Representative Mortgage

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DONALD M. COLE, III, on behalf of ) SUPERIOR COURT OF NEW JERSEY himself and all others similarly situated, ) LAW DIVISION

) BURLINGTON COUNTY

Plaintiffs, ) CASE NO: BURL-L-836-19

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v. )

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FREEDOM MORTGAGE CORPORATION, )

)

Defendant. )

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CLASS ACTION SETTLEMENT AGREEMENT

This Class Action Settlement Agreement (the “Agreement”) is made and entered into as of March, 2020, by plaintiff Donald M. Cole (the “Class Representative”) for himself and as the representative of the Class (as described in Section 1(c) of this Agreement), the Class’s attorneys Motley Rice New Jersey, LLC and Carney Bates Pulliam, PLLC, and defendant Freedom Mortgage Corporation (“Freedom”) (collectively, the “Parties”). RECITALS

WHEREAS, claims have been asserted against Freedom in the above-captioned class action lawsuit titled Cole v. Freedom Mortgage Corporation, in the Superior Court of New Jersey, Law Division, Burlington County, Case No. BURL-L-836-19 (the “Litigation”), asserting that Freedom charged certain borrowers with mortgages insured by the Federal Housing Administration improper fees for property inspections conducted due to borrower defaults, in breach of contract;

WHEREAS, the Class Representative, through the Class Counsel, has conducted research, investigation, and discovery regarding the claims asserted against Freedom in the Litigation; 2

WHEREAS, the Parties engaged in Court-ordered mediation in connection with the Litigation;

WHEREAS, the Class Representative and Class Counsel concluded that a settlement with Freedom, according to the terms set forth below, is in their best interests and the best interests of the members of the Class; and

WHEREAS, while Freedom disputes the allegations in the Litigation and denies that it is or may be liable in this Litigation, it enters into this Agreement to avoid the further expense, inconvenience, distraction, and uncertainty of further discovery and further proceedings in the Litigation, and does so without any express or implied admission of fact or liability; NOW, THEREFORE, the Parties, in consideration of the promises, covenants, and agreements herein described, and for other good and valuable consideration acknowledged by each of them to be satisfactory and adequate, and intending to be legally bound, do hereby mutually agree as follows:

1. DEFINITIONS

a. “Agreement” means this Class Action Settlement Agreement. b. “Appellate Courts” means the New Jersey Superior Court – Appellate Division, the New Jersey Supreme Court, and the United States Supreme Court. c. “Class” means, and the Class to be certified is defined as mortgage loan borrowers with an FHA-Insured Mortgage originated or serviced by Freedom Mortgage who were charged by Freedom fees for Property Inspections, whose loans were never accelerated (i.e., the full amount of the loan was never made due and payable) due to default on the loan and subsequently reinstated

(i.e., deaccelerated), between April 23, 2013 and the Execution Date. Excluded from the Class are: (i) all persons who file a timely and proper request to be excluded from the Class, as provided 3

for under Section 8 of this Agreement; and (ii) all persons who have previously waived or released any claims, demands, and/or counterclaims against Freedom which would otherwise allow them to be a member of the Class.

d. “Class Counsel” means Carney Bates Pulliam, PLLC. e. “Class Representative” means plaintiff Donald M. Cole. f. “Common Fund” means the monies that will be funded by Freedom and maintained and disbursed by the Settlement Administrator under the terms of this Agreement from which the Settlement Benefits will be paid, as described in Section 5 of this Agreement. g. “Court” means the Superior Court of New Jersey, Law Division, Burlington County. h. “Effective Date” means to the date on which the approval of this Settlement reaches Finality.

i. “Exclusion Deadline” means the date established by the Court and to be set forth in the Mailed Notice for the receipt by the Settlement Administrator of any Requests for Exclusion. j. “Execution Date” means the date by which all of the Parties have executed this Agreement by signing it.

k. “Final Fairness Hearing” refers to the hearing, whether in person or telephonically, at which the Court shall: (a) determine whether to grant final approval to this Settlement; (b) consider any timely objections to this Settlement and all responses thereto; and (c) consider requests for an award of attorneys’ fees and expenses to the Class Counsel and for a Service Award to the Class Representative.

l. “Finality” means: (i) the Court’s entry of both a Final Approval Order and Final Judgment Order; and (ii) either (a) no Party or other person has initiated a timely appeal or otherwise sought review of the Final Approval Order or Final Judgment Order, or (b) if the Final Approval Order 4

or Final Judgment Order entered by the Court with respect to the Settlement are appealed to any Appellate Courts, the Final Approval Order and Final Judgment Order have been affirmed in their entirety by the Appellate Courts to which such appeal has been taken and such affirmance is no longer subject to further appeal or review.

m. “Final Approval Order” means an order entered by the Court granting final approval to the Settlement.

n. “Final Judgment Order” means an order entered by the Court dismissing all Released Claims against Freedom with prejudice.

o. “FHA” means the Federal Housing Administration. p. “FHA-Insured Mortgage” means a mortgage loan insured by the Federal Housing Administration.

q. “Freedom” means defendant Freedom Mortgage Corporation. r. “Last Known Mailing Address” shall mean the most current mailing address for the borrower known to Freedom, provided that if the Settlement Administrator determines through use of the U.S. Postal Service’s National Change of Address database or through another method that a borrower has a more current mailing address, such address shall be deemed the Last Known Mailing Address.

s. “Mailed Notice” refers to the Court-approved Notice regarding the Settlement that is to be mailed by the Settlement Administrator to members of the Class, substantially in the form of Exhibit A to this Agreement.

t. “Notice” means, collectively, all Court-approved communications by which the Parties and/or the Court notify or attempt to notify members of the Class of the Settlement, their rights 5

with respect to the Settlement, and the Court’s approval thereof, regardless of whether such notice is actually received.

u. “Notice Deadline” means the Court-approved deadline for the mailing of the Mailed Notice.

v. “Objection” refers to the timely and complete filing with the Court of a written objection to the Settlement, which includes all information specified in Section 7 of this Agreement. w. “Objection Deadline” means the date established by the Court and to be set forth in the Mailed Notice for the filing with the Court of any Objections to the Settlement. x. “Parties” means Donald M. Cole, Motley Rice New Jersey, LLC, Carney Bates Pulliam, PLLC, and Freedom Mortgage Corporation.

y. “Preliminary Fairness Hearing” means the hearing, whether telephonically or in person, at which the Court shall: (1) determine whether to grant the Motion for Preliminary Approval of this Settlement pursuant to the terms of this Agreement; (2) approve the proposed plan to provide Notice to the Class (as set out in Section 10); (3) appoint the Settlement Administrator; (4) establish the Objection Deadline and requirements for the filing of Objections to the Settlement; (5) establish the Exclusion Deadline and requirements for the filing of Requests for Exclusion from the Class; (6) establish a date for the Final Fairness Hearing; (7) appoint Class Counsel as counsel for the Class; and (8) preliminarily enjoin any member of the Class who does not file a complete and valid Request for Exclusion by the Exclusion Deadline from filing suit or asserting any claim, demand, and/or counterclaim with respect to matters released in Section 14 of this Agreement. z. “Property Inspection” means property inspections ordered on a property securing a mortgage due to the borrower becoming delinquent or defaulting on their mortgage, or remaining delinquent or in default on their mortgage.

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aa. “Property Inspection Fees” means the amounts which Freedom paid for Property Inspections on a borrower’s property, including as paid to a third-party vendor, and which were in turn charged by Freedom as a fee to the borrower for the Property Inspection. bb. “Releasees” has the meaning set forth in Section 14 of this Agreement. cc. “Releasors” has the meaning set forth in Section 14 of this Agreement. dd. “Request for Exclusion” means a complete written request to be excluded from the Class that includes all information specified in Section 8 of this Agreement, and is received by the Settlement Administrator before the Exclusion Deadline approved by the Court. ee. “Service Award” means a Court-approved award to the Class Representative, pursuant to Section 11 of this Agreement.

ff. “Settlement” means the settlement, payment of monies, release, and final dismissal of claims contemplated by this Agreement.

gg. “Settlement Administrator” means the entity engaged to send the Mailed Notice of the Settlement, process Requests for Exclusion, disburse payments to members of the Class from the Common Fund, maintain a website regarding the Settlement, and to perform all other tasks set forth in Section 9 of this Agreement.

hh. “Settlement Benefits” means the benefits to be remitted under the terms of this Agreement from the Common Fund to eligible members of the Class as detailed in Section 6 of this Agreement.

ii. “Settlement Fund” refers to the total of monies that will be funded by Freedom into the Common Fund under the terms of this Agreement from which the Settlement Benefits, Court- awarded Class Counsel fees and expenses, Class Representative’s Service Award, Settlement 7

Administrator’s fees, and all of the costs, expenses, fees, and awards related to the carrying out of the Settlement and this Agreement will be paid.

jj. With respect to actions or events which must occur within a certain amount of time under the terms of this Agreement, time shall be computed in the manner described in New Jersey Court Rule 1-3.

kk. Definitions used herein shall apply to the singular and plural forms of each term defined. ll. Definitions used herein shall apply to the masculine, feminine, and neuter genders of each term defined.

mm. References to a person or entity under this Agreement include their permitted heirs, personal representatives, executors, affiliates, successors, and assigns. nn. Whenever the words “include,” “includes,” or “including” are used in this Agreement, they shall not be limiting, but rather shall be deemed to be followed by the words “without limitation.” 2. CONDITIONAL NATURE OF THE AGREEMENT

This Agreement and the Settlement contemplated hereby are expressly conditioned upon all of the following, which the parties agree are each material conditions precedent to the payment of Settlement Benefits to members of the Class, the payment of any Court-awarded Service Awards, and the payment of any Court-awarded attorneys’ fees and expenses to Class Counsel under this Agreement:

a. Class Counsel’s filing with the Court of a Motion for Preliminary Approval of the Settlement;

b. The Court’s holding of the Preliminary Fairness Hearing, and issuance of a Preliminary Approval Order: (1) granting the Motion for Preliminary Approval of the Settlement upon the terms of this Agreement; (2) approving the proposed Notice and the Notice Plan; (3) appointing 8

the Settlement Administrator; (4) establishing the Objection Deadline and requirements for the filing of Objections to the Settlement; (5) establishing the Exclusion Deadline and requirements for the filing of Requests for Exclusion from the Class; (6) establishing a date for the Final Fairness Hearing; (7) appointing Class Counsel as counsel for the Class; and (8) preliminarily enjoining the members of the Class who do not file complete and valid Requests for Exclusion by the Exclusion Deadline from filing suit or asserting any claims, demands, and/or counterclaim with respect to matters released in Section 14 of this Agreement;

c. The mailing of the approved Mailed Notice to the Class; d. The expiration of the Objection Deadline and Exclusion Deadline; e. That either (a) by the Exclusion Deadline, complete and valid Requests for Exclusion are filed with respect to no more than 5% of the loans that the Class obtained that are the subject of the Litigation; or (b) Freedom elects, at its option, up to thirty (30) days after the Exclusion Deadline, to proceed with the Settlement notwithstanding the fact that valid Requests for Exclusion are filed with respect to more than 5% of the loans that the Class obtained that are the subject of the Litigation.

f. Class Counsel’s filing with the Court of a Motion for Final Approval of the Settlement and the Entry of Final Judgment dismissing with prejudice all claims of the Class asserted in the Litigation against Freedom;

g. The Court’s holding of the Final Fairness Hearing and issuance of a Final Approval Order and Final Judgment Order: (1) disposing of any Objections to the Settlement; (2) granting the Motion for Final Approval; (3) granting final approval of the Settlement and the release of claims set forth in Section 14 of this Agreement by the Class Representative and the members of the Class who did not file complete and valid Requests for Exclusion by the Exclusion Deadline; (4) 9

dismissing with prejudice all claims of the Class asserted in the Litigation against Freedom by the Class Representative on behalf of himself and all members of the Class who did not file a complete and valid Request for Exclusion; and (5) permanently enjoining any members of the Class who did not file complete and valid Requests for Exclusion by the Exclusion Deadline from filing suit or any claim, demand, and/or counterclaim with respect to matters released in Section 14 of this Agreement, or from being a member of any other pending or future class action which would allow for recovery of any claim, demand, and/or counterclaim with respect to the matters released in Section 14 of this Agreement;

h. Class Counsel’s filing of a Motion for the Award of Counsel Fees and Expenses and a Motion for Service Awards to the Class Representative, consistent with the terms of this Agreement;

i. The Court’s issuance of an Order deciding the Motion for the Award of Counsel Fees and Expenses and the Motion for Service Awards to the Class Representative, with the understanding that any order awarding the Class Counsel fees and expenses and the Class Representative’s Service Awards shall not exceed the maximum amounts set forth in Sections 11 & 12 of this Agreement, and that all Class Counsel fees and expenses, and the Class Representative’s Service Award, shall be paid solely from the Settlement Fund; and j. The Orders of the Court granting final approval to the Settlement reaching Finality. Should any of these conditions not be met, the Parties agree that the Settlement and the terms of this Agreement shall terminate and be deemed null and void, except for any provisions or sections of this Agreement which expressly state that they survive termination of this Agreement or which describe actions or events related to the termination of the Agreement or the Settlement not reaching Finality.

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3. COOPERATION BY THE PARTIES

The Parties and their counsel agree to cooperate fully and in good faith with each other to promptly execute all documents and take all steps necessary to effectuate the Settlement consistent with the terms and conditions of this Agreement. The Parties and their counsel further agree to support the preliminary and final approval of this Settlement consistent with the terms and conditions of this Agreement, including against any appeal of the Final Approval Order and Final Judgment Order and any collateral attack on the Settlement or the Final Approval Order and Final Judgment Order, to the extent the Settlement, Final Approval Order, and Final Judgment Order are consistent with the terms and conditions of this Agreement. 4. CLASS MEMBER LIST AND CONFIRMATORY DISCOVERY

Freedom and Class Counsel agree to cooperate in good faith to identify members of the Class through reasonable efforts and research of records and information available to the parties, and will work together in good faith to conduct mutually-agreeable, reasonable confirmatory discovery regarding the number of loans and borrowers and the total amount of Property Inspection Fees collected by Freedom which are the subject of this Litigation. Freedom and Class Counsel will identify the final Class Member List on or before the mailing of the Mailed Notice, provided that nothing shall preclude the Parties or the Settlement Administrator from asserting, prior to issuance of the Final Approval Order, that any person identified on the Class Member List is not eligible to be a member of the Class, or that any person not identified on the Class Member List is eligible to be a member of the Class. The Class Member List shall be treated as Confidential pursuant to the terms of the Protective Order entered in the Litigation on September 16, 2019. 11

5. COMMON FUND

The Settlement Fund shall total six hundred fifty thousand dollars ($650,000). Within fourteen (14) days following the entry of the Preliminary Approval Order, $20,000 of the Settlement Fund will be paid by Freedom into a Common Fund account maintained by the Settlement Administrator to be used toward payment of the Settlement Administrator’s fees, with the balance to be distributed in accordance with the Final Approval Order and Final Judgment Order. The Common Fund shall be maintained in an interest-bearing account. Any amounts of the Settlement Fund paid by Freedom are nonrefundable to Freedom, provided that: a) in the event this Agreement or the Settlement are terminated or not approved, any amounts of the Settlement Fund paid into the Common Fund which remain after payment of accrued Settlement Administrator’s fees and expenses will be refunded to Freedom; or b) fees are paid as a credit into Class members’ mortgage accounts for Property Inspection Fees that were charged by Freedom but not paid by the borrowers as set forth in Section 6. Within twenty-one (21) days after Finality, Freedom shall remit to the Settlement Administrator the balance of the Settlement Fund–the remaining $630,000–into the Common Fund to fully fund the Settlement Benefits to the Class, any award of attorney’s fees or expenses to the Class Counsel, any Service Award to the Class Representative, any fees, costs, or expenses for administering the Settlement, including the fees and expenses of the Settlement Administrator. The money in the Common Fund shall be maintained to pay all amounts due in accordance with the terms of this Agreement and the Settlement, as approved by the Court. Freedom shall not be responsible or liable for paying any amounts of money for Settlement Benefits, any award of attorney’s fees or expenses to the Class Counsel, any Service Award to the Class Representative, any fees, costs, or expenses for administering the Settlement, including the 12

fees and expenses of the Settlement Administrator, or any other costs, fees, expenses, or awards related to the Settlement, outside of or in addition to the $650,000 Settlement Fund. Freedom shall not be responsible or liable to pay anything if the Settlement or this Agreement is not approved by the Court, is terminated, or otherwise does not reach Finality. 6. SETTLEMENT BENEFITS

The following adjustments shall be made to and subtracted from the Common Fund: (a) payment to the Settlement Administrator in such amount as required for the administration of the Settlement; (b) payment of any award of Class Counsel’s costs, expenses, and fees, as allowed under Section 12 of this Agreement, in such amount as may be allowed and approved by the Court; and (c) payment of a Service Award to the Class Representative, as allowed under Section 11 of this Agreement, in such amount as may be allowed and approved by the Court. Within thirty (30) days after Finality of the Settlement, the Common Fund, less the adjustments set forth in the preceding paragraph, will be distributed to those members of the Class who did not file a complete and valid Request for Exclusion by the Exclusion Deadline. Each Class member who paid some or all of their Property Inspection Fees shall receive a share of the Common Fund remaining after the adjustments provided in the preceding subparagraph, proportional to the amount of Property Inspection Fees paid by the member of the Class to Freedom which were not waived or refunded by Freedom. Each of the Class members who did not pay some or all of their Property Inspection Fees charged by Freedom will have their amount of Settlement Benefits, proportional to the amount of Property Inspection Fees charged by Freedom which were not waived or refunded by Freedom, paid into their mortgage account as a credit against any Property Inspection Fees which are still owed by the borrower. 13

To the extent that there is more than one borrower on a loan subject to this Settlement, the co-borrowers shall be deemed to be one member of the Class for purposes of the amount of Settlement Benefits to be paid, and the Settlement Benefits shall be paid by check payable jointly to the co-borrowers on such loan.

Settlement Benefits checks shall be mailed by first-class mail by the Settlement Administrator to the Last Known Mailing Addresses for those Class members eligible to receive Settlement Benefits under this Settlement. If there is more than one borrower on a subject loan and the co-borrowers have the same Last Known Mailing Address, the Settlement Benefits check will be mailed to that Last Known Mailing Address. If there is more than one borrower on a subject loan and the co-borrower’s Last Known Mailing Address differs from that of the primary borrower, the Settlement Benefits check will be mailed to the Last Known Mailing Address for the primary borrower on that loan, and the Settlement Administrator will also send a photocopy of the transmittal letter to the co-borrower’s Last Known Mailing Address. Settlement Benefits checks shall be notated as void after ninety (90) days from the date thereof. If a Settlement Benefits check remains un-negotiated after one hundred (100) days from the date of the check, the Settlement Administrator shall stop payment on the uncashed Settlement Benefits check, undertake an updated address verification for the primary borrower and, if an updated address is found, the Settlement Administrator shall reissue a replacement Settlement Benefits check to the payee(s) and mail the replacement check by first-class mail to the updated mailing address for the primary borrower.

Any funds remaining in the Common Fund 30 days after payment is stopped on un- negotiated checks from the second round of mailings to updated mailing addresses shall be contributed and remitted by the Settlement Administrator to Homes for Our Troops, a national 14

non-profit charity which provides specially adapted homes for severely injured post-9/11 veterans. Thereafter, the Common Fund shall be deemed closed and any Class members who did not receive or who did not negotiate their Settlement Benefit checks shall have no further right to receive any Settlement Benefits or any other payment or relief from Freedom for the Released Claims, and the release and covenants provided for under Section 14 shall remain valid and binding on the Class members.

7. RIGHT TO OBJECT TO THE SETTLEMENT

Any member of the Class shall have the right to object to the Settlement by filing a written Objection with the Court at the address listed in the Mailed Notice and by mailing copies thereof to the Parties’ counsel, not later than the Objections Deadline established by the Court, which shall be not more than sixty (60) days after the date the Mailed Notice is mailed to the Class, or as otherwise ordered by the Court. All Objections must be signed by the person(s) making the objection, or an attorney or legal guardian or legal representative authorized to act on their behalf, and must set forth in detail each component of the Settlement to which they object, the reasons for each such objection, and any legal authority that they wish the Court to consider in support thereof. Objections must also include the objector’s full name and current address, the full name and current address of any co-borrower(s) on their mortgage loan which qualified them for inclusion in the Class, the address of the property which secured the mortgage loan qualified them for inclusion in the Class, and an affirmation, under penalty of perjury, that the person on whose behalf the objection is filed and their co-borrower(s), if any, object to the Settlement and intend to appear at the Final Fairness Hearing, at which time their Objections will be considered, if not previously withdrawn.

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8. RIGHT TO BE EXCLUDED (OPT-OUT) FROM THE SETTLEMENT Any member of the Class shall have the right to opt-out of the Class by sending a written Request for Exclusion from the Class to the Settlement Administrator at the address listed in the Mailed Notice, which must be received by the Settlement Administrator no later than the Exclusion Deadline set by the Court, which shall be not more than sixty (60) days after the date the Mailed Notice is mailed to the Class, or as otherwise ordered by the Court. Requests for Exclusion must be signed by the person requesting exclusion from the Class and any co-borrower(s) on their mortgage loan which qualifies them for the Class, and must include the requestor’s full name and current address, the full name and current address of any co-borrower(s) on their mortgage loan which qualifies them for the Class, the address of the property which secured their mortgage loan which qualifies them for the Class, and an affirmation, under penalty of perjury, that the requestor seeking to be excluded from the Class and their co-borrower(s), if any, wish to opt-out of the Class and understand that, in doing so, they will not be entitled to any Settlement Benefits under the Settlement. No single Request for Exclusion shall be effective as to more than one borrower or set of co-borrowers. In no event shall any Request for Exclusion in which a person, who does not possess a valid power of attorney or is not a legal guardian or legal representative authorized to act on behalf of the person to be opted out, purports to opt any other person out of the Settlement

(including any group, aggregate, or class involving more than one Class member) be considered a valid opt-out. Individuals are not permitted to request exclusion for other individuals, and each individual Class member who seeks exclusion from the Class must evidence his or her intent by complying with the procedures above. Any opt-out submitted by a Class member on behalf of a group, aggregate, or putative class shall be deemed valid as to that individual Class member’s loan only, and shall be invalid as to the group, aggregate, or putative class. 16

9. SETTLEMENT ADMINISTRATOR

The Parties agree that Kurtzman Carson Consultants (“KCC”) shall be the Settlement Administrator, unless the parties mutually agree to specify a different entity as Settlement Administrator.

The Settlement Administrator will be retained by Class Counsel and paid out of the Common Fund.

The Settlement Administrator shall be responsible for administering the Settlement, including:

a. prior to any mailings, undertaking address verifications for members of the Class through the U.S. Postal Service’s National Change of Address database to determine whether any class member has a more current mailing address;

b. undertaking address verifications for members of the Class and conducting appropriate research, using competent Internet information brokers, and/or a recognized credit bureau to ensure that any Mailed Notice or settlement check which it returned for the reason that the address is incorrect will be corrected and a timely second notice or check sent; c. sending the Mailed Notice, pursuant to Section 10 of this Agreement; d. preparing reports regarding the Mailed Notice, as directed by the Parties’ counsel and in accordance with the deadline established by the Court; e. accepting and reporting on Requests for Exclusion received by the Exclusion Deadline; f. establishing and maintaining a Settlement website; g. opening an account for the deposit of the Common Fund, at a federally-insured depository institution with a branch in New Jersey, and for remitting payments from the Common Fund for 17

Settlement Benefits payable to eligible members of the Class, the Class Representative, and Class Counsel;

h. preparing such declarations or affidavits as are necessary to present to the Court with respect to the Settlement Administrator’s duties and fulfillment thereof in support of final approval of the Settlement;

i. issuing Form 1099s to the extent required; and

j. any other duties as directed by Class Counsel, provided that any modification of the duties referenced in subparts (a)-(h) of this Section must be mutually agreed to by the Parties. The Parties consent to the release to the Settlement Administrator of the names, addresses, and other personal or identifying information about the Class members for the purposes of fulfilling the Settlement Administrator’s duties under this Agreement, which information shall be maintained as confidential by the Settlement Administrator and shall be

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