with respect to the rights of the Supplier Parties and the Recipient Parties under Section 13, may be enforced only by, Recipient and Supplier. This Agreement does not




ny-1040886

31

create any rights or causes of action in or on behalf of any third parties, including employees, suppliers, customers, Affiliates or Subcontractors of a Party, or create any obligations of a Party to any such third parties, except that either Party is entitled to include as part of its Damages under this Agreement the Damages incurred by its Affiliates or Subcontractors in connection with a breach by the other Party of this Agreement.

16.15 Order of Precedence. In the event of a conflict, this Agreement takes precedence over the Schedules.

[Signature Page Follows]




ny-1040886

Schedule A-1

Parent Services

The following Statements of Work are governed by the Agreement.

AFI to ResCap Statements of Work by Functional Service Area

Functional Service Area SOW Name

SOW Number (if applicable)

1 Audit Internal Audit Services 1G 2 Capital Markets Capital Markets Services 1C 3 Communications Communications and Investor Relations Services - 4 Communications eCommerce Services 1H 5 Compliance Global Security Services 1O 6 Compliance Global Privacy Services 1N

7

Compliance (includes Consent Order Costs) Global Compliance Services 1M

8 Facilities Facilities Services 1Ka 9 Finance Tax Finance Shared Services 1a04 10 Finance Tax Tax Services 1a08 11 Finance Tax General Accounting Services 1A5

12 Government Relations Government Relations 1X

13 Human Resources Human Resources Support Services 1Qa 14 ITG Global Information Security 1R1

15 ITG Application Development and Support – IT Corporate Services 1R9

16 ITG Cross Functional Services - 17 ITG End User Computing Services - 18 ITG IT Technology Strategy and Architecture Services - 19 ITG Voice Services Mobility SOW (Mid)_AFI to ResCap - 20 ITG Network Services – Local Area Network -

21 ITG Network Services – Network WAN Network Services WAN (Mid)_AFI to ResCap -

22 ITG Hosting Operations – Hosting, Implementation and Data Center Services -

23 ITG Voice Services - Telecommunications and Contact Center Telecom Call Center AFI to ResCap -

24 Legal Legal Services 1S 25 Loan Review Loan Review 1T 26 Marketing Global Brand & Product Marketing 1I 27 Risk Risk Management 1J 28 Supply Chain Supply Chain Management Services 1P

29 Treasury Treasury Services - Global Funding and Liquidity (“GF&L”) 1W1

30 Treasury Treasury Services Structured Funding Deal Compliance and Facility Management 1W2

31 Treasury Treasury Services, Treasury Operations 1W7




ny-1040886

Schedule A-2

Reverse Services

The following Statements of Work are governed by the Agreement.

ResCap to AFI Statements of Work by Functional Service Area

# Functional Service Area SOW Name

SOW Number (if applicable)

1 Accounting Capital Markets Accounting 14L 2 Accounting ResCap Accounting Services - 3 Accounting Accounting 14F

4

Business Risk and Controls and Business Excellence Support

Business Risk and Controls and Business Excellence Support 14J

5 Capital Markets Capital Markets 14B 6 Capital Markets Records Services 14I 7 Compliance Line of Business Compliance Services 14H 8 Consumer Lending Consumer Lending Services 14M 9 Finance Mortgage Financial Planning and Analysis 14G 10 Human Resources HR Support Services (AFI) 1Qb 11 Human Resources HR Support Services (Bank) 14C 12 ITG IT Resource Services -

13 ITG Application Support

14A

14 Legal Legal Services (AFI) 1S 15 Legal Legal Services (Bank) 14E

16 Masterservicing Master Servicing for Ally Auto - Bond Administration -

17 Masterservicing Master Servicing for Ally Auto - Bond Modeling -

18 Risk Risk Services Reporting and Special Assets - 19 Risk Risk Management & Data Collection 14D

20 Risk Client Repurchase 14N




ny-1040886

Schedule A-3

Planned IT Projects




SelectedAFI ==> Rescap Driver Monthly $ Annual $ Monthly $ Annual $ Monthly $ Annual $ Monthly $ Annual $Global Functions Infrastructure 33.1% 128,835 1,546,021 13,760 165,120 142,595 1,711,141 47,199 566,388 Corporate Infrastructure 33.1% 34,614 415,364 3,645 43,736 38,258 459,100 12,664 151,962 Security 33.1% 50,000 600,000 22,054 264,646 72,054 864,646 23,850 286,198 Finance 33.1% 53,333 640,000 26,100 313,203 79,434 953,203 26,293 315,510 Treasury 33.1% 97,583 1,171,000 122,259 1,467,106 219,842 2,638,106 72,768 873,213 Compliance 33.1% 35,333 424,000 7,378 88,532 42,711 512,532 14,137 169,648 Legal 33.1% 60,083 721,000 50,439 605,273 110,523 1,326,273 36,583 438,996 HR 24.9% 52,083 625,000 43,152 517,822 95,235 1,142,822 23,707 284,485 Communications 24.9% 12,500 150,000 24,584 295,009 37,084 445,009 9,231 110,777 Supply Chain 33.1% 39,583 475,000 75,825 909,896 115,408 1,384,896 38,200 458,401 Capital Markets 33.1% 60,083 721,000 50,079 600,950 110,162 1,321,950 36,464 437,565 Technology Operations 16.1% 166,327 1,995,928 192,734 2,312,805 359,061 4,308,733 57,809 693,706

Total 790,359 9,484,314 632,008 7,584,098 1,422,368 17,068,412 398,904 4,786,850

Memo: Direct Charged Project ExpenseShared Services ‐ RTCoE Project 401,380 Technology Ops. Project Expense 73,185 Finance ‐ Mortgage Ledger Risk Project 893,630 Direct Charged Infrastructure Shared Services ‐ TI $ 221,928 Mortgage Infrastructure Project Expense 1,690,480

Total Projects Direct and Shared Expense (excl ResCap DW) 8,067,453$

Rescap Data Warehouse Apr‐Dec (Capital) 3,823,528 ResCap Data Warehouse Apr‐Dec (Expense) 158,235 Hardware purchased to date 2,748,351

2012 People ExpenseAllocated Project Costs

2012 Total 3rd Party Expense 2012 Total Project Expense Mortgage Allocation




Consolidated 2012 Project List

Project/Initiative Name

BU/GF Name Budget Allocated To 2012 IT Project Spend Subtotal

(calculated IT Project Spend Expense + IT

Project Spend Software Capital + It Project Spend

2012 IT Project Spend Expense

People Expense Factor (varies by Global

Function)

People Expense Dollar Total Project Expense (3rd Party + People Factor)

Difference in Plan b/w Spend and Capital

Official Color

EU EUI Enterprise Windows 7 Test Environment Global Functions Infrastructure Infrastructure 59$ $23 10.7% $2 $26 $36 Green

EU EUI Wireless LAN Global Functions Infrastructure Infrastructure 4$ $2 10.7% $0 $2 $2 Green

Global Database Upgrade Global Functions Infrastructure Infrastructure 110$ $110 10.7% $12 $121 $0 Green

HT EV 2011 Evergreen-Win & UNIX Servers Global Functions Infrastructure Infrastructure 2$ $1 10.7% $0 $1 $1 Green

HT EV F5 Load Balancing Global Functions Infrastructure Infrastructure 11$ $11 10.7% $1 $12 $0 Green

HT TI TSS Storage and BUR Capacity Optimization Global Functions Infrastructure Infrastructure 7$ $7 10.7% $1 $8 $0 Green

NW D2D - Telecom/Network - LAN - Corporate Port Admission (CPA) Transformation Global Functions Infrastructure Infrastructure 122$ $122 10.7% $13 $135 $0 Green

NW EV Datacenter LAN Expansion and Upgrade�Datacenter WAN Backbone Global Functions Infrastructure Infrastructure 99$ $20 10.7% $2 $23 $79 Green

Risk (TeamMate, Open Pages) Global Functions Infrastructure Infrastructure 1,068$ $868 10.7% $93 $961 $200 Green

SEC EV Security Evergreen - Firewalls, Proxy, IPS - NADD (20%) Global Functions Infrastructure Infrastructure 7$ $7 10.7% $1 $8 $0 Green

SEC EV Security Evergreen - Firewalls, Proxy, IPS - NADD (80%) Global Functions Infrastructure Infrastructure 506$ $183 10.7% $20 $203 $323 Green

SEC EV Security Evergreen - Firewalls, Proxy, IPS - NIDD (20%) Global Functions Infrastructure Infrastructure 127$ $46 10.7% $5 $51 $81 Green

SEC EV Security Evergreen - Firewalls, Proxy, IPS - NIDD (20%) Global Functions Infrastructure Infrastructure 2$ $2 10.7% $0 $2 $0 Green

SM D2D - Service Mgmt Suite for Mortgage / LV Global Functions Infrastructure Infrastructure 167$ $83 10.7% $9 $92 $83 Green

Transition/Transformation Global Functions Infrastructure Infrastructure 52$ $52 10.7% $6 $57 $0 Green

Vulnerability Scanning - Expansion for WebInspect / AMP Global Functions Infrastructure Infrastructure 54$ $9 10.7% $1 $10 $45 Green

Mortgage Data Warehouse Build (Retail and Commercial) Basel II Corp - Basel II 4,386$ $0 39.7% $0 $0 $4,386 Green

Blackrock Interfaces Releases 2012 Capital Markets Corp - Capital Markets 276$ $276 83.3% $230 $506 $0 Green

Broker Dealer Enhancement Releases 2012 Capital Markets Corp - Capital Markets 400$ $200 83.3% $167 $367 $200 Green

Model Support Initiatives Capital Markets Corp - Capital Markets 445$ $245 83.3% $204 $449 $200 Green

Ally Pulse release program Communications Corp - Communications 150$ $150 196.7% $295 $445 $0 Green

Compliance Training Compliance Corp - Compliance 200$ $200 20.9% $42 $242 $0 Green

Control Room Function for Surveillance to the Insider Trading/Pre-clearance Policies Compliance Corp - Compliance 100$ $100 20.9% $21 $121 $0 Green

US Bridger Upgrade Compliance Corp - Compliance 124$ $124 20.9% $26 $150 $0 Green

CMAP / Eagle Release Program Finance Corp - Finance 640$ $640 48.9% $313 $953 $0 Green

Mortgage Ledger Risk Mitigation Finance Corp - Finance 1,350$ $600 48.9% $294 $894 $750 Green

2012 Compensation Cycle Project HR Corp - HR 39$ $39 82.9% $32 $71 $0 Green

2012 HR Talent Mgmt & TA Release Pool HR Corp - HR 10$ $10 82.9% $8 $18 $0 Green

2012 HR Total Rewards Release Pool HR Corp - HR 20$ $20 82.9% $17 $37 $0 Green

2012 Workforce Admin and ER&P Release Pool HR Corp - HR 74$ $74 82.9% $61 $135 $0 Green

2013 Compensation Cycle Project HR Corp - HR 226$ $226 82.9% $187 $413 $0 Green

Annual Enrollment Benefits Program HR Corp - HR 156$ $156 82.9% $129 $285 $0 Green

Equity Program Implementation HR Corp - HR 100$ $100 82.9% $83 $183 $0 Green

eDiscovery Release Legal Corp - Legal 115$ $115 83.9% $97 $212 $0 Green

eDocs DM Upgrade Legal Corp - Legal 57$ $57 83.9% $48 $105 $0 Green

Team Room Release Legal Corp - Legal 42$ $42 83.9% $35 $77 $0 Green

TeamConnect Release Legal Corp - Legal 142$ $142 83.9% $119 $261 $0 Green

TeamConnect Upgrade Legal Corp - Legal 365$ $365 83.9% $306 $671 $0 Green

Cogent Release Pool Risk Corp - Risk 200$ $200 39.7% $79 $279 $0 Green

Open Pages - Release Pool Risk Corp - Risk 892$ $359 39.7% $143 $502 $533 Green

Open Pages - Technology Upgrade Risk Corp - Risk 2,335$ $186 39.7% $74 $260 $2,149 Green

Polytraunche Upgrade (Accutape/Aploytraunche/NEV Tech Upgrade) Risk Corp - Risk 54$ $54 39.7% $21 $75 $0 Green

Ariba Release Program Supply Chain Corp - Supply Chain 248$ $248 191.6% $475 $723 $0 Green

Supplier Risk Management Program Supply Chain Corp - Supply Chain 227$ $227 191.6% $435 $662 $0 Green

Quantum Release Program Treasury Corp - Treasury 212$ $150 125.3% $188 $338 $62 Green

Quantum Upgrade Treasury Corp - Treasury 345$ $195 125.3% $244 $439 $150 Green

Security Compliance and Remediation Treasury Corp - Treasury 286$ $0 125.3% $0 $0 $286 Green

Sierra, Intelimatch, SSB Release Master Treasury Corp - Treasury 665$ $515 125.3% $645 $1,160 $150 Green

WebSeries Release Program Treasury Corp - Treasury 426$ $311 125.3% $390 $701 $115 GreenApplication Vulnerability Scanning Improvements Information Security Information Security 1,200$ $600 44.1% $265 $865 $600 GreenEnterprise IAM R2 Information Security Information Security 700$ $0 44.1% $0 $0 $700 GreenEU EUI Enterprise Windows 7 Test Environment Corp Infrastructure Infrastructure 33$ $13 10.7% $1 $14 $20 GreenEU EUI Wireless LAN Corp Infrastructure Infrastructure 2$ $1 10.7% $0 $1 $1 GreenGlobal Database Upgrade Corp Infrastructure Infrastructure 61$ $61 10.7% $7 $68 $0 GreenHT EV F5 Load Balancing Corp Infrastructure Infrastructure 6$ $6 10.7% $1 $7 $0 GreenHT TI TSS Storage and BUR Capacity Optimization Corp Infrastructure Infrastructure 4$ $4 10.7% $0 $4 $0 GreenNW D2D - Telecom/Network - LAN - Corporate Port Admission (CPA) Transformation Corp Infrastructure Infrastructure 69$ $69 10.7% $7 $76 $0 GreenNW EV Datacenter LAN Expansion and Upgrade Corp Infrastructure Infrastructure 56$ $11 10.7% $1 $13 $44 GreenSEC EV Security Evergreen - Firewalls, Proxy, IPS - NADD (20%) Corp Infrastructure Infrastructure 4$ $4 10.7% $0 $4 $0 GreenSEC EV Security Evergreen - Firewalls, Proxy, IPS - NADD (80%) Corp Infrastructure Infrastructure 283$ $102 10.7% $11 $113 $181 GreenSEC EV Security Evergreen - Firewalls, Proxy, IPS - NIDD (20%) Corp Infrastructure Infrastructure 71$ $26 10.7% $3 $28 $45 GreenSEC EV Security Evergreen - Firewalls, Proxy, IPS - NIDD (20%) Corp Infrastructure Infrastructure 1$ $1 10.7% $0 $1 $0 GreenSM D2D - Service Mgmt Suite for Mortgage / LV Corp Infrastructure Infrastructure 167$ $83 10.7% $9 $92 $83 GreenTI Technical Support Resources Corp Infrastructure Infrastructure 3,500$ $3,500 10.7% $374 $3,874 $0 GreenTransition/Transformation Corp Infrastructure Infrastructure 29$ $29 10.7% $3 $32 $0 GreenVulnerability Scanning - Expansion for WebInspect / AMP Corp Infrastructure Infrastructure 30$ $5 10.7% $1 $6 $25 GreenEU EUI Enterprise Windows 7 Test Environment Mortgage - Infrastructure Infrastructure 77$ $30 10.7% $3 $34 $47 GreenEU EUI Wireless LAN Mortgage - Infrastructure Infrastructure 5$ $2 10.7% $0 $3 $2 GreenGlobal Database Upgrade Mortgage - Infrastructure Infrastructure 143$ $143 10.7% $15 $158 $0 GreenHT EV 2011 Evergreen-Win & UNIX Servers Mortgage - Infrastructure Infrastructure 2$ $1 10.7% $0 $1 $1 GreenHT EV F5 Load Balancing Mortgage - Infrastructure Infrastructure 14$ $14 10.7% $1 $15 $0 GreenHT EV Ruby on Rails 2.0.x + Mongrel 1.x Upgrades and Replacement Mortgage - Infrastructure Infrastructure 3$ $3 10.7% $0 $3 $0 GreenHT EV SunOne Mortgage - Infrastructure Infrastructure 3$ $3 10.7% $0 $3 $0 GreenHT TI TSS Storage and BUR Capacity Optimization Mortgage - Infrastructure Infrastructure 9$ $9 10.7% $1 $10 $0 GreenNW EV Datacenter LAN Expansion and Upgrade Mortgage - Infrastructure Infrastructure 129$ $27 10.7% $3 $29 $103 GreenNW EV Rescap Telephony Evergreen 2015 Mortgage - Infrastructure Infrastructure 75$ $75 10.7% $8 $83 $0 Green

5




Consolidated 2012 Project List

Project/Initiative Name

BU/GF Name Budget Allocated To 2012 IT Project Spend Subtotal

(calculated IT Project Spend Expense + IT

Project Spend Software Capital + It Project Spend

2012 IT Project Spend Expense

People Expense Factor (varies by Global

Function)

People Expense Dollar Total Project Expense (3rd Party + People Factor)

Difference in Plan b/w Spend and Capital

Official Color

Rescap WAN/LAN/Voice Transition Mortgage - Infrastructure Infrastructure 400$ $250 10.7% $27 $277 $150 GreenSEC EV Security Evergreen - Firewalls, Proxy, IPS - NADD (20%) Mortgage - Infrastructure Infrastructure 9$ $9 10.7% $1 $10 $0 GreenSEC EV Security Evergreen - Firewalls, Proxy, IPS - NADD (80%) Mortgage - Infrastructure Infrastructure 659$ $238 10.7% $25 $264 $421 GreenSEC EV Security Evergreen - Firewalls, Proxy, IPS - NIDD (20%) Mortgage - Infrastructure Infrastructure 165$ $60 10.7% $6 $66 $105 GreenSEC EV Security Evergreen - Firewalls, Proxy, IPS - NIDD (20%) Mortgage - Infrastructure Infrastructure 2$ $2 10.7% $0 $3 $0 GreenSM D2D - Service Mgmt Suite for Mortgage / LV Mortgage - Infrastructure Infrastructure 1,000$ $500 10.7% $53 $553 $500 GreenTI EV Infrastructure Evergreen Program Mortgage - Infrastructure Infrastructure 82$ $82 10.7% $9 $90 $0 GreenTransition/Transformation Mortgage - Infrastructure Infrastructure 67$ $67 10.7% $7 $75 $0 GreenVulnerability Scanning - Expansion for WebInspect / AMP Mortgage - Infrastructure Infrastructure 70$ $12 10.7% $1 $13 $58 GreenPMO Resource Release Pool Tech Ops - GPMO TO - GPMO 1,800$ $1,800 29.7% $534 $2,334 $0 GreenRTCoE Managed Resources for BU NADD Tecn Ops - RTCoE TO - RTCoE 6,000$ $6,000 29.7% $1,779 $7,779 $0 Green

Yellow Shading - Projects to be Direct Charged at 100%Grey Shading - Partially Direct Charged

Orange Shading - 100% Capital Charged at 0%

6




CONFIDENTIAL Schedule B Page 1 ny-1040886

Schedule B

Governance Model

1. INTRODUCTION

This Schedule B (this “Schedule B”) is incorporated by reference and attached to the Shared Services Agreement by and between ResCap and AFI dated May__, 2012 (the “Agreement”).

2. AGREEMENT COVERAGE

This Schedule B sets out the service management model for Supplier and Recipient (the “Service Management Model”), related to the Services provided under the Agreement.

3. OVERVIEW

Supplier and Recipient will each appoint responsible, knowledgeable persons to serve as their representatives to oversee the performance of the Agreement (such persons and each Party’s Relationship Manager shall collectively constitute the “Service Management Team”).

The Service Management Team members will work informally on a regular basis, but the Relationship Managers, and such additional Service Management Team members as the Relationship Managers may designate from time to time, will meet formally at least monthly. These monthly meetings will review such topics as significant operational concerns, performance metrics as developed by the Service Management Team, future service needs, transition service progress and pricing. In addition, the Relationship Managers may from time to time designate Service Management Team members to meet in sub-teams either on a temporary or ongoing basis, to deal with specific issues under the Agreement. The Relationship Managers will share the responsibility for organizing the meetings and ensuring the effectiveness of the meetings.

Each Party will staff its Service Management Team as necessary to represent the areas of services offered.

4. SCOPE

The Service Management Team will be responsible for overseeing the overall execution of the Agreement to ensure that each Party performs its responsibilities as expected.

The Service Management Team’s responsibilities shall include the following:

(a) Strategy and Direction. The Service Management Team may make recommendations as to strategic direction and provide critical input for business planning decisions between Supplier and Recipient.




CONFIDENTIAL Schedule B Page 2 ny-1040886

(b) General Service Management. The Service Management Team may review the status of projects and prioritize work. The Service Management Team will also be a forum for discussions between Supplier and Recipient regarding service changes and opportunities for Additional Services, and will coordinate with management and service delivery teams to ensure appropriate execution of such service changes or Additional Services.

(c) Issue Resolution. The Service Management Team will be responsible for resolving problems, concerns or inefficiencies in their execution as they arise, and will escalate unresolved issues as described below.

5. ESCALATION

Issues that cannot be resolved within a reasonable period of time (which period of time shall not exceed twenty (20) days) by the Parties’ respective Service Management Team members responsible for the applicable subject area must be first be escalated to the Relationship Managers. If the Relationship Managers are unable to resolve an issue within ten (10) days, then either Party’s Relationship Manager may, upon prior written notice to the other Relationship Manager, escalate such issue to Recipient’s and Supplier’s executive management representative for resolution. Neither Party may initiate any formal legal proceedings for resolution of such issue until ten (10) business days after such issue has been escalated to each Party’s executive management representatives.

The provisions and time periods specified in this Section 5 will not be construed to prevent a Party from instituting, and a Party is authorized to institute, formal proceedings earlier to (A) avoid the expiration of any applicable limitations period, (B) preserve a superior position with respect to other creditors, or (C) address a claim arising out of the breach of a Party’s obligations under Section 9 of the Agreement or a dispute with respect to Intellectual Property Rights.




CONFIDENTIAL Schedule C Page 1 ny-1040886

Schedule C

Pricing Methodology

1. INTRODUCTION

This Schedule C (this “Schedule C”) is incorporated by reference and attached to the Shared Services Agreement by and between ResCap and AFI dated May__, 2012 (the “Agreement”).

1.1 Charges. This Schedule C describes the Charges, and the methodologies for their calculation, with respect to the Services.

1.2 Order of Precedence. The Parties acknowledge that certain obligations may be set

forth in both this Schedule and elsewhere in the Agreement, and in the event of a conflict, such conflict shall be resolved in accordance with Section 16.15 of the Agreement.

1.3 Section and Article References. Unless otherwise specified, Section references in

this Schedule C refer to the Sections of this Schedule C. 1.4 Definitions. Capitalized terms have the meanings assigned below. Any other

capitalized terms used and not otherwise defined in this Schedule C have the meanings given them in the Agreement.

(a) “Business Change Event” means any change in the products or services offered by Recipient or the expansion or closure of any Facility of any Recipient, or a decrease or increase in Recipient’s level of consumption of the Services from the historical usage levels of its business, in either case that has a material impact on the cost to Supplier of providing any impacted Services.

(b) “Charges” means:

(i) any Total Shared Services Charge;

(ii) amounts to be paid by Recipient as Pass-Through Expenses;

(iii) the charges for Additional Services that may be agreed upon by the Parties pursuant to a signed Supplement from time to time;

(iv) the charges for the Customized Services that may be agreed upon by the Parties pursuant to a signed Supplement from time to time; and

(v) the charges for Termination Assistance Services.





(c) “Monthly Fixed Charges” means, for a given month and Service, the amount reflected in Schedule C-1b or C-2b for such Service. This amount does not include amounts to be paid by Recipient as Monthly Variable Charges or Pass-Through Expenses.

(d) “Monthly Variable Charges” means, for a given month and Service, the (i) total actual costs incurred by Supplier for the Service, multiplied by (ii) the Recipient cost allocation percentage for such Service that was agreed upon between the Parties, as reflected in Schedule C-1b or C-2b, as applicable. This amount does not include amounts to be paid by Recipient as Pass-Through Expenses.

(e) “Pass-Through Expenses” as referenced in Schedule C-1b and C-2b means those third-party, out-of-pocket expenses actually incurred by Supplier in connection with a given Service (e.g., external audit fees, training for consent orders, consent order direct vendor costs), which will be either (i) approved by Recipient prior to being incurred by Supplier; provided, that if Recipient does not approve any such expense Supplier will have no obligation to procure or provide the goods or services associated with such expense, (ii) approved by Recipient in advance as being within a category or for a Service already approved by the Parties as for a billed-as-incurred expense, or (iii) for a good or service reasonably necessary to allow Supplier to deliver the Services contemplated under this Agreement.

(f) “Price Adjustment Event” means any of the following:

(i) a Business Change Event occurs; or

(ii) a Service has been terminated pursuant to Section 3 or Article 14 of the Agreement.

(g) “Price Adjustment Process” means the process described in Section 3.4 of this Schedule C.

(h) “Total Monthly Shared Services Charge” means, in respect of any individual Service, the monthly Charge for that Service, which shall be applicable from the Effective Date until the termination date for such Service, as such Charges are listed on Schedule C-1a or Schedule C-2a and may be adjusted in accordance with any Price Adjustment Event and/or Price Adjustment Process. The Total Shared Services Charge represents the aggregate of the Total Base Costs, Third Party Costs and IT Projects as referenced on Schedule C-1a and Schedule C-2a. The Total Base Costs are equal to an amount representing Employee Costs, IT Costs,





Platform Costs and the Indirect Support Costs for that Functional Service Area, as described below:

(i) Employee Costs means compensation, benefits, travel and other non-compensation related personnel costs;

(ii) IT Costs means those costs associated with IT services under Schedule A-1 and Schedule A-2;

(iii) Platform Costs means the Charges to the Recipient for use of the IT services on Supplier’s platform related to depreciation and amortization in respect of IT infrastructure; and

(iv) Indirect Support Costs means, for AFI, an amount equal to the percentage of the total of Employee Costs, IT Costs and Platform Costs set forth in Schedule C-1b, and for ResCap means an amount equal to the percentage of the total of Employee Costs, IT Costs and Platform Costs set forth in Schedule C-2b. Such percentages in each case are those referenced in the formulas in the Pricing Methodology Spreadsheets titled “Shared Services Global Functions Exhibit v.11.pdf” (AFI to ResCap) and “ResCap to AFI Shared Services Pricing 05-13-12.pdf ” (ResCap to AFI).

These amounts are set forth in Schedule C-1a and Schedule C-2a on a monthly basis as the Total Monthly Shared Services Charge. The Total Monthly Shared Services Charges do not include any (i) Charges for Additional Services or Customized Services, (ii) Termination Assistance Services or (iii) Pass-Through Expenses.

Pricing for the Services set forth on Schedule C-1a and Schedule C-2a

can change on a monthly basis, depending upon whether the Service is priced on the basis of Monthly Fixed Charges or Monthly Variable Charges, as indicated on Schedule C-1b and Schedule C-2b. Any such calculations will be made by reference to and in accordance with the formulas in the Pricing Methodology Spreadsheets titled “Shared Services Global Functions Exhibit v.11.pdf” (AFI to ResCap) and “ResCap to AFI Shared Services Pricing 05-13-12.pdf ” (ResCap to AFI).

1.5 General.

(a) Unless specifically stated otherwise, each Party will be financially responsible for all costs and expenses associated with performing its responsibilities under this Agreement.

(b) Unless the Parties otherwise agree, for the purpose of calculating Charges, any Services that start on a day other than the first day of a month or are





1.6 Attachments. Attached to this Schedule C are the following Attachments:

Schedule C-1a – Pricing for Parent Services

Schedule C-2a – Pricing for Reverse Services

Schedule C-1b –Billing Method by Service – Parent Services

Schedule C-2b –Billing Method by Service – Reverse Services

2. COMMENCEMENT OF CHARGES.

The Total Shared Services Charges will begin on the Effective Date and are set forth in Schedule C-1a and Schedule C-2a. Charges for Additional Services, Customized Services, and Termination Assistance Services shall begin on the date such services begin to be performed by Supplier.

3. PRICING METHODOLOGY.

3.1 Total Monthly Shared Services Charges. All Total Monthly Shared Services Charges will only be adjusted in accordance with the Price Adjustment Process.

3.2 Additional Services. Charges for Additional Services will be set forth in the

applicable Supplement for such Services. To the extent the Additional Services are ongoing, the Charge may also or in the alternative be added as a separate item in Schedule C-1a or Schedule C-2a, as applicable and, if so included as a separate item, will be subject to the Price Adjustment Process just as any other Total Shared Services Charges would be.

3.3 Customized Services. Charges for Customized Services will be set forth in the

applicable Supplement for such Services. To the extent the Customized Services are ongoing, the Charge may also or in the alternative be added as a separate item in Schedule C-1a or Schedule C-2a, as applicable and, if so included as a separate item, will be subject to the Price Adjustment Process just as any other Total Shared Services Charges would be.

3.4 This section is intentionally left blank. 3.5 Price Adjustment Process. The Price Adjustment Process described in this

Section 3.5 will be followed by the Parties upon either Party’s written request in the event of a Price Adjustment Event. The Price Adjustment Process for Business Change Events is subject to any approval right or termination right that Supplier may have with respect to such change in Services pursuant to Section 3 or 14 of the Agreement.

(a) The Price Adjustment Process will be initiated immediately following a Price Adjustment Event and the resulting change to the Charges will take





effect as soon as practical and will be retroactive to the point in time that the Price Adjustment Event occurs (or, in the case of adjustments under Section 3.5(c) below, retroactive to the point in time that the New Cost Allocation is determined).

(b) Unless the Price Adjustment Process is initiated for a Business Change Event, during the Price Adjustment Process the Parties will mutually determine in good faith the cost impact of the Price Adjustment Event through the methodologies set forth in the exhibits to Schedule C including all of the sub-attachments. When a Service is being terminated by a Party, the starting assumption is that Recipient will no longer be charged for that Service; provided, however, that Supplier may be entitled to reimbursement from Recipient of all costs previously paid by Recipient for such Service that Supplier is not able to eliminate, for example, costs for physical assets which cannot be reduced (i.e. leasing expenses or rental expenses which cannot be eliminated), third party costs (i.e. minimum revenue commitments which are required under a third party agreement) or any other non-internal costs (“Stranded Costs”) which the Parties using appropriate due diligence and commercially reasonable efforts can not eliminate. If, after using such efforts the Parties are unable to eliminate 100% of any Stranded Costs, the Parties will meet and discuss the remaining Stranded Costs to be reimbursed by Recipient to Supplier..

(c) The Total Shared Services Charges set forth in Schedule C-1a and

Schedule C-2a were determined by allocating to Recipient a portion of Supplier’s underlying costs of performing the applicable Service (such cost allocation, the “Initial Cost Allocations”). In the event the Price Adjustment Process is initiated solely due to a Business Change Event and does not involve a termination of the applicable Service, then during the Price Adjustment Process, Supplier will (i) use the cost allocation methodology that was used to determine the Initial Cost Allocation for such Service, to determine a new cost allocation reflecting Recipient’s then-current level of consumption of such Service, taking into account material increases or decreases (if any) in Supplier’s overall costs that are a direct result of the change in Recipient’s level of consumption of such Service (a “New Cost Allocation”), and (ii) if the New Cost Allocation differs from the Initial Cost Allocation for such Service, adjust the Total Shared Services Charge for such Service accordingly. Except as otherwise agreed by the Parties, the cost allocation determination described above shall only be performed for the area impacted by the Business Change Event and such cost allocation determination per Functional Service Area shall not be performed more than once per month. At Recipient’s request, Supplier will provide Recipient with all supporting calculations of the effects of such Business Change Event on Supplier’s costs of performing the Services.

3.6 Charges for Extensions of Term. The pricing in this Schedule C as of the





Effective Date includes only the pricing for the Services during the Initial Term. Any extensions of the Term are subject to the Parties reaching agreement of the pricing during such extension period.

3.7 Termination Assistance Services. If requested by Recipient, Supplier will provide

Termination Assistance Services in accordance with Section 14.5 of the Agreement. The price of Termination Assistance Services shall be documented in a Supplement to Schedule A. In addition to any Charges otherwise provided for in the Agreement or Schedule C, Recipient will reimburse Supplier for all incremental additional resource and other costs and expenses required or incurred by Supplier to provide Termination Assistance Services.




Schedule C-1 Pricing for Parent Services (1)

Parent Services Pricing Monthly Total Shared Services Charge (US$)

Functional Service Area

Total Base

Costs (2) Third Party Costs IT ProjectsTotal Shared

Services

Finance / Tax 1,340,595$ -$ 26,293$ 1,366,888$ Audit 12,845 67,168 - 80,013 Treasury 820,790 - 72,768 893,558 Risk 799,225 29,000 - 828,225 Insurance Premium - 1,267,250 - 1,267,250 Compliance 403,948 - 14,137 418,086 Consent Order 189,720 150,000 - 339,720 Loan Review 33,577 - - 33,577 HR 367,188 468,747 23,707 859,642 Legal 127,175 - 36,583 163,758 Communications / IR 296,414 - 9,231 305,645 Capital Markets 464,577 - 36,464 501,041 Marketing 253,271 - - 253,271 Facilities 115,956 119,436 - 235,392 Supply Chain 608,376 - 38,200 646,576 Gov't Relations 31,651 3,000 - 34,651 ITG 1,879,177 - 141,521 2,020,698

Total Monthly Charge 7,744,484$ 2,104,601$ 398,904$ 10,247,989$

(1)Approximate costs of services - refer to 3 supporting Exhibits. C-1a AFI Shared Services Workstream, C-1b Monthly Billing detail and Exhibits in C-1c for Pricing calculations(2) Includes employee costs, IT services, IT platform costs, and 13.8% of Indirect Support




Confidential

Schedule C-1a

AFI Shared Services WorkstreamResCap, LLC - Pricing Summary

As of May 10, 2012

AFI Shared Service

Employee (1) IT Costs

Platform Costs

Indirect Support Costs

Total Base Costs

Third Party Costs

(2)IT Projects

Total As Incurred

Total Shared Services

Total Shared Services Monthly

[A] [B] [C][D] = 13.8% of

[A]+[B]+[C][E] =

[A]+[B]+[C]+[D][F] [G] [H] = [F]+[G] [I] = [E]+[H]

Finance / Tax 5.9$ 5.4$ 2.9$ 2.0$ 16.1$ - 0.3 0.3$ 16.4$ 1.4$ Audit 0.1 0.0 - 0.0 0.2 0.8 - 0.8 1.0 0.1 Treasury 3.9 4.3 0.5 1.2 9.8 - 0.9 0.9 10.7 0.9 Risk 2.8 4.7 0.9 1.2 9.6 0.3 - 0.3 9.9 0.8 Insurance Premium - - - - - 15.2 - 15.2 15.2 1.3 Compliance 2.3 1.5 0.5 0.6 4.8 - 0.2 0.2 5.0 0.4 Consent Order 2.0 - - 0.3 2.3 1.8 - 1.8 4.1 0.3 Loan Review 0.4 - - 0.0 0.4 - - - 0.4 0.0 HR 2.9 0.9 0.0 0.5 4.4 5.6 0.3 5.9 10.3 0.9 Legal 0.3 0.9 0.1 0.2 1.5 - 0.4 0.4 2.0 0.2 Communications 1.4 1.6 0.1 0.4 3.6 - 0.1 0.1 3.7 0.3 Capital Markets 3.4 1.4 0.1 0.7 5.6 - 0.4 0.4 6.0 0.5

BASE COSTS BILLED AS INCURRED

Page 2 of 6 5/12/2012 10:47 AM

Capital Markets 3.4 1.4 0.1 0.7 5.6 - 0.4 0.4 6.0 0.5 Marketing 2.7 - - 0.4 3.0 - - - 3.0 0.3 Facilities 1.0 0.2 0.0 0.2 1.4 1.4 - 1.4 2.8 0.2 Supply Chain 5.6 0.7 0.1 0.9 7.3 - 0.5 0.5 7.8 0.6 Gov't Relations 0.3 - - 0.0 0.4 0.0 - 0.0 0.4 0.0

ITG (3) 17.5 2.4 2.7 22.6 - 1.7 1.7 24.2 2.0

Total Shared Services 34.9$ 39.1$ 7.7$ 11.3$ 92.9$ 25.2$ 4.8$ 30.0$ 123.0$ 10.2$

(1) Base costs include 2012 C&B plus employee cost for T&E, Facilities, Office & Communications, Training, and other employee related expenses(2) Direct / Third Party costs represent pass through costs based on diligence and negotiations

(3) ITG BreakdownTech Infrastructure 8.1 0.8 1.2 10.1 - 0.7 0.7 10.8 Security 5.8 1.4 1.0 8.2 - 0.3 0.3 8.4 Architecture 1.7 0.1 0.2 2.0 - - - 2.0 Tech & Ops 2.0 - 0.3 2.2 - 0.7 0.7 2.9

Total ITG 17.5$ 2.4$ 2.7$ 22.6$ -$ 1.7$ 1.7$ 24.2$

Page 2 of 6 5/12/2012 10:47 AMPage 2 of 6 5/12/2012 10:47 AM




Schedule C-1bPricing for Parent Services

Parent Services Pricing

Function SOW Link Notes ServiceMonthly Total Shared Service Charge (US$)

Monthly Billing Methodology

1 Finance/Tax 1a4 Headcount Finance Shared Services - Payroll $33,260 Monthly Variable

1a4 Purchase Orders Finance Shared Services - P2P $64,648 Monthly Variable

1a4 Reconciliations Finance Shared Services - Accounting $17,379 Monthly Variable

1a4 Expenses Accounts Finance Shared Services - T&E $17,895 Monthly Variable

1a5 Time Study Accounting Policy Team $48,854 Monthly Fixed

1a5 Time Study Benefits Accounting $5,949 Monthly Fixed

1a5 Time StudyAccounting Leadership and Oversight - Accounting and Policy $17,753 Monthly Fixed

1a8 Time Study Tax - Direct Team Costs $212,846 Monthly Fixed

1a8 Time Study Tax Indirect Services $56,717 Monthly Fixed

1a8 Time Study Tax Leadership $48,543 Monthly Fixed

NA pass through External Audit Fees $0Monthly Variable - Bill as

Incurred

1a5 Time StudyFinancial Controls - Consolidated and Global Functions (Grennan Team) $0 Monthly Fixed

1a4 Time StudyITG Finance - FP&A Support for ResCap and Global Functions (Kubitz Team) $32,448 Monthly Fixed

1r9OPEX share less SAP exclusions Finance - Sustain $507,713 Monthly Variable

1r9OPEX share less SAP exclusions Finance - IT Platform $276,591 Monthly Fixed

1r9OPEX share of selected projects Finance - IT Projects $26,293 Monthly Variable

Finance Total $1,366,8882 Audit

1gTime Study

Direct Team Related to ResCap $0 Monthly Fixed

1g Time Study

Training for the Consent Order - signed with PwC - training for all audit staff - already expensed - design classes; customize the services $0

Monthly Variable - Bill as Incurred

1g pass through

Co-Sourcing for the Consent Order - Subject Matter experts for demonstrating enhanced coverage - planning activities make sure we cover the right audits $66,667


1g pass throughIndirect costs for additional Audit work from Fisette Team - Help Mgmt reporting, audit deck etc $9,046 Monthly Variable

1g pass through TeamMate - Audit software to hold workpapers $502Monthly Variable - Bill as

Incurred

1r9 OPEX share Audit - IT Sustain $3,799 Monthly Variable

Audit Total $80,013

3 Treasury 1w1 Time Study ST Liquidity and Funding Planning $16,933 Monthly Fixed

1w1 Time Study LT Liquidity $11,288 Monthly Fixed

1w1 Time Study Risk Controls $3,327 Monthly Fixed

1w1 Time Study Liquidity Executive $8,877 Monthly Fixed

1w1 Time Study OH Allocation - Facilities and Travel $4,209 Monthly Fixed

1w1 Time Study Leadership Direct $7,864 Monthly Fixed

1w2 Time Study Global Funding Team $97,558 Monthly Fixed

1w2 Time Study OH Allocation - Facilities and Travel $8,862 Monthly Fixed

1w2 Time Study Leadership Allocation - Direct $14,202 Monthly Fixed

1w7 Time Study Direct Costing $147,214 Monthly Fixed

1w7 Time Study Facilities and Travel $16,173 Monthly Fixed

1w7 Time Study Leadership Allocation $30,789 Monthly Fixed

1r9 EOP Assets Treasury - ITG Sustain $405,076 Monthly Variable

1r9 EOP Assets Trasury - ITG Platform $48,418 Monthly Fixed

1r9OPEX share of selected projects Treasury - IT Projects $72,768 Monthly Variable

Treasury Total $893,558

4 Risk (Includes Model Governance) 1j Time Study Leadership Administration $101,341 Monthly Fixed

1j Time Study Enterprise Risk (includes Analytics from Seth S. Group) $73,041 Monthly Fixed

1j Time Study Corporate Insurance/BCP $9,969 Monthly Fixed

1j Time Study Market Risk $77,142 Monthly Fixed

1j Time Study SAG $0 Monthly Fixed

3 5/12/2012






1jReserved seats at contigency site

Business Continuity Planning - Sungard Expenses 3rd party $29,000


1j Headcount Corporate Insurance Premiums $1,267,250 Monthly Fixed

1r9 Risk Time Study Risk - IT Sustain $448,279 Monthly Variable

1r9 Risk Time Study Risk - Platform $89,453 Monthly Fixed

Risk Total $2,095,475

5 Compliance (Includes Consent Order Costs) 1o Time Study Global Security $42,747 Monthly Fixed

1n Time Study Privacy Services $0 Monthly Fixed

1m Time Study Leadership Administration $45,046 Monthly Fixed

1m Time Study AML $47,424 Monthly Fixed

1m Time Study Program Management $56,744 Monthly Fixed

1m Time Study Global Functions $22,916 Monthly Fixed

1m 100% to ResCap Consent Order Direct Costs - 3rd Party $150,000Monthly Variable - Bill as

Incurred

1m 100% to ResCap Consent Order Staffing $189,720 Monthly Fixed

1r9 OPEX share Compliance - IT Sustain $143,865 Monthly Variable

1r9 OPEX share Compliance - Platform $45,206 Monthly Fixed

1r9OPEX share of selected projects Compliance - IT Projects $14,137 Monthly Variable

Compliance Total $757,806

6

Loan Review 1t % of total loans reviewed Loan Reviews $33,577 Monthly Fixed7

Human Resources 1q Time Study Benefits Administration $32,410 Monthly Fixed

1q Time study Compensation $67,169 Monthly Fixed

1q ResCap specific BPO costs Employee Relations $15,005 Monthly Fixed

1q Time Study HR Business Partner Support $91,370 Monthly Fixed

1q Time Study Operations - Base Costs $39,485 Monthly Fixed

1q Time Study Operations - Third party $440,167 Monthly Fixed

1q Time Study Staffing - Base Costs $31,247 Monthly Fixed

1q Time Study Staffing - Third Party $28,580 Monthly Fixed

1q

Higher of 11.75% of ResCap base pay or claim experience Medical Dental, Life Insurance, Disability Charges $0 Monthly Variable

1q actual contributions 401K Employer Contributions $0 Monthly Variable

1r9 headcount share HR - IT Sustain $87,360 Monthly Variable

1r9 headcount share HR - IT Platform $3,142 Monthly Variable

1r9 headcount share HR - IT Projects $23,707 Monthly Variable

HR - Total $859,642

8Legal 1s Time Study HR and Employment $10,022 Monthly Fixed

1s Time Study Procurement $2,181 Monthly Fixed

1s Time Study Law Department Management Support $5,527 Monthly Fixed

1s Time Study Proportion of Attorneys & Paralegals $14,798 Monthly Fixed

1r9 OPEX share Legal - IT Sustain $82,841 Monthly Variable

1r9 OPEX share Legal - IT Platform $11,805 Monthly Fixed

1r9OPEX share of selected projects Legal - IT Projects $36,583 Monthly Variable

Legal Total $163,758

9 Communications and Investor Relations SOW* Time Study Employee Communications $2,016 Monthly Fixed

SOW* Time Study Community Relations $0 Monthly as Incurred

SOW* Time Study Digital Communications $10,149 Monthly Fixed

SOW* headcount share Investor Relations $124,433 NA

4 5/12/2012






1r9 headcount share Communications - IT Sustain $150,324 Monthly Variable

1r9 headcount share Communications - IT Platform $9,493 Monthly Fixed

1r9 headcount share Communications - IT Projects $9,231 Monthly Variable

Communications Total $305,645

10Capital Markets and IM SOW* Time Study + Blackrock Investment Management $305,570 Monthly Fixed

SOW* 1 analyst MSR Analyst $14,229 Monthly Fixed

1r9 OPEX share Capital Markets - IT Sustain $136,423 Monthly Variable

1r9 OPEX share Capital Markets - IT Platform $8,355 Monthly Fixed

1r9OPEX share of selected projects Capital Markets - IT Projects $36,464 Monthly Variable

Capital Markets - Total $501,041

11Marketing 1i Time Study Strategic Marketing Planning & Strategy Development $53,206 Monthly Fixed

1i Time Study Creative Asset Design Production & Mgmt $46,856 Monthly Fixed

1i Time StudyMarketing performance evaluation & optimization activities $13,686 Monthly Fixed

1i Time StudyManagement of day-to-day marketing operational responsibilities $12,839 Monthly Fixed

1i Time Study Facilities, Office Communications $8,298 Monthly Fixed

1i Time Study Travel $3,781 Monthly Fixed

1i Time Study eCommerce Product Mgmt Services $50,190 Monthly Fixed

1i Time Study Customer Experience Design & Development $49,137 Monthly Fixed

1i Time Study Website Optimization $3,676 Monthly Fixed

1i Time Study Facilities, Office Communications $7,969 Monthly Fixed

1i Time Study Travel $3,632 Monthly Fixed

Marketing Total $253,27112

Facilities 1ka Square Footage Facility Services $90,479 Monthly Fixed

1ka Square Footage 3rd party JLL Services $119,436 Monthly Fixed

1ka Square Footage

Current rent payment process and allocation to business/function based on occupied space will stay in effect $0 Settled Monthly

1r9 Square Footage Facilities - IT Sustain $22,293 Monthly Variable

1r9 Square Footage Facilities - IT Platform $3,184 Monthly Fixed

Facilities Total $235,392

13 Supply Chain 1kb Time Study

Sourcing, Monitoring and Off-boarding of Vendors $535,930 Monthly Fixed1kb NA

Pricing covers the Maintenance of the Risk Partner Relationships and all work associated with meeting the Consent Order requirements and other services $0 NA

1r9Vendor Spend

Supply Chain - IT Sustain $63,513 Monthly Variable

1r9Vendor Spend

Supply Chain - IT Platform $8,933 Monthly Fixed

1r9OPEX share of selected projects Supply Chain - IT Projects $38,200 Monthly Variable

Supply Chain - Total $646,576

14 Executive Leadership $0 NA

15 Government Relations 1x Government Relations $34,651 Monthly Fixed

16ITG ITG Sustain

All IT SOWs excl 1r1, 1r9, SOW for IT Resources, IT Tech Strat and Architecture

OPEX share less non-Mortgage NIDD exclusions Corporate TI (includes NIDD) $844,182 Monthly Variable

1r1

OPEX share less non-Mortgage Privacy and Project Sustain Security $679,516 Monthly Variable

5 5/12/2012






IT Tech_Strat_Archi

tecture

OPEX share less non Mortgage application and Project Sustain Architecture $169,203 Monthly Variable

Cross Functional OPEX Share Technology Operations Group $186,276 Monthly Variable

IT Projects for Mortgage

1r9OPEX share for selected projects TI Global Functions NADD $47,199 Monthly Variable

1r9OPEX share for selected projects TI Corporate NADD $12,664 Monthly Variable

1r9OPEX share for selected projects Security $23,850 Monthly Variable

1r9 Project spend Technology Operations Group $57,809 Monthly Variable

Projects for Mortgage $0 Monthly Variable

ITG - Total $2,020,698

Total Monthly Shared Service Charge $10,247,989

Annual Total Shared Service Charge $122,975,884

* SOW is not numbered

6 5/12/2012




Schedule C-2Pricing for ResCap Services (1)

ResCap to AFI

Functional Service Area Statement of Work Total Base Costs

(2) Third Party Costs IT ProjectsTotal Shared

ServicesHuman Resources HR Support Services (AFI) $ 74,326 $ - TBD $ 74,326 Legal Legal Services (AFI) 21,481 - TBD 21,481 ITG IT Resource Services 1,015,068 - TBD 1,015,068 Compliance Line of Business Compliance Services 79,088 - TBD 79,088

RiskRisk Services - Reporting and Special Assets

23,342 - TBD 23,342

Accounting ResCap Accounting Services 163,437 - TBD 163,437

Master ServicingMaster Servicing for Ally Auto - Bond Modeling

15,436 15,000 TBD 30,436

Master ServicingMaster Servicing for Ally Auto - Bond Administration

26,274 - TBD 26,274

Subtotal $ 1,418,453 $ 15,000 $ - $ 1,433,453

ResCap to AFI for Bank

Functional Service Area Statement of Work Total Base Costs

(2) Third Party Costs IT ProjectsTotal Shared

ServicesITG Application Support $ 444,495 $ 222,122 TBD $ 666,617 Capital Markets Capital Markets 428,678 - TBD 428,678 Human Resources HR Support Services (Bank) 32,388 - TBD 32,388 Risk Risk Management and Data Collection 501,014 141,858 TBD 642,872 Legal Legal Services (Bank) 20,317 - TBD 20,317 Accounting Accounting 78,159 - TBD 78,159 Finance

Mortgage Financial Planning and Analysis

101,984 - TBD 101,984 Capital Markets Records Services 49,829 - TBD 49,829 Business Risk and Controls and Business Excellence

Business Risk and Controls and Business Excellence

105,454 8,381 TBD 113,835

Accounting Capital Markets Accounting 50,377 - TBD 50,377 Consumer Lending Consumer Lending Services 817,156 - TBD 817,156 Risk Client Repurchase Management 6,638 - TBD 6,638 Subtotal $ 2,636,488 $ 372,361 $ - $ 3,008,850

Subtotal $ 4,054,941 $ 387,361 $ - $ 4,442,302

(1) Approximate costs of services - refer to supporting exhibts C2-a and C2-b(2) Includes Employee Costs and 2.9% indirect support

Monthly Total Shared Services Charges (US $)

Monthly Total Shared Services Charges (US $)




Schedule C-2aPricing for ResCap Services (1)

Employee (1) IT CostsPlatorm Costs

Indirect Support Costs

Total Base Costs

Third Party Costs IT Projects

Total As Incurred

Total Shared Services

ResCap to AFI - Functional Area Statement of Work (A) (B) (C)(D) = 2.9% of (A) + (B)

+ (C)(E) = (A) + (B) + (C) +

(D)(F) (G) (H) = (F) + (G) (i) = (E) + (H)

ResCap to AFIHuman Resources HR Support Services (AFI) 866,926 - - 24,991 891,918 - - - 891,918 Legal Legal Services (AFI) 250,555 - - 7,223 257,777 - - - 257,777 ITG IT Resource Services 11,839,510 - - 341,302 12,180,812 - - - 12,180,812 Compliance Line of Business Compliance Services 922,464 - - 26,592 949,057 - - - 949,057 Risk Risk Services - Reporting and Special Assets 272,258 - - 7,848 280,107 - - - 280,107 Accounting ResCap Accounting Services 1,906,290 - - 54,953 1,961,243 - - - 1,961,243 Master Servicing Master Servicing for Ally Auto - Bond Modeling 174,996 - - 10,234 185,230 180,000 - 180,000 365,230 Master Servicing

Master Servicing for Ally Auto - Bond Administration

306,456 - - 8,834 315,290 - - -

315,290

Total AFI 16,539,455 - - 481,979 17,021,434 180,000 - 180,000

17,201,434

ResCap to AFI for Ally BankITG Application Support 5,109,805 - - 224,141 5,333,945 2,665,462 - 2,665,462 7,999,408 Capital Markets Capital Markets 5,000,000 - - 144,137 5,144,137 - - - 5,144,137 Human Resources HR Support Services (Bank) 377,765 - - 10,890 388,655 - - - 388,655 Risk Risk Management and Data Collection 5,796,011 - - 216,157 6,012,168 1,702,299 - 1,702,299 7,714,467 Legal Legal Services (Bank) 236,973 - - 6,831 243,804 - - - 243,804 Accounting Accounting 911,628 - - 26,280 937,908 - - - 937,908 Finance Mortgage Financial Planning and Analysis 1,189,513 - - 34,291 1,223,804 - - - 1,223,804 Capital Markets Records Services 581,189 - - 16,754 597,943 - - - 597,943 Business Risk and Controls and Business Excellence


1,227,169 - - 38,275 1,265,444 100,575 - 100,575 1,366,019

Accounting Capital Markets Accounting 587,589 - - 16,939 604,528 - - - 604,528 Consumer Lending Consumer Lending Services 9,531,114 - - 274,757 9,805,872 - - - 9,805,872 Risk Client Repurchase Management 77,419 - - 2,232 79,651 - - - 79,651 Total AFI for the Bank 30,626,175 - - 1,011,684 31,637,859 4,468,336 - 4,468,336 36,106,196

Total Bank and AFI 47,165,630 - - 1,493,663 48,659,293 4,648,336 - 4,648,336

53,307,629

(Occupancy is currently cash settled)

(1) Employee Costs include Compensation and Benefits plus costs for T&E, Facilities, Office and Communications, Training and other ermployee related expenses(2) Direct third party costs represent pass-through costs based on diligence and negotiations




Schedule C-2bPricing for ResCap Services

Function Statement of Work ServiceMonthly Total Shared Service Charge (US$) Monthly Billing Methodology

1. Human Resources HR Support Services (AFI) All Services $74,326 Monthly Fixed

Internal Counsel $21,481 Monthly Fixed

External Counsel TBDMonthly Variable

As incurred

IT Sustain $1,015,068 Monthly Variable

As incurred

IT Projects TBDMonthly Variable

As incurred

4. ComplianceLine of Business Compliance Services

All Services $79,088 Monthly Fixed

5. RiskRisk Services - Reporting and Special Assets


6. Accounting ResCap Accounting Services All Services $163,437 Monthly Fixed

7. Master ServicingMaster Servicing for Ally Auto - Bond Modeling


8. Master ServicingMaster Servicing for Ally Auto - Bond Administration

All Services $26,274 Monthly Variable

As incurred

Function Statement of Work ServiceMonthly Total Shared Service Charge (US$) Monthly Billing Methodology

14a ITG Application Support Sustain $666,617 Monthly Variable based on departmental

expenses

Projects TBDMonthly Variable

As incurred


Document Custody 3rd Party TBDMonthly Variable

As incurred

14c. Human Resouces HR Support Services (Bank) All Services $32,388 Monthly Fixed

14d RiskRisk Management and Data Collection

All Services $642,872 Monthly Variable based on departmental

expenses

Internal Counsel $20,317 Monthly Fixed

External Counsel TBDMonthly Variable

As incurred

14f. Accounting Accounting All Services $78,159 Monthly Fixed

14g FinanceMortgage Financial Planning and Analysis



3rd Party Costs TBDMonthly Variable

As incurred

14j Business Risk and Controls and Business Excellence



14L Accounting Capital Markets Accounting All Services $50,377 Monthly Fixed

14M Consumer Lending Consumer Lending Services All Services $817,156 Monthly Variable

Based on Consumer Loans funded

14N RiskClient Repurchase Management


Needs to be reviewd quarterly to establish a new ratio of recoveries processed

Total Monthly Shared Service Charge 4,442,302$

Total Annual Shared Service Charge 53,307,630$

Capital Markets

Legal Services (Bank)

Records Services

ResCap to AFI Pricing

ResCap to AFI for the Bank Pricing

14e Legal

14i Capital Markets

14b Capital Markets

3. ITG

2. Legal Legal Services (AFI)

IT Resource Services




ny-1040886

Schedule D-1

List of AFI and Supported Facilities

As kept by the Corporate Real Estate Office as of the Effective Date




ny-1040886

Schedule D-2

List of ResCap and Supported Facilities

As kept by the Corporate Real Estate Office as of the Effective Date




ny-1040886

Schedule E

Form of Supplement

____________________

Supplement [X]

This Supplement __ (this “Supplement”) is made and entered into as of the __ day of ____, 2012 (the “Supplement Effective Date”) by and between Ally Financial Inc., a Delaware corporation (“AFI”) and Residential Capital, LLC, a Delaware limited liability company (“ResCap”) (together with AFI, the “Parties”).

1. BACKGROUND

This Supplement is entered into pursuant to the terms of the Shared Services Agreement between AFI and ResCap dated [•] (the “Agreement”) and constitutes a Supplement under the Agreement. Capitalized terms used but not defined in this Supplement have the meanings assigned to those terms in the Agreement.

2. SERVICES DESCRIPTION AND CHARGES

Supplier will provide [Insert brief description of the services here.]____ services as [Additional Services]/[Customized Services][, which shall be described in more detail in ________, for the Charges set forth [therein]/[in Schedule C to the Agreement].

3. CHANGES

[Refer to the clauses in the Agreement relating to Services and incorporate here as appropriate and agreed as the clauses in the Agreement do not apply to the Additional Services or Customized Services being added pursuant to this Supplement.]

4. TERM AND TERMINATION

[Term and notice provisions to be inserted as appropriate.]

5. [OTHER TERMS

The Parties further agree:

[Insert any other terms and conditions applicable to the Additional Services or Customized Services to be performed under this Supplement. ]

6. MISCELLANEOUS

This Supplement is incorporated by reference into the Agreement. In the event of




ny-1040886

any conflict between the terms of this Supplement and the Agreement, the terms of this Supplement shall only prevail to the extent that this Supplement expressly states that it is intended to override a term of the Agreement.

SPACE BELOW INTENTIONALLY BLANK – SIGNATURE PAGE FOLLOWS




ny-1040886

IN WITNESS WHEREOF, the Parties have caused this Supplement to be executed by their respective duly authorized representatives as of the Supplement Effective Date.

Ally Financial Inc.

By: ______________________________

Name: Title:

Residential Capital, LLC

By: ______________________________

Name: Title:




STATEMENT OF WORK

For Record Services to the Shared Services Agreement between Residential Capital, LLC and Ally Financial Inc.

Dated as of May ____, 2012 (the “Agreement”)

This Statement of Work (“SOW”), between Ally Financial Inc. (“AFI”) and Residential Capital, LLC (together with its subsidiaries, “ResCap”), is issued this ____, May 2012 (“SOW Effective Date”) to detail the deliverables and/or services to be performed in accordance with the terms and conditions of the Agreement between AFI and ResCap. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement. This SOW is subject, in its entirety, to the terms and conditions of the Agreement.

I. OVERVIEW

This SOW sets forth each Party’s responsibilities for the Record Services Group services provided by ResCap to AFI including the following:

Records Services and what do we do:

– Receive, image, track and maintain mortgage loan file records associated with origination/purchase and servicing of mortgage assets

– Fulfill requests for Data, Documents and Folders

– Manage Final Docs including custodial exception clearing for investor certification and financing line document delivery

– Manage Retention and Destruction of asset related (paper) records

– Recover and correct documents for investors and custodians

– Manage Vendors who support outsourcing of scanning, post-closing, storage and delivery for Record Services

– Manage Projects and Reporting

II. SCOPE OF SERVICES

During the Term of the Statement of Work, ResCap will provide the following services to AFI:

A. In-House Fulfillment 1. Collateral Transfer

a. Facilitates Treasury and Capital Markets in the determination/confirmation of custodial file locations

b. Updates custodial locations in LoanServ & the Custodial File Database and performs research functions to reconcile custodial locations for files that are shown as not on hand

2. File Request Fulfillment

12-12020-mg Doc 1295-2 Filed 08/28/12 Entered 08/28/12 16:48:53 Exhibit 2: Supplemental Mongelluzzo Declaration Pg 12 of 22

12-12020-mg Doc 1920-8 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit H Pg 1 of 11

SOW for Record ServicesResCap as Supplier\AFI as Recipient (for Bank)

May 2012 Final VersionPage 2 of 11

a. Process requests for files/documents that are received from internal and external clients for loans sales, litigation requests, audits and reconciliation projects

b. Deliver files/images to requestor in a mutually agreeable format that is suitable to their request (i.e. electronic format)

3. Mail a. Files and documents are received from various internal and external customers b. Files are received for reinstatement, files and documents are logged into the

Inventory Request Management (IRM) systemc. Requests are processed through a database, files and documents are shipped to the

vendor and or custodian for reinstatement

B. Final Document Recovery and Curative1. Assignment

a. Investors and custodians can request corrections to assignments, new assignments, and prior assignments

b. The request is fulfilled by the Certification Reconciliation Team and sent to the requestor

2. Mortgage a. Investor or custodian may request delivery of the recorded mortgage, delivery of a

county certified copy, or corrections to the recorded mortgage. b. Steps are taken to record and/or correct the mortgage and deliver it to the requestor

when the mortgage has not been recorded or ResCap does not have possession of the recorded mortgage

3. Title a. Investor or custodian may request receipt of the final title policy b. The Certification Reconciliation Team reviews the imaged Title Policy and

confirms the Title Policy is required VA Vendee loans, Hawaii Homeland loans, Secretary of Urban and Housing

Authority loan, and refinances without title charges do not require title policies4. Mods

a. The Certification Reconciliation Team receives document and exception requests through Investor Demands Database

b. GNMA or FHA Loan Modification requests are fulfilled by following GNMA guidelines since the loans are pooled or could potentially be pooled to GNMA regardless of the original source The original GNMA or FHA Loan Modification is required prior to completing

the procedureC. Project Management and Reporting (Project Office)

1. Systems/Database Mgt a. Test and coordinate modifications to a system/database when needed b. Troubleshoot problems when they occur c. Make recommendations and plans for future system upgrades d. Ensures the performance of the systems and databases are properly working

2. Enterprise Initiatives:a. BCP - Business Continuity Planb. CRIM – Company Records and Information Management

3. P&Pa. Compose and maintain all required documentation related to Policies & Procedures

and implementing changes to existing high level documents





3. Reporting/Analyticsa. Report and examine a problem or issue and recommend an action, function as

proposals that identify or define problems and look for specific ways of resolving them

b. Other analytical reports are feasibility studies that examine proposed solutions and determine their practicality

4. Image Pendsa. Documents are uploaded to Looking Glass by various internal and external groups

and departments. If it is determined that an image is illegible or incorrectly cataloged. An Image Pend will be created through Inventory Status System (ISS). The Image Pend lists the incorrect attribute of the image and provides guidance on how to correct the image.

b. The process to correct the image is the same whether Records Services found the discrepancy or the department was made aware of the discrepancy (Attachment A -Image Pend Table Guide)

D. Vendor Management (Project Office)1. Auditing/Performance Reports

a. Responsible for auditing Vendors for compliance to the agreed upon Service Level Agreement (SLA)

b. Vendor Management pulls a representative sample of loans from various applications, and tests individual files and processes from the sample

c. The results are logged and delivered to the Vendor, which aids in identifying and reconciling potential risks

2. Change Orders a. Responsible for receiving and approving Vendor Change Orders

Change Orders are completed to improve or create processes that are or will be handled by a Record Services Vendor

Vendor Management is responsible for ensuring the new or changed procedure is followed

b. Responsible for analyzing vendor processes and makes recommendations for continuous process improvement

3. Invoices/Payables a. After vendor has completed work and the curative actions are taken, the vendor

bills ResCap for the service provided b. Invoices are received, approved, logged, and the curative cost is recorded by

project name and cost center4. SOW

a. Collaborate with Strategic Sourcing and Business Units on Statement of Work review, revision and implementation

5. POA Mgt a. Maintain the inventory of original unrecorded Power of Attorneys and distributes

POA for investors referenced in the beneficiary matrix 6. SBO Payoffs

a. Payoff Report from Master Servicing is requested every other week. The report lists SBO loans that have paid off and is used to generate payoff requests. Vendor Management receives the Payoff Report, processes the report through an internal database, and submits a request in Inventory Status System (ISS) to have the files delivered to the SBO Servicer.

7. Bailee Letters





a. Record Services, through its vendor ACS, currently pursues loan level bailee letters when loans are released from financing lines or if a new investor requests them for the portfolio they are or will be purchasing from ResCap. For financing line loans, there is a bailee letter template for each financing

line.b. For the investor requests, the collateral file has previously been released to the

attorney, so Record Services/ACS is accountable for creating the bailee letter and sending via e-mail to the attorney. Follow-up will occur with the attorney until an executed letter is received. Upon receipt, it is uploaded to Filenet and an image is provided to the investor.

8. Any references to Vendors herein refers to Exhibit C. ResCap may add or remove any Vendor and will provide AFI with an updated Exhibit C.

III. DELIVERABLES

A. In-House Fulfillment 1. Responsible for file, (credit & custodial) and document fulfillment, to include the tracking,

auditing, reconciling, and confirming transfers, custodial requests, file locations, documents, and repurchases

2. Process requests for files/documents that are received from internal and external clients for loans sales, litigation requests, audits and reconciliation projects

B. Final Document Recovery and Curative 1. Research, recover, audit, cure and track the receipt of key final documents from internal

and external customers that are required by the Investor, Treasury, Capital Markets or Lending Channels, per contractual or structured deal requirements

C. Project Office1. Responsible for Internal and External Relationship Management and Vendor Management,

including management of outsourcing and storage vendors 2. Financial Management and support for Budget Planning, Forecasting and Actual spend

tracking; Business Analytics and reporting; Data Analytics and System Support3. Enterprise coordination of change management and communication plans, including

Policies and Procedures documentation and departmental training programs 4. Management of physical and electronic document storage, retention, and destruction 5. Process Mapping; Implementation of business solutions; and Tracking and status reporting

of project issues

IV. TERM

The Term of this SOW shall be in accordance with the term of the Agreement, unless otherwise modified or terminated in accordance with the Agreement.

V. ASSUMPTIONS AND DEPENDENCIES

None Identified





VI. AFI AND RESCAP RESPONSIBILITIES

A. AFI Responsibilities1. Provide ResCap with necessary information related business information, key decisions,

changes in strategy, etc. with sufficient lead time to allow ResCap so it can maintain and deliver services described in this SOW.

B. ResCap Responsibilities1. During the Term of the statement of work, ResCap will provide all services under the terms

and conditions of this SOW2. ResCap will provide notice to AFI of any changes to procedures or processes 3. During the Term, should significant changes be made to ResCap Policies and Procedures that

impact services provided by ResCap, AFI will receive the same communication4. All records and data will be handled, stored and maintained according to the Ally Company

Records and Information Management Policy (CRIM)

VII. SERVICE LEVEL AGREEMENTS

A. Performance Standards

1. In House Fulfillment a. All folder and document requests, will be requested from the appropriate source by

an established timeline. Folder and document requests received after the cutoff time of ordering, will be

requested from the appropriate source on the following business day.b. When folders are locally available, they should be received by ResCap, by a

determined timelinec. When image delivery is required, the folder documents will be scanned within an

established timeline from when the documents are received2. Final Document Recovery and Curative

a. System CIT's SLA are based on the Procedures set in accordance with company policy by the Business owner at the time the CIT is created .

b. Deadlines are determined for presale by the closing date, and post sale deadlines are according to the PSA (Purchasing Sales Agreement) . Each deal is unique according to what closing dates, delivery dates, and special

arrangements they have promised to the Investor.3. Project Management and Reporting (Project Office)

a. Projects and Initiatives are completed by established timeframes4. Vendor Management (Project Office)

a. Vendor Scorecards will be published by the 15th business day of the following month.

b. Power of Attorneys will be shipped to requestors by an established timelinec. Invoices are processed and submitted to Accounts Payable subsequent of being

notified the invoice was reconciled.d. Create and submit Change Orders to vendors within a reasonable timeframe of

identifying issue or process improvement.e. Bailee Letters and SBO requests would be covered within vendor’s SLA





5. Any references to established timelines herein refers to Exhibit D. ResCap may change such established timelines and will provide AFI with an updated Exhibit D. To the extent there are material changes in Rescap's established timelines, ResCap and AFI shall work towards establishing mutually agreeable timelines.

Deliverables noted in this SOW will be provided to AFI within timelines required by the terms of the relevant transactions, due dates or as may be requested and agreed upon by AFI and ResCapto fulfill certain business needs. To the extent such Deliverables have agreed upon timelines, such timelines are deemed to be Service Levels. In addition, any Deliverables in this SOW must be consistent with historical practice and Services provided must be delivered with the same standard of care, diligence, priority and frequency with which the Services were provided immediately prior to the date hereof; provided, however, that ResCap shall be entitled to subcontract the performance of any or all of the Services to a third party to the extent permitted under the Agreement; and provided, further that ResCap may modify processes and service approach as needed so long as impacted Deliverables and Service Levels continue to be met. ResCap remains responsible and liable for the performance of any subcontracted services (and the Services provided by ResCap’s Affiliates) as if performed by ResCap.

B. Remediation Processes

1. If ResCap reasonably determines that there is inadequate staffing or staffing that lacks necessary training or skills to meet the service level agreements set forth in Section VII.A, AFI agrees to work reasonably with ResCap to address any such deficiencies in staff or skill sets

C. Escalation Processes

1. Issues and gaps in performance shall be reviewed by AFI initially with the appropriate ResCap contact.

2. If issues or gaps are not resolved satisfactorily by ResCap in a reasonable time frame, the issues will be escalated by AFI to the appropriate ResCap department manager for resolution.

3. If issues remain unresolved in AFI’s opinion, those issues will be escalated to the appropriate ResCap executive.

Management for ResCap will meet with management for AFI periodically, consistent with the Governance Model described in Schedule B to the Agreement, to review performance, project status, changes to policies and procedures, escalated matters, regulatory changes and any other matters that might need to be reviewed by the parties to this Statement of Work

VIII. PRICING

All services provided by ResCap under the terms of this SOW will be provided at such charges as may be set forth in the pricing exhibit to the Agreement.





IX. EMPLOYEE CONTACTS

AFI and ResCap have identified some of the employees who are currently associated with the Services provided pursuant to this Statement of Work. See Exhibit A for a list of AFI and ResCap employee contacts including names, telephone numbers, and e-mail addresses.

XI. Attachments, Exhibits or Schedules

Exhibit A – List of Employee Contacts

Exhibit B – List of Record Services Systems

Exhibit C – List of Vendors

Exhibit D – Service Level Agreement Timeline

Any attachments, exhibits or schedules attached to this Statement of Work shall be incorporated by references into the SOW.





EXHIBIT A

Key Employee Listing

The following employees are designated by AFI as a point of contact during the term of this SOW. Name: Last, First Role Phone # EmailMainardi, Marianne SVP, Correspondent

Funding(215) 734-4510 [email protected]

The following employees are designated by ResCap as a point of contact during the term of this SOW.

Name: Last, First Role Phone # EmailFisher, Jamie Team Leader – Project

Office(319) 236-5462 [email protected]

Smith, Kimberly Team Leader – Project Office

(319) 236-5211 [email protected]

Magnuson, Lisa Team Leader – Vendor Mgt.


Backora, Dave Team Leader – In House Fulfillment


Osborne, Cassie Team Leader – Final Document Recovery


Karns, Heidi Team Leader – Final Document Curative


DiSandro, Fred Associate – Project Office (215) 734-4007 [email protected]

The following employees are designated by AFI and ResCap as persons who must be notified of escalated issues pertaining to this SOW.

Name: Last, First Role Phone # EmailMongelluzzo, John Managing Director (215) 734-7645 [email protected], Patrick Director (215) 734-4747 [email protected], Todd Manager (319)-236-7495 [email protected]





EXHIBIT B

Record Services Systems

Looking GlassNew Trak – Process ManagementRecord Management System (RMS)ECLIPSEPILOTWALTWATSBusiness Objects/Crystal ReportsFileNet Platform ResCapREKON2000 (SQL2000)MadCapSODAMS AccessCoopers DBInvestor Demands DBCustodial File Mgmt DBForest and TreesDocTrac – RMMFiServ LSP / LoanServDeskTop Image UploadDocSplitterCitrix Application Access ServicesMERS

The systems listed above may change from time to time. ResCap will provide an update to AFI as changes occur.





EXHIBIT C

Record Services Vendors

Iron MountainKenwoodACSIndecomm GlobalCorelogicAmerican TitleCourthouse DirectNBS





EXHIBIT D

Service Level Agreement Timeline

1. In House Fulfillment Folder and Document Request – Ordered on same business day request is made

if received before the established cutoff time Folders and Documents locally available – Received by ResCap within 24 to 48

hours Image Delivery – Folder Documents are scanned on the same day received by

Rescap’s vendor(s) if received before the established cutoff time2. Final Document Recovery and Curative

Purchasing Sales Agreement – Typically 90-120 days from closing date3. Project Management and Reporting

No set timeline as project deadlines differ from one to another4. Vendor Management

Power of Attorneys – Shipped same business day request is made if received before the established cutoff time

Invoices – Submitted within 24hrs of invoice being reconciled Change Orders – Submitted within 48hrs of identified issue or process

improvement Bailee Letters/SBO requests – 96hr SLA



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MORRISON & FOERSTER LLP1290 Avenue of the AmericasNew York, New York 10104Telephone: (212) 468-8000Facsimile: (212) 468-7900Gary S. LeeJoel C. Haims

Counsel for the Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK

In re:


Debtors.

)))))))

Case No. 12-12020 (MG)

Chapter 11

Jointly Administered

SUPPLEMENTAL DECLARATION OF JOHN G. MONGELLUZZO

I, John G. Mongelluzzo, declare:

1. I am Managing Director at Residential Capital, LLC, a Debtor in this bankruptcy case.

(The Debtors and Debtors in Possession are herein collectively referred to as “ResCap.”) In that

role, I am responsible for capital markets operations. I have been employed at ResCap since

April 2009.

2. I submit this declaration to supplement my declaration of August 7, 2012 (my “Initial

Declaration”). First, I address the costs and burdens of producing the Loan Files requested by

the FHFA and anticipated requests for Loan Files from other defendants in the FHFA Case.

Second, I address one Statement of Work that I was involved in negotiating and drafting that is

part of the Shared Services Agreement between ResCap and Ally Financial, Inc.


12-12020-mg Doc 1920-9 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit I Pg 1 of 21

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Document Production Costs and Burdens

3. As discussed in my Initial Declaration, the production of a large number of Loan Files is

costly and burdensome to the Debtors. While I do not know exactly how many Loan Files that

ResCap may eventually be asked to produce in relation to the FHFA litigation, I am informed

that the FHFA has requested 5,000 Loan Files. Below, I discuss the costs and burdens associated

with that request.

4. I am also informed that the defendants in the FHFA case may be seeking approximately

43,000 Loan Files from ResCap. For the Court’s convenience, I also discuss the costs and

burdens associated with such a production below.

5. Because, to my knowledge, no one has identified the specific Loan Files that my group

would be tasked with finding and producing, my descriptions below are based on the average

times and costs associated with finding and producing Loan Files of similar vintage. I also do

not know what the required time frame for production would be, so for the purposes of this

declaration, I assume turnaround times that are normal for ResCap’s business, except where

otherwise noted.

I. FHFA’S REQUEST FOR 5,000 LOAN FILES

6. As described in my Initial Declaration, producing Loan Files is a labor intensive task.

The first step is to locate the Loan Files. To search for 5,000 Loan Files across ResCap’s 14

databases would take approximately three days and occupy time from two of ResCap’s

Fulfillment Group employees. The results of this search would provide the location (or

locations) for the Loan Files and their constituent parts.

7. After running those initial searches, the Fulfillment Group would work to clear up search

errors, exceptions, and other problems that arise during the initial database search. This part of

the process would take approximately two days The Fulfillment Group would then request that



3ny-1054715

the various third party storage vendors employed by the Debtors to store hard copy Loan Files

pull the requested Loan Files.

8. Once the Fulfillment Group informs our vendors which Loan Files are needed, the

vendors track down the documents in their storage facilities. We have a contractual limit of

1,250 boxes per week1 that we can request from our vendors at the set contractual rate. Some

Loan Files may be in the same box as others and some Loan Files are likely to have components

in more than one box, so it is difficult to estimate precisely how many boxes would need to be

pulled to produce these 5,000 Loan Files.

9. If the vendors are required to pull boxes containing Loan Files in excess of the

contractual amounts, the storage vendors charge substantially more per file, if they are able to

comply with the increased volume of requests at all. Based on the contractual limits, it could

take five weeks or more for the vendors to locate and pull all of the Loan Files. However, that

does not account for the fact that ResCap requests thousands of files on a regular basis as part of

its regular business operations. In July of this year ResCap requested 5,082 Loan Files and in

August requested more than 8,000 Loan Files. I also expect there to be increasing requests

necessary for complying with various tasks associated with the bankruptcy, and complying with

other investigations and consent orders. This means that substantially all of the documents at

issue here would have to be requested on an extra-contractual basis (and at extra-contractual

prices, discussed below).

10. While our vendors are usually willing to exceed their contractual limitations, to do so

comes at additional cost to the Debtors and there is a limit to their capacity.

1 In my Initial Declaration, I mistakenly stated that our contractual limit is 250 boxes per week. That mistake was inadvertent, and the correct number is 1,250 boxes per week.



4ny-1054715

11. As Loan Files are pulled by the vendors, they are sent to another vendor, for imaging.

This process, when the imaging vendor is not overburdened, usually only takes a few days.

However, with a request of 5,000 Loan Files being sent to the imaging vendor over the course of

five or so weeks, the imaging process for each Loan File may take longer than a few days

because giving the imaging vendor more than 1,000 Loan Files every week for five weeks in

addition to the Loan Files ResCap already sends on a weekly basis per week is not an

insignificant increase. As a result, the imaging vendor will likely be required to spread out the

imaging requests over a longer period of time so as not to interfere with the imaging that needs to

be completed for other key functions of the Debtor.

12. In summary, and although I stress again that it is somewhat hard to estimate without

knowing the actual loan numbers for the Loan Files at issue, based on the current level of

requests being processed by the Fulfillment Group and assuming our vendors have adequate

capacity, producing 5,000 Loan Files would take approximately five to seven weeks and would,

during most if not all of that time, stress the Fulfillment Group when they are already under

significant burdens to comply with the restructuring related obligations, among others.

13. As described in my Initial Declaration, if the contractual limits with the storage vendors

are not exceeded, it costs approximately $25-$28 per Loan File to locate, ship, image, and

produce each file. Therefore, the approximate cost of producing 5,000 Loan Files would be

$125,000-$140,000. Those costs are exclusive of attorney time, litigation vendor costs, and

other costs that producing Loan Files might incur after the Fulfillment Group has completed its

work, to which I cannot speak.

14. If the contractual limits with the storage vendors are exceeded, the costs increase. As

noted above, because of the existing volume of requests that the Fulfillment Group makes based



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on our business needs, and the increasing requests that are the result of the restructuring process,

the majority of—if not all—of the Loan Files at issue would have to be produced at the extra-

contractual rate. Although the number varies, in the past few months, the Fulfillment Group

requested more than 5,000 Loan Files in July and requested more than 8,000 Loan Files in

August, and I understand that there are more requests for Loan Files forthcoming, including

requests from the Creditor’s Committee and Examiner. For each Loan File requested in excess

of our contractual limitations, I estimate that it costs $75-100 to produce instead of $25-$28 to

produce. Therefore, if all 5,000 Loan Files at issue here must be produced outside of the

contractual rate, which is likely, it would cost approximately $375,000-$500,000.

II. REQUEST FOR 43,000 LOAN FILES

15. I have been informed that the various non-Ally defendants in the FHFA case are likely to

seek the production of 43,000 Loan Files from the debtors because they want all of the Loan

Files in the so-called “supporting loan groups.” I summarize below the likely costs and burdens

associated with such a large request.

16. Clearly, producing 43,000 Loan Files is an enormous undertaking and exponentially

more difficult and costly than producing only 5,000 Loan Files. In fact, it simply may not be

possible to produce 43,000 Loan Files in any reasonable amount of time without completely

preventing the Fulfillment Group and its vendors from undertaking the work necessary for the

Debtors to run their business and complete the restructuring.

17. Producing 43,000 Loan Files would take a lot of time and cost a lot of money. As

outlined in my Initial Declaration, simply searching for 43,000 Loan Files in ResCap’s 14

databases could take a full week. Because of the size of the searches, the Fulfillment Group

would have to search the databases at night because conducting a batch search for that many



6ny-1054715

documents prevents the databases from being used for any other purpose, which is not acceptable

during the working day.

18. After the week of searches, it would take the Fulfillment Group approximately one or two

weeks to clear up search errors, exceptions, and other problems that arise during the initial

database search. The process of searching and reconciling errors and exceptions would occupy

two Fulfillment Group employees during that time.

19. Once the Fulfillment Group tells ResCap’s storage vendors which Loan Files are needed,

it will take time for the vendors to pull the Loan Files. Assuming ResCap’s contractual limits of

1,250 boxes per week are not exceeded, it could take 34 weeks—or eight months—to locate,

pull, and ship all of the requested Loan Files. Asking the vendors to exceed the contractual

limitations for an extended period of time could seriously limit their ability to locate and pull

documents necessary for running the Debtors’ business and consummating the restructuring. Of

course, asking the storage vendors to exceed the contractual capacity will also cause the costs of

production to increase dramatically.

20. As with 5,000 files, having ResCap’s imaging vendor attempt to image 43,000 Loan Files

poses significant problems—but exponentially more so. Such an increased volume of imaging

over such a prolonged period of time will undoubtedly have significant negative implications on

their ability to timely image documents critical to run ResCap’s business and consummate the

restructuring. Because of the volume of imaging that 43,000 Loan Files represents, the imaging

vendor will likely have to spread out the imaging over many months.

21. Because a production of 43,000 Loan Files is so large, I would estimate that if the current

workload of the Fulfillment Group remains constant, it would take approximately ten months to

complete full production of all of those Loan Files. That assumes, however, that the storage



7ny-1054715

vendors and imaging vendors are able to exceed their contractual limits for a prolonged period of

time and that somebody can pay for those costs.

22. Based on the $25-$28 estimate for the production of a Loan File within the contractual

limits, it would cost approximately $1,075,000 to $1,204,000. However, as noted above, that

estimate is unlikely to be the true costs because the Debtors are already requesting thousands of

documents a month. Therefore, the costs would almost certainly be $75-$100 per Loan File,

meaning it would cost between $3,225,000 and $4,300,000 to produce 43,000 Loan Files over

the course of ten months.

23. The only prior experience that could serve as a predictor for how the production of

43,000 Loan Files might go is the MBIA litigation. In that case, the Fulfillment Group produced

64,000 Loan Files in a case where ResCap is a defendant. That production of 64,000 Loan Files

was done on an expedited basis and still took approximately nine months. That production was

very burdensome on the Fulfillment Group, and was undertaken pre-bankruptcy and at a time

when significantly fewer obligations—such as those related the restructuring and various consent

orders—were burdening the Fulfillment Group.

Shared Services Agreement

24. I have been asked to describe the purpose and scope of the Record Services Statement of

Work related to the Shared Services Agreement because I was involved in negotiating and

drafting it. Attached hereto as Exhibit A is the Record Services Statement of Work. Below, I

describe the purpose and scope of that Statement of Work as well as its relationship to large

discovery requests such as are at issue here.



8ny-1054715

25. I am aware of, and have reviewed, the “Shared Services Agreement” between ResCap

and Ally Financial, Inc. (“AFI”). I understand its purpose is to allow ResCap and AFI to

continue sharing the services post-bankruptcy that they had shared pre-bankruptcy.

26. Because some of the functions that the capital markets operations group I oversee at

ResCap previously supported both ResCap and AFI, certain aspects of my group’s work were

included in the Record Services Statement of Work.

27. The Record Services Statement of Work, and in particular the clause which relates to the

processing of “request for files/documents that are received from internal and external clients for

loan sales, litigation requests, audits and reconciliation projects and deliver files/images to

requestor in a mutually agreeable format . . . .” was intended to capture the type of document

processing that group performed for AFI prior to the bankruptcy.

28. The requests that the Fulfillment Group received from AFI pre-bankruptcy were for small

numbers of files (including Loan Files) that were necessary for ordinary business purposes, such

as individual foreclosure cases, repurchase requests, among others. It was not the intention for

the Record Services Statement of Work to include the production of thousands—and certainly

not tens of thousands—of Loan Files for AFI in litigation to which the Debtors were not

involved. Indeed, I do not recall any such large scale requests ever being made by AFI of the

Fulfillment Group prior to the bankruptcy filing, so such a request was not contemplated by or

included in that scope of work. I cannot recall any requests from AFI to the Fulfillment Group

prior to the bankruptcy that involved any more than a few hundred Loan Files, and even those

cases were rare. The type of Loan Files pulls performed by the Fulfillment Group for AFI were

almost always for one or two Loan Files at a time.



9ny-1054715

29. In Exhibit D to the Record Services Statement of Work, it provides that all requests for

Loan Files will be made on the same day as they are received. This is not a turnaround time

ResCap would have—or could have—agreed to if the Record Services Statement of Work

contemplated the production of thousands of Loan Files because, as described above, it can take

day or weeks to even run the database searches for such large numbers of Loan Files. It is,

therefore, a literal impossibility to comply a one day turnaround in such cases.

30. The fee structure set out in the Shared Services Agreement—which allocates just under

$50,000 to ResCap per month for Record Services—was arrived at based on the total services

that ResCap provides to AFI, including modest and limited Loan File and other record pulls that

were the norm prior to the bankruptcy and did not include any contemplation of large Loan File

collections such as what are at issue here. Were such large scale Loan File pulls contemplated,

the monthly fee likely would have to be substantially higher because the burden and costs of

such Loan File pulls would have raised the costs of the services ResCap provides to AFI. It is

also worthy of note that even in the case of the individual Loan Files and other document pulls

contemplated by the Record Services Statement of Work, the third party costs are to be borne by

AFI, not the Debtors.

I declare under penalty of perjury, pursuant to 28 U.S.C. § 1746, that the foregoing is true

to the best of my knowledge, information, and belief. Executed on August 28, 2012, at Fort

Washington, PA.

/s/ John G. Mongelluzzo__________

John G. Mongelluzzo



Exhibit A



STATEMENT OF WORK

For Record Services to the Shared Services Agreement between Residential Capital, LLC and Ally Financial Inc.

Dated as of May ____, 2012 (the “Agreement”)

This Statement of Work (“SOW”), between Ally Financial Inc. (“AFI”) and Residential Capital, LLC (together with its subsidiaries, “ResCap”), is issued this ____, May 2012 (“SOW Effective Date”) to detail the deliverables and/or services to be performed in accordance with the terms and conditions of the Agreement between AFI and ResCap. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement. This SOW is subject, in its entirety, to the terms and conditions of the Agreement.

I. OVERVIEW

This SOW sets forth each Party’s responsibilities for the Record Services Group services provided by ResCap to AFI including the following:

Records Services and what do we do:

– Receive, image, track and maintain mortgage loan file records associated with origination/purchase and servicing of mortgage assets

– Fulfill requests for Data, Documents and Folders

– Manage Final Docs including custodial exception clearing for investor certification and financing line document delivery

– Manage Retention and Destruction of asset related (paper) records

– Recover and correct documents for investors and custodians

– Manage Vendors who support outsourcing of scanning, post-closing, storage and delivery for Record Services

– Manage Projects and Reporting



A. In-House Fulfillment 1. Collateral Transfer

a. Facilitates Treasury and Capital Markets in the determination/confirmation of custodial file locations

b. Updates custodial locations in LoanServ & the Custodial File Database and performs research functions to reconcile custodial locations for files that are shown as not on hand

2. File Request Fulfillment





a. Process requests for files/documents that are received from internal and external clients for loans sales, litigation requests, audits and reconciliation projects

b. Deliver files/images to requestor in a mutually agreeable format that is suitable to their request (i.e. electronic format)

3. Mail a. Files and documents are received from various internal and external customers b. Files are received for reinstatement, files and documents are logged into the

Inventory Request Management (IRM) systemc. Requests are processed through a database, files and documents are shipped to the

vendor and or custodian for reinstatement

B. Final Document Recovery and Curative1. Assignment

a. Investors and custodians can request corrections to assignments, new assignments, and prior assignments

b. The request is fulfilled by the Certification Reconciliation Team and sent to the requestor

2. Mortgage a. Investor or custodian may request delivery of the recorded mortgage, delivery of a

county certified copy, or corrections to the recorded mortgage. b. Steps are taken to record and/or correct the mortgage and deliver it to the requestor

when the mortgage has not been recorded or ResCap does not have possession of the recorded mortgage

3. Title a. Investor or custodian may request receipt of the final title policy b. The Certification Reconciliation Team reviews the imaged Title Policy and

confirms the Title Policy is required VA Vendee loans, Hawaii Homeland loans, Secretary of Urban and Housing

Authority loan, and refinances without title charges do not require title policies4. Mods

a. The Certification Reconciliation Team receives document and exception requests through Investor Demands Database

b. GNMA or FHA Loan Modification requests are fulfilled by following GNMA guidelines since the loans are pooled or could potentially be pooled to GNMA regardless of the original source The original GNMA or FHA Loan Modification is required prior to completing

the procedureC. Project Management and Reporting (Project Office)

1. Systems/Database Mgt a. Test and coordinate modifications to a system/database when needed b. Troubleshoot problems when they occur c. Make recommendations and plans for future system upgrades d. Ensures the performance of the systems and databases are properly working

2. Enterprise Initiatives:a. BCP - Business Continuity Planb. CRIM – Company Records and Information Management

3. P&Pa. Compose and maintain all required documentation related to Policies & Procedures

and implementing changes to existing high level documents





3. Reporting/Analyticsa. Report and examine a problem or issue and recommend an action, function as

proposals that identify or define problems and look for specific ways of resolving them

b. Other analytical reports are feasibility studies that examine proposed solutions and determine their practicality

4. Image Pendsa. Documents are uploaded to Looking Glass by various internal and external groups

and departments. If it is determined that an image is illegible or incorrectly cataloged. An Image Pend will be created through Inventory Status System (ISS). The Image Pend lists the incorrect attribute of the image and provides guidance on how to correct the image.

b. The process to correct the image is the same whether Records Services found the discrepancy or the department was made aware of the discrepancy (Attachment A -Image Pend Table Guide)

D. Vendor Management (Project Office)1. Auditing/Performance Reports

a. Responsible for auditing Vendors for compliance to the agreed upon Service Level Agreement (SLA)

b. Vendor Management pulls a representative sample of loans from various applications, and tests individual files and processes from the sample

c. The results are logged and delivered to the Vendor, which aids in identifying and reconciling potential risks

2. Change Orders a. Responsible for receiving and approving Vendor Change Orders

Change Orders are completed to improve or create processes that are or will be handled by a Record Services Vendor

Vendor Management is responsible for ensuring the new or changed procedure is followed

b. Responsible for analyzing vendor processes and makes recommendations for continuous process improvement

3. Invoices/Payables a. After vendor has completed work and the curative actions are taken, the vendor

bills ResCap for the service provided b. Invoices are received, approved, logged, and the curative cost is recorded by

project name and cost center4. SOW

a. Collaborate with Strategic Sourcing and Business Units on Statement of Work review, revision and implementation

5. POA Mgt a. Maintain the inventory of original unrecorded Power of Attorneys and distributes

POA for investors referenced in the beneficiary matrix 6. SBO Payoffs

a. Payoff Report from Master Servicing is requested every other week. The report lists SBO loans that have paid off and is used to generate payoff requests. Vendor Management receives the Payoff Report, processes the report through an internal database, and submits a request in Inventory Status System (ISS) to have the files delivered to the SBO Servicer.

7. Bailee Letters





a. Record Services, through its vendor ACS, currently pursues loan level bailee letters when loans are released from financing lines or if a new investor requests them for the portfolio they are or will be purchasing from ResCap. For financing line loans, there is a bailee letter template for each financing

line.b. For the investor requests, the collateral file has previously been released to the

attorney, so Record Services/ACS is accountable for creating the bailee letter and sending via e-mail to the attorney. Follow-up will occur with the attorney until an executed letter is received. Upon receipt, it is uploaded to Filenet and an image is provided to the investor.

8. Any references to Vendors herein refers to Exhibit C. ResCap may add or remove any Vendor and will provide AFI with an updated Exhibit C.

III. DELIVERABLES

A. In-House Fulfillment 1. Responsible for file, (credit & custodial) and document fulfillment, to include the tracking,

auditing, reconciling, and confirming transfers, custodial requests, file locations, documents, and repurchases

2. Process requests for files/documents that are received from internal and external clients for loans sales, litigation requests, audits and reconciliation projects

B. Final Document Recovery and Curative 1. Research, recover, audit, cure and track the receipt of key final documents from internal

and external customers that are required by the Investor, Treasury, Capital Markets or Lending Channels, per contractual or structured deal requirements

C. Project Office1. Responsible for Internal and External Relationship Management and Vendor Management,

including management of outsourcing and storage vendors 2. Financial Management and support for Budget Planning, Forecasting and Actual spend

tracking; Business Analytics and reporting; Data Analytics and System Support3. Enterprise coordination of change management and communication plans, including

Policies and Procedures documentation and departmental training programs 4. Management of physical and electronic document storage, retention, and destruction 5. Process Mapping; Implementation of business solutions; and Tracking and status reporting

of project issues

IV. TERM


V. ASSUMPTIONS AND DEPENDENCIES

None Identified





VI. AFI AND RESCAP RESPONSIBILITIES

A. AFI Responsibilities1. Provide ResCap with necessary information related business information, key decisions,

changes in strategy, etc. with sufficient lead time to allow ResCap so it can maintain and deliver services described in this SOW.

B. ResCap Responsibilities1. During the Term of the statement of work, ResCap will provide all services under the terms

and conditions of this SOW2. ResCap will provide notice to AFI of any changes to procedures or processes 3. During the Term, should significant changes be made to ResCap Policies and Procedures that

impact services provided by ResCap, AFI will receive the same communication4. All records and data will be handled, stored and maintained according to the Ally Company

Records and Information Management Policy (CRIM)

VII. SERVICE LEVEL AGREEMENTS

A. Performance Standards

1. In House Fulfillment a. All folder and document requests, will be requested from the appropriate source by

an established timeline. Folder and document requests received after the cutoff time of ordering, will be

requested from the appropriate source on the following business day.b. When folders are locally available, they should be received by ResCap, by a

determined timelinec. When image delivery is required, the folder documents will be scanned within an

established timeline from when the documents are received2. Final Document Recovery and Curative

a. System CIT's SLA are based on the Procedures set in accordance with company policy by the Business owner at the time the CIT is created .

b. Deadlines are determined for presale by the closing date, and post sale deadlines are according to the PSA (Purchasing Sales Agreement) . Each deal is unique according to what closing dates, delivery dates, and special

arrangements they have promised to the Investor.3. Project Management and Reporting (Project Office)

a. Projects and Initiatives are completed by established timeframes4. Vendor Management (Project Office)

a. Vendor Scorecards will be published by the 15th business day of the following month.

b. Power of Attorneys will be shipped to requestors by an established timelinec. Invoices are processed and submitted to Accounts Payable subsequent of being

notified the invoice was reconciled.d. Create and submit Change Orders to vendors within a reasonable timeframe of

identifying issue or process improvement.e. Bailee Letters and SBO requests would be covered within vendor’s SLA





5. Any references to established timelines herein refers to Exhibit D. ResCap may change such established timelines and will provide AFI with an updated Exhibit D. To the extent there are material changes in Rescap's established timelines, ResCap and AFI shall work towards establishing mutually agreeable timelines.

Deliverables noted in this SOW will be provided to AFI within timelines required by the terms of the relevant transactions, due dates or as may be requested and agreed upon by AFI and ResCapto fulfill certain business needs. To the extent such Deliverables have agreed upon timelines, such timelines are deemed to be Service Levels. In addition, any Deliverables in this SOW must be consistent with historical practice and Services provided must be delivered with the same standard of care, diligence, priority and frequency with which the Services were provided immediately prior to the date hereof; provided, however, that ResCap shall be entitled to subcontract the performance of any or all of the Services to a third party to the extent permitted under the Agreement; and provided, further that ResCap may modify processes and service approach as needed so long as impacted Deliverables and Service Levels continue to be met. ResCap remains responsible and liable for the performance of any subcontracted services (and the Services provided by ResCap’s Affiliates) as if performed by ResCap.

B. Remediation Processes

1. If ResCap reasonably determines that there is inadequate staffing or staffing that lacks necessary training or skills to meet the service level agreements set forth in Section VII.A, AFI agrees to work reasonably with ResCap to address any such deficiencies in staff or skill sets

C. Escalation Processes

1. Issues and gaps in performance shall be reviewed by AFI initially with the appropriate ResCap contact.

2. If issues or gaps are not resolved satisfactorily by ResCap in a reasonable time frame, the issues will be escalated by AFI to the appropriate ResCap department manager for resolution.

3. If issues remain unresolved in AFI’s opinion, those issues will be escalated to the appropriate ResCap executive.

Management for ResCap will meet with management for AFI periodically, consistent with the Governance Model described in Schedule B to the Agreement, to review performance, project status, changes to policies and procedures, escalated matters, regulatory changes and any other matters that might need to be reviewed by the parties to this Statement of Work

VIII. PRICING

All services provided by ResCap under the terms of this SOW will be provided at such charges as may be set forth in the pricing exhibit to the Agreement.





IX. EMPLOYEE CONTACTS

AFI and ResCap have identified some of the employees who are currently associated with the Services provided pursuant to this Statement of Work. See Exhibit A for a list of AFI and ResCap employee contacts including names, telephone numbers, and e-mail addresses.

XI. Attachments, Exhibits or Schedules

Exhibit A – List of Employee Contacts

Exhibit B – List of Record Services Systems

Exhibit C – List of Vendors

Exhibit D – Service Level Agreement Timeline

Any attachments, exhibits or schedules attached to this Statement of Work shall be incorporated by references into the SOW.





EXHIBIT A

Key Employee Listing

The following employees are designated by AFI as a point of contact during the term of this SOW. Name: Last, First Role Phone # EmailMainardi, Marianne SVP, Correspondent

Funding(215) 734-4510 [email protected]

The following employees are designated by ResCap as a point of contact during the term of this SOW.

Name: Last, First Role Phone # EmailFisher, Jamie Team Leader – Project

Office(319) 236-5462 [email protected]

Smith, Kimberly Team Leader – Project Office


Magnuson, Lisa Team Leader – Vendor Mgt.


Backora, Dave Team Leader – In House Fulfillment


Osborne, Cassie Team Leader – Final Document Recovery


Karns, Heidi Team Leader – Final Document Curative


DiSandro, Fred Associate – Project Office (215) 734-4007 [email protected]

The following employees are designated by AFI and ResCap as persons who must be notified of escalated issues pertaining to this SOW.

Name: Last, First Role Phone # EmailMongelluzzo, John Managing Director (215) 734-7645 [email protected], Patrick Director (215) 734-4747 [email protected], Todd Manager (319)-236-7495 [email protected]





EXHIBIT B

Record Services Systems

Looking GlassNew Trak – Process ManagementRecord Management System (RMS)ECLIPSEPILOTWALTWATSBusiness Objects/Crystal ReportsFileNet Platform ResCapREKON2000 (SQL2000)MadCapSODAMS AccessCoopers DBInvestor Demands DBCustodial File Mgmt DBForest and TreesDocTrac – RMMFiServ LSP / LoanServDeskTop Image UploadDocSplitterCitrix Application Access ServicesMERS

The systems listed above may change from time to time. ResCap will provide an update to AFI as changes occur.





EXHIBIT C

Record Services Vendors

Iron MountainKenwoodACSIndecomm GlobalCorelogicAmerican TitleCourthouse DirectNBS





EXHIBIT D

Service Level Agreement Timeline

1. In House Fulfillment Folder and Document Request – Ordered on same business day request is made

if received before the established cutoff time Folders and Documents locally available – Received by ResCap within 24 to 48

hours Image Delivery – Folder Documents are scanned on the same day received by

Rescap’s vendor(s) if received before the established cutoff time2. Final Document Recovery and Curative

Purchasing Sales Agreement – Typically 90-120 days from closing date3. Project Management and Reporting

No set timeline as project deadlines differ from one to another4. Vendor Management

Power of Attorneys – Shipped same business day request is made if received before the established cutoff time

Invoices – Submitted within 24hrs of invoice being reconciled Change Orders – Submitted within 48hrs of identified issue or process

improvement Bailee Letters/SBO requests – 96hr SLA



STATEMENT OF WORK

For Legal ServicesTo Shared Services Agreement between Ally Financial Inc. and Residential Capital, LLC

Dated May ___, 2012 (the “Agreement”)

This Statement of Work (“SOW”) between Ally Financial Inc. (“AFI”) and Residential Capital, LLC(together with its subsidiaries, “ResCap”) is issued this ___ of May 2012 (“SOW Effective Date”) to detail the deliverables and/or services to be performed in accordance with the terms and conditions of the Agreement between AFI and ResCap. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement. This SOW is subject, in its entirety, to the terms and conditions of the Agreement.

I. OVERVIEW

This SOW sets forth each Party’s responsibilities with respect to the legal Services to be provided by ResCap to AFI (including its subsidiaries), consisting of the following:

Legal advice and counseling, including advice on change in laws and regulations applicable to AFI’s business

Drafting legal agreements and other legal documents in connection with AFI’s business Litigation support, including service of process and e-discovery Retention and management of outside counsel to represent AFI and its subsidiaries Licensing maintenance and support


Legal Services

During the Term, ResCap will provide the following Services to AFI in connection with its business activities when requested by AFI and consistent with current and historical practice:

Legal advice and counseling, including litigation management and support, including service of process, e-discovery, discovery responses, and litigation holds, as may be necessary or required by AFI from time to time, including without limitation, making available relevant systems and software that may be developed by or for the e-discovery team;

Drafting legal agreements and other legal documents in connections with AFI’s capital markets functions, including, but not limited to, funding facilities, whole loan sales, and securitizations;

Obtaining and maintaining licenses required for AFI’s and its subsidiaries’ respective businesses, to the extent required;

Assistance with legal aspects of investigations and examinations in connection with oversight of the mortgage business by federal, state, and local regulatory bodies;


12-12020-mg Doc 1920-10 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit J Pg 1 of 3

SOW for Legal ServicesResCap as ResCap\AFI as Recipient


Retention, oversight, and management of outside counsel representing AFI as determined by ResCap’s legal staff to be appropriate to conduct litigation and/or provide advice, counseling and other legal support as to legal matters of AFI, including in respect of capital markets activities; and

Make available to AFI for its use the applications listed in Section VIII below.

III. DELIVERABLES

Deliverables may be mutually determined from time to time in connection with the particular Services that ResCap provides to AFI.

IV. TERM


V. AFI RESPONSIBILITIES

To enable ResCap to provide the Services contemplated by this SOW, AFI will inform the persons who are providing the Services under this SOW of the following:

The status of any business issues, decisions, or other developments that may give rise to legal actions or other legal implications involving AFI; and

The status or knowledge of any pending, threatened, or otherwise asserted claims or actions that may give rise to litigation involving AFI.

AFI management is responsible for making decisions and implementing (or not implementing) recommendations provided by ResCap’s Legal Staff, including managing all risks associated with AFI litigation and determining or approving (or not approving) all legal strategies.

VI. SERVICE LEVEL AGREEMENTS

Performance Standards:

The Services provided under this SOW do not lend themselves to advance specification of metrics around delivery of such Services.

Both parties to the Agreement and this Statement of Work agree to reasonably cooperate with each other in the delivery and receipt of the Services.

VII. PRICING

All Services provided by ResCap under the terms of this SOW will be provided at such costs as may be set forth in the pricing exhibit to the Agreement.

At ResCap’s discretion, direct third party fees/charges related to AFI activities will be passed through directly to AFI.



SOW for Legal ServicesResCap as ResCap\AFI as Recipient


VIII. EMPLOYEE CONTACTS

ResCap will, from time to time, designate one or more lawyers, or other appropriate individual(s) who are not lawyers, to provide Services contemplated by this SOW as to various business lines or activities of AFI. ResCap will take appropriate measures to select, supervise, and monitor the individuals performing Services under this SOW.

IX. INFORMATION MANAGEMENT SOFTWARE APPLICATIONS

Evidence Management System - e-discoveryL-Forms - licensingLegal Connects

X. Attachments, Exhibits, or Schedules

Any attachments, exhibits, or schedules attached to this Statement of Work are incorporated by reference into the SOW, as though fully set forth in this SOW.



MORRISON & FOERSTER LLP1290 Avenue of the AmericasNew York, New York 10104Telephone: (212) 468-8000Facsimile: (212) 468-7900Larren M. NashelskyGary S. LeeJoel C. Haims

Counsel for the Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK

In re:


Debtors.

)))))))

Case No. 12-12020 (MG)

Chapter 11

Jointly Administered

DECLARATION OF JOHN G. MONGELLUZZO

I, John G. Mongelluzzo, declare:

1. I am Managing Director at Residential Capital, LLC, a Debtor in this bankruptcy case.

(The Debtors and Debtors in Possession are herein collectively referred to as “ResCap.”) In that

role, I am responsible for capital markets operations. I have been employed at ResCap since

April 2009.

2. I head a group of eighty-seven employees who are responsible for capital markets

operations. Thirteen of these employees staff the Fulfillment Group, which tracks, researches,

and otherwise manages the files ResCap maintains to document the loans it originates, services,

and securitizes.

12-12020-mg Doc 1023-2 Filed 08/07/12 Entered 08/07/12 15:39:56 Exhibit 2: Declaration of John G. Mongelluzzo Pg 2 of 15

12-12020-mg Doc 1920-11 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit K Pg 1 of 14

2

3. ResCap’s principal business is brokering, originating, purchasing, selling, securitizing,

and servicing residential mortgage loans throughout the United States. For example, ResCap is

the fifth largest servicer of residential mortgage loans in the United States, servicing more than

2.4 million mortgage loans.

4. For every loan originated, serviced, or securitized by ResCap, there is an attendant “Loan

File,” or a file maintained in the course of originating, approving, funding, or servicing the loan

that, generally speaking, documents the existence and history of that loan. Because of the scope

of ResCap’s business, as indicated above, ResCap maintains millions of Loan Files.

5. The job of filing and tracking these Loan Files falls to the Fulfillment Group. Of the

Fulfillment Group’s thirteen members, four are dedicated to foreclosures, only researching Loan

Files and executing affidavits for use in foreclosure proceedings. The remaining nine employees

respond to other requests for Loan Files, such as the Federal Housing Finance Agency’s requests

for Loan Files at issue here.

6. I understand that, in the present case, the Federal Housing Finance Agency (“FHFA”) is

seeking various documents from ResCap, including many Loan Files. Specifically, it is my

understanding that FHFA seeks Loan Files for loans that were included in twenty-one

securitizations at issue in FHFA’s lawsuit against Ally Financial, Inc., Ally Securities, and

GMAC Mortgage Group. These securitizations I understand consist of approximately 105,000

loans and were sponsored by Residential Funding Company, LLC (“RFC”), one of ResCap’s two

primary operating subsidiaries that acquired and sold mortgage loans in “private label”

securitizations. To my knowledge, FHFA has not specifically stated how many Loan Files it is

requesting at this time from ResCap. However, for purposes of this declaration, whether FHFA



3

requests 105,000 Loan Files or some lesser number, the analysis regarding the burden on ResCap

to produce Loan Files is the same.

I. COMPOSITION OF LOAN FILES

7. In its request for Loan Files, I understand that FHFA has specifically requested “files that

are aggregated and maintained in the course of originating, underwriting, approving, and funding

the loan,” and “files that are compiled and used in the course of servicing the loan.”

(Doc. 859 ¶ 5.) These sets of documents are components of Loan Files, and in the industry they

are known as (1) origination files and (2) servicing files.

A. The Origination File

8. A Loan File is first started when a loan is originated. Loan documentation created during

origination and prior to closing is considered part of the origination file. These documents

generally include, for example, loan applications, appraisals, credit reports, underwriter reports,

legal and compliance disclosures, income documentation, and asset verifications.

9. If a ResCap entity originated the loan, then ResCap prepared the origination file. If

ResCap did not originate the loan but included that loan in one of its securitizations, then that

loan would have been originated by a third party and then subsequently purchased by ResCap.

For any loan originated by a third party, that third party would have created the origination file,

and ResCap would have acquired that file upon purchasing the loan.

B. The Servicing File

10. After a loan is originated or—for those loans originated by third parties—purchased by

ResCap, the loan is transferred to ResCap’s servicing platform. At this point, a second file, the

servicing file, is created.

11. The servicing file is comprised of post-closing documents, such as servicing notes,

payment histories, borrower correspondence, foreclosure documentation, bankruptcy



4

information, insurance claims, and other any post-closing information received from the

borrower.

II. LOCATION OF LOAN FILES

12. For a variety of reasons set forth below, for loans of the vintage at issue in the FHFA

litigation, it is a labor intensive and time-consuming process to locate and compile these

constituent parts to make a complete Loan File.

A. Electronic and Hard Copy File Formats

13. First, the origination and servicing files for most Loan Files include both electronic and

hard copy documents.

14. For a period of time, ResCap maintained all of its Loan Files in hard copy format. At

some time prior to my arrival at ResCap, ResCap began to image and store electronically the

loan documents for new and existing files as it received them. These documents are stored on

ResCap’s FileNet system. Certain servicing documents, such as payment history and servicing

notes, are electronically stored on a separate system maintained by the servicing group called

MortgageServ.

15. However, ResCap still maintains hard copies of many documents. For example, paper

copies of loan-related documents are arriving in ResCap’s offices all the time, and it is simply

not practicable to image and store all of them electronically.

16. Also, while some older hard copy files may have been pulled from storage and imaged

over the course of the past few years for different reasons—for example, for a foreclosure

proceeding—ResCap has not electronically imaged all old paper documents, because that effort

would be a mammoth undertaking and would be prohibitively expensive.

17. Due to the transition between hard and electronic copies, there are many Loan Files for

which ResCap maintains some hard copy documents and some electronic documents. Thus, in



5

order to compile a full Loan File, we need to locate the hard copy records and the electronic

records, and match the two together.

18. Most of the Loan Files sought by FHFA are likely comprised of both hard copy and

electronic files because of their vintage, but we cannot know for certain until we search our

databases for each Loan File.

B. Search Capabilities

19. Second, someone in the Fulfillment Group has to locate each Loan File and determine

whether the components of such Loan File are stored electronically and/or in hard copy. That

effort is not a fully automated process.

20. ResCap maintains the location information for each piece of a Loan File in a series of

fourteen computer databases. This information is indexed by loan number. To find the

components of any one Loan File, the Fulfillment Group must know the loan number and input

that loan number into all fourteen different databases, one database at a time.

21. This process of searching each and every database for each individual loan is the only

way to identify the location of the Loan File and its constituent parts. There is simply no way to

glean that information from the loan number, the loan’s vintage, or the securitization.

22. The Fulfillment Group can search each database for Loan Files in bulk by loan number.

In other words, the Fulfillment Group can run one search per database for all of the Loan Files,

once they have the corresponding loan number for each file. This process would require having

all the loan numbers for the Loan Files at issue. Someone in the Fulfillment Group would have

to create a spreadsheet containing all the loan numbers for the search. Simply identifying the

loan numbers and creating this spreadsheet to define the search parameters for the thousands of

loans at issue would take significant time.



6

23. For bulk searches, once the spreadsheet is compiled, the Fulfillment Group would then

upload it to a computer system that would search for each loan number in the fourteen databases,

one database at a time.

24. The time it takes to search in this manner dramatically increases as the volume of loan

numbers input into the search system increases. For example, based on my experience, to search

for 105,000 loans in just one database would take approximately one night of computing time.

For such large searches, we have to employ batch processing overnight to avoid overloading our

computer systems during the day. To search through all fourteen databases, therefore, would

take approximately two weeks of nearly non-stop nightly batch processing that would, for the

most part, lock out my staff from using their computer systems during that processing time.

25. This problem is compounded by the reality of scarce computing time: we simply do not

have two weeks of uninterrupted computing time to dedicate to any project. Our resources are

already stretched thin as a result of (1) the daily searches attendant to ResCap’s ongoing business

operations and (2) the other large searches that must be completed as part of ResCap’s

restructuring efforts, which I will describe in further detail below. Any additional large, bulk

searches for Loan Files would have to be prioritized and scheduled around those processes.

26. Moreover, the search process is not complete once the computer systems have finished

processing the search requests in all databases. Each database search simply returns Loan File

location information for each loan number we input. But each database only contains certain

loan numbers, so we must reconcile the search results from each database against every other

database to ensure that we have actually found each Loan File. This means the Fulfillment

Group must cross-check the results of all fourteen bulk searches. This too takes significant time.



7

27. Even then, bulk searches of this type are rarely 100% accurate: the system invariably

returns false-hits when we search in bulk. For example, our search result may show that some

components of Loan Files appear in our system in three different locations; some may come back

as not being in the system at all. Again, the Fulfillment Group would have to spend considerable

time tracking down these errant Loan Files.

C. Hard Copy Storage Locations

28. Third, ResCap stores its hard copy Loan Files in multiple locations across the country.

29. ResCap contracts with two primary vendors, Iron Mountain and Kenwood Records, plus

a few ancillary vendors to store hard copy Loan Files. These vendors own and operate seven or

eight different storage sites for origination files and servicing files. The sites are located in

California, Illinois, Minnesota, Pennsylvania, and Texas, among other places around the country.

30. Loan Files are not stored by securitization, so Loan Files for loans in one securitization

could therefore be in a number of different locations.

31. Each storage site is a large warehouse holding boxes of documents—anywhere from

hundreds of thousands to millions of boxes—for various clients. These sites are not solely

dedicated to housing ResCap documents. ResCap’s millions of Loan Files are stored in boxes

among the millions of other boxes according to the vendors’ own filing systems.

32. ResCap must therefore rely on its storage vendors to locate, pull, and ship documents.

For example, even if today the Fulfillment Group knew which vendors and which storage sites

held each Loan File at issue in the FHFA lawsuit, it would still take significant time for our

vendors to physically locate and pull those files. Precisely how long would largely depend on

the resources the vendors have on hand to devote to the project. In addition, as I will detail

further below, ResCap must pay the vendors to retrieve the loan files, and at times the vendors

charge ResCap a premium for their efforts.



8

III. BURDENS AND COSTS OF LOAN FILE PRODUCTION

33. Due to the nature of the process described above, finding, collecting, and producing Loan

Files is very labor intensive, time consuming, and expensive.

34. Again, in order to simply identify the location of a Loan File—or, more likely, because

the constituent parts are generally not stored together, the various locations of a Loan File—the

Fulfillment Group must enter each and every loan number into the fourteen databases, one

database at a time. The computing time alone to search for 105,000 loans would take at least two

weeks or potentially longer given the Fulfillment Group’s other commitments to supporting

ResCap.

35. Once the searches are completed, the Fulfillment Group would have to review and

reconcile the search results—and that does not include considerable time spent chasing the false-

hits that large bulk searches invariably return.

36. Once my team has reconciled the search results, we can then begin retrieving components

of Loan Files that are identified as electronically stored on ResCap’s systems. At the same time,

we would also send requests to the various vendors and facilities identified as the custodians of

any hard copy components of the Loan Files.

A. Compiling Electronic Files

37. For any piece of a Loan File that is stored electronically, my team must upload the image

files from ResCap’s FileNet system to a viewer program. The viewer program allows our staff

to review images of pages contained in that piece of the Loan File.

38. After the Fulfillment Group has uploaded the image files and reviewed the images to

confirm that we have the piece of the Loan File we searched for, team members can burn those

image files to CD to be sent to, in this case, attorneys or e-discovery vendors.



9

39. This too takes a great deal of time. The Fulfillment Group has the ability to mass-import

and burn image files. But they are generally limited to importing only five hundred files at a

time.

40. Moreover, uploading the electronic images we have on hand is usually not the end of the

story, as the vast majority of Loan Files are comprised of both electronic and hard copy files, as

outlined above.

B. Compiling Hard Copy Files

41. If the databases tell the Fulfillment Group that all or part of a Loan File is stored in hard

copy, we will contact the vendor or vendors who have custody of the relevant pieces of the Loan

File and tell them what we would like them to pull from each storage facility.

42. The vendor must identify in their own filing system which box contains the relevant files.

They must locate that box in the storage facility, pull the box, pull the relevant file from the box,

and work with members of the Fulfillment Group to confirm that the files they obtain respond to

our request.

43. Once the correct box and file are confirmed, the vendor generally ships the file to another

vendor, Affiliated Computer Services (“ACS”), a subsidiary of Xerox, for imaging. On average,

our storage vendors will charge $11 to $12 to search for, pull, ship, retrieve, and re-shelve a

Loan File (though, as detailed below, these costs increase as volume increases).

44. Once ACS receives the file, ACS will work to image it along with the many other

imaging projects it has for ResCap. These other projects are considerable. In my experience,

ACS has imaged approximately 150 to 175 million pages of documents per year for ResCap

alone. For that reason, ACS generally must spread large production requests across days, weeks,

or even months of workflow in order to avoid delaying ResCap’s daily business operations.

Also, ResCap cannot simply speed up the process by contracting with more vendors. Each of



10

ResCap’s vendors must be specially qualified to handle borrowers’ sensitive personally

identifiable information contained in Loan Files—like social security, bank account, and credit

card numbers—and that qualification is itself difficult and time consuming to obtain.

45. Once ACS images a Loan File, the result is electronic image files that ACS can “push” to

ResCap’s FileNet via a secure internet connection. ACS then returns the hard copy file to the

storage vendor for re-shelving. On average, ACS will charge $12 to $13 for imaging costs per

Loan File.

46. As with the electronic files discussed above, once ACS pushes image files to FileNet, the

Fulfillment Group can upload those images to the viewer program and review them. They can

then burn the image files to CD to be shipped to ResCap’s attorneys or e-discovery vendors.

C. Overall Burden and Costs

47. All of this work takes a substantial amount of time. How quickly our vendors can

respond to our requests will depend largely on the size of the request and the resources the

vendor has available at any one time to spend on that request. Even if ResCap is willing and able

to pay a premium for a vendor’s overtime and additional resources, at some point it is not

logistically feasible for a vendor to dedicate more people and resources to a job. For example,

only so many employees and forklifts can work at one time in a packed warehouse, and ACS

only has so many scanners to image documents.

48. The costs and burdens of this process are staggering. In the MBIA Insurance Corp. v.

Residential Funding Company, LLC lawsuit, for example, the Fulfillment Group produced

roughly 64,000 Loan Files over a period of nine months. Notably, that production occurred prior

to the bankruptcy filing, and even then it was not possible to produce documents any faster

without impeding ResCap’s daily operations.



11

49. Besides the tremendous amount of time that the collection and processing of Loan Files

imposes on my team, and the attendant cost of that labor, the company incurs substantial out-of-

pocket costs.

50. For Loan Files stored in hard copy, as indicated above, additional costs include searching,

pulling, shipping, retrieving, and re-shelving costs incurred by our storage vendors—which run

around $12 to $13 per Loan File—and shipping and imaging costs incurred by ACS—which also

run around $12 to $13 per Loan File.

51. For electronically stored files—which includes hard copy files that have been

electronically imaged under the process described above and files already stored electronically

on FileNet—those costs include approximately twenty-five cents per Loan File to burn CDs, plus

an additional $1.25 per Loan File in other internal operating costs. Those costs may seem small

on a per-file basis, but producing 105,000 Loan Files will cost ResCap out-of-pocket

approximately $157,500 on just this aspect of production.

52. On average, therefore, the out-of-pocket cost of collecting and preparing a single Loan

File that contains any hard-copy documents—which nearly every Loan File does—is

approximately $25, plus $1.50 in internal costs. Again, this estimate does not include the costs

of labor associated with ResCap employees. And, as discussed below, these estimates for

average costs are likely substantially lower than the actual costs of producing the Loan Files

requested by the FHFA will be due to the sheer volume of what they have requested.

53. It is important to note that the estimate of more than $25 assumes our vendors are

retrieving and processing a relatively low volume of Loan Files under our current service-level

agreements. Under those agreements, as volume increases, price increases. For example, under

current pricing structures, Kenwood and Iron Mountain will pull 250 boxes for us per week—



12

which could contain 250 distinct Loan Files or pieces of Loan Files, depending on their size.

The $25 figure quoted above is based on these base contractual rates. As soon as we ask for

more than 250 boxes per week, the vendors will charge for additional staffing and overtime.

54. Although the average cost per Loan File will vary when we request more than 250 boxes

per week, based on Loan File size, location, and volume of Loan Files we request, historically it

has cost $75 to $100 per Loan File when we exceed our contractual limit of 250 boxes. Again,

these are out-of-pocket costs to ResCap. So a large scale production of even 40,000 Loan Files

pulled on a short time frame could easily cost $3 million to $4 million in out-of-pocket costs.

55. It is also important to note that any costs associated with preparing and producing Loan

Files for production in the context of litigation are costs incurred after my team has located,

collected, and prepared the Loan Files and turned them over to ResCap’s attorneys or e-

discovery vendors, and after the costs described in paragraphs 50 through 54 above have been

incurred.

56. I understand these additional production costs to include hosting, processing, and

production fees; but those processes and costs are handled by the legal department and outside

litigation counsel. Put another way, the costs I described in paragraph 52 above, plus the costs

associated with hosting, processing, and production in the context of litigation, are the total out-

of-pocket costs for producing loan files.

IV. RESTRUCTURING AND OTHER OBLIGATIONS

57. Unfortunately, as described below, right now and for the foreseeable future my team is

already highly taxed because of restructuring-related obligations, among others. We simply do

not have time to process a request for a substantial number of Loans Files, such as the 105,000 at

issue in the FHFA lawsuit, and meet our existing restructuring-related obligations.



13

58. My group, among many others at ResCap, is under tremendous pressure to meet the

demands of a variety of constituencies during the restructuring process and to meet ResCap’s

preexisting obligations under various settlements and consent agreements. Based on productivity

tracking reports, I estimate that the Fulfillment Group receives tens of thousands of requests to

process and produce documents every month.

59. Simply put, anytime anyone needs a Loan File (other than for purposes of a foreclosure)

there are only nine employees in the Fulfillment Group who can process and respond to that

request. These employees have knowledge of and access to ResCap’s comprehensive filing

systems and cannot be replaced or supplemented with temporary employees.

60. Among the most time-consuming and pressing of those matters that my team is

intimately involved with are the following:

a. Compiling and completing certain loan files as part of the due diligence and other

issues regarding the proposed sales of ResCap’s servicing operations and legacy

loan portfolios. For example, the Fulfillment Group is in the process of pulling

and reviewing approximately 54,000 Loan Files in connection with the asset

purchase agreement with Berkshire Hathaway, Inc. The Fulfillment Group is also

busy researching Loan Files and clearing exceptions in connection with the

proposed sales of ResCap’s mortgage servicing rights, an effort that ultimately

affects the value of those rights and the amount paid under any asset purchase

agreements.

b. Producing documents and responding to requests for information in connection

with investigations by the Creditors’ Committee and the Examiner. For example,

I understand the Committee is currently seeking approximately 3,000 to 5,000



Loan Files from ResCap in connection with its review and analysis of the RMBS

trust settlement.

c. Assisting with data collection related to various United States government entities

and governmental associations to continue to comply with obligations imposed on

mortgage originators and servicers such as FNMA, Federal Home Loan Mortgage

Corporation, Governmental National Mortgage Association, and Department of

Housing and Urban Development.

d. Assisting with document collection and gathering to ensure compliance with the

Aprill3, 2011 Consent Order with the Board of Governors of the Federal Reserve

System.

61. These tasks are in addition to the everyday tasks the Fulfillment Group performs to

support ResCap's underlying business, including gathering loan files for servicing needs, like

foreclosure proceedings, loan payoffs, refinancings, and modifications.

62. Burdening the Fulfillment Group with having to collect, process, and prepare Loan Files

for litigation, such as the 105,000 Loan Files at issue in the FHFA lawsuit, will put a tremendous

strain on our resources and our ability to meet our other obligations.

I declare under penalty of perjury, pursuant to 28 U.S.C. § 1746, that the foregoing is true

to the best of my knowledge, information, and belief. Executed on August 7 , 2012, at Fort

Washington, P A.

fi-7.~ ~gelluzzo

14



ny-1014583

MORRISON & FOERSTER LLP 1290 Avenue of the Americas New York, New York 10104 Telephone: (212) 468-8000 Facsimile: (212) 468-7900 Larren M. Nashelsky Gary S. Lee Lorenzo Marinuzzi Proposed Counsel for the Debtors and Debtors in Possession

IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

In re: RESIDENTIAL CAPITAL, LLC, et al., Debtors.

) ) ) ) ) ) )

Case No. 12- Chapter 11 Joint Administration Pending

DEBTORS’ MOTION FOR INTERIM AND FINAL ORDERS UNDER BANKRUPTCY CODE SECTIONS 105(a) AND 363(b) AUTHORIZING RESIDENTIAL CAPITAL, LLC

TO ENTER INTO A SHARED SERVICES AGREEMENT WITH ALLY FINANCIAL INC. NUNC PRO TUNC TO THE PETITION DATE FOR

THE CONTINUED RECEIPT AND PROVISION OF SHARED SERVICES NECESSARY FOR THE OPERATION OF THE DEBTORS’ BUSINESSES

The debtors and debtors in possession in the above-captioned cases (collectively,

the “Debtors”)1 hereby move for entry of interim and final orders, under sections 105(a) and

363(b) of title 11 of the United States Code (the “Bankruptcy Code”) authorizing Residential

Capital, LLC (“ResCap”) to enter into a shared services agreement (the “Agreement”) with its

indirect non-debtor parent, Ally Financial Inc. (“AFI”) nunc pro tunc to the Petition Date for the

1 The names of the Debtors in these cases and their respective tax identification numbers are identified on

Exhibit 1 to the Whitlinger Affidavit (defined below). Additional subsidiaries and affiliates of the Debtors may file Chapter 11 petitions on a rolling basis. As used herein, the term “Debtors” includes any such entities.


12-12020-mg Doc 1920-12 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit L Pg 1 of 25

2 ny-1014583

continued receipt and provision of shared services between ResCap and AFI necessary for the

continued operation of the Debtors’ businesses (the “Motion”).2 In support of the Motion, the

Debtors rely upon and incorporate by reference the Affidavit of James Whitlinger, Chief

Financial Officer of Residential Capital, LLC, in Support of Chapter 11 Petitions and First Day

Pleadings, filed with the Court concurrently herewith (the “Whitlinger Affidavit”). In further

support of the Motion, the Debtors, by and through their undersigned counsel, respectfully

represent:

JURISDICTION

1. This Court has jurisdiction to consider this Motion under 28 U.S.C. §§ 157

and 1334. This is a core proceeding under 28 U.S.C. § 157(b). Venue of these cases and this

Motion in this district is proper under 28 U.S.C. §§ 1408 and 1409. The statutory predicates for

the relief requested herein are Bankruptcy Code sections 105(a) and 363(b).

BACKGROUND

2. On the date hereof (the “Petition Date”), each of the Debtors filed a

voluntary petition in this Court for relief under Chapter 11 of the Bankruptcy Code. The Debtors

are managing and operating their businesses as debtors in possession pursuant to Bankruptcy

Code sections 1107(a) and 1108. No trustee, examiner or statutory creditors’ committee has

been appointed in these Chapter 11 cases.

3. The Debtors are a leading residential real estate finance company

indirectly owned by AFI, which is not a Debtor. The Debtors and their non-debtor affiliates

operate the fifth largest servicing business and the tenth largest mortgage origination business in

2 Creditors and parties-in-interest with questions or concerns regarding the Debtors’ Chapter 11 cases or the relief

requested in this Motion may refer to http://www.kccllc.net/rescap for additional information.



3 ny-1014583

the United States. A more detailed description of the Debtors, including their business

operations, their capital and debt structure, and the events leading to the filing of these

bankruptcy cases, is set forth in the Whitlinger Affidavit.

4. The Debtors’ primary and most valuable business operations consist of

servicing mortgage loans for investors, including loans originated by the Debtors, Ally Bank, and

other third parties. As of March 31, 2012, the Debtors were servicing over 2.4 million domestic

mortgage loans with an aggregate unpaid principal balance of approximately $374.2 billion. To

preserve and realize the value of these assets and achieve the goals of these Chapter 11 cases, the

Debtors developed and are prepared to implement a strategy that provides maximum value to the

Debtors’ estates.

5. The Debtors negotiated and entered into two separate asset purchase

agreements. The first, with Nationstar Mortgage LLC as the proposed stalking horse bidder

(“Nationstar”) for the sale of their mortgage loan origination and servicing businesses (the

“Platform Sale”), and the second, with AFI as the proposed stalking horse bidder for the sale of

their legacy portfolio consisting mainly of mortgage loans and other residual financial assets (the

“Legacy Sale” and collectively with the Platform Sale, the “Asset Sales”).

6. In furtherance of their restructuring strategy, and contemporaneous with

the commencement of these Chapter 11 cases, the Debtors have filed a motion for authority to,

among other things, establish auction and sale procedures for the Asset Sales,3 and for approval

3 See Debtors’ Motion Pursuant to 11 U.S.C. §§ 105, 363(b), (f), and (m), 365 and 1123, and Fed. R. Bankr. P.

2002, 6004, 6006, and 9014 For Order: (A)(I) Authorizing and Approving Sale Procedures, Including Break-Up-Fee and Expense Reimbursement; (II) Scheduling Bid Deadline and Sale Hearing; (III) Approving Form and Manner of Notice Thereof; and (IV) Granting Related Relief and (B)(I) Authorizing the Sale of Certain Assets Free and Clear of Liens, Claims, Encumbrances, and Other Interests; (II) Authorizing and Approving Asset Purchase Agreements Thereto; (III) Approving the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases Related Thereto; and (IV) Granting Related Relief.



4 ny-1014583

to consummate the Asset Sales under a plan. If, however, the Debtors do not obtain

confirmation of a plan by deadlines to be determined, then the Sale Motion allows the Debtors to

pursue an alternative course of action and immediately move forward with the Asset Sales under

Bankruptcy Code section 363(b) and outside of a plan.

PRELIMINARY STATEMENT

7. The Agreement is critical to the continued operation of the Debtors’

businesses during the pendency of these Chapter 11 cases, specifically in connection with the

Asset Sales discussed above. The services that the Debtors seek to continue providing to and

receiving from AFI during these Chapter 11 cases pursuant to the Agreement include, among

other things: (i) information technology services; (ii) employee benefits administration and other

human resources functions; (iii) accounting, tax and internal audit services; (iv) treasury and

collateral management; (v) risk management functions; (vi) supply chain management, including

procurement of goods and services from third parties; (vii) government and regulatory relations

and compliance services; (viii) facilities management services; (ix) marketing services; and (x)

capital markets services relating to managing the value of certain of the Debtors’ loan servicing

rights. Given the integrated nature of the Debtors’ and AFI’s businesses, the continuation of

these services pursuant to the Agreement is both warranted and absolutely necessary to avoid any

disruption to the Debtors’ day-to-day operations.

8. As described above, the Debtors are seeking authority to sell substantially

all of their assets pursuant to a plan, or in the alternative, through a section 363 sale. As set forth

in the asset purchase agreements, Nationstar and AFI require as a condition to the closing of the

Asset Sales that the Debtors operate their businesses in the ordinary course and use commercially

reasonable efforts to preserve the value of their business enterprise. The Debtors are optimistic



5 ny-1014583

that the sale of substantially all of their assets will yield a significant return for the Debtors’

estates. To comply with the provisions of the asset purchase agreements with Nationstar and

AFI and preserve the value of their businesses, the Debtors must avoid significant disruptions to

their operations during this critical postpetition period. Accordingly, the Debtors seek authority

for ResCap to enter into and perform under the Agreement with AFI to ensure the continued

receipt and provision of the essential services included in the Agreement. As explained in detail

below, the relief requested is in the best interests of the Debtors’ estates and amply warranted

under the circumstances.

RELIEF REQUESTED

9. By this Motion, the Debtors seek entry of interim and final orders pursuant

to Bankruptcy Code sections 105(a) and 363(b) authorizing ResCap to (i) enter into the

Agreement substantially in the form attached hereto as Exhibit A nunc pro tunc to the Petition

Date; (ii) provide services to AFI in accordance with the Agreement; and (iii) pay AFI for

services received in accordance with the Agreement. The Debtors are seeking Court approval of

the Agreement nunc pro tunc to the Petition Date; however, by this Motion, the Debtors are also

seeking to perform under the Agreement as of the Petition Date upon the entry of an interim

order and subject to a final hearing. Only ResCap and AFI are parties to the Agreement;

however, each party is required to work with its respective subsidiaries to ensure that all of the

services are provided and each of the ResCap’s Debtor affiliates and AFI’s non-debtor affiliates

receive services as applicable.

10. The Debtors request that, to the extent necessary, the relief sought by this

Motion apply to any future debtor (a “Future Debtor”) in these jointly-administered cases

without any further order of the Court. The Debtors propose that a debtor be deemed to be a



6 ny-1014583

Future Debtor upon the Court’s entry of an order authorizing the joint administration of such

Future Debtor’s Chapter 11 case with the Chapter 11 cases of the Debtors.

A. The Agreement

11. Prior to the Petition Date, in the ordinary course of business, ResCap, AFI

and certain of their affiliates provided various financial, operational and administrative services

to each other, which the Debtors seek to continue on and after the Petition Date pursuant to the

Agreement. Historically, the services that are now subject of the Agreement were provided on

an undocumented basis. Although these arrangements were suitable, the Debtors determined it

was in their best interests to compile a comprehensive and integrated agreement, to become

effective postpetition, to ensure that (i) the Debtors obtain and pay for only those services that

are necessary during their Chapter 11 cases; (ii) the services that are being provided between

ResCap and AFI are specifically identified; and (iii) ResCap may reduce or terminate the receipt

of services at any time, including, without limitation, following the closing of a sale of

substantially all of the Debtors’ assets.

12. The mortgage loan origination, servicing and related securitization

operations of AFI are an integrated business involving the Debtors and Ally Bank. The Debtors

believe the services covered by the Agreement are common among enterprises similar to those of

the Debtors and their non-debtor affiliates, especially given the integrated nature of their

businesses, because these arrangements eliminate redundant functions, reduce costs and allow

for the realization of operational synergies. The Debtors are seeking the Court’s authority to

allow ResCap to enter into the Agreement with AFI so that these services can be continued

postpetition to allow for a smooth transition to operating as a debtor in possession, facilitate the

Asset Sales, and complete a wind-down of the Debtors’ businesses following a sale.



7 ny-1014583

13. The following are the salient terms of the Agreement:4

Term The initial term of the Agreement begins on the date the Agreement is approved by the Bankruptcy Court (the “Effective Date”)5 and continues through midnight Eastern Time on the one (1) year anniversary of the Petition Date (the “Initial Term”), unless earlier terminated or extended in accordance with the terms of the Agreement and except for any Service that has been terminated in accordance with the terms of the Agreement. The Initial Term will be automatically extended for additional periods of one (1) year each unless either Party provides to the other Party written notice of nonrenewal at least three (3) months prior to the expiration of the then-current Term. The Initial Term as extended by any such additional period(s) (if any) shall be referred to as the “Term.”

Services AFI will provide the Services within each of the Functional Service Areas listed in Schedule A-1 (the “Parent Services”), and ResCap will provide the Services within each of the Functional Service Areas listed in Schedule A-2 (the “Reverse Services”), in each case beginning on the Effective Date. Services provided by a Supplier under the Agreement may be provided by that Supplier directly or through any of its Affiliates and/or Subcontractors at Supplier’s discretion. A Supplier will not be relieved of any of its obligations under the Agreement as a result of the provision of Services by any of Supplier’s Subsidiaries or other Supplier Personnel. Supplier agrees that it will not enter into any new Subcontracting arrangement that would involve the transfer to a Subcontractor or another third party of Recipient’s personal information, without the prior written consent of the other Party. The Supplier Personnel providing Services will at all times be qualified to provide the Services assigned to them.

Additional Services

A Party may, from time to time during the Term, upon at least ninety (90) days prior written notice to the other Party, request that the other Party provide additional services, functions and responsibilities not within the scope of the Services provided by the performing Party (“Additional Services”). Any such Additional Services will be provided under supplements to Schedule A-1 or Schedule A-2, as applicable, entered into by the Parties (“Supplements”) for the charges set forth therein and mutually agreed upon. Supplements shall be in the form of Schedule E to the Agreement. During the ninety (90) day period after the Effective Date, the Parties will work together to define a process reasonably satisfactory to the Parties that will be used to (a) submit and prioritize requests for Additional Services and (b) create and execute Supplements for Additional

4 Capitalized terms used in the summary and not otherwise defined shall have the meaning ascribed to them in the

Agreement. The contents of this summary are qualified in their entirety by the terms of the Agreement. In the event of a conflict between this summary and the Agreement, the Agreement shall govern.

5 As noted above, the Debtors are seeking Court approval of the Agreement nunc pro tunc to the Petition Date. Upon entry of a final order, as requested by the Debtors, the Petition Date will operate as the Effective Date of the Agreement.



8 ny-1014583

Services.

Changes to Services/ Change Control Procedures

A Party may, from time to time during the Term, upon at least ninety (90) days prior written notice to the other Party, request that the other Party provide Customized Services. If the Parties mutually agree on the provision of Customized Services, such request for Customized Services and such Customized Services will be provided under Supplements to Schedule A-1 or Schedule A-2, as applicable. Before Supplier is required to provide any Customized Services, the Parties shall jointly agree on the applicable Charges for any agreed Customized Services, including any Charges that may be required to equitably compensate Supplier for any additional costs it may reasonably incur in connection with any changes to the Services.

Ownership of Data

As between Recipient and Supplier, Recipient owns and will continue to own all right, title and interest in and to all Recipient Data. To the extent that Recipient Data is embedded or incorporated into reports and other documentation, analyses, compilations and other materials (including code or software) owned or licensed by Supplier (“Supplier Materials”) and provided to and for use by Recipient as part of the Services, Supplier will not be deemed to have assigned or transferred any of its right, title or interest in or to any underlying Intellectual Property Rights thereto. Supplier grants to Recipient a perpetual, irrevocable, royalty free, transferable (to a Buyer of all or substantially all of the core business of Recipient) license to use, reproduce, display and perform (whether publicly or otherwise) and modify (and have others exercise such rights on behalf of Recipient (or Buyer)) such Supplier Materials solely as necessary for Recipient’s (or Buyer’s) use in the ordinary course of its mortgage related business. Recipient’s (or Buyer’s) use (including without limitation, the use by any third party on behalf of Recipient (or Buyer)) of the Supplier Materials is subject to the confidentiality obligations set forth in Section 9 of the Agreement and any third party restrictions imposed on any Supplier Materials of which Supplier makes Recipient aware. Additionally, Recipient's ownership of the Recipient Data reflected in Supplier Materials shall not serve to transfer or otherwise affect any of Supplier's right, title and/or interest in and/or to any of underlying Intellectual Property Rights in any Supplier Materials. Supplier may not use Recipient Data for any purpose except: (x) to provide the Services; (y) as required by AFI as the parent of ResCap to meet its financial and regulatory reporting requirements; or (z) as otherwise permitted under the Agreement, nor may Supplier sell, assign, lease or otherwise dispose of or commercially exploit Recipient Data. Supplier acknowledges that Recipient is not restricted from using or disseminating Recipient Data in the format in which it is provided by Supplier or any different format.

Compensation ResCap will pay to AFI the Charges as set forth in Schedule C-1a and elsewhere in Schedule C, and AFI will pay to ResCap the Charges as set forth in Schedule C-2a and elsewhere in Schedule C. Supplier will provide Recipient with estimated invoices (with information linking the Services delivered to the invoice



9 ny-1014583

amounts) on a monthly basis on or before the last day of each calendar month for all Services performed by Supplier and all related Charges incurred by Recipient during that month. The last business day of the calendar month is the cut-off for delivered Services and related Charges to be invoiced in the next calendar month. The estimated charges will be adjusted to actual charged by the last day of the following month. Recipient will pay the estimated and adjusted actual invoices within forty-five (45) days of the receipt of an invoice from Supplier. Any payment by Recipient is without prejudice of its right to contest the accuracy of any Charges.

Recipient Indemnification

Recipient will indemnify, hold harmless and defend Supplier and its Affiliates and their respective directors, officers and employees (“Indemnified Parties”), from and against any and all liabilities, damages, penalties, judgments, assessments, losses, costs and expenses in any case, whether arising under strict liability or otherwise (including reasonable outside attorneys’ fees) (collectively, “Damages”) suffered or otherwise incurred due to a Third Party Claim arising from or out of or relating to the Agreement, including the performance (or failure to perform) by Supplier of its obligations under the Agreement; provided, however, that to the extent and in the proportion Damages also arise out of or relate to the gross negligence or willful misconduct of any Indemnified Party, then such indemnity will not apply.

Supplier Indemnification

Supplier will indemnify, hold harmless and defend the Recipient Indemnified Parties from and against any and all Damages suffered or otherwise incurred due to a Third Party Claim to the extent arising from or out of or relating to the gross negligence or willful misconduct of any Supplier Parties; provided, however, that to the extent and in the proportion Damages also arise from or out of or relate to the performance (or failure to perform) by Recipient of its obligations under the Agreement, then such Supplier indemnity will not apply.

Other Indemnification Provisions

The Agreement also contains indemnification provisions relating to the infringement or misappropriation of intellectual property rights and third party software, as well as procedures for seeking indemnification and certain limitations on liability, as set forth in more detail in the Agreement.

Termination Without limiting the rights of the Parties under any other provision of the Agreement, any Service to be provided under the Agreement may be terminated as follows:

(a) by either Party acting in its capacity as “Supplier”, upon written notice to the other Party if, after Recipient fails to pay the Charges for such Service when due in accordance with the Agreement, the terminating Party sends to the other Party an initial notice of such failure and the other Party fails to pay such Charges within forty-five (45) days of receipt of such initial notice; or (b) by either Party acting in its capacity as “Supplier”, upon written



10 ny-1014583

notice to the other Party if, following a material breach by Recipient of the Agreement other than a payment default, the terminating Party sends to the other Party a notice of such material breach and the other Party fails to cure such material breach within thirty (30) days; provided however, that if cure cannot reasonably be accomplished within such thirty (30) day period, the Agreement may not be terminated by reason of such breach for so long as the other Party commences a cure within such thirty (30) day period and pursues such cure diligently to completion and such completion occurs within ninety (90) days of such written notice; or (c) by either Party acting in its capacity as “Recipient”, upon written

notice to the other Party if, following a material breach by Supplier of the Agreement, the terminating Party sends to the other Party an initial notice of such material breach and the other Party fails to cure such material breach within thirty (30) days of receipt of such initial notice; provided, however, that if cure cannot reasonably be accomplished within such thirty (30) day period, the Agreement may not be terminated by reason of such breach for so long as the other Party commences a cure within such thirty (30) day period and pursues such cure diligently to completion and such completion occurs within ninety (90) days of such written notice; or (d) by either Party acting in its capacity as “Recipient”, upon at least

ninety (90) days prior written notice to the other Party; or (e) otherwise upon mutual agreement of the Parties.

Termination Following Sale

Upon the final approval by the Bankruptcy Court of a Sale, either Party in its capacity as a Supplier may within fourteen (14) days of such final approval elect to terminate the provision of the Services that such Party is required to provide to the other Party under the Agreement, effective upon the closing of such Sale. In the event of such termination, Recipient will provide Supplier with notice of any Termination Assistance Services required by Recipient within twenty-one (21) days after receipt of such notice.

Rights upon Termination or Expiration/ Termination Assistance Services

Commencing six (6) months prior to expiration of the Term or any extension thereof, or upon either Party receiving any notice of termination from the other Party pursuant to Section 14 of the Agreement:

(a) At Recipient’s option, Supplier will provide to Recipient the termination assistance reasonably requested by Recipient to allow the Services to continue, and to facilitate the orderly transfer of responsibility for performance of the Services, including any migration of Recipient Data, to Recipient (collectively, “Termination Assistance Services”), for a period of up to six (6) months (or, with respect to information technology Services, eighteen (18) months) after the effective date of such termination of Services or expiration of the Term (the “Termination Services Periods”);



11 ny-1014583

provided however, that, if mutually agreed upon in writing by the Parties (including with respect to adjustments in Charges), the Termination Service Periods may be extended until the effective date of a plan of reorganization of ResCap and its affiliated Debtors.

(b) The Termination Assistance Services to be provided during the Termination Services Periods may include, as and if reasonably required by Recipient, the following, among other Services: (i) developing, together with Recipient, a plan for the orderly transition of the performance of the Services, including the migration of Recipient Data from Supplier to Recipient or to a third party designated by Recipient; (ii) providing reasonable training for personnel of Recipient in the performance of the Services then being transitioned to Recipient or the third party designated by Recipient, to the extent Services are being assumed by that third party; and (iii) providing cooperation to Recipient to facilitate the transition of the performance of the Services to Recipient or to a third party designated by Recipient, in accordance with a mutually agreed upon transition plan for the applicable Services.

ResCap will pay to AFI Charges for the Termination Assistance Services as set forth in Schedule C to the Agreement, including during the Termination Services Periods. AFI will pay to ResCap Charges for the Termination Assistance Services as set forth in Schedule C to the Agreement, including during the Termination Services Periods. In the event of any termination of Services by Supplier for cause, if approved by the Bankruptcy Court, Charges for the related Termination Assistance Services will be paid by Recipient monthly in advance. As set forth in Schedule C to the Agreement, the price of Termination Assistance Services will be documented in a Supplement to Schedule A. In addition to any Charges otherwise provided for in the Agreement or Schedule C, Recipient will reimburse Supplier for all incremental additional resource and other costs and expenses required or incurred by Supplier to provide Termination Assistance Services.

Transition Services Agreement

Upon the approval by the Bankruptcy Court of any Sale, or as otherwise mutually agreed between the Parties to facilitate a Sale, AFI and ResCap each agree to promptly enter into good faith negotiations with the Buyer(s) in such Sale for an agreement pursuant to which AFI, ResCap and/or the Buyer(s) would provide or receive, as applicable, reasonable specified transition services in connection with such Sale (the “Transition Services Agreement”). The services to be provided to the Buyer and the terms relating to the transition of certain Services are to be addressed in the Transition Services Agreement. For the avoidance of doubt, while AFI agrees to negotiate in good faith with ResCap and/or a Buyer with respect to entering into a Transition Services Agreement, AFI is not obligated to provide services to a Buyer or after a Sale, other than Termination Assistance Services as contemplated in Section 14.5(a)(2) of the Agreement unless otherwise agreed by AFI.



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Total Shared Services Charge

Total Shared Services Charges (as described below) will begin on the Effective Date and are set forth in Schedule C-1a and Schedule C-2a to the Agreement. Charges for Additional Services, Customized Services, and Termination Assistance Services shall begin on the date such services begin to be performed by Supplier.

“Total Monthly Shared Services Charge” means, in respect of any individual Service, the monthly Charge for that Service, which shall be applicable from the Effective Date until the termination date for such Service, as such Charges are listed on Schedule C-1a or Schedule C-2a to the Agreement and may be adjusted in accordance with any Price Adjustment Event and/or Price Adjustment Process (each as described below). The Total Shared Services Charge represents the aggregate of the Total Base Costs, Third Party Costs and IT Projects as referenced on Schedule C-1a and Schedule C-2a. The Total Base Costs are equal to an amount representing Employee Costs, IT Costs, Platform Costs and the Indirect Support Costs for that Functional Service Area, as described below:

(i) Employee Costs means compensation, benefits, travel and other non-compensation related personnel costs;

(ii) IT Costs means those costs associated with IT services under Schedule A-1 and Schedule A-2 to the Agreement;

(iii) Platform Costs means the Charges to the Recipient for use of the IT services on Supplier’s platform related to depreciation and amortization in respect of IT infrastructure; and

(iv) Indirect Support Costs means, for AFI, an amount equal to the percentage of the total of Employee Costs, IT Costs and Platform Costs set forth in Schedule C-1b, and for ResCap means an amount equal to the percentage of the total of Employee Costs, IT Costs and Platform Costs set forth in Schedule C-2b. Such percentages in each case are those referenced in the formulas in the Pricing Methodology Spreadsheets titled “Shared Services Global Functions Exhibit v.11.pdf” (AFI to ResCap) and “ResCap to AFI Shared Services Pricing 05-13-12.pdf ” (ResCap to AFI).

These amounts are set forth in Schedule C-1a and Schedule C-2a to the Agreement on a monthly basis as the Total Monthly Shared Services Charge. The Total Monthly Shared Services Charges do not include any (i) Charges for Additional Services or Customized Services, (ii) Termination Assistance Services or (iii) Pass-Through Expenses.

Pricing for the Services set forth on Schedule C-1a and Schedule C-2a to the



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Agreement can change on a monthly basis, depending upon whether the Service is priced on the basis of Monthly Fixed Charges or Monthly Variable Charges, as indicated on Schedule C-1b and Schedule C-2b to the Agreement. Any such calculations will be made by reference to and in accordance with the formulas in the Pricing Methodology Spreadsheets titled “ResCap to AFI Shared Services Pricing 05-13-12.pdf ” (ResCap to AFI).

Price Adjustment Event

As set forth on Schedule C to the Agreement, “Price Adjustment Event” means any of the following: (i) a Business Change Event6 occurs; or (ii) a Service has been terminated pursuant to Section 3 (Additional Services or Customized Services) or Section 14 (Termination) of the Agreement.

Price Adjustment Process

The Price Adjustment Process described in Schedule C to the Agreement will be followed by the Parties upon either Party’s written request in the event of a Price Adjustment Event. The Price Adjustment Process for Business Change Events is subject to any approval right or termination right that Supplier may have with respect to such change in Services pursuant to Section 3 (Additional Services or Customized Services) or Section 14 (Termination) of the Agreement.

(a) The Price Adjustment Process will be initiated immediately following a Price Adjustment Event and the resulting change to the Charges will take effect as soon as practical and will be retroactive to the point in time that the Price Adjustment Event occurs (or, in the case of adjustments under subsection (c) below, retroactive to the point in time that the New Cost Allocation (as described below) is determined).

(b) Unless the Price Adjustment Process is initiated for a Business Change Event, during the Price Adjustment Process the Parties will mutually determine in good faith the cost impact of the Price Adjustment Event through the methodologies set forth in the exhibits to Schedule C including all of the sub-attachments. When a Service is being terminated by a Party, the starting assumption is that Recipient will no longer be charged for that Service; provided, however, that Supplier may be entitled to reimbursement from Recipient of all costs previously paid by Recipient for such Service that Supplier is not able to eliminate, for example, costs for physical assets which cannot be reduced (i.e. leasing expenses or rental expenses which cannot be eliminated), third party costs (i.e. minimum revenue commitments which are required under a third party agreement) or any other non-internal costs (“Stranded Costs”) which the Parties using appropriate due diligence and commercially reasonable efforts can not eliminate. If, after using such efforts the Parties are unable

6 “Business Change Event” means any change in the products or services offered by Recipient or the expansion

or closure of any Facility of any Recipient, or a decrease or increase in Recipient’s level of consumption of the Services from the historical usage levels of its business, in either case that has an impact on the cost to Supplier of providing any impacted Services.



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to eliminate 100% of any Stranded Costs, the Parties will meet and discuss the remaining Stranded Costs to be reimbursed by Recipient to Supplier.

(c) The Total Shared Services Charges set forth in Schedule C-1a and Schedule C-2a were determined by allocating to Recipient a portion of Supplier’s underlying costs of performing the applicable Service (such cost allocation, the “Initial Cost Allocations”). In the event the Price Adjustment Process is initiated solely due to a Business Change Event and does not involve a termination of the applicable Service, then during the Price Adjustment Process, Supplier will (i) use the cost allocation methodology that was used to determine the Initial Cost Allocation for such Service, to determine a new cost allocation reflecting Recipient’s then-current level of consumption of such Service, taking into account material increases or decreases (if any) in Supplier’s overall costs that are a direct result of the change in Recipient’s level of consumption of such Service (a “New Cost Allocation”), and (ii) if the New Cost Allocation differs from the Initial Cost Allocation for such Service, adjust the Total Shared Services Charge for such Service accordingly. At Recipient’s request, Supplier will provide Recipient with all supporting calculations of the effects of such Business Change Event on Supplier’s costs of performing the Services.

14. As noted above, the services to be provided by AFI and ResCap pursuant

to the Agreement are broken down into categories of services, as set forth on Schedules A-1 and

A-2 to the Agreement (each a “Functional Service Area”), the most significant of which are

summarized as follows:

(a) Information Technology. AFI and ResCap provide information technology development, maintenance and servicing functions to each other for each of the systems used in the operation of their respective businesses. Likewise, AFI and ResCap provide information technology services at their respective facilities for employees of the other affiliates located at such facilities. Many of the information technology services provided by AFI involve creation and maintenance of systems that are critical to Debtors’ daily business operations and the integration of the Debtors’ and Ally Bank’s systems to ensure seamless operation of the Debtors’ mortgage origination, servicing and securitization operations. (b) Human Resources. ResCap and AFI also provide various global human resources functions to each other. For instance, ResCap provides various employee relations, staffing, workforce planning, and compensation design, administration and monitoring functions to AFI. AFI, on the other hand, provides



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ResCap services relating to compensation plan monitoring, benefits design and administration, talent management and performance review functions. (c) Finance, Tax & Audit. AFI and ResCap provide various finance, tax and audit services on a global basis for the consolidated organization. More specifically, ResCap provides Ally Bank with many accounting services relating to general ledger recordation and reconciliation, mortgage loan-level payment accounting, and real estate owned accounting. The Debtors also rely upon AFI for accounts payable and payroll processing, tax services and internal audit procedures and frameworks. In addition, AFI provides ResCap with various regulatory reporting and control services. These services are critical to the Debtors’ ability to continue to operate their businesses in the ordinary course and ensure compliance with the requirements of governmental regulators. (d) Compliance. AFI provides the Debtors with global compliance services, including development of compliance and procedure frameworks, training employees regarding the compliance policies and procedures, and assessing and testing compliance programs. The Debtors also provide to AFI various compliance support services. These services enable the Debtors and AFI to comply with recent agreements and settlements with federal and state authorities and ensure that the Debtors and AFI continue to operate in compliance with the requirements of governmental units that regulate the lending industry. (e) Risk Management. ResCap provides AFI with mortgage credit and servicing policy, risk management, and quality assurance services, as well as certain services related to the repurchase of loans from correspondent lenders and brokers on behalf of Ally Bank. AFI provides to the Debtors enterprise policies and governance, operational risk management, business continuity planning, market and counterparty risk management, and reports and analytics. (f) Treasury. AFI provides the Debtors with various cash management and treasury services,7 including cash and wire desk services, as well as liquidity and collateral management services. Each of these services is critical to the Debtors’ ability to maintain liquidity and funding so that they can continue to operate their businesses and continue activities related to the origination, servicing and securitization of mortgage loans.

(g) Legal. ResCap provides various banking and mortgage related legal services to AFI, while AFI provides general legal services to the Debtors. The legal services that are provided are in the form of certain AFI legal employees allocating a percentage of their time to ResCap legal matters, and vice versa for ResCap’s legal employees working on legal matters relating to AFI.

7 By separate motion, filed concurrently herewith, the Debtors seek to continue their current cash management

systems with modifications necessitated by their postpetition financing needs.



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(h) Supply Chain. AFI’s global supply chain functional group provides ResCap with assistance in negotiating contracts with and transitioning to suppliers, as well as monitoring and off-boarding existing suppliers.

(i) Capital Markets. The Debtors provide various capital markets related functions to Ally Bank, including services related to securitization of mortgages with the GSEs, portfolio management and accounting, and management of mortgage servicing rights. AFI provides various investment management and capital markets IT services to the Debtors. (j) Marketing. AFI provides the Debtors with global brand and product marketing services across mass media, direct, digital, sponsorship/events, and sales support materials. Such services include strategic marketing planning and management of day-to-day marketing operational responsibilities. (k) Facilities. AFI provides the Debtors with various facilities related services, mostly through contracts with third parties, including, without limitation, monitoring and contracting for cost of space, mail and food services; providing space planning; and coordinating any construction or renovations. 15. The specific services to be performed in each Functional Service Area are

set forth in various Statements of Work. The specific services detailed in the Statements of

Work are documented in a summary of the Statements of Work attached hereto as Exhibit B.

16. As discussed above, the Agreement also provides for the provision of

certain Customized Services, Additional Services and Termination Assistance Services. For the

avoidance of doubt, by seeking the authority to enter into and perform under the Agreement, the

Debtors are seeking the authority to provide to, receive from and/or compensate AFI for such

further services, as and if necessary in the ordinary course of business, without the need for

further order of this Court.

17. The prices of the services being provided to AFI and ResCap pursuant to

the Agreement, which are set forth in more detail on Schedules C-1a and C-2a to the Agreement

and described above, are generally in the form of monthly service charges by Functional Service

Area for services provided by ResCap to AFI and services provided by AFI to ResCap. The



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anticipated aggregate monthly cost to ResCap for the services received from AFI is

approximately $10.2 million. The anticipated aggregated monthly cost for services provided by

ResCap to AFI is approximately $4.4 million. The initial charges under the Agreement are based

on projected operations at postpetition levels, which are expected to continue through one or

more sales of the Debtors’ assets. The Debtors are not seeking to pay any prepetition claims

through or pursuant to the Agreement.

18. The quantity and scope of services to be received by the Debtors pursuant

to the Agreement has been scaled back from historical levels to reflect only those services that

the Debtors believe are necessary to ensure the efficient operation of their businesses during their

Chapter 11 cases. As noted above, either party in its capacity as a recipient may terminate the

receipt of services, with pricing to be adjusted based on such termination, at any time pursuant to

the terms of the Agreement, including in connection with the closing of a sale of substantially all

of the Debtors’ assets. Any such termination as a recipient does not relieve the party from its

obligations as a supplier of services. The Debtors anticipate that the services they will need

under the Agreement will be reduced significantly following a sale; however, the Debtors will

likely require the continuation of certain limited services from AFI during a wind-down period.

Pursuant to the Agreement, the Debtors will be able to secure the performance of such limited

services, at reduced costs, to complete the wind-down of their businesses following a sale.

19. The Agreement was negotiated at arm’s length over an extended period of

time by senior personnel from AFI and ResCap with the assistance of independent counsel to

each of the Parties, which is reflected in the flexibility of the services provided and the pricing

and termination rights. On May 13, 2012, ResCap’s board of directors approved ResCap’s entry

into the Agreement.



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B. The Urgent Need for the Agreement

20. As described above, ResCap and AFI provide services to each other that

are critical to the continued operations of their affiliated businesses. If the Debtors are not

authorized to continue receiving and compensating AFI for all of the services as well as

providing services to AFI pursuant to the Agreement, there will be immediate and widespread

disruption of the Debtors’ operations which would, in all likelihood, significantly diminish the

value of the Debtors’ estates and impede the Debtors’ ability to consummate any going concern

sale with a buyer.

21. For example, failure to receive these services would disrupt the Debtors’

use of information technology. The Debtors rely upon AFI to maintain, develop and service

many of the integrated information technology systems utilized, among other things, to

seamlessly transmit loan applications and data among various AFI affiliates. Any disturbance to

the operation of these systems could cause an interruption in the Debtors’ origination and

servicing businesses and result in a significant decline in the value of the Debtors’ businesses.

22. Moreover, discontinuing the services would disrupt fundamental

administrative aspects of the Debtors’ businesses. For example, many of the Debtors’ human

resources services are managed by AFI. Without AFI’s human resource services, the Debtors

would not be able to offer basic health benefits to employees, continue certain other employee

benefit plans and administer payroll, potentially causing an exodus of the Debtors’ most valuable

employees and irreparable harm to employee morale and trust. In an industry where enterprise

value is so heavily contingent on employees, such repercussions would be devastating to the

Debtors’ operations.

23. Likewise, without AFI services, the Debtors cannot continue to ensure

compliance with the myriad of regulatory requirements governing the mortgage origination and



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servicing industry. Ultimately, failing to comply with regulatory requirements could potentially

result in revocation of the licenses that each state requires the Debtors to maintain in order to

continue origination activities and mortgage loan servicing. At a minimum, failure to satisfy

compliance requirements would cause the Debtors to incur substantial costs and administrative

burdens to address any such non-compliance.

24. The Debtors also recognize that they must continue to provide services to

AFI to preserve the value of their bankruptcy estates. The Debtors’ and AFI’s loan origination

and securitization businesses are integrated. In connection with origination activities, across a 47

state platform, the Debtors, in their capacities as licensed mortgage brokers, broker loan

applications and supporting materials with Ally Bank. Ally Bank in turn, then underwrites,

originates and funds loans based on the loan application packages. The substantial majority of

these loans are pooled and securitized as part of GSE backed securities for which the Debtors

typically act as loan servicers. Thus, it is essential to the Debtors’ day-to-day operations and

their business model that AFI and its affiliates are able to continue to rely upon and have the

benefits of the services historically performed by ResCap. Any material disruption to AFI’s

operations caused by ResCap’s failure to provide services would necessarily disrupt the Debtors’

operations to the detriment of the Debtors and their creditors.

APPLICABLE AUTHORITY

A. The Agreement Has a Sound Business Purpose and Should Be Approved Pursuant to Sections 363(b) and 105 (a) of the Bankruptcy Code

25. Bankruptcy Code section 363(b)(1) provides that after notice and a

hearing a debtor may use, sell or lease property of the estate outside the ordinary course of

business. 11 U.S.C. § 363(b)(1). Additionally, under Bankruptcy Code section 105(a), this

Court “may issue any order…that is necessary or appropriate to carry out the provisions of [the



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Bankruptcy Code].” 11 U.S.C. § 105(a). Courts in this Circuit have consistently held that a

debtor may use, sell or lease property of the estate outside the ordinary course of business where

a sound business purpose justifies such actions. Contrarian Funds LLC v. Aretex LLC (In re

WestPoint Stevens, Inc.), 600 F.3d 231, 248 n.8 (2d Cir. 2010); Comm. of Equity Sec. Holders v.

Lionel Corp. (In re Lionel Corp.); 722 F.2d 1063, 1070 (2d Cir. 1983); In re Borders Group, Inc.,

453 B.R. 459, 473 (Bankr. S.D.N.Y. 2011); In re Boston Generating, LLC, 440 B.R. 302, 321

(Bankr. S.D.N.Y. 2010). Specifically, once a debtor articulates a valid business justification for

a particular form of relief, the court reviews the debtor’s request under the “business judgment

rule.” “The business judgment rule ‘is a presumption that in making a business decision the

directors of a corporation acted on an informed basis, in good faith and in the honest belief that

the action taken was in the best interests of the company.’” Official Comm. of Subordinated

Bondholders v. Integrated Res., Inc. (In re Integrated Res., Inc.), 147 B.R. 650, 656 (S.D.N.Y.

1992) (quoting Smith v. Van Gorkom, 488 A.2d 858, 872 (Del. 1985), rev’d on other grounds,

Gantler v. Stephens, 965 A.2d 695, 713 (Del. 2009)); In re Quigley Co., 437 B.R. 102, 156-57

(Bankr. S.D.N.Y. 2010). “Courts are loath to interfere with corporate decisions absent a showing

of bad faith, self-interest, or gross negligence.” In re Quigley Co., 437 B.R. at 157 (quoting In re

Integrated Res., Inc., 147 B.R. at 656). Consequently, a debtor’s business decision “should be

approved by the court unless it is shown to be so manifestly unreasonable that it could not be

based upon sound business judgment, but only on bad faith, or whim or caprice.” In re Aerovox,

Inc., 269 B.R. 74, 80 (Bankr. D. Mass. 2001) (internal quotations omitted); cf. In re Global

Grossing Ltd., 295 B.R. 726, 742 (Bankr. S.D.N.Y. 2003). The burden of rebutting the

presumption in favor of a debtor exercising its business judgment under section 363(b) falls on a

party opposing the requested relief. See In re Integrated Res., Inc., 147 B.R. at 656 (citing



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Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984), rev’d on other grounds, Brehm v. Eisner, 746

A.2d 244, 254 (Del. 2000)).

26. The decision to document and enter into the Agreement is in the sound

business judgment of the Debtors because it ensures that the Debtors are able to continue to

receive necessary services that will permit them to operate their businesses smoothly in Chapter

11 through a sale and a subsequent wind-down. As discussed above, the Agreement was

negotiated at arm’s length and the amount of services to be received by the Debtors pursuant to

the Agreement has been scaled back from historical levels to reflect only those services that the

Debtors believe are necessary during their Chapter 11 cases.

27. Likewise, the Debtors submit that the pricing terms in the Agreement were

heavily negotiated and reasonably calculated. The Agreement was also drafted to provide step-

down pricing so that following the sale of the Debtors’ businesses, ResCap will pay for only

those services that the Debtors require to wind-down their estates, which will permit the Debtors

to reduce costs following the closing of a sale.

28. The cost of the services to be provided to ResCap and its affiliates under

the Agreement is eminently reasonable, particularly when juxtaposed against the additional costs

and administrative burden the Debtors would no doubt incur if they attempted to transfer these

services to new third-party suppliers or perform them in house, assuming they were able to do so

in either case. Given the type and volume of services received and provided by the Debtors, it

would be highly impracticable for the Debtors to duplicate these services through other sources.

Even if they could do so, shifting to outside service providers would likely require significant

expenditures to customize the suppliers’ services to address the Debtors’ particularized needs.

Further, the Debtors’ employees are already experiencing disruption in their day-to-day



22 ny-1014583

operations. Sourcing these services to new third-party providers would only amplify the

disruption and add additional layers of unnecessary complexity to the ability of employees to

complete their daily tasks.

29. In light of the foregoing, the Debtors submit that they have demonstrated

more than a sound business justification to continue to provide and receive the services under the

Agreement. Allowing the Debtors to enter into and provide services under the Agreement

without interruption is absolutely necessary to preserve, enhance and maximize the value of the

Debtors’ estates and is in the best interests of the Debtors, their creditors, and all other parties in

interest. Accordingly, the Debtors submit that entry into the Agreement represents an exercise of

their sound business judgment and request authorization, pursuant to Bankruptcy Code section

363(b), to enter into the Agreement and to continue to provide the services set forth in the

Agreement.

B. Request for Immediate Relief and Waiver of Stay

30. Bankruptcy Rule 6003 generally precludes the Court from authorizing

certain relief until twenty-one days after the petition is filed, except to the extent necessary to

prevent “immediate and irreparable harm.” Fed. R. Bankr. P. 6003. The Debtors submit that

Bankruptcy Rule 6003 has been satisfied because the concerns raised above demonstrate that the

interim relief requested in this Motion is necessary to avoid immediate and irreparable harm to

the Debtors and their estates. Accordingly, the Debtors request that an order granting the relief

requested in this Motion be entered on an interim basis.

31. To successfully implement the foregoing, the Debtors seek a waiver of the

notice requirements under Bankruptcy Rule 6004(a) and the fourteen-day stay under Bankruptcy

Rule 6004(h).



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SCOPE OF MOTION

32. This Motion is limited to the Agreement between ResCap and AFI and the

associated services provided by ResCap and AFI thereunder. The Motion does not cover all

aspects of the Debtors’ transactions with AFI or other affiliates. Other ordinary course

agreements and payment arrangements exist between and among the Debtors and their non-

debtor affiliates, including, without limitation, those that are disclosed in publicly available

filings with the Securities and Exchange Commission and other regulatory bodies.8 Whether or

not a particular transaction with an affiliate is described in the Agreement or this Motion, and

whether or not the Debtors seek an order with respect to the continuation of such transaction, the

Debtors intend to continue ordinary course transactions with affiliates after the Petition Date

pursuant to the authority granted to them by Bankruptcy Code section 363(c). The Debtors do

not believe that any of the relief sought herein limits their right to conduct other transactions with

Debtor and non-debtor affiliates in the ordinary course of business without prior Court approval.

NOTICE

33. Notice of this Motion will be given to the following parties, or in lieu

thereof, to their counsel: (a) the Office of the United States Trustee for the Southern District of

New York; (b) the office of the United States Attorney General; (c) the office of the New York

Attorney General; (d) the office of the United States Attorney for the Southern District of New

York; (e) the Internal Revenue Service; (f) the Securities and Exchange Commission; (g) each of

8 One intercompany item that is not covered by this Motion, or the pricing in the Agreement, is the charge for

AFI’s and Ally Bank’s use of buildings or spaces that are owned or leased by the Debtors, as well as charges for the Debtors’ use of space owned or leased by AFI or Ally Bank. In 2012, the Debtors expect to pay, in the ordinary course of business, up to $3 million to AFI for the use of AFI and/or Ally Bank space. ResCap, on the other hand, expects to charge AFI up to $12 million in 2012 for AFI’s and Ally Bank’s use of the Debtors’ space.



24 ny-1014583

the Debtors’ prepetition lenders, or their agents, if applicable; (h) each of the indenture trustees

for the Debtors’ outstanding notes issuances; (i) Ally Financial Inc. and its counsel; (j) counsel to

the administrative agent for the Debtors’ proposed providers of debtor in possession financing;

(k) Nationstar Mortgage LLC and its counsel; and (l) the parties included on the Debtors’ list of

fifty (50) largest unsecured creditors (collectively, the “Initial Notice Parties”). The Debtors

submit that, in view of the facts and circumstances, such notice is sufficient and no other or

further notice need be provided.

34. Within two (2) days after entry of an interim order, the Debtors propose to

serve a copy of the Motion and the interim order upon the Initial Notice Parties. The Debtors

request that the Court schedule the final hearing on the Motion for a date that is as soon as

practicable, but in no event later than forty-five (45) days following the entry of the interim order,

and establish the date prior to the final hearing for parties to file objections to the Motion.

35. Any objections to the relief requested in the Motion must be filed with the

Clerk of the Bankruptcy Court and served upon and received by: (a) proposed counsel for the

Debtors, Morrison & Foerster LLP (Attn: Larren M. Nashelsky, Gary S. Lee and Lorenzo

Marinuzzi); (b) the Office of the United States Trustee for the Southern District of New York, 33

Whitehall Street, 21st Floor, New York, NY 10004 (Attn: Tracy Hope Davis, Linda A. Riffkin

and Brian S. Masumoto); (c) counsel for AFI, Kirkland and Ellis, LLP, Citigroup Center, 601

Lexington Avenue, New York, NY 10022 (Attn: Richard Cieri); (d) counsel for the

administrative agent for the Debtors’ proposed providers of debtor in possession financing; and

(e) counsel for any statutory committee appointed in the Debtors’ cases. If no objections are

filed to the Motion, the Court may enter the order without further notice or hearing.



25 ny-1014583

CONCLUSION

36. WHEREFORE, the Debtors respectfully request that the Court: (i) enter an

interim order substantially in the form attached hereto as Exhibit C, granting certain of the relief

sought herein immediately; (ii) enter a final order substantially in the form attached hereto as

Exhibit D, granting the relief sought herein on a final basis and authorizing ResCap to enter into

the Agreement nunc pro tunc to the Petition Date; and (iii) grant such other and further relief to

the Debtors as the Court may deem just and proper.

Dated: May 14, 2012 New York, New York

/s/ Larren M. Nashelsky Larren M. Nashelsky Gary S. Lee Lorenzo Marinuzzi MORRISON & FOERSTER LLP 1290 Avenue of the Americas New York, New York 10104 Telephone: (212) 468-8000 Facsimile: (212) 468-7900 Proposed Counsel for the Debtors and Debtors in Possession



1 ny‐1040911

Summary of Statements of Work From AFI to ResCap

Statement of Work (AFI to ResCap)


Scope of Services

1 Finance Shared Services (1a04)

Finance Tax AFI provides various finance services to ResCap including Purchase-to-Pay (P2P) in various ResCap locations. These P2P services include use of the using various applications through AFI’s vendor management system including purchase requisition, invoice reconciliation, create and update vendor master records, and processing invoices for payment to vendors. AFI also processes ResCap’s payroll needs through its various locations, handles travel and expense management services, account reconciliation to the general ledger, fixed assets accounting by entering necessary journal entries and reclaimed property and escheatment processing through AFI’s database.

2 Tax Services (1a08) Finance Tax AFI prepares and validates ResCap’s tax forecast, provides tax planning advice to meet ResCap’s needs as well as preparing supporting schedules necessary to substantiate tax journal entries. AFI also prepare account reconciliations on the for various aspects of ResCap’s tax needs including current taxes, deferred taxes, non-income taxes, tax contingency amounts, and other comprehensive income (OCI) tax related accounts. These services also include preparing, reviewing and validating estimated tax calculations and, as appropriate, communicate adjustments to tax accruals for estimated tax payments and compliance with the provisions of the Tax Allocation Agreements. AFI prepares and files ResCap’s federal income tax return(s) and schedules as well as any non-US income and non-income tax returns and schedules and state income/non-income tax returns and schedules.

3 General Accounting Services (1A5)

Finance Tax AFI provides significant transaction and accounting advisory services to ResCap as well as GAAP monitoring and implementation. AFI supports the accounting standard setting process with various organizations on behalf of ResCap including the Financial Accounting Standards Board (“FASB”) and supports ResCap in the implementation of changes in accounting standards. On a monthly basis, AFI calculates accrual and compensation expense related to ResCap’s compensation plans. On a monthly, it provides basis record journal entries and performs account reconciliations related to pension account balances. It provides support relating to adequacy of reserves, funds transfers pricing, variance analysis, Sarbanes-Oxley IT Testing and derivative accounting services.

4 Capital Markets (1C) Capital Markets Services

AFI manages ResCap’s Non-Core Mortgage Portfolio & Servicing Capital Group based on portfolio targets and balance sheet sensitivities as defined by ResCap’s CEO, and other member of ResCap’s management team, as directed. AFI executes ResCap hedge transactions for MSR & Treasury related exposures as well providing trading liquidity for Pipeline hedging as well as providing reports concerning the foregoing. It performs counterparty relationship management and negotiation of required trading documentation.


12-12020-mg Doc 1920-13 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit M Pg 1 of 22

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Scope of Services

5 Internal Audit Services (1G)

Audit AFI internal audit services to ResCap are divided into two classes of services: The Class A Services include providing targeted audits of various aspects of ResCap’s business lines, including mortgage originations, servicing and capital markets activities. Class B services includes utilizing AFI’s standard risk assessment methodology and tools to conduct the annual risk assessment used as the basis for the ResCap audit plan. This also includes compiling quarterly reports for the ResCap Audit Committee relating to information on new, past due and re-opened audit issues, progress and results from completed audits, and any changes to AFI’s audit plan that may impact audit coverage of ResCap, conducting AFI’s quality assurance and improvement program (QAIP) for ResCap as well performing general accounting tasks such as ad-hoc analysis and research as needed to support the Services.

6 eCommerce (1H) Communications AFI manages online sales and service capabilities for ResCap by developing and documenting business requirements to define the scope of specific initiatives, verifying that all internal reviews, governance and approval processes required by ResCap policies, procedures and governance structure are completed and documented prior to moving forward on any ResCap projects, processes and contracts, working with ResCap to provide that the entire online experience/capability is in full compliance with all regulatory guidelines and providing that ResCap’s online security tools/methods remain up to date.

7 Global Brand & Product Marketing (1I)

Marketing AFI supports ResCap management of ResCap’s origination (home lending) product offering by providing strategic marketing planning & strategy development through its marketing platform development and evolution, messaging strategy, and communications planning activities. AFI helps ResCap develop its creative assets to meet agreed upon strategies and media/marketing plan commitments and performs marketing evaluation and creative optimization activities. AFI provides analytics of modeling associated with targeting. This management of day-to-day marketing operational responsibilities includes managing financial processes related to ResCap marketing expenditures with adherence to ResCap approved budgets as well as managing all agency resources and associated asset development status activities related to ResCap.



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Scope of Services

8 Risk Management (1J) Risk AFI as a global enterprise provides risk management services to ResCap. AFI’s risk committee will advise on an as-needed basis on risk reporting provided through governance channels. This involves providing a policy framework (including the Global Policy on Policies) used to manage the policy lifecycle process for ResCap. It provides support on the new product approval process. AFI prepares risk analytics and reporting for ResCap’s financial and regulatory reporting obligations as well as enterprise stress testing to evaluate the impact of severe yet plausible stress scenarios on risk, financial, capital and liquidity positions, but AFI enterprise stress testing builds on but does not replace autonomous stress tests conducted by ResCap covering specific exposures, portfolios or risks. In additions, AFI is responsible for providing ResCap with the operational risk management framework and business continuity. AFI also provides insurance coverage for ResCap such as Directors & Officers, Errors & Omissions, Fiduciary, Employment Practices Liability, Crime Bond, Property, Cyber Liability, Surety, Domestic & International Casualty – Workers’ Compensation, General Liability and surety bonds. In conjunction with ResCap’s market risk, AFI creates and monitors risk limits for MSR and performs economic stress testing and other analytical support for the MSR asset as needed. and provides analytical support relating to ResCaps HFI & HFS portfolios, whole loan sales and representations and warranties through use of AFI’s models.

9 Facilities Services (1Ka) Facilities AFI provides facilities services to ResCap, either directly or through outsource partner Jones Lang LaSalle (JLL) or other 3rd party service provider as selected by AFI. The facilities services will be at differing levels at each location depending upon the respective lease terms and conditions but may include AFI providing managing use and access of facilities for ResCap employees including the costs and services the cost of the space, security services, building repair and maintenance obligations which are identified as tenant’s obligations under the respective leases, equipment repair and maintenance, food services, mail services, print management Services, janitorial services, utilities, maintaining current levels of access to the facility for ResCap employees (i.e., badges, readers, access and security in all offices maintained by AFI). In addition, AFI provides space planning and project management services for any ResCap offices that require construction or renovation, moves, or other significant changes.

10 Global Compliance Services (1m)

Compliance (includes

Consent Order Costs)

AFI develops and maintains a compliance policy and procedure framework to support ResCap in complying with relevant laws, rules and regulations, including, but not limited to applicable federal consumer protection laws and regulations. This framework will also establish the standards for the development, review process, publishing, and ongoing validation of compliance related policies and procedures across the ResCap and the Global Compliance and Regulatory Affairs organization. AFI develops, conducts, and maintains



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Scope of Services

a comprehensive compliance risk assessment process as a means to identify and measure the compliance risks to ResCap that may arise from violations of laws or regulations, ineffectiveness and/or weaknesses in the control environment, or from noncompliance with internal compliance policies, procedures, or standards. Compliance risk assessments serve as the foundation for the development and execution of the institution’s compliance monitoring and testing program. AFI performs compliance training, monitoring, testing and reporting. In addition, AFI oversees ResCap’s customer complaint process so that the appropriate tools and processes are in place, the capture and handling of complaints results in timely responses and escalation to ResCap’s management, and reporting and analytic support to enable appropriate root-cause analysis to identify weaknesses and trends that may be indicative of systemic problems or violations. AFI performs an oversight role relating to key consumer practices / consumer protection / fair lending strategies and standards and alerting ResCap to relevant risk issues and emerging trends, and providing consultative guidance on such issues and support with regulatory exams as needed. AFI coordinates the completion of a compliance review of contract terms, assessment of compliance impacts of the service provided, a review of the compliance risk management program of the vendor including the data security environment, a determination of the appropriate service levels if applicable, and performance of ongoing compliance related oversight in coordination with the third party vendor management . AFI provides a robust AML/OFAC program to support to ResCap and monitor regulatory compliance and provides detailed and accurate AML related reporting Identification Program; Customer Due Diligence and Enhanced Due Diligence; Transaction Monitoring; Customer Risk Scoring; Unusual Activity Escalation and Investigation; and FinCEN reporting. AFI notifies ResCap of regulatory and compliance policy changes. This program includes an assessment of the applicability of new laws and regulations to ResCap, coordination with ResCap legal representation for early interpretation and timely communication and information. Additional services include: issue tracking and reporting processes identified through regulatory exams, compliance risk assessments, compliance monitoring and testing activities, complaints and other self identified or otherwise escalated issues. AFI will provide support to ResCap as needed with regard to regulatory exam management and the tracking of related corrective action. With respect to ResCap regulators, this may include assisting in the coordination and scheduling of site visits, consolidation of requested documentation and information, and the tracking and reporting/escalation of ResCap related regulatory findings and action plans. AFI will provide a process for compliance oversight and testing of Global Technology & Operations, including risk assessments of technology controls including but not limited to information security. AFI will provide oversight and management of Consent Order



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Scope of Services

deliverables to promote compliance with the Order. 11 Global Privacy Services

(1N) Compliance AFI delivers services to ResCap through its Global Privacy function, which generally

provides such services by developing, implementing, and maintaining appropriate AFI policies and procedures so that consistent operating practices are in place to support ResCap in complying with applicable privacy laws and regulations, both directly and through the use of third-party providers. AFI arranges for and conducts appropriate privacy training for ResCap’s employees to provide a sufficient level of understanding of the privacy laws and regulations that impact job responsibilities as well facilitating global privacy risk self-assessments in conjunction with ResCap’s Data Protection Officers (DPOs). Privacy risk self-assessments are developed and maintained as well monitoring and testing of areas of greatest privacy risk for ResCap as determined through a documented risk assessment on an annual basis. AFI documents all events and incidents and reports impact assessed in the “Incident Notification” report provided to ResCap management and the appropriate Data Privacy Officers and Compliance Officer. AFI coordinate privacy Notices, consents, and opt-outs to ResCap’s customers on behalf of ResCap as per applicable privacy policy.

12 Global Security Services (1O)

Compliance AFI performs security functions across its enterprise. AFI performs the following services for ResCap: drafts and updates the Corporate Anti-Fraud Policy while assisting ResCap with monitoring compliance and enforcing the policy. AFI maintains a case management system for the tracking, reporting and disposition of all security incidents. AFI is responsible for the investigation of all internal security incidents including but not limited to all categories of fraud, ethical/integrity misconduct, theft, security breaches, policy violations, and threats. AFI assists ResCap in managing the risk of external fraud and conducting all external fraud investigations and coordinating with law enforcement as appropriate to seek the recovery of lost assets. Global Security provides support to ResCap in assessing fraud risks in control environments, systems, and processes as well as assistance in assessing fraud prevention and detection tools for use in the ResCap organization. AFI develops content and provides instructors to perform training in live, WebEx, and on-line formats. AFI performs a security review on annual basis on all facilities housing a ResCap operation, and a written report is issued detailing findings, issues resolved, issues pending, and recommendations. AFI also assists ResCap management in providing procedures designed to enhance security and security awareness. AFI also provides security expertise and consultation to ResCap. Global Security analyzes internal and external threats of workplace violence and provides strategies in response including enhanced security measures, investigation, and coordination with law enforcement when appropriate. Global Security also provides training directed at minimizing the likelihood of violence and providing the appropriate response to threats.



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Scope of Services

Global Security provides travel security information to business travelers with destinations in high risk countries, as well as business intelligence regarding global locations where business opportunities are being considered. AFI maintains an internal and external hotline for issues relating to ResCap.

13 Supply Chain Management Services (1P)

Supply Chain AFI gathers ResCap requirements, develops an initial list of potential suppliers, and provide input into the sourcing process based on knowledge of supplier sourcing and risk assessment. AFI provides expertise regarding supplier sourcing including insight into current and past contracts for similar products or services. AFI will assist in development of contracts, negotiate contracts and Service Level Agreements on behalf of ResCap for suppliers ResCap has selected through the Sourcing process and assists with access and maintenance of the contract management application. AFI provides financial risk reviews and supplier risk assessments during the sourcing process in accordance with ResCap’s direction. AFI assists ResCap as mutually agreed between the parties with the transition plan and termination notification during the off-boarding process.

14 Human Resources Support Services (1Qa)

Human Resources

AFI provides many HR Support Services on behalf of ResCap and based on guidance and oversight provided by ResCap. It provides recruiting support, provides systems and processes to track HR data as well as benefits design and administration of benefits through AonHewitt Benefits Service Center as appropriate, according to the terms of the Ally Financial Inc. Welfare Benefit Plan and the Ally Financial Inc. Retirement Savings Plan. Benefits include under these plans currently include: Medical benefits (Anthem BCBS), Prescription Drug benefits(Express Scripts), Expert Consultation service (Best Doctors), Wellness Programs (Alere), Health Savings Accounts (ACS|Mellon), Dental benefits (Delta Dental of Minnesota), Vision benefits (VSP), Life Insurance coverage (Minnesota Life), Disability benefits (The Hartford), Flexible Spending Accounts, Employee Assistance Program (Empathia), and Pre-Tax Commuter benefits. It administers Tuition Reimbursement, Adoption Assistance, and Executive benefits through Accenture, as appropriate and COBRA administration. Subject to reimbursement, AFI will provide and pay on behalf of all eligible ResCap employees to participate in and receive the benefits under the Ally Financial Inc. Welfare Benefit Plan and the Ally Financial Inc. Retirement Savings Plan. Benefits include under these plans currently include: Medical benefits (Anthem BCBS), Prescription Drug benefits(Express Scripts), Expert Consultation service (Best Doctors), Wellness Programs (Alere), Health Savings Accounts (ACS|Mellon), Dental benefits (Delta Dental of Minnesota), Vision benefits (VSP), Life Insurance coverage (Minnesota Life), Disability benefits (The Hartford), Flexible Spending Accounts, Employee Assistance Program (Empathia), and Pre-Tax Commuter benefits. Subject to reimbursement, AFI will continue to offer to eligible ResCap employees certain



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Scope of Services

other employee benefits, including Tuition Reimbursement, Adoption Assistance, Executive benefits, and other related benefits offered as of the date hereof, and make all payments to or on behalf of ResCap employees for these benefits. Subject to reimbursement, AFI will make monthly payments of all premiums, administrative fees, claims and other invoices, as applicable to all insurance companies and third party administrators relating to the plans and benefits listed herein. AFI designs and provides governance for compensations as well providing performance management design, administration, and support. AFI administers training programs, employee relations, manages headcount analysis and tracking as well new hire orientation and off-boarding of staff .

15 Legal Services (1S) Legal AFI provides legal advice and counseling, including regarding changes in laws and regulations applicable to ResCap’s business, as may be necessary from time to time, in the substantive areas of employment law and federal regulation of bank holding companies and their affiliates as well as drafting agreements pertaining thereto. AFI provides law department management support, consisting of identification and management of law department information management software applications including administration of law firm engagement, oversight, evaluation, e-billing and payment processes and other services provided by the outside counsel relations team.

16 Loan Review (IT) Loan Review AFI assists ResCap with establishing and updating an Annual Loan Review Plan. For each individual loan review, AFI performs data analytics and physical file reviews to assess compliance with internal credit policies and loan administration procedures. AFI provides reports with respect to compliance with lending policies and loan administration procedures, assessment of credit policy and procedures, credit risk exposure, provides an annual review of the Allowance for Loan Leases Losses (“ALLL”) qualitative reserves including the components of the qualitative reserve calculations and evaluates the activities of lending personnel including their compliance with lending policies and the quality of their loan approvals, monitoring and risk assessment.

17 Treasury Services – Global Funding and Liquidity

(1W1)

Treasury AFI performs a variety of treasury related functions pertaining to short-term liquidity and funding Planning, produces daily liquidity forecast for a rolling 90 to 120-day period, maintain ResCap’s unrestricted cash balance at targeted levels given by ResCap Treasury management, facilitates and conducts forecasting discussions with ResCap’s business areas to confirm reasonableness of forecast assumptions, provide regular or ad-hoc reporting, within mutually agreeable timeframes, to ResCap’s management and board of directors. In addition, AFI provides long term liquidity forecasting and funding planning, tracks and monitors open audit related issues (i.e., internal audit, SOX, etc.), oversees and coordinate Treasury Business Continuity Plans, provides liquidity strategy and liquidity risk oversight and advisory services as well as ad hoc analysis performed as requested by



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Scope of Services

ResCap. 18 Treasury Services

Structured Funding Deal Compliance and Facility

Management (1W2)

Treasury AFI identifies and build triggers into the monitoring process at the inception of all new deals coordinates internal resources for internal and external audits as necessary, supports the development of investor / servicer reports with Securitization Accounting and Legal as necessary, coordinates timely completion and delivery of daily, monthly, quarterly, and annual requirements for all ResCap secured facilities, e.g., USAP, Regulation AB, SEC filings, Officer Certificates (monthly certification process), audited/unaudited financials, collateral reports, etc. Pool builds and collateral management. In conjunction with Capital Markets, as applicable, manages all collateral and coordinates the process for selecting assets to be sold or financed in secured transactions and performs debt structuring and negotiation, modeling/analytics as well producing all data requested by rating agencies and ad hoc support and analysis.

19 Treasury Services, Treasury Operations

(1W7)

Treasury AFI’s Capital Markets Operations supports the capital markets business which executes fixed income, equity, FX and derivative trades by providing daily cash forecasting, trading product management relating to management of trading product collateral/margin, management of new counterparty set up, management of new products and processes, and management of quality of data. This involves performing collateral / margin calls with external and internal counterparties, counterparty management for Master Agreements for ISDA (derivatives), MSFTA (TBA), Repo, and Futures Clearing (futures/options), new product and process management:, data integrity management. Other treasury services include bank account administration for management and delivery of cash management services from banking . AFI performs cash and wire desk services.

20 Government Relations (1X) Government Relations

AFI will work with ResCap’s Voice of Customer Team in responding to congressional inquiries on mortgage related issues. AFI will work with internal and external legal counsel in connection with ResCap’s responses to governmental investigations involving ResCap. AFI will support ResCap with the following tasks: manage government relations aspects of investigations, including communications with Congressional staff, GAO official and SIGTARP staff and manage the retention and work of external government relations consultants and coordinate the distribution of responsive materials. AFI will provide advice to ResCap from time to time, on political developments and issues and government actions that are relevant to ResCap.

21 Communications and investor Relations Services

Communications AFI’s Communications area will deliver to ResCap employee and executive communications services. It also performs services relating to digital communications, and investor relations.

22 Global Information ITG AFI provides Security Architecture and Consulting Services to verify if ResCap is compliant with Information Security Policy standards and where applicable, baseline



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Scope of Services

Security (1R1) configuration requirements. AFI Identities and accesses management Services. AFI provides operational support of ResCap’s firewalls and intrusion detection capabilities and will monitor these devices. AFI provides computer security incident response support. AFI provides monthly reporting on Information Security Governance. In addition, AFI will provides supervision for IT-related services to monitor that there are proper segregation of duties ( i.e. firewall rules proposed by platform support team are approved prior to implementation by IBM);

23 Application Development and Support – IT

Corporate Services (1R9)

ITG AFI is responsible for the delivery of technology projects and the maintenance of applications worldwide. AFI functions as a strategic adviser to the enterprise and to ResCap to provide new system capabilities while efficiently facilitating day-to-day operations. The Services can be organized into two broad categories including application development and enhancement and application support and maintenance.

24 IT Technology Strategy and Architecture Services

ITG AFI’s Enterprise Architecture team and the underlying architecture development processes (e.g., from requirements through planning, testing and execution). The group works to verify that all projects and related architecture are aligned with the overall strategic IT direction set forth by the IT Standards Council and the IT Architecture Review Board. The group also creates and maintains the Architecture templates defined in the Ally Project Execution (APEX) methodology. The templates are completed by the Enterprise Architecture team (or by an outsourced third party).

25 Cross Functional Services ITG AFI performs a variety of IT related services for ResCap. It involves different aspects of IT related management services including availability management, IT continuity management, incident management, problem management, service level management. Other services include providing management and reporting of common platforms and systems including Clarity (project management tool) and GEAR (enterprise architecture tool), Datastage, Informatica, Business Objects, Cognos and EFT (Enterprise File Transfer), testing services including performance testing, automation, security testing, test data masking and test tool management and support, providing database architecture, database standards and governance, database change and incident technical management, database security compliance and database administration, supporting the delivery of data between applications and from/to a third party vendor; provide extraction, transformation and load of data between applications, providing management and leadership of functional infrastructure areas, including team goals, priorities and work assignments, providing asset tracking service including both automated and manual process for tracking information systems hardware equipment and support configuration management database linkages between the assets, providing authorized user ID administration, ensuringe standardized methods, processes and procedures are used for all changes; maintain the balance between the need for change and the potential detrimental impact of changes.



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Scope of Services

26 End User Computing Services

ITG AFI provides ResCap service desks for all business application services; provide incident management services, provides executive and critical site support; provide general installs, moves, adds and changes of equipment and applications, manages all aspects of projects related to business unit branch openings or relocations and provides logistical coordination of EUC shipments, manages vendors in accordance with contractual obligations, perform service improvement meetings, and ensure properly defined performance improvement plans, supports and perform audits, manage outstanding audit issues and define remediation plans as requested.

27 Voice Services Mobility ITG AFI assists ResCap so that it conforms to AFI's security standards; support in the development of mobility standards and design guidelines; perform all mobility service activities, plans and services. AFI manages the mobile environment, provide technology improvements where possible, provide portable network device administration and management of mobile phones

28 Network Services – Local Area Network

ITG AFI provides ResCap with general LAN management services general project management, provides third party management and coordination and provide information for audit and performance reviews; provides planning and designing of LAN projects to ensure a high quality network LAN environment; provides general monitoring and management of the LAN environment and provide enterprise operations monitoring support; provides predictive analysis, incident management and problem management, manages LAN capacity; reports and analyze LAN performance; plans, manages and perform IMACs including hard, soft, expedited and project IMACs; conducts and documents Site surveys; maintain locations lists, LAN diagrams, configurations and other LAN documentation; provide equipment space, power and security; provide and manage cabling and wiring; manages third parties and software upgrades and test all new LAN software; provides incidental network hardware; manage relationship with third party suppliers that manage network devices and the general LAN environment; provides LAN equipment and software, implement LAN connections, and provide various other LAN services; engages in transport voice and video protocols over the IP LAN, maintain LAN connectivity, provide a multi-protocol LAN network and provide various other technical LAN services; manages and control LAN connectivity between all sites and external networks; provides wireless telecommunication systems and support for office connectivity.

29 Network Services – Network WAN Services

ITG AFI provide general WAN management services; third party management and coordination and provide information for audit and performance reviews; provides planning and designing of WAN projects to ensure a high quality network WAN environment; supports equipment provisioning, equipment retirement and asset management support; provides general monitoring and management of the WAN



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Scope of Services

environment, provide enterprise operations monitoring support; provides proactive analysis and network incident management; manages network capacity ; report and analyze network performance; provides transport support and engineering services, manages and controls connectivity between all sites and external networks; manage and operate all network equipment and software; plans, manages and performs IMACs including hard, soft, expedited and other IMACs; conducts and document Site surveys; provides equipment space, power and security; provide and manage cabling and wiring; provides incidental network hardware; manage the relationship with third party suppliers that manage network devices and the general WAN environment; and supports with general technical requirements, support with system network architecture (SNA), support with routing and data interchange protocols and provide transport for network time protocol servers.

30 Voice Services – Telecommunications and

Contact Center

ITG AFI's provides Telecom call center support to ResCap by establishing security standards; supports in the development of telephony standards and design guidelines; performs all voice service activities, plans and services; manages the voice network including equipment and software; manages third parties; manages voice station headsets, manages unified messaging and provides turret voice services and remotes worker telecommunication services; manages contact center applications, manages and coordinate third parties, assists in planning and design, manages equipment and software, provide fault management, provide capacity and configuration management and assist in performance optimization; provides AFI personnel properly trained to provide services.

31 Hosting Operations – Hosting, Implementation and Data Center Services

ITG AFI provides ResCap with end to end operation services and provides monitoring and management of AFI's regional operation centers responsible for services in ResCap's service zone; provides all integration, design, management and support for equipment and software; provides and manage a VLAN and premise network environment in hosting centers; provides architecting, implementing ad support of storage management solutions; maintains and provides support for job and batch scheduling and provides enterprise operations monitoring support; manages all components of the server environment including equipment, software and related infrastructure; provides performance statistics and provide technical support and advice for applications; provides ResCap identifier service, non-Windows LDAP, and meta directories; deploys all approved patches to all servers following the change management process development; provides normal business hours for on-site system administrative support for the pre-production environment application operations support; tests and clarifies server builds based on templates and specifications provided; provides email server refreshment, mail management, server management and collaborative application management; supports and maintains the configuration of the interface to LDAP global internet mail relay; provides DHCP and



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Scope of Services

BootP services and provide internal DNS and DDNS services with active directory integration; provides documented recovery action plans, basic disaster recovery and management of centralized backup; manages; domain name service (DNS), server name registration and Windows domain requests; support global DNS maintenance, NIS integration and network time protocol (NTP); supports in development environment, pre-production environment and production environment; provides SMTP mail services, gold build deployment and facility management services.



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Summary of Statements of Work From ResCap to AFI

Statement of Work

(ResCap to AFI)

Functional Service

Area

Scope of Services

1 Human Resources Support

Services (1Qb)

Human Resources

ResCap provides support for appropriate organizational design based on the business strategies of the organization, including: (i) provide appropriate functional and process alignment; (ii) define reporting relationships; (iii) evaluate spans of control; (iv) provide appropriate role definition and scope; and (v) support change impacting the organization.

ResCap manages headcount analysis and tracking, provides management reporting and analysis to AFI, provides project management services in support of business initiatives, provides management and support of HR programs including Recruiting, Comp Plan Administration, and Performance Management, provides support for audit, regulatory, legal, and ad hoc requests as required and administers position approval process.

ResCap provides the following compensation plan support: (i) facilitate annual compensation plan review process for AFI working with AFI’s Affiliate’s Global Capital Markets and Broker Dealer, HR Business Partners, and the AFI Compensation Team; and (ii) administrative oversight for variable plans have been reviewed by appropriate parties and payment modeling has been performed.

ResCap provides support for AFI’s performance management process including individual development plans, mid-year performance reviews, and year-end performance reviews and provides assistance in setting objectives/requirements, establishing timing, and providing support and expertise to AFI as related to the above mentioned performance management processes.

ResCap provides Ad-Hoc Consultative Services

2 Legal Services (1)

Legal During the Term, ResCap will provide the following Services to AFI in connection with its business activities when requested by AFI and consistent with current and historical practice: (i) Legal advice and counseling, including litigation management and support, including service of process, e-discovery, discovery responses, and litigation holds, as may be necessary or required by AFI from time to time, including without limitation, making available relevant systems and software that may be developed by or for the e-discovery team; (ii) drafting legal agreements and other legal documents in connections with AFI’s capital markets functions, including, but not limited to, funding facilities, whole loan sales, and securitizations; (iii) obtaining and maintaining licenses required for AFI’s and its subsidiaries’ respective businesses, to the extent required; (iv) assistance with legal aspects of investigations and examinations in connection with oversight of the mortgage business by federal, state, and local regulatory bodies; (v) retention, oversight, and management of outside counsel representing AFI as determined by ResCap’s legal staff to be appropriate to conduct litigation and/or provide advice, counseling and other legal support as to legal matters of AFI, including in respect of capital markets activities; and (vi) make available to AFI for its use the applications listed in Section VIII below.



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Statement of Work

(ResCap to AFI)

Functional Service

Area

Scope of Services

3 IT Resource Services

ITG AFI is responsible for the delivery of applications and services worldwide for its business. ResCap provides support in the nature of personnel, assets, facilities and tools (“ResCap’s Resources”) that facilitates AFI’s day-to-day operations. ResCap’s Resources assists AFI’s ability to support the delivery of applications to existing applications per AFI’s enterprise standards and methodology.

4 ResCap Accounting

Services

Accounting During the Term of the Agreement, ResCap will provide the following services to AFI: (i) General Accounting Operations; (ii) Financial and Regulatory Reporting; and (iii) subject matter expertise and support activities to comply with certain of AFI’s Global Financial Control Policies:

5 Master Servicing Bond Modeling (Auto

1)

Master Servicing

ResCap will perform monthly bond administration functions compliant to securitization deal documentation and as instructed by AFI including : (i) performing model validations on all securitizations within 1 business day after completion of distribution calculations and prior to reporting and distribution of data and investor remittance amounts; (ii) performing initial modeling and ongoing bond administration for newly originated and assigned deals; (iii) coordinating with AFI in addressing audit requests, issues or concerns as raised; (iv) indentifying and incorporating process improvements surrounding existing monthly distribution processes and integrated workbooks including; (v) coordinating with ITG in resolution of spreadsheet deficiencies as reported on monthly defect logs; (vi) reviewing and recommending logic changes to data queries; access and excel macros and related data exchanges; (vii) reviewing and modifying waterfall validation spreadsheets incorporating excel and access enhancements; and (viii) distributing reports to Investors.

6 Master Servicing Bond Administration

(Auto II)

Master Servicing

ResCap will receive monthly, various reports and data files from AFI (or its agent) encompassing the automotive servicing activity for the respective security transactions for the prior month. ResCap will process the activity and calculate amounts owed to and from various parties to the whole loan transaction. Mark to Market deals will be completed and delivered to AFI by EOD on the 6th Business day of the month. Non Mark to Market deals will be completed and delivered on the 10th business day of the month.

7 Compliance Services (14H)

Compliance ResCap will deliver Services through its Compliance and Licensing functions. The following is a general description of the services that may be performed –

Compliance Oversight and Support for the Mortgage LoB: ResCap will provide sufficient compliance resources that are dedicated to oversee and support the Client’s compliance needs regarding its Mortgage LoB, which will include Client providing a dedicated Mortgage Compliance Officer and team. Such dedicated Mortgage Compliance Officer and team will provide appropriate Compliance integration with and oversight of the Client’s mortgage business operations, including input on product design and development, projects and key initiatives, operational processes, business strategies and marketing efforts.

Licensing: ResCap will provide sufficient licensing resources that are dedicated to applying for and maintaining



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Statement of Work

(ResCap to AFI)

Functional Service

Area

Scope of Services

corporate, branch and individual licenses needed to support the Client (based upon the advice of Client’s Legal staff as to licenses needed), which shall include a dedicated Licensing staff. Such dedicated Licensing staff will ensure timely filing of applications to ensure that the Client is in good standing and is appropriately licensed to conduct its business activities.

8 Risk Services Reporting and Special Assets

Risk ResCap will provides risk reporting, as well as support AFI in the valuation of assets for governance and reporting purposes, seek to liquidate assets at the most economical price for AFI’s benefit, evaluate AFI’s strategic alternatives and disposition of assets, support AFI with management services of direct personnel and 3rd party brokers and contractors, provide valuation and risk rating support for tracking of criticized credits and other assets, provide approval of work out resolution recommendations and any loan or asset advance requests and timely and accurate responses to issues that arise on SAG accounts.

9 Application Support (14A)

ITG ResCap facilitates day-to-day operations by maintaining existing system capabilities for AFI. The Services are application enhancement, and application support and maintenance.

ResCap maintains and supports the various application environments including configuration, processing, monitoring, maintenance, trouble shooting, bug correction, application hosting, application maintenance, meeting uptime requirements, responding to incidents and problems as well as disaster recovery. Services also include support for SOX and Enterprise Access Controls (EAC) compliance and responding to audit and other management inquiries. These services can be summarized into application maintenance, application support, information management and reporting, compliance and controls and support for other ad-hoc requests.

10 Capital Markets (14B)

Capital Markets

ResCap will (i) support AFI Lending Channels and Management with product updates and implementation; (ii) negotiate all agreements with Government Sponsored Enterprises (GSE’s) and Mortgage Insurance (MI) partners; and coordinate any new contracts and / or updates to existing contracts.

Loan Pooling, Securities/Loan Delivery, and Settlement: ResCap will obtain commitment authority money and pool numbers. Identify loans in “targeting lending areas” using thresholds set by GNMA, FNMA and FHLMC. Pooling process in accordance with the criteria set by agency / investor. Send notification to GNMA, FNMA and FHLMC when pool is certified. Settlement Sheet Notification. Delivery of AFI owned loans to the agency or investor. Require that all loans are eligible for delivery to the agency or investor. Pipeline Hedging, Trading and Pricing. Assist in the facilitation of the following at the direction of AFI or Ally Investment Management (AFI IM). Hedging and subsequent sale of every originated/purchased loan (Jumbo HFI – excluded for the purposes of hedging and trading). Implementation and Execution of “best execution” model. Advise AFI regarding margins, product development, credit guidelines, and operational processes. Work with RESCAP Treasury and RESCAP IM to obtain and maintain counterparty relationships. Provide base daily pricing to AFI inclusive of all intra day re-pricing. Provide daily pricing (including margins) for rate sheet flow, direct trade, Bulk Bid, as well as AOT pricing. Consult with AFI Lending



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Statement of Work

(ResCap to AFI)

Functional Service

Area

Scope of Services

Channels and Management regarding the following: Current market conditions or changes in market conditions. Origination volumes and pricing, and potential management decisions, actions or steps to keep pricing and volumes aligned with management objectives. The selection of counterparties for funding and hedging. Produce pricing necessary for daily mark to market. Maintain hedge model (QRM) to ensure all market/GSE assumptions are current. Facilitate purchase of loans via bulk bid/direct trade with AFI Correspondents. Capital Markets Program Office. Coordinate IT/Business strategies and policies across Capital Markets Platforms. Application Management. Portfolio Management/Analytics. Loss Mitigation strategy. Manage repurchased assets: Asset valuation modeling:

During the Term of the Statement of Work, RESCAP will provide the following services to AFI: (i) support AFI Lending Channels and Management with product updates and implementation, (ii) negotiate all agreements with Government Sponsored Enterprises (GSE’s) and Mortgage Insurance (MI) partners, (iii) participate in Mortgage Credit Operation Risk Committee (MCORC) where all product changes/implementations are reviewed and approved, (iv) work closely with Trading and Credit Risk to require products are safe and sound, (v) create and maintain product support documentation, (vi) Coordinate any new contracts and / or updates to existing contracts.

11 HR Support Services (14C)

Human Resources

ResCap will provide the following HR Support Services: Organizational Design,

Employee Relations, Headcount Management, Compensation Design & Administration Services, Staffing, Performance Management/Talent Management/Engagement Services and Enterprise Training Requirements, Workforce Planning & Analytics, and Miscellaneous Human Resource Services

12 Risk Management

and Data Collection (14D)

Risk ResCap will develop, maintain, and update all lending product reference material (product summaries), document matrices, prepare communications and memos to external constituencies, coordinate, on behalf of Bank, relationships with agencies (FNMA, FHLMC, FHA, VA, USDA, and GNMA) on credit related issues, maintain and update the credit chapters of Bank’s Guide for all product types, support the development, implementation and maintenance of credit risk support tools, training modules, delegated underwriting authority levels, exclusionary list and condominium management, underwrite performance oversight, develop rules and support maintenance of existing product eligibility and credit risk guidelines within the proprietary automated underwriting system (AUS) (Custom DU) and Engenious Product Engine, provide support to Underwriting/ Product Development on risk related loan transactional/product policy concerns, provide exception oversight on loan eligibility & credit risk exceptions associated with individual loan transaction, bulk transactions and channel process changes, provide administrative support to Mortgage Credit Operational Risk Committee.

Credit Quality Assurance and Fraud. Loan audits are performed on loans for Bank, for compliance with investor and company loan programs, underwriting guidelines, policies, procedures and fraud detection.

Quality Assurance will make additional targeted discretionary loan selections to address identified trends or other



17

ny‐1040911

Statement of Work

(ResCap to AFI)

Functional Service

Area

Scope of Services

higher risk areas. Delinquent Audits: Delinquent loan reviews encompass a sample of loans from all Channels.

Mortgage Fraud Risk Operations (MFRO) provides fraud awareness training. The training program is designed to inform participants of existing, new and emerging fraud schemes, how to identify red flags and elevating concerns. Fraud training is designed to include origination and servicing employees. Fraud Audit: Reporting and alerts identify lenders with the highest risk thresholds.

Appraisal Review: Review of specific appraisals, assessment of Appraisal Management Companies (AMCs), validation of appraisal assessments, vendor monitoring.

Servicing Risk Management, including (i) daily, monthly and quarterly Mortgage Servicing Rights (MSR) valuation, (ii) MSR asset and portfolio reporting, (iii) creation of loan and tranche data tapes, (iv) documentation and performance of SOX controls, (v) support data and information requests for MSR, and (vi) MSR benchmarking.

Credit Risk Modeling - Credit risk analytics and benchmarking, including Ally Bank HFI reserve calculation, ResCap performs the following activities on a monthly basis:

Perform a “first look” analysis to verify the reasonableness of the monthly WestPat and SGM (see “Systems Applications”) cycles.

Perform SOX controls related to the ALLL calculation process, and provide evidence to the SOX team.

Bank HFI ALLL risk analytics and reporting: RESCAP performs the following activities on a monthly basis

Bank HFI ALLL governance and financial reporting: RESCAP performs the following activities on a quarterly (or more frequent, as needed) basis.

Calculation of HFS valuation levels (to Bank Accounting) for quarterly financial disclosure; participation in meetings with Bank and capital markets representatives to review results.

Analysis and presentation of potential updates to WestPat and SGM behavioral model assumptions to the appropriate Bank management and/or Board level Committee.

Preparation and presentation of quarter-end levels, analytics and benchmarking for the appropriate Bank management and/or Board level Committee approval.

Bank HFI internal and regulatory analytics and reporting: ResCap performs the following activities as needed (typically quarterly), including analysis and presentation in response to Regulator requests (as needed), Bank HFI loss model implementation: Analytics and Controls / Governance / Regulatory presentation related to the implementation of new behavioral and/or calculation models.



18

ny‐1040911

Statement of Work

(ResCap to AFI)

Functional Service

Area

Scope of Services

Investor Repurchase Review: The Investor Repurchase team operating at the sole discretion and authority of a designated Officer of AFI, reviews, responds to, and negotiates on repurchase or indemnification requests from investors for loans where Bank owns the Mortgage Servicing Rights (MSR). In addition, Investor Repurchase reviews Notices of MI Rescission put forth by MI providers for loans where Bank owns the MSR. Investor Repurchase reviews and responds to investor findings, and provides Repurchase Reporting and Analytics.

Risk Applications -

a. Risk Application Business Design and Maintenance:

b. Application Access:

c. Business Recovery Planning: Coordination of Business Resiliency Activities to enable compliance with the Bank Business Continuity Policy.

d. Operational Risk Management: Coordination of ORM activities.

Counterparty and Market Risk -

a. Calculating counterparty exposures for derivative transactions, operating balances, forward settling transactions, and other relevant transactions and producing reporting to test compliance with established limits by counterparty.

b. Market Risk Limit monitoring across all portfolios.

13 Legal Services (14E)

Legal During the Service Term, ResCap shall maintain its current level of service and support and will provide the following services to AFI in respect of AFI’s residential mortgage activities:

Where requested by AFI, provide legal analysis and support as may be necessary or required by AFI from time to time, including without limitation, support for the mortgage correspondent, warehouse, and wholesale lending lines

Inform and instruct AFI management regarding changes in laws and regulations affecting AFI;

Examination support;

Review marketing materials;

Fair lending and fair credit support, supplemented by AFI’s legal staff;

Licensing matters not otherwise covered;

Retain and manage outside counsel as determined to be appropriate to conduct litigation and/or provide assistance in



19

ny‐1040911

Statement of Work

(ResCap to AFI)

Functional Service

Area

Scope of Services

other specialized matters; and

Other services as requested from time to time by AFI

14 Accounting (14F)

Accounting During the Term of the Agreement, ResCap will provide the following services to Ally Financial Inc.:

Accounting Operations: ResCap provides accounting services and subject matter expertise related to domestic residential mortgage loan activities to AFI, including services pertaining to:

Mortgage Loan Accounting: (i) Mortgage Loan Inventory, and (ii) Servicing Operations.

Real Estate Owned (REO) Accounting.

Corporate Accounting.

Transaction Support.

Financial and Regulatory Reporting.

Financial Systems Support.

Ad-Hoc Audit Support.

15 Mortgage Financial

Planning and Analysis (14G)

Finance ResCap provides financial information that is needed for AFI’s consolidated forecast and business plan activities. ResCap also provides support as requested, and jointly agreed to between ResCap and AFI, for ad-hoc analysis and reporting (e.g., FED / SEC requests.). Services include:

A. GAAP / Managerial forecasts at the product and portfolio levels

1. Financial forecast and planning services for AFI’s Affiliate, Ally Bank’s Mortgage business including balance sheet (new loan volume, loan sales, asset liquidation/termination, allowance for loan loss and other asset balances) and income statement items (revenue by product and expenses including depreciation, interest, provision, operating, etc.).

2. Forecasts are provided, at a minimum at the direction of Ally Corporate FP&A, typically quarterly for detailed forecasts, monthly for executive forecasts, or more frequently as requested by AFI (for more frequent requests, delivery timeframe jointly agreed to between ResCap and AFI on a case by case basis).

B. GLR / cash flow forecast

1. Liquidity forecast services for AFI’s Affiliate, Ally Bank’s Mortgage business including cash-related balance sheet items (new loan volume, loan sales, asset liquidation/termination) and cash-



20

ny‐1040911

Statement of Work

(ResCap to AFI)

Functional Service

Area

Scope of Services

related income statement items (revenue and expenses).

2. GLR Forecasts are provided at the direction of AFI’s Affiliate, Ally Bank Treasury, typically monthly (for more frequent requests, delivery timeframe jointly agreed to between ResCap and AFI on a case by case basis)

C. Portfolio stress tests

1. Provide impacts to baseline forecasts under various stress scenarios (declining HPI, increasing market delinquencies) as defined by Ally Risk (delivery timeframe and reasonability of stress scenarios jointly agreed to between ResCap and AFI on a case by case basis)

2. Completed at the direction of Ally Corporate FP&A and Ally Risk, usually quarterly (for more frequent requests, delivery timeframe jointly agreed to between ResCap and AFI on a case by case basis)

D. Ad hoc reporting and analytics

1. Support AFI’s Affiliate, Ally Bank’s requests for reporting and analytics related to AFI’s Affiliate, Ally Bank’s Mortgage assets, typically at a product or portfolio level. Product is defined as Vintages and Asset Classes which includes but is not limited to Held for Investment (HFI), Mortgage Servicing Rights (MSR) and Warehouse.

2. Ad hoc reporting and analytics provided to AFI’s Affiliate, Ally Bank typically includes items such as detailed forecast assumptions, and variance explanations (forecast vs. forecast, actual vs. forecast, etc.), portfolio performance summaries, reserve analysis

3. Ad-hoc reporting and analytics in support of special projects as jointly agreed to between ResCap and AFI

4. Ad-hoc support is provided upon request from AFI and jointly agreed to by ResCap

16 Record Services (141)

Capital Markets


Facilitates Treasury and Capital Markets in the determination/confirmation of custodial file locations and updates custodial locations in LoanServ & the Custodial File Database and performs research functions to reconcile custodial locations for files that are shown as not on hand.

Process requests for files/documents that are received from internal and external clients for loans sales, litigation requests, audits and reconciliation projects and deliver files/images to requestor in a mutually agreeable format that is



21

ny‐1040911

Statement of Work

(ResCap to AFI)

Functional Service

Area

Scope of Services

suitable to their request (i.e. electronic format).

Test and coordinate modifications to a system/database when needed.

Responsible for auditing Vendors for compliance to the agreed upon Service Level Agreement (SLA).

17 Business Risk and Controls and Business

Excellence Support (14J)

Business Risk and Controls

and Business

Excellence Support

ResCap will:

Perform testing to ensure key operational procedures are performed timely and are adequately documented;

Perform independent testing/monitoring to identify gaps in controls;

Monitor new and/or revised business practices/strategies, system changes, policies and procedures to ensure that associated risks are identified and addressed;

Provide cross functional knowledge to identify risks, controls, and best practices;

Partner with AFI and Operational Risk Management in the development of the annual key process assessment and respective targeted risk assessments;

Maintain QA program for MERS;

Provide Data Privacy incident management;

Issue Escalation and Issue Tracking/Action Plan status reporting;

Regulatory and Business Continuity Coordination;

Centralized Variable Compensation Administration; and

Audit Management.

18 Capital Markets Accounting

(14L)

Accounting ResCap will provide accounting & reporting support for the Bank Pipeline Swap, including prepare journal entries associated with the Bank Pipeline swap (inclusive of the pipeline and inventory mark) for recordation by Bank, create and maintain procedural documentation in support of the Bank Pipeline Swap., Submit derivative details into the accounting reporting tool - for SEC disclosures and regulatory reporting, and prepare, review and submit Bank disclosures via an upload to the shared AFI Reporting team rooms:

ResCap will also provide accounting & reporting support for the Total Return Swap (TSR), which includes calculating the daily valuation of the Total Return Swap as defined by the legal confirmation (daily and monthly components) as directed by AFI, preparing journal entries associated with the Total Return Swap to be recorded by AFI, including detailed support and assumptions behind the daily exchange, on a daily basis, creating and maintain procedural documentation in support of the Total Return Swap, submitting derivative details into the accounting reporting tool -



22

ny‐1040911

Statement of Work

(ResCap to AFI)

Functional Service

Area

Scope of Services

for SEC disclosures and regulatory reporting, and preparing, reviewing and submitting Bank disclosures via an upload to the shared AFI Reporting team rooms:

ResCap will also provide Mark to Market Accounting.

19 Consumer Lending

Services (14M)

Consumer Lending

ResCap’s consumer lending operations shall provide the Services in connection with loans brokered to AFI by ResCap on the Eclipse loan origination system including: (i) State audit review utilizing Global Compliance State Matrix; send special flood hazard notice to borrower when applicable; (ii) obtaining title commitment and review for clear to close; (iii) ensuring that closing agent is approved through Closing Agent Verification Process; and (iv) schedule loan foreclosing.

ResCap also provides: (i) loan Closing Services; (ii) Loan Funding Services; (iii) Wire Desk services; and (iv) RESPA Curative Services.

20 Client Repurchase

(14N)

Risk Loss recovery: negotiates repurchase/recovery from correspondent and/or broker on Ally Bank owned loans to mitigate potential loss to AFI’s Affiliate, Ally Bank and recapture actual losses on loans that have violated one or more of the loan level representation, warranties, and/or covenants outlined in the applicable contract between AFI’s Affiliate, Ally Bank and the correspondent and/or broker. ResCap Client Repurchase develops and distributes repurchase-related communications to clients associated with the repurchase/make whole process and takes action necessary to enforce said obligations (e.g., Repurchase Demand, Notice of Default, Indemnification Agreements, Payment Plan/Settlement Agreements, etc) as directed under the sole discretion by an Officer of AFI’s Affiliate, Ally Bank.

Loss recovery accounting: on behalf of AFI’s Affiliate, Ally Bank, calculates total amounts due for recovery on a loan level basis for repurchase or make whole. ResCap provides reconciliation of monies received from clients as “repurchase funds” or “make whole funds” due AFI’s Affiliate, Ally Bank.

Loss recovery controls and protocol: provides to AFI’s Affiliate, Ally Bank clients who have breached the protocol by publishing the Early Warning Report.



1

From: Schrock, Ray C. [mailto:[email protected]]Sent: Thursday, August 09, 2012 3:05 PMTo: Daniel A. Fliman; Cieri, Richard M.; Hessler, Stephen E.Cc: Andrew K. Glenn; Kanchana W. LeungSubject: RE: ResCap

Dan,

Thank you for your e-mail. Ally is aware of Judge Cote’s direction and will comply with that direction.

Ray.

Ray C. SchrockKIRKLAND & ELLIS LLP

12-12020-mg Doc 1920-14 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit N Pg 1 of 3

2

601 Lexington AvenueNew York, NY 10022(Tel) (212) 446-4828(Fax) (212) 446-4900(Cell) (917) [email protected]

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the U.S. Internal Revenue Service, weinform you that any tax advice contained in this communication (including any attachments) was not intended or writtento be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S.Internal Revenue Code or (2) promoting, marketing or recommending to another party any tax-related mattersaddressed herein.The information contained in this communication is confidential, may be attorney-client privileged, may constituteinside information, and is intended only for the use of the addressee. It is the property of Kirkland & Ellis LLP or Kirkland& Ellis International LLP. Unauthorized use, disclosure or copying of this communication or any part thereof is strictlyprohibited and may be unlawful. If you have received this communication in error, please notify us immediately byreturn e-mail or by e-mail to [email protected], and destroy this communication and all copies thereof,including all attachments.

From: Daniel A. Fliman [mailto:[email protected]]Sent: Wednesday, August 08, 2012 2:01 PMTo: Cieri, Richard M.; Schrock, Ray C.; Hessler, Stephen E.Cc: Andrew K. Glenn; [email protected]: ResCap

Counsel,

As you know, we represent FHFA in the ResCap bankruptcy cases and in the SDNY action against, among others, AllyFinancial, Inc. (Case No. 11- Civ. 7010). At conferences held on July 11 and 17, 2012, Judge Cote directed FHFA tosubmit an application to the bankruptcy court to obtain access to loan tapes and loan files in the Debtors' possession.Judge Cote directed “Ally to cooperate fully in that application that FHFA would be making to the bankruptcy court.”

FHFA has filed its application concerning the loan tapes [Docket No. 810] and a supplemental application concerning theloan files [Docket No. 859]. A non-evidentiary hearing is scheduled for Tuesday, August 14, 2012 at 10:00 a.m. Pleaseconfirm how Ally intends to cooperate.

Thanks,Dan

Daniel A. FlimanKasowitz, Benson, Torres & Friedman LLP1633 BroadwayNew York, New York 10019Tel. (212) 506-1713Fax (212) [email protected]

This e-mail and any files transmitted with it are confidential and may be subject to the attorney-client privilege. Use or disclosure ofthis e-mail or any such files by anyone other than a designated addressee is unauthorized. If you are not an intended recipient, pleasenotify the sender by e-mail and delete this e-mail without making a copy.


3

***********************************************************IRS Circular 230 Disclosure:To ensure compliance with requirements imposed by the U.S. Internal Revenue Service, we inform you that any taxadvice contained in this communication (including any attachments) was not intended or written to be used, and cannot beused, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code or (2)promoting, marketing or recommending to another party any tax-related matters addressed herein.

The information contained in this communication is confidential, may be attorney-client privileged, may constitute insideinformation, and is intended only for the use of the addressee. It is the property of Kirkland & Ellis LLP or Kirkland & EllisInternational LLP. Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibitedand may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or bye-mail to [email protected], and destroy this communication and all copies thereof, including all attachments.***********************************************************


1

From: Andrew K. GlennSent: Tuesday, September 04, 2012 4:21 PMTo: Schrock, Ray C.; Daniel A. Fliman; Cieri, Richard M.; Hessler, Stephen E.Cc: Kanchana W. Leung; Daniel A. FlimanSubject: RE: ResCap

We note from ResCap’s latest pleading filed in the Bankruptcy Court that ResCap has taken the position that it has noobligation to produce any documents to FHFA under the Shared Services Agreement because Ally Financial, Inc. has notrequested production of the loan files thereunder.

Please confirm whether AFI has made or is willing to make such a request.

Thank you.

Andrew K. GlennKasowitz, Benson, Torres & Friedman LLP1633 BroadwayNew York, New York 10019Tel. (212) 506-1747Fax (212) [email protected]

From: Schrock, Ray C. [mailto:[email protected]]Sent: Thursday, August 09, 2012 3:05 PMTo: Daniel A. Fliman; Cieri, Richard M.; Hessler, Stephen E.Cc: Andrew K. Glenn; Kanchana W. LeungSubject: RE: ResCap

Dan,

12-12020-mg Doc 1920-15 Filed 10/22/12 Entered 10/22/12 21:41:42 Exhibit O Pg 1 of 3

2

Thank you for your e-mail. Ally is aware of Judge Cote’s direction and will comply with that direction.

Ray.

Ray C. SchrockKIRKLAND & ELLIS LLP601 Lexington AvenueNew York, NY 10022(Tel) (212) 446-4828(Fax) (212) 446-4900(Cell) (917) [email protected]

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the U.S. Internal Revenue Service, weinform you that any tax advice contained in this communication (including any attachments) was not intended or writtento be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S.Internal Revenue Code or (2) promoting, marketing or recommending to another party any tax-related mattersaddressed herein.The information contained in this communication is confidential, may be attorney-client privileged, may constituteinside information, and is intended only for the use of the addressee. It is the property of Kirkland & Ellis LLP or Kirkland& Ellis International LLP. Unauthorized use, disclosure or copying of this communication or any part thereof is strictlyprohibited and may be unlawful. If you have received this communication in error, please notify us immediately byreturn e-mail or by e-mail to [email protected], and destroy this communication and all copies thereof,including all attachments.

From: Daniel A. Fliman [mailto:[email protected]]Sent: Wednesday, August 08, 2012 2:01 PMTo: Cieri, Richard M.; Schrock, Ray C.; Hessler, Stephen E.Cc: Andrew K. Glenn; [email protected]: ResCap

Counsel,

As you know, we represent FHFA in the ResCap bankruptcy cases and in the SDNY action against, among others, AllyFinancial, Inc. (Case No. 11- Civ. 7010). At conferences held on July 11 and 17, 2012, Judge Cote directed FHFA tosubmit an application to the bankruptcy court to obtain access to loan tapes and loan files in the Debtors' possession.Judge Cote directed “Ally to cooperate fully in that application that FHFA would be making to the bankruptcy court.”

FHFA has filed its application concerning the loan tapes [Docket No. 810] and a supplemental application concerning theloan files [Docket No. 859]. A non-evidentiary hearing is scheduled for Tuesday, August 14, 2012 at 10:00 a.m. Pleaseconfirm how Ally intends to cooperate.

Thanks,Dan

Daniel A. FlimanKasowitz, Benson, Torres & Friedman LLP1633 BroadwayNew York, New York 10019Tel. (212) 506-1713


3

Fax (212) [email protected]

This e-mail and any files transmitted with it are confidential and may be subject to the attorney-client privilege. Use or disclosure ofthis e-mail or any such files by anyone other than a designated addressee is unauthorized. If you are not an intended recipient, pleasenotify the sender by e-mail and delete this e-mail without making a copy.

***********************************************************IRS Circular 230 Disclosure:To ensure compliance with requirements imposed by the U.S. Internal Revenue Service, we inform you that any taxadvice contained in this communication (including any attachments) was not intended or written to be used, and cannot beused, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code or (2)promoting, marketing or recommending to another party any tax-related matters addressed herein.

The information contained in this communication is confidential, may be attorney-client privileged, may constitute insideinformation, and is intended only for the use of the addressee. It is the property of Kirkland & Ellis LLP or Kirkland & EllisInternational LLP. Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibitedand may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or bye-mail to [email protected], and destroy this communication and all copies thereof, including all attachments.***********************************************************
