EXHIBIT 10.32
WHOLE LOAN PURCHASE AND SALE AGREEMENT
MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
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between
NVR MORTGAGE FINANCE, INC.
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Seller
and
PRUDENTIAL SECURITIES REALTY FUNDING CORPORATION
Purchaser
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
DATED: AUGUST 11, 1997
TABLE OF CONTENTS
Page
Section 1. Definitions.................................................................. 113
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Section 2. Procedures for Purchases of Mortgage Loans................................... 118
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Section 3. Sale of Mortgage Loans to Takeout Investor................................... 118
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Section 4. Completion Fee............................................................... 120
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Section 5. Servicing of the Mortgage Loans.............................................. 121
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Section 6. Trade Assignments............................................................ 122
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Section 7. Transfers of Beneficial Interest in Mortgage Loans by purchaser.............. 122
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Section 8. Record Title to Mortgage Loans; Intent of Parties; Security Interest......... 123
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Section 9. Representations and Warranties............................................... 123
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Section 10. Covenants of seller......................................................... 129
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Section 11. Term........................................................................ 132
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Section 12. Exclusive Benefit of Parties; Assignment.................................... 132
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Section 13. Amendments; Waivers; Cumulative Rights...................................... 132
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Section 14. Execution in Counterparts................................................... 132
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Section 15. Effect of Invalidity of Provisions.......................................... 132
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Section 16. Governing Law............................................................... 132
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Section 17. Notices..................................................................... 133
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Section 18. Entire Agreement............................................................ 133
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Section 19. Costs of Enforcement........................................................ 133
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Section 20. Consent to Service.......................................................... 133
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Section 21. Submission to Jurisdiction.................................................. 133
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Section 22. Jurisdiction Not Exclusive.................................................. 133
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Section 23. Construction................................................................ 133
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MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
This Mortgage Loan Purchase and Sale Agreement ("Agreement"), dated as
of the date set forth on the cover page hereof, is by and between PRUDENTIAL
SECURITIES REALTY FUNDING CORPORATION ("Purchaser") and the Seller whose name is
set forth on the cover page hereof ("Seller").
PRELIMINARY STATEMENT
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Seller may, in its sole discretion, offer to sell to Purchaser from
time to time a 100% undivided ownership interest in certain Mortgage Loans, and
Purchaser, in its sole discretion, may agree to purchase such Mortgage Loans
from Seller in accordance with the terms and conditions set forth in this
Agreement. Seller, subject to the terms hereof, will cause each Mortgage Loan
to be purchased by Takeout Investor. During the period from the purchase of a
Mortgage Loan to the sale of the Mortgage Loan to Takeout Investor, Purchaser
expects to rely entirely upon Seller to service such Mortgage Loan.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
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Capitalized terms used but not defined herein shall have the meanings
set forth in the Custodial Agreement. As used in this Agreement, the following
terms shall have the following meanings:
"Act of Insolvency": With respect to Seller, (a) the commencement by
Seller as debtor of any case or proceeding under any bankruptcy, insolvency,
reorganization, liquidation, dissolution or similar law, or Seller's seeking the
appointment of a receiver, trustee, custodian or similar official for Seller or
any substantial part of its property, or (b) the commencement of any such case
or proceeding against Seller, or another seeking such appointment, or the filing
against Seller of an application for a protective decree which (1) is consented
to or not timely contested by Seller, (2) results in the entry of an order for
relief, such an appointment, the issuance of such a protective decree or the
entry of an order having a similar effect, or (3) is not dismissed within thirty
(30) days, (c) the making by Seller of a general assignment for the benefit of
creditors, or (d) the admission in writing by Seller that Seller is unable to
pay its debts as they become due or the nonpayment generally by Seller of its
debts as they become due.
"Assignee": As defined in Section 7.
"Business Day": Any day other than (a) a Saturday, Sunday or other
day on which banks located in The City of New York, New York are authorized or
obligated by law or executive order to be closed or (b) any day on which
Purchaser or Seller is closed for business, provided that notice thereof shall
have been given not less than seven (7) calendar days prior to such day, and
provided further that such closing does not conflict with any business between
Seller and Purchaser scheduled for such date prior to the giving of such notice.
"Collateral": As defined in Section 8(c).
"Commitment Amount": The aggregate outstanding principal amount of
Mortgage Loans to be purchased pursuant to a Takeout Commitment. If the
Commitment Amount is expressed as a fixed
amount plus or minus a percentage in the related Takeout Confirmation, then the
amount required to be delivered by Seller shall be the minimum amount of such
range and the amount required to be purchased by Takeout Investor shall be the
maximum amount of such range.
"Commitment Date": The date set forth in a Takeout Confirmation as
the commitment date.
"Commitment Guidelines": The guidelines, if any, issued by Takeout
Investor regarding the issuance of Takeout Commitments, as amended from time to
time by Takeout Investor.
"Commitment Number": With respect to a Takeout Commitment, the number
identified on the Takeout Confirmation as the commitment number.
"Completion Fee": With respect to each Mortgage Loan Pool, an amount
equal to the Discount plus the Net Carry Adjustment, less any reduction pursuant
to Section 4(c), which amount shall be payable to Seller by Purchaser as
compensation to Seller for its services hereunder in connection with the
purchase of a Mortgage Loan Pool.
"Confirmation": A written confirmation of Purchaser's intent to
purchase a Mortgage Loan Pool, which written confirmation shall be substantially
in the form attached hereto as Exhibit F.
"Credit File": All Mortgage Loan papers and documents required to be
maintained pursuant to the Sale Agreement, and all other papers and records of
whatever kind or description whether developed or originated by Seller or
others, required to document or service the Mortgage Loan provided, however,
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that such Mortgage Loan papers, documents and records shall not include any
Mortgage Loan papers, documents or records which are contained in the Custodial
File.
"Cure Date": With respect to a Mortgage Loan, the date which is 15
Business Days after the related Commitment Date, unless extended by written
waiver from the Buyer.
"Custodial Account": As defined in Section 5(b).
"Custodial Agreement": The custodial Agreement, dated as of the date
set forth on the cover sheet thereof, among Seller, Purchaser and Custodian.
"Custodial File": As defined in the Custodial Agreement.
"Custodian": The Custodian whose name is set forth on the cover page
of the Custodial Agreement and its permitted successors thereunder.
"Cut-off Date": With respect to a Mortgage Loan, the last day of a
month on which the Settlement Date can occur if accrued interest for such month
is to be collected by Takeout Investor.
"Defective Mortgage Loan": With respect to any Mortgage Loan, either
(i) the Document File does not contain a document required to be contained
therein, (ii) a document within a Document File is, in the judgment of Takeout
Investor, defective or inaccurate in any material respect as determined upon
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evaluation of the Document File against the requirements of the Sale Agreement,
or (iii) a document in the Document File is not legal, valid and binding.
"Discount": With respect to Mortgage Loan Pool sold by Seller to
Purchaser, the amount set forth on the related Confirmation as the Discount.
"Document File": The Credit File and the Custodial File.
"Due Date": The day of the month on which the Monthly Payment is due
on a Mortgage Loan.
"Exhibit B-1 Letter": As defined in Section 2(a).
"Exhibit C-1 Letter": As defined in Section 2(a).
"Expiration Date": With respect to any Takeout Commitment, the
expiration date thereof.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor
thereto.
"FNMA": Federal National Mortgage Association or any successor
thereto.
"Losses": Any and all losses, claims, damages, liabilities or
expenses (including interest and reasonable attorneys' fees) incurred by any
person specified; provided, however, that "Losses" shall not include any losses,
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claims, damages, liabilities or expenses which would have been avoided had such
person taken reasonable actions to mitigate such losses, claims, damages,
liabilities or expenses.
"Monthly Payment": The scheduled monthly payment of principal and
interest on a Mortgage Loan.
"Mortgage": The mortgage, deed of trust or other instrument creating
a lien on an estate in tee simple in real property securing a Mortgage Note.
"Mortgage Interest Rate": The annual rate of interest borne on a
Mortgage Note.
"Mortgage Loan": A mortgage loan which is subject to this Agreement,
and which satisfies the requirements of the Sale Agreement as the same may be
modified from time to time.
"Mortgage Loan Pool": A group of Mortgage Loans purchased by
Purchaser hereunder and subject to a single Confirmation.
"Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
"Mortgaged Property": The property subject to the lien of the
Mortgage securing a Mortgage Note.
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"Mortgagor": The obligor on a Mortgage Note.
"NCUA": National Credit Union Administration, or any successor
thereto.
"Net Carry Adjustment": As defined in Section 4(b).
"Notice of Rejection of Trade Assignment": With respect to any
Mortgage Loan that Purchaser elects not to purchase, a notification by Purchaser
to Takeout Investor in the form of Exhibit G.
"OTS": Office of Thrift Supervision or any successor thereto.
"Parent Company": A corporation or other entity owning at least 50%
of the outstanding shares of voting stock of Seller.
"Pass-Through Rate": With respect to each Mortgage Loan Pool
purchased by Purchaser hereunder, the rate at which interest from the Mortgage
is passed through to Purchaser which initially shall be the rate of interest
specified in the related Confirmation as the Pass-Through Rate, subject to
adjustment in the manner agreed to by Purchaser and Seller.
"Price Adjustment": With respect to a Takeout Commitment, the
incremental percentage by which the trade price is adjusted by applying the
appropriate formula set forth in a price adjustment summary sheet when delivered
by Purchaser to Seller which price adjustment summary sheet may be amended from
time to time by Purchaser's delivery to Seller of a new price adjustment summary
sheet.
"Purchase Date": With respect to any Mortgage Loan Pool purchased by
Purchaser hereunder, the date of payment thereof by Purchaser to Seller of the
Purchase Price.
"Purchase Price": With respect to each Mortgage Loan Pool purchased
by Purchaser hereunder, an amount equal to the Trade Principal less an amount
equal to the product of the Trade Principal and the Discount.
"Purchaser": Prudential Securities Realty Funding Corporation and its
successors in interest, including, but not limited to, a party to whom a Trust
Receipt is assigned as provided hereunder and in the Custodial Agreement.
"Purchaser's Wire Instructions": The wire instructions set forth in a
letter in the form of Exhibit E.
"RTC": Resolution Trust Corporation or any successor thereto.
"Sale Agreement": The agreement providing for the purchase by Takeout
Investor of Mortgage Loans from Seller.
"Seller": The Seller whose name is set forth on the cover page hereof
and its permitted successors hereunder.
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"Seller's Wire Instructions": The wire instructions set forth in a
letter in the form of Exhibit C-2.
"Settlement Date": With respect to any Mortgage Loan, the date of
payment thereof by Takeout Investor to Purchaser of the Takeout Proceeds.
"Settlement Modification Letter": A letter in the form of Exhibit H.
"Successor Servicer": An entity designated by Purchaser, with notice
provided in conformity with Section 17, to replace Seller as issuer and
servicer, mortgagee or seller/servicer of the Mortgage Loans evidenced by a
Trust Receipt.
"Takeout Commitment": A commitment of Seller to sell one or more
Mortgage Loans to Takeout Investor and of Takeout Investor to purchase one or
more Mortgage Loans from Seller.
"Takeout Confirmation": The written notification to Seller from
Takeout Investor containing all of the relevant details of the Takeout
Commitment, which notification may take the form of a trade confirmation.
"Takeout Investor": An Agency or a Conduit, as applicable.
"Takeout Proceeds": With respect to any Mortgage Loan Pool, the
related Trade Principal plus accrued interest as calculated in accordance with
Section 3(a)(2), as amended by any related Settlement Modification Letter
accepted by Purchaser.
"Third Party Underwriter": Any third party, including but not limited
to a mortgage loan pool insurer, who underwrites the Mortgage Loan(s) prior to
the purchase by Purchaser of the related Mortgage Loan Pool.
"Third Party Underwriter's Certificate": A certificate issued by a
Third Party Underwriter with respect to a Mortgage Loan, certifying that such
Mortgage Loan complies with its underwriting requirements.
"Trade Assignment": The assignment by Seller to Purchaser of Seller's
rights under a specific Takeout Commitment, in the form of Exhibit D-l, or of
Seller's rights under all Takeout Commitments, in the form of Exhibit D-2.
"Trade Price": The trade price set forth on a Takeout Commitment less
any applicable Price Adjustment.
"Trade Principal": With respect to any Mortgage Loan Pool, the
aggregate outstanding principal balance of such Mortgage Loan multiplied by a
percentage equal to the Trade Price.
"Warehouse Lender": Any lender providing financing to Seller for the
purpose of originating or purchasing Mortgage Loans which has a security
interest in such Mortgage Loans as collateral for the obligations of Seller to
such lender.
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"Warehouse Lender's Wire Instructions": The wire instructions set
forth in a letter in the form of Exhibit B-2.
SECTION 2. PROCEDURES FOR PURCHASES OF MORTGAGE LOANS.
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(a) Purchaser may, in its sole discretion, from time to time, purchase
one or more Mortgage Loan Pools from Seller. Prior to Purchaser's actual
purchase of any Mortgage Loan Pool, Purchaser shall have received from Custodian
(i) an original Trust Receipt relating to all Mortgage Loans (including the
Mortgage Loan Pool being purchased) relating to Cash Window Transactions or
Conduit Transactions, as applicable, fully completed and authenticated by
Custodian, (ii) a copy of the Takeout Confirmation related to the Mortgage
Loan(s) in such Mortgage Loan Pool, together with a Trade Assignment in the form
of Exhibit D-1 or Exhibit D-2; executed by Seller and Takeout Investor, and
(iii) an original letter in the form of Exhibit B-1 (an "Exhibit B-1 Letter")
from the applicable Warehouse Lender (if any), or an original letter in the form
of Exhibit C-l (an "Exhibit C-1 Letter") in the event that there is no Warehouse
Lender. Simultaneously with the payment by Purchaser of the Purchase Price, in
accordance with the Warehouse Lender's Wire Instructions or Seller's Wire
Instructions, as applicable, with respect to a Mortgage Loan Pool, Seller hereby
conveys to Purchaser all of Seller's right, title and interest in and to the
related Mortgage Loan(s) free and clear of any lien, claim or encumbrance.
Notwithstanding the satisfaction by Seller of the conditions specified in this
Section 2(a), Purchaser is not obligated to purchase any Mortgage Loans offered
to it hereunder.
(b) If Purchaser elects to purchase any Mortgage Loan Pool, Purchaser
shall pay the amount of the Purchase Price for such Mortgage Loan Pool by wire
transfer of immediately available funds in accordance with the Warehouse
Lender's Wire Instructions or if there is no Warehouse Lender, Seller's Wire
Instructions. Upon such payment and not otherwise, Purchaser shall be deemed to
have accepted the related Trade Assignment. In the event that Purchaser rejects
a Mortgage Loan for purchase for any reason and/or does not transmit the
applicable Purchase Price, (i) the Trust Receipt delivered by Custodian to
Purchaser in anticipation of such purchase shall automatically be null and void
and the previously existing Trust Receipt for that type of transaction shall be
in full force and effect, (ii) Purchaser shall not consummate the transactions
contemplated in the applicable Takeout Confirmation and shall deliver to Takeout
Investor (with a copy to Seller and Custodian) a Notice of Rejection of Trade
Assignment, provided, however, that failure of Purchaser to give such notice
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shall not affect the rejection by Purchaser of the Trade Assignment, and (iii)
if Purchaser shall nevertheless receive any portion of the related Takeout
Proceeds, Purchaser shall promptly pay such Takeout Proceeds to Seller in
accordance with Seller's Wire Instructions.
(c) The terms and conditions of the purchase of each Mortgage Loan
Pool shall be as set forth in this Agreement.
SECTION 3. SALE OF MORTGAGE LOANS TO TAKEOUT INVESTOR.
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(a) With respect to Mortgage Loan(s) that Purchaser has elected to
purchase, Purchaser may, at its option, either (i) instruct Custodian to deliver
to Takeout Investor, in accordance with Takeout Investor's instructions, the
Custodial File in respect of such Mortgage Loans, in the manner and at the time
set forth in the Custodial Agreement, or (ii) provide for the delivery of the
Custodial File through an escrow arrangement satisfactory to Purchaser and
Takeout Investor. Seller shall on or after the Purchase Date, but in no event
later than the related Expiration Date, promptly deliver to Takeout Investor
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the related Credit File and thereafter any and all additional documents
requested by Takeout Investor to enable Takeout Investor to purchase such
Mortgage Loan(s) on or before the related Cure Date.
(b) Except when Purchaser has accepted a Settlement Modification
Letter, unless the Takeout Proceeds are received by Purchaser (in immediately
available funds in accordance with Purchaser's Wire Instructions) with respect
to the Mortgage Loans in a Mortgage Pool, on or before the related Cure Date,
the Completion Fee relating to such Mortgage Pool shall not be payable until the
earlier to occur of (1) the date of receipt by Purchaser of the Takeout Proceeds
and, (2) the satisfaction by Seller of its obligations pursuant to the exercise
by Purchaser of any remedial election authorized by this Section 3. Upon
receipt by Purchaser, prior to the Cure Date, of a Settlement Modification
Letter, duly executed by Takeout Investor and Seller, Purchaser may, at its
election, agree to the postponement of the Settlement Date and such other
matters as are set forth in the Settlement Modification Letter. If Purchaser
elects to accept a Settlement Modification Letter, Purchaser shall, not later
than two (2) Business Days after receipt of such Settlement Modification Letter
execute the Settlement Modification Letter and send, via facsimile, copies of
such fully executed Settlement Modification Letter to Seller and Takeout
Investor. Upon execution by Purchaser of a Settlement Modification Letter,
Purchaser shall recalculate the amount of the Completion Fee, if any, due to
Seller using the new terms included in the Settlement Modification Letter and
shall pay to Seller, not later than two (2) Business Days after Purchaser's
execution of such Settlement Modification Letter, the amount of such
recalculated Completion Fee.
(c)(l) If a breach by Seller of this Agreement results in any Mortgage
Loan being a Defective Mortgage Loan at the time of the delivery of the related
Trust Receipt to Purchaser and in Purchaser's sole judgment the defects in such
Mortgage Loan will not be cured (or in fact are not cured) by Seller prior to
the Cure Date, Purchaser, at its election, may require that Seller, upon receipt
of notice from Purchaser of its exercise of such right, either (i) immediately
repurchase Purchaser's ownership interest in such Defective Mortgage Loan by
remitting to Purchaser (in immediately available funds in accordance with
Purchaser's Wire Instructions) the amount paid by Purchaser for such Defective
Mortgage Loan plus interest at the Pass-Through Rate on the principal amount
thereof from the date of Purchaser's purchase of the related Mortgage Loan Pool
to the date of such repurchase or (ii) deliver to Custodian a Mortgage Loan in
exchange for such Defective Mortgage Loan, which newly delivered Mortgage Loan
shall be in all respects acceptable to Purchaser in Purchaser's reasonable
discretion. If the aggregate principal balance of all Mortgage Loan(s) that are
accepted by Purchaser pursuant to clause (ii) of the immediately preceding
sentence is less than the aggregate principal balance of all Defective Mortgage
Loan(s) that are being replaced by such Mortgage Loan(s), Seller shall remit
with such Mortgage Loan to Purchaser an amount equal to the difference between
the aggregate principal balance of the new Mortgage Loan(s) accepted by
Purchaser and the aggregate principal balance of the Defective Mortgage Loan(s)
being replaced thereby.
(c)(2) If Seller fails to comply with its obligations in the manner
described in Section 3(c)(1), not later than the third day after receipt by
Seller of notice from Purchaser, Seller's rights and obligations to service
Mortgage Loan(s) as provided in this Agreement, shall terminate. If an Act of
Insolvency occurs at any time, Seller's rights and obligations to service the
Mortgage Loan(s), as provided in this Agreement, shall terminate immediately,
without any notice or action by Purchaser.
Upon any such termination, Purchaser is hereby authorized and
empowered as the exclusive agent for Seller to sell and transfer such rights to
service the Mortgage Loan(s) for such price and on such terms and conditions as
Purchaser shall reasonably determine, and Seller shall not otherwise
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attempt to sell or transfer such rights to service without the prior consent of
Purchaser. Seller shall perform all acts and take all action so that the
Mortgage Loan(s) and all files and documents relating to such Mortgage Loan(s)
held by Seller, together with all escrow amounts relating to such Mortgage
Loan(s), are delivered to Successor Servicer. To the extent that the approval of
any Third Party Underwriter or any other insurer or guarantor is required for
any such sale or transfer, Seller shall fully cooperate with Purchaser to obtain
such approval. Upon exercise by Purchaser of its remedies under this Section
3(c)(2), Seller hereby authorizes Purchaser to receive all amounts paid by any
purchaser of such rights to service the Mortgage Loan(s) and to remit such
amounts to Seller subject to Purchaser's rights of set-off under this Agreement.
Upon exercise by Purchaser of its remedies under this Section 3(c)(2),
Purchaser's obligation to pay and Seller's right to receive any portion of the
Completion Fee relating to such Mortgage Loan(s) shall automatically be canceled
and become null and void, provided that such cancellation shall in no way
relieve Seller or otherwise affect the obligation of Seller to indemnify and
hold Purchaser harmless as specified in Section 3(e).
(d) Each Mortgage Loan required to be delivered to Successor Servicer
by Section 3(c)(2) shall be delivered free of any servicing rights in favor of
Seller and free of any title, interest, lien, encumbrance or claim of any kind
of Seller and Seller hereby waives its right to assert any interest, lien,
encumbrance or claim of any kind. Seller shall deliver or cause to be delivered
all files and documents relating to each Mortgage Loan held by Seller to
Successor Servicer. Seller shall promptly take such actions and furnish to
Purchaser such documents that Purchaser deems necessary or appropriate to enable
Purchaser to cure any defect in each such Mortgage Loan or to enforce such
Mortgage Loans, as appropriate.
(e) In the event that a Mortgage Loan or Mortgage Pool is not
purchased by a Takeout Investor on or before the Cure Date, upon not less than
five (5) days notice from Purchaser to Seller, Seller shall either obtain a
Commitment from another Takeout Investor to purchase such Mortgage Loan or
Mortgage Pool or issue a Commitment on its own behalf to purchase such Mortgage
Loan or Mortgage Pool.
(f) Seller agrees to indemnify and hold Purchaser and its assigns
harmless from and against all Losses resulting from or relating to any breach or
failure to perform by Seller of any representation, warranty, covenant, term or
condition made or to be performed by Seller under this Agreement.
(g) No exercise by Purchaser of its rights under this Section 3 shall
relieve Seller of responsibility or liability for any breach of this Agreement.
(h) Seller hereby grants Purchaser a right of set-off against the
payment of any amounts that may be due and payable to Purchaser from Seller,
such right to be upon any and all monies or other property of Seller held or
received by Purchaser, or due and owing from Purchaser to Seller.
SECTION 4. COMPLETION FEE.
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(a) With respect to each Mortgage Loan Pool that Purchaser elects to
purchase hereunder, Purchaser shall pay to Seller a Completion Fee. The
Completion Fee shall be payable by Purchaser as provided in subsection (e)
below.
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(b) For purposes of calculating that portion of' the Completion Fee
composed of the "Net Carry Adjustment", the Net Carry Adjustment shall be an
amount (which may be a negative number) equal to (A) the product obtained by
multiplying the number of days in the period beginning on the Purchase Date to
but not including the Settlement Date and the difference between (i) the product
of' the rate of interest to be borne by the related Mortgage Loans in the
Mortgage Pool and the aggregate principal amount of such Mortgage Loans and (ii)
the daily application of the applicable Pass-Through Rate to the Purchase Price;
divided by (B) 360.
(c) If a Mortgage Loan Pool is purchased by Purchaser in the month
prior to the month in which the related Settlement Date occurs, (A) all interest
which accrues on the related Mortgage Loans, on and after the Purchase Date,
through the last day of the month prior to the month in which such Settlement
Date occurs, shall be paid to Purchaser by Seller, as servicer, on the related
Settlement Date and (B) all interest which accrues on the Mortgage Loans in such
Mortgage Loan Pool on and after the first day of the month in which such
Settlement Date occurs, through the day immediately prior to such Settlement
Date, will be paid to Purchaser by Takeout Investor on such Settlement Date
unless such Settlement Date occurs after the Cut-off Date of such month in which
event Seller, as servicer, shall pay such amount to Purchaser on such Settlement
Date. If a Mortgage Loan Pool is purchased by Purchaser in the same month in
which the related Settlement Date occurs, (A) all interest, if any, which
accrues on such Mortgage Loan(s) from the first day of such month to but not
including the related Purchase Date shall be paid by Purchaser to Seller on such
Settlement Date, and (B) all interest which accrues on such Mortgage Loan(s), on
and after the Purchase Date to but not including the Settlement Date will be
paid to Purchaser by Takeout Investor on the Settlement Date unless such
Settlement Date occurs after the Cut-off Date or in a month in which interest
has been prepaid by the Mortgagor in either of which events Seller, as servicer,
shall pay such amount to Purchaser on such Settlement Date. For purposes of
this paragraph all interest payments shall be deemed to accrue at the applicable
rate set forth in the related Takeout Commitment.
(d) It is understood by Seller and Purchaser that, if Seller requests
and Purchaser agrees to pay the Completion Fee prior to the Settlement Date, the
amount of such Completion Fee shall be adjusted as mutually agreed by Seller and
Purchaser.
(e) The Completion Fee relating to each Mortgage Loan Pool is payable
on the earlier to occur of (1) the date of receipt by Purchaser of the Trade
Price, and (2) the satisfaction by Seller of its obligations pursuant to this
Agreement notwithstanding the exercise by Purchaser of any remedial election
authorized herein.
SECTION 5. SERVICING OF THE MORTGAGE LOANS.
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(a) Seller shall service and administer the Mortgage Loan(s) on behalf
of Purchaser in accordance with prudent mortgage loan servicing standards and
procedures generally accepted in the mortgage banking industry and in accordance
with the requirements of Takeout Investor, provided that Seller shall at all
times comply with applicable law, and the requirements of any applicable insurer
or guarantor including, without limitation, any Third Party Underwriter, so that
the insurance in respect of any Mortgage Loan is not voided or reduced. Seller
shall at all times maintain accurate and complete records of its servicing of
each Mortgage Loan, and Purchaser may, at any time during Seller's business
hours on reasonable notice, examine and make copies of such records. In
addition, if a Mortgage Loan is not purchased by Takeout Investor on or before
the Cure Date, Seller shall at Purchaser's request deliver to Purchaser monthly
reports regarding the status of such Mortgage Loan, which reports shall include,
but
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shall not be limited to, a description of each Mortgage Loan in default for more
than thirty (30) days, and such other circumstances with respect to any Mortgage
Loan (whether or not such Mortgage Loan is included in the foregoing list) that
could materially adversely affect any such Mortgage Loan, Purchaser's ownership
of any such Mortgage Loan or the collateral securing any such Mortgage Loan.
Seller shall deliver such a report to Purchaser every thirty (30) days until (i)
the purchase by Takeout Investor of such Mortgage Loan pursuant to the related
Takeout Commitment or (ii) the exercise by Purchaser of any remedial election
pursuant to Section 3.
(b) Within five (5) business days of notice from Purchaser, Seller
shall establish and maintain a separate custodial account (the "Custodial
Account") entitled "[Name of Seller], in trust for Prudential Securities Realty
Funding Corporation and its assignees under the Mortgage Loan Purchase and Sale
Agreement dated [the date of this Agreement]" and shall promptly deposit into
such account in the form received with any necessary endorsements all
collections received in respect of each Mortgage Loan that are payable to
Purchaser as the owner of each such Mortgage Loan.
(c) Amounts deposited in the Custodial Account with respect to any
Mortgage Loan shall be held in trust for Purchaser as the owner of such Mortgage
Loan and shall be released only as follows:
(1) Except as otherwise provided in Section 5(c)(2),
following receipt by Purchaser or its designee of the Takeout Proceeds
for such Mortgage Loan from Takeout Investor, amounts deposited in the
Custodial Account related to such Mortgage Loan not otherwise subject
to setoff as provided hereunder shall be released to Seller. The
amounts paid to Seller (if any) pursuant to this Section 5(c)(1) shall
constitute Seller's sole compensation for servicing the Mortgage Loans
as provided in this Section 5.
(2) If Successor Servicer takes delivery of such Mortgage
Loan (either under the circumstances set forth in Section 3 or
otherwise), all amounts deposited in the Custodial Account shall be
paid to Purchaser promptly upon such delivery.
(3) If a Mortgage Loan is not purchased by Takeout Investor
on or before the Cure Date, during the period thereafter that Seller
remains as servicer, all amounts deposited in the Custodial Account
shall be released only in accordance with a Purchaser's written
instructions.
SECTION 6. TRADE ASSIGNMENTS.
------------------------------
Seller hereby assigns to Purchaser, free of any security interest,
lien, claim or encumbrance of any kind, Seller's rights, under each Takeout
Commitment as to which Takeout Investor has consented to assignment, to deliver
the Mortgage Loan(s) specified therein to the related Takeout Investor and to
receive the Takeout Proceeds therefore from such Takeout Investor. Purchaser
shall not be deemed to have accepted any Trade Assignment unless and until it
purchases the related Mortgage Loans, and nothing set forth herein shall be
deemed to impair Purchaser's right to reject any Mortgage Loan for any reason,
in its sole discretion.
SECTION 7. TRANSFERS OF BENEFICIAL INTEREST IN MORTGAGE LOANS BY PURCHASER.
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Purchaser may, in its sole discretion, assign all of its right, title
and interest in or grant a security interest in any Mortgage Loan sold by Seller
hereunder and all rights of Purchaser under this Agreement and the Custodial
Agreement, in respect of such Mortgage Loan to a tri-party custody and clearing
agent ("Assignee"), subject only to an obligation on the part of Assignee to
deliver each such Mortgage Loan to Takeout Investor pursuant to Section 6 or to
Purchaser to permit Purchaser or its designee to make delivery thereof to a
Takeout Investor pursuant to Section 6. It is anticipated that such assignment
to an Assignee will be made by Purchaser, and Seller hereby irrevocably consents
to such assignment. No notice of such assignment shall be given by Purchaser to
Seller or Takeout Investor. Assignment by Purchaser of the Mortgage Loans as
provided in this Section 7 shall not release Purchaser from its obligations
otherwise under this Agreement.
Without limitation of the foregoing, an assignment of the Mortgage
Loans to an Assignee, as described in this Section 7, shall he effective upon
delivery to the Assignee of a duly executed and authenticated Trust Receipt.
SECTION 8. RECORD TITLE TO MORTGAGE LOANS; INTENT OF PARTIES; SECURITY
-----------------------------------------------------------------------
INTEREST.
---------
(a) From and after the issuance and delivery of the related Trust
Receipt, and subject to the remedies of Purchaser in Section 3, Seller shall
remain the last named payee or endorsee of each Mortgage Note and the mortgagee
or assignee of record of each Mortgage in trust for the benefit of Purchaser,
for the sole purpose of facilitating the servicing of such Mortgage Loan.
(b) Seller shall maintain a complete set of books and records for each
Mortgage Loan which shall be clearly marked to reflect the ownership interest in
each Mortgage Loan of the holder of the related Trust Receipt.
(c) Purchaser and Seller confirm that the transactions contemplated
herein are intended to be sales of the Mortgage Loans by Seller to Purchaser
rather than borrowings secured by the Mortgage Loans. In the event, for any
reason, any transaction is construed by any court or regulatory authority as a
borrowing rather than as a sale, Seller and Purchaser intend that Purchaser or
its Assignee, as the case may be, shall have a perfected first priority security
interest in the Mortgage Loans, the Custodial Account, and all proceeds thereof,
the Takeout Commitments and the proceeds of any and all of the foregoing
(collectively, the "Collateral"), free and clear of adverse claims. In such
case, Seller shall be deemed to have hereby granted to Purchaser or Assignee, as
the case may be, a first priority security interest in and lien upon the
Collateral, free and clear of adverse claims. In such event, this Agreement
shall constitute a security agreement, the Custodian shall be deemed to be an
independent custodian for purposes of perfection of the security interest
granted to Purchaser or Assignee, as the case may be, and Purchaser or Assignee,
as the case may be, shall have all of the rights of a secured party under
applicable law.
SECTION 9. REPRESENTATIONS AND WARRANTIES.
-------------------------------------------
(a) Seller hereby represents and warrants to Purchaser as of the date
hereof and as of the date of each issuance and delivery of a Trust Receipt that:
(i) Seller is duly organized, validly existing and in good
standing under the laws of the state of its organization and has all
licenses necessary to carry on its
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business as now being conducted and is licensed, qualified and in,
good standing in the state where the Mortgaged Property is located if
the laws of such state require licensing or qualification in order to
conduct business of the type conducted by Seller. Seller has all
requisite power and authority (including, if applicable, corporate
power) to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered
pursuant to this Agreement) by Seller and the consummation of the
transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and
enforceable obligation of Seller; and all requisite action (including,
if applicable, corporate action) has been taken by Seller to make this
Agreement valid and binding upon Seller in accordance with its terms;
(ii) No approval of the transactions contemplated by this
Agreement from the OTS, the NCUA, the FDIC or any similar federal or
state regulatory authority having jurisdiction over Seller is
required, or if required, such approval has been obtained. There are
no actions or proceedings pending or affecting Seller which would
adversely affect its ability to perform hereunder. The transfers,
assignments and conveyances provided for herein are not subject to the
bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction;
(iii) The consummation of' the transactions contemplated by
this Agreement are in the ordinary course of business of Seller and
will not result in the breach of any term or provision of the charter
or by-laws of Seller or result in the breach of any term or provision
of, or conflict with or constitute a default under or result in the
acceleration of any obligation under, any agreement, indenture or loan
or credit agreement or other instrument to which Seller or its
property is subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which Seller or its property
is subject;
(iv) This Agreement, the Custodial Agreement and every
document to be executed by Seller pursuant to this Agreement is and
will be valid, binding and subsisting obligations of Seller,
enforceable in accordance with their respective terms. No consents or
approvals are required to be obtained by Seller or its Parent Company
for the execution, delivery and performance of this Agreement or the
Custodial Agreement by Seller;
(v) Seller has not sold, assigned, transferred, pledged
or hypothecated any interest in any Mortgage Loan sold hereunder to
any person other than Purchaser, and upon delivery of a related Trust
Receipt to Purchaser, Purchaser will be the sole owner thereof, free
and clear of any lien, claim or encumbrance; and
(vi) All information relating to Seller that Seller has
delivered or caused to be delivered to Purchaser, including, but not
limited to, all documents related to this Agreement, the Custodial
Agreement or Seller's financial statements, does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make
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the statements made therein or herein in light of the circumstances
under which they were made, not misleading.
(b) Seller hereby represents, warrants and covenants to Purchaser with
respect to each Mortgage Loan as of the Purchase Date of such Mortgage Loan
that:
(i) The Mortgage Loan conforms in all respects to the
requirements of this Agreement, the Sale Agreement, the Commitment
Guidelines and the requirements of the related Third Party
Underwriter's Certificate;
(ii) Seller is the sole owner and holder of the Mortgage
Loan free and clear of' any and all liens, pledges, charges or
security interests of any nature and has full right and authority,
subject to no interest or participation of, or agreement with, any
other party, to sell and assign the same pursuant to this Agreement;
(iii) No servicing agreement has been entered into with
respect to the Mortgage Loan, or any such servicing agreement has been
terminated and there are no restrictions, contractual or governmental,
which would impair the ability of Purchaser or Purchaser's designees
from servicing the Mortgage Loan;
(iv) The Mortgage is a valid and subsisting lien on the
property therein described and the Mortgaged Property is free and
clear of all encumbrances and liens having priority over the lien of
the Mortgage except for liens for real estate taxes and special
assessments not yet due and payable and other liens permitted by
Purchaser. In the event that the Mortgage is not a first priority
lien on the property described therein, there is no event of default
or situation which upon the passage of time would become a default
under any obligation secured by a senior lien on the Mortgaged
Property. Any pledge account, security agreement, chattel mortgage or
equivalent document related to, and delivered to Purchaser with the
Mortgage, establishes in Seller a valid and subsisting lien on the
property described and the priority provided therein, and Seller has
full right to sell and assign the same to Purchaser;
(v) Neither Seller nor any prior holder of the Mortgage
has modified the Mortgage in any material respect; satisfied, canceled
or subordinated the Mortgage in whole or in part; released the
Mortgaged Property in whole or in part from the lien of the Mortgage;
or executed any instrument of release, cancellation, modification or
satisfaction unless such release, cancellation, modification or
satisfaction does not adversely affect the value of the Mortgage Loan
and is contained in the related Document File;
(vi) The Mortgage Loan is not in default, and all Monthly
Payments due prior to the Purchase Date and all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges,
leasehold payments or ground rents have been paid. Seller has not
advanced funds, or induced or solicited any advance of funds by a
party other than the Mortgagor directly or indirectly, for the payment
of any amount required by the Mortgage Loan. The collection practices
used by each entity which has serviced the Mortgage Loan have been in
all respects legal, proper, prudent, and customary in the mortgage
servicing business. With respect to escrow deposits and
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payments in those instances where such were required, there exist no
deficiencies in connection therewith for which customary arrangements
for repayment thereof' have not been made and no escrow deposits or
payments or other charges or payments have been capitalized under any
Mortgage or the related Mortgage Note;
(vii) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Mortgage Note
and no event which, with the passage of time or with notice and the
expiration of any grace of cure period, would constitute a default,
breach, violation or event of acceleration; and Seller has not waived
any default, breach, violation or event of acceleration;
(viii) The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including 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, or subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(ix) The Mortgage Note and the related Mortgage 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 and the Mortgage had legal capacity to execute
the Mortgage Note and the Mortgage and each Mortgage Note and Mortgage
have been duly and properly executed by the Mortgagor;
(x) The Mortgage Loan meets, or is exempt from,
applicable state or federal laws, regulations and other requirements
pertaining to usury, and the Mortgage Loan is not usurious;
(xi) Any and all requirements of any federal, state or
local law including, without limitation, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, and Seller shall deliver to Purchaser upon demand,
evidence of compliance with all such requirements;
(xii) Either: (A) Seller and every other holder of the
Mortgage, if any, were authorized to transact and do business in the
jurisdiction in which the Mortgaged Property is located at all times
when such party held the Mortgage; or (B) the loan of mortgage funds,
the acquisition of the Mortgage (if Seller was not the original
lender), the holding of the Mortgage and the transfer of the Mortgage
did not constitute the transaction of business or the doing of
business in such jurisdiction;
(xiii) Not less than 95% of the proceeds of the Mortgage
Loan have been fully disbursed, there is no requirement for future
advances thereunder greater than 5% of the Mortgage Loan and any and
all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds, therefore,
have been
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or will be complied with. All costs, fees and expenses incurred in
making, closing or recording the Mortgage Loans were paid;
(xiv) The related 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, including, (i) in the case
of a Mortgage designated as a deed of trust, by trustee's sale, and
(ii) otherwise by judicial foreclosure. There is no homestead or
other exemption available to the Mortgagor which would interfere with
the right to sell the Mortgaged Property at a trustee's sale or the
right to foreclose the Mortgage;
(xv) The Mortgage Loan was originated free of any
"original issue discount" with respect to which the owner of the
Mortgage Loan could be deemed to have income pursuant to Sections 1271
et seq. of the Internal Revenue Code;
-- ---
(xvi) Each Mortgage Loan was originated by an institution
described in Section 3(a)(41)(A)(ii) of the Securities Exchange Act of
1934, as amended;
(xvii) At origination, the Mortgaged Property was free and
clear of all mechanics' and materialmen's liens or liens in the nature
thereof which are or could be prior to the Mortgage lien except as
provided in the Mortgage, and no rights are outstanding that under law
could give rise to any such lien;
(xviii) All of the improvements which are included for the
purpose of determining the appraised value of the Mortgaged Property
lie wholly within the boundaries and building restriction lines of
such property, and no improvements on adjoining properties encroach
upon the Mortgaged Property;
(xix) At origination, no improvement located on or being
part of the Mortgaged Property was in violation of any applicable
zoning law or regulation and 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, had been
made or obtained from the appropriate authorities and the Mortgaged
Property was lawfully occupied under applicable law. No improvement
located on or being part of the Mortgaged Property is in violation of
any applicable zoning law or regulation and all inspections, licenses
and certificates required to be made or issued with respect to 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 and the Mortgaged Property is lawfully
occupied under applicable law;
(xx) There is no proceeding pending for the total or
partial condemnation of the Mortgaged Property and said property is
undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty;
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(xxi) The Custodial File contains and the Credit File
contains or shall contain prior to the Cure Date each of the documents
and instruments specified to be included therein duly executed and in
due and proper form and each such document or instrument is either in
form acceptable to or to the best of the Seller's knowledge would be
acceptable to FNMA or is a FNMA/FHLMC uniform instrument. Each
Mortgage Note and Mortgage are on forms approved by to or to the best
of the Seller's knowledge would be approved by FNMA with such riders
as have been approved or to Seller's best knowledge would be approved
by FNMA; Seller is currently in possession of the Custodial File for
each Mortgage Loan and is in possession or shall be prior to the
Expiration Date of the Credit File for each Mortgage Loan and there
are no custodial agreements in effect adversely affecting the rights
of Seller to make the deliveries required within the required time.
Seller shall not deliver a Credit File to Takeout Investor after the
related Commitment Date;
(xxii) Each Mortgage Loan is covered by a mortgage title
insurance policy acceptable to FNMA, issued by, and the valid and
binding obligation of, a title insurer acceptable to FNMA and
qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring Seller, its successors and assigns, as
to the validity and appropriate priority of the lien created by the
Mortgage in the original principal amount of the Mortgage Loan, Seller
is the named insured and the sole insured of such mortgage title
insurance policy, the assignment to Purchaser of Seller's interest in
such mortgage title insurance policy does not require the consent of
or notification to the insurer, such mortgage title insurance policy
is in full force and effect and will be in full force and effect and
inure to the benefit of Purchaser upon the consummation of the
transactions contemplated by this Agreement and no claims have been
made under such mortgage title insurance policy and no prior holder of
the related Mortgage, including Seller, has done, by act or omission,
anything which would impair the coverage of such mortgage title
insurance policy;
(xxiii) All buildings upon the Mortgaged Property are
insured against loss by fire, hazards of extended coverage and such
other hazards as are customary in the area where the Mortgaged
Property is located, pursuant to fire and hazard insurance policies
with extended coverage or other insurance required by the Sale
Agreement, in an amount at least equal to the lesser of (i) the
outstanding principal balance of the Mortgage Loan or (ii) the maximum
insurable value (replacement cost without deduction for depreciation)
of the improvements constituting the Mortgaged Property. If
applicable laws limit the amount of such insurance to the replacement
cost of the improvements constituting the Mortgaged Property or to
some other amount, then such insurance is in an amount equal to the
maximum allowed by such laws. Such insurance amount is sufficient to
prevent the Mortgagor or the loss payee under the policy from becoming
a co-insurer. The insurer issuing such insurance is acceptable
pursuant to the Sale Agreement. All individual insurance policies
contain a standard mortgagee clause naming Seller, its successors and
assigns, as mortgagee and all premiums thereon have been paid. Each
Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at Mortgagor's cost and expense, and upon the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at Mortgagor's cost and
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expense and to seek reimbursement therefor from the Mortgagor. Any
flood insurance required by applicable law has been obtained;
(xxiv) The original principal amount of the related Mortgage
Note (plus the amount of all other prior obligations for which their
is a senior lien on the Mortgaged Property) either (a) was not more
than 80% of the lesser of (i) the purchase price of the Mortgaged
Property paid by the Mortgagor at the origination of the Mortgage Loan
and (ii) the appraised value of the Mortgaged Property, such appraised
value being, for the purposes hereof, the amount set forth in an
appraisal made in connection with the origination of such Mortgage
Loan, or (b) is and will be insured as to payment defaults by a policy
of primary mortgage guaranty insurance in accordance with the Sale
Agreement and all provisions of such primary mortgage guaranty
insurance policy have been and are being complied with, such policy is
in full force and effect, and all premiums due thereunder have been
paid. Any Mortgage Loan subject to any such policy of primary mortgage
guaranty insurance obligates the Mortgagor thereunder to maintain such
insurance and pay all premiums and charges in connection therewith.
The original principal amount of each Mortgage Note was not more than
95 % of the purchase price of the related Mortgaged Property paid by
the Mortgagor at the origination of the Mortgage Loan. No action,
event or state of facts exists or has existed which, because involving
or arising from any dishonest, fraudulent, criminal, negligent or
knowingly wrongful act, error or omission by the Mortgagor or the
originator or servicer of the Mortgage Loan, would result in the
exclusion from, denial of, or defense, to coverage which otherwise
would be provided by such insurance;
(xxv) At the time that the related Mortgage Loan was made
the Mortgagor represented that the Mortgagor would occupy such
Mortgaged Property as Mortgagor's primary residence;
(xxvi) The Mortgaged Property consists of a single parcel
of real property; and
(xxvii) There are no circumstances or conditions with
respect to the Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can be reasonably expected to cause
private institutional investors to regard the Mortgage Loan as an
unacceptable investment, cause the Mortgage Loan to become delinquent
or adversely affect the value or marketability of the Mortgage Loan.
The representations and warranties of Seller in this Section 9 are
unaffected by and supersede any provision in any endorsement of any Mortgage
Loan or in any assignment with respect to such Mortgage Loan to the effect that
such endorsement or assignment is without recourse or without representation or
warranty.
SECTION 10. COVENANTS OF SELLER.
---------------------------------
Seller hereby covenants and agrees with Purchaser as follows.
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(a) Seller shall deliver to Purchaser:
(i) Within one hundred twenty (120) days after the end of
each fiscal year of Seller, consolidated balance sheets of Seller and
its consolidated subsidiaries and the related consolidated statements
of income showing the financial condition of Seller and its
consolidated subsidiaries as of the close of such fiscal year and the
results of operations during such year, and a consolidated statement
of cash flows, as of the close of such fiscal year, setting forth, in
each case, in comparative form the corresponding figures for the
preceding year, all the foregoing consolidated financial statements to
be reported on by, and to carry the report (acceptable in form and
content to Purchaser) of an independent public accountant of national
standing acceptable to Purchaser;
(ii) Within sixty (60) days after the end of each of the
first three fiscal quarters of each fiscal year of Seller, unaudited
consolidated balance sheets and consolidated statements of income, all
to be in a form acceptable to Purchaser, showing the financial
condition and results of operations of Seller and its consolidated
subsidiaries on a consolidated basis as of the end of each such
quarter and for the then elapsed portion of the fiscal year, setting
forth, in each case, in comparative form the corresponding figures for
the corresponding periods of the preceding fiscal year, certified by a
financial officer of Seller (acceptable to Purchaser) as presenting
fairly the financial position and results of operations of Seller and
its consolidated subsidiaries and as having been prepared in
accordance with generally accepted accounting principles consistently
applied, in each case, subject to normal year-end audit adjustments;
(iii) Promptly upon receipt thereof, a copy of each other
report submitted to Seller by its independent public accountants in
connection with any annual, interim or special audit of Seller;
(iv) Promptly upon becoming aware thereof', notice of (1)
the commencement of, or any determination in, any legal, judicial or
regulatory proceedings, (2) any dispute between Seller or its Parent
Company and any governmental or regulatory body, (3) any event or
condition, which, in any case of (1) or (2) if adversely determined,
would have a material adverse effect on (A) the validity or
enforceability of this Agreement, (B) the financial condition or
business operations of Seller, or (C) the ability of Seller to fulfill
its obligations under this Agreement or (4) any material adverse
change in the business, operations, prospects or financial condition
of Seller, including, without limitation, the insolvency of Seller or
its Parent Company;
(v) Promptly upon becoming available, copies of all
financial statements, reports, notices and proxy statements sent by
its Parent Company, Seller or any of Seller's consolidated
subsidiaries in a general mailing to their respective stockholders and
of all reports and other material (including copies of all
registration statements under the Securities Act of 1933, as amended)
filed by any of them with any securities exchange or with the
Securities and Exchange Commission or any governmental authority
succeeding to any or all of the functions of said Commission;
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(vi) Promptly upon becoming available, copies of any press
releases issued by its Parent Company or Seller and copies of any
annual and quarterly financial reports and any reports on Form H-(b)12
which its Parent Company or Seller may be required to file with the
OTS or the RTC or comparable reports which a Parent Company or Seller
may be required to file with the FDIC or any other federal banking
agency containing such financial statements and other information
concerning such Parent Company's or Seller's business and affairs as
is required to be included in such reports in accordance with the
rules and regulations of the OTS, the RTC, the FDIC or such other
banking agency, as may be promulgated from time to time;
(vii) Such supplements to the aforementioned documents and
such other information regarding the operations, business, affairs and
financial condition of its Parent Company, Seller or any of Seller's
consolidated subsidiaries as Purchaser may request;
(viii) A copy of (1) the articles of incorporation of
Seller and any amendments thereto, certified by the Secretary of State
of Seller's state of incorporation, (2) a copy of Seller's by-laws,
together with any amendments thereto, (3) a copy of the resolutions
adopted by Seller's Board of Directors authorizing Seller to enter
into this Agreement and the Custodial Agreement and authorizing one or
more of Seller's officers to execute the documents related to this
Agreement and the Custodial Agreement, and (4) a certificate of
incumbency and signature of each officer of Seller executing any
document in connection with this Agreement;
(ix) Neither Seller nor any affiliate thereof will acquire
at any time any economic interest in or obligation with respect to any
Mortgage Loan;
(x) Under generally accepted accounting principles
("GAAP") and for federal income tax purposes, Seller will report each
sale of a Mortgage Loan to the Purchaser hereunder as a sale of the
ownership interest in the Mortgage Loan. Seller has been advised by or
has confirmed with its independent public accountants that the
foregoing transactions will be so classified under ("GAAP");
(xi) The consideration received by Seller upon the sale of
each Mortgage Loan Pool will constitute reasonably equivalent value
and fair consideration for the ownership interest in the Mortgage
Loans included therein;
(xii) Seller will be solvent at all relevant times prior
to, and will not be rendered insolvent by, any sale of a Mortgage Loan
to the Purchaser; and
(xiii) Seller will not sell any Mortgage Loan to the
Purchaser with any intent to hinder, delay or defraud any of Seller's
creditors.
(b) Seller shall comply, in all material respects, with all laws,
rules and regulations to which it is or may become subject.
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(c) Seller shall, upon request of Purchaser, promptly execute and
deliver to Purchaser all such other and further documents and instruments of
transfer, conveyance and assignment, and shall take such other action as
Purchaser may require more effectively to transfer, convey, assign to and vest
in Purchaser and to put Purchaser in possession of the property to be
transferred, conveyed, assigned and delivered hereunder and otherwise to carry
out more effectively the intent of the provisions under this Agreement.
SECTION 11. TERM
-----------------
This Agreement shall continue in effect until terminated as to future
transactions by written instruction signed by either Seller or Purchaser and
delivered to the other, provided that no termination will affect the obligations
hereunder as to any of the Mortgage Loans purchased hereunder.
SECTION 12. EXCLUSIVE BENEFIT OF PARTIES; ASSIGNMENT.
------------------------------------------------------
This Agreement is for the exclusive benefit of the parties hereto and
their respective successors and assigns and shall not be deemed to give any
legal or equitable right to any other person, including the Custodian. Except
as provided in Section 7, no rights or obligations created by this Agreement may
be assigned by any party hereto without the prior written consent of the other
parties.
SECTION 13. AMENDMENTS; WAIVERS; CUMULATIVE RIGHTS.
----------------------------------------------------
This Agreement may be amended from time to time only by written
agreement of Seller and Purchaser. Any forbearance, failure or delay by either
party in exercising any right, power or remedy hereunder shall not be deemed to
be a waiver thereof, and any single or partial exercise by Purchaser of any
right, power or remedy hereunder shall not preclude the further exercise
thereof. Every right, power and remedy of Purchaser shall continue in full
force and effect until specifically waived by Purchaser in writing. No right,
power or remedy shall be exclusive, and each such right, power or remedy shall
be cumulative and in addition to any other right, power or remedy, whether
conferred hereby or hereafter available at law or in equity or by statute or
otherwise.
SECTION 14. EXECUTION IN COUNTERPARTS.
---------------------------------------
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
SECTION 15. EFFECT OF INVALIDITY OF PROVISIONS.
------------------------------------------------
In case any one or more of the provisions contained in this Agreement
should be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein or therein shall in no way be affected, prejudiced or disturbed thereby.
SECTION 16. GOVERNING LAW.
---------------------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflict of laws rules.
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SECTION 17. NOTICES.
---------------------
Any notices, consents, elections, directions and other communications
given under this Agreement shall be in writing and shall be deemed to have been
duly given when telecopied or delivered by overnight courier, personally
delivered, or on the third day following the placing thereof in the mail, first
class postage prepaid, to the respective addresses set forth on the cover page
hereof for Seller and Purchaser, or to such other address as either party shall
give notice to the other party pursuant to this Section 17. Notices to any
Assignee shall be given to such address as Assignee shall provide to Seller in
writing.
SECTION 18. ENTIRE AGREEMENT.
------------------------------
This Agreement and the Custodial Agreement contain the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersede all prior and contemporaneous agreements between them, oral or
written, of any nature whatsoever with respect to the subject matter hereof.
SECTION 19. COSTS OF ENFORCEMENT.
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In addition to any other indemnity specified in this Agreement, in the
event of a breach by Seller of this Agreement, the Custodial Agreement or a
Takeout Commitment, Seller agrees to pay the reasonable attorneys' fees and
expenses of Purchaser and/or Assignee incurred as a consequence of such breach.
SECTION 20. CONSENT TO SERVICE.
--------------------------------
Each party irrevocably consents to the service of process by
registered or certified mail, postage prepaid, to it at its address given in or
pursuant to Section 17.
SECTION 21. SUBMISSION TO JURISDICTION.
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With respect to any claim arising out of this Agreement each party (a)
irrevocably submits to the nonexclusive jurisdiction of the courts of the State
of New York and the United States District Court located in the Borough of
Manhattan in New York City, and (b) irrevocably waives (i) any objection which
it may have at any time to the laying of venue of any suit, action or proceeding
arising out of or relating hereto brought in any such court, (ii) any claim that
any such suit, action or proceeding brought in any such court has been brought
in any inconvenient forum and (iii) the right to object, with respect to such
claim, suit, action or proceeding brought in any such court, that such court
does not have jurisdiction over such party.
SECTION 22. JURISDICTION NOT EXCLUSIVE.
----------------------------------------
Nothing herein will be deemed to preclude either party hereto from
bringing an action or proceeding in respect of this Agreement in any
jurisdiction other than as set forth in Section 21.
SECTION 23. CONSTRUCTION.
--------------------------
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The headings in this Agreement are for convenience only and are not
intended to influence its construction. References to Sections, Exhibits and
Annexes in this Agreement are to the Sections of and Exhibits to this Agreement.
The Exhibits are part of this Agreement, and are incorporated herein by
reference. The singular includes the plural, the plural the singular, and the
words "and" and "or" are used in the conjunctive or disjunctive as the sense and
circumstances may require.
IN WITNESS WHEREOF, Purchaser and Seller have duly executed this
Agreement as of the date and year set forth on the cover page hereof.
PRUDENTIAL SECURITIES REALTY FUNDING CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
-------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
NVR MORTGAGE FINANCE, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President
Address (if different from cover page):
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