Get documents about "NELSON 20JEANNIE
Document Sample
1
1 NO. 03-01-00267-CV
2 EMERSON HOME BUYERS ) IN THE DISTRICT COURT
ASSOCIATION, AS INFORMAL )
3 ASSOCIATION OF APRIL )
UNDERWOOD, ET AL., )
4 )
Plaintiff(s), )
5 )
VS. ) 410TH JUDICIAL DISTRICT
6 )
EMERSON MANUFACTURED )
7 HOMES, ET AL., )
)
8 Defendant(s), ) MONTGOMERY COUNTY, TEXAS
9 ******************************************************
10 ORAL DEPOSITION OF
11 JEANNIE NELSON
12 DECEMBER 16, 2004
13 ******************************************************
14
15
16 ORAL DEPOSITION of JEANNIE NELSON, produced as a
17 witness at the instance of the Intervenor, and duly
18 sworn, was taken in the above-styled and numbered
19 cause on the 16th day of December, 2004, from
20 9:01 a.m. to 2:37 p.m., before Terry A. Goss, CSR in
21 and for the State of Texas, reported by machine
22 shorthand, at the offices of Jackson Walker, 1401
23 McKinney, Suite 1900, Houston, Texas, pursuant to the
24 Texas Rules of Civil Procedure and the provisions
25 stated on the record.
26
2
1 A P P E A R A N C E S
2 FOR THE PLAINTIFF(S):
Mr. William H. Piper
3 Mr. Ellis Munoz
BOYD, MUNOZ & PIPER
4 804 West Dallas
Conroe, Texas 77301
5 936-756-3030
6
FOR THE DEFENDANT(S) FOREMOST COUNTY MUTUAL INSURANCE
7 COMPANY:
Mr. John Clayton
8 JACKSON WALKER, L.L.P.
1401 McKinney, Suite 1900
9 Houston, Texas 77010
713-752-4200
10
FOR THE DEFENDANT(S) HOCHHEIM INSURANCE CO.:
11 Ms. Suzanne C. Pickering (telephonically)
CURNEY, GARCIA, FARMER, PICKERING & HOUSE
12 411 Heimer Road
San Antonio, Texas 78232-4854
13 210-377-1990
14 FOR THE DEFENDANT(S) BECKY BLANKENSHIP & BLANKENSHIP
INSURANCE AGENCY:
15 Mr. Dan Burrows
BURCK, LAPIDUS & LANZA, P.C.
16 5177 Richmond, Suite 850
Houston, Texas 77056
17 713-400-6000
18 FOR THE INTERVENOR/PLAINTIFF NATIONAL CITY MORTGAGE
COMPANY D/B/A ACCUBANC MORTGAGE:
19 Mr. David M. Scott
ZIMMERMAN, AXELRAD, MEYER, STERN & WISE, P.C.
20 3040 Post Oak Boulevard, Suite 1300
Houston, Texas 77056-6560
21 713-552-1234
22 FOR THE DEFENDANT(S) ROYAL LION MORTGAGE, INC. and
JACQUELINE STEPHENS:
23 Mr. Matthew L. Hoeg
ANDREWS KURTH, L.L.P.
24 600 Travis, Suite 4200
Houston, Texas 77002
25 713-220-4012
26
3
1 APPEARANCES CONTINUED
2 FOR THE DEFENDANT(S) PATRICIA LENNON D/B/A AMERISTAR
APPRAISAL SERVICES:
3 Mr. Gregory Holloway
TEKELL, BOOK, MATTHEWS & LIMMER, L.L.P.
4 1221 McKinney Street, Suite 4300
Houston, Texas 77010-2015
5 713-222-9542
6 FOR THE DEFENDANT(S) JEANNIE NELSON:
Mr. G. Allen Goodling
7 ATTORNEY AT LAW
402 Main Street, Suite 400
8 Houston, Texas 77002
713-228-3390
9
FOR THE DEFENDANT ABN AMRO MORTGAGE:
10 Ms. Laura Wessels
DEVLIN & PIGNUOLO
11 3200 Post Oak Blvd., Suite 700
Houston, Texas 77056
12
ALSO PRESENT:
13 Mr. Mark Hendrix, Videographer
14
15
16
17
18
19
20
21
22
23
24
25
26
4
1 INDEX
2 Appearances................................. 2-3
3 Stipulations................................ 5
4
JEANNIE NELSON
5
Examination by Mr. Scott............... 6
6 Examination by Mr. Piper............... 100
Examination by Mr. Burows.............. 133
7 Examination by Ms. Pickering........... 160
Examination by Mr. Clayton............. 163
8 Further Examination by Mr. Scott....... 179
Further Examination by Mr. Piper....... 203
9 Examination by Mr. Hoeg................ 217
Further Examination by Mr. Piper....... 218
10
11 Signature and Changes....................... 220
12 Reporter's Certificate...................... 222
13 EXHIBITS
14
NO. DESCRIPTION PAGE
15
402 ........................................ 47
16 Request For Approval
403 ........................................ 75
17 Uniform Residential Loan Application
18
19
20
21
22
23
24
25
26
5
1 THE VIDEOGRAPHER: The date is
2 December 16th, 2004. The time is 9:01 a.m. We are
3 now on the record.
4 JEANNIE NELSON,
5 having been first duly sworn, testified as follows:
6 THE REPORTER: Would you state your
7 stipulations for the record?
8 MR. SCOTT: The stipulations are the
9 same as what we had been doing prior.
10 MR. CLAYTON: Yeah. I'm sure she
11 wants to read and sign, correct?
12 MR. GOODLING: Yes.
13 MR. CLAYTON: And if it's not signed
14 within 30 days from the time you get it, we can use
15 any copy, as we choose, as though it were signed?
16 MR. GOODLING: Yeah.
17 MR. CLAYTON: We want to do, David,
18 the one objection good for all?
19 MR. SCOTT: That's fine.
20 MR. CLAYTON: Any problem with anybody
21 with that?
22 MR. BURROWS: No.
23 MR. PIPER: No.
24 MR. CLAYTON: I can't think of any
25 other.
26
6
1 MR. SCOTT: No other stipulations?
2 MR. GOODLING: Other than I know you
3 got my letter. I filed it on Lexus Nexus, stating
4 that Mrs. Nelson's not being produced as a custodian
5 of -- or a corporate representative of Royal Lion.
6 MR. SCOTT: I understand.
7 MR. GOODLING: Okay.
8 MR. SCOTT: Anything else?
9 MR. GOODLING: That's it.
10 EXAMINATION
11 BY MR. SCOTT:
12 Q. Mrs. Nelson, my name's David Scott. Before
13 today, you and I have never met; is that correct?
14 A. That's correct.
15 Q. Have you ever had your deposition taken
16 before?
17 A. No, I have not.
18 Q. Okay. There are a few ground rules. Let's
19 just go over them real quickly. I'm going to be
20 asking you questions and you're going to be providing
21 your answers, and the court reporter here is going to
22 be taking down both my questions and your answers.
23 Okay?
24 A. Okay.
25 Q. So it's important, when you're giving an
26
7
1 answer, that you make it loud enough so the court
2 reporter can hear it.
3 A. Okay.
4 Q. And if the answer calls for a "yes" or a
5 "no," go ahead and give a verbal response, rather
6 than saying "huh-uh" or shaking your head because
7 that's hard for the court reporter to take down.
8 A. Okay.
9 Q. Also, if you don't understand a question or
10 need help clarifying it, please ask me to repeat the
11 question. That's not a problem at all. Okay?
12 A. Okay.
13 Q. If at any time you need to take a break,
14 just let me know or let your attorney know and we'll
15 go ahead and take a break.
16 A. Okay.
17 Q. Also, if you wouldn't mind, just so it's
18 clear on the record, would you wait for me to finish
19 my question before giving your answer, and I will
20 wait for you to finish your answer before asking the
21 next question.
22 A. Okay.
23 Q. Okay. If you do answer a question, we're
24 all going to assume that you understand it.
25 A. Okay.
26
8
1 Q. Is that fair? Is that fair?
2 A. That's fair.
3 Q. Okay. Have you reviewed any documents in
4 preparation for today's deposition?
5 A. I reviewed Candy Powell's deposition.
6 Q. Okay. Any other documents that you
7 reviewed prior to today's deposition?
8 A. No.
9 Q. Okay. Would you go ahead and please state
10 your name for the record?
11 A. Jeannie Nelson.
12 Q. Mrs. Nelson, is there any reason that you
13 can't provide your deposition today?
14 A. No, there's not.
15 Q. Are you taking any medication that would
16 prevent you from providing answers to my questions?
17 A. No.
18 Q. What is your current address?
19 A. [redacted].
20 Q. Where were you living prior to this address
21 on [reacted] Court?
22 A. [redacted],
23 77356.
24 Q. And how long were you working -- were you
25 living in Montgomery?
26
9
1 A. Probably four months.
2 Q. When were those four months?
3 A. July to November.
4 Q. Of 2004?
5 A. Yes.
6 Q. So you have been living on [redacted] Court
7 since November of 2004; very recently?
8 A. November 19th.
9 Q. Okay. Any reason you moved in November of
10 '04?
11 A. We rented a house.
12 Q. Okay. Prior --
13 A. I was living at my mother's.
14 Q. Prior to living at Montgomery, what was the
15 previous address?
16 A. [redacted].
17 Q. And how long were you living back in
18 Conroe?
19 A. Two-and-a-half years.
20 Q. Until July?
21 A. July.
22 Q. Okay. Would you please provide me with
23 your Social Security Number?
24 A. [redacted].
25 Q. And your Texas Driver's License Number?
26
10
1 A. [redacted]
2 .
3 Q. Thank you. Mrs. Nelson, have you ever been
4 arrested?
5 A. Yes, I have.
6 Q. Can you tell me about that?
7 A. I was arrested for a hot check warrant in
8 1998, I think.
9 Q. It's okay. Do you need to take a minute?
10 A. I'm fine. And then I was arrested on
11 February 14th of 1999.
12 Q. What was that arrest for?
13 A. It was a former employer alleged I had
14 stolen money from her.
15 Q. Did you, in fact, steal money?
16 A. No, I did not.
17 Q. What was the result of those arrests?
18 A. The first arrest, I got six months
19 probation deferred. The second one I got five years
20 probation deferred.
21 Q. Now, when you say it was a hot check
22 warrant in 1998 --
23 A. It was probably Ninety -- that was before
24 '98.
25 Q. Okay.
26 A. It was '95, I think.
27
11
1 Q. What was that in relation to?
2 A. It was -- I don't really remember. It was
3 a check. And the way they filed it, you couldn't pay
4 it, you had to go to court.
5 Q. I see. Was there any reference in either
6 of those warrants to computer software?
7 A. In the second.
8 Q. Second one?
9 MR. GOODLING: I don't mean to
10 interrupt you, David, but I'm just gonna say -- I'm
11 gonna object, for the record, to the whole line of
12 questioning in that none of this is admissible in
13 court. Of course, you can continue with your
14 questions, but I want that on the record.
15 MR. SCOTT: That's fine. Just going
16 for discovery here.
17 Q. Are you currently married, Mrs. Nelson?
18 A. Yes, I am.
19 Q. What is your husband's name?
20 A. Alton.
21 Q. And how long have you been married?
22 A. Four years.
23 Q. Were you married previously?
24 A. Yes, I was.
25 Q. To whom?
26
12
1 A. Gregory Curry.
2 Q. How long were you married to Mr. Curry?
3 A. A year-and-a-half.
4 Q. When was that?
5 A. '96 to '98, actually. January, '98.
6 Q. When did you meet Alton?
7 A. How did I meet him?
8 Q. Well, when?
9 A. September of '99.
10 Q. And when did you get married?
11 A. October of 2000.
12 Q. Do you have any children?
13 A. Yes, I do.
14 Q. How many children?
15 A. One.
16 Q. What is your child's name?
17 A. Alton.
18 Q. How old is Alton?
19 A. He's two.
20 Q. Have you been married to anybody else
21 either -- other than Alton or Gregory?
22 A. No.
23 Q. Do you have any other prior spouses?
24 A. No.
25 Q. Any relatives who currently reside in
26
13
1 Montgomery County?
2 A. Yes.
3 Q. Who are they, please?
4 A. I have a sister.
5 Q. What is her name?
6 A. Jeanette Vonderembse.
7 Q. Can you spell that last name?
8 A. V-O-N-D-E-R-E-M-B-S-E.
9 Q. E-M-B-S-E?
10 A. (Witness nodded head.) And a brother, Jason
11 Alston. A-L-S-T-O-N.
12 Q. Any other relatives living in Montgomery
13 County?
14 A. We have in-laws.
15 Q. Okay. Who are they, please?
16 A. Autumn and Steve Hurd.
17 Q. Steve Hurd?
18 A. Steve.
19 Q. Last name?
20 A. H-U-R-D.
21 Q. H-U-R-D. And was that Otto?
22 A. Autumn. A-U-T-U-M-N. Like the season.
23 Q. Thank you. And those are your in-laws.
24 That's Alton's parents?
25 A. Alton's sister and brother-in-law.
26
14
1 Q. Alton's sister and brother-in-law. Any
2 other relatives in Montgomery County?
3 A. No.
4 Q. Have you been known as any -- in any other
5 name?
6 A. Jeannie -- my maiden name, Jeannie Alston.
7 Q. Okay.
8 A. My married name, Jeannie Curry; my married
9 name, Jeannie Nelson.
10 Q. Any other names?
11 A. No.
12 Q. Are you a notary?
13 A. No, I am not.
14 Q. You're not a notary?
15 A. No. I was.
16 Q. You were a notary?
17 A. My notary's expired.
18 Q. When were you a notary?
19 A. When -- when I was MBI --
20 Q. Okay.
21 A. -- as Jeannie Curry.
22 Q. As Jeannie Curry. Any other notary names?
23 A. No.
24 Q. Okay. Mrs. Nelson, did you graduate from
25 high school?
26
15
1 A. Yes, I did.
2 Q. Where did you go to high school?
3 A. Bellaire High School.
4 Q. And when did you graduate?
5 A. In '94. No, '92. I'm sorry.
6 Q. '92. And that's Bellaire in Houston?
7 A. Yes.
8 Q. Where were you living in Houston at the
9 time?
10 A. [redacted].
11 Q. [redacted] Court?
12 A. [redacted], in Bellaire.
13 Q. Do you have any formal education after high
14 school?
15 A. Some college.
16 Q. Where did you attend?
17 A. San Jacinto.
18 Q. How many years were you at San Jacinto?
19 A. A year.
20 Q. Would that have been in '93?
21 A. '94.
22 Q. '94. Any other college education?
23 A. No.
24 Q. Any other advanced degrees, other than your
25 high school degree?
26
16
1 A. No. I have a mortgage broker's license.
2 Q. When did you obtain the mortgage broker's
3 license?
4 A. I obtained my broker's license in,
5 probably, March or April of 2001. Prior to that, I
6 had a loan officer's license that I obtained in,
7 maybe, '99 or 2000. I don't remember.
8 MR. CLAYTON: Excuse me. What other
9 license did she have?
10 Q. Was that a real estate officer's --
11 A. No. Loan officer license.
12 Q. Loan officer's license.
13 MR. CLAYTON: Sorry.
14 MR. SCOTT: That's okay.
15 Q. Where did you obtain the loan officer's
16 license? From what institution?
17 A. You just apply to the State.
18 Q. Is it an application process and a fee?
19 A. Yes.
20 Q. Do you recall how much the fee was?
21 A. No.
22 Q. Same thing with the mortgage broker's
23 license?
24 A. Yes.
25 Q. And you don't recall a fee for that either?
26
17
1 A. No.
2 Q. Why did you decide to obtain these
3 certifications?
4 A. It was mandatory for my job.
5 Q. Okay. You got the job and they needed you
6 to get the certification, so that's what you did?
7 A. Well, I had the job at a mortgage company
8 and the state required -- came into licensing laws
9 and required all loan officers to be licensed.
10 Q. Why did you decide to go work in the
11 mortgage industry?
12 A. I got hired as a receptionist to start with
13 and I just -- I liked it.
14 Q. Okay. Fair enough. Have your
15 certifications or licenses ever been revoked?
16 A. No.
17 Q. Have they ever been suspended?
18 A. No.
19 Q. Okay. You mentioned that you got the job
20 by working as a receptionist at a -- at your
21 employment. Where was that?
22 A. Summit Capital.
23 Q. Was this the first mortgage broker office
24 you worked at?
25 A. Yes.
26
18
1 Q. And, roughly, when was that?
2 A. 1998.
3 Q. Would it be fair to say that between '94,
4 at San Jacinto, and 1998, you were working at other
5 positions --
6 A. Yes.
7 Q. -- and other kinds of work?
8 A. Yes.
9 Q. What other kinds of work were you doing?
10 A. I was doing accounts for Canrig Drilling.
11 Q. Petroleum?
12 A. Canrig Drilling.
13 Q. Canrig Drilling. Okay. Any other places
14 of employment?
15 A. Prior to that, I was accounts payable at
16 Reddy Ice.
17 Q. Okay. Anything else?
18 A. I mean, other than when I was in high
19 school at Randall's, no.
20 Q. Sure. But between your San Jacinto year in
21 1994, and 1998 when you started at Summit, you were
22 working at places like Canrig Drilling and Reddy Ice?
23 A. Those are the only two places.
24 Q. Those are the only two. Okay. You left
25 Reddy Ice and went to Summit Capital in 1998?
26
19
1 A. I left Canrig and went to Summit Capital.
2 Q. When were you at Canrig? So you were at
3 Reddy Ice first and then you were at Canrig?
4 A. Yes.
5 Q. Okay. At Summit Capital, how long were you
6 there?
7 A. Probably seven months.
8 Q. You were there as a receptionist?
9 A. Yes.
10 Q. And then you decided that you wanted to get
11 licensed as a mortgage broker?
12 A. I applied at MBI Mortgage as a receptionist
13 and he offered me a loan officer position. At that
14 time, loan officers did not have to be licensed.
15 Q. Got it. After you left Summit Capital at
16 seven -- for seven months, you went to another
17 mortgage broker?
18 A. It was closer to home.
19 Q. Okay. And that was?
20 A. MBI.
21 Q. MBI. Also in around '98, or are we in '99
22 now?
23 A. It was '98. November of '98.
24 Q. How long were you at MBI?
25 A. Until April or May of 2001.
26
20
1 Q. Okay. Does your spouse currently work?
2 A. Yes, he does.
3 Q. Where does he work?
4 A. City of Willis.
5 Q. What does he do for the city?
6 A. He's a police sergeant.
7 Q. Has he been a police sergeant from the time
8 you've known him?
9 A. He's been a police officer for 13 years.
10 Q. Okay. With what force?
11 A. He was with Galveston County prior to
12 that.
13 Q. And currently he's with what?
14 A. City of Willis.
15 Q. City of Willis Police Department. Correct?
16 A. Yes.
17 Q. Have you ever been fired from a job?
18 A. No. No.
19 Q. Are you sure?
20 A. Yeah. I had to think back. But, no, I
21 haven't.
22 Q. Okay. You were at MBI for about three
23 years?
24 A. '98 -- November of '98 until April or May
25 of 2001.
26
21
1 Q. Okay. What were you job duties when you
2 were at MBI?
3 A. I was a loan officer.
4 Q. What does that mean?
5 A. You originate mortgage loans.
6 Q. How do you figure out where they originate
7 from?
8 A. Well, we had Internet websites, people
9 would call and apply.
10 Q. Who did you work with when you were at
11 MBI? Can you give me some names of people?
12 A. Scott Sears.
13 Q. Scott Sears?
14 A. Debbie Thompson, Candy Powell, Larry
15 Winslow, and a lot of people came and went.
16 Q. Do you recall Keith Raybon ever working
17 there?
18 A. He didn't really work there. He didn't
19 work in my office.
20 Q. Where did he work?
21 A. He had a satellite-type office in Willis.
22 Q. Keith Raybon was affiliated with MBI, but
23 just not in your office?
24 A. Right.
25 Q. He had his own satellite office in Willis?
26
22
1 A. Well, he had a mobile home dealership or
2 manufactured home or whatever.
3 Q. And he did that in conjunction with working
4 with MBI somehow?
5 A. MBI originated his mortgage loans.
6 Q. I see. And what about Candy Powell, how
7 long was she there?
8 A. She was -- I don't remember when she came
9 in our office. She was at the Airtex office prior to
10 that, but she was -- worked with me in my office,
11 probably, maybe a year.
12 Q. So how long have you known Candy Powell?
13 A. Well, I knew of her when I started MBI.
14 She was at Airtex. But I've known her personally
15 probably from late '99 maybe, early 2000.
16 Q. Okay. What about Keith Raybon, did you
17 know of him when you were working at MBI?
18 A. I met him at MBI.
19 Q. When did you meet him?
20 A. September, October, November, 2000,
21 probably. Somewhere in that range.
22 Q. How would you describe your working
23 relationship with Candy Powell when you were at MBI?
24 A. It was okay.
25 Q. Why do you say just okay?
26
23
1 A. I mean, we got along. She's not the most
2 personable of people sometimes. Other than that...
3 Q. Were you friendly?
4 A. Yes.
5 Q. Did you socialize outside of work?
6 A. We did lunch.
7 Q. You did lunch. How often would you go out
8 to lunch?
9 A. Probably three times a week.
10 Q. When did you leave MBI?
11 A. I think it was April. I think April of
12 2001.
13 Q. And under what circumstances did you leave
14 MBI?
15 A. I opened my own company.
16 Q. Tell me about that.
17 A. My mother retired in 2000. We had talked
18 in, probably, January of doing something, opening a
19 mortgage company of our own. The mortgage industry
20 was pretty good at that time and, so, with her not
21 working, able to help me, we opened our own company.
22 Q. And the name of that company?
23 A. Royal Lion Mortgage.
24 Q. For purposes of today, if I say "Royal
25 Lion," you'll know that I'm talking about Royal Lion
26
24
1 Mortgage --
2 A. Yes.
3 Q. -- is that fair? So you joined it in
4 January -- or you formed it in January of '01 with
5 your mother?
6 A. No. We just talked about it in January.
7 It probably wasn't until February or March until we
8 actually talked seriously.
9 Q. That must have been exciting.
10 A. Yeah. It was.
11 Q. What steps did you take or did you and your
12 mother take to get Royal Lion formed?
13 A. Well, any time you open a business it's --
14 you know, you don't want to just -- you have to have,
15 you know -- in the mortgage industry, you have to
16 have some sort of business coming in to be able to
17 sustain business.
18 Keith had actually approached me. He
19 wanted to open a mortgage company, and I did not want
20 to work for Keith. I didn't want to work out of a
21 manufactured home in Cut And Shoot, for one, and he
22 said -- you know, he approached Candy about going to
23 work with him, also.
24 Candy came to me and said that Keith
25 had approached her. I said, "Well, he approached me,
26
25
1 also." And she said, you know, we can probably do
2 this with her real estate connections because she was
3 a real estate person prior to, and without, you know,
4 Keith's involvement, but on our own.
5 So I knew nothing about running a
6 company, businesswise. I knew everything about the
7 mortgage business, but not businesswise and that's
8 why I approached my mom because she has a lot of
9 experience with bookkeeping and, you know, and me and
10 Candy and my mom sat down and we thought of a name
11 and did the incorporation.
12 Jackie paid $1,000 to file the
13 corporation and then we got -- my father does
14 equipment leasing and he gave us an equipment lease
15 for computers and our furniture.
16 Q. You said that Keith approached you. I
17 assume you're talking about Keith Raybon?
18 A. Yes.
19 Q. Okay. Any idea why he approached you?
20 A. No. Candy was doing his loans at MBI. I
21 didn't do his loans at MBI. And Candy was doing his
22 loans at MBI and he had actually had a meeting with
23 Scott to delve out his loans throughout all the loan
24 officers in the loan office.
25 Q. That's Scott Sears?
26
26
1 A. Yes. And they kind of did that, but he
2 wanted somebody to work in his office all the time
3 and, you know, not to be there when people came in,
4 but I didn't want -- I didn't know him well enough
5 and I didn't want to work out of a mobile home in
6 Cut And Shoot.
7 Q. Do you know whether Keith approached you
8 first or Candy first?
9 A. I don't know.
10 Q. But it was, roughly, around the same
11 time --
12 A. Yes, it was.
13 Q. -- because you talked at lunch and she said
14 that he approached her and --
15 A. Right.
16 Q. -- you said he approached you, as well?
17 You mentioned you didn't want to work for Keith
18 Raybon because you didn't want to work out of the
19 mobile home.
20 A. I didn't want to do just mobile homes, I
21 didn't want to work out of a mobile home in
22 Cut And Shoot and I didn't -- if you -- if I'm doing
23 just his stuff in his office, then I can't originate
24 business other places, and it's just not a very
25 professional atmosphere.
26
27
1 Q. Were there any other reasons you didn't
2 want to work for Keith Raybon?
3 A. No.
4 Q. Some of the loans in this case were
5 brokered by Royal Lion; is that right?
6 A. Yes.
7 Q. And you were working at Royal Lion during
8 the time that some of these loans in this case were
9 brokered there?
10 A. Yes.
11 Q. Okay. Who else was working at Royal Lion
12 with you?
13 A. Candy Powell, Jackie Stephens, Tamara
14 Davis, Jason Alston, Tracie Kusmaul, Janna Parker.
15 At one time we had a Millie, but I don't remember her
16 last name. And that's it at that time.
17 Q. Jacqueline is your mother, Jacqueline
18 Stephens?
19 A. Yes, she is.
20 Q. Who's Tamara Davis?
21 A. She's Michael Davis' daughter. She worked
22 at Emerson.
23 Q. Who is Michael Davis?
24 A. He worked at Emerson. He was Keith's
25 partner at Emerson.
26
28
1 Q. Any idea how Michael Davis and Keith Raybon
2 began working together?
3 A. I have no idea. They -- he -- Michael
4 Davis was working with Keith even when I was at MBI.
5 Q. So Michael Davis and Keith Raybon were
6 working together at the satellite office in Willis
7 while you were working with MBI?
8 A. Yes.
9 Q. Okay. How did Tamara Davis get to Royal
10 Lion?
11 A. Jackie kept telling Candy she needed help,
12 needed help with the paperwork because it was a lot
13 of paperwork. And it's not easy just to find a
14 clerical person and Tamara was familiar with, kind
15 of, the procedures, so we hired her.
16 Q. You testified that your brother Jason
17 Alston --
18 A. Alston.
19 Q. -- also worked there. Is he a licensed
20 mortgage broker?
21 A. He's a licensed mortgage loan officer.
22 Q. Has he been with the company since it
23 started?
24 A. No.
25 Q. When was he working there?
26
29
1 A. I don't remember what month he came in. It
2 was latter part of 2001.
3 Q. And Tracie -- I didn't get the last name.
4 A. Kusmaul.
5 Q. Can you spell that?
6 A. K-U-S-M-A-U-L.
7 Q. Who was she?
8 A. She was the receptionist.
9 Q. And Janna Parker?
10 A. Yes.
11 Q. Janna, J-A--
12 A. J-A-N-N-A.
13 Q. Who was she?
14 A. She was a loan officer in the Deer Park
15 office.
16 Q. How did you find Janna?
17 A. She was a real estate agent that I got
18 business from. She was -- she called me one day and
19 said that she was going to go get her loan officer's
20 license, and I didn't want to lose her business to
21 somewhere else, so I asked her about if she wanted to
22 do something in that area.
23 Q. How would you describe Candy Powell's
24 employment with Royal Lion?
25 A. I mean, she was employed there. I mean,
26
30
1 what do you mean?
2 Q. How would you describe her professionally?
3 A. She was over the processing department.
4 She had been a processor for so many years. I didn't
5 have any processing experience, so -- we got along.
6 I mean, I don't --
7 Q. You guys got along. What was your opinion
8 of the kind of work she did?
9 A. Well, I didn't question the work she did
10 because she had more experience at it than I did.
11 Q. Did you think she did a good job?
12 A. Yeah, at the time.
13 Q. Did that change at some point?
14 A. During the time of Royal Lion, no.
15 Q. Okay. You said at the time. What did you
16 mean?
17 A. I mean, she did a good job, from what I
18 saw, while I was there with her while she worked
19 there.
20 Q. Did you always think that she did a good
21 job?
22 A. While we were at Royal Lion, yes.
23 Q. Before or after you were at Royal Lion.
24 A. Now?
25 Q. Yes.
26
31
1 A. Maybe not. I mean probably not, no.
2 Q. Why is that?
3 A. Well, we're all sitting in this room for
4 obvious reasons, so...
5 Q. Well, what is your personal knowledge about
6 Candy and her involvement in this case? If any.
7 A. Not really. I mean -- what do I think
8 about her being involved or...
9 Q. Well, what personal knowledge do you have
10 about her involvement that would lead you to think
11 that she's the reason we're all in this room?
12 A. I don't think she's the reason we're in
13 this room.
14 Q. Okay.
15 A. I just -- I think she needed help, you
16 know, farther down the line.
17 Q. Why did she need help?
18 A. I mean, it's a lot of paperwork to deal
19 with.
20 Q. Okay. Do you think that she made mistakes
21 with the paperwork?
22 A. I don't think she made intentional
23 mistakes, no.
24 Q. What kind of mistakes do you think she
25 made?
26
32
1 MR. HOEG: Objection to the form.
2 A. I mean, I don't -- I mean, I just don't
3 think that she -- I mean, I don't -- I mean, I don't
4 really know any specific mistakes that she made, no,
5 but I think she could have asked for a little more
6 help.
7 Q. You felt she was overwhelmed?
8 A. Yes, I do.
9 Q. Was anybody offering her assistance in that
10 regard?
11 A. We offered -- she didn't want help. We did
12 offer. Jackie asked to hire people to help her and
13 she didn't want people to help her.
14 Q. She was not your supervisor, right?
15 A. No. She wasn't. We -- I mean, I wasn't
16 her supervisor; she wasn't mine. We had equal
17 partnership in the business.
18 Q. Okay. Would it be fair to say that you and
19 she had equal partnership, but somebody else in the
20 company had more interest in the partnership?
21 A. Jackie owned more of the company, but she
22 wasn't our superior.
23 Q. Okay. How much percentage ownership did
24 Jacqueline hold in Royal Lion?
25 A. Eighty percent.
26
33
1 Q. And you and Candy each had ten percent?
2 A. Yes.
3 Q. At any point, did somebody say to Candy,
4 "You need more help and I want you to do this, to
5 hire more help?"
6 A. That's why we hired Tamara.
7 Q. Did that sort of fix the problem?
8 A. We thought, yes.
9 Q. When did you find out that it hadn't fixed
10 the problem?
11 MR. HOEG: Objection, form.
12 A. I mean, we didn't even know there was a
13 problem.
14 Q. Well, we're talking about problems. What
15 problems do you think occurred?
16 A. I mean, we didn't really think there was
17 any problems that occurred.
18 Q. Do you know now whether there were any
19 problems that occurred?
20 A. I mean, I know -- I mean -- no. I mean, I
21 know there's questions about the stuff that was done,
22 but I don't know that it's a problem.
23 Q. What questions are existing about what was
24 done?
25 A. Well, I mean what the lawsuit alleges.
26
34
1 Q. What is your understanding of what the
2 lawsuit alleges?
3 A. That we requested appraised values of
4 property and insurance, but, you know, overstated
5 values.
6 Q. Is any of that true?
7 A. No. It's not.
8 Q. You testified that you and your mother
9 started Royal Lion.
10 A. Me and my mother and Candy.
11 Q. And Candy, together started Royal Lion.
12 A. Yes.
13 Q. Were there any start-up costs associated
14 with the formation of the company?
15 A. There was $1,000 for the -- file the
16 corporation, and other than the equipment and --
17 other than that, no.
18 Q. Would it be fair to say that the $1,000
19 that your mother paid --
20 A. Yes.
21 Q. -- represented the total amount of money
22 that needed -- that was needed to start up the
23 company?
24 A. Yes. That's why she had 80 percent. It
25 was her money.
26
35
1 Q. Did the money come from anywhere else?
2 A. No.
3 Q. Did Keith Raybon ever pay any of you for
4 starting up the company?
5 A. No.
6 Q. Okay. What was Keith Raybon's -- what was
7 Keith Raybon's relationship to Royal Lion after it
8 was formed?
9 A. I mean, we did his land-home loans.
10 Q. How did that start?
11 A. He sent over a deal on a house that he
12 wanted off his books -- to refinance off his books
13 because the owner financed his houses and we just
14 started a relationship doing his loans.
15 Q. Was there ever any discussion about how
16 much the loans would be?
17 A. No. He just submits a payoff of what he's
18 owed; we refinance the lien.
19 Q. What about the website, do you maintain the
20 website?
21 A. Jason maintained the website.
22 Q. Did you have any involvement with the
23 website?
24 A. Jason was the Internet. I mean, he did
25 real estate and Internet. Real -- real estate agent
26
36
1 and Internet.
2 Q. So you had no involvement with the website?
3 A. Not really. I mean, I gave him -- I did
4 Internet lending at MBI, so I gave him the place
5 where we had had our website before and that's it.
6 Q. But in terms of the way the website was put
7 together or designed or any of that, you didn't have
8 any involvement with that?
9 A. No.
10 Q. Have you worked at any other mortgage
11 brokers, other than the two that we talked about?
12 MBI and satellite, I think.
13 A. No.
14 Q. Summit.
15 A. Summit Capital.
16 Q. Summit Capital.
17 A. No.
18 Q. How about mortgage lenders, have you ever
19 worked for a mortgage lender?
20 A. No.
21 Q. Do you know anybody at National City
22 Mortgage, for instance?
23 A. No, I do not.
24 Q. Have you ever heard of anybody from
25 National City calling?
26
37
1 A. No.
2 Q. How about ABN Amro?
3 A. Yes.
4 Q. Okay. Did you have -- would you say you
5 had a large amount of loans that dealt with ABN Amro?
6 A. Yes.
7 Q. Okay. Do you know anybody at Lodge
8 Mortgage?
9 A. No, I do not.
10 Q. What about Amwest Financial?
11 A. No.
12 Q. Do you know Kerrie Berglan?
13 A. Who?
14 Q. Kerrie Berglan.
15 A. No.
16 Q. What about Steven Broder?
17 A. No.
18 Q. What mortgage -- what sellers have you
19 worked with when you were at Royal Lion, other than
20 Keith Raybon's company?
21 A. I don't remember their names.
22 Q. Roughly, how many were there?
23 A. Fifty, hundred, maybe.
24 Q. So somewhere between 50 and 100 other
25 sellers that you've brokered deals with?
26
38
1 A. Yes.
2 Q. In addition to Keith Raybon?
3 A. Yes.
4 Q. Okay. You testified earlier that you did
5 work with ABN Amro as well?
6 A. Yes.
7 Q. How many loans can you recall having done
8 with ABN Amro?
9 A. I don't remember.
10 Q. More than 100?
11 A. Probably.
12 Q. More than 500?
13 A. Oh, I don't know. I mean, I don't have
14 any -- I mean, I don't have --
15 Q. Two-fifty? Three hundred? Do you have any
16 other numbers?
17 A. I mean, I really don't know. I mean, it
18 was two-and-a-half years.
19 Q. Sure.
20 A. I don't remember.
21 Q. But it was at least 100?
22 A. Probably, yes.
23 Q. How long -- or how many months were you
24 with ABN Amro using them as a mort-- they were using
25 you as a mortgage broker?
26
39
1 A. I used them at MBI --
2 Q. Okay.
3 A. -- and probably two years, maybe --
4 Q. Okay.
5 A. -- between the two companies.
6 Q. Any idea when that ended?
7 A. May, 2001.
8 Q. 2001?
9 A. Two, I'm sorry.
10 Q. So May, 2002, your relationship ceased?
11 A. Yes.
12 Q. Can you tell me the circumstances of how
13 that happened?
14 A. I got a call from the account rep, stating
15 that we could no longer submit loans.
16 Q. Did she give you a reason why?
17 A. No.
18 Q. Do you know the reason why?
19 A. No.
20 Q. Did you investigate why?
21 A. They wouldn't give me any answers.
22 Q. Did you do any investigation at Royal Lion
23 as to why that occurred?
24 A. No.
25 Q. Did you tell anybody at Royal Lion?
26
40
1 A. Well, yeah. I mean, you -- they can't
2 submit loans there, you have to tell them.
3 Q. Okay. So did anybody ask you why that
4 happened?
5 A. Sure.
6 Q. And what was your response?
7 A. "I don't know."
8 Q. Was there any further investigation at
9 Royal Lion as to how that happened?
10 A. I mean, no. I mean, we -- they said that
11 we were under quality control review.
12 Q. What does that mean?
13 A. I have no idea.
14 Q. Do you know, sitting here today at your
15 deposition, why ABN Amro ceased doing business with
16 Royal Lion?
17 A. Yeah. I mean, now I know.
18 Q. What is your understanding of how that --
19 why that happened?
20 A. The questionable appraisals.
21 Q. What do you mean by that?
22 A. The appraised values of the property.
23 Q. What about the appraised values of the
24 property?
25 A. They say that they're overstated.
26
41
1 Q. Overstated. What does that mean?
2 A. The appraisal states that it's higher than
3 the actual value.
4 Q. You testified earlier that you worked with
5 Keith Raybon when you were at MBI.
6 A. Briefly, yes.
7 Q. What kind of work did you do together?
8 A. We didn't -- I mean, he originated loans
9 and brought them to Scott and Scott delegated them
10 throughout the office. That's basically it.
11 Q. How would you describe Keith Raybon
12 professionally?
13 A. I mean, is he professional or not
14 professional, is that what you're asking?
15 Q. Sure.
16 A. He's professional.
17 Q. Okay. What are you basing that opinion on?
18 A. He's not -- he talks eloquently, he dresses
19 decent. He -- you know, he doesn't come off
20 unintelligent.
21 Q. Do you think that his business practices
22 are professional?
23 A. I don't know. I mean, I personally -- from
24 my business dealings with him, I didn't really deal
25 with what he did. I mean, he developed the land. I
26
42
1 mean, I dealt with -- I dealt more with Michael
2 Davis.
3 Q. What about Michael Davis professionally, do
4 you feel like he was -- his business practices were
5 professional?
6 A. I guess. I mean, yeah. I mean, I really
7 don't have an opinion about it, one way or the other,
8 to be honest with you.
9 Q. Okay. You testified that ABN Amro ceased
10 to do business with Royal Lion in May, 2002, because
11 of what you said were questionable appraisals.
12 A. Uh-huh.
13 Q. Any idea how Royal Lion found out about
14 questionable appraisals?
15 A. Yes.
16 Q. Can you tell me about that?
17 A. I got a call from Michael Davis in April,
18 2001 -- or 2002, stating that he and Keith had just
19 had a meeting with Holly Heasley and Holly could no
20 longer appraise the properties the way that she was
21 appraising them.
22 And I said, "Well, what do you mean?"
23 Because I didn't know of any law changes or anything
24 and he said, "She said could no longer use the
25 appraised value as the sales price of the comps."
26
43
1 And I said, "Well, you can never do
2 that. Are you telling me that's what she's been
3 doing?" And he said, "She's a licensed appraiser,"
4 you know, "she knows her job." I said, "Well, if
5 you're telling me that's what she's been doing, you
6 can never do that. And if that's what she's been
7 doing, then that means that there's a problem."
8 So I called our alternate appraiser,
9 Pat, and I ran it by her, because I was, like, "Pat,
10 am I confused?" Because I really don't think that
11 you could ever do that. And she said, "No, you could
12 never do that. Are you telling me that's what she's
13 been doing?" I said, "I'm telling you that's
14 what" -- "Michael Davis just called and told me
15 that's what she's been doing." And she said -- and
16 we agreed at that time.
17 (Fire alarm sounding)
18 MR. SCOTT: Why don't we go off the
19 record.
20 THE VIDEOGRAPHER: The time is 9:39.
21 We are now off the record.
22 (Recess from 9:39 to 9:48)
23 THE VIDEOGRAPHER: The time is now
24 9:48. We are now on the record.
25 Q. Mrs. Nelson, we were interrupted a moment
26
44
1 ago and before the interruption, you were telling us
2 about a meeting in January of '02 that you had
3 with -- that you understood took place between
4 Michael Davis and Holly Heasley regarding the
5 practices of Holly Heasley.
6 A. It was April '02.
7 Q. April of '02. Sorry about the
8 interruption. Can you please continue or tell us
9 again what you understood the meeting to be about?
10 A. Michael Davis called and said that he and
11 Keith had just had a meeting with Holly Heasley and
12 that we needed to discuss my fees because they could
13 no longer appraise -- Holly could no longer appraise
14 the properties with the comps, using the appraised
15 value as the sales price.
16 And I said, "You could never do that.
17 Are you telling me that's what she said?" And he
18 said, "Well, she's a licensed appraiser. I'm sure,
19 you know, she was doing what she was supposed to be
20 doing.
21 And I said, "Well, if you're telling
22 me that's what she was doing, you can never tell
23 that, but I'm gonna find out." So I called Pat, who
24 did our other appraisals, and asked Pat if, in fact,
25 she could use the appraised value as the actual sales
26
45
1 price on the comps.
2 And she said, "No. Are you telling me
3 that's what she's been doing?" I said, "I'm telling
4 you that's what they told me she's been doing." And
5 Pat was very upset, said that she was concerned
6 because now that the comps that she had used that
7 were Holly's comps from Holly's appraisals would
8 affect her appraisals.
9 And, of course, I was upset because,
10 you know, that means that these appraisals have been
11 done incorrectly. And then I was really upset to
12 have to go tell Jackie that we have a problem,
13 because she wasn't ever involved in the loan side of
14 anything.
15 I mean, I didn't know really what to
16 do about -- and that's when we decided to no longer
17 do business with Emerson. Pat had decided to no
18 longer do business with Emerson because in light of
19 that fact, I mean, I couldn't ethically go and
20 continue to do business with them, based on that
21 information. And she -- Pat quit doing business.
22 About a week later, we got a letter
23 from Pat, listing the appraisals that she had done
24 that were done with Monopoly's comps, stating that
25 they were -- the values were incorrect, so forth.
26
46
1 That's basically it.
2 Q. Okay. Let's see if we can break that down
3 a little bit. You said that your mother was not in
4 charge of the loan side of things.
5 A. No.
6 Q. Does that mean you were in charge of the
7 loan side of things?
8 A. Well, I didn't -- she didn't do anything
9 with the loans.
10 Q. You did?
11 A. It was me and Candy.
12 Q. Okay. So you and Candy shared the
13 responsibility for the loan process?
14 A. Yes.
15 Q. Okay. And when you said you had -- you
16 learned of this meeting with Holly Heasley, who is
17 Holly Heasley?
18 A. She's with Monopoly.
19 Q. What is your understanding of Holly's role
20 at Monopoly?
21 A. I never met her personally. I never talked
22 to her personally.
23 Q. So she -- is she an appraiser with
24 Monopoly?
25 A. I believe so.
26
47
1 Q. How would you believe that -- or why would
2 you believe that Holly is an appraiser?
3 A. Well, she was on the appraisal request
4 forms that Candy and Tamara issued.
5 Q. Okay. So when you guys needed an
6 appraiser, you sent it to Holly at Monopoly?
7 A. Or Pat or --
8 Q. Or Pat. Was it first Holly and then later
9 you went to Pat because you said --
10 A. I don't remember. I didn't order
11 appraisals.
12 Q. Okay. And Pat would be who?
13 A. Lennon with AmeriStar.
14 Q. Okay. When you order an appraisal, and
15 let's assume you ordered it from Holly, you send a
16 request to Holly to do the appraisal. What
17 information did Holly have to perform the appraisal?
18 A. I don't know. I didn't order appraisals.
19 Q. Who ordered the appraisals?
20 A. Candy.
21 Q. Okay. Did you ever look at the forms that
22 Candy submitted to Holly?
23 A. No.
24 Q. Okay.
25 (Exhibit 402 marked)
26
48
1 Q. I'm showing you an exhibit that's been
2 marked as 402. Do you recognize that exhibit?
3 A. Yes. It's a Calyx form.
4 Q. What is Calyx?
5 A. Calyx is a mortgaging software.
6 Q. Did you use Calyx at Royal Lion?
7 A. Yes.
8 Q. Was that software that was custom in the
9 industry to use --
10 A. Yes.
11 Q. -- by mortgage brokers? And Calyx provided
12 these forms for you?
13 A. Yes.
14 Q. What else does Calyx do?
15 A. Well, it has your loan application form, it
16 has request for title. It has marketing material. I
17 mean, it has --
18 Q. So it has your basic software package of
19 documents that you're gonna need to do a loan?
20 A. Yes.
21 Q. So you've -- Candy, I assume -- you
22 testified filled out this request for appraisal?
23 MR. HOEG: Object to the form.
24 A. I don't know if she did this one
25 particular.
26
49
1 Q. Let's back up. As you're looking at
2 Exhibit 402, do you recognize Candy Powell's name
3 anywhere?
4 A. Her name is on the form, yes.
5 Q. Do you recognize her signature?
6 A. I don't -- I wouldn't know her signature.
7 Q. Okay. So in box five under "Signature Of
8 Lender," you cannot testify whether that's Candy's
9 name or not?
10 A. No, I cannot.
11 Q. But would you agree that this form came
12 from Royal Lion Mortgage?
13 A. Yes.
14 Q. Okay. Looking at this form, is this the
15 first time you've seen a request for appraisal form?
16 A. No, it is not.
17 Q. How many times have you seen documents that
18 look like this?
19 A. I have no -- I mean a ton of times,
20 probably.
21 Q. Okay. So you're familiar with this
22 document?
23 A. Yes, I am.
24 Q. I'd like you to take a look at Box 14,
25 estimated value.
26
50
1 A. Uh-huh.
2 Q. Is that number, $110,000?
3 A. That's what it says.
4 Q. Okay. Would that be, in the ton of forms
5 you've looked at, customary to put estimated value
6 and fill in that number before sending it off to an
7 appraiser?
8 MR. SCOTT: Objection, form.
9 A. I don't request appraisals, so I don't
10 know. I mean, I don't send them off.
11 Q. Do you recall in the ton of documents
12 you've looked at, that look just like request for
13 appraisal, Exhibit 402, seeing estimated value filled
14 in with any number?
15 A. Yes.
16 Q. Would you say that's usually what happens?
17 MR. GOODLING: Objection, form.
18 MR. HOEG: Objection, form.
19 A. I mean, I guess whoever orders the -- I
20 don't -- I mean, I don't know. I don't order
21 appraisals.
22 Q. But it's your knowl-- to your knowledge, in
23 the documents you've looked at, they have a number
24 filled in under estimated value?
25 A. I know on this document it does.
26
51
1 Q. Can you compare that with the other
2 documents you've seen?
3 MR. GOODLING: Objection, form.
4 A. I mean, honestly, I couldn't honestly tell
5 you because I don't pay that close -- I mean, I don't
6 ever pay that close attention to them because I
7 don't -- the information on them isn't pertinent to
8 what I do.
9 Q. Okay. This form is then sent to the
10 appraiser who performs an appraisal?
11 A. Right.
12 Q. To your knowledge, does the appraisal ever
13 come back to you?
14 A. No, it does not.
15 Q. What happens to the appraisal after the
16 appraiser does it?
17 A. It goes to the processing department.
18 Q. Okay. Processing department where?
19 A. At the mortgage -- yeah, I mean -- at the
20 company or --
21 Q. Okay.
22 A. -- at the broker.
23 Q. Okay. In these -- in these loans, did the
24 appraisal go to Royal Lion for packaging so it was
25 sent to --
26
52
1 A. Yes.
2 Q. -- the title companies?
3 A. Yes.
4 MR. HOEG: Object to the form.
5 Q. You testified that the forms -- the
6 appraisals that are submitted from the appraiser are
7 sent to underwriting.
8 A. No. I didn't say that.
9 Q. Okay. Help me understand what happens to
10 the forms after -- let's take just the appraisal.
11 After it's prepared and completed, where does it go?
12 A. Goes to the processor.
13 Q. Okay. Who was the processor?
14 A. In what case? In this case? You need to
15 be specific.
16 Q. Okay. The processor -- is there a
17 processor at Royal Lion Mortgage?
18 A. Yes, there is.
19 Q. Who are the names -- what are the names of
20 the processors at Royal Lion?
21 A. Candy Powell.
22 Q. Okay. So Candy Powell served as the
23 processor at Royal Lion?
24 A. Yes.
25 Q. Did anyone else at Royal Lion serve as a
26
53
1 processor?
2 A. Tamara was setup clerk. Other than that,
3 no.
4 Q. Okay. So would it be fair to say that once
5 an appraisal is completed and sent to a processor, it
6 would go to either Candy Powell or Tamara Davis?
7 A. Yes, it would.
8 Q. Okay. Would it surprise you that the
9 appraisal that was prepared was equal to or greater
10 than what this estimated value shows?
11 MR. HOEG: Objection, form.
12 A. I mean -- I mean, I really don't have a --
13 I mean, probably not. I mean, I don't really have an
14 opinion about it.
15 Q. Okay.
16 MR. HOEG: David, why are we asking
17 questions about Perla Randall, who is not one of the
18 expedited cases, which we have an order abating
19 discovery about case other than the expedited cases?
20 MR. SCOTT: I'm not requesting any
21 information directed to this borrower. I'm only
22 asking about the form and the way the forms are
23 prepared.
24 MR. HOEG: Well, in fact, you just
25 asked, "Would it surprise you in this case?"
26
54
1 MR. SCOTT: Okay.
2 MR. HOEG: So I'm gonna object to any
3 discovery about anything other than the expedited
4 cases.
5 MR. SCOTT: That's fair.
6 Q. To your knowledge, Mrs. Nelson, do the
7 appraisals that are sent from the appraiser equal to
8 or greater than the request for appraisal set by
9 Royal Lion?
10 MR. GOODLING: Objection, form.
11 MR. HOEG: Form.
12 A. I don't know. I mean, we rely on our
13 appraiser to give us a value. I don't know how it
14 pertains to any value that's on this form.
15 Q. Okay. After you notified Pat Lennon about
16 what was going on, you testified that she prepared a
17 letter.
18 A. Yes.
19 Q. Do you recall what the letter said?
20 A. No, I don't. I mean it just had a list of
21 the appraisals that she had done where she had used
22 Monopoly's comps as her comps and -- I mean, I don't
23 really know how that -- I mean, I don't know how that
24 works, but to where she had used information obtained
25 from Monopoly, that if that information was
26
55
1 incorrect, that it impacted her appraisals and she
2 feels notifying all the borrowers that she had done.
3 And she had sent them out to all the people she had
4 done the appraisals for, individuals, that their
5 appraisal might be incorrect.
6 Q. And what did you do with this information?
7 A. We submitted it to an attorney.
8 Q. Okay. And I don't want to know what you
9 talked about with your attorney. Did you ever notify
10 the lender about Pat Lennon's letter?
11 A. I, personally? No. She sent it to the
12 lenders.
13 Q. She sent it to ABN Amro, for instance?
14 A. I guess. She sent it to the lenders.
15 Q. Okay. Did you receive anything in writing
16 from the Monopoly Company about this?
17 A. No. I never did.
18 Q. You testified earlier about Keith Raybon at
19 Emerson Manufactured Homes.
20 A. Okay.
21 Q. Who else, at Emerson, did you work with
22 other than Michael Davis?
23 A. I mean, I was in contact with, mostly,
24 Michael Davis. Sometimes Mike Grimes. Sometimes
25 Charity Kelly. Other than that, not really anybody.
26
56
1 Q. How often would you talk with Michael
2 Davis?
3 A. Everyday.
4 Q. What would you talk about?
5 A. The closing schedules. They always wanted
6 things done fast. How we could be more efficient and
7 do things, you know, faster. Other than that...
8 Q. Do you feel like they rushed you?
9 A. No.
10 Q. Okay. But they just wanted to be more
11 efficient?
12 A. Yes.
13 Q. Did you ever have any information or
14 knowledge of anyone at Emerson putting money into
15 borrowers' accounts?
16 A. No.
17 Q. Nobody told you about that?
18 A. No. At Emerson?
19 Q. Anywhere.
20 A. No.
21 Q. Nobody's ever told you about that?
22 A. Now?
23 Q. Well, during the time in 2001, 2002, did
24 you ever learn about anybody doing this?
25 A. No.
26
57
1 Q. But do you now know that this occurred?
2 A. I know that probably in latter 2002 -- it
3 was after my son was born, so my husband came to me
4 because they had a guy that worked with him at the
5 police department, his son had bought a home from
6 them, and I don't -- and I didn't do the loan, but
7 his son had moved out because -- and left the
8 house -- I don't know the story for a fact, but he
9 just came to me because the guy had told him that
10 they had given his son money in the amount of $5,000
11 and put it into their bank account and then stopped
12 payment on the check.
13 Q. I see.
14 A. But we were no longer doing business with
15 Emerson at the time.
16 Q. Now, this was from somebody your husband
17 worked with?
18 A. Yes. His son.
19 Q. This is a partner of your husband's?
20 A. No. He's a police officer. I mean, it was
21 another police officer's son had bought a home from
22 Emerson.
23 Q. Can you recall the other police officer's
24 name?
25 A. Terry Elam.
26
58
1 Q. Terry Elam?
2 A. E-L-A-M.
3 Q. E-L-A-M. And that's Terry with a Y?
4 A. I believe. I don't know.
5 Q. What was Terry's son's name?
6 A. I don't know.
7 Q. Okay. But it was Terry Elam's son who
8 purchased a home and it involved a loan closed
9 with -- brokered by Royal Lion?
10 A. No.
11 Q. Okay. Had nothing to do with Royal Lion?
12 A. No.
13 Q. Do you know whether Terry's son purchased a
14 home from Emerson?
15 A. It was from Emerson.
16 Q. Okay. How closely would you say you worked
17 together with Emerson?
18 A. I mean, I did their mortgages. I mean...
19 Q. Roughly, how many mortgages did you do with
20 Emerson?
21 A. I don't remember.
22 Q. How often -- you said you spoke with
23 Michael Davis everyday?
24 A. Yes.
25 Q. Were there ever any discussions with anyone
26
59
1 at Emerson as to how much the sales price should be
2 for the manufactured homes?
3 A. We -- there wasn't a sales price. It was a
4 payoff. They were refinances.
5 Q. Explain how that process works.
6 A. Well, refinance is a renewal and extension
7 of an existing lien and title.
8 Q. Was it your understanding that the borrower
9 already had title to the house?
10 A. We had title commitments that showed them
11 entitled to the home.
12 Q. What do you mean by title commitments?
13 A. Issued from title companies.
14 Q. Prior to you getting involved in the
15 transaction?
16 A. Prior to us -- yes. You have to have title
17 commitments to close a loan.
18 Q. So you had title commitments from title
19 companies saying that they were preexisting liens?
20 A. Yes.
21 Q. And on that basis you refinanced the loans
22 for lesser values -- for lesser payments?
23 A. Yes.
24 Q. Did you ever discuss what the refinance
25 amount would be with Emerson?
26
60
1 A. They have to issue you a payoff in
2 writing.
3 Q. So they issued a payoff to you of what they
4 wanted the refinance to be?
5 A. Well, it's a payoff of the existing lien.
6 Q. And, to your knowledge, were there existing
7 liens from other lienholders?
8 A. I'm not -- I didn't review the title
9 commitments personally, so...
10 Q. Was it in the standard of practice of Royal
11 Lion to review these title commitments?
12 A. They're sent to attorneys for review.
13 Q. Okay. If Keith Raybon testifies that you
14 discussed with him how much to sell the home for or
15 how much the refinance should be and that you arrived
16 at this amount together, would he be lying?
17 MR. SCOTT: Objection, form.
18 MR. HOEG: Objection, form.
19 A. He would totally be lying.
20 Q. If Michael Davis testifies that you
21 discussed with him how much this amount should be,
22 would he be lying?
23 MR. SCOTT: Objection, form.
24 MR. HOEG: Objection, form.
25 A. I don't care what their values -- I mean
26
61
1 what their payoff is. It doesn't matter to me.
2 Q. Why doesn't it matter to you?
3 A. Because I'm gonna refinance the lien. I
4 don't -- I mean, I don't -- whatever their payoff is,
5 is their profit. I mean, it's their -- it's what
6 they are owed, what they're in contract with with
7 those current owners. Doesn't -- it doesn't matter
8 to me what that value is.
9 Q. What about what Royal Lion's profit?
10 A. It doesn't matter.
11 Q. Isn't it true that Royal Lion gets a
12 commission off the loan?
13 A. You get paid points, yes, but if you take
14 one percent, based on 100,000 and 70,000, I mean, the
15 difference is $300. What's really $300, you know.
16 It doesn't -- it's not gonna -- it doesn't matter to
17 us. I mean, we do loans as little as 25,000; as
18 large as, you know, over a million. It didn't
19 matter.
20 Q. But you were doing several hundred with
21 Emerson?
22 A. Probably. I mean, I don't remember the
23 exact amount.
24 Q. Okay.
25 MR. SCOTT: Why don't we take a
26
62
1 break.
2 THE VIDEOGRAPHER: The time is 10:06.
3 We are now off the record.
4 (Recess from 10:06 to 10:20)
5 THE VIDEOGRAPHER: The time is 10:20.
6 We are now on the record.
7 Q. Mrs. Nelson, we're back from break. You
8 were talking to me earlier about a meeting that you
9 understood took place between Keith Raybon and
10 Michael Davis and Holly Heasley. Do you know whether
11 Hollis Heasley was present?
12 A. I have no idea.
13 Q. Do you know Hollis Heasley?
14 A. No, I don't.
15 Q. Have you ever heard his name before?
16 A. Yes, I have.
17 Q. What is your understanding of Hollis
18 Healsey's involvement?
19 A. I mean, I just heard his name associated
20 with Monopoly.
21 Q. Do you know whether he's an appraiser or
22 not?
23 A. I have no idea.
24 Q. I understood you to say that part of the
25 issue in the meeting was the quality of the
26
63
1 appraisals that were being prepared. Correct?
2 A. I didn't use the word quality.
3 Q. What word would you use?
4 A. Just the way they were being done.
5 Q. What did you or anyone at Royal Lion do to
6 make sure that they were being done properly?
7 A. I didn't really do anything for or
8 against. That was Candy's department. That was
9 processing department.
10 Q. It was Candy's department to make sure that
11 the appraisals were --
12 A. Well, there's no way to really make sure
13 that they're done prop-- I mean, you're relying on a
14 licensed appraiser to do their job and what they
15 provide you and they're licensed by the State the
16 same way.
17 There's not really any way to go back
18 and see if what they have given you is accurate or
19 not accurate. There's no way for us, as a mortgage
20 broker, to do that.
21 Q. So there's -- so you would agree that Royal
22 Lion didn't do anything to make sure that the
23 appraisals were done properly?
24 A. There was nothing that we could do. I
25 mean, there was no way to do anything.
26
64
1 Q. Royal Lion didn't do anything to make sure
2 the comparables were being used properly?
3 A. There's no way to verify that her
4 comparables are correct or incorrect for us.
5 Q. You also testified that the value of the
6 appraisals has slight impact with the amount of
7 points that you make as a mortgage broker.
8 A. No, I didn't.
9 MR. SCOTT: Objection, form.
10 MR. HOEG: Objection, form.
11 Q. Okay. Tell me -- help me understand what
12 you were talking about because I heard you say
13 something about $300 wasn't really significant.
14 A. You asked me if -- about the payoffs if --
15 what -- their payoffs affected us, and I said no.
16 Q. Okay.
17 A. And I used that as an example.
18 Q. Okay.
19 A. The difference between a $70,000 loan and a
20 $100,000 loan is only about $300 to us so it really
21 don't mat-- I mean, it's just an example.
22 Q. Okay.
23 A. What -- the amount of the loan, to us, does
24 not matter.
25 Q. And I appreciate that it doesn't matter in
26
65
1 that one case, but you'd agree with me --
2 A. In any case.
3 Q. Well, you'd agree with me that if we were
4 talking about -- we're not talking about just one
5 loan here, we're talking about several hundred
6 loans.
7 A. Uh-huh.
8 Q. So if you take several hundred loans, then
9 it would become significant, the level of your
10 points, correct?
11 A. Not really. I mean, a hundred -- no. I
12 mean -- I'm sure over, you know, so many loans, I
13 mean your dollar value on your loan amount sure would
14 make a difference if you thought about it, but,
15 honestly, I never thought about it like that.
16 I mean, perfectly honest with you, I
17 never did. I mean, I do a $25,000 loan the same way
18 I do a $350,000 loan. It is no different to me. I'm
19 gonna make money either way.
20 Q. You testified earlier about $1,000 that
21 your mother put up to start up the business.
22 A. Yes.
23 Q. Do you know whether insurance was provided?
24 A. For the company?
25 Q. Yes.
26
66
1 A. Yes. We have errors and omissions
2 insurance.
3 Q. How was the errors and omissions insurance
4 paid for?
5 A. I don't know.
6 Q. Have you heard of Tom Lipar?
7 A. No.
8 Q. What about Eric Lipar?
9 A. No.
10 Q. Do you know Willard Hodge?
11 A. No.
12 Q. Do you know whether Willard Hodge was
13 working at MBI?
14 A. I have no -- no.
15 Q. Nor his wife Patty Hodge?
16 A. No.
17 Q. What about Tom Wilson?
18 A. Not while I was there.
19 Q. At all?
20 A. No. I mean, I don't know -- I've never
21 heard of those people.
22 Q. Okay. Did you ever do any work with
23 anybody at Lonestar Ranch?
24 A. No.
25 Q. Have you heard of Michael Bowden?
26
67
1 A. Yes.
2 Q. Who is Michael Bowden?
3 A. He's an appraiser in the Conroe area.
4 Q. Did you do any appraisals -- or order any
5 appraisals from Michael Bowden?
6 A. Yes.
7 Q. Now, you testified earlier that on that
8 sheet Candy was the one who requested the
9 appraisals.
10 A. Yes.
11 Q. Did you also request appraisals?
12 A. No, I did not.
13 Q. So you personally didn't request any
14 appraisals from Michael Bowden?
15 A. I, personally, did not. When I worked at
16 MBI, I did.
17 Q. Okay. So you worked with Michael at MBI.
18 And you used his appraisals for MBI closings?
19 A. You have a list of appraisers. I mean, I
20 might have used him once or twice.
21 Q. When you were at MBI, did you prepare
22 documents like that for request for appraisals?
23 A. Every once in awhile. Not very often.
24 Only in the event that the processor was not at the
25 office.
26
68
1 Q. And when you prepared those requests for
2 appraisal forms when you were at MBI, did you ever
3 provide an estimated value for Mr. Bowden?
4 A. No.
5 Q. Why are appraisals important?
6 A. You have to know the value of the property
7 that you're financing.
8 Q. Why would an appraiser need to know an
9 estimated value of a piece of property?
10 A. I don't know.
11 Q. Why would a broker need to know that?
12 A. That's a -- I mean, we don't know that. We
13 go off what the appraisal says. The estimated value
14 doesn't mean anything to us.
15 Q. Why would it be important for the mortgage
16 lender to know what the appraised value of a piece of
17 property is?
18 MR. HOEG: I'm sorry. What was the
19 question?
20 MR. SCOTT: Why would a mortgage
21 lender need to know what the estimated value of a
22 piece of property is -- appraised value of a piece of
23 property is?
24 A. They need to know the value of their
25 collateral.
26
69
1 Q. You understand that the appraisals that
2 were performed in this case were flawed?
3 A. No.
4 MR. GOODLING: Wait a second. What
5 did you say.
6 Q. You understand that the appraisals -- let's
7 back up.
8 You testified earlier that you
9 understood there was a meeting and Holly Heasley and
10 Monopoly Company were not doing appraisals properly.
11 Is that correct?
12 A. That's what I was told.
13 Q. So, to your knowledge, those appraisals
14 were not done properly?
15 MR. BURROWS: Objection, form.
16 A. From Holly Heasley?
17 Q. Correct.
18 A. That's what I was told.
19 Q. Okay. And you have no idea what
20 comparables were used to render those appraisals?
21 A. I have no idea.
22 Q. Did you talk to any appraiser about how
23 they did appraisals?
24 A. No. I mean, after we quit using Monopoly
25 and Pat was no longer doing them, I sent a letter out
26
70
1 to Tamara and had a meeting with her, because Candy
2 was no longer with us at that time, that all the
3 comparables -- to check the appraisals, that all
4 comparables had to be from the multiple listings
5 system, MLS.
6 Q. Was it your understanding that they weren't
7 being used by MLS prior to that?
8 A. Prior to my conversation?
9 Q. With Pat Lennon?
10 A. Well, Pat Lennon confirmed that she got
11 hers from Monopoly, so -- and I talked to an
12 underwriter and they said that -- you know, and asked
13 them how to -- from future to not have -- because we
14 don't have a check and point system, there's no way
15 for a broker to check and point comps.
16 The only thing that we can rely on is
17 the appraiser, and to secure us -- to help us, they
18 have to come -- for future reference, on appraisals,
19 they needed to have MLS comps.
20 Q. Did you ever have Pat Lennon go back and
21 redo her appraisals so that it would use MLS comps?
22 A. I didn't use Pat Lennon anymore either.
23 Pat Lennon wasn't doing -- we didn't use Pat or
24 Monopoly. And not that I had anything against Pat, I
25 mean, it was just -- you know, we just -- I quit
26
71
1 doing business all together pretty much at that point
2 within -- we had a handful of mortgage loans left to
3 close.
4 We had to reorder appraisals on every
5 single one of them with appraisers we found out of
6 the phone book, and the specification was that all
7 the comps had to be MLS. That was per the advice of
8 an underwriter that I had spoke to on the situation.
9 Q. Who did you speak with?
10 A. I don't -- it was -- I don't remember their
11 name. It was a general question. I called one of
12 our lenders and asked them.
13 Q. Do you recall which lender you spoke with?
14 A. MIT Lending.
15 Q. So it was an underwriter with MIT Lending?
16 A. Yes.
17 Q. Did you ever have the appraisals that were
18 done based on Holly Heasley's or Monopoly Company's
19 comps redone?
20 A. No.
21 Q. Why didn't you do that?
22 A. Just the cost alone. I mean, $300 -- $350
23 an appraisal, you know, I mean -- and it was all -- I
24 mean, I didn't have -- I'm not an appraiser. I mean,
25 I'm just going off of what Michael Davis had the
26
72
1 conversation with her and my conversation with Pat.
2 Q. Did you follow up with anything directly
3 with Monopoly Company after you talked with Michael
4 Davis?
5 A. No, I didn't. I've never even spoke to
6 Holly Heasley. Tamara was instructed to not order
7 appraisals from them at all, and all appraisals had
8 to have MLS comps.
9 Q. Do you have any knowledge as to whether an
10 appraiser has to meet a certain target in coming up
11 with an appraised value?
12 A. No.
13 Q. Isn't it true that Royal Lion's job in the
14 transaction was to close the loan and get an
15 appraisal?
16 MR. HOEG: Objection, form.
17 A. I mean, it was -- we closed the loan, but
18 you obtain other things other than the appraisal.
19 Q. Isn't it true that part of the closing
20 process for Royal Lion was to obtain an appraisal?
21 A. Yes, it was. From a licensed appraiser.
22 Q. Correct. And you'd agree with me that it's
23 a problem with properties are overvalued?
24 MR. HOEG: Objection, form.
25 A. I would probably agree with you, yes.
26
73
1 Q. And that the higher the appraised value,
2 the higher the loan would be?
3 A. Not necessarily.
4 Q. Can you explain that?
5 A. I mean, the loan amount is based on the
6 payoff. It has nothing to do with the appraisal.
7 Q. Did Royal Lion ever have any loans that
8 were not refinance loans?
9 A. Yes.
10 Q. And what kind of loans were those?
11 A. Purchase loans.
12 Q. Okay. How would a purchase loan be dealt
13 with, with respect to an appraised value?
14 A. It doesn't matter. I mean, as long as the
15 appraisal is for at least the purchase price, because
16 the loan value is based off the lesser of the two.
17 Q. So the higher the appraised value, the
18 higher the purchase price?
19 A. No. Not necessarily. The lesser of the
20 two. So if you have a house that's selling for
21 $50,000 and only appraises for 48, you're only going
22 to be able to loan off of 48, so it needs to appraise
23 for at least your purchase price.
24 Q. To your knowledge, were there ever any
25 appraisals that were less than for what the purchase
26
74
1 price was going to be?
2 A. I never got appraisals so I don't -- not to
3 my knowledge.
4 Q. Nobody at Royal Lion ever requested copies
5 of appraisals?
6 A. You order appraisals, yes, so Candy ordered
7 appraisals and Tamara ordered appraisals.
8 Q. And she got them back because she was the
9 processor?
10 A. Yes.
11 Q. But you never saw any?
12 A. I never saw any.
13 Q. What happens if an appraiser like Monopoly
14 Company overvalues the property?
15 A. I don't really know. I mean, I don't
16 know.
17 Q. You have no idea what that does to the
18 transaction?
19 A. I mean -- what do you mean? I mean, if
20 it's...
21 Q. You've been in the mortgage broker industry
22 for some time and you've worked with appraisals. If
23 an appraiser overvalues the property, what's the
24 result of that?
25 A. This is the first instance I've had of it
26
75
1 so, I mean, I don't know, I mean, what the result is
2 other -- I mean we rely on the appraiser to give us
3 an appraisal.
4 I mean, they -- it depends -- I don't
5 know -- you know, they get their information either
6 from MLS or, you know, the sales in the area. I
7 mean, it -- I never thought of, you know, them being
8 overvalued, so I don't -- I mean, I really don't know
9 what -- I mean, is it wrong? Yes. But I don't -- I
10 mean, I don't know what else you're asking.
11 (Exhibit 403 marked)
12 Q. Let me show you a document. I'm going to
13 mark Exhibit 403, and this is a previously used
14 document, Exhibit 145. Have you seen Exhibit 14--
15 403 before, please?
16 A. I don't remember.
17 Q. Do you recognize this kind of piece of
18 paper?
19 A. Yes.
20 Q. How do you recognize this document?
21 A. It's a universal residential loan
22 application.
23 Q. And what is that, generally?
24 A. It's the loan application. We use the
25 information obtained on it to get financing.
26
76
1 Q. Okay. Would you go ahead and turn to the
2 last page of Exhibit 403? Is that your signature on
3 the bottom?
4 A. No, it's not.
5 Q. It's not your signature?
6 A. No, it's not.
7 Q. Okay. How --
8 MR. HOEG: Can I stop you for a
9 second?
10 MR. SCOTT: Sure.
11 MR. HOEG: We're coming up one short.
12 And I hate to put the onus on you, but since you're
13 not actually in the case...
14 MR. SCOTT: Are you okay?
15 MR. HOEG: I'm fine.
16 Q. How do you know that this last page is not
17 your signature?
18 A. Because I know my signature.
19 Q. Okay. Do you know who signed your name?
20 A. No, I don't.
21 Q. Was it customary at Royal Lion for other
22 people to sign your name?
23 A. They shouldn't have been signing my name.
24 Q. Do you know whether Candy Powell ever
25 signed your name?
26
77
1 A. From her deposition, yes.
2 Q. Did you have knowledge, before reading her
3 deposition, that Candy Powell signed your name?
4 A. No.
5 Q. Did you ever sign your name to these
6 documents?
7 A. I have, yes.
8 Q. Roughly, how many times have you signed
9 your name to a Uniform Residential Loan Application?
10 A. Well, it's only become an underwriting
11 condition probably within the last two years, so
12 maybe ten times.
13 Q. Okay. Have you read this document before,
14 if you've only signed it ten times?
15 A. Yes, I have.
16 Q. Okay. And you do agree that you have
17 signed documents like this one before?
18 A. Yes.
19 Q. If you look on the left -- left of the
20 signature there, it's got a face-to-face interview --
21 A. Yes.
22 Q. -- and it's checked. Do you know whether
23 an interview was had face-to-face prior to signing
24 these documents?
25 A. It wasn't. That's a default in the Calyx
26
78
1 software at the time.
2 Q. I've heard that, but explain to me how that
3 works.
4 A. There's -- the software -- I mean, they
5 come out with new versions all the time, but there's
6 defaults, you know, in any software --
7 Q. Sure.
8 A. -- and, you know, it's just a default.
9 It's there. If you don't check it -- you know, if
10 you don't move it from face-to-face or by mail to
11 mail or telephone, it just stays face-to-face.
12 Q. Can that check mark be removed from all
13 three boxes?
14 A. I don't know.
15 Q. Have you ever seen a blank Uniform
16 Residential Loan Application where none of those
17 three boxes are checked?
18 A. No.
19 Q. So it's always been at least one box
20 checked?
21 A. Yes.
22 Q. And, to your knowledge, face-to-face is the
23 default on that software?
24 A. Yes, it is.
25 Q. So if somebody doesn't go in there and move
26
79
1 it, they are basically saying it's been done
2 face-to-face?
3 A. Yes.
4 Q. Do you know whether any brokers met
5 face-to-face with the borrower prior to -- at Royal
6 Lion prior to completing the Uniform Residential Loan
7 Application?
8 MR. GOODLING: Objection, form.
9 A. Yes.
10 Q. You do know?
11 A. Yes, I did.
12 Q. You've met with borrowers?
13 A. Yes, I have.
14 Q. Can you recall the names of any of the
15 borrowers you met face-to-face with?
16 A. Kim and Jason Crogan.
17 Q. Crogan. Okay.
18 A. I don't -- I mean, that was over two years
19 ago, so --
20 Q. I understand.
21 A. -- I mean, I don't remember their names.
22 Q. Where would you have been when you signed
23 these documents?
24 A. I didn't sign this document.
25 Q. I understand not this one, but you
26
80
1 testified that you've signed about ten of them.
2 A. Uh-huh.
3 Q. Where would you have signed them?
4 A. I guess in my -- I don't know. In my
5 office.
6 Q. Would you have signed them while you were
7 working at Royal Lion or --
8 A. If I -- if I -- if I -- no. I mean -- yes,
9 I did sign them when I worked at Royal Lion,
10 actually, at the end.
11 Q. Okay. So somebody at Emerson, for example,
12 would have gotten the form to you for you to sign?
13 A. No.
14 Q. Okay. So you would have signed it before
15 any borrower would have signed it?
16 A. No. You don't sign it until the end.
17 Q. So explain to me how the document gets from
18 the seller to Royal Lion for your signature.
19 MR. HOEG: Objection, form.
20 A. Well, we issue the document. We send the
21 package out --
22 Q. Okay.
23 A. -- to the borrower --
24 Q. Okay.
25 A. -- and they sign it and send it back.
26
81
1 Q. Did the seller have anything to do with
2 this document then?
3 A. We would send the package over to them.
4 Q. How often would you bring documents to
5 Emerson?
6 A. I didn't bring documents to Emerson.
7 Q. To your knowledge, did anybody at Royal
8 Lion ever bring documents to Emerson for the loan
9 application?
10 A. Tamara Davis.
11 Q. Okay. How often would Tamara Davis go over
12 to Emerson to drop off these applications?
13 A. Daily.
14 Q. Okay. You testified about Calyx. Is that
15 the only software application that you guys use?
16 A. Yes.
17 Q. Okay. And Calyx, you testified earlier,
18 also has those forms that you can fill out and submit
19 to other parties, right?
20 A. Yes.
21 Q. The information on the 1003 on this Exhibit
22 403 --
23 A. Uh-huh.
24 Q. -- is that inputted into anywhere?
25 A. It's inputted into the software.
26
82
1 Q. What software is that?
2 A. Calyx.
3 Q. Okay. So that's also inputted into Calyx?
4 A. Uh-huh.
5 Q. And what happens after that information is
6 submitted into Calyx?
7 A. It's printed up.
8 Q. And then what happens to it?
9 A. It's -- what do you mean? I mean, what do
10 we do with it? I mean --
11 Q. Sure. Does that information end up going
12 somewhere?
13 A. Yes. We submit them to the lenders.
14 Q. Okay. So the mortgage lender gets the
15 information that you guys input into Calyx?
16 A. Yes.
17 Q. Okay. Do you verify the information on the
18 loan application before you submit it into Calyx?
19 A. I don't.
20 Q. Somebody at Royal Lion does?
21 A. Candy.
22 Q. Candy Powell verifies information?
23 A. The processing department in any mortgage
24 company verifies the information.
25 Q. Okay. Do you know whether the information
26
83
1 in Calyx was submitted more than once on the same
2 borrower?
3 A. Submitted to where?
4 Q. To the mortgage lender.
5 A. I have no idea. I don't know why it would
6 be.
7 Q. Why not?
8 A. I mean you have a preliminary and then a
9 final 1003, so, I mean, they're both submitted to the
10 lender.
11 Q. So you would estimate that information
12 inputted into the computer software's submitted to
13 the lender maybe twice?
14 A. Maybe.
15 Q. Would it surprise you if it's submitted
16 more than that?
17 A. Probably, yes.
18 Q. Why would that surprise you?
19 A. I mean, if it's -- why would it need to
20 be? I mean, the only time you would resubmit the
21 information is if, you know, something was incorrect
22 the first time.
23 Q. If there was a typo, you mean?
24 A. Yeah. Like a name misspelled or street or
25 in their name or maybe address numbers transposed or
26
84
1 something. But other than that, I mean...
2 Q. Other than that, there would be no reason
3 to submit documents through Calyx or any other
4 computer software system more than once?
5 A. Probably not, no.
6 Q. It's your testimony that a mortgage lender
7 would expect its brokers to be honest and
8 trustworthy, right?
9 MR. GOODLING: Objection, form.
10 MR. HOEG: Objection, form.
11 A. Yes.
12 Q. And the mortgage broker should have the
13 mortgage lender's best interest in preparing the loan
14 transaction?
15 MR. HOEG: Objection, form.
16 A. Yes.
17 Q. Are you aware of any information on Uniform
18 Residential Loan Applications that was submitted that
19 was false?
20 A. No.
21 Q. Other than Candy Powell, do you know of
22 anybody else who submitted information into the Calyx
23 computer system?
24 A. Everybody had access to it.
25 Q. Did you have access?
26
85
1 A. Yes, I did.
2 Q. Did you submit information into Calyx,
3 based on the 1003's?
4 A. I submitted information based on what I was
5 provided by the borrower.
6 Q. And you relied on Candy Powell to verify
7 that information?
8 A. Yes.
9 Q. Let's turn for a second to gift funds.
10 What are gift funds?
11 A. Gift funds only apply in purchase
12 transactions.
13 Q. Have you had experience with gift funds
14 before?
15 A. On purchase transactions, yes.
16 Q. Can you tell me a little bit about that
17 process?
18 A. Well, you can get gifts from noninterested
19 relatives, employers. A gift is a gift. It's a
20 non-- it's something you don't have to pay back.
21 Q. Okay. And what are they used for in
22 connection with purchases of real estate?
23 A. They're used towards your down payment and
24 closing costs.
25 Q. What's a two-for-one buy down?
26
86
1 A. I have no idea.
2 Q. You've never heard of a two-for-one buy
3 down?
4 A. I've heard of buy down, but I don't have
5 any idea what two-for-one buy down is.
6 Q. Okay. You testified that gift funds are
7 used for down payment. What's the minimum percentage
8 of a gift that a lender would require for a down
9 payment?
10 A. Depends on what program.
11 Q. Okay. What are the different programs?
12 A. Well, you have hundred percent financing,
13 which you can finance up to a hundred percent of the
14 sales price and/or appraised value.
15 Q. But is that hundred percent all from the
16 gift?
17 A. No.
18 Q. Okay. So --
19 A. But then you have closing costs on top of
20 that, and the gift can be used towards your closing
21 costs.
22 Q. Okay. When gifts are used for down
23 payment, what's the percentage, generally, or the
24 minimum percentage that a lender would require?
25 A. Depends on what type of loan you're doing.
26
87
1 Q. If you're doing a purchase loan?
2 A. It depends on what type, if it's
3 conventional, FHA or subprime.
4 Q. Let's assume it's FHA.
5 A. Six percent.
6 Q. So six percent would be the minimum that
7 the lender would probably require for a gift?
8 A. Not require. It's the maximum they allow.
9 Q. What's the minimum they allow?
10 A. I don't know. I don't do FHA loans,
11 really.
12 Q. Okay. So somewhere between -- up to six
13 percent would be an amount that the mortgage lender
14 would require --
15 A. Would allow.
16 Q. Would allow for a down payment from a gift?
17 A. Yes.
18 Q. Why would --
19 A. They allow up to 20 percent, actually.
20 Q. Okay.
21 A. On a conventional loan, if you finance an
22 80 percent LTB, you can -- all 20 percent can be a
23 gift.
24 Q. And why would gifts need to be more than
25 the six or -- six percent?
26
88
1 A. Some people want their payments less. If
2 their family has the money to give them or their
3 employer or whatever -- they can get it from their
4 401(k), they can get it from -- you know, as long as
5 it's not repayment.
6 Q. What about for approval process? Does it
7 have any impact with getting approved, based on how
8 much the down payment is going to be?
9 A. I mean -- no. I mean, a gift -- actually,
10 it's harder to get a loan with a gift approved than
11 it is if it's your own money.
12 Q. Is it harder to get a gift approved if
13 there's a higher gift, like a 20 percent gift versus
14 a three percent or six percent gift?
15 A. No. I mean, it's all computer automated.
16 I mean, I wouldn't think so. I don't know.
17 Q. To your knowledge, were any of these
18 borrowers credit risks?
19 A. No.
20 Q. Did they all have good credit?
21 A. No.
22 Q. Did they have bad credit?
23 MR. HOEG: David, when you say "these
24 borrowers," are you talking about the five or talking
25 more generic.
26
89
1 MR. SCOTT: The borrowers that she
2 dealt with at Royal Lion. She testified that she met
3 individually with borrowers, that she's put together
4 loan applications for particular borrowers.
5 MR. GOODLING: Well, are we talking
6 about this case or are we talking about in general?
7 MR. SCOTT: Let's limit it.
8 Q. The borrowers that are involved in this
9 case --
10 A. Uh-huh.
11 Q. -- are you familiar with who they are?
12 A. I mean, I did their loans.
13 Q. Okay. And the borrowers that were involved
14 in these cases -- this case, would you describe their
15 creditworthiness?
16 A. It varied.
17 Q. Okay.
18 A. You know, you have some with really good
19 credit and some with good credit and, you know, bad
20 old credit, but with reestablished credit, I mean, as
21 much as I remember. This is going back three years
22 almost now.
23 Q. Have you heard of a preclosing before?
24 A. No.
25 Q. To your knowledge, were loan applications
26
90
1 signed that showed a refinance rather than a purchase
2 of a home?
3 A. Yes. They were done as refinances.
4 Q. Let's take a look at the first page of
5 Exhibit 403. In Exhibit 403, in the first box on the
6 top, that's for a conventional loan; is that correct?
7 A. Yes.
8 Q. And the amount of the loan is how much?
9 A. Looks like $106,000.
10 Q. Okay. And what was the purpose of the
11 loan? Was it a purchase or refi?
12 A. It's a refinance.
13 Q. Okay. And the year that it was acquired?
14 A. 2002.
15 Q. When it says the year that it was acquired
16 is 2002, what does that mean in terms of this
17 particular borrower's ownership in the property?
18 A. He bought the property in 2002.
19 Q. And he was refinancing it when?
20 A. Well, it looks like 2002. He's only been
21 there point one months.
22 Q. Okay. So he was there for 30 days and then
23 he refinanced it?
24 A. Yes.
25 Q. Do you know whether he owned the home or
26
91
1 had ever had any other closing for the home prior to
2 this one on March 15th of 2002?
3 A. He was entitled to the time. Owned title,
4 so I don't -- I mean, he would have had to.
5 Q. So he would have had to have had some sort
6 of other closing in order for there to have been a
7 home that he was already titled to?
8 A. Yes.
9 Q. And if he testifies, in fact, that this was
10 the only closing he ever attended, how would you
11 describe that transaction?
12 MR. GOODLING: Objection, form.
13 MR. HOEG: Objection, form.
14 A. I don't know.
15 Q. To your knowledge, was there ever more than
16 one closing in order for a person to be refinanced?
17 A. Well, they would have had to have closed on
18 the property prior to us closing it. It's a
19 refinance transaction. He's entitled to the home.
20 Q. Is it your testimony that every single
21 refinance had a prior closing in order to get them
22 title to the home?
23 MR. GOODLING: Objection, form.
24 A. I don't know if it's a -- they would have
25 to have bought the home to be entitled to it.
26
92
1 Q. If a borrower believed he was buying a new
2 home, through this transaction, would he be wrong?
3 MR. HOEG: Objection, form.
4 A. He didn't buy the home on this
5 transaction. He already owned the home on this
6 transaction.
7 Q. Okay. At what point did the borrower ever
8 receive a deed for his home?
9 A. Well, he would have received one when he
10 bought it originally, and he would have received one
11 when he -- they renew and extended the lien on this
12 transaction.
13 Q. Okay. Tell me about your working
14 relationship with Candy Powell at Royal Lion. How
15 would you describe the working relationship?
16 A. Well, we -- we got along.
17 Q. Was there ever any friction in the
18 relationship?
19 A. Not really.
20 Q. Okay. Do you know Becky Blankenship?
21 A. I've heard of her, yes.
22 Q. In what capacity have you heard of her?
23 A. I know that she did insurance on the
24 properties.
25 Q. Okay. How many loans can you recall that
26
93
1 you used Becky Blankenship as the insurance agent?
2 A. I don't know. I didn't order insurance.
3 Q. Who ordered the insurance?
4 A. Candy or Tamara.
5 Q. Do you have any estimate as to how many
6 used --
7 A. I have no idea.
8 Q. More than a hundred? You have no idea?
9 A. I have no idea.
10 Q. Do you recall a conversation that took
11 place between Candy Powell and Becky Blankenship over
12 insurance?
13 A. That's the only time I ever spoke to Becky.
14 Q. Can you tell me about that conversation?
15 A. She had called me because she said that she
16 could only write insurance on the home value, not the
17 land and the home, and that Candy was giving her some
18 flack about it.
19 And I told her that I would call the
20 lenders and find out what is required. And I made
21 some calls and got two different answers. One person
22 said that, you know, it had to be loan amount or had
23 to be covered for what their loan is, and one person
24 said that they could back out the land value.
25 So I told Becky -- I called Becky back
26
94
1 with Candy on the phone and told Becky that -- to
2 write it the way that she was supposed to write it,
3 and if it had to have the land backed out, then back
4 the land out if that's the way it's supposed to be
5 done.
6 Q. Did you tell her to go back and redo all
7 the ones that she had done previously?
8 A. No.
9 Q. So what's the proper amount of insurance
10 that Blankenship Insurance should have covered the
11 homes for?
12 MR. BURROWS: Objection, form.
13 MR. HOEG: Objection, form.
14 A. I don't know. I mean, I'm not an insurance
15 agent. Every lender requires something different. I
16 mean...
17 Q. What did you tell Becky Blankenship?
18 A. I told her to write it the way that she
19 thought it should be written.
20 Q. Did an issue ever arise, to your knowledge,
21 about whether to use Becky Blankenship?
22 A. No.
23 Q. Did you have any familiarity with Cates
24 Insurance Agency?
25 A. Yes.
26
95
1 Q. When were you using Cates Insurance?
2 A. I don't -- I didn't order insurance, so it
3 was one of the insurance companies that Candy and
4 Tamara used.
5 Q. Do you know whether Cates was used prior to
6 Becky Blankenship or after Becky Blankenship or at
7 the same time?
8 A. Probably at the same time.
9 Q. At some point, was there a move to use only
10 Becky Blankenship exclusively?
11 A. Not to my knowledge.
12 Q. And, to your knowledge, do you know which
13 insurance company Becky Blankenship worked with?
14 A. No. To be honest with you, I don't.
15 Q. Why is insurance coverage important in
16 closing a loan?
17 A. I mean, you have to have car insurance. I
18 mean, it's insurance in the event of, you know, fire,
19 wind, storm, hail.
20 Q. So you'd agree with me that it's important
21 to have insurance to protect the property?
22 A. Yes.
23 Q. What about to close the loan? Is it
24 important to close the loan?
25 A. Every loan has to have insurance.
26
96
1 Q. In order for it to close?
2 A. Yes.
3 Q. And isn't it true that a lender would rely
4 on the insurance coverage provided in order to fund
5 the loan?
6 MR. BURROWS: Objection, form.
7 MR. CLAYTON: Objection, form.
8 A. I mean, you have to have insurance, but I
9 mean -- yeah, I guess.
10 Q. How many documents do you prepare in a
11 typical manufactured home closing?
12 A. They're the same as any other closing.
13 Q. Okay. A lot of documents?
14 A. I guess. I don't prepare them either, so I
15 don't know.
16 Q. Okay. What are your typical -- what are
17 your normal job duties at Royal Lion?
18 A. Mine?
19 Q. Yes.
20 A. I review credit.
21 Q. What else?
22 A. And, I mean, I take loan applications from
23 the -- you know, depends on if it's by mail, fax,
24 phone, person, and that's really it. I mean,
25 customer relations, basically; you go out and try to
26
97
1 get business.
2 Q. Okay. So in the Royal Lion structure, your
3 main job was to review credit and take loan
4 applications and do other marketing?
5 A. Yes.
6 Q. About how many documents are you aware of,
7 to your knowledge, are needed for a borrower's
8 signature at the closing?
9 A. At the closing? It's a package that's
10 about an inch-and-a-half thick, so I have no idea.
11 Q. It's a lot of documents?
12 A. It's a lot.
13 Q. Okay. How long would the average closing
14 take to sign all these documents?
15 A. I don't know. I mean, probably maybe an
16 hour, I would think. I don't know. From my own
17 experience, maybe an hour from start to copy finish.
18 Q. Did you ever attend any of the closings in
19 this case?
20 A. No, I didn't.
21 Q. Is it normal or customary for the mortgage
22 broker to go to these closings?
23 A. Not in all cases, no.
24 Q. When would the mortgage broker need to
25 attend the closing?
26
98
1 A. Only if it's requested by the borrower.
2 Q. That's the only reason?
3 A. Yes.
4 Q. Do you ever offer to attend with the
5 borrower?
6 A. No.
7 Q. Are you aware of special loan instructions
8 that are provided to the title company from the bank?
9 A. Yes.
10 Q. Do you ever get to see those loan
11 instructions?
12 A. I don't know.
13 Q. Those go straight from the lender to the
14 title company?
15 A. Yes. I think so.
16 Q. Have you seen these loan instructions
17 before?
18 A. No.
19 Q. Okay. But you would agree with me that the
20 title company or the title officer should follow
21 those loan instructions that are given to it by the
22 mortgage lender?
23 MR. BURROWS: Objection, form.
24 A. I don't -- I mean, I -- I mean, I don't
25 know what they are, really, to be honest with you, so
26
99
1 I mean, I don't -- I don't do that.
2 Q. I understand.
3 A. That's why I don't know. I don't know.
4 Q. But do you know in the field or in the
5 industry what the purpose of the loan instructions
6 are for?
7 A. I believe they're just to give us -- give
8 them the fees and the -- you know what they're
9 required to collect at closing and so forth.
10 Q. And you'd expect the title officer to
11 follow those instructions?
12 A. Yes.
13 Q. Would you agree with me that Royal Lion had
14 a duty to its mortgage ledger to ensure that fraud
15 wasn't presented in these loan applications?
16 MR. GOODLING: Objection, form.
17 MR. HOEG: Objection, form.
18 A. Yes.
19 Q. Isn't it true that Royal Lion had a duty to
20 its lender to not be an active participant in any
21 fraud?
22 A. Yes.
23 MR. GOODLING: Objection, form.
24 MR. HOEG: Objection, form.
25 Q. Is there anything about your relationship
26
100
1 or practice with Royal Lion that you would have done
2 differently?
3 MR. GOODLING: Objection, form.
4 A. I don't know. I mean, maybe hire more
5 people to -- you know, I mean -- I mean -- I mean, I
6 don't know. Probably just hire more people, have
7 more -- maybe more check points. I don't know.
8 Q. What do you mean by check points?
9 A. Sometimes five eyes see things that two
10 eyes can't, you know, so, you know, that's what I
11 mean by that. I mean...
12 Q. Do you have any knowledge of what five eyes
13 could have seen that two eyes didn't?
14 A. No.
15 MR. SCOTT: I'm going to pass the
16 witness at this time. Then I'll probably have some
17 questions later on.
18 THE WITNESS: Okay.
19 MR. SCOTT: Thank you for your time.
20 EXAMINATION
21 BY MR. PIPER:
22 Q. Mrs. Nelson, I'm Bill Piper and I
23 represented the Plaintiffs in this case, and I'm
24 going to -- let me get hooked up here first.
25 I have a few questions trying to
26
101
1 clarify your involvement in the -- in Royal Lion.
2 And as I understand what you're saying is that Royal
3 Lion consisted of three others, your mother, yourself
4 and Candy Powell?
5 A. Yes, initially.
6 Q. And that the ownership was 80 percent, 10
7 percent and 10 percent, correct?
8 A. Yes.
9 Q. Was -- how long -- when was the company
10 formed?
11 A. I think we got our incorporation in
12 February or March of 2001.
13 Q. 2001. Okay. And you did -- and when did
14 you cease doing business as Royal Lion?
15 A. December, January of 2002.
16 Q. December or January of 2002?
17 A. 2002-2003, December or January.
18 Q. Okay. Did you subsequently dissolve the
19 corporation?
20 A. Yes, we did.
21 Q. Okay. And was the -- were there any assets
22 left over?
23 A. We sold them.
24 Q. And did you divide the money at that time?
25 A. No.
26
102
1 Q. Do you still have the money intact that you
2 sold from your assets?
3 A. We didn't really have anything left after
4 we paid creditors.
5 Q. So you're saying that you had no -- that
6 you paid off all liabilities when you dissolved the
7 company? Is that what you're saying?
8 A. All liabilities that we knew about, yes.
9 Q. Okay. Did you ever receive a DTPA notice
10 letter from me?
11 A. I believe we did in August of 2002.
12 MR. GOODLING: Are we clarifying? I
13 just want to make sure, and I'm not trying to
14 interrupt anything, but are you asking did she
15 receive a letter or did Royal Lion receive a letter?
16 MR. PIPER: We'll ask, first, Royal
17 Lion. Did Royal Lion receive a letter?
18 MR. GOODLING: And I'm going to object
19 because I stated earlier, she's not here as a
20 representative of Royal Lion.
21 MR. PIPER: I understand.
22 Q. But to the best of your knowledge, did
23 Royal Lion receive a letter?
24 A. Yes.
25 MR. GOODLING: Objection, form.
26
103
1 Q. To the best of your knowledge, did you see
2 that letter?
3 A. No, I did not.
4 Q. Did you hear about that letter?
5 A. Yes, I did.
6 Q. Who did you hear it from?
7 A. Jackie.
8 Q. Okay. And, so, did anybody -- to the best
9 of your knowledge, did anybody ever contact me
10 regarding that letter?
11 A. I believe our attorney. We gave the letter
12 to our attorney.
13 Q. And when did you give the letter to your
14 attorney?
15 A. I'm not sure.
16 Q. To the best of your knowledge, did you
17 instruct your attorney to -- who was your attorney at
18 that point in time?
19 MR. GOODLING: Objection, form.
20 A. I don't know.
21 Q. Do you know who your attorney was at that
22 time?
23 A. No.
24 Q. So who -- do you know who gave the letter
25 to or informed your attorney?
26
104
1 A. Jackie.
2 Q. Did she tell you that?
3 A. Yes.
4 Q. Okay. So to the best of your knowledge,
5 there was no liabilities outstanding at the time you
6 dissolved, correct?
7 A. Correct.
8 Q. Huh?
9 A. Correct.
10 Q. And you -- did you ever -- did you divvy up
11 any property?
12 A. No, we did not.
13 Q. You didn't take anything out of it?
14 A. No.
15 Q. How about Candy Powell, did she get
16 anything?
17 A. No.
18 Q. Did she participate in the dissolution?
19 A. No. She was no longer with us.
20 Q. Okay. When did she cease having ownership?
21 A. Well, she always had her stock, but she
22 resigned as an officer of the corporation in April of
23 2002.
24 Q. So it's your understanding that assets get
25 divided among the officers?
26
105
1 A. No. We didn't have assets left.
2 MR. HOEG: Objection, form.
3 Q. I'm just asking the question. Is it your
4 understanding that assets, when they get divided,
5 would be divided among the officers?
6 MR. HOEG: Objection, form.
7 A. I don't know. I mean, I didn't get
8 anything, so...
9 Q. So what you believe, who owns -- who owns
10 the corporation? Do you know?
11 A. I guess the officers of the corporation or
12 the stockholders.
13 Q. Which is it, do you know?
14 A. No. Honestly, I don't. I mean, I don't
15 have a business degree. I don't know.
16 Q. I'm not trying to argue with you, I'm just
17 asking the question.
18 A. I don't know.
19 Q. Okay.
20 A. I did not handle that part. I don't know.
21 Q. Who handled that part?
22 A. Jackie.
23 Q. So Jackie was the business person, correct?
24 A. She just handled the insurance and the
25 books.
26
106
1 Q. Wait a minute. She was the president,
2 correct?
3 A. Yes.
4 Q. And you're saying all she did was handle
5 the insurance and the books?
6 A. Well, the accounting and the -- our health
7 insurance and daily office duties.
8 Q. So she was involved in the day-to-day
9 operations?
10 A. No. She handled -- of what part?
11 Q. The day-to-day operations of the company.
12 MR. HOEG: Objection, form.
13 A. Yeah. If we need office supplies, yes.
14 Q. But she wasn't involved in any business
15 aspects of the company is what you're testifying to?
16 A. She wasn't involved in any other loan
17 aspects of the company, no.
18 Q. She never met with Keith Raybon?
19 A. No.
20 Q. Ever?
21 A. She met him, yes.
22 Q. She never met with him?
23 A. No.
24 Q. How about Michael Davis?
25 A. No.
26
107
1 Q. How about anybody -- she never met with
2 anybody outside of your company, other than vendors.
3 Is that what you're saying?
4 A. We didn't really have vendors.
5 Q. You didn't buy supplies and stuff like
6 that?
7 A. Office Depo.
8 Q. Okay. But she met with them, obviously, or
9 talked with them?
10 A. We ordered online. I mean...
11 Q. Okay. So your testimony is your mother had
12 no interfacing with anybody outside the office in the
13 business context, correct?
14 A. Where the loans are concerned, no, she
15 didn't.
16 Q. No. No. Just talking, right now, in
17 general. Let's go back to the general.
18 A. She dealt with our landlord. She dealt
19 with the leasing company that had the lease on our
20 furniture and equipment. She dealt with the
21 insurance on our health insurance. She dealt with, I
22 guess, our bank holders, you know, our bank
23 accounts. I mean that's what she dealt with.
24 Q. How about your E & O insurance?
25 A. I don't know. I suppose she's the one that
26
108
1 got it.
2 Q. You didn't get it though?
3 A. No, I did not.
4 Q. Did Candy order it?
5 A. I don't know. I doubt it. I mean, I don't
6 know.
7 Q. Okay. Did you-all have regular meetings
8 about the operations of the company?
9 A. We had meetings.
10 Q. What was discussed at a typical meeting?
11 A. If we were gonna hire somebody, what -- you
12 know, if -- we had a Christmas party we had a meeting
13 about. We had --
14 Q. Where was this Christmas party?
15 A. At Buca di Beppo.
16 MR. HOEG: I'm going to object. Let
17 her finish her answer first, then if you want to
18 follow up, but you're interrupting her. Let her
19 finish her answer first.
20 A. We had -- we went to lunch everyday.
21 MR. PIPER: Is that an objection to
22 form?
23 MR. HOEG: No. I'm telling you to let
24 her finish her answer.
25 Q. Then, please -- would you answer my
26
109
1 question on where the Christmas party was?
2 MR. HOEG: No. Finish your answer
3 about what you --
4 MR. PIPER: You're not her attorney,
5 as I recall, are you?
6 MR. HOEG: I'm participating in this
7 deposition. You can't interrupt the witness in the
8 middle of her answer because you want to go to
9 something else. You asked her a question, let her
10 finish it.
11 MR. PIPER: Are you her attorney?
12 MR. HOEG: No. I'm not her attorney.
13 MR. PIPER: Thank you.
14 A. Now, where were we?
15 Q. I would like to know where the Christmas
16 party was.
17 A. Buca di Beppo.
18 Q. Did you ever have one at Walton Yacht Club?
19 A. No, did not.
20 Q. Let's go back to what you discussed with
21 your -- you had periodic meetings about the company?
22 A. Yeah. I mean, we discussed if we were
23 gonna buy a new computer or if we were gonna -- you
24 know, our health insurance premiums. We had a
25 meeting once about if we wanted a thousand dollar
26
110
1 deductible or five hundred dollar deductible. I
2 mean, it wasn't...
3 Q. Did you ever talk about income?
4 A. We set income from the very beginning.
5 Q. I'm sorry?
6 A. When we initially set the corporation, we
7 set everybody's salaries.
8 Q. No. No. No. I'm talking about income to
9 the company. I'm sorry, I misspoke myself.
10 A. No.
11 Q. So you never talked about what your gross
12 proceeds were on a monthly basis or daily basis?
13 A. No.
14 Q. Nor your expenditures?
15 A. I mean, we knew what the expenditures were
16 when we got the equipment lease and when we signed
17 the lease on our building. We didn't have monthly
18 meetings about it, no.
19 Q. Who made decisions on how you were gonna
20 set pricing or your fees or that type of thing?
21 A. They were set at the beginning.
22 Q. By whom?
23 A. By me and Candy.
24 Q. By you and Candy. Your mother did not
25 participate in that at all?
26
111
1 A. No.
2 Q. She had no input in that whatsoever?
3 A. No. She didn't know anything about the
4 loan business, period.
5 Q. I thought you brought your mother on
6 because she was the business person?
7 A. She was the business person when it comes
8 to accounting and bookkeeping and insurance and
9 dealing with, you know, building leases, but she
10 doesn't know anything about the loans side. She had
11 never done mortgage loans.
12 Q. What was your gross income in 2001?
13 A. I don't even remember.
14 Q. Roughly.
15 A. Maybe two hundred thousand, maybe.
16 Q. Could have been more?
17 A. Probably not, no.
18 Q. How about 2002?
19 A. 2002 was probably the same, two hundred
20 thousand.
21 Q. And how many -- during that period that you
22 were in business, how many loans did you process?
23 A. I didn't process loans.
24 Q. How many loans did Royal Lion process?
25 A. I have no idea. I don't remember.
26
112
1 Q. You never discussed this at a meeting?
2 A. No.
3 Q. How many applications did you take in a
4 week?
5 A. I don't remember.
6 Q. So you were -- now, with ABN -- and correct
7 me if I'm wrong. You got approved by ABN in March of
8 2001, correct?
9 A. I believe so. I don't remember.
10 Q. That was within 30 days of your starting,
11 right?
12 A. I don't remember.
13 Q. Okay. And it was terminated by ABN in May
14 of 2002, correct?
15 A. Yes.
16 Q. Okay. So that's 13 months if I -- my math
17 is correct, right?
18 A. Maybe.
19 Q. How many loans did you process for ABN in
20 those 13 months?
21 A. I don't remember.
22 Q. Does 676 ring a bell?
23 A. Maybe. I don't remember.
24 Q. Could it be more?
25 A. I don't -- I don't -- I don't know. I
26
113
1 don't remember. It's been over -- it's been almost
2 three years. I don't remember how many we did.
3 Q. And how much did you -- on the average, how
4 much did you make off a loan?
5 A. I made 50 percent of the premium.
6 Q. Of what premium?
7 A. The yield spread premium.
8 Q. What's the yield spread? What is the yield
9 spread premium?
10 A. It's what the lender pays you for the loan
11 origination or for doing the loan with them. It's
12 what you get paid on your interest rate that you
13 offer.
14 Q. Are you familiar with a 1003?
15 A. Yes, I am.
16 Q. Okay. And they've got something on the --
17 called the loan origination fee. I'm sorry, the
18 HUD-1. Are you familiar with the HUD-1?
19 A. Yes.
20 Q. Okay. It shows something called a loan
21 origination fee.
22 A. Yes.
23 Q. Does that go to you?
24 A. No.
25 Q. That one percent doesn't go to you?
26
114
1 A. It goes to Royal Lion Mortgage.
2 Q. All right. As Royal Lion -- you are an
3 officer of Royal Lion Mortgage, correct?
4 A. Yes, I am.
5 Q. Okay. You were a shareholder?
6 A. Yes, I am.
7 Q. Okay. Are you Royal Lion Mortgage -- did
8 you work for Royal Lion Mortgage in an officer
9 capacity?
10 A. Yes, I did.
11 Q. So I'm asking you, in an officer capacity,
12 did Royal Lion -- what part of the loan origination
13 fee did Royal Lion retain?
14 A. All of it.
15 Q. How about -- the next one is called, and
16 the writing's very bad, loan discount.
17 A. Uh-huh.
18 Q. What portion did Royal Lion --
19 A. All of it.
20 Q. All of it. So those two fees you kept --
21 or Royal Lion kept?
22 A. Royal Lion kept.
23 Q. And what part of those fees did you
24 personally take home?
25 A. What part of those fees --
26
115
1 Q. Uh-huh.
2 A. -- did I personally take home?
3 Q. Uh-huh.
4 A. I didn't. I took 50 percent of the yield
5 spread premium.
6 Q. What is the yield spread premium? I guess
7 I don't understand what you're saying.
8 A. It's on the HUD-1.
9 Q. Okay. Where? Do you know?
10 A. It's in line 800s at the bottom.
11 Q. 800 at the bottom.
12 A. It's in the line 800s. I don't know what
13 page you're on.
14 Q. No, I understand. I found line 800, except
15 my line 800 shows no money?
16 MR. GOODLING: It might help if you
17 want to introduce a document and show her.
18 MR. PIPER: I was gonna do that in a
19 second.
20 A. It's not specifically on line 800, it's in
21 the 800s section of the HUD-1 statement.
22 Q. All right. Very good. Thank you. But to
23 the best of your knowledge, loan origination fee and
24 the loan discount fee you retained in -- Royal Lion
25 got the full benefit of it, correct?
26
116
1 A. Yes.
2 Q. Okay. I'll get back to the -- we'll go
3 into the 1003s a little bit later.
4 But do you remember or do you have any
5 recollection of, in general, what kind of dollar
6 amount you would get from a typical loan?
7 A. It varies.
8 Q. No, I understand that. But do you have any
9 number that sticks in mind?
10 A. Between -- probably between 2,500 and
11 $5,500.
12 Q. Okay. So 5,500. Would it be fair to say,
13 then, just for talking purposes, that 3,000 would be
14 kind of a good number?
15 MR. GOODLING: Objection, form.
16 A. Between 2,500 and 5,500. I've collected
17 money on loans as little as $700. It just all
18 depends. Every loan situation is different.
19 Q. Well, I'm just trying --
20 MR. PIPER: How much do we have left
21 on the tape?
22 THE VIDEOGRAPHER: We've got about
23 seven minutes.
24 MR. PIPER: Let's take a break here
25 and let him change the tape because I want to go into
26
117
1 this a little bit more.
2 THE VIDEOGRAPHER: The time is 11:12.
3 We are now off the record.
4 (Recess from 11:12 to 11:23)
5 THE VIDEOGRAPHER: The time is 11:23.
6 We are now on the record.
7 Q. Before our little break -- and I thank
8 everybody for that, but there are some things that I
9 was reviewing in my mind.
10 You had said -- and if I'm wrong,
11 please tell me -- that you thought that the company
12 earned about 200,000 a year for both years of
13 operation, correct?
14 A. That's not what I said.
15 MR. GOODLING: Objection, form.
16 Q. Oh, what did you say? Correct me.
17 A. You asked me what I earned.
18 Q. So you earned 200,000. Okay. That makes
19 some sense. Do you have any idea what the company
20 earned during that period of time?
21 A. I have no idea.
22 Q. Okay. Would the number -- if -- if -- I
23 will submit to you that ABN has claimed that you had
24 originated over -- I mean your firm had originated
25 over 600 loans over that 13, 14 month period --
26
118
1 MR. GOODLING: Objection, form, and
2 objection as to what ABN says. ABN is not a party to
3 this lawsuit.
4 MR. PIPER: So what? Excuse me. I'm
5 asking -- I'm saying that's what they represented.
6 I'm verifying with the witness if that number is
7 correct.
8 MR. GOODLING: Why are you verifying
9 what someone who's not a party to this lawsuit says?
10 MR. PIPER: I'm asking what she
11 knows. May I not do that, sir?
12 MR. GOODLING: All right. Object to
13 form.
14 MR. PIPER: Thank you.
15 Q. Please answer the question. Does 600 loans
16 sound about right for that period of time?
17 A. I don't remember.
18 Q. Could it be right?
19 A. I guess. I mean, I don't remember. I
20 don't know.
21 Q. All right. Let's go back to your business
22 organization because I'm still unclear on this. Who
23 ran the day-to-day operations?
24 A. What do you mean by day-to-day operations?
25 Q. Day-to-day operations. Who operated the
26
119
1 company? Who set pricing? Who did the accounting,
2 that type of thing?
3 A. Pricing for what?
4 Q. Of your services.
5 A. Pricing of our services was set by me and
6 Candy.
7 Q. Okay. Who administered the pricing? Who
8 invoiced -- who wrote the invoices?
9 A. Well, you don't write invoices in a
10 mortgage company to anybody for anything.
11 Q. Really? So when you close a loan, then,
12 the check just --
13 A. You don't write an invoice. You submit
14 fees on your closing documents and they're put on the
15 HUD-1 statement. You do not submit an invoice.
16 Q. Okay. So who did that?
17 A. Candy.
18 Q. Candy did that?
19 A. Yes.
20 Q. Who input the data into the Calyx system?
21 A. Candy, Tamara, me. I mean, everybody had
22 access to it.
23 Q. So it's not true, then, that whatever we
24 may have heard from other places, that you're the
25 only one that inputs data? Is that not true?
26
120
1 MR. GOODLING: Objection, form.
2 MR. HOEG: Object to the form.
3 A. I'm not the only one that entered data into
4 the Calyx system, no.
5 Q. Is the -- so you're saying that all
6 three -- Tamara, Candy and you -- what data did you
7 enter into the Calyx system?
8 A. Depends on what I was working on.
9 Q. Who did the bulk of the entering?
10 A. Tamara.
11 Q. So -- so let's take a loan process. A loan
12 comes into the office and it goes to whom, an
13 application?
14 A. Tamara.
15 Q. What does Tamara do with it?
16 A. She enters it into Calyx.
17 Q. Then what happens?
18 A. She puts it on my desk to review credit and
19 the information that was entered.
20 Q. Okay. And what did you do then?
21 A. Either said it could be approved or denied
22 and put it in a file and waited for the --
23 Q. You're getting a little bit ahead of me.
24 I'd like to take that a little bit slower. The
25 information came to you. Then you ran a credit
26
121
1 check?
2 A. Yes.
3 Q. Isn't it true -- it was my understanding
4 that the Calyx actually ran a credit check for you.
5 A. No.
6 Q. So how did you run a credit check?
7 A. Through a credit bureau we're registered
8 with.
9 Q. Did you call them or did you fax them
10 information?
11 A. It's done online.
12 Q. From the Calyx program?
13 A. No.
14 Q. So you would enter it into a different
15 program?
16 A. It's not a program. It's their website.
17 Q. So you would go into their website and fill
18 out a questionnaire?
19 A. You would fill out the information, the
20 borrower's name, address and Social Security Number.
21 Q. Okay. Was any of this information that you
22 gave to them come with the loan application to you?
23 A. It came with the information from Emerson.
24 Q. Okay. How about -- that's what they owed,
25 that type of thing?
26
122
1 A. We got that from the credit report.
2 Q. Okay. So that was a result of when you
3 would check with the credit company, right?
4 A. Yes.
5 Q. Okay. So you got that report back. And
6 did they send you -- how did they inform you whether
7 they were approved or disapproved?
8 A. The credit company didn't approve or
9 disapprove them.
10 Q. What did they tell you?
11 A. They gave us a credit report.
12 Q. Okay. And what did you do with that
13 information?
14 A. I reviewed it and looked at the credit
15 score and, you know, said that based on their credit
16 and credit score they could qualify for -- through a
17 25-, 30-, 15- or 10-year loan.
18 Q. Okay. So that -- and how did you make that
19 determination?
20 A. Just out of my mind, really. I mean, I --
21 at that point, I mean, that's just the very initial
22 steps in doing a loan pre-qualification.
23 Q. Okay. Would you ever get a phone call from
24 the sales office giving you information and asking
25 you for an initial read on whether they were
26
123
1 qualified or not?
2 A. I didn't, no.
3 Q. You did not?
4 A. I did not, no.
5 Q. So once you got this initial qualification,
6 what did you do, then, next with this information?
7 You put it in the file and then where did the file
8 go?
9 A. I would give Emerson a copy of the little
10 form with either a 10, 15, 20 or 25 preapproval on
11 it.
12 Q. When you -- and then it would -- would it
13 come back to you at any point in time after that?
14 A. Yes.
15 Q. What would happen then when you got it
16 back? Or what would you -- I'm sorry. Let me strike
17 that.
18 You would send it over to them -- you
19 would send over some information. They would then do
20 something with it. Do you know what they would do
21 with it?
22 A. No.
23 Q. And then you would get something back from
24 them?
25 A. Tamara would bring me the package request
26
124
1 form.
2 Q. Okay. What is a package request form?
3 A. That the people decided to do their loan
4 with us and they needed the full application and
5 disclosures.
6 Q. Okay.
7 A. And at that time I would actually run the
8 loan on an automated approval system to see if it
9 would actually be approved or not.
10 Q. That was the desktop underwriter system?
11 A. Yes.
12 Q. Okay. How many iterations could you run
13 inside the desktop underwriting system?
14 A. I have no idea.
15 Q. More than five?
16 A. I don't -- I mean, I guess you could run as
17 many times as you want.
18 Q. Okay. You were not aware of an upper limit
19 where it would have to recycle?
20 A. No.
21 Q. Okay. Now, what was -- when you put it on
22 the automatic desktop system, what would happen then?
23 A. It would either come back approved or
24 denied.
25 Q. Okay. If you went back and made subsequent
26
125
1 changes, would that happen each time that you would
2 get an approval or a denial each time?
3 A. You run it off of what you have.
4 Q. The reason I'm asking --
5 A. It's either approved or denied.
6 Q. Would you run more than one on a party?
7 A. The only time is, is if the loan amount
8 changed or the -- you know, something like that.
9 Only if your loan amount changes. And then Candy
10 would rerun them when she would get the verification
11 of the loan applications back.
12 Q. All right. Let me ask it this way. Let's
13 just say that one would come back denied. Would you
14 contact the sales organization at all and say it was
15 denied?
16 A. Yes.
17 Q. Would they come back with new information
18 that may influence that decision?
19 A. I mean, there's really not any new
20 information they can provide you that would influence
21 that.
22 Q. Now, I --
23 A. Maybe if they wanted a cheaper house or
24 something, you know, because their debt ratio was a
25 little high or something like that, then we could run
26
126
1 it based on that. But other than that...
2 Q. Well, then, why would -- why would more
3 than one copy of this show up in the client's
4 closing -- or in the customer's closing file?
5 A. There shouldn't be more than one copy of
6 it --
7 MR. GOODLING: Objection, form.
8 A. -- at all.
9 MR. GOODLING: What document are we
10 talking about being in the file?
11 MR. PIPER: 1003.
12 A. The 1003 is different from what you're
13 talking about.
14 Q. All right. What am I -- what are you
15 talking about then? Excuse me?
16 A. The findings. The approval findings.
17 Q. Okay. When that comes back -- if it comes
18 back -- wait a minute. That's the desktop
19 underwriter. Doesn't the desktop underwriter produce
20 the 1003?
21 A. No, it doesn't. That's the Calyx. You
22 might want to write that down somewhere because
23 you've asked me that like ten times. I don't mean to
24 be frustrated with you, but, I mean, y'all are
25 accusing me of things and you're sitting here and you
26
127
1 don't even know what you're talking about, and I've
2 told you this probably ten times --
3 MR. GOODLING: Jeannie.
4 A. -- in the last five minutes.
5 MR. GOODLING: Jeannie.
6 THE WITNESS: I'm sorry.
7 MR. GOODLING: I'll object as
8 nonresponsive.
9 MR. PIPER: Thank you.
10 MR. HOEG: Even if true?
11 MR. GOODLING: Even if true.
12 MR. PIPER: Even if true.
13 MR. GOODLING: Thank you, Matt.
14 Eloquent as always.
15 Q. Mrs. Nelson, the purpose that we're here is
16 so we can understand the facts. Do you understand
17 that?
18 A. Okay.
19 Q. And if we've got questions about certain
20 documents that appear in here, that's what we're
21 trying to get to the bottom of.
22 A. Okay.
23 Q. Do you understand that?
24 A. Yes.
25 Q. Is that an agreement we can make?
26
128
1 A. Yes. And I want you to get to the bottom
2 of it.
3 Q. Good. So do we. But you don't remember
4 how many loans you made, correct, in that 13-year
5 period through ABN?
6 A. No, I do not.
7 Q. Okay. You don't know who ran the company,
8 correct?
9 MR. BURROWS: Objection, form.
10 A. Excuse me?
11 Q. Who ran the company?
12 MR. GOODLING: Objection, form.
13 MR. HOEG: Objection, form.
14 A. We all ran the company. We all had
15 different duties that ran the company. Every company
16 has other -- you know, you could have several vice
17 presidents of a company that have different duties
18 and you don't have one specific person that runs the
19 company. There was not one specific person that ran
20 that company.
21 MR. PIPER: Objection, nonresponsive.
22 Q. I want to ask this again. Did you have an
23 accountant?
24 A. I don't know. No. We had a guy that did
25 our taxes, yes.
26
129
1 Q. Okay. Who did your taxes?
2 A. I don't know his name.
3 Q. Is there any document you can look at to
4 tell us?
5 A. No. I don't know. I don't have the
6 document.
7 MR. PIPER: Counsel, could you
8 ascertain who their tax person was?
9 MR. GOODLING: No, Mr. Piper. I do
10 not represent Royal Lion Mortgage. I represent
11 Mrs. Jeannie Nelson, who has been sued individually
12 in this case.
13 MR. PIPER: I understand.
14 MR. GOODLING: Talk to the counsel for
15 Royal Lion if you want Royal Lion documents.
16 MR. PIPER: I will. Thank you. I was
17 just asking if you happened to have a copy. Since
18 you've ascertained that you don't have one or will
19 not produce one for me, I will talk to them. Thank
20 you.
21 MR. GOODLING: Why would I produce one
22 if I don't have it and I don't represent them?
23 MR. PIPER: That was my question,
24 Counsel, and you've answered the question in the
25 negative and we're wasting my hour. Thank you. All
26
130
1 you could have said was, no, I don't have one, and
2 that would have been sufficient without the lecture
3 in the middle.
4 Q. Are you surprised that on every one of the
5 expedited Plaintiffs that your signature shows up?
6 A. Yes, I am.
7 Q. You signed -- and I think you testified
8 that you only signed ten of these; is that correct?
9 A. No. That's not what I said.
10 Q. Oh, I thought that's what you said.
11 A. I said I had signed ten in a period of
12 time. I did not say that I signed ten of those.
13 I've signed ten loan applications, probably, in my
14 career.
15 Q. All right. I'm confused.
16 MR. HOEG: She's thinking you're
17 saying those being the ten in this case.
18 Q. Did you -- all right. You signed the
19 bottom of the 1003, correct? Or someone does.
20 Whoever the loan officer is on this -- on a loan?
21 A. That wasn't even a requirement really at
22 that time, but I guess somebody did. It wasn't me.
23 Q. So if I show you the relevant 1003s which
24 had been entered otherwise in this case --
25 A. I have one.
26
131
1 MR. HOEG: Bill, she has one of those.
2 MR. PIPER: Oh, do you?
3 A. Exhibit 403.
4 Q. That's not your signature, correct?
5 A. No, it's not.
6 Q. Okay. Let me go to another one of the
7 cases here, and I just want to show you the document
8 and you can verify. For Mandy Rutledge is the next
9 one. Is there a signature on that page?
10 A. No. There's no signature.
11 Q. Okay. And your belief is that there was no
12 requirement to have that signed, correct?
13 A. That's correct.
14 Q. Okay. Jonathan Cook, who was another one.
15 Here's another signature.
16 A. That is not my signature.
17 Q. That's not your signature. Bradley
18 Schlosser, is that your signature?
19 A. No, it's not.
20 Q. And the last one is Joeyanne and William
21 Hammons. Is that your signature?
22 A. No, it's not.
23 Q. So it's your testimony you haven't signed
24 any of these?
25 A. No, I have not.
26
132
1 Q. Do you recall ever seeing these 1003s or
2 did you have anything to do with these particular
3 loans that I just mentioned?
4 A. I -- I mean, I'm sure I had something to do
5 with the loans.
6 Q. Do you remember specifically?
7 A. No. I don't remember specifically each of
8 these loans.
9 Q. Now, you --
10 MR. CLAYTON: When you get to a
11 stopping point, would you let me know?
12 MR. PIPER: Sure. What time is it
13 now? Why don't we -- why don't we stop here, because
14 that'll give you an extra ten minutes, because I just
15 wanted to show her the document. But why don't we do
16 that when we come back. I don't have much longer,
17 anyway.
18 THE VIDEOGRAPHER: The time is 11:36.
19 We are now off the record.
20 (Recess from 11:36 to 12:44)
21 THE VIDEOGRAPHER: The time is 12:44.
22 We are now on the record.
23 MR. PIPER: Counsel, what we're
24 gonna -- I believe we have 40 minutes left on our
25 side, so what we'll do is pass for other questions.
26
133
1 And I know, Dan, you expressed that maybe you wanted
2 to ask some questions and get out. So why don't we
3 go ahead and pass and then come back to us at the end
4 here.
5 EXAMINATION
6 BY MR. BURROWS:
7 Q. Mrs. Nelson, my name is Dan Burrows. We
8 were introduced for the first time this morning. And
9 I represent Becky Blankenship and Blankenship
10 Insurance Agency, one of the people that has been
11 sued in this lawsuit, along with yourself.
12 Let me first kind of ask you some
13 follow-up questions from some of the testimony that
14 you gave this morning, and I apologize for having you
15 go over some of this, but I was a little confused
16 about some of your testimony.
17 You mentioned that in May of 2002 that
18 you had received a call from someone at ABN,
19 informing you -- or was it a call or letter saying
20 that --
21 A. It was a call.
22 Q. It was a call. Do you recall who it was
23 with ABN that you talked with?
24 A. It was our account executive.
25 Q. Okay. Do you recall who that was?
26
134
1 A. Rhett Babb.
2 Q. I'm sorry. Can you spell that for the
3 court reporter?
4 A. I don't -- Rhett, like Rhett Butler, you
5 know. R-H-E-T-T, I would believe. B-A-B-B.
6 Q. And other than telling you that their
7 decision not to use Royal Lion anymore was based upon
8 high appraisals -- or did he even discuss that with
9 you?
10 A. No. He just said that we were under
11 quality control review.
12 Q. Did you understand what a quality control
13 review was?
14 A. No.
15 Q. Okay. Had you been made aware, prior to
16 that May 2002 conversation, that you were under some
17 type of review from ABN?
18 A. No.
19 Q. At this same time, did you know if you were
20 under a review from any other lender?
21 A. No.
22 Q. And then if I understand your testimony,
23 your belief that it had to do with appraisals being
24 higher than they should be was based upon the April
25 conversation that you had with Mike Davis?
26
135
1 A. Yeah. Because that's the only problem that
2 we were aware of, and it all happened -- both the
3 conversations, the ABN conversation and the Michael
4 Davis conversation probably happened within a week of
5 each other.
6 Q. Okay.
7 A. And I do not remember which one came first.
8 Q. So it's possible that the conversation you
9 had with Michael Davis where he talked about the
10 meeting that took place with Keith Raybon and Holly
11 Heasley may have been actually after --
12 A. Yes.
13 Q. -- talking with the representative for ABN?
14 A. Yes.
15 Q. Now, when that occurred, I assume that you
16 were still actively processing loans -- or Emerson
17 loans?
18 A. No. We had -- we had several loans left
19 with them. We closed out the ones that were ready
20 for closing, we ordered new appraisals and we just
21 closed maybe nine or ten and then we ceased business
22 with them.
23 Q. Why did you cease doing business with
24 either Keith Raybon or any of the Emerson entities?
25 A. Well, he opened his own mortgage company,
26
136
1 for one. For two, with the light of the appraisal
2 issue, we didn't do business with anybody at all
3 after that. I mean, I didn't -- you know, I just --
4 I felt like he might have known. I don't know that
5 he did know. He says he didn't.
6 But she didn't have the -- feel the
7 need to have the meeting with us. She felt like her
8 relationship with was him. She didn't come to us
9 about the appraisal problem. They never called us
10 about the appraisal problem. Emerson was the one
11 that called us.
12 Q. So do I understand your testimony to be
13 that you didn't do any more manufactured home loans
14 after that -- after that day?
15 A. After those ten, no, we did not.
16 Q. And, specifically, that related to Emerson?
17 A. Yes. Emerson was the only one. Unless
18 someone called us individually outside of the Emerson
19 institution -- you know, from our advertising or
20 something on a manufactured home, you know, I didn't
21 do any more manufactured housing.
22 Q. So when you talked to us earlier about the
23 fact that there might have been 50 or 60 other
24 sellers that you might have gotten -- or processed
25 loans for, none of those were manufactured home
26
137
1 loans?
2 A. No. I mean, real estate agents don't
3 usually market -- or look to sell manufactured
4 housing, so -- and your Internet shoppers, shopping
5 rate and fees, usually aren't your manufactured
6 homebuyers, you know.
7 I mean, no, I didn't. When I spoke to
8 the underwriter regarding the appraisal issue, we
9 made the choice then not to do the manufactured
10 housing loans after those ten.
11 Q. Up until that time, whenever that
12 conversation took place between you and Mike Davis
13 where he told you about the problem with the
14 appraisals, were you still actively doing
15 manufactured home loans or had it slowed down or
16 stayed the same or do you recall?
17 A. That day, we told them that we would no
18 longer -- I had a meeting with Jackie. We didn't
19 have a processor. Candy had quit the week before,
20 about, so I didn't really have anybody to process the
21 loans, except Tamara finished up the ten loans we
22 had, I had a meeting with Jackie, she didn't want to
23 do business with Keith. I didn't want to do
24 business -- we didn't have a processor, so we told
25 them we could no longer do business with them.
26
138
1 And he was -- it had slowed down
2 because he was using his -- he had opened his own
3 mortgage company.
4 Q. Who was that?
5 A. Modern Home Mortgage. He was also using,
6 you know, other mortgage companies at that time. He
7 wasn't sending us the amount of business that he had
8 sent prior to that.
9 Q. Prior to this conversation you had with
10 Mike Davis --
11 A. Well, that whole year it had slowed down.
12 Q. Okay. That was my next question. So in
13 2002, starting approximately the first of the year,
14 it started to slow down?
15 A. Uh-huh.
16 Q. Were you ever given an explanation as to
17 why you weren't getting as many loan requests as you
18 were previously?
19 A. I knew he opened his own mortgage company.
20 I just assumed that was what it was.
21 Q. And do you know when it was that he opened
22 his own mortgage company?
23 A. No. Because I had found out about it -- he
24 didn't even tell me he did, I just found out about it
25 on the state licensing website because it was a
26
139
1 mortgage company listed at his business address and I
2 actually asked him, so I just put two and two
3 together.
4 Q. You asked him if he had opened up a
5 mortgage company, and he told you that he did?
6 A. Yes. But he said that he wasn't doing any
7 loans with it. But I wasn't getting the volume of
8 loans I was before, so I don't know if he was or
9 wasn't.
10 Q. Did Jackie Stephens tell you why she didn't
11 want to do business with Keith Raybon anymore?
12 A. Well, she never liked Keith to begin with.
13 She met him a couple of times and she just didn't
14 like him. And we didn't have a processor and we
15 couldn't efficiently process the files without a
16 processor, so we just told him we couldn't handle
17 their volume of business and thank you for previous
18 business and that was it, you know.
19 There wasn't anybody at the office to
20 process the loans. No one was qualified to do that,
21 once Candy quit, so we just didn't do them.
22 Q. Let me see if I can get kind of a feel for
23 the volume and how that may have changed. Let's say
24 in the latter part of 2001 --
25 A. Uh-huh.
26
140
1 Q. -- and I know, as far as the number of
2 loans that you have no idea about that, but as far as
3 the percentage of the loans that were being processed
4 by Royal Lion, what percentage of that was
5 manufactured homes, say, in the latter part of 2001,
6 approximately?
7 A. Maybe 85 or 90 percent.
8 Q. Okay. And let's say in that time frame of
9 the spring of 2002, you know, March, April, May, what
10 percentage of your loan processing was manufactured
11 homes?
12 A. Probably the same.
13 Q. About the same?
14 A. Just not in the same -- you know, just not
15 as many. It was about the same percentage.
16 Q. Now, the approximately ten outstanding
17 loans that you were processing for Emerson at the
18 point in time that you decided not to do business
19 with him anymore, I think you mentioned that you got
20 new appraisals -- or new appraisers involved as far
21 as getting appraisers --
22 A. Yes.
23 Q. -- or appraisals?
24 A. Yes.
25 Q. Do you know if those appraisers used MLS
26
141
1 comps with their appraisals?
2 A. Yes. Because I looked at them from that
3 point forward.
4 Q. Okay. Did you ever go back and look at the
5 appraisals that had been done previously either by
6 Monopoly or by Pat Lennon?
7 A. Yes.
8 Q. Did you see, in those appraisals, that
9 there was no identifying MLS number on the comps?
10 A. Yes, because I didn't even know -- I knew
11 what MLS was, but I didn't know really that
12 appraisers used that as a source of, you know, their
13 comps.
14 So I had to -- I kind of -- in that
15 time frame, I wanted to know, you know, what I was
16 looking at then because I didn't know before, so,
17 yes. But they had put HUD-1's closing statements as
18 their comps. You know --
19 Q. Right.
20 A. -- the closing date and the closing
21 statements.
22 Q. So as best you recall, the ten --
23 approximately ten outstanding loans that you were
24 still processing, they were -- the appraisers were
25 able to find MLS comps in order to complete those
26
142
1 appraisals?
2 A. Yes.
3 Q. Do you recall the names of any of those
4 appraisers that you worked with?
5 A. I didn't order them. I gave Tamara the
6 task of finding the new appraisers and to -- Pat had
7 sent us a letter, stating that -- the issue with the
8 appraisal, that some of her other clients had issues,
9 stating that we request this appraisal -- we request
10 an appraisal back that's of accurate information and,
11 you know, just a basic stipulation letter.
12 And in that, we put that all comps
13 must be MLS comps, and we sent that out with the
14 appraisal request.
15 Q. Do you have any personal knowledge of
16 whether or not there were any MLS listings of these
17 types of manufactured home/land packages?
18 A. I don't. I mean, I don't have access to
19 MLS. I don't know.
20 Q. Let me see if I can understand a little bit
21 about how you put together one of these loans. How
22 often would you speak with, say, underwriters from
23 lenders as part of that process?
24 A. I didn't.
25 Q. Okay. Do you have any knowledge as to
26
143
1 whether or not Candy Powell would have any contact
2 with underwriters of lenders?
3 A. She would have, yes.
4 Q. Okay. If there's any questions that are
5 raised by a lender regarding their ultimate decision
6 to either accept the loan or not accept the loan,
7 would that have been through Candy then?
8 MR. SCOTT: Objection, form.
9 A. At the processing point, yes.
10 Q. Okay. Were there ever any occasions where,
11 after a loan closed, that an underwriter for a lender
12 would have questions about the documentation or any
13 of the specific information in the documentation?
14 MR. SCOTT: Objection, form.
15 A. I guess -- I guess -- I don't know. I
16 mean, I guess they could. I don't know.
17 Q. Specifically, my question is, did you ever
18 have any conversations with any underwriter from a
19 lender, after a loan had closed, about any questions
20 they had about the documentation?
21 A. No. Not with an underwriter, no.
22 Q. Is there a period of time between the
23 actual closing and the funding of the loan?
24 A. It depends on what type of loan it is.
25 Q. Okay. Tell me about how that varies with
26
144
1 the type of loan.
2 A. A purchase funds that day or refinance has
3 a three-day right of recision and the borrower can
4 cancel their loan within that 72-hour period from
5 closing. They have a right to cancel. They don't
6 have to take the loan. Whereas, in a purchase, you
7 sign and -- you sign and it's funded.
8 Q. So if I understand your testimony, because
9 of this three-day right of recision, there's no
10 funding that takes place on that loan until that 72
11 hours has expired?
12 A. Yes. Excluding Sundays.
13 Q. Okay. Prior to closing, what information
14 is sent to the lender regarding your work in
15 processing that loan?
16 A. A 1003, the 1008, the credit findings.
17 Every lender's different, so, I mean, flood certs,
18 you know -- I mean, what lender are we talking
19 about?
20 Q. Well, let's put it in context and say ABN.
21 A. That's all ABN received prior to closing.
22 Q. Just for the record, if you could go ahead
23 and identify the numbers, the form numbers that you
24 told me about, which ones they are?
25 A. 1008 is the Fannie-Mae form. It's a
26
145
1 transmittal summary. A 1003 is the Fannie-Mae form,
2 the residential loan application.
3 Q. Do any of those documents recite the amount
4 of the appraisal that has been obtained?
5 A. The 1008 does.
6 Q. Okay. At some point in time, is the lender
7 sent the actual appraisal?
8 A. Yes, they are.
9 Q. When does that take place?
10 A. After closing.
11 Q. Can you give me a general idea? And I
12 understand it may vary, but at least an approximation
13 of how long it would take after a closing before you
14 would send that documentation?
15 A. Candy sent them out with her closing
16 package to the title company, usually. I mean, I
17 believe that's what she did. Of course, she mailed
18 them with the closing package back to the lender.
19 Q. How many days or hours -- I'm not sure how
20 that would work from the standpoint of getting the
21 final documentation to the title company. Is that
22 typically a couple days before or the day of or do
23 you know?
24 A. I don't know, in those particular
25 instances, but usually it's that day or the day
26
146
1 before. It's usually never, you know, week before or
2 anything.
3 Q. What about the amount of the insurance
4 that -- and I'm talking about casualty insurance that
5 is being sought as part of that loan. When -- are
6 there any of these forms that tell the lender what
7 the amount of insurance, casualty insurance that has
8 been obtained?
9 A. Well, I didn't order insurance and I didn't
10 order documents, so, I mean, I know they -- I know,
11 from my experience, that you're supposed to provide
12 an insurance dec page to the lender.
13 Q. And when you say they are supposed to
14 provide an insurance dec page --
15 A. Whoever orders papers --
16 Q. Okay.
17 A. -- for closing provides an insurance dec
18 page.
19 Q. And when you say the person who's ordering
20 the papers, are you talking about somebody like
21 Candy?
22 A. Your processing department.
23 Q. Okay. Candy Powell, Tamara Davis or
24 somebody like that?
25 A. Yes.
26
147
1 Q. And you have no knowledge as to whether or
2 not that insurance information is sent prior to -- is
3 actually in the hands of the lender prior to closing
4 or not?
5 A. It's in the hands of their attorneys prior
6 to closing. They have attorneys that have to review
7 the title commitment, insurance, survey and tax certs
8 and, you know, all -- it's a Texas law, it has to be
9 drawn by attorneys, so they have to have that to
10 issue papers.
11 Q. And I assume that each lender, you know,
12 decides what attorneys they want to use as part of
13 that review?
14 A. It's their attorneys.
15 Q. When you say their attorneys, are you
16 talking about an attorney who's in-house with that
17 particular lender or is it --
18 MR. SCOTT: Objection, form.
19 A. Well, I don't know where they are. I mean,
20 it's their company and they're sought to draw the
21 papers for their company.
22 Q. Do you have any personal knowledge as to
23 how an underwriter is involved in that loan
24 application process prior to closing? In other
25 words, what the underwriter's doing during that
26
148
1 period of time?
2 A. Well, an underwriter is there to review the
3 documentation that you send off and give you a clear
4 to close.
5 Q. And give you a what? I'm sorry.
6 A. A clear to close.
7 Q. Okay. And the documentation that would be
8 sent to the underwriter would be the documents --
9 A. In whose case?
10 Q. -- that you've told me about?
11 A. In whose case?
12 Q. In ABN's case.
13 A. ABN didn't really have underwriters that we
14 were in contact with. They would just receive the
15 items that I told you previously.
16 Q. Okay. And that's different from other
17 lenders?
18 A. Yes.
19 Q. How were other lenders doing it?
20 A. You have to provide them paycheck stubs,
21 W-2's, bank statements, everything to back up your
22 loan application. And they verify it on their
23 quality side, you know, to make sure it's true and
24 accurate, and they might request more information and
25 they might not.
26
149
1 And if they don't need any more
2 information, then they give you a clear to close.
3 Q. So if I understand your testimony, as far
4 as ABN is concerned, you wouldn't have to get a clear
5 to close from ABN prior to closing?
6 A. You would, yes.
7 Q. Okay. And who would that be from? Would
8 it be an underwriter?
9 A. I don't know. No. Their system was a
10 little different. You didn't -- you would have to
11 send all that information, the list of items I gave
12 you previously, and with that they would give you a
13 clear to close.
14 Q. But as far as who that person is that is
15 giving you that clear to close --
16 A. I have no idea.
17 Q. -- you don't know who that is?
18 A. No, I don't.
19 Q. Would that be somebody that you would be
20 talking with or dealing with or is that somebody
21 that, typically, Candy would be dealing with?
22 A. Candy would deal with those.
23 Q. Okay. And as far as that actual process of
24 requesting insurance, you weren't involved in that.
25 That would be, typically, Candy?
26
150
1 A. Candy or Tamara order insurance. I've only
2 contacted them one time.
3 Q. I'll get to that here shortly, but was
4 there any type of list or how was the determination
5 made as far as what insurance agent to use?
6 A. I mean, I usually don't know. Usually the
7 borrower picks their own insurance and Candy and
8 Tamara -- insurance was originally ordered completely
9 by Emerson at the initial start and Candy insisted
10 that she wanted to do it for -- for efficiency
11 reasons, she wouldn't have to wait for somebody else,
12 you know, to get it to her, wouldn't have to go
13 through a middle person. So I don't know how they
14 determined who they ordered what -- you know, what
15 from.
16 Q. To the best of your knowledge, then, Candy
17 worked that out with the seller, as far as who they
18 were gonna use as an insurance agent?
19 A. I don't know.
20 Q. Okay.
21 A. I don't know how -- I mean, I really
22 don't.
23 Q. At any point in time prior to Candy leaving
24 Royal Lion, did you have a discussion with her about
25 who to use as an insurance agent or why?
26
151
1 A. No. She had said that she had a
2 conversation with Keith on who to use on his
3 insurance, but, you know, I never told her who she
4 should or should not use.
5 Q. You mentioned, at the start of your
6 deposition, that you did, in fact, review Candy
7 Powell's deposition.
8 A. Yes, I did.
9 Q. I can assume, from your testimony, that you
10 have some disagreements with the testimony that she
11 gave.
12 A. Some of it, yes.
13 Q. Tell me, as best you can recall, the
14 circumstances under which Candy Powell left.
15 A. I don't -- I do not recall what she said
16 about the conversation on the VOD.
17 Q. The what?
18 A. The verification of deposits. I never
19 recall that happening. And I was out sick. She had
20 a meeting with Jackie. I was not present. And I got
21 a call saying that Candy resigned and that was it. I
22 didn't even really know that there was much of a
23 problem, to be honest with you.
24 Q. You don't recall any conversation that you
25 had with Candy Powell about any concerns or problems
26
152
1 that she was having in doing her work in loan
2 processing prior to her decision to leave?
3 A. I knew she was overwhelmed. She had lots
4 of files in her office and we were -- you know, I
5 would ask her why, you know, she has -- why aren't
6 they filed? Why aren't they sent -- you know, sent
7 off, you know, that type of thing, but not, you know,
8 really anything, you know, specific.
9 Q. As far as the verification of deposits, do
10 you recall actually discussing that with her at any
11 time?
12 A. No. I don't recall that at all.
13 Q. Okay. And let me ask you about that
14 because when people say they don't recall, that means
15 different things to different people sometimes.
16 When somebody says they don't recall,
17 to some people that means it didn't happen. To other
18 people, when they say "I don't recall," it means that
19 it may have happened, it may not have happened, I
20 just don't remember one way or the other. What do
21 you mean by that?
22 A. That I don't remember it happening.
23 Q. Okay. Do you think, in your mind, that if
24 it had happened, that would be something that you
25 would have remembered?
26
153
1 A. It's pretty significant. I think I would
2 remember that, because I remembered it when my
3 husband heard from his peer that, you know, we
4 weren't doing -- we weren't doing business with
5 Emerson at the time, it was after the fact, but it
6 just accounted to -- you know, his comment was, you
7 know, good thing you're not doing business with him,
8 this is what, you know, Terry told me that he had
9 done.
10 Q. Well, let me go, then, if I could, to that
11 time frame in which you had some conversations with
12 Becky Blankenship, my client.
13 And if I understand your testimony,
14 there was actually two telephone conversations you
15 had with her. The first where she raised the
16 question or concern that she had, and then the second
17 when you called her back and told her what your
18 decision was.
19 A. Yes.
20 Q. And that very first conversation you had
21 with Becky Blankenship, as best you can recall, is
22 the first time that you had ever spoken with Becky
23 Blankenship?
24 A. Yes, it is.
25 Q. And the substance of that conversation was
26
154
1 that she was explaining to you what she could do or
2 could not do from the standpoint of writing
3 insurance, meaning that she had to make it for the
4 manufactured home itself, minus the land, and that
5 she was having some problems or having some concern
6 about how she was being able to do that with Candy
7 Powell and what she was wanting to have done?
8 A. Yes.
9 Q. Do you recall any other details of that
10 first initial conversation?
11 A. She just called and said that she was
12 having a problem with Candy. She said that she could
13 no longer write insurance at full loan amount, they
14 had to back out the land value and that Candy was
15 giving her flack about it.
16 And I said, well, let me do some
17 research and find out what we need, you know. It's
18 been typical of the lenders requiring that they want
19 their full loan amount covered under insurance, so we
20 made a call.
21 One person said -- called the first
22 time, they said it needs to be full loan amount. So
23 we hung up and called back because you got somebody
24 new every single time you called. You couldn't call
25 and speak to the same person twice.
26
155
1 Called back and that person said, no,
2 it can be, you know, home value only, back out the
3 land. So I called her back and had Candy on the
4 phone and told her to write it the way that she was
5 supposed to write it and we would go with that. And
6 if that -- there was a problem, then, you know,
7 they'd let us know about it. But I never got a
8 straight answer for the way that it was supposed to
9 be done on the lender's side.
10 Q. Do you recall what lender it was that you
11 called?
12 A. It was ABN.
13 Q. Okay. Do you recall who it was you spoke
14 with at ABN?
15 A. No. I mean, they have a 1-800 number and
16 you just speak to whoever answers the phone.
17 Q. Okay. Now, during that process of making
18 these phone calls to the lender -- and I'm talking
19 about that time frame in between the first time you
20 spoke with Becky Blankenship and then the second
21 time. In addition to calling the lenders, did you
22 discuss that with Candy Powell?
23 A. I told her, Candy, you know -- she was
24 upset because they were arguing, you know, and I just
25 told her, you know, well, just do it her way. I
26
156
1 mean, they're the insurance person.
2 They know what they're supposed to do,
3 so -- I mean, she says it has to be home, less land,
4 then -- and I did ask Becky why and she said -- it
5 made sense to me, you know. She said, well, if your
6 house burns down, the land still exists, you know, so
7 it's not really something that can be insured. Land
8 doesn't disappear.
9 I was like, okay, well, that makes
10 sense to me. Seems logical. So if that's the way
11 you say it needs to be done, then we'll do it that
12 way because the lender didn't give me a direct -- you
13 know, one person said this and the other person said
14 that.
15 Q. When you made the decision to tell Becky
16 that she could write it however she needed to write
17 it, was Candy Powell upset with that?
18 A. She was frustrated. I mean, she was
19 frustrated. Candy's kind of a confrontational
20 person, so, I mean, she was frustrated over the whole
21 confrontation, you know, of the whole deal.
22 Q. And I think you mentioned that whenever you
23 called Becky back, Candy Powell was on the line with
24 you?
25 A. Yes. We had a conference call.
26
157
1 Q. Okay. And as far as you're concerned, did
2 that resolve the question that was raised, as far as
3 the question?
4 A. Yeah. And we never heard anything else.
5 Q. Can you put that in a time context for me?
6 Was this in relationship to, say, Candy leaving?
7 A. No. It was several months before Candy
8 left.
9 Q. Okay. By the way, when Candy left, was
10 that prior to the phone call that you received from
11 ABN and/or the phone conversation you had with Mike
12 Davis about the question they had with the Heasley
13 appraisals?
14 A. Candy left on a Friday and I got the call
15 from ABN on Monday, and I probably spoke to Michael
16 within the next week, so it all -- I mean, it all
17 happened right there at the same time.
18 Q. Do you have any personal knowledge as to
19 whether or not Candy Powell spoke with anyone from
20 ABN about her leaving Royal Lion and/or the reasons
21 for her leaving Royal Lion?
22 A. All I know is what I've read in the lawsuit
23 allegations.
24 Q. Okay. And at least based upon your
25 personal knowledge, as far as casualty insurance,
26
158
1 that would either be something that the buyers would
2 obtain or they would allow the seller and/or Royal
3 Lion to obtain the insurance?
4 A. Yes. They have to sign something,
5 obtaining the insurance. I mean, we just can't get
6 insurance for someone. I mean, they're obligating
7 themselves to that insurance policy, as well, in the
8 payments or can-- you know, they have to -- you know,
9 they have to agree to accept that insurance.
10 Q. Did you ever have any directions or
11 instructions from Keith Raybon as far as how you were
12 to do your business as a mortgage broker?
13 A. No, we did not.
14 Q. Specifically, did you ever have any
15 conversation with Keith Raybon as far as insurance
16 issues and/or who to use as an insurance agent?
17 A. I didn't personally, no.
18 Q. Do you know of anybody else that did?
19 A. I read in Candy's deposition she did. I
20 mean --
21 Q. Did Candy -- I'm sorry. I didn't mean to
22 interrupt.
23 A. As a mortgage person, we don't care what
24 insurance person you use, you know. It doesn't
25 matter to us. It affects your payment who you choose
26
159
1 to go with, you know, we don't care.
2 Q. Did Candy Powell ever tell you -- prior to
3 you reading it in her deposition, did she ever tell
4 you about this conversation she had with Keith Raybon
5 about who to use as an insurance agent?
6 A. I don't recall, no.
7 Q. Okay. Is that, again, something that you
8 would have remembered if that conversation took
9 place?
10 A. I might have remembered or might not. I
11 mean, it wasn't very significant to me.
12 Q. Did you or anyone else from Royal Lion set
13 what the purchase price of the property was gonna be?
14 A. No.
15 Q. Did you even care what that purchase price
16 was?
17 A. No.
18 Q. As far as ABN is concerned, do you know
19 when they would have received the insurance binder?
20 A. In the closing package?
21 Q. Yeah.
22 A. Their attorneys received it prior to
23 drawing documents.
24 Q. Did you ever receive a call from a lender,
25 after closing, telling you that the amount of
26
160
1 insurance was too low?
2 MR. SCOTT: Objection, form.
3 A. No. I don't believe so.
4 Q. Did Candy Powell ever tell you that she had
5 ever received any type of conversation like that with
6 a lender?
7 MR. SCOTT: Objection, form.
8 A. Not that I recall. Not that I remember.
9 Q. And certainly after this conversation with
10 Becky Blankenship where she told you how she would
11 have to write the insurance, do you recall any lender
12 raising a problem with that?
13 MR. SCOTT: Objection, form.
14 A. No.
15 MR. BURROWS: I'm gonna go ahead and
16 pass the witness. And I think we're at the end of
17 the tape, so probably a good point to break.
18 THE VIDEOGRAPHER: The time is 1:26.
19 We are now off the record.
20 (Recess from 1:26 to 1:36)
21 THE VIDEOGRAPHER: The time is 1:36.
22 We are now on the record.
23 EXAMINATION
24 BY MS. PICKERING:
25 Q. Mrs. Nelson?
26
161
1 A. Yes.
2 Q. Can you hear me okay?
3 A. Yes, I can.
4 Q. My name is Suzanne Pickering and I
5 represent Hochheim Prairie Farm Mutual Insurance
6 Company. It's another one of the Defendants in this
7 case. Do you understand that?
8 A. Yes, ma'am.
9 Q. During your tenure with Royal Lion, did you
10 personally have any direct communication, whether
11 that's written or oral, with anyone with Hochheim?
12 A. No, I have not.
13 Q. Okay. At any time before your stint with
14 Royal Lion had you had any direct communication with
15 anyone from Hochheim?
16 A. No, I have not.
17 Q. How about subsequent to leaving Royal Lion,
18 have you had any direct communication?
19 A. No, I have not.
20 Q. Have you ever had any discussions with
21 anyone outside of your lawyers in this case --
22 A. No.
23 Q. -- about Hochheim and its relation to this
24 case?
25 A. No, I have not.
26
162
1 Q. Have you talked about Hochheim about
2 anything outside of this case with anyone?
3 A. No, I have not.
4 Q. Are you aware of anybody else with Royal
5 Lion that had any direct communication with Hochheim?
6 A. No, I have not.
7 Q. Have you ever heard anyone, whether that be
8 with Royal Lion or otherwise, discuss Hochheim in
9 relation to this case?
10 A. No.
11 Q. Have you had any direct communication with
12 anyone from Cates?
13 A. No.
14 Q. Okay. Do you know of anybody, whether with
15 Royal Lion or otherwise, who has had any direct
16 communication with Cates?
17 A. At which time?
18 Q. Well, let's start with during your tenure
19 with Royal Lion.
20 A. Yes.
21 Q. And who would that be?
22 A. Candy Powell, Tamara Davis.
23 Q. Okay. Outside of Mrs. Powell, anybody
24 else?
25 A. No. Not to my knowledge.
26
163
1 Q. To your knowledge. And that's all I need
2 to know is what you know directly. Are you aware of
3 anyone outside of Royal Lion that had any
4 communications with anyone from Cates? Just that you
5 might be aware of.
6 A. No.
7 Q. Okay. Mrs. Nelson, I think that's all I
8 have. I appreciate your time.
9 A. Thank you.
10 MS. PICKERING: I'll pass the
11 witness.
12 EXAMINATION
13 BY MR. CLAYTON:
14 Q. Mrs. Nelson, I'm John Clayton. I represent
15 Foremost Insurance Company.
16 A. Okay.
17 Q. And I've got just a few follow-up
18 questions. It will be scattered, there won't be any
19 pattern to it and I'll go as quickly as I can.
20 First, I want to show you what was marked as Exhibit
21 402. Do you have it in front of you?
22 A. Yes, I do.
23 Q. And the question that I had is, was this a
24 form that Monopoly Appraisal Company sent over to
25 your office for y'all to fill out or was it one of
26
164
1 your forms that y'all made to fill out to send to
2 Monopoly?
3 A. It's a form that's in our mortgaging
4 software that they would send to the appraiser.
5 Q. Okay. Who put the information on 402?
6 A. I'm -- I'm not sure who did this. I mean,
7 it would either be Candy or Tamara.
8 Q. Okay. And it was put on prior to sending
9 it over to whomever you were requesting an appraisal
10 for?
11 A. Yes.
12 Q. Do you have any knowledge, yourself, about
13 why -- and this may have already been asked of you --
14 why an estimated value was put on this form?
15 A. No.
16 Q. Do you have any -- I'm not referring to
17 this particular transaction -- any transaction. Do
18 you know why any transaction would, on this form,
19 have the estimated value for the loan amount on it?
20 A. It's just -- that's a default field, again,
21 in the Calyx software that comes from the appraisal
22 field, so I don't know why, you know.
23 I mean, all files, you ask the
24 borrower or sell-- or whoever what they think the
25 estimated value of their property is. It's just an
26
165
1 estimate.
2 Q. Would this same type form go to whichever
3 appraiser that you-all were requesting the appraisal
4 from?
5 A. This is the form that we use to request
6 appraisals from anybody.
7 Q. Okay. Several times, and correct me if I'm
8 wrong, that you've said that Candy was -- Candy
9 Powell, in your office, was overwhelmed and that she
10 had lots of files.
11 Help us a little bit and describe, if
12 you can, any other thought or detail that you have
13 about her being overwhelmed. What are you referring
14 to when you say that?
15 A. Well, it's just my opinion.
16 Q. I understand.
17 A. I would be overwhelmed if I had that much
18 paperwork, and that's just all I'm basing it on
19 really.
20 Q. Do you -- do you think she was doing her
21 job?
22 A. Yes.
23 Q. Do you think, at some point, that she
24 was -- well, you tell me. Do you have any other
25 feeling or idea about what you mean when you say
26
166
1 overwhelmed?
2 A. Just busy. Just really busy --
3 Q. Okay.
4 A. -- all the time.
5 Q. Sometime lawyers get all caught up in time
6 frames.
7 A. Right.
8 Q. So let me confirm to you that these time
9 frames are correct.
10 A. Okay.
11 Q. And then I want to ask you to fill in a
12 blank for me.
13 A. Okay.
14 Q. The company was formed in either February
15 or March of 2001.
16 A. Okay.
17 Q. The company I'm referring to is Royal
18 Lion.
19 A. Okay.
20 Q. Okay. Is that correct?
21 A. Yes.
22 Q. You stopped doing business, Royal Lion did,
23 in either December of 2002 or January, 2003.
24 A. Yes.
25 Q. And Candy Powell left Royal Lion on a
26
167
1 Friday in April of 2002?
2 A. Yes.
3 Q. The ABN call to stop sending loan packages
4 to them, that they were -- you were no longer to do
5 loans with them came after Candy Powell left on
6 Friday at the first part of the following week; is
7 that correct?
8 A. Yes.
9 Q. What I don't know and what I didn't catch,
10 if you said, was the telephone conference that you,
11 Candy Powell and Becky Blankenship had regarding the
12 insurance coverage. It was before Candy Powell left
13 in April of 2002, but how far back was it?
14 A. It was probably -- I mean, it was pretty
15 far back. I mean, it was earlier that -- I mean,
16 probably January. I mean, I'm just guessing. I
17 don't know. It was several months before she left.
18 Q. January of 2002?
19 A. Yes.
20 Q. Something like that?
21 A. Yes.
22 Q. Okay. And I know you don't know exactly,
23 I'm just trying to get a feeling for it. All right.
24 You used the terms "clear to close" and "loan packet"
25 and documents were sent to -- in a packet from Candy
26
168
1 Powell to the lenders' attorneys; is that correct?
2 A. Yes.
3 Q. This was prior to closing?
4 A. Yes.
5 Q. This was to prepare additional documents
6 for closing; is that correct?
7 A. To prepare the closing documents.
8 Q. Okay. And would those documents go from
9 those attorneys, the lenders' attorneys to the
10 closing agency?
11 MR. SCOTT: Objection, form.
12 A. To the title company.
13 Q. To the title company?
14 A. Yes.
15 Q. Prior to closing?
16 A. Yes.
17 Q. And how did the lenders, if you know, get
18 the documents back for their files? Would the
19 closing agents send copies to the lender?
20 MR. SCOTT: Objection, form.
21 A. I don't know how they did it, but that's
22 how they should have done it.
23 Q. Okay. All right. In the documents that
24 went to the lenders' attorneys prior to closing was
25 the insurance binder; is that correct?
26
169
1 A. Yes.
2 MR. SCOTT: Objection, form.
3 Q. Okay. You defined the 1008 form, and I
4 caught part of it and part of it I didn't, so don't
5 fuss at me.
6 A. It's okay.
7 Q. Tell me what all that form is.
8 A. It's the transmittal summary.
9 Q. And it contains or involves what?
10 A. It's just the basic summary of your loan.
11 Q. And in that summary would be the amount of
12 the appraised value furnished by an appraiser?
13 A. Yes, it is.
14 Q. Okay. Jackie, your mom --
15 A. Yes.
16 Q. -- did I understand you correctly when you
17 said she did -- she never did anything regarding the
18 loan side of your business?
19 A. That's correct.
20 Q. Of the Royal Lion business?
21 A. That's correct.
22 Q. Okay. Part of your job, again correct me
23 if I misunderstood, was to review the credit of the
24 borrowers that -- whose applications wound up in your
25 office?
26
170
1 A. Yes.
2 Q. How did you go about doing that?
3 A. Just reviewed their credit and looked at
4 the credit score and their overall credit history.
5 Q. Okay. And some lenders required more
6 documentation regarding the issue of credit than
7 others, correct?
8 A. That's correct.
9 Q. And did I understand you correct to say
10 that ABN did not require pay stubs?
11 A. Not up front. No, they did not.
12 Q. When you say up front, are you talking
13 about initially for approval?
14 A. That's correct.
15 Q. Would you ultimately in the packet -- or
16 Candy ultimately, in the packet, send them pay stubs?
17 A. Candy should have, yes.
18 Q. Do you know whether ABN ever received pay
19 stubs as part of the creditworthiness of the
20 borrower?
21 MR. SCOTT: Objection, form.
22 A. I'm sure they did.
23 Q. Okay. In addition to pay stubs, what other
24 documentation are we talking about? W-2's?
25 A. W-2's, bank statements, 401(k) statements.
26
171
1 Q. Do you believe that ABN approved the loans
2 that they housed or bought or made, initially
3 approved, prior to receiving the documentation that
4 you were looking at as far as creditworthiness is
5 concerned?
6 MR. SCOTT: Objection, form.
7 Q. Documentation being the W-2's, the pay
8 stubs, any bonuses or any type of --
9 A. Yes.
10 Q. -- financial pay evidence?
11 A. Yes.
12 MR. SCOTT: Renewed.
13 Q. Is that common in the lending industry to
14 do it that way?
15 MR. SCOTT: Objection, form.
16 A. No. No, it's not.
17 Q. You never had any experience with National
18 City Mortgage, did you?
19 A. No, I did not.
20 Q. When you sent out -- strike that. When
21 Candy, from your office, sent out a request for an
22 appraisal and the appraisal came back, you being in
23 the mortgage business, realize and would agree with
24 me that there are a lot of people in the transaction
25 that would rely on the appraisal; would you not?
26
172
1 A. Yes, I do.
2 MR. PIPER: Objection, form.
3 Q. Wouldn't be surprised at all if the
4 insurance agent relied somewhat on an appraisal,
5 would you?
6 MR. SCOTT: Objection, form.
7 A. No. Some insurance agents ask for the
8 appraisal.
9 Q. Okay. What do you believe Candy Powell's
10 relationship was with Keith Raybon?
11 A. I don't know. She worked with him prior to
12 me working with him, so, I mean, I don't -- they got
13 along, I guess. I didn't witness any problems
14 between the two.
15 Q. Okay. Did -- if you know, did she
16 communicate with Keith Raybon or did she communicate
17 with Michael Davis?
18 A. I don't really know. I would think she
19 would communicate more with Michael Davis.
20 Q. Okay. Why do you believe that?
21 A. Well, Michael Davis was over dealing with
22 the mortgage side of their operation.
23 Q. Okay. Did you ever have the feeling, the
24 suspicion or idea that Keith Raybon was trying to get
25 Candy Powell to do anything?
26
173
1 A. No, I did not.
2 Q. In response to Mr. Burrows' question a
3 minute ago regarding his client, Becky Blankenship, I
4 believe you said Candy was giving flack to Becky and
5 that's what she reported to you when she first called
6 you?
7 A. Yes.
8 Q. Did Candy -- did you have an understanding
9 of why Candy was giving Mrs. Blankenship flack?
10 A. Yes. Because she had called prior to and
11 the lender had told her it had to be for actual loan
12 amount. So when Becky was requesting something else,
13 Candy was insisting it had to be one way and Becky
14 was saying it had to be different.
15 Q. Okay. Fair enough. Do you -- I think you
16 were asked this and I think you've answered it. Do
17 you have any personal knowledge that MLS contains
18 manufactured homes?
19 A. Do I know if it does contain --
20 Q. Uh-huh.
21 A. I know it contains manufactured homes.
22 Q. Do you know when it first contained -- when
23 MLS first contained manufactured homes?
24 A. No. I have no idea.
25 Q. You used appraisers -- I think you
26
174
1 categorized them as new appraisers -- to finish up
2 your nine or ten loans after you-all quit --
3 A. Yes.
4 Q. -- doing manufactured home mortgage
5 brokerage for Emerson.
6 A. Yes.
7 Q. Is that a fair statement?
8 A. Yes.
9 Q. Okay. What appraisers were those, if you
10 recall?
11 A. I don't remember their names. I don't know
12 who they are.
13 Q. But their specific instructions were to use
14 comps off of the MLS containing manufactured home
15 MLS --
16 A. Yes.
17 Q. -- comparables?
18 A. Yes.
19 Q. Do you know if that was done or not?
20 A. I know it was done.
21 Q. Did you check to see that that was done?
22 A. Yes.
23 Q. How did you check to see that?
24 A. I looked at the appraisal. I mean, he had
25 the MLS number on the appraisal.
26
175
1 Q. Fair enough. I had never -- strike all
2 that.
3 The name of Keith Raybon's mortgage
4 company that you think he had just maybe right before
5 y'all quit doing most of the work for him was Modern
6 Home Mortgage?
7 A. Yes.
8 Q. Do you know where it's officed?
9 A. It was -- I don't know where it is now, but
10 it was in the office with him out 105.
11 Q. Okay. At the sales office?
12 A. Yes.
13 Q. Do you know who worked in that office?
14 A. No. I mean -- at the mortgage?
15 Q. At the mortgage part.
16 A. No, I don't. I don't remember his name.
17 Q. Okay. How do you know, first of all, it
18 was a guy?
19 A. Well, I looked on the state licensing
20 website and it pulled up the mortgage company and the
21 broker's name and the address of the company.
22 Q. And that's how you found out he -- I didn't
23 mean to cut you off. That's how you found out that
24 he had a mortgage --
25 A. Yes, sir.
26
176
1 Q. -- company of his own? Okay. Do you know
2 of -- after you quit representing Emerson as a
3 mortgage broker, do you know, other than his own
4 company, who else may have done his mortgage
5 brokering business?
6 A. Yes. Tamara continued to work with us, so,
7 you know, we heard. It was Intertrust and Amwest and
8 Gold Key and that's all that I know.
9 Q. Intertrust, Amwest and Gold Key?
10 A. (Witness nodded head.)
11 Q. And you heard that from Tamara that was
12 working --
13 A. Yes.
14 Q. -- in your office? Where did Tamara go
15 after you closed your office?
16 A. She said she was going to work for her dad.
17 Q. And what kind of business is her dad in?
18 A. I think now he owns a mortgage company.
19 Q. He no longer is with Raybon?
20 A. I don't know. I mean, I haven't spoke to
21 he or Keith since I quit doing business with them.
22 It's been over two years.
23 Q. Okay. Did Royal Lion have a satellite
24 office at Emerson in 2001 right after y'all went into
25 business?
26
177
1 A. No, we did not.
2 Q. Did you ever have a satellite office at
3 Emerson?
4 A. No, we did not.
5 Q. If there are documents from any state
6 agencies that refer to a Royal Lion office at the
7 Emerson sales office at -- on 105, was that just
8 mistaken?
9 A. Has to be a mistake. The only satellite
10 office we had was Deer Park, on Center Street, and
11 you have to license -- register every mortgage office
12 with the State.
13 Q. And you're talking about Deer Park --
14 A. Texas.
15 Q. -- here close to Houston?
16 A. Yes.
17 Q. Okay. Did Royal Lion ever, itself,
18 directly finance any of Emerson's sales?
19 A. No.
20 Q. And if there's any document that implies or
21 states that that occurred, that's incorrect?
22 A. Well, when you draw papers as a broker,
23 they're drawn as the broker as the actual lienholder,
24 but then you turn around and sign a -- I don't even
25 know what the document's called, but you sign them
26
178
1 back over to mortgage holder, so there would be an
2 initial document saying that, yes, we were the
3 lienholders, but it's immediately sold at the same
4 time back to the actual lender that funded the loan.
5 Q. Okay.
6 A. We -- Royal Lion never funded any loans for
7 Emerson.
8 Q. So prior to the signing of that assignment,
9 if that's the correct --
10 A. Yes.
11 Q. -- word then you would have been a
12 titleholder for a small --
13 A. Two minutes.
14 Q. Two minutes, yes. Okay. All right.
15 MR. CLAYTON: Right now I will pass
16 the witness.
17 MR. BURROWS: Can we have like two
18 minutes real quick?
19 THE VIDEOGRAPHER: The time is 1:58.
20 We are now off the record.
21 (Recess from 1:58 to 2:02)
22 THE VIDEOGRAPHER: The time is 2:02.
23 We are now on the record.
24
25
26
179
1 FURTHER EXAMINATION
2 BY MR. SCOTT:
3 Q. Mrs. Nelson, just a few -- just some
4 follow-up questions. I know that you need to leave
5 soon.
6 You testified earlier about the
7 structure for Royal Lion and the ownership of Royal
8 Lion, and you said initially it was 80 percent, 10
9 percent and 10 percent; meaning you had 10 percent
10 and your mom had 80 percent and Candy Powell had 10
11 percent. Do you recall that?
12 A. I don't remember saying initially. It
13 always stayed that way.
14 Q. Did that ever change?
15 A. No, it did not.
16 Q. I just wanted to be sure. You also
17 testified about the automated underwriting system.
18 A. Yes.
19 Q. When you and I were talking, we talked
20 mostly about Calyx and it was my understanding that
21 Calyx was the software program that you used --
22 A. Yes.
23 Q. -- in coming up with all these forms?
24 A. Yes.
25 Q. Was there other software -- I understand
26
180
1 that there's other software, including the automated
2 underwriting system that you were also using at Royal
3 Lion; is that correct?
4 A. It's not really a software. It's a
5 web-based interface.
6 Q. Okay. It was a web-based interface. Do
7 you know what it was connected to? What site you
8 went to?
9 A. I mean, it was on Fannie-Mae. I mean, it
10 was through Fannie-Mae.
11 Q. Okay. So it was a Fannie-Mae directed
12 automated underwriting system?
13 A. Yes.
14 Q. And you would input information into
15 Fannie-Mae, and what were you -- what was the object
16 of putting that information into Fannie-Mae?
17 A. You would just download your 1003 into
18 their automated system and it would either come back
19 approved or denied.
20 Q. Okay. And that's for the credit-worthiness
21 of the borrowers?
22 A. Yes.
23 Q. Is it in -- was it your experience that you
24 put the information in -- into Fannie-Mae based on
25 the information provided to you on the 1003?
26
181
1 A. Yes.
2 Q. It came back rejected. What would be your
3 next step in that process?
4 A. We would tell Emerson that the loan was
5 denied.
6 Q. And how many times would you estimate you
7 would input that information again into automated
8 underwriting system?
9 A. You usually wouldn't.
10 Q. Once you told Emerson it was rejected, you
11 never put it back onto -- you never resubmitted it
12 into the automated underwriting system?
13 A. No.
14 Q. You testified that you didn't sign Exhibit
15 402, the Uniform Residential Loan Application. I'm
16 sorry.
17 A. You mean 403?
18 Q. Exhibit 403, the 1003 application; is that
19 correct?
20 A. That's correct.
21 Q. Did you sign any documents in connection
22 with the loan closing process?
23 A. Not usually, no.
24 Q. Okay. So it wasn't your practice to sign
25 anything prior to the loan being closed?
26
182
1 A. Well --
2 Q. That the borrower would also sign?
3 A. No.
4 Q. Okay. Were there other documents that you
5 also did sign?
6 A. Not until the end. I mean, when we used
7 other lenders and the underwriters would come back
8 and say, "Oh, you have to sign this" or, "You need to
9 do that," then I would.
10 Q. Okay.
11 A. But I don't recall, you know, what they
12 were.
13 Q. And you're talking about the 1003s that the
14 lender made you go back and sign?
15 A. Yes.
16 Q. Like the 1003 --
17 A. Well, it didn't become an op-- every
18 lender's different, so it didn't become an issue
19 until probably late 2002, at the very end, that's why
20 there wasn't that many.
21 Q. So in the very end, from late 2002 forward,
22 is that the time period when you testified that you
23 signed ten or so --
24 A. Probably.
25 Q. -- loan applications?
26
183
1 A. Yes.
2 Q. Okay. You testified earlier about you
3 being on probation.
4 A. Yes.
5 Q. Were you on probation during the time that
6 you also worked for Royal Lion?
7 A. Yes, I was.
8 Q. You would agree with me that you don't work
9 for the lender as the broker?
10 A. I don't work for the lender, no.
11 Q. You don't work for the lender. You are --
12 you only work for the broker; is that right?
13 A. Yes.
14 Q. And that the lender's funding loans based
15 on the accuracy of the information that you provide?
16 A. I suppose, yes.
17 Q. Okay. When you testified about the
18 appraisals that you learned had been done improperly,
19 both from the Monopoly Company and from AmeriStar,
20 did you go back and make them redo those appraisals?
21 A. I didn't learn from Monopoly that they are
22 incorrect. I learned from Michael Davis and Pat, and
23 Pat sent the letter out to her individuals; and the
24 loans I had left, I reordered appraisals on them
25 through another source.
26
184
1 Q. You didn't ask Pat to redo those
2 appraisals?
3 A. She did it on her own.
4 Q. Did you get those appraisals from her?
5 A. No. I never did that. I never got them
6 from her. I didn't have anymore contact with Pat
7 after that.
8 Q. How do you know she redid them?
9 A. She sent letters out to everybody
10 requesting that. And I don't really know for a fact
11 that she actually did, but I'm just using my
12 guestimation. If I got a letter, stating my
13 appraisal was incorrect and she would redo it, then I
14 would, you know, call them.
15 Q. You don't follow up with Pat about that?
16 A. No, I did not.
17 Q. You didn't tell any of the lenders about
18 that?
19 A. No.
20 Q. Do you believe that you probably should?
21 MR. HOEG: Objection, form.
22 A. I mean, I don't know what you, you know,
23 would say. She sent the letters to the lenders,
24 also. The lenders got the letter.
25 Q. You testified that you didn't know about
26
185
1 Monopoly Company's -- the quality of their
2 appraisals, that you had learned it from Michael
3 Davis.
4 A. Yes.
5 Q. Did you ever follow up with anybody at
6 Monopoly Company to find out whether that was true?
7 A. No. I mean, I didn't trust them to tell me
8 the truth at that point. I mean, why would they say,
9 yes, we didn't do them right. I mean, they were --
10 everybody was instructed to no longer use Monopoly,
11 period.
12 Q. Did you investigate as to whether those
13 appraisals were actually done properly?
14 A. There's not really anything I can do to
15 investigate that. I don't -- you know, I don't have
16 access to the information that they used.
17 Q. Did you look at those appraisals to see
18 whether they were using MLS comparables?
19 A. They were not using MLS comparables.
20 Q. Did you tell anybody that they weren't
21 using MLS comparables?
22 A. It wasn't a requirement that they had to
23 use MLS comparables.
24 Q. Did you tell anybody in the lenders'
25 offices that -- what you had learned from Michael
26
186
1 Davis?
2 A. No, I did not.
3 Q. Do you believe that was something you
4 should have done?
5 MR. HOEG: Objection, form.
6 A. I mean -- at the time, I mean, we just
7 submitted the letters to our attorney and, I mean, we
8 didn't use the appraiser any longer.
9 Q. Sitting here today at your deposition, is
10 it your testimony that you should not have talked to
11 the lenders about this problem?
12 MR. HOEG: Objection, form.
13 MR. GOODLING: Objection, form.
14 A. This particular lender in particular, you
15 never -- there's not one particular person that you
16 could have talked to. You get a customer service rep
17 and that's it. I did not have a contact to actually
18 discuss that situation --
19 Q. I under--
20 A. -- with.
21 Q. I'm sorry. I didn't mean to interrupt
22 you. I understand you got conflicting answers from
23 different people when you tried to contact the
24 lender.
25 A. Yes.
26
187
1 Q. Did you ever follow up to try to find out
2 what the right answer was, go above their heads?
3 A. Yes. We asked -- you know, you got a
4 different answer every time you asked somebody.
5 Q. How high up did you talk to them?
6 A. We asked our account executive and that's
7 our immediate contact.
8 Q. Once the account executive told you
9 something, did you follow up with somebody else at
10 the lenders?
11 A. No. Wasn't no one higher to go to than
12 your account executive. That's your -- you know,
13 with that company in particular, that is your, you
14 know -- I mean, it's not a small company.
15 Like a small lender, you know, you
16 would call the branch manager. This didn't have like
17 branch managers or anything. Your contact was the
18 account executive.
19 Q. Do you understand whether there was a
20 supervisor of the account executive?
21 A. No.
22 Q. It's your testimony that there was no
23 supervisor?
24 A. I don't know if there was or not.
25 Q. Did you ask to speak to the supervisor?
26
188
1 A. No, I did not.
2 Q. You testified, also, about your salary or
3 your -- the income you made at Royal Lion as being
4 around $200,000.
5 A. Yes.
6 Q. What was your salary prior to joining Royal
7 Lion; at MBI, for example?
8 A. Probably 80- to 90,000.
9 Q. And before that you were at Summit. What
10 was your --
11 A. I was a receptionist, so -- that's why --
12 maybe $2,500 a month.
13 Q. Okay. Did you ever see anybody at Emerson
14 do anything improper?
15 A. No, I did not.
16 Q. Did anybody at Emerson ever ask you to do
17 anything that you considered to be improper?
18 A. No, they did not.
19 Q. Do you know what kickbacks are?
20 A. I guess when people pay you to do stuff. I
21 mean...
22 Q. Do you have any personal knowledge of
23 whether there were any kickbacks that were going on
24 between Royal Lion and Emerson?
25 A. There was none.
26
189
1 Q. How many times did you go to the Emerson
2 offices?
3 A. Maybe four times in the whole
4 year-and-a-half maybe.
5 Q. You only went to Emerson Manufactured
6 Housing or their Emerson offices about four times?
7 A. Yeah, maybe, at the most.
8 Q. I think you testified earlier that Tamara
9 went more than that?
10 A. Tamara went everyday.
11 Q. She went everyday. What was she going
12 there to do?
13 A. I guess drop off packages. And her dad
14 worked there, so I don't -- I mean, I don't know. I
15 didn't go with her.
16 Q. Did you ever have any occasion to spend any
17 time with Keith Raybon outside of the offices?
18 A. We had dinner one time.
19 Q. Who was present at the dinner?
20 A. Me and my husband and his wife and his
21 son.
22 Q. So the four or five people went out for
23 dinner?
24 A. Yes.
25 Q. One time?
26
190
1 A. One time.
2 Q. Where did you go?
3 A. To the restaurant in his neighborhood.
4 Q. Do you remember the name?
5 A. It was Bentwater. It was in Bentwater. It
6 was at their country club.
7 Q. So you had dinner at their country club.
8 Bentwater, you said?
9 A. Yes.
10 Q. Was that just for social or was there
11 business discussed?
12 A. It was social. Purely social.
13 Q. Had you been to any parties where Keith
14 Raybon was there?
15 A. We had a Christmas get together.
16 Q. And which year was that? Christmas of --
17 A. 2001.
18 Q. '01. Any other occasions where you
19 socialized outside of work with Keith Raybon?
20 A. No.
21 Q. What about the Heasleys at Monopoly
22 Company, how did you become associated with them in
23 terms of their doing your appraisals?
24 A. Keith was using them prior to me doing his
25 loans, and we just continued to use them when I
26
191
1 started.
2 Q. Would it be fair to say, then, that Keith
3 referred the Heasleys to you?
4 A. Yes. But I never met the Heasleys.
5 Q. Okay. Did you ever meet Holly Heasley?
6 A. No, I did not.
7 Q. Did you ever talk to her?
8 A. I don't remember ever speaking to her on
9 the telephone.
10 Q. And you never talked with Hollis Heasley?
11 A. No, I have not.
12 Q. Okay. When did you last talk with any of
13 the Defendants in this case? Let's back up. That's
14 a lot of people. Have you talked with any Defendants
15 in this case since --
16 A. I talk to my mom everyday, so...
17 Q. Do you and your mom talk about this case?
18 A. No, we don't. It's a very hard -- tough
19 discussion between us.
20 Q. Okay. Have you talked with anybody else at
21 Royal Lion, who was part of this case, since it was
22 filed?
23 A. Tamara worked with us since I -- since the
24 case was filed?
25 Q. Uh-huh.
26
192
1 A. I saw Tamara once at the mall. I have not
2 spoke to Keith. I have not spoke to Michael. Of
3 course, I talk to my brother. So, no, I haven't. I
4 haven't spoke to Pat. I haven't spoke to -- I
5 haven't spoke to anybody about it.
6 Q. Let's break that down. Have you talked
7 with Michael Davis about this lawsuit?
8 A. No, I have not.
9 Q. Have you talked with Keith Raybon about
10 this lawsuit?
11 A. No, I have not.
12 Q. Have you talked to Michael Grimes about
13 this lawsuit?
14 A. No, I have not.
15 Q. Have you talked to Tamara Davis about this
16 lawsuit?
17 A. No, I have not.
18 Q. Have you talked to your brother about this
19 lawsuit?
20 A. No, not specifically. I mean, other than I
21 got served.
22 Q. Okay. But nothing about the merits of the
23 case or the substance of the case?
24 A. Other than he didn't have anything to do
25 with Emerson Homes and didn't understand why he was
26
193
1 being served.
2 Q. Okay. You testified that you had some
3 disagreements with what Candy Powell testified about
4 in her deposition.
5 A. Yeah.
6 Q. By the way, have you talked to her about
7 this case?
8 A. No.
9 Q. Okay. What were some of the other
10 disagreements that you had with her testimony?
11 A. I don't remember specifically. The only
12 one that stood out is the conversation over the
13 verification of deposit.
14 Q. Anything else in her deposition that you
15 can recall, other than that conversation, being
16 something that jumped out at you as something you
17 disagreed with?
18 A. That maybe if she wasn't available to
19 process the check, he would process or that Jason did
20 anything with Emerson or some of the stuff that she
21 said that I would have entered in the computer that I
22 did not. Tamara did the data entry.
23 Q. Anything else?
24 A. Not that -- right off the top of my head.
25 It was about two-and-a-half hours worth of reading,
26
194
1 so --
2 Q. I understand. Is it your testimony, then,
3 that your mom, Jackie, did not do any of the
4 processing for these loans?
5 A. She didn't do processing, period, on any
6 loans.
7 Q. And is it your testimony that your brother,
8 Jason, did not deal with any loan with respect to
9 Emerson Manufactured Homes?
10 A. He did one loan after we did not do
11 business with ABN. It was a -- through Wells Fargo
12 and it was basically just to help me because we
13 didn't have a processor, and that was it.
14 Q. And Tamara was the main person who did
15 computer data entry?
16 A. Yes.
17 Q. Did you do any computer data entry?
18 A. Not really, no.
19 Q. Your connection with the computer, I recall
20 being only with Calyx and the credit checks?
21 A. And then the submission to Fannie-Mae.
22 Q. Submission over the desktop underwriting
23 system?
24 A. Yes.
25 Q. Any other computer entries or computer work
26
195
1 that you did at Royal Lion?
2 A. Check my email, surf the Internet.
3 Q. Okay. How long have you -- how long did
4 you prepare for today's deposition, Mrs. Nelson?
5 A. I didn't. I read the deposition of Candy
6 and that was it.
7 Q. Why did you read that deposition, as
8 opposed to anything else?
9 A. That was the only one I had a copy of.
10 Q. Okay. Did you request to read anything
11 else?
12 A. There wasn't -- that's the only one we had
13 the copy of and I didn't know who else had already
14 been deposed.
15 Q. Okay. And did you meet with anybody prior
16 to your deposition today?
17 A. I met with my attorney to get the copy of
18 Candy's deposition.
19 Q. Okay. So was that part of the preparation
20 for this case, meeting with your lawyer?
21 A. We didn't -- yeah, I mean, I guess.
22 Q. How long did you meet with him?
23 A. Thirty minutes.
24 Q. Do you have any other attorneys, criminal
25 attorneys, that you also engaged in this case?
26
196
1 A. No, I do not.
2 Q. Okay. Mrs. Nelson, you would agree with me
3 that a mortgage lender relies on the information that
4 is submitted to it before closing before loaning its
5 money?
6 MR. HOEG: Objection, form.
7 A. No. Most mortgage lenders verify the loan
8 package prior to clearing a loan to close and loaning
9 its money.
10 MR. SCOTT: Objection, nonresponsive.
11 Q. Did -- is it your under-- is it your
12 understanding that mortgage lenders rely on the
13 information they're being provided?
14 A. Yes.
15 MR. HOEG: Objection, form.
16 MR. GOODLING: Objection, form.
17 Q. And a lender would rely on a broker to be
18 honest and trustworthy, correct?
19 A. Yes.
20 MR. HOEG: Objection, form.
21 MR. GOODLING: Objection, form.
22 Q. If a broker is not honest or trustworthy,
23 banks could loan money based on false
24 representations; isn't that true?
25 MR. GOODLING: Objection, form.
26
197
1 MR. HOEG: Objection, form.
2 A. I guess if they weren't honest and
3 trustworthy.
4 Q. Excuse me?
5 A. I guess if they weren't honest and
6 trustworthy.
7 Q. So, then, the answer is, the bank would be
8 relying on information based on false representations
9 if the broker was not honest and trustworthy?
10 A. Yes.
11 MR. HOEG: Objection, form.
12 MR. GOODLING: Objection, form.
13 David, can I just rely upon my objections from the
14 next time you ask these questions?
15 MR. SCOTT: I just wanted to make sure
16 I understood the answer.
17 Q. In fact, it would be wrong for a broker to
18 be dishonest and not trustworthy, right?
19 MR. HOEG: Objection, form.
20 MR. GOODLING: Objection, form.
21 A. It's wrong for anybody to be honest [sic]
22 and distrustworthy.
23 Q. I want to look at this -- on the 1003, the
24 check mark next to the face-to-face meeting.
25 A. Uh-huh.
26
198
1 Q. And just ask you real quickly again about
2 the default that you mentioned. This default, how
3 did that -- how does that work on Calyx?
4 A. I don't know. I don't know how to set the
5 Calyx software up. It's just a default in their
6 software. I mean, it's just there. You would have
7 to move it to one or the other.
8 Q. If a box is checked saying a face-to-face
9 meeting, isn't that something that people are gonna
10 rely on, that it actually happened?
11 A. I mean, I guess, but it never was an
12 issue. It never -- no underwriter has ever asked us
13 to -- otherwise.
14 Q. Is it possible that the underwriter or the
15 mortgage lender always assume that the face-to-face
16 meeting took place if that box was checked?
17 MR. HOEG: Objection, form.
18 MR. GOODLING: Objection, form.
19 A. I guess.
20 Q. You'd agree with me that checking that box
21 is a representation?
22 A. We didn't check the box. It was already
23 checked.
24 Q. You didn't uncheck the box?
25 A. I didn't, no.
26
199
1 Q. So --
2 A. I didn't do that part of the loan
3 application.
4 Q. So having that on the loan application is
5 representing information, isn't it?
6 MR. GOODLING: Objection, form.
7 A. Yes.
8 Q. It is, isn't it?
9 A. Yes.
10 Q. When did you recognize that this system had
11 this default provision on the face-to-face meetings?
12 A. I don't remember. I mean...
13 Q. Was it the first time you put out this --
14 printed out one of these things and you noticed this
15 box was checked and you said, "Wait a second, I
16 didn't check that"?
17 A. Honestly, I never paid attention to this
18 part of the loan application, period.
19 Q. Did you ever read the loan application?
20 A. I've read a loan application, yes.
21 Q. What does it mean to be a default on
22 there? It's always there?
23 A. It's there unless you change it.
24 Q. And can it be removed so that none of the
25 boxes are checked?
26
200
1 A. I don't know.
2 Q. Would it be fair to say that the mortgage
3 lender reviewing that document would rely on the fact
4 that a face-to-face meeting occurred?
5 MR. GOODLING: Objection, form.
6 MR. HOEG: Objection, form.
7 A. I guess, but I don't really know what it
8 pertain -- how it pertains to anything. I mean,
9 people apply for loans all day long and you never
10 meet them over the telephone, over the Internet, over
11 anywhere, so, you know, I mean, I guess. Just tell
12 them that you met face-to-face.
13 Q. So the answer to the question would be yes?
14 MR. HOEG: Objection, form.
15 A. I suppose.
16 Q. Okay. Regarding Keith Raybon's mortgage
17 company, Modern Home Mortgage, did you believe him
18 when he said that he didn't use Modern Mortgage for
19 mortgages?
20 A. No.
21 Q. Why not?
22 A. Because he wasn't sending the same amount
23 of volume to me, so it had to be going somewhere.
24 Q. Do you believe that Keith Raybon was being
25 dishonest with you?
26
201
1 A. On that, yes.
2 Q. Do you think that he was being dishonest
3 about anything else that you talked with him about?
4 A. I mean, I never -- no, not that I can think
5 of.
6 Q. You also testified about the borrower
7 picking their own insurance; is that correct?
8 A. Yes.
9 Q. Do you know of any case in which the
10 borrower did not pick -- or in which the borrower
11 elected to pick his or her own insurance company?
12 A. That they elected to choose?
13 Q. Yes.
14 A. I know on the last ten files, I asked them
15 because I was, you know, helping Tamara get those ten
16 closed, and I asked them who they wanted to use.
17 They usually -- in this practice, you would usually
18 ask someone to use whoever their car insurance is
19 with.
20 Q. Okay. And is that what you asked these
21 borrowers?
22 A. On the ten that I finished, yes.
23 Q. Do you know whether on any of the other
24 loans involved in this case anybody other than Becky
25 Blankenship was picked as the insurance agent?
26
202
1 MR. SAFIER: Objection, form.
2 A. I didn't order insurance. I never saw the
3 insurance. I don't know.
4 Q. The police -- the friend of your husband,
5 the police officer, Terry --
6 A. Uh-huh.
7 Q. -- whose son purchased, also, a loan
8 through Emerson, right?
9 A. Yes.
10 Q. Okay.
11 MR. HOEG: I'm sorry. What was that
12 question? Can you read that question back to me?
13 Did you say purchased a loan from Emerson?
14 MR. SCOTT: I'm sorry. Purchased a
15 loan home from Emerson. Excuse me, Matt. Thank you
16 for clarifying.
17 Q. Was that before or after Royal Lion began
18 using Emerson?
19 A. It was after we did business with Emerson.
20 Q. So you had already done business with
21 Emerson and then you found out about this issue with
22 Terry; is that correct?
23 A. Yes.
24 Q. Did you do any follow-up investigation
25 after you found that out?
26
203
1 A. I didn't do Terry's loan.
2 Q. I understand that. But did you do any
3 investigation between you and Emerson about --
4 A. We weren't doing business at all anymore.
5 Royal Lion was a dissolved corporation at that point.
6 Q. So at the time you found this out about
7 Terry, Royal Lion had already been dissolved?
8 A. Yes.
9 Q. Okay. I just wanted to be clear on the
10 timing.
11 MR. SCOTT: Pass the witness. Thank
12 you for your time.
13 FURTHER EXAMINATION
14 BY MR. PIPER:
15 Q. I just need to clear up a few points, too.
16 You're saying that the only thing that you -- scratch
17 that question.
18 Let me ask this this way. Is there
19 any other document that you would have signed in
20 conjunction with ABN loans that would have verified
21 the 1003 information?
22 MR. HOEG: Objection, form?
23 A. Not that I remember.
24 Q. So -- and, again, I'm not trying to trap
25 you here. But there was -- to your knowledge, there
26
204
1 was no other document that you signed?
2 A. Not that I remember signing, no. I mean,
3 it was over -- it was almost three years ago. I
4 really don't remember.
5 Q. I understand that. But you were saying
6 that all you did -- and, again, I'm not trying to
7 trap you here, but you took the 1003 and you
8 submitted that to the Fannie-Mae website and that was
9 the extent of your involvement with that -- was
10 passing information along, correct?
11 A. Yes. I'd take the loan application and
12 findings and give them to Candy.
13 Q. Right. Okay. But you did not sign -- it
14 was also your testimony that you did not sign the
15 1003s.
16 A. I did not sign the 1003s.
17 Q. Okay. And I asked if there was any other
18 document you would have signed that would have acted
19 as the verification for the numbers or the data
20 entered into the 1003.
21 A. There could have been, but I don't remember
22 the entire process.
23 Q. Okay. But if there were such a form that
24 required verification, would you have done that
25 verification?
26
205
1 MR. HOEG: Objection, form.
2 A. If there was something that the lender
3 required me to sign?
4 Q. Yes.
5 A. And they sent it to me directly?
6 Q. Yes.
7 A. Then yes.
8 Q. You would have verified all the amounts on
9 the 1003 or whatever they asked you to verify?
10 A. I wouldn't have verified, no. I don't
11 verify that information.
12 Q. I understand that. But if they sent you a
13 form and you signed it, saying you had verified it --
14 MR. HOEG: Objection, form.
15 A. Would I have signed it?
16 Q. Would you have verified it?
17 MR. GOODLING: Objection, form.
18 A. No. I mean, no. Candy still verified it.
19 Q. Okay. Just a couple more. I'm just trying
20 to review because we've talked about a lot today. So
21 you did not -- you didn't take part in the day-to-day
22 basically management operations of the company. That
23 was done by your mother, right?
24 MR. HOEG: Objection, form.
25 A. The bookkeeping and the -- be specific.
26
206
1 Q. The day-to-day operations. You know,
2 paying bills, bookkeeping, that kind of stuff.
3 A. No, I did not do that.
4 Q. You did not do that. You -- again, I asked
5 this before, but real quick. You didn't fill out the
6 1003 form?
7 MR. GOODLING: Objection, form.
8 A. It was a data entry. Tamara did the data
9 entry from the loan application the borrower
10 provided.
11 Q. Right. So you did not fill it out,
12 correct?
13 A. No, I did not.
14 Q. Okay. And you -- to the best of your
15 recollection, you've signed maybe ten of these 1003s?
16 A. 1003's pertaining to this case or --
17 Q. Yes.
18 A. -- 1003s -- I didn't sign any of the 1003s
19 pertaining to this case.
20 Q. Okay. And, in fact, the five that we
21 showed you here or you identified was not your
22 signature, correct?
23 A. No, it was not.
24 Q. And so it's a forgery, right?
25 A. I guess.
26
207
1 Q. Okay. Were you aware, before this moment
2 in time, that your signature had been forged on these
3 1003s?
4 A. I wasn't aware until I read Candy's
5 deposition or they subpoenaed the files and we looked
6 at them.
7 Q. Did you notify anybody that they were
8 forgeries?
9 A. No.
10 Q. You were not concerned that your name had
11 been forged on the bottom of these 1003s?
12 MR. GOODLING: Objection, form.
13 A. Of course, I was concerned or upset. She
14 didn't have my permission to sign, but, I mean,
15 what -- I mean, I didn't know that I had any legal
16 right to notify anybody.
17 Q. In other words, a verification document
18 with your signature that is not your signature,
19 saying that you had a face-to-face interview and it
20 was signed by somebody else and you weren't worried
21 about that?
22 MR. HOEG: Objection, form.
23 MR. GOODLING: Objection, form.
24 A. What am I supposed to be worried about? I
25 mean, of course, I was upset that she signed my name,
26
208
1 but, I mean, what --
2 Q. Who's she?
3 A. Supposably it was Candy. It's either Candy
4 or Tamara. There was only two other people that
5 could have been there.
6 Q. How about your mother, could she have done
7 it?
8 A. She didn't do anything with the loans,
9 period.
10 Q. Did you ever ask her if she signed it?
11 A. Did I ever ask my mom if she signed it?
12 Q. Uh-huh.
13 A. Well, no, because I know she didn't. I
14 know my mom's signature, and that's not her
15 signature.
16 Q. Well, supposably, it's your signature, but
17 you're saying it's not yours either. But you never
18 asked your mom if she had ever signed a 1003 for you?
19 A. No. She never would, period. She wouldn't
20 do that.
21 Q. But you never asked her?
22 A. No.
23 Q. Okay. You never had any kind of management
24 meetings at Royal Lion?
25 MR. HOEG: Objection, form.
26
209
1 A. Yes. I told you we did.
2 Q. When? How often? I'm sorry, I missed it.
3 A. We had management meetings about insurance
4 or office supplies or if we were gonna buy new
5 computers or, you know, stuff like that.
6 Q. How about how the business was going or
7 what the profits were and that kind of stuff?
8 A. No, we did not.
9 Q. You never had any of those?
10 A. No.
11 Q. Not ever in the two years that you were
12 operational?
13 A. No.
14 Q. How about when you dissolved, did you sit
15 down and have a meeting and go through how the --
16 what was happening with the dissolution?
17 A. Jackie and I sat down and said we were
18 gonna dissolve the corporation. We were losing money
19 and we didn't have any money.
20 Q. Did you go to an attorney to help you do
21 this?
22 A. I'm sure she did.
23 Q. Do you know who she went to?
24 A. No.
25 Q. Did you ever -- now, when you got a tax
26
210
1 return, did you get some -- did Royal Lion issue you
2 any kind of income statement, as far as dividends and
3 that type of stuff?
4 A. You mean the -- which?
5 Q. For tax purposes, did you get any --
6 A. Which one? I mean --
7 Q. From Royal Lion?
8 A. -- you get --
9 Q. Yeah, okay. What did you get?
10 A. I got a W-2.
11 Q. Right.
12 A. And then we got a -- I don't know what it
13 is. I guess your profit for your ownership interest
14 or loss.
15 Q. That's what I'm talking about. You got
16 some --
17 A. Yes.
18 Q. -- other form? Okay. You got some other
19 form from them as well?
20 A. Yes.
21 Q. And you never participated in the
22 preparation of these tax returns or questioned
23 their --
24 A. No.
25 Q. Okay. Going back to the argument between
26
211
1 Becky and -- or between Candy and -- the discussion
2 between Becky and Candy. You're absolutely sure that
3 what the issue here was the appraisal amount to be
4 used, correct?
5 A. No. It was the insured amount.
6 Q. Okay. Well, the insurance amount based
7 on -- I thought it was about the appraisal.
8 A. No. It was the insured amount based on the
9 home value and the land value.
10 Q. Okay. Where would they get the home and
11 land value except for the appraisal?
12 A. I guess from the appraisal.
13 Q. Okay. So -- but it was about which amount
14 to be used, right?
15 A. Either the home or the home and land.
16 Q. No. No. I understand. So it was about
17 the -- your recollection, it was about that. It was
18 not because Candy -- that you had come to Candy and
19 told her that she was no longer to use Cates as an
20 insurance agent?
21 A. I never told Candy to no longer use Cates.
22 Q. And you never told her that Keith said that
23 Royal Lion Mortgage would never use Cates anymore, it
24 should use only Becky?
25 A. No. I liked Cates. I had my personal
26
212
1 homeowner insurance with Cates.
2 Q. But it's your testimony that Keith never
3 told you that and you never told that to anybody
4 else?
5 A. No, he did not.
6 Q. Okay. Now, you were earning 200,000 a
7 year, right?
8 A. Yes.
9 Q. And your job was to run credit checks,
10 right?
11 A. Well, I marketed to real estate agents. I
12 reviewed credit.
13 Q. But your business disappeared when Raybon
14 disappeared, right?
15 A. Yes.
16 Q. And you closed shortly thereafter?
17 A. Well, it was eight or nine months.
18 Q. Okay. Did you ever call anybody at Emerson
19 to get additional borrower credit information?
20 A. No, I didn't.
21 Q. Did you ever call the borrower themselves
22 and ask for additional information?
23 A. No, I didn't.
24 Q. And you said you met with Keith Raybon
25 maybe four times?
26
213
1 A. No. I said I went to Emerson's office
2 maybe four times.
3 Q. So you never had regular meetings with
4 Keith and Michael?
5 A. No.
6 Q. Did you have regular meetings with Michael?
7 A. We talked on the phone everyday.
8 Q. How long everyday?
9 A. I don't know.
10 Q. Four hours? Three hours?
11 A. No. Sit and talk on the phone three to
12 four hours a day?
13 Q. So if someone offered testimony, saying
14 that you were on the phone all day with Michael
15 Davis, that would be incorrect?
16 MR. HOEG: Objection, form.
17 MR. GOODLING: Objection, form.
18 A. That would be very incorrect.
19 Q. You're a licensed loan officer?
20 A. I'm a licensed mortgage broker.
21 Q. So you're a mortgage broker. How long have
22 you been a mortgage broker?
23 A. It will be --
24 Q. Well, let me ask it this way. When did you
25 get your broker's license?
26
214
1 A. Probably January or February of 2001.
2 Q. Of 2001. You were still on probation at
3 that point?
4 A. Yes, I was.
5 Q. Okay. Did you inform the appropriate Texas
6 agencies that you were on --
7 A. It wasn't required on that license.
8 MR. GOODLING: Objection, form.
9 Q. I'm not asking that question. Did you
10 inform them that you were on probation?
11 A. No.
12 MR. GOODLING: Objection, form.
13 Q. One of the things that you were alleged to
14 have -- that you pled guilty to, although were not
15 found guilty under the deferment, was Calyx software,
16 correct?
17 A. Yes.
18 MR. GOODLING: Objection, form.
19 Q. Who chose the kind of loan -- when an
20 applicant or a borrower would apply, who chose
21 whether it was gonna be an FHA loan or a refinance,
22 conventional loan or that type of thing?
23 A. We don't choose if it's gonna be a
24 refinance or a purchase. It either is or it isn't.
25 And we don't do FHA loans, so it was always
26
215
1 conventional.
2 Q. So who informed you that this was gonna be
3 a refinance loan?
4 A. When the people apply with you, they tell
5 you they're either refinancing or purchasing.
6 Q. Who is the people? Define who they were.
7 A. The borrower.
8 Q. The borrower --
9 A. On the initial loan application.
10 Q. The borrower contacted you directly?
11 A. No. On their initial loan application.
12 Q. Okay. Where did the loan application come
13 from?
14 A. Emerson Homes.
15 Q. Who filled out the loan application?
16 A. The borrower. They signed it.
17 Q. Are you sure? That's not what I asked. I
18 asked who filled it out?
19 A. I don't know.
20 Q. But it came from Emerson?
21 A. Yes.
22 Q. As far as you know, it was signed?
23 A. It was signed by the borrower.
24 Q. It was signed?
25 A. Yes.
26
216
1 Q. Do you know it was signed by the borrower?
2 A. I didn't physically witness them sign it,
3 no.
4 Q. So you don't know who signed it, correct?
5 A. Yes.
6 Q. Now, it was your signature block on the
7 1003, correct?
8 A. I'm sorry?
9 Q. It was your signature block on the 1003,
10 correct?
11 A. Did I sign the 1003?
12 Q. No. No. It was your signature block. The
13 one we showed you right there in the bottom. It'll
14 say -- it says say Jeannie Nelson and --
15 A. Yes.
16 Q. -- Royal Lion Mortgage and et cetera,
17 et cetera, et cetera?
18 A. Yes.
19 Q. One last question. To your knowledge, did
20 you or anyone ever falsify any data on a 1003?
21 A. No.
22 MR. GOODLING: Objection, form.
23 A. No.
24 Q. Did you ever --
25 MR. GOODLING: You just said one last
26
217
1 question.
2 MR. PIPER: Thank you. Can I ask a
3 follow-up?
4 MR. GOODLING: You can do whatever you
5 want.
6 MR. PIPER: Thank you, I appreciate
7 that. I'm burning minutes, too.
8 Q. Again, just let me ask this another way,
9 just that so I am entirely clear. Did you or someone
10 in your staff -- well, let me ask it this way. Did
11 you verify any of the information on the 1003?
12 MR. GOODLING: Objection, form.
13 A. Did I verify the information?
14 Q. Yes.
15 A. No, I did not.
16 MR. PIPER: Okay. Pass the witness.
17 MR. HOEG: I have questions. How many
18 minutes do you have left?
19 THE VIDEOGRAPHER: We have three
20 minutes left.
21 EXAMINATION
22 BY MR. HOEG:
23 Q. Mrs. Nelson, first of all, let me put you
24 at ease and tell you that I deposed each one of
25 Mr. Piper's clients, and they all testified that
26
218
1 they, in fact, signed the application, form. Okay?
2 Secondly, let me make sure that I
3 understand something. You were asked a lot of
4 questions by Mr. Scott about what you would have said
5 to the lender or to the -- about the appraisals and
6 all of that.
7 Mr. Scott represents a company called
8 National City Mortgage Company. To your knowledge,
9 did Royal Lion do any business with or for National
10 City Mortgage Company?
11 A. No, we did not.
12 Q. Okay. So when Mr. Scott was asking you
13 about lenders might rely upon things and of that
14 nature, to your knowledge has anyone at Royal Lion
15 made any representations, oral or written, about any
16 particular loan in the world to National City
17 Mortgage Company?
18 A. No, we have not.
19 Q. Okay.
20 MR. HOEG: That's all the questions I
21 have. Thank you.
22 FURTHER EXAMINATION
23 BY MR. PIPER:
24 Q. I have a follow-up on that one. Did you
25 knowingly make any misrepresentation to any lender?
26
219
1 A. No, I did not.
2 MR. PIPER: Thank you.
3 MR. GOODLING: Objection, form. And I
4 will reserve my questions until time.
5 THE VIDEOGRAPHER: The time is 2:37.
6 We are now off the record.
7 (Proceedings concluded at
8 2:37 p.m.)
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
220
1 CHANGES AND SIGNATURE
2 PAGE LINE CHANGE REASON
3 ____________________________________________________
4 ____________________________________________________
5 ____________________________________________________
6 ____________________________________________________
7 ____________________________________________________
8 ____________________________________________________
9 ____________________________________________________
10 ____________________________________________________
11 ____________________________________________________
12 ____________________________________________________
13 ____________________________________________________
14 ____________________________________________________
15 ____________________________________________________
16 ____________________________________________________
17 ____________________________________________________
18 ____________________________________________________
19 ____________________________________________________
20 ____________________________________________________
21 ____________________________________________________
22 ____________________________________________________
23 ____________________________________________________
24 ____________________________________________________
25 ____________________________________________________
26
221
1 I, JEANNIE NELSON, have read the foregoing
2 deposition and hereby affix my signature that same is
3 true and correct, except as noted above.
4
5
6
_________________________
7 JEANNIE NELSON
8
9
10 THE STATE OF _________ )
11 COUNTY OF _________ )
12 Before me, ____________________, on this
13 day personally appeared JEANNIE NELSON, known to me
14 (or proved to me under oath or through
15 ______________) (description of identity card or
16 other document) to be the person whose name is
17 subscribed to the foregoing instrument and
18 acknowledged to me that they executed the same for
19 the purposes and consideration therein expressed.
20 Given under my hand and seal of office this
21 _____ day of _____________, ______.
22
23
24 _______________________
NOTARY PUBLIC IN AND FOR
25 THE STATE OF ___________
26
222
1 NO. 03-01-00267-CV
2 EMERSON HOME BUYERS ) IN THE DISTRICT COURT
ASSOCIATION, AS INFORMAL )
3 ASSOCIATION OF APRIL )
UNDERWOOD, ET AL., )
4 )
Plaintiff(s), )
5 )
VS. ) 410TH JUDICIAL DISTRICT
6 )
EMERSON MANUFACTURED )
7 HOMES, ET AL., )
)
8 Defendant(s), ) MONTGOMERY COUNTY, TEXAS
9
REPORTER'S CERTIFICATION
10 DEPOSITION OF JEANNIE NELSON
DECEMBER 16, 2004
11
12 I, TERRY A. GOSS, Certified Shorthand
13 Reporter in and for the State of Texas, hereby
14 certify to the following:
15 That the witness, JEANNIE NELSON, was duly
16 sworn by the officer and that the transcript of the
17 oral deposition is a true record of the testimony
18 given by the witness;
19 That the deposition transcript was
20 submitted on ___________________, to the witness or
21 to the attorney for the witness for examination,
22 signature and return to me by ___________________;
23 That the amount of time used by each party
24 at the deposition is as follows:
25 Mr. David Scott - 1:52
Mr. William Piper - 00:54
26
223
1 Mr. Dan Burrows - 00:42
Ms. Suzanne Pickering - 00:02
2 Mr. John Clayton - 00:17
Mr. Matthew Hoeg - 00:01
3
4
5 That pursuant to information given to the
6 deposition officer at the time said testimony was
7 taken, the following includes counsel for all parties
8 of record:
9
10 FOR THE PLAINTIFF(S):
Mr. William H. Piper
11 Mr. Ellis Munoz
BOYD, MUNOZ & PIPER
12 804 West Dallas
Conroe, Texas 77301
13 936-756-3030
14 FOR THE DEFENDANT(S) FOREMOST COUNTY MUTUAL INSURANCE
COMPANY:
15 Mr. John Clayton
JACKSON WALKER, L.L.P.
16 1401 McKinney, Suite 1900
Houston, Texas 77010
17 713-752-4200
18 FOR THE DEFENDANT(S) HOCHHEIM INSURANCE CO.:
Ms. Suzanne C. Pickering
19 CURNEY, GARCIA, FARMER, PICKERING & HOUSE
411 Heimer Road
20 San Antonio, Texas 78232-4854
210-377-1990
21
FOR THE DEFENDANT(S) BECKY BLANKENSHIP & BLANKENSHIP
22 INSURANCE AGENCY:
Mr. Dan Burrows
23 BURCK, LAPIDUS & LANZA, P.C.
5177 Richmond, Suite 850
24 Houston, Texas 77056
713-400-6000
25
FOR THE INTERVENOR/PLAINTIFF NATIONAL CITY MORTGAGE
26
224
1 COMPANY D/B/A ACCUBANC MORTGAGE:
Mr. David M. Scott
2 ZIMMERMAN, AXELRAD, MEYER, STERN & WISE, P.C.
3040 Post Oak Boulevard, Suite 1300
3 Houston, Texas 77056-6560
713-552-1234
4
FOR THE DEFENDANT(S) ROYAL LION MORTGAGE, INC. and
5 JACQUELINE STEPHENS:
Mr. Matthew L. Hoeg
6 ANDREWS KURTH, L.L.P.
600 Travis, Suite 4200
7 Houston, Texas 77002
713-220-4012
8
FOR THE DEFENDANT(S) PATRICIA LENNON D/B/A AMERISTAR
9 APPRAISAL SERVICES:
Mr. Gregory Holloway
10 TEKELL, BOOK, MATTHEWS & LIMMER, L.L.P.
1221 McKinney Street, Suite 4300
11 Houston, Texas 77010-2015
713-222-9542
12
FOR THE DEFENDANT(S) JEANNIE NELSON:
13 Mr. G. Allen Goodling
ATTORNEY AT LAW
14 402 Main Street, Suite 400
Houston, Texas 77002
15 713-228-3390
16 FOR THE DEFENDANT ABN AMRO MORTGAGE:
Ms. Laura Wessels
17 DEVLIN & PIGNUOLO
3200 Post Oak Blvd., Suite 700
18 Houston, Texas 77056
19 I further certify that I am neither counsel
20 for, related to, nor employed by any of the parties
21 or attorneys in the action in which this proceeding
22 was taken, and further that I am not financially or
23 otherwise interested in the outcome of the action.
24 Further certification requirements pursuant
25 to Rule 203 of TRCP will be certified to after they
26
225
1 have occurred.
2 Certified to by me this 26th day of
3 December, 2004.
4 ________________________________
TERRY A. GOSS, Texas CSR 2081
5 Expiration Date: 12-31-2004
Firm Registration No. 460
6 Independent Reporting, Inc.
13101 Northwest Freeway, #210
7 Houston, Texas 77040
(281) 469-5580
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
226
1 FURTHER CERTIFICATION UNDER RULE 203 TRCP
2 The original deposition/signature page was/was
3 not returned to the deposition officer on
4 ______________________;
5 If returned, the attached Changes and Signature
6 page contains any changes and the reasons therefor;
7 If returned, the original deposition was
8 delivered to __________________, Custodial Attorney;
9 That $ _______ is the deposition officer's
10 charges to the Intervenor for preparing the original
11 deposition transcript and any copies of exhibits;
12 That the deposition was delivered in accordance
13 with Rule 203.3, and that a copy of this certificate
14 was served on all parties shown herein on __________
15 and filed with the Clerk.
16 Certified to by me this ___ day of ____________,
17 ______.
18
19
20 ________________________________
TERRY A. GOSS, Texas CSR 2081
21 Expiration Date: 12-31-2004
Firm Registration No. 460
22 Independent Reporting, Inc.
13101 Northwest Freeway, #210
23 Houston, Texas 77040
(281) 469-5580
24
25
