Case 1:15-cv-00293-LTS-RWL Document 400-16 Filed 05/10/19 Page 1 of 13

PLAINTIFF’S EXHIBIT 16
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RICHARD W. PAYNE, III January 28, 2019

S & A CAPITAL PARTNERS vs JPMORGAN CHASE BANK 1

·1· · · · · · · · · · · · ·Payne

·2· ·UNITED STATES DISTRICT COURT

· · ·SOUTHERN DISTRICT OF NEW YORK
·3· ·------------------------------x
· · ·MORTGAGE RESOLUTION SERVICING,
·4· ·LLC, 1ST FIDELITY LOAN
· · ·SERVICING, LLC, and
·5· ·S&A CAPITAL PARTNERS, INC.,

·6· · · · · · · · · Plaintiffs,

·7· · · · ·against· · ·1:15-CV-00293 (LTS)(RWL)

·8· ·JPMORGAN CHASE BANK, N.A.,

· · ·CHASE HOME FINANCE LLC and
·9· ·JPMORGAN CHASE & CO.,

10· · · · · · · · · Defendants.
· · ·------------------------------x
11

12

13· · · · · · RICHARD WEEDON PAYNE, III

14· · · · · · · ·New York, New York

15· · · · · · Monday, January 28, 2019

16

17

18

19

20

21

22

23· ·Reported by:· Steven Neil Cohen, RPR

24· ·Job No. J3561513

25

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RICHARD W. PAYNE, III January 28, 2019

S & A CAPITAL PARTNERS vs JPMORGAN CHASE BANK 142

·1· · · · · · · · · · · · · ·Payne
·2· · ·suffered by MRS as a result of lien
·3· · ·releases?
·4· · · · · · · ·MR. LONGO:· Object.
·5· · · · · · · ·THE WITNESS:· I am going to
·6· · · · ·testify at trial what I have in my
·7· · · · ·report, that the overall profile of
·8· · · · ·the portfolio caused MRS to have
·9· · · · ·opportunity costs.
10· · · · · · · ·I am not going to testify as to
11· · · · ·specific loans.
12· ·BY MR. PISTILLI:
13· · · · ·Q.· · Are you aware of even a single
14· · ·loan with respect to which MRS suffered
15· · ·opportunity costs?
16· · · · · · · ·MR. LONGO:· Note my objection to
17· · · · ·the form.
18· · · · · · · ·THE WITNESS:· I mean an example
19· · · · ·would be Chase admitted that they did
20· · · · ·not assign loans as I point out in
21· · · · ·paragraph -- I am sorry, page 21, with
22· · · · ·the sentence -- with the paragraph
23· · · · ·associated with footnote 32.· So if
24· · · · ·you were collecting on loans that
25· · · · ·weren't assigned to you that certainly

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RICHARD W. PAYNE, III January 28, 2019

S & A CAPITAL PARTNERS vs JPMORGAN CHASE BANK 143

·1· · · · · · · · · · · · · ·Payne
·2· · · · ·would cause opportunity costs because
·3· · · · ·you, first off, really don't have the
·4· · · · ·legal right to collect on those loans.
·5· · · · · · · ·I wanted to point out one more.
·6· · · · ·That is just an example of where if
·7· · · · ·you don't have a proper transfer of
·8· · · · ·servicing rights it is hard to
·9· · · · ·efficiently collect on the loans.
10· ·BY MR. PISTILLI:
11· · · · ·Q.· · How does the text associated with
12· · ·footnote 32 demonstrate opportunity costs?
13· · · · ·A.· · You are done?
14· · · · · · · ·Because the loans were improperly
15· · ·assigned so they could have been collecting
16· · ·on loans where they did not have the right
17· · ·to collect on them.· So that would be
18· · ·opportunity costs.
19· · · · ·Q.· · The loans were all purchased by
20· · ·MRS, right?
21· · · · ·A.· · If they could have been properly
22· · ·conveyed, yes.
23· · · · ·Q.· · After the mortgage loan purchase
24· · ·agreement was signed who, if you have an
25· · ·opinion on this, was the owner of the loans

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RICHARD W. PAYNE, III January 28, 2019

S & A CAPITAL PARTNERS vs JPMORGAN CHASE BANK 144

·1· · · · · · · · · · · · ·Payne
·2· ·that were subject to the transaction?
·3· · · ·A.· · The -- get into mortgage
·4· ·technicalities, the owner would be if you
·5· ·looked up in the courthouse who the loan was
·6· ·assigned to, that would be the owner in the
·7· ·eyes of the courts or whatever so you have
·8· ·to assign a mortgage to another party in
·9· ·order to convey ownership of the mortgage.
10· · · ·Q.· · So in your opinion MRS didn't own
11· ·the loans that they purchased in the MLPA?
12· · · ·A.· · In my opinion they weren't
13· ·properly assigned as evidenced by what I
14· ·describe in footnote 32 and in my report.
15· · · ·Q.· · How does the alleged failure to
16· ·provide proper assignments create
17· ·opportunity costs?
18· · · ·A.· · I think I have already answered
19· ·that.· If you are collecting on loans where
20· ·you are not the owner of record, there is
21· ·countless cases of companies that have had
22· ·foreclosures vacated because they weren't
23· ·the -- the chain of title wasn't proper
24· ·which would lead to the assignments so you
25· ·could have instances where they were

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RICHARD W. PAYNE, III January 28, 2019

S & A CAPITAL PARTNERS vs JPMORGAN CHASE BANK 145

·1· · · · · · · · · · · · · ·Payne
·2· · ·collecting on loans where they aren't the
·3· · ·owner of record.
·4· · · · ·Q.· · I am asking whether you are aware
·5· · ·of that actually happening in this case?
·6· · · · ·A.· · No.· I am not.
·7· · · · ·Q.· · So your testimony is that there
·8· · ·might be opportunity costs but you have not
·9· · ·analyzed to see whether they were in fact
10· · ·occurred here?
11· · · · · · · ·MR. LONGO:· Note my objection to
12· · · · ·the form.
13· · · · · · · ·THE WITNESS:· I did not do an
14· · · · ·analysis of what the cost of the
15· · · · ·opportunity costs or the damages due
16· · · · ·to the opportunity costs were.
17· ·BY MR. PISTILLI:
18· · · · ·Q.· · Nor did you do an analysis to
19· · ·determine if there actually were opportunity
20· · ·costs?
21· · · · · · · ·MR. LONGO:· Note my objection.
22· · · · · · · ·THE WITNESS:· My opinion is that
23· · · · ·there could have been -- like you said
24· · · · ·earlier, my opinion was that or is
25· · · · ·that based on items like I described

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RICHARD W. PAYNE, III January 28, 2019

S & A CAPITAL PARTNERS vs JPMORGAN CHASE BANK 213

·1· · · · · · · · · · · · · ·Payne
·2· · ·MLPA?
·3· · · · ·A.· · I am not offering an opinion that
·4· · ·the information on Exhibit A was not true
·5· · ·and correct.
·6· · · · ·Q.· · Are you offering the opinion that
·7· · ·the mortgage loan schedule provided by Chase
·8· · ·failed to conform with Chase's obligations
·9· · ·under the MLPA?
10· · · · ·A.· · I am not offering that opinion.
11· · · · · · · ·MR. PISTILLI:· I tender the
12· · · · ·witness to Mr. Longo.
13· · ·EXAMINATION
14· ·BY MR. LONGO:
15· · · · ·Q.· · Mr. Payne, if a servicer is
16· · ·provided with only a borrower's name and
17· · ·mailing address is that servicer able to
18· · ·service the loan?
19· · · · ·A.· · No.· They aren't able to properly
20· · ·service the loan.
21· · · · ·Q.· · Why not?
22· · · · ·A.· · Because they wouldn't know what
23· · ·the principal balance was, they wouldn't
24· · ·know what the payments due were, they
25· · ·wouldn't know if they have real -- if they

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RICHARD W. PAYNE, III January 28, 2019

S & A CAPITAL PARTNERS vs JPMORGAN CHASE BANK 214

·1· · · · · · · · · · · · · ·Payne
·2· · ·have funds to pay real estate taxes or funds
·3· · ·to pay hazard insurance, wouldn't know how
·4· · ·to properly amortize the loan, just to name
·5· · ·several divisions.
·6· · · · ·Q.· · If someone did not -- if the
·7· · ·servicer did not receive an assignment of
·8· · ·the loan could they service that loan
·9· · ·legally?
10· · · · ·A.· · They -- they could not -- they
11· · ·could service the loan but all of the funds
12· · ·that they collected and their ability to
13· · ·foreclose would be impaired so they couldn't
14· · ·properly service the loan.
15· · · · · · · ·I have never had this happen. I
16· · ·didn't know -- what did ask you him to do?
17· · · · · · · ·MR. LONGO:· He tendered --
18· · · · · · · ·MR. PISTILLI:· You said
19· · · · ·"tendered."
20· · · · · · · ·THE WITNESS:· I thought you said
21· · · · ·TENA.· Okay.· Go ahead.· I am sorry.
22· ·BY MR. LONGO:
23· · · · ·Q.· · If you look at Exhibit Payne 8 of
24· · ·today's deposition, that is the RESPA
25· · ·document?

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RICHARD W. PAYNE, III January 28, 2019

S & A CAPITAL PARTNERS vs JPMORGAN CHASE BANK 215

·1· · · · · · · · · · · · ·Payne
·2· · · ·A.· · Yes.
·3· · · ·Q.· · If you look at the sample letter
·4· ·that is attached which is --
·5· · · ·A.· · Yes.
·6· · · ·Q.· · -- toward the back of that
·7· ·exhibit, it talks about what the borrower's
·8· ·rights are with respect to receipt of that
·9· ·letter.· If you look at it towards, I guess,
10· ·if you look at the last two pages?
11· · · ·A.· · Yes.
12· · · ·Q.· · There are some provisions there.
13· ·It says, "During the 60-day following --
14· ·"60-day period following the effective date
15· ·of the transfer of the loan servicing a loan
16· ·payment received by your old servicer before
17· ·the due date may not be treated by the new
18· ·loan servicer as late."
19· · · · · · ·If you go down to the next
20· ·paragraph, Section 6 it said it gives you
21· ·certain consumer rights.· Do you see that
22· ·section?
23· · · ·A.· · Yes.
24· · · ·Q.· · That section talks about the right
25· ·of the borrower to request information from

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RICHARD W. PAYNE, III January 28, 2019

S & A CAPITAL PARTNERS vs JPMORGAN CHASE BANK 216

·1· · · · · · · · · · · · ·Payne
·2· ·the new servicer, correct?
·3· · · ·A.· · Correct.
·4· · · ·Q.· · That information includes loan
·5· ·amount, payments, things of that nature,
·6· ·correct?
·7· · · ·A.· · It is not detailed like that but
·8· ·that is generally what the request would be.
·9· · · ·Q.· · If a servicer doesn't have that
10· ·information to respond to the borrower would
11· ·that impair their ability to service the
12· ·loan?
13· · · ·A.· · Absolutely, yes.
14· · · ·Q.· · In looking at the MLPA itself
15· ·which I believe is Payne Exhibit 2?
16· · · ·A.· · Yes.
17· · · ·Q.· · That contract doesn't contain any
18· ·definitions, does it, a definitions section?
19· · · ·A.· · I did not see one, no, it does
20· ·not.
21· · · ·Q.· · So to understand the terms of some
22· ·of the things that are referenced within
23· ·that document a person has to have some
24· ·understanding of the mortgage industry,
25· ·correct?

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RICHARD W. PAYNE, III January 28, 2019

S & A CAPITAL PARTNERS vs JPMORGAN CHASE BANK 217

·1· · · · · · · · · · · · · ·Payne
·2· · · · ·A.· · Correct.
·3· · · · ·Q.· · You have that expertise, do you
·4· · ·not?
·5· · · · ·A.· · Yes.
·6· · · · ·Q.· · In rendering your opinions in this
·7· · ·matter did you rely upon that expertise?
·8· · · · ·A.· · Yes.
·9· · · · · · · ·(Record read)
10· ·BY MR. LONGO:
11· · · · ·Q.· · In your testimony today,
12· · ·Mr. Payne, there is a lot of questions with
13· · ·respect to Section 6, the representations
14· · ·and warranty section.
15· · · · · · · ·Do you recall that testimony?
16· · · · ·A.· · Yes.
17· · · · ·Q.· · Going back to the first page of
18· · ·this document, it does say that the loans or
19· · ·the liens that are part of this are supposed
20· · ·to be first lien mortgages, correct?
21· · · · ·A.· · Correct.
22· · · · ·Q.· · In doing your analysis of whether
23· · ·or not Chase breached that aspect of this
24· · ·agreement did you come to a conclusion with
25· · ·respect to as to whether or not they failed

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RICHARD W. PAYNE, III January 28, 2019

S & A CAPITAL PARTNERS vs JPMORGAN CHASE BANK 218

·1· · · · · · · · · · · · ·Payne
·2· ·to provide only first lien mortgages?
·3· · · ·A.· · I was able to determine that from
·4· ·a loan listing that was provided on May 29,
·5· ·2013 as described on page 12 of my report
·6· ·where it identified certain loans that were
·7· ·not first liens.
·8· · · ·Q.· · Do you recall how many loans were
·9· ·encompassed by the MLPA, what the total
10· ·number was?· If you have to look at your
11· ·report.
12· · · ·A.· · It is -- well, the MLPA says 3,529
13· ·loans.
14· · · ·Q.· · Is it your testimony that of those
15· ·loans all of them were supposed to be first
16· ·lien mortgages?
17· · · ·A.· · Yes.
18· · · ·Q.· · Did you come to a conclusion as to
19· ·how many of them were not first lien
20· ·mortgages?
21· · · ·A.· · Based on that loan list of May 29,
22· ·2013 as I detail in my report there were 104
23· ·second liens, four third liens, 725
24· ·unsecured loans and 282 loans that did not
25· ·have a lien identification in that column.

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RICHARD W. PAYNE, III January 28, 2019

S & A CAPITAL PARTNERS vs JPMORGAN CHASE BANK 219

·1· · · · · · · · · · · · ·Payne
·2· · · ·Q.· · If a loan is unsecured is that a
·3· ·first lien?
·4· · · ·A.· · No.
·5· · · ·Q.· · Why not?
·6· · · ·A.· · It is not a lien at all.
·7· · · ·Q.· · And obviously of the 282 that were
·8· ·not identified there would be no way of
·9· ·knowing whether or not those did or did not
10· ·comply with that provision, correct?
11· · · ·A.· · Correct.
12· · · ·Q.· · During your testimony earlier as
13· ·well you were going back and forth a bit
14· ·with counsel with respect to RESPA
15· ·requirements and whether it was just the
16· ·good-bye letters or there were other
17· ·requirements that were not met in the
18· ·transfer of the loans in the Exhibit A.· You
19· ·have indicated not giving over the escrow
20· ·amounts, is that something you would
21· ·consider a violation of RESPA?
22· · · ·A.· · The handling of escrows would not
23· ·only be covered by -- it would be covered by
24· ·violations of laws, state laws as well and
25· ·federal laws so I can't remember if there is

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