Innovative Strategies for Loss
Mitigation & Foreclosure
Prevention Through Short Sales
•Managing Director, Tim Rood
1/19/2009
•Managing Director, Brian O’Reilly
Proprietary and Confidential

Capital Financial Solutions
2
Experienced Business Executives Providing
Management Strategy and Business Consulting
Services to Matt Martin Real Estate Management
Knowledge, experience and access to qualified,
competent service provider partners
• QC reviews and supporting analytics
• Partial or complete outsourced origination
• Special servicing
• Loss mitigation
» Solicitation, Processing, Analysis, Outreach, and settlement
• Short sales and REO marketing and management
Proprietary and Confidential

Marketscape - Key Drivers
3
• Economic Conditions
Defaults and Foreclosures Expected to climb in 2009 - 2010
Unemployment Nationally May Peak as High as 10% (27 Year High)
FDIC estimates 1.6 Million homeowners are delinquent by 60-90 days
FDIC estimates 3.8 Million homeowners will be 60-90 days delinquent EOY 2009
• Lenders/Investors Will Remain Capital Constrained
Lenders/Investors therefore biased towards home preservation vs.
liquidation
Foreclosure moratoriums and mass modifications
• Negative Buyer Sentiment
Home buyers are increasingly wary of REOs
80 percent of U.S. adults are now concerned with negative aspects, citing hidden costs,
risky process, home losing value and personal connection with foreclosure as the core
concerns.
Proprietary and Confidential

The Value Proposition of Short Sales
4
• Reduces the flow of REO inventory
• Reduced severity of loss than foreclosure
Investor • Provides Balance Sheet Relief - reduces contingent
liabilities
• Value
Buyer • Certainty (Short sale supports traditional buyer inspections and walkthroughs vs REO)
• Offers Near Term Opportunity for Competitive
Advantage
Agent • Differentiated value in marketplace
• Fast moving inventory of listings
• Buy and sell side referrals
• Pipeline of future buyers
Proprietary and Confidential

Issues Plaguing Short Sales
In 2008 Fewer than 2% of delinquent loans were mitigated by a short sale
(FHFA) largely due to the following:
• Lack of standardized process
• Overburdened servicers
Investor • Process is time consuming and expensive
• Fear of Fraud Involving Parties to Transaction
• Extremely high fallout rate
• Long, inconsistent, unfamiliar process
• High degree of Uncertainty Regarding Success
Prospects
Agent • High Fallout
• Lack of experience negotiating with investors
• Lack of communication and control
• Reputation risk
• Long, unfamiliar process
Buyer • Uncertainty/Fallout
• Lack of communication and control

Overcoming Current
Challenges to Short Sales
6
Requires a new operating model that increases investor, lender and
Realtor support and achieves the following:
•Faster turnaround of conditional approvals
Delegation of approval within value threshold
Proactively leverage seasoned Realtor network at initial sign of intent not to
occupy
•Improved Control and communication
Automated workflow ensure business rules are followed and the right tasks
assigned at the right time
Customer centric model that establishes lines of communication and
ongoing relationships with investors, agents, and sellers/buyers
•Increased Standardization Processes and Procedures
Investor specific specifications, criteria, methods, processes, and practices
Clear delineation and articulation between roles and responsibilities of
Introducing a Team of Investor/Lender Qualified Short Sale Specialists as Intermediaries
parties
Makes Accomplishing These Objectives Possible
Proprietary and Confidential

Short Sale Specialist Operating Model
The Operating Model Supports:
Consistent Processes, Improved Communication, and Improved Conversion Rates
Short Sale Realtor
Specialist Roles & Roles &
Responsibilities Responsibilities
Investor
Investor Homeowner
Realtor Lead Generation/ Homeowner
Information Lead
Repository and Qualification
Support
Property Listing
& Marketing
Initial Investor
(collateral
Contact/Negotiate
management)
Property
valuation and Homeowner
Servicer
Servicer reasonableness Seller Data
Prospective
Prospective
test of offer Collection
Purchaser
Purchaser
Fraud check and Purchaser
investigation Negotiation
Assemble and Contract
process file Execution and
Regulatory
Investor Compliance
Negotiation
Lender
Lender Investor/
Investor/
Property
Investor workflow Lender Referred
Lender Referred
monitoring
and monitoring Homeowner
Homeowner
And Reporting
Disposition
Disposition
Advisory
Advisory
Others Others

Centralized Short Sale Dept
8
1. Common interface for agents, borrowers, and
servicers/investors
2. Improved transaction control and communication
3. Standardization - clear delineation between roles and
responsibilities of parties, and processing and negotiation
activities
• Interview and collect documentation
• Create electronic file with workstations/views for all interested parties
• Procure Valuation
• Listing with Realtor, and/or Secure Buyer Agent
• Vetting (triage offers – low ball, potential, reasonable/acceptable)
• Process file, communicate progress with all parties
• Negotiate with lien holder(s)
Proprietary and Confidential

Ancillary Benefits
9
• Structured, predictable approach to short sales
• Allows agent to focus on their high customer value , core
competencies without getting bogged down in time
consuming, low customer value activities
• Allows servicers to outsource an expensive and time
consuming transaction
• Viable and compelling alternative to foreclosure for
investors
• A clear compelling value proposition to buyers and
sellers
A successful short sale salvages a sellers credit, and prevents
deficiency judgments that impact many critical life
events/decisions, college, divorce, retirement, etc.
Proprietary and Confidential

Capital Financial Solutions
10
• Work with Federal Housing Finance
Agencies (FNMA, FRE, GNMA, HUD) and
their lenders to solve meaningful strategic
and tactical problems
• Partner, consult, and position best in class
service providers and product companies
to ensure they have the best chance for
success the Federal Housing Finance
Agencies
Proprietary and Confidential

Capital Financial Solutions
Overview & Approach
11
Broad and deep assessment &
triaging of business problems –
FAST!
Triage the Problem
Is it better that I try to solve
Objectively the problem with help, or
Explore Solution are there existing full/partial
solutions in the market?
Options
Solve The
Problem as
Solutions
Quickly & Cost
Effectively as
Possible

CFS’ Human & Strategic Assets
12
• QC bulk file reviews: rep/warrant breach • Origination, processing, and
audits and forensic documentation QC/Compliance technology
• Partial or complete outsourced • eClosing, Imaging, and Enterprise
origination (loss mit via refi/short refi) Content Mgmt vendors
Strategic • Special servicing/sub servicing • Partial or complete outsourced lead
generation, and origination (loss mit via
• Loss mitigation: Solicitation, Processing,
Partnerships refi/short refi)
Analysis, Outreach, and settlement
• Pipeline and Interest rate hedging
• Technology: rules administration and
management for loss mitigation workflow • Special servicing/sub servicing
compliance, and short sale acceptance
Consulting or specialized staff augmentation
• QC due diligence (pre and post closing, • Strategic, Operational, and IT Systems
and reporting) Expertise
• QC/Compliance & Fraud policy makers
• Servicing management and oversight
Expertise & and support staff
• Portfolio analysis for proactive and
Human predictive loss mit special counseling • Credit Risk Analytics
• REO management , contract negotiations, • Fair value accounting and analysis
Capital and sales • Tactical and operational contract
• On-going default and re-performing loan resources
monitoring
• IT systems and software design/testing