Letter the purpose of WFB-EL-00000001 Wells Fargo Bank, N.A. August 31, 2011 any other respect perform the Foreclosure Review as further detailed in this letter. Promontory will conduct the Foreclosure Review entirely Independently of Wells Fargo, subject to the direction of the OCC and not Wells Fargo. WeJls Fargo may not oversee, direct, or supervise the engagement, but this will not preclude Wells Fargo and Promontory from working consultatively, or Wells Fargo from communicating with Promontory as necessary both to identify opportunities to Improve the operations of its foreclosure processes in light of information rearned by Promontory through the performance of the Foreclosure Review, and to confirm that Promontory's performance of the Foreclosure Review complies with the requirements of the Consent Order. Promontory will be subject to review and oversight by the OCC at all stages of the Foreclosure Review, will regularly brief the OCC on the work being performed, and will follow comments and directions provided by the OCC. 1. B.ACKGROUND The Consent Order: On April 13, 2011, Wells Fargo and the OCC entered into the Consent Order, which relates to the conduct of Wells Fargo's mortgage servicing business. Article VII of the Consent Order requires Wells Fargo, within 45 days of the date of the Consent Order, to retain an independent consultant to review certain residential mortgage foreclosures completed or initiated by Wells Fargo in calendar years 2009 and 2010 (the "Foreclosure Review") within 120 days following the OCC's approval of the independent consultant's retention. The Foreclosure Review Preparation SOW: In anticipation of the Consent Order, and in accordance with the MSA, Wells Fargo and Promontory entered into a Statement of Work (the «(Foreclosure Review Preparation SOW") that obligated Promontory to perform various planning and preparation tasks to ensure the smooth and effective conduct ofthe Foreclosure Review. Those tasks included the development of this Agreement. 2. ORGANIZATION OF THIS AGREEMENT Section 3 of this Agreement sets forth its essential terms and conditions. Section 3.a sets forth an affirmative statement of the parties' intent to comply with the terms of the Consent Order. Section 3.b identifies the project name. Section 3.c describes the scope and timing of services to be provided by Promontory pursuant to this Agreement. Section 3.d describes the performance period. Section 3.e identifies work sites. Section 3.f identifies Attachment D as describing the fees that Promontory expects to charge Wells Fargo for services performed under this Agreement, as well as the costs for which Wells Fargo will reimburse Promontory. Section 3.g sets forth acceptance criteria. Sections 3.h and 3.1 Foreclosure Review Engagement Letter, page 2 WFB-EL-00000002 ! Wells Fargo Bank, N.A. August 31, 2011 identify project managers. Section 3.j identifies subcontractors that Promontory intends to use. Section 3.k sets all other terms and conditions governing the conduct of this agreement. Article VII(2) of the Consent Order requires this Agreement to include four items. The table below summarizes those items and indicates the section and page of this Agreement that responds to each of them. AGREEMENT REQUIREMENT SECTION PAGE Methodology for conducting the File Review Process Attachment A A·i Expertise and resources to be dedicated to the Foreclosure Review Attachment C C"i Completion of the Foreclosure Review within one hundred twenty (120) days from approval of this Agreement Section 3.d.ii,1 6 Commitment that any workpapers associated with the Foreclosure Review be made available to the acc immediately upon request Section 3.e.vi 5 Nine attachments provide important supplemental information and are integral to this Agreement Attachment A ("File Review Process and Methodology") sets forth the methodology Promontory intends to use in performing the File Review Process. In accordance with the terms of the Consent Order, Attachment A includes (i) a description of the information systems and documents that Promontory will review, including the selection of criteria for cases to be reviewed; (ii) the criteria Promontory intends to apply in evaluating the reasonableness of fees and penalties; (iii) other procedures necessary to make the required determinations (such as through interviews of employees and third parties and a process for submission and review of borrower claims and complaints)j and (iv) Promontory's proposed sampling techniques, induding both a full description of the statistical basis for the sampling methods chosen, as well as procedures to increase the size of our sample depending on results of the initial sampling. Attachment B ("Complaint Process and Methodology") sets forth the methodology Promontory intends to use in performing the Complaint Process. Attachment B describes how Promontory envisions that Foreclosure Review Engagement Letter, page 3 WFB-EL-00000003 Fargo Bank, N.A. August 31, 2011 Wells Fargo, in coordination with other servicers, will promote the complaint opportunity to borrowers within the scope of the Foreclosure Review and the processes that Wells Fargo and Promontory will use to ensure that every complaint received from an in-scope borrower receives independent consideration and disposition. Attachment C ("Resources and Expertise") describes the resources and expertise Promontory will use to complete the Foreclosure Review, Including personnel and information systems. Attachment C further describes Promontory's plans for enlisting additional resources necessary to complete the Foreclosure Review in the event that initial sampling identifies needs for more extensive file review. Attachment D ("Fees") describes the fees that Promontory expects to charge Wells Fargo for services performed under this Agreement, as well as the costs for which Wells Fargo will reimburse Promontory. Attachment E ("Project Plan") provides a high-level Foreclosure Review Project Plan. The parties intend this Plan to be a working document, subject to periodic revision upon mutual agreement of the parties throughout the performance of services pursuant to this Agreement. Attachment F ("Security and Access Provisions") describes certain additional understandings regarding system and facilitIes access, network connections, data safeguards, and related matters. Attachment G ("Out of Pocket Expenses Reimbursement Policy") details certain additional understandings of the parties regarding reimbursement by Wells Fargo for out-Of-pocket expenses .incurred by Promontory in the course of performing services under this Agreement. Attachment H ("Dispute Resolution Procedures") details the steps to be taken by the parties in resolving any dispute that may arise in regard to this Agreement. Attachment I ("Conflicts of Interest Policy") details Promontory's policy on conflicts of interest. 3. TERMS AND CONDITIONS a. COMPLIANCE WITH CONSENT ORDER The parties intend this Agreement to comply fully with the requirements of Article VII of the Consent Order and with all Interpretive guidance the occ may issue pursuant thereto. In the event that the ace requires further refinement of this letter as a condition of its approval, the parties agree to work together in good faith to make refinements acceptable to the OCC. b. PROJECT NAME: Foreclosure Review c. SCOPE ANDTIMING OF PROMONTORY SERVICES Foreclosure Review Engagement letter, page 4 WFB-EL-00000004 i. Foreclosure Review. Within the performance period set forth in section 3.d, Promontory will conduct an independent review . ("Foreclosure Review") of certain residential foreclosure actions initiated or completed on owner- occupied, 1-4 family dwellings by divisions of the institution that process first lien mortgage foreclosures. Promontory's review shall include residential foreclosure actions or proceedings (including foreclosures that were in process or completed) for loans serviced by Wells Fargo, whether brought in the name of Wells Fargo, the investor, the mortgage note holder, or any agent for the mortgage note holder (including MERS), that have been pending at any time from January 1, 2009 to December 31, 2010, as well as residential foreclosure sales that occurred during this time period. ii. Report of Findings. Within thirty (30) days of completing the Foreclosure Review, Promontory will prepare a written report detailing the findings of the Foreclosure Review ("Foreclosure Review Report"). Upon completion, Promontory will simultaneously deliver the Foreclosure Report to the members of the Board of Directors of Wells Fargo, to the Compliance Committee established in conformance with the Consent Order, to the acC's Deputy Comptroller for Large Bank Supervision, to the acC's Examiner in Charge of Wells Fargo, and to you. iii. Reporting. 1. Periodic Reports to Management. Promontory will report to Wells Fargo at regular intervals and in a form to be mutually agreed, no less than every fourteen {14} days, concerning the status of its performance of services under this Agreement. At a minimum, Promontory's reporting will identify any respects in which the accomplishment of milestones set forth in the Forecfosure Review Project Plan (Attachment E) is at risk, any need(s} for assistance from Wells Fargo, and any findings or observations believed by Promontory likely to warrant indusion in the Foreclosure Report. 2. Ad Hoc Reports to Management. Managing Directors assigned by Promontory to this engagement shall be reasonably available to Wells Fargo management by telephone, e-mail, or in-person for ad hoc consultations and status reports throughout the period of this Agreement. 3. Reporting to the Board(s). Upon reasonable notice, Promontory will report to the Board of Wells Fargo & Co.; the Board of Wells Fargo Bank, N.A., or any committee of such boards charged with oversight of Wells Fargo's efforts to comply with the Consent Order for the purpose of discussing the status of Promontory's provision of Foreclosure Review Engagement Letter, page 5 WFB-EL-00000005 services pursuant to this Agreement and any findings or observations Promontory may have made in the course of providing such services. 4. Reporting to the OCC. If requested by Wells Fargo orthe acc, Promontory will meet with representatives of the acc to discuss . the status of the Foreclosure Review, the findings set forth in the Foreclosure Report, or any other matters germane to this engagement. iv. Independence. Promontory envisions a consultative working relationship with Wells Fargo, with the shared objective of Identifying Wells Fargo borrowers within scope of the Foreclosure Review who have incurred financial injury attributable to errors, misrepresentations or other deficiencies within the scope of the Consent Order. As independent consultant, Promontory will have sole responsibility for the methodology, findings and observations set forth in the Foreclosure Report. Promontory has confidence in its ability to conduct itself independently for five reasons. First, Promontory has no ongoing relationship with Wells Fargo and does not act for Wells Fargo in any advocacy capacity. Beyond its current efforts to assist Wells Fargo in preparing for the foreclosure review, Promontory has no active engagement with Wells Fargo & Co. or any Wells Fargo subsidiary. Second, Promontory's engagement is conducted under the oversight of the Wells Fargo Board of Directors and the independent Corporate Risk function, not the residential mortgage servicing area that is subject to review. Third, none of Promontory's previous engagements with Wells Fargo relate closely to the subject matter of the Foreclosure Review. The Foreclosure Review will not require Promontory to evaluate or re- evaluate any of the findings and observations it has reached in prior engagements. Accordingly, Promontory's prior work with Wells Fargo is unlikely to affect Promontory'~ objectivity and thoroughness in performing the Foreclosure Review. Fourth, as further described below, Wells Fargo has a history of engaging Promontory precisely for the purpose of providing independent advice. Several of Promontory's previous engagements with Wells Fargo involved the provision of advice directly to Wells Fargo's corporate risk management functions, internal audit function, and committees of the Board of Directors. Promontory and Wells Fargo agree that the success of the Foreclosure Review will require Promontory to conduct itself with a high degree of independence. Finally, Promontory enjoys a large and growing clientele. The firm's economic success does not depend and never has depended on its business relationships with Wells Fargo. Foreclosure Review Engagement Letter, page 6 WFB-EL-00000006 Wells Fargo Bank, N.A. August31, 2011 1. Independence of Consultant conducting Foreclosure Review Promontory agrees that the Foreclosure Review will comply with all requirements set forth in Article VII of the Consent Order issued to Wells Fargo on April 13, 2011, and that it will conduct the Foreclosure Review as separate and independent from any review, study, or other work performed by the Bank or its contractors or agents with respect to the Bank's mortgage servicing portfolio or the Bank's compliance with other requirements of the Consent Order, as set forth below: a. Conduct of the Foreclosure Review by Promontory shall not be subject to direction, control, supervision, oversight, or influence by the Bank, its contractors or agents. Promontory shall immediately notify the Office of the Comptroller of the Currency (the "OCC") of any effort by the Bank, directly or indirectly, to exert any such direction, control, supervision, oversight, or influence over the Independent Consultant, its contractors or agents. b. Promontory agrees that it is solely responsible for the conduct and results of the Forecfosure Review, In accordance with the requirements of Article VII of the Consent Order. C. The conduct of the Foreclosure Review shall be subject to the monitoring, oversight, and direction of the Occ. Promontory agrees to promptly comply with all written comments, directions, and instructions of the OCC concerning the conduct of the Foreclosure Review, and that it will promptly provide any documents, workpapers, materials or other information requested by the OCC, regardless of any claim of privilege or confidentiality. d. Promontory agrees to provide regular progress reports, updates and information concerning the conduct of the Foreclosure Review to the OCC, as directed by the OCC. e, Promontory will conduct the Foreclosure Review using only personnel employed or retained by Promontory to perform the work required to complete the Foreclosure Review. Promontory shall not employ or use services provided by Bank employees, or contractors or agents retained by the Bank with respect to the Consent Order or with respect to matters addressed in the Consent Order, in order to conduct the Foreclosure Review, except where the OCC specifically provides prior written approval to do so. f. Subject to the requirements and restrictions of paragraph e above, including the requirement of specific approval by the OCC, Promontory may utilize documents, materials or other information provided by the Bank, and may communicate with the Bank, its contractors or agents; in order to conduct the Foreclosure Review. g. Promontory agrees that any legal advice needed in conducting the Foreclosure Review shall be obtained from the outside law firm whose retention for that purpose has been approved by the OCC. Promontory agrees not to obtain legal advice (or other professional services) in conducting the Foreclosure Review from the Bank's inside counsel, or from outside counsel retained by the Foreclosure Review Engagement Letter, page 7 WFB-EL-00000007 Bank or its affiliates to provide legal advice concerning the Consent Order or matters contained In the Consent Order. h. If the OCC determines; in its sole discretion, that Promontory has not been fully compliant with the foregoing standards (paragraphs a-g, above), the OCC may direct the Bank to dismiss Promontory and retain a successor consultant, in which case the Bank shall have no further obligation to Promontory other than for services performed up to that date for the Bank. 2. PromontorYs Past Work with Wells Fargo Promontory has performed several previous engagements for Wells Fargo. Promontory and Wells Fargo believe this experience gives Promontory institutional knowledge of Wells Fargo that will contribute to the success of the Foreclosure Review, and that Promontory's history of engagement with Wells Fargo does not present.alevel of entanglement or conflict that would be likely to compromise Promontory's independence in performing the Foreclosure Review. Promontory's previous engagements with WelJs Fargo include: Foreclosure Review Engagement Letter, page 8 WFB-EL-00000008 Wells Fargo Bank, N.A. August 31, 2011 Foreclosure Review Engagement letter, page 9 WFB-EL-00000009 : 3. Actual or Potential Conflicts of Interest Promontory has been engaged by multiple clients to perform a variety of advisory services relating to the Consent Orders and related orders of the same date issued by the Federal Reserve Board of Governors. Promontory believes these clients share a common interest in complying fully with the requirements of the ace and Federal Reserve, that their interests in this regard are not adverse} and that Promontory's work with them, accordingly} does not present a conflict of interest. Foreclosure Review Engagement letter, page 10 WFB-EL-00000010