Complaint Exhibits

Exhibit A  page 1 Exhibit A  page 2

Exhibit A Pages 3-8

Exhibit B

Exhibit C

Exhibit D

Red is current scenario
Blue is fairytale scenario when the option ARM began its destruction

Exhibit E

Growth rate of Option ARMs
The most widely marketed, dangerous and deceptive product on the Internet

Exhibit F
Exhibits F-J represent a summary of one borrowers' Option ARM
Exhibit G
Exhibit H

Tying arrangements whereby the borrowers are provided additional credit in order to maintain payments on the initial loan.  There are a variety of reasons the lenders will extend additional credit, including but not limited to repurchase agreements with mortgage investors and to boost fraudulent earnings.  Through the use of NIV guidelines many borrowers committed loan fraud and were provided loans they could not afford.  Few of these borrowers would risk shopping elsewhere when they knew their current lender would continue their unsafe and unsound practices.  Many of these borrowers have been economically coerced from shopping interest rates or lenders. 

Lenders will also report late payments in order to deter borrowers from shopping elsewhere and in order to receive advance notice of borrowers' request for credit.  

Exhibit I
Exhibit J
Exhibit K
Federal Reserve Board's Z.1


Exhibit L
World Savings / Herbert Sandler are the Founder of Option ARMs

Exhibit M
World Savings 2005 10-K & Wachovia Bank's 2006 10-K


Deferred Interest in the Loan Portfolio

by LTV/CLTV Bands and Year of Origination

As of December 31, 2005

(Dollars in Thousands)

Deferred interest balance by LTV/CLTV(b)     2005     2004     2003 & prior     Total
At or below 80.00%                            
60.00% or less    $ 22,543    $ 27,031    $ 8,897    $ 58,471
60.01% to 70.00%      31,848      35,809      9,980      77,637
70.01% to 80.00%      71,853      84,477      23,068      179,398
Subtotal      126,244      147,317      41,945      315,506
80.01% to 85.00%      46,938      54,903      12,996      114,837
85.01% to 90.00%      2,146      3,223      1,190      6,559
Greater than 90.00%(c)      4,839      5,684      1,391      11,914
Total deferred interest    $ 180,167    $ 211,127    $ 57,522    $ 448,816
(a) The first lien’s origination year is used in this table if a second lien has a different origination year from the associated first lien.


(b) First mortgage LTVs and first and second mortgage CLTVs are both included in this table. These calculations rarely take into account any changes in property value since the time of origination.


(c) Approximately 99% of this deferred interest is on loans covered by mortgage or pool insurance

The aggregate amount of deferred interest in the loan portfolio amounted to $449 million, $55 million, and $21 million at December 31, 2005, 2004, and 2003, respectively.
Deferred interest amounted to less than .39% of the total loan portfolio on those dates.
Deferred interest levels increased primarily because the balance of ARM loans in our portfolio increased by $41 billion since 2003, the indexes on our ARMs increased,
the minimum payment on most new and many existing loans was less than the interest due, and many borrowers made monthly payments that were lower than the amount
of interest due. We do not believe the aggregate amount of deferred interest in the portfolio is a principal indicator of credit risk exposure.
Nonetheless, we carefully monitor the payment behavior and performance of all loans with deferred interest.

Based on our 25-year track record with ARM loans that have the potential for deferred interest, together with our underwriting and appraisal processes, we believe we can manage
incremental credit risk that may be associated with loans with deferred interest. We continually analyze the portfolio and market trends to try to detect issues early enough so we can
minimize future credit losses. As short-term interest rates have risen, we have begun increasing the minimum payment allowable on many of our new originations because the discount
between the minimum payment and the fully-indexed payment affects the amount of deferred interest loans incur and could affect the loans’ potential credit risk.

As of December 31, 2005, 2004, and 2003, we had assets of $124.6 billion, $106.9 billion, and $82.5 billion, respectively.
For the years ended December 31, 2005, 2004, and 2003, we had net income of $1.5 billion, $1.3 billion, and $1.1 billion, respectively.

Wachovia Bank's 2006 10-K
The amount of deferred interest related to all Option ARMs was $1.6 billion at December 31, 2006;
(Wachovia was only including GDW/World's deferred interest; it did not appear that Wachovia was originating or purchasing Option ARMs from prior 10-ks)


World Savings
(in thousands) 2006 2005 2004 2003




$124,600,000 $106,900,000 $82,500,000  
Net Income   $1,486,164 $1,279,721 $1,106,099 $958,279
Net Income % of Assets   1.19% 1.20% 1.34%  
Deferred Interest $1,600,000* $448,816 $55,000 $21,000  
Deferred Interest % of Assest   .36% .05% .03%  
Increased Deferred Interest as a % of Prior Years Net Income *77.46% 30.77% 3.07%    
% Increase of Deferred Int. form prior **256.49% 716.03% 161.90%

* Huge increase from 2005 following substantial increase from 2004.
** Huge percentage increase 2004-2005.  Although percentage increase was smaller 2005-2006; relative to net income it was another huge step towards insolvency.  World's financials are
now diluted with Wachovia's.

Clearly these increases are not sustainable given the need for increased allowance for loan losses ("ALL") and interest payments to depositors and MBS investors.
Option ARMs are predatory pricing products (in more ways than one) 


 Loans Receivable and MBS with Recourse by Type of Security 
2001 - 2005
(Dollars in Thousands)
Loans collateralized by primarily first deeds of trust
  2005 2004 2003 2002 2001
One-to four-family units
290% increase 2001-2005
$111,394,353 $94,449,233 $69,586,604 $54,934,357 $38,326,759
Over four-family units $4,794,359 $4,748,335 $3,554,715 $3,257,389 $2,766,888
Commercial real estate $10,205 $15,220 $18,598 $20,465 $29,117
Land $0 $0 $0 $114 $199
Loans on deposits $10,509 $10,734 $11,780 $13,240 $16,672
Other(a) $1,672,539 $1,335,657 $1,033,881 $717,751 $451,084
Total loans receivable $117,881,965 $100,559,179 $74,205,578 $58,943,316 $41,590,719
MBS with recourse collateralized by:        
One-to four-family units $1,168,480 $1,719,982 $2,579,288 $4,458,582 $11,821,868
Over four-family units $0 $0 $1,070,760 $1,412,487 $1,747,751
Total MBS with recourse $1,168,480 $1,719,982 $3,650,048 $5,871,069 $13,569,619
Loans receivable and MBS with recourse $119,050,445 $102,279,161 $77,855,626 $64,814,385 $55,160,338
(a) Includes loans in process, net deferred loan costs, allowance for loan losses, and other miscellaneous discounts and reserves.
At December 31, 2005, 99.8% of loans receivable and MBS with recourse had remaining terms to maturity in excess of 10 years.
  Single Family 1-4 Units 5+ Units Commercial Total Loans % of Portfolio
Northern California $38,415,784 $1,751,342 $8,136 $40,175,262 34
Southern California $30,566,045 $1,502,523 $901 $32,069,469 27
Total California $68,981,829 $3,253,865 $9,037 $72,244,731 62
Florida $8,133,373 $83,976 $120 $8,217,469 7
New Jersey $5,392,039 -0- $256 $5,392,295 5
Texas $3,256,839 $155,631 $39 $3,412,509 3
Illinois $2,824,643 $142,322 -0- $2,966,965 3
Virginia $2,610,051 $2,972 -0- $2,613,023 2
Washington $1,803,743 $726,347 -0- $2,530,090 2
Other states (a) $19,560,316 $429,246 $753 $19,990,315 17
Totals $112,562,833 $4,794,359 $10,205 $117,367,397 100
Loans on Deposit       $10,509  
other (b)       $1,672,539  
Total Receivables and MBS with Recourse     $119,050,445  
Loans with Recourse       $1,168,480 (c)
(a) Each state included in Other states has a total loan balance that is less than 2% of total loans as of December 31, 2005.  
(b) Includes loans in process, net deferred loan costs, allowance for loan losses, and other miscellaneous discounts.  
(c) The above schedule includes the balances of loans that were securitized and retained as MBS with recourse. 


Exhibit N

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  Financial Institution Letters
Letter to Stakeholders
Second Quarter 2007 Edition of FDIC's Letter to Stakeholders
August 7, 2007



Among the significant activities reported in the Letter to Stakeholders for the second quarter of 2007 are the following:

  • FDIC-insured commercial banks and savings institutions reported net income of $36.0 billion in the first quarter of 2007, slightly below the $36.9 billion earned in the first quarter of 2006.
  • Estimated insured deposits increased by $84.4 billion in the first quarter, the second largest quarterly increase in the past five years.
  • The Deposit Insurance Fund (DIF) balance increased by $580 million (1.2%), bringing the fund balance to $50.7 billion at the end of the first quarter.
  • The DIF earned assessment income of $94 million in the first quarter of 2007. The FDIC anticipates the DIF will reach its designated reserve ratio of 1.25% in 2009.
  • The federal bank, thrift and credit union regulatory agencies issued the Statement on Subprime Mortgage Lending to address issues relating to certain adjustable-rate mortgage products that may result in payment shock.
  • The FDIC released a new publication, FDIC Quarterly, which provides a single source for industry data, analysis and research.

Your feedback to the Letter to Stakeholders is encouraged, as are suggestions for improvement. For more information, visit the FDIC's Web site at

FDIC-Insured Institutions

Suggested Routing:
Chief Executive Officer

Related Topics:
FDIC Key Indices

Letter to Stakeholders

Senior Accountant Karen Flynn at (703) 562-6188

Printable Format:
FIL-66-2007 - PDF (PDF Help)

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Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562-2200).


Summary: The FDIC has issued the attached Letter to Stakeholders, which reports on the FDIC's priorities and activities for the second quarter of 2007.

Last Updated 8/7/2007


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If the fund balance is only $50.7 billion and is under 1.25% of insured deposits there is over $4 trillion dollars of insured deposits to be protected.  I have called numerous times to get a more accurate number, but I have been unsuccessful.  The banking industry has created a perfect storm and their projections are useless.   

World Savings/GDW before being acquired had approximately $61 billion in deposits most of which are insured.

Wachovia has over $328 billion most of which are insured.

Providian had over $9 billion most of which are insured.

Washington Mutual has over $183 billion most of  which are insured.

Countrywide Financial has over $60 billion most of which are insured

Wells Fargo has over $290 billion most of which are insured.

Without adding Citigroup, other defendants and many additional insured banks we have already exceeded $533 billion dollars in deposits most of which are insured.   

Current mortgage debt has risen from $3.5 trillion in 1995 to
$5.1 trillion in 2000 to $10.3 trillion in 2006
Adjustable rate loans, NIV guidelines, Option ARMs and 100% financing are now industry standards instead of exceptions.  The risks to our financial system are incalculable. 

Securitizations have not completely eliminated risk from the banks. 
Repurchase agreements and litigation will continue to plague many of these institutions for decades. 

The major contributor to the S&L crisis were low fixed rate loans and increasing interest rates.  The solution to reduce risk was to securitize debt and sell ARMs.

Now instead of 1,043 institutions failing we will have millions of borrowers defaulting and 500 large institutions failing.   

Savings and Loan Crisis
"As of December 31, 1999, the thrift crisis had cost taxpayers approximately $124 billion and the thrift industry another $29 billion, for an estimated total loss of approximately $153 billion. The losses were higher than those predicted in the late 1980s, when the RTC was established, but below those forecasted during the early to mid 1990s, at the height of the crisis."

(These figure does not include all the potential settlements from "Winstar" lawsuits.  I have not researched the status of the appeals)

It is evident that Wall Street and the Banking Industry has surpassed all prior bubbles.  Unfortunately, millions of Americans will be tossed on the streets because of fraud.