HUD HECM Complaint Appendix II Exhibits 22-42

8/20/2019 HUD HECM Complaint Appendix II Exhibits 22-42

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APPENDIX II

Gillespie Complaint to HUD, August 9, 2012

U.S. Department of Housing and Urban Development (HUD)RE: Reverse Mortgage Solutions, acct./loan no. 68011002615899

Exhibit 22 HUD final settlement statement, HECM, June 5, 2008

Exhibit 23 Email from Liz Baize, Park Ave Bank, problem with documents, June 10, 2008

Exhibit 24 HECM Notice of Right to Cancel, June 5, 2008

Exhibit 25 Fax to RMS, dispute the delinquency and foreclosure, June 19, 2012

Exhibit 26 Bank Failure, Geoorgia Dept. Banking closed Park Ave. Bank, April 29, 2011

Exhibit 27 FDIC, receiver for Park Ave. Bank, April 29, 2011

Exhibit 28 FDIC, Park Ave. Bank, Consent, 09-084-WA/RB-HC-SM, July 14, 2009

Exhibit 29 San Jose Business Journal, Financial Title Shuts Down, July 30, 2008

Exhibit 30 Genworth lures Liberty Reverse Mortgage with $50 million, July 29, 2007

Exhibit 31 Durable Power of Attorney, Neil Gillespie, February 21, 2006

Exhibit 32 HECM Mortgage, with INTERLINEATION

Exhibit 33 HECM Second Mortgage, with INTERLINEATION

Exhibit 34 Tom DeBeauchamp, BofA FedEX label, January 15, 2009

Exhibit 35 Negative growth reimbursement check, $38.89, January 6, 2009

Exhibit 36 Reimbursement check, $133.38 January 6, 2009

Exhibit 37 Letter, Karen Yantis, BofA, RE: Negative Growth, January 14, 2009

Exhibit 38 Liberty Reverse Mortgage, Fla. Div. Corp., 2008 Annual Report

Exhibit 39 Liberty Reverse Mortgage, Fla. Div. Corp., 2008 name change to Genworth

Exhibit 40 HUD: $1 BILLION TO BE PAID BY THE BANK OF AMERICA

Exhibit 41 HUD Rev. Mortgage Handbook, B.10 Reviewing Client’s Level of Understanding

Exhibit 42 General Allegations, HUD, breach of Fiduciary Duty, Predatory Lending


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FORM APPROVED

OMB NO 2.502-0265

U.S. DEPARTMENT OF HOUSINO AND URBAN DEVELOPMENT

TYPIOP LOAN 1. ...)(_

FIlA

1-

_PI I I i l A

SETILBMENT

STATEMENT

3.

Cl:lHV.

VI'llNS. 4.

VA

3. COHV,IIIS.

J.

1'lLlI1I1JMB1IIl:

17.LOANNUMBIIIl:

39100

: ; 1 ~ : ~ u a A N O I C A l I N U M B I l I \ :

C: NOTE: This form is frmlished

/0

rlWl you a ItaJulwnt

of Q C t u a l l ~ I I I n t M t

COlli. Amovnll

paid

to and by off/tlllntmt armt an Ihown.

tcm.r

marked (P.o.c)

wtn

oaldoutsld th, CIOlinll:

thCII

arc

Ihown hut

for informational

DUrtJOIG

and an no/Included

In

the

Totau.

D. N A M B O F B O R R O ~

PendoDe

M

GDleiolo

E. NAME

AND

ADDRESS

OF

SELLER:

_

F. NAME AND

ADDRESS OF LENDER:

r IN L

berty

RevtneMortpp, 11Ic,

10951 WbII1 Rock Road. SuIte 100

Ranello CordO\l1l CA 95670

G.

PROPERTY LOCATION:

8091 SW 115111 Loop

OClla FL 34481

H. SETILEMENT

AGENT:

FINANCIAL TITLE

I.

SETILEMENT

DA"fE: PLACE OF SElTLEMENT:

OO.'nl Date:

JUIlO 85,

1008

81 BLUE

RAVINE ROAD (mO

Disbunement Date: JUllolO,ZOIl

FOLSOM,

CA 95630

1.

SUMMARY OF

BORROWER'S TRANSACTION

K.

SUMMARY

01' SELLER'S TRANSACTION

100. GROSS AMOUNT DUE FROM

BORROWER: 400. GROSS

AMOUNT DUB

TO

SELLER:

101.

Contracl

salenrice

401.

COIIlracUal. . Drioo

101. POrlonl1 DrOIlortv

402.

J'enonal

DrODllI1V

10J. Soulemenl

charRes

10 bonower (line 14001 9 1 7 9 ~

03.

104.

PIVOtT 10:

SURTNll

\6 n9 4

404.

lOS. Payoff to:

Sun

T uII 30323.6:'

140,.

106. Plyoff 10:

1406

107. Oi$bunemenl

10:

1407.

108. Di,bunemcnl

10:

1408.

109. Oi,bunemenl 10; U _ ftw

Id Itwsfllu

n -


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U.S. DEPARTMENT OF

HOUSING

AND URBAN DEVELOPMENT

SETTLEMENT

STATEMENT

Paolor2

FHA

CuD

No. : 091-440574)1952·255

L.

SETTLEMENT CHARGES

700. TOTAL SALESIBROKER'S

COMMISSION:

based on orice

S

a

-

PAID PROM

PAm fROM

Divi.ion

ofCommiSlion

Oine 700) 81

fonOWl:

BORROWER'S

SELLER S

.

701.

S

to

FUNDS AT

PUNDSAT

SB'rI'L6MENT

SJm'L!MENT

702.

S

to

703.

Commission

paid

at

SeUlemcnt

704.

800. ITEMS PAYABLE IN CONNECfiON W1TH LOAN

801.

Loan Oriaination

Fee

to

Park

AVeDUO BIDIe

2,640.00

803. APDriisal Fee

to

Mee.tip I i

Morales

AwraiJals

250.00

804. Credit Report

to

Park A

venue BlnkIKroll

10. 4

80.5. Lender's Insuection Feo

co

0.00

806.

807. Tax Service

Feo

to

0.00

808. Repair Administration Poe

to

0.00

809. Flood Certificate Fee

to Park

Ave

BankIKroll

12.00

810. Compliance Certificate

to

0.00

8I

I.

Broker Fec

to

(POe: S 3'8.70

Parle

AvonUi Bank)

0.00

812. Corresuondent Fee

to poe: S 250.00 Park Avenue Bank)

8)

3. Peo to

Scrvicinl Company

to

CPOe: $ 395.00 LRMl

900. ITEMS REQUIRED

BY

LENDER TO BE PAID IN ADVANCE

901.

rnterest

From

to

@ Slday

902. Mortpgc Insurance Premium for

to

2,640.00

903. Hazard

Insurance Premium

for

yean

to

(POC:

S

698.00 Marlcet

Plaee)

0.00

904. Field904Labcl

tQ

0.00

90S.

to

0.00

1000.

RESERVES

DEPOSITED

WITH

LENDER

1001.

Hazard

mODthl@S

1002.

M0rtello Insurance

montbJ@S

1003. City

Property Taxe

montb,@S

1004.

County

Property monthl@S

laos

AnnulI

Assessments

monthl@S

IJOO.

TITLE CHARGES

110 J.

SeUlemenl or

closing Cee to

Financial Titlo Company

484.00

1102.

Abstract or title search

to

PilUUlcial Title ComD8llY

J7'.00

1I03. Title examination to

0.00

1104. TitJo

Insuranco Binder

to 0.00

11

OS Documena

Preparation

to

BayDoCI

100.00

1106. Notary feel to

Richard KwlatkowalJc

48S.00

J

107.

Attorney's fees

to

0.00

(lncilides

Qbove

i / . .

..

bm )

II

08.

Title inlurance

to

Financial Tide

ComPany

735.00

(rnclwkl 4160 . .

I t ,

numlMn:)

J

J

09.

Lender's

coverage S

132.000.00

)110. Owner's coverage

1111. TitlC' Endorsements

to Financial

Title ComPlnY

100.00

1112. ALTA 9

to

Financial TiU,

ComPIDY

73.50

) 1

13.

to

J

00.

GOVERNMENT

RECORDING

AND TRANSFER CHARGES

)20

1. R e c o r d i m ~ fees:

Deed' MortPlc

295.00 lleJoaes 295.00

1202. City/county

taxl'tamps

Ooed' Morton

J 089.70

1089.10

1203.

Stato tax/slamps

Deed'

MOnDIe

0.00

1204.

Doc Prep

to

Financial

Title

ComlJlDY

'0.00

120S.

to

1300. ADDITIONAL SETfLEMENTCHARGES

J301.

Survey

to

0.00

1302. Pest

Inspection

to

0.00

1303.

Courier

Chime

to

Financial Titlo

Company 40.00

1304. to

130S.

10

1400. TOTAL SElTLEMENTCHARGES

(ar.,

on

(Ina 103

etlan J

QtIl/

S01 SfIC#O J )

S9,179.44

I have prepared the HUD-)

SetdelJlentStatemeot

By: ; -

Liberty

ReveRe

Mortgage, Inc.

Company

Repraentatlve

To'the orm)' knowledge,

Ib

RUD·I S e t t l J l t R ~ i C 4 I C l J I C l D w Y h

~ f t r l J J a j m t I ICCUI ato

account

oltbe

fundi

whidl jpllfcjttlCl.

orwiIJ

be di,burled, by

onderslpoclll

J*1or ,

By:

~ f 1 ~ . t ......

~ ~ ~ ~ ~ ~ .......

-

Date

WARNINO:

It il • crime to knowiaaJy make falsCllea

to

tho Unitecl

Statu oa

thil or aDy .imllar fbrm. PenaJtia upon

convlctioa

CIa

i

'imprisonment. for dcllill.cc: TlUc 18 U.S. Code Scctioa

JOOI

and

ScctJuu

1010.

(t7/)·

/d

Y

. 2 0 ( 2


4/92


5/92

Page 1

of

eil Gillese!!"----- _

rom:

"LIZ BAIZE"

Tuesday, June 10, 2008 4:49 PM

update

, there may be a day or two delay in funding your loan. I

just

notified your attorney that a

ll revision needed to be done because A) with all that signing, a signature line for your mom

ND

the interest rate for the week before, although a slight difference, was picked up

ckage and identified prior to being sent to HUD.

OlIT

expense) has agreed to

go

to

your

attorneys office to meet you there to sign the

and

Mr

Stermer said that was fine with him. I am trying to confIrm with Liberty that

l cover any cost incurred

if

a notary needs to go

back

out to Mark.

nce in rate over the life of the loan is less than 1/8th percent. s soon as I know more I

n touch.

B

care about your privacy and security.

of communication, please do not send any

6/10/2008

23


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NOTE: This fax and the accompanying information is privileged and confidential and is intended only for use by the above

addressee. If you are not the intended recipient, you are hereby notified that any use, dissemination or copying of this fax

and the accompanying communications is strictly prohibited. If you have received this communication in error, please

immediately notify the sender by telephone, collect if necessary, and return the original message to me at the above address

via U.S. mail. Thank you for your cooperation.

FaxFrom: Neil J. Gillespie

8092 SW 115th Loop Ocala, FL 34481

Telephone: (352) 854-7807

To: Reverse Mortgage Solutions (RMS) Foreclosure Department

Fax: 1-866-790-3451

Date: June 19, 2012

Pages: two (2) including this pageRe: DISPUTE: loan 68011002615899 - Notice of Default - Intent to Foreclose

Please be advised that loan no. 68011002615899 is not in default, and I/we hereby dispute the

delinquency. The records of RMS are not accurate, there are three borrowers, and I am living in the

home. An “Assignment of Mortgage” provided by RMS in response to my RESPA request clearly

shows me as one of three original borrowers. A copy of the assignment accompanies this fax.

RMS did not provide a copy of the note in response to my RESPA request dated May 14, 2012

showing that the loan was legally transferred from Bank of America to RMS. This copy is needed to

show proof that RMS has a legal claim to the transferred mortgage by demonstrating a proper chain of custody of the promissory note. The “Assignment of Mortgage” provided by RMS is not legally

sufficient in Florida to show a chain of custody.

Please be advised that I/we will defend any foreclosure action by RMS.

If RMS has a “cash for keys” program please advise. Thank you.

25


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Recording Requested By:

Bank of America

Prepared By: Diana De Avila

888-603-9011

When recorded mail to:

Reverse Mortgage Solutions, Inc.

2727 Spring Creek Drive

Spring , TX 77373

DocID# 1266801100261589920032

Property Address:

8092

SW

115TH LOOP

OCALA, FL 34481

FLO-AM 18001254 3 2712012 This space for Recorder's use

ASSIGNMENT

OF

MORTGAGE

For Value Received, the undersigned holder

of

a Mortgage (herein "Assignor") whose address

is

190

QUEEN

ANNE,

NORTH SUITE 100 SEATTLE WA 98109 does hereby grant, sell, assign, transfer and convey unto REVERSE

MORTGAGE SOLUTI ONS, INC., whose address is 2727 SPRING CREEK DRIVE SPRING TX 77373 all

beneficial interest under that certain Mortgage described below together with the note(s) and obligations therein

described and the money due and to become due thereon with interest and all rights accrued or to accrue under said

Mortgage,

Original Lender:

LIBERTY REVERSE MORTGAGE INC.

Original Borrower(s): PENELOPE M. GILLESPIE INDIVIDUALLY AND AS TRUSTEE NEIL J.

GILLESPIE AND MARK GILLESPIE AS CO-TRUSTEES OF

THE

GILLESPIE

FAMILY LIVING TRUST AGREEMENT DATED FEBRU ARY 10, 1997

Date

of

Mortgage:

6/5/2008

Original Loan Amount: $198,000.00

Recorded in Marion County, FL on: 6/25/2008 book OR 05057, page 1670 and instrument number 2008065289

IN W T ~ ~ S Yo tQ::REOF, the undersigned has caused this Assignment of Mortgage to be executed on

MAR Z

/

ZOlZ

Assistant

Vice President

By L£2:0G

ominique

Jobnso

itness: C_hest _ L_9_'V_i _g_S

Witness: Edward Gallegos

State of

California

County of Ventura

On

MAR 27

2 12 before me,

appeared Jane Martorana

J jJ jan

JEllison

and

,No4U"Y

Public, perso

O6mlnlqUe Johnson

nally

who proved

to me on the basis

of

satisfactory evidence to be the person(s)

whose

name(s) is/are subscribed to the within

instrument and acknowledged to me that helshelthey executed the same in hislher/their authorized capacity(ies),

and that by hislher/their signature(s) on the instrumen t

the

person(s), or the entity upon behalf of which the person

(s) acted, executed the instrument.

I certify

under

PENALTY OF PERJURY under the laws of

the

State

of

California that the foregoing

paragraph is

true and correct.

Notary Pu c:

Lillian

J.

Ellison

•

LILLIAN J. ELLISON

C(lIMIIllion t 256\7

. Public -Cllltornit

, los

Angele. County.

..

M

Comm.

Ex

res Mar 13. 2015

My Commission Expires: Ma ch 13, 2015


9/92

FOR IMMEDIATE RELEASE Friday, April 29, 2011

Georgia Department of Banking and Finance TakesPossession of The Park Avenue Bank, Valdosta, Georgia

A t l a n t a , Ge o r g i a - The Georgia Department of Banking and Finance (“Department”) took possessionof The Park Avenue Bank, Valdosta, Georgia on April 29, 2011. The Superior Court of LowndesCounty issued an Order appointing the Federal Deposit Insurance Corporation (“FDIC”) as Receiver of the Bank effective upon the Department taking possession of The Park Avenue Bank.

The Department took possession of The Park Avenue Bank pursuant to the Official Code of Georgia,

Section 7-1-150(a) which authorizes the Department in its discretion to take possession of thebusiness and property of any state chartered financial institution whenever such financial institution iseither insolvent or operating in an unsafe or unsound condition to transact its business, is operating in

violation of any court order, statute, rule or regulation, or requests the Department to takepossession of its business and property.

Through an agreement with the FDIC, The Park Avenue Bank will be acquired by Bank of the Ozarks,Little Rock, Arkansas.

All deposit accounts of The Park Avenue Bank have been transferred to Bank of the Ozarks and will beavailable immediately. Depositors will be able to access their accounts at the former main office andbranch locations of The Park Avenue Bank during regular business hours. Customers of both banksshould continue to use their existing branches until Bank of the Ozarks can fully integrate the depositrecords of The Park Avenue Bank. Additionally, the former depositors of The Park Avenue Bank cancontinue to access their accounts through automated teller machine transactions, checks and debittransactions.

All deposits will be transferred to Bank of the Ozarks and, therefore, it is not anticipated that therewill be any loss exposure to former The Park Avenue Bank depositors that have deposits exceedingthe FDIC Deposit Insurance amounts.

The Department’s Commissioner, Robert M. Braswell, reminds depositors that deposits of all Georgiabanks are insured by the FDIC up to $250,000. Special rules are in place for accounts held in truststatus and joint accounts that may further expand deposit insurance coverage. Additional informationon FDIC Deposit Insurance may be found at www.fdic.gov.

The FDIC has established a website and a toll-free phone number to answer questions fromdepositors, creditors and other interested parties regarding the receivership of The Park Avenue

Bank. Please refer to the FDIC’s website for further information regarding the details of the purchaseand assumption transaction. The website is http://www.fdic.gov/bank/individual/failed

ia.gov - 2011 Releases http://dbf.georgia.gov/00/press_print/0,2669,43414745_1665088

7/3/2012

26


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UNITED STATES OF AMERICABEFORE THE

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEMWASHINGTON, DC.

STATE OF GEORGIADEPARTMENT OF BANKING AND FINANCEATLANTA, GEORGIA

Written Agreement by and among

PAB BANKSHARES, INC.Valdosta, Georgia

THE PARK AVENUE BANKValdosta, Georgia

FEDERAL RESERVE BANK OF ATLANTAAtlanta, Georgia

and

BANKING COMMISSIONER OFTHE STATE OF GEORGIA

Atlanta, Georgia

Docket Nos. 09-084-WA/RB-HC09-084-WA/RB-SM

WHEREAS, in recognition of their common goal to maintain the financial soundness of

PAB Bankshares, Inc., Valdosta, Georgia ("Bankshares"), a registered bank holding company,

and its subsidiary bank, The Park Avenue Bank, Valdosta, Georgia (the "Bank"), a state

chartered bank that is a member of the Federal Reserve System, Bankshares, the Bank, the

Federal Reserve Bank of Atlanta (the "Reserve Bank"), and the Banking Commissioner of the

State of Georgia (the "Commissioner") have mutually agreed to enter into this Written

Agreement (the "Agreement"); and

28


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WHEREAS, on July 9, 2009, Bankshares's and the Bank's boards of directors,

at duly constituted meetings, adopted resolutions authorizing and directing Donald J. Torbert, Jr.,

president and chief executive officer to consent to this Agreement on behalf of Bankshares and

the Bank and consenting to compliance with each and every applicable provision of this

Agreement by Bankshares, the Bank, and their institution-affiliated parties, as defined in

sections 3(u) and 8(b)(3) of the Federal Deposit Insurance Act, as amended (the "FDI Act")

(12U.S.C. §§ 1813(u)and 1818(b)(3)).

NOW, THEREFORE, Bankshares, the Bank, the Reserve Bank, and the Commissioner

agree as follows:

Credit Risk Management

1. Within 60 days of this Agreement, the Bank shall submit to the Reserve Bank and

the Commissioner an acceptable written plan to strengthen credit risk management practices.

The plan shall, at a minimum, address, consider, and include:

(a) Procedures to periodically review and revise risk exposure limits to

address changes in market conditions;

(b) strategies to minimize credit losses;

(c) procedures to identify, limit, and manage concentrations of credit that are

consistent with the Interagency Guidance on Concentrations in Commercial Real Estate Lending,

Sound Risk Management Practices, dated December 12, 2006 (SR 07-1), including but not

limited to: establishment of concentration of credit risk tolerances or limits by types of loan

products, geographic locations, and other common risk characteristics or sensitivities; enhanced

stress testing; and enhanced periodic reporting to management and the board of directors; and


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(d) measures to address the criticisms regarding credit risk management noted

in the report of the examination of the Bank that was conducted jointly by the Reserve Bank and

Commissioner that commenced on January 26, 2009 (the "Report of Examination").

Lending and Credit Administration


the Commissioner an acceptable written lending and credit administration program that shall, at a

minimum, address, consider, and include:

(a) Underwriting standards that require documented analyses of any borrower's

and guarantor's repayment sources, global cash flow, and overall debt service ability;

(b) procedures for the periodic analyses of any current borrower's and

guarantor's repayment sources, global cash flow, and overall debt service ability;

(c) an enhanced internal loan review process that includes, but is not limited to,

increased frequency of loan reviews;

(d) the appropriate use of interest reserves;

(e) limitations on the capitalization of interest; and

(f) improved documentation of loan modifications.

Asset Improvement

3. (a) The Bank shall not, directly or indirectly, extend or renew any credit to or

for the benefit of any borrower, including any related interest of the borrower, who is obligated

to the Bank in any manner on any extension of credit or portion thereof that has been charged off

by the Bank or classified, in whole or in part, "loss" in the Report of Examination or in any

subsequent report of examination, as long as such credit remains uncollected.


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(b) The Bank shall not, directly or indirectly, extend or renew any credit to or

for the benefit of any borrower, including any related interest of the borrower, whose extension

of credit has been classified "doubtful" or "substandard" in the Report of Examination or in any

subsequent report of examination, without the prior approval of the Bank's board of directors.

The board of directors shall document in writing the reasons for the extension of credit or

renewal, specifically certifying that: (i) the extension of credit is necessary to protect the Bank's

interest in the ultimate collection of the credit already granted or (ii) the extension of credit is in

full compliance with the Bank's written loan policy, is adequately secured, and a thorough credit

analysis has been performed indicating that the extension or renewal is reasonable and justified,

all necessary loan documentation has been properly and accurately prepared and filed, the

extension of credit will not impair the Bank's interest in obtaining repayment of the already

outstanding credit, and the board of directors reasonably believes that the extension of credit or

renewal will be repaid according to its terms. The written certification shall be made a part of

the minutes of the board of directors meetings, and a copy of the signed certification, together

with the credit analysis and related information that was used in the determination, shall be

retained by the Bank in the borrower's credit file for subsequent supervisory review. For

purposes of this Agreement, the term "related interest" is defined as set forth in section 215.2(n)

of Regulation O of the Board of Governors of the Federal Reserve System (the "Board of

Governors") (12 C.F.R. § 215.2(n)).

4. (a) Within 60 days of this Agreement, the Bank shall submit to the Reserve

Bank and the Commissioner an acceptable written plan designed to improve the Bank's position

through repayment, amortization, liquidation, additional collateral, or other means on each loan

or other asset in excess of $500,000, including OREO, that: (i) is past due as to principal or


17/92

interest more than 90 days as of the date of this Agreement; (ii) is on the Bank's problem loan

list; or (iii) was adversely classified in the Report of Examination. In developing the plan for

each loan, the Bank shall, at a minimum, review, analyze, and document the financial position of

the borrower, including source of repayment, repayment ability, and alternative repayment

sources, as well as the value and accessibility of any pledged or assigned collateral, and any

possible actions to improve the Bank's collateral position.

(b) Within 30 days of the date that any additional loan or other asset in excess

of $500,000, including OREO: (i) becomes past due as to principal or interest for more than

90 days; (ii) is on the Bank's problem loan list; or (iii) is adversely classified in any subsequent

report of examination of the Bank, the Bank shall submit to the Reserve Bank and the

Commissioner an acceptable written plan to improve the Bank's position on such loan or asset.

(c) Within 30 days after the end of each calendar quarter thereafter, the Bank

shall submit a written progress report to the Reserve Bank and the Commissioner to update each

asset improvement plan, which shall include, at a minimum, the carrying value of the loan or

other asset and changes in the nature and value of supporting collateral, along with a copy of the

Bank's current problem loan list, extension report, and past due/non-accrual report. The board of

directors shall review the progress reports before submission to the Reserve Bank and shall

document the review in the minutes of the board of directors' meetings.

Allowance for Loan and Lease Losses

5. (a) Within 10 days of this Agreement, the Bank shall eliminate from its

books, by charge-off or collection, all assets or portions of assets classified "loss" in the Report

of Examination that have not been previously collected in full or charged off. Thereafter the

Bank shall, within 30 days from the receipt of any federal or state report of examination, charge


18/92


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capital at Bankshares, on a consolidated basis, and the Bank as a separate legal entity on a

stand-alone basis. The plan shall, at a minimum, address, consider, and include:

(a) Bankshares's current and future capital requirements, including

compliance with the Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based

Measure and Tier 1 Leverage Measure, Appendices A and D of Regulation Y of the Board of

Governors (12 C.F.R. Part 225, App. A and D);

(b) the Bank's current and future capital requirements, including compliance

with the Capital Adequacy Guidelines for State Member Banks: Risk-Based Measure and Tier 1

Leverage Measure, Appendices A and B of Regulation H of the Board of Governors (12 C.F.R.

Part 208, App. A and B);

(c) the adequacy of the Bank's capital, taking into account the volume of

classified credits, concentrations of credit, ALLL, current and projected asset growth, and

projected retained earnings;

(d) the source and timing of additional funds to fulfill Bankshares's and the

Bank's future capital requirements; and

(e) the requirements of section 225.4(a) of Regulation Y of the Board of

Governors (12 C.F.R. § 225.4(a)) that Bankshares serve as a source of strength to the Bank.

7. Bankshares shall notify the Reserve Bank and the Commissioner, in writing, no

more than 30 days after the end of any quarter in which any of Bankshares's consolidated capital

ratios fall below the approved plan's minimum ratios. Bankshares and the Bank shall notify the

Reserve Bank and the Commissioner, in writing, no more than 30 days after the end of any

quarter in which any of the Bank's capital ratios (total risk-based, Tier 1 risk-based, or leverage)

fall below the approved plan's minimum ratios. Together with the notification, Bankshares and


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(b) a timetable to reduce reliance on borrowing and short-term wholesale

funding, including brokered deposits; and

(c) specific liquidity targets and parameters and the maintenance of sufficient

liquidity to meet contractual obligations and unanticipated demands.


the Commissioner an acceptable revised written contingency funding plan that, at a minimum,

identifies available sources of liquidity and includes adverse scenario planning.

Dividends

11. (a) Bankshares and the Bank shall not declare or pay any dividends without

the prior written approval of the Reserve Bank and the Director of the Division of Banking

Supervision and Regulation of the Board of Governors (the "Director"), and the Commissioner.

(b) Bankshares shall not take any other form of payment representing a

reduction in capital from the Bank without the prior written approval of the Reserve Bank and

the Commissioner.

(c) Bankshares and its nonbank subsidiaries shall not make any distributions

of interest, principal, or other sums on subordinated debentures or trust preferred securities

without the prior written approval of the Reserve Bank, the Director, and the Commissioner.

(d) All requests for prior approval shall be received at least 30 days prior to

the proposed dividend declaration date, proposed distribution on subordinated debentures, and

required notice of deferral on trust preferred securities. All requests shall contain, at a minimum,

current and projected information, as appropriate, on the parent's capital, earnings, and cash

flow; the Bank's capital, asset quality, earnings and ALLL needs; and identification of the

sources of funds for the proposed payment or distribution. For requests to declare or pay


22/92

dividends, Bankshares and the Bank, as appropriate, must also demonstrate that the requested

declaration or payment of dividends is consistent with the Board of Governors' Policy Statement

on the Payment of Cash Dividends by State Member Banks and Bank Holding Companies, dated

November 14, 1985 (Federal Reserve Regulatory Service, 4-877 at page 4-323).

Debt and Stock Redemption

12. (a) Bankshares shall not, directly or indirectly, incur, increase, or guarantee

any debt without the prior written approval of the Reserve Bank and the Commissioner. All

requests for prior written approval shall contain, but not be limited to, a statement regarding the

purpose of the debt, the terms of the debt, and the planned source(s) for debt repayment, and an

analysis of the cash flow resources available to meet such debt repayment.

(b) Bankshares shall not, directly or indirectly, purchase or redeem any shares

of its stock without the prior written approval of the Reserve Bank and the Commissioner.

Compliance with Laws and Regulations

13. (a) The Bank shall immediately take all necessary steps to correct the

violations of section 7-1-285 of the Financial Institutions Code of Georgia cited in the Report of

Examination. In addition, the Bank shall take necessary steps to ensure future compliance with

all applicable laws and regulations.

(b) In appointing any new director or senior executive officer, or changing the

responsibilities of any senior executive officer so that the officer would assume a different senior

executive officer position, Bankshares and the Bank shall comply with the notice provisions of

section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of Regulation Y of the Board of

Governors (12 C.F.R. §§ 225.71 et seq.).


23/92

(c) Bankshares and the Bank shall comply with the restrictions on

indemnification and severance payments of section 18(k) of the FDI Act (12 U.S.C. § 1828(k))

and Part 359 of the Federal Deposit Insurance Corporation's regulations (12 C.F.R. Part 359).

Compliance with the Agreement

14. (a) Within 10 days of this Agreement, the boards of directors of Bankshares

and the Bank shall appoint a joint committee (the "Compliance Committee") to monitor and

coordinate Bankshares's and the Bank's compliance with the provisions of this Agreement. The

Compliance Committee shall include a majority of outside directors who are not executive

officers or principal shareholders of Bankshares and the Bank, as defined in sections 215.2(e)(1)

and 215.2(m)(1) of Regulation O of the Board of Governors (12 C.F.R. §§ 215.2(e)(1) and

215.2(m)(1)). At a minimum, the Compliance Committee shall meet at least monthly, keep

detailed minutes of each meeting, and report its findings to the boards of directors of Bankshares

and the Bank.

(b) Within 30 days after the end of each calendar quarter following the date of

this Agreement, the Bank shall submit to the Reserve Bank and the Commissioner written

progress reports detailing the form and manner of all actions taken to secure compliance with

this Agreement and the results thereof.

Approval and Implementation of Plans and Programs

15. (a) The Bank and, as applicable, Bankshares shall submit written plans and

programs that are acceptable to the Reserve Bank and the Commissioner within the applicable

time periods set forth in paragraphs 1, 2, 4, 5(c), 6, 9, and 10 of this Agreement.

(b) Within 10 days of approval by the Reserve Bank and the Commissioner,

the Bank and, as applicable, Bankshares shall adopt the approved plans and programs. Upon


24/92

adoption, the Bank and, as applicable, Bankshares shall promptly implement the approved plans

and programs, and thereafter fully comply with them.

(c) During the term of this Agreement, the approved plans and programs shall

not be amended or rescinded without the prior written approval of the Reserve Bank and the

Commissioner.

Communications

16. All communications regarding this Agreement shall be sent to:

(a) Mr. Robert D. HawkinsAssistant Vice President

Federal Reserve Bank of Atlanta1000PeachtreeSt.,N.E.Atlanta, Georgia 30309-4470

(b) Mr. Robert M. BraswellCommissionerDepartment of Banking and Finance2900 Brandywine RoadSuite 200Atlanta, Georgia 30341

(c) Mr. Donald J. Torbert, Jr.President and Chief Executive OfficerPAB Bankshares, Inc.The Park Avenue BankP.O. Box 3460Valdosta, Georgia 31604-3460

Miscellaneous

17. Notwithstanding any provision of this Agreement, the Reserve Bank and the

Commissioner may, in their sole discretion, grant written extensions of time to Bankshares and

the Bank to comply with any provision of this Agreement.

18. The provisions of this Agreement shall be binding upon Bankshares, the Bank,

and their institution-affiliated parties, in their capacities as such, and their successors and assigns.


25/92

19. Each provision of this Agreement shall remain effective and enforceable until

stayed, modified, terminated, or suspended in writing by the Reserve Bank and the

Commissioner.

20. The provisions of this Agreement shall not bar, estop, or otherwise prevent the

Board of Governors, the Reserve Bank, the Commissioner, or any other federal or state agency

from taking any other action affecting Bankshares, the Bank, or any of their current or former

institution-affiliated parties and their successors and assigns.

21. Pursuant to Section 50 of the FDI Act (12 U.S.C. § 1831aa), this Agreement is

enforceable by the Board of Governors under Section 8 of the FDI Act (12 U.S.C. § 1818).

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of

the 14th day of July, 2009.

PAB BANKSHARES, INC.

By: /s/ Donald J. Tolbert, Jr.President and CEO

FEDERAL RESERVE BANK OFATLANTA

By: /s/ Robert D. HawkinsAssistant Vice President

THE PARK AVENUE BANK

By: /s/ Donald J. Tolbert, Jr.President and CEO

BANKING COMMISSIONER OFTHE STATE OF GEORGIA

By: /s/ George A. ReynoldsGeorge A. Reynolds forRobert M. BraswellCommissioner


26/92

From the Silicon Valley / San Jose Business Journal:http://www.bizjournals.com/sanjose/stories/2008/07/28/daily50.html

Silicon Valley / San Jose Business Journal by Sharon Simonson

Date: Wednesday, July 30, 2008, 11:23am PDT

Related:

Residential Real Estate

Financial Title Co. has shut its doors across the state as part of a closure of multiple offices andtitle companies by its parent, Mercury Cos. of Colorado.

The decision by the largest real-estate title agent in Silicon Valley follows a move by Mercury'slenders to pull their line of credit after Mercury failed to meet loan requirements, according to ane-mail from Jim Hilbun, president of United Title of Texas. Unite Title is also owned by Mercury.

"Mercury is closing all of its companies outside of Colorado, which includes Arizona, California,Oregon and Nevada," Hilbun told employees.

Examiners representing the California Department of Insurance, which regulates and polices title-policy underwriters and agents, were on hand at all 57 Financial Title offices in the stateWednesday to ensure that escrow funds were properly handled and not stolen or lost, said Darrel

Ng, press secretary for the agency.

Financial Title did not close due any enforcement action by the state nor has First Americanassumed responsibility for the pending escrows as a result of state pressure or requirement, hesaid.

Workers were removing items before dawn on Wednesday from Financial Title's Pruneyard officein Campbell. A sign posted on the door said the office was closing and referred inquiries to First

American, Financial's title policy underwriter, and to Mercury.

The Pruneyard office is one of 16 listed in Santa Clara County on Financial Title's Web site. It also

lists five in San Mateo County, five in San Francisco, four in Contra Costa County and 15 inSacramento County.

Neither Financial Title nor Mercury nor First American responded to calls for this story immediately.

Sources who have spoken to Financial Title employees said the title company began closing itsdoors in Santa Clara County Tuesday night. Those sources said all employees have lost their jobs,and Financial's underwriter, First American Title Co., has been collecting open escrow files at theclosed offices. They also say Financial Chief Executive Officer Ivy Anderson has resigned.

Anderson did not return a message left on her cell phone. Jim Cortese, county manager of

cial Title Co. shuts down in California - Silicon Valley / San Jose B... http://www.bizjournals.com/sanjose/stories/2008/07/28/daily50.htm

7/3/2012


27/92

Financial's Santa Clara County operations, also has lost his job.

The abrupt move mirrors that of Financial's former sister company, Alliance Title Co., which alsoclosed with almost no notice late last year. Former employees and landlords of Alliance have filedmultiple lawsuits alleging they were not paid. Alliance declared Chapter 7 bankruptcy in NorthernCalifornia federal court June 5.

Mercury is owned by the Jerrold G. "Jerry" Hauptman family of Colorado. Financial Title is still

operating in Colorado.

cial Title Co. shuts down in California - Silicon Valley / San Jose B... http://www.bizjournals.com/sanjose/stories/2008/07/28/daily50.htm

7/3/2012


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..

DURABLE POWER OF ATTORNEY

I, PENELOPE M. GILLESPIE of8 92 SW 115thLoop, Ocala, Florida 34481, appoint

NEIL J GILLESPIE of8 92 SW 115

th

Loop, Ocala, Florida 34481, my true and lawful attorney

in fact for me and in my name, place, and stead and for my use and benefit to manage my affairs

as set forth below. Upon the death, failure or inability ofhim to act as my attorney in fact, then

I appoint ELIZABETH

A

BAUERLE of6356 SW 106

th

Place, Ocala, Florida 34476; to act as

my attorney in fact in

his

stead.

1 Powers Granted: Except as otherwise limited by applicable law or by this durable

power

of

attorney, my attorney

in

fact has full authority to perform, without prior court approval,

every act authorized and specifically enumerated below:

a To exercise, do, or perform any act, right, power, duty, or obligation

whatsoever that I now have or may acquire the legal right, power or capacity to exercise, do, or

perform in connection with, arising out of, or relating to any person, item, thing, transaction,

business property, real or personal, tangible or intangible, including homestead real property, and

whether held in joint tenancy with right

of

survivorship, tenancy in common or tenancy by the

entirety, and all property over which I hold a general, limited or special power of appointment,

and all contractual or statutory rights or elections, including but not limited to, any rights or

elections in any probate or similar proceedings to which I am or may become entitled; or any other

matter whatsoever;

b

To ask, demand, redeem, sue for, recover, collect, receive, and hold and possess

all such sums of money, debts, dues, bonds, notes, checks, drafts, accounts, deposits, legacies,

bequests, devises, interests, dividends, stock certificates, certificates ofdeposit, annuities, pension

1

31


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and retirement benefits, insurance benefits and proceeds, documents

of

title, choses in action, per-

sonal and real property, intangible and tangible property and property rights, and demands

whatsoever, liquidated

or

unliquidated, as are now,

or

shall hereafter become due, owing, payable,

owned, or belonging

to

me

or

in which I have or may acquire an interest, and

to

have, use, and

take all lawful ways and means and legal and equitable remedies, procedures, and writs in my name

for the collection and recovery thereof, and to compromise, settle, and agree for the same, and to

make, execute, and deliver for me and in my name all endorsements, acquittances, releases,

receipts,

or

other sufficient discharges for the same;

c. To lease, purchase, exchange and acquire, and to bargain, contract, and agree

for the lease, purchase, exchange and acquisition of, and to take, receive, and possess any real

or

personal property whatsoever, intangible

or

tangible, or interest therein, on such terms and

conditions, and under such covenants as my attorney in fact shall deem proper;

d

To improve, repair, maintain, manage, insure, rent, lease, sell, release, convey,

subject

to

liens, mortgage, and hypothecate, and in any way

or

manner deal with all

or

any part

of

any real

or

personal property, intangible and tangible, whatsoever,

or

any interest therein, which

I

now

own

or

may hereafter acquire, for me and in my name, and under such terms and conditions,

and under such covenants as such attorney in fact shall deem proper, including my homestead

property which I may own.

If

am married, my attorney in fact may not mortgage

or

convey my

homestead property without joinder

of

my spouse

or

my spouse's legal guardian. Joinder by my

spouse may be accomplished by the exercise

of

authority in a durable power

of

attorney executed

by my joining spouse, and either my spouse

or

I may appoint the other as attorney in fact;

e. To engage in and transact any and all lawful business

of

whatever nature or kind

2


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for me and in my name;

f To sign, endorse, execute, acknowledge, deliver, receive, and possess such

applications, contracts, agreements, bills

of

sale, leases, mortgages, assignments, insurance

policies, bills oflading, warehouse receipts, documents of title, bills, bonds, debentures, checks,

drafts, bills

of

exchange, notes, stock certificates, proxies, warrants, commercial paper, receipts,

withdrawal receipts and deposit instruments relating to accounts or deposits in, or certificatesof

deposit

of

banks, savings and loan

or

other institutions or associations, proofs

ofloss

evidences

ofdebts, releases, and satisfaction ofmortgages, judgments, liens, security agreements, and other

debts and obligations, and such other instruments in writing

of

whatever kind and nature as may

be necessary

or

proper in the exercise

of

the rights and powers herein granted;

g. Borrow moneyon such terms and with such security as my attorney in fact may

think

fit

and to execute all notes, mortgages and other instruments that my attorney in fact finds

necessary or desirable;

h

Enter any safe deposit box or other place

of

safekeeping standing in my name

alone or jointly with another and to remove the contents and to make additions, substitutions and

replacements;

i To execute stock powers or similar documents on my behalfand delegate to a

transfer agent or similar person the authority to register any stocks, bonds, or other securities

either into

or

out

of

my name or nominee's name;

j. To represent me before the Treasury Department in connection with any matter

involving any federal taxes in which I am a party, to make, sign, execute,

verifY

and

file

any return

required to be made under the revenue laws

of

the United States, or the Internal Revenue Code,

3


33/92

or

under the statutes

of

any state and

to fil

any claim for refund, offer and compromise

or

application for a closing agreement, receive refund checks, execute waivers of any period of

limitation, extensions of time, execute any waiver of restrictions on assessment for collection of

any tax, and execute Petition of Appeal

to

the United States Tax Court;

k. To make gifts ofcash or ofany interest that I may own in other assets and real

property to any person

or

enti ty,just as I made the gifts myself, as long as any such transfers do

not incur any Federal

or

State Gift Tax liability; and

1

Transfer th title of any interest that I may

own

in property, whether it be

personal

or

real and

how v r

it be held, into the name

of

any living trust, and necessary the

Successor Trustee of said trust, which I may have previously made

or

will make in the future.

2. Full Real Estate Powers: My attorney in fact herein named is granted the authority

to

sell,

to

convey, to maintain, to mortgage

or

to dispose ofth following described real property,

and to execute any and ll documents necessary to effectuate the sale and/or conveyance, and to

encumber, and to dispose of, the following described real property, unless previously titled in the

name

of

my Living Trust, any:

See Exhibit "A" which is attached and incorporated hereto by reference.

Such documents shall include, but not be limited to, contracts, deeds, affidavits, bills

of

sale, closing statements, mortgages, notes and such other instruments as may be required to carry

out the purposes herein expressed, and I hereby give and grant unto my attorney in fact named

herein, full authority and power to do and perform all and every act and thing whatsoever requisite

and necessary to be done in and about the premises as fully, to ll intents and purposes, as I might

or could do personally present, with full power of substitution and revocation, hereby ratifying

4


34/92

and confirming all that my attorney in fact shall lawfully do or cause to be done by virtue o the

power granted herein.

3. Full Substitution: I grant to my attorney in fact full power and authority to do and

perform ll and every act and thing whatsoever requisite, necessary, and proper and to be done

in the exercise o any o the rights and powers herein granted, as fully

to

all intents and purposes

as I might or could do personally present, with full power o substitution

or

revocation, hereby

ratifying and confirming all that my attorney in fact, shall lawfully do or cause to be done by virtue

o this power o attorney and the rights and powers herein granted. The powers conferred upon

my attorney in fact extend to all

o

my right, title and interest in property in which I may have an

interestjointlywith any other person, whether in an estate by the entirety, joint tenancyor tenancy

mcommon.

4. Limitations: Notwithstanding the powers contained in this durable power o

attorney, my attorney in fact may not:

a

Performduties under contract that requires the exercise

o

my personal services;

b. Make any affidavit as to my personal knowledge;

c. Vote in any public election on my behalf;

d. Execute, create, amend, modifyor revoke any

will,

codicil or trust

on

my behalf;

and

e

Exercise powers and authority granted to me as trustee

or

as court-appointed

fiduciary.

5. Standard

o

Care: Except as otherwise provided herein, myattorney in fact named

herein is a fiduciary who must observe the standards o care applicable to trustees as described in

5


35/92

Florida Statute Section 737.302. My attorney in fact

s

not liable to third parties for any act

pursuant to this durable power of attorney i the act was authorized at the time. the exercise

ofthe power s improper, my attorney in fact s liable to interested persons as described in Florida

Statute Section 731.201 for damage or loss resulting from a breach

of

fiduciary duty by my

attorney in fact to the same extent as the trustee of an express trust. f

my

attorney in fact h s

accepted appointment either expressly in writing or by acting under the powers granted herein, my

attorney in fact s not excused from liability for failure to participate in the administration ofassets

subject to the powers granted herein or for failure to attempt to prevent a breach of fiduciary

obligations thereunder.

6. Interpretation: This instrument s to be construed and interpreted as a durable

powerofattorney pursuant to Florida Statute Section 709.08. The enumerationofspecific items,

acts, rights, or powers herein does not limit or restrict, and s not to be construed or interpreted

as limiting or restricting the general powers herein granted to

my

attorney in fact. This durable

power ofattorney shall not be affected by any physicalor mental disability that I may suffer except

as provided by Florida Statute Section 709.08, and shall be exercisable from the date

of

execution.

All acts done by my attorney

n

fact pursuant to this durable power

of

attorney shall bind me, my

heirs, devisees and personal representatives. This durable power of attorney

s

nondelegable.

7. Governing Law: This instrument s executed by me n the State ofFlorida, but t

s my intention that this durable power

of

attorney shall be exercisable

n

any other state or

jurisdiction where I may have any property

or

interests in property. This instrument s executed

and delivered n the State ofFlorida and the laws ofthe State ofFlorida shall govern all questions

as to the validity of the powers herein and the construction of its provisions.

6


36/92

8. Third Party Reliance:

a Any third party may rely upon the authority granted in my durable power

of

attorney until the third party has received notice as provided herein;

b. Until a third party has received notice

of

revocation pursuant to the terms

contained herein, partial

or

complete termination ofthis durable power

of

attorney by adjudication

of incapacity, suspension by initiation ofproceedings to determine incapacity, my death, or the

occurrence of an event referenced in this durable power ofattorney, the third party may act in

reliance upon the authority granted in this durable power ofattorney;

c. A third party that has not received written notice hereunder may, but need not,

require that my attorney in fact execute n affidavit stating that there has been no revocation,

partial

or

complete termination,

or

suspension

of

this durable power of attorney at the time this

power of attorney is exercised;

d. Third parties who act in reliance upon the authority granted to my attorney in

fact hereunder and in accordance with the instructions

ofthe attorney in fact will be held harmless

by me from any loss suffered or liability incurred as a result of actions taken prior

to

receipt of

written notice of revocation, suspension, notice of petition to determine incapacity, partial or

complete revocation, or my death. A person who acts in good faith upon any representation,

direction, decision,

or

act ofmy attorney in fact is not liable to me

or

to my estate, beneficiaries,

or joint owners for those acts; and

e. My attorney in fact is not liable for any acts

or

decisions made by

im

or

her in

good fuith and under the terms ofthis durable power of attorney.

7


37/92

9. Notice:

a A notice, including but not limited to, a notice o revocation, partial or complete

termination, suspension, or otherwise,

is

not effective until written notice

is

served upon my

attorney in fact or any third persons relying upon this durable power

o

attorney; and

b. Notice must e in writing and served on the person or entity to e bound by

such notice. Service may e by any form

o

m il that requires a signed receipt

or

by personal

delivery as provided in the Florida Statutes for service

o process, and must otherwise

e

in

accordance with Florida Statutes Section 709.08.

10. Damages and Costs: In any judicial action regarding this durable power

o

attorney, including but not limited to, the unreasonable refusal

o

a third party to allow

my

attorney in fact to act pursuant to the powers granted herein and/or challenge o the proper

exercise o authority by the attorney

in

fact, per statute, the prevailing party

is

entitled to damages

and costs, including reasonable attorney's fees.

11 Validity: This durable power

o

attorney shall e valid until such time as I shall die,

revoke this durable power o attorney, either partially or completely, or shall e adjudged totally

or partially incompetent by a courto competent jurisdiction. I may revoke this durable power

o

attorney only by providing written notice to my attorney in fact. All acts o my attorney

in

fact,

taken or done without actual knowledge o my death, or adjudication o my incompetency or my

revocation, are valid and effective and are hereby ratified and confirmed by me.

12 Revocation

o

Prior Instruments: By this instrument, I hereby revoke any power

o

attorney, durable or otherwise, that I may have executed prior to the date of this durable power

o

attorney. I hereby confirm all acts

o

my attorney in fact pursuant to the powers herein granted.

8


38/92

Any act that is done under the

powers

herein granted between the revocation of this instrument,

i any, and the notice of that revocation to my

attorney

in fact shall be valid unless the person

claiming the benefit of the act had notice of that revocation.

IN WITNESS WHEREOF I have hereunto set my hand and seal this

J

day f _ - - - - - L 0 _ ~ - - - = - - - - - - - - - 2006.

Signed, sealed and delivered

m t h e ~

N 2 ~ ~ ~ E M ~ I ~ r / 0

~ Address: 8092 SW 115th Loop

/

~ ~ ~ _

-Ocala, Florida 34481

Name: MARYBETH BOWMAN

N O T R Y K N O ~ E D G M E N T

STATE OF FLORIDA

COUNTY OF

CITRUS

I HEREBY CERTIFY that

on

this day personally appeared before me an officer duly

authorized to administer oaths and take acknowledgments, PENELOPE M. GILLESPIE, to me

personally

known

to

be the

person

described in and

who

executed the foregoing instruments

or

who provided

rL-

as identification, and she acknowledged and

swore before

me that

she executed the same freely and voluntarily for the

purposes therein

expressed.

WITNESS

my hand and official seal at Inverness, County ofCitrus, and State ofFlorida,

this d S ~ day of F h L _ J ~ , ~

~ ~ ~ y ~ ~

State of Florida at L a r g ( ; J r ' ~ ~ ~ : ~ : ~ ~ 4 ~ } ~ ~ ~ ~ l '

My

Commission x p i r e ~ ~ A : r ~ MY C ~ ~ ~ I ~ ~ ~ ~ R ~ ~ ~ 5 5

This Document Prepared By:

· · · ; f , . ~ f ; , i h ~ · ·

EXPIRES:

January

21

2007

Steven H.L. Bowman, Esquire

611 U.S. Highway 4 South

Inverness, Florida 34450

352) 726-3800

9


39/92

EXHIBIT A

Lot

1

Block G, OAK RUN WOODSIDE TRACT, as per plat thereofrecorded

n

Plat

ook

2, pages

106 through 112, of the Public Records

of

Marion County, Florida.


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64/92

FedEx Ship Manager - Print Your Label(s)

Page 1 o 1

T

111

DeBeauchcrnp

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190 Queen

Anne

Ave N 400

ActWgt

1.0 LB

CAD: 291482511NET8091

Account : S

Seattle.

WA 98109

JCl.S1112t1121123

Delivery Address Bar Code

Ref

Invoice

PO

Dept

SHIP

TO:

(352) 854-7807

BILL

SENDER

MS.

PENELOPE M. GILLESPIE

8092

SW

105 LOOP

OCALA, FL

34481

TRK

1 2 1J 7972

5015 2826

XH OCFA

THU •

15JAN

STANDARD

OVERNI4

RES

34481,

FL-US

Mea

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' - - ~ ' - - - : - - _ . - - N_BKE_4_W_P1_62 _932_43

BANK OF AMERICA N.A. 30-1/1140

SEATTLE, WA CONSUMER REAL ESTATE, SEATTLE, WA #0014007

Date: 01/06/09

AMOUNT: 38.89

COMMENTS:

lOAN#: 68011002615899

NEGATIVE GROWTH REIMBURSEMENT CHECK

CHECK 90565

MEMO:

NEGATIVE GROWTH REIMBURSEMENT CHECK

PENELOPE

M.

GILLESPIE

NON NEGOTIABLE

8092 SW 115TH LOOP

CUSTOMER FILE COPY

OCALA FL 34481

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67/92

NBKIX3116200912617

BANK OF AMERICA

N.A.

30 1/1140

SEATTLE,

WA

CONSUMER REAL ESTATE, SEATTLE,

WA

0014007

Date: 01/06/09

AMOUNT: 133.38

I

COMMENTS:

LOAN #: 68011002615899

CHECK 90327

MEMO:

PENELOPE

M.

GILLESPIE

NON NEGOTIABLE

8092 SW 115TH LOOP

CUSTOMER FILE COPY

OCALA FL 34481

.

TO·

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PENELOPE

M.

GILLESPIE

8092;SW115TH LOOP

OoALA FL34481 .

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36


68/92


69/92

Bankof merica -

• •

January 14 2009


8092

SW

115TH LOOP

OCALA, FL 34481

Re:

68011002615899

Dear Mortgagor(s):

This letter is being sent to you

in

regards to your recent inquiries about the Growth

accruing on your loan. The following paragraphs will describe how Growth

is

calculated

and how it reflects on your monthly statement. There are several components utilized in

the growth calculation process. Each of these components are listed below and the

calculations for each are described. For reference, copies of the Exhibit 1 Payment Plan

and the Home Equity Conversion Loan Agreement from your loan closing package have

been included with this letter.

Net Principal

imit

The Net Principal Limit reflects the funds available to a borrower at any given time.

These funds may be held

in

a Line of Credit, a Payment Reserve (for scheduled

payments), a Tax and Insurance Set Aside, or a combination of the three. The

calculation used to determine the Net Principal Limit at closing is the same calculation

used today. Examining the Exhibit 1 Payment Plan, Line 14 lists this calculation as

Principal Limit less Closing costs, Discharge of Liens, Loan Advances, Servicing Fee Set

Aside, Repairs, and First Year Property Charges. The Closing Costs, Discharge of

Liens and Loan Advances all make up the original Outstanding Loan Balance.

Using an example loan with a Principal Limit of 250,000.00, an Outstanding Loan

Balance of 75,000.00, a Servicing Fee Set Aside (SFSA) of 5,000.00, and 500.00

each for Repairs and First Year Property Charges the calculation works as follows:

$250,000.00 - $75,000.00 - $5,000.00 - $500.00 - $500.00 =$169,000.00

Principal Limit - Outstanding Loan Balance - SFSA - Repair &First Year =Net Principal Limit

This calculation will be revisited towards the end of this letter to better describe the

Growth calculation process.

Principal

imit

The Principal Limit is equal to the total amount of funds available to a borrower at the

very outset of the Reverse Mortgage prior to any closing and loan origination deductions.

You will notice in the Exhibit 1 Payment Plan this figure is listed on the first line. It is this

figure that will grow each month by one-twelfth of the current interest rate plus .5%. This

37


70/92

Bankof

merica

-.

. .

•

alculation is set down by the Department of Housing and Urban Development (HUD)

and is listed under section 1.7 of the Loan Agreement included with this letter.

As stated above, the Principal Limit undergoes this calculation once a month (at the end

of business on the last day

o

the month). The product of this calculation, the Growth, is

then added back into the existing Principal Limit value to increase the Principal Limit to a

new value. Below is an example of how this calculation works:

$250,000.00 * (3.5% + .5%) 12

=

$833.33

Principal Limit * Current rate + .5% /

2

= Growth

$250,000.00

+

$833.33

=

$250,833.33

Principal Limit + Growth =New Principal Limit

Outstanding Loan Balance

Each month Interest, Mortgage Insurance, and the Monthly Servicing Fee accrue on the

Outstanding Loan Balance. The Monthly Servicing Fee is a set amount; however,

interest and Mortgage Insurance (MIP) are based on rates, existing balances, and

advances and will vary over the life of the loan. These monthly accruals are added to

the eXisting Outstanding Loan Balance on the last day of the month similar to the way

in

which Growth is added to the Principal Limit. The interest and MIP calculations are a bit

more complex as they differ between monthly and daily accruals

Interest

Interest accrues based on the current interest rate in effect at the time which interest is

calculated. As mentioned above the calculation method may vary slightly depending on

whether the monthly

or

daily (or both) calculation methods are used. The monthly

interest calculation is based on the prior month's ending Outstanding Loan Balance,

while the daily interest calculation is used to calculate interest on advances made from

the loan. The daily calculation is used to ensure borrowers are only charged interest for

the number of days the advance was outstanding. An example of how this calculation

will work on loan with a 75,000.00 Outstanding Loan Balance from the previous month

end and a 2,000.00 advance taken on the 5

th

day

o

a 30 day month is as follows:

$75,000.00 * 3.5% 12

=

$218.75

Prior Month's Ending Balance * Current Interest Rate I

12 =

Monthly Interest

$2,000.00 * 3.5% 365 * 25 = $4.79

Advance Amount * Current Interest Rate

1

ofdays in the year * # ofdays outstanding =Daily Interest

$218.75

+

$4.79

=

$223.54

Monthly Interest

+

Daily Interest =Total Interest Accrual

In the example above there was Monthly and Daily interest accrued on the loan. These

two figures were then added together to provide the Total Interest Accrual for the month

which is the figure that would reflect on the monthly statement.

MIP


71/92

Bankof

merica

-

• •

ortgage Insurance works much the same way interest does. There is only one notable

difference between the two. While the rate used to calculate interest will vary over the

life of the loan, the MIP calculation uses a set .5% rate to calculate. Using the same

example listed above for the interest accrual, the MIP calculations below show how this

calculation would work:

$75,000

*

.5%

2

=

$31.25

Prior Month's Ending Balance

*

.5% / 12 =Monthly MIP

$2,000.00 * .5% I 365 * 25 =$0.68

Advance Amount *

.5% /

# ofdays in the year * # ofdays outstanding = Daily MIP

$31.25 + $0.68 = $31.93

Monthly MIP + Daily MIP =Total MIP Accrual

Servicing Fee

The monthly Servicing Fee amount was set at closing and will accrue

on

the Reverse

Mortgage at the end of each month along with the interest and MIP. Using the

calculations listed above with a monthly Servicing Fee

of

30.00, the new Outstanding

Loan Balance would reflect

as

$75,000.00 + $2,000.00 + $223.54 + $31.93 + $30.00 =$77,285.47

Prior Month's Balance

+

Advance

+

Interest

+

MIP

+

Servicing Fee = ewOutstanding Loan Balance

Servicing Fee Set Aside

The Servicing Fee Set Aside is a value calculated at closing. It represents the total

estimated funds that need to be set aside from the Principal Limit to ensure the monthly

Servicing Fee can be accrued on the Outstanding Loan Balance every month. This

figure is also listed on the Exhibit 1 Payment Plan and undergoes its own set of monthly

calculations.

Before describing the calculations used on the Servicing Fee Set Aside (SFSA) it is

important to discuss how the initial SFSA shown on the Payment Plan was calculated at

closing. The initial value was calculated using the monthly Servicing Fee amount, the

Expected Average Interest Rate (also listed on the Payment Plan), and the number of

months remaining until the youngest borrower's 100

th

birthday. You will notice however

that the monthly

e r v i i n ~

Fee amount multiplied by the number of month's until the

youngest borrower's 100 birthday produces a much higher figure than that listed on the

Payment Plan. This is because the SFSA grows every month as well and this monthly

growth was taken into account when the initial SFSA value was calculated at closing.

The Servicing Fee Set Aside goes through a set of calculations each month to arrive at

new figures. First the monthly Servicing Fee being added to the Outstanding Loan

Balance is deducted. Then the Growth on the SFSA is calculated and added back to the

remaining balance. For example:

$5,000.00 - $30.00 =$4,970.00

SFSA - Monthly Servicing Fee =Adjusted SFSA

$4,970.00

*

(4.3%

+

.5%) 12

=

$19.88


72/92

BankofAmerica

.

..

djusted SFSA

*

Expected Average Interest Rate + .5% /

2 =

SFSA Growth

$4,970.00 + $19.88

=

$4,989.88

Adjusted SFSA

+

SFSA Growth =

New

SFSA

As listed above, the SFSA value decreased and then grew using the Expected Average

Interest Rate as opposed to the current interest rate used to calculate Growth on the

Principal Limit. The Expected Average Interest Rate is another value determined and

set at closing. It will remain the same value for the life

of

the loan.

Repairs and First Year Property Charges

If there are repairs required as a stipulation to obtaining the Reverse Mortgage, or if a

borrower has elected to set aside funds from the Principal Limit to pay the property taxes

and homeowner's insurance for the first year

of

the loan, the Repair and/or First Year

Set Asides are created. These values will decrease as the necessary repairs, taxes, or

insurance are paid.

Net Principal imit (Revisited)

Now that each

of

the components

of

Growth have been discussed, refer back to the

initial Net Principal Limit calculation discussed at the beginning

of

this letter. The

calculation is listed as:

$250,000.00 - $75,000.00 - $5,000.00 - $500.00 - $500.00 =$169,000.00

Principal Limit

-


-

SFSA

-

Repair

&

First Year = Net Principal Limit

Using this as

an

example, the preceding sections have covered how each

of

these

figures grows and adjusts. After the next month end, the Net Principal Limit of

169,000.00 changes to 167,560.05 by using the calculation:

$250,833.33 - $77,285.47 - $4,989.88 - $500.00 - $500.00 = $ 167,557.98

Principal Limit

-


-

SFSA

-

Repair

&

First Year

=

Net Principal Limit

On the surface, this may seem to be a decrease in the Net Principal Limit. However, if

we take into consideration that there was a 2,000.00 advance added to the loan .

balance (see Outstanding Loan Balance section), we can see there is actually an

increase

in

the Net Principal Limit

of

557.98. To better highlight this, let's run through

another month of calculations using the new figures provided above.

Principal

imit

$250,833.33 * (3.5% + .5%) 12

=

$836.11

Principal Limit

*

Current rate + .5% /

2 =

Growth

$250,833.33+ $836.11= $251,669.44

Principal Limit + Growth

=

New Principal Limit


$77,285.47

*

3.5% 12 = $225.42


73/92

Bankof

merica

• •

rior Month's Ending Balance * Current Interest Rate

/ 12 =

Monthly Interest

$77,285.47 * .5% 12 = $32.20

Prior Month's Ending Balance * .5% / 12 =Monthly MIP

$77,285.47 + $225.42 + $32.20 + $30.00

=

$77,573.09

Prior Month's Balance

+

Interest

+

MIP

+

Servicing Fee

=

New Outstanding Loan Balance

Servicing

Fee

Set Aside

$4,989.88 - $30.00 =$4,959.88

SFSA - Monthly Servicing Fee

=

Adjusted SFSA

$4,959.88 * (4.3%

+

.5%)

12

=$19.84

Adjusted

SFSA

* Expected Average Interest Rate +

.5% / 12

=

SFSA

Growth

$4,959.88 + $19.84 =$4,979.72

Adjusted SFSA + SFSA Growth =

ew

SFSA

Net Principal Limit

$251,669.44 - $77,573.09 - $4,979.72 - $500.00 - $500.00 =$168,116.63

Principal Limit

-


-

SFSA

-

Repair

&

First Year =Net Principal Limit

The calculations listed above differ than those previously discussed only in that there

was no advance. In this scenario the Net Principal Limit changed from $167,557.98 to

$168,116.63, an increase of $558.65. This value will be reflected on the monthly

statement as the Net Principal Limit Increase just like the $557.98 figure did. This figure

reflects the net increase

in

the funds available to a borrower at any given time, or the

Growth.

I hope this letter has served to clarify the Growth process. The calculations referenced in

this letter are quite complex and as such your Reverse Servicing department welcomes

any questions you may have regarding the calculations. Please do not hesitate to

contact one of our specialists at the toll free number listed below with questions

regarding Growth or any other facet of your Reverse Mortgage.

iZ

aren Yantis

Bank of America

Reverse Servicing Division

190 Queen Anne Ave. N Suite 400

Seattle, W 98109

1-866-863-5224


74/92

Negative Growth

There is also the potential for the Net Principal Limit to begin decreasing. This phenomenon is

referred to as Negative Growth and will only occur on a Reverse Mortgage when certain

conditions are place, namely that the current interest rate is less than the expected average

interest rate and that the Net Principal Limit has a relatively small existing balance. When the

HUD calculations are used on a monthly basis to calculate the available funds (Net Principal

Limit), they will begin to decrease even though no advances were taken on the account. For

example, using the loan figures listed below we can see the Net Principal Limit is relatively small.

$250,000.00 - $243,000.00 - 5,000.00 - $500.00 - $500.00

=

$1,000.00

Principal Limit - Outstanding Loan Balance - SFSA - Repair &First Year = etPrincipal Limit

If the current interest rate was 3.5% and the expected average interest rate was 5.5% the

calculations would reflect as follows:

Principal imit

$250,000.00

*

(3.5%

+

.5%)

12

=

$833.33

Principal Limit * Current rate + .5% / 2 = Growth

$250,000.00

+

$833.33

=

$250,833.33

Principal Limit + Growth =

ew

Principal Limit


$243,000.00

*

3.50/0 12 = $708.75


*

Current Interest Rate

/ 12

= Monthly Interest

$243,000.00

*

.5% 12 = $101.25


* .5% / 12 =

Monthly MIP

$243,000.00

+

$708.75

+

$101.25

+

$30.00

=

$ 243,840.00

Prior Month's Balance + Interest + MIP + Servicing Fee =

ew


Servicing Fee Set Aside

$5,000.00 - 30.00

=

$4,970.00

SFSA - Monthly Servicing Fee =Adjusted SFSA

$4,970.00

*

(5.5%

+ .50/0 12 =

$24.85

Adjusted SFS

*

Expected Average Interest Rate

+ .5% / 12 =

SFSA Growth

$4,970.00 + $24.85

=

$4,994.85

Adjusted SFSA

+

SFSA Growth

=

ew

SFSA

Net Principal

imit

$250,833.33 - $243,840.00 - $4,994.85 - $500.00 - $500.00 = $998.48

Principal Limit

-


-

SFSA

-

Repair & First Year =

et

Principal Limit

In

this scenario the Net Principal Limit shows a clear decrease from 1,000.00 to 998.48. So

long as the expected average interest rate remains higher than the current interest rate, the

available Net Principal Limit will continue to decrease.


75/92

Bank o America has contacted the Department o Housing and Urban Development to notify

them o the calculation results and Negative Growth. However, there is a reimbursement process

n place to ensure our borrowers are not impacted by the results o Negative Growth. You will

find a Negative Growth Reimbursement Form attached to this letter. To seek reimbursement for

any funds lost due to Negative Growth all you need do is sign the form and send it back to the

Reverse Servicing Department. Doing so authorizes the Reverse Servicing Department to

release the remaining funds to you (to prevent further Negative Growth deductions) and to

reimburse you for funds lost to Negative Growth. Reverse Servicing Specialists will ensure you

are fully reimbursed for the most recent highest dollar amount available n your Net Principal

Li

HUD HECM Complaint Appendix II Exhibits 22-42

Documents

Transcript of HUD HECM Complaint Appendix II Exhibits 22-42