WILLIAMS v. FANNIE MAE — Entry #33: MOTION for Summary Judgment by FANNIE MAE, RICHARD LAWCH, GRACE HUERSCHER

Case 1:05-cv-01483-JDB Document 33-3 Filed 06/21/2007 Page 1 of 29

EXHIBIT A


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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

MARIALICE BATHRUS WILLIAMS,

Plaintiff,
Civil Action No. 1:05CV01483

VS.
Judge John D. Bates

FEDERAL NATIONAL MORTGAGE

ASSOCIATION, et al.
DECLARATION OF GRACE

Defendants. : HUEBSCHER

I, Grace Huebscher, hereby declare as follows:

1. I have been employed by the Federal National Mortgage Association (“Fannie
Mae”) since 1996. I currently hold the position of Vice President for Capital Markets.

2. Attached hereto at Tab 1 are true and correct copies of excerpts from the
transcript of my deposition testimony in the lawsuit entitled CAM Financial Services, Inc. v.
General Star Nat’l Insurance Co., et al., Civil Action No. 01-314 (S.D. Miss.) (“CAM Financial
lawsuit”). That testimony is true and accurate.

3. Although I met with Ms. Williams concerning the May 2001 Proposal, I did not
promise Ms. Williams any business at that or any other time.

4. I did not have any business interactions with Ms. Williams after December 20,
2001, when CAM Financial Services, Inc. (“CAM Financial’) amended the complaint in the
CAM Financial lawsuit to add Fannie Mae as a party.

5. I did not have any business interactions with any officer, director or other
representative from CAM Financial after December 20, 2001.

6. I never made false and defamatory comments regarding Ms. Williams to any


Case 1:05-cv-01483-JOB Document3o-3 Filed 06/21/2007 Page 3 of 29

officer, director or other representative from CAM Financial.

7. I never discouraged CAM Financial from doing business with Ms. Williams.

I declare under penalty of perjury that the foregoing is true and correct. Executed on this 18th of

AIR

GRACE HUEBSCHER

June 2007 at Washington, DC.


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ae IN THE UNITED STATES DISTRICT COURT
2 SOUTHERN DISTRICT OF MISSISSIPPI
3 SOUTHERN DIVISION
4 woe eee eee eee x

5 CAM FINANCIAL SERVICES, INC., :

6 Plaintiff, : Case No.1:01cv314BrR
7.

8 GENERAL STAR NATIONAL INSURANCE :

9 COMPANY; GENERAL STAR INDEMNITY :
10 COMPANY: GENERAL STAR MANAGEMENT:
11 COMPANY, GENERAL RE CORPORATION;:
12 GENERAL REINSURANCE CORPORATION;:
13 CRUMP INSURANCE SERVICES OF

14 MEMPHIS, INC.; CRAIG OTT,

15 INDIVIDUALLY AND IN HIS

16 REPRESENTATIVE CAPACITY AS VICE :

17 PRESIDENT OF GENERAL STAR

18 MANAGEMENT COMPANY

19 FEDERAL NATIONAL MORTGAGE

20 ASSOCIATION

21 (FANNIE MAE),

22 Defendants.

23 ------- errr e Xx

24 Washington, D.C.

25 Tuesday, March 25, 2003

March 25, 2003 CAM of FM - Huebscher Page I

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00002
1 Videotaped deposition of GRACE ANN

2 HUEBSCHER, a witness herein, called for examination
3 by counsel for Plaintiff in the above-entitled

4 matter, pursuant to notice, the witness being duly

5 sworn by MARY GRACE CASTLEBERRY, a Notary Public in
6 and for the District of Columbia, taken at the Four

7 Seasons Hotel, 2800 Pennsylvania Avenue, N.W.,

8 Washington, D.C., at 9:53 a.m., Tuesday, March 25,

9 2003, and the proceedings being taken down by

10 Stenotype by MARY GRACE CASTLEBERRY, RPR, and
11 transcribed under her direction.

12

13

14

15

16

17

18

19

20

21

22

23

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25

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00013
1 National Cooperative Bank. And from 1989 to 1994, I

2 believe, I was with National Cooperative Bank running
3 their mortgage company in Washington, D.C. And from
4 1994 to 1996, I was with Hamilton Securities and from
5 1996 until now, I was with Fannie Mae.

6 QQ. And I want to come back to a couple of

7 those. The only professional degrees, then, you have

8 are your B.A. in economics and Spanish Literature?

9 A. Yes.

10  Q. When you went to work for Fannie Mae in

11 1996, what position did you originally come on board
12 as?

13. A. Iwas the director of aggregation.

14 QQ. What does the director of aggregation do?

15 A. Iwas hired to start Fannie Mae's

16 multifamily conduit which was a means by which we
17 allowed our lenders, which normally risk share with
18 us, to deliver loans to us on a nonrecourse basis.

i9 Q. AndI'msorry, did you say risk share?

90 A. Yes. And, you know, pause if you have --

21 Luse a lot of lingo.

22  Q. Iunderstand. And some of that I may ask

23 you to define as we go along. Let me see. You said
24 you were hired to start Fannie Mae's multifamily

25 conduit which is a means by which we allowed our

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00014
1 lenders, which we normally share risk with us, to

2 deliver loans on a nonrecourse basis.

3 Can you give me that in layman's terms?

4 A. Sure. Fannie Mae multifamily, as its

5 business model, primarily chooses to purchase loans

6 from lenders and would like those lenders to share in

7 the risk of that sale. Our prominent program is the

8 DUS program which stands for delegated underwriting
9 and servicing.

10 That's -- the majority of the volume or

11 purchases of mortgages through multifamily come

12 through that channel. And we buy loans from the DUS
13 lenders one by one, and the lenders, when they sell

14 them to us, they agree to share in the losses if any

15 losses occur on a loan-by-loan basis.

16 QQ. Andso when you say one by one, that's on

17 a loan-by-loan basis --

18 <A. Right.
19 QQ. --as opposed to a lender-by-lender basis.

20 <A. Yes, with that specific lender. All the

21 DUS lenders share risk according to a prescribed

22 formula on a loan level basis and they take 5 percent
23 of the first loss of any loan, if in fact it goes

24 into default, then they share thereafter. That's the

25 primary majority of our business and has always been.

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00015
i We also buy pools from lenders from mostly

2 depositories and insurance companies and there too

3 typically we require that they share risk in those

4 portfolios.

5 What had happened in mid-1980s is that

6 many of our DUS lenders were going to Wall Street and
7 selling their loans without any risk sharing. And

8 typically they do this because either they've had too

9 much concentration to one borrower, maybe a

10 geographic concentration, or they just choose not to

11 take a risk in a particular market so that they were

12 selling those loans to the Wall Street firms.

13 The Wall Street firms, without any risk

14 sharing. The Wail Street firms would then turn

15 around and create securities, typically REMICs, which
16 are real estate mortgage investment conduits. And

17 those pools and REMICs were basically rated by rating
18 agencies and chopped up into AAA, AA, all the way
19 down to unrated securities and sold to third parties.

20 What was happening was many of the Wall

21 Street firms were coming to Fannie Mae and saying to
22 Fannie Mae, would you please wrap the risk for AAA
23 down to BBB, which is the risk profile we typically
24 like to take. And what Fannie Mae discovered is why

25 not provide this service directly to our lenders

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00016
1 rather than having them go through a Wall Street firm

2 who is going to take a slice and, you know, basically
3 improve the economics.

4 Q. And let Fannie Mae keep that slice that

5 was going to the Wall Street firm?

6 A. Orsharing it with the lenders, just

7 improving the economics, or even passing that on to a
8 savings to the borrowers ultimately who are

9 multifamily owners of properties who are taking out
10 these mortgages. So that was our job and we started
11 out doing exactly what the Wall Street firms were

12 doing, which is taking a position in the loans,

13 buying the loans, waiting until we had enough to

14 aggregate into a REMIC, going to a rating agency,
15 having them all rated, Fannie Mae would wrap through
16 BBB and either buy those securities ourselves or sell
17 them to a third party and we would also sell the B

18 pieces.

19 We really only did it to provide an extra

20 service to our DUS lenders really as more of a -- as
21 trying to be good, you know, just to provide

22 basically another outlet for them in case they needed
23 it. It's not something that they would primarily

24 choose to do, nor would we primarily choose to do,

25 but it was an added service on top of our flagship

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00017
1 product of DUS.

2  Q. When you say that it is just an added

3 service and is not something that you would choose to
4 do -- and I want to make sure that I'm understanding

5 this. And I'm not trying to put words in your mouth.
6 Do not hesitate to correct me if I

7 characterize your testimony in any way that is not

8 correct. When you say it's not something that Fannie
9 Mae would choose to do, was this a source of

10 significant revenue for Fannie Mae to perform these

11. securitizations?

12 MR. WIMBERLY: Objection, form.
13 THE WITNESS: No, it wasn't.
i4 BY MR. WISER:

15 Q. What sort of volume are you talking about
16 in terms of performing these securitizations on an

17 annual basis once the program gets started?

18 MR. WIMBERLY: Objection, form.
19 THE WITNESS: You mean how many mortgages?
20 BY MR. WISER:

21 Q. How many mortgages and the unpaid
22 principal balance.

23 A. It varied, but in terms of a percentage of
24 our volume, it was, you know, minuscule.

25  Q. And Ican appreciate that because of

March 25, 2003 CAM of FM - Huebscher Page 17

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00018
1 understanding what Fannie Mae's principal line is

2 but, at the same time, can you give me something that
3 is not expressed in terms of its relationship to the

4 principal business but rather a dollar figure? What

5 was the typical unpaid principal balance of loans

6 that were securitized in 1998, approximately?

7 MR. WIMBERLY: Objection to form.

8 THE WITNESS: It could be - I don't

9 remember the exact amounts but 70 million to maybe
10 150 million compared to total volume in that given
11 year of maybe 8 to 10 billion.

12 BY MR. WISER:

13. Q. That would have gone through the DUS

14 program?

15 A. No. The 70 to 150 million would have been
16 what would have gone through aggregation on this
17 nonrecourse basis versus 8 to 10 billion in annual
18 volume.

19 QQ. And I asked you just because it was the

20 first year that came into my head for 1998. Has that

21 increased since 1998?

22 MR. WIMBERLY: Objection to form.
23 THE WITNESS: No.
24 BY MR. WISER:

25 Q. Has it stayed approximately the same?

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00019
1 A. And less at times.

2 Q. We'll get back to that. You started, I

3 believe you said, as the director of aggregation?

4 A. Ub-huh.

5 Q. And what happened -- I mean, what was

6 your -- give me how you have progressed through

7 various positions at Fannie Mae since that time.

8 A. I've worked for Richard Lawch the whole

9 time I've been at Fannie Mae. Richard has also

10 expanded his responsibilities over time and as he's

11 expanded, I've taken on some of his responsibilities.
12 I was running aggregation — I still actually do run

13 aggregation although it's part of a team which I

14 manage.

15 I expanded into managing pool purchases

16 from depositories and insurance companies, I helped
17 create another channel, our MFLEX lenders, which is
18 basically just instead of buying pools at one

19 particular point in time from a depository, we would
20 buy loan by loan from depositories using risk

21 sharing. And I've more recently gotten involved with
22 product development and customer management

23 responsibilities in the DUS world as well.

24  Q. When you say product development, what

25 does that include?

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00239
1 UNITED STATES DISTRICT COURT
2 SOUTHERN DISTRICT OF MISSISSIPPI |
3. SOUTHERN DIVISION
4 ane ceeneeeeeees x

5 CAM FINANCIAL SERVICES, INC., :
. 6 Plaintiff, : Case No.
7 vs. =: 1:0lev314BrR
8 GENERAL STAR NATIONAL INSURANCE :

- 9 COMPANY; GENERAL STAR INDEMNITY :
10 COMPANY, GENERAL STAR MANAGEMENT:
11 COMPANY, GENERAL RE CORPORATION:
12 GENERAL REINSURANCE CORPORATION::
13 CRUMP INSURANCE SERVICES OF:
14 MEMPHIS, INC.; CRAIG OTT;

15 INDIVIDUALLY AND IN HIS ©
16 REPRESENTATIVE CAPACITY AS VICE:
17 PRESIDENT OF GENERAL STAR

_18 MANAGEMENT COMPANY
19 FEDERAL NATIONAL MORTGAGE
20 ASSOCIATION (FANNIE MAB),

21 Defendants.

22 -------- eee eee x

23° Washington, D.C.

24 Wednesday, March 26, 2003
25

March 26, 2003 CAM of FM - Huebscher | Page 239

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00240 .
1. Continued Videotaped Deposition of:

2 GRACE HUEBSCHER -

3 the witness, called for examination by counsel

4 for the Plaintiff, pursuant to notice and |

5 agreement, commencing at 9:20 a.m., at the Four

6 Seasons Hotel, 2800 Pennsylvania Avenue NW,
7 before Virlana Kardash, RPR, CSR, a Notary Public

8 in and for the District of Columbia, when were

9 present on behalf of the respective parties:

10

11 APPEARANCES:

12 |

13 On behalf of the Plaintiff:

14 N. WISER, Esquire

15 BYRD & WISER

16 145 Main Street

17. Biloxi, Mississippi 39530

18 228-432-8123

19 |

20 On behalf of the Defendant Fannie Mae:

21 G. WIMBERLY, JR., Esquire

22 McGLINCHEY STAFFORD

23 643 Magazine Street |

24 New Orleans, Louisiana 70130

25 504-586-1200

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00448
1 Or had there been meetings prior to this

2 time?
3 A I believe there were other meetings.
4 Q When did those meetings start?
5 A They could have been over probably a
_ 6 couple of months before this because Renee is the
7 boss of, you know, the big boss of the division
8 that would have written this business and was
~ 9 coming in to do last-minute due diligence.
10 Q That is Renee Henderson that's
11 referenced in the first paragraph?
12 A Yes.
13. Q Whois Gavin?
14 A Gavin Wellington works for Walter.
15 Bauman and provides the equivalent pricing and
16 analytics that Rick and Walter, who have been
17 referred to in the past, are providing now in
18 aggregation.
19 Q They're the number crunchers?
20 A Yes. |
21 Q Gotyou. And I believe the question!
22 was in the process of asking before I sidetracked
23 myself is is it your testimony that the reason
24 that it took approximately eight to ten months
‘25 after Craig Ott's original proposal was finding

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00449 . |
1 someone that was willing to write this kind of

2 insurance?
3 MR. WIMBERLY: Objection. Form.
4 | THE WITNESS: ] think that's one
5 reason. In addition, there really hasn't been a
6 compelling need either on our part, that really
7 aggregation has not produced the kind of volume --
8 hasn't really produced significant volume ever. _
9 It's just not a mainstream product for us.
10 BY MR. WISER: |
11 Q Whyisthat?
12 A AsI mentioned in prior testimony,
13 Fannie Mae's flagship product DUS, Delegated
14 Underwriting and Servicing, and its business model
15 in general is more reliant on seller recourse than
16 it is on third-party recourse partly -- mostly
17 because we like our selling entities, our seller
18 servicers, to have what we call "skin of the —
19 game."
20 So it's our preference to do it that way.
21 If our programs are all delegated and the
22 individuals that are selling and servicing for us
23 are doing the underwriting and credit-risk
24 analysis for us on our behalf, we would like them

25 to have a stake in the game.

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00461
1 a matter of best evidence, but you didn't ask me

2 to bring it today. .
3 MR. WISER: [understand that. And Im

4 not suggesting that 1 did.

3 MR. WIMBERLY: It's available to you,

6 Mr. Wiser.

7 _ MR. WISER: I would like to get that

8 back.

9 MR. WIMBERLY: I assure you we'll take
10 care of it. |
11 MR. WISER: And the reason I was

12 mentioning it now is that I did go back and look,
13 andin looking at the documents that CAM has
14 produced, this is all we received. It was just
15 this one page.
16 Therefore, I was going to check and make
17 sure. T've been advised that this is all that was
18 in the envelope. So while there may be more to
19 this document than 9692, that's all that we've
20 got. And everything that was produced to you was
21 all that we received. |
22 MR. WIMBERLY: So noted.

23 BY MR. WISER:
24 Q Ms. Huebscher, have you seen this
25 e-mail before?

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00462
1 A Yes.

2 Q Do you recall the substance of the
3 communications that were contained in the e-mail?
4 A Yes. |
Ԥ Q > What's this about?
6 A This is Marialice approached Rhoda and
7 said that she’s had some conversations with some _
8 of the DUS community about reinsuring their DUS
9 risk, and that's basically, I think, the nature of
10 it.
11 Q. And what was the response to Fannie Mae
12 upon receipt of this information from .
14 MR. WIMBERLY: Objection. Form.
15. THE WITNESS: Did you say what was the
16 response by Fannie Mae? |
17. © BY MR. WISER:
18 Q Yes.
19 A As you can see from my e-mail reply,
20 I'm asking Richard for advice. At this point in
21 time, I'm not really that involved with DUS. In
22 fact, | was just beginning to be more involved --
23 well, no -- it's 2002 -- yes.
24 So I wasn't really that involved with DUS.
25 Sol'm asking him is this something that we want

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00463 .
1 topursue. And actually, I was surprised that

2 Richard wanted to pursue it in light of what I had
3 just said in my previous testimony, which is we
4 like the DUS lenders to have risk, to have at
| 5 risk, and wouldn't necessarily want them to rely

6 on third party to reinsurance.
7 | But as you see, what Richard has said back
8 here, we also were in the process of receiving and
9 finalizing what were going to be Fannie Mae's
10 risk-based capital guidelines for OFHEO,
11 O-F-H-E-O. And that's Fannie Mae's regulator.
12 And so I think he was trying to keep all of
13 his options open, and I think -- and then you see
14 my reply there. |
15 Q_ Isee that, in forwarding this message
16 on to Richard Lawch, you comment that, "My gut is
17 no."
18 A Yes. My gut is no based on what I just
19 said; I was really surprised that we would
20 consider that from a business perspective. That .
21 wasn't really consistent with what I understood
22 our business model to be.

23 QQ Sothe fact that you said, "Do we want
24 to pursue with her" was not really a reference to

25 Marialice Williams but, rather, was directed as to

March 26, 2003 CAM of FM - Huebscher Page 463

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00464
. 1 the subject matter itself; is that correct?

2 <A Pretty much.
3 Q. What was Richard's response?
4 A Tjust explained that.
5 Q Would you give that to me again.
6 A Sure. "If OFHEO comes back with bad

7 RBC rules, we may be interested. Are these
8 different players than Craig is showing us?"
9 Q And RBC rules would be the risk-based
10 capital? | |
il A Yes.
12 Q What is it about bad RBC rules that
13 might have interested? |
14. A As! mentioned in my testimony just
15 previous to this is that we were in the midst of
16 receiving revised guidelines from our regulator |
17 OFHEO, and we weren't certain how they were going -
18 to view the DUS entities.
19 Many of our DUS entities are unrated
20 entities; they don't have official long-term debt
21 rating. So we were uncertain of what kind of
22 treatment they would have. So what I think

- 93 Richard must have been jumping to as a possibility
24 is if, in fact, there's un— like you know, say

25 they penalize us for more capital, would we be

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00465
1 better off, through some kind of reinsurance of

2 their risk, getting a higher rated counterparty so
3 we'd have to post less capital against that
4 business.
‘S| Q > Why do you respond that, "If we want to
_ 6 engage Craig on the project, it might be a better
7 choice"?
8 MR. WIMBERLY: Objection.
9 Mischaracterization. Misleading.
10 THE WITNESS: This is, again, a very --
11 there's thousands of things happening in our
12 business. This is probably one of those things
13 that's a real quick e-mail exchange between
14. Richard and J and is so tangential to the business
15 athand. | |
16 But probably what I'm saying - keep inmind
17 this is May, 2001. You know, we had successful
18 Gen Star transactions with Craig. Craig has now
19 brought us, you know, Great American. We've had
20 success with him. .
21 So is he potentially more proven to help out
22 in this area? We did not pursue it, by the way.
23 And we did not pursue it with Marialice.
24 BY MR. WISER:
25 Q. Why if the DUS lender had approached

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00466 a
— 1 Marialice, would you consider going to someone

2 else besides Marialice Williams?
3 A I think at the end of the day we
4 actually had some DUS lenders approach us and
- § said, "Are you okay with us talking to Marialice?"
6 And we said, "Sure." |
7 Q Who were those DUS lenders? |
8 A I think Lend Lease was one of those.
9 Q. Okay. Any others?
10 A I don't remember the other names. So |
11 we didn't prohibit it from happening. |
12 QQ. There is a reference here, in the very
13 top, in your last response there, "Maybe you and I
14 can discuss or put on agenda for our team's weekly
15 strategy meeting"?
16 <A Uh-huh.
17 Q What is the team’s weekly strategy
18 meeting? |
19 A It was Richard's direct reports at the
20 time, those individuals that were reportedly
21 directly to Richard Lawch.
22 Q Was that a formal meeting that,
- 23 theoretically, took place each week?
24 A Theoretically took place each week.
25 Q Did it, in fact, take place each week?

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1 IN THE UNITED STATES DISTRICT COURT |
SOUTHERN DISTRICT OF MISSISSIPPI

2 SOUTHERN DIVISION

da.
3 :

CAM FINANCIAL SERVICES, INC.,
4 :

Plaintiff,
3 : Case No.
¥v. ~  t 1:01cev314BrR

GENERAL STAR NATIONAL INSURANCE :

7 COMPANY; GENERAL STAR INDEMNITY : _
COMPANY; GENERAL STAR MANAGEMENT :

_ § COMPANY, GENERAL RE CORPORATION; :

_ CRUMP INSURANCE SERVICES OF — :

9 MEMPHIS, INC.; CRAIG OTT, :
INDIVIDUALLY ANDINHIS — :

10 REPRESENTATIVE CAPACITY AS VICE :
PRESIDENT OF GENERAL STAR :

11 MANAGEMENT COMPANY; FEDERAL

12 NATIONAL MORTGAGE ASSOCIATION
13 (FANNIE MAE),

14
15 Defendants.

16

17 -+-------- eer ree x

18 ‘Washington, D.C. | .
19 "Thursday, March 27, 2003

20 The continued deposition of GRACE HUEBSCHER,
21 called for examination by counsel for Plaintiff in -
22 the above-entitled matter, pursuant to notice, at
23 the Four Seasons Hotel, 2800 Pennsylvania Avenue,
24 N.W., Washington, D.C., Room 478, convened at 9:26
25 am., before Sandy Medford Nelson, a notary public

March 27, 2003 CAM of FM - Huebscher

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00503

Oo CO st BD mH Bh WD bo

Mob N RR ND m
A oS &£§ 5 © we DAA ERE BE TS

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Case 1:05-cv-01463-JDB Document 33-3

00504
1 APPEARANCES: ;
On behalf of the Plaintiff:
2 NICHOLAS VAN WISER, ESQ.
Byrd & Wiser |
3 Metro Plaza One
8401 Colesville Road, Suite 501 -
4 Silver Spring, Maryland 20910
(301) 495-3131
5 On behalf of the Defendant Fannie Mae:
GERALD E. WIMBERLY, JR., ESQ.
6 WILLIAM H. LEACH, ESQ.
McGlinchey Stafford, PLLC
7 643 Magazine Street
New Orleans, Louisiana 70130
8 (504) 586-1200 |
9 JONATHAN L. GRIFFITH, ESQ.
10 Associate General Counsel
li Fannie Mae
12 3900 Wisconsin Avenue, N.W.
13 Washington, D.C. 20016-2892
14 (504) 586-1200 |
15 On behalf of the General Star Defendants:
16 WILSON CARROLL, ESQ. .
17 Phelps Dunbar, LLP.
18 SkyTel Centre, Suite 500
19 200 South Lamar Street
20 Post Office Box 23066
21 Jackson, Mississippi 39225-3066
22. (504) 586-1200 |
23 ALSO PRESENT:
24 JONATHON PERRY, Videographer
25 BOB JONES

Filed 06/21/2007

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00505 a
1 CONTENTS

2 EXAMINATION BY COUNSEL FOR

3 WITNESS PLAINTIFF DEFENDANTS

4 GRACEHUEBSCHER 506,577 571
5 EXHIBITS
6 HUEBSCHER DEPOSITION EXHIBITS MARKED
7 No. 423 - Spreadsheet 519
8 No.424-Email 541
9 No. 425 - Document . 550
10 |
TH
12
13
14
15
16
17
18
19
20
21
22
23
24
25

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00519 . .
ol (Deposition Exhibit No. 423

marked for identification.)

MR. WISER: Did y'all get one?

2
3
4 BY MR. WISER:
5 Q Okay. And I'm just going to ask you about
6 the first page. |
7 A. Okay. Are we done with this one?
8 QI don't know yet. We may not be.
9 A Okay. — |
10 Q = Can you tell me--I'm sorry. Have you had
11 achance to look at it? ©
12 <A Well, I generally know what this is.
13. Q Okay. Can you tell me generally what this
14 is? | |
15. A AsI mentioned previously when--Fannie Mae
16 has a lot of different tools by which it can manage
17 first loss risk, and not only portfolios. It buys
18 from lenders and flow, but aggregation as well.
19 So, what this is is a comparison of the cost of
20 various executions against us because one of the -
21 things that, you know, DUS, is—because of the fact
22 that you have seller risk sharing and that skin in
' 23 the game, as I discussed before-- . |
24 Q Yes.
25  A_ --we believe that the performance under

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00520
1 DUS warrants an all-in pricing to the market that's

2 better and lower than aggregation. So, we try to
3 manage the pricing on those two executions to

4 ensure that that relationship takes place. So,
5 that's why DUS is here.

6 Q Okay. it's kind of the benchmark, would
7 you say? | .

8 A Idon't know if that's fair to say. 1

9 mean, the whole competitive marketplace.

10 MR. LEACH: I'm going to just object to
11 the document you've marked as an exhibit to the
12 extent I think she's testifying as to the first

13 page, but it attaches several seemingly separate
14 pieces of correspondence. I just want the record
15 to be clear that she's testifying as to the first

16 page. I don't know whether you intend to

17 continue--to include ail of the other pages in the
18 exhibit. That's your decision, but they are,

19 apparently, separate documents.

20 MR. WISER: I understand. I'd like to .
21 have them included in the exhibit, but I don't

22 intend to ask her any questions about anything
23 other than the first page at this point.

24 MR. LEACH: Okay, Mr. Wiser.

25 MR. WISER: But your objection is noted.

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