Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 1 of 41

Exhibit 2
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 2 of 41

·1· · · · · · · · · · · · ·Payne

·2· ·UNITED STATES DISTRICT COURT

· · ·SOUTHERN DISTRICT OF NEW YORK
·3· ·------------------------------x
· · ·MORTGAGE RESOLUTION SERVICING,
·4· ·LLC, 1ST FIDELITY LOAN
· · ·SERVICING, LLC, and
·5· ·S&A CAPITAL PARTNERS, INC.,

·6· · · · · · · · · Plaintiffs,

·7· · · · ·against· · ·1:15-CV-00293 (LTS)(RWL)

·8· ·JPMORGAN CHASE BANK, N.A.,

· · ·CHASE HOME FINANCE LLC and
·9· ·JPMORGAN CHASE & CO.,

10· · · · · · · · · Defendants.
· · ·------------------------------x
11

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13· · · · · · RICHARD WEEDON PAYNE, III

14· · · · · · · ·New York, New York

15· · · · · · Monday, January 28, 2019

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23· ·Reported by:· Steven Neil Cohen, RPR

24· ·Job No. J3561513

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 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 3 of 41

·1· · · · · · · · · · · · ·Payne
·2· · · · · · · · January 28, 2019
·3· · · · · · · · · · 9:36 a.m.
·4
·5· · · · · · ·Videotaped Deposition of RICHARD
·6· ·WEEDON PAYNE, III, taken by Defendants,
·7· ·pursuant to notice, at the offices of
·8· ·Covington & Burling, LLP, 620 Eighth Avenue,
·9· ·New York, New York,· before Steven Neil
10· ·Cohen, a Registered Professional Reporter
11· ·and Notary Public of the State of New York.
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 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 4 of 41

·1· · · · · · · · · · · · ·Payne
·2· · · · · · · · · ·APPEARANCES
·3
·4· ·FOSTER, WALKER & Di MARCO, ESQS.
·5· ·350 Main Street
·6· ·Third Floor
·7· ·Malden, Massachusetts 02148
·8· · · · · · · Attorneys for Plaintiffs
·9· ·BY:· · MICHAEL V. LONGO, ESQ.
10
11· ·COVINGTON & BURLING LLP
12· ·One City Center
13· ·850 Tenth Street, NW
14· ·Washington, DC 20001-4956
15· · · · · · ·Attorneys for Defendants
16· ·BY:· · CHRISTIAN J. PISTILLI, ESQ.
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19· ·ALSO PRESENT:
20· · · · · Phil Glauberson, Videographer
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 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 5 of 41

·1· · · · · · · · · · · · ·Payne
·2· ·borrower relating to the transfer of
·3· ·servicing rights, you mentioned escrow
·4· ·information.
·5· · · · · · ·Are there any other provisions of
·6· ·RESPA that in your opinion require sell --
·7· ·sellers of mortgage debt to provide
·8· ·information to the purchasers?
·9· · · ·A.· · Not that I am aware of, no.
10· · · ·Q.· · Are you offering an opinion in
11· ·this case that Chase failed to provide
12· ·escrow information that is required under
13· ·RESPA?
14· · · ·A.· · I didn't see any indication that
15· ·they provided it but it is not my opinion,
16· ·no.
17· · · ·Q.· · So that nothing in either of the
18· ·reports contains an opinion that Chase
19· ·failed to provide escrow information
20· ·required under RESPA, right?
21· · · ·A.· · Right.· That is what I just said,
22· ·yes.
23· · · ·Q.· · So that is not going to be part of
24· ·your testimony?
25· · · · · · ·MR. LONGO:· Note my objection.
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 6 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · · · · ·Go ahead.
·3· · · · · · · ·THE WITNESS:· No.
·4· ·BY MR. PISTILLI:
·5· · · · ·Q.· · No, it is not going to be part of
·6· · ·your testimony?
·7· · · · ·A.· · Unless -- unless it as I said I am
·8· · ·presented additional information that would
·9· · ·show that but I don't anticipate that.
10· · · · ·Q.· · But as of now you have not done
11· · ·any work to determine whether Chase failed
12· · ·to provide escrow information provided under
13· · ·RESPA?
14· · · · ·A.· · No, I have not.
15· · · · ·Q.· · So now setting to one side escrow
16· · ·information and the transfer of servicing
17· · ·rights issues what, if any, provisions of
18· · ·the contract between Chase and MRS specify
19· · ·the sorts of loan by loan information that
20· · ·Chase was required to provide under the
21· · ·contract?
22· · · · ·A.· · The only thing that is -- let me
23· · ·just go back to it.
24· · · · · · · ·It was required to list the
25· · ·outstanding principal balance.
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 7 of 41

·1· · · · · · · · · · · · ·Payne
·2· · · ·Q.· · Is there any provision of the
·3· ·mortgage loan contract -- mortgage loan
·4· ·purchase agreement that required Chase to
·5· ·provide loan level property address
·6· ·information?
·7· · · ·A.· · There is no provision in this
·8· ·agreement that requires that.
·9· · · ·Q.· · Is there a provision in the
10· ·agreement that requires Chase to provide
11· ·original balance information?
12· · · ·A.· · Original balance, no.
13· · · ·Q.· · Is there a provision in the
14· ·agreement that requires Chase to provide
15· ·note dates?
16· · · ·A.· · Note dates, no.
17· · · ·Q.· · Is there a provision in the
18· ·agreement that requires Chase to provide
19· ·property type?
20· · · ·A.· · No.
21· · · ·Q.· · Is there a provision of the
22· ·agreement that requires Chase to provide
23· ·payment history?
24· · · ·A.· · No.
25· · · ·Q.· · Is there a provision in the
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 8 of 41

·1· · · · · · · · · · · · ·Payne
·2· ·agreement that requires Chase to provide
·3· ·interest rates?
·4· · · ·A.· · No.
·5· · · ·Q.· · Is there a provision in the
·6· ·agreement that requires Chase to provide
·7· ·mortgage payment information?
·8· · · ·A.· · No.
·9· · · · · · ·MR. PISTILLI:· Why don't we take
10· · · ·a lunch break?
11· · · · · · ·THE VIDEOGRAPHER:· This will end
12· · · ·video 2 in the deposition of Richard
13· · · ·Payne.
14· · · · · · ·We are going off the record at
15· · · ·12:12 p.m., January 28, 2019.
16· · · · · · ·(Luncheon recess: 12:12 p.m.)
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 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 9 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · · · · · · AFTERNOON SESSION
·3· · · · · · · · · · ·12:45 p.m.
·4· · · · · · · ·THE VIDEOGRAPHER:· We are back
·5· · · · ·on the record.· The time is 12:45 p.m.
·6· · · · ·January 28, 2019.
·7· · · · · · · ·This will begin video 3 of the
·8· · · · ·deposition of Richard Payne.
·9· ·BY MR. PISTILLI:
10· · · · ·Q.· · Good afternoon, Mr. Payne.
11· · · · · · · ·We can turn back to Exhibit 3
12· · ·which is a copy of your report.
13· · · · ·A.· · Okay.
14· · · · ·Q.· · Please turn to page 10.
15· · · · ·A.· · I am there.
16· · · · ·Q.· · Do you see where you write, "A
17· · ·mortgage loan purchase agreement should not
18· · ·be used to allow a seller to convey problem
19· · ·assets."
20· · · · ·A.· · I see that as a portion of that
21· · ·sentence, yes.
22· · · · ·Q.· · Are you offering an opinion in
23· · ·this case as to whether or not Chase used
24· · ·the mortgage loan purchase agreement with
25· · ·MRS to convey problem assets?
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 10 of 41

·1· · · · · · · · · · · · ·Payne
·2· · · ·A.· · Well, they were certainly problem
·3· ·assets.· The full reading of that sentence
·4· ·is "A mortgage loan purchase agreement
·5· ·should not be used to allow a seller to
·6· ·convey problem assets and transfer their
·7· ·obligations regarding compliance with state
·8· ·and federal regulations as well as the
·9· ·inability to service the assets to an
10· ·unwitting purchaser unless these
11· ·deficiencies were adequately disclosed."
12· · · · · · ·So in that opinion I am just
13· ·really saying that you have to disclose the
14· ·problems on the loan.
15· · · · · · ·I don't think all of the problems
16· ·with these loans were adequately --
17· ·adequately disclosed.
18· · · ·Q.· · What were the problems with these
19· ·loans that in your opinion were not
20· ·adequately disclosed?
21· · · ·A.· · Number 1, that there were some
22· ·second mortgages.
23· · · · · · ·Number 2 is that -- that the loans
24· ·as we discussed earlier today would --
25· ·eventually some of the loans would be used,
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 11 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · ·name but generally for a servicer to
·3· · · · ·issue RESPA letters they board the
·4· · · · ·loans.
·5· · · · · · · ·So now you are talking about
·6· · · · ·even if they got the borrower's
·7· · · · ·mailing address in a timely fashion
·8· · · · ·they would have to send out manual
·9· · · · ·RESPA notices and also this section is
10· · · · ·more geared toward the fact that the
11· · · · ·defendant never complied with the
12· · · · ·RESPA letters requirement.
13· ·BY MR. PISTILLI:
14· · · · ·Q.· · We will get to that.
15· · · · · · · ·But right now I want to focus on
16· · ·where you say "Plaintiff made several
17· · ·efforts to ensure it complied with the
18· · ·federal regulations but the defendants did
19· · ·not cooperate."
20· · · · · · · ·It is a very simple question, sir.
21· · ·In order for plaintiff MRS to comply with
22· · ·the regulations and send out notices what
23· · ·information did they need from Chase that
24· · ·they didn't get?
25· · · · ·A.· · Like I have already said, the
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 12 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · ·borrower's mailing address and name.
·3· · · · ·Q.· · They got both of those, right,
·4· · ·sir?
·5· · · · ·A.· · I -- they got both of those.
·6· · · · ·Q.· · Right.· So Chase provided MRS with
·7· · ·every bit of information MRS needed to
·8· · ·comply with its obligations under RESPA,
·9· · ·didn't it?
10· · · · · · · ·MR. LONGO:· Objection to the
11· · · · ·form.
12· · · · · · · ·THE WITNESS:· It provided the
13· · · · ·information in an unconventional
14· · · · ·fashion that did not meet industry
15· · · · ·standards for sure and did not allow
16· · · · ·the -- MRS to board the loans because
17· · · · ·they didn't get the necessary boarding
18· · · · ·information.
19· ·BY MR. PISTILLI:
20· · · · ·Q.· · They got everything that they
21· · ·needed to send out the letters required by
22· · ·RESPA, right?
23· · · · · · · ·MR. LONGO:· Objection to the
24· · · · ·form.
25· · · · · · · ·THE WITNESS:· To manually send
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 13 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · ·out the letters, yes.
·3· ·BY MR. PISTILLI:
·4· · · · ·Q.· · To do a mail merge with an Excel
·5· · ·file and the RESPA letter?
·6· · · · ·A.· · I am not that technically
·7· · ·proficient but they could have done
·8· · ·something like that, yes.
·9· · · · ·Q.· · Yes.· They had everything they
10· · ·needed to send out the RESPA letters?
11· · · · · · · ·MR. LONGO:· Note my objection.
12· · · · · · · ·THE WITNESS:· Is that a
13· · · · ·question?
14· ·BY MR. PISTILLI:
15· · · · ·Q.· · Yes.
16· · · · ·A.· · They got the borrower's name and
17· · ·mailing address, yes.
18· · · · ·Q.· · So to the extent that MRS didn't
19· · ·comply with its obligations under RESPA that
20· · ·is not the result of lacking information
21· · ·from Chase that they needed?
22· · · · · · · ·MR. LONGO:· Objection to the
23· · · · ·form.
24· · · · · · · ·THE WITNESS:· A usual -- well,
25· · · · ·it is to give the borrowers enough
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 14 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · ·information to make payments on their
·3· · · · ·loan they certainly didn't have that
·4· · · · ·information.· They didn't even have
·5· · · · ·the next due date and that would be
·6· · · · ·normally what would go out in a hello
·7· · · · ·letter.
·8· ·BY MR. PISTILLI:
·9· · · · ·Q.· · Let's take a look at Exhibit 8.
10· · · · ·A.· · Do I have that?
11· · · · ·Q.· · It is the RESPA regs and you see
12· · ·that the regs refer to an appendix MS1 with
13· · ·a model compliant RESPA letter.
14· · · · ·A.· · Yes.· I think that is a standard
15· · ·letter.
16· · · · ·Q.· · Yes.· And if MRS wanted to it had
17· · ·all the information it needed to send this
18· · ·letter from Chase?
19· · · · ·A.· · Yes.
20· · · · ·Q.· · Now, take a look at page 20 of
21· · ·your report.· You say, "26 days after the
22· · ·transaction date the plaintiff inquired with
23· · ·the defendant when the good-bye letters
24· · ·would be going out which would be the
25· · ·transferor's notification.· The defendant's
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 15 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · ·address.
·3· · · · ·Q.· · So this additional information was
·4· · ·just information that MRS would have found
·5· · ·useful to have?
·6· · · · · · · ·MR. LONGO:· Note my objection to
·7· · · · ·the form.
·8· · · · · · · ·THE WITNESS:· MRS or any
·9· · · · ·servicer for that matter, yes.
10· ·BY MR. PISTILLI:
11· · · · ·Q.· · And, in fact, you point out in
12· · ·your report on page 19, you say, "Two months
13· · ·prior to the transaction the plaintiffs
14· · ·identified the necessary data needed to
15· · ·board the loans," right, that is your claim?
16· · · · ·A.· · Did you say page 19?
17· · · · ·Q.· · Yes.· The very end.
18· · · · ·A.· · Oh, yes, yes, that's right.· Okay.
19· · · · ·Q.· · So this was stuff that you believe
20· · ·Mr. Schneider wanted?
21· · · · · · · ·MR. LONGO:· Object to the form.
22· · · · · · · ·THE WITNESS:· Yes.
23· ·BY MR. PISTILLI:
24· · · · ·Q.· · As we discussed earlier though
25· · ·that information wasn't included in the MLPA
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 16 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · ·contract?
·3· · · · ·A.· · They discussed a lot earlier.· Did
·4· · ·we discuss that, yes, we did discuss that.
·5· · ·It was not included in the -- it was not
·6· · ·included in the MLPA contract.
·7· · · · ·Q.· · Mr. Schneider signed the contract
·8· · ·anyway?
·9· · · · · · · ·MR. LONGO:· Objection to the
10· · · · ·form.
11· · · · · · · ·THE WITNESS:· Mr. Schneider
12· · · · ·certainly signed the contract, yes.
13· ·BY MR. PISTILLI:
14· · · · ·Q.· · And the contract is what specifies
15· · ·the obligations?
16· · · · ·A.· · Yes.
17· · · · ·Q.· · Let's take a look at page 20 of
18· · ·your report.· It is sort of a long paragraph
19· · ·but all of Section E is one paragraph. I
20· · ·guess it is not -- yes.
21· · · · · · · ·Could you just read the first
22· · ·sentence of Section E on page 20 running on
23· · ·to page 21?
24· · · · ·A.· · "The seller represented and
25· · ·warranted in the MLPA that 'they,'" again in
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 17 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · ·A.· · Correct.
·3· · · · ·Q.· · And it is your understanding that
·4· · ·maybe he didn't get everything he wanted?
·5· · · · ·A.· · It is my understanding that he did
·6· · ·not get what he wanted, right.
·7· · · · · · · ·MR. LONGO:· Before or after you
·8· · · · ·are talking.· I am not sure what your
·9· · · · ·question is asking.
10· ·BY MR. PISTILLI:
11· · · · ·Q.· · Prior to executing the MLPA he
12· · ·asked for information, right, that is what
13· · ·this paragraph is about?
14· · · · ·A.· · Yes.
15· · · · ·Q.· · Yes.
16· · · · ·A.· · Yes.
17· · · · ·Q.· · And it is your understanding he
18· · ·didn't get everything he wanted?
19· · · · ·A.· · It is my understanding that he did
20· · ·not get everything he wanted as far as
21· · ·information for the mortgage loan schedule.
22· · · · ·Q.· · But now under Section 4 of the
23· · ·MLPA except as concerns the express reps and
24· · ·warrants in Section 6 he was agreeing that
25· · ·he wasn't entitled to that information?
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 18 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · ·A.· · He agreed --
·3· · · · · · · ·MR. LONGO:· Note my objection.
·4· · · · · · · ·THE WITNESS:· -- that he was
·5· · · · ·buying the loans with not getting that
·6· · · · ·information.
·7· ·BY MR. PISTILLI:
·8· · · · ·Q.· · So he knew he wanted the
·9· · ·information and he didn't have it, he signed
10· · ·the MLPA anyway -- the MLPA anyway, right?
11· · · · ·A.· · Yes.
12· · · · · · · ·MR. LONGO:· Note my objection.
13· ·BY MR. PISTILLI:
14· · · · ·Q.· · And that meant that the loans
15· · ·subject to the transaction were the loans
16· · ·subject to the transaction irrespective of
17· · ·what that information would show?
18· · · · · · · ·MR. LONGO:· Note my objection.
19· · · · · · · ·THE WITNESS:· You had "subject
20· · · · ·to the transaction" twice so that
21· · · · ·confused me.
22· · · · · · · ·Could you repeat that because I
23· · · · ·got hung up?
24· ·BY MR. PISTILLI:
25· · · · ·Q.· · What is -- what in your opinion is
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 19 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · ·on any other violation of regulations
·3· · · · ·or laws.
·4· ·BY MR. PISTILLI:
·5· · · · ·Q.· · So no opinions as to violations of
·6· · ·any other regulations or laws besides the
·7· · ·good-bye letter regulations?
·8· · · · ·A.· · Correct.
·9· · · · ·Q.· · Take a look at page 22 of your
10· · ·report.
11· · · · ·A.· · I am there.
12· · · · ·Q.· · You see your last conclusion, you
13· · ·say, "The lack of complete information on
14· · ·the mortgage loan schedule (Exhibit A)
15· · ·prevented plaintiff from properly servicing
16· · ·the loans."
17· · · · ·A.· · Yes, I see that.
18· · · · ·Q.· · What information in your opinion
19· · ·was incomplete?
20· · · · ·A.· · Well, we have already discussed
21· · ·earlier today escrow information, I didn't
22· · ·see anything that indicated they got the
23· · ·escrow information.· I didn't see -- I
24· · ·didn't see original term so you could
25· · ·properly amortize the loan, interest rate,
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 20 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · ·and items like that.
·3· · · · ·Q.· · We looked at a list on page 14 of
·4· · ·your report earlier today, right?
·5· · · · ·A.· · Right.
·6· · · · ·Q.· · That is information that in your
·7· · ·view would have been helpful to MRS,
·8· · ·correct?
·9· · · · ·A.· · Correct.
10· · · · ·Q.· · You testified --
11· · · · · · · ·MR. LONGO:· Note my objection to
12· · · · ·the form.
13· ·BY MR. PISTILLI:
14· · · · ·Q.· · You testified that the MLPA
15· · ·doesn't contain an obligation to provide
16· · ·that information on Schedule A, correct?
17· · · · ·A.· · Correct.
18· · · · · · · ·MR. PISTILLI:· Let's take a
19· · · · ·short break.
20· · · · · · · ·THE VIDEOGRAPHER:· This will end
21· · · · ·video 4 in the deposition of Richard
22· · · · ·Payne.
23· · · · · · · ·We are going off the record at
24· · · · ·3:28 p.m., January 28, 2019.
25· · · · · · · ·(Recess)
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 21 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · · · · ·THE VIDEOGRAPHER:· We are back
·3· · · · ·on the record.· The time is 3:36 p.m.,
·4· · · · ·January 28, 2019.
·5· · · · · · · ·This will begin video 5 in the
·6· · · · ·deposition of Richard Payne.
·7· ·BY MR. PISTILLI:
·8· · · · ·Q.· · Mr. Payne, I just want to continue
·9· · ·talking about the very end of your report
10· · ·again.· And you have the conclusion on page
11· · ·21 you say, "It is my expert opinion that
12· · ·the defendant did not meet the obligations
13· · ·as stated in the representations and
14· · ·warranties."
15· · · · · · · ·You say, "This failure to do so
16· · ·harmed the plaintiff in the following ways."
17· · · · · · · ·Then you go on to the third item,
18· · ·the one we have been discussing, it says,
19· · ·"The lack of complete information on the
20· · ·mortgage loan schedule Exhibit A prevented
21· · ·plaintiff from properly servicing the loan."
22· · · · · · · ·My question is:· Are you offering
23· · ·the opinion that Chase's alleged failure to
24· · ·provide certain information violated a
25· · ·representation and warranty contained in the
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 22 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · ·MLPA?
·3· · · · ·A.· · I am not offering an opinion that
·4· · ·the information on Exhibit A was not true
·5· · ·and correct.
·6· · · · ·Q.· · Are you offering the opinion that
·7· · ·the mortgage loan schedule provided by Chase
·8· · ·failed to conform with Chase's obligations
·9· · ·under the MLPA?
10· · · · ·A.· · I am not offering that opinion.
11· · · · · · · ·MR. PISTILLI:· I tender the
12· · · · ·witness to Mr. Longo.
13· · ·EXAMINATION
14· ·BY MR. LONGO:
15· · · · ·Q.· · Mr. Payne, if a servicer is
16· · ·provided with only a borrower's name and
17· · ·mailing address is that servicer able to
18· · ·service the loan?
19· · · · ·A.· · No.· They aren't able to properly
20· · ·service the loan.
21· · · · ·Q.· · Why not?
22· · · · ·A.· · Because they wouldn't know what
23· · ·the principal balance was, they wouldn't
24· · ·know what the payments due were, they
25· · ·wouldn't know if they have real -- if they
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 23 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · ·have funds to pay real estate taxes or funds
·3· · ·to pay hazard insurance, wouldn't know how
·4· · ·to properly amortize the loan, just to name
·5· · ·several divisions.
·6· · · · ·Q.· · If someone did not -- if the
·7· · ·servicer did not receive an assignment of
·8· · ·the loan could they service that loan
·9· · ·legally?
10· · · · ·A.· · They -- they could not -- they
11· · ·could service the loan but all of the funds
12· · ·that they collected and their ability to
13· · ·foreclose would be impaired so they couldn't
14· · ·properly service the loan.
15· · · · · · · ·I have never had this happen. I
16· · ·didn't know -- what did ask you him to do?
17· · · · · · · ·MR. LONGO:· He tendered --
18· · · · · · · ·MR. PISTILLI:· You said
19· · · · ·"tendered."
20· · · · · · · ·THE WITNESS:· I thought you said
21· · · · ·TENA.· Okay.· Go ahead.· I am sorry.
22· ·BY MR. LONGO:
23· · · · ·Q.· · If you look at Exhibit Payne 8 of
24· · ·today's deposition, that is the RESPA
25· · ·document?
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 24 of 41

·1· · · · · · · · · · · · ·Payne
·2· · · ·A.· · Yes.
·3· · · ·Q.· · If you look at the sample letter
·4· ·that is attached which is --
·5· · · ·A.· · Yes.
·6· · · ·Q.· · -- toward the back of that
·7· ·exhibit, it talks about what the borrower's
·8· ·rights are with respect to receipt of that
·9· ·letter.· If you look at it towards, I guess,
10· ·if you look at the last two pages?
11· · · ·A.· · Yes.
12· · · ·Q.· · There are some provisions there.
13· ·It says, "During the 60-day following --
14· ·"60-day period following the effective date
15· ·of the transfer of the loan servicing a loan
16· ·payment received by your old servicer before
17· ·the due date may not be treated by the new
18· ·loan servicer as late."
19· · · · · · ·If you go down to the next
20· ·paragraph, Section 6 it said it gives you
21· ·certain consumer rights.· Do you see that
22· ·section?
23· · · ·A.· · Yes.
24· · · ·Q.· · That section talks about the right
25· ·of the borrower to request information from
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 25 of 41

·1· · · · · · · · · · · · ·Payne
·2· ·the new servicer, correct?
·3· · · ·A.· · Correct.
·4· · · ·Q.· · That information includes loan
·5· ·amount, payments, things of that nature,
·6· ·correct?
·7· · · ·A.· · It is not detailed like that but
·8· ·that is generally what the request would be.
·9· · · ·Q.· · If a servicer doesn't have that
10· ·information to respond to the borrower would
11· ·that impair their ability to service the
12· ·loan?
13· · · ·A.· · Absolutely, yes.
14· · · ·Q.· · In looking at the MLPA itself
15· ·which I believe is Payne Exhibit 2?
16· · · ·A.· · Yes.
17· · · ·Q.· · That contract doesn't contain any
18· ·definitions, does it, a definitions section?
19· · · ·A.· · I did not see one, no, it does
20· ·not.
21· · · ·Q.· · So to understand the terms of some
22· ·of the things that are referenced within
23· ·that document a person has to have some
24· ·understanding of the mortgage industry,
25· ·correct?
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 26 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · ·A.· · Correct.
·3· · · · ·Q.· · You have that expertise, do you
·4· · ·not?
·5· · · · ·A.· · Yes.
·6· · · · ·Q.· · In rendering your opinions in this
·7· · ·matter did you rely upon that expertise?
·8· · · · ·A.· · Yes.
·9· · · · · · · ·(Record read)
10· ·BY MR. LONGO:
11· · · · ·Q.· · In your testimony today,
12· · ·Mr. Payne, there is a lot of questions with
13· · ·respect to Section 6, the representations
14· · ·and warranty section.
15· · · · · · · ·Do you recall that testimony?
16· · · · ·A.· · Yes.
17· · · · ·Q.· · Going back to the first page of
18· · ·this document, it does say that the loans or
19· · ·the liens that are part of this are supposed
20· · ·to be first lien mortgages, correct?
21· · · · ·A.· · Correct.
22· · · · ·Q.· · In doing your analysis of whether
23· · ·or not Chase breached that aspect of this
24· · ·agreement did you come to a conclusion with
25· · ·respect to as to whether or not they failed
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 27 of 41

·1· · · · · · · · · · · · ·Payne
·2· ·to provide only first lien mortgages?
·3· · · ·A.· · I was able to determine that from
·4· ·a loan listing that was provided on May 29,
·5· ·2013 as described on page 12 of my report
·6· ·where it identified certain loans that were
·7· ·not first liens.
·8· · · ·Q.· · Do you recall how many loans were
·9· ·encompassed by the MLPA, what the total
10· ·number was?· If you have to look at your
11· ·report.
12· · · ·A.· · It is -- well, the MLPA says 3,529
13· ·loans.
14· · · ·Q.· · Is it your testimony that of those
15· ·loans all of them were supposed to be first
16· ·lien mortgages?
17· · · ·A.· · Yes.
18· · · ·Q.· · Did you come to a conclusion as to
19· ·how many of them were not first lien
20· ·mortgages?
21· · · ·A.· · Based on that loan list of May 29,
22· ·2013 as I detail in my report there were 104
23· ·second liens, four third liens, 725
24· ·unsecured loans and 282 loans that did not
25· ·have a lien identification in that column.
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 28 of 41

·1· · · · · · · · · · · · ·Payne
·2· · · ·Q.· · If a loan is unsecured is that a
·3· ·first lien?
·4· · · ·A.· · No.
·5· · · ·Q.· · Why not?
·6· · · ·A.· · It is not a lien at all.
·7· · · ·Q.· · And obviously of the 282 that were
·8· ·not identified there would be no way of
·9· ·knowing whether or not those did or did not
10· ·comply with that provision, correct?
11· · · ·A.· · Correct.
12· · · ·Q.· · During your testimony earlier as
13· ·well you were going back and forth a bit
14· ·with counsel with respect to RESPA
15· ·requirements and whether it was just the
16· ·good-bye letters or there were other
17· ·requirements that were not met in the
18· ·transfer of the loans in the Exhibit A.· You
19· ·have indicated not giving over the escrow
20· ·amounts, is that something you would
21· ·consider a violation of RESPA?
22· · · ·A.· · The handling of escrows would not
23· ·only be covered by -- it would be covered by
24· ·violations of laws, state laws as well and
25· ·federal laws so I can't remember if there is
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 29 of 41

·1· · · · · · · · · · · · ·Payne
·2· ·definitely federal regulations regarding
·3· ·escrows and I am pretty sure it is in RESPA
·4· ·but I am not 100 percent sure so --
·5· · · ·Q.· · And in looking at Section 2 of the
·6· ·MLPA there was some testimony -- a good
·7· ·amount of testimony earlier about comparing
·8· ·Payne Exhibit 2 and the provisions in that
·9· ·agreement with Exhibit 5 which was the
10· ·Radian Services, LLC agreement.
11· · · · · · ·Do you recall that testimony?
12· · · ·A.· · Yes.
13· · · ·Q.· · In the Section 2 of the MLPA where
14· ·it talks about Exhibit A it does say that is
15· ·supposed to include a principal balance,
16· ·does it not?
17· · · ·A.· · Yes.· It does.
18· · · ·Q.· · Did Exhibit A contain a principal
19· ·balance for all of the loans that you
20· ·reviewed in this case?
21· · · ·A.· · There were some -- I don't
22· ·think -- no, it did not.
23· · · ·Q.· · Would that be in your opinion a
24· ·breach of the MLPA if it did not contain
25· ·that information?
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 30 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · ·A.· · In my opinion it would be a breach
·3· · ·for that particular loan but not -- it would
·4· · ·be on a loan by loan basis.
·5· · · · · · · ·Could we take a quick break
·6· · ·please?
·7· · · · · · · ·MR. LONGO:· Yes.
·8· · · · · · · ·THE VIDEOGRAPHER:· Going off the
·9· · · · ·record.· The time is 3:54 p.m.
10· · · · · · · ·(Recess)
11· · · · · · · ·THE VIDEOGRAPHER:· We are back
12· · · · ·on the record.· The time is 3:56 p.m.
13· ·BY MR. LONGO:
14· · · · ·Q.· · What was my last question?
15· · · · · · · ·(Record read)
16· · · · · · · ·MR. LONGO:· I have nothing
17· · · · ·further.
18· · · · · · · ·MR. PISTILLI:· Just a few quick
19· · · · ·followups.
20· · ·EXAMINATION (CONTINUED)
21· ·BY MR. PISTILLI:
22· · · · ·Q.· · Have you undertaken to determine
23· · ·which of the MLPA loans in your opinion
24· · ·Chase failed to provide principal balance
25· · ·information for?
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 31 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · ·A.· · Have I looked, no.
·3· · · · ·Q.· · Are you going to testify at trial
·4· · ·as to whether Chase did or didn't provide
·5· · ·principal balance information for any of the
·6· · ·loans at issue in this case?
·7· · · · · · · ·MR. LONGO:· Just note my
·8· · · · ·objection.
·9· · · · · · · ·THE WITNESS:· I would have it on
10· · · · ·record from this deposition that I
11· · · · ·said they had some that could be
12· · · · ·entered in I guess so --
13· ·BY MR. PISTILLI:
14· · · · ·Q.· · Where in your report do you
15· · ·testify that -- strike that.
16· · · · · · · ·Where in your report do you
17· · ·indicate that Chase failed to provide
18· · ·principal balance information for any MLPA
19· · ·loans?
20· · · · ·A.· · I don't.
21· · · · ·Q.· · That wasn't disclosed in your
22· · ·opening report, was it?
23· · · · ·A.· · No.
24· · · · ·Q.· · It wasn't disclosed in your
25· · ·rebuttal report, was it, sir?
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 32 of 41

·1· · · · · · · · · · · · ·Payne
·2· · · ·A.· · No.· I was just trying to qualify
·3· ·since it was -- I don't know all the legal
·4· ·ramifications but it has been entered into
·5· ·record now so I don't know if they will put
·6· ·it in but I don't plan at testifying at
·7· ·trial.
·8· · · ·Q.· · So you are not going to testify at
·9· ·trial as to whether or not Chase breached an
10· ·obligation to provide principal balance
11· ·information?
12· · · ·A.· · I am only going to testify to what
13· ·is in the report and that is not in the
14· ·report.
15· · · ·Q.· · Thank you.
16· · · · · · ·I wanted to go back, there are
17· ·some questions about alleged failures to
18· ·give escrow information?
19· · · ·A.· · Correct.
20· · · ·Q.· · We discussed that much earlier
21· ·today.· And I think I asked you this then
22· ·but I want to be very clear now.
23· · · · · · ·Do you disclose anywhere in your
24· ·report any alleged breaches on the part of
25· ·Chase relating to the provision of escrow
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 33 of 41

·1· · · · · · · · · · · · ·Payne
·2· ·information?
·3· · · ·A.· · Do I -- I don't discuss escrow
·4· ·information in my report if that answers
·5· ·your question.
·6· · · ·Q.· · Do you intend to testify at trial
·7· ·as to whether or not Chase fulfilled its
·8· ·obligation to provide escrow information
·9· ·under law?
10· · · ·A.· · Well, I do have in my report that
11· ·they had to comply with RESPA.· Like I just
12· ·said I am not 100 percent sure that that is
13· ·a violation of RESPA.· It might be a
14· ·violation of another law which I already
15· ·said I am not, earlier today, prepared to
16· ·give an opinion on.
17· · · ·Q.· · Right.· The only alleged violation
18· ·of law that you are prepared to give an
19· ·opinion on at trial relates to RESPA's
20· ·servicing transfer provisions --
21· · · ·A.· · Right.
22· · · ·Q.· · -- correct?
23· · · ·A.· · I am sorry, I cut you off.· I said
24· ·correct.· I am not an escrow expert. I
25· ·know -- so that is the answer to your
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 34 of 41

·1· · · · · · · · · · · · ·Payne
·2· ·question.
·3· · · ·Q.· · So there is no opinion that Chase
·4· ·breached the contract with respect to escrow
·5· ·requirements?
·6· · · ·A.· · I would not give that opinion.
·7· · · ·Q.· · We discussed earlier today this is
·8· ·a pool of charged off mortgage debt?
·9· · · ·A.· · Correct.
10· · · ·Q.· · You are familiar generally with
11· ·how charged off mortgage debt was serviced
12· ·ed by banks based on your experience in the
13· ·industry?
14· · · ·A.· · Yes.
15· · · ·Q.· · During the relevant time period
16· ·would it have been uncommon for a bank to
17· ·stop making -- stop charging periodic
18· ·interest after a loan was charged off?
19· · · ·A.· · I don't know if "charging" is the
20· ·right word.
21· · · · · · ·They would have been accruing the
22· ·interest.· But they wouldn't have been
23· ·recording it as a income on their balance
24· ·sheet, income statement, so -- but if they
25· ·were going to calculate what a borrower
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 35 of 41

·1· · · · · · · · · · · · ·Payne
·2· ·needed to pay in order to bring the loan
·3· ·current they would have charged them all the
·4· ·interest to that date, if that answers your
·5· ·question.
·6· · · ·Q.· · So in your experience banks would
·7· ·not sometimes after a loan was charged off
·8· ·cease adding interest and other payments to
·9· ·the account balance?
10· · · ·A.· · I think I described that earlier.
11· ·They would never relinquish their right to
12· ·collect the interest.· They probably would
13· ·just cease all collection activity and they
14· ·certainly wouldn't record the interest as
15· ·income on their income statement but if they
16· ·were -- if they -- if for some reason the
17· ·borrower hit the lottery and they said they
18· ·could bring their loan current they would go
19· ·back and charge that borrower interest.
20· · · ·Q.· · Would it be uncommon to stop
21· ·sending periodic statements when interest
22· ·and late charges after a loan was charged
23· ·off?
24· · · ·A.· · No.· It would not be uncommon.
25· · · ·Q.· · So it would have been standard
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 36 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · ·practice at the time once a loan was charged
·3· · ·off not to send periodic statements with
·4· · ·finance and interest charges accruing?
·5· · · · ·A.· · Once a loan is charged off the
·6· · ·general -- the lenders would generally cease
·7· · ·all collection activity which would include
·8· · ·sending out items like that.
·9· · · · ·Q.· · So there is effectively a balance
10· · ·that is frozen at the time of charge off?
11· · · · · · · ·MR. LONGO:· Note my objection
12· · · · ·but you can answer.
13· · · · · · · ·THE WITNESS:· For the
14· · · · ·purposes -- the only time it would be
15· · · · ·unfrozen is when I said if they for
16· · · · ·some reason were able to bring the
17· · · · ·loan current they would make them pay
18· · · · ·all the charges.· But they are frozen
19· · · · ·on the bank's balance sheet.
20· ·BY MR. PISTILLI:
21· · · · ·Q.· · And the loans that MRS purchased
22· · ·pursuant to the MLPA were those sort of
23· · ·charged off frozen loans, right?
24· · · · ·A.· · Yes.
25· · · · ·Q.· · So at the time that MRS elected to
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 37 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · ·purchase the loans periodic interest charges
·3· · ·weren't accruing, right?
·4· · · · · · · ·MR. LONGO:· Note my objection to
·5· · · · ·the extent he already described that.
·6· · · · · · · ·THE WITNESS:· It is more of an
·7· · · · ·accounting technique to stop -- that
·8· · · · ·is what I am trying to describe, to
·9· · · · ·stop accruing.· It never -- the
10· · · · ·borrower -- I mean the lender never
11· · · · ·relinquishes their right to collect
12· · · · ·all the interest they are entitled to.
13· · · · · · · ·But I am -- now lost track of
14· · · · ·your question.· It wouldn't be
15· · · · ·uncommon for a lender selling charged
16· · · · ·off loans not to show accrued interest
17· · · · ·for those charged off loans, unpaid
18· · · · ·accrued interest.
19· ·BY MR. PISTILLI:
20· · · · ·Q.· · The same thing for late charges
21· · ·and other charges of that nature?
22· · · · ·A.· · Correct.
23· · · · ·Q.· · Mr. Longo asked whether the MLPA
24· · ·contained the definition section?
25· · · · ·A.· · Correct.
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 38 of 41

·1· · · · · · · · · · · · ·Payne
·2· · · ·Q.· · I believe that he suggested that
·3· ·you were relying on your expertise in
·4· ·reading the MLPA.· My question is which
·5· ·terms in the MLPA are you relying on your
·6· ·expertise to interpret?
·7· · · ·A.· · Well, the name on the first lien
·8· ·mortgage loan which appears to be a defined
·9· ·term when they say mortgage loan after that.
10· ·But --
11· · · ·Q.· · Sorry.· Go ahead.
12· · · ·A.· · I didn't need any definitions page
13· ·for the -- if that is your question.
14· · · ·Q.· · My question is what, if any, terms
15· ·in this agreement are you relying on your
16· ·expertise to -- in order to come to an
17· ·understanding as to the parties' rights and
18· ·obligations under the MLPA?
19· · · ·A.· · I guess the main one would be the
20· ·first liens and then my interpretation of
21· ·"except as expressly provided herein"
22· ·although I don't know if that is a term but
23· ·that clearly states that they provided for
24· ·some reps and warrants.
25· · · ·Q.· · The contract uses the term
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 39 of 41

·1· · · · · · · · · · · · ·Payne
·2· ·"mortgage loan" and "mortgage loans,"
·3· ·correct?
·4· · · ·A.· · Mortgage loan and loans, yes.
·5· · · ·Q.· · And that is a defined term?
·6· · · ·A.· · Yes.· I said that, right.
·7· · · ·Q.· · Are you relying on any special
·8· ·expertise in forming your opinions as to the
·9· ·contents of the mortgage loan schedule that
10· ·was to be attached as Exhibit A?
11· · · ·A.· · We have already discussed earlier
12· ·today that there was no obligations in the
13· ·MLPA for what needs to be in a mortgage loan
14· ·servicing -- a mortgage loan schedule other
15· ·than the information has to be true and
16· ·correct.
17· · · · · · ·So it is my opinion, you can't
18· ·properly service loans unless you get enough
19· ·of -- enough information to service them.
20· ·But I think I might have lost track of your
21· ·question but --
22· · · ·Q.· · Well, the information that Chase
23· ·was obligated to provide in Exhibit A is
24· ·essentially whatever the contract says is to
25· ·be provided, correct?
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 40 of 41

·1· · · · · · · · · · · · · ·Payne
·2· · · · ·A.· · The contract provides that they
·3· · ·are supposed to give the principal balance.
·4· · ·And that is what they were obligated to do.
·5· · · · ·Q.· · Right.· And there is a host of
·6· · ·other information that your report suggests
·7· · ·might have been helpful to MRS to receive
·8· · ·but the contract doesn't obligate Chase to
·9· · ·provide that information, correct?
10· · · · ·A.· · There is no provision in the
11· · ·contract to provide that information.
12· · · · ·Q.· · Right.· And you are not saying
13· · ·that in the absence of a contractual
14· · ·provision that somehow Chase nonetheless was
15· · ·obligated to provide it?
16· · · · · · · ·MR. LONGO:· Note my objection.
17· · · · · · · ·THE WITNESS:· They were not
18· · · · ·obligated by the contract.
19· ·BY MR. PISTILLI:
20· · · · ·Q.· · So other than the meaning of the
21· · ·term "first lien mortgage" are there any
22· · ·terms used in this contract that you are
23· · ·relying on your experience to interpret?
24· · · · ·A.· · I mean I don't think there is any
25· · ·that I have -- anything -- my report clearly
 Case 1:15-cv-00293-LTS-RWL Document 403-2 Filed 05/10/19 Page 41 of 41

·1· · · · · · · · · · · · ·Payne
·2· ·says what I am giving an opinion on.
·3· ·Clearly it describes what I think the
·4· ·purchase agreement requires and by "term" I
·5· ·am not quite sure what you mean by that but
·6· ·in my experience on giving my opinion on
·7· ·what is required from this contract that is
·8· ·what I used to give that opinion.· So.
·9· · · ·Q.· · Which portions of the MLPA are you
10· ·relying on your experience to interpret?
11· · · ·A.· · Everything in the MLPA.· Again, I
12· ·gave you an example of the reps and warrants
13· ·because there is a carve out for what is
14· ·expressly provided herein.
15· · · · · · ·Then what the reps and warrants
16· ·are.· We talked about that at length today.
17· · · ·Q.· · Is there a provision of this
18· ·agreement that in your opinion is ambiguous
19· ·such that your experience is needed in order
20· ·for the jury to understand what it means?
21· · · ·A.· · The only thing that I would -- I
22· ·am not going to say the only thing.· The
23· ·main issue is there is no recourse provision
24· ·and the fact that it is -- it has this carve
25· ·out for "expressly provided herein" and I