UNITED STATES OF AMERICA v. FIFTH THIRD MORTGAGE COMPANY et al
Filing
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CONSENT ORDER. Ordered by U.S. District Judge MARC THOMAS TREADWELL on 8/11/2014. (tlh)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION
UNITED STATES OF AMERICA,
)
)
Plaintiff,
)
)
v.
)
)
FIFTH THIRD MORTGAGE COMPANY, )
CRANBROOK MORTGAGE
)
CORPORATION
)
d/b/a CRANBROOK LOANS,
)
and MICHAEL AYOUB,
)
)
Defendants.
)
____________________________________)
CIVIL ACTION NO.
CONSENT ORDER
I. INTRODUCTION
This Consent Order (“Order”) resolves the claims of the United States that the
Defendants, Fifth Third Mortgage Company (“Fifth Third”), Cranbrook Mortgage Corporation
d/b/a Cranbrook Loans (“Cranbrook”), and Michael Ayoub (together, “Defendants”), have
violated the Fair Housing Act (“FHA”), 42 U.S.C. §§ 3601-3619, by discriminating on the basis
of disability, and have violated the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. §§ 16911691f, by discriminating on the basis of receipt of public assistance. The Order also resolves the
claims of the United States brought pursuant to 42 U.S.C. § 3612(o) on behalf of Robert
Carruthers and Marilyn Carruthers.
There has been no factual finding or adjudication with respect to any matter alleged by
the United States. The parties have entered into the Order to avoid the risks, expenses, and
burdens of litigation and to resolve voluntarily the claims in the Complaint of the Defendants’
alleged violations of the FHA and the ECOA.
II. BACKGROUND
Fifth Third is headquartered in Cincinnati, Ohio and is indirectly owned by Fifth Third
Bancorp. Fifth Third conducts direct lending via branches in 12 states and internet banking
services, and offers mortgage loans in 38 states. Fifth Third Bancorp provides a diversified
range of banking and non-banking financial services and products.
Cranbrook is a mortgage broker located in Clinton Township, Michigan. At the time of
the Carruthers’ loan application, Cranbrook was an approved mortgage broker for Fifth Third
and was authorized to originate loans on Fifth Third’s behalf. Michael Ayoub is the CEO and
President of Cranbrook and was the loan officer for the Carruthers’ loan application.
The United States alleges that the Defendants discriminated against Robert and Marilyn
Carruthers and certain other mortgage applicants on the basis of disability and receipt of
disability income by requiring, as a condition of originating a mortgage loan, that some
applicants provide a letter from a doctor to show that Social Security Disability Insurance
(“SSDI”) income and other disability income would continue. The Defendants deny these
allegations. Robert and Marilyn Carruthers filed a complaint with the Department of Housing
and Urban Development (“HUD”) as set out in the Complaint. Fifth Third and Cranbrook agree
to pay money damages to Robert and Marilyn Carruthers. Fifth Third also agrees to pay money
damages to other mortgage applicants and borrowers who either were, or may have been,
requested to provide a letter from a doctor or other medical information to show that their SSDI
income or other disability income would continue (“Affected Borrowers”). Fifth Third and
Cranbrook each agree to maintain revised policies with regard to disability income, and provide
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training to their respective employees to ensure that mortgage applicants with a disability are
treated in a manner that does not discriminate on the basis of disability or receipt of public
assistance, consistent with the requirements of the FHA and the ECOA.
III. REMEDIAL ORDER
1.
The Effective Date shall be the date on which the Order is approved and entered
by the Court.
2.
The Defendants, including all of their respective officers, employees, agents,
assignees, successors in interest, and all those in active concert or participation with any of them,
are hereby enjoined from engaging in any act or practice that unlawfully discriminates against a
mortgage loan applicant on the basis of disability or receipt of public assistance in connection
with a submitted or potential mortgage application. This prohibition includes, but is not limited
to, the adoption, performance, or implementation of any policy, practice, or act that results in
unlawful discrimination against an applicant with a disability or an applicant who relies on SSDI
income or other disability income.
A.
Cranbrook Policies and Procedures
3.
On March 1, 2014, Cranbrook submitted to the United States its new policies
regarding proper documentation of SSDI and other disability income when underwriting
mortgage loans. During the term of this Order, Cranbrook shall maintain the new policies or
substantially similar policies regarding the documentation of disability income.
4.
Cranbrook shall not request that an applicant for a mortgage loan provide a letter
from a doctor to document or substantiate SSDI or other disability income or to establish that
SSDI or other disability income will continue.
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B.
Cranbrook Training
5.
Within 90 days of the Effective Date of the Order, Cranbrook shall provide equal
credit opportunity training to its management officials and employees who participate in taking
applications for, underwriting, originating, or pricing loans secured by residential real estate.
During the term of this Order, Cranbrook shall provide equal credit opportunity training to each
new management official or employee whose responsibilities include those set forth in the
preceding sentence within 90 days of beginning his or her employment in that position.
6.
During the equal credit opportunity training, Cranbrook shall provide to each
participant training on the terms of this Order, the policies referenced therein, the requirements
of the FHA, the ECOA, and his or her responsibilities under each; shall address proper
documentation of disability income; and shall provide a copy of the Order and the policies
referenced therein. All management officials and employees who receive a copy of the Order
shall execute the Employee Acknowledgement at Appendix A. The content of the training
program required by Paragraphs 5 and 6 shall be approved in advance by the United States. Any
expenses associated with this training program shall be borne by Cranbrook.
C.
Fifth Third Policies and Procedures
7.
On May 17, 2012, Fifth Third promulgated revised underwriting policies
regarding the documentation of SSDI and other disability income. During the term of this Order,
Fifth Third shall maintain the revised policies or substantially similar policies regarding the
documentation of disability income.
8.
Fifth Third shall not request that an applicant for a mortgage loan provide a letter
from a doctor to document or substantiate SSDI or other disability income or to establish that
SSDI or other disability income will continue.
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D.
Fifth Third Training
9.
During the term of this Order, as part of its regular training for employees, Fifth
Third shall provide equal credit opportunity training for management officials and employees
who participate in taking applications for, underwriting, originating, or pricing loans secured by
residential real estate. Fifth Third shall provide equal credit opportunity training to each new
management official or employee whose responsibilities include those set forth in the preceding
sentence within 90 days of beginning his or her employment in that position. The training shall
include the relevant terms of this Order, the policies referenced therein, the requirements of the
FHA and the ECOA, and the responsibilities of employees under each; it shall address proper
documentation of disability income.
10.
Within 90 days of the Effective Date, Fifth Third shall provide to each
management official and employee who participates in taking applications for, underwriting,
originating, or pricing loans secured by residential real estate, a copy of the Order and the
policies referenced therein, together with written training relating to the Order, the policies, and
proper documentation of disability income. All management officials and employees who
receive a copy of the Order and policies shall execute the Employee Acknowledgement at
Appendix B, which may be executed in substantially similar content through an email or other
electronically recorded response. The content of the training required by Paragraphs 9 and 10
shall be approved in advance by the United States. Any expenses associated with this training
program shall be borne by Fifth Third.
E.
Compensation for HUD Complainants
11.
Fifth Third has paid HUD complainants Robert and Marilyn Carruthers $55,000
total.
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12.
Within ten (10) business days of receipt of a properly executed release in the form
of Appendix C, or the Effective Date of the Order, whichever is later, Cranbrook shall pay HUD
complainants Robert and Marilyn Carruthers $2,000 total.
F.
Compensation for Affected Borrowers
13.
Fifth Third will deposit in an interest-bearing escrow account the total sum of
$1,522,000 to compensate borrowers affected by Fifth Third’s practices relating to disability
income (“Affected Borrowers”). Title to this account will specify that it is “for the benefit of
affected borrowers pursuant to Order of the Court in United States v. Fifth Third Mortgage
Company et al.” Fifth Third will provide written verification of the deposit to the United States
within 5 days of the Effective Date of the Agreement. Any interest that accrues will become part
of the Settlement Fund and be utilized and disposed of as set forth herein.
14.
Within five days of the Effective Date, the United States will provide Fifth Third
with a list of Affected Borrowers, together with the compensation amounts determined by the
United States. Within thirty (30) days of the Effective Date of the Order, Fifth Third shall send a
letter substantially in the form of Appendix D, a release in the form of Appendix E, and a
postage paid return envelope to each Affected Borrower. All mailings to Affected Borrowers
shall be approved in advance by the United States.
15.
Fifth Third shall use best efforts, using all reasonable methods, to locate and
contact the Affected Borrowers, including (a) searching for updated addresses via Fifth Third’s
own address records for other products, Lexis Nexis, and other suitable address databases, (b)
sending duplicate letters to updated addresses, and (c) contacting affected borrowers by
telephone. Fifth Third shall regularly report to the United States its progress on locating and
contacting Affected Borrowers.
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16.
Fifth Third shall provide a cost-free means for Affected Borrowers to contact it,
including an email address, a toll-free telephone number, and means for persons with disabilities
to communicate effectively, including TTY.
17.
Within ten (10) days of receipt of a properly executed Release from an Affected
Borrower, Fifth Third shall pay the Affected Borrower the amount determined by the United
States. No Affected Borrower shall be paid any amount under this Order until he or she has
executed and delivered to Fifth Third a written release.
18.
Fifth Third shall not be entitled to a set-off, or any other reduction, of the amount
of payments to an Affected Borrower because of any debts owed to Fifth Third by an Affected
Borrower. Fifth Third also shall not refuse to make a payment based on a release of legal claims
previously signed by any Affected Borrower.
G. Identification of Additional Affected Borrowers
19.
During the first year of the Order, if any person contacts the United States or Fifth
Third claiming that he or she should be paid as an Affected Borrower, or should be paid an
amount different than the amount determined by the United States, Fifth Third shall undertake a
review of all records related to the mortgage application of the person. Fifth Third shall report to
the United States all such contacts and the results of the review of records, and the United States
shall determine whether the person should be paid as an Affected Borrower and the amount of
the payment.
20.
All money not distributed to Affected Borrowers from the Settlement Fund shall
be distributed to one or more organizations that provide services including credit and housing
counseling, legal representation of borrowers seeking to obtain a loan modification or to prevent
foreclosure, financial literacy, or other related programs targeted at persons with disabilities
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(“Organization”). Before distributing the funds, Fifth Third will provide the name of the
Organization(s) and a description of the program(s) to which the remainder Settlement Funds are
to be allocated and obtain the non-objection of the United States. Fifth Third will submit the
name of the Organization(s) and supporting information to the United States 15 months after the
Effective Date, and the United States shall respond to Fifth Third’s request for non-objection
within 10 days of Fifth Third’s request. The United States may request modification of the
selected program(s) or before approving the Organization(s). Organization(s) must not be
related to Fifth Third, Fifth Third Bancorp, or any entity owned by Fifth Third Bancorp. The
parties shall obtain the Court’s approval for the Organizations and the amount to be distributed to
each prior to distribution provided by Paragraph 20. Fifth Third shall require each Organization
to submit to Fifth Third and the United States a report detailing that funds are utilized for the
purposes identified in Paragraph 20 within one year after the funds are distributed and every year
thereafter until the funds are exhausted.
IV. EVALUATING AND MONITORING COMPLIANCE
21.
Within 90 days of the Effective Date, Fifth Third shall implement a monitoring
program designed to ensure compliance with its policies regarding documentation of SSDI
income and other disability income and the Order, which will monitor loan processing and
underwriting activities for compliance with the Bank’s policies and applicable fair lending laws
with respect to applicants that rely on SSDI income or other disability income in mortgage
applications received after May 17, 2012. Fifth Third will provide a description of the
monitoring program to the United States within 60 days of the Effective Date of the Order. Fifth
Third shall maintain the monitoring program or a substantially similar monitoring program
during the term of the Order.
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22.
If the monitoring program identifies borrowers who meet the criteria for
compensation under this Order, Fifth Third shall report information concerning the borrowers to
the United States and the United States shall determine whether the person should be paid as an
Affected Borrower and the amount of the payment. If the funds in the Settlement Fund are not
sufficient to compensate all Affected Borrowers identified via this process, Fifth Third shall
deposit additional funds sufficient to pay all Affected Borrowers.
23.
For the duration of the Order, Fifth Third and Cranbrook shall each retain all
records relating to their respective obligations hereunder as well as their compliance activities as
set forth herein. The United States shall have the right to review and copy such records upon
request, including files and electronic data for mortgage applications made during the duration of
the Order.
24.
Cranbrook shall submit a report to the United States on its progress in completing
the requirements of the Order four months after the Effective Date and six months after the
Effective Date. The reports shall provide a complete account of Cranbrook’s actions to comply
with each requirement of the Order, an assessment of the extent to which each obligation was
met, an explanation of why any particular obligation was not met, and any recommendations for
additional actions to achieve the obligations of the Order. In addition, Cranbrook shall attach to
the reports copies of training materials disseminated pursuant to the Order.
25.
In addition to the submission of any other plans or reports specified in the Order,
Fifth Third shall submit reports to the United States on its progress in completing the
requirements of the Order. Each such report shall provide a complete account of Fifth Third’s
actions to comply with each requirement of the Order during the previous reporting period, an
assessment of the extent to which each obligation was met, an explanation of why any particular
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obligation was not met for the previous reporting period, and any recommendations for
additional actions to achieve the obligations of the Order. Fifth Third shall submit reports every
six months in the first year after the Effective Date and shall submit a final report 60 days prior
to the expiration of the Order demonstrating full compliance with all obligations under the Order.
In addition, if applicable, Fifth Third shall attach to the reports copies of training materials
disseminated pursuant to the Order.
V. ADMINISTRATION
26.
The Order shall remain in effect for 24 months after the Effective Date.
Notwithstanding the above, the Order may be extended further for either party upon motion of
the United States to the Court, for good cause shown.
27.
The details in administration set forth in Paragraphs 14 through 17 may be
modified by written agreement of the United States and Fifth Third and without further Court
approval. Any time limits for performance fixed by the Order may be extended by written
agreement of the relevant parties. Other modifications to the Order may be made only upon
approval of the Court, upon motion by either party.
28.
The Order shall be binding on Fifth Third and Cranbrook, including all their
respective officers, employees, agents, representatives, assignees, and successors in interest, and
all those in active concert or participation with any of them. In the event Fifth Third or
Cranbrook seeks to transfer or assign all or part of its respective operations, and the successor or
assign intends on carrying on the same or similar type of business, as a condition of sale, Fifth
Third or Cranbrook shall obtain the written agreement of the successor or assign to any
obligations remaining under the Order for its remaining term.
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29.
Nothing in the Order shall excuse Fifth Third’s or Cranbrook’s non-compliance
with any currently or subsequently effective provision of law or order of a regulator with
authority over Fifth Third or Cranbrook that imposes additional obligations on Fifth Third or
Cranbrook.
30.
The parties agree that, as of the Effective Date, litigation is not “reasonably
foreseeable” concerning the matters described in the Order. To the extent that any party
previously implemented a litigation hold to preserve documents, electronically stored
information, or things related to the matters described in the Order, the party is no longer
required to maintain such a litigation hold.
31.
In the event that any disputes arise about the interpretation of or compliance with
the terms of the Order, the parties shall endeavor in good faith to resolve any such dispute
between themselves before bringing it to this Court for resolution. If the United States believes
that Fifth Third or Cranbrook has violated any provision of the Order, it will provide Fifth Third
or Cranbrook written notice thereof and allow 30 days to resolve the alleged violation before
presenting the matter to this Court. In the event of either a failure by Fifth Third or Cranbrook to
perform in a timely manner any act required by the Order or an act by Fifth Third or Cranbrook
in violation of any provision hereof, the United States may move this Court to impose any
remedy authorized by law or equity, including attorneys’ fees and costs.
32.
Fifth Third’s and Cranbrook’s compliance with the terms of the Order, as those
terms apply to each party, shall fully and finally resolve all FHA claims and all ECOA claims
that are raised in the Complaint’s allegations of discrimination on the basis of disability and
discrimination on the basis of receipt of public assistance, including all claims for equitable relief
and monetary damages and penalties arising from those claims against Fifth Third, Cranbrook,
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S/ Marc T. Treadwell
MARC T. TREADWELL, JUDGE
UNITED STATES DISTRICT COURT
The undersigned hereby apply for and consent to the entry of the Order:
For Plaintiff United States of America:
Dated: August 7, 2014
Respectfully submitted,
MICHAEL J. MOORE
United States Attorney
Middle District of Georgia
MOLLY MORAN
Acting Assistant Attorney General
Civil Rights Division
STEVEN H. ROSENBAUM
Chief
Civil Rights Division
Housing and Civil Enforcement Section
JON M. SEWARD
Deputy Chief
Civil Rights Division
Housing and Civil Enforcement Section
s/ Bernard Snell
BERNARD SNELL
Assistant United States Attorney
Middle District of Georgia
GA Bar No. 665692
Gateway Plaza
300 Mulberry Street, 4th Floor
Macon, Georgia 31201
bernard.snell@usdoj.gov
Phone: (478) 752-3511
s/ Lucy G. Carlson
LUCY G. CARLSON
Trial Attorney
Civil Rights Division
U.S. Department of Justice
950 Pennsylvania Avenue NW – G St.
Northwest Building, 7th Floor
Washington, DC 20530
lucy.carlson@usdoj.gov
Phone: (202) 305-0017
Fax: (202) 514-1116
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For Fifth Third Mortgage Company
Dated: August 7, 2014
s/ Andrea K. Mitchell
Andrew L. Sandler
Andrea K. Mitchell
BuckleySandler LLP
1250 24th Street NW, Suite 700
Washington, DC 20037
asandler@buckleysandler.com
amitchell@buckleysandler.com
Phone: (202) 349-8000
Fax: (202) 349-8080
For Cranbrook Mortgage Corporation
Dated: August 6, 2014
s/ Theresa L. Kitay
Theresa L. Kitay
Attorney at Law
GA Bar No. 424295
578 Washington Blvd.
Suite 836
Marina del Rey, California 90292
(310) 578-9134
Fax (770) 454-0126
Email tkitay@kitaylaw.net
For Michael Ayoub
Dated: August 6, 2014
s/ Theresa L. Kitay
Theresa L. Kitay
Attorney at Law
GA Bar No. 424295
578 Washington Blvd.
Suite 836
Marina del Rey, California 90292
(310) 578-9134
Fax (770) 454-0126
Email tkitay@kitaylaw.net
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APPENDIX A
Cranbrook Mortgage Corporation Employee Acknowledgment
I acknowledge that on ________________, I was provided information about and access
to the Consent Order entered by the Court in United States v. Fifth Third et al. (M.D.Ga.), as
well as Cranbrook Mortgage Corporation’s written policies regarding disability income. I have
had my questions about these documents answered. I understand my legal responsibilities and
shall comply with those responsibilities.
__________________________________
Signature
__________________________________
Print Name
__________________________________
Job Title
__________________________________
Date
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APPENDIX B
Fifth Third Mortgage Company Employee Acknowledgment
I acknowledge that I was provided information about and access to the relevant sections
of the Consent Order entered by the Court in United States v. Fifth Third et al. (M.D.Ga.), as
well as Fifth Third Mortgage Company’s written policies regarding proof of continuance of
disability income. I have had my questions about these documents answered. I understand my
legal responsibilities and shall comply with those responsibilities.
__________________________________
Signature
__________________________________
Print Name
__________________________________
Job Title
__________________________________
Date
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APPENDIX C
Release
In consideration for the parties’ agreement to the terms of the Consent Order entered in
United States v. Fifth Third et al. (M.D.Ga.), and the payment to us of $2,000 pursuant to the
Consent Order and effective upon that payment, we hereby release and forever discharge all
claims, rights, remedies, and recoveries against Cranbrook Mortgage Corporation, Michael
Ayoub, and David Ambo related to the facts of housing and credit discrimination on the basis of
disability alleged in the litigation referenced above, including claims known and unknown, up to
and including the date of execution of this release. We understand that this releases those claims,
rights, remedies and recoveries against Michael Ayoub, David Ambo, and Cranbrook Mortgage
Corporation, and against any and all related entities, parents, predecessors, successors,
subsidiaries, and affiliates, and against any and all of their past and present directors, officers,
agents, managers, supervisors, shareholders, and employees and their heirs, executors,
administrators, successors in interest, or assigns.
Executed this ___ day of _______, ____.
__________________________________
Robert Carruthers
127 Northridge Drive
Macon, GA 31220
__________________________________
Marilyn Carruthers
127 Northridge Drive
Macon, GA 31220
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APPENDIX D
[Letter to Affected Borrowers]
The United States settled certain claims regarding discrimination on the basis of disability
against Fifth Third Mortgage Company. Among other things, Fifth Third Mortgage Company
has agreed to compensate mortgage loan applicants who were asked to provide a letter from a
doctor or other medical information to document Social Security Disability Insurance (“SSDI”)
income or other disability income.
On [date] the United States District Court for the Middle District of Georgia entered an
order regarding this settlement. Under the Court’s order, Fifth Third Mortgage Company
has agreed to pay you[
]. To receive your payment, you must sign and return the enclosed
Release. By signing the Release, you agree that you will not sue Fifth Third Mortgage Company
or any company affiliated with Fifth Third Mortgage Company for any claims you may have
against them based on alleged discrimination on the basis of your SSDI income or other
disability income. If you decide to sign this Release, please write the date, print your name and
sign your name where designated. You should return the signed Release in the enclosed preaddressed postage pre-paid envelope.
After you sign and return the release, the money that is to be paid to you will be sent to
you by check.
Please be aware that the money you receive may be considered taxable income and thus
may affect your federal, state, or local tax liability. The United States Department of Justice and
Fifth Third Mortgage Company cannot give you any advice on tax or other legal matters. We
encourage you to consult with a qualified individual or organization about any possible tax or
other consequences resulting from your receipt of this payment.
If you do not want to participate in this settlement, you may decline to do so. By
declining to participate, you will give up your right to receive money through this settlement, but
will not waive any other rights or claims that you believe you may have.
Please also be advised that government attorneys cannot act as your private attorney.
Therefore, you may want to consult with a private attorney to discuss this matter and the options
available to you or to have an attorney of your choice contact us.
If you have questions about the settlement, or if any of your contact information changes,
please call 1-888-XXX-XXXX (TTY 1-855-XXX-XXXX) or email XXX@XXX.com. None of
the parties to the settlement can offer advice on whether you should participate in the settlement.
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APPENDIX E
Release
In exchange for the payment to me of $_______ and effective upon that payment, I
hereby release and forever discharge all claims, rights, remedies, and recoveries related to the
facts of housing and credit discrimination on the basis of disability and receipt of public
assistance in the court case referenced above, and in connection with my application(s) for a
residential mortgage. These claims may be known and unknown, up to and including the date of
execution of this release. I understand that this releases those claims, rights, remedies and
recoveries against Fifth Third Mortgage Company and against any and all related entities,
parents, predecessors, successors, subsidiaries, and affiliates, and against any and all of their past
and present directors, officers, agents, managers, supervisors, shareholders, and employees and
their heirs, executors, administrators, successors in interest, or assigns.
Executed this ___ day of _______, ____.
__________________________________
Signature
__________________________________
Print Name
__________________________________
Address
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