Free Response to Motion - District Court of Colorado - Colorado

Case 1:03-cv-02485-MSK-PAC

Document 345-7

Filed 02/16/2006

Page 1 of 17

Howard R. Berman 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.

Page 1

1

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

2
3

Camille Melonakis-Kurz,

5 similarly situated
employees,
6
7

4 indi vidually and on behalf of other

Plaintiff,
vs.
Civil Action
No. 03 - MK - 2 4 8 5

8

9

Heartland Home Finance,

Inc. ,
10

Defendant.
11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
The Videotaped Deposi tion of HOWARD R. BERMAN ADVANCED LEGAL/STEFFAN & STAUFFER, LTD. 411 Seventh Avenue, Suite 1140 Pittsburgh, Pennsylvania 15219

November 21, 2005 12:27 p.m.

Case 1:03-cv-02485-MSK-PAC

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Howard R. Berman 11/21/2005 Camile Melonakis-Kurz, et al v. Heartland Home Finance, Inc.

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1 the federal minimum wage of 5.15 an

2 hour?
3
4

A.
Q.

I was not aware of that.

Okay, that is all I need, thank

5
6

you.

Let's talk about your job duties.
Do you want to just

Really quickly.

7 take me through what your job duties

8 are?
9

A.

My job duties wi th Heartland

10 basically were we were handed out leads

11 and we were to contact those leads.
12 13
14
Q.

Were the leads from Heartland?

A.

Heartland did provide the leads,

yes.

You could also provide your own

15 referral sources if you had them.
16
Q.
Were a maj ori ty of the leads

1 7 from Heartland?
18

19

percent of leads were from Heartland, yes.
A.

I would say 90

my

20
21
22

Q.

Okay.
They would give you minimum of

A.

two a day.

After

you were a

better
You

23

performer you would get extra ones.

24 could also, there were leads that were
25 left around that were seconds, you could

Case 1:03-cv-02485-MSK-PAC

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Howard R. Berman 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.

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1 then you would know, you know,
2 qualifications, with the information we

3 were given, and we would have to break

4 down and qualify that customer to a

5 loan.
6

Q.

How did you know that someone

7 called for that loan?
8

A.

Basically the information you

9 would gather, you would, every loan has

10 criteria, and you fit their information
11 to the cr iter ia. And then you would be
12

able to produce a loan.

Sometimes it

13 wouldn't work, most times, you know, the 14 leads were pretty strong wi th how they

15 were targeted.
16
Q.

Was it Heartland's cri teria that

17 you were referring to when you say, meet

18 the criteria?
19
A.
The cri teria is basically Fannie

20 Mac, Freddie Mae, it's a federal
21 criteria by the, set up for them, and

22 Heartland's bank followed that criteria.
23 So we were pretty much following that 24 along. It is pretty much industry

25 standard.

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1

Q.

Okay.

Did you follow any

2 Heartland policies and procedures in
3 regard to how to call a lead, how to
4 fill out an application, and how to send

5 it through?
6

A.

I was given a brief overview.

7 It was basically done on your own
8

intuition, you know, to say things.

You

9 had to follow certain laws that we had
10 to follow and do, that Heartland has to

11 follow under the regulations for the 12 licensing. Bu t, you know, you couldn't
13 lie to anybody basically, had to be

honest. You know, they 15 honest organization.
14

did run a very

16

Q.

Okay.

So, the secretary would

1 7 pull credi t and then would the

18 application go to processing after that?
19
A.

Well, after you filled it out

20 and you sold the loan, you know, you
2 1 w 0 u 1 d fin ish i t up, you w 0 u 1 d t yp e the

22 deal out ourselves, send the paperwork

23 out to the customer. Wait for the
24 paperwork to return. We also ordered an
25 appraisal, so once the appraisal came

Case 1:03-cv-02485-MSK-PAC

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Howard R. Berman 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.

1 Heartland's bank for it.
2

Page 21

Q.

When you went to InterFirst,

3 did the whole application have to go
4 through Heartland, get rej ected by

5 underwriting, and then go to InterFirst?
6 7

A.

We could do that as a second,

secondary market if that happened.

I

8 don't recall that happening too often
9

10 11
12

with me. I mean maybe I had one or two loans that happened, but the majority of loans were pret ty well qualified, I
though t .
Q.

13

Would you say

the

maj ori ty

of

14 your loans went through Heartland?
15
A.

Yes, defini tely.
Okay.

Not every

16 one, but 85 percent, yes.
17
Q.

Did you use a product

18 matrix when you were talking to a 19 customer to figure out which products to
20 offer them?
21
A.

Not really. We were using a

22 conforming product most of the time. We
23 were looking for full-block conforming

24 people, so we really didn't have a
25 matrix, you know, you just went right to

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Howard R. Berman 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.

it. There 2 didn't.
1

Page 22

are matrixes available but I

3

Q.

Okay.

Did you use a rate sheet

4 at all?
5

A.

Yes.

Every day we had a

6 published rate sheet.
7

Q.

Was that provided to you by

8 Heartland?
9

A.

Heartland would fax it into us

10 at about 11 a.m. eastern standard time

11 every day.
12
Q.

Okay.

Did your manager ever

13 tell you anything about working

14 overtime?
15
A.
Q.

Absolutely not.
Did you have to get approval if

16

17 you wanted to work overtime?
18

A.

No.

Just work the hours.

You

19

know.

To get the results -- we were

20 sales, get numbers.

21 Q. And when you were told to
22 report only eight hours a day on your

23 time sheet, do know who told your

24 manager to tell you to do that?
25
A.
No, I don't.

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1 know, I'm not going to say I'm the

2 ultimate expert on it, but I did a 3 pretty decent job with it.
4

Q.

I s there a loan tha t you're
Not really.

5 most proud of?
6

A.

I mean, anyone

7 that closes and you get paid on, you

8 are proud of.
9

Q.

Tell me a little bit about, you

10 know, at the very beginning you talked 11 about how you collect information from
12 this customer. What sort of things

13 would they tell you, what sort of things
14 would you ask them?
15
A.

You would generally get their

16 name, telephone number, address, you'd

17 ask them what they thought the value of Then you'd ask 18 their home would be. 19 them some history on what kind of
20 mortgage they presently had now, what

21 interest rate they were at, what their
22 P a yme n t was, i f the y had any b ill s the y

23 wanted to payoff, what kind of goals 24 they were seeking by doing this loan. 25 You know, you work through the criteria

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Howard R. Berman 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.

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1 basically to come up with a deal that
2 would benefi t them and you.
3

Q.

Now, the goals that they had,

4 what sort of goals would somebody have?

5 A. Most goal s are lower payments.
6 Defini tely. You know, sometimes they

7 would want to pay all their bills off
8 and put it all in their mortgage and
9 that's called a consolidation loan, and

10 you know, bottom line is that they would
11 pay less money per month than they were
12

today.

It was how much you could save

13 them was basically how much you could

14 make and how well the deal was

15 structured.
16
Q.

Now were there some people who

17 had needs for like immediate cash for

18 something?
19
A.

Well, some people wanted cash

20 out, that's called a cash-out loan.
21
Q.

And when you found out that

22 they had a goal of lowering payments or

23 consolidation or cash out, how did you 24 decide what sort of a deal might work
25 for them?

Case 1:03-cv-02485-MSK-PAC

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Howard R. Berman 11/21/2005 Camile Melonakis-Kurz, et al v. Heartland Home Finance, Inc.

1 A. Well, I would give them a
2 scenario, and I would ask them what they
3

Page 37

thought their credi t score was.

Then I

4 would tell them if your credit score is
5

this is what you will be.

If credi t

6 score is different, we're going to have

7 to reevaluate and talk about it. And

8 usually at that point in time I would
9 finish filling out what we call a 1003

10 which was a uniform loan application,
11
which was industry standard.
I would

12 take it to our secretary whose name was
13
Sally at that time.
She would give me,

14 pull the one credi t score. And it
15 would give me a guide so where their 16 credi twas, and I would also be able to
1 7 see their mortgage payment on it and

18 their history and that they were paying

19 bills on time or not. And structure it
20 to see if they were going to be

21 eligible at that point in time to do
22

thi s .

And then I would contact the

23 customer back, follow through with them,

24 and at that point in time if we had a
25 deal, I would have to go into our, I

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Howard R. Berman 11/21/2005 Camile Melonakis-Kurz, et al v. Heartland Home Finance, Inc.

Page 42

1

what they wanted.

We were dealing

2 mostly with people with 660 to 780

3 scores, and these people are pretty
4

mortgage-savvy.
Q.

They were not the

5 people that have no idea.
6

How did you decide wha t sort of

7 fees you would charge on these loans?

8 A. That was really arbitrary, up
9 to us. But you knew that you had to
10 charge fees because that is how you made
11

your living.

They didn't give us a

12 direct guide saying, you will charge one

13 percent of the loan in the front and 14 you will make one percent in the back. 15 You know, that is a great scenario, but

16 they didn't particularly tell us tha t.
17 It was basically left up to us, you
18

know.

When we went through training we

19 were given a guideline of what you 20 should charge, what you shouldn't 21 charge, and you tal k to the people you
22 worked wi th and everybody had a

Basically, 24 you used intuition, you talked to the
23
different theory, you know.

25 customer and you saw what you would get

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Howard R. Berman 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.

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1 from the customer to charge them.
2

Q.

Even though you had these
There really wasn't a wri tten
And if people had different

3 guidelines?
4

A.

5 guideline.
6

Q.

7 theories about things, then let me,
8 depending upon who the loan officer was,

9 then a different loan officer might 10 structure a deal differently? Is that
11 right in terms of fees?
12 13
A.

It was up to them
I can't speak for them,

independently.
Q.

14 it was up to them.
15
In terms of origination fees

16 then, what sort of range do you think 17 you charged in terms of origination 1 8 fee s ?
19
A.
I can't recall.
I can't.

I

20 would have to look at my paperwork which

21 I'm sure you have to provide if

22 necessary.
23
Q.

And what about like processing

24 fees?
25
A.

Processing fees were, at the

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Howard R. Berman 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.

1 pay.
2

Page 46

Q.

And was there a way that you

3 would discuss this with the customers?
4

A.

Well, we tried.

You know, the

5 customer would ask you what the cost

6 was, you tried not to get into this
7 potentially wi th the customer. And then
8 some customers were savvy and, you know,

9 you'd explain it, look, if I'm going to
10 charge you this, this is what you're 11 going to pay me. So if you don't want
12 to pay those fees, then your rate goes

13 up and your payment is going to be
14

more.

So it's always better to have

15 fees in the front than it is with
16

paying the higher rate.
the house.

And it depended

1 7 on how long they're going to stay in
18

I f you're going to stay in

19 the house 30 year s, then you're going to

20 pay an additional point in the rate to 21 save costs up front. In the long run
22 it's going to cost that customer a
23 tremendous amount of money more.
24
Q.

Now, you were talking about

25 conforming loan?

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Howard R. Berman 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.

1

loans.

Page 48

But at the time our leads were

2 more geared toward people wi th good
3 credi t and good scenarios.
4

Q.

Were there differences, you

5 talked about InterFirst being another
6 conforming lender that you would use

7 sometimes?
8

A.

Yes, it was apples and oranges
InterFirst at one time

9

pret ty much.

10 was, and they have to go back to
11 Heartland and I looked at work at 12 Heartland before they were a bank, they
13
were just a broker at one time.

Then

14 they became a bank or thrift, I'm not 15 sure exactly what their standing is. 16 And they had, they started their own
1 7 banking di vision. And InterFirst was

18 one of their big providers and in our
19 office prior to Heartland becoming a,
20
21
their own bank.

When I worked there,

they already had their own bank.

So

22 you had either or. And obviously it
23 was a lot easier to get a loan done

24 wi th Heartland because they were their
25

own bank.

If it was speed you wanted,

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Page 52

1 a loan faster if you gave up $250
2 c omm is s ion to c 1 0 sea loa n wit h
3
4

Heartland.

It wasn't a big deal, you
I mean, that was not

just did it.

5 directed by, you know, management
6 obviously wished that we would do more 7 loans with Heartland at the beginning I
8

was there.

I noticed we became more

9 directed towards the end but at the
10 beginning it was just sell loans, make
11
mone y .

Everybody makes money if you

12 make money.
13
Q.

Were there ever times where

14 during the process of doing a loan, you 15 would find that you needed to alter or
16 adjust your fees up or down?
17

A.

Yes, you would, sometimes things

18 would change in the loan parameters, and
19 to make it work you'd need to squeeze.

20 But you did what it took to get the
21 loan to the table so the people would

22 sign and close.
23
Q.

What sort of things would you

24 do?
25
A.

Sometimes you had to lower your

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Howard R. Berman 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.

1

origination.

Page 53

Sometimes you had to

2

change the ra te .

You know, we were in

3 the process of rates falling rather
4

heavily at that time.

I think when I

5 started it was 6 five and by the time I

6 left there, we were selling loans at

7 5.875. The rates were dropping pretty
8 heavily. People would say, well, you
9 know, I'm not going to do this loan at
10 6.5 when I get 6.125 somewhere else.

11 And you'd have to change the rate, you 12 know, and hopefully had locked the loan
13

and you could live wi th it.

You know.

14 Because rates were dropping, you would,
15
you know, you would float a loan.

And

16 save your yield spread premi urn.
17
Q.

If somebody, you know, needed,

18 like, you found that you had somebody
19 who was going to end up paying money at 20 closing, would you ever change your rate

21 or your fee so that you could basically 22 zero them out at closing?
23 24
A.
You know wha t, I can't recall,

I mean, doing that then and there.

But

25 I know, you know, I don't think I

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1 little procedural difference, but you

2 are still doing the same thing.
3

Q.

And wha t do you mean by

4 template?
5

A.

How much your cos t s are, and

6 our base cost origination, processing,

7 underwriting, they are all similar for 8 each month. What changes are the ti tle 9 charges, clearing the title to the
10

property.

Each state has different

11 ti tle insurance ti tle charges, and
12 t hat's w hat we had to lea r n . An d

13

different taxes.

Some have recordation

14 taxes, some have simple fees, and even

15 in some states you can change via
16

county.

So, you know, you basically are

17 only estimating, and the title company

18 provides the final cost of that to you.
19 So when you pu t out the loan, you

20 estimate it.
21
Q.

Now, in terms of setting
.

22 origination fees and some of these other

23 fees that we talked about, were you

24 still able to set different ones

25 depending on what the loan was?

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1 A. It was dependent on the
2 customer, your feel for it, what you

3 could get from the customer.
4

Q.

Okay.

So like, so that's why

5 in Georgia where we see, if we look at
6 this, different loans, if you look at

7 the percent at the fees as a percent of

8 a loan amount, those are going to vary

9 from loan to loan?
10
A.

Yes . An d jus tin G eo r g i a , the
So, you

11 fees are most of those fees are lower
12

loan amounts if you look.

13 know, if you weren't going to do a fee
14 for no money at all, so you would

15 charge a higher, higher fee because it
16 was a lower amount so your percentage
1 7 wouldn't necessarily then be higher.
18
Q.

And how did you know to do

19 that?
20
MS. NOVAK:

Objection, asked

21 and answered.
22
THE WITNESS:

It is in our

23 sales. After ten to 15 years when
24 you're selling products and making

25 you're prices, you learn to do it.