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AMERICAN HOME EQUITY SERVICES plaintiff Respondent vs by jennyyingdi

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									                                                  APPELLATE DIVISIOhr
AMERICAN HOME EQUITY SERVICES,                                AM-1122-99Tl
plaintiff-Respondent,                       DOCKETNO.

vs.                                                            CIVIL
                                                                   ACTION
BEATRICE TROUP AND CURTIS TROUP
Defendants-Appellants, .                                  ONAPPEALFROM

vs.
                                                 PARTIAL JUDGMENT OF THE LAW
GARY WISHNIA, 'GENERAL BUILDERS                  DIVISIONDATED August 3, 2000
SUPPLY, INC., PROPERTY REDEVEL-
OPMENT CENTER, INC., EAST COAST                             SATBELOW
MORTGAGE CORP. AND JEFFREY AHRENS,                      a
Third-Party Defendants/Appellants                   HON. THOMAS BROWN, J.S.C.




                 APPENDIX FOR THIRD-PARTY DEFENDANTS/RESPONDENTS
                EAST COAST MORTGAGE CORPORATION AND JEFFREY AHREk3




                                                 GREINER, GALLAGHER &
                                                 CAVANAUGH, LLC
                                                 2001 Route 46, Suite 202
                                                 Parsippany, NJ 07054
                                                  (973) 335-7400
                                A TTORNEYO FOR   Third - party
                                                 Defendants/Respondents
                                                 East Coast Mortgage Corp.
                                                 Jeffrey Ahrens




      ^^ ^__   fintrr ^hl irn
                   TABLE OF CONTENTS OF APPENDIX
                                                         PAGE
Supplemental Certification of Counsel
In Support of Motion for Summary Judgment
By East Coast Mortgage Corp. and Jeffrey Ahrens
Filed May 1, 2000.............;......................      1
  Exh. "A" -    Portions of Transcript of
                Deposition of Jeffrey Ahrens..........     2

  Exh. "B".     Memo dated May 6, 1996 from      .
                Jeff Ahrens...........................     9
                Memo "Mini Bulk (5/3/96)..............     10
                Notification of Funding...............     11
                Warehouse Lending Corporation
                Of America WET Funding Wiring
                Instructions..........................     12

  Exh.. " C "        Portion of Transcript of
                Deposition of Dick LaFrance...........     13

Certification of Jeffrey Ahrens In Opposition
to Troupls Motion for Summary Judgment filed
April 11, 2000........................................    16

Response to Troup's Statement of Material,
Undisputed Facts Filed April 11, 2000................. 19
Defendants/Counterclaimants R. 4:45-2(b)
Counterstatement of Material Facts
Filed April 11, 2000..................................    24
                              .
Statement of Material, Undisputed Facts of
Third-Party Defendants, East Coast Mortgage Corp.
and Jeffrey Ahrens filed March 23, 2000............... 51
Certification of Counsel In Support of Motion
For Summary Judgment filed March 23, 2000............. 57
  Exh. "A"      General Builders Contract Proposal
                Dated September 1995................... 62
  Exh. "B"      General Builders Contract Proposal
                Dated November 16, 1995................ 64




                                  -i-
                  TABLE OF CONTENTS OF APPENDIX

                                                     PAGE

 Exh. "C"      Troup's Answer to ECM's Interrogatories 67
 Exh. "D"      Checks dated January, February, March
               And April 1996......................... 74
 Exh. "E"      Mortgage Loan Commitment............... 76
 Exh. "F"      Truth In Lending Statement .............   77
               Adjustable Rate Disclosure .............   78
               Escrow Payment Notice ..................   79
               Borrowers' Right to Counsel Notice .....   80
               Amount Financed Itemization..........:.    81
               Adjustable Rate Rider ..................   82
               Adjustable Rate Note ...................   84
               Balloon Payment Rider ..................   86

 Exh. "H       Notice of Right to Cancel dated
               April 27, 1996......................... 87
               Mortgage............................... 89
 Exh. "J"      Credit Reports......................... 95
 Exh. "K"      Portions of Transcript of Deposition
               Of Jeffrey Ahrens...................... 97
  Exh. "L"     Portion of Troup's Answers to
               Plaintiff's Interrogatories............ 101
  Exh. "M"     Portions of Transcript of Deposition
               Of Dick La France...................... 111
Notice of Motion by Third-Party Defendants, East
Coast Mortgage Corp. and Jeffrey Ahrens for Partial
Summary Judgment Dismissing the Third-Party
Complaint with Prejudice field March 23, 2000......... 114
Certification of Counsel With Respect to
Plaintiff's Application for Discovery Order......;.... 118




                                -ll-
GREINER, GALLAGHER KAVANAUGH, L.L.C.
2001 Route 46, Suite 202
Parsippany, New Jersey 07054
(973) 335-7400
Attorneys for Third-Party Defendants,
East Coast Mortgage Corp. and Jeffrey Ahrens

                                                    SUPERIOR COURT OF NEW JERSEY
 ASSOCIATES HOME EQUITY SERVICES, MC. fk/a          CHANCERY DIVISION:
 FORD CONSUMER FINANCE COMPANY, MC.,                ESSEX COUNTY

                                 Plaintiff,         DOCKET NO. F-5466-98

                        vs.
                                                                   CIVIL ACTION
 BEATRICE TROUP and MR- TROUP, husband of
 BEATRICE TROUP, CURTIS TROUP and MRS.              SUPPLEMENTAL CERTIFICATION OF
 CURTIS TROUP; STATE OF NEW JERSEY, UNITED          COUNSEL IN SUPPORT OF MOTION FOR
 STATES OF AMERICA:                                 SUMMARY JUDGMENT BY EAST COAST
                                                    IMORTGAGE CORP. AND JEFFREY AHRENS
                                 Defendants.


 BEATRICE TROUP and CURTIS TROUP,
            DefendantsKounterclaimants.

                  vs.                          .

 GARY WISHNIA, GENERAL BUILDERS SUPPLY,
 INC., PROPERTY REDEVELOPMENT CENTER,
 INC., EAST COAST MORTGAGE CORP. and
 JEFFREY AHRENS,

             Third-Party Defendants



       I, Kathleen Cavanaqh, being of full age, certify to the COUK as fellows:

       1.      I am an attorney at law of the State of New Jersey and a Partner in the law firm of

Greiner, Gallagher Sr Cavanaush. L.L.C.. attorneys for Third-Party Defendams, East Coast

S-Iortgze Corporation (“EC>l”) and Jeffrey Ahrens (“Ahrens”). I make this Csrtifickgn in

tiriher support of [he Morion by Ahrens and EC31   to   dismiss the Counterclaims oi De~endar,rs.
-
                         SUPERIOR COURT OF NEW JERSEY

                         CHANCERY DIVISION                          : ESSEX COUNTY
                         DOCKET NO. F-8466-98


                                                          ..
2LSSOCIATES HOME EQUITY
I;ERVICES,       INC.,    f/k/a FORD                      :.

CZONSUMER       FINANCE COMPANY, INC.,:
                 Plaintiffs,

                 -vs-

I3EATRICE TROUP and
   ..
1lusband of Beatrice
    (CURTIS TROUP and MRS. C&TaS                           :
                           J-i\ \
    cl?ROUP, his wife, STATE OF NEW                            :

    ,                                                          :
                                                               ..
    iAMERICA,
                                                               :

    I                                                          :

                                               &~FFREY AHRENS

                    WEDNESDAY,          MARCH          15,          2000


                      ROSENBERG                &    ASSOCIATES

        Certified Shorthznd Reporters & Videoqraphers
                        425 Eagle F.ock Avenue
                          1     -
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                ECSENEEE$ & $$~S~CI)qES                             (973) 228-9100
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                              2: 1
                                       JEFFREY AHRENS.                            1  East Coast sell all of its loans?
                               $&nestown Road, Basking Ridge, New Jersey,         2      A.   Yes.
    N BY PAGE                                                                     3      Q.    Was there any maximum number of
                              i;hiiing been first duly sworn according to law,
                              @ifies as follows:                                  4  points that East Coast charged in that period
IN      6                     2%                                                  5  of time? Was there a cutoff beyond which East
146.149                       y... -_-
                              y-            EXAMINATION                           6  Coast would not charge additional points?
   148:                                                                                  A. Whatever the legal limit was.
                              Bi MS. HOUSTON:
                        m.;c,tj:, Q. Mr. Ahrens, my name is Madeline              ii     Q.   Was there a limit at that time that
                        $:.;‘lHouston and as you’re aware, I’m the attorney       9 you’re aware of?
                        O?&w Beatrice Troup in the case of Ford versus           10      A.   Well, there are usury laws and
                        l%Troup versus East Coast and Ahrens, and I’m            11 there are requirements, you know, for selling
            PAGE     @2:i’ping to be asking you questions today. The             12 loans. We have never charged, I believe. more
          69         i/13’ court reporter is going to be taking down the         13 than ten points on a loan.
                     ;]4 answers. If I ask you any question that you             14      Q.    During that period of time, how did
          69         r15 don’t understand, please tell me that and I             15 East Coast determine the credit rating of a
                       16 will try to rephrase it so that you do                 16 borrower? When I say the term credit rating,
          76           17 understand it.                                         17 I’m referring to A, B or C. If East Coast used
                       18               Mr. Ahrens. what was your title or       18 some other credit rating system, then please
ure           89       19 titles at East Coast in September of 1995?             19 tell me what it was.
ales)          98     20                President.                               20      A.   It varies year’to year. For that
:nt           100
                      21           t:   No other titles?                         21 exact year, I mean, I couldn’t tell you the
 tion         117     22          A.    President.                               22 specifics. If I could just tell you the
lent           118                                                               23 general things that we look at .-
                      23           Q. And --
        131           24         A. Wait a second, and chief executive,          24      Q.   Okay. Can you tell me the general
                      25 but president is one title. It subsumes the             25 things that you look at?




                                                                             7                                                       0

                     1     other.                                                 1       A.   Yes. We use the credit bureaus TRW
                     2         Q.     Covering a somewhat larger period               and Trans Union and we review them to look at
         P AGE
                     3     from September of 1995 through and including           :   what credit history a person has, how many
        133          4     April of 1996. did you hold any other titles           4   times they’ve been late, whether or not there
7                    5     during that period of time?               .            5   are any collections accounts or charge offs,
                     6               (A brief interruption.)                      6   things of that nature, judgments. We look at
        145                          (Mr. Wishnia arrives.)                       7   anything that shows up that, you know, would be
                      l3       Q.     I think the last thing I asked you          8   negative or positive.
                      9    was .-                                                 9       Q. And having looked at those factors,
                     LO        A.     I was the president.                       10   would you then give a credit rating to a loan
                     11        Q.     So from September of ‘95 through           11   applicant?
                     12    and including April of ‘96. you were president?       12       A.   What do you mean a credit rating?
                     13        A.     Yes.                                       13       Q. Well, A, B. C or whatever
                     14        Q.     And what were your duties at East          14   designation that East Coast used.
                     15    Coast during that period of time?                     15       A.   I don’t know that we had a
                     16        A.     I’m in charge of everything.               16   designation at that time. We didn’t assign
                     17    E-ierybody would report to me. I ran the              17   something to it. I’m not sure when -- I never
                     18    company.                                              18   used the designation system. I don’t know
                     19        Q.     And unless I state otherwise, we           1Q   about other people in the company, maybe yes
                     20    will stick to that limited period of time,            2;   maybe not.
                     21    which is September of 1905 to April of 1996.          21      .Q.   You indicated be!ore that you were
                     22    During that period of time, was East Coast            2s   in charge of evepjthing and that everyone
                     23    giving both fixed rate and variable loans?            23   repcrted to you. Would that not include your
                     2;1       A.     Yes, I believe so.                         2d   advising people on how they should ..
                     25         Q.    During that period of time, dia            25       A.   There are certain loans that don’t




                                       anC=nlr?cFC A’, ACSn?!gTF?                            /9-i?\ 33ii.Ql nn
                                                        58                                                          60

 1 were re-entered and retyped, many, many times;             1 typed?
 2 information was lost. It was a disaster.                   2      A.   I don’t know. I can’t .- I can’t
 3      Q.    If an individual requested a loan               3 be certain. It’s not a definite.
 4 on certain terms and East Coast was not willing            4      Q.   What would it depend upon?
 5 to give a loan on those terms, would any form              5      A.   Whether or not somebody met with
 6 of a written rejection of the terms requested              6 them personally, there’s a lot of factors.
 7 by the homeowner be sent to the homeowner?                 7 Every loan is handled differently. It depends
 8      A    Mm-hmm, yes. It3 the same form                   8 on who’s communicating with the borrower, how
 9 with a different box checked. KS a denial of               9 we’re getting things back and forth. Some
10 credit form that either, you know, we turn them           10 people don’t want to be bothered, some people
11 down and the reason, or they canceled. didn’t             11 don’t want come to our office and some people
12 want something, that there are diierent boxes             12 come to our office and fill out an
13 to check.                                                 13 application. It’s so very, very different in
14      Q. And if East Coast were going to                   ;; different cases.
15 deny the terms requested by a homeowner but was                   Q.   If an application is taken over the
16 willing to make a loan on different terms,                16 phone, is it handwritten or is it typed?
17 would that be set forth in a writing to the               17      A.   It could be either, it depends how
18 homeowner?                                                18 lazy the person working on the file is. If
19      A.   If the homeowner was not                        19 their handwriting is bad and they need someone
20 interested, I don’t see what the point would              20 to type it in because they can’t read ii. it’s
21 be. Whether or not an aggressive loan officer             21 got to be typed. I can’t tell you
22 wanted to send a letter, I have no idea. You              22 specifically. The onfy thing I can tell you is
23 know, saying I can do this for you, please                23 that there has to be a typed one in the file by
2A consider me, we give better service than this             24 the time of closing. that’s the only definite,
25 to other companies, I mean, I have no idea.               25      Q.   And why does it have to be in the




                                                        59                                                          61
                                                              1
 1    That’s an individual loan officer, if there’s                file by the time of closing?
 2    one working on the file. It’s very specific to          ;         A.   Because it has to be clear, it has
 3    who the person is and, you know, how they came          3    to be legible, it is required by anyone you
 4    to be applying for a loan and how many other           .4    sell a loan to that there be a final typed one
 5    places they’re talking to and how much                  5    and that’s it. There has to be one that the
 6    communication is required.                              6    customer can review again that’s typed and
 7        Q.    What I’m asking you is if East                7    signed at the time of closing.
 8    Coast determined that they were going to make           8         Q.   You indicated that if the person
 9    an offer to the homeowner different from what           9    taking the application was lazy. that they
10    the homeowner had requested. was there any             10    might have it typed in later; is that correct,
11    specific form that East Coast would use to             11    or is that not what you said?
12    convey that to the homeowner?                          12         A.   No, that they might not have typed
13        A.    No. I don’t believe so. I believe            13    it, so there might not have been a typed one
14    that somebody would talk to the homeowner on           14    earlier.
15    the phone, would call them to see if they were         15         Q.    Do the individuals who take the
16    interested.                                            16    applications at that point in time, did they
17        Q.    In this case, the application is             17    have the capacity to type the information -1
18    typed. Dces that mean that there would have            18         A.   Wait, who are you talking about?
19    been a written applicaticn that ihe typeo cne                     Q.   Whoever was taking the
20    was based upon!                                        :s    application.
21            MS. CAVANAUG%: Cbjec!ion to fcrr.              21         A.   Well, again, you’ve got a wide
-I”
LL        A                                                  22    range of things. Is it a loan oificer taking
               What do ;JOU mean ‘based ucon’?
23        Q,.  Would there have beer: a uniform              23    an application thrcugh one oi his Realtcr
23    resiceniial loan acpiication in the Trout              2.l   peoole. is a telemarketer taking phone
25    :ransac:ion that :vzs ,.vritten. as cpcc;sec :s        25    infcrmationl




                                                                   ECM Da4
                                                                            62                                                                64
     60
                         1        Q.     We are talking about the uniform             1      has been made to the homeowner?
                         2    residential loan application, D-4, and what I’m         2         A.    Well, after, unless you’re just
                         3    asking is do individuals who take the                   3      doing -- you can do a title search first, a
                         4    residential loan application, D-4. have the             4      prop check, that would disclose things that
                         5    capacity to type into the actual form while             5     would not appear on credit, as opposed to
                         6    they’re on the phone with an individual taking          6      ordering a title. You know, a prop check is
                         7    information?                                            7      inexpensive and it will disclose judgments and
                         8        A.     I would say for the majority of the          8     whether or not the people actually own the
1OW                      9    people in the company, no.                              9      property. I differentiate that as a different
                        10        Q;     And if they don’t have that                 10      process in ordering title.
le                      11    capacity, then what would happen, where would          11         Q.    Okay, and what do you did you call
ie                      12    the information get written?                           12    that?
                        13        A.    What do you mean, where would it             13         A. A prop check. A prop check can
                        14    get written?                                           14     disclose other liens on the property that you
                        15        Q. If they are not typing it in                    15     won’t see on the credit report.
                        16    directly, then they are hand writing                   16         Q.    Is an appraisal of the property
                        17    information; is that correct?                          17     ordered by East Coast with regard to every
                        18        A.    Yeah, a processor, whoever the               18     security loan that they make?
                        19    processor is on the file, is going to have to          19         A.    Y e s .
                        20    type it in eventually.                                 20         Q.    And what is the title of the
                        21        Q.    And where is the handwritten                 21     individual at East Coast that would generally
                        22    information set forth?                                 22   order the appraisal?
                        23        A.    If there is handwritten                      23         A.    That has changed so often. I can’t
                        24    information, then it would just -- whatever            24     possibly tell you. It keeps changing all the
                        25    scraps would be in the loan. everything would          25    time. It used to try to consolidate in one
                                                                                 -



                                                                                 -

                                                                            63                                                                65

                         1    be in the loan file.                                        person, then people could order it themselves.
                         2         Q.     Is it is your testimony that you.          ;    At that point in time I couldn’t possibly tell
                         3    in fact, did not take an application from               3   you how we were doing it.
                         4    Beatrice Troup or Curtis Troup? ,                       4       Q.    When you say people could order it
                         5         A.     To the best of my recollection,             5   themselves .-
                         6    I’ve never taken an application from anybody,           6       A.    If it were loan officers.
                         7    except personal friends.                                7       Q. Meaning?
                         8         Q.     Can you tell me who did take an             8       A.    Meaning a loan officer who met‘with
                         9    application from Beatrice Troup and/or Curtis           9   a Realtor and they’re buying a house and, you
                        10    Troup?                                                 10   know, he can order the appraisal.
                        l!         A.     No, I can’t.                               11       Q.    When you say ‘he’, you mean the
                        12         Q.     Would that information be in a loan        12   real estate broker?
                        13    file?                                                  13       A.    No, I mean the loan officer who is
                        14         A.     It would be typed on this                  14   dealing with the customer can -- he’ll collect
                        15    application, which somebody left my name as the        15   a check or the customer can pay at the door or
                        16    default.                                               16   however it’s worked out, and he’ll order the
                        17         Q.     Would there be no other evidence in        17   appraisal.
     j                  18    the loan file as to who took the application?          18       Q.    But it would always be an East
     I                  !C         A.     I don’; bt?!ieve so. !f the people         19   Coast employee who would order the appraisa!?
     i                                                                               20
                        2n4   were a call-in CT a marketer. it was somebody                  A.     Gh, yeah. Well; the appraisal
                        21    in the maIn ciiics. It ,.vocldn’t make a               21   companies won’t do an appraisal for a company
                        _I                                                           22
                        LL    qiti?‘=c.-” to :hem :hat :hey took it. Samebody
                                    . ban-b                                               unless it’s been ordered from that company.
                        A-.                                                          23
                        L;    ‘,vas !a~;/ jnc . ! :cn’! ;(r.c:v.                              Q.    Were there requests for acorcvals.
                        24l        Q.      1s title insurance genoraily sought       24   one or more, submitted to different lending
                        ?Z
                        --     I- 3s: Las: 22:cr.s cr 3i;?l a :oan ccmmltmenr
                               -y                                                    25   entities regarding a loan to Miss Trouo!
                                                                                 -
-


          .._. _    1                                                       ECM Da5
             ..
          . ..-..
          . . ,-.
                                                         T4 I                                                       76

 1     customer or any dispute the customer had with                   to cancel. is Saturday considered a business
 2     respect to a payoff balance received on any of            :     day?
 3     their accounts, I would assume that that’s when           3        A.      Saturday is considered a day that
 4     it went through, but I don’t know. I don’t                4     you can use in your calculation. Sometimes we
 5     have particular knowledge and the settlement                    give people more time. We can count Saturday
       agent would be the person who could tell you              z     or not Saturday. Its perfectly valid to count
 76    that.                                                     7     Saturday as a rescission day.
 8          Q.    Is it correct that funds would not             8’       Q.      I’m going to ask you to look again
 9     be disbursed on May 1st or earlier?                       9    at the document that’s been marked D-2, the
10         A.    That is correct.                               10    pre-approval termination, and let me pull out
11          Q.   Does East Coast give any                       11    another document to give to you for a moment.
12     instructions to its settlement agent to wait             12              (Document is marked as D-10 for
13    any period of time afler the last day to                  13     Identification.)
14     rescind to see whether or not a notice of                14              I show you D-10 for Identification,
15    rescission is coming in the mail?                         15    the East Coast Mortgage loan commitment.
16         A.    No, I don’t believe there are any              16              (Witness reviews document.)
17    instructions given about waiting. They are not            17              If you could look at the
18    allowed to wait. Unless we have some sort of              18    pre.approval, D-2, and the mortgage loan
19    notice that the loan has rescinded, we are                19    commitment, D-10, at the top of D-2 there is a
20    required to fund the loan.                                20    section that says pricing and it says variable
21         Q-    If the Troup loan was funded                   21    intro 1.1. margin, 4.25. Can you tell me what
22    through a warehouse line of credit, would there           22    that means. that it was pre-approved, intro 11.
23    be documentation of that in the Troup loan                23    margin 4.25?
24    file?                                                     24        A.     I don’t remember how these sheets
25         A.    No. Well, there could be. It’s                 25    worked back then, but they have some strange




                                                                                                                             I


                                                                                                                   77 I
1     really an accounting issue. It would be in the              1 programs where they give you a temporarily low
2     accounting records.                                        2 rate that raises later, that’s something about,
3         Q.    And when you say in the accounting               3 I guess, an intro program they had at the
4      records, are you speaking of East Coast                   4 time. It may have, you know, it may have been
 5    accounting records?                                        5 good for a couple of months and then something
 6        A.    Yes, East Coast accounting records.              6 changed. I don’t know.
 7        Q.    And those records would not be part              7     Q.     Where it says margin, 4.25, does
 8    of the individual loan file?                               8 that indicate the margin pursuant to which Ford
 9        A.    Accounting records, no. I’m not                  9 was willing to make a loan to the Troups?
10    saying that there might have -- a copy might              10           MR. McDAVID: Objection.
11    not have gotten in there about a draw down                11     A.    I don’t know that Ford was willing
12    request or anything like that, but the original           12 to make a loan to the Troups. I don’t believe
13    documents with respect to the warehouse are in            13 the Troups applied to Ford for a loan.
14    the accounting records.                                   14     Q.     Does the pre-approval indicate that
15        Q-    Would documentation of a particular             15 Ford was willing to purchase a loan from East
16    loan or of the Troup’loan being funded through            16 Coast. which loan was made to the Troups that
17    a warehouse agreement, would there be                     17 contained a margin of 4.25?
18    documentation. of that anywhere else, other than          18     A.    I don’t know that this means that
10    East Coast accounting records?                            19 they ‘would purchase the loan at all. This is
20        A.    With the warehouse lender itse!f.               20 really a credit grade and them determining
21             MS. HOUSTON: Can we go off the                   21 where. if they looked at a closed loan package
22    record for a minute?                                      22 that had certarn parameters on it. how they
I_
L2             (A discussion is heid off :he                    23 lock at it. The:/ are not even obligated to buy
2a    record.)                                                  22 the ioan. escecially if perhaps :hey don’t . .
25       Q.      For purposes of the notice of   rigni          “C
                                                                L- the:: thank cur accraisal is net gocd or !hey




                                                            ECXI Da6                                                     I

                    CAC’\lCCDP D ,ICC^” ‘-7:                                  .n--. ,-,-q *_ Ah
                                                  98                                                        10(
 1   to go back and pull the accounting records from     1      Q.   Okay. And can you tell me how, if
 2   five years ago and trace it.                       2 a premium were to be paid, the exact amount of
 3        Q.     Do you have those accounting           3 the premium was calculated?
 4   records?                                           4      A.    No. It’s different in’every thing
 5        A.    I will call my accountant. I would      5 and the guy, the way they do it, changes all
 6   think that we do.                                  6 the time. There’s no set thing.
 7        Q.    We have in the notice of deposition     7’         (Document is marked as D-13 for
 8   that we want an agent of East Coast who has        8 Identification.)
 9   knowledge of the basis upon which the 84.244.36    9       Q.   I’m showing you the document that’s
10   commission referred to on the document-annexed    10 been marked D-13 for Identification and it says
11   as A 00135 was calculated upon, all facts and     11 on the front loan purchase agreement between
12   criteria upon which calculation of that amount    12 Ford Consumer Finance Company, Inc. and East
13   was based, and it goes on. Why don’t we have      13 Coast Mortgage Corporation.
14   this marked for identification.                   14      A. Yes.
15             (Document is marked as D-12 for         15      Q.    Mr. Ahrens. did you negotiate this
16   Identification.)                                  16 agreement with Ford?
17        Q.    The document marked D-12 for           17      A.   I believe I did.
18   Identification. notice of deposition, I read      18      Q. And on page five of the agreement,
19   part of it to you and it says that to be          19 it says premium paid by buyer towards the top
20   produced was an agent of East Coast who has       20 of the page?
21   knowledge of the basis upon which the $4.244.36   21      A.   Excuse me. where are you Idoking?
22   referred to on the annexed documents, including   22      Q.   Right there, premium paid by
23   all the facts and criteria upon which a           23 buyer.
24   calculation of that amount was based. If it’s     24    A.    Yeah.
25   claimed that there’s no person at East Coast      25      Q.   Did you negotiate with Ford how




                                                  99                                                       101
     who knows how that particular amount was            1     premiums were to be paid to East Coast?
:    arrived at in the Troup transaction, then an        2         A.   No. and that has nothing to do with
3    agent of East Coast who has knowledge of on         3     how premiums are paid to East Coast. That has
     what basis such commlssions were routinely          4     to do with repaying premium to Ford if it were
 4   calculated in and around February of 1?96.          5     paid to East Coast and the loan paid off early.
 6   inc!uding all the facts and criteria routinely    ‘ 6         Q.   I understand that, but before you
 7   used to calculate such a commission -- do you             can repay the premium, a premium has to be
 8   want to look at that for a minute, Mr. Ahrens.      i     paid. What I’m asking you is did you negotiate
 9   or are you reading it?                              9    with Ford the basis upon which premiums would
10       A.    I’m reading it right here.               10    be paid to East Coast. pursuant to the
11       Q.    Would you be the person who East         11    agreement that you’re looking at!
12   Coast would produce to .-                          12         A. No.
13       A.   Yeah.                                    13          Q.   You did not negotiate that with
14       Q- -- deal with that deposition               14     them?
15   request?                                          15          A.   No. It’s not negotiable.
16       A. Yes.                                        16         Q. How was it determined what the
17       Q.    Okay; Now. you indicated that you       17     premium would be that would be paid to East
18   don’t know whether or not a premium was paid in   18     Coast in any individual transaction?
19   the Troup transaction; is that correc!!           10          A.   They had determined the criteria
20            Correc!.                                 20     when you go to se!l the loans, every investor
21       ;.    Is it correct that pursuant to !he      2!     dces.
     loan purchase agreement that East Coast tiac      22          Q.   When you say they de!ermine the
                                                       ,.-
     wtth Ford that premiums were paid to East CJaSt   L2     .zri+Ma. could YOU give me an idea of what
     in certain transac*ions?                          2”
         A.   Premium; cculd be paid.                  ‘- E
                                                       ‘-                        :ary je!l loans c.1.
           1
           i!
           1(
           3
           ”                                                       102                                                         104
           sf
           -
           ;      1    float, they’re usually in a package. and it’s          1     A.     There is nothing in writing as to
                  2    backed on usually the weighted average coupon          2  how the premiums are calculated.
            ;
                  3    and any other factors that they consider               3     Q.     There was never at any point in
            ij                                                                4  time anything given to you in writing as to how
                  4    relevant.
           f
            7     5        Q.    You indicated that Ford could say            5  premiums were calculated?
           .!     6    to you on any particular day, This is how we’re        6     A.     If they had anything on one of
           :i     7    doing it, this is what we’re paying to you, and        7  their rate sheets that showed things, that
          -;
           u      8    East Coast has no say in it?                             would be it. I don’t recall seeing it.
           B
           4      9        A. Absolutely, yes.                                i Usually it’s based on weighted average coupon
          E      10        Q.    Was there a form you look at at any         10 and what they have for individual float loans
          ;1     11    given time when a premium was paid to you, was        11 is not applicable to us. The majority of the
          f      12    it based on a formula?                                12 time we sell our loans in block. Any
          3      13        A.    Usually it’s based on weighted              13 information that they put out, it’s really the
          *
          2      14    average coupon. It depends on whether or not          14 information they put out. It’s on, like, the
          5      15    we’re selling a block of loans or if we’re            15 rate sheets, if they fax something. We are not
         7                                                                   16 selling anything but closed whole loans and
         b       16    selling a loan on float. If we’re selling a
         ?.                                                                  17 usually we’re selling them in packages.
         I:      17    loan on float, often we have some pre-approval
         ;:      18    sheet that if we get in within 30 days, we can        18     Q.     What information would be on the
        I
        :        19    use that as a base. However, very often we’ve         19 rate sheets? You have referred to rate
        ;        20    sent in these pre-approvals just so we can fund       20 sheets. What information would be on the rate
        j
        E        21    off the warehouse. We have held loans as long         21 sheets?
        .:             as 75 days before we’ve sold them. Rates                     A.    The rate sheets go to brokers. I’m
        2
                 $23   change, programs change, there’s no -- they           %Z just saying that I don’t know our names in the
        G                                                                    24 data base. Sometimes we get faxed in sheets
                 24    determine how they pay premium and it’s take it
       2         25    or leave it. We shop, we go to different              25 from the wrong division of a company we deal
       ii
       T
       .t
       :.
       ,
      L                                                                  -
       .                                                          103                                                         105
      I           1 places and say here is the loans we have, here            1 with. I just want to be honest with you that
                  2 is the loans we have, what would you give us,             2 there could be something around somewhere that
      z           3 and then they tell us and we pick whoever would           3 says what a rate is. It doesn’t apply to us.
                  4 give us the best deal.                                    4 but I don’t want to mislead you into thinking
                  5        Q. At any point in time when For! paid             5 that we’ve never seen anything that may have
      .e          6 you a premium did it depend on the margin that            6 set a rate on it.
                  7 you got the loan on?                                      7     Q.     You’ve spoken of the term weighted
                  8             I don’t know I don’t recall. I                8 average coupon?
                  9 don’; know. Ford’s b’een -- this is older with            9     A. Weighted average coupon is one of
                 10 Ford guidelines and stuff. They haven’t been             10 the most important factors. Other things are
                 11 Ford in a while.                                         11 the weighted average grade and weighted average
                 12        Q.   I understand that. What I’m asking           12 maturity and whatever is important to that
                 13 you is if at any given point in time the                 13 investor. Weighted average coupon is the most
                 14 premium that was paid by Ford to East Coast              14 important.
                 15 would turn in any way on the margin based upon           15     Q. What is weighted average coupon?
                 16 which the loan was given?                                16     A. Weighted average coupon, which I
                 17             I don’t recall and I don’t know if           17 explained to you at my last deposition, is a
                 18. it ,“,; loan specific or -- I don’t know. It            18 formula where you take the amount of a loan and
                 19 was five yearsago. I mean, we haven’t done               19 the interest rate of the loan and through a
                 20 business with Ford for years.                            20 calculus summation, you come up with an average
                 21        Q.   Are you indicating that there was            21 coupon yield. It is a fcrmula in calculus
                 22 nothing in writing as to how these premiums              22 which is far too complex :cr me to do without a
5                23 were determined?                                         23 calculator and it gives you a number and they
.’8              211            MS. CAVANAUGii: Cbjection to form.           24 will !ell you what the minimum is and ii
.-               25 Go ahead and answer.                                     25 deoends cn where you hit. It aleo depends wfia:
:
                                                                         -
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.h                                i?OSENEE!?G & ASSOCIATES                               (973) 228-9180
O.l/04/00 TUE 16:51 F.U 73"889875             ECX - Executive O*"tce




                   WAREEOUSZ LENDING (A-ON GRACE)
                   JEFF BIERENS
        RE:        BULX!ZALB
      DATE:        H A Y      6, 1996

              TODAY WB SOLD A LOANS'TO FORD CONSUMER CREDIT.           ~CLuDm IN
      TBIS PACKAGE AR2 TIiZ FOLLOWG LoAZ?S TBAT WICRX FUNDED BY You.
              1:    TROUP
              2:    EHMONS
              3:    JACKSON (UPON RECEIi?T)
              4:
           TEE SALE IS FOR THURSDAY, HAY 9, 1996.       CONSEQUENTLY, WE
     REQUIRE !TXAl' THE NOTES FOR CP)IESE =ANS BE ENDORSED TO "FORD
     CONSUHER FINANCE CO." USING TEE NAXE5 AND ADDRXSS PROVIDED, AND
     FEDERAL EXPRESSED TO "XM3" FOR A WEDNESDAY DELIVERY.       TH2 F'GNDS
     CORRESPONDING TO THESE LOANS WILL BE WIRED TO OUR WARXXOUSE ACCOm
     ON TEIUIiSDAY.
              SHOULD YOU HAVE ANY QUESTIONS, PLZASE CLLL HE.
                                 FORD COZbMER FINANCE CO.
                                 2 ARMSTRONG ROAD
                                 aELTON, CT 06484


              cc.
04/04/00       TLIE 16:S-I F.4.I 73**8898iS        ECX - Execurive Of'ptce          @loo1


  ;        .




                       MINI f5/3/96) FON CONSUMER FI~cE COMPANY


                                NC0818            XMMCNS            $ 33,ooo.oo
                                NC0761            JXCKSON           $ 72,OOO.Oo
                                NC0860            TROUP             $ 46,500.Oo
                                                                    ----------
                                              3



                                                                                  ...




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       EAST COAST MORTGAGE CORP.
        67 Walnut Avenue. Clark, New J-say 07060 * Tale (908) 388-1700


                           P?AREXOUSE LENDING CORPORATION OF AMERICA
                                'tiT FIBdmG - WIRE XNSTXUCTIONS




                                                                               w
    A M O U N T   NESDED   TO   CLOSE:    $       44,620.60            .

    CREDITTO:                            PAUL J. GELMAN, ATMRNEY TRUST ACCOUNT

    ACCOUNT NDMEPR:                      141020511-8

    ABA ROUTIHG NUMBER:                  031200730

    BANK NAME:                           CORE9TATRS/NS JERSEY NATIONAL BnMc

    BANK ADDRESS:                        WEST COLLINGSWOOD, NJ '08107

    ORIGINXTOR:                          EAST COAST MORTGACX CORP.
                                         BORROWER'S NiXME:BEXTRICE TROUP
                                         CURTIS TROUP


                    SPECIAL
                  INSTRUCTIONS           ESCROW NUMBER:

                                         TITLZ OE'FICZR:

                                         ORDER NUMBER:

    CLOSING AGRNT :                      ?AUL 3. GELMAN, ESQ.


I   ADDmSS:                              47s UHITE HORSR PIit
                                         NEST COLLINGSWOOD, NJ 08107
1 PHONE NUKBER:                          (609)   050-4200




                                         /,jyy$~& ’
                                             \
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                                               /Q@
                        SUPERIOR COURT OF NEW JERSEY
                        CHANCERY         DIVISION            -    ESSEX      COUNTY
                        DOCKET       NO.       F-8466-98
ASSOCIATES     HOME       EQUITY       SERVICES,             INC.     F/k/a
FORD   CONSUMER       FINANCE        COMPANY,
                        Plaintiff,
            vs.
BEATRICE   TROUP      and      MR.      .TROUP,       husband of
Beatrice     Troup.;Curtis Troup and MRS.                             CURTiS
                                   -.=
TROUP,     his wife, STATE OF NEW JERSEY,
                            .- - -                                    UNITED

STATES OF AMERICA,
                        Defendants.

---_-----    -_-e----m-                    --B-----e
BEATRICE TROU? and CUR TIS .TROUP
                        Coun ter ClE imants,
                              b
             vs.

GARY   WISHNIA,       GENERAL        BUILDERS            SUPPLY,          INC.,
PROPERTY    REDEVELOPMENT             CENTER,         INC.         East     Coast
MORTGAGE CORPORATION and JEFFREY AHRENS,
                        CouEterdefendants.
                        DEPOSITION OF: RICSAZD LaFRANCE
                              TUZSDAY,         March 7,            2000
                        ~ic)s~>j~~~.~      &   ,L-SSOCI-Z..,TS
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                                         ECM Dal 3
                                                                    62

     1     on the page.                                                       1    end.
     2         A. Yes.                                                        2       Q. Okay.
     3         Q.     Looking at it on this page, do you                      3          Can you explain to me what back end
     4     have any idea the significance of those words                      4              is?
     5     and those figures?                                                 5        A.    We wouldn’t pay them anything extra
     6         A.    I am assuming that’s what they paid                      6    for the loan. We would break even. Buy the
     7     for the loan.                                                      7    loan with no points on the back end.
     a         Q. Okay.                                                       a        Q.    Hypothetically, if the other lender
    -9              And the phrase broker space COMM?                         9    made the loan at two percent above par --
    10         A.    I have no idea.                                         10      A.    Okay.
    11         Q. You have no idea what that means?                          11        Q.    -what affect would that have on
    12        A.    No.                                                      12    what Associates would pay?
    13               MS. TOTARO: Off the record.                             13        A. We pay a premium for the loan.
    14          (A DISCUSSION WAS HELD OFF THE RECORD.)                      14        Q. A premium?
    15               MR. LAURA: In reviewing the Notice                      15      A.    Yes.
    16      of Deposition which we probably should mark for                  16        Q.    Do you have any idea how that
    17      the record, it is evident Mr. LaFrance is not a                  17    premium would be calculated?
    18      person with knowledge of the first paragraph of                  18             Right now, no.
    I9     .the 1482 section of the notice if that is what                   19        t Would the premium be higher if the
    20      we call it, the person from Associates with                      20    ultimate interest rate of the loan be higher?
    21      knowledge. It says that you generally want                       21            MR. LAURA: Objection.
    22      somebody to speak about the 4244 dollar 36 cent                  !2        Q. Was higher?
    23’   entry on the two documents you just showed Mr.                     ?3            MR. LAURA: Objection.
    24    LaFrance. He is not the person that can talk                       !4            MS. TOTARO: I will rephrase the
    25      about that. Whether we havesomebody with                         25   question.
                                                                         L




                                                                         -

                                                                    63                                                               6:
     1     knowledge, I don’t know, but I will inquire.                       1      Q. Would the premium paid to the other
     2             MS. TOTARO: Mark that O-6. the                                 lender increase as the interest rate of the
     3     Notice of Deposition.                                             :    loan increased?
     4             (DEFENDANTS 6: THE NOTICE OF                              4      .   A.     Yes.   .
     5     DE?OSITION MARKED FOR IDENTIFICi\TION. AS OF                                    MR. LAURA: Note my objection to
     6     THIS DATE.)                                                       z    that question. Go ahead.
     7        Q.     My final question on this                               7             MS. TOTARO: Okay.
     a     particular document, A00137 .- l’m sorry.                         a        Q.    But as you are sitting here today,
     9     136.                                                              9    you cannot tell me what the formula would be
    10             The third-from the last line says,                        10   for determining how much it would increase?
    11      ‘complete rescission form 610864 dash new                        11       A.    No. Not at this point, no.
    12     loan.’                                                            12       Q. Okay.
    13             Do you have any idea what that                            13            I just want to take about five
    14     refers to?                                                        14   minutes to look over my notes and maybe you
    15         A.    It would be just a guess on my                          15   guys can take a short break. It would be
    16    par-t. I don’t know.                                               16   about five minutes tops.
    17        Q.     We have spoken about. Mr. LaFrance.                     17            After that, I should have almost
    ia    the par rate that you would assign to a loan.                      ia   nothing.
    !C              Is that scmething !hat would be                          19               (A BRIEF RECESS WAS TAKEN.).
    20    faxed back to the other lender?                                    20              MS. TOTARO: I have a couple mere
    2'1       A.     Yes.                                                    21   questions. Do you want to go Kathy?
    7-Y
    --        Q.     De!ine for me. in your own words.                       22           MS. CAVANAUGH: No. Finish.
    22    mar the ‘par rate’ IS.                                             -f        Q.   Mr. LaFrance. the rare sheets that
    2a        A.     If the lender soid us a !oan a[                         ;i   ‘tie have been referring to, were they generarec
    25    car. ‘we LNouldn’t pay anything on the back                        25   by a computer prcgram?
                                                                         -



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                                                               ECM Dal4
                                                           -   -.    .---
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 1 creditors, would this then have been an A           1         What was -- when you were in
 2 credit grade loan?                                  2 correspondence doing underwriting, what was
 3           MR. LAURA: Objection.                     3 your idea of what the business was of
 4      A. You know, I couldn’t say unless,            4 corresponding?
 5 you know, I was looking at a different package.               What did it do?
 6      Q. Can you explain that to me?                 2          My purpose was to buy loans.
 7     A.     Based on what I have here?               7     “d   Okay.
 8      Q. Right.                                      8         And from what kind of entities did
 9     A. Okay. I graded it C plus 50,                 9 you buy loans?
10 right?                                             10     A.   Mortgage bankers, le’nders.
11      Q. Okay.                                      11     Q.   Did you buy loans from mortgage
12     A.    Unless I could see another credit        12 brokers?
13 bureau report and, you know, you are asking me     13     A.   Not my department.
14 hypothetically could it be an A. I don’t           14     Q.   What department would have handled
15 know.                                              15 buying loans from mortgage brokers?
16      Q. Well. I’m asking you to envision           16     A.   Retail.
17 this same set of papers before you --              17     Q.   Do you have an understanding of
18      A. Okay.                                      18 what the distinction was between a mortgage
19     Q. -- hypothetically.                          19 broker and a mortgage banker?
20          And hypothetically, let’s assume          20     A. Yes.
21 that the’one charge off .item was not on the              Q. What was that distinction?
22 credit report.                                     ;:    A.   You would table fund a mortgage
23     A. Okay.                                       23 broker and a mortgage lender would make the
24      Q. Would this still be a C plus 50?           24 loan and we buy it from the lender.
25      A.   I probably would have tagged it C        25     Q.   When’you say, ‘table fund.‘what -




                                                 71                                                      73

 1 plus 50.                                            1 did it do?
 2      Q.   I’m’sorry. Would have kept it at C        2      A. We would fund the loan at the          ._
 3 plus 50.                                            3 table.
 4     A.    In all probability, yes.                  4      Q.    Would it be fair to say that the
.5      Q. Okay..                                      5 money for the actual funding to the loan from
 6.        ‘And what I am asking you is, did           6 the borrower would come from Associates?
 7 this loan go from an A to a C plus 50 strictly             A. Yes.
 8 based on the existence of the write-off and the     ;      Q.    Okay. I’m going to ask you to look
 9 absence of other positive references to             9 at Al62 which was marked as D-4. I realize
10 creditors on the report?                           10 that it is a loan application. I realize,it
11          MR. LAURA: Objection.                     11 may not have been a loan application that you
12          MS. GAVANAUGH: Objection.                 12 looked at or probably wasn’t because of the
13      Q.   Do you understand the question?.         13 date, but I’m going to ask you a few questions
14    A.    Yes.                                      14 and ask you to refer to this if it is helpful.
15      Q.     Okay.       -                          15           There are two borrowers who were
16          Is that what made it go from an A         16 reflected on this loan. Curtis Troup and
1 7 toaCplus50?                                       17 Beatrice Trcup. Is that correct?
18    A.    Yes.                                      18    A.     Yes.
19          MR. LAURA: Objecticn.                     19      Q. Okay.
20          MS. CAVANAUGH: Note my cbjeciion as       20           Would Associates normally take into
2 1 we!l.                                             21 actount the income of bcth borrowers in
22          MS. TOTARO: Okay, that’s it.              22 determining the credit wcrrhiness of these
23 CROSS-EXAMINATION SY MS. CAVANAUGH:                2 3 borrcwers?
24     Q.    !usr a few qcesticns. :Mr.               2s      a. Yes.
25   LaFrance.                                        25      Q.    If Eeatrice Trocp -. le: me back ii




                                             ECM Da15
                 EOSENZE?G & ASSOCIATES
                                                                                                                             -VT       .4~,~.*~.
                                                                                                     -   --       --     -         ._ _

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                                                                                                                                                 I
GREINER, GALLAGHER KAVANAUGH, L.L.C.                                                                                      ‘-‘_ 3       .      -.      .-..
200 I Route 46, Suite 202                                                                                                  , . .;       ’     .-     .i,‘:

Parsippany, New Jersey 07054
                                                                                                                   .-w...:_       7 - _.
(973) 325-7400                                                                                                                                   .e-_,

Attorneys for Third-Party Defendants,
East Coast IMortgage Corp. and Jeffrey Ahrens                                                 1
                                                                                                    ‘S
                                                                                                                       ----.-.-             -c               .

                                                                                SUPERIOR COURT OF NEW JERSEY
 ASSOCIATES HOME EQUIlY SERVICES, INC. flk/a                                    CHANCERY DIVISION:
 FORD CONSUMER FINANCE COMPANY, MC.,                                            ESSEX COUNTY

                                               Plaintiff,                       DOCKET NO. F-8466-98

                                    vs.
                                                                                                  CIVIL ACTION
 BEATRICE TROUP and MR. TROUP, husband of
 BEATRICE TROUP, CURTIS TROUP and MRS.                                         CERTIFICATION OF JEFFREY AHRENS I-N
 CURTIS TROUP; STATE OF NEW JERSEY, UNITED                                     OPPOSITION TO TROUP’S MOTION FOR
 STATES OF AMERICA,                                                            SUMMARY JUDGMENT

                                               Defendants.


 BEATRICE TROUP and CURTIS TROUP,
            DefendantsiCounrerclaimants.
                                                               .
                          vs.

 GARY WISHNIA, GENERAL BUILDERS SUPPLY.
 INC., PROPERTY REDEVELOPMENT CENTER,
 INC.. EAST COAST MORTGAGE CORP. and
 JEFFREY AHRENS,

                    Third-Party Defendants



           I. JEFFREY AHRENS, being of full age. certify to the Court as follows.

            1L         I am an xtorne~t at !aw of the Stare of New Jersey: and ~!le President of Defend:lllt.

i.L\L -
r.. -. c :?35; 1’I(,-! 4 gnge {COT. l”EC!.i”l. 1 2ko am name:! 2s nn indi~:idurli de!‘enc!;!tit in [l:is n~:~[~fy.
               _

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0~/10/00      !fON 12:26 FQ -23889875                          - Executive   ^afice
A&10-00 RON 11                                                     FAX NO.    .3 335 6018               P. 03Qoo5




             2.    Truup alleges thhat Iho form of NoI& ,of Right to Cancel used by RX is dcfcctive,

   bccausc the d&c of the closiw is cntcrcrl nur the si~alure lint for xscksion. Contrary to the

   unfom&d &~ans by Troup, (he d&c w not “typed h” by Ec%‘L Em utilized a computer

   soflwm program for Ihr.        prod&on of mslTy     lOall   dosing bcumcnts. The compukr would

   automatically ptaca tile &tc ofclosingnexttoSiWIincs- Apparmtly. the wmputcr program
   ontcrcd   the dale of&sing next to the s@dUn hcs fib Ihc Nabs Of fight to Camel.

             3.    T~ups’ anmel also idc&ficdthis probltm ad brought itto ECWs attention in the
                                                   I
   context or am&w da, LC.. the suit by Wtie Mae Moses. That wm tbc first             time auy allcpd

  problem wj~h tllc date was brought lo our attdon. NO borrower h;ls chimed ta bc confused OS

   mislead by the entry of &he closiq da on the document Notwithsl~ldiq the abbxncc of any
   confusionor problem with any borrow, ECM has lakcn steps 10 stop the insertionofthe date.

             4.    T~OUP &o ~1cgc.s that $50.00 we imp=d by tie dosin= attorneys, tieLaw

   Ofj~e of&u1 Gelman, m a~1 iqxmk~~e IinanCt Cbrgk ‘I‘ht charge is not a c?mgc required

   or imposed by EC&l. me iqosition ofthc charge is note by ECM and ECM did not receive
                                            ..  .
   or r~raitl t& charge. ‘11~ &rgc was not a condition impod by KM incident to the cxknsion of

   crcdi t to Tmup.
             5.       I hereby ccctify lbat the foregoicy statemenk n&e by me arc hue. I am aware &at

   if any ofthc foregoing wenti made by mc arc tilfdiy tic, I am subject to punishment

   Dared:April10,ZOOO




                                                    EUvl Dal7
                          CERTIFICATION PURSUANT TO R. l:@(C)


                  I, KATHLEEN CAVANAUGH, being of full age, certify:

       1.   I   am an attorney at law of the State of New Jersey and a Partner with the law firm

of Greiner, Gallagher Kavanaugh, LLC. On this date, Jeffkey Ahrens acknowledged that the

si,onature on the attached Certification is genuine. A copy of the Certification with the ori,oinal

sigature of Jeffrey Ahrens will be filed if requested by the Court or a party.

       I hereby certify that the fore_goin,o Statements made by me are- true. I am aware that if

any of the fore,ooing statements made by me are willfully false, I am subject to punishment.



Dated: April 10, 2000

                                      ..’
                                  ;p- /-&-
                                K.\THLEEN CAVANAUGH
                                                                                                      ‘.._._



  GREINER, GALLAGHER Sr CAVAiiAUGH, L.L.C.                                      ..    -           --            _._ _ _       _
  200 1 Route 46, Suite 202
  Parsippany, New Jersey 07054
  (973) 335-7400
                                                                                                                ‘;)
  Attorneys for Defendants,                                                                                           .:*i,

  East Coast LMortgage Corp. and Jeffrey Ahrens
                                                                                     --.      -        -       -_ - -__i

   ASSOCIATES HOME EQUITY SERVICES,                                     t4                 .- .._ _
   INC., formerly known as FORD CONSUMER
   FINANCE COMPANY, INC.,                                        SUPERIOR COURT OF NEW JERSEY
                                                                 CHA$KERY DIVISION
                                      Plaintiff,                 ESSEX COUNTY

                   vs.                                           Docket No. F-5466-95

   BEATRICE TROUP, et al.                                                      CIVIL ACTION


                                                                 RESPONSE TO TROUP’S STATEMENT
   BEATRICE TROUP and CURTIS TROUP,                              OF MATERIAL, UNDISPUTED FACTS

                    DefendantsKounterclaimants,

                  vs.

  GARY W-ISHNIA, 6ENERAL BUILDERS
                               .
  SUPPLY, INC., PROPERTY
  REDEVELOPMENT CENTER: INC., EAST
  COAST MORTGAGE CORP. AND JEFFREY
  AHRENS,

                    Third-Party Defendants.


            Third-Party Defendants. East COW Mortgage Corp. (“ECM”) and Jeffrey Aluens

                                                           -
(“.Mvens”). respccrtrully submit rhs fohving x heir Rzspon Lc’ X dx Sia.tement of hlaterial.

L-rxiispured Fats submined on ‘rhnifoi 3e~[ricz Troup xc! c‘xis Trl?uz I c:)ile-Li\.eis.

                                                                          .. T!:.‘~~*--.~-~
“Ti(>lIp”). \vi[ll respect to Trol!p’s \[o[j,~r, s_\r ?;1r:i;;i jt:r,rizr-. -..L .=... c..i r::::r:.:‘nie .l.?rii 20.

-Ijl;(:l.
        1.      ECM does not admit or deny the allegations of Paragraph 1, because the

allegations do not reiate to ECM and ECM is without knowledge or information to admit or deny

the allegations of Paragraph 1.

        3
        -.      KM does not admit or deny the allegations of Paragraph 2, because the

allegations do not relate to ECM and ECM is without knowledge or information to admit or deny

the allegations of Para_graph 2.

        3.      ECM does not admit or deny the allegations of Parasaph 3, because the

allegations do not reIate to ECM and ECM is without knowledge or information to admit or deny

the allegations of Paragraph 3.

        4.      ECM does not admit or deny the allegations of Paragraph 4, because the

alle,oations do not relate to ECM and ECM is without knowledge or information to admit or deny

the allegations of Paragraph 4.

        5.      ECM does not admit or deny the allegations of Paragraph 5: because the

allegations do not relate to EC&l and ECM is without knowledge or information to admit or deny

the allegations of Paragraph 5.

        6.      ECM does not admit or deny the allegations of Paragraph 6, because the

allegations do not relate to ECM and ECM is without knowledge or information to admit or deny

the allegations of Paragraph 6.

        7;      EC>1 does not admit or deny the allegations of Paragraph 7, because the

ailqrions do aor relate to EC1.1 and ECU is \virhout kn~mkdge or informarior? :o admit or den;:

Ihe ailtytions of Paragaph7.




                                              EGA4 Da20
         8.       ECM does not admit or deny the allegations of Paragraph 8, because the

allegations do not relate to ECM and ECM is without knowledge or information to admit or deny

the allegations of Paragraph 8.

         9.       ECM does not admit or deny the allegations of Pam-mph 9, because the

allegations do not relate to ECM and ECM is without knowledge or information to admit or deny

the allegations of Paragraph 9.

         10.      ECM does not admit or deny the allegations of Para,graph 10, because the

allegations do not relate to ECM and ECM is without knowledge or information to admit or deny

the allegations of Paragraph IO.

         11.      ECM does not admit or deny the allegations of Paragraph 11. because the

allegations do not relate to ECM and EC?vl is without knowledge or information to admit or deny

the allegations of Para-graph 11.

         12.      ECM does not admit or deny the allegations of Para,oraph 12. because the

allegations do not relate to ECM and ECM is without knowledge or information to admit or deny

the allegations of Paragraph 12.

         13.      ECM does not admit or deny the allegations of Paragraph 13, because the

allegations do not rela’te to ECM and ECJA is without knowledge or information to admit or deny

the allegations bf Paragraph IL

         14.      EC%1 denies thar it provided “permanent financing” of the contract or contracfs

bt:\veen General Builders Supply. Inc. and Beatrice and Curtis Troup. EC\ I refers to :1x

\lorrgage Xote and other cioc:lm<nrs attached to the: Ctnification oi Kathiz1 C;:~xx$, Sic2

t:\n Llarch 2: ‘000 tllat j<! ;‘ortll Ilk! iCYIllS Of tht: qezxe:nr bsven EC\. [ rm;. Cartis ;:::cl
             -. -

‘;c:ilt:ic:= Trgl~~. EC>1 &es .?r~)t dmit or &:I! r!l< rtzi::inin; r:,ii<;::.tii:i;z :-,I’ y..::.~::::-I   --. ‘-::.::...--.


                                                         ECM Da 2 1
the allegations do not relate to ECM and ECM is without knowledge or information to admit or

deny such allegations.

              15.   ECM admits Paragraph 15.

              16.   ECM denies Paragraph 16, because it is vage. in that it states that “East Coast

consistently used the same Notice of Right to Rescind Form for at least a one and a half year

period between April 1996 and January 1998.” ECM admits that it used a form based upon the

Model Form H-S set forth in the United States Code of Federal Regulations.

          17.       ECM denies Paragraph 17, because those allegations are without foundation, and

ECM refers to the Certification of Jeffrey Ahrens dated April IO! 2000, at paragraphs 2 and 3.

setting forth the facts with respect to the dating of the Notices of Right to Cancel. ECM denies

that the date set forth was “consistently three days sooner than the right to rescind could expire,”

and refers to Troup’s Notice of Right to Cancel, March X,2000 Cavanaugh Cert. Exh. “H”.

          18.       ECM admits that the attorney at the closiq charged a SSO.00 fee which is

characrerized on the attorney’s invoice as being for services as “disbursement agent.” ECM

denier, this allegation to the extent that thriroups ar,oue that it means that ECM imposed that fee

or charge as a condition of the extension of credit. ECM refers to the complete absence of any

evidence to support such an allegations and to Paragraph 4 of the April 10: 2000 Certification of

Jeffrey Ahrens which sets forth that the charge was not imposed. required. received or retained

by ECL4. ECM further notes that ECM produced Jeffrey Ahrens for a deposition on &larch 15.

2000 at lvhich time Troups’ CCL : n sz! had an opponunitv to question Jeffrev ?&ens at ienzth on

this issue. Therefore. a.tier till1 ciixa\.e:r:-. EC&[ ‘5 ;ositiou tllX L!W   C!lXg?   \\‘,1S   not iillp(Js~d.




r?:!uir,s. receiiyyj or retained by fc1l iS anciis;?uki.
     .   -4




                                                  ECM Da22
        19.     ECM admits that the Amounts Financed Itemization Statement lists the total fee

paid to counsel and ECM refers to that document for the content there,of. Troup’s Brief at

Appendix page Da26. ECM denies this allegation to the extent that Troup’s argue that it means

that ECM imposed that fee or charge as a condition of the extension of credit, and ECM refers to

its response to Paragraph 18 of Troups’ Statement of Material, Undisputed Facts.

        20.     ECM does not admit or deny the allegations of Paragraph 20, because the

allegations do not relate to ECM and ECM is without knowledge or information to admit or deny

the allegations of Paragraph 20.

        21.     ECM admits that the %46,500.00 was the principal balance of the loan. ECM

admits, as set forth in the HUD-1 settlement statement, that loan proceeds were utilized to pay

the costs associated with the loan, including, the loan discount fee of $1,860.00, the appraisal fee

cost of $250.00, the credit report fee cost of S19.40, the title insurance costs of $408.00, the ,

S495.00 costs for attorneys services and disbursements and the $57.00 costs of recording a deed

and mortgge. ECM objects to the Troups’ characterizations of some of the items to the extent

that they deviate from the description of those items on the loan documents.

        33
        --.     ECM admits that it received a November 11: 1998 letter from Madeline L.

Houston. Esq. stating, “Pleas [sic] be advised that MS. Beatrice Troup is hereby rescinding the

above noted transaction pursuant to 15 U.S.C.A. 1635.” ECM is without knowledge or

information as to the date that the notice was mailed.

                               GREINER. GXLL.\GHER & C.AV.WAUGH. L.L.C.
                               .\rromcys for Third-Party Defendants.
                               East Coast Mortgage Corporxion and Jeffrey .-Uirzns




DATED: .+rii ! 0. Z!jOC,                   ECM Da 23
 HOUSTON & TOTARO                                                          D/i'   (ied


 Attorneys-at-Law                                                    \k
                                                                   A@   ’     3-
 152 Market Street, Suite 3 14
 Paterson, N. J. 07505
 (973) 754-9200
 Attorneys for Beatrice and Curtis Troup
                                               SUPERIOR COURT OF NEW JERSEY
                                               ESSEX COUNTY: CHANCERY DIVISION
                                               DOCKET NO. F-8466-98
 ASSOCIATES HOME EQUITY
 SERVICES, INC., f/k/a FORD
 CONSUMER FINANCE COMPANY, INC.,‘:

               Plaintiff,
               -v-

 BEATRICE TROUP and MR. TROUP                  ;
 husband of Beatrice Troup; CURTIS             :
 TROUP and MRS. CURTIS TROUP,                  :
 his wife; STATE OF NEW JERSEY;                :           CIVIL ACTION
 UNITED STATES OF AMERICA,                     :

            Defendants,                             DEFENDANTS/COUNTERCLAIMANTS
************+************************                 R. 4:46-2(b) COUNTERSTATEMENT
BEATRICE TROUP and CURTIS TROUP, :                        OF MATERIAL FACTS

               Counterclaimant,

               -v-
                                           ..
GARY WISHNIA; GENERAL
BUILDERS SUPPLY, INC.;
PROPERTY REDEVELOPMENT ;
CENTER, INC.; EAST COAST
MORTGAGE CORPORATION, and ;
JEFFREY AHRENS,

              Counterdefendants.           :

       DefendantsKounterclaimants respond as follows to Associates’ Statement

of Material Facts:

1.     Admitted.

3
-.     Admitted.
3.        Admitted.

4.        Admitted.

5.        Admitted.

6.        Admitted.

7.        Admitted except that defendants point out that under the Court Rules claims

asserted as counterclaims can also be deemed affirmative defenses.                 See

defendants’ accompanying brief.

8.        Defendants submit that defendants’ claims in their pleading speak for

themselves.

9.    .   Defendants submit that defendants’ claims in their pleading speak for

themselves.

10.       Defendants admit that Jeffrey Ahrens did so testify.

11.       Defendants admit that Jeffrey Ahrens did so testify.

12.       Admitted.

13.       Admitted that Mr. La France so testified. Denied that race and/or the
                                     .
location of property does not effect Associates’ decisions to purchase loans and at

what terms to purchase them.          Defendants note that opposing facts are set forth

par. 33, ef seq., infra; and further note that Associates has improperly withheld

relevant information from defendants in discovery which deprives them of the

ability to set forth a full rebuttal of this factual allegation.

14.       Denied. Defendants note that opposing facts are set forth infra par. 33, ef

seq. and further note that Associates has improperly withheld relevant information
from, jffnvr’-
          -*,,=nts in discovery which deprives them of the ability to set forth a full

rebuttal of this factual allegation.

15.    The stated principal amount, interest rate, and maturity date are admitted,

The implication that these are the only relevant features of the financing is denied.

Opposing facts are set forth infra, par. 33, et seq.

16.    Admitted that defendants argue as a matter of law that the loan terms in and

of themselves are sufficient to establish unconscionabiiity under the Consumer

Fraud Act. To the extent that Associates intends to state herein that defendants’

pleading and interrogatory answers as a whole did not put Associates on notice

that there was disproportionate bargaining power as between the Troups ‘and East

Coast, denied. The facts set forth in the Troups’ Counterclaim and their

interrogatory answers (Cavanaugh Cert. Exh. C and L) give notice of the fact.

17.    Denied, the loan terms were not more favorable than the Wishnia financing

terms and in fact that there was no benefit to the Troups in East Coast’s

“refinancing” of the transaction. See opposing facts set forth infra, par. 57, et seq.

18.    Admitted.

       DefendantsKounterclaimants        respond as follows to East Coast/Jeffrey

Ahrens’ Statement of Material Facts:

1.     Admitted.       t

2.    Admitted.

3.    Admitted that East Coast was not technically a contracting party. The implication

that East Coast and Ahrens thereby had nothing to do with Wishnia’s obtaining of the

contract is denied. Opposing facts are set forth par. 3, et seq., infra, and it is further




                                            3
                                                       ECM Da26
  pointed out that facts relevant to this issue are still being sought in discovery through

  depositions, and it is further pointed out that East Coast’s lost loan file prejudices

defendants in their ability to obtain even additional facts relevant to how these parties

  worked together on the Troup transaction.                     ,

  4.       See 3, supra.

  5.       See 3, supra.

  6.       See 3, supra.

  7.       Admitted.

  8.       Admitted.

  9.       Admitted.

  10.      Admitted that these payments were made. Denied that these were all the

 payments made to Wishnia directly by Ms. Troup, she in fact had to continue making

 payments to Wishnia even after the East Coast loan. See opposing facts infra, par. 13,

 ef seq.

  11.      Admitted.   It is noted that the implication in East Coast’s chronology, which skips
                                              .
 from the home repair contracts in September and November of 1995 to the April 1996

 mortgage, that East Coast had no involvement in the Troup transactions until April is

 false.    See opposing facts inffa par. 13, et seq.

 12.       Admitted.       -

 13.      Admitted. It is also noted that $465.82 is the only monthly payment listed, i.e.,

 there is no indication on the Mortgage Commitment that the payments will go up.

 14.      Admitted.




                                                4
                                                             ECM Da27
15.     Admitted. It is also noted that the Mortgage Commitment does not state tha.t the

11.65% will go up and could go up as high as 17.65%.

16.     Admitted.

17.     Admitted.                                         ,

18.     Admitted that the Troups signed numerous documents on April 27, 1996 given to

them to sign by an attorney at East Coast’s offices and that this document was among

them.

I 9.    Admitted that the Troups signed numerous documents on April 27, 1996 given to

them to sign by an attorney at East Coast’s offices and that this document was among

them.

20.     Admitted that the Troups signed numerous documents on April 27, 1996 given to

them to sign by an attorney at East Coast’s offices and that this document was among

them.

21.     Admitted that the Troups signed numerous documents on April 27, 1996 given to

them to sign by an attorney at East Coast’s offices and that this document was among
                                      .
them.

22.     Admitted that the Troups signed numerous documents on April 27, 1996 given to

them to sign by an attorney at East Coast’s offices and that this document was among

them.

23.     Admitted that the Troups signed numerous documents on April 27, 1996 given to

them to sign by an attorney at East Coast’s offices and that this document was among

them.




                                           3
                                                         EC&VI Da2S
24.      Admitted that the Trouos signed numerous documents on April 27, 1996 given to

them to sign by an attorney at East Coast’s offices and that this document was among

them.

2       .
      5 Admitted that the Troups signed numerous documents on April 27, 1996 given to

them to sign by an attorney at East Coast’s offices and that this document was among

them.

26.     Admitted that the wording on this document reads as stated. The implication that

the Troups were given a sufficient opportunity to read the documents they were given to

sign is denied and the implication that the Troups actually read and understood the cited

language is denied and it is further pointed out that Ms. Troup specifically asked the

attorney at the closing should she not bring the papers to an attorney to look over and

East Coast’s attorney told her it was not necessary. See opposing facts infra.

27.     Admitted that the Troups signed numerous documents on April 27, 1996 given to

them to sign by an attorney at East Coast’s offices and that this document was among

them.

28.     Admitted that the Troups signed numerous documents on April 27, 1996 given to

them to sign by an attorney at East Coast’s offices and that this document was among

them.

29.      Admitted.

30.     Admitted that there was a $75 charge off on Mr. Troup’s credit record.

31.     Admitted that Dick LaFrance so testified.

32.     Denied. Ms. Troup’s statements to the attorney at the closing could be deemed

a “complaint” about the “note and mortgage.” See opposing facts infra, par. 53, ef seq.




                                             6
                                                       ECM Da 29
33.    Admitted.

34.    Admitted.

35.    Admitted that Dick LaFrance so testified. Denied that race and/or the location of

property does not effect Associates’ decisions to purchase loans and at what terms to

purchase them.         Defendants note that opposing facts are set forth inffa; par. 33, et

seq., and further note that Associates has improperly withheld relevant information from

defendants in discovery which deprives them of the ability to set forth a full rebuttal of

this factual allegation.     See defendants’ opposing facts infra and brief submitted with

this Statement.

36.    Admitted that Mr. La France so testified. Denied that race and/or the location of

property does not effect Associates’ decisions to purchase loans and at what terms to

purchase them.        Defendants note that opposing facts are set forth infra par. 33, et seq.;

and further note that Associates has improperly withheld relevant information from

defendants in discovery which deprives them of the ability to set forth a full rebuttal of

this factual allegation.
                                             6
37.    Admitted that Jeffrey Ahrens so testified. Denied that race and/or the location

of property does not effect Jeffrey AhrenslEast Coast’s decisions regarding the terms of

credit to be given to borrowers.      Defendants note that opposing facts are set forth infra

par. 33, ef seq. and further note that East Coast has improperly withheld/destroyed

relevant information which deprives them of the ability to set forth a full rebuttal of this

factual allegation.

38.    Admitted that Jeffrey Ahrens so testified. Denied that race andlcr the location

of property does not effect Jeffrey AhrenslEast Coast’s decisicns regarding the terms of




                                                           ECM Da30
credit to be given to borrowers.    Deienden?s note that opposing facts are set forth infrz.

par. 33, et seq.; and further note that East Coast has improperly withheld/destroyed

relevant information which deprives them of the abiiity to set forth a full rebuttal of this

factual allegation.                                          .

39.     Admitted that Jeffrey Ahrens so testified. Denied that race and/or the location

of property does not effect Jeffrey Ahrens/East Coast’s decisions regarding the terms of

credit to be given to borrowers.   Defendants note that opposing facts are set forth infra,

par. 33, ef seq.; and further note that East Coast has improperly withheld/destroyed

relevant information which deprives them of the ability to set forth a full rebuttal of this

factual allegation.

40.     Admitted that Jeffrey Ahrens so testified.



            DEFENDANTS’ COUNTERSTATEMENT OF MATERIAL FACTS

1.      Beatrice Troup has lived in her home in Newark since 1946; when her father

died in 1994 she inherited the home, without encumbrances. Copy of Deed, da 1.2.

2.      Ms. Troup is 75 years old. She is black (85% of the population within her

“census tract” is black or hispanic; 46% live below the poverty line). (Copy of

Certification of B. Troup, original submitted in the matter of Willie Mae Moses v.

Gary Wishnia, East Coast Mortgage Corp., Jeffrey Ahrens, et al., Docket No. ESX-

L-9788-98, da 3, 4 (hereinafter referred to as “Troup Cert.“); Census Statistics, da

5-7).




                                              8
    3.    As stated in September of 1995 she owned her house free and clear. Then

    she got a telephone call soliciting home repairs and next Gary Wishnia was at her

    home. (Troup Cert., da 3, 4).

    4.    On September II, 1995, a home repair contract was written up for a cash

    price of $38,580, which Wishnia had Ms. Troup and her son Curtis sign.

    (Cavanaugh Cert. Exh. A). The contract was to be financed, as indicated by a

    notation on it that payments would be $479.75 over 240 months. (Id.)

    5.    Wishnia told Ms. Troup not to worry, that he would get her the financing.

    (Troup Cert.,da 3, 4).

6.        The total price including interest (which when one uses a calculator to do

the multiplication comes to $115,140.00) was not disclosed on the contract; nor

was the interest rate (which when one computes the amortization comes to 14%);

nor was the dollar amount of the interest (which after calculation comes to

$76,560).’ (Cavanaugh Cert. Exh A).

7.    Even just looking at the cash price of $38,580.00, this price was grossly
                                         .
excessive, particularly in light of the extremely poor and in some cases dangerous

nature of the work done. The work to be done was supposed to include siding on

the house, a new roof, 19 new windows and the building of a two-story rear porch.

(Cavanaugh Cert. Exh. A). An expert in the field* reports the following with regard

to the porch “built” by Gary Wishnia/General Builders:


1
        See defendants’ Motion for Summary Judgment against Gary Wishnia and his home
repair companies, returnable the same day as plaintiffs and counterdefendants’ motions of
summary judgment, for a detailed discussion of these violations.
2
    See Thomas Kraeutler’s resume annexed to defendants’ Notice of Motion for
Summary Judgment. For the court’s convenience defendants will highlight a few


                                           9
                                                      ECMDa32
                    The deck constructed by Gary Wishnia is one of the
                    most dangerous pieces of work I have ever observed:
                    Specifically, the staircase is improperly built as it is too
                    steep and shakes from side to side. Wishnia utilized a
                    tread depth of only 5 inches where 9 inches is the
                    minimum required depth. As a result, the stair is closer in
                    configuration to a ladder than a stair used by occupants
                    accessing a 2nd story apartment. As a result this staircase
                    presents an imminent risk of serious injury to anyone
                    using it. I recommend this staircase not be used until it
                    can be completely redesigned and reconstructed. In
                    addition, the upper story platform was not reinforced and,
                    as a result, shakes from side to side when walking on the
                    deck. Finally the upper deck is also.. not correctly
                    supported to the vertical posts at the corners, is in
                    imminent danger of collapse and should not be used
                    until repaired. [Kraeutler Report p. 2, par. 4, annexed to
                    defendant’s Notice of Motion for Summary Judgment;
                    emphasis added].

8.          Wishnia had the “work” done on the Troup home without ensuring that all

     necessary building permits were obtained in violation of the Home Improvement

     Practices Regulations, N.J.A.C. 13:45A-16.2(a)l Oi. (Copy of Certification of Newark

     Building Department, da 8). “Had such permits been properly attained prior to initiation

     of the work, inspections by the city’s licensed building and mechanical sub-code officials

     would have ensued . . .    the extreme shoddiness of Wishnia’s work as well as code

     violations would have been caught and the contractors ordered to correct all defects. By

     failing to secure proper permits, Wishnia avoided this consumer protection mechanism

     and was able to surreptitiously complete his shoddy work while avoiding inspection by




     examples of Mr. Krauetler’s experience: Chairman of the NJ Home Inspection Advisory
     Committee which has regulatory authority over the home inspection indust;y pursuant to
     the New Jersey Professional Home Inspection Licensing Act; for the past 12 years
     President of a professional home inspection firm and has personally completed over
     5,000 inspections including defecf idenfificafion and repair cost esfimafing; for four years
     prior to that a genera/ building contractor specializing in, infer alia, residential
     remodeling.

                                                 10
                                                           ECM Da33
city building officials.” (Kraeutler Report p. 1 i amex& i3 defendants’ Notice of Motion

for Summary Judgment).

9.    As for the roof the expert has, inter alja, this to say:

             Wishnia did not strip all roofs as specified. The rear,
             lowslope, roof was simply roofed over and done very
             sloppily at that. Due to this faulty workmanship, the
             roof leaks severely and has caused and is continuing to
             cause severe damage to the subject property. In addition
             the upper asphalt shingle roof was also improperly
             installed and leaks, especially at the chimney. [Id. p. 2,
             par. 1; emphasis added]

10.   And as for the windows:

             The windows installed were of the most inferior quality
             available. Moreover the windows have proven to be draft
             and inoperable in many respects. Large gaps were found
             around the window installation which allows cold air to
             enter the interior of the home and the exterior aluminum
             trim was not caulked. In addition, several of the windows
             will not stay up when opened. [Id. p. 2, par. 3; emphasis
             added].

11.   And as for the siding, gutters and trim:

              [T]he siding installed was of the cheapest grade
             available and was very poorly installed..., using
             improper nailing and without adequate preparation of the
             surfaces to be covered. [Id. p. 2, par. 5; emphasis
             added].

             The gutters and leaders were so poorly installed that
             they have fallen off the house. In addition, the aluminum
             installed over the new trim was sloppily done, especially
             at the rear edge of the flat roof. [Id. p. 2, par. 2; emphasis
             added].

12.   According to plaintiffs’ expert, the maximum reasonable price that could

have been charged for everything done under the first contract would have been

$14,625.00. (Kraeutler Report p. 5, annexed to defendants’ Notice of Motion for




                                           11
                                                          ECM Da34
Summary Judgment). The actual cash price Ms. Troup was charged by Wishnia -

$38,580 - was well over 2 % times this price. (Cavanaugh Cert. Exh. A).

13.    Whereas ECM/JA imply that they were not involved in this matter until they made

a loan to the Troups in April 1996 (see ECM Statement of Material Facts par. 11, 12)

and whereas they claim that “there is no evidence that ECM or Ahrens were even aware

of the existence of the home improvement contracts until months after they were made,”

(ECMbG), this claim is simply not credible based on the following facts:

14.    As- stated, Wishnia obtained the first contract from Ms. Troup on September 11,

1995, telling her he would take care of the financing. See par. 4, 5, supra.

15.    Two days later on September 13, 1995 East Coast Mortgage obtained Beatrice

and Curtis Troup’s credit reports (Cavanaugh Cert. Exh. J, reference to inquiry by East

Coast on 9/l 3195) and on September 14, 1995 Jeffrey Ahrens, president and an owner

of East Coast Mortgage filled out a loan application in connection with a loan to the

Troups. (Da 9-l 2).       ’

16.   Other preliminary loan documents were also generated by East Coast in
                                   .
September of 1995. (Da 13-l 6).

17.    Documents reflect Wishnia did the “leg work” on the financing for East Coast:

Wishnia ordered the appraisal (da 17); Wshnia at East Coast’s request obtained

income documentation from the Troups (da 18);3 Wishnia arranged for a limousine to



3
        The document defendants rely on in support of this fact, fortunately for defendants,
was left by Gary Wishnia at Ms. Troup’s home. If it had not been defendants would not
to this day know of its existence because East Coast states that it has lost its entire
loan file on this transaction and this memorandum was not in Associates’ loan file.
Because of this defendants have no way of knowing how many other such written
communications between East Coast/J.Ahrens and Wishnia there were reflecting their
coliaboration and concerted action on this transaction. (Defendants are simultaneously


                                            12
                                                     ECM DaX
    oe: the Troqs to East ‘Coast’s offices for the closing4 (Troup Cert., da 3-4), the one

    and only time they had any contact with East Coast (Troup interrog Answer 1,

    Cavanaugh Cert. Exh. L).

    18.   Jeffrey Ahrens and Gary Wishnia have known each other for many years.

    (Ahrens dep. Testimony in the Moses matter, da 19, T20-10 thru 23). ECM/JA has

    financed at least 5 Gary Wishnia home repair contracts that defendants’ counsel

    know of. (Da 22-36). The full number of contracts on which Wishnia and East

    Coast/J.Ahrens worked together is unknown and cannot reliably be determined at

this point because of East Coast’s destruction of documents and the fact that the

way the transactions are structured public record searches will reveal the

    connection.     See n. 6, infra.      (See defendants’ papers in connection with

application for discovery sanctions, returnable on the same date as this motion).




requesting appropriate relief in connection with this discovery issue by way of an application
returnable on the same day as this motionr.

     “Dragging the body” has been recognized for years to be a common practice
4




w h e r e b y

                  . . . a merchant, desiring to circumvent restrictions upon the
                  holder in due course doctrine, arranges for a consumer
                  purchase to be financed by a cooperating financing agency.
                  The resultant financial transaction has the appearance of a
                  direct cash loan, payment of which can be enforced by the
                  loan company without reference to the underlying
                  transaction. [Federal Trade Commission Statement of Basis
                  and Purpose, Preservation of Consumers’ Claims and
                  Defenses Rule (“Holder Rule”), 40 Fed. Reg. 53506, 53514
                  (1975)].

To facilitate the consumer’s signing of the requisite documents, he or she is actually
physically brought to the lender’s premises, hence the term “dragging the body.”



                                               13
19.    One of the contracts East Coast has financed for Wishnia was in connection with

a woman named Willie Mae Moses, a black 77-year-old woman also with a home in

Newark. (Moses Dep Test, da37, 38). In Ms. Moses’s case she was telephoned by an

East Coast telemarketer and immediately thereafter a home repair contractor named

Michael Ahrens - Jeffrey Ahrens’ brother-went to her house and a $14;900 Citywide

Builders contract was signed, which was then financed with an East Coast mortgage

loan. (Da 39, 40, 41).

20.    Then, three months later Gary Wishnia comes on the scene, obtains a $19,500

contract from Ms. Moses - which is &I financed with an East Coast mortgage loan.

(Da 20-l a, 21, 22).

21.    Michael Ahrens and Gary Wishnia’s home repair businesses used to be located

at the same address, and in the Moses transactions used the same subcontractors.

(Sharp dep T39-22 thru 40-4, da 4244).5

22.    Mable Brown of Newark, N.J. had two contracts with General Builders/Gary

Wishnia. The second Brown contract on May 10, 1995, da 28-30, led to a May 12, 1995

“application” approval from East Coast, da 32, to an East Coast mortgage on June 7,

1995. (Da 31). The first Brown contract on June 17, 1994 had been directly assigned

by Gary Wishnia to Jeffrey Ahrens’ sister Hari Ahrens’ company First Suburban

Investment. Da 48! It was Wishnia who arranged the financing of the Brown contract


5
       The quality of the work done to the Moses home and the unconscionability of the
price was as appalling as in this matter. See copy of a Certification submitted by expert
Thomas Kraeutler in the Moses matter, annexed to defendants’ Counterstatement of
Material Facts.

      Hari Ahrens’ company financed no fewer than 35 home repair contracts for Gary
6




WishniaIGeneral Builders Supply over a 2 ‘/z year period, and that includes only a partial
search of First Suburban Investment mortgages in the deed room for that time period for


                                            14
                                                          ECM Da37
with East Coast; for example, although it is standard for East Coast to charge

homeowners for property appraisals, with Mable Brown Wishnia put a notation on the

face of the General Builders home repair contract stating “Appraisal N/C [i.e., no

charge] per Gary.”     East Coast did as “Gary” instructed and Ms. Brown was not

charged for the property appraisal. (Da 31).

23.    When asked about his brother’s, his sister’s and his father’s dealings with Gary

Wishnia at his deposition in the Moses matter, Jeffrey Ahrens, who is “very close to [his]

family” and is “in touch with them all the time” (da 20, depT22-IO), testified that he

“really does not know” whether Gary Wishnia ever worked at his father Sidney Ahren’s

home repair company (da 20, depT21-24); that he had “no idea” if Gary Wishnia did

business with J. Ahrens’ sister Hari Ahren’s company First Suburban (da 20 depT23-6);

that he only knew “as a result of this [Moses] litigation” that his brother Michael Ahrens

shared office space with Gary Wishnia (da 20 depT24-9); and that in fact he only knew

that Gary Wishnia owned and operated a home repair company “as a result of this

litigation” (i.e., the Moses litigation which commenced in 1998) da 20 T23-24.
                                             .


only one county. (Totaro Cert., da 4546). The way the Gary WishniaIGeneral Builders -
Han Ahrens/First Suburban business arrangement was conducted makes it relatively simple
to search public records and determine the volume of business they did together: the
Wishnia contracts were assigned directly to First Suburban and the mortgages were made
out directly to First Suburban with a reference on their face that they secure a General
Builders contract. With East Coast and Wishnia one cannot use public records to determine
which East Coast loans financed Wishnia contracts since the Wishnia related East Coast
loans are structured to appear as if they are loans made directly to consumers who then just
happen to use the money to pay off a Wishnia contract. Thus it is only through East Coast’s
own records that this information could be obtained. See defendants’ concurrent discovery
application.
        It is important to note that the law looks at substance and not form: the FTC Holder
Rule and the Home .Improvement Practices Regulations render the lender liable for the
sellers’ conduct whenever the designated factual underpinnings are present, regardless of’
how the transaction is structured. See defendants’ brief submitted herewith.



                                            15
                                                     ECM Da38
    24.   As for Ms. Troup, after the September contract Wishnia had the Troups sign

    on to another contract in November of 1995, this time for interior “work” to the

    home. (Cavanaugh Cert. Exh. B).         This second home repair contract did not

    disclose a separate cash price for the separate work but instead contained a higher

    combined price for both the September and November contracts - $49,990 (when

    the calculations are done it comes to a cash price of $11,410 for the second

    contract alone, assuming the new combined amount did not include any

    accumulated finance charges, see defendants’ brief in support of summary

judgment against Wishnia).       (Cavanaugh Cert. Exh. B).

    25.   Again it was understood that Wishnia would take care of the financing - on

    its face the November contract states “payts are to be made beginning January 1,

    1996 payable to Property Redevelopment Center, Inc. until permanent financing

    is obtained.” (Cavanaugh Cert. Exh. B).

26.       Once again the disclosures required by law were not made: the total price
                                                             ,
including interest (which when calculated comes to $217344.40 for the

    combined contracts) was not stated, nor was the amount of the finance charge

    (which when calculated comes to $167,554.40). In addition, no Notice of Right to

    Cancel was given in conjunction with this second contract.’

27.       The “work” and price in connection with the second contract was as

egregious as the first. For example:

                Instead of taking the time and expense to install the lights
                using code approved methods and materials, Wishnia
                chose to hang the light fixtures off of wooden blocks. This
                method ‘was both foolish and dangerous. Wood is never
7

       See defendants’ concurrent motion for summary judgment against Wishnia,
returnable on the same day as this motion.


                                            16
                                                         ECM Da39
            used for electrical connections since it is combustible. In
            addition, he failed to enclose live electric splices in
            junction boxes as also is required by electrical code. . . .
             Installation techniques such as these have created
             imminent fire hazards at the subject property. [Kraeutler
             Report p. 7, annexed to Defendants’ Motion for Summary
            Judgment].                                  ,

28.   As for price, Mr. Kraeutler states that “the work p&formed under the

11116195 contract has a maximum value of $2,250....”            Looking just at the

$11,410 cash price charged by Wishnia for this contract, it is over five times the

maximum reasonable price.         (Kraeutler Report p. 9, annexed to defendants’

Motion for Summary Judgment).

29.   As has been stated, the November contract states on its face that as of

January 1, 1996 Ms. Troup was to pay Property Redevelopment (the name

Wishnia changed his company to) “until permanent financing is obtained.”

(Cavanaugh Cert. Exh. B).

30.   In February East Coast was again making inquiries on the Troups from TRW

(Cavanaugh Exh. J, p. 2) and in fact sought from Associates its pre-approval of a

mortgage loan: on February 20, 1996 Associates advised East Coast that they

would purchase a loan to the Troups for up to a $56,250 with, infer alia, the

following terms: a variable rate loan with an introductory rate of 11% and a fully

indexed rate of 12.5%. (Da 49).

31.   The fluctuating principal of the financing being obtained is further indication

that East Coast and Wishnia were working together. As stated in February of 1996

East Coast sought pre-approval from Associates for a $56,250 loan - enough to cover

the $49,990 in Wishnia home repair contrac!s with enough on top for plenty of points




                                        17
                                                      ECM Da40
and closing costs.   However, the pre-approval iron Associates was conditioned on a

maximum 75% loan to value [of the home] ratio (da 49) so a problem arose when the

property appraisal came back in April at just $62,000 (an almost 91% loan to value

ratio). (Da 50).

32.    As a result, the loan amount had to be reduced, so instead of the full $49,990

Wishnia accepted just $42,000 from East Coast (da 51, Affidavit whereby Wishnia

afirms that the true payoff figure for the Troup financing is $41,999.71 - yet he required

Ms. Troup to continue making payments to him even after the East Coast loan, see next

paragraph - which affidavit is notarized by East Coast loan officer Lynda Podgurski),

thus leaving room for East Coast’s “discount points” and closing costs, all adding up to a

convenient $46,500 - precisely the 75% maximum loan to value ratio ($46,500 loan

divided by $62,000 property value = 75%) that Associates had required for the loan to

qualify for the pre-approval Associates gave East Coast in February of 1996. It is worth

noting here again that the Troups had no contact with anyone at East Coast until the

loan closing: during all of these events they dealt only with Gary Wishnia. (Troup

interrog answer 1, Cavanaugh Cert. Exh: L).

33.    Of course, agreeing to accept $42,000 from East Coast in order to ensure that

the financing would go through did not mean that Wishnia intended to only be paid

$42,000 - thereafter Ms. Troup had to not only pay East Coast their monthly

payments on the -new loan but she also had to continue paying Wishnia - a

revised amount of $105 per month - which she in fact did until stopping eleven

months later. (Da 52-54).




                                            18
                                                          ECb[ Da 11
    34.   As stated, on February 20, 1996 Associates advised East Coast that the

Troups were pre-approved for a variable rate loan with an introductory rate of 11%

    and a fully indexed rate of 12.5%. (Da 49).’

    35.   Two months later, the Troups were extended credit of $46,500 through East

    Coast - $10,000 ~ than the amount pre-approved by Associates, yet the credit

terms given to the Troups were a variable rate loan with a hioher introductory rate

    of 11.65% and a ( C afully indexedarate of 13.65%.’ x h .
                    hioher  v a n        u g h      E                     F ,     p .      1 ,

top left corner of page).

36.       East Coast also charged the Troups $1,860 in points, which was made part

of the principal and financed at the foregoing interest rates (HUD-l Settlement

Statement, da 55-56).

37.         What could possibly explain why. the Troups were given more onerous

terms than those at which Associates had already informed East Coast they would

extend the credit/purchase the loan? The answer is simple: Associates pays the

lenders it buys loans from “premiums” which are calculated so as to provide those

lenders with an incentive to inflate the interest rates of loans as high as possible.

The higher the interest rate over and above the preapproved rate” East Coast can



        The fully indexed rate means the rate that the loan would be without the initial teaser
0




rate, viz., the chosen margin added to the identified index. Associates’ figures were based
on the Prime Rate (in February thru April 1996 8.25%, da 57) to which the margin - 4.25%
for the Troups - was added, equalling a “fully indexed rate” of 12.5%.

        East Coast used a different index for the Troup loan so that the “margin” in the Troup
9




loan was 8.15% added to the LIBOR index rate of 5.5% (Cavanaugh Cert. Exh. F, p. I),
;hich adds up to the “fully indexed rate” of 13.65%.
        The preapproved rate is the “par rate” of the loan, defined by Associates undenvriter
Dick LaFrance as ‘I... A. If the lender sold us a loan at par, we wouldn’t pay anything on the
back end.... We wouldn’t pay them anything extra for the lcan . . . . Q. Hypothetically, if the
other lender made the loan at two percent above par . . . what affect YXLII~ that have on what


                                             19
                                                           EC41 Da-!3
oe? a borrower to sign on to the higher the premium Associates will pay.        See n.

10: infra.

38.     .in the Troup loan, in return for having the Troups sign onto a loan at a

higher introductory and a higher fully indexed ratethan Associates had told

East Coast the Troups qualified for, Associates paid East Coast a premium of

$2,325.00. (Da 58, 59, bottom right corner”) This $2,325.00 premium paid to East

Coast is in addition to the $1,860 in points East Coast was already paid on the

Troup loan.‘*

39.    East Coast refers to the difference between the terms the Troups were given

and the terms for which they qualified with Associates as “slight.” ECMb17. The

cost to Ms. Troup of East Coast’s $2,325.00 premium - and the profit for

Associates by employing this incentive - was anything but slight. Below is a

comparison of the what the Troup loan terms looked like as given by East Coast,

as opposed to the terms at which Associates had told East Coast they were willing

to purchase the loan at:
                                        .




Associates would pay? A. We pay a premium for the loan.... Q. Would the premium paid to
the other lender increase as the interest rate of the loan increased? A. Yes.” LaFrance
T63-22 through 65-4. (Da 6ldepT thru 65).
11
       Da 58 is an Associates document showing the figure $4,244.36 labeled as
“BROKER COMM” - this figure includes the points of $1,860, accrued interest of $59.36
and, by process of elimination, the yield spread premium of $2,325. (Da 59).
12
       Points that East Coast labe!ed on the HUD-: Settlement Statement to be loan
“discount” points. (Da 56).


                                            20
                                                   ECM Da 13
                      Current Loan, at Terms at       What Loan Could Have               Difference
                      Which Associates Paid ECM       Been At the Interest Rate at
                      a $2325.00 Yield                Which Associates Would
                      Spread Premium                  Have Bought the Troup
                                                      Loan Without a Yield
                                                      Spread Premium

 Amortization       i 360 month/l80 month             360 month/ 180 balloon I               ---
                      balloon
 Loan Principal       $46,500                         $46,500                                w-m
 Intro Interest       11.65%                          11%                                    .65%
 Rate
 Fully Indexed        13.65%                          12.5%                                1.15%
 Rate
 Payment            16    Q465.82                     6     @ 465.82                         ---
 Schedule             6   @     501.51                5     @ 501.51                         ---
                      167@ 536.67                     167@ 536.67                            ---
                      1   @     $41,603.58            1   @   $20,675.89                 $20,927.69
 Balloon Payment
 Finance Charge       $92,391.45                      $71,463.76                         $20,927.69
1 Total Payments      $137,031.45                     $116,103.76                    1     $20,927.69
                                             .


     40.    As can he seen, as a direct result of the yield spread premium, the

     finance charge on the loan increased by almost $21,000.00.

     41.      In addition to ?nd independent of the yield spread premium aspect, the loan’s

     terms were extraordinarily onerous in comparison to the “going rate” at the time this

     loan was made.

    42.     In April of 1996 the average introductory rate for an adjustable rate mortgage

    was 5.73% (da 63; Compared to Troup loan at 11.65%); the average fully indexed




                                                 21
r~-~-       rate was 8.33% (da 63-65;13 compared to Troup loan at 13.65%); and these rates

            were given with an average of only 1.4 points (da 63; compared to Troup loan at 4

            points). Why were the Troups given an interest rate about 5% hioher than the

            average rate being offered in April 1996?     Looking at the facts there was simply

            no legitimate, objective basis for it.   Based on the information East Coast and

            Associates had at the time (da 10):

            43.   The Troups’ combined income was $3,108.09 per month, whereas their

            monthly housing expenses would only be $590.07 after the loan was made (da 10,

            Uniform Loan Application) - this made for only an 18.98% debt to income ratio - a

        fraction of the maximum debt to income ratio Associates conditioned purchasing

        the loan on;

        44.       The loan to value ratio ($46,500/$62,000 value of the house, da 50) was

        75% - leaving fully 25% of the value of the home over and above the amount

        needed to secure repayment, and the loan in issue was a first lien;

        45.   Mr. Troup had worked in his job for 16 years at the time, and according to
                                            b
        the Verification of Employment his chances of continued employment there were

        good (da 66, Verification of Employment).

        46.       Ms. Troup had no bankruptcies, no collections, no late payments, no

        judgments, no negatives whatsoever on her credit report, and whereas she did

        have a lack of credit history, this also meant that she did not have a number of

        outstanding accounts indicative of overextension (Cavanaugh Exh. J);


        1   3

               Freddie Mac’s survey of adjustable rate mortgages gives an average margin using
        the Treasury Bill index, not Libor or Prime. Da 64. By adding the average margin listed for
        April 1996 - 2.79, da 63, to the April 1996 Treasury Bill rate for April 1996, da 65. the
        average fully indexed rate in the Freddie Mac survey is obtained.


                                                     22
47.   Mr. Troup had all of two negatives on his credit report - a “charge-ofr” of $75

and a DMV judgment of $250; he too had no outstanding accounts or credit cards.

(Cavanaugh Exh. J).

48.   In addition to an interest rate over 5 percentage points higher than the

going rate at the time, and points of almost triple to going number of points at

the time, the loan had other onerous terms:

49.   The interest rate was adjustable every 6 months, i.e., the rate could go up a

full percentage point every six months up to a maximum of a full 6 percent above

the initial rate, or 17.65%. (Cavanaugh Cert. Exh. G). Although the rate could go

up to 17.65%, it was virtually certain to not go down: the most the rate could drop

under the applicable formula arranged by East Coast was the index rate plus

8.15%. At the time of the loan the index rate was 5.5% and since 1979 the lowest

that index rate had ever been was 3.31%. (Cavanaugh Cert. Exh. F, p. 2).

50.   Thus, even assuming the index would fall this low again, the rate on the

Troups’ loan would “fall” to 11.46% - not even */lo of a percent lower than the initial
                                       .
rate.

51.   In addition, East Coast arranged the loan as a balloon loan, i.e., the monthly

payment amount was calculated based on a 30 year amortization schedule but

after 15 years of monthly payments, a balloon payment of $41,603.58 would be

due. (Cavanaugh Exh. F, p. 1).

52.   Arranging a loan so that it has a balloon payment feature such as. this one is

extremely advantageous for a lender, e.g., it sets up a virtually certain opportunity

for refinancing in the future (with the concomitant opportunity of charging more




                                          23
                                                     ECM Da-!6
points and closing fees), and it allows the disclosure of a far lower “finance charge”

and “total of payments.“14

53.    In the Troup loan, what allowed East Coast to disclose a finance charge of

$%,%I.45 was the scheduling of a required $41,603.58 balloon payment after 15

years; without that balloon payment the finance charge would have to have been

disclosed as $146,377.71. (a full 30 years of non-balloon monthly payments).

“Total of payments” could be disclosed at $137,031.45 on this loan with the balloon

feature; without the balloon “total of payments” would have to have been disclosed

to be $192,877.91. Obviously the IatterIbolded figures reflect the reality of the

situation where the borrower has no reasonable prospect of paying the balloon

payment when due unless they refinance it.

54.    Far from being requested or “negotiated” by the Troups none of the foregoing

terms were even explained to them; as stated Ms. Troup dealt only with Gary Wtshnia.

When the Troups were brought to the East Coast loan closing in the limousine sent by

Wishnia, they met with a woman who told them she was an attorney.       They were told

“Gary” had arranged everything so all they needed to do was sign the paperwork. So

they signed and they signed to the point that Ms. Troup told the woman she felt like she

was signing her life away. She especially expressed concern about something she saw

in the papers regarding payments that could change; the attorney told her that meant


14
       “Another common source of trouble for consumers is balloon payments. When
used with High Cost Mortgages, balloon payments often mislead the borrower by making
the loan appear less expensive than is the case. Later, when the consumer is unable to
afford the balloon payment, he or she may face a choice between foreclosure and
refinancing on outra’geous terms.” SENATE COMM. ON BANKING, HOUSING, AND
URBAN AFFAIRS, RIEGLE COMMUNITY DEVELOPMENT AND REGULATORY
IMPROVEMENT ACT OF 1994, S. Rep. No. 103-169, 103d Cong., 2nd Sess., reptinted in
1994 U.S. Code Cong. and Admin. News 1881,191O; emphasis added.


                                          24
                                                    ECM Da47
that the payments could sometimes go up and could sometimes go down. The attorney

did not tell the Troups that, as set forth above, it was a virtual certainty that the interest

rate and payments would only go up.” Ms. Troup expressed concern about the balloon

payment she saw mentioned in the paperwork, and asked the attorney where she would

get that kind of money. The attorney told her not to worry about that. Among all the

other papers being signed Ms. Troup was also given a deed to sign giving her son

Curtis half of her home, da 6769, but nothing was said to the Troups about it by East

Coast’s attorney. During the process Ms. Troup asked the attorney would she not be

better off taking all the papers to a lawyer to look at. The attorney told her that was not

necessary. (Troup interrog answer 1, Cavanaugh Exh. L).

55.    Why did they not get up and walk out? To go where? The money was thought to

be owed to Wishnia and it had been understood from the beginning that his directly

financing the contracts was temporary; that he would find them permanent financing.

(Cavanaugh Exh 6, p. 1). How were consumers such as these to know that they had a

right to refuse financing he arranged? How were they to know that they had not bound

themselves to whatever consequences ‘might come by acquiescing to this “two step”

process to begin &ith.16

56.    It is well recognized that residents of inner city communities in cities such as

Newark do not have any real choice when it comes to financing:



15
       In fact the interest rate did go up every six months. The monthly payments went
from 5465.82 to 5550.92 in just 18 months.
16
       As for how Wishnia’s home repair contracts violated various state laws and
regulations by not properly disclosing their finance terms see defendants’ Motion for
Summary Judgment against Wishnia, returnable simultaneously with this one.



                                             25
                                                        ECM Da4S
                Redlining is the practise of denying credit within certain
                geographic boundaries, often based on income, race, or
                ethnicity. . ..[R] everse redlining . . . [is] the targeting of
                residents of those same communities for credit on
                unfair terms. Considerable testimony before the committee
                indicates that communities lacking access to traditional
                lending institutions are being victimized in *this fashion by
                second mortgage lenders, home improvement contractors,
                and finance companies....”              [SENATE COMM. ON
                BANKING, HOUSING, AND URBAN AFFAIRS, RIEGLE
                COMMUNIIY DEVELOPMENT AND REGULATORY
                IMPROVEMENT ACT OF 1994, S. Rep. No. 103-169, 103d
                Cong., 2nd Sess., reprinted in 1994 U.S. Code Cong. and
                Admin. News 1881, 1910; emphasis added.

57.     A new study” confirms that the problem is still pervasive:

                 A new study of nearly 240,000 home loan applications
               from 1998 in New York City concludes that conventional
               banks have largely ignored black neighborhoods, even
               those with above average incomes, creating a vacuum
               that has been filled by high-cost and often abusive
               lenders.
                 The analysis was done by the staff of United States
               Senator Charles E. Schumer, Democrat of Brooklyn. He
               called the results the best evidence yet of racial
               discrimination in loan decisions by banks and so-called
               subprime lenders that charge high fees and interest for
               home equity loans to borrowers with limited access to
               credit.                  .

                 While banks made most of their loans in New York
                City’s white neighborhoods, lenders catering to the

17
         The information set forth in the New York Times article cited supra is subject to
judicial notice, as is all information provided herein regarding prevailing interest rates, index
rates, etc. at the time of the transaction. See, e.g., State in the lnferest of LG., 151 NJ.
565, 584 (1997).        In that case the New Jersey Supreme Court reviewed a trial court
decision wherein the trial court had heard the testimony of a number of medical experts, all
of which. testified that knowledge of the alleged perpetrators’ HIV status would be useless
and in fact potentially harmful to the victim in making her own health care decisions. The
Supreme Court rejected the trial court’s finding of facts based on the expert testimony and
instead the Court found that a victim’s knowledge of whether her attacker has AIDS can be
physically and psychologically helpful, relying on facts the Court itself had found in,
inter alia, articles in the New York Times. See also generally, Biunno, Current N.J. Rules
of Evidence, Comment 9 to N.J.R.E. 201 (Gann 2000) and cases cited therein.



                                               26
                                                            ECM Da49
                 subprime market dominated in black areas, providing 55
                 percent of the home loans but only 9 percent of the loans
                 in white areas.

                  [T]he study also found stark disparities in lending in
                neighborhood comparisons that paired six mostly white
                areas with six mostly black areas of similar income in the
                Bronx, Brooklyn and Queens.
                  For example, in the black. upper middle class community
                of East Flatbush, which has an average. income of
                $60,010, banks rejected 25 percent of loan applications,
                and suprime lenders cornered 54 percent of the market.
                  But in a white neighborhood, Sheepshead Bay, with an
                average income of $58,230, banks denied only 8 percent
                of the applications, and subprime lenders did only 20
                percent of the loan business there.
                  [Senator Schumer’s] proposed Predatory Lending
                Deterrence Act would require impartial credit counseling
                for borrowers[“l and redefine high-cost loansngl as those
                with an interest rate 8 points above the treasury rate . . . or
                with points and fees exceeding 4 percent of the total loan
                [the Troups’ loan carried 4 points jusJ in “loan discount
                points” not to mention other fees]. It would also bar
                penalties for prepaying a loan, refinancing that fails to
                benefit borrowers, [see immediately infra] the financing of
                points and fees, excessive balloon payments [Troup loan
                had a $41,063 balloon payment] and lenders’ demands
                for early payment. [New York Times, Analysis Shows
                Racial Bias in Lending, Schumer Says, April 9, 2000;
                emphasis added, da 70-721.

58.       Associates’ assertion that the loan provided to the Troups was beneficial

for the borrowers as compared to Wishnia’s financing of the home repair

contracts is utterly meritless. ASSOC Stmnt Mat Facts par. 17, 18.                It completely

ignores that the reason the total payments due on Wishnia’s financing came to

$217,440 was because 1) there was no balloon payment feature artificially deflating the



          Ai has been stz,ted East Coast did not even speak to the Troups.
:c
          “High Cost Loans” are those referred to in the Senate Committee Report cited
.SU,DE.




                                             27
                                                        EC&l Da50
GREINER,GALLAGHER&CAVAiiAUGH,L.L.C.
2001 Route 46, Suite 202
Parsippany, New Jersey 07054
(973) 3x-7400
Attorneys for Defendants,
East Coast Mortgage Corp. and Jeffrey Ah-ens




 ASSOCIATES HOME EQUITY SERVICES,
 NC., formerly known as FORD CONSUMER
 FINANCE COMPANY, NC.,                                      SUPERIOR COURT OF ?jEW J’bRSEY
                                                            CHANCERY DMSION
                                  PlaintifF,                ESSEX COUNTY

                vs.                                         Docket No. F-5466-98

 BEATRICE TROUP, et al.                                                 CIVIL ACTION


                                                            STATEMENT OF MATERIAL,
 BEATIUCE TROUP and CURTIS TROUI’,                          UNDISPUTED FACTS OF THIRD-
                                                            PARTY DEFENDANTS, EAST COAST
                 DefendantsKounterclaimants,                MORTGAGE CORP. AND JEFFREY
                                                            AHRENS
                                                 .
               vs.

 GARY WISHNIA, GENERAL BUILDEk
 SUPPLY, NC., PROPERTY
 REDEVELOPMENT CENTER NC., EAST
 COAST MORTGAGE CORP. AND JEFFREY
 AHRENS,                  I

                  Third-Pm Defendants.


        Third-Parry Defendants. East Coast Mortgage Corp. (“ECM”) and Jeffrey Ahrens

(“.&ens”). ;espec:full.y submit t!x following as their Statement of Material. Undisputed Facts

T:birll respec: LO [heir blocion fcr Pxial Summary Judgment dismissing the Third-Parry

                                                            I+,*viveiy “Troup”:). Lvith prejudice.
<;mpir;inr tJ.!f ~~~[p:c~ T’i)UD 2r.C: <L;!YiS TiCi:? / C.Ji.,L.



                                                     ECM Da5 I
1.   In or about September 1995, Troup entered into a home improvement contract

     with Third-Party Defendant, General Builders Supply, Inc. (“General Builders”).

     See Contract, Counsel Cert. Exh. “A “and Counterclaim at Paragraph 4.

3.
-    In or about November 1995, Troup entered into a home improvement contract

     with Third-Party Defendant, General Builders. See Contract, Counsel Cert. Exh.

     “B ” and Counterclaim at Paragraph 5.

3.   ECM was not a party to the September 1995 contract. See Contract, Counsel

     Cert. E,xh. “A ‘I.

4.   Ahrens was not a party to the September 1995 contract. See Contract, Counsel

     Cert. Exh. “A I’.

5.   ECM was not a party to the November 1995 contract. See Contract, Counsel

     Cert. Exh. “A ‘I.

6.   Ahrens was not a party to the November 1995 contract. See Contract, Counsel

     Cert. Exh. “B I’.           .

7.   Troup had no contact with ECM until in or about April 1996. See Beatrice

     Troup’s Answer to Interrogatory 1, Counsel Cert. E,xh. “C I’.

8.   Troup does not allege that Troup ever informed ECM of dissatisfaction with the

     home improvements performed by General Builders or the price charged by

     General Builders. See Counterclaim.

9.   Pursuant to the terms of the November 1995 Contract. Troup agreed to make

     monthly payments co Gmerai Builders. Se::: Conrrac:. Counsel Cert.. Exh. “B”.



                                      ---
10.    Troup made payments to Third-Party Defendant, Property Redevelopment Center,

       Inc. (“Property Redevelopment”) on or about January 6, 1996. February 6, 1996,

       March 6,1996 and April 6, 1996. See checks, attached as Counsel Cert. E><h.

       “D”.

11.    In or about April 1996, Troup executed 3 Mortgage Loan Commitment issued by

       ECM. Counsel Cert. Exh. “E ‘I.

12.    The Mortgage Loan Commitment states that the “Loan Amount” is $46,500.00.

       Id

13.    The Mortgage Loan Commitment states that Troup’s monthly payments will be

       $465.82. Id

14.    The Mortgage Loan Commitment states that the total finance charge will be

       $92,392.4. Id.

15.    The Mortgage Loan Commitment states that the Note Rate will be 11.650?/0. Id.

16.    The Mortgage Loan Commitment states that the Annual Percentage Rate will be

       14.0555%. Id

17.    The Mortgage Loan Commitment describes the loan as a six month LIBOR loan.

       Id.

18.    On or about April 27, 1996, Troup executed a Truth-In-Lending Disclosure for

       Real Estate hfortgage Loans. Counsel Cert. E.xh. “F ‘I.

19.    On or about .\pril 1:. 1996. Troup executed an A-mount Financed Itemization.

       Counsel Ctfi. E.xb. “F ‘I..

2’3.   (At-~ or ;?bou! .1.x! l’. !o”6.   TTOUD   executed an .\diusrabie Ruts Yore in favor oi

                                            -7-




                                                 ECM Da53
      ECM in the principal amount of S46,500.00.. Counsel Cert. E,xh. “G ‘I.

21.   On or about April 27, 1996, Troup executed 3 Balloon Payment Rider to Note and

      Security Instrument. Counsel Cert. E,xh. “B “.

22.   On or about April 27,1996, Troup executed a Notice of Right to Cancel. Counsel

      Cert. E,xh. “H “.

23.   On or about April 27,1996, Troup executed a Mortgage in favor of ECM in the

      principal sum of $46,500.00. Counsel Cert. E‘xh. “I ‘I.

24.   On or about April 27, 1996, Troup executed an Adjustable Rate Rider. Counsel

      Cert. Exh. “F ‘I.

25.   On or about April 27, 1996, Troup executed a Borrower’s Right to Counsel

      Notice. Counsel Cert. E.xh. “F ‘I.

26.   In the Borrower’s Right to Counsel Notice, Troup states, under oath, “I have been

      advised of my right to be represented by an attorney of my choosing at the time

      this secondary mortgage loan is closed, and you have advised me that if I wish to

      adjourn this closing to another date to have my attorney present, that I may do so

      without cost or penalty.” Id. at Exh. “F”.

27.   On or about April 27,1996, Troup executed an Ac’knowiedgment of Receipt of

      Documentation. Counsel Cert. Exh. “F I’.

28.   In the Acknowledgment of Receipt of Documentation. Troup ac!;nowledges

      receipt of a number of documents including the Note. Mortgage. Ba!loon Note

      Rider and Notice of Right to Ca.ncei. Id.

-
-0    .A CxSir Lzxks Title repor: obtained by EC>I :ek:ed ;1 j:.!C<~::~ in :k s;i;ll       :




                                           ECM Da54
       of $250.00 against Curtis Troup under Judgment Number DJ25 19 14-95. Id. at

       Exh. “J”.

30.    A TRW Consumer Credit Report dated April 22,1996 obtained by EClM reflected

       a charged off account of Curtis Troup to Beneficial Tax Masters. Counsel Cert.

       Exh. “J ‘I.

31.    Dick La France, a former employee of Plaintiff, and Jeffrey Ahrens, the

       representative of ECM, testified that the absence of a credit history would be a

       negative factor in considering a loan.

32.    Troup has made no allegation that ever informed ECM of any complaints

       regarding the home improvement work or the Note and Mortgage. See

       Counterclaim.

2;.    Troup’s counsel sensed a request for rescission upon EC&I in or about November

       1998. Counterclaim at 170.

3-C.   Troup filed the Counterclaim in or about June 1999.

35.    Dick La France, a former employee of Associates. testified under oath at his

       deposition that he ~3s unaware of the race of Troup when he decided to issue the

       Pre-Approval to ECM. Counsel Cert. at Exh.“M” .

36.    Dick La France, a former employee of Associates. testified under             03th   at his

       deposition that he was un3ware of the racial make-up of the neighborhood of the

       Troup property \vhtn he decided to issue tht Pie-.-?pprovai 10 ECM Counsel

       Cm. at Exh. “>I” .

57.

       bhx the ie,ms of ic\XlS    shouid bc! !O 3. bor;c?Lv*f: L\C *.v?,&xr a Scrro~ver should

       r~c~i~:c 2 1032. J<ffiz!r .\;?,r:nj De?, 2~ ;zzz aide. c~,;.~~.~~: I.~:z, E:<j;. “3: “,
                                                                                                    ECM
           38.        Jefl?ey Ahrens testified that the racial makeup of the neighborhood of a borrower

                      was not a factor taken into account by ECM in any of its decisions with respect to

                      a credit application. Id

          39.         Jeffrey Ahrens testified that race did not in any way factor in to the terms of loans

                      or credit that ECM would extend. Id at page 148-149.

          40.         Jeffrey Ahrens testified that in order to determine the appropriate loan terms, each

                      loan must be considered on an individual basis. Counsel Cert. at Exhs. “K” and

                      “M”.

                                        GALLAGHER, CAVANAUGH & PERZLEY, L.L.C.
                                        Attorneys for Third-Party Defendants
                                        East Coast Mortgage Corporation and Jeffrey Ahrens


                                        By:
                                              tithieen Cavanaugh

DATED: March 22,200O



S:‘Est C0as1   174OUroup 014&J motion.wpd
                                                                                :;   :./.:,::   4..   ..




                                                                      RECEZVE~ Ilri’ir: T’il ,‘-I:‘~
                                                                       (Jfiice of 11:~ s~~;Yt:.i: -‘.;, 1 ..::..
                                                                      Ej/ $jl$p g*:;-: . y .. ,    ”
            GREMER, GALLAGHER &CAVANAUGH, L.L.C.
            200 I Route 46, Suite 202
            Parsippany, New Jersey 07054                                        ‘@$         ;     .
            (973) 335-7400
            Attorneys for Third-Party Defendants,
            East Coast Mortgage Corp. and Jeffrey Ahrens
                                                                         , .. .
                                                                         * -.----
                                                                 SUPERIOR COURT OF NE\1J JERSEY
             ASSOCIATES HOME EQUITY SERVICES, INC. f/k/a         CHANCERY rjIttiStoN:.“*
             FORD CONSUMER FINANCE COMPANY, INC.,

                                              Plaintiff,
                                                                 ESSEX COUNTY

                                                                 DOCKET NO. F-8466-98
                                                                                                                   \’   ;-        . . .-


                                     vs.
                                                                                      CIVIL ACTION
             BEATRICE TROUP and MR. TROUP, husband of
             BEATRICE TROUT’, CURTIS TROUP and MRS.
             CURTIS TROUP; STATE OF NEW JERSEY, UNITED
             STATES OF AMERICA,
                                                                                                           c

                                              Defendants.
                                                                 CERTIFICATION OF COUNSEL IN SUPPORT
                                                                 OF MOTION FOR SUMMARY JUDGMENT
             BEATRICE TROUP and CURTIS TROUP,
                        Defendants/CountercIaimants,

                              vs.

             GARY WISHNIA, GENERAL BUILDERS SUPPLY,
             INC., PROPERTY REDEVELOPMENT CENTER,
             INC., EAST COAST MORTGAGE CORP. and L
             JEFFREY AHRENS,

                          Third-Party Defendants.



                   I, Kathleen Cavanaugh, being of full age, certify to the Court as follows:

                    1.     I am an attorney at law of the State of New Jersey and a Partner in the law firm of

            Greiner, Gallagher& Cavanaugh, L.L.C., attorneys forThird-Party Defendants, East Coast Mortgage

            Corporation (“ECM”) and Jeffrey Ahrens (“Ahrens”). I make this Certification in support of the

            hlotion by Ahrens and BCM for Partial Summary Judgment dismissing the Counterclaim (which

            includes aThird-Party Complaint) filed by Defendants, Beatrice Troup and Curtis Troup (hereinat‘rer

            collectively “Troup”), with prejudice.

     .; i
.’
                                                                  ECM Da57                                               -? , .
       3
       -.      This action was commenced by the filing of a Complaint in foreclosure in or about

1998. ECM and Ahrens were made parties to this action by the filing of Troup’s Answer and

Counterclaim (which included a Third-Party Complaint, hereinafter the “Counterclaim”) in June

1999. ECM and Ahrens filed an Answer to the Counterclaim in October 1999, disputing any liability

to Troup.

       3.      In October 1999, a scheduling conference was conducted.         At that time, counsel

discussed deadlines for discovery, including deadlines for the filing of expert reports. At that time

Troup’s counsel indicated that Troup did not intend to retain an expert with respect to Troup’s

discrimination claims. The deadline for service of expert reports has passed, and no expert report

has been produced with respect to the discrimination claims and Troup has not indicated any

intention of retaining an expert with respect to those claims.

       4.      In Troup’s Counterclaim, Troup alleges that on or about September 11, 1985, Troup

signed a home repair contract in favor of Third-Party Defendant, General Builders Supply, Inc.

(“General Builders”).     A true copy of that co&act as produced in discovery by Third-Party
                                            .
Defendant, Gary Wishnia (“Wishnia”), is attached hereto as Exhibit “A”. See Counterclaim at

Paragraph 4.

        5.     Thereafter, Troup alleges that Troup signed another contract dated November 16,

1995 in favor of General Builders. A copy of the contract as produced in discovery by Wishnia is

attached hereto as Exhibit “B”.

        6.      Based upon checks produced in discovery, it appears Trotip made regular monthly

payments to Property. Redevelopment, as successor to General Builders, on January 6, 1996,

February 6, 1996, March 6, 1996 and April 1996. A true copy of checks produced in discovery in

this matter are attached hereto as Exhibit “D”.


                                                      ECM Da58
       7.      Troup refinanced their obligation to Property Redevelopment through the mox-tgage

loan by ECM dated April 37, 1996 which is the subject of the Complaint. A true copy of the

Adjustable Rate Note and Balloon Payment Rider as produced by Plaintiff, Associates Home Equity

Services, Inc. (“Associates”) in discovery is attached hereto as Exhibit “G” and a true copy of the

Mortgage as produced by Associates in discovery is attached hereto as Exhibit “I”. See also

Counterclaim, Paragraph 6.

       8.      ECM propounded Interrogatories upon Troup in this matter. A true copy of the

pertinent Interrogatory answers are attached hereto as Exhibit “C”.

       9.      A true copy of the Mortgage Loan Commitment as produced by Associates in

discovery is attached hereto as Exhibit “E”.

       10.     A true copy of documents relating to the loan transaction, including the Truth In

Lending Disclosure Statement, Amount Financed Itemization, Adjustable Rate Rider, Right to

Counsel Notice, Adjustable Rate Disclosure and Acknowledgment of Receipt of Documentation

as produced by Associates in are attached hereto collectively as Exhibit “F”.
                                            .
        11.    A true copy of the Notice of Right to Cancel with respect to the loan transaction as

produced by Associates in discovery is attached hereto as Exhibit “H.”

        12.    A true copy of credit reports obtained with respect to the Troup loan with respect to

Beatrice Troup and Curtis Troup as produced by Associates in discovery in this matter are attached

hereto collectively as Exhibit “J”.

        13.     Beatrice Troup and Curtis Troup answered Interrogatories‘propounded on behalf of

Plaintiff, Associates, in this matter. .4 true copy of the pertinent portions of Troup’s answers to

Interrogatories are attached hereto collectively as Exhibit “L”.




                                                   ECM Da 59
r           14.    Dick La France, a former employee of Plaintiff, and Jeffrey Ahrens, the representative

    of ECM, testified that the absence of a credit history of Beatrice Troup would be a negative factor

    in considering a potential borrower’s credit rating. See transcript ofthe deposition of Jefiey Ahrens,

    true copies of the pertinent pages of which are attached hereto as Exhibit “K”, at page 12, and

    transcript of deposition of Dick La France, true copies ofthe pertinent portions ofwhich are attached

    hereto as Exhibit “M” at page 22.

            15.’   Dick La France, a former employee of Associates, testified under oath at his

    deposition that he was unaware of the race of Troup when he, on behalf of Ford Consumer Credit,

    decided to issue the Pm-Approval to ECM and he was unaware of the race of the Troup’s at the time

    of his deposition. La France Dep. at pages 82-83, Exh. “M” hereto.

           16.     Dick La France further testified under oath at his deposition that he was unaware of

    the racial make-up of the neighborhood of the Troup property when he decided to issue the Pre-

    Approval to ECM. D. La France Dep. at pages 82-83.

            17.    Jeffrey Ahrens testified that race was not a factor utilized by ECM in deciding what
                                                  .
    the terms of loans should be to a borrower or whether a borrower should receive a loan. Jeffrey

    Ahrens Dep. at page 148, Exh. “K ” hereto.

            18.    Jeffrey Ahrens testified that the racial makeup of the neighborhood of a borrower was

    not a factor taken into account by ECM in any of its decisions with respect to a credit application.



            19.    Jeffrey Ahrens testified that race did not in any way factor in to the terms of loans or

    credit that ECM would extend. Iii. at page 148-149.

            20.    Jeffrey Ahrens testified that the terms of each loan was determined on an individual

    basis. J. .I\hrens Dep. Transcript at page 83-84, 111-l 14, Exhibit “K” hereto.


                                                     ECM Da60
          21.         I hereby certify that the foregoing statements made by me are true. I am aware that

if any of the foregoing statements made by me are wilfklly false, I am subject to punishment.



Dated: March 22, 2000
                                                             z&f



                                                           Kathleen Cavanaugh



S \Easr Coast 1740\Troup Ol4kjcounsclccn.wpd




                                               ECM Da 61
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                                                                                                                            1200 CLINTON AVENUE’ ’
                                                                                                                              IRVINGTON, NJ 07111 ’ : )
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                  .’                                                                                                                                          1200 CLINTON AVENUE
                                                                                                                                                               IRVINGTON, NJ 07111
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                                8% @l%wc hereby to furnish mattxiai and labor - complele in accordance with above                                                                                                                                                                                  specifications, for the sum 01: .                                                                         ’

                                                                                                                                                                               s        32, ($3
 I“~~~O-UtOuoI*I:



                                                                                                                                                                                                                                                             A                                                                                                                                                   II



      Allmalenal*guardnleedb kae specJied.AJlwurklokamplriodina

      extra met* mll be exeaaed ony upon writlen otden. and will become an extra duqr over                                                                                                                                                                                    1,
      ~JW a&v. IIIO eewnam. AU aqrwmen~.~ mntinqen~ upon slrikes. acddenu or de+ byond
      Our mnlfol. Owner lo carry Rn. lomedo and olhef naaesary insurarca. Our wOndn are fully                                                                                                                              Note: This pmpaal may be
      covered by Workmen’s Compenaadon Insumnca.                                                                                                                                                                withdrawn by us il not accepted within                                                                                                                                               days.




        ~~i~rU a~ =dSfaC.Or)’ and are hfmby aaepted. You are ulhormd IO do Ihe
        wont as -fled. Payment WIU be made a.3 outlined above.

                                                                                                c,+rj{
        Caleofkcapranca                                                                                                                                                                                              Signature

     - - -                                                                                                                                                            ECM Da66
HOUSTON & TOTARO
Attorneys-at-Law
152 Market Street, Suite 314
Paterson, N.J. 07505
(973) 754-9200
Attorneys for Beatrice Troup and Curtis Troup
                                      SUPERIOR COURT OF NEW JERSEY
                                       ESSEX COUNTY: CHANCERY DIVISION
                                       DOCKET NO. F-8466-98
ASSOCIATES HOME EQUITY                :
SERVICES, INC., f/k/a FORD             :
CONSUMER FINANCE COMPANY, :
                                      .
INC.,
              Plaintiff,
               -V-
                                                           CIVIL ACTION
BEATRICE TROUP and CURTIS                    I
TROUP, et al.,
                                             ..        DEFENDANTS’ ANSWERS
                     Defendants,
tt******t*t*ttttttt~~~*~~~~~~~~~~~~~~~~*~~            TO EAST COAST/J.AHRENS’
BEATRICE TROUP and CURTIS    :                           INTERROGATORIES
TROUP,
          Counterclaimants, :

                -V-


GARY WISHNIA, er al.
           Counterdefendants. :
TO: KATHLEEN CAVANAUGH, ESQ.
     Greiner, Gallagher & Cavanaugh
     2001 Route 46, Suite 202
     Parsippany, N.J. 07054-1395

       Defendants Beatrice.Troup and Curtis Troup hereby answers counterdefen-
dants’ interrogatories as follows:

       I.      Beatrice Troup - has knowledge of circumstances surrounding her
entering into a home repair contract with Gary Wishnia and his arranging of the fi-
nancing thereof; has some knowledge of the extremely substandard nature of the
home repairs provided by Wishnia.

             Curtis Troup - has knowledge of circumstances surrounding his co-
signing on the home repair contract between his mother and Gary Wishnia and
Wishnia’s arranging of the financing thereof; has some knowledge of the extremely
substandard nature of the home repairs provided by Wishnia.

              Gary \/l/ishnia - has knowledge of arranging the financing of the home
repairs; has knowledge of all aspects of the home repairs and the prices charged;

                                                  1     ECM Da67
has knowledge of the failure to obtain permits; code violations and other violations
of law in connection with the home repairs.

              All third party defendant subcontractors - will have knowledge re-
garding the quality of the materials used and workmanship performed on the Troup
home and pertaining to the amounts paid to them by Wishnia for the
work/materials. Will also have knowledge of failure to obtain permits and code
violations in connection with the home repairs.

              Jeffrey Ahrens - has knowledge of East Coast’s lending practices, of
East Coast’s and his own relationship with Gary Wishnia; of how he obtained the
information in the Troup September 19% Loan Application and other contacts be-
tween East Coast and Gary Wishnia about the transaction.

            Nan McCall, Esq. - has knowledge of Gary Wishnia’s arranging of the
loan between East Coast and the Troups.

             Claudia Sharp - has knowledge of Gary Wishnia arranging the fi-
nancing of home repairs on her grandmother’s home with East Coast Mortgage.

             Mable Brown - has knowledge of Gary Wishnia arranging the financ-
ing of home repairs on her home with East Coast Mortgage.

            Alvin Taylor - has knowledge of Gary Wishnia arranging the financing
of home repairs on his home with East Coast Mortgage.

              As of yet unidentified employee(s) of Gary Wishnia.

              As of yet unidentified employee(s) of East Coast.

              This list will be supplemented as necessary as discovery and other factual
investigation proceeds.

      2.     Thomas Kraeutler, 304 Roosevelt Avenue, Suite 1, Oakhurst, N.J.
07755. As regards field of expertise, please see Mr. Kraeutler’s curriculum vitae,
which is produced herewith.

         3.     The Troup home is a tangible item relevant to the subject matter of
this litigation. As for documents, all relevant documents that plaintiff will use at trial
in any way will be produced either in response to defendants! current document re-
quest or as such documents are obtained by defendants during the course of dis-
covery/factual investigation. Defendants object to being asked to “identify” (as that
term is defined in the interrogatories) every single one of such documents as said
request is unduly burdensome.

       4.     A statement relevant to the subject matter of this liti(z,Ttion l.vas ob-
tained from Mable Brown in the context of the Moses v. Properfy RecJei/e!opmeni
Canier, Inc., et a/. litigation. A copy of that statement is produced herewith. In ad-
                                                     ECM Da68
                                            2
dition, statements made by Willie Mae Moses and Claudia Sharp in their deposi-
tions are relevant to this litigation. No other statements have been obtained at this
time.

      5.     Neither Beatrice Troup nor Curtis Troup have been convicted of a
crime. Defendants do not know whether any of the other individuals listed in an-
swer #I have been convicted of a crime.

      6.

      COUNT ONE

      The factual basis is that the work was done in an extremely shoddy manner
and the materials were of very poor quality. These factual allegations will be
proven by way of an expert’s examination. and report. Such a report will be sub-
mitted as soon as possible and no later than the Court deadline. Preliminary find-
ings by said expert were summarized in a Certification in the Moses matter and is
submitted herewith. Further support will be sought in discovery.

      COUNT TWO

        See Count One. Gary Wishnia’s state of mind can be inferred from circum-
stantial evidence such as the egregious nature of the work.

       COUNT THREE

        The representation that work would be done in a workmanlike manner was
made expressly in the contract; in addition such a representation is implicit in every
home repair contract. Defendants would not have entered into the contract had
they known that this representation was false. Gary Wishnia’s state of mind can be            .
inferred from circumstantial evidence such as the egregious nature of the work.
Plaintiff’s damages will be shown by way of expert examination and report. Further
factual support will be sought in discovery.

       COUNT FOUR

       The factual basis is that a reasonable price for the work is far lower than
$38,580 and $11,410. This factual allegation will be proven by way of an expert’s
examination and report. Such a report will be submitted as soon as possible and
no later than the deadline set by the Court. Further factual support will be sought in
discovery.

       COUNT FIVE

        Both contracts failed to provide a description of the work to be done and materi-
als to be used or installed as required by the regulations. The September contract
failed to disclose terms and conditions of the contract affecting price such as the finance
charges and the total price to bz paid. The November contract failed to disclose terms

                                            3
                                                     ECM Da69
and conditions of the contract affecting price such as the total price to be paid and the
finance charges. The contracts entailed the execution of a note which note did not have
printed on it the preservation of buyer’s claims and defenses language required by fed-
eral law, in violation of N.J.A.C. 13:45A-16.2(a)l3.ii. The contracts did not contain a
description of the mortgage or security interest to be taken in connection with the fi-
nancing or sale of the home improvement as required by N.J.A.C. 13:45A9-16.2(a)l 3.~.

       COUNT SIX

       Work permits were not issued. This is a matter of public record. If permits had
been issued inspections would have been required and it can be inferred that poor
work/materials/code violations would have been avoided. As for damages, these will be
proven by way of an expert.

       COUNT SEVEN

        As for the September 1995 home repair contract neither of the Troups was given
copies of a Notice of Right to Cancel, if in fact one was signed by them. In addition,
even assuming they were given a Notice of Right to Cancel, they were not also provided
with a disclosure of all. financing terms as required by the Home Repair Financing Act,
rendering the notice of the right to cancel, if it was given at all, defective. As for the No-
vember 1995 contract defendant Wishnia’s discovery answers acknowledge that no No-
tice of Right to Cancel was provided for that contract.

       COUNT EIGHT

        The factual bases for Count Eight are set out clearly in paragraphs 58 through 60
of the pleading and are clear on the face of the documents.
                                       .
       COUNT NINE

       The expiration date of the right to rescind is not conspicuously set forth on
the Notice. The expiration date is not clearly disclosed in that it is confused by the
erroneous date on the signature line which leads the consumer to believe that s/he
must sign the rescission notice on the date preprinted on that line in order to effec-
tively cancel. The preprinted date on the signature line is not a “typo” because
East Coast as a routine matter improperly preprinted the date of the transaction on
the signature line of the Notice that the consumer would be using to cancel the
transaction.

       COUNT TEN

       The factual. basis for this Count is set out clearly in paragraphs 66 through
63 of the pleading.




                                              4          ECM Da 70

								
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