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and were sold to unrelated lenders in the secondary
mortgage market. Tricor and RMIC are the private mortgage
insurance companies that issued mortgage insurance covering
the loans at issue in the instant cases.
The information submitted as part of Dr. Hewitt's
report confirms, as one would suspect, that the private
mortgage insurers thoroughly investigated EPIC's business
and were particularly careful to investigate the risks
relating to the values of the properties that EPIC
syndicated. That information also shows that the private
mortgage insurers had occasion to review appraisals
submitted by EPIC in connection with its application for
mortgage insurance and, in some cases, the private mortgage
insurers ordered spot appraisals to compare with EPIC's
appraisals. It would be readily evident from reviewing the
contemporaneous appraisals that EPIC had valued each of the
condominiums and other residential properties purchased by
its limited partnerships on an individual or retail basis
and not on a discounted or wholesale basis. Therefore,
the record suggests that the private mortgage insurers knew
or had reason to know that EPIC valued the properties that
it purchased on a retail, rather than on a wholesale,
basis. We do not mean to suggest that the private mortgage
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