Case 1:05-cv-01483-JDB Document 33-3 Filed 06/21/2007 Page 1 of 29 EXHIBIT A Case 1:05-cv-01483-JOB Document3o-3 Filed 06/21/2007 Page 2 of 29 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. Case 1:05-cv-01483-J0D8 Document 3a-3 Filed 06/21/2007 Page 4 of 29 Case 1:05-cv-01483-JOB Document3o-3 Filed 06/21/2007 Page 5 of 29 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 CONFIDENTIAL FNMA.MBW.002343 Case 1:05-cv-01483-JOB Document3a-3 Filed 06/21/2007 Page 6 of 29 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 24 25 March 25, 2003 CAM of FM - Huebscher Page 2 CONFIDENTIAL FNMA.MBW.002344 Case 1:05-cv-01483-JOB Document3o-3 Filed 06/21/2007 Page 7 of 29 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 March 25, 2003 CAM of FM - Huebscher Page 13 CONFIDENTIAL FNMA.MBW.002355 Case 1:05-cv-01483-JOB Document 3a-3 Filed 06/21/2007 Page 8 of 29 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 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 March 26, 2003 CAM of FM-Huebscher Page 462 CONFIDENTIAL FNMA.MBW.002804 Case 1 05-cv-01463-JDB Document 33-3 Ried 06/21/2007 Page 20 of 29 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 CONFIDENTIAL FNMA.MBW.002805 Case 1:05-cv-01463-JDB Document33-4 Filed Qb/21/2007 Page 21 of 29 00464 . 1 the subject matter itself; is that correct? 2 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 March 26, 2003 CAM of FM - Huebscher | Page 465 CONFIDENTIAL FNMA.MBW.002807 Case 1:05-cv-01463-JDB Documeni3c-3 Filed 06/21/2007 Page 23 of 29 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