Legal Case Summary

this morning is Petrie versus Prosperity Mortgage Company. And I guess we'll hear first from Mr. Carney whenever you're ready. May I please the court? The central issue in this appeal is whether as a matter of Maryland State Law a finders fee can include a fee for services. The statutory text of the Maryland finders be asked as that it must. The district court's decision however said that it can't. The district court's construction in addition to being contrary to the text of the finders be asked. You're going to have to start with the facts. It seems to me we either have Prosperity as a broker or as a lender. If it's a lender this case goes away to broker they can't charge lending fees and brokering fees. But to get into an abstract chase through the various definitions of the Maryland code ultimately end up as to whether Prosperity was a lender. Well, you're on the claim in this case is that Prosperity was actually both a broker and a lender. Now that's an impossibility you can't you can't broker a loan for yourself. Well, in fact, you're going to play double talk with the language of the statute that the statute says it brokers one that does not include a lender. But in common language you can't be a broker of a loan and the lender on the loan. When you solicit a loan for yourself you don't call yourself a broker you're the lender. And that's one of the problems in this case. I think that your brief consistently talks about being a broker and a lender at the same time which would involve double payment, double fees. But in this case all the loan documents talk about a loan from Prosperity to your clients and they paid normal lending fees and everything's referred to as a loan. And your only case comes from the notion that because they had a preexisting arrangement to sell that loan four days later they somehow become a broker because somebody else ultimately purchased the loan. But I must say we have to start I think with the facts the case and if those lending documents are total shans then you're going to show some evidence that they are. Otherwise we take them the way they say on their face don't we? Well you're on the notion of a broker being a lender in the same transaction question my question was don't we take the loan documents on their face the closing documents on their face unless there's some reason to indicate under the finders be acts. I'm not I'm talking about factually we have cases start with facts real life transaction. In this case up the petries borrowed money from Prosperity according to the papers now you have to argue something else and I don't know where on what facts you're going to rely that Petrie was I mean prosperity was a broker. You are the facts that prosperity acted as a broker in the transaction are shown by the table funded nature of the loan. So it wasn't table funded was it it was sold four days later. No you're on the the loan was table loan funded right at the table there yes your honor the loan was funded by Wells Fargo prosperity put its name on the documents is the lender. People why isn't that legitimate because under the Maryland finders be act a table funded loan is brokered by the originator so in that situation prosperity is the broker they're also naming themselves as the lender. Let me let me just because it's really intriguing to me getting to the business of table funded what the documents say. And yet is we sort of gloss over the fact of what prosperity really is. It's a company that's 50% on by walk over you know Wells Fargo and long and foster a broker and a lender 50% on. I'm of the I got to believe no matter what they charge has to be split profit wise. 50% 50% yes you're on and I don't I mean this is really not coming out clear in terms of it. I'm still trying to understand because that looks like to me fundamentally the problem and you're talking about the borrow in terms of what the borrow is paying. So the borrow pays two thousand dollars prosperity gets it. I don't know if this is the case or not maybe the other side of the tell me but it was seen to me one thousand goes to walk over you one goes to the other fifth percent partner which would indicate that's not what walk over you could have charged with a charge is borrow because they only got a thousand dollars for that broker long and foster got another thousand dollars. That's what's good fusing to me about this case I mean I know we're getting a whole business of actual fees these are what walk over you actually would have charged as a lender can't be because they can't unless they unless they are getting all of those fees. This is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this is the reason for this has given me even all four participants company tried to get to get to be a lender just because one of the participants family in two as well as different producers in two models to be an employer rules out and when we talk about this, we talk about these solutions, especially girls because the finders be at specifically contemplates that a broker can be a lender and it wants to stop these self-interested arrangements

. And so- And this is the whole mortgage market. The whole and even as today, the boy banks get capital as they make loans, they sell the loans and with the proceeds makes further loans. The loans that are sold are securitized and they get their money back often from the securitization of those loans or they just hold them on their own interests. But to suggest that the whole mortgage industry because they have our preexisting arrangements for making loans and then selling those loans and say that's a brokering for the back people, then you have to say they're also brokering for the public in these loans. But the documents incidentally, I thought in this case and I was just trying to look it up, I thought in this case it was not a table loan. Petrie made the loan and I think the loan was sold four days later, wasn't it to Mark Kofi? Your honor, the loan was table funded, that's the allegation. No, I don't want to use the term, I said, when was it sold? It was in fact sold before the loan was closed. The thing is that the arrangement between prosperity and wealth fargo. In the arrangement, every loan I've made on my house, they tell me it's gonna be sold. I know it's gonna be sold. Everybody goes to savings and loans, makes a loan and the savings alone sells for loan. The question I had to use factually is when was the Petrie loan sold to Wells Fargo? The Petrie loan was sold to Wells Fargo, contemporaneous with closing at the moment that the loan closed. And this is not challenging every mortgage transaction in the country, this is specifically challenging the table funded, the Petrie loan. The Petrie loan, the loan based on the arrangement between prosperity and Wells Fargo and long and foster. The thing is terms sold, I mean, I understand that's what happened, sold. But the money came from Wells Fargo. Yes, Your Honor. Two, prosperity. They turn around, close it and sell it to them. I don't get it. I mean, maybe I'm missing something here. I know it may be legal interiors of technicalities here, but I'm trying to understand what's actually happening here is the broker and a lender have gotten together, created an entity to do these things. And now fees arise, of course now the contention is the cost benefit analysis, which you take a cost benefit analysis if the borough makes out better in that transaction. The question is does it find a V.A. The borough. You know, whereas if the borough comes out of this and the audit evidence shows, he's better off, even in this arrangement, even if you do take money or whatever, and then he would it be otherwise, because these are actual fees. That's the question, isn't it? Well, Your Honor, the question under the Finder's V.A. is whether the relationship exists, because the Maryland legislature determined that the arrangement itself was bound to create additional fees. Those fees may be harder to prove. It may infect the entire marketplace. Hold on, let's start with this one. The C-trees went to prosperity. Prosperity, in a long and foster office. Yeah, but they set up a loan with prosperity. Prosperity dealt with it

. They have an office. They have capital. They have a line of credit. They made the loan. The notice payable to prosperity. There was not even a mention of Wells Fargo in any of those documents. And I don't know, I keep coming to bat with you here, but I'm looking here at the half of David that says that the loan closed on October 21 and it was funded by prosperity and was closed in prosperity's name. Wells Fargo purchased plaintiffs loan from prosperity on the secondary market on October 25, four days later. And now, is there some document to indicate otherwise? Well, there's testimony. There are the top executives of prosperity and long and foster testified that all prosperity loans are table funded. West Foster and Mike Luthund. But the table funded is a term of art. And it usually means that simultaneously at the transaction, the funding is given to the bank and the bank gives it. But that did not occur in this case. The, it was a clean, untable funded loan and with money was advanced by prosperity. They were the only entity that was present at the table. They provided the money and they sold it ways later to Wells Fargo. Well, you're honored. The first of all, the district court found that there was a dispute of material fact about this. But this is a question for the jury. So the district court. What's the fact other than prosperity was loan on the loan paper? The loan papers have disclosures that say, who's the lender, what the lending fees are? And as a matter of fact, the testimony, in this case, the lending fees were at market or below a 1200 bucks closing fees for the lender. And that included a priceless credit report. All done by the lender. And then the lender with the preexisting arrangement sold it to Wells Fargo four days later. That's what the trail paper trail says. Now, if you're gonna come in and say the papers are all shams in their fraud, that's the heavy thing to say. Well, you're honored. The defendants have presented some evidence that, you know, they say suggest that. We've presented some evidence that suggests that that is not the case. This is the issue that was. That's not the case. That the number one that the loans were table funded. Don't use that word, please. Tell me what the transactions are. Okay. Your Honor, that the loans were closed in the name of prosperity, but funded by Wells Fargo

. Of course, we were funded by Wells Fargo ultimately, but prosperity drew on the line of credit. That's undisputed, which they had. But, Your Honor, the money came directly from Wells Fargo. It didn't even pass through prosperity. It came directly to the closing table from Wells Fargo. Because the documents show the loan was made and the note paid to prosperity. The notes payable to prosperity, right? The notes. And the deed of trust is prosperity. Yes, but they both refer to Wells Fargo as being the place for contacts or correspondence to be sent. Is there any indication that the loan that the so-called selling of this loan to back to the Bacovia or to Bacovia could have done to anybody else? And where's Quay have sold this to Bank of America? No, Your Honor. I mean, it's wealth. It's Judge Lima says this is a lot of it. But it's money actually being bought by Wells Fargo. Yes, Your Honor. And they turn around on the secondary market and sell it to another company. Can they do that? That prosperity can't. So they can't do it. So what matters if it's 10 days or 20 days it's going to Wacovia. That's fine. No matter if you do it at that table or not. And if you decide to lay it, if you want to keep it from calling a table funnel and you already know I'm going to get it, then you just say don't give it to me until four days later. That's good. And I'm not table funnel and we'll be outside it. You give it back to me today. Good. But guess what? You can't sell it to anybody else but me. Is that the case? That's the case, Your Honor. And in fact, the people who executed the documents to transfer the loan on paper from prosperity to Wells Fargo were Wells Fargo employees at a Wells Fargo campus. So there was no chance for anybody else. What would it be? If 50% of the owners of the company. That's a long and long and foster. You said they were writing a long and foster's office. Chief executive office, right? In the line of chain with Long and Foster. I mean, essentially you got a bank in a lender sitting right there in another entity is created. That's correct, Your Honor. And the idea that they would be able to inoculate themselves from liability either by waiting to sell the loan or by prosperity, simply naming itself as a lender. It doesn't get the, I don't think it gets the word we ought today because we could get it this

. That troubles me. But I don't think that's before us. I think what we're dealing with is a question of so what if is that? If in fact the boroughs did not work hard, so to speak. They didn't pay anything other than what they regular all it would pay. Let me follow up on that. It seems like that the act is directed towards finder's fees. Yes, Your Honor. Hosed by the broker paid by the borough. In this record, what are those fees? The fees are shown in the 800 series on the HUD one. And those are all fees paid to prosperity. They can be paid by or on behalf of the borough work. And the finder's fee act says that those fees. Well, let's look at the fees in particular. Application fee was $410. That included $350 a prasal and a credit report of 2940. Then there was a processing fee of 490. And then there was an underwriting fee of 390. Total $1290. That's all that was paid to prosperity. Well, and there was, I believe there was a fee paid to Wells Fargo real estate tax earners as well. I thought about the prosperity. We're talking about prosperity being a broker. Yes, Your Honor. The finder's fee as opposed to a lender collecting lending fees. Yes, Your Honor. Well, those are all three lending fees that are legitimate lending fees. And that's all that was paid to the borough work paid to prosperity. And the finder's fee act classifies as finder's fees. All fees paid to the broker. For the broker's service. That's the act in fact, classified them as in addition to finder's fees. No, Your Honor. A finder's fee is defined as all fees that are charged for the broker's services, paid for the broker's services and procuring, arranging or otherwise assisting a borough work, in obtaining a loan. So this is right here? But then you get to 804. Yes, Your Honor. And it says, in addition to a finder's fee, a mortgage broker may charge a borough for the actual cost of, and then there's a list of fees very similar to the fees that Judge Neymar just described. Yes, Your Honor

. And those are the only fees that are carved out of that definition of a finder's fee. So what is the finder's fee? The finder's fee are all of those fees. And this is something that the district were found. I've got them listed right here. I'm looking at the HUD document, the settlement closing sheet. All of the fees outside of the, uh, be paid for the appraisal for the credit report for the actual costs. Those are the finder's fees. So, so this is where I'm sort of missing the boat on this. And I, maybe I'm seeing too much in this. I can understand the $410. $350 went to the appraisal and the other went to the credit report. The 390 and underwriting fees and the 490 and processing fees goes to prosperity. Prosperity is not an entity to just out there by itself and goes off. That money ultimately annures to the benefit of the lender and the broker that owns it. Yes, and I, and it would be my, I don't know if, let's just give it to someone else. One half is going to, while Kovia, the other half is going to long and falsies since the 50, unless, and maybe the administrative costs have taken out for whatever you do here. But it would seem to me if that's the instance, then in essence, if this borough had gone directly to our Kovia, it has to be lower than what is coming from prosperity, because part of it has to go to the broker, unless the broker is just in this for the fun. I mean, it's got to be some profit coming in this broker over there. Well, it's the nature of a middleman that it's in general going to increase fees. And that's the reason that the legislature did not require excessive or redundant fees. It just required the relationship to exist to show that no finders fee, that's not broken. That's my point is, if you look at, if prosperity truly was a third party, wasn't owned by either one of these, I'm probably much more comfortable in dealing with this. But they, it's not, you can't look at it like that. That's not what it is. It's wholly owned by those two entities. At it's got one fee to $14, you've already designated where it's going, and that may be something you may not even pay all that out, I don't know, but that's, that's, I'll give the $14 is due. But the rest of it is part of the company and the profit it makes, and then it's split between those entities that's selling, that's, that's buying this loan for the borough, that's going on here. That's what I'm having some difficulty understanding, what's actual fees here. And, and in fact, the fees that are, what's an underwriting fee? An underwriting fee in general, parlance would be a fee charge for underwriting the loan. That means collecting all the data about whether they're credit worthy, having them fill out the applications, reviewing the data, whether they earn enough money, that type of thing, right? I believe things like that would be included. And that's what prosperity did in this case for the underwriting fee, didn't it? Well, there's, there's a dispute about that. There was, the underwriting was, there's a dispute by Wells Fargo, but, but, but, Your Honor, just a minute. Yes, Your Honor. They sat there before a employee of prosperity and gave all this information, and the underwriting fee was a below market amount of $390 to underwrite the loan. Now, why isn't that just totally an underwriting fee? Well, Your Honor, it, however, it's classified, it's still a finder's fee. Well, how do you have to argue against that? It seems to me. So, yes, it's a fee to prosperity, but the problem is, prosperity is not by itself just an entity out there

. You can look at it as though it's some third part of the heavy interest, but then the money and the profit from that, then necessarily, it knew us to the benefit of the lender and the broker that. Yes, Your Honor. And in fact, it never, it doesn't get sent to prosperity in the first instance. The loans are net funded. So, if you have a $100,000 loan and prosperity gets $5,000 in fees, Wells Fargo only sends $95,000 to the closing table. That $5,000 Wells Fargo fees. That's where I'm getting with this thing here. That's the need to be coming out on this is, is, yes, they are all reasonable fees that they charge a prosperity, but it does not go to prosperity because it's not, it doesn't own itself. It's owned by the very entities that would deal with a broker and a lender who cannot do this directly with themselves. So, they create this company to do something they can't do directly. Yes, Your Honor. Okay, why don't we hear from Mr. Thank you, your Honor. Ms. Fredell. Fredell. Fredell. Fredell. May it please the court? I'm Irene Fredell and I'm speaking on behalf of all the appellants today. You're going to help me and clean me up on this because I'm not understanding that relationship very well. Your Honor, the mentor case, which you'll hear about an hour, 40 minutes, was addressed to prosperity structure as a result of the investigation. Yes, it's a respite case. It's dealing with the financial. Yeah, we're dealing with finders fees, but in both the Petri case and the mentor case were brought by the plaintiff's same plaintiff's counsel. They alleged that prosperity was the product of a scheme by Wells Fargo and the long- I'm only getting that the whole basis of it whether there's a scheme or a sham or not ultimately what it is. I'm not saying it's a sham can be legit. I'm just saying but what it is is new into the benefit of a broker and an an allenda. Well, let me say first, long-poster is a real estate agent. It's not a mortgage broker and Mr. Barron will speak to them. Well, it's a real estate agent. It's not a mortgage broker and Mr. Barron, who's speaking next, we'll address that. I'm using a wrong term, real estate broker. But at any rate, the mentor trial was based entirely. The plaintiffs attacked the legitimacy of prosperity as a lender. They claimed prosperity was a broker

. It was table funding all of its loans and after a five-week jury trial, the jury rejected the plaintiffs' claims in three hours or less. So that issue has been out. It's been fully vetted. That's the mentioned mentor case. We'll get to that one. Let me get to the finders fee law. There are two questions of liability under the finders fee law. Was prosperity a broker and did it charge a finders fee? We absolutely agree with Judge Niemire. The prosperity was not a broker within the meaning of the finders fee law. It was identified as the lender, the creditor, and the loan documents in the note, the deed of trust on the HUD settlement statement. And therefore, under the definition, the very clear definition under Maryland law of mortgage broker prosperity was a lender. It was not a mortgage broker. The definition excludes any entity from mortgage broker if it's identified as the creditor in the loan documents. Prosperity made the loan. It provided all the services to make the loan. Find what would be a broker. A broker is a matchmaker in essence. The Conner versus Morris Berman case from the Maryland court of special appeals is directly on point. In that case, there was a mortgage broker, mortgage masters. There was the mortgage lender, Morris Berman. The mortgage masters purported to match the borer with Morris Berman the lender. Morris Berman then made the loan. It charged lending fees and it charged a broker fee or mortgage masters charged a broker fee. It turned out. I'm intrigued with this relationship. It's lending to a broker. Will you go online or lend a tree and they match you up with? Yes, that's a matchmaker. And that's, you know, that's what the finders fees aimed at. It's aimed at fees paid to a broker for making the match. That's the intent and purpose of the finders fee law. But in this case, the plaintiff said prosperity is not just a match here. If you know, is it, is it so that this loan was on could all these loans are only so? If it nowhere's the walk over your money is set to prosperity? Are those loans only sold back to walk over your? No, the loans are sold to a number of investors. A number of folks. Right. And that was an issue in the mentor trial. Prosperity made the loans with its own money. It got them from a line of credit from Wells Fargo, but there was nothing

. There was no, nothing fraudulent about the line of credit that was vetted in the mentor trial for five weeks. Prosperity is a lender. It didn't act as a broker in this case. So, Matt, why could you owns 5th percent of it? It does not matter. And I appreciate your comments. I'm about to own 5th percent of it. It's not relevant. Prosperity is a legitimate joint venture. There are many in the industry. I'm trying to figure out how I can do something like this. Because it really is interesting to me. You can set up a make money yet. Well, I'm sure businesses have set up something to make money. That much, I believe. There are many joint ventures. And so the profits that derive from prosperity, are they then split? I assume because it's a 50-50. I mean, ultimately, the joint venture profits and the owners receive the profits. That would flow from this would be from these fees. Is that right? Well, the fees would go into the profit, but they also pay for prosperity's 300 employees and all the services it provides. I mean, there's obviously a lot of costs. But again, prosperity has a profit. I assume, otherwise, you would get rid of it. So that profit then goes to the two owns. Yes. So it sort of is, I don't want to, it's not kickback. I understand that. But it's something that goes back to the park over here. But I haven't set up this nice arrangement. It's like any joint venture. The owners receive the profits from the joint venture. And in this case, these types of joint ventures are common in the lending industry because the idea is one stop shopping. Somebody needs to buy a house. They go to long and foster. They find their house prosperity. They're not required to use prosperity, but a home purchaser can use prosperity. In this case, there was undisputed evidence that prosperity's loan prices were competitive. They were prosperity competed with Wallspar

. That's what I was getting at. Is that the use of the case is forget it. I mean, forget whatever it is. If the bottom line is the borough is in the same position as being if you're not in the body else, is that the whole just the way we are on this? Because that takes care of all the problems. It doesn't matter. So what? The plaintiff's brother's case saying, if they'd only gone to Wells Fargo, they would have gotten a better loan. A better price. So we took all of prosperity's loan data. We gave it to the plaintiff's and we did it. By definition, it seems to be true. It seems to be true by definition, because you just told me that the product profits go along and foster. And an entity that exists, in which it sends products along and foster, it decreases the amount that that while Kofi gets. And therefore, the amount while Kofi gets, you would think if you went directly to them, then you would get that. Well, we determined conclusively that prosperity did not charge more than Wallspargo. They competed on the open market. But you can negotiate these things. I mean, I've done close in hundreds of clothes. And I know those fees there. They're not as locked as they see. You're not negotiating anything with prosperity. Once they charge that $400 or some of our dollars or whatever that processing fees, you're not negotiating. Wells Fargo, if you go directly, you might be in the go-shows. Well, with respect to our prosperity's out there competing in the marketplace, trying to get loans. And these people, the petries, got a great deal. They paid, it doesn't over half a percent. I understand. I'm not disagreeing with you. I don't think, but I am trying to understand that the statement that you couldn't get a better deal from Waukouya, and I'm going back to the economic analysis this because that's the bottom line. Is he better off that an entity that's in the middle that makes a profit, and it splits that profit between Waukouya into a long and Waukouya does not, in fact, yet, what it would have gotten, what it would have paid. If all of this had been sent to Waukouya fine, yes, that's the same thing you're going to go to Waukouya. But if in fact Waukouya, who's lent this money over Waukouya, who will not have credit now getting it back through the selling of it, is the fee they get is actually less. It would seem intuitively to borrow. Had you gone directly here, you could have skipped this middle ban and and well, that's what the plaintiffs of the legend, it turned out not to be true. The evidence show the prosperity's loan prices were as well. I'm not talking about what they're liege. I'm saying as a fact, you're saying as a matter of five. As far as Fargo's loan was more expensive

. Well, as an analyst, cannot be, cannot be, it was because they are not getting that fee. They are getting something much less. I'm talking about a fact. I don't understand what they're alleging. I'm talking about fact. From an economic analysis, they have to get less. It is not the case. It really is fact. We hired a retained an expert, Marsha Corshin. She analyzed all of the pricing data. The actual pricing data loans the borrowers got from prosperity and that she compared it to data from Waukouya. This was tons of pricing data. We didn't know how it was going to come out. We didn't think the borrowers paid more at prosperity. It turned out they don't. Prosperity charged fees commensurate with the correspondent letter that was competitive in the marketplace. The Petri's did in fact, based on the analysis of the data, get a good deal at just over half a percent of the column. That may be the answer to our question. If it's no difference, does the finance fee doesn't kick in? Is that something that's clear on the Maryland law? Well, under merit, getting back to what a finder's fee is under Maryland law, the plaintiffs, they never conceded that they had no evidence that prosperity charged any fee that wasn't for the lending services. Prosperity was the only lender here. Wells Fargo was an outcharging duplicative fees to the borrower. Only prosperity charge fees. The question is, and this goes back to the Conor case, what fee did prosperity charge that was a broker fee or a finder's fee? Prosperity is entitled to compensation as a lender. That's clear under Maryland law. That's clear under the Conor case. So what did prosperity charge that wasn't for the services as a lender? And the plaintiffs stood before the court and said they didn't have evidence to show that prosperity charged any fee that wasn't for the lending services. And that's the crux of the case. I do agree with Judge Neumire, though, that we don't even need to get to this question because prosperity was not a broker under the statute. It didn't fall within the definition of broker and the case should have been dismissed at the motion dismissed. What percentage of prosperity loans went to Wells Fargo? At times up to 90 percent, but there was very ability in that. What was the mechanism for going somewhere other than Wells Fargo? That gets into the second, there's a secondary market group that analyzes which loans should go where and in terms of the choice from borrow. Now the borrower doesn't, this is all on the secondary market, so the borrower gets a loan from prosperity. It's like if you get a loan from, you know, some trust or any any other entity, often these lenders sell their loans on the secondary market. That's one of the frustrating things about being a borrower. You get a mortgage, then you find out you're making your payments elsewhere. But that's a common, that's just the reality of the secondary mortgage market. What percentage of long and forceders clients went to prosperity? That's a question I'm afraid my co-counsel Mr. Varron will have to answer, but it was in the range of, I want to say 30, 30, 20 to 30 percent. And what was the decision mechanism for the borrower to go there as opposed to somewhere else? Well the borrower's shop, they shop around. We know in this case, and in the mentor case, the borrower's testified that they looked for the best price they could get. They saw what the options were on the marketplace. They were absolutely not required to use prosperity. Obviously with 20 to 30 percent of long and foster customers going elsewhere, a lot of borrowers did go. The borrower's license to do businesses, a lender in Maryland. Prosperity, yes, and it's regulated as a lender. It is a lender. So borrowers would choose prosperity because they thought the service was good or they got a good price. And here the petries did in fact get a good price. They didn't, they had no complaint that they, they didn't knowledge they got their loan from somebody other than prosperity. They went to prosperity as a lender. Prosperity didn't hold itself out as a broker. They didn't dispute that they got the services that were required to make the loan. So this was a loan that was made and funded by prosperity. And the finders fee law is aimed at regulating brokers, not lenders and not lender fees. I just find it so interesting that we can talk about prosperity as though it's somebody over in India doing these things. When in fact, it's an entity own 50 percent high-wells foggle and 50 percent by long and foster. And it's nice to call it a separate entity with a separate identity that has almost like there's no conflict. What percentage do you send to Wells Fargo 90 percent and how much do you send? Well, you know what this is about. I mean, there's an arrangement here. I think you use the term one stop. Well, the model here is one stop shopping. Yeah, which I mean if that saves money and that's the basis of it, then it all comes back to my question. Then it's a cost-benefit analysis. If the bottom line is the borrowers just is good off a good a better than it would be. Anywhere else we don't worry about this little one stop arrangement. Prosperity added more competition to the marketplace. I mean Wells Fargo loan officers competed with prosperity loan officers to get business prosperity competed with Bank of America and Suntrust and any other lender. You need to recognize prosperity as an entity. It is not its ownership. And we look at corporations all the time for its kinds. They're distinct from their stockholders. And prosperity is a legitimate company that's licensed to do business and even competes. Seems to me we look at that company and not where they send their profits later. Yes, we absolutely agree with that

. Varron will have to answer, but it was in the range of, I want to say 30, 30, 20 to 30 percent. And what was the decision mechanism for the borrower to go there as opposed to somewhere else? Well the borrower's shop, they shop around. We know in this case, and in the mentor case, the borrower's testified that they looked for the best price they could get. They saw what the options were on the marketplace. They were absolutely not required to use prosperity. Obviously with 20 to 30 percent of long and foster customers going elsewhere, a lot of borrowers did go. The borrower's license to do businesses, a lender in Maryland. Prosperity, yes, and it's regulated as a lender. It is a lender. So borrowers would choose prosperity because they thought the service was good or they got a good price. And here the petries did in fact get a good price. They didn't, they had no complaint that they, they didn't knowledge they got their loan from somebody other than prosperity. They went to prosperity as a lender. Prosperity didn't hold itself out as a broker. They didn't dispute that they got the services that were required to make the loan. So this was a loan that was made and funded by prosperity. And the finders fee law is aimed at regulating brokers, not lenders and not lender fees. I just find it so interesting that we can talk about prosperity as though it's somebody over in India doing these things. When in fact, it's an entity own 50 percent high-wells foggle and 50 percent by long and foster. And it's nice to call it a separate entity with a separate identity that has almost like there's no conflict. What percentage do you send to Wells Fargo 90 percent and how much do you send? Well, you know what this is about. I mean, there's an arrangement here. I think you use the term one stop. Well, the model here is one stop shopping. Yeah, which I mean if that saves money and that's the basis of it, then it all comes back to my question. Then it's a cost-benefit analysis. If the bottom line is the borrowers just is good off a good a better than it would be. Anywhere else we don't worry about this little one stop arrangement. Prosperity added more competition to the marketplace. I mean Wells Fargo loan officers competed with prosperity loan officers to get business prosperity competed with Bank of America and Suntrust and any other lender. You need to recognize prosperity as an entity. It is not its ownership. And we look at corporations all the time for its kinds. They're distinct from their stockholders. And prosperity is a legitimate company that's licensed to do business and even competes. Seems to me we look at that company and not where they send their profits later. Yes, we absolutely agree with that. Every send profits at all. We don't even know that there's some profit. Right. And that that was not an issue that was litigated in the Petri case. That was litigated in the mintor case. But again, joint ventures are common in our society. And you can see Eric and many things run around the country and never tell you that they're connected anything else. But again, that's not it is. I just said it's a separate entity. Prosperity didn't lie that it was a joint venture. But it's but the reality because you're talking about actual fees. Yes. And you're saying these are the same things. Why Coby would have charged. There's a wait a minute. Why Coby it but but they will accept less because they are accepting less. Well prosperity would also prosperity actually was more competitive in many instances. They wanted the business. They wanted to get these loans. They had to survive. They had to prove their existence and their worth. If they didn't get loans and they wouldn't have no reason to exist. Money and volume is because of the number of volume is the reason why Coby would do this is because the number of loans. Well, just more competition. It's just they're adding more competition in the marketplace. They want to it's their business to to be in the mortgage lending industry. And that's prosperity was another avenue to do that. All right. All right. I think we've gone beyond the light. Thank you very much. Thank you, Your Honours. Good morning. I'm Jay Varen from Folian Lardner. Speaking for all for all defendants, I represent Long and Foster and Walker Jackson. So I wanted to focus on a question that Judge Neumacher asked is the determinative question whether prosperity is a lender or a mortgage broker. And it's Mr

. Every send profits at all. We don't even know that there's some profit. Right. And that that was not an issue that was litigated in the Petri case. That was litigated in the mintor case. But again, joint ventures are common in our society. And you can see Eric and many things run around the country and never tell you that they're connected anything else. But again, that's not it is. I just said it's a separate entity. Prosperity didn't lie that it was a joint venture. But it's but the reality because you're talking about actual fees. Yes. And you're saying these are the same things. Why Coby would have charged. There's a wait a minute. Why Coby it but but they will accept less because they are accepting less. Well prosperity would also prosperity actually was more competitive in many instances. They wanted the business. They wanted to get these loans. They had to survive. They had to prove their existence and their worth. If they didn't get loans and they wouldn't have no reason to exist. Money and volume is because of the number of volume is the reason why Coby would do this is because the number of loans. Well, just more competition. It's just they're adding more competition in the marketplace. They want to it's their business to to be in the mortgage lending industry. And that's prosperity was another avenue to do that. All right. All right. I think we've gone beyond the light. Thank you very much. Thank you, Your Honours. Good morning. I'm Jay Varen from Folian Lardner. Speaking for all for all defendants, I represent Long and Foster and Walker Jackson. So I wanted to focus on a question that Judge Neumacher asked is the determinative question whether prosperity is a lender or a mortgage broker. And it's Mr. Del said it was it is a lender of the loan document show it's a lender. But the point that I'd like to argue today is the collateral of stop will judicial as stop will affect from the mintor case. Because all of Mr. Carnie's arguments to you today, all the factual arguments that he he gave to you today about how it's table funded, how they're simultaneous assignments, how this ownership structure is wrong. Is this testify that it was table funded? Excuse me. Didn't some of your witnesses say that? Well, one or two of our witnesses did say that it was table funded, but that apparently wouldn't. It was not true. The for instance, the president of Long and Foster, who the owner of Long and Foster, who is a real estate guy and those nothing about mortgage lending. He's kind of the boss of your your your guy. He's the owner. But he's he's head of that chain that you came by far over over prosperity. So he's got nothing to do with prosperity, Your Honor. He owns Long and Foster. But the point is he do nothing about mortgage lending. You say he has nothing to do with prosperity. Yes, he has nothing to do with. He's not involved in the operations. He doesn't understand mortgage lending. There was testimony at the trial that he delegated all responsibilities about prosperity to people in his organization. That's new. Nothing to do with it. But he is that is the parent corporation. That corporate. He's directly in the line of he owns Long and Foster. Long and Foster owns prosperity. He doesn't know mortgage lending. The jury accepted his testimony, Your Honor. And that's my point. All of these allegations about prosperity being a mortgage broker, about prosperity not being a legitimate company. We're on trial and mentor for 17 days. And the jury rejected all of these contensions. In particular, the the allegation of mortgage broker came in relationship to this ownership structure, which is called under respa and affiliated business arrangement. So this is what the jury this is what the judges and instructions to the jury were about plain of theory. But my questions have not gone in terms of the challenge the respa implications are, or the even the whole business of the affiliated business arrangements. It's really really going to the whole question of what are these things and how do these fees are they actual fees and are they the same? And of course you can look at the bottom line. You can crunch the data out then look at the market and says okay, that's doing just good as the market is doing. And then there's the reality

. Del said it was it is a lender of the loan document show it's a lender. But the point that I'd like to argue today is the collateral of stop will judicial as stop will affect from the mintor case. Because all of Mr. Carnie's arguments to you today, all the factual arguments that he he gave to you today about how it's table funded, how they're simultaneous assignments, how this ownership structure is wrong. Is this testify that it was table funded? Excuse me. Didn't some of your witnesses say that? Well, one or two of our witnesses did say that it was table funded, but that apparently wouldn't. It was not true. The for instance, the president of Long and Foster, who the owner of Long and Foster, who is a real estate guy and those nothing about mortgage lending. He's kind of the boss of your your your guy. He's the owner. But he's he's head of that chain that you came by far over over prosperity. So he's got nothing to do with prosperity, Your Honor. He owns Long and Foster. But the point is he do nothing about mortgage lending. You say he has nothing to do with prosperity. Yes, he has nothing to do with. He's not involved in the operations. He doesn't understand mortgage lending. There was testimony at the trial that he delegated all responsibilities about prosperity to people in his organization. That's new. Nothing to do with it. But he is that is the parent corporation. That corporate. He's directly in the line of he owns Long and Foster. Long and Foster owns prosperity. He doesn't know mortgage lending. The jury accepted his testimony, Your Honor. And that's my point. All of these allegations about prosperity being a mortgage broker, about prosperity not being a legitimate company. We're on trial and mentor for 17 days. And the jury rejected all of these contensions. In particular, the the allegation of mortgage broker came in relationship to this ownership structure, which is called under respa and affiliated business arrangement. So this is what the jury this is what the judges and instructions to the jury were about plain of theory. But my questions have not gone in terms of the challenge the respa implications are, or the even the whole business of the affiliated business arrangements. It's really really going to the whole question of what are these things and how do these fees are they actual fees and are they the same? And of course you can look at the bottom line. You can crunch the data out then look at the market and says okay, that's doing just good as the market is doing. And then there's the reality. The reality is corporation entity that's owned by the lender in which the lender is sending the money there. And 90% of it is coming right back to the lender through the secondary market. That's not how it works, Your Honor. Well, well, they did not give them a line of credit. Well, well, Fargo is well, Fargo does lots of different things in the other place. They did not give this money to prosperity. What does that mean? They're a warehouse lender. They provided warehouse loans to prosperity. They get money from others too. No, they had an exclusive warehouse line with Wells Fargo. That's permitted. There's nothing wrong with that. They sold 10% of their loans. Every penny of their money comes from well thought's foggo. And they turn around, they sell back 90% of it back to Wells Fargo. That's true. And in doing that, they do not give them the underwriting fees and all of that to $4.90 because they've got their own little expenses. But the profit from it is shared with long and fast. The profit is shared with the partners. Your Honor, if the partner is long and fast, but your Honor, prosperity, I want to know, don't don't don't miss my words. I'm trying to, I'm trying to make this simple. Okay, honest there, we can say partner and all that stuff. We have two partners, right, long and foster and walk over you. And the profit is shared with the two partners. That is correct. I mean, the question then is this lender, which is walk over you, even though you might, you can say the money comes to you and it goes back, only gets a percentage of what that B is that the borrow is paying. So any opportunity the borrow has to done that directly negotiate with while Kobe is for gold. It's just not the case, Your Honor, with prosperity competes with all kinds of different mortgage lenders. All those mortgage lenders profits go to their shareholders. All those mortgage lenders have warehouse lines of credit just like prosperity does. Who are the mortgage lenders? The difference many of them are banks. Many of the mortgage companies are 100% owned subsidiaries of banks. Some of the mortgage companies like SunTrust has a SunTrust mortgage company. The mortgage companies are separate entities. Some of the banks obviously, You're talking about the shareholders of what company? The mortgage lenders. The mortgage lenders

. The reality is corporation entity that's owned by the lender in which the lender is sending the money there. And 90% of it is coming right back to the lender through the secondary market. That's not how it works, Your Honor. Well, well, they did not give them a line of credit. Well, well, Fargo is well, Fargo does lots of different things in the other place. They did not give this money to prosperity. What does that mean? They're a warehouse lender. They provided warehouse loans to prosperity. They get money from others too. No, they had an exclusive warehouse line with Wells Fargo. That's permitted. There's nothing wrong with that. They sold 10% of their loans. Every penny of their money comes from well thought's foggo. And they turn around, they sell back 90% of it back to Wells Fargo. That's true. And in doing that, they do not give them the underwriting fees and all of that to $4.90 because they've got their own little expenses. But the profit from it is shared with long and fast. The profit is shared with the partners. Your Honor, if the partner is long and fast, but your Honor, prosperity, I want to know, don't don't don't miss my words. I'm trying to, I'm trying to make this simple. Okay, honest there, we can say partner and all that stuff. We have two partners, right, long and foster and walk over you. And the profit is shared with the two partners. That is correct. I mean, the question then is this lender, which is walk over you, even though you might, you can say the money comes to you and it goes back, only gets a percentage of what that B is that the borrow is paying. So any opportunity the borrow has to done that directly negotiate with while Kobe is for gold. It's just not the case, Your Honor, with prosperity competes with all kinds of different mortgage lenders. All those mortgage lenders profits go to their shareholders. All those mortgage lenders have warehouse lines of credit just like prosperity does. Who are the mortgage lenders? The difference many of them are banks. Many of the mortgage companies are 100% owned subsidiaries of banks. Some of the mortgage companies like SunTrust has a SunTrust mortgage company. The mortgage companies are separate entities. Some of the banks obviously, You're talking about the shareholders of what company? The mortgage lenders. The mortgage lenders. What is that? PHH mortgage is not a bank. It's a mortgage lender. It has shareholders. I'm accepting the legal proposition you can pull. I understand that. I'm talking about the reality here. My point to you, Your Honor, is that the reality was litigated and mentor and found to be permissible. And more on this issue, not just this issue. The rest for issue that's dealing with it, but not the question of what is actual fees. That's true. But the, my, but that's all I've been asking about. I understand the rest but. But, Your Honor, there is one very important point if I could. As, as we started off, the Finder Fiat only applies to mortgage brokers. If prosperity isn't a mortgage broker, then the Finder Fiat has absolutely no applicability. In mentor, the plaintiffs argued vociferously that prosperity was a mortgage broker because it was indispensable to their two respoclames. So that's what I was going to read you. What the jury was told about one of the respoclames. Your argument, I gather, is that the allegation that prosperity is a mortgage broker is common to both this case and mentor. Absolutely, Your Honor. And if it's a mortgage broker, in this case, then the fees are going to be Finder fees. But if it's a lender in this case, then the fees charged and they apparently are lending fees, lending types fees. And your argument is that because the jury found that prosperity was not a mortgage broker, but a lender, that they are bound by that. That's absolutely correct, Your Honor. And the classes overlapped. They were not completely congruent by any means, but they overlapped the same plaintiffs council represented both. If I were the case, if they overlapped, then your argument would be stronger than raised due to Codd, it would be law of the case. Well, they don't overlap completely, but 20,000 people in the Petri class were also members of the mentor class. So we think that at least for the members that were in both classes, they are collateralists stopped by virtue of the finding in the mentor case. And then it's the finding you're talking about part of the special verdict. Yes, Your Honor. It's question three. The plaintiffs say that the mentor court never reached the question of whether prosperity was a mortgage broker. But that's not true. In the closing argument, the plaintiffs council told the jury that the verdict that the mortgage broker claim consisted of verdict questions three and four. The instructions were. The council's argument didn't in a mine in the closing argument of that case

. What is that? PHH mortgage is not a bank. It's a mortgage lender. It has shareholders. I'm accepting the legal proposition you can pull. I understand that. I'm talking about the reality here. My point to you, Your Honor, is that the reality was litigated and mentor and found to be permissible. And more on this issue, not just this issue. The rest for issue that's dealing with it, but not the question of what is actual fees. That's true. But the, my, but that's all I've been asking about. I understand the rest but. But, Your Honor, there is one very important point if I could. As, as we started off, the Finder Fiat only applies to mortgage brokers. If prosperity isn't a mortgage broker, then the Finder Fiat has absolutely no applicability. In mentor, the plaintiffs argued vociferously that prosperity was a mortgage broker because it was indispensable to their two respoclames. So that's what I was going to read you. What the jury was told about one of the respoclames. Your argument, I gather, is that the allegation that prosperity is a mortgage broker is common to both this case and mentor. Absolutely, Your Honor. And if it's a mortgage broker, in this case, then the fees are going to be Finder fees. But if it's a lender in this case, then the fees charged and they apparently are lending fees, lending types fees. And your argument is that because the jury found that prosperity was not a mortgage broker, but a lender, that they are bound by that. That's absolutely correct, Your Honor. And the classes overlapped. They were not completely congruent by any means, but they overlapped the same plaintiffs council represented both. If I were the case, if they overlapped, then your argument would be stronger than raised due to Codd, it would be law of the case. Well, they don't overlap completely, but 20,000 people in the Petri class were also members of the mentor class. So we think that at least for the members that were in both classes, they are collateralists stopped by virtue of the finding in the mentor case. And then it's the finding you're talking about part of the special verdict. Yes, Your Honor. It's question three. The plaintiffs say that the mentor court never reached the question of whether prosperity was a mortgage broker. But that's not true. In the closing argument, the plaintiffs council told the jury that the verdict that the mortgage broker claim consisted of verdict questions three and four. The instructions were. The council's argument didn't in a mine in the closing argument of that case. I'm sorry. Something else. They didn't pay much attention to the council's argument apparently. Well, in their case, Your Honor. No, it's not true. I think the council, if we get into the mentor case, we're going to get into I'm sure you are. Which, which, which, I mean, if you're in there, I mean, it looks like they didn't really pay attention to what you were saying. You're right. The jury had, you know, 17 days of trial, five hours of closing argument. They might have forgotten what council said. You were lying on council's argument. You're going there and I said, wait a minute. Let's not use council's argument. I'm not sure they listen. Okay. Well, then let me, you might not have made any difference in the world. Let me just look at the verdict form. The jury instructions that the judge gave said that prosperity and wells were in an affiliated business arrangement. And they're claiming that a respovialation occurred in the mentor and all borough transactions by prosperity's referral of plaintiffs loans to Wells Fargo bank as the actual lender without disclosing to the plaintiffs its true relationship as referring broker to Wells Fargo. And then they asked special verdict question three. Sorry, four. Did you prove by a preponderance of the evidence that prosperity referred business to Wells Fargo? Answer no. Because there was indisputable evidence that prosperity was the lender. The jury rejected all these arguments that the transaction was table fun. I'm sorry. Not understanding an argument. The other argument you're on was about the referral between long and foster and prosperity. This argument is about whether prosperity referred business to Wells Fargo as it would have had to if it was a broker. If prosperity was the lender as it was then it wouldn't have referred business to Wells Fargo because Wells Fargo supplying the funds in the secondary market isn't subject to respa. It's not it's not a referral. And so the jury unequivocally rejected the proposition and all the arguments that Mr. Carney made that prosperity was a mortgage broker. And so our point is that based on collateral stop-o certainly with respect to all the common members of the class but also with respect to the other putative members of the class because they had the identical interest in proving that prosperity was a mortgage broker. I think yeah. We've gone through the red light here. Oh, I'm sorry you're on it. There's a judicial stop-o component too

. I'm sorry. Something else. They didn't pay much attention to the council's argument apparently. Well, in their case, Your Honor. No, it's not true. I think the council, if we get into the mentor case, we're going to get into I'm sure you are. Which, which, which, I mean, if you're in there, I mean, it looks like they didn't really pay attention to what you were saying. You're right. The jury had, you know, 17 days of trial, five hours of closing argument. They might have forgotten what council said. You were lying on council's argument. You're going there and I said, wait a minute. Let's not use council's argument. I'm not sure they listen. Okay. Well, then let me, you might not have made any difference in the world. Let me just look at the verdict form. The jury instructions that the judge gave said that prosperity and wells were in an affiliated business arrangement. And they're claiming that a respovialation occurred in the mentor and all borough transactions by prosperity's referral of plaintiffs loans to Wells Fargo bank as the actual lender without disclosing to the plaintiffs its true relationship as referring broker to Wells Fargo. And then they asked special verdict question three. Sorry, four. Did you prove by a preponderance of the evidence that prosperity referred business to Wells Fargo? Answer no. Because there was indisputable evidence that prosperity was the lender. The jury rejected all these arguments that the transaction was table fun. I'm sorry. Not understanding an argument. The other argument you're on was about the referral between long and foster and prosperity. This argument is about whether prosperity referred business to Wells Fargo as it would have had to if it was a broker. If prosperity was the lender as it was then it wouldn't have referred business to Wells Fargo because Wells Fargo supplying the funds in the secondary market isn't subject to respa. It's not it's not a referral. And so the jury unequivocally rejected the proposition and all the arguments that Mr. Carney made that prosperity was a mortgage broker. And so our point is that based on collateral stop-o certainly with respect to all the common members of the class but also with respect to the other putative members of the class because they had the identical interest in proving that prosperity was a mortgage broker. I think yeah. We've gone through the red light here. Oh, I'm sorry you're on it. There's a judicial stop-o component too. I appreciate it. And I got a conditional stop. Judicial stop-o. Got it. Mr. Carney. Thank you, Your Honours. I'd like to start with a response to one of Judge Conrad's questions which was about the assignment of the loans of prosperity's loans to anybody else whether be Wells Fargo or Ms. Prydell talked about US Bank. All of those loans were initially assigned to Wells Fargo. And that's the testimony of prosperity's own employee that all of prosperity's loans were initially assigned to Wells Fargo. Now 10% of those loans because of regulatory concerns after regulatory concerns were raised they picked a percentage amount to send Wells Fargo to send to other lenders. And that was done by Wells Fargo's secondary market staff. So those any assignment to any lender or any entity other than Wells Fargo took place at the behest of Wells Fargo and at its under its control. And what is the provident force of that fact with respect to the status as a broker? That demonstrates that prosperity was table funding these loans that these loans were always under the control of Wells Fargo. That Wells Fargo controlled the funds. Wells Fargo controlled the funding process. And Wells Fargo had those loans, had ownership of those loans at the moment of funding. And that satisfies the definition of table funding. And if they table funded those loans then prosperity as a matter of law was the broker. And that's the issue that the district court said had to go to the jury. That's the question of fact. So there's a question of fact that the district court said had to go to the jury about whether or not prosperity was a broker. So that's an issue that again they're disputing bits of evidence. The defendants have argued theirs but this is something where there is conflicting evidence and it should go to the jury. But there is ample evidence that prosperity was the broker in these transactions. Where's the evidence of a finders fee? The finders fee is shown by the fact that prosperity took fees that were not those actual costs that your honor referenced in section 12804b. As the district court held in the class certification decision and as every other court to have considered the issue has held any fees that are not in those 12804b exclusions are finders fees. And the Jones case on which the district court relied found that an origination fee was a finders fee. And that's a fee for originating alone. The thrash webster case found that an origination fee, a processing fee, were finders fees. Same fees at issue in this case. The Maryland Commission or Financial Regulation, the regulator of the finders fee act issued an advisory which said in no uncertain terms that all fees collected by the broker are finders fees. So all fees that are collected by the entity who's the broker, which is the jury question in this case, are the finders fees? Your argument is that the calling a dog a duck but he's working that question. Well, my argument, your honor, is that the determination as to whether a finders fee was collected depends on whether prosperity was a broker. And that's the ultimate issue in this case. The fact that they're calling themselves a lender, the facts you believe indicate that they were functioning as a broker

. I appreciate it. And I got a conditional stop. Judicial stop-o. Got it. Mr. Carney. Thank you, Your Honours. I'd like to start with a response to one of Judge Conrad's questions which was about the assignment of the loans of prosperity's loans to anybody else whether be Wells Fargo or Ms. Prydell talked about US Bank. All of those loans were initially assigned to Wells Fargo. And that's the testimony of prosperity's own employee that all of prosperity's loans were initially assigned to Wells Fargo. Now 10% of those loans because of regulatory concerns after regulatory concerns were raised they picked a percentage amount to send Wells Fargo to send to other lenders. And that was done by Wells Fargo's secondary market staff. So those any assignment to any lender or any entity other than Wells Fargo took place at the behest of Wells Fargo and at its under its control. And what is the provident force of that fact with respect to the status as a broker? That demonstrates that prosperity was table funding these loans that these loans were always under the control of Wells Fargo. That Wells Fargo controlled the funds. Wells Fargo controlled the funding process. And Wells Fargo had those loans, had ownership of those loans at the moment of funding. And that satisfies the definition of table funding. And if they table funded those loans then prosperity as a matter of law was the broker. And that's the issue that the district court said had to go to the jury. That's the question of fact. So there's a question of fact that the district court said had to go to the jury about whether or not prosperity was a broker. So that's an issue that again they're disputing bits of evidence. The defendants have argued theirs but this is something where there is conflicting evidence and it should go to the jury. But there is ample evidence that prosperity was the broker in these transactions. Where's the evidence of a finders fee? The finders fee is shown by the fact that prosperity took fees that were not those actual costs that your honor referenced in section 12804b. As the district court held in the class certification decision and as every other court to have considered the issue has held any fees that are not in those 12804b exclusions are finders fees. And the Jones case on which the district court relied found that an origination fee was a finders fee. And that's a fee for originating alone. The thrash webster case found that an origination fee, a processing fee, were finders fees. Same fees at issue in this case. The Maryland Commission or Financial Regulation, the regulator of the finders fee act issued an advisory which said in no uncertain terms that all fees collected by the broker are finders fees. So all fees that are collected by the entity who's the broker, which is the jury question in this case, are the finders fees? Your argument is that the calling a dog a duck but he's working that question. Well, my argument, your honor, is that the determination as to whether a finders fee was collected depends on whether prosperity was a broker. And that's the ultimate issue in this case. The fact that they're calling themselves a lender, the facts you believe indicate that they were functioning as a broker. They were functioning as both a broker and a lender. Yes, your honor. And that is an arrangement that the Maryland legislature expressly prohibited. And that's the purpose of the finders fee act was to stop this marriage between brokering and lending. Your argument about the decision in mentor having an adverse effect on you. In other words, there the jury found that prosperity was not a broker but a lender. Well, in fact, your honor, the jury did not find that. Well, I understand, but we'll get to that, but accept that as a hypothetical for this purpose. That the jury found that prosperity was a lender, not a broker. Well, assuming that that was the case and the defendants carved all of the petri- carved the petries and 75% of the petri class out of the mentor case. That was desertified. It was not at issue in mentor. And in fact, the defendants insisted and the district court order. There is an overlap of about- Like to overlap. 25% of the class members, not including the name plaintiffs. Well, you know, that's an issue. There is no effect because the jury didn't reach the broker question. I'm asking to assume that the jury found that prosperity was not a broker. My question is what effect does that have on this case? Well, again, your honor, the jury just simply didn't find it. If the jury had found that prosperity was not a broker- If the jury had found that prosperity was not a broker, then that would have an impact on 25% of the class, which may be something- What should we do with that if we were to conclude that? Well, then that should be something that should be brought to the district court's attention. And the district court always has the authority, the discretion to modify the class certification. But- Well, then it's a pretty persuasive finding that implicates both cases. Because in one case, the jury made findings a fact after a long trial and you presented the same evidence with respect to the role of prosperity in these cases. And the jury made a finding. Now, I- I will talk about that in a minute, case. But when you read the jury's question, and connect with the judges' instructions for answering those questions, it seems to me a claim, a legitimate claim, could be made to the jury's found that prosperity was not a broker. Well, Your Honor, there was- You can dispute- You can already do that, and I'm going to reserve that. But I have to have the hypothetical now. And it seems to me when the jury has made that factual finding. Your Honor, if the jury had made that factual finding that precluded the 25% of the Petri class members from litigating that issue, the- Again, the defendants insisted in the district court ordered that a notice be sent to 75% of the Petri class, including the name plaintiff saying the Mintor verdict does not apply to you. The defendants insisted on that. That notice was sent out to 75% of the Petri class members. The Mintor verdict does not apply to you. That's not overlapped. That doesn't advance- That doesn't address the problem that we're facing, is where we have overlapped. And I'm trying to find out where you have overlapped in the classes, what is the legal effect of such a finding? Not on the scope of the class. You've to define the scope

. They were functioning as both a broker and a lender. Yes, your honor. And that is an arrangement that the Maryland legislature expressly prohibited. And that's the purpose of the finders fee act was to stop this marriage between brokering and lending. Your argument about the decision in mentor having an adverse effect on you. In other words, there the jury found that prosperity was not a broker but a lender. Well, in fact, your honor, the jury did not find that. Well, I understand, but we'll get to that, but accept that as a hypothetical for this purpose. That the jury found that prosperity was a lender, not a broker. Well, assuming that that was the case and the defendants carved all of the petri- carved the petries and 75% of the petri class out of the mentor case. That was desertified. It was not at issue in mentor. And in fact, the defendants insisted and the district court order. There is an overlap of about- Like to overlap. 25% of the class members, not including the name plaintiffs. Well, you know, that's an issue. There is no effect because the jury didn't reach the broker question. I'm asking to assume that the jury found that prosperity was not a broker. My question is what effect does that have on this case? Well, again, your honor, the jury just simply didn't find it. If the jury had found that prosperity was not a broker- If the jury had found that prosperity was not a broker, then that would have an impact on 25% of the class, which may be something- What should we do with that if we were to conclude that? Well, then that should be something that should be brought to the district court's attention. And the district court always has the authority, the discretion to modify the class certification. But- Well, then it's a pretty persuasive finding that implicates both cases. Because in one case, the jury made findings a fact after a long trial and you presented the same evidence with respect to the role of prosperity in these cases. And the jury made a finding. Now, I- I will talk about that in a minute, case. But when you read the jury's question, and connect with the judges' instructions for answering those questions, it seems to me a claim, a legitimate claim, could be made to the jury's found that prosperity was not a broker. Well, Your Honor, there was- You can dispute- You can already do that, and I'm going to reserve that. But I have to have the hypothetical now. And it seems to me when the jury has made that factual finding. Your Honor, if the jury had made that factual finding that precluded the 25% of the Petri class members from litigating that issue, the- Again, the defendants insisted in the district court ordered that a notice be sent to 75% of the Petri class, including the name plaintiff saying the Mintor verdict does not apply to you. The defendants insisted on that. That notice was sent out to 75% of the Petri class members. The Mintor verdict does not apply to you. That's not overlapped. That doesn't advance- That doesn't address the problem that we're facing, is where we have overlapped. And I'm trying to find out where you have overlapped in the classes, what is the legal effect of such a finding? Not on the scope of the class. You've to define the scope. And you agree that 25% are parties to both cases. Yes, Your Honor. Okay, now, if they're parties to both cases, are those 25% found by the jury finding? If it's case. Assuming that the Mintor jury had found that under the finder fee act- My question is, is the 25% in this case bound by what the jury found in Mintor? The 25% is bound- The 25% of the Petri class that is in the Mintor class is bound by the Mintor verdict. Yes, Your Honor. That's what I thought. Okay, thank you. And one other point, the issue about the distinction- I have gone to a red light, or you take a minute. Okay, the issue about the distinctions between Wells Fargo and Long and Foster and Prosperity under the finder's fee act all must be seen as the same. The finder's fee act defines a person as including two or more persons with a joint or common interest, and here that is indisputably all of the defendants. They're all the same. This is exactly the kind of arrangement that the finder's fee act was designed to prevent. And the legislative history of the act shows that that mortgage broker- tying, marrying mortgage brokering and mortgage lending together was what the act was intended to prevent. And so we respectfully ask that the court certify the questions to the Maryland Court of Appeals about the definition of finders fee and reverse the district court. Thank you, Your Honor. Now, do I understand we have some serve buttle here, some kind, or we buttle on the straw? Yes, Your Honor. I have one minute I believe, and the point would be to just talk quickly about the conditional cross appeal that we made. We don't think that we sincerely hope that your honors don't remain the case, but that if you did, there were issues in class certification that we wanted to bring to the court's attention and have done in the briefs. We don't think that the class should be taken as is. If remanded, there were problems that was decided. Pre-Wallmart, the judge made the determinations based on allegations, not on what the claims and evidence would show. He lumped timely claims in with untimely claims. And as this court said in Doe, that undermines typicality. We think he misconstrued the statute of limitations as well. So if there is any kind of remand, we would ask that either the court decertify the class or at least indicate that it should be looked at and knew. If I could just respond real quickly on this collateral stop-al thing for a second, because the 25 percent, I think, is clearly bored, but I think the 75 percent are bored as well, because not only was the interest the same and the representation adequate, but there were judicialist stop-al statements that come in here in addition, where if you look at what the plaintiffs wrote in their class briefs and what the judge wrote in the order, they represented that all the loans were the same in both mentor and Petri. In short, either prosperity, Wells Fogger relationship and their funding method makes prosperity a mortgage broker or it doesn't. The answer to the question will apply to all punitive class members. Every single loan made by prosperity to plaintiff Denise Mentor, Alboro and Bradley and Stacey Petri were funded by the same warehouse line of credit. Every class member's loan was identical. These statements, the last one I- No, both of them. Okay. Yeah, from different items. Some of the statements about the result being the same for all class members, IE the 25 percent and the 75 percent were made in the Petri Docket number 164 at page 16 and also at page 12. The statements about the loans in the Petri case and the mentor case being identical are also made in that same reply brief at page 2. And then in the main plaintiff class cert brief 124 at pages 46 and 47 of the brief, basically they say that commonality is established because of the uniform manner in which defendants treated putative class members in both cases. IE the mortgage loans made the class members in both mentor and Petri were originated process underwritten funded and assigned in the same manner

. The loans made to plaintiff Denise Mentor, Jason and Rachel Alboro and Bradley and Stacey Petri followed the same fact pattern. Thank you, Your Honours. We'll come down at Greek Council and take a short recess. Now, before we take three briefs out