Mortgage Communications Director Colleagues:

We have before us both a significant challenge and a tremendous opportunity. The first few weeks of a new operation can establish the course that the company will follow for years to come and so I'm very excited to have been hired as the new Director of Communications for this group of mortgage professionals who are taking over this mortgage group. We have a number of key issues immediately before us and I will be issuing a series of memos to address these in turn.

This first memo addresses the most pressing need facing our Group, which is the need to raise $3 million in capital to complete the acquisition. This must be done quickly or a number of key personnel will be lost. While the company has some real assets - including its name, its current contractual agreements and its IT system, the real worth of any company lies in its workforce.

In order to convince investors of the necessity of moving quickly to help us maintain as an intact working unit I have assembled a portfolio outlining the skills and talents of each of the team members as well as presenting a list of the projects that they have worked on. This serves the dual purpose of demonstrating to investors the value of the Group that they are buying into as well as demonstrating the need for urgency.

In addition to this push to show that the property is available in its current state of value for only a brief period of time, I have also put together a prospectus that outlines the benefits of early investment. Although these methods are not of course in any way unique to us, we are offering the usual incentives, including a lowered stock price and an impressive array of future stock options. However, even as we recognize the importance of such tactics, what we feel that we most have to sell is the strength of our business plan. We do not want to give the impression (by relying too heavily on the importance of stock splits, etc.) that the business plan is not in and of itself a sufficiently good reason to invest in this company.

In agreeing to be our first private label credit union, GEM has agreed to provide us with a package of mortgage services that will allow us to beat our competitors in both speed and quality of service. This is essential in our being able to succeed as a company because we are offering what is at base the same service that is offered by all other mortgage companies given that interest rates are the same for all of us. What we have to offer - both in terms of our investors and in terms of our customers - is not a better product per se but a better way to deliver the same product.

GEM's association with us will allow us to do precisely this in the following ways:

Its online mortgage application and lending system is designed to be user friendly. We have found through a fair amount of research that even people who are generally comfortable around computers are still somewhat leery of using them to conduct financial transactions. Gem's system has built into it a number of security precautions that will reassure theses customers. And its overall simplicity will help to reassure those who are not in fact comfortably with computer technology

With the software that GEM is bringing to this acquisition we will be one of the few companies that is able to offer mortgage application and approval in real-time via the Internet. This is an very important issue for customers. In today's competitive housing market, a property may only be available for a very short period of time. If we are not able to get people approved within that period of time then we will lose their goodwill. By offering them almost instantaneous service, they will have the chance to bid on properties that they have fallen in love with and this will generate a great deal of goodwill for our Group

The automated underwriting system that will allow us to offer nearly immediate approval to customers is also far more flexible than that offered by other firms in that it can process any type of loan, Fannie Mae, FHA and/or Sub-prime.

The entire online process has been streamlined. Our customer research on the mortgage-approval process has shown that the aspect of the process that customers dislike the most - even more than being turned down - is its complexity. In an instantaneous society, people have little...

To combat the frustration that people feel with the traditional mortgage process, Gem has developed a program in which there are only ten questions and twenty-five possible mouse clicks
We also offer a face-to-face option with a loan officer for those who simply do not want to use the computer. We believe that the online option may be especially attractive for those who are afraid of being turned down as well as those who believe that the online option is more efficient. By offering both options with no penalties for either we will be able to compete with both more traditional firms as well as upstart companies that offer only internet access. We can offer both our investors and our customers the best of the traditional mortgage business and the best of the new mortgage business.

We have a sound business plan and a highly attractive product that we are offering to investors along with excellent incentives to our investors. Given that we have only 20% of the company available for capital investment we should have few difficulties in meeting our investments goals.

Memo #2

Colleagues:

We have now arrived at another critical point in the acquisition process: The agreement to acquire has been signed by all concerned parties but the company personnel have not yet been acquired by the new entity. This memo is therefore directed primarily at those new personnel and is designed to address some of the concerns that they no doubt have.

The new Unit will have all the advantages of the current staff. I understand that it's traditional at a time like this to praise that staff in an attempt to get those staff to stay on and I can't say that that isn't what I'm doing. However, that in no way means that it isn't also absolutely true that this new Unit will be far stronger with your continued contributions.

But we can hardly expect you to continue with this company if we are not offering you something valuable for your time and for the transferal of your loyalty. We believe that we do in fact have something valuable: A sound company with a well-thought-out business plan that is able to present the customer with service that he or she will be unable to find anywhere else.

More specifically, we are able to promise that each one of you is unlikely to see any dip in personal commissions, always an important issue when a company changes hands. It is true that Citibank will be taking its leads with it. This is only proper as those leads were a part of the company's overall assets and they properly are taking them with them. However, one of advantages that we are beginning the life of the Unit with is the fact that GEM has negotiated a substantially reduced volume price of $18.50 for the purchase of 22,500 leads for our three-month initial start-up period. The following assessment comes directly from GEM:

GEM expects that within a relatively short time (perhaps as short as 6 months) it will be possible to bring the loan production in the Target back to the impressive levels achieved under Citimortgage. Although there may be some variance in the average customer demographics, due to a number of strategic improvements, the per loan profit levels should very quickly surpass those previously achieved.

This should reassure those who have been working at the company that their personal income should not fall as a result of the transition. We can understand how current workers, who have an understanding of how Citimortgage works, might consider following that company. We certainly agree that Citimortgage is an excellent firm with reputable and sound business practices. However, we believe that our own business plan is more cutting edge and will provide us with a competitive edge that more established companies do not have. Given this fact, all that we need to succeed is a priming of the pump. These leads that GEM has provided for the start-up period will provide that priming action. The overall business strategy that we have in place will allow the company to proceed in helping you and the company make money after this period.

One change that will occur as a result of the system that GEM is introducing is a greater…