SETTLEIVIENT AGREEMENT AND 

MUTUAL GENERAL RELEASE 

I. PARTIES: The parties to this Settlement Agreement ("Agreement'') are Plaintiff 

FEDERAL DEPOSIT INSURANCE CORPORATION as Receiver for Downey Savings & Loan 

Association, F.A. C'FDIC-R"), and Defenda."'t appraiser SPENCER WADE SMITH ("Smith"), 

an individual. The FDlCwR and Smith are sometimes herein collectively referred to as the 

"Parties." 

RECITAL§: This Agreement is made with reference to the following facts: 

2. l Certain claims arose between the Parties concerning a residential refinance 

(b)( 4 )?(1:>.1 ... .l9.i!D.Jh~t w.asmadeby. .o wneytobon:owe~ H t"Loan ''), 

(6) 2.2 The Loan was secured by a first trus~ deed on the real property owned by 

tB}~~~r@Ld ~~onl¥--kno~ --- jGHroy, California. The Loan 

~B~ appli.cation was submitted to Downey by Absolute Investment Group, lnc. dba Palacio Mortgage 

("Palac1o") 

(b)( 4 )~(1?.1 ..................... . . ............................... £:> oan application Palacio obtained an a raisal report 

~Bl(6) that was ~rt.edlv prep_a.red_b_y Downey 

thereafter engaged Smith to conduct a review appraisal of the I .............. lreport ...... Smilb. H H... .................... H(p)(§) 

(b)(6) .H ... ................ concludedthati · ··H · lreport complied with the Unifonn Standa,rds ofProfessional 

Practice ("USPAP") and he agreed with the final opinion ofvalue; although, Smith made 

(b )(6 ) ____ __®Jali..ons_j)f.so~ulu~~ -· I report concerning their mis·ana!ysis of 

several of the comparables. Do».-ney relied on Smith's review appraisal and approved and 

(b)(4)!(1?.1 ... .................. Jundedthe8<>an on September 14,.2005. 

(B~( 4 )JP) 2.4 Sub quently..thc .. EJ.-oan defaulted and at the trustee's foreclosure 

(6) sale the properly reverted to Downey on its credit bid. Based on that bid, Downey sustained a 

base los~ of over $290,000: Thereafter, Do\Vliey had to maintain and market the property for 

sale as REO. 

2.5 On November 18, 2008, the FDIC-R was appointed the Receiver over all 

of Downey's assets and liabilities. Among 'the assets the fDIC·R is charged with trying to 

recover upon is the loss Downey sustained on the I ............... oan{'-'Claim };H H ..................... . .. .. ....... . 

2.6 The Claim subsequently became the subject of a Complaint ("Complaint") 

entitled FDIC-R Y. Absolute Investment Group, Jnc., er al., Case No .. CV 10-04927 JPW (RCx) 

Page I of 5 

----·-- .. ·-·····-·······-SETTlEMENT AOREE~~'ENT"AN MUTUALRELEA-S-:-S -----

(9.)(4J,(b) 

(6) 
C'Aclion") that was flied by the FDlC·R in the United States District Court for the Central 

District of California, Western Division. 

2.7 Smith Ansvvered the FDlC-R's Complaint in the Action and is represented 

by legal counsel. 

2.8 At a Court ordered mediation of the Action, the Parties conditi\mally 

agreed to a senlement of the FDlC·R's Claim agai nst Smith on the tenns that are hereafter set 

forth. The only condition to the Parties' settlement was. the FDIC-R obtaining formal approval to 

enter imo this settlement, which approval has now been obtained by the FDIC-R. 

2.9 By th~s Agreement the Parties hereto intend to settle a.o<J dispose of, fully 

and completely, any and all claims. demands, causes of action, obligations, damages~ and 

liabilities that arise out. of or relate to the Action and the Claim alleged therein by the FDIC~R 

against Smith. 

2, l 0 The FDIC-R expressly reserves and retains its right to proceed agai."lSt 

other defendants named in the Actio~ including requesting entry of a default ju~ent against 

any and all named defendants whom it served with process, but who failed to timely appear in 

response thereto. Further, the FDIC~R expressly reserves a.nd retains 'its right to enter into a 

separate settlement with other appearing defendants, including Paul aka Pablo Curiel, Christy 

Bosteder and Raya Qhajar. 

2.11 The Federal Deposit Insurance Corporation in its separate corporate 

capacity as the insurer of deposits and as a bank regulator, and all other federal agencies of the 

United States of America, are not parties to this Agreement and are not bound in any manner to . 

its !erms and conditions. The FDIC~R enters into this Agreemen~ solely in its limited capacity as 

the appointed Receiver of Downey Savings & Loan Association. F.A., and for no other 

receivership now exis(ing, previously existing or hereafter appointed. 

3. NQ ADMISSION RE MERJTS OF CLAIMS: The Parties agree that nothing in 

this Agreement. and no performance under this Agreement, shall be construed as an admission 

by any Party of the validity or invalidity of the· Claim alleged in the Action against Smith; and, 

the Parties agree that this Agreement is entered into solely fOr the purpose of convenience and to 

compromise the disputed Claim the FDlC-R has alleged in the Action agains1 Smith. 

4. SETTLEI\-IENT TERMS: The Parties agree to the following settlement terms: 

4.1 Smith shall pay, by draft payable: on first pre~ntation, the sum of Seventyfive Thousand No/100 OoHars {$75,000.00) to the FD!C-R within thirty (30) days of the full 

execution of this Agreement After said payrnent has been made and the d.raft has cleared Smith 

shall be dismissed from the Action with prejudice. 

4.2 No Administrative Grievances. In executing this Agreement, each of the 

Parties warrants that he or it will not initiate nor cause to he initiated any action or proceeding 

!'age 2 of S 
pertaining to or concerning I he appraisal license of Smith and/or any of his agents or employees, 

which arises out of or relates, in whole or in part, to the claims, demands, causes of action$ 

choses in action or matters relating to or arising out of the Action and/or the Loan. 

5. MUTUAL GENERAL RELEASES: 

5. l ln consideration of the Settlement terms as set forth in Paragraph 4 above, 

and all other promises, covenants a.";(] consideration provided for herein, the Parties agree tba~ 

except as lO such rights or claims as may be created by this Agreement, they hereby covenant not 

to sue each ·other ever again on the Claims and the Parties acknowledge full and complete 

satisfaction of, and hereby release, remise. and forever discharge each other, including their 

respective insurers, officers, directors, affiliated companies, agents~ servants, representatives, 

spouse, heirs. Su(cessors or predecessors in interest, assignees. attorneys, employees and . 

contractors from any and all the Claims, demands. counts, obligations, agreements, damages, 

liabilities, losses, costs and expenses of any kind, in law or in equity, whether known or 

Wlkno\.\1), that either Party now holds, or has ever held against the other~ or may hold in the 

future, that arbe out of or are in any way connected with, the Claims alleged in the Action. 

5.2 The parties expressly waive all rights under section 1542 of the California 

Civil Code or analogous provisions of other state and/or federal laws. California Civil C()(}e 

section i 542 provides: 

A general release does not extend to claims which the creditor 

does not know or suspect to exist in his or her favor ·at the time 

of executing the release, which if known by him or her must 

. have materially affected his or her settlement with the debtor. 

5.3 The Parties agree that the possibility that such unknown claims exist was 

taken into acccunr in determining the consideration to be paid for the giving of this Agreement 

Accordingly, the FDIC-R expressly waives any and all possible future claims, either knoYvn or 

unknown, that would arise out of Smith's work as a panel appraiser for loans originated by or 

har.d!ed through Downey. 

SA. This Agreement shall be binding on the Parlies and on their respective 

officers, directors~ affili~ted companies, agents, servants, representatives, spouses, heirs, 

successors, predecessors in interest, assignees, insurers, attorneys, employees and contractors 

and shall inure to the benefit of the Parties, and each of them. 

6. ATTORNEYS' FEES: In the event any acticn is brought to enforce or interpret 

this Agreement, the prevailing party shall be entitled lo an award of reasonable attorneys' fees in 

addition to any other relief to which the prevailing party may be entitled. 

Page 3 of5 

······m·-~----~ .. ·-~·· ·····ffi~rLEM~Nf"A'{fREEMENi AND MUTlJALRC:LMSE-~-"······~ 
7. REPRESENTATIONS A~D WARRANTIES: The Parti<:s represent, warrant, 

and agree as follows; 

7 .I The FDIC~R is the lawfully appointed Receiver for Downey and has 

succeeded lo and now holds each of the Claims that are the subject of the Action and this 

Agreement. The FDIC-R has the authority to enter into this compromise and settlement of the 

Claim against Smith as the Receiver of Downey. 

7.2 .Each of the Parties has received or had the opportunity to seek their own 

independent legal advice with respect to the advisability of executing this Agreement. 

7.3 The Parties acknowledge that they have executed this Agreement without 

fraud, duress, or undue influence. The Parties affirm that they have read this Agreement and 

understand the contents hereof. 

7.4 No Party. nor any agent or attorney of a.11y Party, has .made any statemeni, 

representaLion, or promise to any other Party regarding any facts which the Party has then relied 

upon in entering into this Agreement: and the Parties here each affirm that they have not relied 

upon any stalernent, represenlation or promise by any other Party, or of any agent or attorney for . 

another Party, in executing this Agreement, or in making the settlement provided for herein1 

except as is expressly represented or promised in this Agreement. 

7.5 None of the Parties have heretofore assigned, transferred, or granted, or 

purported to assign, transfer, or grant, any Claim alleged in the Action. 

7.6 Each Patty agrees to execute any additional ~ocuments as reasonably 

convenieni, necessary or desirable to carry out the provisions of this Agreement including 

without limitation a Stipulation for Dismissal of Smith from the Action, with prejudice. 

8. MISCELLANEOUS: 

8.1 This Agreement shall be deemed to have been executed and delivered 

within the State of California, and the rights and -obligations of the Parties hereto shall be 

construed and enforced in accordance with. and governed by, the laws of the State of California. 

8.2 This Agreemenl constitutes a single, integrated written contract expressing 

the entire agreement of the Parties. This Agreement may on!y be moditied in a writing signed by 

all the Parties. This Agreement shall be interpreted in accordance with the plain meaning of ils 

terms and not strictly for or against a.-1y of the Parties to this Agreement. 

8J The provisions of lhis Agreement are contractual and not mere recitals. 

The Agreemem shall be con:.idered severable, such that if any provision or pa.'t of the Agreement 

is ever hel<l invalid under any law or ruling all other provisions or parts shaH remain in full force 

and effect. 

8.4 This Agreement may be executed in counterparts and shall be effective on 

the date first executed by· any one of the Parties hereto if so executed in counterparts (the 

Page 4 of5 
"effective date"). Any sigr.ature obtained by fa<:simile or e-mail shall be as valid as an original 

signature. An authenticated copy of this Agreement can be used for any purpose for which the 

(b)(e) :=~~~:taz~~ ITH, an indiv' 

DATED: 81!_ I I,, ,-l 

APPROVED AS TO FORM: 

HERSHOlHN & HENRY LLP 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, as Receiver for Downey 

Savings & Loan Assoc., F.A. 

................................................................................ ..... ...... . ... JI?.J(~) 

By: -~N~wme--:--~~0~~-v,-~~~~-~~~~~--------~ 

Title: -.AXM~.~.:\..,.......:;._ .... Ir'!~~. _ ... _""-'}+· __ ;__ __ 

I ..LL 

(b )(

6

) ---;;;~t..."'''J"tHrn'~...,e'~"'". l:'l':w""tt..,.c~o~x--=<-""""r"'~-....... 

CLAUDIA MOURAD 

(b )(6) ·············································· 

Attorneys for Federal Deposit Insurance 

Corporation as Receiver for DoWTte)l 

Savings & Loan Association, F.A. 

:J=~:~<=~~D~ ROBERT W .LOFTON 

Attorneys for Spencer Wade Smith. 

a."'' individual 

.P~SofS 

SETILE.MENT AGREBMEN't AND MUTUAL R.ELnASE