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CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT 10.90
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MASTER MORTGAGE LOAN PURCHASE AGREEMENT
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Dated as of June 29, 1998
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SOVEREIGN BANK,
as Buyer
MEGO MORTGAGE CORPORATION,
as Seller
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1.1 Defined Terms...............................................................................1
ARTICLE II PURCHASE AND SALE COMMITMENT
Section 2.1 Flow Purchase and Delivery Obligation.......................................................8
Section 2.2 Acceptance of Loan..........................................................................8
Section 2.3 Conditions and Timing of Purchase...........................................................9
Section 2.4 Underwriting Review........................................................................10
Section 2.5 Exclusivity................................................................................10
Section 2.6 Right of First Refusal.....................................................................11
ARTICLE III PURCHASE AND SALE OF LOANS
Section 3.1 Conveyance of Mortgage Loans; Possession and Ownership.....................................12
Section 3.2 Price and Closing Methodology..............................................................12
Section 3.3 Custodial Agreement........................................................................13
Section 3.4 Delivery of Documents......................................................................13
Section 3.5 Prepayment Rebate..........................................................................15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER
Section 4.1 Representations and Warranties of Seller - General.........................................16
Section 4.2 Representations and Warranties of Seller As to Each Loan...................................19
Section 4.3 Representations and Warranties of Buyer....................................................28
Section 4.4 Remedies for Breach of Representations and Warranties......................................29
Section 4.5 Indemnification............................................................................30
ARTICLE V LOSS PROTECTION
Section 5.1 Reserve Account............................................................................31
Section 5.2 Remedy For First Payment Default...........................................................32
Section 5.3 Remedy to Insure Accuracy of Real Estate Appraisals........................................32
ARTICLE VI COVENANTS
Section 6.1 Covenants of Seller........................................................................33
Section 6.2 Covenants of Buyer.........................................................................34
Section 6.3 Mutual Covenants...........................................................................35
ARTICLE VII EVENT OF PURCHASE TERMINATION
Section 7.1 Events of Purchase Termination.............................................................35
Section 7.2 Buyer's Rights.............................................................................37
(i)
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ARTICLE VIII MISCELLANEOUS
Section 8.1 Relationship of the Parties...............................................................38
Section 8.2 Sale Treatment............................................................................38
Section 8.3 Survival of Covenants, Agreements, Representations and Warranties;
Successors and Assigns....................................................................38
Section 8.4 Severability..............................................................................38
Section 8.5 Fees and Expenses.........................................................................38
Section 8.6 Waivers...................................................................................38
Section 8.7 Notices...................................................................................39
Section 8.8 Assignment................................................................................39
Section 8.9 Captions..................................................................................39
Section 8.10 Entire Agreement..........................................................................39
Section 8.11 Duration of This Agreement................................................................40
Section 8.12 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial..............................40
Section 8.13 Recordation of Agreement..................................................................40
Section 8.14 Endorsements..............................................................................41
Section 8.15 Reproduction of Documents.................................................................41
Section 8.16 Sale and Security Interest................................................................41
Section 8.17 Excess Servicing Fee......................................................................41
Section 8.18 Further Assurances........................................................................41
Section 8.19 Clean up Call.............................................................................42
Section 8.20 Servicer is Third Party Beneficiary.......................................................42
Exhibits
Exhibit A - Officer's Certificate
Exhibit B - Opinion of Counsel
Exhibit C - Underwriting Guidelines
Exhibit D - The Servicing Agreement
Exhibit E - Xxxx of Sale
(ii)
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MASTER MORTGAGE LOAN PURCHASE AGREEMENT
MASTER MORTGAGE LOAN PURCHASE AGREEMENT (this "Agreement"),
dated as of June 29, 1998, by and between SOVEREIGN BANK, located in
Wyomissing, Pennsylvania, a federal savings bank organized and existing under
the laws of the United States of America ("Buyer"), and MEGO MORTGAGE
CORPORATION, a Delaware corporation, located in Atlanta, Georgia (the
"Seller").
RECITALS
Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, on the terms and subject to the conditions set forth
herein certain Loans originated or purchased by Seller evidenced by notes and
secured by mortgages of the agreed upon priority on real property owned by the
mortgagors.
Buyer and Seller desire to enter into this Agreement to
govern the sale and purchase of said Loans.
NOW, THEREFORE, in consideration of the above recitals and
the mutual covenants contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. Capitalized terms used herein
shall have the meanings given to such terms in this Section 1.1. The following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
125 Loans: Those loans which comply with the Underwriting
Guidelines and the other terms and conditions of this Agreement having an LTV
in excess of 100% but not exceeding 125% and which conform to the terms and
conditions of this Agreement.
Acceptance Sheet: The document delivered to Seller by Buyer
as set forth in Section 2.2.
Accepted Servicing Practices: As to any Loan, those
mortgage servicing practices of prudent mortgage lending institutions that
service for themselves and for other investors mortgage loans of the same type
as the Loan in the jurisdiction where the related Mortgaged Property is
located.
Agreement: This Master Mortgage Loan Purchase Agreement and
all amendments hereof and supplements hereto.
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ALTA: The American Land Title Association or any successor
thereto.
Appraised Value: The value of the related Mortgaged
Property as set forth in an appraisal if required pursuant to the Underwriting
Guidelines made in connection with the origination of a Loan.
Assignment of Mortgage: As to any Loan, an assignment of
the related Mortgage, notice of transfer, or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the sale of the Loan
to the Buyer.
Bankruptcy Law. Title 11 of the U.S. Code or any other
federal or state law relating to bankruptcy, insolvency, reorganization,
winding up or composition or adjustment of debts now or hereafter in effect
relating to creditors' rights and remedies generally.
Xxxx of Sale: The Xxxx of Sale in the form attached hereto
as Exhibit E.
Business Day: Any day other than (i) a Saturday or Sunday,
or (ii) a day on which Federal Savings banks are authorized or obligated by law
or executive order to be closed.
Buyer: Sovereign Bank, or its successor in interest or any
successor to the Buyer under this Agreement as herein provided.
Closing Date: June 29, 1998.
Condemnation Proceeds: All awards or settlements in respect
of a Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation (or consideration
received for a deed in lieu of condemnation), to the extent not required to be
released to a Mortgagor in accordance with the terms of the related Mortgage
Loan documents.
Custodial File: As to any Loan, each of the items set forth
in Sections 3.4(a) and 3.4(b).
Custodian: State Street Bank and Trust Company or such
other custodian reasonably acceptable to Buyer and Seller.
Cut-off Date: The close of business on the Business Day
five days prior to the related Funding Date.
Deleted Mortgage Loan: A Loan which is repurchased by the
Seller in accordance with the terms of this Agreement.
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Due Date: The day of the month on which the Monthly Payment
is due on a Loan, exclusive of any days of grace.
Excess Servicing Fee. With respect to each Loan, a monthly
amount equal to one-twelfth of the product of (a) the Excess Servicing Fee Rate
and (b) the outstanding principal balance of such Loan. Such amount shall be
determined monthly, computed on the same basis and on the same principal amount
and period respecting which any related interest payment on such Loan is
completed. The Excess Servicing Fee is limited to, and funded solely from, the
interest portion (including recoveries with respect to interest from
Liquidation Proceeds) and is payable only after payment of the Servicing Fee
and interest on the Loans to Buyer at the Remittance Rate.
Excess Servicing Fee Rate: Except as set forth below, the
Excess Servicing Fee Rate is the difference between (a) the Interest Rate and
(b) the sum of ((x) the Remittance Rate and (y) the Servicing Fee Rate).
FNMA: The Federal National Mortgage Association, or any
successor thereto.
Funding Date: The Funding Date shall be no later than the
last Business Day of each calendar quarter beginning with the initial Funding
Date of December 31, 1998, or as otherwise mutually agreed to between the
parties.
Funding Date Principal Balance: The principal balance of
the applicable Loan as of the Cut-off Date for a related Funding Date after
deduction of payments of principal actually received on or before such Cut-off
Date.
Hazardous Substances: (i) Those substances included within
the definitions of any one or more of the terms: "hazardous substances,"
"hazardous materials," "toxic substances," "toxic pollutants," and "hazardous
waste" in the Clean Water Act, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, the Resource Conservation
and Recovery Act of 1976, as amended, or the Hazardous Materials Transportation
Act, as amended, or in the regulations promulgated pursuant to such laws, (ii)
such other substances, materials, and wastes as are classified as hazardous or
toxic under federal, state or local laws or regulations, and (iii) any
materials, wastes or substances that are (a) petroleum; (b) friable asbestos;
(c) polychlorinated biphenyls; (d) flammable explosives; or (e) radioactive
materials.
High LTV Loan: Those loans which comply with the
Underwriting Guidelines and the other terms and conditions of this Agreement
and which have an LTV not exceeding 100%.
Initial Certification of Receipt: The certification of
receipt from the Custodian certifying as to receipt of the items set forth in
Section 3.4(a).
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Insurance Proceeds: With respect to each Loan, proceeds of
insurance policies including, without limitation, hazard and flood insurance
insuring the Loan or the related Mortgaged Property.
Interest Rate: The annual rate of interest borne on a Note.
Liquidation Proceeds: Cash received in connection with the
liquidation of a defaulted Loan, whether through the sale or assignment of such
Loan, trustee's sale, foreclosure sale or otherwise, or the sale of an REO
Property.
Loan: An individual 125 Loan and/or High LTV Loan
identified on the Loan Schedule, which Loan includes, without limitation, the
Mortgage File, the Monthly Payments, Principal Prepayments, Prepayment Penalty,
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and all other
rights, benefits, proceeds and obligations arising from or in connection with
such Mortgage Loan.
Loan Schedule: The schedule of Loans to be delivered on the
Funding Date, such schedule setting forth the following information with
respect to each Loan: (1) the Seller's Loan identifying number; (2) the
Mortgagor's name; (3) the street address of the Mortgaged Property including
the state and zip code; (4) the mailing address of the Mortgagor; (5) a code
indicating the property type of the Mortgaged Property (e.g., single-family
residence, two-family, three-family, four-family, planned unit development,
condominium, etc.); (6) the original months to maturity, (7) the remaining
months to maturity from the Cut-off Date based on the original amortization
schedule, and if different, the maturity expressed in the same manner but based
on the actual amortization schedule; (8) the Loan-to-Value Ratio at
origination; (9) the Interest Rate; (10) the date on which the Loan was
originated; (11) the stated maturity date; (12) the amount of the Monthly
Payment; (13) the last Due Date for which a Monthly Payment was received; (14)
the original principal amount of the Loan; (15) the Funding Date Principal
Balance; (16) the date on which the first payment was due on the Loan; (17) the
Appraised Value or stated value, as applicable pursuant to the Underwriting
Guidelines; (18) the lien priority of the Mortgage; (19) the amount of the
Senior Lien, if any; (20) Seller Loan program type; (21) FICO score; and (22)
other credit scores, if any.
Loss: means the negative result, if any, of the following
calculations: (x) the total of: (i) the Stated Principal Balance of the Loan,
with accrued interest thereon at the Remittance Rate up to the earlier of (A)
the date a loss is established under generally accepted accounting principles
consistently applied and (B) the date the Loan is charged-off (except for a
Loan in foreclosure or for which there is a deed in lieu of foreclosure then
upon final liquidation of the Loan or Mortgaged Property); (ii) all advances by
or charged to Buyer; less (y) the net Liquidation Proceeds. For purposes of
determining Loss, charge-off of a Loan shall occur when the applicable
Mortgagor is 180 days delinquent on a contractual basis.
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LTV: With respect to any Loan, the ratio (expressed as a
percentage) of (i) (a) the principal balance of the Loan at origination plus
(b) the remaining principal balance of any Senior Lien at the time of
origination to (ii) the Appraised Value or stated value (as applicable pursuant
to the Underwriting Guidelines) of the Mortgaged Property.
Monthly Advance: Any advances of principal and interest
made by the Seller or the Seller's servicing agent with respect to delinquent
Monthly Payments.
Monthly Payment: The scheduled monthly payment of principal
and interest on a Loan.
Mortgage: The mortgage, deed of trust or other instrument
securing a Note, which creates a lien on an unsubordinated estate in fee simple
in real property securing the Note.
Mortgage File: All documents, records, and items pertaining
to a particular Loan, including without limitation the Custodial File.
Mortgaged Property: The real property subject to the
Mortgage securing repayment of the debt evidenced by a Note.
Mortgagor: The obligor on a Loan.
Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage, which shall not include a lost note affidavit.
Officer's Certificate: A certificate in the form of Exhibit
A signed by the Chairman, any Vice Chairman, the President, any Vice President
or any assistant Vice President and by the Treasurer, the Secretary or any
Assistant Treasurers or Assistant Secretaries of the Seller and delivered to
Buyer as required by this Agreement.
Person: Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof, or any other
legal entity.
Pool: The pool of Loans purchased on a given Funding Date
or such other pool of Loans as agreed by the Buyer and Seller.
Prepayment Penalty: Any fee, penalty or other similar cost
paid by the Mortgagor (other than the principal balance and accrued interest)
in connection with the payment of the principal balance of a Note prior to its
scheduled due date.
Prepayment Rebate: The prepayment rebate set forth in
Section 3.5.
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Principal Prepayment: Any payment or other recovery of
principal on a Loan which is received in advance of its scheduled Due Date and
which is not accompanied by an amount of interest representing scheduled
interest due on any Due Date in any month subsequent to the month of
prepayment.
REO Property: A Mortgaged Property acquired by Buyer
through foreclosure or by deed in lieu of foreclosure.
Rebate Date: The earlier of (1) the actual date of
repurchase, (2) the date Seller received notice of or knew of the applicable
breach or other event which led to repurchase, or (3) the last Due Date for
which a Monthly Payment was received.
Remittance Date: The Remittance Date set forth in the
Servicing Agreement.
Remittance Rate: With respect to a Loan in a specific Pool,
as of the applicable Cut-off Date, the yield on the interpolated 4-year U.S.
Treasury securities adjusted to a constant term to maturity as published by the
Federal Reserve Board plus either (i) *** basis points for 125 Loans and (ii)
*** basis points for High LTV Loans.
Repurchase Price: A price equal to 100 percent of the
Stated Principal Balance of the Loan, plus (i) accrued and unpaid interest on
such Stated Principal Balance at the Remittance Rate from the date with respect
to which interest has last been paid to and received by the Buyer to the date
of repurchase, plus (ii) rebate of premium to Buyer as follows: If a Loan is
repurchased pursuant to this Agreement, Seller shall, upon demand by Buyer,
refund to Buyer the premium (which, for a High LTV Loan shall be *** of the
Funding Date Principal Balance and for a 125 Loan shall be *** of the Funding
Date Principal Balance) paid by Buyer to Seller as follows: if the Rebate Date
is within one (1) month of the Funding Date, 12/12ths of the premium shall be
refunded; if the Rebate Date is within two (2) months of the Funding Date,
11/12ths of the premium shall be refunded; if the Rebate Date is within three
(3) months of the Funding Date, 10/12ths of the premium shall be refunded; if
the Rebate Date is within four (4) months of the Funding Date, 9/12ths of the
premium shall be refunded; if the Rebate Date is within five (5) months of the
Funding Date, 8/12ths of the premium shall be refunded; if the Rebate Date is
within six (6) months of the Funding Date, 7/12ths of the premium shall be
refunded; if the Rebate Date is within seven (7) months of the Funding Date,
6/12ths of the premium shall be refunded; if the Rebate Date is within eight
(8) months of the Funding Date,
*** OMITTED PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST AND FILED SEPARATELY
WITH THE COMMISSION
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5/12ths of the premium shall be refunded; if the Rebate Date is within nine (9)
months of the Funding Date, 4/12ths of the premium shall be refunded; if the
Rebate Date is within ten (10) months of the Funding Date, 3/12ths of the
premium shall be refunded; if the Rebate Date is within eleven (11) months of
the Funding Date, 2/12ths of the premium shall be refunded; if the Rebate Date
is within twelve (12) months of the Funding Date, 1/12th of the premium shall
be refunded.
Reserve Account: Each Reserve Account shall be a
noninterest bearing, uninsured account established with the Buyer by the Seller
on behalf of the Buyer. A separate Reserve Account shall be established on each
Funding Date in connection with the related Pool.
Seller: Mego Mortgage Corporation, or its successor in
interest.
Senior Lien: The lien, if any, on the Mortgaged Property,
senior in right to the Mortgage, which senior lien amount is identified in the
Loan Schedule.
Servicer: City Mortgage Services, a division of City
National Bank of West Virginia, or, its successor in interest.
Servicing Agreement: The Servicing Agreement the form of
which is attached hereto as Exhibit D.
Servicing Fee Rate: 0.75 percent per annum for High LTV
Loans and 1.00 percent for 125 Loans.
Stated Principal Balance: As to each Loan, (i) the Funding
Date Principal Balance, minus (ii) all amounts previously distributed to the
Buyer with respect to the related Loan representing payments or recoveries of
principal.
Target Reserve Account Balance: With respect to each Pool,
the Target Reserve Account shall be equal to (a) for the four (4) year period
subsequent to the Funding Date or until such time when the aggregate Stated
Principal Balance of Loans in such Pool is equal to or less than *** of the
Funding Date Principal Balance, *** of the Funding Date Principal Balance, or
(b) upon reaching the fourth (4th) anniversary of the Funding Date with respect
to such Pool or when the aggregate Stated Principal Balance of Loans in such
Pool is equal or less than *** of the Funding Date Principal Balance whichever
occurs first, *** of the Stated Principal Balance at the time of such event.
Once the Target Reserve Account Balance for a Pool is determined in accordance
with part (b) of this paragraph, the Target Reserve Account Balance shall
remain at *** of the Stated Principal Balance until this Agreement is
terminated with respect to such Pool.
*** OMITTED PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST AND FILED SEPARATELY
WITH THE COMMISSION
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Underwriting Guidelines: The underwriting guidelines
attached hereto as Exhibit C or as such underwriting guidelines may be changed,
amended, modified or supplemented from time to time but only with the consent
of Buyer which consent may be withheld for any reason or no reason. Any change,
amendment, modification or supplement for purposes of this Agreement shall only
apply to Loans originated or purchased by Seller via Seller's correspondent
network or other origination channels after such changes, amendments,
modifications, or supplements are consented to by Buyer.
Y2K Compliant: Shall mean, collectively with respect to any
product or system and its constituent elements, that such product or system and
its constituent elements correctly, completely, consistently, accurately,
reliably, efficiently, and securely processes, transforms, operates, sorts,
calculates, compares, reports, displays, archives and accepts commands related
to data and associated programs across multiple interfaces and across multiple
centuries without utilizing bridges, gateways and the like while still
preserving the level of functionality, usability, reliability, efficiency,
performance and accessibility of such data and associated programs as existed
prior to any modification to such product or system and its constituent
elements to make the same Y2K compliant.
ARTICLE II
PURCHASE AND SALE COMMITMENT
Section 2.1 Flow Purchase and Delivery Obligation. By this
Agreement and subject to the terms of this Agreement, for each calendar quarter
beginning with the calendar quarter ending December 31, 1998 and ending with
the calendar quarter ending September 30, 2001, the Buyer shall purchase from
Seller and the Seller shall use its best efforts to originate or acquire
through Seller's correspondent network or other origination channels and then
sell to Buyer on the Funding Date for each such calendar quarter 125 Loans and
High LTV Loans in aggregate Funding Date Principal Balance of $100,000,000,
which $100,000,000 shall not consist of more than $75,000,000 of 125 Loans;
provided, however, that Buyer shall not be required to purchase more than
$200,000,000 of 125 Loans in aggregate Funding Date Principal Balance for each
of the following periods: (1) the period beginning on the date of this
Agreement and ending September 30, 1999; (2) the period beginning October 1,
1999 and ending September 30, 2000; and (3) the period beginning, October 1,
2000 and ending September 30, 2001. Nothing herein shall require Seller to
acquire or originate loans at a loss (as determined in accordance with
generally accepted accounting principles consistently applied) in order to
fulfill the requirements of this Section.
Section 2.2 Acceptance of Loan. Seller shall, at least
monthly, offer Loans to Buyer for acceptance for purchase pursuant to this
Agreement. Buyer shall, in response to such an offer, issue to Seller an
Acceptance Sheet within 10 Business Days of receipt of such offer and all
information reasonably necessary for Buyer to accept such Loans pursuant to
this Section 2.2, thereby indicating that Buyer has reviewed such Loans and
identifying which Loans
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Buyer has accepted and which Loans Buyer has rejected for purchase pursuant to
this Agreement. The aggregate principal balance of Loans submitted by Seller
for such acceptance shall be at least $5,000,000. Notwithstanding an acceptance
by Buyer and the issuance to Seller of an Acceptance Sheet, Buyer's obligation
to purchase such Loans on the Funding Date shall still be subject to Seller's
compliance with the terms and conditions of this Agreement and the Loans being
in compliance with the Underwriting Guidelines and representations and
warranties of this Agreement, and such acceptance shall not constitute a waiver
of any representation, warranty, covenant or condition of this Agreement unless
specifically set forth in writing in such Acceptance Sheet.
Section 2.3 Conditions and Timing of Purchase.
(a) Purchase by the Buyer of the Loans shall
occur on each Funding Date (unless otherwise agreed to by the Seller and the
Buyer).
(b) Purchase by Buyer of Loans on the applicable
Funding Date is conditioned upon the following:
(i) compliance by Seller in all
material respects with all requirements of this Agreement, including
without limitation Section 2.4 of this Agreement;
(ii) the representations and warranties
of Seller under this Agreement being true and correct in all material
respects as of the Funding Date;
(iii) each Mortgage Loan being purchased
having been reviewed and approved by Buyer pursuant to Section 2.4
hereof;
(iv) receipt by Buyer of a complete
Loan Schedule for all of the Loans in the applicable Pool from Seller
to Buyer;
(v) If Buyer requests prior to the
Funding Dates, receipt by Buyer from Seller of an Opinion of Counsel
of the Seller in the form of Exhibit B, dated the date of execution of
this Agreement;
(vi) receipt by Buyer from Seller of an
Officer's Certificate, in the form of Exhibit A, and attached thereto
the resolutions of the Seller and a certificate of good standing of
the Seller;
(vii) receipt by Buyer from Seller of a
certificate or other evidence of merger or change of name, signed or
stamped by the applicable regulatory authority, if any of the Loans
were acquired by Seller by merger or acquired or originated by Seller
while conducting business under a name other than its present name;
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(viii) receipt by Buyer of the Initial
Certification of Receipt from the Custodian; and
(ix) receipt of a release from any and
all lenders having an interest in any Loan.
(x) the Buyer received the offer to
purchase together with all information required pursuant to this
Agreement to make such decision at least 10 Business Days prior to the
applicable Funding Date.
(c) In the event that any conditions in (b)
above to the purchase of a Loan by Buyer are not fully satisfied, the
obligation of Buyer to purchase such Loan or Loans shall, at Buyer's option,
(x) be suspended until such time as Seller has fulfilled all such conditions or
(y) be terminated, and the Buyer shall have no further obligation or liability
with respect to such Loan or Loans. Any loan Buyer rejects pursuant this
Section 2.3 (other than loans rejected pursuant to Section 2.3(b)(iii), which
loans Seller shall be free to sell to any third party; provided that Seller has
acted in good faith in submitting such loans for approval) shall, after such
rejection, be governed by Section 2.6(b) of this Agreement. The Seller shall
use its reasonable best efforts to fulfill each condition in (b) above and to
remedy any defect or failure of such conditions as soon as practicable.
Section 2.4 Underwriting Review. Prior to each Funding
Date, the Buyer or its agent shall have the right to conduct an underwriting
review of each related Loan to determine whether such Loan is acceptable for
purchase. Seller shall cooperate fully with the Buyer or its agent and shall
provide Buyer or its agents with full on-site access and all reasonably
requested information. Buyer may, in accordance with the Underwriting
Guidelines and in its sole discretion, reject any Loan, or determine that
additional documentation or explanatory material is required for the
underwriting review. The underwriting review of each Loan shall be based upon
the Underwriting Guidelines. Buyer may reject any Loan which does not meet, or
causes Buyer to violate any regulations or requirements of the OTS or any other
regulatory agencies. Any loan Buyer rejects pursuant to this Section 2.4 shall,
after such rejection, be governed by Section 2.6 of this Agreement; provided,
however, Seller shall be free to offer and sell to third parties any Loan or
Loans rejected due to OTS or other regulatory agency guidelines.
Section 2.5 Exclusivity. During the term of this Agreement,
Buyer shall have the exclusive right to purchase and Seller shall be obligated
to sell 125 Loans and High LTV Loans exclusively to Buyer in the amounts set
forth in Section 2.1 hereof. Until Seller has delivered Loans in the amounts
set forth in Section 2.1 which comply with the terms and conditions of this
Agreement, Seller shall not sell Loans to any other Person. The rights of the
parties with respect to Loans in amounts in excess of that set forth in Section
2.1 shall be governed by Section 2.6(b) hereinbelow.
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Section 2.6 Right of First Refusal.
(a) Intentionally omitted.
(b) Other Loans. From the date of execution
hereof until September 30, 2001, Buyer shall have the additional option, but
not the obligation, to purchase from Seller any loans offered by Seller to
third parties. Such option shall include the option to enter into forward
commitments and flow purchase and sale agreements and similar arrangements.
Prior to offering to any other Person, Seller shall provide written notice to
Buyer setting forth the type of loan, forward commitment, or flow loan purchase
and sale agreement, the volume of such loans, price, and the terms and
conditions of Seller's offer and all additional information reasonably
necessary for the Buyer to make a decision regarding such option. Within 5
Business Days after receipt of such information, Buyer shall provide Seller
with a nonbinding indication of interest indicating whether Buyer is interested
in purchasing or, if applicable, entering into a forward commitment or a flow
purchase and sale agreement or similar agreement. Within 10 Business Days after
the receipt of such information, Buyer shall provide Seller with written
notification whether Buyer intends to exercise its option which written
notification shall be binding on Buyer and Seller subject to Buyer's due
diligence. If Buyer does not exercise its option, Seller may sell the loans,
enter into a forward purchase or sale agreement, or flow purchase and sale
agreement or similar arrangement which were the subject of such offer to, a
third party within 60 days after Buyer's rejection on terms not materially more
favorable to such third party than were offered to Buyer. If Seller is unable
to sell such loans or enter into a forward purchase agreement or flow purchase
and sale agreement or similar arrangement within such 60 day period or if
Seller desires to sell or enter into a forward purchase agreement or flow
purchase and sale agreement or similar arrangement on terms materially more
favorable than offered to Buyer, Seller must reoffer the loans, forward
purchase agreement or flow purchase and sale agreement or similar arrangement
to Buyer pursuant to the terms above in this Section 2.6(b). If Seller decides
to sell to a third party, it shall report the terms and conditions of such sale
to Buyer if requested by Buyer and afford Buyer a reasonable opportunity to
review the sale transaction documents as soon as practicable after the
consummation of such sale. This provision shall apply to the sale of loans,
leases, financial instruments, and loan type products. A securitization shall
constitute a sale under this Section 2.6(b). If and only if a flow purchase and
sale agreement or similar arrangement offers periodic market pricing changes
(hereinafter a "Master Purchase Agreement Structure") and Buyer declined to
exercise its option as set forth above, Buyer shall have and Seller shall
provide Buyer with a continuing opportunity to create a Master Purchase
Agreement Arrangement with terms and conditions not materially less favorable
to Seller than such declined Master Purchase Agreement Arrangement and, upon
completion and notice to Seller, Seller shall be obligated to sell to Buyer
when and if Buyer's stated pricing is more than or equal to the stated pricing
of such other Master Purchase Agreement Arrangement.
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(c) Failure to Notify. If Buyer fails to notify
Seller within the time periods set forth in Subsections (a) or (b) above,
Seller shall have the right to sell the applicable loan products to third
parties.
ARTICLE III
PURCHASE AND SALE OF LOANS
Section 3.1 Conveyance of Mortgage Loans; Possession and
Ownership. On each applicable Funding Date, Seller shall sell, transfer,
assign, set over and convey to Buyer and Buyer shall purchase from Seller, all
of Seller's right, title and interest in and to the Loans for the applicable
Pool which shall be identified on the Loan Schedule. All such Loans purchased
on a Funding Date shall constitute a separate Pool (unless the parties mutually
agree otherwise). Conveyance of title to the Loans in the applicable Pool shall
be accomplished by endorsement of each Note in blank by Seller, an assignment
of each Mortgage by Seller to Buyer, and delivery of a Xxxx of Sale in the form
attached hereto as Exhibit E.
On the applicable Funding Date, Seller shall deliver or
cause to be delivered to the Custodian on behalf of the Buyer, the Custodial
File for each Loan in the applicable Pool On the applicable Funding Date,
Seller shall transfer ownership of the Mortgage File for each Loan in the
applicable Pool to the Buyer. The ownership of all records and documents with
respect to the Loans in the applicable Pool prepared by, or which come into the
possession of, Seller shall vest immediately in Buyer and any such records and
documents which are to remain with Seller, shall be retained and maintained by
Seller, in trust, at the will of Buyer and only in such custodial capacity.
Loan documents, servicing files, mortgage files, credit file with respect to a
Loan shall be delivered by the Seller to Buyer or Buyer's designee in a
commercially reasonable time and manner.
Except as provided in Section 2.02, from and after the
applicable Cut-off Date all rights arising out of the Loans in the applicable
Pool shall be the property of Buyer.
Section 3.2 Price and Closing Methodology. On each Funding
Date, Buyer shall pay to Seller in immediately available funds the aggregate
purchase price equal to the sum of (a) *** of the Funding Date Principal
Balance for each 125 Loan in the applicable Pool and *** of the Funding Date
Principal Balance for each High LTV Loan in the applicable Pool and (b) accrued
and unpaid interest on such Funding Date Principal Balance from the date with
respect to which interest has last been paid to Seller to (but not including)
the Closing Date at the Remittance Rate minus, (c) interest payments received
by Seller that, in accordance with the
*** OMITTED PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST AND FILED SEPARATELY
WITH THE COMMISSION
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terms of the Note, were due on or after the Funding Date. Principal and
interest payments received after the applicable Cut-off Date (regardless of
when due) shall belong to Buyer and if Seller (or Seller's agent) receives such
payments, Seller shall pay or forward such payments to Buyer as soon as
practicable. Buyer shall also be entitled to all other recoveries (including
specifically any payment of fees or penalties) on the Loans collected after the
Cut-off Date.
If either Buyer or Seller receives any payments to which
either is not entitled under this Agreement, such party shall forward such
payments to the correct party as soon as practicable.
If either party discovers an error in the Purchase Price
calculation or payment within 180 days after a Funding Date, such party shall
notify the other party and the parties shall make any Purchase Price
adjustments and transfer of funds required to correct any errors in the
calculation or payment of Purchase Price.
Section 3.3 Custodial Agreement. As soon as practicable
after the date hereof, Buyer and Seller will enter into a custodial agreement
with the Custodian on terms and conditions satisfactory to Buyer and which
provides for, at a minimum, the usual and ordinary protections provided to a
buyer of loans of the same type as the Loans. Seller shall pay all reasonable
fees and expenses charged by the Custodian.
Section 3.4 Delivery of Documents.
(a) With respect to each Loan, on or prior to
the related Funding Date, and the Seller shall deliver or shall cause to be
delivered, to the Custodian as the agent of Buyer each of the following
documents (collectively, the "Custodial File"):
(i) The original Note, endorsed "Pay
to the order of [Blank] , without recourse" and signed, by manual
signature, in the name of the Seller by an authorized officer of
Seller, together with all intervening endorsements that evidence a
complete chain of title from the originator thereof to the Seller,
provided that any of the foregoing endorsements may be contained on an
allonge which shall be firmly affixed to such Note;
(ii) With respect to each Note, either:
(A) the original Mortgage, with evidence of recording thereon, (B) a
copy of the Mortgage certified as a true copy by an authorized officer
of the Seller or by the closing attorney, if the original has been
transmitted for recording but has not, at the time of delivery of this
Agreement, been returned or (C) a copy of the Mortgage certified by
the applicable public recording office in those instances where the
original recorded Mortgage has been lost or has been retained by the
public recording office;
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(iii) With respect to each Note, either
(A) the original Assignment of Mortgage assigned to "Sovereign Bank"
and signed in the name of the Seller by an authorized Officer with
evidence of recording thereon, (B) a copy of the Assignment of
Mortgage, certified as a true copy by an authorized officer of the
Seller where the original has been transmitted for recording but has
not, at the time of delivery of this Agreement, been returned or (C) a
copy of the Assignment of Mortgage certified by the applicable public
recording office in those instances where the original recorded
Assignment of Mortgage has been lost or has been retained by the
public recording office, provided that any such Assignments of
Mortgage may be made by blanket assignments for Loans secured by
Mortgaged Properties located in the same county, if permitted by
applicable law;
(iv) With respect to each Note, either:
(A) originals of all intervening assignments of the Mortgage, with
evidence of recording thereon, (B) if the original intervening
assignments have not yet been returned from the recording office, a
copy of the originals of such intervening assignments together with a
certificate of an authorized officer of Seller or the closing attorney
certifying that the copy is a true copy of the original of such
intervening assignments or (C) a copy of the intervening assignment
certified by the public recording office in those instances where the
original recorded intervening assignment has been lost or has been
retained by the public recording office; provided that the chain of
intervening recorded assignments shall not be required to match the
chain of intervening endorsements of the Note, so long as the chain of
intervening recorded assignments, if applicable, evidences one or more
assignments of the Mortgage from the original mortgagee ultimately to
the person who has executed the Assignment of Mortgage referred to in
clause (iii) above;
(v) Originals of all assumption and
modification agreements, if any, or a copy certified as a true copy by
an authorized officer of Seller if the original has been transmitted
for recording until such time as the original is returned by the
public recording office;
(vi) With respect to each Note, either:
(A) the original power of attorney used at Closing, if applicable,
with evidence of recording thereon, (B) a copy of the power of
attorney used at Closing, if applicable, certified as a true copy by
an authorized officer of the Seller or by the closing attorney, if the
original has been transmitted for recording but has not, at the time
of delivery of this Agreement, been returned or (C) a copy of the
power of attorney used at closing, if applicable, certified by the
applicable public recording office in those instances where the
original recorded Mortgage has been lost or has been retained by the
public recording office;
(vii) Originals of guaranties, if
applicable; and
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(viii) Original of the title report or
title policy as required by the Underwriting Guidelines or if such
title report or policy is not yet available at closing, a preliminary
title report.
(b) With respect to each Loan, Seller shall,
within ten Business Days after the receipt thereof, and in any event, within
nine (9) months of the applicable Funding Date deliver or cause to be delivered
to the Custodian: (i) the original recorded Mortgage in those instances where a
copy thereof certified by Seller was delivered to the Custodian; (ii) the
original recorded Assignment of Mortgage; (iii) any original recorded
intervening assignments of Mortgage in those instances where copies thereof
certified by Seller were delivered to the Custodian; and (iv) the original
recorded assumption and modification agreement in those instances in which a
copy was delivered; (v) the original recorded power of attorney, if applicable;
and the title report or title policy as required by the Underwriting
Guidelines. Notwithstanding anything to the contrary contained in this Section
3.4(b), in those instances where the public recording office retains the
original Mortgage or, if applicable, the Assignment of Mortgage, the
intervening assignments of the Mortgage or the original recorded assumption and
modification agreement after it has been recorded, or where any such original
has been lost or destroyed, Seller shall be deemed to have satisfied their
respective obligations hereunder with respect to the delivery of any such
document upon delivery to the Custodian of a copy, as certified by the public
recording office to be a true copy of the recorded original of such Mortgage
or, if applicable, the Assignment of Mortgage, intervening assignments of
Mortgage or assumption and modification agreement, respectively.
(c) All recordings required pursuant to this
Section 3.4 and this Agreement shall be accomplished by and at the expense of
the Seller.
Section 3.5 Prepayment Rebate. In the event that on the
fourth (4th) anniversary date of the Funding Date, the aggregate Stated
Principal Balance of a Pool is less than the product of (a) *** and (b) the
aggregate Funding Date Principal Balance of such Pool, Seller shall refund to
Buyer an amount (the "Prepayment Rebate") equal to the product of (a) the
Premium and (b) the difference of ((i) *** times the aggregate Funding Date
Principal Balance of such Pool and (ii) the aggregate Stated Principal Balance
of such Pool as of the fourth (4th) anniversary date of the Funding Date). The
Prepayment Rebate shall be withdrawn by Buyer from the Reserve Account and
Seller's liability with respect to the Prepayment Rebate shall be limited to
those amounts in all the Reserve Accounts and those amounts required to be paid
into
*** OMITTED PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST AND FILED SEPARATELY
WITH THE COMMISSION
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all the Reserve Accounts. Buyer may withdraw at any time amounts from the
Reserve Account equal to any portion of such Prepayment Rebate which was not
previously withdrawn from the Reserve Account. Any Prepayment Penalties
previously paid to Buyer shall be credited against the Prepayment Rebate
refunded to Buyer. For purposes of this Section 3.5, Premium shall mean *** for
a 125 Loan and *** for a High LTV Loan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 4.1 Representations and Warranties of Seller -
General. It is understood and agreed by Seller and Buyer that, as a material
inducement to Buyer to enter into this Agreement, Seller hereby represents and
warrants to Buyer on the date hereof and on each Funding Date as follows:
(a) Duly Organized; Good Standing; Qualification.
Seller is a corporation and is duly organized, validly existing and in good
standing under the laws of Delaware, and is duly qualified in all jurisdictions
in which any Loans are originated.
(b) Due Authorization. The execution and
delivery of this Agreement by Seller and the performance by Seller of the
obligations to be performed by it hereunder have been duly authorized by all
necessary corporate or other similar action. Seller shall deliver to Buyer no
later than the date this Agreement is executed, a good standing certificate for
the state of its incorporation and for each state in which Seller is qualified
to do business and certified copies of relevant corporate or similar
resolutions.
(c) No Conflicts. Neither the execution and
delivery of this Agreement, the acquisition of Loans by Seller, the sale of the
Loans to Buyer or the transactions contemplated hereby, nor the fulfillment of
or compliance with the terms and conditions of this Agreement, will conflict
with or result in a breach of any of the terms, conditions or provisions of
Seller's articles, charter or bylaws or any legal restriction or any agreement
or instrument to which Seller is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing,
or result in the violation of any law, rule, regulation, order, judgment or
decree to which Seller or its property is subject, or impair the ability of
Buyer to realize on the Loans, or impair the value of the Loans.
*** OMITTED PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST AND FILED SEPARATELY
WITH THE COMMISSION
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(d) Duly Licensed. All parties which have had
any interest in the Loans, whether as mortgagee, assignee (other than Buyer or
assignee of Buyer) or pledgee are (or during the period in which they held and
disposed of such interest, were) in compliance with all applicable licensing
requirements of the federal, state, and local government wherein the Mortgaged
Property is located.
(e) Binding Obligation. This Agreement
constitutes, when duly executed and delivered by Seller, a legal, valid and
binding obligation of Seller enforceable against Seller according to its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium, or similar laws affecting creditors'
rights in general, including equitable remedies.
(f) No Actions Pending. Other than as disclosed
to Buyer prior to execution hereof, there is no action, suit, proceeding or
investigation pending or, to the best of Seller's knowledge, threatened against
Seller which (1) either in any one instance or in the aggregate, if determined
adversely to Seller, would result in (A) any material adverse change in the
business, operations, financial condition, properties or assets of Seller, (B)
any material impairment of the right or ability of Seller to carry on its
business substantially as now conducted, or (C) any material liability on the
part of Seller, (2) would draw into question the validity of this Agreement or
the Loans or of any action taken or to be taken in connection with the
obligations of Seller contemplated herein, or (3) would be likely to impair
materially the ability of Seller to perform under the terms of this Agreement.
(g) No Broker. Seller has not, in connection
with each Loan purchased by Buyer, incurred any obligation, made any commitment
or taken any action which might result in a claim against Buyer or an
obligation by Buyer to pay a sales brokerage commission, finder's fee or
similar fee in respect to the transactions between Buyer and Seller as
described in this Agreement.
(h) Ordinary Course of Business. After the
recapitalization of Seller which closed as of the date of this Agreement,
Seller is not insolvent, nor will it be made insolvent by the transfer of any
Loans hereunder, nor is Seller aware of any pending insolvency. The
consummation of the transactions contemplated by this Agreement are in the
ordinary course of business of the Seller, and the transfer, assignment and
conveyance of the Mortgage Notes and the Mortgages by Seller pursuant to this
Agreement are not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction. Seller has not transferred
any Loan to Buyer with any intent to hinder, delay or defraud any of Seller's
creditors.
(i) Ability to Perform. Seller can perform each
and every covenant contained in this Agreement in all material respects;
(j) No Consent Required. No consent, approval,
authorization or order of any court or governmental agency or body is required
for the execution, delivery and
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performance by Seller of or compliance by Seller with this Agreement or the
sale of the Loans in accordance with the terms of this Agreement, or if
required, such approval has been obtained prior to the Closing Date.
(k) No Default. After the recapitalization of
Seller which closed on the date of this Agreement, neither Seller nor any of
its affiliates is in material default under any agreement, contract, instrument
or indenture of any nature whatsoever to which Seller or any of its
subsidiaries is a party or by which it is bound nor has any event occurred
which with notice or lapse of time or both would constitute a material default
under any such agreement, contract, instrument or indenture and which default
would have a material adverse effect on its ability to perform its obligations
under this Agreement.
(l) Sale Treatment. The disposition of the
Loans pursuant to this Agreement will be afforded sale treatment for financial
and regulatory accounting purposes and tax purposes by Seller.
(m) No Untrue Information. Neither this
Agreement nor any statement, report or other document prepared by Seller
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading.
(n) Selection Procedures. Seller has used no
selection procedures that identified the Loans as being less desirable or
valuable than other comparable mortgage loans as to which the representations
and warranties described in Section 4.2 could be made.
(o) Financial Statements. Seller has delivered
to the Buyer financial statements as to its last two complete fiscal years and
any later quarter ended more than 60 days prior to the Closing Date. All such
financial statements fairly present the pertinent results of operations and in
cash flow for each of such periods and the financial condition at the end of
each such period of the Seller and its subsidiaries. All such financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as set
forth in the notes thereto.
(p) Material Adverse Change. Other than as
disclosed in Seller's Offering Memorandum dated June 9, 1998, there has been no
change in the business, operations, financial condition, properties or assets
of the Seller since the date of Seller's financial statements which would have
a material adverse effect on its ability to perform its obligations under this
Agreement.
(q) Errors and Omissions Policies. Seller has
one or more errors and omissions insurance policies and fidelity bonds, each in
an amount or, in the aggregate, in an amount, customarily maintained by similar
companies, each of which policies and bonds is in full force and effect. Each
such policy or policies and bond or bonds and the respective amounts
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of each shall, together, comply with the requirements from time to time of FNMA
for persons performing servicing for mortgage loans purchased by FNMA.
(r) Fair Consideration. Seller received fair
consideration and reasonably equivalent value in exchange for the sale of the
Loans to the Buyer.
(s) Y2K Compliant. Seller represents and
warrants that it, and all of its information systems, data processing and other
hardware, software and other systems, facilities, programs and procedures, are
subject to a plan which has been initiated and which has the goal of rendering
such systems, data processing, hardware, software and procedures Y2K Compliant
by June 30, 1999 and that such systems, data processing, hardware, software and
procedures shall be Y2K Compliant by June 30, 1999.
The representations and warranties in this Section shall
survive the execution and assignment of this Agreement and any subsequent
transfers of each Loan.
Section 4.2 Representations and Warranties of Seller As to
Each Loan. It is understood and agreed by Seller and Buyer that, as a material
inducement to Buyer to enter into this Agreement, Seller hereby represents and
warrants to Buyer as of each Funding Date with respect to each Loan purchased
on such Funding Date:
(a) Sole Owner; Good Title. Seller is
transferring good and marketable title to the Loan, with servicing retained by
a third party, to the Buyer free and clear of any and all encumbrances, liens,
pledges, equities, participation interests, claims, charges, rights of first
refusal or similar rights, or security interests of any nature encumbering such
Loan.
(b) Holder in Due Course. The Note is a
negotiable instrument, and Seller is a holder in due course of the Note.
(c) Loan Schedule Complete, True and Correct.
The information set forth in the Loan Schedule is complete, true and correct in
all material respects.
(d) State and Federal Laws. Applicable state,
federal and local laws, regulations and other requirements pertaining to usury,
and, any and all other requirements of any federal, state or local law
including, without limitation, truth-in-lending, tax, real estate settlement
procedures, consumer credit protection, equal credit opportunity, and
disclosure laws (including without limitation disclosure relating to flood
insurance) applicable to the Loan have been complied with. All disclosures
required by law, rule, regulation or any interpretation thereof, whether
federal, state or local, were properly made by Seller or the originator prior
to the closing of the Loan.
(e) Validity of the Mortgage Documents. The
Note, the related Mortgage and all other agreements executed in connection with
the Loan are each the legal, valid
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and binding obligation of the maker thereof, enforceable in accordance with the
terms thereof except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles
affecting the enforcement of creditors' rights. All parties to the related Note
and Mortgage had legal capacity to enter into the Loan and to execute and
deliver such Note and Mortgage, and such Note and Mortgage have been duly and
properly executed by such parties.
(f) Valid Lien. The Mortgage is a valid,
subsisting, and enforceable lien on the related Mortgaged Property, including
all improvements on the Mortgaged Property, having the lien priority set forth
in the Loan Schedule and the Mortgaged Property is free and clear of all
encumbrances and liens having priority over the lien of the Mortgage except for
(i) Senior Liens, if any, (ii) liens for current real estate taxes and current
special assessments not yet due and payable, (iii) such covenants, conditions
and restrictions, rights of way, easements and other matters of public record
as of the date of recording of the Mortgage, as are (A) generally acceptable to
mortgage lending institutions making similar type loans in the area in which
the Mortgaged Property is located and (B) specifically referred to in the
mortgagee's title insurance policy or attorney's title certificate or opinion
delivered to the originator of the Loan, and (iv) other matters to which like
properties are commonly subject which do not, individually or in the aggregate,
materially interfere with the benefits of the security intended to be provided
by the Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property.
(g) Security Agreement. Any security agreement,
chattel mortgage or equivalent document related to the Mortgage Loan
establishes in Seller a valid, subsisting and enforceable lien and security
interest with the priority set forth in the Loan Schedule on the property
described therein and Seller has full right to sell and assign the same to the
Buyer hereunder.
(h) No Modifications. Neither Seller nor any
prior holder of the Loan has impaired, waived, altered or modified the related
Mortgage or Note in any material respect, except by written instruments which
are a part of the Custodial File and which impairment, waiver, alteration or
modification has been approved by the insurer under any title insurance and is
reflected in the Loan Schedule.
(i) Taxes, Assessments, Insurance Premiums and
Other Charges. All taxes, governmental assessments, insurance premiums, water
charges, sewer charges, municipal charges, ground rents, or other outstanding
charges affecting the Mortgaged Property, which previously became due and owing
in respect of the related Mortgaged Property have been paid, if such items
would result in a lien on such Mortgaged Property.
(j) No Advances. Seller has not advanced funds
or received any advance of funds by a party other than the Mortgagor, directly
or indirectly, for the payment of any amount required to be paid by the
Mortgagor under the related Loan.
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(k) No Condemnation, Damage or Waste. There is
no proceeding pending or threatened for the total or partial condemnation of
the related Mortgaged Property, and such Mortgaged Property is in good repair
and free and clear of any damage or waste that would affect materially and
adversely the value or marketability of such Mortgaged Property.
(l) No Mechanics' or Materialmen's Liens. The
related Mortgaged Property is free and clear of all mechanics' and
materialmen's liens or liens in the nature thereof, and no rights are
outstanding that under law could give rise to any such liens, any of which
liens are or may be prior to, or equal with, the lien of the Mortgage except
those which are insured against by the mortgagee title insurance policy
referred to in this Section.
(m) Within Boundaries. All of the improvements
which were included for the purpose of determining the Appraised Value of the
related Mortgaged Property at the time of the origination of the Mortgage Loan
lie wholly within the boundaries and building restriction lines of such
Mortgaged Property, and no improvements on adjoining properties encroach upon
such Mortgaged Property.
(n) Originator and Subsequent Mortgagee
Authorized. To the extent required under applicable law, all parties which have
had any interest in the Loan, whether as originator, mortgagee, subsequent
mortgagee, assignee, pledgee or otherwise are or were at the time such party
held such interest (i) in compliance with any and all applicable licensing
requirements of the laws of the state where the related Mortgaged Property is
located and (ii) (A) organized under the laws of such state, (B) qualified to
do business in such state, (C) federal savings and loan associations, federal
savings banks or national banks having principal offices in such state, or (D)
not doing business in such state.
(o) Title Insurance Policy. If required by the
Underwriting Guidelines, the Loan is covered by either (i) an ALTA mortgagee
title insurance policy acceptable to FNMA, issued by, and which is the valid
and binding obligation of, a title insurer acceptable to FNMA and qualified to
do business in the jurisdiction where the related Mortgaged Property is
located, insuring the Seller, its successors and assigns, as to the priority
lien of the related Mortgage in the original principal amount of the Loan, as
increased by deferred and capitalized interest, if applicable (subject only to
(A) a Senior Lien, if any, (B) liens for current real property taxes and
current assessments not yet due and payable, and (C) such covenants, conditions
and restrictions, rights-of-way, easements and other matters of public record
as of the date of recording of the Mortgage as are (1) acceptable to mortgage
lending institutions in the area in which the Mortgaged Property is located and
(2) specifically referred to in and insured by the mortgagee's title insurance
policy or attorney's title certificate or opinion delivered to the originator
of the Loan or are specifically referred to in the appraisal performed in
connection with the origination of the Loan), and (D) other matters to which
like properties are commonly subject which do not, individually or in the
aggregate, materially interfere with the benefits of the security intended to
be provided by the Mortgage or the use, enjoyment, value or marketability of
the related Mortgaged Property; or (ii) an attorney's opinion of title or title
certificate given by an attorney
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licensed to practice law in the jurisdiction where such Mortgaged Property is
located, stating that the Mortgage is a lien in the priority set forth in the
Loan Schedule on the Mortgaged Property, subject only to the matters listed in
(A), (B), (C) and (D) above. Additionally, such mortgagee's title insurance
policy (if a title insurance policy is required by the Underwriting Guidelines)
affirmatively insures ingress and egress, and against (i) encroachments by or
upon the Mortgaged Property or any interest therein, (ii) any other adverse
circumstance that either is disclosed or would have been disclosed by an
accurate survey, and (iii) against loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of such Mortgage or
Note providing for adjustment in the Interest Rate and the Monthly Payment. The
Seller and its successors and assigns are the sole insureds of such mortgagee's
title insurance policy and such policy is in full force and effect and will be
in full force and effect upon the consummation of the transactions contemplated
by this Agreement. No claims have been made under the mortgagee's title
insurance policy, and no prior holder of the Loan, including the Seller, has
done, by act or omission, anything which would impair the coverage of such
mortgagee's title insurance policy. If a title insurance policy is not required
pursuant to the Underwriting Guidelines, there is an insured title report in
the Custodial File which complies with the origination requirements of Seller
and the Underwriting Guidelines.
(p) Hazard Insurance. All buildings and other
improvements upon the related Mortgaged Property are insured by a generally
acceptable insurer against loss by fire, hazards of extended coverage, flood
hazards (if the Mortgaged Property is in an area identified as having special
flood hazards by the Federal Emergency Management Agency) and such other
hazards as are customary in the area where such Mortgaged Property is located,
pursuant to insurance policies conforming to the requirements of FNMA. All such
insurance policies contain a standard mortgagee clause naming the originator of
the Loan, its successors and assigns, as mortgagee and all premiums thereon
have been paid. The related Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of such Mortgage to
maintain such insurance at Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor. The hazard insurance policy is the
valid and binding obligation of the insurer, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Buyer upon the
sale of the Loans to the Buyer. The Seller has not engaged in, and has no
knowledge of the Mortgagor having engaged in, any act or omission which would
impair the coverage of any such policy, the benefits of the endorsement
provided for herein, or the validity and binding effect of either.
(q) No Defaults. There is no default, breach,
violation or event of acceleration existing under the related Mortgage or Note
and no event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation or
event of acceleration and the Seller has not waived any default, breach,
violation or event of acceleration. No foreclosure (including any non-judicial
foreclosure) or any other legal action has been brought by Seller or any senior
lienholder in connection therewith.
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(r) One- To Four-Family Residential Property.
The related Mortgaged Property consists of a single parcel of real property
with a detached single family residence erected thereon, or a two- to
four-family residential dwelling, or an individual residential condominium
unit; provided, however, that the related Mortgaged Property does not consist
of a mobile home or the land on which the same has been placed.
(s) No Delinquencies. Except as disclosed on
the Loan Schedule, as of the Cut-off Date, all payments required to be made up
to and including the Cut-off Date for such Mortgage Loan under the terms of the
related Mortgage and Note have been made and credited and no Loan had a
delinquency for 30 or more days during the 3-month period immediately preceding
the Cut-off Date.
(t) No Release of Mortgage. The Mortgage has
not been released, satisfied, cancelled, subordinated or rescinded, in whole or
in part, and the Mortgaged Property has not been released from the lien of the
Mortgage, in whole or in part, nor has any instrument been executed that would
effect any such release, cancellation, subordination, rescission, or
satisfaction.
(u) Principal Payments. Principal payments on
the Loan commenced no more than 60 days after funds were disbursed in
connection with the Loan.
(v) No Defenses. The related Note or Mortgage
are not subject to any right of rescission, set-off, counterclaim or defense,
including the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto, nor will the
operation of any of the terms of such Note or Mortgage, or the exercise of any
right thereunder, (i) render such Note or Mortgage unenforceable, in whole or
in part, or (ii) render such Note or Mortgage subject to any right of
rescission, set-off, counterclaim or defense.
(w) Loan Closed. The Loan has closed and the
proceeds of the Loan have been fully disbursed and there is no requirement for
future advances thereunder. All costs, fees and expenses incurred in making or
closing the Loan and the recording of the Mortgage were paid, and the Mortgagor
is not entitled to any refund of any amounts paid or due under the Note or
Mortgage.
(x) Note and Mortgage Forms. The Note and
Mortgage are on forms acceptable to FNMA.
(y) Conventional Mortgage. The Loan is a
mortgage loan having an original term to maturity of not more than 30 years,
with interest payable in arrears. The required Monthly Payment is sufficient to
fully amortize the original principal balance over the original term and to pay
interest at the related Interest Rate; interest on each Loan is calculated on
the basis of a 360 day year consisting of twelve 30-day months, and the Note
does not provide for any extension of the original term.
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(z) Customary and Enforceable Provisions. The
Note and related Mortgage contains customary and enforceable provisions for
Loans of this type such as to render the rights and remedies of the holder
thereof adequate for the realization against the related Mortgaged Property of
the benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise
by judicial foreclosure. Other than the federal bankruptcy homestead exemption,
there is no homestead or other exemption available to the Mortgagor which would
interfere with the right to sell the related Mortgaged Property at a trustee's
sale or the right to foreclose the Mortgage. The related Mortgage or Note
contains the usual and customary "due-on-sale" clause or other similar
provision for the acceleration of the payment of the unpaid principal balance
of the Loan in the event the related Mortgaged Property is sold without the
prior consent of the mortgagee thereunder.
(aa) The Collateral. The related Note is not and
has not been secured by any collateral except the lien of the corresponding
Mortgage and the security interest of any applicable security agreement or
chattel mortgage referred to in (g) above.
(bb) The Appraisal. If required by the
Underwriting Guidelines, the Mortgage File contains an appraisal of the related
Mortgaged Property on forms and riders, signed prior to the approval of the
Loan application by an appraiser who had no interest, direct or indirect in the
Mortgaged Property or in any loan made on the security thereof, and whose
compensation was not affected by the approval or disapproval of the Loan and
who met the minimum qualification of FNMA for appraisers and, for every
Mortgage Loan originated after December 31, 1992, the appraisal conforms to
Title XI of the Financial Institutions Reform Recovery and Enforcement Act of
1989.
(cc) Trustee for Deed of Trust. In the event the
related Mortgage constitutes a deed of trust, a trustee, duly qualified under
applicable law to serve as such, has been properly designated and currently so
serves and is named in the Mortgage, and no fees or expenses are or will become
payable by the Buyer to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor, but only from
the proceeds of such sale.
(dd) No Buydowns. No Loan is currently subject
to any provision pursuant to which Monthly Payments are (i) paid or partially
paid with funds deposited in any separate account established by the Seller,
the Mortgagor, or anyone on behalf of the Mortgagor, (ii) paid by any source
other than the Mortgagor or (iii) contains any other similar provisions which
may constitute a "buydown" provision.
(ee) Mortgagor Disclosure Statement. The
Mortgagor has executed a statement to the effect that the Mortgagor has
received all disclosure materials required by applicable law with respect to
the making of conventional mortgage loans and the Mortgage File includes such
statements.
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(ff) No Facilitation Loans. No Loan was made in
connection with facilitating the sale of a Mortgaged Property that had been
acquired by the Seller by foreclosure or deed-in-lieu thereof.
(gg) No Adverse Circumstances or Conditions. The
Seller has no knowledge of any material circumstances or condition with respect
to the Loan, Mortgage File, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can reasonably be expected to cause private
institutional investors which invest in loans and other financial instruments
backed by loans similar to the Loans to regard the Loan as an unacceptable
investment, cause the Loan to become delinquent, or adversely affect the value
or marketability of the Loan;
(hh) Lawfully Occupied. To the Sellers's
knowledge, the Mortgaged Property is lawfully occupied under applicable law. To
the Seller's knowledge, all inspections, licenses and certificates required to
be made or issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same, including but
not limited to certificates of occupancy and fire underwriting certificates,
have been made or obtained from the appropriate authorities.
(ii) No Commercial Purposes. To the best of
Seller's knowledge, no portion of the Mortgaged Property is used for commercial
purposes.
(jj) Leaseholds. If the Mortgaged Property
securing the Loan is a leasehold estate, then (i) the lease is a lease of a fee
or a sublease executed by the fee owner and the sublessor; (ii) the use of a
leasehold or ground rent estate for residential properties is an accepted
practice in the area where the Mortgaged Property is located; (iii) residential
properties in the area consisting of leasehold or ground rent estates are
readily marketable; (iv) the lease, sublease, or conveyance reserving ground
rents and their provisions are in a form commonly acceptable to private
institutional mortgage investors in the area where the Mortgaged Property is
located; (v) the remaining term or exercised renewal of the lease and sublease
with any renewals enforceable by the mortgagee do not terminate earlier than
ten (10) years after the maturity date of the Loan; and (vi) the sublease
payments if any, are at least equal to the lease payments and are due no less
frequently than the lease payments.
(kk) No Impairment of Insurance Coverage. No
action, error, omission, misrepresentation, negligence, fraud or similar
occurrence in respect of any Loan has taken place on the part of any Person
(including without limitation the Mortgagor, the appraiser, any builder or
developer or any party involved in the origination of the Loan) or in the
application for any insurance relating to such Loan that would result in a
failure or impairment of full and timely coverage under any insurance policy
required to be obtained for the Loan.
(ll) Primary Residence. The Mortgaged Property
is occupied by the Mortgagor as the Mortgagor's primary residence.
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(mm) Soldiers' and Sailors' Civil Relief Act.
The Loan has not been modified as a result of the application of, and Seller is
unaware of and has received no notice with respect to any Loan regarding the
application of, the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, or any similar law or regulation.
(nn) Delivery of Collateral File. The Collateral
File for the Loan and any other documents required to be delivered by the
Seller under this Agreement have been delivered to Buyer or the Custodian.
(oo) Transfer of Loans. The Assignment of
Mortgage is in recordable form and is acceptable for recording under the laws
of the jurisdiction in which the Mortgaged Property is located.
(pp) Origination, Servicing and Collection
Practices. The origination, servicing and collection practices used with
respect to the Loan have been in accordance with Accepted Servicing Practices,
and have been in all material respects legal, proper, prudent and customary.
The Loan has been serviced in accordance with the terms of the Mortgage and
Note. No fraud or misrepresentations was committed by any Person in connection
with the origination or servicing of the Loan.
(qq) No Graduated Payments or Contingent
Interests. The Loan is not a graduated payment mortgage loan and the Loan does
not have a shared appreciation or other contingent interest feature.
(rr) Environmental Matters. No Mortgaged
Property has been used for the storage, treatment or disposal of Hazardous
Substances; no Hazardous Substances are present in, on or below any Mortgaged
Property in such a manner or concentration as to violate any law or regulation;
and, no Mortgaged Property, by itself or as part of any other property, has
been identified by any government agency as the site of a "release," within the
meaning of CERCLA or RCRA, of a Hazardous Substance.
(ss) Underwriting, Origination and Documentation
Guidelines. Except as expressly agreed to by Buyer in writing, each Loan
conforms in all material respects to the Underwriting Guidelines in effect on
such Funding Date.
(tt) No Additional Instruments. No instruments,
other than those delivered herewith or with the Loans on the related Funding
Date are required under applicable law to evidence the indebtedness represented
by the Loan or to perfect the lien of the related Mortgage.
(uu) Transfer of Interest. Seller has
transferred to Buyer all of its right, title and interest in the Note, the
related Mortgage and the documents related to such Loan, and Buyer has
purchased such Loan and the related Note, Mortgage and documents related to
such
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Loan, together with an individual flood insurance policy (to the extent
required by the Flood Disaster Protection Act) and an individual current hazard
insurance policy (including fire and extended coverage and other matters as are
customary in the area of the Mortgaged Property), or a blanket policy in lieu
thereof, or a certificate if Buyer agrees in writing to accept a certificate,
insuring the Mortgaged Property, with a loss payable clause in favor of Seller,
its successors and assigns in an amount equal to the lower of: (a) the
replacement value of the Mortgaged Property, or (b) the aggregate unpaid
principal balance of the Loan and all senior liens, free and clear of any
pledge, liens, claims, encumbrances, mortgages, charges, exceptions or security
interests; Seller shall have complied and caused the Mortgagor to comply with
all laws relating to issuing the Mortgaged Property with respect to flood
insurance protection.
(vv) Recording. The original Mortgage was
recorded or submitted for recording, and all subsequent assignments of the
original Mortgage (other than the assignment from Seller to Buyer) have been
recorded, or submitted for recording in the appropriate jurisdictions wherein
such recordation is necessary to perfect the lien thereof as against creditors
of the Seller, or, pursuant to the terms and conditions hereof, is in the
process of being recorded.
(ww) Additional Payments. There is no obligation
on the part of the Seller or any other party to make payments in addition to
those made by the Mortgagor under the Loan.
(xx) Prepayment Penalty. If the Loan provides
for any Prepayment Penalty to be paid by the Mortgagor in connection with any
prepayment, Seller has specified to Buyer in writing on the mortgage loan
schedule delivered to Buyer on or before the related Funding Date that such
Loan provides for such a Prepayment Penalty and Seller represents and warrants
to Buyer that such Prepayment Penalty is enforceable and is in compliance with
all applicable laws, rules and regulations.
(yy) Servicing. Unless otherwise agreed in a
writing executed by both of the parties hereto, the Loan is being serviced by
Servicer.
(zz) Principal Balance. The outstanding
principal balance of the Loan on the Funding Date does not exceed the original
principal balance of the Note.
(aaa) Information Not Misleading. No statement,
report or other document prepared by Seller in connection with the Loan
contains any untrue statement of material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading.
(bbb) Intentionally Omitted
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(ccc) Bulk Transfer Laws. The transfer,
assignment and conveyance of the Debt Instruments and the Mortgages by Seller
to the Depositor were not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction.
(ddd) No Bankruptcy. As of the applicable Cut-Off
Date, Mortgagor is not a debtor under proceedings under any Bankruptcy Law, and
no such Mortgagor has defaulted in payments on a Loan after the filing of such
bankruptcy case, whether under a plan or reorganization or otherwise.
(eee) Compliance With Environmental Laws. To
Seller's best knowledge, there exists no violation of any environmental law
(either local, state or federal), rule or regulation in respect of the Property
which violation has or could have a material adverse effect on the market value
of such Property. Seller has no knowledge of any pending action or proceeding
directly involving the related Property in which compliance with any
environmental law, rule or regulation is in issue, and, to Seller's best
knowledge, nothing further remains to be done to satisfy in full all
requirements of each such law, rule or regulation constituting a prerequisite
to the use and enjoyment of such Property.
(fff) Consent of Senior Lienholder. With respect
to each Loan that is not a first mortgage loan, either (i) no consent for the
Loan is required by the holder of the related prior lien or (ii) such consent
has been obtained and has been delivered to Buyer.
(ggg) Pool Parameters. Unless waived in writing
by Buyer, no more than 20% of the Loans in a Pool as measured by Funding Date
Principal Balance are secured by Mortgaged Property in one state or are from
one correspondent or other Person from Seller's other origination channels. No
more than 30% of the Loans in a Pool are B credits pursuant to the Underwriting
Guidelines. There are no Loans secured by Mortgaged Property in Alabama or
Louisiana.
The representations and warranties in this Section shall
survive the execution and assignment of this Agreement and any subsequent
transfers of each Loan.
Section 4.3 Representations and Warranties of Buyer. Buyer
hereby represents and warrants to Seller on the date hereof as follows:
(a) It is a federal savings bank, duly
organized, validly existing and in good standing under the laws of the United
States of America.
(b) The execution and delivery of the Agreement
by it and the performance by it of the obligations to be performed by it
hereunder have been duly authorized by all necessary corporate or other similar
action.
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(c) The execution and delivery of this
Agreement by it and the performance by it of the obligations to be performed by
it hereunder do not, and will not, violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to it or to its articles of
association or bylaws.
(d) The execution and delivery of this
Agreement by it and the performance by it of the obligations to be performed by
it hereunder do not and will not result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease
or instrument to which it is a party or by which it or its properties may be
bound or affected.
(e) This Agreement constitutes, when duly
executed and delivered by it, a legal, valid and binding obligation of Buyer
enforceable against Buyer according to its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar laws affecting creditors' rights in
general, including equitable remedies.
(f) There are no actions, suits or proceedings
pending or, to its knowledge, threatened against or affecting it or its
properties before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which, if determined
adversely, would have a material adverse effect on its financial condition,
properties or operation.
(g) The transactions contemplated by this
Agreement are in the ordinary course of business of Buyer.
(h) Buyer has not, in connection with each Loan
purchased by Buyer, incurred any obligation, made any commitment or taken any
action which might result in a claim against Seller or an obligation by Seller
to pay a sales brokerage commission, finder's fee or similar fee in respect to
the transactions between Buyer and Seller as described in this Agreement.
Section 4.4 Remedies for Breach of Representations and
Warranties. It is understood and agreed that the representations and warranties
set forth in Sections 4.1 and 4.2 shall survive the sale of the Loans to the
Buyer and the delivery of the Mortgage Files to the Buyer and shall inure to
the benefit of the Buyer, notwithstanding any restrictive or qualified
endorsement on any Note or Assignment of Mortgage or the examination or failure
to examine any Mortgage File or any recital set forth in any Assignment which
provides that such assignment is without recourse or representations. Upon
discovery by either the Seller or the Buyer of a breach of any of the foregoing
representations and warranties which materially and adversely affects the value
of the Loans or the interest of the Buyer in the Loans (or which materially and
adversely affects the interest of the Buyer in, or the value of, the related
Loan in
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the case of a representation and warranty with respect to a particular Loan),
the party discovering such breach shall give prompt written notice to the
other.
Within 45 days of the earlier of either discovery by or
notice to the Seller of any breach of a representation or warranty which
materially and adversely affects the value of a Loan (or the interest of the
Buyer in a Loan), the Seller shall use its reasonable best efforts promptly to
cure such breach in all material respects and, if such breach cannot be cured
within such 45 days, the Seller shall, at the Buyer's option, repurchase such
Loan at the Repurchase Price within ten Business Days of Buyer's demand. In the
event that a breach shall involve any representation or warranty set forth in
Section 4.1, and such breach cannot be cured within 90 days of the earlier of
either discovery by or notice to the Seller of such breach, all of the Loans
shall, at the Buyer's option, be repurchased by the Seller at the Repurchase
Price. Any repurchase of a Loan or Loans pursuant to the foregoing provisions
of this Section 4.4 shall be accomplished by wire transfer of immediately
available funds in the amount of the Repurchase Price in such account as the
Buyer may direct.
At the time of repurchase, the Buyer and the Seller shall
arrange for the reassignment of the Deleted Mortgage Loan without recourse to
the Seller and the delivery to the Seller within five Business Days after
Buyer's receipt of the Repurchase Price of any documents held by the Buyer
relating to the Deleted Mortgage Loan. In the event of a repurchase, the Seller
shall, simultaneously with such reassignment, give written notice to the Buyer
that such repurchase has taken place.
In addition to such repurchase obligation, the Seller shall
indemnify the Buyer and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of the Seller's representations and warranties contained in this
Agreement. It is understood and agreed that the obligations of the Seller set
forth in this Section 4.4 to cure or repurchase a defective Loan and to
indemnify the Buyer as provided in this Section 4.4 constitute the sole
remedies of the Buyer respecting a breach of the foregoing representations and
warranties.
Any cause of action against the Seller relating to or
arising out of the breach of any representations and warranties made in
Sections 4.1 and 4.2 shall accrue as to any Loan upon (i) discovery of such
breach by the Buyer or notice thereof by the Seller to the Buyer, (ii) failure
by the Seller to cure such breach or repurchase such Loan as specified above,
and (iii) demand upon the Seller by the Buyer for compliance with this
Agreement.
Section 4.5 Indemnification. Seller, on the one hand, and
Buyer, on the other hand each for itself and its successors (herein, each an
"Indemnifying Person") hereby agrees to reimburse and indemnify and upon
request, defend the other, its affiliates, and their respective directors,
officers, employees and agents, and their respective heirs, personal
representatives, successors and assigns of the foregoing (herein, each an
"Indemnified Person") from and against
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any and all losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgements, suits, costs or disbursements of any kind or
nature whatever (including, without limitation, the fees and disbursements of
counsel in connection with the investigative, administrative or judicial
proceedings commenced or threatened, whether or not such Indemnified Person is
a party thereto) that may at any time be imposed on, asserted against or
incurred by such Indemnified Person as a result of, or arising out of any
breach of a representation, warranty, covenant, agreement or duty under or in
connection with this Agreement. The obligations of each Indemnifying person
under this Section shall survive the termination of this Agreement.
ARTICLE V
LOSS PROTECTION
Section 5.1 Reserve Account.
(a) On each Funding Date, Seller shall (i)
deposit into a separate Reserve Account with respect to each Pool *** of the
Stated Principal Balance and (ii) for the four (4) year period beginning on
such Funding Date, deposit into such account the Excess Servicing Fee, on each
Remittance Date, until the balance of the Reserve Account for such Loans is
equal to the Target Reserve Account Balance.
(b) Buyer shall deposit that portion of the
Excess Servicing Fee as may be necessary to maintain the Reserve Account at the
Target Reserve Account Balance. Buyer may withdraw amounts from the Reserve
Account equal to (i) any interest due on a Loan which was not paid by the
Mortgagor for a payment to be remitted by Servicer to Buyer on the last
Remittance Date and (ii) any accrued Losses not previously reimbursed from the
Excess Servicing Fee or Reserve Account. The Excess Servicing Fee shall be
applied by Seller first to reduce accrued Losses, second to current Losses and
third to the Target Reserve Account Balance. To the extent that the balance of
the Reserve Account is at the Target Reserve Account Balance, any additional
available Excess Servicing Fee shall be remitted by Buyer to Seller within two
Business Days after the applicable Remittance Date.
(c) If the Reserve Account for a Pool has
insufficient funds in it to reimburse Buyer for any amount required to
reimburse Buyer pursuant to Section 5.1(b) above or pursuant to Section 3.5,
then Buyer shall have the option to withdraw funds sufficient to so reimburse
Buyer from one or more Reserve Accounts for different Pools. The selection of
the Reserve Accounts shall be at the option of Buyer.
*** OMITTED PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST AND FILED SEPARATELY
WITH THE COMMISSION.
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(d) In the event Buyer sells or participated
the Loans in any Pool, Buyer may elect, by delivery in writing of notice of
such election to Seller, to eliminate the right of the purchaser or the
participant(s) in Section 5.1(c) above with respect to the Loans in the
applicable Pool.
(e) Notwithstanding anything in this Agreement
to the contrary, ownership of each Reserve Account resides with Seller. Buyer
holds each Reserve Account as collateral for certain obligations of Seller as
set forth in this Agreement. Seller grants Buyer a security interest in each
Reserve Account and will take all actions requested by Seller reasonably
necessary to perfect Seller's security interest in each Reserve Account.
(f) Buyer shall release to Seller the funds in
a Reserve Account 60 days after the final payment or other liquidation of the
last Loan in the related Pool or the disposition of any Mortgaged Property with
respect to the last Loan in the related Pool and the remittance to Buyer of all
funds from the Pool and related Reserve Account due to Buyer.
(g) Buyer may transfer its interest in a
Reserve Account.
(h) Any collections on Loans which were
charged-off for purposes of calculating Loss shall be deposited by Buyer into
the applicable Reserve Account.
Section 5.2 Remedy For First Payment Default.
Notwithstanding anything to the contrary herein contained, if a Mortgagor fails
to make the first payment due to Buyer within sixty (60) days of the first
payment due date to occur after the Funding Date, regardless of whether such
payment is subsequently paid by the Mortgagor, Buyer, at its sole and absolute
discretion, shall have the right to require Seller to repurchase such Loan at
the Repurchase Price within 10 days after receipt by Seller from Buyer of a
written request to repurchase such Loans.
Section 5.3 Remedy to Insure Accuracy of Real Estate
Appraisals. If an appraisal is required pursuant to the Underwriting
Guidelines, within sixty (60) days after any Loan purchase, Buyer may, at its
own expense, in order to verify the accuracy of real property appraisals
prepared for Seller, order a reappraisal of the property secured by a Mortgage
to determine the property value at the date of the original appraisal. If the
reappraisal obtained by Buyer indicates a fair market value which is more than
ten (10%) percent less than the original appraisal value, then if such Loan
would not meet the Underwriting Guidelines and the other terms and conditions
of this Agreement after accounting for the impact of the new appraisal upon
receipt by Seller from Buyer of a signed copy of the reappraisal, Seller shall
repurchase the Loan at the Repurchase Price and reimburse Buyer for the cost of
the appraisal within 30 Business Days of written demand by Buyer. If such Loan
would move from being a High LTV Loan to a 125 Loan after accounting for the
impact of the new appraisal, then the appropriate adjustments to the Purchase
Price, the Remittance Rate, Excess Serving Fee, and Reserve Account shall be
effected back to and as of the applicable Cut-Off Date and Seller or Buyer, as
applicable, shall remit the necessary funds to the other party within 5
Business Days after written demand.
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ARTICLE VI
COVENANTS
Section 6.1 Covenants of Seller.
(a) Intentionally Omitted
(b) Intentionally Omitted
(c) Marked-Up Title Insurance Binder. If Buyer
purchases a Loan having relied on a marked-up title insurance binder or title
certificate rather than a title insurance policy, Seller shall have thirty (30)
days to deliver to Buyer the title insurance policy.
(d) Refinancing. Seller shall not take any
action to solicit Mortgagors in order to effect the refinancing of a Loan.
Seller shall use its best efforts to prohibit correspondents and other Persons
from Seller's other origination channels from refinancing a Loan.
(e) Preservation of Rights and Remedies. Seller
has caused to be performed or shall cause to be performed within 15 Business
Days of the Closing Date any and all acts required to preserve the rights and
remedies of the Buyer in any insurance policies applicable to each Loan,
including, without limitation, any necessary notifications of insurers,
assignments of policies or interests therein, and establishment of coinsured,
joint loss payee and mortgagee rights in favor of Buyer.
(f) Actions by Buyer. Any and all decisions
made by Buyer in good faith consistent with customary standards for loans of
this type to take action or to not take action relative to a Loan, including,
but not limited to, the sale or liquidation of a Loan, Mortgaged Property or
collateral shall be final and conclusively binding upon Seller in the event
Seller does not repurchase a Loan within ten (10) days of notification by Buyer
pursuant to Sections 4.4, 5.2 and 5.3 of this Agreement.
(g) Future Obligations; Power of Attorney. In
order to enforce Buyer's rights under this Agreement, Seller shall, upon the
request of Buyer or its assigns, do and perform or cause to be done and
performed, every reasonable act and thing necessary or advisable to put Buyer
and its assigns in position to carry out the intent of this Agreement,
including the execution of and, if necessary, the recordation of additional
documents including separate endorsements and assignments upon request of
Buyer.
(h) Errors and Omissions Insurance Policy.
Seller shall maintain one or more errors and omissions insurance policies and
fidelity bonds, each in an amount or, in the aggregate, in an amount, and in
all other manners, in compliance with the requirements from
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time to time of FNMA for persons performing servicing for mortgage loans
purchased by FNMA.
(i) Access to Premises. Seller agrees to allow
Buyer, its authorized representatives and any governmental officials having
regulatory responsibility with respect to the Buyer full access to all of the
properties, personnel, books and records of Seller as is required by Buyer
and/or the aforementioned officials in connection with this Agreement.
(j) Regulatory Requirements. Seller agrees to
take such further actions and obtain and/or execute, acknowledge, deliver
and/or record such further documents and instruments, as Buyer may reasonably
request to fulfill any obligations Buyer may have under applicable banking
regulations or as requested by Seller's regulatory examiners.
(k) Y2K Compliant. Seller covenants and agrees
to protect its business and operations against any contamination or
recontamination of its products and systems arising, directly or indirectly, by
reason of any third-party's failure to be Y2K Compliant (including, without
limitation, third-parties which conduct business with the Seller or any of its
customers).
Section 6.2 Covenants of Buyer.
(a) Reports. Buyer shall produce and provide to
Seller a statement on a monthly basis reporting the amount of funds available
in the Reserve Account, the amount of funds added to the Reserve Account for
the preceding month and the funds removed from the Reserve Account with respect
to such month.
(b) Solicitation. Buyer shall not use the
information received from Seller or Servicer to solicit High LTV Loan and 125
Loan business from Mortgagors of the Loans; provided, however, that such
information (other than that obtained from rejected loans) may be used by Buyer
except loans rejected to solicit business from such Mortgagors for other loan
products of Buyer.
(c) Servicing Agreements. During the term of
the Flow Servicing Agreement, dated as of June 29, 1998, between Seller and
Servicer, Buyer shall enter into a servicing agreement in the form of the
Servicing Agreement attached as Exhibit B with Servicer for each Pool of Loans
unless (i) any Event of Default described in Section 5.02 (other than
subsection 10 thereof [the numerical performance standards]) of the applicable
Servicing Agreement shall have occurred and be continuing with respect to any
Pool or Pools then serviced by Servicer or any Servicing Agreement previously
entered into with Servicer pursuant to this Section has been terminated by
Buyer due to any such Event of Default, (ii) if Servicer is then servicing or
has at any time serviced pursuant to one or more Servicing Agreements entered
into pursuant to this Section 6.2 Mortgage Loans with an aggregate principal
balance of at least $100,000,000, (a) an Event of Default described in Section
5.02(10) of the applicable Servicing
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Agreement shall have occurred and be continuing with respect to two or more
Pools each having an outstanding principal balance of $35,000,000 or more or
(b) two or more Servicing Agreements previously entered into with Servicer
pursuant to this Section with respect to Mortgage Loans having an aggregate
outstanding principal balance at the date of such Servicing Agreements of at
least $50 million have been terminated due to an Event of Default described in
Section 5.02(10).
(d) Notice. Buyer will provide Seller with
written notice of any material adverse change which would result in Buyer being
unable to perform or fulfill its obligations under this Agreement.
Section 6.3 Mutual Covenants. Each party shall, from time
to time, execute and deliver or cause to be executed and delivered, such
additional instruments, assignments, endorsements, papers and documents as the
other party may at any time reasonably request for the purpose of carrying out
this Agreement and the transfers provided for herein.
ARTICLE VII
EVENT OF PURCHASE TERMINATION
Section 7.1 Events of Purchase Termination. An Event of
Purchase Termination shall mean the occurrence or existence of one or more of
the following events or conditions (for any reason, whether voluntary,
involuntary or effected or required by law):
(a) Seller shall default in the performance of
any covenant contained herein provided, as to any default of any covenant not
involving the payment of money, the Buyer shall have given the Seller ten (10)
days written notice of an opportunity to cure such default.
(b) Any representation or warranty made by
Seller hereunder shall prove to have been untrue in any material respect as of
the time when made or deemed made; or any statement made by Seller in any
report, notice or document to Buyer is untrue in any material respect and Buyer
shall have given Seller 10 days written notice of an opportunity to cure such
default; provided, however, with respect to the representatives and warranties
in Section 4.2, such representations and warranties must prove to have been
untrue with respect to a material amount of Loans measured by Funding Date
Principal Balance in any Pool.
(c) A governmental authority shall issue a
cease and desist order or its equivalent against Seller which shall materially
impair Seller's ability to perform or prohibit Seller's performance under this
Agreement.
(d) A material adverse change shall have
occurred in the business, operations, condition (financial or otherwise) or
prospects of Seller, or Seller shall become, in the
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reasonable judgment of Seller, unable to perform its obligations hereunder in a
satisfactory manner;
(e) Any creditor of Seller declares, or becomes
entitled to declare, any indebtedness of Seller or any affiliate in an
aggregate amount in excess of $1,000,000 to be due and payable prior to its
expressed maturity, or any such indebtedness becomes due by its terms and shall
not be promptly paid or extended; or Seller shall breach materially any
material contract (now existing or hereafter existing) to which it is a party
under which it is obligated to sell loans to, or service loans for, another
Person;
(f) Any creditor of Seller or of any affiliate
of Seller of Seller issues or obtains issuance of execution in a sum in excess
of $1,000,000 against Seller or any Affiliate or any of their assets or
properties;
(g) A proceeding shall have been instituted in
respect of Seller or any affiliate of Seller or either of them which, if
adversely decided, shall either (x) result in the entry of an order granting
relief against Seller or (y) shall not have been dismissed in favor of Seller
within 90 days of its filing: (i) seeking to have an order for relief entered
in respect of such Person, or seeking a declaration or entering a finding that
such Person is insolvent or a similar declaration or finding, or seeking
dissolution, winding up, charter revocation or forfeiture, liquidation,
reorganization or other similar relief with respect to such Person under any
law relating to bankruptcy, insolvency, receivership, relief of debtors or
protection of creditors, termination of legal entities or any other similar law
now or hereafter in effect; or (ii) seeking appointment of a receiver, trustee,
liquidator, assignee, sequestrator or other custodian for such Person or for
all or any substantial part of its property provided the foregoing shall not
apply to the dissolution of any nonoperating affiliate;
(h) Seller shall become insolvent or shall fail to
pay, become unable to pay, or state that it is or will be unable to pay, its
debts as they become due; or Seller or any affiliate shall: (i) voluntarily
suspend transaction of its business; (ii) make a general assignment for the
benefit of creditors; (iii) institute (or fail to controvert in a timely and
appropriate manner) a proceeding described in Section 7.1(g)(i) hereof, or
(whether or not any such proceeding has been instituted) shall consent to or
acquiesce in any such order for relief, declaration, finding or relief
described therein; (iv) institute (or fail to controvert in a timely and
appropriate manner) a proceeding described in Section 6.1(g) or (ii) hereof, or
(whether or not any such proceeding has been instituted) shall consent to or
acquiesce in any such appointment or to the taking of possession by any such
custodian of all or any substantial part of its property; (v) dissolve, wind
up, revoke or forfeit its charter (or other constituent documents) or liquidate
itself or any substantial party of its property; or (vi) take any action in
furtherance of any of the foregoing, provided the foregoing shall not apply to
the dissolution of any nonoperating affiliate;
(i) The fidelity bond coverage and errors and
omissions coverage required hereunder shall at any time cease to be in force
for a period in excess of 10 days, or
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Seller shall in any respect fail in any material respects to comply with its
obligations under this Agreement in relation to fidelity bond or other
insurance coverage which shall remain uncured for 10 days;
(j) There shall occur any material breach or
default by Seller under this Agreement the Participation Agreement dated June
29, 1998 between Buyer and Seller, or the Indenture for 12.5% Subordinated
Notes due 2001 dated as of June 29, 1998, as amended, by and between Seller and
American Stock Transfer and Trust Company, as indenture trustee;
(k) Any Event of Servicing Termination shall
have occurred under the Servicing Agreement with respect to any Pool and Seller
fails to provide a replacement servicer satisfactory to Buyer within 120 days
if requested by Buyer.
(l) The board of directors of the Seller shall
fail to include at least one (1) nominee of Sovereign Bancorp, Inc. for a
period in excess of ten (10) Business Days unless (i) Sovereign Bancorp, Inc.
has consented in writing or (ii) such failure is due to a voluntary act by
Sovereign Bancorp, Inc.
(m) With respect to any Pool of Loans if the
charge-off experience exceeds the following:
As of the Cumulative Charge-Offs as a
Last Day Percentage of Funding Date
of the Month Principal Balance
------------ --------------------------
12 1.5%
24 5.0%
36 7.0%
48 8.0%
Section 7.2 Buyer's Rights. If any Event of Purchase
Termination shall occur, then, at the option of the Buyer exercised by delivery
of written notice to Seller upon receipt by the Seller and of notice of the
occurrence of the Event of Purchase Termination (the "Purchase Termination
Notice") in addition to all other rights and remedies which Buyer may have
hereunder, or otherwise at law, in equity or otherwise:
(a) Buyer's commitments hereunder shall no
longer be in force, and Buyer may exercise any or all of the remedies available
to Buyer hereunder or under the this Agreement. Without limiting the foregoing,
Buyer shall have no further obligation to purchase any mortgage loans, or to
fund any purchase;
(b) Buyer shall also be entitled to set off any
sums of Seller held by Buyer or any debts owed to Seller by Buyer against any
obligations owed to Buyer by Seller.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1 Relationship of the Parties. It is agreed that
Seller and Buyer are not partners or joint venturers and that Seller is not an
agent for Buyer in originating, administering or collecting any Loan, but shall
have the status of and shall act in all matters hereunder as an independent
contractor.
Section 8.2 Sale Treatment. The sale of each Loan to Buyer
shall be reflected on Seller's balance sheet and other records as a sale of
assets by Seller.
Section 8.3 Survival of Covenants, Agreements,
Representations and Warranties; Successors and Assigns. All representations,
warranties, covenants and agreements made herein or in any other instrument or
writing delivered hereunder or in connection with any transaction contemplated
hereby or thereby, including those made by third parties for the benefit of
either party, shall be considered to have been relied upon by the recipient or
beneficiary thereof and shall survive the termination of this Agreement. Buyer
reserves the right to proceed against third parties to enforce any
representations, warranties and covenants made by them for the benefit of
Seller.
Section 8.4 Severability. If any provision, or part
thereof, of this Agreement is invalid or unenforceable under any law, such
provision, or part thereof, is and will be totally ineffective to that extent,
but the remaining provisions, or part thereof, will be unaffected.
Section 8.5 Fees and Expenses. Each of the parties hereto
shall pay all legal fees and expenses incurred by it in connection with the
negotiation, preparation, execution and delivery of this Agreement. Seller
shall pay all reasonable legal fees and expenses incurred by Buyer as may from
time to time be incurred by Buyer in connection with any enforcement of any
obligation of the Seller under this Agreement. All such fees and expenses to be
paid by Seller shall be promptly paid upon receipt of an invoice therefor.
Notwithstanding anything to the contrary herein contained, in any action at
law, in equity, arbitration or otherwise between the parties in relation to
this Agreement or any transaction contemplated hereby or any Loan or other
instrument or agreement required or purchased or sold hereunder or thereunder,
the non-prevailing party, in addition to any other sums which such party shall
be required to pay pursuant to the terms and conditions of this Agreement, at
law, in equity, arbitration or otherwise, shall also be required to pay to the
prevailing party all costs and expenses of such litigation, including
reasonable attorney fees.
Section 8.6 Waivers. No waiver of any term, provision or
condition of this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or construed as a further or continuing
waiver of any such term, provision or condition, or of any other term,
provision or condition of this Agreement.
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Section 8.7 Notices. Any notice or other communication in
this Agreement provided or permitted to be given by one party to the other must
be in writing and given by personal delivery or by depositing the same in the
United States mail (certified mail, return receipt requested), addressed to the
other party to be notified, postage prepaid. For purposes of notice, the
addresses of the parties shall be as follows:
BUYER: Sovereign Bank
000 Xxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxxxxxxx,
Senior Vice President
Copy to: Xxxxx X. Xxxxxxxxx,
Chief Legal Officer
SELLER: Mego Mortgage Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxx, President
Copy to: Xxxxxx Xxxxxxxx, Vice President
and Corporate Counsel
The above addresses may be changed from time to time by
written notice from one party to the other.
Section 8.8 Assignment. Seller may not and shall not assign
any of its rights or obligations hereunder. Any such attempted assignment shall
be null and void. The Buyer may not assign all or part of its rights hereunder;
provided, however, Buyer may assign all or part of its rights with respect to
any Loan or Pool of Loans Buyer has purchased.
Section 8.9 Captions. Paragraph or other headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
Section 8.10 Entire Agreement. This Agreement, the Exhibits
attached hereto and the documents referred to herein constitute the entire
agreement between the parties hereto with respect to the subject matter hereof,
and, other than the Participation Agreement between the parties dated as of the
date of this Agreement, there are no prior agreements, understandings,
restrictions, warranties or representations between the parties with respect
thereto.
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Section 8.11 Duration of This Agreement. This Agreement
shall continue in existence and effect until terminated as herein provided.
This Agreement shall continue notwithstanding transfers of the Loans by Buyer.
This Agreement shall terminate either: (i) 60 days after
the final payment or other liquidation of the last Loan or the disposition of
any Mortgaged Property with respect to the last Loan and the remittance of all
funds due hereunder; or (ii) the mutual consent of Seller and Buyer in writing.
Section 8.12 Governing Law; Consent to Jurisdiction; Waiver
of Jury Trial. This Agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of Pennsylvania without regard to any
principles of conflict of laws.
Seller hereby agrees that any LEGAL ACTION OR PROCEEDING BY
IT OR AGAINST IT WITH RESPECT TO THIS AGREEMENT, OR ANY OF THE AGREEMENTS,
DOCUMENTS OR INSTRUMENTS DELIVERED IN CONNECTION WITH THIS AGREEMENT SHALL BE
BROUGHT IN THE COURTS OF THE COMMONWEALTH OF PENNSYLVANIA OR OF THE UNITED
STATES OF AMERICA FOR THE EASTERN DISTRICT OF PENNSYLVANIA unless Buyer elects
otherwise, and, by execution and delivery hereof, Seller accepts and consents
to, for itself and in respect to its property, generally and unconditionally,
the jurisdiction of the aforesaid courts and agrees that such jurisdiction
shall be exclusive, unless waived by Buyer in writing, with respect to any
action or proceeding brought by Seller against Buyer or by Buyer against
Seller. Nothing herein shall limit the right of Buyer to bring proceedings
against Seller in the courts of any other jurisdiction.
EACH OF THE SELLER AND THE BUYER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT, OR ANY OTHER DOCUMENTS AND INSTRUMENTS
EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE SELLER OR THE BUYER.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BUYER TO ENTER INTO THIS
AGREEMENT.
Section 8.13 Recordation of Agreement. To the extent
necessary under applicable law to protect the interests of Buyer, this
Agreement is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by Seller at Seller's expense upon direction of Buyer.
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Section 8.14 Endorsements. In the event that the remedies
or other terms outlined in this Agreement conflict with the terms of any,
endorsement by Seller of any Note evidencing a Loan purchased by Buyer from
Seller, including, but not limited to, an endorsement stating that the
assignment of the Note is without recourse, the remedies and terms of this
Agreement shall govern and control.
Section 8.15 Reproduction of Documents. This Agreement and
all documents relating thereto, including, without limitation, (i) consents,
waivers and modifications which may hereafter be executed, (ii) documents
received by any part at the closing, and (iii) financial statements,
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, optical storage, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
Section 8.16 Sale and Security Interest. It is the
intention of the parties to this Agreement that the conveyance of Seller's
right, title and interest in and to the Loans pursuant to this Agreement shall
constitute a sale and not a pledge. If the conveyance of the Loans from the
Seller to the Trustee is characterized as a pledge, it is the intention of the
parties to this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Seller shall be deemed to have
granted to the Buyer a first priority security interest in all of Seller's
right, title and interest in, to and under the Loans, all other rights relating
to and payments made in respect to the Loans in the related Pool, and all
proceeds thereof to secure payment of the obligations of the Seller herein.
accordingly, Seller will cooperate with Buyer and take such actions as are
reasonably required by Buyer to perfect Buyer's security interest in the Loans
and related assets.
Section 8.17 Excess Servicing Fee. Subject to the
provisions of Section 5.1 and Section 3.5 of this Agreement, Buyer shall pay to
Seller the Excess Servicing Fee with respect to each Pool of Loans within two
Business Days after the applicable Remittance Date. Seller's right to receive
the Excess Servicing Fee does not, and shall not be deemed to, constitute an
interest in any Loan or Pool of Loans. Such right of the Seller to be paid the
Excess Servicing Fee is solely a contractual obligation of the Buyer to the
Seller.
Section 8.18 Further Assurances. Each party shall use its
reasonable efforts to perform such other duties, furnish such reports, and
execute such other documents and provide such other and further assurances in
connection with this Agreement as the other party from time to time may
reasonably request. The requesting party shall bear all reasonable
out-of-pocket costs in connection with such actions.
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Section 8.19 Clean up Call. The Seller may, at its option,
effect an early termination of a Pool of Loans on or after any Remittance Date
on which the aggregate Stated Principal Balance of a Pool is less than 10% of
the Funding Date Principal Balance of such Pool. Seller shall effect such
termination by repurchasing from Buyer all of the remaining Loans in such Pool
at the Repurchase Price. Upon 10 Business Days written notice received from
Seller, Buyer shall take such actions reasonably necessary to transfer such
Loans to Seller upon receipt of the Repurchase Price in immediately available
funds.
Section 8.20 Servicer is Third Party Beneficiary. Servicer
is an express third party beneficiary of the representation of Seller set forth
in Section 4.1(n) and the covenant of Buyer contained in Section 6.2(c) hereof.
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the parties have executed this
Agreement on the date first above written:
SOVEREIGN BANK
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
--------------------------------------
Title: Senior Vice President
--------------------------------------
MEGO MORTGAGE CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
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COMMONWEALTH OF PENNSYLVANIA :
:ss
COUNTY OF BERKS :
The foregoing instrument was acknowledged before me this
_______ day of June, 1998, by _____________________, a ___________________ of
and on behalf of Sovereign Bank, a federal savings bank, who is ( ) personally
known to me, or who has produced __________________________ as identification.
----------------------------------------------
Notary Public in and for the State and County
aforesaid.
Commission No.:
-------------------------------
My Commission expires:
------------------------
Print Notary Name:
(Notary Seal)
----------------------------------------------
STATE OF_________________ :
:ss
COUNTY OF _______________ :
The foregoing instrument was acknowledged before me this
_______ day of _____________, 199___, by __________________, as the
______________ of and on behalf of ______________________, a
___________________ [corporation] [limited partnership] [partnership] [limited
liability company], who is ( ) personally known to me, or who has ( )
produced ______________________ as identification.
----------------------------------------------
Notary Public in and for the State and County
aforesaid.
Commission No.:
-------------------------------
My Commission expires:
------------------------
Print Notary Name:
(Notary Seal)
----------------------------------------------
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