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EXHIBIT 6(n)
RESIDENTIAL MORTGAGE SERVICES
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of Texas
June 11, 1999
Austin Funding Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx X. XxXxxxxx
MORTGAGES PURCHASE AGREEMENT
Dear Xx. XxXxxxxx:
OVERVIEW
Section 1. WAREHOUSE FACILITY. HSA Residential Mortgage Services of Texas, Inc.
("RMST") has established a mortgage gestation facility with various financial
institutions pursuant to which the institutions, at the request of RMST, will
purchase certain mortgage loans which are originated to finance the purchase or
re-financing of owner-occupied and investor owned, 1-4 family residential
dwellings and the land on which they are situated.
Section 2. CERTAIN TERMS. We are pleased to advise you that RMST has approved
the participation by the Company in the Warehouse Facility on the terms set
forth in this agreement (as it may from time to time be supplemented, amended or
restated, this "AGREEMENT"). The following are certain terms of the Company's
participation. (See Section 3 for additional defined terms.)
COMPANY Austin Funding Corporation
KEY PRINCIPALS Xxxxx X. XxXxxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxx,
Xxxxxxx Xxxxxx
PURCHASE LIMIT Five Million Dollars ($5,000,000)
NON-AGENCY RATE Prime + 2%
DEFAULT RATE Prime + 3%
LOAN SET UP FEE Fifty dollars ($50.00) per Mortgage
BULK MORTGAGE TAKEOUT Five Hundred Thousand Dollar ($500,000) Money Market
PROTECTION AMOUNT Acct
MINIMUM NET WORTH Nine Hundred Thousand Dollars ($900,000)
GUARANTOR(S) Xxxxx X. XxXxxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxx,
Xxxxxxx Xxxxxx
Section 3. CERTAIN DEFINITIONS. The following terms shall have the
meaning set forth below in this Agreement:
(a) AFFECTED MORTGAGE. The term "AFFECTED MORTGAGE" is defined
in Section 23 and Section 26.
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(b) AGENCY MORTGAGE. An "AGENCY MORTGAGE" is a Mortgage that is
eligible for purchase by the Federal Home Loan Mortgage Association, the
Federal National Mortgage Corporation or the Government National Mortgage
Association.
(c) AGENT. The person acting at the time as administrative agent and
collateral agent for the Warehouse Purchasers is referred to as the
"AGENT." All references to the Agent are to the Agent in its capacity as
administrative agent and collateral agent for the Warehouse Purchasers and
not in its own capacity or for its own account. The Agent currently is
Chase Bank of Texas, National Association. RMST will promptly advise the
Company of any successor Agent.
(d) APPLICABLE REPURCHASE AMOUNT. The term "APPLICABLE REPURCHASE
AMOUNT" means the payment to the Agent in good, collected Bank funds of
the sum of (y) an amount equal to the Minimum Net Share which would have
been earned in respect of that Mortgage if its purchase by the Investor
provided for in the Commitment represented by the Company to have most
recently covered it (whether or not it was actually so covered) were
completed in strict accordance with its terms and on its stated expiration
date plus (z) (without duplication of any payment) an amount equal to
any increase in the Minimum Net Share due to the passage of time or to
RMST's or the Agent's having provided additional custodial-type services
since that expiration date.
(e) BANK PRIME. The "BANK PRIME" is the prime rate as announced by
Chase Bank of Texas, National Association from time to time. This rate is
a reference rate and does not necessarily represent its best or lowest
rate and is not necessarily a favored rate. Bank Prime shall be adjusted
as of the effective date of each change in the prime rate announced by
Chase Bank of Texas, National Association.
(f) BANK. The term "BANK" is defined in Section 19.
(g) BANKING BUSINESS DAY. The term "BANKING BUSINESS DAY" is defined
in the RMST Procedures.
(h) BULK MORTGAGE TAKEOUT PROTECTION ACCOUNT. The term "BULK MORTGAGE
TAKEOUT PROTECTION ACCOUNT" is defined in Section 33.
(i) BULK PURCHASE MORTGAGE TAKEOUT DATE. The term "BULK PURCHASE
MORTGAGE TAKEOUT DATE" is defined in Section 9.
(j) BULK PURCHASE MORTGAGE. A "BULK PURCHASE MORTGAGE" is an Eligible
Mortgage that meets RMST's criteria for funding without a Commitment.
(k) CLOSER. The term "CLOSER" is defined in Section 12.
(l) COMMITMENT. A "COMMITMENT" is a written commitment to purchase a
Mortgage as a whole loan obtained by the Company and approved in writing
by RMST, issued by a reputable investor or securities broker-dealer (the
"INVESTOR") acceptable to RMST and the Agent. In addition to any other
criteria established by RMST from time to time by notice given to the
Company, each Commitment shall be written, describe the types of Mortgages
the Investor agrees to purchase, state the settlement date, price
(including any applicable servicing release premium) and expiration date
for the purchase, be (or be endorsed to be) in favor of RMST and its
assigns, be enforceable and be irrevocable until a date shown on the
Commitment.
(m) DEBTOR LAWS. The term "DEBTOR LAWS" is defined in Section 44.
(n) DEFAULT. The term "DEFAULT" is defined in Section 44.
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(o) DEFECTIVE MORTGAGE. A "DEFECTIVE MORTGAGE" is a Mortgage which
has been purchased by the Warehouse Purchasers but meets RMST's criteria
for Defective Mortgages which are attached as Appendix 7. RMST may change
the criteria by notice given to the Company.
(p) DOCUMENT FILE. The term "DOCUMENT FILE" is defined in Section 9.
(q) ELIGIBLE MORTGAGE. An "ELIGIBLE MORTGAGE" is Mortgage which meets
RMST's criteria for funding under the Warehouse Facility. RMST's current
criteria for Eligible Mortgages is attached as Appendix 8. RMST may change
the criteria by notice given to the Company.
(r) ENCLOSURES. The term "ENCLOSURES" is defined in Section 9.
(s) FAILURE DATE. The term "FAILURE DATE" is defined in Section 22.
(t) GUIDE. The term "GUIDE" is defined in Section 34.
(u) INCLUDES. Wherever the words "INCLUDING," "WHICH INCLUDES" or any
correlative appears in this Agreement, it shall be read to mean,
"including by way of example but not without limiting the generality of the
subject or concept referred to."
(v) INVESTOR. An "INVESTOR", is a person issuing a Commitment to the
Company or otherwise agreeing to purchase a Mortgage from the Warehouse
Purchasers.
(w) LOST COMMITMENT MORTGAGES. The term "LOST COMMITMENT MORTGAGES"
is defined in Section 20.
(x) MAKE WHOLE PAYMENT. The term "MAKE WHOLE PAYMENT" is defined in
Section 30.
(y) MINIMUM NET SHARE. The term "MINIMUM NET SHARE" is defined in
Section 17.
(z) MORTGAGE DEFAULT DATE. The "MORTGAGE DEFAULT DATE" is defined in
Section 20, Section 22 and Section 24.
(aa) MORTGAGE PURCHASE COST. The term "MORTGAGE PURCHASE COST" is
defined in Section 17.
(bb) MORTGAGE. A "MORTGAGE" is a mortgage loan secured by residential
real property.
(cc) OFFER. The term "OFFER" is defined in Section 9.
(dd) PERIOD HELD. The term "PERIOD HELD" is defined in Section 17.
(ee) PROCEEDS ACCOUNT. The term "PROCEEDS ACCOUNT" is defined in
Section 19.
(ff) QUALIFIED SUBSTITUTE TAKEOUT. The term "QUALIFIED SUBSTITUTE
TAKEOUT" is defined in Section 20.
(gg) RMST ADVANCE. The term "RMST ADVANCE" is defined in Section 13.
(hh) RMST PROCEDURES. The "RMST PROCEDURES" are those procedures
promulgated by RMST from time to time specifying the times by which
certain actions are to be taken in connection with purchases under the
Warehouse Facility. The current RMST Procedures are attached as Appendix
2.
(ii) SALE PROCEEDS. The term "SALES PROCEEDS" is defined in Section
17.
(jj) SECOND LIEN MORTGAGE. A "SECOND LIEN MORTGAGE" is a Mortgage
that is secured by a second priority lien on the real property that
secures it.
(kk) SETTLEMENT ACCOUNT. The term "SETTLEMENT ACCOUNT" is defined in
Section 19.
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(ll) SHORTFALL AMOUNT. The term "SHORTFALL AMOUNT" is defined in
Section 25.
(mm) SUBSTITUTE MORTGAGE. The term "SUBSTITUTE MORTGAGE" is defined
in Section 24.
(nn) WAREHOUSE FACILITY. The facility described in Section 1 as it
may be amended, supplemented, modified or replaced is referred to as the
"WAREHOUSE FACILITY."
(oo) WAREHOUSE PURCHASERS. The institutions purchasing Eligible
Mortgages under the Warehouse Facility from time to time are referred to
collectively as the "WAREHOUSE PURCHASERS," and individually as a
"WAREHOUSE PURCHASER."
(pp) VALUE REPLACEMENT PAYMENTS. The term "VALUE REPLACEMENT
PAYMENTS" is defined in Section 32.
(qq) YEAR 2000 COMPLIANT. The term "YEAR 2000 COMPLIANT" is defined
in Section 48(aa).
PURCHASE OF ELIGIBLE MORTGAGES
Section 4. REVOLVING PURCHASE FACILITY. Although the Company will offer
the Mortgages to RMST for purchase under the Warehouse Facility on a
case-by-case basis and RMST will evaluate each Mortgage to determine whether it
is an Eligible Mortgage, the Company and RMST mutually contemplate that this
will be a revolving purchase facility pursuant to which the Company will sell
Mortgages to the Warehouse Purchasers.
Section 5. NO OBLIGATION. THIS AGREEMENT DOES NOT OBLIGATE RMST TO CAUSE
THE WAREHOUSE PURCHASERS TO PURCHASE MORTGAGES FROM THE COMPANY. RMST, IN ITS
SOLE DISCRETION, MAY ELECT TO CAUSE THE WAREHOUSE PURCHASERS TO PURCHASE A
MORTGAGE FROM THE COMPANY OR MAY ELECT NOT TO CAUSE THEM TO PURCHASE THE
MORTGAGE.
Section 6. LIMITS. The outstanding balance of the aggregate purchase
prices paid to the Company by the Warehouse Purchasers for Eligible Mortgages
(including Second Lien Mortgages and Bulk Purchase Mortgages, if any) which
have not yet been sold to an Investor shall not exceed the Purchase Limit at
any time. The outstanding balance of the aggregate purchase prices paid to the
Company by the Warehouse Purchasers for Second Lien Mortgages which have not
yet been sold to an Investor shall not exceed the Second Lien Sub-Limit at any
time. The outstanding balance of the aggregate purchase prices paid to the
Company by the Warehouse Purchasers for Bulk Purchase Mortgages which have not
yet been sold to an Investor shall not exceed the Bulk Purchase Sub-Limit at
any time. RMST reserves the right to reduce the Purchase Limit, the Second Lien
Sub-Limit or Bulk Purchase Sub-Limit by giving sixty (60) days' written notice
to the Company specifying the new limit at any time and for any reason.
Section 7. PRIOR APPROVAL OF INVESTORS. Each Investor shall have been
approved by RMST and the Agent prior to the Offer of a Mortgage as to which the
Commitment applies. To be considered for approval by RMST, the Investor must,
at a minimum, meet the criteria set forth on Appendix 9. RMST may change the
minimum criteria for approval of an investor by notice given to the Company.
The approval of an Investor by RMST or the Agent shall not cause RMST or the
Agent to be a guarantor of the Investor's performance. Any dealings by the
Company with an Investor (whether or not approved by RMST or the Agent) shall
be at the sole risk of the Company.
Section 8. COMMITMENT. Each Eligible Mortgage acquired from the Company
under the Warehouse Facility except Bulk Purchase Mortgages shall have a
Commitment. The Company shall provide RMST a copy of the Commitment at the same
time the Company delivers to RMST the Document File. If RMST is dissatisfied,
in its sole discretion, with either the form or terms of any Commitment, it
shall have no obligation to cause the Warehouse Purchasers to acquire any
Mortgage covered by that Commitment.
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Section 9. OFFER. If the Company wishes to sell a Mortgage through RMST to
the Warehouse Purchasers under this Agreement, the Company shall submit a
written Offer to Sell Mortgages in the form attached as Appendix 1 to this
Agreement (the "OFFER") with all enclosures required by Appendix 4 to this
Agreement (the "ENCLOSURES"), and with all blocks and blanks in the Offer and
the Enclosures properly completed (the Offer and Enclosures together are called
the "DOCUMENT FILE"). Appendix 1 and Appendix 4 are subject to modification by
RMST by notice given to the Company. If the Mortgage is requested to be a Bulk
Purchase Mortgage, the Offer shall state the date by which an Investor will
purchase the Mortgage (the "BULK PURCHASE MORTGAGE TAKEOUT DATE"). The
purchase price for an Eligible Mortgage shall be the least of (i) the price the
Investor has promised to pay for the Mortgage pursuant to the Commitment (this
factor is inapplicable to a Bulk Purchase Mortgage); (ii) the face principal
amount of the promissory note evidencing the Mortgage; or (iii) the unpaid
principal balance of the promissory note. Upon acceptance of the Offer, any
Commitment referred to in the Offer shall be deemed assigned and transferred to
RMST and its assigns without any further act by the Company.
Section 10. ACCEPTANCE OR REJECTION. If RMST elects to accept an Offer,
then if the Mortgage is an Eligible Mortgage and the Company is in compliance
with all the terms of this Agreement, RMST will cause the Warehouse Purchasers
to pay the purchase price for the Eligible Mortgages stated in the Offer and,
upon that acceptance, to cause the Warehouse Purchasers to become the owner of
the Eligible Mortgages. RMST has no obligation to accept any Offer.
Section 11. ENDORSEMENT AND CLOSING INSTRUCTIONS. The Company shall
endorse in blank the promissory note to evidence each Eligible Mortgage which
is the subject of an accepted Offer when, or before, the note is executed by
its maker. The Company hereby declares its intent that each such endorsement be
effective as to each such note from such note's inception, regardless of when
the endorsement is actually made. The Company shall give the Closer of each
Eligible Mortgage the written instructions for the closing of the transaction
set forth on Appendix 5, and will not give any rescinding, inconsistent or
conflicting instructions. Appendix 5 is subject to modification by RMST by
notice given to the Company. The Company or the Closer shall deliver to RMST
the Eligible Mortgage and all of its related documentation (including for each
Eligible Mortgage the documents listed on Appendix 4) to be physically held by
the Agent until the Mortgages are either (i) shipped by the Agent to an
Investor or its document custodian for purchase or (ii) the Company repurchases
the Mortgage in accordance with its obligations stated in Section 20, Section
22 or Section 24.
Section 12. PAYMENT BY WAREHOUSE PURCHASERS. The purchase price for
Eligible Mortgages shall be paid at the request of RMST by the Agent (i) to the
Company, in the case of Eligible Mortgages purchased after the Company has
closed them; or (ii) in all other instances, by providing money for the
original funding of the Mortgages directly to the title company or other person
or entity handling the closing (the "CLOSER"), net of origination, discount
points, and any other fees and other prepaid items the Company may stipulate.
The payment will be made at the time and in the manner specified in the RMST
Procedures.
Section 13. ADVANCES BY RMST. In its sole discretion, RMST may advance
funds to the Company, in the case of Eligible Mortgages purchased after the
Company has closed them, or to the Closer, in all other instances, to pay
amounts relating to the origination of a Mortgage. These funds so advanced (an
"RMST ADVANCE") are a loan from RMST to the Company, are secured by the
security interest created by Section 39, bear interest at the Default Rate and
are due on demand unless earlier repaid in connection with the sale of the
Mortgage to which the RMST Advance relates.
SALE TO INVESTORS
Section 14. SALE TO INVESTORS. The Company will take all steps necessary
to cause:
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(a) all Eligible Mortgages and their related mortgage files to be
correctly closed, funded, documented and completed;
(b) the sale as whole loans of all Eligible Mortgages to be timely
completed in accordance with any related Commitment;
(c) the entire sale price due from Eligible Mortgages sold to be
transferred by Fed funds wire directly to the account of the Agent at
Chase Bank of Texas, National Association or at a bank designated by RMST.
Section 15. INSTRUCTION TO INVESTORS. Promptly after any Eligible
Mortgages which is subject to a commitment is purchased by the Warehouse
Purchasers, the Company shall: (i) direct the Investor which issued the
Commitment to pay the entire amount of the purchase consideration for those
Eligible Mortgages directly to the Agent and to confirm receipt of that
direction directly with the Agent, with a copy to RMST; (ii) not issue any
conflicting instructions to the Investors; and (iii) not cause or permit any
cash proceeds of any of those Mortgages to be issued to, registered in the name
of, or paid to, anyone other than the Agent.
Section 16. SHIPMENT TO INVESTORS. Mortgages shipped to Investors for
purchase shall be shipped under letters substantially in the form of letter
attached as Appendix 10, in the case of Mortgages sold by the Agent, or
Appendix 11, in the case of Mortgages sold by RMST. The letters may be revised
by RMST by notice given to the Company.
PAYMENT TO RMST AND DISTRIBUTION TO COMPANY
Section 17. MINIMUM NET SHARE. The Agent will retain, for the benefit of
the Warehouse Purchasers and RMST--or, in the case of Mortgages sold by RMST,
RMST will retain for its benefit--from the sale proceeds (the "SALE PROCEEDS")
received for and allocable to each Mortgage sold to an Investor hereunder an
amount (the "MINIMUM NET SHARE") equal to the sum of __________:
(i) the purchase price paid by the Warehouse Purchasers for the
Eligible Mortgage reduced by any amounts paid to the Warehouse
Purchasers by the obligor of the Mortgage as principal or
interest on the Mortgage and also reduced by any Value
Replacement Payments made with respect to the Mortgage (the
"MORTGAGE PURCHASE COST");
plus (ii) a return on the daily balance of the Mortgage Purchase Cost
which accrues daily during the period (the "PERIOD HELD")
consisting of the actual number of days from (and including) the
date on which the Warehouse Purchasers funded the acquisition of
the Mortgage to (but excluding) the date on which the Agent (or
RMST) receives the Sale Proceeds for the Mortgage, at a per
annum rate equal to the Agency Rate if the Mortgage is an Agency
Mortgage or equal to the Non-Agency Rate if the Mortgage is not
an Agency Mortgage. After the Mortgage Default Date the per
annum rate as to any Affected Mortgage shall be the greater of
(y) the Default Rate or (z) the annual interest rate stated on
the promissory note related to the Affected Mortgage. After the
occurrence of a Default, the per annum rate as to all Mortgages
shall be the Default Rate. The calculations based on the per
annum rates shall be made on a daily basis during the Period
Held and on the basis of a 360-day year;
plus (iii) any RMST Advance with respect to that Mortgage together
with interest on the RMST Advance at the Default Rate from the
date on which the RMST Advance was made to (but excluding) the
date on which the Agent (or RMST) receives the Sales Proceeds
for the Mortgage;
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plus (iv) the Loan Set Up Fee for the Mortgage.
Section 18. INTEREST COLLECTED AND REMITTED. Interest on an Eligible
Mortgage collected by the Company and remitted to the Agent shall be treated as
part of the proceeds received for the sale of the Mortgage to the Investor for
purposes of determining the Minimum Net Share.
Section 19. BALANCE OF SALES PROCEEDS. Provided that the Company is not
then in default of any of its obligations under this Agreement, RMST shall
deposit the balance of the Sales Proceeds remaining after deducting the Minimum
Net Share in a demand deposit account maintained at Chase Bank of Texas,
National Association (in its capacity as a depository institution, the "BANK")
in the name of RMST for the benefit of the Company (the "PROCEEDS ACCOUNT"), but
as to which the Company shall have no rights of withdrawal. As long as the
Company is not then in default of any of its obligations under this Agreement,
RMST shall transfer the collected funds in the Proceeds Account to a demand
deposit account (the "SETTLEMENT ACCOUNT") maintained at the Bank in the name of
the Company and under the exclusive control of the Company. If, there is a
Default, then any amounts then remaining in the Proceeds Account shall be cash
collateral securing any rights RMST shall have pursuant to this Agreement and
the Company shall not withdraw any funds from the Settlement Account without the
prior consent of RMST.
FAILURE OF COMMITMENT
Section 20. LOSS OF COMMITMENT. If for any reason, except the willful or
grossly negligent act or omission of RMST, the Agent or the Warehouse
Purchasers, any Commitment in respect of any Eligible Mortgage is canceled,
paired off or revoked by any means, or if the Investor shall at any time have a
defense to performance of its obligations under the Commitment either on account
of offsetting obligations against the Company or for any other reason, or the
Commitment is terminated for any reason (other than expiration by the passage of
time) (collectively, these Mortgages are referred to as the "LOST COMMITMENT
MORTGAGES"), then, on or before the date (the "MORTGAGE DEFAULT DATE" for that
Mortgage) that is ten (10) days after the date on which the Commitment was
terminated or cancelled or otherwise lost, the Company shall either (i) obtain
and furnish to RMST for the Warehouse Purchasers a replacement Commitment
acceptable (and issued by an Investor acceptable) to RMST and the Agent and
having characteristics all of which can be satisfied by the Eligible Mortgage
and providing for the purchase of the Mortgage for no less than the Minimum Net
Share for that Mortgage (a "QUALIFIED SUBSTITUTE TAKEOUT"), or (ii) repurchase
the Lost Commitment Mortgage from the Warehouse Purchasers (or RMST if RMST has
purchased the Mortgage) for the Applicable Repurchase Amount.
Section 21. ASSISTANCE BY RMST. RMST will exert reasonable efforts to
assist the Company to obtain a Qualified Substitute Takeout, but RMST shall do
so only as an accommodation to the Company. RMST shall have no additional
obligation to the Company as a result of its efforts and no liability to the
Company for the results (or failure) of its efforts.
Section 22. FAILURE TO SELL. If for any reason, except the willful or
grossly negligent act or omission of RMST, the Agent or the Warehouse
Purchasers, the Company has not caused any Eligible Mortgage to be sold to an
Investor on or before the date (the "FAILURE DATE") that is the earlier of:
(a) sixty (60) days after the Warehouse Purchasers purchased the
Eligible Mortgage or
(b) (i) in the case of Bulk Purchase Mortgages, the Bulk Mortgage
Takeout Date or, (ii) as to all other Eligible Mortgages, the date the
Commitment which relates to that Eligible Mortgage expires,
then, on or before the date (the "MORTGAGE DEFAULT DATE" for that Mortgage) that
is three (3) Banking Business Days after the Failure Date, the Company shall
repurchase the Eligible Mortgages from the
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Warehouse Purchasers (or RMST if RMST has purchased the Mortgage) for the
Applicable Repurchase Amount.
Section 23. EFFECT OF COMPANY'S FAILURE. If by the Mortgage Default Date
the Company has not repurchased the Lost Commitment Mortgage or obtained a
Qualified Substitute Takeout in the case of a failure under Section 20, or
repurchased the Mortgage in the case of a failure under Section 22, then the
Company shall be in default of its obligations under this Agreement with regard
to that Mortgage (which shall be "AFFECTED MORTGAGE" after that failure) and
shall have committed a breach of this Agreement.
DEFECTIVE MORTGAGES
Section 24. DEFECTIVE MORTGAGES. If RMST determines that any Eligible
Mortgage is a Defective Mortgage the Company shall wholly cure (to the
satisfaction of RMST and the Agent) such defects in the Mortgage upon notice
from RMST. If the Company fails to wholly cure such defects by the day which is
three (3) Banking Business Days after the notice to cure from RMST (the
"MORTGAGE DEFAULT DATE" for that Mortgage), then, by notice given to the
Company, RMST may require that by the close of the next Banking Business Day
following receipt of RMST's notice, the Company shall either (i) repurchase the
Defective Mortgage from the Warehouse Purchasers (or RMST if RMST has purchased
the Mortgage) for the Applicable Repurchase Amount, or (ii) substitute a new
Eligible Mortgage (the "SUBSTITUTE MORTGAGE"), which is in all respects
acceptable to RMST and the Agent in their reasonable discretion.
Section 25. PAYMENT OF SHORTFALL AMOUNT. If the aggregate principal
balances of all Substitute Mortgages are less than the aggregate principal
balances of all Defective Mortgages being replaced, then the Company shall remit
with such Substitute Mortgages an amount equal to the difference (the "SHORTFALL
AMOUNT") between the aggregate principal balance of the Substitute Mortgages and
the Defective Mortgages, plus any fees that would have been earned under this
Agreement on the aggregate principal balance difference calculated as if, on the
date of such remittance, the Company were repurchasing a Mortgage in principal
amount equal to the Shortfall Amount and covered by the same Commitment as the
Defective Mortgages which were only partially replaced, with the Period Held
applicable to such hypothetical Mortgage being repurchased ending on the date of
such remittance. Absent manifest error, or if the Company does not object in
writing to RMST's calculation of a Shortfall Amount and fees on or before thirty
(30) days after RMST gives the Company written notice of RMST's calculated value
of that Shortfall Amount and fees, RMST's calculation of the Shortfall Amount
and fees shall be conclusive and binding.
Section 26. EFFECT OF COMPANY'S FAILURE. If by the close of the next
Banking Business Day after notice under Section 24 the Company has not delivered
a Substitute Mortgage or repurchased the Defective Mortgage, then the Company
shall be in default of its obligations under this Agreement with regard to that
Mortgage (which shall be "AFFECTED MORTGAGE" after that failure) and shall have
committed a breach of this Agreement.
REMEDIES--AFFECTED MORTGAGES
Section 27. EFFECT OF BREACH. Upon the occurrence of a breach under Section
23 or Section 26, RMST, in addition to its rights otherwise provided for under
this Agreement, may elect then, or at any time thereafter, to: (i) terminate the
Company's rights and obligations to service the Affected Mortgage; (ii) obtain a
new Commitment from a third party to purchase the Affected Mortgage; (iii) cause
the Warehouse Purchasers to sell--or, if RMST has purchased the Affected
Mortgage, sell--the Affected Mortgage to a third party; (iv) terminate this
Agreement by giving notice to the Company in which event the provisions of
Section 45 shall apply; or (v) do any combination of those things.
Section 28. EFFECT ON VALUE REPLACEMENT OBLIGATIONS. The Company's breach
of this Agreement under Section 23 or Section 26 shall not terminate or xxxxx
the Company's value replacement
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obligations to RMST with regard to the Affected Mortgage, as provided for in
Section 32 of this Agreement, and the value replacement obligations to RMST with
regard to the Affected Mortgage shall only terminate upon (i) the sale of the
Affected Mortgage to a third party, or (ii) the repurchase by the Company of the
Affected Mortgage from the Warehouse Purchasers (or RMST if RMST has purchased
the Mortgage) for the Applicable Repurchase Amount.
Section 29. SALE TO THIRD PARTY. If RMST causes the Warehouse Purchasers to
sell any Affected Mortgage to a third party as permitted under Section 27, then,
in the absence of manifest error, the purchase price obtained by the Warehouse
Purchasers shall be conclusively presumed to be the fair market value of that
Affected Mortgage (which may or may not be the same as the quoted market value
for comparable mortgages as quoted on the quotation system which is used for
calculating the value replacement obligations to RMST as provided for in Section
32).
Section 30. MAKE WHOLE PAYMENT. Upon the sale of any Affected Mortgage to a
third party, the Company shall promptly pay to the Agent an amount (the "MAKE
WHOLE PAYMENT") equal to the Minimum Net Share as of the sale date, less the net
proceeds realized by the Warehouse Purchasers upon the sale of the Affected
Mortgage. RMST may offset any value replacement previously paid by the Company
with respect to the Affected Mortgage against the Company's obligation to
pay the Make Whole Payment, and if there is any excess of value replacement
related to the Affected Mortgage after applying the value replacement to the
Make Whole Payment, RMST will refund such excess to the Company, provided that
the Company is not then in default in performance of any of its obligations
under this Agreement in any other respect. However, application of the value
replacement related to the Affected Mortgage to the Make Whole Payment shall in
no way limit or waive any rights RMST may possess under or diminish any
obligations of the Company with respect to, any provision of the Agreement for
any Mortgage, including the Affected Mortgage.
VALUE PROTECTION
Section 31. RELIANCE BY RMST. The Company acknowledges that when arranging
for the purchase of Mortgages, RMST will rely on the Company's representations
that: (i) the Commitment obtained by the Company in respect of each Offer (other
than an Offer relating to a Bulk Purchase Mortgage) will be the source for RMST
and the Warehouse Purchasers to recover the Minimum Net Share in respect of the
Mortgage and the Mortgage will be purchased by the Investor no later than the
date prescribed in the Commitment; and (ii) each Bulk Purchase Mortgage will be
acquired by Investors by its Bulk Purchase Mortgage Takeout Date for an amount
at least sufficient to permit RMST and the Warehouse Purchasers to recover the
Minimum Net Share with respect to the Mortgage.
Section 32. VALUE REPLACEMENT PAYMENT. If the Warehouse Purchasers or
RMST hold any Bulk Purchase Mortgages or if there are any Lost Commitment
Mortgages which have not been sold to Investors or repurchased by the
Company, then RMST may require the Company to make payments to the Warehouse
Purchasers--or to RMST if RMST holds the Bulk Purchase Mortgages or Lost
Commitment Mortgages--to reduce the purchase price for the Lost Commitment
Mortgages and the Bulk Purchase Mortgages ("VALUE REPLACEMENT PAYMENTS").
The amount of the Value Replacement Payment on any day for a Bulk Purchase
Mortgage or Lost Commitment Mortgage is the amount, if greater than zero,
sufficient to cause (i) the Minimum Net Share for that day for that Mortgage
based on the purchase price paid by the Warehouse Purchasers for that
Mortgage (reduced by this and any prior Value Replacement Payment), to be no
greater than (ii) the value on that day of mortgage-backed securities based
on and backed by mortgage loans comparable to the Mortgage. In determining
the Value Replacement Payment, RMST may use such reasonable averaging,
allocation and attribution methods as it shall elect, and absent manifest
error, the market value quoted for any such security as quoted on the
quotation system to which RMST subscribes (or any comparable system to which
RMST may hereafter
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MORTGAGES PURCHASE AGREEMENT PAGE 9
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subscribe and RMST may elect to use for the purposes of determining the market
value of mortgage-backed securities) shall be conclusive evidence of the market
value of such security. The Company shall pay the Value Replacement Payment to
RMST no later than the next Banking Business Day after RMST makes demand by
notice to the Company.
Section 33. BULK MORTGAGE TAKEOUT PROTECTION. The Bank shall maintain the
Bulk Mortgage Protection Amount on deposit in an account (the "BULK MORTGAGE
TAKEOUT PROTECTION ACCOUNT") in a bank designed by RMST. The Bulk Mortgage
Takeout Protection Account shall be an account in the name of RMST for the
benefit of the Company but as to which the Company shall have no rights of
withdrawal. If there is a Default, any amounts remaining in the Bulk Mortgage
Takeout Protection Account shall be cash collateral securing any rights RMST
shall have pursuant to this Agreement.
SERVICING
Section 34. SERVICING AFTER PURCHASE. After the Eligible Mortgages are
purchased, the Company agrees to service and administer the Eligible Mortgages
for the benefit of the Warehouse Purchasers in accordance with prudent mortgage
loan servicing standards and procedures generally accepted in the mortgage
banking industry and in accordance with the servicing provisions of the
applicable GNMA, FNMA or FHLMC mortgage-backed securities seller/servicer guide
("GUIDE") for the account, however, of the Warehouse Purchasers instead of GNMA,
FNMA or FHLMC, provided that the Company shall at all times comply with
applicable law, FHA regulations and VA regulations and the requirements of any
private mortgage insurer so that the FHA insurance, VA guarantee or any other
applicable insurance or guaranty applicable to any Mortgage is not voided or
reduced.
Section 35. REMITTANCES. As long as the Warehouse Purchasers own a
Mortgage, the Company agrees to remit to the Agent by the fifth (5th) day
following the day the Company receives any principal and interest payments and
principal prepayments all such sums received for deposit to an account for the
benefit of the Warehouse Purchasers.
Section 36. ESCROW ACCOUNTS. All escrow amounts relating to all Eligible
Mortgages shall be maintained on deposit in an individual custodial account at a
bank designated by RMST until the Eligible Mortgage is sold to an Investor.
Section 37. NO CHARGE FOR SERVICES. The Company's services under Section 34
shall be provided without charge.
Section 38. TERMINATION OF SERVICING. If RMST terminates the Company's
rights and obligations to service a Mortgage, the Company shall promptly deliver
all files and papers related to that Mortgage to RMST. Any ancillary income
received by RMST related to the servicing of the Mortgage shall not be applied
to or reduce the Minimum Net Share for the Mortgage.
SECURITY
Section 39. SECURITY AGREEMENT. To secure performance of all of the
Company's obligations under this Agreement and under each Offer, the Company
hereby grants to RMST, for itself, the Agent and the Warehouse Purchasers, a
security interest in all of the Company's present and future right, title and
interest in and to: (i) the Company's share of Sale Proceeds, if any; (ii) each
unexpired Commitment; (iii) the Settlement Account; (iv) the Proceeds Account;
and (v) the Bulk Mortgage Takeout Protection Account. All such security
interests granted hereby shall be first and prior and shall continue in full
force and effect, notwithstanding any termination of this Agreement, until all
of the Company's obligations to RMST, the Agent and the Warehouse Purchasers
under this Agreement and every accepted Offer have been fully performed and
satisfied. RMST shall have all of the rights of a secured party under the laws
of
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MORTGAGES PURCHASE AGREEMENT PAGE 10
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the state where such collateral is located, and shall have the express right to
transfer any collateral into its own name, either before or after default.
Section 40. RIGHT OF OFFSET. RMST shall also have a right of offset against
the Proceeds Account for, and to secure, any and all sums due RMST, the Agent or
the Warehouse Purchasers under this Agreement.
Section 41. SUBROGATION TO RIGHTS UNDER COMMITMENT. The Company recognizes
that by virtue of the Warehouse Purchasers' ownership of the Mortgages and
RMST's rights under this Agreement, RMST, the Agent and the Warehouse Purchasers
have a valuable property right in the Commitment, and to secure that right the
Company shall permit RMST to subrogate to all rights the Company may have in the
Commitment if the Company fails to perform any of its obligations under this
Agreement.
Section 42. CONSTRUCTION AS FINANCING. Without limiting any of the
foregoing provisions, if for any reason any court of competent jurisdiction
shall construe the purchase by the Warehouse Purchasers of any Eligible
Mortgages to be a loan or extension of credit rather than the absolute and
unconditional sale to the Warehouse Purchasers which the Company and RMST
expressly hereby declare that they intend it to be, then the provisions of
this Agreement shall be construed and given effect so as to create and
perfect in RMST, for itself, the Agent and the Warehouse Purchasers, a
first, prior and continuous security interest in all of the Company's
interests in each of the affected Eligible Mortgages and all proceeds from
(1) the earlier of (a) the date the Warehouse Purchasers give value for the
Eligible Mortgage or (b) the date the Company acquires (or reacquires) an
interest in the Eligible Mortgage until (2) the earlier of (x) the sale of
the Eligible Mortgage to an Investor pursuant to the terms of this Agreement
or (y) complete fulfillment of all of the Company's obligations to RMST
under this Agreement. The term "proceeds" shall be construed to include each
Commitment related to the Mortgage. In the event of such a construction, the
amount of all fees and realizations owed to, earned by or payable to RMST or
the Warehouse Purchasers for the transaction or transactions so construed
shall be absolutely limited to the maximum non-usurious amount of interest
allowed by whichever of applicable Texas (or other applicable state law) or
federal laws permit the higher amount of interest to be contracted for,
reserved, charged or received (as applicable to the circumstance), it being
the intention of the parties to comply with, and not to evade, all usury and
other applicable laws.
INDEMNITY
Section 43. INDEMNIFICATION OF RMST AND OTHERS. The Company agrees to
and does hereby indemnify and hold harmless RMST, the Agent and the
Warehouse Purchasers against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, cost, expenses and
disbursements of any kind or nature whatsoever, which may be imposed on,
incurred by, or assessed against RMST, the Agent or the Warehouse Purchasers
in any way related to, or arising out of any of the loan papers or any of
the transactions contemplated therein, to the extent that any of the same
results directly or indirectly from any claims made or actions, suits or
proceedings commenced by or on behalf of any person other than RMST, the
Agent or the Warehouse Purchasers, provided that RMST, the Agent and the
Warehouse Purchasers shall not have the right to be indemnified hereunder
for their own fraud or negligence. The indemnities contained in this section
shall survive the termination of this Agreement.
DEFAULT
Section 44. DEFAULT. The following shall be a Default under this
Agreement:
(a) as to any FNMA, FHLMC, GNMA or HUD programs for which the Company
has, at any time, represented to RMST that the Company was eligible to
participate, the Company loses its eligibility to participate in that
program;
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MORTGAGES PURCHASE AGREEMENT PAGE 11
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(b) the Company's participation in a take out program is suspended by
the Investor offering that program for a reason other than termination of
the program as a whole by the Investor;
(c) any one of the Key Principals ceases to be actively involved in
the management of the Company for any reason (including death, disability
or retirement) or the ceases to own an equity interest in the Company;
(d) any equity interest in the Company is issued to any person who is
not a Key Principal;
(e) there is, in the reasonable judgement of RMST, a material adverse
change in the Company's financial condition, the prospects for the
Company's timely and complete performance of its obligations under this
Agreement or the prospects for the Company's continuing in business as a
going concern;
(f) the Agent determines that the Company is no longer eligible to
participate in the Warehouse Facility;
(g) the fair value of the Company's assets do not exceed its
liabilities, or the Company does not have sufficient cash flow to enable it
to pay its debts as they mature or the Company has an unreasonably small
capital to conduct its business;
(h) the Company voluntarily seeks, consents to, or acquiesces in the
benefit of any liquidation, conservatorship, bankruptcy, moratorium,
arrangement, receivership, insolvency, reorganization or similar laws from
time to time in effect and affecting creditors' rights generally
(collectively "DEBTOR LAWS") or becomes a party to, or is made the subject
of, any proceeding provided for by any Debtor Law (other than as a creditor
or claimant) that could stay the enforcement of RMST's rights or the rights
of the Warehouse Purchasers;
(i) the Company is not, in the reasonable judgement of RMST, able to
comply with any of the material terms of this Agreement for any reason;
(j) the Company is not, in the reasonable judgement of RMST, able to
comply with the underwriting, closing, delivery and funding requirements of
any of its institutional end-loan investors; or
(k) the Company commits a breach of this Agreement which is not cured
within five (5) Banking Business Days of the giving of the notice of
default by RMST provided there shall be no cure period for a breach under
Section 23 or Section 26.
Section 45. REMEDIES. Upon the occurrence of a Default, in addition to its
rights under Section 27, RMST may by notice given to the Company (i) terminate
the Company's rights and obligations to service any or all Eligible Mortgages
purchased by the Warehouse Purchasers; (ii) terminate any obligations RMST has
to cause future purchases to be funded under this Agreement; (iii) cause the
Warehouse Purchasers to sell--or, if RMST has purchased some or all of the
Eligible Mortgages, sell--any or all of the Eligible Mortgages to one or more
third parties; (iv) terminate this Agreement by giving notice to the Company; or
(v) do any combination of those things.
Section 46. EFFECT OF TERMINATION. Upon termination, this Agreement will
survive and otherwise remain in full force and effect with respect to all of
Company's obligations and responsibilities for Mortgages purchased hereunder
except that all monetary obligations of the Company to RMST, the Agent or the
Investors shall bear interest at the Default Rate and the determination of
Minimum Net Share shall be determined using the Default Rate for all periods
after the occurrence of the Default. The Company will, after such termination,
reasonably cooperate with RMST, the Agent, the Warehouse Purchasers and the
Investors in completing all transactions, documents, reports, payments and acts
contemplated or provided hereunder.
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MORTGAGES PURCHASE AGREEMENT PAGE 12
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Section 47. COSTS OF COLLECTION AND ENFORCEMENT. The Company shall pay (i)
all fees, charges, or taxes for the recording or filing of any document to
create or perfect the security interest created by Section 39; (ii) all amounts
reasonably expended, advanced or incurred by RMST, the Agent or the Warehouse
Purchasers to satisfy any obligation of the Company under this Agreement, to
collect the any obligations arising under this Agreement or to enforce the
rights of RMST, the Agent or the Warehouse Purchasers under this Agreement,
including all court costs, attorneys' fees (whether for trial, appeal, other
proceedings or otherwise), fees of auditors and accountants and investigation
expenses reasonably incurred by RMST, the Agent or the Warehouse Purchasers in
connection with any such matters; and (iii) interest at an annual interest rate
equal to the Default Rate on each item specified in clauses (i) and (ii) above
from ten (10) days after the date of written demand or request for reimbursement
to the date of reimbursement.
REPRESENTATIONS AND WARRANTIES; COVENANTS
Section 48. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants (and such representations and warranties shall be deemed remade at the
time any Mortgage is sold to the Warehouse Purchasers pursuant to this
Agreement) as set forth below.
(a) BLANK ASSIGNMENTS' VALIDITY. The written assignment of each
Mortgage in blank from the Company is valid and effective and RMST or the
Agent and each of its successors, substitutes and assigns are each duly
authorized to complete the blanks in each such assignment and to take such
other steps as are necessary or appropriate, in the judgment of the person
acting, to transfer the Mortgage and any related Commitment, as
contemplated by the Specific Power of Attorney form attached as Appendix 3
(and the Company hereby agrees to execute one or more originals of such
Specific Power of Attorney and any supplement to it which RMST may from
time to time request from the Company.)
(b) DOCUMENTS GENUINE, STATEMENTS TRUE. All documents submitted in
connection with each Offer are genuine, the statements contained in the
Offer submitted to RMST and all other statements and representations as to
any such Mortgages are accurate, true and correct in all material respects
and meet each of the requirements and specifications of this Agreement.
(c) DELIVERY RISK AND RESPONSIBILITY. All deliveries of all Mortgage
documents shall be at the Company's risk and (except only for deliveries of
Mortgages required to be made by the Agent as custodian under the relevant
GNMA, FNMA or FHLMC Guide) the Company's responsibility, and the Company
agrees to indemnify RMST, the Agent and the Warehouse Purchasers and hold
each of them harmless from all bona fide and reasonable claims, loss, cost,
damage or expense (including reasonable attorneys' fees) arising out of or
incurred in connection therewith, including any resulting in whole or in
part from RMST's, the Agent's or the Warehouse Purchaser's own acts except
only to the extent that any such loss, cost or expense results solely from
their negligent acts or omissions or breach of this Agreement.
(d) EACH MORTGAGE VALID. Each Mortgage sold to the Warehouse
Purchasers has been duly executed by the mortgagor(s), acknowledged and
recorded (or duly sent by the Closer to be recorded) and is valid and
binding upon such mortgagor(s) and enforceable in accordance with its
terms.
(e) MORTGAGE GUARANTY AND INSURANCE. Each Mortgage that the Company
represents to be insurable by FHA or by a private mortgage insurer, or
sufficient to be guaranteed by the VA, is or will be so insured or
guaranteed as represented.
(f) MORTGAGES' CHARACTERISTICS. The full principal amount of each
Mortgage has been (or when funded by the Warehouse Purchasers if so
requested, will be) advanced to the mortgagor
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MORTGAGES PURCHASE AGREEMENT PAGE 13
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under the Mortgage, either by payment directly to the mortgagor or by
payment made on the mortgagor's request or approval; the unpaid principal
balance is as stated in the Offer all costs, fees and expenses incurred in
making, closing and recording the Mortgage have been paid (or will be paid
at the closing); no part of the property covered by the Mortgage has been
or will be released from its lien; the terms of the Mortgage have in no way
been changed or modified and the Mortgage is current and not in default.
(g) MORTGAGES COMPLY WITH LAW. As to each individual Mortgage offered
to or purchased by the Warehouse Purchasers, and all escrow balances
related to the Mortgages, all applicable federal, state and local laws,
rules and regulations have been complied with, including the Real Estate
Settlement Procedures Act, the Equal Credit Opportunity Act, the Flood
Disaster Protection Act, the Truth-in-Lending Act of 1968, the Depository
Institutions Deregulatory and Monetary Control Act of 1980, all as amended,
and regulations issued pursuant to them; and all usury laws and
limitations, all conditions within the control of the Company as to the
validity of the insurance or guaranty required by the National Housing Act
of 1934, as amended, and the rules and regulations thereunder, and the
Servicemen's Readjustment Act of 1944, as amended, and the rules and
regulations thereunder, and all requirements of the mortgage insurance
companies or other insurers, have been properly satisfied, and such
insurance or guaranty is valid or enforceable. All escrow balances have
been calculated in accordance with the contractual provisions of the
Mortgage, or, if more restrictive, in accordance with any applicable GNMA,
FNMA or FHLMC Guides.
(h) TITLE INSURANCE. There is in force a paid-up title insurance
policy on each Mortgage issued by an accredited title insurer in an amount
at least equal to the outstanding principal balance of such Mortgage. The
title insurance policy has been, or shall be, issued by a title insurance
underwriter duly authorized to issue title insurance in the state where the
real property covered by the Mortgage is located.
(i) HAZARD INSURANCE. Hazard insurance policies meeting the
requirements of each the Mortgage and of the relevant GNMA, FNMA or FHLMC
Guide and the Investor's requirements are in force.
(j) SERVICING NOT OTHERWISE PLEDGED. If applicable, the Company has
not directly or indirectly pledged any servicing rights with respect to any
Mortgages offered to or purchased by the Warehouse Purchasers under this
Agreement to any person or entity other than the Warehouse Purchasers
pursuant to this Agreement, nor will the Company do so without RMST's prior
written approval.
(k) COMMITMENTS. The Company warrants that each Commitment is, and
will remain forever, free of any security interest, lien, claim, or
encumbrance of any kind and may be assigned by the Company to RMST and its
assigns.
(l) APPRAISALS SATISFY APPLICABLE REQUIREMENTS. A written appraisal of
the real property securing each Mortgage has been prepared by a
duly-licensed appraiser and satisfies all requirements for any applicable
VA guaranty, FHA insurance or private mortgage insurance and all
requirements imposed by the Investor which issued the Commitment covering
such Mortgage, as well as the requirements of 12 C.F.R., Part 323, as
amended or replaced (if the Mortgage is two hundred fifty thousand dollars
($250,000) or more).
(m) QUALITY CONTROL REPORTS. The Company agrees at its own cost to
provide periodic reports to RMST as requested by RMST from time to time, of
the Company's Mortgage loan
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MORTGAGES PURCHASE AGREEMENT PAGE 14
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origination, acquisition and servicing operations performed by the
quality-control reviewer, which is satisfactory to the applicable
governing agency and RMST.
(n) ELIGIBILITY. The Company will be approved, qualified and in
good standing as:
(i) an FHA-approved mortgage, eligible to originate,
purchase, hold, sell and service FHA loans;
(ii) a VA-approved (not VA automatic) mortgagee, eligible to
originate, purchase, hold, sell and service VA loans;
prior to making an Offer for a FHA or VA loan, as the case may be, and at
the time of making that Offer meets all requirements applicable to its
status as such. The Company agrees not to take or omit to take any act
which would result in its losing its status as an eligible mortgagee,
seller and issuer as described above.
(o) ORGANIZATION; GOOD STANDING. The Company (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (ii) has the requisite legal power and
authority to own its property and to carry on its business as currently
conducted and (iii) is duly qualified as a foreign corporation to do
business and is in good standing in each jurisdiction in which the
transaction of its business makes such qualification necessary, except in
jurisdictions, if any, where a failure to be in good standing has no
material adverse effect on its financial condition.
(p) LICENSED. The Company is licensed and qualified to transact the
mortgage origination business in, and is in good standing under, the laws
of each state in which real estate which secures a Mortgage is located or
is otherwise exempt under applicable law from such licensing and
qualification. There has been no unsatisfied demand made upon the Company
by any state in which real estate which secures a Mortgage is located that
the Company be licensed or qualified to transact the mortgage origination
business under the laws of that state. The Company is in compliance with
the laws of all states necessary to insure the enforceability of each
Mortgage.
(q) AUTHORIZATION; NO CONFLICT. The Company has the power and
authority to execute, deliver and comply with the terms of this Agreement.
The Company's execution, delivery and performance of this Agreement: (i)
have been duly and validly authorized by all necessary corporate action on
the Company's part (none of which action has been modified or rescinded and
all of which is in full force and effect); (ii) do not and will not: (1)
conflict with or violate any laws or court orders of which the Company is,
or in the normal course of its business should be, aware of, or the
Company's articles of incorporation or bylaws; (2) either conflict with,
result in a breach of, constitute a default under, require any consent
under, or result in the creation of any lien or security interest (other
than the security interest created by this Agreement) upon any of the
Company's property under any agreement, indenture or other papers to which
the Company is party or by which the Company or its property may be bound
or affected; and (iii) do not and will not result in, or permit the holder
of any such agreement, indenture or other papers to cause, the acceleration
of any of the Company's: (1) debt; (2) obligations in respect of letters of
credit, acceptances or similar obligations issued or created for the
Company's account; (3) direct or indirect guaranties of debt of others; (4)
liabilities secured by any lien or security interest existing on property
owned by the Company, including secured liabilities which have not been
assumed by the Company or with respect to which the Company is not
personally liable; or (5) liabilities in respect of unfunded and vested
benefits under ERISA plans.
(r) ENFORCEABILITY. This Agreement constitutes the valid and binding
obligation of the Company enforceable in accordance with its terms, except
as limited by (i) bankruptcy,
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MORTGAGES PURCHASE AGREEMENT PAGE 15
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insolvency or other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights and (ii) the application of equitable
principles.
(s) APPROVALS. The Company's execution and delivery of this Agreement
and the Company's performance of its obligations do not require any
license, consent, approval or other action of any court or other
governmental authority other than those that the Company is, or in the
normal course of its business should be, aware of, other than those which
have been obtained and remain in full force and effect.
(t) FINANCIAL STATEMENTS. The Company's annual financial statements
for the most recent two fiscal years ending more than ninety (90) days
prior to the date of this Agreement have been furnished to RMST. The annual
financial statements are audited.
(u) PRESENTATION. The financial statements furnished as described in
(t) above and any financial statements provided to RMST pursuant to Section
49 fairly present the Company's financial condition and the results of the
Company's operations as of and for the fiscal period ended on the
respective dates of such financial statements. On the dates of such
financial statements, the Company was, and on the date of any sale of any
Mortgage hereunder is, solvent (i.e., able to pay its debts as they mature
and having assets with value greater than its liabilities). Such financial
statements were prepared in accordance with generally-accepted accounting
principles. Since the date of such financial statements, nothing has
occurred which has had a material adverse effect on the Company's
operations or financial condition nor is the Company aware of any state of
facts which (with or without notice or lapse of time or both) would or
could result in such a material adverse effect, and the Company is solvent
as of the date of this Agreement and will maintain its solvency on a
continuing basis. Notwithstanding any of the aforementioned the Company
further agrees to maintain its tangible net worth at a minimum of Nine
Hundred Thousand Dollars ($900,000).
(v) LITIGATION. There are no actions, claims, suits or proceedings
pending, or to the Company's knowledge, threatened or reasonably
anticipated, against or affecting the Company by any person, entity or
governmental authority, other than those disclosed in (i) its most recent
audited annual financial statements or (ii) as listed on APPENDIX 6 which,
if adversely determined, may reasonably be expected to result in a material
adverse effect on the Company's operations or financial condition.
(w) PAYMENT OF TAXES. The Company has filed or caused to be filed all
of the Company's federal, state and other tax returns required to be filed,
all such returns are true and correct and the Company has paid (or caused
to be paid) all material taxes that are due and payable as shown on such
returns, including all applicable FICA payments and withholding taxes,
except taxes being contested in good faith. The amounts reserved as a
liability for taxes payable in the financial statements described above are
sufficient for payment of all of the Company's unpaid taxes, whether or not
disputed, accrued for or applicable to the period and on the dates of such
financial statements and all years and periods prior to them and for which
the Company may be liable in its own right or as transferee of the assets
of, or as successor to, any other person or entity.
(x) VA AND FHA LOANS. The Company has complied, and will continue to
comply, with all applicable laws in respect of the FHA insurance or VA
guaranty of each Mortgage offered or sold to the Warehouse Purchasers and
designated by the Company as an FHA loan or a VA loan, respectively, and
such insurance or guaranty is and will continue to be in full force and
effect. All such FHA loans or VA loans comply and will continue to comply
in all respects with all applicable requirements for purchase under the
industry standard forms of selling contracts for FHA loans or VA loans,
respectively, and any supplement to them then in effect. All Mortgages
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MORTGAGES PURCHASE AGREEMENT PAGE 16
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offered to the Warehouse Purchasers under this Agreement and represented to
be (i) VA loans are currently guaranteed by VA or (ii) FHA loans are
currently insured by FHA. With respect to Mortgages not yet endorsed by FHA
for insurance and Mortgages for which the Company has not yet obtained
evidence of guaranty from VA or insurance from FHA, the Company shall
proceed diligently and promptly to comply with the documentation
requirements and all other applicable requirements in order to procure the
FHA endorsement for insurance or evidence of VA guaranty or FHA insurance,
as the case may be and, in the event that the Company ever has reason to
believe that any such endorsement or evidence will not be forthcoming, the
Company shall promptly so notify RMST and repurchase the related FHA loan
or VA loan.
(y) FIRE AND CASUALTY POLICIES. All fire and casualty policies
covering the premises encumbered by each Mortgage offered to or purchased
by the Warehouse Purchasers under this Agreement: (i) presently name and
will continue to name the Company "and its successors and/or assigns in
interest as they may appear" of each as the insured under a standard
mortgage clause or, for newly funded Mortgages, a notice for an endorsement
changing the named mortgagee has been submitted to the carrier and will be
pursued diligently until issued; (ii) are and will continue to be in full
force and effect; and (iii) afford and will continue to afford insurance
against fire and such other risks as are usually insured against in the
broad form of extended coverage insurance from time-to-time available, as
well as insurance against flood hazards if it is required by FHA, VA or any
applicable law, court or other governmental authority.
(z) FLOOD INSURANCE. Mortgages offered to or purchased by the
Warehouse Purchasers under this Agreement which are secured by premises
located in a special flood hazard are designated as such by the Secretary
of HUD which require flood insurance are and shall continue to be covered
by special flood insurance under the National Flood Insurance Program.
(aa) YEAR 2000. The Company has undertaken a detailed inventory,
review, and assessment of all areas within and affecting the Company's
business and operations that could be adversely affected by the failure of
the Company to be Year 2000 Compliant on a timely basis; has developed a
detailed plan and time line for becoming Year 2000 Compliant on a timely
basis; and, to date, has implemented that plan in accordance with the
specified timetable in all material respects. The Company has made written
inquiry of each of the Company's key suppliers, vendors and customers as to
whether they will be Year 2000 Compliant in all material respects on a
timely basis and on the basis of that inquiry believes that all of them
will be so compliant. As used herein, "YEAR 2000 COMPLIANT" shall mean that
all software, embedded microchips and other processing capabilities
utilized by the Company or the Company's key suppliers, vendors and
customers will correctly process, sequence, and calculate, without
interruption, all date and date related data for all dates to, through and
after January 1, 2000, including leap year calculations, and recognize,
store and transmit date data in a format which clearly indicates the
correct century. As used herein, "key suppliers, vendors and customers"
means those suppliers, vendors, and customers of the Company whose business
failure or material business disruption would, in RMST's judgment, be
reasonably likely to result in a material adverse change in the business,
properties, condition (financial or otherwise), or prospects of the
Company.
Section 49. COVENANTS.
(a) SERVICING. The Company agrees to service (or cause to be serviced) all
Mortgages purchased by the Warehouse Purchasers under this Agreement which
the Company has the right to service, in accordance with the servicing
standards stated above in this Agreement and all applicable GNMA, FNMA,
FHLMC, FHA and VA requirements, including taking all actions necessary to
enforce the obligations of the obligors under such Mortgage.
--------------------------------------------------------------------------------
MORTGAGES PURCHASE AGREEMENT PAGE 17
18
(b) COMPLY WITH COMMITMENTS. The Company agrees to timely comply in
all respects with all terms and conditions of all Commitments covering any
Eligible Mortgage (and any renewals, extensions, or modifications of them
or substitutions for them), and cause the Mortgages covered by and
intended to be sold under each Commitment to be so sold before its
expiration date and in the manner and order contemplated by the
Commitment.
(c) MAINTAIN COMMITMENTS. The Company agrees to maintain each
Commitment and all of the Company's rights and obligations under it in
full force and effect, not to pair off or otherwise cause or acquiesce in
the effective partial or complete cancellation of any Commitment without
RMST's specific written consent, not to suffer or permit any default under
any Commitment, and to enforce performance by the issuer of each
Commitment. Without limitation, the Company expressly agrees to timely
deliver any and all margin required by the terms of each Commitment.
(d) CHANGE IN STATUS. The Company agrees to give prompt written
notice to RMST of any change in its status as such or in the relationship
between the Company and any Investor approved by RMST.
(e) NOTIFICATION OF MORTGAGE DEFAULTS. The Company agrees to
immediately notify RMST upon learning of any default under any of the
Mortgages purchased (or agreed to be purchased) by the Warehouse
Purchasers, or of the institution of any proceeding before any court or
other governmental authority in respect of a claimed violation by the
Company or any other person of any statute, rule or regulation relating to
any the Mortgage or a claimed defense or offset to any Mortgage.
(f) LOAN DOCUMENTS. The Company agrees to maintain - at the Company's
principal office or in the office of a computer service bureau engaged by
the Company - the originals (or copies in any case where the original has
been delivered to RMST or the Agent) of all promissory notes and mortgages
or deeds of trust for the Mortgages, and all Commitments related to them,
and all related papers, as well as files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, disks, cards,
accounting records and other information and data relating to such
Mortgages for a period not to exceed one year. Upon RMST's written
request, the Company will promptly make them conveniently available to
RMST.
(g) CURRENT FINANCIAL INFORMATION. The Company agrees to furnish
RMST, within ninety (90) days after the end of the Company's fiscal year,
audited annual financial statements for that year end, reflecting the
corresponding figures for the preceding fiscal year in comparative form,
accompanied by the related report acceptable to RMST prepared by the
Company's independent certified public accountants stating that the
statements were prepared according to generally accepted account
principles applied on a basis consistent with prior periods except for
such changes in generally accepted accounting principles concurred in by
the Company's independent public accountants. Promptly when available and
least within forty five (45) days after the end of each of the first three
fiscal quarters in the Company's fiscal year, the Company shall furnish
RMST its financial statements for that quarter and the year to date, each
reflecting the corresponding figures for the same quarter in the preceding
fiscal year in comparative form. If requested by RMST, the Company will
provide RMST monthly financial statements no later than twenty (20) days
after the close of each month in its fiscal year.
(h) YEAR 2000. The Company shall deliver to RMST promptly after they
become available the Company's Year 2000 plan and time line, all periodic
internally and externally prepared evaluations and progress reports
concerning the Company's Year 2000 plan and Year 2000 readiness, any
management or other letters from the Company's accountants addressing or
mentioning the Company's Year 2000 Compliance, and such other information,
documentation
-------------------------------------------------------------------------------
MORTGAGES PURCHASE AGREEMENT PAGE 18
19
and materials as RMST may reasonably request from time to time in order to
confirm that the Company is Year 2000 Compliant and the methods used by
the Company to become Year 2000 Compliant.
(i) OTHER INFORMATION. Promptly upon request, the Company agrees to
furnish such other information as RMST may request concerning the Company,
its business affairs, the Mortgages and its relationship with any
Investor.
Section 50. ADJUSTMENT TO LOAN SET UP FEE. RMST may elect to increase or
decrease the Loan Set Up Fee from time to time by giving the Company written
notice of the change specifying a date when the change will become effective
which is at least thirty (30) days after the notice. Any change in the Loan Set
Up Fee shall be effective only as to Mortgages acquired by the Warehouse
Purchasers on or after the effective date of the change.
MISCELLANEOUS
Section 51. ASSIGNMENT PROHIBITED. This Agreement may not be assigned by
the Company.
Section 52. NOTICES. All notices, demands, consents, requests and other
communications required or permitted to be given or made hereunder shall be in
writing and shall be delivered in person or telecopied (with an additional copy
to be mailed as provided herein) or mailed, first class, return receipt
requested, postage prepaid, addressed to the respective parties hereto at their
respective addresses hereinafter set forth or, as to any such party, at such
other address as may be designated by it in a notice to the other given in the
manner provided in this Section. All notices shall be conclusively deemed to
have been properly given or made when duly delivered, in person, to a Vice
President or more senior officer of the addressee, or if mailed, on the first
Banking Business Day after being deposited in the mails or if telecopied when
transmitted, addressed as follows:
IF TO THE COMPANY: Xxxxx X. XxXxxxxx
President
Austin Funding Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
IF TO RMST: HSA Residential Mortgage Services of Texas, Inc.
0000 Xxxx Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
IF TO GUARANTOR Xxxxx X. XxXxxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxxxx
Austin Funding Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
No notice to or demand on the Company or any other person shall entitle the
Company or any other person to any other or further notice or demand in similar
or other circumstances.
-------------------------------------------------------------------------------
MORTGAGES PURCHASE AGREEMENT PAGE 19
20
Section 53. NO FINANCING INTENDED. This Agreement evidences a facility for
the sale of Mortgages to the Warehouse Purchasers, and is not intended by the
Company or RMST to evidence a financing arrangement. The Company will report
the sale of the Mortgages under generally accepted accounting principles and
for federal income tax purposes as a sale of the entire mortgage, subject to a
limited right of RMST to require the repurchase of Defective Mortgages, and
subject to a Make Whole Payment for breach of the warranties, representations
or covenants given by the Company in this Agreement. The consideration received
by the Company upon the sale of each Mortgage will constitute reasonably
equivalent value and fair consideration for the transfer of ownership of the
Mortgages. The Company warrants and covenants that it is solvent at all times
relevant to the sale of any Mortgage, and will not be made insolvent by the
sale of any Mortgage. The Company will not sell any Mortgage to the Warehouse
Purchasers with any intent to hinder, delay or defraud any of the Company's
creditors.
Section 54. CONFIDENTIAL/PROPRIETARY INFORMATION. This Agreement is
considered the confidential and proprietary information of RMST, and the
Company may not reveal this Agreement or its contents to any person other than
employees of the Company who need to have knowledge of its content to perform
their duties, or to the attorneys and auditors of the Company solely in
connection with their representation of the Company. This Agreement is subject
to the copyright of RMST and may not be reproduced without the express
permission of RMST.
Section 55. UNILATERAL AMENDMENT. RMST reserves the right to unilaterally
amend this Agreement in its sole discretion to comply (to the sole satisfaction
of RMST) with any law, rule or regulation affecting RMST in effect now or
hereafter. Any such amendment shall be effective immediately. However, and
notwithstanding any other provision of this Agreement, in the event of a
unilateral amendment, the Company shall have the right to terminate this
Agreement by written notice to RMST within ten (10) days of the Company's
receipt of notice of such amendment. Termination, shall not affect any
obligation of the Company incurred prior to RMST's receipt of notice of
termination.
Section 56. BINDING. This Agreement supersedes and replaces entirely any
and all similar agreements and arrangements heretofore existing between the
Agent and the Company or between RMST and the Company and shall bind and
benefit the Company, RMST and their respective successors, trustees, receivers
and permitted assigns.
Section 57. GOVERNING LAW; VENUE. This Agreement shall be governed by
applicable United States and Texas law with specific venue in Xxxxxx County,
Texas.
Section 58. HEADINGS. The headings and captions used in this Agreement are
for convenience only and shall not be deemed to limit, amplify or modify the
terms of this Agreement, nor shall they effect their meaning.
Section 59. NUMBER; GENDER. Whenever the singular number is used herein,
it includes the plural where appropriate, and words of any gender shall include
each other gender where appropriate.
Section 60. COUNTERPARTS. This Agreement may be executed in counterparts
each of which shall constitute an original instrument.
Section 61. SEVERABILITY. if any provision of this is Agreement is held
invalid, illegal or unenforceable, the remaining provisions shall be enforced
and shall not be affected or impaired thereby.
Section 62. INCORPORATED DOCUMENTS. Each reference made in this Agreement
to any Appendix, Exhibit, Schedule or Annex shall be read as a reference to
that Appendix, Exhibit, Schedule or Annex to this Agreement except where
otherwise expressly specified, and each Appendix, Exhibit, Schedule and Annex
to this Agreement is hereby incorporated into this Agreement as if set forth
verbatim at each place in this Agreement where it is referred to. Each
Appendix, Exhibit, Schedule or Annex which is a form to
-------------------------------------------------------------------------------
MORTGAGES PURCHASE AGREEMENT PAGE 20
21
be completed, executed and delivered pursuant to this Agreement may be
completed in accordance with this Agreement by either the Company or RMST
before, when or after it is executed and delivered.
Section 63. GUARANTY. The Guarantor unconditionally guarantees the payment
when due of any and all indebtedness and the satisfaction and performance when
required of all covenants, obligations and liabilities (collectively, the
"Obligations and Liabilities") of the Company under this Agreement. If any or
all Obligations and Liabilities of the Company hereunder are not timely
satisfied by the Company, the Guarantor unconditionally promises to perform or
cause to be performed such Obligations and Liabilities to RMST or to pay to
RMST, without deduction of any kind, in lawful money of the United States, the
amount of the Obligation and Liability if the same shall be monetary in nature.
The Guarantor acknowledges that a separate action or actions may be brought and
prosecuted against him/her/them whether or not action is brought against the
Company and whether or not the Company is joined in any such separate action or
actions. The Guarantor authorizes RMST, without notice or demand (except as
shall be required by applicable law providing the same cannot be waived), and
without affecting or impairing the liability of the Guarantor under this
Section, from time to time in accordance with this Agreement or by mutual
agreement with the Company, to renew, compromise, extend, increase, accelerate
or otherwise change the time for payment of, or otherwise change the terms of,
any indebtedness of the Company or to modify the terms and time for
performance of any or all Obligations and Liabilities under this Agreement.
The Guarantor waives notice of dishonor, notice of acceptance, any right to
require RMST to proceed against the Company, or to pursue any other remedy in
RMST's power whatsoever. Until all of the Obligations and Liabilities shall
have been fully performed, and until all periods under applicable law to
contest preferential or fraudulent payments have expired, Guarantor waives all
rights of contribution and subrogation from the Company.
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MORTGAGES PURCHASE AGREEMENT PAGE 21
22
Section 64. ENTIRE AGREEMENT. This Agreement represent the final agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
AUSTIN FUNDING CORPORATION HSA RESIDENTIAL MORTGAGE SERVICES OF
TEXAS, INC.
By: /s/ XXXXX X. XXXXXXXX By: /s/ XXX XXX XXXXXXX
------------------------------ ------------------------------
Name: Xxxxx X. XxXxxxxx Name: Xxx Xxx Xxxxxxx
Title: President Title: Vice President
Date: 6-17-99 Date: 6-11-99
GUARANTORS
By: /s/ XXXXX X. XXXXXXXX
------------------------------
Name: Xxxxx X. XxXxxxxx
Date: 6-17-99
By: /s/ XXXXX XXXXXXXX
------------------------------
Name: Xxxxx Xxxxxxxx
Date: 6-16-99
By: /s/ XXXXX XXXXXX
------------------------------
Name: Xxxxx Xxxxxx
Date: 6-21-99
By: /s/ XXXXXXX XXXXXX
------------------------------
Name: Xxxxxxx Xxxxxx
Date:
----------------------------
ATTACHED:
Appendix 1 Offer to Sell Mortgage
Appendix 2 RMST Procedures
Appendix 3 Specific Power of Attorney
Appendix 4 Collateral/Credit Documents
Appendix 5 Special Closing Instructions
Appendix 6 Pending or Threatened Litigation
Appendix 7 Defective Mortgage Criteria
Appendix 8 Eligible Mortgage Criteria
Appendix 9 Minimum Criteria for Investors
Appendix 10 Bailee Letter (from Agent)
Appendix 11 Bailee Letter (from RMST)
--------------------------------------------------------------------------------
MORTGAGES PURCHASE AGREEMENT PAGE 22
23
APPENDIX 1
OFFER TO SELL MORTGAGE
HSA Residential Mortgage Services of
Texas, Inc. (RMST) RMST Loan#
0000 Xxxx Xxx Xxxxx Xxxxx, Xxxxx 000 -----------------
Xxxxxxx, Xxxxx 00000 Investor #
ATTN: Xxxxxxxx X. Xxxxxxx ------------------------
Funding Date:
---------------------
Check #
---------------------------
MORTGAGE INFORMATION
COMPANY
BORROWER
INVESTOR
COMMITMENT DATE
COMMITMENT EXPIRATION DATE
BULK MORTGAGE TAKEOUT DATE
SERVICE RELEASE PREMIUM (IF ANY)
COMMITMENT AMOUNT
MORTGAGE FACE AMOUNT
MORTGAGE UNPAID BALANCE
PURCHASE PRICE
CLOSER NAME AND ADDRESS
Pursuant to our Mortgages Purchase Agreement with you ("RMST") dated
June 11, 1999, as it may have been supplemented, amended or restated the Company
has completed this Offer to Sell Mortgage (except for the RMST's certification
and signature blocks) and hereby offers to sell to the Warehouse Purchasers
through Chase Bank of Texas, National Association (as administrative agent and
collateral agent for various purchasers), the Mortgage described above for a
cash price equal to the amount set forth above, which is the least of (i) the
price the Investor has promised to pay for the Mortgage pursuant to the
Commitment; (ii) the face principal amount of the promissory note evidencing the
Mortgage; or (iii) the unpaid principal balance of the promissory note.
Upon acceptance of this Offer, the Company will instruct the Closer
identified for the Mortgage listed above to comply with the requirements and
instructions in Appendix 5 to the Mortgages Purchase Agreement. The Company
hereby promises to deliver, or cause to be delivered, to RMST for transmission
to the Agent all other documents, with all necessary endorsements, required to
satisfy all the requirements of the applicable Commitment for each such
Mortgage.
If the Mortgage, is to be sold as a whole loan pursuant to the
Commitment, the Company hereby agrees to timely provide all remaining documents
and to take all remaining steps necessary or appropriate to enable the Warehouse
Purchasers to sell the Mortgage to the Investor as a whole loan.
The Company hereby agrees to timely complete the sale of the Mortgage
on or before the Expiration Date stated in the Commitment and to require of the
Investor, and to ensure, that the entire
--------------------------------------------------------------------------------
APPENDIX 1 PAGE i
24
proceeds of their sale are paid directly to the Agent for the account of the
Warehouse Purchasers by the Investor on the settlement date.
This Offer is made upon and subject to the terms of the Mortgages
Purchase Agreement which is hereby incorporated herein (and all capitalized
terms used in this letter which are defined in the Mortgages Purchase Agreement
and not specifically defined in this letter shall have the same means here as
there), and the Company hereby reaffirms its covenants under the Mortgages
Purchase Agreement and reconfirms all of its representations and warranties
stated in the Mortgages Purchase Agreement as being current, true and correct in
all material respects and hereby republishes all of them.
Austin Funding Corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date:
--------------------------------
Enclosures:
1003 or HUD equivalent Investor Commitment
Pages 1 and 2 of Appraisal Underwriting Approval
Credit Report Disbursement Sheet
MI Certificate or Equivalent, if applicable
[ ] RMST hereby accepts Austin Funding Corporation's Offer dated
____________________, and on _______________ will fund/wire the purchase
price(s) specified in the Offer to the Closer named in the Offer on the closing
dates specified in the Offer.
[ ] RMST hereby respectfully declines your Offer.
HSA RESIDENTIAL MORTGAGE SERVICES OF TEXAS, INC.
By:
--------------------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: President
Date: Time:
--------------- ---------------
Title Co. Closer:
--------------
Title Company:
--------------
Title Co. Address:
--------------
--------------
Title Co. Phone#
------------
Title Co. Fax #
------------
GF#:
--------------
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APPENDIX 1 PAGE ii
25
APPENDIX 2
RMST PROCEDURES
BANKING BUSINESS DAY
A "BANKING BUSINESS DAY" is any Monday through Friday when national
banks domiciled in Xxxxxx County, Texas are open to conduct regular commercial
banking business and wire transfers may be made.
MORTGAGE PURCHASES
RMST will accept or reject an Offer on the Banking Business Day on
which it is delivered to RMST and, if RMST elects to accept an Offer, cause the
Warehouse Purchasers to purchase the related Eligible Mortgage on that Banking
Business Day so long as:
(i) the Company has given RMST written notice by Noon on that
Banking Business Day of the amount which the Company wishes to
have wired to the Closer (no prior notice is required if the
disbursement is to be by check); and
(ii) the Company delivers the Document File to RMST no later
than 1:00 p.m. on that Banking Business Day.
If the Company fails to give notice or deliver the Document File to RMST by the
above times, RMST shall have no obligation to cause the Warehouse Purchasers to
purchase the Mortgage on that Banking Business Day, but RMST agrees to use
reasonable efforts to cause the Warehouse Purchasers to do so.
FUNDING
RMST will cause the Warehouse Purchasers to fund the purchase of an
Eligible Mortgage on the Banking Business Day determined as provided under
"Mortgage Purchases" either:
(i) by a bank wire transmitted on that Banking Business Day if
the Company requested that the purchase be by bank wire, or
(ii) by a check authorized to be drawn on that Banking
Business Day if the Company requested that the purchase be by
check.
The date on which the wire is transferred or on which the check is authorized to
be drawn is the date on which the Warehouse Purchasers are deemed to have funded
the acquisition of the Mortgage for the purpose of determining the Period Held
even if the actual date of purchase of the Eligible Mortgage is a later date.
MORTGAGE NOT PURCHASED
If a bank wire is transmitted or a check is authorized to be drawn and
the Mortgage is not purchased for any reason other than the willful or grossly
negligent act or omission of RMST, the Agent or the Warehouse Purchasers, then
the amount of the bank wire or the check shall be deemed to be an RMST Advance
made on the Banking Business Day the wire was transmitted or the check was
authorized to be drawn.
TIME OF PAYMENT
Any payments made by the Company to RMST shall be deemed received when
made in immediately available funds.
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APPENDIX 2 PAGE i
26
APPENDIX 3
SPECIFIC POWER OF ATTORNEY
Austin Funding Corporation (the "COMPANY"), A Texas corporation, hereby
irrevocably designates and appoints HSA RESIDENTIAL MORTGAGE SERVICES OF TEXAS,
INC. ("RMST") and its successors and assigns as the Company's true and lawful
agent and attorney-in-fact with full power of substitution and with the power
and authority:
(i) to endorse and deliver, negotiate or otherwise transfer to itself
or any other person any promissory notes; and
(ii) to prepare, complete, execute, deliver and record any assignment,
transfer or release to itself, to any investor in Mortgages (an "INVESTOR")
or any other person of any assignments of mortgages, deeds of trust, deeds
to secure debt and other mortgage instruments of all kinds and descriptions
("MORTGAGES") and any security agreement, collateral assignment or other
security instrument of any kind, securing any Mortgage, any insurance
contract, claim, right or interest relating to it or any indemnity or
suretyship contract relating to it, or any of its documents related to the
Mortgage; and
(iii) to cancel any endorsement or assignment previously made by or on
behalf of the Company to any person or in blank, on or in respect of any
Mortgage, any promissory note evidencing it or any of its other documents
related to the Mortgage; and
(iv) to endorse and deliver to any person any order, check, instrument
or other document or paper received or obtained by RMST that represents
payment in respect of any Mortgage,
(v) to commence, prosecute, settle, discontinue, defend or otherwise
dispose of any claim relating to any Mortgage; and
(vi) to execute and deliver any and all other papers as RMST or its
substitutes shall deem necessary, appropriate or incidental to the
administration and execution of any of the covenants, agreements or
transactions provided for in or contemplated by the agreement dated June 11,
1999 between the Company and RMST, as it may have been or may hereafter be
supplemented, amended or restated (the "MORTGAGES PURCHASE AGREEMENT") to
which reference is hereby made; and
(vii) to sign the Company's name wherever RMST shall deem it necessary,
appropriate or desirable to effect performance of the Mortgages Purchase
Agreement, any related documents or any act authorized hereby;
for all purposes in the Company's name, place and stead and at any time and from
time-to-time, in each instance acting by and through any person who is at the
time an officer of RMST or its substitute and any such act by RMST, its
successors, substitutes or assigns, shall have the same force and effect as if
done by the Company itself pursuant to a duly adopted resolution of its
then-incumbent board of directors. (Notwithstanding the reference in the
preceding sentence to the Mortgages Purchase Agreement, no Investor or other
person or entity dealing with RMST shall be required to look beyond this
Specific Power of Attorney itself or shall be charged with knowledge of the
provisions of the Mortgages Purchase Agreement or any other instrument, but
instead may rely upon, and shall be fully protected by the Company in relying
upon, this Specific Power of Attorney and RMST's authority as set forth herein
or reasonably inferable wherefrom as incidental to the authority expressly
stated herein.) Without limiting its authority to otherwise assign or delegate
its powers to others or to substitute others for it hereunder, RMST is expressly
authorized to delegate its powers under this Specific Power of Attorney to Chase
Bank of Texas, National Association, the Agent identified in the Mortgages
Purchase Agreement. This
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APPENDIX 3 PAGE i
27
power is coupled with an interest and shall remain in force for so long as the
Company has or may have any unperformed obligation to RMST, its successors or
assigns, under or in respect of the Mortgages Purchase Agreement, and shall be
irrevocable during that time. This Specific Power of Attorney is expressly
limited to the purposes set forth above, shall not be interpreted as a general
power of attorney, and shall have no force or effect except as to matters
pertaining to the Mortgages Purchase Agreement, although it shall be broadly
construed as to those matters.
Austin Funding Corporation
By: /s/ XXXXX X. XXXXXXXX
---------------------------------
Name: Xxxxx X. XxXxxxxx
Title: President
Date: 0-00-00
Xxxxx xx Xxxxx )
)ss:
County of Xxxxxx )
This instrument was acknowledged before me on this 17th day of June, 1999
by Xxxxx X. XxXxxxxx as President of Austin Funding Corporation.
/s/ XXXXX X. XXXX
------------------------------
(Signature of notarial officer)
(Seal, if any)
------------------------------
Title
My Commission Expires: 08/14/00
------------------------------
[SEAL)
--------------------------------------------------------------------------------
APPENDIX 3 PAGE ii
28
APPENDIX 4
COLLATERAL/CREDIT DOCUMENTS
1. Commitment from an RMST-approved Investor
2. Underwriting approval from investor or delegated underwriters from
Company
3. Certified copy of the borrower's credit application (FNMA form
1003) or HUD equivalent
4. Credit Report
5. Proof of mortgage insurance or guaranty, or FHA insurance approval
if applicable
6. Appraisal - Pages 1 and 2 Only
7. Closing Statement or HUD-1
(1) Required at closing and funding
(2) Required as part of Offer to Sell Mortgages
8. Note
9. Certified Copy of the Deed of Trust
10. Truth-In-Lending
11. Hazard Insurance
12. Power of Attorney (if applicable)
13. Flood Insurance (if applicable)
14. Title Commitment
--------------------------------------------------------------------------------
APPENDIX 4 PAGE i
29
APPENDIX 5
(INSTRUCTIONS TO MORTGAGE LOAN CLOSER)
SPECIAL CLOSING INSTRUCTIONS
FOR LOAN FUNDS WHICH ARE
PROVIDED TO
--------------------------
BY CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, AS AGENT
FOR THE ____________________ LOAN
GF # ____________________________
1. The money to fund this loan is expected to be provided to you by Chase
Bank of Texas, National Association, (in its capacity as agent for
various purchasers (the "PURCHASERS") under a Master Purchase Agreement
between them and HSA Residential Mortgage Services of Texas, Inc.)
which will purchase this loan from AUSTIN FUNDING CORPORATION (the
"COMPANY") when it is closed. If for any reason this loan does not
close as scheduled, you agree to notify Xxxxx Xxxxxxx or Xxxxxx X.
Xxxxx of HSA Residential Mortgage Services of Texas, Inc. immediately
at 000-000-0000 and return the funds by wire transfer to our account
within twenty-four (24) hours.
2. Accordingly, this is notice that you will be the "bailee" of the
Purchasers under Section 8.305 of the Uniform Commercial Code for the
promissory note and all other papers for this loan which come into your
possessions, from the instant the promissory note for this loan is
executed and delivered until you have delivered them to HSA Residential
Mortgages Services of Texas, Inc. for the account of Chase Bank of
Texas, National Association, as agent.
3. FAX to HSA Residential Mortgage Services of Texas, Inc. at (713)
[COORDINATOR FAX], marked to the attention of [Loan Coordinator]
(Phone: (713) [COORDINATOR PHONE]) the following items:
(1) A certified copy of the HUD-1 or Closing Statement prepared by
your company and executed at the closing by the borrower;
(2) A certified copy of this bailee letter with the blanks in the
block below completed and signed by your company.
YOU ARE NOT AUTHORIZED TO FUND THIS LOAN UNTIL YOU HAVE RECEIVED A FUNDING
NUMBER FROM AUSTIN FUNDING CORPORATION AND A CORRESPONDING RMST TRANSACTION
NUMBER FROM [LOAN COORDINATOR]. YOU MUST CALL [LOAN COORDINATOR] TO OBTAIN A
VERBAL AUTHORIZATION NUMBER.
4. SEND by courier within TWENTY-FOUR (24) HOURS after funding, the
original note and the other closing papers listed below to HSA
Residential Mortgage Services of Texas, Inc. at 0000 Xxxx Xxx Xxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attention: [Loan Coordinator].
a. ORIGINAL PROMISSORY NOTE executed by the borrower(s) and ONE
CERTIFIED COPY.
b. ONE CERTIFIED COPY OF THE MORTGAGE OR DEED OF TRUST certified
that the original has been sent for recording or registration.
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APPENDIX 5 PAGE i
30
c. COPY OF ANY APPLICABLE POWER OF ATTORNEY FOR ANY MORTGAGOR OR
NOTE MAKER certified as a true copy of the original and that
the original has been sent for recording or registration.
d. ONE CERTIFIED COPY OF THE HAZARD INSURANCE POLICY.
e. ONE CERTIFIED COPY OF THE TITLE COMMITMENT.
f. ONE CERTIFIED COPY OF THE EXECUTED TRUTH-IN-LENDING.
g. ONE CERTIFIED COPY OF THE FLOOD INSURANCE (IF APPLICABLE).
h. ONE CERTIFIED COPY OF ANY POWER OF ATTORNEY USED BY THE BUYERS
(IF APPLICABLE).
i. After the original deed of trust and, if applicable, power of
attorney have been recorded, they should be sent to AUSTIN
FUNDING CORPORATION or their Investor. The Title Policy, when
issued, should also be sent to AUSTIN FUNDING CORPORATION for
delivery to their Investor.
j. Special provisions:
(i) A FUNDING NUMBER MUST BE OBTAINED FROM AUSTIN FUNDING
CORPORATION and conveyed to HSA Residential Mortgage
Services of Texas, Inc. prior to any release of
funds.
(ii) Please contact Xxxxxx X. Xxxxx at (000) 000-0000
regarding any excess monies collected at closing.
_______________________________ hereby acknowledges receipt of the
foregoing notice that it is bailee for the Purchasers in respect of the
promissory note, executed by ___________________________ and payable to the
order of (or endorsed by its payee to be payable to the order of) AUSTIN FUNDING
CORPORATION and which has been endorsed by AUSTIN FUNDING CORPORATION in blank.
We are today mailing the original executed and properly endorsed note to HSA
Residential Mortgage Services of Texas, Inc. with the other papers listed above.
----------------------------------------
(Title Company)
By:
-------------------------------------
Name:
-----------------------------------
Title: Closer
Date:
-----------------------------------
--------------------------------------------------------------------------------
APPENDIX 5 PAGE ii
31
APPENDIX 6
PENDING OR THREATENED LITIGATION
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APPENDIX 6 PAGE i
32
APPENDIX 7
DEFECTIVE MORTGAGE CRITERIA
Defective Mortgage means any Mortgage:
(i) the Enclosures for which are incomplete in any material respect;
(ii) for which any required Enclosures are, in the reasonable opinion
of RMST or (in the ease of a Mortgage covered by a Commitment) the applicable
Investor, defective or inaccurate in any material respect considered in light of
the requirements of the relevant Commitment or (for any Bulk Purchase Mortgage)
secondary market investors' requirements therefor reasonably anticipated by
RMST;
(iii) for which any material Enclosure is, in the reasonable opinion of
RMST or the Investor, not valid and binding;
(iv) that is in default as to payment of principal, interest or both
and past due more than thirty (30) days as of the day the Warehouse Purchasers
(acting through Agent) purchased the Mortgage;
(v) as to which any representation of the Company that is specific to
that Mortgage (whether by itself or together with others) is false or misleading
in any material respect;
(vi) with respect to which the Company shall have breached any warranty
that is specific to that Mortgage (whether by itself or together with others) in
any material respect;
(vii) with respect to which any fraud was committed by any mortgagor,
guarantor, title or closing agent, any other material party to the origination
or funding thereof or any holder or endorser thereof;
(viii) which contains documentary exceptions which RMST has declared to
be defective;
(ix) that does not meet, or for any reason has ceased to meet, the
applicable conditions for eligibility as an Eligible Mortgage;
(x) as to which seven (7) Banking Business Days have elapsed since its
purchase without RMST having received its Enclosures; or
(xi) that the Company fails to service in accordance with this
Agreement and as to which the Company fails to correct all such servicing errors
on or before thirty (30) days after receipt of written notice from RMST setting
forth the nature of the servicing errors in reasonable detail.
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APPENDIX 7 PAGE i
33
APPENDIX 8
ELIGIBLE MORTGAGE CRITERIA
Eligible Mortgage means a Mortgage that, at the time of its purchase,
meets the following conditions:
1. It is a conventional Mortgage, FHA Mortgage or VA Mortgage or
subprime Mortgage, except that the dollar limitations on the maximum amount of
principal to be eligible for participation in a program offered by GNMA, FNMA,
VA or FHLMC may be exceeded so long as no Mortgage exceeds Seven Hundred Fifty
Thousand Dollars ($750,000) in original principal amount without Agent's prior
approval on a case-by-case basis.
2. The promissory note evidencing it (a) is the standard form approved
by GNMA, VA, FHA, FNMA or FHLMC or a form otherwise acceptable to RMST, (b) has
a maturity within thirty (30) years of its origination, (c) is payable or
endorsed by the Company (without restriction or limitation) in blank, (d) is
fully funded and (e) is valid and enforceable without offset, counterclaim,
defense or right of rescission or avoidance of any kind other than for valid
payments made on it and any exceptions to enforceability under Debtor Laws.
3. No default in the payment of principal or interest or any other
default on it has continued uncured for thirty (30) calendar days, no
foreclosure or other similar proceedings have commenced and no claim for any
credit, allowance or adjustment exists.
4. It is secured by a mortgage, deed of trust or trust deed that (a) is
the standard form approved by VA, GNMA, FHA, FNMA or FHLMC or a form otherwise
acceptable to RMST and (b) grants a first priority lien on residential real
property described therein that either has been perfected by recording or will
be perfected upon recording; provided that the mortgage, deed of trust or trust
deed securing a Second Lien Mortgage may grant a second priority lien on such
real estate.
5. It has been fully and finally funded and is not subject to any
unexpired right of rescission provided for by any applicable federal or other
laws.
6. The underlying residential real property securing it (a) consists of
land and (i) a one- to four-family dwelling, (ii) a condominium unit that is
ready for occupancy or (iii) a manufactured home unit, but is not a mobile home,
a co-op or a multifamily dwelling for more than four (4) families, (b) is, if
required by applicable appraisal laws, covered by an appraisal and (c) is
insured against loss or damage by fire and all other hazards normally included
in standard extended coverage insurance (including flood insurance if the
property is in a federally-designated flood hazard area) in accordance with the
Enclosures for it and the Company (as servicer) or Agent has the right to be
named as the loss payee for that insurance.
7. Unless it is a Bulk Purchase Mortgage, it conforms in all material
respects with all of the requirements of a valid and enforceable Commitment
issued by an Investor and duly assigned to RMST and its assigns and is covered
by the Commitment (including the requirements that such Commitment (i) has not
been "paired off" or otherwise presently or prospectively terminated, (ii) has
not been reduced by takeout purchases of other mortgage loans so that it is
insufficient to cover the subject Mortgage and each other Mortgage that has been
purchased, or is being proposed by the Company for purchase, by Warehouse
Purchasers with an express or implied representation by the Company that it is
covered by the Commitment and (iii) is in full force and effect and enforceable
in accordance with its terms); provided that a Mortgage that was covered by a
Commitment when sold to the Warehouse Purchasers but thereafter loses such
coverage shall not be considered a Lost Commitment Mortgage unless and until ten
(10) days shall have elapsed after such coverage is lost within which the
Company has not caused the Mortgage to be again covered by a Commitment duly
assigned and delivered to RMST and its assigns.
--------------------------------------------------------------------------------
APPENDIX 8 PAGE i
34
For this purpose coverage shall not be deemed lost until the expiration of any
grace period to deliver the Mortgage.
8. If it is a Bulk Purchase Mortgage, (i) the Company currently and
reasonably believes in good faith that it satisfies all underwriting policies
and criteria of a specific secondary mortgage market investor in subprime
mortgage loans and, if requested to do so, that investor would in fact purchase
it, and (ii) its loan-to-collateral-value ratio does not exceed one hundred
percent (100%) and foreclosure proceedings have not been initiated in respect of
any property securing it.
9. The Enclosures for it are (a) delivered to RMST as required by the
provisions of this Agreement, (b) in compliance with all laws, (c) otherwise in
compliance with the requirements of this Agreement and otherwise in form and
substance acceptable to RMST and (d) subject to no liens.
10. The Enclosures together with the recorded deed of trust and the
policy of title insurance are delivered to RMST as required by the provisions of
any applicable commitment and, in any event, within sixty (60) calendar days
after the date of the related promissory note.
11. It has been owned by Warehouse Purchasers for no more than sixty
(60) calendar days.
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APPENDIX 8 PAGE ii
35
APPENDIX 9
MINIMUM CRITERIA FOR INVESTORS
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APPENDIX 9 PAGE i
36
APPENDIX 10
BAILEE LETTER (FROM AGENT)
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
000 XXXX XXXXXX XXXX
XXXXXXX, XXXXX 00000
TELEPHONE (000) 000-0000
TELECOPY (000) 000-0000
----------------------
----------------------
----------------------
Re: [Mortgagor(s) name(s) and loan no.] originated by [name of originator]
(the "ORIGINATOR")
Beneficial ownership of the mortgage loans (the "LOANS") listed on the
attached list and the enclosed mortgage notes and other documents (the "MORTGAGE
DOCUMENTS") for them has been purchased by Chase Bank of Texas, National
Association ("AGENT") for itself and the other Buyers under the Master Purchase
Agreement dated as of September 18, 1998 (as renewed, extended, amended, or
restated, the "MASTER PURCHASE AGREEMENT") between (i) HSA Residential Mortgages
Services of Texas, Inc. ("RMST") and American General Finance, Inc. and (ii)
Agent and the Buyers named therein.
Agent herewith delivers the Mortgage Documents to you for purchase
[INCLUDE THIS TEXT ONLY FOR MORTGAGE LOANS COVERED BY TAKEOUT COMMITMENTS:
under the forward purchase agreement or takeout commitment (the "TAKEOUT
COMMITMENT") that you issued to the Originator.] If you purchase the Loans, (i)
your purchase will be without recourse against either Agent or any of the other
Buyers under the Master Purchase Agreement, and without express or implied
warranty or representation from any of them, except that Agent, on behalf of
the Buyers, will warrant that Agent has the power and authority to deliver the
Loans to you and that the Buyers and Agent have neither conveyed the Loans them
to anyone other than you nor encumbered them, and (ii) any claim you may have
in respect of the purchase other than for violation of such express special
warranty will accordingly be required to be made against the Originator to whom
you issued your Takeout commitment. Within twenty-one (21) days after the date
of this letter, Agent must receive either (i) payment in full for the Mortgage
Documents or (ii) the returned Mortgaged Documents themselves. "Payment in
full" means payment of the purchase price for the Loans [USE THIS TEXT FOR
MORTGAGE LOANS COVERED BY TAKEOUT COMMITMENTS: DETERMINED IN ACCORDANCE WITH
THE TERMS OF YOUR TAKEOUT COMMITMENT] [USE THIS TEXT FOR MORTGAGE LOANS THAT
ARE NOT COVERED BY TAKEOUT COMMITMENTS: AS YOU HAVE AGREED WITH THE ORIGINATOR]
plus accrued interest to the date of purchase, BUT IN NO EVENT LESS THAN THE
"MINIMUM PRICE" STATED FOR EACH MORTGAGE LOAN ON THE ATTACHED LIST. Until Agent
has received either the Mortgage Documents or payment in full for them, you
shall be deemed to be holding the Mortgage Documents IN TRUST for Buyers as
their beneficial owners, and as Buyers' bailee pursuant to -- or as otherwise
provided in accordance with -- applicable provisions of the Uniform Commercial
Code. No property interests in the Mortgage Documents are or will be
transferred to you until payment in full has been received by Agent. If you
receive conflicting instructions regarding the Mortgage Documents from RMST or
Buyers, you agree to act in accordance with Agent's instructions. AGENT
RESERVES THE RIGHT, AT ANY TIME BEFORE IT RECEIVES FULL PAYMENT, TO REQUIRE BY
NOTICE TO YOU THAT YOU RETURN THE MORTGAGE DOCUMENTS, AND IF YOU RECEIVE SUCH A
NOTICE, YOU AGREE TO IMMEDIATELY RETURN THEM TO AGENT AND TO INDEMNIFY AGENT
AND HOLD AGENT AND THE BUYERS HARMLESS AGAINST ANY LOSS, COST,
-------------------------------------------------------------------------------
APPENDIX 10 PAGE i
37
DAMAGE, CLAIM OR EXPENSE THAT THEY MAY INCUR IF THE LOAN IS NEITHER PURCHASED
NOR RETURNED To AGENT AS HEREIN PROVIDED.
-----------------------------------------------------------------
IF YOU FAIL TO MAKE FULL PAYMENT TO AGENT WITHIN TWENTY-ONE (21)
DAYS AFTER THE DATE OF THIS LETTER, YOU ARE INSTRUCTED TO RETURN
ALL OF THE MORTGAGE DOCUMENTS TO AGENT.
-----------------------------------------------------------------
Payment for the Mortgage Documents must be made by wire transfer of immediately
available funds to:
Chase Bank of Texas, National Association
ABA Number 0000-0000-0
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
For Credit to HSA RMST, Inc. Settlement Account no. 00103196573
Ref: [Mortgagors' names and loan nos.]
BY ACCEPTING THE MORTGAGE DOCUMENTS DELIVERED TO YOU WITH THIS LETTER, YOU
CONSENT TO BE BUYERS' TRUSTEE AND BAILEE ON THE TERMS DESCRIBED IN THIS
LETTER. AGENT REQUESTS THAT YOU ACKNOWLEDGE RECEIPT OF THE ENCLOSED MORTGAGE
DOCUMENTS AND THIS LETTER AND CONFIRM YOUR AGREEMENTS AS SET FORTH IN THIS
LETTER BY SIGNING AND RETURNING TO AGENT THE ENCLOSED COPY OF THIS LETTER,
ALTHOUGH YOUR FAILURE TO DO SO SHALL NOT DIMINISH, AFFECT OR IMPAIR ANY TERM OR
CONDITION OF THIS LETTER, YOUR AGREEMENTS STATED HEREIN (WHICH ARISE
AUTOMATICALLY ON YOUR ACCEPTANCE OF THIS LETTER AND THE ENCLOSED MORTGAGE
DOCUMENTS) OR THEIR BINDING EFFECTS ON YOU. The preceding provision shall in no
way affect or impair any claim or cause of action against you in respect of
your [use this text for Mortgage Loans covered by Takeout Commitments: TAKEOUT
COMMITMENT] [use (this text for Mortgage Loans that are not covered by Takeout
Commitments: AGREEMENTS WITH THE ORIGINATOR].
This letter shall bind you and your successors, assigns, trustees, conservators
and receivers and shall benefit Buyers and their respective successors and
assigns.
Very truly yours,
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Agent
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Accepted and agreed to:
----------------------------------
By:
-------------------------------
-------------------------------------------------------------------------------
APPENDIX 10 PAGE ii
38
Name:
--------------------------------
Title:
-------------------------------
Date:
--------------------------------
-------------------------------------------------------------------------------
APPENDIX 10 PAGE iii
39
APPENDIX 11
BAILEE LETTER (FROM RMST)
HSA RESIDENTIAL MORTGAGE SERVICES OF TEXAS, INC.
0000 XXXX XXX XXXXX XXXXX
XXXXX 000
XXXXXXX, XXXXX 00000
TELEPHONE (000) 000-0000
TELECOPY (000) 000-0000
----------------------
----------------------
----------------------
Re: [Mortgagor(s) name(s) and loan no.] originated by [name of originator]
(the "ORIGINATOR")
Beneficial ownership of the mortgage loans (the "LOANS") listed on the
attached list and the enclosed mortgage notes and other documents (the
"MORTGAGE DOCUMENTS") for them has been purchased by HSA Residential Mortgages
Services of Texas, Inc. ("RMST").
RMST herewith delivers the Mortgage Documents to you for purchase
[INCLUDE THIS TEXT ONLY FOR MORTGAGE LOANS COVERED BY COMMITMENTS: under the
forward purchase agreement or takeout commitment (the "COMMITMENT") that you
issued to the Originator.] If you purchase the Loans, (i) your purchase will be
without recourse against RMST, and without express or implied warranty or
representation from it, except that RMST will warrant that RMST has the power
and authority to deliver the Loans to you and that the RMST has neither conveyed
the Loans to anyone other than you nor encumbered them, and (ii) any claim you
may have in respect of the purchase other than for violation of such express
special warranty will accordingly be required to be made against the Originator
to whom you issued your Commitment. Within twenty-one (21) days after the date
of this letter, RMST must receive either (i) payment in full for the Mortgage
Documents or (ii) the returned Mortgaged Documents themselves. "Payment in full"
means payment of the purchase price for the Loans [USE THIS TEXT FOR MORTGAGE
LOANS COVERED BY COMMITMENTS: DETERMINED IN ACCORDANCE WITH THE TERMS OF YOUR
COMMITMENT] [USE THIS TEXT FOR MORTGAGE LOANS THAT ARE NOT COVERED BY
COMMITMENTS: AS YOU HAVE AGREED WITH THE ORIGINATOR] plus accrued interest to
the date of purchase, BUT IN NO EVENT LESS THAN THE "MINIMUM PRICE" STATED FOR
EACH MORTGAGE LOAN ON THE ATTACHED LIST. Until RMST has received either the
Mortgage Documents or payment in full for them, you shall be deemed to be
holding the Mortgage Documents IN TRUST for RMST as their beneficial owner, and
as RMST's bailee pursuant to -- or as otherwise provided in accordance with --
applicable provisions of the Uniform Commercial Code. No property interests in
the Mortgage Documents are or will be transferred to you until payment in full
has been received by RMST. RMST RESERVES THIS RIGHT, AT ANY TIME BEFORE IT
RECEIVES FULL PAYMENT, TO REQUIRE BY NOTICE TO YOU THAT YOU RETURN THE MORTGAGE
DOCUMENTS, AND IF YOU RECEIVE SUCH A NOTICE, YOU AGREE TO IMMEDIATELY RETURN
THEM TO RMST AND TO INDEMNIFY RMST AND HOLD RMST HARMLESS AGAINST ANY LOSS,
COST, DAMAGE, CLAIM OR EXPENSE THAT IT MAY INCUR IF THE LOAN IS NEITHER
PURCHASED NOR RETURNED TO RMST AS HEREIN PROVIDED.
-------------------------------------------------------------------------------
APPENDIX 11 PAGE i
40
---------------------------------------------------------------------
IF YOU FAIL TO MAKE FULL PAYMENT TO RMST WITHIN TWENTY-ONE (21) DAYS
AFTER THE DATE OF THIS LETTER, YOU ARE INSTRUCTED TO RETURN ALL OF THE
MORTGAGE DOCUMENTS TO RMST.
---------------------------------------------------------------------
Payment for the Mortgage Documents must be made by wire transfer of immediately
available funds to:
---------------------------------------------
ABA Number
----------------------------
Attention:
----------------------------
Telephone: (713)
--------------------------
Fax: (713)
-----------------------
For Credit to - Account no.
----------------- -----------------
Ref: [Mortgagors' names and loan nos.]
BY ACCEPTING THE MORTGAGE DOCUMENTS DELIVERED TO YOU WITH THIS LETTER, YOU
CONSENT TO BE RMST'S TRUSTEE AND BAILEE ON THE TERMS DESCRIBED IN THIS LETTER.
RMST REQUESTS THAT YOU ACKNOWLEDGE RECEIPT OF THE ENCLOSED MORTGAGE DOCUMENTS
AND THIS LETTER AND CONFIRM YOUR AGREEMENTS AS SET FORTH IN THIS LETTER BY
SIGNING AND RETURNING TO RMST THE ENCLOSED COPY OF THIS LETTER, ALTHOUGH YOUR
FAILURE TO DO SO SHALL NOT DIMINISH, AFFECT OR IMPAIR ANY TERM OR CONDITION OF
THIS LETTER, YOUR AGREEMENTS STATED HEREIN (WHICH ARISE AUTOMATICALLY ON YOUR
ACCEPTANCE OF THIS LETTER AND THE ENCLOSED MORTGAGE DOCUMENTS) OR THEIR BINDING
EFFECTS ON YOU. The preceding provision shall in no way affect or impair any
claim or cause of action against you in respect of your [use this text for
Mortgage Loans covered by Commitments: COMMITMENT] [use this text for Mortgage
Loans that are not covered by Takeout Commitments: AGREEMENTS WITH THE
ORIGINATOR].
This letter shall bind you and your successors, assigns, trustees, conservators
and receivers and shall benefit RMST and its successors and assigns.
Very truly yours,
HSA RESIDENTIAL MORTGAGE SERVICES OF TEXAS,
INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Accepted and agreed to:
------------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Date:
-------------------------------
-------------------------------------------------------------------------------
APPENDIX 11 PAGE ii