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MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
CALIFORNIA FEDERAL PREFERRED CAPITAL CORPORATION
Purchaser
CALIFORNIA FEDERAL BANK, A FEDERAL SAVINGS BANK
Seller
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Dated as of January 24, 1997
Residential Mortgage Loans
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TABLE OF CONTENTS
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SECTION 1. Definitions................................................... 1
SECTION 2. Agreement to Purchase Initial Portfolio....................... 12
SECTION 3. Subsequent Purchases.......................................... 12
Section 4. Payment of Purchase Price..................................... 12
SECTION 5. Examination of Servicing Files................................ 13
SECTION 6. Conveyance from Seller to Purchaser........................... 14
Subsection 6.1 Possession of Servicing Files.................... 14
Subsection 6.2 Books and Records................................ 14
Subsection 6.3 Delivery of Mortgage Loan Documents.............. 14
SECTION 7. Servicing of the Mortgage Loans............................... 15
SECTION 8. Representations, Warranties and Covenants
of the Seller; Remedies for Breach.......................... 16
Subsection 8.1 Representations and Warranties
Regarding the Seller........................... 16
Subsection 8.2 Representations and Warranties
Regarding Individual Mortgage Loans............ 18
Subsection 8.3 Remedies for Breach of Representations
and Warranties................................. 31
SECTION 9. Closing...................................................... 33
SECTION 10. Closing Documents............................................ 34
SECTION 11. Costs........................................................ 35
SECTION 12. Merger or Consolidation of the Seller........................ 35
SECTION 13. Mandatory Delivery; Grant of Security Interest............... 36
SECTION 14. Notices...................................................... 36
SECTION 15. Severability Clause.......................................... 37
SECTION 16. Counterparts................................................. 37
SECTION 17. Governing Law................................................ 38
SECTION 18. Intention of the Parties..................................... 38
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SECTION 19. Successors and Assigns; Assignment of
Purchase Agreement......................................... 38
SECTION 20. Waivers...................................................... 38
SECTION 21. Entire Agreement; Amendment.................................. 39
SECTION 22. General Interpretive Principles.............................. 39
SECTION 23. Reproduction of Documents.................................... 39
SECTION 24. Further Agreements........................................... 40
SECTION 25. Recordation of Assignments of Mortgage....................... 40
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EXHIBITS
EXHIBIT A CONTENTS OF MORTGAGE FILES
EXHIBIT B FORM OF SERVICING AGREEMENT
EXHIBIT C FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT E FORM OF SERVICER'S OFFICER'S CERTIFICATE
EXHIBIT F FORM OF OPINION OF COUNSEL TO THE SERVICER
EXHIBIT G FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT H FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT I INITIAL PORTFOLIO MORTGAGE LOAN SCHEDULE
EXHIBIT J FORM OF COMMITMENT LETTER
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MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
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This MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT (the
"Agreement"), dated as of January 24, 1997, by and between California Federal
Preferred Capital Corporation, a Maryland corporation, having an office at 000
Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (the "Purchaser"), and
California Federal Bank, A Federal Savings Bank, a stock savings bank organized
under the laws of the United States of America, having an office at 000 Xxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 (the "Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, from time to time, certain
Mortgage Loans (as defined herein) on a servicing released basis as described
herein, and which shall be delivered as whole loans; and
WHEREAS, each Mortgage Loan, at the time it is sold by Seller to
Purchaser pursuant to this Agreement, will be secured by a mortgage, deed of
trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the related Mortgage Loan
Schedule or a pledge of stock allocated to a dwelling unit in a residential
cooperative housing corporation; and
WHEREAS, the Purchaser and the Seller wish to prescribe the manner of
the conveyance, servicing and control of the Mortgage Loans.
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, the Purchaser and the Seller
agree as follows:
SECTION 1. Definitions.
For purposes of this Agreement and any Commitment Letter (as defined
herein), the following capitalized terms shall have the respective meanings set
forth below. Other capitalized terms used in this Agreement and not defined
herein shall have the respective meanings set forth in the Servicing Agreement
attached as Exhibit B hereto.
"Accepted Servicing Practices" means, with respect to any Mortgage
Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the
same type as such Mortgage Loan in the jurisdiction where the related Mortgaged
Property is located.
"Act" means The National Housing Act, as amended from time to time.
"Adjustable Rate Mortgage Loan" means any individual Mortgage Loan
(including a Convertible Mortgage Loan prior to the conversion date) purchased
pursuant to this Agreement the Mortgage Interest Rate of which adjusts
periodically.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" means this Mortgage Loan Purchase and Warranties
Agreement, all amendments hereof and supplements hereto and each Commitment
Letter hereunder.
"ALTA" means The American Land Title Association or any successor
thereto.
"Ancillary Income" means all late charges, assumption fees, escrow
account benefits, reinstatement fees, prepayment penalties, ARM conversion
fees, optional insurance commissions and similar types of fees arising from or
in connection with any Mortgage and collected from the related Mortgagor, to
the extent not otherwise payable to the Mortgagor under applicable law or
pursuant to the terms of the related Mortgage Note.
"Appraised Value" means 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" means an assignment of the Mortgage delivered
in blank, 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 the sale of the Mortgage Loan to the Purchaser.
"Business Day" means any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking and savings and loan institutions in the State of
California or the State of Maryland are authorized or obligated by law or
executive order to be closed.
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"Classified" is used herein generally to describe a Mortgage Loan
which is troubled or deemed substandard or doubtful with respect to
collectability.
"Closing Date" means the Initial Closing Date and any other date on
which the parties hereto shall agree to close a sale of Mortgage Loans
hereunder as set forth in a duly executed Commitment Letter.
"Code" means Internal Revenue Code of 1986, as amended.
"Commitment Letter" means a letter agreement executed by the Purchaser
and the Seller providing for the purchase and sale of Mortgage Loans and
substantially in the form of Exhibit J hereto.
"Condemnation Proceeds" means 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, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan documents.
"Convertible Mortgage Loan" means any individual Mortgage Loan
purchased pursuant to this Agreement which contains a provision whereby the
Mortgagor is permitted to convert the Mortgage Loan to a fixed rate Mortgage
Loan in accordance with the terms of the related Mortgage Note.
"Co-op Lease" means, with respect to a Co-op Loan, the lease with
respect to the dwelling unit occupied by the Mortgagor and relating to the
stock allocated to the related dwelling unit.
"Co-op Loan" means a Mortgage Loan secured by the pledge of stock
allocated to a dwelling unit in a residential cooperative housing corporation
and a collateral assignment of the related Co-op Lease.
"Co-op Project" means the real property owned by the residential
cooperative housing association upon which the cooperative unit which is the
subject of the Co-op Lease is situated, including the common areas associated
therewith,
"Custodial Account" means the separate trust account created and
maintained pursuant to Section 2.4 of the Servicing Agreement.
"Custodian's File" means, with respect to each Mortgage Loan, the
documents pertaining to such Mortgage Loan set forth in Section I of Exhibit A
hereto and any additional documents required to be included or added to the
Custodian's File pursuant to this Agreement.
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"Cut-off Date" means the Initial Cut-off Date and any other date as of
which the principal balance of Mortgage Loans will be determined for purposes
of calculating the Purchase Price for the purchase and sale of Mortgage Loans,
which date shall be set forth in the related Commitment Letter.
"Deleted Mortgage Loan" means a Mortgage Loan that is repurchased or
replaced with a Qualified Substitute Mortgage Loan by the Seller in accordance
with the terms of this Agreement.
"Due Date" means the day of the month on which the Monthly Payment is
due on a Mortgage Loan, exclusive of any days of grace.
"Escrow Account" means the separate account created and maintained
pursuant to Section 2.6 of the Servicing Agreement with respect to each
Mortgage Loan, as specified in the Servicing Agreement.
"Escrow Payments" means, 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, flood insurance premiums, earthquake insurance premiums,
condominium charges, and, to the extent that such items can become a lien on
the Mortgaged Property superior to the Mortgage, if unpaid, and are reportable
by the Servicer's tax lien reporting service, any other payments required to be
escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any
other document.
"FHA" means the Federal Housing Administration, an agency within the
United States Department of Housing and Urban Development, or any successor
thereto and including the Federal Housing Commissioner and the Secretary of
Housing and Urban Development where appropriate under the FHA Regulations.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or any
successor thereto.
"FNMA" means the Federal National Mortgage Association, or any
successor thereto.
"FNMC" means First Nationwide Mortgage Corporation, a Delaware
corporation and a wholly owned subsidiary of the Seller.
"Gross Margin" means, with respect to each Adjustable Rate Mortgage
Loan, the applicable fixed percentage which, when added to the applicable
Index, calculates to the current Mortgage Interest Rate paid by the related
Mortgagor (without taking into account any Lifetime Rate Caps, Periodic Rate
Caps, minimum interest rates or Payment Adjustment Caps).
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"HUD" means the Department of Housing and Urban Development, or any
federal agency or official thereof which may from time to time succeed to the
functions thereof with regard to FHA mortgage insurance. The term "HUD," for
purposes of this Agreement, is also deemed to include subdivisions thereof such
as the FHA and Government National Mortgage Association.
"Independent Directors" means the members of the Board of Directors of
the Purchaser who are not current employees or officers of the Purchaser or
current employees, officers or directors of the Seller or any affiliate of the
Seller. In addition, any members of the Board of Directors of the Purchaser
elected by holders of the preferred stock of the Purchaser, including the
Series A Preferred Shares, will be deemed to be "Independent Directors" for
purposes of approving actions requiring the approval of a majority of the
Independent Directors.
"Index" means, with respect to each Interest Rate Adjustment Date as
indicated on the Mortgage Loan Schedule (i) either the weekly auction average
(investment) rate on U.S. Treasury securities with a six-month maturity or the
cumulative average over a 26-week period of the weekly auction average rate on
United States Treasury securities with a six-month maturity, in each case as
made available by the Federal Reserve Board in Statistical Release H.15 (519);
(ii) the weekly average yield on United States Treasury securities adjusted to
a constant maturity of one year, as made available by the Federal Reserve Board
in Statistical Release H.15 (519); (iii) the then-current monthly weighted
average cost of funds for savings institutions in Arizona, California and
Nevada that are members of the Eleventh Federal Home Loan Bank District; or
(iv) such other index as is indicated on the Mortgage Loan Schedule.
"Initial Closing Date" means January 31, 1997, or such other date as
the parties hereto may mutually agree.
"Initial Cut-off Date" means January 1, 1997.
"Initial Portfolio Mortgage Loan Schedule" means the schedule of
Mortgage Loans to be purchased by the Purchaser on the Initial Closing Date,
attached hereto as Exhibit I.
"Initial Portfolio Purchase Price" means the amount set forth in
Section 2 of this Agreement.
"Insurance Proceeds" means, with respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property, to the extent not required to be released to a Mortgagor in
accordance with the terms of the related Mortgage Loan documents.
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"Interest Rate Adjustment Date" means, with respect to each Adjustable
Rate Mortgage Loan, the date, specified in the related Mortgage Note and
Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
"Lifetime Rate Cap" means the provision of each Mortgage Note related
to an Adjustable Rate Mortgage Loan which provides for an absolute maximum
Mortgage Interest Rate thereunder as set forth on the related Mortgage Loan
Schedule.
"Liquidation Proceeds" means cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or
assignment of such Mortgage Loan, trustee's sale, foreclosure sale or
otherwise, or the sale of the related Mortgaged Property if the Mortgaged
Property is acquired in satisfaction of such Mortgage Loan.
"Loan-to-Value Ratio" or "LTV" means, with respect to any Mortgage
Loan, the ratio (expressed as a percentage) of the original principal amount of
the Mortgage Loan to the lesser of (a) the Appraised Value of the related
Mortgaged Property at origination and (b) if the Mortgage Loan was made to
finance the acquisition of the related Mortgaged Property, the purchase price
of the Mortgaged Property.
"Monthly Payment" means the scheduled monthly payment of principal and
interest on a Mortgage Loan.
"Mortgage" means (i) with respect to a Mortgage Loan that is not a
Co-op Loan, the mortgage, deed of trust or other instrument securing a Mortgage
Note, which creates a first lien on an unsubordinated estate in fee simple in
real property securing the Mortgage Note; except that with respect to real
property located in jurisdictions in which the use of leasehold estates for
residential properties is a widely accepted practice, the mortgage, deed of
trust or other instrument securing the Mortgage Note may secure and create a
first lien upon a leasehold estate of the Mortgagor and (ii) with respect to a
Co-op Loan, the security agreement creating a security interest in the stock
allocated to a dwelling unit in a residential cooperative housing corporation
that was pledged to secure such Co-op Loan and the related Co-op Lease.
"Mortgage File" means, with respect to each Mortgage Loan, the
Custodian's File and the Servicing File.
"Mortgage Interest Rate" means the annual rate of interest borne on a
Mortgage Note, which, in the case of an Adjustable Rate Mortgage Loan, shall be
adjusted from time to time, with respect to each Mortgage Loan.
"Mortgage Interest Rate Cap" means, with respect to
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each Adjustable Rate Mortgage Loan, the limit on each Mortgage Interest Rate
adjustment as set forth in the related Mortgage Note.
"Mortgage Loan" means an individual residential first mortgage loan
which is the subject of this Agreement, each Mortgage Loan originally sold
pursuant to this Agreement being identified on Exhibit I attached hereto, and
each Mortgage Loan sold pursuant to a Commitment Letter being identified on the
applicable Mortgage Loan Schedule, and each of which Mortgage Loans includes or
shall include, without limitation, the Mortgage File, the Monthly Payments,
Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds, and all other rights, benefits, proceeds and obligations arising from
or in connection with such Mortgage Loan, excluding replaced or repurchased
mortgage loans.
"Mortgage Loan Schedule" means (a)the Initial Portfolio Mortgage Loan
Schedule attached hereto as Exhibit I and (b) any schedule of Mortgage Loans in
similar form attached to and constituting part of a duly executed Commitment
Letter, in each case setting forth at least the following information with
respect to each Mortgage Loan set forth thereon: (1) the Seller's Mortgage Loan
identifying number; (2) the Mortgagor's name; (3) the street address of the
Mortgaged Property including the city, state and zip code; (4) a code
indicating whether the Mortgaged Property is owner-occupied, second home or
investor owned; (5) the property type, i.e., the type of residential units
constituting the Mortgaged Property; (6) the original months to maturity; (7)
the remaining months to maturity from the applicable 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 Mortgage Interest Rate as of the
applicable Cut-off Date; (10) the stated maturity date; (11) the amount of the
Monthly Payment as of the applicable Cut-off Date; (12) the original principal
amount of the Mortgage Loan; (13) the principal balance of the Mortgage Loan as
of the close of business on the applicable Cut-off Date, after deduction of
payments of principal due on or before such Cut-off Date whether or not
collected; (14) a code indicating the purpose of the loan (i.e., purchase, rate
and term refinance, equity take-out refinance); (15) a code indicating the
documentation style (i.e. full, alternative or reduced); (16) a code indicating
whether the Mortgage Loan is a Convertible Mortgage Loan; (17) the number of
times during the 12 month period preceding the applicable Closing Date that any
Monthly Payment has been received thirty or more days after its Due Date; (18)
the type of Mortgage Loan product, if any; (19) the first payment Due Date;
(19) the initial Mortgage Interest Rate; (20) the amount of the first Monthly
Payment; (21) the name of any Qualified Insurer with respect to a PMI Policy;
(22) the Servicing Fee Rate; and
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(23) a code indicating whether the Mortgagor has the option to extend the
Maturity Date of the Loan. With respect to any Adjustable Rate Mortgage Loan,
such schedule shall also set forth (1) the Interest Rate Adjustment Dates; (2)
the Gross Margin; (3) the Lifetime Rate Cap; (4) any Periodic Rate Caps; (5)
any minimum interest rate, if other than the Gross Margin; (6) the first
Interest Rate Adjustment Date after the applicable Cut-off Date; (7) any
Payment Adjustment Cap; (8) the first Payment Adjustment Date after the related
Cut-off Date; (9) whether such Mortgage Loan has the potential to negatively
amortize; and (10) the name of the applicable Index, in each case, under the
terms of the Mortgage Note. With respect to the Mortgage Loans in the aggregate
set forth thereon, each Mortgage Loan Schedule shall set forth the following
information, as of the applicable Cut-off Date: (1) the number of Mortgage
Loans; (2) the current aggregate outstanding principal balance of the Mortgage
Loans; (3) the weighted average Mortgage Interest Rate of the Mortgage Loans;
and (4) the weighted average maturity of the Mortgage Loans.
"Mortgage Note" means the note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.
"Mortgaged Property" means (i) with respect to a Mortgage Loan that is
not a Co-op Loan, the real property (or leasehold estate, if applicable)
securing repayment of the debt evidenced by a Mortgage Note and (ii) with
respect to a Co-op Loan, the dwelling unit that is the subject of the Co-op
Lease.
"Mortgagor" means the obligor on a Mortgage Note.
"Non-accrual Status" refers to Mortgage Loans that generally are 90
days or more past due in the payment of principal or interest.
"Officer's Certificate" means a certificate signed by the Chairman of
the Board or the Vice Chairman of the Board or a President or a Vice President
and by the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries of the Seller or FNMC, as the case may be, and delivered
to the Purchaser as required by this Agreement.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Seller, reasonably acceptable to the Purchaser.
"Payment Adjustment Cap" means, with respect to an Adjustable Rate
Mortgage Loan, the maximum amount of the related Monthly Payment as adjusted on
a given Payment Adjustment Date in accordance with the terms of the related
Mortgage Note.
"Payment Adjustment Date" means, with respect to each Adjustable Rate
Mortgage Loan, the date set forth in the related
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Mortgage Note on which the Monthly Payment is adjusted in accordance with the
terms of the Mortgage Note.
"Periodic Rate Cap" means the provision of each Mortgage Note related
to each Adjustable Rate Mortgage Loan which provides for an absolute maximum
amount by which the Mortgage Interest Rate therein may increase or decrease on
an Interest Rate Adjustment Date above or below the Mortgage Interest Rate
previously in effect as set forth on the applicable Mortgage Loan Schedule.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, limited liability company,
unincorporated organization, government or any agency or political subdivision
thereof.
"PMI Policy" or "Primary Insurance Policy" means a policy of primary
mortgage guaranty insurance issued by a Qualified Insurer.
"Prime Rate" means the prime rate announced to be in effect from time
to time, as published as the average rate in The Wall Street Journal (Northeast
edition).
"Principal Prepayment" means any payment or other recovery of
principal on a Mortgage Loan which is received in advance of its scheduled Due
Date, including any prepayment penalty or premium thereon and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
"Purchase Price" means the price to be paid on the applicable Closing
Date by the Purchaser to the Seller in consideration for the Mortgage Loans to
be purchased by the Purchaser on such Closing Date (including, without
limitation, the Initial Portfolio Purchase Price to be paid by Purchaser at the
Initial Closing) as set forth in this Agreement or a duly executed Commitment
Letter, as the case may be.
"Purchaser" means California Federal Preferred Capital Corporation or
its successor in interest or assigns or any successor to the Purchaser under
this Agreement as herein provided.
"Qualified Appraiser" means, with respect to a Mortgaged Property, an
appraiser who had no interest, direct or indirect in such Mortgaged Property or
in any loan made on the security thereof, and whose compensation is not
affected by the approval or disapproval of the Mortgage Loan, and such
appraiser and the appraisal made by such appraiser both satisfy the
requirements of Title XI of the Federal Institutions Reform,
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Recovery, and Enforcement Act of 1989 and the regulations promulgated
thereunder, all as in effect on the date the Mortgage Loan was originated.
"Qualified Insurer" means an insurance company duly qualified as such
under the laws of the states in which the Mortgaged Properties are located,
duly authorized and licensed in such states to transact the applicable
insurance business and to write the insurance provided and approved as an
insurer by FNMA with respect to primary mortgage insurance.
"Qualified Substitute Mortgage Loan" means a mortgage loan eligible to
be substituted by the Seller for a Deleted Mortgage Loan which must, on the
date of such substitution, (i) have an outstanding principal balance, after
deduction of all scheduled payments due in the month of substitution (or in the
case of a substitution of more than one mortgage loan for a Deleted Mortgage
Loan, an aggregate principal balance), not in excess of the outstanding
principal balance of the Deleted Mortgage Loan (the amount of any shortfall
will be deposited in the Custodial Account by the Seller in the month of
substitution); (ii) have a Mortgage Interest Rate not less than and not more
than 1.00% greater than the Mortgage Interest Rate of the Deleted Mortgage
Loan; (iii) have a remaining term to maturity not greater than and not more
than one year less than that of the Deleted Mortgage Loan; (iv) be of the same
type as the Deleted Mortgage Loan (i.e., Mortgage Loan with the same Mortgage
Interest Rate Caps or fixed rate); and (v) comply with each representation and
warranty (respecting individual Mortgage Loans) set forth in Section 8.2
hereof.
"Remittance Date" means the date specified in the Servicing Agreement
(with respect to each Mortgage Loan, as specified therein).
"Repurchase Price" means, with respect to any Mortgage Loan, a price
equal to (i) the unpaid principal balance of such Mortgage Loan plus (ii)
interest, net of Servicing Fees, on such unpaid principal balance of such
Mortgage Loan at the Mortgage Interest Rate from the last date through which
interest has been paid or advanced to the Purchaser to the date of repurchase,
less, in the case of any Mortgage Loan repurchased by the Servicer, any
unreimbursed advances in respect of such repurchased Mortgage Loan.
"RESPA" means Real Estate Settlement Procedures Act, as amended from
time to time.
"Security Instruments" means, with respect to a Co-op Loan, the
Mortgage, the stock certificates representing the stock allocated to the
cooperative unit that is the subject of the Co-op Lease, the stock power
associated with such stock
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certificates, the Co-op Lease, the collateral assignment of the Co-op Lease and
the recognition agreement.
"Seller" means California Federal Bank, A Federal Savings Bank, and
its successors in interest and assigns.
"Series A Preferred Shares" means the 91/8% Noncumulative Exchangeable
Preferred Stock, Series A, par value $.01 per share, of the Purchaser.
"Servicer" means FNMC.
"Servicing Agreement" means the agreement, attached as Exhibit B
hereto, to be entered into by the Purchaser and FNMC, as servicer, providing
for FNMC to service the Mortgage Loans as specified by the Servicing Agreement.
"Servicing Fee" means, with respect to each Mortgage Loan, the amount
of the annual fee the Purchaser shall pay to FNMC, which shall for a period of
one full month be equal to one-twelfth of the product of (a) the Servicing Fee
Rate and (b) the Stated Principal Balance of such Mortgage Loan. Such fee shall
be payable monthly, computed on the basis of the same principal amount and
period in respect of which any related interest payment on a Mortgage Loan is
computed, and shall be pro rated for any portion of a month during which the
Mortgage Loan is serviced by FNMC under the Servicing Agreement. The obligation
of the Purchaser to pay the Servicing Fee with respect to any Mortgage Loan is
limited to, and the Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds, to
the extent permitted by the Servicing Agreement) of the related Monthly Payment
collected by FNMC, or as otherwise provided under the Servicing Agreement. In
addition to the Servicing Fee, FNMC shall be entitled to retain all Ancillary
Income.
"Servicing Fee Rate" means, with respect to each Mortgage Loan
acquired on the Initial Closing Date, the rate specified in the applicable
Mortgage Loan Schedule with respect to such Mortgage Loan and with respect to
each Mortgage Loan subsequently purchased by the Purchaser, a rate per annum
between 0.25% and 0.50% as specified on the applicable Mortgage Loan Schedule.
"Servicing File" means, with respect to each Mortgage Loan, the files
retained by FNMC during the period in which FNMC is acting as servicer pursuant
to the Servicing Agreement, consisting of the documents set forth in Section II
of Exhibit A hereto pertaining to such Mortgage Loan and such other documents
held by the Servicer as is consistent with Accepted Servicing Practices.
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"Stated Principal Balance" means as to each Mortgage Loan and any date
of determination, (i) the principal balance of the Mortgage Loan as of the
applicable Cut-off Date after giving effect to payments of principal due on or
before such date, whether or not received, minus (ii) all amounts previously
received by the Purchaser with respect to the related Mortgage Loan
representing payments or recoveries of principal or advances in lieu thereof.
SECTION 2. Agreement to Purchase Initial Portfolio.
The Seller hereby agrees to sell, transfer, assign, set over and
convey to the Purchaser on the Initial Closing Date, without recourse, but
subject to the terms of this Agreement, all right, title and interest of the
Seller in and to the Mortgage Loans set forth on the Initial Portfolio Mortgage
Loan Schedule and the related Mortgage Files and all rights and obligations
arising under the documents contained therein. Mortgage Loans on the Initial
Portfolio Mortgage Loan Schedule shall have an aggregate principal balance on
the Initial Cut-off Date in an amount equal to $901,125,418 (assuming
application of payments of principal due on or before the Initial Cut-off Date
whether or not received), or in such other amount as agreed by the Purchaser
and the Seller as evidenced by the actual aggregate principal balance of the
Mortgage Loans accepted by the Purchaser on the Initial Closing Date.
The Initial Portfolio Purchase Price payable by the Purchaser in
consideration for the Mortgage Loans listed on the Initial Portfolio Mortgage
Loan Schedule shall be $898,665,067.22, or such other amount as agreed by the
Purchaser and the Seller as evidenced by the actual aggregate principal balance
of the Mortgage Loans accepted by the Purchaser on the Initial Closing Date.
SECTION 3. Subsequent Purchases.
From time to time, by executing a Commitment Letter substantially in
the form of Exhibit J hereto, the Seller shall sell, transfer, assign, set over
and convey to the Purchaser, without recourse, but subject to the terms of this
Agreement, and the Purchaser will purchase, all the right, title and interest
of the Seller, as of the applicable Closing Date, in and to the Mortgage Loans
set forth in the Mortgage Loan Schedule attached to such Commitment Letter, and
the Purchaser shall pay to Seller the Purchase Price set forth in such
Commitment Letter on such Closing Date.
SECTION 4. Payment of Purchase Price.
In addition to the applicable Purchase Price payable by Purchaser on
any Closing Date as described above, the Purchaser
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shall pay to the Seller, at each Closing, accrued interest on the initial
principal amount of the related Mortgage Loans at the weighted average Mortgage
Interest Rate of such Mortgage Loans, minus any amounts attributable to
Servicing Fees as provided in the Servicing Agreement from the applicable
Cut-off Date through the day prior to the applicable Closing Date, inclusive.
The Purchase Price plus accrued interest as set forth in the preceding
paragraph shall be paid by Purchaser on the applicable Closing Date by wire
transfer of immediately available funds.
The Purchaser shall, with respect to any Mortgage Loan purchased
hereunder or pursuant to a duly executed Commitment Letter, be entitled to (1)
all scheduled principal due after the applicable Cut-off Date, (2) all other
recoveries of principal collected on or after the applicable Cut-off Date
(other than scheduled payments of principal due on or before such Cut-off
Date), and (3) all payments of interest on the Mortgage Loans (net of
applicable Servicing Fees as provided in the Servicing Agreement) collected on
or after such Cut-off Date (other than that portion of any such payment which
is allocable to the period prior to such Cut-off Date). The outstanding
principal balance of each Mortgage Loan as of the applicable Cut-off Date is
determined after application of payments of principal due on or before such
Cut-off Date whether or not received, together with any unscheduled principal
prepayments received prior to such Cutoff Date; provided, however, that
payments of scheduled principal and interest prepaid for a Due Date beyond such
Cut-off Date shall not be applied to the principal balance as of such Cut-off
Date. Such prepaid amounts shall be the property of the Purchaser. Any such
prepaid amounts shall be deposited into the Custodial Account, which account is
established pursuant to the Servicing Agreement for the benefit of the
Purchaser for subsequent remittance to the Purchaser.
SECTION 5. Examination of Mortgage Files.
Prior to the date hereof or the date of any duly executed Commitment
Letter, as the case may be, the Seller has or shall have (a) delivered to the
Purchaser or its designee in escrow, for examination with respect to each
Mortgage Loan to be purchased, the related Mortgage File pertaining to each
Mortgage Loan, or (b) made the related Mortgage File available to the Purchaser
for examination at the Seller's offices or such other location as shall
otherwise be agreed upon by the Purchaser and the Seller. The fact that the
Purchaser or its designee has conducted or has failed to conduct any partial or
complete examination of any Mortgage Files shall not affect the Purchaser's (or
any of its successor's) rights to demand repurchase, substitution or other
relief as provided herein.
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SECTION 6. Conveyance from Seller to Purchaser.
Subsection 6.1 Possession of Servicing Files.
The Servicing Files relating to any Mortgage Loans purchased by
Purchaser hereunder or pursuant to a duly executed Commitment Letter shall be
delivered to or retained by FNMC, as the case may be, in accordance with the
terms of the Servicing Agreement and, as provided therein, shall be
appropriately identified in the computer system and/or books and records of
FNMC, as appropriate, to clearly reflect the sale of the related Mortgage Loan
to the Purchaser.
Subsection 6.2 Books and Records.
Record title to each Mortgage Loan as of the applicable Closing Date
shall be in the name of the Seller, FNMC or one of their affiliates, or the
Purchaser or one or more of its designees, as the Purchaser shall select.
Notwithstanding the foregoing, each Mortgage and related Mortgage Note shall be
possessed solely by the Purchaser or the appropriate designee of the Purchaser,
as the case may be. All rights arising out of the Mortgage Loans including, but
not limited to, all amounts received by the Seller or FNMC after the applicable
Cut-off Date on or in connection with a Mortgage Loan (other than amounts due
prior to the applicable Cut-off Date) shall be vested in the Purchaser or one
or more of its designees; provided, however, that all amounts received on or in
connection with a Mortgage Loan (other than amounts due prior to the applicable
Cut-off Date) shall be received and held by the Seller or FNMC in trust for the
benefit of the Purchaser or its designee, as the case may be, as the owner of
the Mortgage Loans pursuant to the terms of this Agreement.
The sale of each Mortgage Loan shall be reflected on the Seller's
balance sheet and other financial statements as a sale of assets by the Seller.
Subsection 6.3 Delivery of Custodian's File.
On or prior to each Closing Date, the Seller shall deliver and release
to the Purchaser or its designee the Custodian's File with respect to each
Mortgage Loan sold to the Purchaser on such Closing Date.
The Seller shall forward, or shall cause FNMC to forward, to the
Purchaser or its designee all original documents evidencing an assumption,
modification, consolidation, conversion or extension of any Mortgage Loan
entered into on or prior to the date hereof within 30 days of their execution,
provided, however, that the Seller shall provide, or shall cause FMNC to
provide, the Purchaser or its designee with a certified true copy of any
14
such document submitted for recordation within 30 days of its execution, and
shall promptly provide the original of any document submitted for recordation
or a copy of such document certified by the appropriate public recording office
to be a true and complete copy of the original within ninety (90) days of its
submission for recordation (provided, that with respect to assignments of the
Mortgages reflecting the assignment from the Seller to the Purchaser, one final
assignment shall be executed by Seller in blanket non-recordable form, and no
other forms of assignment of such Mortgages shall be executed or recorded
unless and until the Purchaser shall request execution of individual
Assignments of Mortgages pursuant to and in accordance with Section 25 hereof).
In the event that such original or copy of any document submitted for
recordation to the appropriate public recording office is not so delivered to
the Purchaser or its designee within 90 days following the Closing Date and in
the event that the Seller does not cure such failure within 30 days of
discovery or receipt of written notification of such failure from the
Purchaser, the related Mortgage Loan shall, upon the request of the Purchaser,
be repurchased by the Seller at the price and in the manner specified in
Subsection 8.3. The foregoing repurchase obligation shall not apply in the
event that the Seller cannot deliver, or cause to be delivered, such original
or copy of any document submitted for recordation to the appropriate public
recording office within the specified period due to a delay caused by the
recording office in the applicable jurisdiction; provided that the Seller shall
instead deliver, or cause to be delivered, a recording receipt of such
recording office or, if such recording receipt is not available, an officer's
certificate of a servicing officer of the Seller or FNMC, confirming that such
documents have been accepted for recording.
SECTION 7. Servicing of the Mortgage Loans.
All Mortgage Loans will be sold by the Seller to the Purchaser on a
servicing released basis.
The Purchaser shall retain FNMC as independent contract servicer of
the Mortgage Loans pursuant to and in accordance with the terms and conditions
contained in the Servicing Agreement. The Purchaser and FNMC shall execute the
Servicing Agreement on the Initial Closing Date in the form attached hereto as
Exhibit B.
Pursuant to the Servicing Agreement, FNMC shall service the Mortgage
Loans on behalf of the Purchaser and shall be entitled to the Servicing Fee and
any Ancillary Income with respect to each Mortgage Loan from the Closing Date
with respect to the sale and purchase thereof until the termination of the
Servicing Agreement with respect to such Mortgage Loan as set
15
forth in the Servicing Agreement. FNMC shall conduct such servicing in
accordance with the terms of the Servicing Agreement.
SECTION 8. Representations, Warranties and Covenants of the Seller;
Remedies for Breach.
Subsection 8.1 Representations and Warranties Regarding the Seller.
The Seller represents, warrants and covenants to the Purchaser that as
of the date hereof and as of each Closing Date:
(a) Due Organization and Authority; Enforceability. The Seller is
a stock savings bank duly organized, validly existing and in good standing
under the laws of the United States of America 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 the Seller, and in any event the Seller is in compliance with the
laws of any such state to the extent necessary to ensure the enforceability of
the related Mortgage Loan in accordance with the terms of this Agreement; the
Seller has the full corporate power, authority and legal right to hold,
transfer and convey the Mortgage Loans and to execute and deliver this
Agreement and to perform its obligations hereunder; the execution, delivery and
performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Seller and the consummation of the
transactions contemplated hereby have been duly and validly authorized; this
Agreement and all agreements contemplated hereby have been duly executed and
delivered and constitute the valid, legal, binding and enforceable obligations
of the Seller subject to bankruptcy laws and other similar laws of general
application affecting rights of creditors and subject to the application of the
rules of equity, including those respecting the availability of specific
performance, none of which will materially interfere with the realization of
the benefits provided thereunder, regardless of whether such enforcement is
sought in a proceeding in equity or at law; and all requisite corporate action
has been taken by the 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 the
Seller, and the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller pursuant to this Agreement are not subject to the
16
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the sale of the Mortgage Loans to the Purchaser, the consummation of
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 the Seller's charter or
by-laws or any legal restriction or any agreement or instrument to which the
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 the
Seller or its property is subject, or result in the creation or imposition of
any lien, charge or encumbrance that would have an adverse effect upon any of
its properties pursuant to the terms of any mortgage, contract, deed of trust
or other instrument or impair the ability of the Purchaser to realize on the
Mortgage Loans, impair the value of the Mortgage Loans, or impair the ability
of the Purchaser to realize the full amount of any mortgage insurance benefits
accruing pursuant to this Agreement;
(d) Ability to Perform; Solvency. The Seller does not believe, nor
does it have any reason or cause to believe, that it cannot perform each and
every covenant contained in this Agreement. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale
of the Mortgage Loans is not undertaken with the intent to hinder, delay or
defraud any of the Seller's creditors;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Seller, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, could result in any material adverse change in the business,
operations, financial condition, properties or assets of the Seller, or in any
material impairment of the right or ability of the Seller to carry on its
business substantially as now conducted, 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 the Seller contemplated herein,
or which would be likely to impair materially the ability of the Seller to
perform under the terms of this Agreement;
(f) 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 including HUD
17
is required for the execution, delivery and performance by the Seller of or
compliance by the Seller with this Agreement or the Mortgage Loans, the
delivery of a portion of the Mortgage Files to the Purchaser or its designee or
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 applicable Closing Date;
(g) Selection Process. The Mortgage Loans were selected from among the
outstanding one- to four-family residential and co-op mortgage loans in the
Seller's portfolio as of the applicable Closing Date as to which the
representations and warranties set forth in Subsection 8.2 could be made and
such selection was not made in a manner so as to affect adversely the interests
of the Purchaser;
(h) Initial Portfolio. The aggregate characteristics of the Mortgage
Loans set forth on the Initial Portfolio Mortgage Loan Schedule are as set
forth under the heading "Business and Strategy--Description of Initial
Portfolio" in the Prospectus relating to the Series A Preferred Shares of the
Purchaser, dated January 24, 1997;
(i) No Untrue Information. Neither this Agreement nor any information,
statement, tape, diskette, report, form, or other document furnished or to be
furnished pursuant to this Agreement or in connection with the transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading; and
(j) No Brokers. The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans.
Subsection 8.2 Representations and Warranties Regarding Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser, as to each
Mortgage Loan and as of the applicable Closing Date for such Mortgage Loan (or
as of such other date as may be specified below), that:
(a) Mortgage Loans as Described. The information set forth in the
applicable Mortgage Loan Schedule is complete, true and correct in all material
respects;
(b) Payments Current; Status. All payments required to be made up to,
but not including, the applicable Cut-off Date for the Mortgage Loan under the
terms of the Mortgage Note have
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been made and credited. No payment required under the Mortgage Loan is
delinquent nor has any payment under the Mortgage Loan been 30 days or more
delinquent more than once within the period falling twelve (12) months prior to
the applicable Cut-off Date. The Mortgage Loan is not, and has not been at any
time in the twelve months immediately preceding the applicable Cut-off Date,
(i) Classified, (ii) in Nonaccrual Status or (iii) renegotiated due to the
financial deterioration of the Mortgagor;
(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 delinquent have been paid, or 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. The 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 day
which precedes by one month the Due Date of the first installment of principal
and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which has
been delivered to the Purchaser or its designee and the terms of which are
reflected in the related Mortgage Loan Schedule, if applicable. The terms of
any such waiver, alteration or modification are reflected on the related
Mortgage Loan Schedule, if applicable, and either (i) the substance of such
terms has been approved by the title insurer, if any, to the extent required by
the policy, or (ii) such waiver, alteration or modification has not and will
not affect the priority of the related Mortgage. No Mortgagor has been
released, in whole or in part, except in connection with an assumption
agreement, which assumption agreement is part of the Custodian's File delivered
to the Purchaser or its designee and the terms of which are reflected in the
related Mortgage Loan Schedule;
(e) No Defenses. 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 and no
such right of rescission, set-off, counterclaim or
19
defense has been asserted with respect thereto, and no Mortgagor is now or was,
at the time of origination of the related Mortgage Loan, a debtor in any state
or Federal bankruptcy or insolvency proceeding;
(f) Hazard Insurance. As to Mortgage Loans that are not Co-op Loans,
pursuant to the terms of the Mortgage, all buildings or other improvements upon
the Mortgaged Property are, and as to Co-op Loans, the Co-op Project is,
insured by a generally acceptable insurer against loss by fire, hazards of
extended coverage and such other hazards as are set forth in Section 2.10 of
the Servicing Agreement attached hereto as Exhibit B. If required by the Flood
Disaster Protection Act of 1973, as amended, the Mortgage Loan is covered by a
flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration, which policy conforms to FNMA, as well as
all additional requirements set forth in Section 2.10 of the Servicing
Agreement attached hereto as Exhibit B. With respect to Mortgage Loans that are
not Co-op Loans, all individual insurance policies contain a standard mortgagee
clause naming the Seller and its successors and assigns as mortgagee, and all
premiums thereon have been paid. The Mortgage for each Mortgage Loan that is
not a Co-op Loan 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 a condominium, or any hazard insurance policy
covering the common facilities of a planned unit development. 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 Purchaser upon the consummation of the transactions contemplated by this
Agreement. The 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 the Seller;
(g) 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, fair housing,
20
equal credit opportunity and disclosure laws applicable to the Mortgage Loan
have been complied with, the consummation of the transactions contemplated
hereby will not involve the violation of any such laws or regulations, and the
Seller shall maintain in its possession, available for the Purchaser's
inspection, and shall deliver to the Purchaser upon demand, evidence of
compliance with all such requirements;
(h) 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. The 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 the
Seller waived any default resulting from any action or inaction by the
Mortgagor;
(i) Location and Type of Mortgaged Property. With respect to each
Mortgage Loan that is not a Co-op Loan the Mortgaged Property is located in the
state identified in the related Mortgage Loan Schedule and consists of a single
parcel of real property with a detached single family residence erected
thereon, or a townhouse, or a two- to four-family dwelling, or an individual
condominium unit in a condominium project, or an individual unit in a planned
unit development, provided, however, that no residence or dwelling is a single
parcel of real property with a cooperative housing corporation erected thereon,
a mobile home or a manufactured dwelling. As of the date of origination, no
portion of the Mortgaged Property is used for commercial purposes, and since
the date of origination no portion of the Mortgaged Property is used for
commercial purposes;
(j) Valid First Lien. With respect to each Mortgage Loan that is not a
Co-op Loan, the Mortgage is a valid, subsisting, enforceable and perfected
first lien on the Mortgaged Property, including all buildings and improvements
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 only 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
21
of the Mortgage Loan and (a) specifically 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.
With respect to Co-op Loans, the Mortgage is a valid, subsisting enforceable
and perfected first security interest in the stock of the residential
cooperative housing corporation and the Co-op Lease pledged to secure the Co-op
Loan, subject only to (a) the lien of the related residential cooperative
housing corporation for unpaid assessments representing the Mortgagor's pro
rata share of the corporation's payments for its blanket mortgage, current and
future real property taxes, insurance premiums, maintenance fees and other
assessments to which like collateral is commonly subject; and (b) other matters
to which like collateral is commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the Mortgage. Also
with respect to a Co-op Loan, a cooperative lien search has been made by a
company competent to make same, which company is acceptable to FNMA and is
qualified to do business in the jurisdiction where the Co-op Project is
located.
Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting, enforceable and perfected first lien and first priority security
interest on the property described therein and the Seller has full right to
sell and assign the same to the Purchaser. The Mortgaged Property was not, as
of the date of origination of the Mortgage Loan, subject to a mortgage, deed of
trust, deed to secure debt or other security instrument creating a lien
subordinate to the lien of the Mortgage (except any such subordinate loan which
was created in connection with the origination of the related Mortgage Loan
details of which are contained in the related Mortgage File);
(k) Validity of Mortgage Documents. The 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. 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, and the Mortgage Note,
the Mortgage and any other such related agreement have been duly and properly
executed by
22
such parties. No fraud, error, omission, misrepresentation, negligence or
similar occurrence with respect to a Mortgage Loan has taken place on the part
of any Person, including without limitation, the Mortgagor, any appraiser, any
builder or developer, or any other party involved in the origination of the
Mortgage Loan;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and 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 improvement 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. The Seller is the sole owner of record and holder of
the Mortgage Loan and the indebtedness evidenced by each Mortgage Note, except
for the assignments of mortgage which have been sent for recording, and upon
recordation the Seller will be the owner of record of each Mortgage and the
indebtedness evidenced by each Mortgage Note, and upon the sale of the Mortgage
Loans to the Purchaser, the Seller will retain the Mortgage Files or any part
thereof not delivered to the Purchaser or its designee in trust only for the
purpose of servicing and supervising the servicing of each Mortgage Loan. The
Mortgage Loan is not assigned or pledged, and the Seller has good and
indefeasible title thereto, and has full right to transfer and sell the
Mortgage Loan to the 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, the Purchaser
will own such Mortgage Loan free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest. The
Seller intends to relinquish all rights to possess, control and monitor the
Mortgage Loan, except indirectly for purposes of servicing the Mortgage Loan as
set forth in the Servicing Agreement. After the applicable Closing Date, the
Seller will have no right to modify or alter the terms of the sale of any
Mortgage Loan and the Seller will have no obligation or right to repurchase
such Mortgage Loan or substitute another Mortgage Loan therefor, except as
provided in this Agreement;
(n) 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) (1)
in compliance with
23
any and all applicable licensing requirements of the laws of the state wherein
the Mortgaged Property is located and (2) either (i) organized under the laws
of such state, or (ii) qualified to do business in such state, or (iii) a
federal savings and loan association, a savings bank or a national bank having
a principal office in such state, or (3) not doing business in such state;
(o) PMI Policy. Each Mortgage Loan which at the time of its
origination was required to be insured as to payment defaults by a PMI Policy
in accordance with the underwriting policies customarily employed by the Seller
or one of its predecessors in interest during the period of such origination
was so insured. All provisions of each PMI Policy have been and are being
complied with, each 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 by the PMI Policy. 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 as set forth
on the related Mortgage Loan Schedule is net of any such insurance premium;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA lender's
title insurance policy or other generally acceptable form of policy or
insurance acceptable to FNMA and each such title insurance policy is issued by
a title insurer acceptable to FNMA and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring the Seller, its
successors and assigns, as to the first priority lien of the Mortgage in the
original principal amount of the Mortgage Loan, subject only to the exceptions
contained in clauses (1), (2) and (3) of paragraph (j) of this Subsection 8.2,
and against any loss by reason of the invalidity or unenforce-ability 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. Additionally, such lender's title
insurance policy affirmatively insures ingress and egress, and against
encroachments by or upon the Mortgaged Property or any interest therein. The
Seller, its successor 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 and will be in force and effect upon the consummation
of the transactions contemplated by this Agreement. No claims have been made
under such lender's title insurance policy, and no prior holder of the related
Mortgage, including the 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,
24
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 the Seller;
(q) No Defaults. There is no default, breach, violation or event which
would permit acceleration existing under the Mortgage or 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 which would permit acceleration, and neither the Seller nor its
predecessors have waived any default, breach, violation or event which would
permit acceleration;
(r) No Mechanics' Liens. With respect to each Mortgage Loan, as of its
date of origination, there was, and to the best knowledge of Seller there is,
no mechanics' or similar liens or claims filed for work, labor or material (and
no rights are outstanding that under 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;
(s) Location of Improvements; No Encroachments. With respect to each
Mortgage Loan, to the best knowledge of Seller, all improvements which were
considered in determining the Appraised Value of the Mortgaged Property lay
wholly within the boundaries and building restriction lines of the 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;
(t) Origination: Payment Terms. The Mortgage Loan was originated by a
mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the Act, a savings and loan association, a savings
bank, a commercial bank, credit union, insurance company or similar institution
which is supervised and examined by a federal or state authority. The
documents, instruments and agreements submitted for loan underwriting were not
falsified and contain no untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
information and statements therein not misleading. Principal payments on the
Mortgage Loan commenced no more than sixty (60) days after funds were disbursed
in connection with the Mortgage Loan. The Mortgage Interest Rate, as well as
the Lifetime Rate Cap and the Periodic Rate Cap if the Mortgage Loan is an
Adjustable Rate Mortgage Loan, are as set forth on the applicable Mortgage Loan
Schedule. The Mortgage Note is payable each month in equal monthly installments
of principal and interest, which
25
installments of principal and interest are subject to change if the Mortgage
Loan is an Adjustable Rate Mortgage Loan 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 forty years from
commencement of amortization. Each Convertible Mortgage Loan contains a
provision allowing the Mortgagor to convert the Mortgage Note from an
adjustable interest rate Mortgage Note to a fixed interest rate Mortgage Note
in accordance with the terms of the Mortgage Note or a rider to the related
Mortgage Note;
(u) 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, the holder of the 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, subject to applicable federal and state laws and judicial
precedent with respect to bankruptcy and right of redemption or similar law.
The Mortgage contains due-on-sale provisions providing for the acceleration of
the payment of the unpaid principal balance of such Mortgage Loan in the event
that all or any part of the Mortgaged Property is sold or transferred without
the prior written consent of the Mortgagee. With respect to a Co-op Loan, (i)
there is no provision in any Co-op Lease which requires that Mortgagor, before
the shares owned by such Mortgagor are offered to a third party, to offer for
sale such shares to the residential cooperative housing corporation at a price
that is below the fair market price for such shares, as such fair market price
is determined at time of such offer, and (ii) there is no prohibition in any
Co-op Lease against pledging the shares or assigning the Co-op Lease;
(v) Conformance with Agency and Underwriting Standards. The Mortgage
Loan was underwritten in accordance with the underwriting standards of the
Seller or one of its predecessors in interest, as applicable, or FNMA's
underwriting standards (except that the principal balance of certain Mortgage
Loans may have exceeded the limits of FNMA), in each case in effect at the time
the Mortgage Loan was originated. The Mortgage Note and Mortgage are on forms
acceptable to the Purchaser, in its sole discretion, as evidenced by the
Purchaser's purchase of the related Mortgage Loans, and the
26
Seller has not made any representations to a Mortgagor that are inconsistent
with the mortgage instruments used;
(w) Occupancy of the Mortgaged Property. As of the date of origination
of each Mortgage Loan, the related Mortgaged Property was, and to the best
knowledge of Seller, is, lawfully occupied under applicable law. To the best
knowledge of Seller, 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;
(x) No Additional Collateral. The Mortgage 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 clause (j) above;
(y) 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 the
Purchaser to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor;
(z) Value and Marketability. The Seller has no actual knowledge of any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor, the Mortgage File or the Mortgagor's credit standing
that can reasonably be expected to cause the Mortgage Loan to become
delinquent, or adversely affect the value or marketability of the Mortgage
Loan;
(aa) Delivery of Mortgage Documents. The Mortgage Note, the Mortgage,
the Assignment of Mortgage and any other documents in the Custodian's File for
each Mortgage Loan have been delivered to the Purchaser or its designee. FNMC
is in possession of a complete, true and accurate Servicing File, except for
such documents the originals of which have been delivered to the Purchaser or
its designee;
(bb) [reserved]
(cc) [reserved]
(dd) Assumability. Either (i) the documents in the Custodian's File
provide that a related Mortgage Loan may only be assumed if the party assuming
such Mortgage Loan meets certain credit requirements stated in such documents,
or (ii) the Mortgage Note with respect to such Mortgage Loan contains a "due-
27
on-sale" provision which prevents the assumption of the Mortgage Loan by a
proposed transferee and accelerates the payment of the outstanding principal
balance of such Mortgage Loan;
(ee) No Buydown Provisions; No Graduated Payments or Contingent
Interests. 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 the 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 "buydown"
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;
(ff) [reserved]
(gg) Mortgaged Property Undamaged; No Condemnation Proceedings. To the
best knowledge of Seller, there is no proceeding pending or threatened for the
total or partial condemnation of the Mortgaged Property. To the best knowledge
of Seller, the Mortgaged 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 Mortgaged 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 proceedings with respect
to the Mortgaged Property and the Seller has no knowledge of any such
proceedings in the future;
(hh) Collection Practices; Escrow Deposits; Interest Rate Adjustments.
The origination and collection practices used by the Seller with respect to the
Mortgage Loan have been in all respects in compliance with Accepted Servicing
Practices, applicable laws and regulations, and have been in all respects legal
and proper. With respect to escrow deposits and Escrow Payments, all such
payments are in the possession of, or under the control of, the Seller or FNMC
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 and the provisions
of the related Mortgage Note and Mortgage. An escrow of funds is not prohibited
by applicable law and 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
the Seller have been capitalized under the Mortgage or the Mortgage Note. All
Mortgage Interest Rate adjustments and adjustments to the Monthly Payment, if
the Mortgage Loan is an Adjustable Rate Mortgage Loan, have been made in strict
compliance with state and federal law and the terms of the related Mortgage and
Mortgage Note on the related Interest
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Rate Adjustment Date. With respect to each Adjustable Rate Mortgage Loan, the
Mortgage Interest Rate adjusts annually, semiannually or monthly as set forth
herein. If, pursuant to the terms of the Mortgage Note, another index was
selected for determining the Mortgage Interest Rate, the same index was used
with respect to each Mortgage Note which required a new index to be selected,
and such selection did not conflict with the terms of the related Mortgage
Note. The Seller executed and delivered any and all notices required under
applicable law and the terms of the related Mortgage Note and Mortgage
regarding the Mortgage Interest Rate and the Monthly Payment adjustments. Any
interest required to be paid pursuant to state, federal and local law has been
properly paid and credited;
(ii) Other Insurance Policies. No action, inaction or event has
occurred and no state of facts exists or has existed that has resulted or could
result in the exclusion from, denial of, or defense to coverage under any
hazard insurance policy or PMI Policy. In connection with the placement of any
such insurance, no commission, fee, or other compensation has been or will be
received by the Seller or by any officer, director, or employee of the Seller
or any designee of the Seller or any corporation in which the Seller or any
officer, director, or employee had a financial interest at the time of
placement of such insurance;
(jj) No Violation of Environmental Laws. To the knowledge of Seller,
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; there is no violation of any environmental law, rule or regulation
with respect to the Mortgaged Property; and nothing further remains to be done
to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;
(kk) Soldiers' and Sailors' Civil Relief Act. The Mortgagor has not
notified the Seller and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Soldiers' and Sailors' Civil Relief Act of
1940;
(ll) Appraisal. The Mortgage File contains an appraisal of the related
Mortgaged Property signed prior to the origination of the Mortgage Loan by a
Qualified Appraiser who had no interest, direct or indirect in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation is
not affected by the approval or disapproval of the Mortgage Loan, and the
appraisal and appraiser both satisfy the requirements of FNMA and Title XI of
the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated;
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(mm) Disclosure Materials. The Mortgagor has received all disclosure
materials required by and the Seller complied with all applicable law with
respect to the making of the Mortgage Loans, and the Servicing File contains a
signed statement of the Mortgagor to that effect;
(nn) Construction or Rehabilitation of Mortgaged Property. No Mortgage
Loan was made in connection with the construction or rehabilitation of a
Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property;
(oo) No Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the applicable Closing Date (whether or not known to the
Seller on or prior to such date) which has resulted or will result in an
exclusion from, denial of, or defense to coverage under any primary mortgage
insurance (including, without limitation, any exclusions, denials or defenses
which would limit or reduce the availability of the timely payment of the full
amount of the loss otherwise due thereunder to the insured) whether arising out
of actions, representations, errors, omissions, negligence, or fraud of the
Seller, the related Mortgagor or any party involved in the application for such
coverage, including the appraisal, plans and specifications and other exhibits
or documents submitted therewith to the insurer under such insurance policy, or
for any other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy or
such insurer's financial inability to pay;
(pp) Escrow Analysis. With respect to each Mortgage, Seller has within
the last twelve months (unless such Mortgage was originated within such twelve
month period) analyzed the required Escrow Payments for each Mortgage and
adjusted the amount of such payments so that, assuming all required payments
are timely made, any deficiency will be eliminated on or before the first
anniversary of such analysis, or any overage will be refunded to the Mortgagor,
in accordance with RESPA and any other applicable law; and
(qq) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in compliance with Accepted Servicing Practices; provided
that, in the event of any breach of the representation and warranty set forth
in this Subsection (qq), the Seller shall not be required to repurchase any
such Mortgage Loan unless such breach had, and continues to have, a material
and adverse effect on the value of the related Mortgage Loan or the interest of
the Purchaser therein.
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Subsection 8.3 Remedies for Breach of Representations and Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 8.1 and 8.2 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the 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 the Seller or the Purchaser of a breach of any
of the foregoing representations and warranties which materially and adversely
affects the interests of the Purchaser in the related Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other.
The Seller, promptly after discovery of a breach of any representation
or warranty, shall notify the Purchaser of such breach and the details thereof.
Within ninety (90) days of the earlier of (i) notice by the Seller pursuant to
the immediately preceding sentence or (ii) notice by the Purchaser to the
Seller of any breach of a representation or warranty with respect to a Mortgage
Loan, the Seller shall use its best efforts promptly to cure such breach in all
material respects. If such breach can ultimately be cured but is not reasonably
expected to be cured within the 90 day period, Seller shall have such
additional time as is reasonably determined by Purchaser (not to exceed 180
days) to cure or correct such breach provided Seller has commenced curing or
correcting such breach and is diligently pursuing same. If such breach cannot
be or has not been cured, the Seller shall, upon the expiration of the cure
period described above, at the Purchaser's option and subject to the provisions
of this Subsection 8.3, repurchase such Mortgage Loan at the Repurchase Price,
unless the Seller elects to substitute a Qualified Substitute Mortgage Loan for
such Mortgage Loan pursuant to this Subsection 8.3. In the event that a breach
shall involve any representation or warranty set forth in Subsection 8.1, and
such breach cannot be cured within ninety (90) days of the earlier of either
discovery by or notice to the Seller of such breach, all of the Mortgage Loans
shall, at the Purchaser's option and subject to the provisions of this
Subsection 8.3, be repurchased by the Seller at the Repurchase Price. However,
if the breach shall involve a representation or warranty set forth in
Subsection 8.2, the Seller may, at the Seller's option and provided that the
Seller has a Qualified Substitute Mortgage Loan, rather than repurchase the
Mortgage Loan as provided above, remove such Mortgage Loan (a "Deleted Mortgage
Loan") and substitute in its place a Qualified Substitute Mortgage Loan or
Loans. If the Seller has no Qualified Substitute Mortgage Loan, it shall
repurchase the deficient Mortgage Loan. Any repurchase of a Mortgage Loan or
Mortgage Loans pursuant to the foregoing provisions of this Subsection 8.3
shall be accomplished by either (a) if the Servicing Agreement is in effect,
deposit in the
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Custodial Account of the amount of the Repurchase Price for payment to the
Purchaser on the next scheduled Remittance Date, after deducting therefrom any
amount received in respect of such repurchased Mortgage Loan or Loans and being
held in the Custodial Account for future distribution or (b) if the Servicing
Agreement is no longer in effect, by direct remittance of the Repurchase Price
to the Purchaser or its designee in accordance with the Purchaser's
instructions.
At the time of repurchase or substitution, the Purchaser and the
Seller shall arrange for the reassignment of the Deleted Mortgage Loan to the
Seller and the delivery to the Seller of any documents held by the Purchaser or
its designee relating to the Deleted Mortgage Loan. In addition, upon any such
repurchase, all funds maintained in the Escrow Account with respect to such
Deleted Mortgage Loan shall be transferred to the Seller. In the event of a
repurchase or substitution, the Seller shall, simultaneously with such
reassignment, give written notice to the Purchaser that such repurchase or
substitution has taken place, amend the related Mortgage Loan Schedule to
reflect the withdrawal of the Deleted Mortgage Loan from this Agreement, and,
in the case of substitution, identify a Qualified Substitute Mortgage Loan and
amend the related Mortgage Loan Schedule to reflect the addition of such
Qualified Substitute Mortgage Loan to this Agreement. In connection with any
such substitution, the Seller shall be deemed to have made as to such Qualified
Substitute Mortgage Loan the representations and warranties set forth in this
Agreement except that all such representations and warranties set forth in this
Agreement shall be deemed made as of the date of such substitution. The Seller
shall effect such substitution by delivering to the Purchaser or its designee
for such Qualified Substitute Mortgage Loan the documents required by
Subsection 6.3, with the Mortgage Note endorsed as required by Subsection 6.3.
No substitution will be made in any calendar month after the Investor Cut-off
Date for such month. The Seller shall deposit in the Custodial Account the
Monthly Payment, or in the event that the Servicing Agreement is no longer in
effect remit directly to the Purchaser or its designee in accordance with the
Purchaser's instructions the Monthly Payment less the Servicing Fee due, if
any, on such Qualified Substitute Mortgage Loan or Loans in the month following
the date of such substitution. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution shall be retained by the
Seller. For the month of substitution, payments to the Purchaser shall include
the Monthly Payment due on any Deleted Mortgage Loan in the month of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received by the Seller in respect of such Deleted Mortgage Loan.
For any month in which the Seller substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan,
32
the Seller shall determine the amount (if any) by which the aggregate principal
balance of all Qualified Substitute Mortgage Loans as of the date of
substitution is less than the aggregate Stated Principal Balance of all Deleted
Mortgage Loans (after application of scheduled principal payments due in the
month of substitution). The amount of such shortfall shall be distributed by
the Seller directly to the Purchaser or its designee in accordance with the
Purchaser's instructions within two (2) Business Days of such substitution.
In addition to such repurchase or substitution obligation, the Seller
shall indemnify the 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 and warranties contained in this
Agreement. It is understood and agreed that the obligations of the Seller set
forth in this Subsection 8.3 to cure, substitute for or repurchase a defective
Mortgage Loan and to indemnify the Purchaser as provided in this Subsection 8.3
constitute the sole remedies of the Purchaser 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 Subsections 8.1 and
8.2 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by
the Seller to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Seller by the Purchaser for compliance with
this Agreement.
SECTION 9. Closing.
The closing for the purchase and sale of any Mortgage Loans shall take
place on (i) the Initial Closing Date with respect to the purchase and sale of
the Mortgage Loans set forth on the Initial Portfolio Mortgage Loan Schedule
and (ii) on the Closing Date set forth in a duly executed Commitment Letter
with respect to the purchase and sale of Mortgage Loans pursuant thereto. At
the Purchaser's option, any closing shall be either: by telephone, confirmed by
letter or wire as the parties shall agree, or conducted in person, at such
place as the parties shall agree.
The closing for the purchase and sale of Mortgage Loans to be
purchased on any Closing Date shall be subject to each of the following
conditions:
(a) all of the representations and warranties of the Seller
33
under this Agreement and of FNMC under the Servicing Agreement (with
respect to each Mortgage Loan, as specified therein) shall be true and
correct as of such Closing Date, and no event shall have occurred
which, with notice or the passage of time, would constitute a default
under this Agreement or an Event of Default under the Servicing
Agreement;
(b) the Purchaser shall have received, or the Purchaser's attorneys shall
have received in escrow, all closing documents as specified in Section
10 of this Agreement, in such forms as are agreed upon and acceptable
to the Purchaser, duly executed by all signatories other than the
Purchaser as required pursuant to the terms hereof;
(c) the Seller shall have delivered and released to the Purchaser or its
designee all Mortgage Loan documents in the Custodian's File with
respect to each Mortgage Loan; and
(d) all other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the applicable Closing Date the applicable Purchase Price, plus
accrued interest pursuant to Section 4 of this Agreement, by wire transfer of
immediately available funds to the account designated by the Seller.
SECTION 10. Closing Documents.
The closing documents for the Mortgage Loans to be purchased on any
Closing Date shall consist of fully executed originals of the following
documents:
1. on the Initial Closing Date only, this Agreement (and on all
subsequent Closing Dates, a Commitment Letter in the form of
Exhibit J hereto);
2. on the Initial Closing Date only, the Servicing Agreement, dated
as of the Initial Cut-off Date, in the form of Exhibit B hereto;
3. on the Initial Closing Date only, a Custodial Account Letter
Agreement or a Custodial Account Certification, as applicable, as
required under the Servicing Agreement;
4. on the Initial Closing Date only, an Escrow Account Letter
Agreement or an Escrow Account Certification, as applicable, as
required under the Servicing Agreement;
34
5. an Officer's Certificate, in the form of Exhibit C hereto,
including all attachments thereto;
6. an Opinion of Counsel of the Seller (who may be an employee of
the Seller), in the form of Exhibit D hereto;
7. a Security Release Certification, in the form of Exhibit G or
Exhibit H, if applicable, hereto executed by any person, as
requested by the Purchaser, if any of the Mortgage Loans have at
any time been subject to any security interest, pledge or
hypothecation for the benefit of such person; and
8. a certificate or other evidence of merger or acquisition, if any
of the Mortgage Loans being purchased were acquired by Seller by
merger or acquisition.
The Seller shall bear the risk of loss of any closing documents and
Mortgage Loan documents until such time as they are received by the Purchaser
or its attorneys or designees, as applicable.
SECTION 11. Costs.
The Purchaser shall pay any commissions due its salesmen and 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 recording Assignments of Mortgages, fees for title
policy endorsements and continuations and, if applicable, the Seller's
attorney's fees, shall be paid by the Seller.
SECTION 12. Merger or Consolidation of the Seller.
The 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 Person into which the Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Seller shall be a party, or any Person succeeding to the business of the
Seller, shall be the successor of the Seller hereunder, without the execution
or filing of any paper or any further act on the part of any of the
35
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person shall have a tangible net worth
of at least $30,000,000.
SECTION 13. Mandatory Delivery; Grant of Security Interest.
The sale and delivery on any Closing Date of the Mortgage Loans
described on the applicable Mortgage Loan Schedule is mandatory from and after
the date of the execution of this Agreement or a Commitment Letter, as the case
may be, it being specifically understood and agreed that each Mortgage Loan is
unique and identifiable and that an award of money damages would be
insufficient to compensate the Purchaser for the losses and damages incurred by
the Purchaser (including damages to prospective purchasers of the Mortgage
Loans) in the event of the Seller's failure to deliver (i) each of the Mortgage
Loans or (ii) one or more Qualified Substitute Mortgage Loans or (iii) one or
more Mortgage Loans otherwise acceptable to the Purchaser on or before such
Closing Date. The Seller hereby grants to the Purchaser a lien on and a
continuing security interest in each Mortgage Loan set forth on the Initial
Portfolio Mortgage Loan Schedule and each document and instrument evidencing
each such Mortgage Loan to secure the performance by the Seller of its
obligations under this Agreement, and the Seller agrees that it shall hold such
Mortgage Loans in custody for the Purchaser subject to the Purchaser's (i)
right to reject any Mortgage Loan (or Qualified Substitute Mortgage Loan) under
the terms of this Agreement and to require another Mortgage Loan (or Qualified
Substitute Mortgage Loan) to be substituted therefor, and (ii) obligation to
pay the Initial Purchase Price plus accrued interest as set forth in Section 4
hereof for the Mortgage Loans. All rights and remedies of the Purchaser under
this Agreement are distinct from, and cumulative with, any other rights or
remedies under this Agreement or afforded by law or equity and all such rights
and remedies may be exercised concurrently, independently or successively.
SECTION 14. Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address as follows:
36
(i) if to the Seller:
California Federal Bank,
A Federal Savings Bank
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Fax: (000) 000-0000
(ii) if to the Purchaser:
California Federal Preferred Capital Corporation
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 15. Severability Clause.
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 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. To the extent permitted
by applicable law, the parties hereto waive any provision of law which
prohibits or renders void or unenforceable any provision hereof. If the
invalidity of any part, provision, representation or warranty of this Agreement
shall deprive any party of the economic benefit intended to be conferred by
this Agreement, the parties shall negotiate, in good faith, to develop a
structure the economic effect of which is nearly as possible the same as the
economic effect of this Agreement without regard to such invalidity.
SECTION 16. Counterparts.
This Agreement may be executed simultaneously 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.
37
SECTION 17. Governing Law.
This Agreement shall be deemed to have been made in the State of
California. 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 substantive laws of the
State of California (without regard to conflicts of laws principles), except to
the extent preempted by Federal law.
SECTION 18. Intention of the Parties.
It is the intention of the parties that the Purchaser is purchasing,
and the Seller is selling the Mortgage Loans and not a debt instrument of the
Seller or another security. Accordingly, the parties hereto each intend to
treat the transaction for Federal income tax purposes as a sale by the Seller,
and a purchase by the Purchaser, of the Mortgage Loans.
SECTION 19. Successors and Assigns; Assignment of Purchase Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller and the Purchaser and the respective permitted
successors and assigns of the Seller and the successors and assigns of the
Purchaser. This Agreement shall not be assigned, pledged or hypothecated by the
Seller to a third party without the consent of the Purchaser. This Agreement
may be assigned, pledged or hypothecated by the Purchaser without the prior
consent of the Seller. If the Purchaser assigns all or any of its rights as
Purchaser hereunder, the assignee of the Purchaser will become the "Purchaser"
hereunder to the extent of such assignment, provided that at no time shall
there be more than fifteen (15) persons having the status of "Purchaser"
hereunder.
SECTION 20. 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.
SECTION 21. Entire Agreement; Amendment.
This Agreement (including the Schedules and Exhibits annexed hereto or
referred to herein) and any Commitment Letter duly executed by the parties
hereto contain the entire agreement between the parties with respect to the
transactions contemplated hereby and supersede all prior agreements, written or
oral, with respect thereto. No amendment, modification or alteration of the
terms or provisions of this Agreement shall be binding unless the
38
same shall be in writing and duly executed by the authorized representatives of
the parties hereto, provided, however, that as long as any Series A Preferred
Shares remain outstanding, no material amendment to or modification or
alteration of this Agreement may be entered into or approved by the Purchaser
without the approval of a majority of the Independent Directors.
SECTION 22. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions
of this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
SECTION 23. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at any closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, 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
39
business, and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
SECTION 24. Further Agreements.
The Seller and the 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 purposes of
this Agreement.
SECTION 25. Recordation of Assignments of Mortgage.
The Seller and the Purchaser shall execute a blanket assignment of the
Mortgages underlying each Mortgage Loan (other than Co-op Loans) sold to the
Purchaser, whether pursuant to this Agreement or pursuant to a duly executed
Commitment Letter. Upon the written request of Purchaser (whether due to the
proposed sale of any Mortgage Loan by Purchaser or otherwise), or to the extent
deemed necessary by FNMC in connection with servicing a Mortgage Loan pursuant
to the terms of the Servicing Agreement, the Seller shall promptly prepare and
execute such individual Assignments of Mortgage (except those for Co-op Loans)
as Purchaser shall request, to be recorded in all appropriate public offices
for real property records in all the counties or other comparable jurisdictions
in which any or all of the related Mortgaged Properties are situated, and in
any other appropriate public recording office or elsewhere, such recordation to
be effected by the Purchaser or Purchaser's designee, but in any event, at the
Seller's expense for a single recordation with respect to each such Assignment
of Mortgage. Seller shall execute a limited power of attorney for the purpose
of enabling FNMC to execute Assignments of Mortgages on behalf of Seller in
accordance with this Section 25.
[Signatures Commence on Following Page]
40
IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the date and year first above written.
CALIFORNIA FEDERAL PREFERRED CAPITAL
CORPORATION
(the Purchaser)
By: /s/ Xxxxx Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxxxx Tucei
----------------------------------
Title: Vice President and Assistant
---------------------------------
Treasurer
---------------------------------
CALIFORNIA FEDERAL BANK,
A FEDERAL SAVINGS BANK
(the Seller)
By: /s/ Xxxxx Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxxxx Tucei
----------------------------------
Title: Senior Vice President and
---------------------------------
Controller
---------------------------------
41
EXHIBIT A
CONTENTS OF MORTGAGE FILES
--------------------------
I. With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items, which shall be available for inspection by the
Purchaser and any prospective Purchaser, and which shall be delivered to
the Purchaser or its designee pursuant to Section 6.3 of the Mortgage Loan
Purchase and Warranties Agreement to which this Exhibit is attached (the
"Agreement"):
1. The original Mortgage Note (or, with respect to Mortgage Loans,
if any, listed on Exhibit 1 to the related Mortgage Loan
Schedule, a lost note affidavit, executed by an officer of the
Seller, with a copy of the original note or a copy of the related
security agreement attached thereto) bearing all intervening
endorsements, endorsed "Pay to the order of __________ without
recourse" and signed in the name of the Seller by an authorized
officer. To the extent that there is no room on the face of the
Mortgage Notes for endorsements, the endorsement may be contained
on an allonge, if state law so allows. If the Mortgage Loan was
acquired by the Seller in a merger, the endorsement must be by
"California Federal Bank, A Federal Savings Bank, successor by
merger to [name of predecessor]". If the Mortgage Loan was
acquired or originated by the Seller while doing business under
another name, the endorsement must be by "California Federal
Bank, A Federal Savings Bank, formerly known as [previous name]".
2. The original of any guarantee executed in connection with the
Mortgage Note.
3. The original Mortgage, with evidence of recording thereon. If, in
connection with any Mortgage Loan, the Seller cannot deliver or
cause to be delivered the original Mortgage with evidence of
recording thereon on or prior to the applicable Closing Date
because of a delay caused by the public recording office
where such Mortgage has been delivered for recordation, a
photocopy of such Mortgage certified by the Seller to be true and
correct will be delivered; if such Mortgage has been lost or if
such public recording office retains the original recorded
Mortgage, the Seller shall deliver or cause to be delivered to
the Purchaser a photocopy of such Mortgage, certified by such
public recording office to be a true and complete copy of the
original recorded Mortgage or containing recording information
thereon.
4. The originals of all assumption, modification, consolidation or
extension agreements, if any, with evidence of recording thereon
or if the originals thereof are unavailable, copies of such
documents certified by the public recording office where such
document has been delivered for recordation or containing
recording information thereon.
5. If requested by the Purchaser pursuant to Section 25 of the
Agreement, the original Assignment of Mortgage endorsed "Pay to
the order of __________" and signed in the name of the Seller by
an authorized officer. If the Mortgage Loan was acquired by the
Seller in a merger, the Assignment of Mortgage must be made by
"California Federal Bank, A Federal Savings Bank, successor by
merger to [name of predecessor]". If the Mortgage Loan was
acquired or originated by the Seller while doing business under
another name, the Assignment of Mortgage must be by "California
Federal Bank, A Federal Savings Bank, formerly known as [previous
name]". With respect to each Co-op Loan, the Assignment of
Mortgage shall include an assignment of Security Instruments.
6. Originals or copies of all intervening assignments of the
Mortgage with evidence of recording thereon if such intervening
assignment has been recorded.
7. Original Form UCC-1 with evidence of filing thereon entered into
by the Mortgagor with respect to such Mortgage
2
Loan, which in the case of a Co-op Loan should indicate the unit
number or other identification of the Mortgaged Property subject
to the Co-op Lease, the name of the debtor and the address of the
cooperative building. Original Form UCC-3 in blank by the Seller
assigning the security interest covered by the Form UCC-1
referred to above and any intervening Forms UCC-3.
8. Any original security agreement, chattel mortgage or equivalent
executed in connection with the Mortgage.
9. With respect to a Co-op Loan that is not a refinance transaction,
a document executed by the cooperative association consenting to
the sale of the cooperative shares and assignment of the Co-op
Lease to the Mortgagor and certifying that all maintenance
charges relating to the cooperative unit that is the subject of
the Co-op Lease have been paid.
10. With respect to each Co-op Loan, the stock certificate(s)
representing the stock allocated to the cooperative unit in the
cooperative pledged with respect to such Mortgage Loan with a
stock power in blank.
11. With respect to each Co-op Loan, the original Co-op Lease and the
Collateral Assignment of Lease.
12. With respect to each Co-op Loan, the original Recognition
Agreement of the interests of the applicable Seller with respect
to the Mortgage Loan by the Cooperative, the stock of which was
pledged in respect of such Mortgage Loan, in the standard
"AZTECH" form or a form containing provisions not less favorable
to the lender than are contained in such a standard AZTECH form.
13. For Mortgage Loans that are not Co-op Loans, the original
mortgagee policy of title insurance or, in the event such
original title policy is unavailable, a true copy of the related
policy binder or commitment for title provided by the title
3
insurance company. For Co-op Loans, a cooperative lien search
which has searched for (a) federal tax liens, mechanics' liens,
lis pendens, judgments or record or otherwise against the
cooperative association, the seller of the cooperative shares and
the Mortgagor (if the Co-op Loan is a refinance transaction); (b)
filings of financing statements against the cooperative shares;
and (c) the deed of the Co-op Project to the residential
cooperative housing corporation.
II. With respect to each Mortgage Loan, the Mortgage File shall also include
each of the following items:
14. For Mortgage Loans that are not Co-op Loans, the original hazard
insurance policy and, if required by law, flood insurance policy,
in accordance with Section 8.2(f) of the Agreement.
15. Residential loan application.
16. Mortgage Loan closing statement.
17. Verification of employment and income.
18. Verification of acceptable evidence of source and amount of down
payment.
19. Credit report on the Mortgagor.
20. Residential appraisal report.
21. Photograph of the Mortgaged Property.
22. Survey of the Mortgaged Property, if any.
23. Copy of each instrument necessary to complete identification of
any exception set forth in the exception schedule in the title
policy, i.e., map or plat, restrictions, easements, sewer
agreements, home association declarations, etc.
24. All required disclosure statements.
25. If available, termite report, structural engineer's report, water
portability and septic certification.
4
26. Sales contract.
27. Tax receipts, insurance premium receipts, ledger sheets,
insurance claim files, correspondence, current and historical
computerized data files, and all other processing, underwriting
and closing papers and records which are customarily contained in
a mortgage loan file and which are required to document the
Mortgage Loan or to service the Mortgage Loan.
28. Evidence of a Primary Insurance Policy with respect to each
Mortgage Loan which at the time of origination was required to be
so insured in accordance with the underwriting policies
customarily employed by the Seller or one of its predecessors in
interest during the period of such origination.
5
EXHIBIT B
FORM OF SERVICING AGREEMENT
EXHIBIT C
FORM OF SELLER'S OFFICER'S CERTIFICATE
I, , hereby certify that I am the duly elected
[Vice] President of California Federal Bank, A Federal Savings Bank, a stock
savings bank organized under the laws of the United States of America (the
"Seller") and further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and complete copy
of the federal stock charter of the Seller which is in full force and effect on
the date hereof and which has been in effect without amendment, waiver,
rescission or modification since.
2. Attached hereto as Exhibit 2 is a true, correct and complete copy
of the bylaws of the Seller which are in effect on the date hereof and which
have been in effect without amendment, waiver, rescission or modification
since.
3. Attached hereto as Exhibit 3 is an original certificate of
organization and existence the Seller issued within ten days of the date
hereof, and no event has occurred since the date thereof which would impair
such standing.
4. Attached hereto as Exhibit 4 is a true, correct and complete copy
of the corporate resolutions of the Board of Directors of the Seller
authorizing the Seller to execute and deliver each of the Mortgage Loan
Purchase and Warranties Agreement, dated as of _______, 1997, by and between
California Federal Preferred Capital Corporation (the "Purchaser") and the
Seller (the "Purchase Agreement"), the Commitment Letter, dated as of _______,
___, by and between the Purchaser and the Seller [if applicable] and to endorse
the mortgage notes and execute the assignments of mortgages by original [or
facsimile] signature, and such resolutions are in effect on the date hereof and
have been in effect without amendment, waiver, rescission or modification
since.
5. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery
and performance by the Seller of or compliance by the Seller with the Purchase
Agreement [and the Commitment Letter], the sale of the mortgage loans or the
consummation of the transactions contemplated by the Purchase Agreement; or
(ii) any required consent, approval, authorization or
order has been obtained by the Seller.
6. Neither the consummation of the transactions contemplated by, nor
the fulfillment of the terms of, the Purchase Agreement [and the Commitment
Letter] conflicts or will conflict with or results or will result in a breach
of or constitutes or will constitute a default under the charter or by-laws of
the Seller, the terms of any indenture or other agreement or instrument to
which the Seller is a party or by which it is bound or to which it is subject,
or any statute or order, rule, regulations, writ, injunction or decree of any
court, governmental authority or regulatory body to which the Seller is subject
or by which it is bound.
7. To the best of my knowledge, there is no action, suit, proceeding
or investigation pending or threatened against the Seller which, in my
judgment, 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 the Seller or in any material impairment of the right
or ability of the Seller to carry on its business substantially as now
conducted or in any material liability on the part of the Seller or which would
draw into question the validity of the Purchase Agreement [or the Commitment
Letter] or the Mortgage Loans or of any action taken or to be taken in
connection with the transactions contemplated hereby, or which would be likely
to impair materially the ability of the Seller to perform under the terms of
the Purchase Agreement [and the Commitment Letter].
8. Each person listed on Exhibit 5 attached hereto who, as an officer
or representative of the Seller, signed the Purchase Agreement [and the
Commitment Letter] and any other document delivered prior to or on the date
hereof in connection with any purchase described in the [Purchase Agreement]
[Commitment Letter] was, at the respective times of such signing and delivery,
and is now, a duly elected or appointed, qualified and acting officer or
representative of the Seller, who holds the office set forth opposite his or
her name on Exhibit 5, and the signatures of such persons appearing on such
documents are their genuine signatures.
9. The Seller is duly authorized to engage in the transactions
described and contemplated in the Purchase Agreement [and the Commitment
Letter].
2
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Seller.
Dated: , 19 By:
-------------- -- ------------------------------
Name:
----------------------------
[Seal] Title: Vice President
I, ________________________, an [Assistant] Vice President of California
Federal Bank, A Federal Savings Bank, hereby certify that
_______________________ is the duly elected, qualified and acting Vice
President of the Seller and that the signature appearing above is [her] [his]
genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: , 19 By:
-------------- -- ------------------------------
Name:
----------------------------
Title: [Assistant] Vice
President
3
EXHIBIT 5
to Seller's Officer's Certificate
NAME TITLE SIGNATURE
4
EXHIBIT D
FORM OF OPINION OF COUNSEL TO THE SELLER
, 1997
California Federal Preferred Capital Corporation
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Dear Sirs:
You have requested my opinion, as Senior Vice President and Senior
Counsel to California Federal Bank, A Federal Savings Bank (the "Seller"), with
respect to certain matters in connection with the sale by the Seller of the
Mortgage Loans pursuant to that certain Mortgage Loan Purchase and Warranties
Agreement by and between the Seller and California Federal Preferred Capital
Corporation (the "Purchaser"), dated as of __________, 1997 (the "Purchase
Agreement") which sale is in the form of whole loans, delivered pursuant to the
Purchase Agreement and serviced pursuant to a Servicing Agreement, dated as of
__________, 1997, by and between the First Nationwide Mortgage Corporation (the
"Servicer") and the Purchaser (the "Servicing Agreement"). Capitalized terms
not otherwise defined herein have the meanings set forth in the Purchase
Agreement and the Servicing Agreement.
I have examined the following documents:
1. the Purchase Agreement;
2. the Servicing Agreement; and
3. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon
the representations and warranties of the Seller contained in the Purchase
Agreement. I have assumed the authenticity of all documents submitted to me as
originals, the genuineness of all signatures, the legal capacity of natural
persons and the conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that:
1. The Seller is a savings bank organized, existing and in good standing
under the laws of
the United States and is qualified to transact business in, and is in
good standing under, the laws of the United States.
2. The Seller has the power to engage in the transactions contemplated by
the Purchase Agreement and all requisite power, authority and legal
right to execute and deliver the Purchase Agreement and to perform and
observe the terms and conditions of such agreements.
3. The Purchase Agreement has been duly authorized, executed and
delivered by the Seller and is a legal, valid and binding agreement
enforceable in accordance with its respective terms against the
Seller, subject to bankruptcy laws and other similar laws of general
application affecting rights of creditors and subject to the
application of the rules of equity, including those respecting the
availability of specific performance, none of which will materially
interfere with the realization of the benefits provided thereunder or
with the Purchaser's ownership of the Mortgage Loans.
[4. The Seller has been duly authorized to allow any of its officers to
execute any and all documents by original signature in order to
complete the transactions contemplated by the Purchase Agreement and
by original [or facsimile] signature in order to execute the
endorsements to the Mortgage Notes, and the original [or facsimile]
signature of the officer at the Seller executing the endorsements to
the Mortgage Notes represents the legal and valid signature of said
officer of the Seller].
[5. Either (i) no consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Seller of or compliance by the Seller with the
Purchase Agreement and the sale of the Mortgage Loans or the
consummation of the transactions contemplated by the Purchase
Agreement or (ii) any required consent, approval, authorization or
order has been obtained by the Seller.]
[6. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the
2
terms of, the Purchase Agreement conflicts or will conflict with or
results or will result in a breach of or constitutes or will
constitute a default under the charter or by-laws of the Seller, the
terms of any indenture or other agreement or instrument to which the
Seller is a party or by which it is bound or to which it is subject,
or violates any statute or order, rule, regulations, writ, injunction
or decree of any court, governmental authority or regulatory body to
which the Seller is subject or by which it is bound.]
This opinion is given to you for your sole benefit, and no other
person or entity is entitled to rely hereon except that the purchaser or
purchasers to which you initially and directly resell the Mortgage Loans may
rely on this opinion as if it were addressed to them as of its date.
Very truly yours,
-----------------------------------
Xxxx X. Xxxxxxxx
Senior Vice President and Senior
Counsel
3
EXHIBIT G
, 199
---------------- -
Federal Home Loan Bank of
(the "Association")
-----------------------------
-----------------------------
-----------------------------
-----------------------------
Attention:
------------------------
------------------------
Re: Notice of Sale and Release of Collateral
Dear Sirs:
This letter serves as notice that California Federal Bank, A Federal
Savings, a stock savings bank, organized pursuant to the laws of the United
States of America (the "Bank") has committed to sell to California Federal
Preferred Capital Corporation under a Mortgage Loan Purchase and Warranties
Agreement, dated as of __________, 1997, certain mortgage loans originated by
the Association. The Bank warrants that the mortgage loans to be sold to
California Federal Preferred Capital Corporation are in addition to and beyond
any collateral required to secure advances made by the Association to the Bank.
The Bank acknowledges that the mortgage loans to be sold to California
Federal Preferred Capital Corporation shall not be used as additional or
substitute collateral for advances made by the Association. California Federal
Preferred Capital Corporation understands that the balance of the Bank's
mortgage loan portfolio may be used as collateral or additional collateral for
advances made by the Association, and confirms that it has no interest therein.
Execution of this letter by the Association shall constitute a full
and complete release of any security interest, claim, or lien which the
Association
may have against the mortgage loans to be sold to California Federal Preferred
Capital Corporation.
Very truly yours,
---------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Acknowledged and approved:
FEDERAL HOME LOAN BANK OF
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Date:
-----------------------------
2
EXHIBIT H
FORM OF SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
The financial institution named below hereby relinquishes any and all
right, title and interest it may have in all Mortgage Loans to be purchased by
California Federal Preferred Capital Corporation from California Federal Bank,
a Federal Savings pursuant to that certain Mortgage Loan Purchase and
Warranties Agreement, dated as of __________, 1997, and certifies that all
notes, mortgages, assignments and other documents in its possession relating to
such Mortgage Loans have been delivered and released to California Federal
Bank, a Federal Savings Bank or its designees, as of the date and time of the
sale of such Mortgage Loans to California Federal Preferred Capital
Corporation.
Name and Address of Financial Institution
-----------------------------
(name)
-----------------------------
(Address)
By:
--------------------------
II. Certification of Release
California Federal Bank, a Federal Savings Bank hereby certifies to
California Federal Preferred Capital Corporation that, as of the date and time
of the sale of the above-mentioned Mortgage Loans to California Federal
Preferred Capital Corporation, the security interests in the Mortgage Loans
released by the above named financial institution comprise all security
interests relating to or affecting any and all such Mortgage Loans. The Company
warrants that, as of such time, there are and will be no other security
interests affecting any or all of such Mortgage Loans.
-----------------------------------
By:
--------------------------------
Title:
-----------------------------
Date:
------------------------------
Exhibit J
FORM OF COMMITMENT LETTER
[Date]
California Federal Bank,
A Federal Savings Bank
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
California Federal Preferred Capital Corporation, a Maryland
corporation ("Purchaser"), hereby agrees to purchase from you ("Seller"), and
you hereby agree to sell, transfer, assign and convey to Purchaser, on
_________ (the "Closing Date"), all of your right, title and interest in and to
those residential mortgage loans (the "Mortgage Loans") set forth on Schedule I
(the "Mortgage Loan Schedule") attached hereto, the related Mortgage Files and
all rights and obligations of Seller arising under the documents contained
therein, subject to the terms and conditions set forth in this Commitment
Letter and in that certain Mortgage Loan Purchase and Warranties Agreement,
dated as of January __, 1997 (the "Purchase Agreement"), by and between
Purchaser and Seller.
The Mortgage Loans shall have an aggregate principal balance on
__________ (the "Cut-off Date") of $_______, or such other amount as Purchaser
and Seller shall agree upon as evidenced by the aggregate principal balance of
the Mortgage Loans accepted by Purchaser on the Closing Date. The purchase
price payable by Purchaser to Seller at the Closing in consideration for the
Mortgage Loans set forth on the Mortgage Loan Schedule shall be $______ (the
"Purchase Price"), or such other amount as Purchaser and Seller shall agree
upon as evidenced by the aggregate principal balance of the Mortgage Loans
accepted by Purchaser on the Closing Date.
The purchase and sale of the Mortgage Loans contemplated hereby shall
be consummated by Purchaser and Seller subject to and in accordance with the
terms and conditions of the Purchase Agreement, including, without limitation,
the representations and warranties of Seller contained in Section 8 thereof and
the provisions relating to the purchase and sale of Mortgage Loans and delivery
of related documents in connection therewith set forth in Sections 4, 5, 6, 9
and 10 thereof. Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Purchase Agreement.
Very truly yours,
CALIFORNIA FEDERAL PREFERRED
CAPITAL CORPORATION
By:
--------------------------------
Name:
Title:
Agreed and accepted as of the day first written above:
CALIFORNIA FEDERAL BANK,
A FEDERAL SAVINGS BANK
By:
-----------------------------
Name:
Title:
2
