Free Brief in Support of Motion - District Court of Colorado - Colorado

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

Document 339-7

Filed 01/31/2006

Page 1 of 15

Howard R. Bennan 11/2112005

Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

VIDEOTAPED DEPOSITION

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Camille Melonakis-Kurz,

HOWARD BERMAN
November 21, 2005 THE VIDEOGRAPHER: Good
afternoon. My name is Matthew Fuller, I am the videographer who will be recording today's testimony. I am with
the firm of Advanced Legal located at 411 7th Avenue, Pittsburgh, Pennsylvania. Today is the 21st day of November. The

4 individually and on

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behalf of other
5 similarly situated

employees,
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7~. eM' ~'" (Ç (Q ¡P ~
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Plaintiff,

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Heartland Home Finance, .:' L
Defendant.

~~, . .
No. 03-MK-2485

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The Videotaped Deposition of HOWARD R. BERMAN ADVANCED LEGAUSTEFF AN & STAUFFER, L TO 411 Seventh Avenue, Suite 1140

Pittsburgh, Pennsylvania 15219
November 21, 2005
12:27 p.m.

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time is approximately 12:27 p.m. We are at the offces of Advanced Legal to take the deposition of Howard Berman in the matter of Kurz versus Heartland, case number 03-MK-2485. Will counsel please identify themselves for the record stating your name, firm, address and

whom you represent.
MR. POCKRASS: Steve Pockrass from the firm Ice Miller Indianapolis. I represent the Defendant, Heartland

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Finance.
MS. HATFIELD: Beth Hatfeld, also of the firm of Ice Miller representing Heartland Home Finance.
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APPEARANCES
ON BEHALF OF THE PLAINTIFF: Jill M. Novak, Attorney-at-Law NICHOLS, KASTER & ANDERSON, PLLP 4600 IDS Center

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MS. NOVAK: And I'm Jill Novack, I'm from Nichols Kaster & Anderson representing the Plaintiffs

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today.
THE VIDEOGRAPHER: Mr.

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80 South 8th Street Minneapolis, Minnesota 55402 Telephone: 612.338.1919
Fax: 612.338.4878 Email: novak(inka.com

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Berman, wil you please turn to the
court reporter to be sworn in? COURT REPORTER: Raise your right hand, sir? Do you swear to tell the truth, the whole truth and nothing

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ON BEHALF OF THE DEFENDAN~ Steven F. Pockrass, Esquire Beth Hatfeld, Attorney-at-Law ICE MILLER One American Square, Box 82001 Indianapolis, Indiana 46282

Telephone: 317.236.2100
Fax: 317.236.2219

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but the truth, so help you God? THE WITNESS: Yes. THE VIDEOGRAPHER: Counsel, you may proceed.
DIRECT-EXAMINATION BY MS. NOVAK:

Good afternoon. Can you state your name for the record, please. A. Howard Berman.
Q. Q. Mr. Berman, have you ever been deposed before?
A.

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Email: pockrass(iicemiler.com
Email: beth.hatfeld(iicemiller.com

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Yes, but not in this matter.
What was the nature of those

Q.

proceedings? A. Anything from property disputes

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

Document 339-7

Filed 01/31/2006

Page 2 of 15

Howard R. Bennan 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.
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to business disputes over the years. Being in business.
Okay. I, even though you've been deposed before, I just want to lay a couple ground rules down. This is Bill, the court reporter, he's taking down everything we say. It is very important you give verbal responses, no nods or shakes of the head or anything
Q.

A.

Not in our branch. There was a
Was it on the same floor as

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second branch next door to us.
Q.

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that?
A.
Q.

Same floor, yeah.
Could you see the other loan

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like that. Ifat any time you don't
understand a question I'm asking you, please just ask me to repeat it or rephrase it. If you need to take a break, just let me know at any time. I will ask and if I have a question pending you go ahead answer it and we will take a break, do you understand

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officers? A. From time to time we talked to each other. There were time that we were involved, but not, not a basis, but

you know, everybody talks to each other,
train together, and do things together.
i can't even remember his name. I can't recall his name at this point in time. Q. Who is Megan Deak? A. Megan was manager of Pittsburgh One, she was my boss.
Q. Q. A.

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Who is your manager?

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everything? A. Yes.
Q.
A. Q.

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Did you work for Heartland Home

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Okay. Was she a manager of

Finance?
Yes, i did. And what were your dates of

Pittsburgh One the whole time you were a

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employment? A. My best recollection is from
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loan offcer?
Yes, she was. You understand you are making claim for overtime pay?
A. Q.

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September 2002 until January 2003. Q. Okay. And what was your job title?
A.

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Loan officer. And then they

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did promote me towards the end to senior loan officer. Q. Okay. Is there a difference between senior loan offcer and regular loan offcer? A. Basically the difference is the amount of money you earn on commission

Yes, I do. Q. Can you give me your typical weekly schedule Monday through Friday, what time did you come in the offce, what time did you typically leave?
A. A. Anywhere from 9:30 ti10 i would arrive. And I would leave

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anywhere from 7:30 to nine depending on

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the night. It was not a set schedule,

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splis.
Q.

but it was, i stayed a lot because i saw that i needed to be there to do my 12 job to be able to earn a living.
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Q.

Your job duties are still the

So on average you were

same?
Very similar, yes. Which branch offce did you work in?
A.
Q.

typically there from 9:30 to 10 a.m. to approximately seven to nine p.m.?
A. Yes, it would vary. I wouldn't lock those times in exactly, but in that range, yes. Q. And did you take a lunch when you worked? A. Yes, i did. Some days i

A.

Pittsburgh One out of Foster

Plaza.
Did you work in the Pittsburgh One branch offce the whole time you
Q.

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were there?
Yes, i did. Q. Were there any other teams that worked in the same branch offce?
A.

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didn't, but some days I did, usually half hour, 40 minutes, you know.
Q.
A.

Did you work on the weekends?

No, I did not work Saturdays.

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

Document 339-7

Filed 01/31/2006

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Howard R. Bennan 11/21/2005 Camile Melonakis-Kurz, et al v. Heartland Home Finance, Inc.
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And when you were just giving me the typical schedule that you gave me, did you take into account time that you might have left work early, or time you might have taken a lunch or days off, things like that when you were kind of factoring?
Q.
A.

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To my best recollection it just had something to do with corporate, I wasn't explained why or anything like
A.
th at.

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Q. How did you know it had to do with corporate? A. I just was told that it was a

The only days I can recall

taking off during my tenure there, and I 10 can't recall if I had a day that I was
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corporate thing, they didn't want to see more than eight hours on the time sheet.
Q. A. Q. A. Q.

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Who told you that?

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sick, I know that I, I'm of the Jewish faith and 1 took the Jewish holidays
off.
Q. So, would it be fair to say that on average you worked approximately

I believe it was my manager.

60 hours a week? A. Yes.
And again you took, you subtracted time out for lunch and the times you might left early or when you might have taken a day off for a
Q.

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holiday? A. Yes.
Q. Did you record your hours on time sheets when you worked there?

A. Yes. i mean, I wouldn't know specifically their times, but in general, yes, a core of us would be 20 there in the evening. 21 Q. Okay. Did you have a gate key 22 for the offce that you worked at? 23 A. It was a security gate key, it 24 was after five o'clock, we would have to 25 go through a pass key to either go out
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Megan Deak?
Megan Deak, yes. Were other loan offcers in

your branch offce working overtime as

well?

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A. Q.

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I did, yes. The whole time you worked

and get in from the bathroom or when we

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would leave the building or the alarm
would be set off.
Q. To your knowledge did that basically clock in the times you were entering the building or the times you were --

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there?
A.

Yes.

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Q. Were you given any specific instructions with regard to how you should -fil the time sheets out?

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Okay, initially when i was fillng time sheets out, I was filling
A.

A.

There were keys assigned to

them out for my full-time. Then it was
brought to my attention not to fill out

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each person with a number on it, so my

assumption would be that it was, the record was being kept somewhere.

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for more than eight hours a day.
Q.

Okay. And when you say you

were filling them out the whole time, all the hours that you were working, is that what you mean?
A. Q. A. Q. A.

Yes. I was doing that.
Were you working more than 40

hours per week?
Definitely, yes. Were you getting paid overtime?
No. Do you recall why you were

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12 Q. Okay. 13 A. Maybe by Guardian Security, who 14 was the security company on it. 15 Q. Okay. Just to go back to the 16 time sheets very quickly, were you told 17 to backdate time sheets and change the 18 hours that you reported to reflect only 19 40 per week? 20 A. No, never told that.
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Q.

instructed to only report eight hours
per day on the time sheets?

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Q. Was your manager aware you were working overtime? A. Yes, she was aware of the times I was there, yes. Q. How do you know that?

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

Document 339-7

Filed 01/31/2006

Page 4 of 15

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

She would be there into the

the federal minimum wage of 5.15 an

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evenings, not all evenings, but she would see the time sheets. We were

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hour?
I was not aware of that. Okay, that is alii need, thank you. Let's talk about your job duties. Really quickly. Do you want to just take me through what your job duties
A. Q.

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there early. We were there before
everybody. And she would leave, I would leave after her most nights. She would know i was there more than eight hours,
just visually.

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are?
A. My job duties with Heartland basically were we were handed out leads and we were to contact those leads.

Q. Okay. Did you ever have conversations with Megan about working overtime or being compensated for

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overtime?
A. No. Q. Did you ever have conversations with any other managers about working overtime, or being compensated for

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overtime?
A.

Q.

No. You were compensated on a draw,

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$500 twice a month, is that correct? A. Yes, if you didn't have enough commission monies in your n if you had

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Heartland did provide the leads, yes. You could also provide your own referral sources if you had them.
Q. A.
Q. A.

Q. A.

Were the leads from Heartland?

Were a majority of the leads

from Heartland?

i would say 90 percent of my
Okay.

leads were from Heartland, yes.
They would give you minimum of

commission monies, you didn't receive a draw.
Q.

Okay. I'm just going to enter
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two a day. After you were a better penormeryou would get extra ones. You

could also, there were leads that were
left around that were seconds, you could
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this as Plaintiffs Exhibit 1. Let me
show it to Defense Counsel really quick. A. Okay. Q. What I'm going to show you is

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have as many of those as you wanted to call, and, you know, you worked the phones until people answered, and you qualified them, you took an application

Plaintiffs Exhibit 1, Defendant Bates
number 11390. I'm going to represent this to you as a personal earning statement that Defense Counsel produced to us, and have you look at that one

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from them for credit, got back to them, basically sold a loan to them.
Q. Okay so you got a lead from Heartland and then you would call somebody. Would you fill out 1003

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minute. Do you notice there is, on
that document there were times you were paid $500 or less in a pay period? A. Yes. Q. Okay, and are you aware at the overtime estimate you gave us of working 60 hours per week and making $500 or less that you weren't making federal minimum wage of $5.15 an hour?

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application? A. Yes, you'd fill out a 1003,

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MR. POCKRASS: Object to the
extent calls for legal conclusion. Also that it is leading.
Q.

12 yes. 13 Q. After you got information on 14 the 1003 application would you have to 15 take it to your, the application to your 16 manager? 17 A. i didn't have to take the 18 application to my manager, you know. I 19 would assume some people did. I never

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had to. You know, what i would do

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Okay, do you, were you aware

after that, I would give it to our 22 secretary.
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that if you worked more than 45 hours

per week and you were making less than
$500 a month that you were not making

And she would pull credit and get a credit score on the customer and

Q. A.

Okay.

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

Document 339-7

Filed 01/31/2006

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Howard R. Berman 11121/2005

Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.
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Page 19
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then you would know, you know,

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qualifications, with the information we were given, and we would have to break down and qualify that customer to a loan.
How did you know that someone called for that loan?
Q.

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back, and the paperwork came back, then a processing fie would be opened up.
Okay. Okay, at that time processing would be sending the necessary papers to
Q. A.

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get payoffs, and things that we needed,
and the file would sit on your desk as things came in. Q. Okay. A. And after we recouped everything, then processing would take it, put a package together for the

A.

Basically the information you

would gather, you would, every loan has

criteria, and you fit their information to the criteria. 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 with how they 15 were targeted.
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Q. Was it Heartland's criteria that you were referring to when you say, meet the criteria? A.

The criteria is basically Fannie

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underwriting division of Heartland Bank.
Okay. Send it out to underwriting, and then we would wait for underwriting's decision. If the decision came back positive, go into
Q. A.

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Mac, Freddie Mae, it's a federal

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conditions, and at that time my manager Megan usually got pretty involved
clearing the conditions so we could get

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criteria by the, set up for them, and Heartland's bank followed that criteria. So we were pretty much following that
along. It is pretty much industry

standard.
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this loan to close.
Q. Okay. Did all of your applications have to go through Heartland first?

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Q. Okay. Did you follow any Heartland policies and procedures in regard to how to call a lead, how to fill out an application, and how to send it through? A. i was given a brief overview.

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A. Q. A.

At that time, when i first
Okay.

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started, no.

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We were able to use a different bank for a litte while there. But
towards the end it became Heartland, all

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It was basically done on your own intuition, you know, to say things. You

Heartland.
Q. When you say a little while, how long do you mean?

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had to follow certain laws that we had 10 to follow and do, that Heartland has to
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I would say through the first

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follow under the regulations for the licensing. But, you know, you couldn't lie to anybody basically, had to be honest. You know, they did run a very honest organization.
Q. Okay. So, the secretary would pull credit and then would the application go to processing after that? A.

four months of my employment, I was
there six, and we were able to go to,

Well, after you filled it out

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we used a bank called InterFirst as a
secondary, I mean you try to go through Heartland because the pricing was better, you'd make more money, but if it didn't fit, you would go over to InterFirst and that came to an end. i believe InterFirst ended the relationship

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and you sold the loan, you know, you

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with Heartland and then Heartland was,
made it very difficult, there was part

would finish it up, you would type the
deal out ourselves, send the paperwork out to the customer. Wait for the

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paperwork to return. We also ordered an appraisal, so once the appraisal came

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of a closing condition we'd have to get and they certainly made it diffcult for
us to get those. So we were pretty much locked in going right to

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

Document 339-7

Filed 01/31/2006

Page 6 of 15

Howard R. Bennan 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.
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Heartland's bank for it.
Q.

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When you went to InterFirst,

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MS. NOVAK: Nothing further. CROSS-EXAMINATION
BY MR. POCKRASS:
Q.

did the whole application have to go
through Heartland, get rejected by underwriting, and then go to InterFirst?
A. We could do that as a second, secondary market if that happened. I don't recall that happening too often

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Mr. Berman, you were given an

oath today? A. Yes.
Q. Do you understand the meaning of that oath? A. Yes, I do. Q. You understand that that requires you to tell the truth? A. Yes, I do. Q. You understand that you are giving testimony today just as you would in court, and that lying under oath can be punished by penalties of perjury? A. Yes. Q. Are you currently taking any medications that would prevent you from telling the truth? A. No, I'm not. Q. Are you currently taking any medications that would prevent you from

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with me. I mean maybe I had one or two
loans that happened, but the majority of loans were pretty well qualified, I

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thought.
Q. A. Q.

Would you say the majority of

your loans went through Heartland?

Yes, definitely. Not every
Okay. Did you use a product

one, but 85 percent, yes.

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

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Not really. We were using a

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conforming product most of the time. We were looking for full-block conforming people, so we really didn't have a matrix, you know, you just went right to
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remembering things?
A.

No.
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it. There are matrixes available but I
didn't.
Q.
at all?

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Okay. Did you use a rate sheet
Yes. Every day we had a

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In terms of the ground rules here, I know your Counsel talked with you a little bit about that. I would
Q.

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simply ask that you wait until finish
asking a question before you answer just

A. Q. A.

published rate sheet.
Was that provided to you by

so that we make sure that we get a
clear transcript of the questions and answers and just as, just as I've asked you to do that for me, I'm going to try to do that for you. If you're giving an answer, I will try not to interrupt you, okay?
A. Q.

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Heartland?

Heartland would fax it into us

at about 11 a.m. eastern standard time
every day.

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Q. Okay. Did your manager ever tell you anything about working

overtime?
A.

Absolutely not.

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Q. Did you have to get approval if you wanted to work overtime? A. No. Just work the hours. You

know. To get the results .. we were
sales, get numbers.
Q. And when you were told to report only eight hours a day on your

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Yes.
You had testified that you have

given depositions before? A. Yes.
Q. Were you a party to any of the cases in which you have given

depositions?
No. Approximately how many times do you think you have been deposed?
A. Q. A. Two, three, this is some, I'm going to be 45 years old, so I have been working in business since I have

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time sheet, do know who told your manager to tell you to do that? A. No, I don't.

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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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A.

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Q.

No. Is that because the months we

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going to lock myself in to say it was 9:30 every day, ten every day, but, you
know, I would say the majority of time.
Q. Okay. And what, how far a drive is it from where your -A.

are talking about were not baseball

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season?
A. Q.

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That is correct.
What about other activities with

During non-rush hour time, about
Is that a non-rush hour time?

your kids?

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20 minutes.
Q. A.

A.

Basically my wife is a stay-at-

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home wife, so she was able to take care of th at.
Q.
A.

Yes, after nine in Pittsburgh,

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So your wife doesn't work

you know, you might hit a little bit of traffic, but not a lot.
Q.

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outside the home?
No. Q. Did she work outside the home at all while you were employed at

Heartland?
No. When you were employed in the Pittsburgh One branch, there was another branch offce located on the same floor?
A.
Q.

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Would you pick up your son

after school too? A. No, take the bus home.
Q. Now when you would come in between 9:30 and ten, how many other loan offcers would usually be there? A. There would be a speckling, one or two, three maybe, a lot of them

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would roll in later.
Q. And who were the people, were there certain people who were consistently there when you were there? A. You know what, I don't recall, I don't even recall the names of most

A. Q.

Correct.

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Were there any windows from your offce area from your branch into

the other branch?
A.

No, there was solid wall
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separating the two of us, side-by-side,

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but.
Were there any windows for that branch into the hallway or corridor?
Q. A.

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of the people I worked with at this point in time.
Q. After you got in, I know you said others would come in afterward, how many loan offcers were working your branch at that time? A. I believe we had somewhere between 12 and 15 at any given time. Q. Now if you were working at the far corner, does that mean that you would walk past where other people were so that you could see? A.

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Basically, in the door there

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was a window but beside that there were no open, you couldn't, basically unless
you were in -- our end had a reception

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area, you walked right in. They could
see out. We really would have to walk

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into the reception area to where the copying machine was.
Q. From where you were at your desk, could you see into the other

offce?
A. No. I was at the far end of the building. i was at the furthest

corner away from everybody. Q. And what time did you say you
usually came in in the morning?
A.

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Well, let me rephrase that a

litte bit. In the first month or so I was there, my desk was towards the front
of the office, and then as people left other people moved around, i moved my desk back to a larger space so i could have more room. So, you know, you'd walk through obviously to go to the

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Usually between 9:30 and ten.

bathroom, get cup of coffee, everyhing

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Based on when I, because I would drop

my son off at school and then, he had to be at school at 9:05 and then head
across town into the office. I'm not

22 would have to be, you'd have to come 23 back to the front of the office, so you 24 know you hear people, get the gist of 25 who was there.

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Howard R. Berman 11/21/2005 Camile Melonakis-Kurz, et al v. Heartland Home Finance, Inc.
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Did you get a sense of what time most people came in?
Q. A.

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No, I didn't pay attention. I

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was too busy doing what I needed to do
to make a living. Q. You had talked before about,
you know, that basically everybody sort of trained together and worked together.
A.

know, I'm not going to say I'm the ultimate expert on it, but I did a pretty decent job with it.
Q. Is there a loan that you're most proud of? A. Not really. I mean, anyone

4
5 6 7 8 9

6
7

8 9 10
11

that closes and you get paid on, you are proud of.
Q. Tell me a little bit about, you know, at the very beginning you talked about how you collect information from this customer. What sort of things

Uh-huh.

Can you tell me a little bit about what sort of things you all would
Q.

10
11

12 do? 13 A. Well, we would, the big thing 14 together there would be meetings and we 15 would have, you know, there was a 16 gentleman, but I can't remember his last 17 name, was Ken J. Who works for the 18 corporation. You could ask your client, 19 he came in and did some training and we

20
21

22 23 24 25

were mixed with that for a couple days. You know, Megan would do some things, and have a meeting every so often, and it would pull the group together. You

12 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 18 their home would be. Then you'd ask 19 them some history on what kind of

20
21

mortgage they presently had now, what

interest rate they were at, what their 22 payment was, if they had any bils they
23 24 25
Page 34

know. Wasn't an everyday interaction, but there was some, a litte bit of

wanted to payoff, what kind of goals

they were seeking by doing this loan.
You know, you work through the criteria
Page 36

1

interaction.
Q. Would you talk with some of the other loan offcers about how you might structure a deal or what -A.

1

2
3

2 3

basically to come up with a deal that would benefit them and you.
Q. Now, the goals that they had, what sort of goals would somebody have? A. Most goals are lower payments. Definitely. You know, sometimes they

4 5
6

4
5

We would bounce things off each

other definitely, yes.
Q. And what sort of things would you bounce off of each other? A.

6
7

7 8 9 10
11

would want to pay all their bils off
and put it all in their mortgage and

You know, you have a certain

8
9 10
11

that's called a consolidation loan, and
you know, bottom line is that they would pay less money per month than they were
today. It was how much you could save

kind of client with a score and an L TV,

what do you think we should do for 12 them, how should we, you know, our loan 13 to value is A TV, in mortgage jargon. 14 You structure it together. And you
15 16 17 18 19

basically would find the best way to
help your potential client out.
Were there people who would, it sounds like you know this stuff prett well. Were there people who would come to you asking you questions? A. You know, I was, when I started
Q.

20
21

12 13 14 15 16 17 18 19

them was basically how much you could make and how well the deal was

structured.
Q. Now were there some people who had needs for like immediate cash for

20
21

22 I was very rough. And courtesy of 23 Megan i learned pretty fast, she did a 24 pretty good job, and I'm pretty much a 25 self learner, self-taught. i got, you

something? A. Well, some people wanted cash out, that's called a cash-out loan. 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?

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Page 39
1

2 3

4
5 6 7 8

Well, I would give them a scenario, and I would ask them what they thought their credit score was. Then I would tell them if your credit score is this is what you will be. If credit score is different, we're going to have
A.

pretty much our loan parameters then,
you know, that is what we were working

2 3

with at that point in time. It was
pretty much the, as I found out later, it's pretty much the basics in the loan business. It wasn't anything really exotic, or fancy or anything like that.
Q. And you could do adjustable rate mortgages too, couldn't you? A. Yes, that's what the three-year

4
5

6 7
8

to reevaluate and talk about it. And
usually at that point in time i would

9 10
11

finish filling out what we call a 1003
which was a uniform loan application, which was industry standard. i would

9

10
11

and the five-year were. There were some
products, they had what you would call a Be system where they had a two-year and three-year, they don't have a fixedpayment function to them. And then they would become adjustable. At the time,

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 this. 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
Page 38
1

12 13 14 15 16 17 18 19

take it to our secretary whose name was Sally at that time. She would give me,
pull the one credit score. And it would give me a guide so where their credit was, and i would also be able to see their mortgage payment on it and

12

their history and that they were paying

13 14 15 16 17 18 19

we didn't have anything that was a onemonth-adjustable or a three-monthadjustable. Anything we were selling of that nature we really weren't marketing

20
21

at that time. The Heartland loan
products were pretty much straightforward at that point in time. i don't know what they are now, but at that point in

22 23 24 25

time they were.
Page 40

2 3

guess, our computer room where we had two computers, and type out paperwork,

1

put the proper papers together, we had
to list on the wall, and put them in overnight mail to them. Then wait for them to send the paperwork back while we

2 3

Q. Let's say for example, BC, what is that?
A. Q.

That's bad credit.

4
5

4
5 6 7 8

6
7

So, if you had someone with bad credit, why would you do one of these two- to three-year loans with them?
A.

8
9 10
11

ordered an appraisal for them, and an appraiser would come out and then
hopefully all would come together, and

Well, there is a reason you

have bad credit. The reason you have
bad credit normally is you don't have

9
10
11

we would all benefit.
Q. Depending upon what the credit score showed and what their goals were, would you say, would there be some people who you would say I would rather do 30-year-loan or a 20-year-loan or a 15-year-loan, I mean, did you differentiate, were there different

income to pay your bills. So we had to find a way to lower their bils so if
you can consolidate them or they're just paying $1,000 out or less a month, you can do that loan for two years, they

12 13 14 15 16 17 18 19

12 13
14 15

could get into a better credit standing,
and then when that loan was up, they

products?
A.

There were different types of

16 17 18 19

can redo it, come back and do a conforming loan.
Q. Would you explain to them sort of why it is that you would set it up like that? A. Yes. Definitely. Q. What was the reaction from people when you talked to them about

20
21

loans, you can do, you know, given that

20
21

22 23 24 25

we were conforming, basically you had an option of three-year.fixed or a the 27.
year-adjustable, five.year.fixed or the 25.year.adjustable. Fifteen-year.fixed, 20.year-fixed, 30.year-fixed. Those were

22 23 24 25

that?

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Page 43
1

2 3

4
5

Most people were happy about that. You know, I, and I'm going to go back a little bit. I can't recall if I did any two- or three-year Be loans at Heartland at that time. Most of my
A.

from the customer to charge them.
Q.

2

Even though you had these

3 4
5

guidelines? A. There really wasn't a written guideline.
Q. And if people had different theories about things, then let me, depending upon who the loan officer was, then a different loan offcer might

6
7

stuff wasn't, but that would be the
process. I did, I think I did a couple three, and a couple fives, or actually seven years at that point in time is what I had done. I can't recall the
exact loans. I mean, i don't even

6 7 8 9 10
11

8
9 10
11

structure a deal differently? Is that
right in terms of fees? A. It was up to them

12 13 14 15 16 17 18 19

know, I can't remember them, the amount of loans i closed at that time with

Heartland there, you know, just went
about your business every day, and you

were hoping that there would be a check
there every two weeks.
Q. Now, does the amount of time that a person is planning on staying in the house, would that affect the type of loan that you will do for somebody? A. It could. Depends, and a lot

12 13 14 15 16 17 18 19

independently. I can't speak for them, it was up to them.
Q. In terms of origination fees then, what sort of range do you think you charged in terms of origination

fees?
A. I can't recalL. I can't. i would have to look at my paperwork which I'm sure you have to provide if

20
21

20
21

22 23 of this is, you know, customers weren't 24 totally naive about it, they knew what 25 was out there, and they would tell you
Page 42
1

22 23 24 25

necessary.
Q.

And what about like processing

fees?
A.

Processing fees were, at the
Page 44

what they wanted. We were dealing
mostly with people with 660 to 780

1

time I believe the company's processing

2 3

4
5 6 7 8 9 10
11

scores, and these people are pretty mortgage-savvy. They were not the

2 3

fee what $400, which we would charge,
and sometimes we would add more to that, whenever we added more to that, we would be available to a percentage of that.

4
5 6 7 8 9 10
11

people that have no idea.
How did you decide what sort of fees you would charge on these loans?
Q. A.

You know, sometimes I'd charge $600,
sometimes I'd charge $500. You know,

That was really arbitrary, up

just where you felt you could put fees
on to a loan, you just did it.
Q. Now, you talked before about having one percent, you said like, having one percent up front? A. I'm using that as an example,

to us. But you knew that you had to

charge fees because that is how you made

your living. They didn't give us a
direct guide saying, you will charge one percent of the loan in the front and

12 13 14 15 16 17 18 19

you wil make one percent in the back.
You know, that is a great scenario, but
they didn't

particularly tell us that.

It was basically left up to us, you

know. When we went through training we
were given a

20
21
.f

guideline of what you should charge, what you shouldn't charge, and you talk to the people you

12 13 14 15 16 17 18 19

yes.
Q.

Explain to me what, what does

that mean? A. Okay, you have a $100,000 loan,
one percent up front would be $1,000.

20
21

\

22 23 24 25

worked with and everybody had a
different theory, you know. Basically, you used intuition, you talked to the customer and you saw what you would get

22 23 24 25

And then one percent in the back would be another $1,000. What the back is is they have what they call a yield spread premium, and you look at an interest

rate, they have a rate which they call
a par rate, that has no yield behind

it, costing the bank what you are paying

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Howard R. Berman 11121/2005

Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.
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2 3

for, it's the same thing. If you sell a higher rate, then there is a premium

A. Q. A.

Yes.
Heartland also had?

2
3

4
5 6 7 8 9 10
11

behind it. And for basically, you know, for an eighth of a point you would get a quarter in premium. And each, you
know, six percent loan, if you would sell them a six-and-a-quarter you'd get a half. If you'd sell them a six-anda-half you'd get one, I'm using that as an example.
And are there advantages to the customer in terms of these points that you would charge?
Q. A.

Had a nonconforming.

4
5 6 7 8 9 10
11

Q. What sort of work did you do in
a nonconforming?
A. i don't know if I actually ever closed a loan in nonconforming side. i looked at it. You know, I was new to the business and I really hadn't learned
the BC side. I

learned the conforming

12 13 14 15 16 17 18 19

It depends on how you would

structure the deaL. Because you
wouldn't want to make so much up front, so sometimes the customers didn't want to pay up front, they don't want to make cost, so you'd have to make it up

12 13 14 15 16 17 18 19

side. And you have to understand, this is at the time I started in this

business as mortgage rates were fallng
and everybody out there wanted to refinance. It was basically, you know, you had the cream-of-the-crop borrowers. I concentrated basically where the volume would be. i mean, i would get things come across my desk and

20
21

in the rate. So you charge them a
higher rate. So basically it would be up to the customer, you know, are they going to pay the front fees, the costs,

20
21

try it. But it wasn't a priority of
mine to do the BC loans, I mean, if they came in, I would take a shot at them. I mean, historically, I think you

22 23 24 25

or they're going to pay it in the rate.
So one way or another, you are going to
Page 46

22 23 24 25

can make more money doing bad credit
loans than you can doing conforming
Page 48

1

pay.
And was there a way that you would discuss this with the customers? A. Well, we tried. You know, the
Q.

1

loans. But at the time our leads were

2 3

2 3

more geared toward people with good
credit and good scenarios.
Q. Were there differences, you talked about InterFirst being another conforming lender that you would use

4
5 6 7 8 9 10
11

4
5 6

customer would ask you what the cost

was, you tried not to get into this
potentially with the customer. And then some customers were savvy and, you know, you'd explain it, look, if I'm going to charge you this, this is what you're going to pay me. So if you don't want

7
8 9

sometimes?
A.

Yes, it was apples and oranges

pretty much. InterFirst at one time 10 was, and they have to go back to 11 Heartland and I looked at work at
12 13 14 15 16 17 18 19

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. And it depended 17 on how long they're going to stay in 18 the house. If you're going to stay in 19 the house 30 years, then you're going to 20 pay an additional point in the rate to
21

Heartland before they were a bank, they

were just a broker at one time. Then
they became a bank or thrift, I'm not sure exactly what their standing is. And they had, they started their own

22 23 24 25

save costs up front. In the long run it's going to cost that customer a tremendous amount of money more.
Q.

banking division. And InterFirst was one of their big providers and in our office prior to Heartland becoming a, 20 their own bank. When I worked there, 21 they already had their own bank. So
22 23 24 25

you had either or. And obviously it

was a lot easier to get a loan done
with Heartland because they were their

Now, you were talking about

conforming loan?

own bank. If it was speed you wanted,

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

2 3

you could turn a loan in a couple weeks.
Now what about InterFirst, were there certain things that say, you'd look at and you'd say, boy, this would be a good one for InterFirst, or i could somehow get a better deal with InterFirst?
Q.

2
3

And are you familiar with the laws that affected Heartland's ability
Q.

4
5 6

4
5 6 7 8 9

7 8
9

to do loans under 50,000? A. I don't think it was laws, you know, from what I know now it would have been investor-driven. They didn't have someone to sell the loan to because

they were packaging the loans up and
selling them off, they weren't keeping the loans, they aren't a bank that collects payments each month, they

10
11

Basically what it was, is we would run what they call LP approvaL.
A.

10
11

think it's computer-based model that evaluates it, and sometimes Heartland 20 would turn that loan down and then you'd 21 send it in to InterFirst, and InterFirst 22 would approve it, or vice versa, it 23 would happen the opposite way. i would 24 say I think 90 percent of my loans
25

12 13 14 15 16 17 18 19

I'm not sure what LP actually stands

for, but what it was is you would run approvals and you would send your
information, basically credit score, you'd send credit, income, L TV level

down, and it would be evaluated, and i

12 13 14 15 16 17 18 19

basically roll the money each month.
They sell the loan and then they sell it off to third party investors who then

collect the monthly payments for the long-term.
Q. Was there anything else in terms of say, InterFirst, where you might think, say, other than a loan that was less than $50,000, where you might think that this is one that I ought to try at InterFirst before I try at

20
21

weren't through Heartland.
Page 50

22 23 24 25

Heartland?
A.

No, no. I mean you are working

for Heartland, you knew you could close
Page 52

1

2
3

Now, why would you, you mentioned sometimes it would happen that Heartland would turn it down and
Q.

1

2
3

a loan faster if you gave up $250 commission to close a Joan with
Heartland. It wasn't a big deal, you

4
5 6

7
8 9

InterFirst would take it, and sometimes InterFirst would turn it down and Heartland would take it? A. I had no privy to why that was.

4 5 6 7 8 9 10
11

just did it. I mean, that was not directed by, you know, management obviously wished that we would do more
loans with Heartland at the beginning I was there. i noticed we became more

You know, each one set their standards.

There was a parameter that they could
set their standards, and one might have

10
11

12 13 14 15 16 17 18 19

standards that are a litte easier and one might have standards that are a litte harder, but they were within that
parameter, and it just depended on the market. You know, I'm not, i know a lot more about the banking industry now than I did when i started there. And

directed towards the end but at the beginning it was just sell loans, make
money. Everybody makes money if you make money. Q. Were there ever times where during the process of doing a loan, you would find that you needed to alter or adjust your fees up or down? A. Yes, you would, sometimes things would change in the loan parameters, and to make it work you'd need to squeeze. But you did what it took to get the loan to the table so the people would

how it is driven, which had no
preference to this conversation but what one of the things was Heartland didn't do loans under 50,000 at that point in

12 13 14 15 16 17 18 19

20
21

20
21

22 23 24 25

time, or 60,000, or something like that.
So if we got a low-end loan, we definitely had to take it outside the

system.

22 23 24 25

sign and close.
Q.

What sort of things would you

do?
A.

Sometimes you had to lower your

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Howard R. Bennan 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.
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origination. Sometimes you had to
change the rate. You know, we were in the process of rates falling rather heavily at that time. I think when I started it was 6 five and by the time I left there, we were selling loans at

minutes from the office and brought my

2 3

2
3

lunch back and sat at my desk and ate
it and then went back to work. So I might have spent 15 minutes, 20 minutes max for lunch that day. Other days, you know, there were some days where I

4
5 6

4 5 6
7

7 8 9 10
11

5.875. The rates were dropping pretty heavily. People would say, well, you
know, I'm not going to do this loan at 6.5 when I get 6.125 somewhere else. And you'd have to change the rate, you

worked through lunch because I maybe was
going to leave at 7:30 or 8 o'clock instead of 9 o'clock that day. You know, there wasn't a set pattern, it was

8 9

10
11

just whatever the day brought me, and
that is how I did it.
Q. And there were not set hours that you were told you had to work? MS. NOVAK: Objection, asked and answered. EXAMINATION BY MR. POCKRASS: Q. A.
You can go ahead and answer.

12 13 14 15 16 17 18 19

know, and hopefully had locked the loan
and you could live with it. You know. Because rates were dropping, you would, you know, you would float a loan. And save your yield spread premium.
Q. If somebody, you know, needed, like, you found that you had somebody who was going to end up paying money at closing, would you ever change your rate or your fee so that you could basically zero them out at closing?

12 13 14 15 16 17 18 19

20
21

20
21

You know, there was, I was told

that you were expected to be there, but
it wasn't like a set hour time, you

22 23 24 25

You know what, i can't recall, I mean, doing that then and there. But i know, you know, i don't think I
A.
Page 54

22 23 24 25

know. It was obvious to me that if you didn't show up, you didn't make money.
Your desk would be gone because somebody
Page 56

1

2 3

credited anybody at closing. i can't really recall that while I was at Heartland.
Q. In terms of, as you are talking about these, you know, rates dropping and things and you're saying, I got to make some adjustments, getting squeezed, how would you decide, you know, how much you would lower your fee or adjust the

1

else would be wanting to make money.
Q. Can you give me an estimate of, best you can remember, how many days a week you would have lunch and how many you wouldn't?

2 3

4
5 6 7 8

4
5 6
7 8

A.

i would say i have eaten lunch

three to four times a week, maybe one day a week i wouldn't have lunch. Like
i said before, you know, some days it was 45 minutes, some days 20 minutes. I didn't keep track of it.
Q. Now on the time sheets that you talked about, was there a space for filling out for out to lunch and back in?
A. You know what? i would have to look at one to recall. You know, we
are going three years since i left.

9 10
11

rate?
A.

9 10
11

It was on a per loan basis. I

12 13 14 15 16 17 18 19

mean, I didn't have a formula. I mean,
basically, my goal was to get them to the table to sign because that is how I ate. Whatever it took to get the loan

to close.
Q. In terms of your hours that you talked about, were there times, you, I know you said that you took lunch say, 30 to 45 minutes, is that -A. In retrospect, yeah, I mean,

12 13 14 15 16 17 18 19

20
21

20
21

Q. When you were, forgive me if you answered this already, but when was it that you were first told about time

22 23 24 25

I'm not going to stick to that exact time limit, but yeah, I was in that realm. It was a lot of days that I ran down to the Wendy's which was five

22 23 24 25

sheets?
MS. NOVAK: Objection,asked
and answered.

THE WITNESS: You know what,

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Q.

Now who was the EquiFirst rep?

2
3

A. You know what, I can't remember his name. It's, I have no recall what

2 3

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

could get from the customer.
Q. Okay. So like, so that's why in Georgia where we see, if we look at this, different loans, if you look at the percent at the fees as a percent of a loan amount, those are going to vary from loan to loan? A.

4
5 6 7 8 9 10
11

his name was.
What was it that this rep would have done with you?
Q. A. He just helped me walk them through their program and their rate sheet and the qualifications. One of

4
5 6 7 8 9 10
11

the reasons that that loan went, was

their loan to value, those were 95, 100

Yes. And just in Georgia, the

fees are most of those fees are lower

12 percent loan-to-value loans which is 13 something Heartland didn't do at the 14 time. 15 Q. Now, I see that you did other 16 loans besides the Crevis loan. You did 17 other loans in Georgia? 18 A. Yes. 19 Q. How did you learn how to do 20 Georgia loans in addition to -21

12 13 14 15 16 17 18 19

loan amounts if you look. So, you
know, if you weren't going to do a fee for no money at all, so you would charge a higher, higher fee because it was a lower amount so your percentage
wouldn't necessarily then be higher.

Q.

And how did you know to do

that?
MS. NOVAK: Objection, asked and answered.
THE WITNESS: It is in our sales. After ten to 15 years when you're selling products and making you're prices, you learn to do it.
Page 92

20
21

A.

Well, I was licensed in Georgia

22 23 24 25

and we had template and we worked off
the template that was provided for the
cost. You know, sellng loans from one

state to the next, there might be a
Page 90

22 23 24 25

1

2
3

litte procedural difference, but you are still doing the same thing.
Q. A.

1

2 3

EXAMINATION BY MR. POCKRASS:
Q. I'm not sure i follow you on that. What do you mean by that? A.

And what do you mean by

4
5 6 7 8 9 10
11

template?
How much your costs are, and our base cost origination, processing, underwriting, they are all similar for each month. What changes are the title charges, clearing the title to the

4
5 6 7 8

What do i mean, well, what are

you -Q. I don't understand what the relationship, what are you saying the

property. Each state has different title insurance title charges, and
that's what we had to learn. And

9 10
11

relationship is, why is it at 10 to 15
years of sales?
A.

You learn how to price deals.

12 13 14 15 16 17 18 19

different taxes. Some have recordation
taxes, some have simple fees, and even in some states you can change via

county. So, you know, you basically are only estimating, and the title company
provides the final cost of that to you. So when you put out the loan, you estimate it.
Q. Now, in terms of setting origination fees and some of these other fees that we talked about, were you still able to set different ones

12 13 14 15 16 17 18 19

If it is not a high enough price deal, you learn to mark it up to get a better

margin.
Q.
A.

There wasn't anybody at

Heartland who showed you how to do that?
No. Q. Did you have a processor who worked with you when you were at

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21

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Heartland? A. Yes.
Q. A. Q.

22 23 24 25 depending on what the loan was?

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Who was that?

I can't recall his name. Billy
And where did Bily sit in

was his first name.

23 (Pages 89 to 92)

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

Document 339-7

Filed 01/31/2006

Page 15 of 15

Howard R. Bennan 11/21/2005 Camille Melonakis-Kurz, et al v. Heartland Home Finance, Inc.
Page 137
1

Page 139
1

have a definitive answer for you, I

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can't tell you.
When you were saying, it sounds like you and Mortie and Carl were three people who... A. Stayed late.
Q.

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things, there would be a secondary set of criteria with higher interest rates that they would follow.
Q. And so nobody ever told you that Heartland was going to be doing more of the A minus loans? A. No, we were just told that, they, we were doing too much A minus

4
5 6 7 8

4
5 6 7 8
9

Q.

Okay. Stayed late. When there

people, or sometimes none? 11 A. Sometimes. A lot of times it 12 was just me, a lot of times it was two 13 or three. It was, you know, we were 14 closing down for the night. 15 Q. With regard to InterFirst, are
16 17 18 19

9 10

were other people walking out with you, were there always one or two other

10
11

business and not enough A with InterFirst, so they no longer wanted our business. That is what we were told.
Q. Now, if Heartland had a price bump and had priced it too high, would you take that type of loan to

you sure that it is InterFirst that cut off its business with Heartland?
A.

That is what we were told.

That came from Megan. So that is where
that came from. I mean, i didn't have a pipeline to that corporation. You know, that is what I was told, I was

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we no longer were going to be their rep, that they were no longer going to honor loans from us because we
told that

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Page 138

InterFirst? A. If they had it priced it too high, I would say I wouldn't get the business. Most of mine -- InterFirst learns were under 100,000, so it was basically, you know, it was noncompetitive loans, loans we wouldn't have gotten at all, so those loans that I got through InterFirst were basically loans that wouldn't come to the company,

we would not have sold them.
Page 140

1

had given them A minus, is what they
called it, not the A, which is the basic stream loan that would be something wrong with the person and the rates get a little higher. It wasn't our office that was doing the A minus,

1

Q.

So you knew that those would be

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lost?
A.

I always priced them out at

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4
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InterFirst, and then I looked and it
was such a disparity that, you know, when you are a half point, three-quarters of a point, you know, he

but a lot of other Heartland offces in

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8 9 10
11

the country, from what i understood. 9 And you know, that is what I got from 10 Megan. So i can only answer what I was 11 told.
8 12 Q. And who else was present when 13 Megan told you this? 14 A. She told it to several of us in 15 the office it just wasn't me. i mean, 16 if you would bring a couple people in 17 here, they will tell you the same thing. 18 Q. A minus loans were better 19 priced at Heartland at that point in 20 time? 21 A. No, what it would be is, there

didn't have a choice, it was what his
investors were telling him. MR. POCKRASS: i don't have any other questions.
MS. NOVAK: i just have one more follow-up question. REDIRECT-EXAMINATION BY MS. NOVAK: Q. You testified earlier today that there would be trouble if you showed

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more than eight hours per day on your
time sheets, what did you mean by that?
A.
Q.

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Just that the trouble would be
How did you know that?

for the manager.
That was basically something that was told, I believe, you know, I asked why, and she said they don't want
A.

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was your conforming loan, which, our

basic loan we did. If for some reason
the person didn't qualify in that neat

package, and they were out one or two

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35 (Pages 137 to 140)