Wells Fargo VP Declaration in Hamp Litigation

8/7/2019 Wells Fargo VP Declaration in Hamp Litigation

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BOS-1434538 v2

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

WILFREDO and ODALID BOSQUE, VERAVICENTE MEEK, JENNIFER WILLIAMS,

JENNIFER RYAN and GARY VOLTAIRE,and PAUL MONTERO, on behalf ofthemselves and all others similarly situated

Plaintiffs,

v. C.A. NO. 10-10311

WELLS FARGO BANK, N.A. d/b/a WELLSFARGO HOME MORTGAGE d/b/aAMERICAS SERVICING COMPANY,

Defendant.

DECLARATION OF BEN WINDUST

I, Ben Windust, Senior Vice President, Wells Fargo Bank, N.A., do hereby declare under

oath as follows based on my personal knowledge, except where indicated, and on my review and

familiarity with the business records of Wells Fargo Bank, N.A. (Wells Fargo):

1. I am Senior Vice President, Servicing/Default Operations, at Wells Fargo in Des

Moines, Iowa. I have been in this position for two years. I am responsible for risk management

and industry/client relations for the Default Servicing business group. Prior to becoming Senior

Vice President, Servicing/Default Operations, I was Senior Vice President of Customer Service

Operations and my responsibilities included managing Wells Fargos customer service

operations for mortgage servicing. I have been employed by Wells Fargo since 1998.

2. In my current capacity as Senior Vice President, Servicing/Default Operations, I

review data and reports regarding Wells Fargos performance under the U.S. Treasurys Home

Affordable Modification Program (HAMP). I am also responsible for operational risk

management, industry and client relations, and community housing assistance programs. I am

Case 4:10-cv-10311-FDS Document 43 Filed 11/03/10 Page 1 of 41


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familiar with Wells Fargos policies and practices regarding implementation of the HAMP

program. I am also familiar with Wells Fargos policies and practices with respect to the referral

of loans to foreclosure, including in connection with borrowers who are (or have been)

participating in HAMP.

3. Wells Fargo is the nations largest mortgage lender, and the second largest home

loan servicer. Approximately 80% of the home loans in Wells Fargos servicing portfolio are

serviced for other investors such as Fannie Mae, Freddie Mac, Ginnie Mae, or private securities.

The remaining 20% are loans Wells Fargo owns.

4. Wells Fargo has long practiced responsible lending and servicing principles,

including never having originated negative amortizing or Option ARM loans. Because of the

product choices Wells Fargo made, its disciplined underwriting, and the manner in which Wells

Fargo approaches foreclosure prevention, Wells Fargos delinquency and foreclosure rates in the

second quarter of 2010 were 75% of the industry average. Approximately 92% of our first- and

second-mortgage customers were current in their payments as of the second quarter of 2010 and

less than 2% of our owner-occupied servicing portfolio had gone to a foreclosure sale over the

last twelve months.

5. From January 2009 through September 30, 2010, Wells Fargo has provided

homeowners with 556,868 active trial or completed modifications. Approximately 88% of the

modifications provided by Wells Fargo were made outside of HAMP. Wells Fargo has also

assisted more than 100,000 unemployed customers with short-term forbearance modifications.

6. Wells Fargo considers itself a leader in the challenge to find solutions for borrowers

negatively affected by the recent economic downturn. Wells Fargos focus has been to do

everything reasonably possible to prevent foreclosure for people facing financial hardships who



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are willing to manage their overall debt and who can afford to be in their homes once their home

payments are reduced.

HAMPs Stated Trial Plans

7. On February 18, 2009, the Obama Administration announced the creation of the

Making Home Affordable (MHA) Program, which included as one of its several components

the HAMP program for loans held by Freddie Mac and Fannie Mae (GSE loans). As

expressed by the U.S. Treasury, HAMP encourages loan servicers to modify eligible first-lien

mortgages for homeowners in default or imminent default so that monthly payments will be

reduced to affordable levels (not more than 31% of the borrowers monthly gross income).

8. Monetary incentives are paid to servicers for permanent modifications that become

effective under the program. In particular, Wells Fargo receives a one-time payment of $1,000

for each completed permanent modification under HAMP. Wells Fargo will receive an

additional $500 if the loan was current but under risk of imminent default prior to the trial period

plan. Wells Fargo will also receive, on an annual basis, a pay-for-success fee of up to $1,000

for three years if the borrower stays less than 90 days delinquent on the modified loan.

Borrowers and investors are also eligible for incentive payments through the HAMP program.

Incentives are only paid after the loan has been permanently modified.

9. In April 2009, HAMP was extended to servicers of non-GSE loans, such as loans held

privately by servicers, securitization trusts, or investors. Participation in HAMP as to non-GSE

loans is voluntary, and a servicer that chooses to participate in HAMP as to such loans is

required to execute a Servicer Participation Agreement (SPA) with Fannie Mae as agent for



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the United States. On April 13, 2009, Wells Fargo was one of the first major servicers to execute

an SPA with the U.S. Treasury. (Wells Fargo executed an Amended SPA on March 16, 2010.)1

10. Not all loans serviced by Wells Fargo are eligible for consideration under HAMP, and

the participating servicer is not required to modify every HAMP-eligible loan. HAMP

guidelines outline the manner in which servicers are to determine borrower eligibility for a

permanent modification. See, e.g., HAMP Supplemental Directive (SD) 09-01 at 2-12.

11. Several months after the HAMP program was initiated, the U.S. Treasury expressed

frustration to Wells Fargo and other servicers based on the relatively low numbers of borrowers

who were being placed on HAMP trial plans (or trial period plans (TPPs) or starts).

Government policy as expressed to participating servicers, including Wells Fargo, was to get

borrowers on trial plans with limited discussion as to whether the borrowers would ultimately

qualify for a permanent modification. In other words, we were directed to get borrowers on trial

plans first, and determine final qualification for a permanent modification thereafter.

12. Accordingly, to reach an Administration-established goal of 500,000 trial starts by

November 2009, the Treasury Department encouraged servicers in July 2009 to place customers

into HAMP trial modifications before the customer had provided the servicer with all the

documentation necessary for the servicer to verify the accuracy of the customers income and

other eligibility criteria

13. Wells Fargo had not previously supported this approach for loans covered by the

Treasury program because we were concerned about the potential outcomes. These types of trial

plans are referred to as stated trial plans, and they were not a guarantee that the borrower

1 Wells Fargos SPA and Amended SPA are available publicly at:http://www.financialstability.gov/docs/HAMP/Wells%20Fargo%20Bank%20Servicer%20Participation%20Agreement.pdf and http://www.financialstability.gov/docs/HAMP/093010wellsfargobanknaSPA(incltransmittal)-r.pdf.



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would receive a permanent modification if they simply made the three or more scheduled

payments set forth in the TPP.

14. Before a customer could obtain a stated trial plan, they were screened to determine if

they satisfied the following HAMP baseline eligibility requirements: (1) the property must be

owner-occupied and it must be the borrowers primary residence; (2) the property must be a

single-family residence with a maximum unpaid principal balance of not more than $729,750;

(3) the loan must have been originated on or before January 1, 2009; (4) the borrower must

verbally state a qualifying hardship ; and (5) the first-lien mortgage payment must be more than

31% of the homeowners stated gross monthly income. To be placed on a stated trial plan (prior

to June 1, 2010 under HAMP guidelines), a borrower needed to provide only verbal confirmation

that they met these requirements; they were required to provide documentation to verify the

accuracy of the eligibility criteria during the trial period. The documentation that the borrower is

required to provide to Wells Fargo, pursuant to HAMP guidance (see SD 09-01), includes

financial information establishing the source of his or her hardship, signed and completed

requests for tax return transcripts (or the most recent Federal income tax return, including all

schedules and forms), and income verification documentation showing, for example,

employment and rental income. (Wells Fargo is required by HAMP guidance to maintain

documentation of its HAMP activities with respect to each borrower screened and it must

provide such documentation to Freddie Mac, the U.S. Treasurys compliance agent, upon

request.)

15. Once the documentation is received, Wells Fargo will determine whether a borrower

is eligible for a permanent HAMP modification. Wells Fargo first capitalizes interest and fees by

adding them to the outstanding principal balance of the mortgage. Wells Fargo then applies a



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series of steps known as the waterfall in an effort to obtain an affordable monthly payment for

the borrower (31% or less of their gross monthly income). First, we will reduce the interest rate

to as low as 2%. Next, if necessary, we will extend the loan term to 40 years. Finally, if

necessary, we will forebear repayment of a portion of the principal until the loan is paid off and

will waive interest on the deferred amount. See SD 09-01 at 8-10.2

16. If application of the waterfall does not produce an affordable payment, the loan does

not qualify for a permanent HAMP modification under HAMP guidelines. If application of the

waterfall does produce an affordable payment, Wells Fargo performs a net present value

(NPV) test through a Treasury-approved model to determine whether the modification is in the

best interest of the investor. Generally speaking, the NPV test compares the expected cash flows

from a modified loan to the same loan with no modification, based on certain assumptions. If the

expected investor cash flow with a modification is greater than the expected cash flow without a

modification, Wells Fargo is required to modify the loan. If the NPV test produces a negative

result (that is, losses from foreclosure are less than losses from modification), Wells Fargo is not

obligated to modify the loan. See SD 09-01 at 5.

17. Whether a borrower is eligible for a permanent modification under HAMP also

depends on whether there are investor restrictions that apply to the loan. Pooling and Servicing

Agreements (PSAs) set forth Wells Fargos contractual obligations, as servicer, for loans in

privately-issued mortgage backed securities. Some of these agreements restrict Wells Fargo

from offering HAMP modifications and some restrict any form of permanent loan modification.

2 The servicer may also forgive principal, but it is not required to do so. Through 2009 andinto the first half of 2010, Wells Fargo completed approximately 60,000 HAMP and non-HAMPmodifications that involved principal forgiveness, with a total reduction of principal of more than$3.2 billion. Principal forgiveness, however, is not an across-the-board solution. Paymentaffordability is the key component to a successful modification.



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As of April 31, 2010, nearly 15% of privately-securitized loans that were serviced by Wells

Fargo required investor approval before a permanent modification could be offered.

Approximately 45% of privately-securitized loans serviced by Wells Fargo required investor

approval and the applicable PSA contained limitations on what loan terms could be modified.

7% of privately-securitized loans serviced by Wells Fargo could not be permanently modified

under any circumstances. Wells Fargo made an effort to avoid placing borrowers in HAMP trial

plans if their loans were covered by restrictive PSAs.

The Conversion To Verified Trial Plans

18. Trial period plans were originally intended to last 90 days. However, statistics

provided by the U.S. Treasury have shown that, through June 2010, approximately 46% of active

trial plans for all participants were more than six months old. See Making Home Affordable

Program, Servicer Performance Report Through June 2010 attached to this declaration as Exhibit

1 (also available at

http://www.financialstability.gov/docs/June%20MHA%20Public%20FINAL%20072010.pdf)

(June 2010 Servicer Performance Report). These are commonly referred to as aged trial

plans. Government statistics also show that the TPPs for a significant number of borrowers

placed on stated trial plans were cancelled and thus were not converted into a permanent

modification. See id.

19. On January 28, 2010, the Treasury Department reversed its policy on stated trial plans

because significant numbers of trial plans were not being converted to permanent modifications.

See HAMP Supplemental Directive 10-01 (SD 10-01), effective June 1, 2010. The policy had

caused numerous customers to be placed on trial plans by servicers, including Wells Fargo

giving them the expectation that they would get a permanent HAMP modification when, in



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fact, the customers ultimately did not qualify for a permanent modification. The primary reasons

that customers were canceled out of HAMP trial modifications include the following: (1) the

customers current payment was already below 31%; (2) the customer was unresponsive and/or

unable or unwilling to provide Wells Fargo with all necessary documentation; (3) HAMP

program guidelines, when applied to the customers loan, were unable to achieve a debt-to-

income ratio of 31%; (4) the customer was not imminently in default; and (5) the customers loan

failed the NPV test. Accordingly, on January 28, 2010, the U.S. Treasury issued SD 10-01,

which signaled a major program change by requiring that servicers verify borrower eligibility for

a permanent modification prior to offering a trial loan modification.

20. As stated above, a stated trial plan was never intended to be a guarantee by Wells

Fargo, or to the best of my knowledge the U.S. Treasury, that the borrower would qualify for a

permanent modification. This is borne out by HAMP guidance, Treasury policy3 encouraging

servicers to place borrowers on stated TPPs, and the statistics showing how many borrowers who

obtained stated trial plans from Wells Fargo (and the major servicers) actually obtained

permanent modifications.

21. As of the June 2010 Servicer Performance Report, Wells Fargos percentage of aged

trial plans nationally was 42%. At the same time, the average percentage of aged trials for all

servicers was 46%. For more information on the aged HAMP trial population, see June 2010

Servicer Performance Report.

3The Congressional Oversight Panels Report states that [SD 10-01] followed Treasurys initial decision to

allow servicers to offer trial period plans based on stated or verified income so that the program could reach a largernumber of borrowers in the shortest amount of time in order to stem the flood of foreclosures that many saw coming.This was part of a general decision to roll out HAMP very quickly. See the Congressional Oversight Panels AprilOversight Report: Evaluating Progress on TARP Foreclosure Mitigation Programs, at 12 (Apr. 14, 2010), Dckt. 17-3.



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However, converting stated trial plans into permanent modifications continues to be a challenge

even though the numbers of borrowers who remain on aged stated trial plans has substantially

shrunk and will soon disappear.

26. Significantly, for loans referred to foreclosure prior to the initiation of a HAMP trial

plan, homeowners whose loans remain active in HAMP (regardless of the age of the trial plan)

with Wells Fargo will not be subject to a foreclosure sale while they are awaiting a decision from

Wells Fargo as to whether their loans are eligible for permanent modification. It is Wells

Fargos policy not to initiate a referral to foreclosure or complete a foreclosure sale for

borrowers who are participating in a HAMP trial plan while they are awaiting a decision from

Wells Fargo as to eligibility for a permanent modification.

27. To ensure Wells Fargo is materially in compliance with the spirit and requirements of

the Treasury directives, we complete a quality assurance review of all owner-occupied loans

thirty (30) days prior to scheduled foreclosure sale dates. This review is designed to validate that

all loss mitigation options have been exhausted and that borrower outreach programs have been

executed. Any loan determined to have not met the test criteria are referred back to the home

preservation team for remediation. Additionally, Wells Fargo performs a quality assurance

review of loans referred to foreclosure to ensure we have made all required borrower contacts

and solicitations, we validate that correct income and expense information has been captured, we

validate that there is evidence that retention or liquidation (short sale/deed in lieu) have been

offered and that the loan was not actively being reviewed for a workout solution at the time of

referral.

28. For quality assurance purposes, Wells Fargo developed a peer review process for

loans that are reviewed for HAMP eligibility. Once financial data is received from the borrower



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and Wells Fargos employees perform calculations to determine the borrowers overall monthly

income and expenses, Wells Fargo will submit those calculations to peer review to ensure that

the information that Wells Fargo is relying upon is correct. Currently, peer review is performed

on five loans per Home Preservation Specialist per month. Up until several months ago, peer

review was performed on every HAMP loan.

29. In addition to peer review, certain loans receive a second level review, which may be

performed by the investor. Like the peer review process, the second level review is another step

that is taken for certain loans to assure that Wells Fargos determination that a particular loan

does not satisfy HAMPs eligibility requirements is correct. Second level reviews are performed

for any loan that is declined for a HAMP modification and, also, if the borrower is self-employed

or the circumstances of the borrowers income is particularly complex.

30. Cancellation of a stated trial plan by Wells Fargo, however, does not lead inexorably

to foreclosure. The June 2010 HAMP Servicer Performance Report (Exhibit 1) shows various

outcomes for the numerous borrowers who were in a HAMP trial modification with Wells Fargo

that was cancelled (due to, for example, trial plan payment default, insufficient documentation,

or borrower ineligibility). Some of those borrowers have brought their loans current, entered

into an alternative modification from Wells Fargo, entered into a payment plan or paid off their

loan, or engaged in a short sale or deed in lieu of foreclosure. A very small percentage of Wells

Fargos borrowers (1,774 out of 86,607 nationally) had their home sold in foreclosure after their

HAMP trial modification was cancelled.

31. When a foreclosure sale occurs everyone loses, the customer, the investor, the

servicer, and the public. Accordingly, Wells Fargos focus from the beginning has been on

doing everything reasonably possible to prevent foreclosure. The unfortunate reality is, and



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Treasury itself recognizes that, not every borrower can be helped and some borrowers are in

homes that they simply cannot afford, even with substantially reduced payments. In those cases,

which represent a very small percentage of the loans serviced by Wells Fargo, there is no

reasonable foreclosure prevention option.

Wells Fargos Massachusetts Customers

32. Through the first half of 2010, 91% of Wells Fargos servicing customers in

Massachusetts remain current on their mortgage payments. From 2009 through the first half of

2010, in Massachusetts, Wells Fargo provided its customers more than 7,400 trial or permanent

modifications, which was an increase on a monthly basis of over 250% from 2008. Of the

modifications that it has provided to Massachusetts borrowers in 2009 through the first half of

2010, over 83% resulted in payment reductions, which increases the probability that borrowers

will sustain their payments, which, in turn, lowers re-default rates and foreclosures.

33. In the first half of 2010, Wells Fargo completed foreclosures on 1.7% of its

customers in Massachusetts. Of those foreclosures, 35% were on non-owner occupied property

or Wells Fargo was never able to make contact with the borrower despite persistent, repeated

attempts. Of the 6% of our Massachusetts customers who are seriously delinquent, nearly 51%,

or 4,110, are actively engaged with us to find a workout solution or are currently in a trial

program. Of the remaining borrowers, 26% were actively engaged with us but did not follow

through, 10% have been contacted by Wells Fargo but have not provided their financial

information, and 13% are non-owner occupied, vacant or we have been unable to contact them.

34. Wells Fargo is continuing to work to resolve permanent HAMP eligibility for its

Massachusetts borrowers who were placed on stated trial plans, that is, trial plans provided by

Wells Fargo before March 1, 2010. I understand that plaintiffs are asking the Court to



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provisionally certify a class of Wells Fargos borrowers in Massachusetts who entered into a

HAMP TPP, who made the payments identified in their plan, but to whom Wells Fargo did not

send a written denial of eligibility for HAMP prior to the Modification Effective Date4 in the

TPP and to whom Wells Fargo also did not send a permanent HAMP modification agreement.

35. Under my supervision, members of Wells Fargos Servicing Data & Analytics

department have reviewed Wells Fargos data for its Massachusetts customers to determine how

many borrowers may fall within plaintiffs provisional class definition. I have been informed of

the following data: as of October 12, 2010, Wells Fargo had 93 Massachusetts customers who

Wells considers in active stated trial plans. In other words, those borrowers received their

HAMP TPP from Wells Fargo before March 1, 2010. Of those 93 borrowers, Wells Fargo has

determined that 58 are eligible for a permanent modification and therefore those borrowers are at

varying stages of having their modifications finalized. The remaining 35 borrowers are in stated

trial plans, but have not yet been determined eligible for a permanent modification or been

denied a modification. Of those 35, 17 borrowers are in bankruptcy and their eligibility

determination has been delayed due to the bankruptcy process. Accordingly, there are 18

borrowers in Massachusetts, who are not in bankruptcy, on aged stated trial plans whose

4 The form TPP that Wells Fargo used for its customers that entered into the HAMPprogram on stated trial plans was provided to Wells Fargo by the U.S. Treasury. Wells Fargo didnot draft the language in the form TPP; it simply fills in the blanks as appropriate. Each TPP hasa Modification Effective Date. The Modification Effective Date is the date on which aborrowers permanent modification becomes effective and, according to the MHA Handbook

(section 9.1), occurs when: (i) the borrower has satisfied all of the requirements of the TPPNotice, (ii) the borrower and the servicer have executed the Modification Agreement, (iii) theservicer has returned a fully executed copy of the Modification Agreement to the borrower, and(iv) the Modification Effective Date provided in the Modification Agreement has occurred. TheModification Effective Date is also defined in the MHA Handbook as the due date for the firstpayment under the permanent modification. Section 6.3.3. A sample form TPP used by WellsFargo prior to March 1, 2010 is attached hereto as Exhibit 2.



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eligibility determination for a permanent modification has not yet been made by Wells Fargo.

The reasons why they are in that category can only be determined by a file-by-file review but it

is likely that Wells Fargo is awaiting documentation from some borrowers and that other

borrowers are awaiting a decision from Wells Fargo or the applicable investor for their loan.

Wells Fargo will not proceed with a foreclosure sale as to any of those borrowers while they are

awaiting a decision on HAMP.

36. I understand that plaintiffs have defined their putative, provisional class as including

borrowers who may have been denied a permanent HAMP modification but did not receive their

denial before the Modification Effective Date stated in the TPP. Accordingly, it appears that

plaintiffs intend to include borrowers in their provisional class who like hundreds of thousands

of other borrowers whose loans have been serviced by Wells Fargo and other servicers, were in

aged trial plans and did not receive a HAMP denial until after they completed the trial payment

schedule set forth in their TPP.

37. Wells Fargo cannot determine the date upon which a borrower in a stated trial plan

received a denial notice from Wells Fargo without performing a file-by-file review of the

borrowers servicing records. Moreover, Well Fargo cannot determine the Modification

Effective Date for any borrower if that borrower was determined ineligible for a permanent

modification. See footnote 4 above.

38. Again, as stated above, there are numerous reasons why borrowers may not have

converted to a permanent modification from a stated TPP, including, for example, missed or late

TPP payments, failure to provide documentation that verifies their income and expenses, a

mortgage payment that is below 31% of their monthly income, their home no longer serving as

their principal residence, or investor restrictions prohibiting a permanent modification.



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Accordingly, while Wells Fargo as stated above can determine the numbers of Massachusetts

borrowers who are still active in HAMP and who have not yet received a denial or a permanent

modification, it cannot determine the number of borrowers who did not receive their denial letter

on or before their Modification Effective Date. The number of Massachusetts borrowers who

were on stated TPPs and who have already received a HAMP denial letter, regardless of when

they received the denial letter, is approximately 2,600. Of this group of borrowers, the majority

are working with Wells Fargo to find an alternative modification, 25% are now current (many

with the assistance of Wells Fargo), 2% are in bankruptcy and 3% have completed a foreclosure

sale.

Wells Fargos Implementation of HAMP

39. Wells Fargo has in place Responsible Servicing Practices, which the company has

lived by for many years and formalized in 2007, long before HAMP was created. The principles

underlying Wells Fargos Responsible Servicing Practices include to: (1) approach every

interaction from the customers point of view, (2) provide clear and timely information to

consumers, (3) provide tools, products, services and information that can help our customers

manage their credit; and (4) do all we can to help keep people in their homes whenever possible.

Wells Fargo works everyday to achieve these principles and our team members are held

accountable for these principles.

40. As with any large scale customer service operation, Wells Fargo recognizes that

mistakes are occasionally made and customers are sometimes provided with information or

requests that are not accurate. The demands and pressures of the mortgage crisis coupled with

the numerous government programs, like HAMP, designed to help borrowers, but which are

complex and frequently changing, has caused all of the major servicers to dramatically ramp up



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their operations, hire quantities of new employees, and develop new procedures and programs

(and frequently adjust them) at an extremely rapid rate.

41. Since the initiation of HAMP, Wells Fargo has worked aggressively with the

government to implement the program. We have continuously taken steps to improve service

levels for Wells Fargo customers facing financial hardships. The average inventory of borrowers

seeking assistance has increased approximately 160% from the first half of 2009 to the first half

of 2010. To handle this increase in borrowers seeking assistance, Wells Fargo has trained an

additional 10,900 U.S.-based home retention staff for a total of more than 18,000 team members.

Since the beginning of 2009 alone, staffing peaked at an approximate 150% increase to Wells

Fargos home retention staff on top of increased usage of outsourced collections and document

collection resources. This has required the development of new processes to rapidly onboard,

train, and retrain people to manage the evolving, complex guidelines inherent in home retention

programs.

42. We have further enhanced our support systems and our training and re-training to aid

our service representatives in appropriately communicating modification programs and

guidelines that have continually changed and expanded to help more borrowers. Wells Fargos

training program is comprehensive, and it includes traditional classroom-type training as well as

practical training from our most seasoned representatives. We actively rotate our representatives

so that they are working at the appropriate level in light of the skills that they have. Wells Fargo

also performs internal quality assurance, including recording and listening to phone calls, to

ensure that our team members communicate appropriately and consistently with our customers.

43. We have also improved how we obtain the extensive documentation the government

requires for HAMP from borrowers, and we continue to work to ensure all documents are



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processed in a timely manner. For example, Wells Fargo has streamlined the receipt, imaging,

and processing of the required documents. According to recent Treasury statistics, for all calls

into the Home Preservation Foundation HAMP Hotline through April 2010, less than 0.5% of the

Wells Fargo calls were complaints stating that Wells Fargo lost the callers paperwork.

44. Earlier this year, Wells Fargo transitioned to assigning one person to manage one loan

modification from beginning to end. This improved process has been in place since the end of

June 2010 and we hope that it is beginning to have a positive impact on our customers

experiences. In addition, we have been working with other industry collaborators, such as

investors and appraisers, to institute a 5-day credit decision turn-around for customers in need

who provide the information necessary to quickly finalize a decision.

45. Wells Fargo also has a dedicated phone line for Congressional staff members and

case workers to use in the event that their constituents, who are Wells Fargo customers, have

issues that require resolution.

46. Notably, the June 2010 Servicer Performance Report reflects that, of the four major

servicers, Wells Fargo had the lowest servicer complaint rate to the Homeowners HOPE Hotline

from the beginning of the program through May 2010. Similarly, of the four major servicers,

Wells Fargo had the second lowest answer time for homeowner calls. Finally, Wells Fargo had

the shortest response time of the four major servicers for responding to third-party escalations.

47. We understand the frustration some borrowers feel in getting clear, timely

communications from us as HAMP guidelines and the requirements for the various modification

programs have continued to change. Wells Fargo holds itself to a high level of accountability for

improving communication and providing the highest possible level of service to each of our

customers. Wells Fargo is continuing to seek ways to improve the process to address the



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constant challenges facing our customers and our investors, and we continually seek to

implement improvements to the process as they are developed. We also have met with staff at

the U.S. Treasury on numerous occasions to discuss the challenges presented by HAMP and we

have offered suggestions and opportunities to make the HAMP program more effective.

HAMP Alternatives

48. While HAMP has been an important option for borrowers, HAMP will not help all

borrowers, in Massachusetts or elsewhere, find payment relief. For the customers who are

ineligible for HAMP, Wells Fargo also provides customized loan modifications.

49. Since the beginning of 2009 through the first half of 2010, 85% of the modifications

that Wells Fargo initiated or completed were done outside of HAMP. We believe this is

primarily associated with our strong loan origination underwriting guidelines because many of

the borrowers seeking assistance already have payment-to-income percentages below 31%, the

targeted payment ratio established by the HAMP program. Since 2009 through the first half of

2010, at the same time that Wells Fargo was providing HAMP modifications to eligible

borrowers, we provided 3,633 non-HAMP modifications to Massachusetts borrowers.

50. The crisis of unemployment and under-employment has placed limits on what

servicers, including Wells Fargo, can do to help borrowers attain an affordable mortgage

payment. Wells Fargo has offered forbearance programs where appropriate and we have done

all we can to place borrowers in permanent modifications once the borrower becomes fully

employed again.

51. Under certain circumstances, Wells Fargo has placed borrowers on non-HAMP (or

alternative) modifications. As the June 2010 Servicer Performance Report reflects, since the

HAMP program was initiated, Wells Fargo has worked with 56,821 borrowers who were



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cancelled from HAMP by finding alternative modifications. Wells Fargo receives no financial

incentive from the U.S. Treasury for placing borrowers on non-HAMP modifications. It

generally does so to provide a greater array of solutions to borrowers otherwise facing

foreclosure. Wells Fargos relatively lower percentage of aged trial plans, as well as the

substantial number of borrowers who Wells Fargo has placed in alternative modifications reflects

Wells Fargos commitment and capabilities for helping borrowers stay in their homes and avoid

foreclosure.

The Wyatt Report

52. I am familiar with the claims made by plaintiffs in the above-captioned action, and I

have reviewed the Expert Report of Christopher Wyatt, which I understand was filed with the

Court on September 15, 2010. To my knowledge, Mr. Wyatt has never worked for Wells Fargo,

including in its capacity as a mortgage loan servicer, and he does not have first-hand or personal

knowledge of Wells Fargos operations, particularly with respect to HAMP compliance.

53. Mr. Wyatt makes a number of statements regarding Wells Fargos HAMP activities

that are not accurate. First, Mr. Wyatt states that the putative class members in this case were all

determined eligible for a permanent HAMP modification by Wells Fargo because they received

a TPP. Wyatt Report at 5. As stated above, however, Wells Fargo placed thousands of

borrowers on stated trial plans prior to March 1, 2010 where Wells Fargo did not yet have

sufficient information to determine the borrowers final eligibility for a permanent modification.

Accordingly, it is not correct to state, as Mr. Wyatt does, that any borrower who received a trial

plan from Wells Fargo was determined to have met all HAMP eligibility requirements. All that

can be said about the borrowers receipt of a trial plan, prior to March 1, 2010, is that the

borrowers satisfied Wells Fargos initial screening, as set forth in paragraph 14 above.



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54. To support his opinion that Wells Fargo failed to timely convert eligible

homeowners in an active Trial Period Plan into a permanent loan modification, Mr. Wyatt

references (at page 15 of his report) comments made in August 2009 by Bill Merrill, Senior Vice

President of Wells Fargo, to the California Mortgage Bankers Association (CMBA). The

apparent source for Mr. Wyatts testimony regarding Mr. Merrill is at www.mortgageorb.com

(October 14, 2009). See Wyatt Report at 15 & n. 23. Mr. Wyatts rendition of the description of

Mr. Merrills comments to the CMBA is not accurate as is apparent from a review of the

reported article.

55. In particular, Mr. Merrill accurately commented that Wells Fargo had retained six

Sigma consultants in order to assist Wells Fargo in facing the numerous challenges presented by

the structure of the HAMP program. The consultants found, and Mr. Merrill observed, that the

HAMP process itself as of August 2009 was the challenge, not, as Mr. Wyatt recounts, the

particular conduct of Wells Fargo. Specifically, the article that Mr. Wyatt references states:

Bill Merrill, senior vice president of Wells Fargos default servicing operations,noted at the CMBA conference that return rates on pre-approved modificationpackages have been particularly difficult to manage because servicers arentalways in control of the process.

Six Sigma experts, brought in by the bank as consultants, were going crazywhen they reviewed the typical loan modification process and found servicersonly looked at a file for 45 minutes in a 30-day time period. And while thepackage sits with the borrower for the better part of a month, outreach campaigns- which include phone calls and letters - ratchet up costs.

Its a very broken process in the sense that you move quick, stop. Move quick,stop, Merrill said, pointing out that investors and insurance companies have tosign off on packages. The time we actually touch the files is pretty limited whenyou look at just one file.

56. Neither the statements made by Mr. Merrill as recounted at www.mortgageorb.com

nor anything else relied upon by Mr. Wyatt supports his conclusions that Wells Fargo has failed



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to convert borrowers to permanent HAMP modifications in violation of its obligations under

HAMP TPP agreements, and that Wells Fargos alleged failure is directly caused by inadequate

staffing and procedures. In fact, as discussed at length above, Wells Fargo has diligently and

aggressively worked to implement and comply with the HAMP program. I am not aware of any

information in my position at Wells Fargo that would support Mr. Wyatts conclusion that Wells

Fargo borrowers, as individuals or as a class, have been inappropriately denied permanent

HAMP modifications due to inadequate staffing and procedures.

Foreclosure moratorium

57. It is my understanding that plaintiffs seek a foreclosure moratorium for loans that

Wells Fargo is reviewing but for which Wells Fargo has not yet determined eligibility for a

permanent HAMP modification and for loans that Wells Fargo has reviewed for a HAMP

permanent modification but for which the borrower did not receive a HAMP denial letter before

their Modification Effective Date.

58. As previously mentioned, any borrower who is in an extended HAMP trial plan is

not referred to foreclosure or allowed to proceed to foreclosure sale until such time as the HAMP

evaluation is completed. In cases where a permanent HAMP modification is denied due to a

negative NPV result, the borrower is provided a 30-day period to contest the NPV results.

Additionally, Wells also reviews borrowers for any available alternative modifications before

denying the borrower additional assistance.

59. Moreover, as discussed above, the foreclosures that plaintiffs seek to halt would only

occur in the small percentage of cases where Wells Fargo has carefully determined that the loan

is not eligible for either a HAMP or non-HAMP modification nor would the loan have qualified

for another pre-foreclosure work out, such as a deed in lieu of foreclosure or short sale.



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60. In light of Wells Fargos extensive and proven efforts to keep every borrower out of

foreclosure whenever another alternative is present, Wells Fargo strongly believes that the

foreclosure moratorium that plaintiffs ask this Court to impose on Wells Fargo as to the small

number of borrowers in Massachusetts for whom Wells Fargo is already committed to placing in

either a HAMP modification or an alternative workout solution would be burdensome and

inappropriate. Wells Fargo believes that forced moratoriums should only be mandated in very

limited circumstances, which are not present here.

61. Wells Fargo has made extensive, credible efforts to modify the loans of its customers

in Massachusetts and nationally, and the results establish why a foreclosure moratorium, for any

limited purpose, is not appropriate in this case. Wells Fargo believes that its loan workout

processes are some of the most robust in the country and Wells Fargo is committed to continuing

to work with Massachusetts borrowers to place every struggling homeowner in a loan

modification or other workout option short of foreclosure whenever possible.



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EXHIBIT 1



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Mak ing Home Af fordable ProgramServ icer Performance Report Through June 2010

Disposition PathHomeowners in Canceled HAMP Trial Modifications

Through May 2010 (8 Largest Servicers) 1

HomeownersWhose HAMPTrialModificationWasCanceledintheProcessof:

Servicer

Action

Pending2 Bankruptcy

Borrower

Current

Alternative

Modification

Payment

Plan3 LoanPayoff

ShortSale/

Deedin

Lieu

Foreclosure

Starts

Foreclosure

Completions

AmericanHome

Mortgage Servicing Inc.60 9 26 16 8 1 0 6 3

BankofAmerica,NA4 69,653 2,154 3,009 20,564 761 392 1,248 2,440 192

CitiMortgage Inc. 16,863 6,232 7,471 30,145 1,063 232 1,017 5,286 509

GMACMortgageInc. 1,053 202 877 4,310 226 239 223 651 275

JPMorganChaseBank

NA512,462 205 712 31,973 58 246 903 10,927 1,119

LittonLoanServicingLP 2,726 334 1,286 8,259 363 61 591 1,814 218

OneWest Bank 1,816 174 173 2,785 40 8 360 883 350

WellsFargoBankNA6 6,229 435 6,592 56,821 544 1,699 3,903 8,610 1,774

TOTAL

(These8 Servicers)

110,862

32.1%

9,745

2.8%

20,146

5.8%

154,873

44.9%

3,063

0.9%

2,878

0.8%

8,245

2.4%

30,617

8.9%

4,440

1.3%

Note: Data is as reported by servicers for actions completed through May 31, 2010.1 As defined by cap amount.2 Trial loans that have been canceled, but no further action has yet been taken.3 An arrangement with the borrower and servicer that does not involve a formal loan modification.4 Bank of America, NA includes Bank of America, NA, BAC Home Loans Servicing LP, Home Loan Services and Wilshire Credit Corporation.5 J.P. Morgan Chase Bank, NA includes EMC Mortgage Corporation.6 Wells Fargo Bank, NA includes a portion of the loans previously included in Wachovia Mortgage, FSB. Excludes Wachovia Mortgage FSB Pick-a-Payment Loans.Note:Excludescancellationspendingdatacorrections.


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Disposition PathHomeowners Not Accepted for HAMP Trial Modificatio

Through May 2010 (8 Largest Servicers) 1

HomeownersNotAcceptedforaHAMPTrialModification intheProcessof:

Servicer

Action

Pending2 Bankruptcy

Borrower

Current

Alternative

Modification

Payment

Plan3 LoanPayoff

ShortSale/

Deedin

Lieu

Foreclosure

Starts

Foreclosure

Completions

AmericanHome

Mortgage Servicing Inc.1,209 529 2,096 12,851 395 313 1,116 2,463 18

BankofAmerica,NA4 29,070 2,264 1,922 8,729 690 265 8,768 13,588 1,097

CitiMortgage Inc. 33,881 8,282 8,912 24,316 4,165 13,470 1,382 11,414 4,068

GMACMortgageInc. 13,076 2,721 15,664 25,653 3,411 3,221 2,536 8,043 3,223

JPMorganChaseBank

NA516,467 537 43,401 32,504 110 400 908 4,765 446

LittonLoanServicingLP 7,806 3,009 6,856 8,432 1,273 174 2,651 6,894 1,274

OneWest Bank 7,530 1,331 4,562 3,844 509 102 2,284 3,338 3,839

WellsFargoBankNA6 12,657 1,021 18,951 41,334 1,676 2,630 3,236 12,119 4,886

TOTAL

(These8 Servicers)

121,696

22.6%

19,694

3.7%

102,364

19.0%

157,663

29.3%

12,229

2.3%

20,575

3.8%

22,881

4.2%

62,624

11.6%

18,851

3.5%

Note: Data is as reported by servicers for actions completed through May 31, 2010.1 As defined by cap amount.2 Homeowners who were not approved for a HAMP trial modification, but no further action has yet been taken.3 An arrangement with the borrower and servicer that does not involve a formal loan modification.4 Bank of America, NA includes Bank of America, NA, BAC Home Loans Servicing LP, Home Loan Services and Wilshire Credit Corporation.5 J.P. Morgan Chase Bank, NA includes EMC Mortgage Corporation.6 Wells Fargo Bank, NA includes a portion of the loans previously included in Wachovia Mortgage, FSB. Excludes Wachovia Mortgage FSB Pick-a-Payment Loans.


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2%

3%

4%

5%

6%

Litton JPMorgan

ChaseNA

OneWe st

%ofCallsforSpecificServicer

ThatAreComplaints

Source: Homeowners HOPETM Hotline.Note: Complaint rate is the share of a specific sLitton, 5.3% included complaints.)

Homeowner Experience (8 Largest Servicers)*

Average Speed to Answer Homeowner Calls (May)

0

10

20

30

40

50

60

Bankof

AmericaNA

Litton JPMorgan

ChaseNA

GMAC OneWest Am.Home

Servicing

WellsFargo CitiMortgage

Seconds

Homeowners HOPETM

Hotline Average for May:2.8 Seconds

Call Abandon Rate (May)

0%

1%

2%

3%

4%

5%

Bankof

America

Litton JPMorgan

ChaseNA

GMAC Am.Home

Servicing

WellsFargo OneWest CitiMortgage

Homeowners HOPETM

Hotline Average for May:1.8%

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

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

Program to date, there have been Hotline regarding a specific service

Below shows specific complaint rat

Servicer Time to Resolve(Program to Date, Throu

0

10

20

30

40

JPMorgan

ChaseNA

Bankof

AmericaNA

OneWest C

Resolved: 755 1,038 208

Cases(PTD)

CalendarDays

Target

Source: HAMP Solutions Center. Target of 25 calendprocessing by HAMP Solutions Center.*As defined by cap amount.

Servicer Complaint Rate to H(Program to Date, Through J


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Note: Includes active trial and permanen

modifications from the official HAMP sysrecord.

Source: Mortgage BankersAssociation. Data is as of 1st

Quarter 2010.

StateActiveTrials

PermanentModifications Total

% ofTotal State

ActiveTrials

PermanentModifications Total

% ofTotal

AK 161 170 331 0.0% MT 504 418 922 0.1%

AL 2,319 2,380 4,699 0.6% NC 7,231 7,574 14,805 2.0%

AR 946 993 1,939 0.3% ND 87 71 158 0.0%

AZ 16,816 20,652 37,468 5.0% NE 467 548 1,015 0.1%

CA 82,341 85,814 168,155 22.3% NH 1,555 1,874 3,429 0.5%

CO 4,870 5,656 10,526 1.4% NJ 11,739 12,727 24,466 3.2%

CT 4,489 5,147 9,636 1.3% NM 1,302 1,252 2,554 0.3%

DC 705 634 1,339 0.2% NV 9,664 10,498 20,162 2.7%

DE 1,107 1,286 2,393 0.3% NY 17,472 15,882 33,354 4.4%

FL 45,725 47,029 92,754 12.3% OH 7,702 8,769 16,471 2.2%

GA 14,175 14,471 28,646 3.8% OK 1,044 943 1,987 0.3%

HI 1,349 1,454 2,803 0.4% OR 4,017 4,389 8,406 1.1%

IA 1,015 1,028 2,043 0.3% PA 7,746 8,180 15,926 2.1%

ID 1,378 1,505 2,883 0.4% RI 1,611 2,060 3,671 0.5%

IL 18,841 20,725 39,566 5.3% SC 3,544 3,868 7,412 1.0%

IN 3,470 3,987 7,457 1.0% SD 173 143 316 0.0%

KS 957 982 1,939 0.3% TN 3,878 4,227 8,105 1.1%

KY 1,433 1,546 2,979 0.4% TX 12,025 9,752 21,777 2.9%

LA 2,079 1,983 4,062 0.5% UT 3,186 3,612 6,798 0.9%

MA 8,128 9,857 17,985 2.4% VA 9,191 9,938 19,129 2.5%MD 11,702 13,210 24,912 3.3% VT 263 327 590 0.1%

ME 919 1,134 2,053 0.3% WA 7,110 7,721 14,831 2.0%

MI 11,362 13,547 24,909 3.3% WI 3,421 3,977 7,398 1.0%

MN 5,650 7,783 13,433 1.8% WV 536 632 1,168 0.2%

MO 4,046 4,411 8,457 1.1% WY 204 191 395 0.1%

MS 1,277 1,498 2,775 0.4% Other* 1,145 743 1,888 0.3%

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

60+

5

HAMP Activity by State Modifica

Mortgage De


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Exhibit 2



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Documents

Wells Fargo VP Declaration in Hamp Litigation