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EXHIBIT 6(g)
MORTGAGE LOAN
PURCHASE AND SALE AGREEMENT
LIFE BANK
Purchaser
AUSTIN FUNDING CORP.
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Seller
Dated as of February 22, 1999
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MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
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This MORTGAGE LOAN PURCHASE AND SALE AGREEMENT (this "Agreement") is made and
entered into as of February 22, 1999, by and between LIFE BANK ("Purchaser")
and Austin Funding Corp. ("Seller").
WITNESSETH:
WHEREAS, Seller desires to sell, from time to time to Purchaser, and Purchaser
desires to purchase, from time to time from Seller, mortgage loans on the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Purchaser and Seller agree as
follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following capitalized terms have the
respective meanings set forth below.
APPRAISED VALUE: The value set forth in an appraisal made in connection
with the origination of the related Mortgage Loan as the
value of the Mortgaged Property.
ASSIGNMENT
OF MORTGAGE: An assignment of the Mortgage, notice of transfer of
equivalent instrument in recordable form, sufficient
under the laws of the jurisdiction wherein the related
Mortgaged Property is located to reflect the sale of the
Mortgage to Purchaser, which assignment, notice of
transfer or equivalent instrument may be in the form of
one or more blanket assignments covering the Mortgage
Loans secured by Mortgaged Properties located in the same
jurisdiction, if permitted by law.
CLOSING DATE: The date or dates on which Purchaser from time to time
shall purchase, and Seller from time to time shall sell,
Mortgage Loans.
CUT-OFF DATE: The first day of the month in which the related Closing
Date occurs.
DUE DATE: The day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.
ESCROW PAYMENTS: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water
rates, sewer rents, municipal charges, mortgage insurance
premiums, fire and hazard insurance premiums, condominium
charges, and any other payments required to be escrowed
by the Mortgagor (or requested by the Mortgagor) with the
mortgagee pursuant to the Mortgage or any other document.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FNMA: The Federal National Mortgage Association, or any
successor thereto.
FNMA GUIDES: The FNMA Seller's Guide and the FNMA Servicer's Guide and
all amendments or additions thereto.
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MANUAL: Purchaser's Correspondent Seller Guide, as amended from
time to time.
MONTHLY PAYMENT: The scheduled monthly payment of principal and interest
on a Mortgage Loan.
MORTGAGE: The mortgage, deed of trust or other security instrument
securing a Mortgage Note, which creates a valid first or
second lien on an unsubordinated estate in fee simple or
leasehold estate in real property securing the Mortgage
Note.
MORTGAGE FILE: All documents now held, or subsequently acquired by
Seller relating to a Mortgage Loan.
MORTGAGE
INTEREST RATE: The annual rate interest borne on a Mortgage Note, which
shall be adjusted from time to time with respect to
adjustable rate Mortgage Loans.
MORTGAGE LOAN: An individual Mortgage Loan which is the subject of this
Agreement, which Mortgage Loan includes without
limitation the Mortgage File, the Monthly Payments, and
all other rights, benefits, proceeds and obligations
arising from or in connection with such Mortgage Loan,
excluding repurchased mortgage loans.
MORTGAGE NOTE: The note and any modifications or other evidence of the
indebtedness of a Mortgage secured by a Mortgage.
MORTGAGED
PROPERTY: The real property securing repayment of the debt
evidenced by a Mortgage Note.
MORTGAGOR: The obligor on a Mortgage Note.
PMI OR PRIMARY
INSURANCE
POLICY: A policy of primary mortgage guaranty insurance issued by
a Qualified Insurer.
PROGRAM
REQUIREMENTS: Purchaser's requirements (sometimes referred to by
Purchaser as "individual program parameters/guidelines",
as amended from time to time, for each type of loan which
Purchaser is willing to purchase under this Agreement.
PURCHASE PRICE: The price paid on the related Closing Date by Purchaser
to Seller in exchange for the Mortgage Loans purchased on
such Closing Date as calculated in Section 4 of this
Agreement.
QUALIFIED INSURER: An insurance company duly qualified as such under laws of
the state in which the related Mortgage Property is
located, duly authorized and licensed in such state to
transact the applicable insurance business and to write
the insurance provided, as described in the Manual.
REPURCHASE PRICE: With respect to any Mortgage Loan, a price equal to (i)
the greater of (a) the principal portion of the Purchase
Price and (b) the outstanding principal balance of the
Mortgage Loan as of the Cut-Off Date; less (ii) any
payments of principal received by Purchaser; plus (iii)
interest at the Mortgage Interest Rate from the last date
through which interest has been paid to Purchaser to the
date of repurchase; plus (iv) any premium (amount paid
above par) originally paid to Seller by Purchaser; plus
(v) any other expenses incurred by Purchaser with respect
to such Mortgage Loan as a result of a breach of a Seller
representation, warranty or covenant with respect to such
Mortgage Loan.
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SECTION 2. PURCHASE AND SALE OF MORTGAGE LOANS
From time to time, Seller may sell to Purchaser, and Purchaser may
purchase from Seller, one or more Mortgage Loans in accordance with the
procedures and on the terms and conditions set forth in the Manual, the
related Program Requirements and this Agreement.
SECTION 3. DELIVERY AND REVIEW OF LOAN DOCUMENTATION
With respect to each Mortgage Loan proposed to be sold to Purchaser by
Seller, Seller shall deliver to Purchaser loan documentation in accordance
with the procedures and requirements set forth in the Manual and the
related Program Requirements. Purchaser may, at its option and without
notice to Seller, purchase Mortgage Loans without a partial or complete
review of the loan documentation. Purchaser's review or failure to review
the loan documentation or failure to conduct any partial or complete
review shall not affect Purchaser's right to demand repurchase of a
Mortgage Loan or other relief as provided in this Agreement.
SECTION 4. PURCHASE PRICE
The Purchase Price for each Mortgage Loan shall be (i) the percentage of
par (including any premium) agreed upon by Purchaser and Seller in
accordance with the procedures set forth In the Manual and as shown in the
daily Correspondent Pricing publication, multiplied by the outstanding
principal balance, as of the related Cut-Off Date, of the Mortgage Loan,
after application of scheduled payments of principal due on or before the
related Cut-Off Date whether or not collected; plus (ii) interest on such
principal balance at the related Mortgage Interest Rate from the related
Cut-Off Date to the day prior to the related Closing Date, inclusive.
SECTION 5. PAYMENT COLLECTION TRANSITION PROCEDURES
Purchaser shall be entitled to (i) all scheduled principal due after the
related Cut-Off Date, (ii) all other recoveries of principal collected
after the related Cut-Off Date (provided, however, that all scheduled
payments of principal due on or before the related Cut-Off Date and
collected by Seller after the related Cut-Off Date shall belong to the
Seller), and (iii) all payments of interest on the Mortgage Loans (minus
that portion of any such payment which is allocable to the period prior to
the related Cut-Off Date). The outstanding principal balance of each
Mortgage Loan as of the related Cut-Off Date is determined after
application of payments of principal due on or before the related Cut-Off
Date whether or not collected. Therefore, payments of scheduled principal
and interest prepaid for a due date beyond the related Cut-off Date shall
not be applied to the principal balance as of the related Cut-Off Date.
Such prepaid amounts shall be the property of Purchaser and shall be paid
to Purchaser on the related Closing Date. All payments of principal and
interest due after the related Cut-Off Date and received by Seller shall
be promptly paid to Purchaser.
SECTION 6. CONVEYANCE OF MORTGAGE LOANS
As of each Closing Date, Seller hereby transfers, and assigns and conveys
to Purchaser the related Mortgage Loans, Mortgage Files and all other
rights and interests related hereto. The sale of each Mortgage Loan shall
be reflected on Seller's balance sheet and other financial statements as a
sale of assets by Seller.
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SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER;
REMEDIES FOR BREACH
7.01 REPRESENTATIONS AND WARRANTIES RESPECTING SELLER
Seller represents, warrants and covenants to Purchaser that as of
each Closing Date or as of such date specifically provided herein:
(a) DUE ORGANIZATIONAL AND AUTHORITY
Seller is a corporation duly organized, validly existing and
in good standing under the laws of the state of its
incorporation and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and
in good standing in each state wherein it owns or leases any
material properties or where a Mortgaged Property is located,
if the laws of such state require licensing or qualification
in order to conduct business of the type conducted by Seller.
In each case except to the extent the failure to be licensed
or qualified would not materially and adversely affect
Seller's ability to perform in accordance with this Agreement,
and in any event Seller is an compliance with the laws of any
such state to the extent necessary to ensure the
enforceability of the related Mortgage Loans; Seller has full
corporate power, authority and legal right to transfer and
convey the Mortgage Loans and to execute and deliver this
Agreement and to perform in accordance with the terms of this
Agreement; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by Seller and the
consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement and all
agreements contemplated hereby evidence the valid, legal,
binding and enforceable obligation of Seller, regardless of
whether such enforcement is sought in a proceeding in equity
or at law, and all requisite corporate action has been taken
by Seller to make this Agreement and all agreements
contemplated hereby valid and binding upon the Seller in
accordance with their terms.
(b) ORDINARY COURSE OF BUSINESS
The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of 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 of any similar statutory
provisions in effect in any applicable jurisdiction.
(c) NO CONFLICTS
Neither the execution and delivery of this Agreement, the
acquisition of the Mortgage Loans by Seller, the sale of the
Mortgage Loans to Purchaser 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 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 result
in the creation or imposition of any lien, charge or
encumbrance that would have an adverse affect upon any of its
properties pursuant to the terms of any mortgage, contract,
deed or trust or other instrument or impair the ability of
Purchaser to realize on the Mortgage Loans, impair the value
of the Mortgage Loans, or impair the ability of Purchaser to
realize the full benefit of insurance benefits relating to the
Mortgage Loans.
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(d) ABILITY TO SELL/SERVICE
Seller is duly qualified, licensed, registered and otherwise
authorized under all applicable federal, state and local laws
and regulations and is in good standing to endorse, originate,
sell and to service mortgage loans in the jurisdiction where
the Mortgaged Properties are located. Seller warrants no event
has occurred, including but not limited to a change in
insurance coverage which would make Seller unable to comply
with all eligibility requirements.
(e) ABILITY TO PERFORM; SOLVENCY
Seller does not believe, nor does it have any reason to cause
to believe, that it cannot perform each and every covenant
contained in this Agreement. Seller is solvent and the sale of
the Mortgage Loans will not cause Seller to become insolvent.
The sale of the Mortgage Loans is not undertaken with the
intent to hinder, delay or defraud any of Seller's creditors.
(f) NO LITIGATION PENDING
There is no action, suit, proceeding or investigation pending
or threatened against Seller which, either in any one instance
or in the aggregate, may result in any material adverse change
in the business operations, financial condition, properties or
assets of Seller, or in any conducted, or in any material
impairment of the right or ability of Seller to carry on its
business substantially as now conducted, or in any material
liability on the part of Seller, or which would draw into
question the validity of this Agreement or the Mortgage Loans
or of any action taken or to be taken in connection with the
obligations of Seller contemplated herein, or which would be
likely to impair materially the ability of Seller to perform
under the terms of this Agreement.
(g) NO CONSENT REQUIRED
No consent, approval, authorization or order of, or
registration or filing with, or notice to any court or
governmental agency or body is required for the execution,
delivery and performance by Seller of or compliance by Seller
with this Agreement of the sale of the Mortgage Loans or the
consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained
prior to the Closing Date.
(h) SELECTION PROCESS
The Mortgage Loans were selected from among the outstanding
one-to-four family mortgage loans in Seller's portfolio as to
which the representations and warranties set forth in
Subsection 7.02 could be made and such selection was not made
in a manner so as to affect adversely the interests of
Purchaser.
(i) NO UNTRUE INFORMATION
Neither this Agreement nor any statement, report, form, or
other document furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains
any untrue statement of fact or omits to state a fact
necessary to make the statements contained therein not
misleading.
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(j) FINANCIAL STATEMENTS
Seller has delivered to Purchaser financial statements as to
its last two complete fiscal years and any later quarter ended
more than 90 days prior to the execution of this Agreement.
All such financial statements fairly present the pertinent
results of operations and changes in financial position for
each of such periods and the financial position at the end of
each such period of Seller and its subsidiaries and have been
prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods
involved, except as set forth in the notes thereto. There has
been no change in the business, operations, financial
conditions, properties or assets of Seller since the date of
Seller's financial statements that would have a material
adverse effect on its ability to perform its obligations under
this Agreement.
(k) SALE TREATMENT
Seller has been advised by its independent certified public
accountants that under generally accepted accounting
principles the transfer of the Mortgage Loans may be treated
as a sale on the books and records of Seller.
(1) REASONABLE PURCHASE PRICE
The consideration received by Seller upon the sale of the
Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage
Loans.
7.02 REPRESENTATION AND WARRANTIES REGARDING INDIVIDUAL MORTGAGE LOANS
As to each Mortgage Loan, Seller shall be deemed to make
representations and warranties to Purchaser as of each related
Closing Date as follows:
(a) UNDERWRITING; COMPLIANCE WITH MANUAL
Each Mortgage Loan was originated and underwritten in
accordance with the Manual and related Program Requirements,
and each Mortgage Loan and Mortgage File has been delivered in
accordance with and is in full compliance with the Manual and
related Program Requirements.
(b) PAYMENTS CURRENT
All payments required to be made up to the Closing Date for
the Mortgage Loan under the terms of the Mortgage Note have
been made and credited. No payment required under the Mortgage
Loan is delinquent nor has any payment under the Mortgage Loan
been delinquent at any time since the origination of the
Mortgage Loan, unless disclosed in writing to and approved by
Purchaser prior to Closing Date.
(c) NO OUTSTANDING CHARGES
There are no defaults in complying with the terms of the
Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing
have been paid, or, if required by the Mortgage or applicable
law, an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and
which has been assessed but is not yet due and payable.
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Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than
the Mortgagor, directly or indirectly, for the payment of any
amount required under the Mortgage Loan, except for interest
accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage Loan proceeds, whichever is
earlier, to the date which precedes by one month the Due Date
of the first installment of principal and interest.
(d) ORIGINAL TERMS UNMODIFIED; NO DEFENSES
The terms of the Mortgage Loan Note and Mortgage have not been
impaired, altered or modified in any respect, and no Mortgagor
has been released, in whole or in part except as disclosed in
writing to and approved by Purchaser prior to Closing Date.
The Mortgage Loan is not subject to any right of rescission
set-off, counterclaim or defense, including without limitation
the defense of usury, nor will the operation of any of the
terms of the Mortgage Note or the Mortgage, or the exercise of
any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable, in whole or in part, no such right of
rescission, set-off, counterclaim or defense has been asserted
with respect thereto, and no Mortgagor was a debtor, in any
state or federal bankruptcy or insolvency proceeding at the
time the Mortgage Loan was originated.
(e) HAZARD INSURANCE
All buildings or other improvements upon the Mortgaged
Property are insured by a generally acceptable insurer against
loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where the Mortgaged
Property is located pursuant to insurance policies conforming
to the requirements of the Manual. If upon origination of the
Mortgage Loan, the Mortgage Property was in an area identified
in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards (and such flood
insurance was required by federal regulation and such flood
insurance has been made available), a flood insurance policy
meeting the requirements of the current guidelines of the
Federal Insurance Administration and the Manual. All
individual insurance policies contain a standard mortgagee
clause naming Seller and its successors and assigns as
mortgagee, and all premiums thereon have been paid. The
Mortgage obligates the Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense,
and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at such
Mortgagor's cost and expense, and to seek reimbursement
therefor from the Mortgagor. Where required by state law or
regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance, provided
the policy is not a "master" or "blanket" hazard insurance
policy covering the common facilities of a planned unit
development. Each insurance policy required hereunder 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 Purchaser upon the consummation of the
transactions contemplated by this Agreement. Seller has not
engaged in, and has no knowledge of the Mortgagor's 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 including, without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value
of any kind has been or will be received, retained or realized
by any attorney, firm or other person or entity, and no such
unlawful items have been received, retained or realized by
Seller.
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(f) COMPLIANCE WITH APPLICABLE LAWS
Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to the
Mortgage Loan have been complied with, and Seller shall
maintain in its possession, available for Purchaser's
inspection, and shall deliver to Purchaser in the Mortgage
File, evidence of compliance with all such requirements, to
the extent compliance requires preparation of one or more
documents.
(g) NO SATISFACTION OF MORTGAGE
The Mortgage has not been satisfied, canceled, 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 or
rescission. Seller has not waived the performance by the
Mortgagor of any action, if the Mortgagor's failure to perform
such action would cause the Mortgage Loan to be in default,
nor has Seller waived any default resulting from any action or
inaction by the Mortgagor.
(h) VALID FIRST OR SECOND LIEN.
The Mortgage is a valid, subsisting and enforceable first or
second lien on the Mortgaged Property, including all buildings
on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning
systems located in or annexed to such buildings, and all
additions, alterations and replacements made at any time with
respect to the foregoing. The lien of the Mortgage is subject
to:
(1) the lien of current real property taxes and assessments
not yet due and payable;
(2) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the
date of recording acceptable to prudent mortgage lending
institutions generally and specifically referred to in the
lender's title Insurance policy delivered to the
originator of the Mortgage Loan and (a) referred to or
otherwise considered in the appraisal made for the
originator of the Mortgage Loan or (b) which do not
adversely affect the Appraised Value of the Mortgaged
Property set forth in such appraisal; and
(3) other matters to which like properties are commonly
subject which do not 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.
Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, subsisting
and enforceable first or second lien and first or second
priority security interest an the property described
therein and Seller has full right to sell and assign the
same to Purchaser.
(i) VALIDITY OF MORTGAGE DOCUMENTS
This Mortgage Note and the Mortgage and any other agreement
executed and delivered by a Mortgagor in connection with a
Mortgage Loan are genuine, and each is the legal, valid and
binding obligation of the maker thereof enforceable in
accordance with its terms.
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All parties to the Mortgage Note, the Mortgage and any other
such related agreement had legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note,
the Mortgage and any such agreement. 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. Seller has reviewed all of the documents
constituting the Mortgage File and has made such inquiries as
it deems necessary to make and confirm the accuracy of the
representations set forth herein.
(j) FULL DISBURSEMENT OF PROCEEDS
Except as permitted by the Manual and the related Program
Requirements, the proceeds of the Mortgage Loan have been
fully disbursed and there is no requirement for future
advances thereunder, and any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied
with. All costs, fees and expenses incurred in making or
closing the Mortgage Loan and the recording of the Mortgage or
closing the Mortgage Loan and the recording of the Mortgage
were paid, and the Mortgagor is not entitled to any refunds of
any amounts paid or due under the Mortgage Note or Mortgage.
(k) OWNERSHIP
Seller is the sole owner of record and holder of the Mortgage
Loan. Upon receipt of the Purchase Price therefor, the
Mortgage Loan shall not be assigned or pledged, and Seller has
good, indefeasible and marketable title thereto, and has full
right to transfer and sell the Mortgage Loan to Purchaser free
and clear of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest, and has full
right and authority subject to no interest or participation
of, or agreement with, any other party, to sell and assign
each Mortgage Loan pursuant to this Agreement, and following
the sale of each Mortgage Loan, Purchaser will own such
Mortgage Loans free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or
security interest. Seller intends to relinquish all rights to
possess, control and monitor the Mortgage Loan. After the
Closing Date, Seller will have no right to modify or alter the
terms of sale of the Mortgage Loan and Seller will have no
obligation or right to repurchase the Mortgage Loan, except as
provided in Section 7.03 hereof.
(l) DOING BUSINESS
All parties which have had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such
interest, were) (i) in compliance with any and all applicable
licensing requirements of the laws of the state wherein the
Mortgaged Property is located, (ii) organized under the laws
of such state, (iii) qualified to do business in such state,
(iv) federal savings and loan association or national banks
having principal offices in such state, or (v) not doing
business in such state.
(m) PRIVATE MORTGAGE INSURANCE (PMI) POLICY
All provisions of any PMI Policy have been and are being
complied with, such policy is valid and remains in full force
and effect, and all premiums due thereunder have been paid. No
action, inaction, or event has occurred and no state of facts
exists that has, or will result in the exclusion from, denial
of, or defense to coverage.
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If the Mortgage Loan provides for negative amortization the
potential of negative amortization, the PMI Policy insures any
increase in the outstanding principal balance over the
original balance of the Mortgage Note. Any Mortgage Loan
subject to a PMI Policy obligates the Mortgagor thereunder to
maintain the PMI Policy and to pay all premiums and charges in
connection therewith. The Mortgage Interest Rate for each such
Mortgage Loan Is net of any such insurance premium.
(n) TITLE INSURANCE
The Mortgage Loan is covered by either (i) an attorney's
opinion of title and abstract of title, the form and substance
of which is acceptable to prudent mortgage lending
institutions making mortgage loans in the area where the
Mortgaged Property is located or (ii) an ALTA lender's title
insurance policy or other generally acceptable to FNMA, or
(iii) an abbreviated title insurance policy as described in
the Manual and each such title insurance policy is issued by a
title insurer acceptable to FNMA and is qualified to do
business in the jurisdiction where the Mortgaged Property is
located, insuring Seller, its successors and assigns, as to
the first or second priority lien of the Mortgage in the
original principal amount of the Mortgage Loan (or to the
extent a Mortgage Note provides for negative amortization, the
maximum amount of negative amortization in accordance with the
Mortgage), subject only to the exceptions contained in clauses
(1), (2) and (3) of paragraph (h) of this Section 7.02, and,
in the case of adjustable rate Mortgage Loans, against any
loss by reason of the invalidity or unenforceability of the
lien resulting from the provisions of the Mortgage providing
for adjustment to the Mortgage Interest Rate and Monthly
Payment. Where required by state law or regulation, the
Mortgagor has been given the opportunity to choose the carrier
of the required mortgage title insurance. Seller, its
successors and assigns, are the sole insureds of such lender's
title insurance policy, and such lender's title insurance
policy is valid and remains in full force and effect. No
claims have been made under such lender's title insurance
policy, and no prior holder of the Mortgage, including Seller,
has done, by act or omission, anything which would impair the
coverage of such lender's title insurance policy, including
without limitation, no unlawful fee, commission, kickback or
other unlawful compensation or value of any kind has been or
will be received, retained or realized by any attorney, firm
or other person or entity, and no such unlawful items have
been received, retained or realized by Seller.
(o) NO DEFAULTS
There is no default, breach, violation or event of
acceleration existing under the Mortgage 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
neither Seller nor its predecessors have waived any default,
breach, violation or event of acceleration.
(p) NO MECHANICS' LIENS
There are no mechanics' or similar liens or claims which have
been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens)
affecting the related Mortgaged Property which are or may be
liens prior to, or equal or coordinate with, the lien of the
related Mortgage.
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(q) LOCATION OF IMPROVEMENTS; NO ENCROACHMENTS
All improvements which were considered in determining the
Appraised Value of (he Mortgage Property lie wholly within the
boundaries and building restrictions lines of (he Mortgaged
Property and no improvements on adjoining properties encroach
upon the Mortgaged Property. No improvement located on or
being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation.
(r) ORIGINATION; PAYMENT TERMS
The Mortgage Loan was originated by a mortgagee or by a
savings and loan association, a savings bank, a commercial
bank or similar banking institution or other lender which is
supervised and examined by a federal or state authority. The
Mortgage Note is payable on the first day of each month in
equal monthly installments of principal and interest (which
Installments of interest. with respect to adjustable rate
Mortgage Loans, are subject to change due to the adjustments
to the Mortgage Interest Rate on each interest rate adjustment
date, with interest calculated and payable in arrears)
sufficient to amortize the Mortgage Loan fully by the stated
maturity date, over an original term of not more than thirty
years from commencement of amortization. There is no negative
amortization or balloon payment terms, except as permitted by
the Manual and the related Program Requirements.
(s) CUSTOMARY PROVISIONS
The Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder
thereof adequate for the realization against the 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. Upon default by a Mortgagor on a Mortgage Loan
and foreclosure on, or trustee's sale of, the Mortgaged
Property pursuant to the proper procedures, (he holder of (he
Mortgage Loan will be able to deliver good and merchantable
title to the Mortgaged Property. There is no homestead or
other exemption available to a Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's
sale or the right to foreclose the Mortgage.
(t) CONFORMANCE WITH PURCHASER STANDARDS
Each Mortgage Loan was underwritten in accordance with the
Manual, and the Mortgage Note and Mortgage are on forms
acceptable to Purchaser, and Seller has not made any
representations to a Mortgagor that are inconsistent with the
mortgage instruments used.
(u) OCCUPANCY AND USE OF THE MORTGAGED PROPERTY
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. No portion of
the Mortgaged Property is used for commercial purposes.
(v) NO ADDITIONAL COLLATERAL
The Mortgage Note Is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and
(he security Interest of any applicable security agreement or
chattel mortgage referred to in (h) above.
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(w) DEEDS OF TRUST
In the event the Mortgage constitutes a deed of trust, a
trustee. authorized and 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 Purchaser to the trustee under
the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor.
(x) ACCEPTABLE INVESTMENT
Based on prudent underwriting practices, Seller is not aware
of any circumstances or conditions with respect to the
Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can reasonably be expected to
cause private or institutional investors to regard the
Mortgage Loan as an unacceptable investment, cause (he
Mortgage Loan to become delinquent, or adversely affect the
value or marketability of the Mortgage Loan.
(y) DUE-ON-SALE
The Mortgage contains an enforceable provision for (tie
acceleration of the payment of the unpaid principal balance of
the Mortgage Loan in the event that the Mortgaged Property Is
sold or transferred without the prior written consent of the
mortgagee thereunder.
(z) NO BUY DOWN PROVISIONS; NO GRADUATED PAYMENTS OR
CONTINGENT INTERESTS
Except as permitted by the Manual and the related Program
Requirements, the Mortgage Loan does not contain provisions
pursuant to which Monthly Payments are paid or partially paid
with funds deposited in any separate account established by
Seller, the Mortgagor or anyone on behalf of the Mortgagor, or
paid by any source other than the Mortgagor nor does it
contain any other similar provisions which may constitute a
"Buy down" provision. The Mortgage Loan is not a graduated
payment mortgage loan and the Mortgage Loan does not have a
shared appreciation or other contingent interest feature.
(aa) CONSOLIDATION OF FUTURE ADVANCES
Any future advances made prior to the Cut-Off Date have been
consolidated with the outstanding principal amount secured by
the Mortgage. and the secured principal amount, as
consolidated, bears a single interest rate and single
repayment term. The lien of the Mortgage securing the
consolidated principal amount is expressly Insured as having
first or second lien priority by a title insurance policy, an
endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence acceptable to
FNMA and Purchaser. The consolidated principal amount does not
exceed the original principal amount of the Mortgage Loan.
(bb) MORTGAGE PROPERTY UNDAMAGED
The Mortgage Property is undamaged by waste, fire. earthquake
or earth movement, windstorm, flood, tornado or other casualty
so as to affect adversely the value of the Mortgage Property
as security for the Mortgage Loan or the use for which the
premises were intended and each Mortgaged Property is In good
repair. There have not been any condemnation proceeding with
respect to the Mortgaged Property, and Seller has no knowledge
of any such proceedings In the future.
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(cc) SERVICING; ESCROW DEPOSITS; INTEREST RATE ADJUSTMENTS
The Mortgage Loans have been serviced in accordance with all
applicable state and federal laws and with the FNMA Guides.
With respect to escrow deposits and Escrow Payments, all such
payments have or will be transferred to Purchaser in
accordance with the Manual and there exist no deficiencies in
connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments
have been collected in full compliance with state and federal
law. If required under the Mortgage and not prohibited by
applicable law, an escrow of funds has been established in an
amount sufficient to pay for every item that remains unpaid
and has been assessed but is not yet due and payable. No
escrow deposits or Escrow Payments or other charges or
payments due Seller have been capitalized under the Mortgage
or the Mortgage Note. All Mortgage Interest Rate adjustments
have been made in strict compliance with state and federal
law and the terms of the related Mortgage Note. Any interest
required to be paid pursuant to state and local law has been
properly paid and credited.
(dd) NO VIOLATION OF ENVIRONMENTAL LAWS
There is no pending action or proceeding directly involving
the Mortgaged Property in which compliance with any
environmental law, rule or regulation is an issue, and nothing
further remains to be done to satisfy in full requirements of
each such law, rule or regulation constituting a prerequisite
to residential use and enjoyment of said property.
(ee) SOLDIERS' AND SAILORS' CIVIL RELIEF ACT
The Mortgagor has not notified Seller and Seller has no
knowledge of any relief requested by the Mortgagor under the
Soldiers' and Sailors' Civil Relief Act of 1990.
(ff) LEASEHOLDS
With respect to any Mortgage Loan secured by a leasehold
estate, the Mortgage Loan satisfies the FNMA requirements for
leasehold mortgages including, without limitation, that the
lease is valid and in good standing, all rents and other
payments that have become due under the lease have been paid
properly, the lessee is not in default under any provision of
the lease, the lease does not provide for its forfeiture or
termination for any reason except the non-payment of lease
rents, and the maturity date of the lease is at least ten
years after the maturity date of the Mortgage.
(gg) NO MISREPRESENTATION
Neither the Mortgagor nor any other party has made any
misrepresentation or committed fraud in connection with the
origination of the Mortgage Loan or the sale of the Mortgage
Loan to Purchaser.
7.03 REMEDIES FOR BREACH OF REPRESENTATIONS AND WARRANTIES
(a) REPURCHASE
It is understood and agreed that the representation and
warranties set forth in Sections 7.01 and 7.02 and in the
Manual shall survive the sale of the Mortgage Loans to
Purchaser and shall inure to the benefit of Purchaser,
notwithstanding any restrictive or qualified endorsement on
any Mortgage Note or Assignment of Mortgage or the examination
or failure to examine any Mortgage File. Upon discovery by
either Seller or Purchaser of a breach of any of the foregoing
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representation and warranties which adversely affects the
value of the Mortgage Loans or the interest of the Purchaser
(or which adversely affects the interests of the Purchaser in
the related Mortgage Loan in the case of a representation and
warranty relating to a particular Mortgage Loan), the party
discovering such breach shall give prompt written notice to
the other. Within 30 days of the earlier discovery by or
notice to Seller of any such breach of a representation or
warranty, the Seller shall use its best efforts promptly to
cure such breach in all material respects, and if such breach
cannot be cured, Seller shall, at Purchaser's option,
repurchase the Mortgage Loan adversely affected by such
breach at the Repurchase Price. In the event that a breach
shall involve any representation or warranty set forth in
Section 7.01 and such breach cannot be cured within 30 days
of the earlier of either discovery by or notice to Seller of
such breach, all of the Mortgage Loans adversely affected by
such breach shall, at the Purchaser's option, be repurchased
by Seller at the Repurchase Price. At the time of repurchase
of a Mortgage Loan, Purchaser and Seller shall arrange for
the reassignment of such Mortgage Loan to Seller and the
delivery to Seller of any documents held by Purchaser
relating to such Mortgage Loan.
(b) REMEDY FOR NON-DELIVERY OF DOCUMENTS
In the event the Seller is required to deliver to the
Purchaser any document related to a purchased loan pursuant
hereto and Seller fails to deliver such document in the proper
form, Purchaser shall notify Seller of the breach. and Seller
shall have thirty (30) days from the date of notice to cure
the breach or such longer period as agreed upon by the parties
hereto in writing. If Seller has not cured the breach within
the thirty-day cure period or such longer period as agreed
upon by the parties hereto in writing, Seller shall within ten
(10) business days repurchase the loan upon Purchaser's or its
representatives' demand at the Repurchase Price. Any loan
repurchased from Purchaser pursuant to this Section shall be
without recourse, representation or warranty,
Notwithstanding the above, Seller shall have sixty (60) days
to deliver to Purchaser a final title insurance policy if
Purchaser purchases a loan in reliance on a marked-up title
insurance commitment, title insurance binder or certificate.
If Seller fails to deliver said policy, Seller shall within
ten (10) business days repurchase the loan upon Purchaser's or
its representatives' demand at the repurchase price.
(c) INDEMNIFICATION
In addition to such repurchase obligation, Seller shall
indemnity Purchaser 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 representations or warranties contained
in this Agreement. It is understood and agreed that the
obligations of Seller set forth in this Section 7.03 to cure
or repurchase a defective Mortgage Loan and to indemnify
Purchaser as provided in this Section 7.03 constitute the sole
remedies of Purchaser respecting a breach of the foregoing
representations and warranties.
7.04 REMEDY FOR EARLY PAYMENT DELINQUENCY OR DEFAULT
Purchaser shall have the right to demand repurchase, at the
Repurchase Price by the Seller within ten (10) business days, any
Mortgage Loan as to which one of the following conditions apply:
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o Any failure by the Borrower to make any of the first
(1) payment due to the Purchaser or Purchaser's
Servicer in their entirety by the close of business on
the date on which the following payment becomes due;
regardless of whether such payment is subsequently paid
by borrower, such loan shall be considered a "30-Day
delinquent loan."
o Foreclosure proceedings have been initiated based on a
delinquency which began with the second or third
Monthly Payments due to the Purchaser or Purchaser's
Services. Such loan shall be considered an "Early
Payment Default" Notwithstanding the preceding
sentence. Seller shall not be obligated to repurchase a
Mortgage Loan solely because an "Early Payment Default"
exists with respect thereto if such Early Payment
Default" was caused directly by a "Mitigating Cause", A
"Mitigating Cause" is an event or circumstance that (i)
occurred after the Closing Date for such Mortgage Loan,
(ii) was beyond the control of Seller and any other
person or entity involved in the origination of the
Mortgage Loan, and (iii) at the time the Mortgage Loan
was funded, was unforeseeable by Seller, any other
person or entity involved in the origination of the
Mortgage Loan and the related Mortgagor. All three
conditions listed in clauses (i) - (iii) in the
preceding sentence must be satisfied for an event or
circumstance to be a "Mitigating Cause" repurchase of
Early Payment Delinquencies.
SECTION 8. POST SETTLEMENT ADJUSTMENTS
In the event that a premium is paid by the Purchaser to Seller on a
loan and such loan is prepaid in full by the borrower within (12)
twelve months the date of purchase, the Seller, within (ten) 10
business days, refund to Purchaser in Immediately available funds,
the appropriate percentage specified below, the premium paid by the
Purchaser to the Seller:
DAYS FOLLOWING SETTLEMENT. PREMIUM REBATE
--------------------------- --------------
0-30 days 12/12
31 -60 days 11/12
61-90 days 10/12
91-120 days 9/12
121-150 days 8/12
151-180 days 7/12
181-210 days 6/12
211-240 days 6/12
241-270 days 4/12
271-300 days 3/12
301-330 days 2/12
331-360 days 1/12
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In the event the borrower prepays a mortgage prior to maturity, and
such mortgage contains a prepayment provision which is enforceable
under all applicable laws, then the premium rebate payable will be
reduced by the amount of the prepayment fee received by purchaser.
Setter agrees to pay purchaser the difference between the
prepayment fee paid by the borrower add the premium rebate if any.
Seller shall not be liable or responsible to Purchaser for
repayment of any premium rebates to any Mortgage Loan which is
refinanced by Purchaser, and subsidiary, affiliate, parent
organization of or successor institution into which Purchaser may
be merged or consolidated.
SECTION 9. CLOSING
The closing for each Mortgage Loan shall take place on the related
Closing Date and shall be subject to each of the following
conditions:
(a) All of the representations and warranties of Seller under this
Agreement shall be true and correct as of the related Closing Date
and no event shall have occurred which, with notice or the passage
of time, would constitute a default under this Agreement; and
(b) All other terms and conditions of this Agreement, the Manual and
the related Program Requirements shall have been complied with.
Subject to the foregoing conditions. Purchaser shall pay to Seller
on the related Closing Date the Purchase Price, by wire transfer of
immediately available funds to the account designated by Seller.
SECTION 10. CLOSING DOCUMENTS
Concurrently with execution of this Agreement, Seller has delivered to
Purchaser a Seller's Officer's Certificate, in the form of Exhibit A
hereto, including all attachments thereto. Seller shall update such
document from time to time as Purchaser may reasonably request.
SECTION 11. COSTS
Purchaser shall pay the legal fees and expenses of its attorneys. All
other costs and expenses incurred in connection with the transfer and
delivery of the Mortgage Loans, including recording fees, fees for title
policy endorsements and continuations and Seller's attorneys fees shall be
paid by Seller.
SECTION 12. TRANSFER OF SERVICING
Seller shall transfer to Purchaser servicing responsibility with respect
to Mortgage Loans purchased by Purchaser in accordance with procedures set
forth in the Manual.
SECTION 13. MERGER OR CONSOLIDATION OF SELLER
Seller will keep in full effect its existence, rights and franchises as a
corporation under the laws of the state of its incorporation except as
permitted herein, and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to
perform its duties under this Agreement. Any entity into which Seller may
be merged or consolidated, or any corporation resulting from any merger,
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conversion or consolidation to which Seller shall be a party, or any
entity succeeding to the business of Seller, shall be the successor of
Seller hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided, however, that the successor or
surviving entity shall be an institution whose deposits are insured by
FDIC or a company whose business is the origination and servicing of
mortgage loans, unless otherwise consented to by Purchaser, which consent
shall not be unreasonably withheld.
SECTION 14. TERMINATION
Either party may terminate this Agreement with respect to future
transactions effective upon receipt of notice of such termination. Such
termination shall not affect Mortgage Loans which Seller has offered to
sell and Purchaser has agreed to purchase in accordance with the
procedures set forth in the Manual.
SECTION 15. GENERAL PROVISIONS
15.01 NOTICES
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given when received
by the other party at its address as follows:
(i) if to Purchaser:
LIFE BANK
00000 Xxxxxxxx Xxxxxx, Xxxxx X
Xxxxxxxxx, XX 00000-0000
Attn. Xxxxxx X. X. Xxxxxxxxx
(000) 000-0000
(000) 000-0000
(ii) if to Seller
Austin Funding Corp.
X.X. Xxx 00
Xxxx, XX. 00000
Attn. Xxxxxxx Dell
15.02 SEVERABILITY
Any part, provision, representation or warranty of this Agreement
which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such
jurisdiction, to the extent of such prohibition or unenforceability
in any jurisdiction without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15.03 COUNTERPARTS
This Agreement may be executed in any number of counterparts. Each
counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
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15.04 GOVERNING LAW
The agreement shall be construed in Accordance with the laws of the
State of California and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with the State
of California, except to the extent preempted by federal law.
15.05 INTENTION OF THE PARTIES
It is the intention of the parties that Purchaser is purchasing,
and Seller is selling the Mortgage Loans and not a debt instrument
of Seller or another security. Accordingly, the parties hereto each
intend to treat the transaction for federal income tax purposes as
a sale by Seller, and a purchase by Purchaser, of the Mortgage
Loans.
15.06 PLACE OF CONTRACTING
Seller and Purchaser each agree that this Agreement has been
entered into and is to be performed within the State of California
and the County of Riverside.
15.07 ATTORNEYS' FEES AND COSTS
In the event an action, including but not limited to the
commencement of civil litigation, is commenced to enforce any of
the provisions of this Agreement or to obtain declaratory relief in
connection with any of the provisions of this Agreement or the
mortgages that are purchased by Purchaser as a result this
Agreement, the prevailing party shall be entitled to recover
attorneys' fees, costs and expenses incurred therein.
15.09 PLACE OF CONTRACTING
Seller and Purchaser each agree that this Agreement has been
entered into and is to be performed within the State of California
and the County of Riverside.
15.10 SUCCESSORS AND ASSIGNS; ASSIGNMENT OF AGREEMENT
This Agreement shall bind and inure to the benefit of and be
enforceable by Seller and Purchaser and the respective successors
and assigns of Seller and Purchaser. This Agreement shall not be
assigned, pledged or hypothecated by Seller to a third party
without the consent of Purchaser.
15.11 WAIVERS
No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the
party against whom such waiver or modification is sought to be
enforced.
15.12 BROKERS
Each party shall indemnify, defend and hold harmless the other from
and against any claims for broker's or finder's fees based upon
actions or alleged actions for the indemnifying party.
15.13 AMENDMENT OF MANUAL AND PROGRAM REQUIREMENTS
Purchaser may, from time to time in its sole discretion, amend the
Manual or any Program Requirements, provided that no such amendment
shall affect any Mortgage Loan which Purchaser has, prior to
Seller's receipt of notification of such amendment, agreed to
purchase pursuant to the Manual and Program Requirements in effect
prior to such amendment.
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15.14 FURTHER AGREEMENTS
Seller and Purchaser each agree to execute and deliver to the other
such reasonable and appropriate additional documents, instruments
or agreements as may be necessary or appropriate to effectuate the
purpose of this Agreement.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to
be signed hereto by their respective officers thereunto duly authorized as
of the date first above written.
LIFE BANK
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
(Seller) AUSTIN FUNDING CORPORATION
By: /s/ XXXXX XXXXXXXX
-------------------------------------------
Name: Xxxxx XxXxxxxx
-----------------------------------------
Title: President
----------------------------------------
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