Qualifying Mortgage Loans In order for a mortgage loan to be a Qualifying Loan it must meet all of the following criteria, which must be confirmed by the lender: • The collateral securing the mortgage loan is owner-occupied and the owner’s primary residence; and • The mortgagor has a first priority lien on the collateral; and • Either the borrower is at least 60 days delinquent or a default is reasonably foreseeable. Modification Process The lender shall undertake a review of its mortgage loan portfolio to identify Qualifying Loans. For each Qualifying Loan, the lender shall determine the net present value of the modified loan and, if it will exceed the net present value of the foreclosed collateral upon disposition, then the Qualifying Loan shall be modified so as to reduce the borrower’s monthly DTI Ratio to no more than 31% at the time of the modification. To achieve this, the lender shall use a combination of interest rate reduction, term extension and principal forbearance, as necessary. The borrower’s monthly DTI Ratio shall be a percentage calculated by dividing the borrower’s monthly income by the borrower’s monthly housing payment (including principal, interest, taxes and insurance). For these purposes, (1) the borrower’s monthly income shall be the amount of the borrower’s (along with any co-borrowers’) documented and verified gross monthly income, and (2) the borrower’s monthly housing payment shall be the amount required to pay monthly principal and interest plus one-twelfth of the then current annual amount required to pay real property taxes and homeowner’s insurance with respect to the collateral. In order to calculate the monthly principal payment, the lender shall capitalize to the outstanding principal balance of the Qualifying Loan the amount of all delinquent interest, delinquent taxes, past due insurance premiums, third party fees and (without duplication) escrow advances (such amount, the “Capitalized Balance”). In order to achieve the goal of reducing the DTI Ratio to 31%, the lender shall take the following steps in the following order of priority with respect to each Qualifying Loan:
Sale of Receivables (a) The Seller sells and assigns, without recourse (except as provided in this Agreement), to the Buyer the following property on and as of the dates specified below:
(i) on the first Closing Date, (A) all of its right, title and interest in, to and under each Sold Receivable originated in each Initial Account and all Related Security with respect to such Sold Receivables owned by the Seller at the close of business on the Cutoff Date and (B) all monies due or to become due and all amounts received with respect to any of the foregoing and all proceeds (including “proceeds,” as defined in the UCC) and Recoveries thereof;
(ii) on the applicable Addition Date, (A) all of its right, title and interest in, to and under each Sold Receivable originated in each Additional Account and all Related Security with respect to such Sold Receivables owned by the Seller at the close of business on the applicable Additional Cutoff Date, and (B) all monies due or to become due and all amounts received with respect to any of the foregoing and all proceeds (including “proceeds,” as defined in the UCC) and Recoveries thereof; and
(iii) on each Sale Date, (A) all of its right, title and interest in, to and under each Sold Receivable originated in each Account on such Sale Date and all Related Security with respect to such Sold Receivable owned by the Seller at the close of business on the applicable Sale Date and not previously sold to the Buyer pursuant to this Agreement and (B) all monies due or to become due and all amounts received with respect to any of the foregoing and all proceeds (including “proceeds,” as defined in the UCC) and Recoveries thereof.
(b) The foregoing sales, and any subsequent sales, do not constitute, and are not intended to result in, the creation, or an assumption by the Buyer, of any obligation of the Servicer, the Seller, Ford or any other Person in connection with the Accounts or the related Receivables or under any related agreement or instrument, including any obligation to any Dealers or Ford. The foregoing sales are not sales of the Accounts but rather are sales of the Sold Receivables originated in the Accounts.
(c) In connection with the foregoing sales, the Seller will record and file, at its own expense, a financing statement on form UCC-1 or any other applicable form (and continuation statements when applicable) with respect to the Sold Receivables sold by the Seller, for the sale, for UCC purposes, of “tangible chattel paper,” “payment intangibles,” “general intangibles” or “accounts” (each as defined in the UCC), meeting the requirements of Applicable Law in such manner and in such jurisdictions as are necessary to perfect the sale and assignment, for UCC purposes, of the Sold Receivables and the Related Security to the Buyer, and to deliver a file-stamped copy of such financing statements or other evidence of such filing to the Buyer on or before the first Closing Date, in the case of the Initial Accounts, and (if any additional filing is necessary) the applicable Addition Date, in the case of Additional Accounts. The Buyer is under no obligation whatsoever to file such financing statement, or a continuation statement to such financing statement, or to make any other filing under Applicable Law in connection with such sales.
(d) The Seller and the Buyer intend that all transfers of Sold Receivables under this Agreement constitute sales of such Sold Receivables and not transfers of such Sold Receivables as security for a loan. However, if the transfers of the Sold Receivables under this Agreement were to be characterized as transfers of security for a loan and not as sales, then (i) the Seller will have Granted, and Grants, to the Buyer a security interest in each Sold Receivable and the Related Security, whether now owned or hereafter acquired, and all monies due or to become due and all amounts received with respect to any of the foregoing and all proceeds (including “proceeds,” as defined in the UCC) and Recoveries thereof and (ii) this Agreement constitutes a security agreement.
(e) On or before the first Closing Date, in the case of the Initial Accounts, and on or before the applicable Addition Date, in the case of Additional Accounts, the Seller will, at its own expense:
(i) indicate in its computer files that the Sold Receivables and the Related Security have been (A) sold and assigned to the Buyer pursuant to this Agreement, (B) sold and assigned by the Buyer to the Issuer pursuant to the Sale and Servicing Agreement and (C) pledged by the Issuer to the Indenture Trustee for the benefit of the Secured Parties pursuant to the Indenture and the Indenture Supplements;
(ii) in the case of the Initial Accounts, deliver to the Buyer the Initial Account Schedule; and
(iii) in the case of Additional Accounts, deliver to the Buyer an Additional Account Schedule.
(f) The Account Schedule, as amended, supplemented or otherwise modified from time to time, will be marked as Schedule 1 to this Agreement and is incorporated into and made a part of this Agreement.
(g) The purchase price for the Sold Receivables sold pursuant to this Agreement will be equal to the principal amount of the Sold Receivables, or such other price as may be agreed to by the Buyer and the Seller at the time of acquisition by the Buyer. The purchase price will not be materially less favorable than prices for transactions of a generally similar character at the time of the acquisition, taking into account the quality of such Sold Receivables the Seller’s cost of originating such Sold Receivables and a reasonable return on such costs, and other pertinent factors; provided that such consideration will in no event be less than reasonably equivalent value therefor. The Depositor and the Buyer each represents and warrants to the other that the amount of cash paid by the Depositor on any Sale Date, together with the increase in the value in the Buyer’s capital in the Depositor, is equal to the fair market value of the Sold Receivables sold on such Sale Date.
(h) Notwithstanding anything in this Agreement or in the other Transaction Documents to the contrary, in originating the Receivables, the Seller acts solely in its individual capacity and not in the capacity of agent or nominee of the Issuer. Furthermore, in connection with all sales of Sold Receivables by the Seller to the Buyer under this Agreement, the Seller is under no obligation, and does not intend, to inform the related Dealers of such sales by the Seller to the Buyer or of the transfer thereof by the Buyer to the Issuer under the Sale and Servicing Agreement or of the pledge thereof by the Issuer to the Indenture Trustee under the Indenture.
