Exhibit 6 

Case: 1:20-cv-02402 Document #: 86-7 Filed: 05/12/22 Page 1 of 43 PageID #:1120
1 UNITED STATES DISTRICT COURT

2 NORTHERN DISTRICT OF CALIFORNIA

3 SAN FRANCISCO DIVISION

4 ---oOo---

5

6 ALICIA HERNANDEZ, et al.,

individually and on

7 behalf of all others

similarly situated,

8

 Plaintiffs,

9

vs. No. 3:18-cv-07354-WHA

10

WELLS FARGO & COMPANY, and

11 WELLS FARGO BANK, N.A.,

12 Defendants.

___________________________/

13

14

15

16 30(b)(6) VIDEOTAPED DEPOSITION OF CARMEN BELL

17 SAN FRANCISCO, CALIFORNIA

18 FRIDAY, AUGUST 2, 2019

19

20

21 Stenographically reported by:

22 ANDREA M. IGNACIO, CSR, RPR, CRR, CCRR, CLR

23 California CSR No. 9830

24 Job No. 3476159

25 Pages 1- 266

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1 until the decision date. 10:00

2 The actuals were all reconciled to all State 10:00

3 allowables. The control that was missed in the loss 10:01

4 mitigation process for the decision was, we did not 10:01

5 confirm that what the attorney gave us did not put a 10:01

6 particular customer over the State allowable. 10:01

7 MR. PAUL: Okay. 10:01

8 Q So let me see if I can simplify that. 10:01

9 So the first error is, the State maximum from 10:01

10 the table would be added to whatever fees had been 10:01

11 incurred as of that date, which allowed it to be 10:01

12 higher than -- if there were incurred fees, when they 10:01

13 were added to the maximum, that put them over the 10:01

14 maximum; is that right? 10:01

15 MS. KNIGHT: Ob- -- object to form. 10:01

16 THE WITNESS: I would describe that slightly 10:01

17 differently by saying billed -- incurred and paid, 10:01

18 plus the State fee matrix, versus just incurred. 10:01

19 MR. PAUL: Oh, okay. 10:01

20 THE WITNESS: So paid, and then added the 10:01

21 State fee matrix. 10:02

22 MR. PAUL: Okay. 10:02

23 Q And then the second error was -- that was 10:02

24 used, the fees that were incurred and paid, just there 10:02

25 wasn't a check to see that they didn't exceed the 10:02

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1 of how he describes his role above the Jennifer Vaughn 10:08

2 year-end comments -- 10:08

3 A Okay. 10:08

4 Q -- where he says: 10:08

5 "I was tasked as being the lead IC to manage 10:08

6 the corporate advanced attorney fee project." 10:08

7 Do you see that? 10:08

8 A I do see that. 10:08

9 Q What is IC? 10:08

10 A Individual contributor. 10:08

11 Q Okay. And the corporate advanced attorney 10:08

12 fee project, is -- is that a description of the first 10:08

13 error? 10:08

14 MS. KNIGHT: I'll object to form. 10:08

15 THE WITNESS: I cannot say if it's 10:08

16 specifically related to the calculation error or 10:09

17 something different. 10:09

18 MR. PAUL: All right. 10:09

19 Q In terms of process within the bank, when 10:09

20 a -- an error like this is discovered, what is the -- 10:09

21 the general process for diving into it and figuring it 10:09

22 out? 10:09

23 MS. KNIGHT: Object to form. 10:09

24 THE WITNESS: Is there a time period you'd 10:09

25 like me to describe, or just a general -- it's 10:10

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1 obviously a long time period, and a lot has changed. 10:10

2 Can you -- 10:10

3 MR. PAUL: Sure. That's fair. 10:10

4 Q So let's -- let's start with this second half 10:10

5 of 2013 -- 10:10

6 A Okay. 10:10

7 Q -- first half of 2014 time period. 10:10

8 A From what we've been able to look at from all 10:10

9 of the documentation from historical, and still today, 10:10

10 as soon as someone raises their hand and identifies an 10:10

11 issue or -- you know, there's various ways you can 10:10

12 find potential issues. 10:10

13 Typically, it's assigned to either a person 10:10

14 or team collectively to do the research. And that 10:10

15 usually includes people from various disciplines -- 10:10

16 technology team, the line of business, our control 10:10

17 team, and compliance -- to first understand what 10:10

18 occurred, and determine the root cause. 10:10

19 Next, once we understand that piece, then it 10:11

20 would be to identify if there was any customer impact. 10:11

21 Identify if there's -- what type of solution would be 10:11

22 able to be put in place to -- if it was, in fact, an 10:11

23 issue. And then, if there is any remediation that 10:11

24 needs to take place, complete the remediation. 10:11

25 Q All right. 10:11

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9 the loan that -- the incorrect decision date. 10:41

8 product type and remediation amount and the status of 10:41

7 And it has various columns, including the 10:41

6 determined to be not impacted. 10:41

25 Q -- or names? 10:42

24 A Yes. 10:42

23 But you could tie each of these to a name -- 10:42

22 removed. 10:42

21 And so I -- I understand where that was 10:42

20 Q All right. 10:42

19 A That's correct. 10:42

18 unique to a borrower; correct? 10:42

17 there on their mortgage loan documents. So that's 10:42

16 So the -- the loan number is going to be 10:42

15 at. 10:42

14 Q -- just to be sure I know what we're looking 10:42

13 A Okay. 10:42

12 some of the columns -- 10:42

11 Let me walk through the -- some of the -- 10:42

10 Q All right. 10:42

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1 All right. 10:42

2 And then -- let's see. The category of 10:42

3 "Remediation" column, would you describe that for us, 10:42

4 please. 10:42

5 A At the time, when we identified the impact 10:42

6 and -- we classified the -- each loan into 10:42

7 five categories in order to determine which 10:43

8 remediation category they were -- would be remediated 10:43

9 under. 10:43

10 And that status is as of the date that we 10:43

11 identified and started the remediation for that 10:43

12 customer. 10:43

13 Q All right. 10:43

14 Would you walk me through what each of the 10:43

15 categories are, please. 10:43

16 A Sure. 10:43

17 In order would probably be the easiest, 10:43

18 No. 1 -- 10:43

19 Q Yes. 10:43

20 A -- even though they're not in order on the 10:43

21 spreadsheet. 10:43

22 The ones numbered No. 1 would be active. And 10:43

23 active would mean they still have a Wells Fargo 10:43

24 mortgage -- that Wells Fargo mortgage with Wells Fargo 10:43

25 as the servicer. 10:43

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1 (Document marked Exhibit 397 11:19

2 for identification.) 11:19

3 MR. PAUL: All right. 11:19

4 Q Ma'am, I've handed you what we've marked as 11:19

5 Exhibit 397, which is an e-mail chain that you're not 11:19

6 copied on. I wouldn't expect you to have any 11:19

7 knowledge of. 11:19

8 But there is -- if you'll turn to the page 11:19

9 that is Bates numbered '10407. 11:19

10 A (Witness complies.) 11:19

11 Okay. 11:19

12 Q There is a listing of the State fee matrix. 11:19

13 And what I want to confirm is that this is 11:19

14 the -- essentially, the -- the data from the table 11:19

15 that was pulled in as part of the HPA process? 11:19

16 A If I could just look at it -- 11:19

17 Q Sure. 11:20

18 A -- for a moment. 11:20

19 (Witness reading document.) 11:20

20 Without having knowledge of the e-mail, it 11:20

21 does appear that's the case. 11:20

22 Q Okay. And I'm not going to tie you down to 11:20

23 the numbers specifically. 11:20

24 A Yeah. 11:20

25 Q But I -- I -- I do want to get some 11:20

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1 So by September, you're aware of both the 11:40

2 first and second errors? 11:40

3 MS. KNIGHT: Object to form. 11:40

4 THE WITNESS: Yes. 11:40

5 MR. PAUL: All right. 11:40

6 Q And on the third page of Exhibit 400, there 11:40

7 is -- there are several pages of -- of what is 11:40

8 described as HPA tool issue chronology. 11:40

9 Do you see that? 11:40

10 A I do. 11:40

11 Q All right. 11:40

12 And I'd like to walk through that chronology 11:40

13 with you. It says -- the first bullet point says: 11:40

14 "In March 2011, Wells Fargo began 11:40

15 implementing an enhanced process related to change 11:41

16 control per consent order requirements." 11:41

17 What is that a reference to? 11:41

18 A As part of the consent order we were under, 11:41

19 one of the requirements was to enhance our change 11:41

20 control process. And that would be the date, as I 11:41

21 know it, that those enhancements begun. 11:41

22 Q Okay. And did these enhancements have some 11:41

23 bearing on the errors that occurred? 11:41

24 MS. KNIGHT: Object to the form. 11:41

25 THE WITNESS: I don't understand the 11:41

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1 A I do see that. 12:07

2 Q And what was the change control process 12:07

3 referenced here in July of 2014? 12:07

4 Let me -- let me ask it differently. 12:07

5 What were the new change drivers added as 12:07

6 part of the change control process in July of 2014? 12:07

7 A That when you initiated a change, going 12:08

8 through the process of change control, the person who 12:08

9 opened that change request was able to select if it 12:08

10 was related to an event that impacted the customer 12:08

11 and/or was part of a remediation effort that impacted 12:08

12 the customer. 12:08

13 Q So prior to July of 2014, there was no 12:08

14 selection of whether it impacted a customer? 12:08

15 MS. KNIGHT: Object -- 12:08

16 MR. PAUL: And prior -- after July 2014, 12:08

17 there was. 12:08

18 Q Is that what you're saying? 12:08

19 MS. KNIGHT: Object to form. 12:08

20 THE WITNESS: Yes, as it relates to the 12:08

21 actual change control process being opened. 12:09

22 MR. PAUL: Okay. 12:09

23 Q And so, in the context of the HPA tool that 12:09

24 we're talking about, when the CR and the -- well, is 12:09

25 the change control process reflected from the CR? 12:09

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1 MS. KNIGHT: Object to form. 12:10

2 THE WITNESS: That is correct. 12:10

3 MR. PAUL: Okay. 12:10

4 Q And were those new change drivers also 12:10

5 related to one of the consent orders or amendments 12:11

6 thereto? 12:11

7 MS. KNIGHT: Object to form. 12:11

8 THE WITNESS: The enhancements, that we put 12:11

9 in place to change control, were related to meet our 12:11

10 consent order requirements. 12:11

11 MR. PAUL: All right. 12:11

12 Q Next bullet point: 12:11

13 "On April 2, 2015, commitment to customer 12:11

14 policy was published. Home lending provided training 12:11

15 on the policy requirements implemented July 31, 2015." 12:11

16 What -- what is the commitment to customer 12:11

17 policy? 12:11

18 A Would it be okay if I flip back to -- I 12:11

19 believe it's in -- included in this document -- 12:11

20 Q Sure. 12:11

21 A -- so I can make sure I reference the right 12:11

22 information? 12:11

23 (Witness reading document.) 12:12

24 So the -- again, it's -- as part of the 12:12

25 consent order, there were requirements in regards to 12:12

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1 issues management and compliance management. 12:12

2 And the commitment to customer policy that 12:12

3 was rolled out on those dates, that were on the other 12:12

4 page, referenced -- 12:12

5 Q April 2nd -- 12:12

6 A -- April -- April 2nd of 2015 and home 12:12

7 lending training provided in July, that commitment to 12:12

8 customer policy was the corporate policy for how we 12:12

9 handled customer remediation events. 12:12

10 Q All right. 12:12

11 And the document that's reflected here 12:12

12 that's -- that you referenced, that is entitled 12:13

13 "Wells Fargo Commitment to Customer Policy" on Bates 12:13

14 No. '87927, is this the actual policy? 12:13

15 MS. KNIGHT: Object to form. 12:13

16 THE WITNESS: I would say this is the 12:13

17 overview of the policy. There likely is another 12:13

18 actual official non-PowerPoint version of the 12:13

19 corporate policy. 12:13

20 MR. PAUL: All right. 12:13

21 Q And in a broad overview, what was the intent 12:13

22 or purpose that the commitment to customer policy was 12:13

23 designed to -- to affect? 12:13

24 A I would say to ensure and demonstrate that, 12:13

25 when an issue was -- a potential issue was identified, 12:13

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1 third one I was going to reference. But a very 12:20

2 rigorous release testing, release related to 12:20

3 technology releases. And there's absolutely a 12:20

4 documented issues management policy. 12:20

5 Q Okay. So you said that, after being released 12:21

6 from the consent order in May of 2016. 12:21

7 But were each of those three components put 12:21

8 in place in 2016, or was it just at some point after 12:21

9 2016? 12:21

10 MS. KNIGHT: Object to form. 12:21

11 THE WITNESS: Within the consent order, all 12:21

12 three of those that I referenced -- release testing, 12:21

13 change control, and issues management -- all were part 12:21

14 of the consent order. So we did have enhanced 12:21

15 practices in place, that were in place in May of 2016. 12:21

16 There were additional enhancements after 12:22

17 that, that were not required per the consent order. 12:22

18 MR. PAUL: Q. Do you recall what the date of 12:22

19 the consent order was? 12:22

20 A When we received it? 12:22

21 Q Yes. 12:22

22 A I know it's in that binder. I don't have the 12:22

23 exact date. There was -- I don't have the exact date. 12:22

24 Q Okay. And -- and there's more than one, so I 12:22

25 want to make sure we're talk -- we're talking about 12:22

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1 the -- it's 2011 -- sometime in 2011; right? 12:22

2 A Yeah. There was one in 2011, and then we 12:22

3 received an amended consent order. I believe it was 12:22

4 in 2000 -- 12:22

5 Q '13? 12:22

6 A -- '13. 12:22

7 Q Okay. And were any of these three components 12:22

8 put in place before the 2013 amendment? 12:22

9 MS. KNIGHT: Object to form. 12:22

10 THE WITNESS: I don't know the exact dates. 12:22

11 MR. PAUL: Okay. 12:23

12 THE WITNESS: I can reference the timeline we 12:23

13 were looking at, because I believe that -- 12:23

14 MR. PAUL: Sure. 12:23

15 THE WITNESS: -- gives the dates of -- 12:23

16 MR. PAUL: Yeah, yeah. 12:23

17 Q That's not -- it's not a memory test. If 12:23

18 you've got a document that can answer the question -- 12:23

19 A Well, the document you were -- 12:23

20 THE REPORTER: One at a time. 12:23

21 THE WITNESS: It's the document you were 12:23

22 walking me through, the timeline. 12:23

23 MR. PAUL: Sure. 12:23

24 THE WITNESS: So I'm on Document 400, and 12:23

25 back to page 2. It appears, based on this document, 12:23

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1 It appears, from reading all the e-mails, 12:33

2 that that -- you could see the thread that said, We 12:33

3 can't close this until the system is resolved, 12:33

4 regardless if there's customer impact. 12:33

5 So I believe that to be true, but I can't be 12:34

6 definitive. 12:34

7 MR. PAUL: Okay. Let me try it a different 12:34

8 way. 12:34

9 Q The -- the RID 200 would have remained open, 12:34

10 had there been a correct determination that customers 12:34

11 had been improperly denied loan modifications? 12:34

12 A Yes. 12:34

13 MS. KNIGHT: Object to form. 12:34

14 MR. PAUL: Q. And is the -- the remediation 12:34

15 required by the investors? 12:34

16 MS. KNIGHT: Object to form. 12:34

17 THE WITNESS: No. 12:34

18 MR. PAUL: All right. 12:34

19 Q Is there any requirement, external to the 12:35

20 bank, that dictates that remediation occur? 12:35

21 MS. KNIGHT: I'll object to form. 12:35

22 And I also will caution the witness not to 12:35

23 answer, to the extent it requires her to reveal 12:35

24 communications with regulators. 12:35

25 THE WITNESS: I'm not aware of any 12:35

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1 requirement externally that you must remediate. 12:35

2 MR. PAUL: Q. So to your knowledge, that's a 12:35

3 decision being made independently by Wells Fargo? 12:35

4 MS. KNIGHT: And I'll -- also, Counsel, this 12:35

5 is getting beyond the scope of the notice for the 12:35

6 remediation. 12:35

7 You're free to ask her at the end with 12:35

8 respect to what she knows personally, but remediation 12:35

9 is not one of the topics that she's been designated 12:35

10 for. Yeah, I'll just leave it at that. 12:35

11 MR. PAUL: All right. 12:36

12 Q Back to the chronology. The October of 2015 12:36

13 change was not required to go through service 12:36

14 regulatory program office, as it was not an investor 12:36

15 regulatory guideline change. It was a correction in 12:36

16 the actual tool. 12:36

17 What does that mean? 12:36

18 A The -- 12:36

19 Q Let me ask a different question. 12:36

20 What is the service regulatory program 12:36

21 office? 12:36

22 A So any time we receive guideline changes, 12:36

23 handbook changes from the investor, we had a program 12:36

24 office that facilitated those changes. And since this 12:36

25 wasn't related to an investor making a change in the 12:37

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1 Q What -- what's the fix that makes that 12:56

2 happen? 12:56

3 MS. KNIGHT: Object to form. 12:56

4 THE WITNESS: I don't agree that that's 12:56

5 always what was supposed to happen. 12:56

6 MR. PAUL: Okay. 12:56

7 Q In -- let's say in 2011, what -- what's your 12:57

8 understanding of what the process was, with respect to 12:57

9 using attorneys' fees in the -- the capitalization 12:57

10 process? 12:57

11 MS. KNIGHT: Object to form. 12:57

12 THE WITNESS: There's two steps in the 12:57

13 attorneys' fees. There is what's been paid, which has 12:57

14 been already reconciled to the State fee caps, and 12:57

15 then there is incurred but not yet paid, that has -- 12:57

16 at the date of the decision for the modification 12:57

17 trial. 12:57

18 In 2011, there were two practices in place. 12:57

19 The first issue, we used actuals billed and 12:57

20 paid, and it inaccurately added a State fee matrix 12:58

21 instead of comparing to a State fee when you took 12:58

22 actuals plus pending. 12:58

23 The second issue was a control issue in which 12:58

24 we took actuals, received that pending from the 12:58

25 attorney, but those pending, when added to actuals, 12:58

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1 did not have a control to reconcile. 12:58

2 So that's my understanding and knowledge of 12:58

3 2011. 12:58

4 MR. PAUL: Q. So is there an additional 12:58

5 reconciliation process in place now to make sure that 12:58

6 the State caps are not exceeded? 12:58

7 MS. KNIGHT: Object to form. 12:58

8 THE WITNESS: In today's process, starting 12:58

9 June 1st of 2019, for the trial modification, we only 12:58

10 use what has been billed and paid, which is reconciled 12:59

11 to all State fee allowables. 12:59

12 MR. PAUL: Okay. All right. 12:59

13 Q Back to our chronology. CCR 82506 was opened 12:59

14 on June 14, 2018, to update the procedure, recoverable 12:59

15 fees, and cost reconciliation. 12:59

16 What is CCR 82506? 12:59

17 A That would have been specific to the change 12:59

18 that we implemented on May 1st. We rolled it out in a 12:59

19 manual fashion, meaning two team members. And this 12:59

20 was to formalize to get the procedure updated on our 13:00

21 procedures website, is how I would describe it best. 13:00

22 Q June 11, 2018, the issue risk rating was 13:00

23 changed to critical. 13:00

24 What had been learned between March of 2018 13:00

25 and June of 2018 to cause it to be -- the risk level 13:00

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1 Q All right. 13:05

2 And "verbally," you mean phone calls were 13:05

3 made? 13:05

4 A That's correct. 13:05

5 Q All right. 13:05

6 The next bullet point: 13:05

7 "WFAS and independent risk management will 13:05

8 begin their validation activities on November 11, 13:05

9 2018." 13:05

10 What is that a reference to? 13:05

11 A WFAS stands for Wells Fargo Audit Services, 13:06

12 the independent risk management arm of Wells Fargo for 13:06

13 audit. They started their validation of the effort in 13:06

14 November. 13:06

15 Q And were they validate -- validating the 13:06

16 remediation effort or the corrective action? 13:06

17 MS. KNIGHT: Object to form. 13:06

18 THE WITNESS: They are validating the impact, 13:06

19 the remediation, and the corrective action that took 13:06

20 place. 13:06

21 MR. PAUL: All right. 13:06

22 Q And here, it notes it was to be -- to be 13:06

23 completed -- scheduled to be completed by September -- 13:07

24 February 7th, 2019. But it's still ongoing today; 13:07

25 correct? 13:07

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1 MR. PAUL: Okay. 14:35

2 Q So -- so what about either of those changes 14:35

3 would have precluded the second error from happening? 14:35

4 A In the first -- 14:35

5 MS. KNIGHT: Object to form. 14:35

6 THE WITNESS: -- one, setting the table to 0, 14:35

7 which is what was, in fact, implemented in October -- 14:35

8 by setting it to 0, it only used paid, which is 14:35

9 reconciled to the State fee amount. 14:35

10 And so, in that case, because those are 14:35

11 already reconciled, and there's no pending or State 14:35

12 fee additional matrix in, that could not result in the 14:35

13 error that was caused by issue two we've been 14:36

14 discussing. 14:36

15 MR. PAUL: Q. But the -- the error did still 14:36

16 occur with the HPA tool after the table was set to 0 14:36

17 in October of 2015? 14:36

18 MS. KNIGHT: Object to form. 14:36

19 THE WITNESS: Not where the tool was 14:36

20 corrected and set to 0. 14:36

21 MR. PAUL: All right. 14:36

22 Q So help me with that. How could the tool 14:36

23 have not been set to 0 after October of 2015? 14:36

24 A This morning, I mentioned that the HPA tool 14:36

25 had multiple investors and multiple programs within 14:36

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1 the tool. There was only a certain group of investors 14:37

2 and programs in which the calculation error was 14:37

3 present. 14:37

4 And because of that, when we set those GSE 14:37

5 programs, bank and private, and owned HAMP to 0 for 14:37

6 the State fee matrix, that meant it was only using 14:37

7 what was paid, which is reconciled to the State fee 14:37

8 matrix, State allowables. And there's no error that 14:37

9 was present in those after October 2nd of 2015. 14:37

10 Q What's the category of loan that is not 14:37

11 within those groups for which the tool was set to 0, 14:38

12 but still used HPA as opposed to SLOAD? 14:38

13 A If I could reference the spreadsheet. 14:38

14 Q Sure. 14:38

15 A I don't know what number that is. 14:38

16 Q 395. 14:38

17 MS. KNIGHT: Yeah, here it is. 14:38

18 THE WITNESS: I think I gave an example 14:38

19 earlier. It was the repayment plan, so not FHA. So 14:38

20 it would have been -- I've got to find one again on 14:38

21 here. 14:38

22 MR. PAUL: Q. Page 14, I think, is the 14:38

23 example -- 14:38

24 A It was 14 that I was talking -- 14:38

25 Q Yeah. 14:39

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1 were the employees within Wells Fargo who were 17:20

2 involved in making that decision? 17:20

3 A Allen Parker, general counsel; Tim Sloan, 17:20

4 CEO; SEC attorneys, and counsel. 17:20

5 Q Okay. Did you have any role in that 17:20

6 yourself? 17:20

7 A I did not. 17:20

8 Q Okay. All right. 17:20

9 Let's turn to the consent order and -- 17:20

10 A 420? 17:21

11 Q Exhibit 420. 17:21

12 And I think for this, let's go back to -- 17:21

13 I'll just reorient us. 17:21

14 Exhibit 389 was the deposition topic on -- 17:21

15 topics on which you've been designated. 17:21

16 A (Witness complies.) 17:21

17 I've got them. 17:21

18 Q And Topic 6 is actions Wells Fargo took to 17:21

19 ensure compliance with the two 2011 consent orders, 17:21

20 only to the extent it relates to loan modifications 17:21

21 and to whether an error existed in Wells Fargo's loan 17:21

22 modification software. 17:21

23 Do you see that? 17:21

24 A I do see that. 17:21

25 Q All right. 17:21

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1 And what we've marked as Exhibit 420 is one 17:21

2 of the consent orders referenced here. 17:21

3 And other than preparing to testify, given 17:21

4 you're the corporate representative on this topic, did 17:22

5 you have involvement with respect to your job 17:22

6 responsibilities, prior to being designated as its 17:22

7 corporate representative, to carry out compliance 17:22

8 issues related to the consent orders? 17:22

9 MS. KNIGHT: Object to form. 17:22

10 THE WITNESS: Can you ask the question again, 17:22

11 please? 17:22

12 MR. PAUL: I can. And let me make it more 17:22

13 simple. 17:22

14 Q With respect to Topic 6, is that -- is the 17:22

15 items that you're prepared to testify to today, are 17:22

16 those things that you knew because you lived them and 17:22

17 did them, or is it something that you went and 17:22

18 prepared for today's deposition, or both? 17:22

19 A Both. 17:23

20 Q Okay. With respect to changes that Wells 17:23

21 Fargo made after receiving this consent order in 2011, 17:23

22 what -- and let's -- let's block it -- break it up in 17:23

23 time. 17:23

24 Before the 2013 amendment, between 2011 and 17:23

25 2013, what did Wells Fargo do to enhance or change or 17:23

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1 modify its processes and practices with respect to 17:23

2 loan modifications? 17:23

3 MS. KNIGHT: Object to form. 17:23

4 THE WITNESS: Would it be okay if I referred 17:23

5 to the documents? 17:23

6 MR. PAUL: Of course. 17:23

7 THE WITNESS: Okay. I'm going to -- you also 17:23

8 gave me the amended consent order, which in there, I 17:23

9 believe it does reference some of the things that -- 17:23

10 that we did do. So I may -- I may use this if I 17:23

11 can't -- my -- my memory isn't as good at this time of 17:24

12 the day. 17:24

13 MR. PAUL: Q. Let -- ma'am, let me -- I 17:24

14 don't mean to interrupt you. 17:24

15 A Yeah. 17:24

16 Q But let me -- I'll say, if you need your 17:24

17 notebook back, if there's something in there -- 17:24

18 A Yeah. 17:24

19 Q -- that would refresh your memory; whatever 17:24

20 you need. 17:24

21 A Yeah. These same documents are in there. 17:24

22 It's -- 17:24

23 Q Okay. 17:24

24 A -- a lot of information. 17:24

25 We enhanced our -- one of the requirements 17:24

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1 was around staffing and staffing models, and 17:24

2 specifically related to loss mitigation and other 17:24

3 processes that included loss mitigation. And so we 17:24

4 built out enhanced staffing models, including back 17:24

5 testing of those models. 17:24

6 We also built out the single point of 17:24

7 contact. I think in the documents, it's referred to 17:24

8 as SPOC, or single point of contact, to ensure that 17:24

9 customers were able to get ahold of and have a person, 17:25

10 where possible, contact them. 17:25

11 We also, as it relates to loan modifications, 17:25

12 improved our communications and timeliness, 17:25

13 specifically related to getting back to borrowers, 17:25

14 customers, when they -- there was a need to gain 17:25

15 additional documentation from them and/or clarity in 17:25

16 our communications related to declines. 17:25

17 Those -- that would be the ones that are top 17:25

18 of mind for the -- the initial 2011. 17:25

19 And then I can go into things that we had to 17:25

20 improve, as identified by the consent order, that we 17:25

21 did in order to come out of the consent order in May 17:25

22 of 2016. 17:26

23 Q All right. 17:26

24 So let's, I guess, start with the -- the 17:26

25 consent order in Exhibit 420. 17:26

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1 A Okay. 17:26

2 Q The second sentence there in the first 17:26

3 paragraph: 17:26

4 "The OCC has identified certain deficiencies 17:26

5 and unsafe or unsound practices in residential 17:26

6 mortgage servicing, and in the bank's initiation and 17:26

7 handling of foreclosure proceedings." 17:26

8 Do you see that? 17:26

9 A I'm just trying to figure out where the first 17:26

10 sentence ends to get to the second sentence. 17:26

11 Q It's '401. 17:26

12 A Oh, I'm -- you know what? I'm sorry. I was 17:26

13 on 421. No wonder I couldn't find it. 17:26

14 Yes, I do see that now. 17:26

15 Q Okay. And part of the consent order with the 17:26

16 OCC was to correct those deficiencies; correct? 17:26

17 MS. KNIGHT: Object to form. 17:27

18 THE WITNESS: I'll say address the 17:27

19 deficiencies. I don't know that everything needed a 17:27

20 correction, because it may have not had anything in 17:27

21 place. So correcting something you don't have in 17:27

22 place isn't possible. 17:27

23 MR. PAUL: Fair enough. 17:27

24 Q The -- go to the -- well, let's -- let's kind 17:27

25 of walk through this. 17:27

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1 The second page, "Comptroller's Findings," 17:27

2 notes that the bank is among the largest of mortgagers 17:27

3 of residential mortgages in the United States. 17:27

4 Does that remain true today? 17:27

5 A It does. 17:27

6 Q Okay. And -- and then it notes, which we 17:28

7 probably all know, there was a housing recession, 17:28

8 which greatly increased the number of foreclosures; 17:28

9 true? 17:28

10 A That's -- 17:28

11 MS. KNIGHT: Yeah. And I'm just going to -- 17:28

12 I'm going to give you a little leeway here, because 17:28

13 it's getting close to the end of the day. But this is 17:28

14 beyond the scope of the notice, as far as these 17:28

15 findings. 17:28

16 So she can testify as to her personal 17:28

17 knowledge. But she's not designated, on behalf of the 17:28

18 bank, for the findings in the consent order. 17:28

19 THE WITNESS: This statement that the housing 17:28

20 crisis caused that was -- that resulted in 17:28

21 foreclosures increasing, is an accurate statement. 17:28

22 MR. PAUL: Thank you. 17:28

23 Q And that also resulted, again, just in 17:28

24 background, in the creation of the HAMP program and 17:28

25 other programs to modify loans to keep people in their 17:28

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1 homes; correct? 17:28

2 MS. KNIGHT: She can answer in her personal 17:28

3 knowledge. 17:28

4 THE WITNESS: Yes. 17:28

5 MR. PAUL: Q. One of the things that the 17:28

6 bank committed to do, if you look on Article 2, 17:28

7 page 3, is to maintain a compliance committee; 17:29

8 correct? 17:29

9 A Yes. 17:29

10 Q To your knowledge, did the compliance 17:29

11 committee -- well, let me state it this way. 17:29

12 To your knowledge, when was the first time 17:29

13 that the issues described in CITs 1552 or 6214 were 17:29

14 brought to the attention of the bank's compliance 17:29

15 committee? 17:29

16 MS. KNIGHT: Object to the form; also, beyond 17:29

17 the scope of the topics for which she's been 17:29

18 designated. 17:29

19 She can testify in her personal knowledge. 17:29

20 MR. PAUL: No, I -- this is the actions the 17:29

21 bank took to ensure compliance. So this is exactly 17:29

22 what I want the corporate representative -- 17:29

23 MS. KNIGHT: It says shall maintain a 17:29

24 compliance committee, and the compliance committee 17:30

25 shall be responsi- -- responsible for monitoring and 17:30

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1 coordinating the bank's compliance. 17:30

2 But you're asking about a specific 17:30

3 communication. I don't view that as being covered 17:30

4 within the bank's efforts to comply with the consent 17:30

5 order, as it relates to loan modifications or the 17:30

6 software. 17:30

7 MR. SCHRAG: That's not a reasonable 17:30

8 reason -- 17:30

9 MR. PAUL: We -- we can take that up with the 17:30

10 Court -- 17:30

11 MS. KNIGHT: Okay. 17:30

12 MR. PAUL: -- whether this is personal or 17:30

13 corporate rep. 17:30

14 THE WITNESS: The -- there was no reason to 17:30

15 bring the issue the first time in 2014, because it was 17:30

16 identified as -- inaccurately as an issue. 17:30

17 The first time that this issue would have 17:30

18 been brought to a compliance committee was in this 17:30

19 recent re-review of the issue. 17:30

20 MR. PAUL: All right. 17:30

21 Q And can you be more specific as to the date 17:30

22 that was brought to the attention of the compliance 17:30

23 committee? 17:30

24 MS. KNIGHT: I -- this is definitely outside 17:30

25 the scope, because the bank was released from the 17:31

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1 consent order well prior to this time frame. 17:31

2 So she can answer in her personal knowledge, 17:31

3 if she knows. But this -- yeah. 17:31

4 THE WITNESS: I don't know the exact date 17:31

5 and -- of the issue being brought to a compliance 17:31

6 committee. 17:31

7 I know the one document we reviewed today was 17:31

8 July of '18. But I can't say that that was the first 17:31

9 time -- I know it wasn't the first time that it was 17:31

10 reviewed with a compliance committee. 17:31

11 MR. PAUL: You mentioned the implementation 17:31

12 of the single point of contact. 17:31

13 Q Did the OCC later find that Wells Fargo had 17:31

14 too many customers assigned to the single point -- to 17:31

15 a single point of contact? 17:31

16 MS. KNIGHT: Object to the form. 17:31

17 THE WITNESS: I would have to read through to 17:31

18 answer your question specifically. I do not believe 17:32

19 they found too many as a number versus a suggestion to 17:32

20 enhance our model. 17:32

21 MR. PAUL: All right. That's fair enough. 17:32

22 THE WITNESS: I would have to read their 17:32

23 exact language to be able to tell you what they found. 17:32

24 MR. PAUL: Let's do it this way. 17:32

25 Q In terms of Exhibit 421, so we -- the bank 17:32

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1 agrees to the consent order in 2011. And then there 17:32

2 is an amendment to it in 2013, which is reflected in 17:32

3 Exhibit 421; correct? 17:32

4 A That is correct. 17:32

5 Q All right. 17:32

6 And to your understanding, what is it that -- 17:32

7 that led to the 2011 consent order being amended in 17:32

8 2013? 17:32

9 MS. KNIGHT: And I'm going to object to the 17:32

10 form. Also, it's beyond the scope. 17:33

11 She's here to testify about what steps it 17:33

12 took to comply. But she can answer, if she has 17:33

13 personal knowledge. 17:33

14 THE WITNESS: Just give me one moment so I 17:33

15 make sure I get the amendments right for my answer. 17:33

16 This amendment to the plan was part of the 17:34

17 independent foreclosure settlement that was done as 17:34

18 referenced in -- on page 2 to the -- the independent 17:34

19 foreclosure monitor or consultant to conduct an 17:34

20 independent review of the foreclosure process. 17:34

21 MR. PAUL: Q. And part of the purpose of 17:35

22 that was to prevent foreclosures; correct? 17:35

23 A That's correct. 17:35

24 Q And you would agree that is the purpose of 17:35

25 Wells Fargo's loss mitigation department; correct? 17:35

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1 A That's correct. 17:35

2 Q And part of the reason why the -- the -- the 17:35

3 tool that we're talking about, HPA, is the home 17:35

4 preservation. It's to preserve people in their homes; 17:35

5 correct? 17:35

6 A That's correct. 17:35

7 Q Let's go to Exhibit 422. 17:35

8 A (Witness complies.) 17:35

9 Q Two years later, 2015, there's another 17:35

10 consent order, amending both the 2011 consent order 17:35

11 and the 2013 amendment to the consent order; correct? 17:36

12 A That is correct. 17:36

13 Q And the bottom "whereas" clause in the bottom 17:36

14 first page of Exhibit 422: 17:36

15 "Whereas the bank is in continuing 17:36

16 noncompliance with and in violation of the consent 17:36

17 order, and continues to engage in unsafe and unsound 17:36

18 practices." 17:36

19 Do you believe that the errors or the 17:36

20 deficiency in the HPA tool, that led to the Phase 1 17:36

21 errors, was a -- an unsound and unsafe banking 17:36

22 practice? 17:36

23 MS. KNIGHT: Object to the form; also, beyond 17:37

24 the scope of the notice. 17:37

25 She can testify in her personal capacity. 17:37

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1 THE WITNESS: Can you ask me the question 17:37

2 again, please? 17:37

3 MR. PAUL: Yeah. 17:37

4 Q Do you believe that the defect in the HPA 17:37

5 tool, that resulted in the Phase 1 errors, was an 17:37

6 unsafe and unsound banking practice? 17:37

7 MS. KNIGHT: Same objections. 17:37

8 THE WITNESS: Any time we have an impact that 17:37

9 impacts a borrower, it -- I would consider it to be 17:37

10 unsafe. 17:37

11 MR. PAUL: Q. Is there anything specific in 17:37

12 any of these three consent orders, that we've marked 17:37

13 as Exhibits 420, 421, and 422, that you believe 17:37

14 addresses the -- the issues encompassed by the Phase 1 17:38

15 or Phase 2 errors? 17:38

16 MS. KNIGHT: Object to the form. 17:38

17 THE WITNESS: 422, is the amended consent 17:38

18 order in the OCC's findings of what we needed to 17:38

19 continue to work on, based on what they identified 17:38

20 that we did not have to meet their expectations. 17:38

21 I believe what we did to be released from the 17:38

22 consent order in May of 2016, all of the actions 17:38

23 leading up until that point of release, are things 17:39

24 that I would point directly to that would prevent this 17:39

25 from happening. 17:39

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1 MR. PAUL: Q. But at the time that Wells 17:39

2 Fargo was released from this consent order, it was 17:39

3 still improperly denying loan modifications because of 17:39

4 both the Phase 1 and Phase 2 errors; correct? 17:39

5 MS. KNIGHT: Object to form. 17:39

6 THE WITNESS: Yes. 17:39

7 MR. PAUL: Q. Do you agree that additional 17:39

8 auditing of the HPA tool could have uncovered the 17:39

9 Phase 1 and Phase 2 errors earlier -- let me -- let me 17:40

10 rephrase that. 17:40

11 Do you believe that additional auditing of 17:40

12 the HPA tool could have revealed the customer impact 17:40

13 of the Phase 1 and Phase 2 errors earlier? 17:40

14 MS. KNIGHT: Object to form; also, beyond the 17:40

15 scope. 17:40

16 She can answer in her personal capacity. 17:40

17 THE WITNESS: "Earlier" is a broad -- I don't 17:40

18 know what "earlier" means. 17:40

19 MR. PAUL: Well, earlier than 2018. 17:40

20 MS. KNIGHT: Same objections. 17:40

21 THE WITNESS: We fixed it for Phase 1 in 17:40

22 2015, so -- for the Phase 1. 17:40

23 So that -- I'm -- I don't know how to answer 17:40

24 the question, based on a broad date of "earlier." 17:40

25 MR. PAUL: Q. Well, let's -- let's break 17:40

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1 them up then. 17:41

2 A Okay. 17:41

3 Q So do you believe -- well, while the problem 17:41

4 may have been fixed, the customer impact wasn't 17:41

5 uncovered until 2018; correct? 17:41

6 A That's correct. 17:41

7 Q So do you believe that additional auditing of 17:41

8 the tool could have uncovered the impact on Wells 17:41

9 Fargo's customers prior to 2018? 17:41

10 MS. KNIGHT: Same objections. 17:41

11 THE WITNESS: The tool was not the root cause 17:41

12 of the calculation. It was the BRD. So I -- I don't 17:41

13 know. 17:41

14 The review of the tool took place, and we 17:41

15 inaccurately determined that there was harm. So -- 17:41

16 MR. PAUL: Q. But there was no harm? 17:41

17 A -- I believe the an- -- that there was no 17:41

18 harm. I believe the answer is no, because that's the 17:41

19 root cause of why we had to come back in 2018, was 17:42

20 because we made an inaccurate assessment of the harm. 17:42

21 Q But you -- you've already said that the 17:42

22 enhanced processes that you put in place post that 17:42

23 inaccurate determination wouldn't have allowed that 17:42

24 process to have been shut down without corrective 17:42

25 action being taken place; right? 17:42

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1 MS. KNIGHT: Object to form. 17:42

2 THE WITNESS: Yes. 17:42

3 MR. PAUL: Okay. 17:42

4 Q And so had more strict procedures or 17:42

5 practices been in place in 2014, there wouldn't have 17:42

6 been allowed to continue this risk of customers' homes 17:42

7 being foreclosed on, based on improper denial of a 17:42

8 trial loan modification; right? 17:42

9 MS. KNIGHT: Object to form; beyond the 17:42

10 scope. 17:42

11 She can answer in her personal capacity. 17:42

12 THE WITNESS: I don't agree with the 17:42

13 statement. 17:42

14 MR. PAUL: Okay. 17:42

15 Q Is it your position that there is -- once 17:43

16 this mistake in the business requirements was made, 17:43

17 that there isn't much that could have been done to 17:43

18 uncover that error? 17:43

19 MS. KNIGHT: Object to form; also, beyond the 17:43

20 scope. 17:43

21 She can answer in her personal capacity. 17:43

22 THE WITNESS: I absolutely believe that 17:43

23 there's things that we could have done differently, as 17:43

24 proven by the things that we enhanced, as I 17:43

25 referenced, the change control processes, the issue 17:43

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1 management practices, the testing and releasing -- 17:43

2 release, all of which were part of the consent orders 17:43

3 which we were released from in -- in 2016. 17:43

4 MR. PAUL: Q. And do you believe that Wells 17:43

5 Fargo would have been released from the consent order, 17:44

6 had it disclosed to the OCC that it had allowed this 17:44

7 error to continue, where loan modifications were 17:44

8 being -- or at least were at risk of being improperly 17:44

9 denied because of excessive capitalized fees? 17:44

10 MS. KNIGHT: Object to form; beyond the scope 17:44

11 of the designation. 17:44

12 She can answer in her personal capacity. 17:44

13 THE WITNESS: I do not know that answer. 17:44

14 MR. PAUL: Okay. All right. 17:44

15 Let's go off the record. 17:44

16 THE VIDEOGRAPHER: Going off the record. The 17:44

17 time is 5:44. 17:44

18 (Recess taken.) 17:44

19 THE VIDEOGRAPHER: We are back on the record. 17:50

20 The time is 5:50. 17:50

21 MR. PAUL: Q. Ma'am, back on Exhibit 420, 17:50

22 one of the things that Wells Fargo committed to do was 17:50

23 to conduct a foreclosure review; correct? 17:50

24 A Yes. 17:50

25 Q And do you have an understanding as to why 17:50

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1 the foreclosure review did not uncover the errors that 17:50

2 we've been talking about? 17:51

3 MS. KNIGHT: Object to form. 17:51

4 THE WITNESS: The foreclosure review that was 17:51

5 agreed upon, in the independent foreclosure review 17:51

6 settlement, moved from an individual file review to a 17:51

7 settlement based on a category of a loan. 17:51

8 MR. PAUL: Q. So looking at page 17 of 17:51

9 Exhibit 420, one of the purposes of the foreclosure 17:51

10 review was to determine, in looking at Subsection G, 17:51

11 whether loss mitigation activities, with respect to 17:51

12 foreclosed loans, were handled in accordance with the 17:51

13 requirements of the HAMP, and consistent with the 17:51

14 policies and procedures applicable to the bank's 17:52

15 proprietary loan modifications or other loss 17:52

16 mitigation programs. 17:52

17 Do you see that? 17:52

18 A I do. 17:52

19 Q And with respect to instances where borrowers 17:52

20 impacted by the Phase 1 and Phase 2 errors resulted in 17:52

21 a foreclosure, that was done not in accordance with 17:52

22 the requirements of HAMP or the other loan 17:52

23 modification programs; correct? 17:52

24 MS. KNIGHT: Object to form. 17:52

25 THE WITNESS: Can you -- 17:52

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1 MS. KNIGHT: It's beyond the scope. 17:52

2 THE WITNESS: -- can you re-ask the question? 17:52

3 I was on page 17, but then -- on G, and then 17:52

4 I kind of got lost. 17:53

5 MR. PAUL: Sure. 17:53

6 Q The -- the foreclosure review -- well, the -- 17:53

7 the errors that we've been talking about today 17:53

8 resulted in foreclosures that were not conducted in 17:53

9 accordance with the requirements of HAMP, because 17:53

10 those borrowers, at least with respect to the HAMP 17:53

11 loan modification denials, should have been offered a 17:53

12 trial loan modification; right? 17:53

13 MS. KNIGHT: Object to the form; beyond the 17:53

14 scope. 17:53

15 THE WITNESS: I disagree that it resulted in 17:53

16 a foreclosure. 17:53

17 MR. PAUL: Okay. 17:53

18 Q And the foreclosure review that was done, did 17:53

19 it ever go back and look at the waterfalls for the 17:53

20 denials of trial modifications? 17:53

21 MS. KNIGHT: Object to form. 17:53

22 THE WITNESS: No. 17:53

23 MR. PAUL: Q. If you'll go back to -- well, 17:54

24 so for context, page 7, the Article 4 is the 17:54

25 compliance program that the bank agreed to implement; 17:54

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1 correct? 17:54

2 A Did you say page 4? 17:54

3 Q I'm sorry. Page 7, Article 4. 17:54

4 A (Witness complies.) 17:54

5 Yes. 17:54

6 Q Okay. And at the bottom of Section 1, it 17:54

7 says: 17:54

8 "The compliance program shall include, at a 17:54

9 minimum" -- 17:54

10 And there's a whole bunch of sub-points. 17:54

11 And if you'll flip over to page 9. 17:54

12 A (Witness complies.) 17:54

13 Q Subparagraph 0 says: 17:54

14 "Processes to ensure that the risk 17:54

15 management, quality control, audit, and compliance 17:55

16 programs have the requisite authority and status 17:55

17 within the organization so that appropriate reviews of 17:55

18 the bank's mortgage servicing, loss mitigation, and 17:55

19 foreclosure activities and operations may occur, and 17:55

20 deficiencies are identified and promptly remedied." 17:55

21 Do you see that? 17:55

22 A I do see that. 17:55

23 Q And the compliance program -- well, was this 17:55

24 compliance program in place at the time that the 17:55

25 errors -- Phase 1 and Phase II errors were identified 17:55

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1 in late 2013? 17:55

2 MS. KNIGHT: Object to the form. 17:55

3 THE WITNESS: No. 17:55

4 MR. PAUL: Q. When did -- 17:55

5 A I do not believe so, no. 17:55

6 Q Okay. So the -- the consent order required 17:55

7 this compliance program to be put in place within 17:55

8 60 days of the date of this order. 17:55

9 Is -- did the bank not, in fact, do that? 17:55

10 MS. KNIGHT: Object to the form. 17:55

11 THE WITNESS: You have to tie all of the 17:56

12 consent orders together to get to the answer. And 17:56

13 that's why it's challenging when you're picking out 17:56

14 one document from a 60-day, because if you tie the 17:56

15 2015 amended consent order to it, you'll see in there 17:56

16 that the controller's -- comp controller's findings 17:56

17 were that we did not comply appropriately to all of 17:56

18 the orders, including this one, as referenced on page 17:56

19 3 of the amended -- amended consent order. 17:56

20 MR. PAUL: Q. Just because I marked them, 17:56

21 would you -- I think we handed you Exhibits 423 and 17:56

22 424 as well. Can you tell us what those -- each of 17:56

23 those are? 17:57

24 A Mine goes to 422. 17:57

25 Q Do you have -- 17:57

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1 A I -- oh, you know what? I'm sorry. 17:57

2 They're -- I found them. 17:57

3 Q Okay. What is Exhibit 423? 17:57

4 A Let me review it. 17:57

5 (Witness reading document.) 17:57

6 The OCC's civil money penalty -- 17:57

7 Q All right. 17:58

8 A -- for the -- I mean, for -- for, I believe, 17:58

9 the consent orders we were referring to. 17:58

10 I'd need to confirm that, that they were 17:58

11 directly tied to the consent orders that we were just 17:58

12 referring to. 17:58

13 Q All right. 17:58

14 What about Exhibit 424? 17:58

15 A I haven't seen this document in my prep 17:58

16 materials, so I'll need a minute to review this. 17:58

17 Q Okay. 17:58

18 A (Witness reading document.) 17:58

19 So this -- can you ask me the question again, 17:59

20 please? 17:59

21 Q Yeah. 17:59

22 What is it? 17:59

23 A This is a procedures policy document, related 17:59

24 to customer impact processes. I don't know what time 17:59

25 frame, unless I could find a date on here somewhere 17:59

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Case: 1:20-cv-02402 Document #: 86-7 Filed: 05/12/22 Page 42 of 43 PageID #:1161
1 CERTIFICATE OF REPORTER

2 I, ANDREA M. IGNACIO, hereby certify that the

3 witness in the foregoing deposition was by me duly

4 sworn to tell the truth, the whole truth, and nothing

5 but the truth in the within-entitled cause;

6 That said deposition was taken in shorthand

7 by me, a disinterested person, at the time and place

8 therein stated, and that the testimony of the said

9 witness was thereafter reduced to typewriting, by

10 computer, under my direction and supervision;

11 That before completion of the deposition,

12 review of the transcript [ ] was [x] was not

13 requested. If requested, any changes made by the

14 deponent (and provided to the reporter) during the

15 period allowed are appended hereto.

16 I further certify that I am not of counsel or

17 attorney for either or any of the parties to the said

18 deposition, nor in any way interested in the event of

19 this cause, and that I am not related to any of the

20 parties thereto.

21 Dated: August 6, 2019

22

23

24 <%6345,Signature%>

25 ANDREA M. IGNACIO, RPR, CRR, CCRR, CLR, CSR No. 9830

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