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SETTLEMENT AGREEI\iiENT A.~ RELEASE 

This Settlement Agreement and Release (11Agreement1:) is made as ofthis 18th day of 

January. 2012, by, between, and among the Federal Deposit Insura.<J.ce Corporation as Receiver. 

for AmTrust Bank, Cleveland, Ohlo ("FDIC~R')), and Paramount Equity Mortgage, Inc. 

("PEM') (individually) the FDIC-R and .PE?\.1 may be referred to hereiri as a ' 4.Party" and 

collectively as the "Parties"). 

WHEREAS: 

Prior to December 4, 2009, Am Trust Bank, Clevelan~ Ohio, previously known as Ohio 

Savings Bank (''Bank"), was a depository institution organized and existing under the laws ofthe 

United States. 

On December 4) 2009, the Office ofThrift Supervision clo~ed the Bank and appointed . ­

the Federal Deposit Insurance Corporation as its receiver. In accordance with 12 U.S.C. §. 

1821(d), the FDIC-R succeeded. to all rights} titles, powers, and privileges ofthe Bank, including 

those with respect to its assets. 

PEM and the Bank entered into aMaster Conespondent Loan Purchase Agreement dated 

Januacy 11, 2006 (''Contract''). Pursuant to the terms ofthe Contract, PEM sold to the Bank 

various tesidential mortgage loans. The Bank's assets now belonging to the FDlC-'R include any 

and all ofthe Bank's claims, demands, and causes ofaction. including all ofthe Bank's claims 

related to any and all loans PEM sold under the Contract to the Bank ("Loans"). 

A dispute has arisen between the Parties with respect to claims by the FDIC-R to PEM 

for repurchase and/or indemnity on certain ofthe Loans based on alleged breaches of 

representations and warranties set forth inthe Contract (hereinafter any and all present and future 

claims by the FDIC-R against PEM under the Contract ofan obligation to repurchase or 
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indemnify for losses associated with the·Loans is referred to as the "Claims"). TI1e Parties , · 

engaged in settlement negotiations as a result of the Clai::ms. The Parties now deem it in their 

best interests to enter into this Agreement to avoid the uncertainty, trouble, and expense of 

litigation. 

NOW, TIIEREFORE, in consideratiO:n ofthe promises, undertakings, payments; and· 

releases stated herein, the sufficiency ofwhich consideration is hereby acknowledged, the 

undersigned Patties agree, each with the other, as follows: 

SECTION I: Payment to FDIC-R. 

A. As an essential covenant and condition to this Agreement, on or before February. 

10, 2012~ PEM shall pay the FDIC~R the total sum_ofTwo Hundred Thousand Dollars 

($20~;000) (the HSettlement Payment"). The Settlement Payme~t shall be due on or before 

either: (1) February 10, 2012; or, (2) five (5) business days following PEM's actual receipt of a 

copy ofthis A ..g:reement which has been signed by an authorized representative ofthe FDIC~R, 

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whichever date shall last occur. The Settlement Payment shall be made by wire transfer made 

payable ro "Mortgage Recovery Law C'rroup Client Tmst Account," Account Number: 

~B~~~l : I m' ~outingNumbe~ feference: ArnTrust/Paramount Equity Moltgage 

Settlement. 

B. Ifthe FDIC-R does not receive. the Settlement Payment in full on or before the date 

detennined by subparagraph A above ("Settlement Payment Due Date1'), then the FDIC-R, in its 

sole discretion, shall have the right to: 

1. extend the period oftime for payment, including interest accruing from the 

Settlement Payment Due Date through the date ofpayment at a rate calculated in 

accorda.11ce with 26 U.S,C. § 6621 (b )(3); or 

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2.· . · enforce this Agreement and> in such event, PEM agrees to jurisdiction in 


Federal District Court in California and to pay all ofthc FDIC-R'sreasonable attorney's 


fees and costs expended in enforcing the tenns ofthis Agreement; or 


3. 	 declare this Agreement null and void, move to vacate any dismissal order, 

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. t to whiCh PE1vf agrees to co.iisentf and institute an action oii the FDIC~R's claims, -as to : . ~ 

which PEM waives any and all objections and defenses and covenant and agree not to 


assert any objections and defenses; and/or 


4. seek any .other reliefavailable to it in law or equity, 

Any extension oftime for delivery ofthe Settlement Payment shall notprejudice the FDlC-R'.s 

right to take other action or seek any rehef during or .after such period ofextension, including the 

right to bring an action to enforce the Agreement~ or ~eclare the Agreement null and void. 

SECTION II: Releases. 

Each Party acknowledges thafthis Agreement applies to all claims for injuries, damages, 

or losses of any type or nature (whether those injuries, damages, or losses are knovm or 

unknoVvllj foreseen or tmforesee~ patent or latent) which that Party may have against another 

Party arising from the Claims. Each Party hereby expressly waives application of Ca[ffornia 

Civil Code §1542 and any other similar statute or rule. 

Each Party certifies that they have read and understood the following provisions of 

California Civil Code §1542, which states in pertinent part as follows: 

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 ifknown by him or her must have 

materially affected his or her settlement with the debtor. 

Each Party understands and acknowledges tbat the sigpificance and consequence ofits 

waiver of Califomia Civil Code §1542 is that even if any Party should eventually suffer 

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additional damages arising out ofthe Claims, the claims and causes of action that were or could. 

have been asserted relating to the Claims~ or any facts or circumstances related to the Claims, · 

that Party will not be able to make. any claim against the other Party for those damages. 

Furthennore, each Party acknowledges that it consciously intends these consequences even as to · 

claims for danuige8 that niay exist as of the date ofthis release but which tha:t Party does not · · 

lmow exists, and which, ifknown, would materially affect that Party's decision to execute this 

release, regardless ofwhether that Party's lack ofknowledge is the result ofignorance, oversight, 

enor, negligence, or any other cause. 

A. The f'DIC-R's Release. 

Upon receipt ofthe Settlement Payment, plus any accrued interest, and except as 

provided in PARAGRAPH II.C., the FDIC-~ for itself and its successors and assigns, hereby 

releases and discharges PEM and its respective employees, officers, directors. representatives: 

heirs, executors, administrators) successors and assigns> from any and all claims, demands, 

contracts~ obligations~ damages, actions, and causes of action, direct or indirect, in law or in 

equity belonging to the FDIC-R, arising out of or relating to the facts and circumstances giving 

rise to the Claims. 

B. PEM's Release. 

Effective simultaneously \\t:ith the release in PARAGR..A.PH II.A. above, P~ on behalf 

ofitself, and its respective employees, office:rs1 directors, representatives, heirs, executors, 

. . administrators, successors and assigns. hereby releases and discharges the FDIC-R~ and its 

employees, officers, directors, representatives, successors and assigns~ from any and all claims 

belonging to PEM, arising out ofor relating to the facts and circumstances alleged by the Claims. 

C. Exceptions to Release by FDIC-R 

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·. L ·:·: .Notwithstandipg any other provision ofthis Agreement, the FDIG-Rdoes .. 

not release; .and expressly preserves fully and to the same .extent as if this Agreement had not , 

been executed~ any claims or causes ofaction: 

a. against PEM or any,other person or entity for liability, if any, 

· incuil-ed as the niaker, endorser or guarantor ofany pi·omissory note or indebtedness payable or . · · 

owed by them to FDIC-R the Bank, other financial institutions, or any other person or entity. 

including without limitation any claims acquired by FDIC-R as successor in interest to the Bank 

or any person or entity other than Bank (for the avoidance ofdoubt, the pro·visions ofthis 

paragraph II(C)l(a) do not apply to or concern any or all ofthe following: (i) any Loan endorsed · 

by PEM as pru.t ofthe sale ofthat Loan pursuant to the Contract; and/or (ii) any guarantee given 

' ' 

by PEM or any ofits employees, officers, directors~ representatives, successors or assigrurm 

connection with the Contract); 

b. against any person or entity not expressly released by the FDIC-R 

in this Agreement; or 

c, which are not ex-pressly released in P AR.I\GRAPH ll.A. above; or 

d. · arising out of any axisting or failed financial institutions other than 

the Bank. 

2, Notwithstanding any other provision ofthis Agreement, nothing hereL.1. 

limits, waives~ releases, diminishes or comprotn.ises the jurisdiction and authority ofthe Federal 

Deposit Insurance Corporation in the exercise ofits supervisory or regulatory authority to 

institute administrative enforcement or other proceedings seeking removal, prohibition, civil 

penalties~ restitution or other relief it is authorized to seek pursuant to its supervisory or 

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regulatory authority against any person, or which may arise by operation oflaw~ ·rule, or.. 

:. -::-. . . regulation. 

· 3. Notwithstanding any other provision ofthis Agreement, this Agreement 

. does not waive any claims wlrich could be brought by the United States through the Department 

of Justice~ the United States Attorney's Office for any federal judicial district. Jn addition, the 

FDIC-R specifically reserves the right to seek court ordered restitution pursuant to the.relevant · 

provisions oftheVictimandWitness Protection Act, 18 U:S.C. § 3663, et. seq., if appropriate. 

SECTION Ill: Insolvency. 

A · , Insolvency. 

PEM warrants as to payments made by or on ~ts.or its behalf)hat at the time of such 

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payment, it is not ins?lvent nor will the payment made by or on its behalf rende~ it insolvent 

within the meaning andior for the purposes ofthe United States Bankruptcy Code. This warranty 

is made by PEM and not by its counsel. 

B. Preferences. 

In the event that the FDIC-R is required to return any portion ofthe Settlement Payment 

due to a final order by a court that the transfer ofthe Settlement Paym(,"llt or any portion thereof 

constituted a preference, voidable preference, :fraudulent transfer or similar transaction, then, in 

its sole discretion, the FDIC-R may, without waiver of any other rights it may have in law or 

equity) pursue any oftbe rights and remedies set forth inparagraph I( C) above, and/or otherwise 

permitted by law. 

SECTION IV: Termination. 

fu the event the FDIC-R exercises its right to declare this Agreement null and void as 

provided herein, then, for the purposes of any statute of limitations or other time-based defense 

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to any ofthe claims ofthe FDIC-R; the parties to this Agreement shall be deemed to have 

reverted to theirrespective status as of5:00p.m. Eastern Time, December 1, 2011. 

SECTIONV: Notices. 

Any notices requited heretmder shaH be sent by registered mail. frrst class, return receipt. 

., requested· oi maybe sent by email. to the following: .. t 

Ifto the FDIC-R: 

Michael Deibick 


Mortgage Recovery Law Group 


700 North Brand Boulevard, Suite 830 


Glendale, California 91203 


(818) 630~7905 

(b)(6) I ············-····················· . .. .... ···············~;;;;·;;;;;....------~---------1 

.. IftoPEM: 

Matt Dawson, EVP 


Paramount Equity Mortgage, Inc. 


4202 Douglas Blvd, Suite 100 


C'mmite Bay, CA 95746 


(b)(6).. ...................I.___________ ········-·...····--······..·········· ...... ____. 


SECTION VI: Other Matters. 

A. No Admission ofLiability. 

The undersigned Parties each aclmowledge and agree that the matters set forth in this 

Agreement constitute the settlement and compromise ofdisputed claims and defen.')es. -that this 

Agreement is not an admission or evidence ofliability or infinnity by any ofthem regarding any 

claim or defense, and that the Agreement shall not be offered or received :in evidence by or 

against any Party hereto~ except to enforce its tenus. 

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B; Execution in Counterparts. 


This Agreement may be executed in counterparts by one or more ofthe Parties .named. 


herein and all such counterparts when so executed shaH together constitute the fmal Agreement, 

as ifone document had been signed by all Parties hereto; and each such counte..tpart, upon 

execution and·deli~ery, shall be deemed a complete original, hinding the Party orParties. 

subscribed thereto upon the execution by all Parties to this Agreement. 

C. Bindi:orr Effect. 

All ofthe undersigned persons represent and warrant that they are a Party hereto or are . 

authorized to sign this Agreement on behalf ofthe respective Party, and that they have the full 

power and authority to bind such Party to each and every provision ofthis Agree.rnent This 

,_ ,. 

:· Agreement shall be binding upon and inure to the benefi~·of the lUldersigned Parties and their 

respective heirs, executors, administrators, representatives, attorneys, successors and assigns. 

D. Entire Agreement. 

Tiris Agreement constitutes the entire agreement and underStanding between and among 

the undersigned Parties concerning the matters set forth herein and supersedes any prior 

agreements or understandings. No representations, warranties or inducements haye been made to 

or relied on by any Party concerning this Agreement and its exhibits other than those contained 

therein. 

E. Amendments. 

This Agreement may not be amended or modified, nor may any ofits provisions be 

waived, except in ·w:dting by the Party or Parties bound thereby, or by their respec~ve ~uthorized 

attomey(s) or other representative(s). 

F. Reasonable CooperatioiL 

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1. The undersigned Parties agree to cooperate in good faith to effectuate all 

the terms and conditions ofthis Agreement, including doing, or causing their agents and . 

attorneys to do, whatever is reasonably necessai:Y to effeetuate the signing, delivery, execution, 

· filing, recording; and entry) ofany documents necessary to perfonn the terms of this Agreement. 

2. Further, PEM agrees to cooperate fully with the FDIC.:R mco1:mection 

with any action required under this Agreement. Any such cooperation that involves any out of 

pocket costs is subject to reasonable reimbursement by the FDIC-Rpursuant to its internal 

guidelines and policy for such reimbursement. 

G. Choice ofLaw. 


This Agreement shall be interpreted, construed and.enforced according to applicable 


·.. federal law, or in its absence, the internal laws •' 

ofthe State ofCalifornia, without regard to its 

conflicts oflaws. 

H. Advice ofCounseL 

Each Party hereby acknowledges that he or it has consulted with and obtained the advice 

ofcounsel prim to executing this Agreement, and that this Agreement has been explained to that 

Party by his or its counsel. 

I. Title and Cm>tions. 

All section titles and captions contained in this Agreement are for convenience only and 

shall not affect the interpretation ofthis Agreement. 

J. AuthorshipiConstruction. 

This Agreement sets forth terms and agreements jointly negotiated by the Parties. It is 

expressly a reed that this Agreement shall not be construed for or against any party by reason of 

which party drafted it. 

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IN WITNESS WHEREOF, the pruties hereto have caused this Agreement to be e..xecuted by each 

ofthem,or their duly authorized representatives on the dates hereinafter subscribed.· ... :, ··. 

FDIC as Receiver .for AmTrust · Paramount Equity Mortgage,Inc. 

Bank, Cleveland, Ohio 

By: By: • ...· 

Name: Name: 

Title: Title: 

Date: Date: 

·.­

( 

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IN WITNESS \\!HEREOF, the parties hereto have caused this Agreement to be executed by each 

ofthem or their duly authorized representatives on the dates hereinafter subscribed. 

FDIC as Receiver for AmTrust Paramount Equity Mortgage, Inc. 

By: 

Name: 

-----------------------· 

Title: Lt?V!Ift.( Title: 

Date: ~k~~-~ ,).._ot l- Date: 

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