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EXHIBIT 10.2
DELEGATED UNDERWRITING AND
SERVICING ADDENDUM TO
MORTGAGE SELLING AND SERVICING CONTRACT
This Delegated Underwriting and Servicing Addendum to Mortgage Selling
and Servicing Contract ("Addendum") is made between Federal National Mortgage
Association, a corporation organized and existing under the laws of the United
States of America ("Xxxxxx Xxx"), and Washington Mortgage Financial Group,
Ltd., a Delaware corporation ("Lender").
RECITALS:
A. Xxxxxx Mae and Lender have entered into the Mortgage Selling and
Servicing Contract ("Contract"; collectively, the Contract, this Addendum and
any other addenda to the Contract are the "DUS Contract") to (i) establish
Lender as an approved seller of mortgage loans and participation interests in
mortgage loans to Xxxxxx Xxx; (ii) provide the terms and conditions of the
sales; (iii) establish Lender as an approved servicer of mortgages that Xxxxxx
Mae has purchased or in which Xxxxxx Xxx has purchased a participation
interest; and (iv) provide the terms and conditions of servicing of mortgage
loans.
B. Xxxxxx Mae offers a multifamily mortgage purchase product line
called Delegated Underwriting and Servicing (as defined below), under which
Xxxxxx Xxx purchases multifamily mortgage loans from approved multifamily
mortgage lenders that underwrite, originate, sell and service such mortgage
loans.
C. Xxxxxx Mae has approved Lender for Delegated Underwriting and
Servicing, and Xxxxxx Xxx and Lender desire to modify the Contract to include
amended and restated terms and provisions that pertain to Delegated
Underwriting and Servicing.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings set forth in this Addendum, and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, Xxxxxx
Mae and Lender agree as follows:
1. Amendment and Restatement. The Delegated Underwriting and
Servicing Addendum previously executed by Lender and Xxxxxx Xxx is amended and
restated in its entirety by this Addendum.
2. Amendment of the Contract. The Contract is amended by adding the
following Section XVI-C to the Contract:
XVI-C. DELEGATED UNDERWRITING AND SERVICING -- SPECIAL PROVISIONS.
This section contains provisions which pertain solely to the Delegated
Underwriting and Servicing product line. Except as modified by this section,
all other provisions of the Contract also pertain to Delegated Underwriting and
Servicing.
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(a) PURPOSE. Section I-A of the Contract is modified to include the
following additional purposes of the Contract:
- to establish Lender as an approved underwriter,
originator and seller of DUS Mortgages (as defined
below) to Xxxxxx Mae under Delegated Underwriting and
Servicing;
- to set forth the terms and conditions that, together
with the applicable provisions of the DUS Guide (as
defined below), govern the sale and servicing of DUS
Mortgages by Lender under Delegated Underwriting and
Servicing; and
- to establish Lender as an approved servicer of the
DUS Mortgages that Xxxxxx Xxx purchases from Lender
under Delegated Underwriting and Servicing and any
other DUS Mortgages with respect to which Xxxxxx Mae
has approved a transfer of servicing to Lender.
(b) INCORPORATION OF DUS GUIDE. Section I-C of the Contract is
modified to add the DUS Guide as a "Guide" under the Contract.
(c) ADDITIONAL IMPORTANT DEFINITIONS. Section I-D of the Contract is
modified to include the following additional definitions:
6. Collateral: The letters of credit, investment
agreements and other collateral that Lender delivers
and pledges for the benefit of Xxxxxx Xxx under the
DUS Reserve Agreement (as defined below).
7. Confidential Information: All non-public information
relating to Xxxxxx Mae or the assets of Xxxxxx Xxx
that is disclosed or provided to Lender by Xxxxxx Mae
including, without limitation, information regarding
delinquent multifamily loans and related properties.
8. Custodian: The entity so named and defined in the
DUS Reserve Agreement, including any successor
appointed under such agreement.
9. Delegated Underwriting and Servicing: Xxxxxx Mae's
multifamily mortgage purchase product line so named,
as further described in the DUS Guide.
10. DUS Commitment: Any commitment that Xxxxxx Mae
issues pursuant to the DUS Guide to Lender to
purchase a DUS Mortgage, as such commitment may be
amended.
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11. DUS Guide: The Xxxxxx Xxx Multifamily Delegated
Underwriting and Servicing Guide, as the Multifamily
Delegated Underwriting and Servicing Guide may be
amended or supplemented from time to time by Xxxxxx
Mae.
12. DUS Loss Sharing Agreement: The Delegated
Underwriting and Servicing Master Loss Sharing
Agreement between Xxxxxx Xxx and Lender that sets
forth certain obligations of Lender with respect to
each DUS Mortgage and the terms and conditions under
which Lender and Xxxxxx Mae will share any loss that
may arise with respect to any DUS Mortgage, as such
agreement may be amended from time to time.
13. DUS Mortgage: Any Mortgage that is purchased by
Xxxxxx Xxx under Delegated Underwriting and
Servicing.
14. DUS Reserve Agreement: The Delegated Underwriting and
Servicing Reserve Agreement among Xxxxxx Mae, Lender
and the Custodian, under which Lender delivers and
pledges Collateral for the benefit of Xxxxxx Xxx, and
the Custodian, as Xxxxxx Mae's agent and bailee,
receives, holds, administers and disburses or
disposes of the Collateral, as such agreement may be
amended from time to time.
(d) COMPLIANCE WITH DELEGATED UNDERWRITING AND SERVICING STANDARDS.
Section II of the Contract is modified to include the following additional
provisions:
E. Compliance with Delegated Underwriting and Servicing Standards.
In order to be and remain eligible to sell and service DUS
Mortgages to Xxxxxx Xxx, Lender must be and remain in compliance
with all of the requirements of Delegated Underwriting and
Servicing as set forth in the DUS Guide and the DUS Contract.
(e) SALE OF DUS MORTGAGES. Section III-A of the Contract is modified
to include the following additional provision:
Lender's sale of each DUS Mortgage to Xxxxxx Mae will be governed by
the applicable DUS Commitment, the DUS Guide (as in effect at the time
of the applicable DUS Commitment), the DUS Contract, the DUS Reserve
Agreement and the DUS Loss Sharing Agreement. Each time that Lender
delivers a DUS Mortgage to Xxxxxx Xxx, Lender must ensure that the
Collateral under the DUS Reserve Agreement satisfies the requirements
of such agreement.
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(f) ASSIGNING MORTGAGE SERVICING. Section VII of the Contract is
modified to include the following additional provision:
Any Person to whom Lender is permitted by Xxxxxx Mae to assign
Lender's obligations and rights to service a DUS Mortgage, in
accordance with Section VII of the Contract, must assume all of
Lender's rights and obligations under the DUS Contract, the DUS
Reserve Agreement and the DUS Loss Sharing Agreement with respect to
all DUS Mortgages for which servicing rights and obligations are
transferred.
(g) ADDITIONAL AND MODIFIED WARRANTIES.
i. MODIFIED CONTRACT WARRANTIES. Except as otherwise specifically
provided in this Addendum, Lender makes to Xxxxxx Xxx all the
warranties contained in Section IV-A of the Contract and in this
Addendum with respect to each DUS Mortgage that Lender sells to
Xxxxxx Mae under a DUS Commitment.
(A) The warranty contained in Section IV-A(1) of the
Contract is replaced in its entirety with the
following:
1. MORTGAGE MEETS REQUIREMENTS.
(a) Each DUS Mortgage upon delivery to Xxxxxx Xxx
(i) satisfies the loan amount limitation of
the Xxxxxx Mae Charter Act, based on the
number of units in and type of structure of
the property securing that DUS Mortgage, (ii)
has been underwritten and delivered by Lender
in material compliance with all applicable
requirements of the DUS Guide as in effect on
the date of the DUS Commitment for such DUS
Mortgage, including, but not limited to,
requirements pertaining to debt service
coverage, loan-to-value ratio, maximum
principal amount, loan term and amortization,
additional collateral, borrower eligibility,
credit, insurance, management, and
environmental compliance, and (iii) has been
documented in substantial compliance with the
DUS Guide as in effect on the date of
delivery of that DUS Mortgage.
(b) Lender will service each DUS Mortgage that
Lender services for Xxxxxx Xxx as required by
the DUS Guide (including remitting payments
to Xxxxxx Mae, maintaining a loan file,
reporting and
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maintaining required custodial accounts,
escrows and reserves, all as required by the
DUS Guide).
(B) The warranty contained in Section IV-A(2) of the
Contract is replaced in its entirety with the
following warranty and covenant:
2. LENDER AUTHORIZED TO DO BUSINESS. Lender and
any other party that held the DUS Mortgage
either:
(a) Were, at all times that either such
party held that mortgage, authorized
to transact business in the
jurisdiction and licensed in which
the property securing the DUS
Mortgage is located (the "Property
Jurisdiction"), or
(b) Under the laws of the Property
Jurisdiction, were not required to
be so authorized and none of the
following activities, taking into
account all of Lender's (or other
holder's) other activities in the
Property Jurisdiction, constitute
doing business in the Property
Jurisdiction:
-- lending the mortgage funds;
-- acquiring the mortgage;
-- holding the mortgage;
-- servicing the mortgage; or
-- transferring the mortgage in
whole or in part; and
if Lender (or any other holder of the
DUS Mortgage) were not authorized to
do business in the Property
Jurisdiction at all times that party
held the DUS Mortgage, the failure
of Lender (or such other party) to be
authorized to do business will have
no adverse effect on Xxxxxx Mae's
ability to enforce the DUS Mortgage
(assuming that Xxxxxx Mae itself is,
or need not be, authorized to do
business in that jurisdiction).
Lender will pay all costs related to
qualification or authorization to do business
or obtaining licenses in the event that
enforcement of any DUS Mortgage so requires
or is delayed in connection with Lender's
failure to be so qualified, authorized or
licensed.
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(C) The warranty contained in Section IV-A(3) of the
Contract is replaced in its entirety by the following:
3. LENDER HAS FULL RIGHT TO SELL AND ASSIGN.
Lender is the sole owner and holder of the
DUS Mortgage and has full right and authority
to sell it, or a participation interest in
it, to Xxxxxx Xxx, subject, if applicable, to
the rights of a warehouse lender as revealed
to Xxxxxx Mae prior to or at the time of
delivery of the DUS Mortgage. In addition,
and except as provided in the preceding
sentence, Lender's right to sell and assign
the DUS Mortgage or a participation interest
in it is not subject to any other party's
interest or to an agreement with any other
party.
(D) The warranty contained in Section IV-A(8) of the
Contract is modified by inserting the following at
the end of that section:
The terms and conditions of the DUS Mortgage
as reflected in the loan documents delivered
to Xxxxxx Xxx have not been amended, modified
or supplemented by any other agreement or
understanding of the parties or waiver of any
of the material provisions of those loan
documents, and all documents (originals or
true copies, as required by the DUS Guide)
evidencing, securing or otherwise setting
forth the terms of the DUS Mortgage or any
guaranty or recourse agreement with respect
to the DUS Mortgage have been delivered to
Xxxxxx Mae.
ii. Additional Warranties. Section IV-A of the Contract is
modified to include the following warranties and covenants,
each of which is made by Lender to Xxxxxx Xxx as to each DUS
Mortgage that Lender sells to Xxxxxx Mae under a DUS
Commitment:
21. Lender has all power and authority necessary to
originate, assign, transfer and deliver the DUS
Mortgage to Xxxxxx Xxx.
22. To the best of Lender's knowledge, information and
belief (based on Lender's exercise of due diligence,
as a prudent lender, to discover all pertinent facts,
information and circumstances):
- The credit reports and financial statements
relating to the borrower(s) and any other
person or entity required by the DUS Guide as
in effect on the date of the applicable DUS
Commitment in connection with the DUS
Mortgage
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correctly reflect the financial condition of
such person(s), without material exception.
- Neither any borrower under the DUS Mortgage,
any general partner of a borrower, any key
principal(s) identified in the loan
documents, nor any guarantor of the DUS
Mortgage is currently a party to any
bankruptcy, reorganization, insolvency or
comparable proceeding.
- The requirements of the DUS Guide as in
effect on the date of the applicable DUS
Commitment have been satisfied with respect
to the experience and qualifications of the
borrower(s) and any other person or entity
whose experience and qualifications are
required by such guide to be ascertained in
connection with that DUS Mortgage.
23. No part of the property subject to the lien of a DUS
Mortgage:
- Is subject to the lien of any other mortgage,
deed of trust or other type of lien, except
as otherwise permitted by the DUS Guide or
expressly agreed in writing by Xxxxxx Mae;
- Is subject to any lease other than leases
with respect to which the material
requirements of the DUS Guide as in effect on
the date of the DUS Commitment for such DUS
Mortgage with respect to subordination and
assignment of leases and rents have been
satisfied; and
- Has been taken in condemnation or other like
proceeding to an extent that would impair the
value of the DUS Mortgage or the property
subject to the DUS Mortgage, or the
usefulness of such property for the
contemplated purposes, nor is any such
proceeding known by Lender to be pending or
contemplated.
24. The appraisal on which the value determination with
respect to the property subject to the DUS Mortgage
has been based materially satisfies all requirements
of the DUS Guide as in effect on the date of the DUS
Commitment for such DUS Mortgage, and Lender has made
any adjustments to that value in underwriting that
are necessary to comply with the underwriting
requirements of the DUS Guide as in effect on such
date.
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25. Lender agrees to maintain the confidentiality of the
Confidential Information and not to disclose,
directly or indirectly, any such Confidential
Information without the prior written consent of
Xxxxxx Xxx except to those employees of and investors
in Lender who need to know such information in
connection with the underwriting, origination,
selling and servicing of DUS Mortgages. Without
limitation, neither Lender nor any of its employees
or investors will disclose any Confidential
Information to any other lender, including any
warehouse lender providing credit to Lender or any
other purchaser of mortgage loans. Lender agrees to
take all reasonable action, by instruction, agreement
and otherwise, with such employees and investors to
satisfy its obligations under the DUS Contract with
respect to confidentiality, non-disclosure and
limitation of use. All copies of all Confidential
Information which Lender or any of its employees or
investors possesses or controls shall be returned to
Xxxxxx Mae upon request by Xxxxxx Xxx.
iii. WARRANTY CRITERIA. Notwithstanding anything to the contrary in
the Contract, this Addendum or the DUS Guide:
(A) If there is a material breach of warranty contained
in this Addendum or in Section IV-A of the Contract
with respect to any DUS Mortgage purchased by Xxxxxx
Mae under a DUS Commitment (other than a breach
relating to the underwriting of that DUS Mortgage
with respect to which the DUS Loss Sharing Agreement
will prevail), Lender, at Xxxxxx Mae's request, will:
(a) indemnify Xxxxxx Mae and hold Xxxxxx Xxx
harmless against all losses, damages, judgments or
legal expenses arising out of such breach and (b)
promptly take such action as is necessary to correct
such breach or the condition giving rise to it.
Xxxxxx Mae also may take such action as it deems
necessary to remedy such breach or the condition
giving rise to it, and, in addition to being
indemnified and held harmless as provided above,
Xxxxxx Xxx will be entitled to indemnity from Lender
for the expenses and costs incurred in undertaking
such remedial action. Xxxxxx Mae will not incur any
cost or expense under the preceding sentence unless
Lender has failed to respond promptly to Xxxxxx Mae's
request to undertake the remedial action required
thereunder.
(B) Each warranty set forth in the Contract (as such
warranty may have been modified expressly in this
Addendum) and in this Addendum, made by Lender with
respect to a DUS Mortgage, is made (and will be
construed) separately and independently from
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every other warranty with respect to that DUS
Mortgage; and a breach of any warranty will entitle
Xxxxxx Mae to the applicable rights and remedies
therefor (as any such rights or remedies may have
been modified expressly in this Addendum) without
regard to the provisions and conditions of any other
warranty and regardless of whether or not the facts
or circumstances giving rise to such breach also
would give rise to a breach of any other warranty.
(h) BREACHES OF CONTRACT. Section VIII-A(2) of the Contract is
modified to include the following additional acts or omissions that will
constitute a breach of the Contract:
- Lender's failure to deliver and pledge the Collateral as required
under the DUS Reserve Agreement; or
- Lender's failure to pay in a timely manner any of its Payment
Obligations (as defined in the DUS Loss Sharing Agreement) when
required under the DUS Loss Sharing Agreement; or
- Lender's repudiation or, within any applicable cure period,
failure to perform any of its other obligations under the DUS
Reserve Agreement or the DUS Loss Sharing Agreement; or
- Lender's material failure to underwrite, originate, deliver or
service any DUS Mortgage in accordance with the DUS Guide; or
- Lender's failure timely to deliver to Xxxxxx Xxx, in accordance
with the DUS Guide in effect on the date of the applicable DUS
Commitment, a Mortgage for which Xxxxxx Mae has issued a
mandatory delivery DUS Commitment; or
- Disclosure by Lender, its employees or investors of any
Confidential Information other than in accordance with the DUS
Contract.
(i) TERMINATION. If Xxxxxx Xxx or Lender terminates the DUS Contract
as provided in the DUS Contract, then (1) Lender shall remain liable under the
DUS Reserve Agreement and the DUS Loss Sharing Agreement that it has executed
until Lender's duties and obligations under those agreements terminate in
accordance with their terms; and (2) except as otherwise provided in the DUS
Reserve Agreement and the DUS Loss Sharing Agreement, the Collateral shall
remain with the Custodian or Xxxxxx Mae until such time as Lender is entitled
to have the Collateral released under the terms of the DUS Reserve Agreement
and the DUS Loss Sharing Agreement.
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(j) CONTINUATION OF LENDER'S RIGHTS AND RESPONSIBILITIES. All
covenants, representations, warranties, rights, responsibilities and
obligations of Lender under the terms and provisions of the DUS Contract, the
DUS Reserve Agreement and the DUS Loss Sharing Agreement shall continue
unchanged without regard to any subsequent conveyance of the DUS Mortgages by
Xxxxxx Xxx to a trust formed by or on behalf of Xxxxxx Mae for purposes of
selling beneficial ownership interests in the DUS Mortgages under Xxxxxx Mae's
programs relating to Mortgage-Backed Securities.
3. No License, Franchise or Transfer Rights Granted. Apart from the
rights expressly enumerated or granted to Lender under the DUS Contract, the
DUS Reserve Agreement or the DUS Loss Sharing Agreement, Xxxxxx Mae does not
confer upon Lender a license, franchise, or any other transferrable or
assignable right. No transfer or assignment of Lender's rights and obligations
under the DUS Contract, the DUS Reserve Agreement or the DUS Loss Sharing
Agreement may be made except in accordance with the express terms of those
documents.
4. Ownership of Confidential Information; Survival of Obligations.
All ownership rights in, and intellectual property rights associated with, the
Confidential Information, including, without limitation, patent, trademark,
copyright and trade secret rights, shall remain the property of Xxxxxx Xxx.
All obligations of confidentiality shall survive the termination of the
Contract.
5. Defined Terms. All capitalized terms in this Addendum shall have
the meanings attributed to them in the Contract, unless otherwise indicated in
this Addendum.
6. Benefit of Contract and Addendum. All provisions of the Contract
and this Addendum are for the benefit of Lender and Xxxxxx Mae only, and
nothing expressed or implied in the Contract or this Addendum is intended to be
for the benefit of any other person.
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7. No Modification Except in Addendum. Except as expressly set
forth in this Addendum, no modification of the Contract is made or intended to
be made by this Addendum, and the Contract, as amended by this Addendum, is
confirmed and reaffirmed by Lender and Xxxxxx Xxx and shall be and remain in
full force and effect. In the event of an inconsistency between the Contract
and this Addendum, the provisions of this Addendum shall govern.
This Addendum shall become effective as of the date of its execution by
Xxxxxx Mae.
FEDERAL NATIONAL MORTGAGE ASSOCIATION
By: /s/ XXXXXX X. XXXXX (seal)
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Name: Xxxxxx X. Xxxxx
Title: Senior Vice President for Multifamily Activities
Date: As of March 1, 1994
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LENDER:
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD.,
a Delaware corporation
By: /s/ XXXXXX XXXXXXXXXX (seal)
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Name: Xxxxxx Xxxxxxxxxx
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Title: President and Chief Executive Officer
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Date: February 14, 1994
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