PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (the "Agreement") is hereby made as of the 25TH
dayof May, 2000, by and between Referral Xxxxxxx.xxx, Corp. (the "Mortgage
Originator"), with an address of 0000 Xx Xxxxx Xxxxx #00, Xxxxxx. XX 00000 ,
and STERLING BANK AND TRUST, FSB (the "Participant"), with an address of Xxx
Xxxxx Xxxxxx, x0xx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
WITNESSETH
The Mortgage Originator is the holder from time to time of various mortgage
loans (the "Mortgage Loans") evidenced by notes and secured by first mortgages
and/or deeds of trust (referred to collectively herein as "mortgages") on
improved one- to four-family residential real properties. The Mortgage Loans
will be eligible for purchase in the secondary market by FNMA or FHLMC or other
investors, or are eligible to serve as collateral for mortgage-backed securities
issued by GNMA. The Mortgage Originator desires to sell a senior participation
interest ( each a "Participation") in each of the Mortgage Loans from time to
time to the Participant, and the Participant is willing to purchase such
Participations under the terms and conditions hereof.
NOW, THEREFORE, in consideration of the premises and the mutual promises herein
contained, it is agreed:
1. Purchase of Participations. The Participant agrees to purchase from time to
time from the Mortgage Originator, but only in accordance with the terms
and conditions hereof, one or more loan participation certificates (the
"Participation Certificates"), substantially in the form of Exhibit A ___
hereto, each of which represents the Participant's Participation in a
Mortgage Loan originated by the Mortgage Originator. The principal balance
of each Participation (the "Participation Principal Balance") shall be set
out in the related Participation Certificate and shall decrease as any
portion of the principal collections with respect to the Mortgage Loans are
paid to the Participant. The principal terms relating to the purchase of
each Participation, including but not limited to the maximum participation
percentage, the purchase price and the interest rate on the Participation
Principal Balance may be set out in the terms addendum attached hereto as
Exhibit B, as the same may be amended from time to time (the "Terms
Addendum"). Each Participation shall bear interest on the related
Participation Principal Balance at the rate specified as the "Interest
Rate" on the Terms Addendum; provided, however, that from the date on which
any Event of Default (defined below) sha1l be deemed to have occurred until
the earlier of (i) the date on which the default is, in Participant's sole
discretion, waived in writing or (ii) the date on which the Participation
is paid in full, the Participation shall bear interest at the Default Rate
set forth on the Terms Addendum. The aggregate outstanding principal
balance of all Participations on any day shall not exceed the amount
specified as the "Maximum Participation Amount" on the Terms Addendum.
2. Mechanics of Purchase and Repurchase. The Mortgage Loan subject to a
Participation shall be listed on Schedule I to the related Participation
Certificate (the "Mortgage Loan Schedule"). The Mortgage Originator shall
be responsible for -- delivering a Mortgage Loan Schedule.
(a) From time to time prior to the termination of this Agreement, the
Mortgage Originator may request that the Participant purchase a
Participation. If no Event of Default exists or no event that with the
passage of time would become an Event of Default, the Participant, in
its sole discretion, may accept the Participation for purchase and the
Participant shall pay the Mortgage Originator or, on behalf of the
Mortgage Originator, a settlement agent, in the Participant's sole
discretion. an amount equal to the purchase price.
(b) The Mortgage Originator shall deliver the Participation Certificate
simultaneously with the documents referenced in Section 10 and if
Participant accepts the same, Participant shall make the payment
referenced in Section 2(a) above. The Participation Certificate and
the documents referenced in Section 10 shall be forwarded to
Participant, or they may, in the sole discretion of the Participant,
be delivered to a settlement agent approved by Participant. The
Mortgage Originator shall submit the names of settlement agents for
approval by Participant, accompanied by such information regarding the
settlement agents as Participant shall require. Each such settlement
agent shall execute an escrow instruction letter with Participant on
terms satisfactory to Participant.
(c) If the Mortgager Originator delivers to the Participant the
Participation Certificate and other documents referenced in Section 10
at the time Participant makes the payment referenced in Section 2(a)
above, then the purchase is referred to in this Agreement (and in
exhibits hereto and other documentation relating to the purchase and
sale of Participations by Participant and Mortgage Originator) as a
"Dry Funding". If the Mortgager Originator delivers to the settlement
agent pursuant to Section 2(b ) above the Participation Certificate
and other documents referenced in Section 10 at the time Participant
makes the payment referenced in Section 2(a) above, then the purchase
is referred to in this Agreement (and in exhibits hereto and other
documentation relating to the purchase and sale of Participations by
Participant and Mortgage Originator) as a "Wet Funding".
(d) From time to time prior to the termination of this Agreement, the
Mortgage Originator may request to repurchase a Participation by (i)
delivering a written request to the Participant, substantially in the
form attached as Exhibit C, and (ii) tendering to the Participant the
related "Repurchase Amount" for each such Participation. The request
for repurchase shall specify that a Participation is being repurchased
for one of the following reasons: (A) the Mortgage Loan has been paid
in full; (B) the Mortgage Loan is being sold pursuant to a Takeout
Commitment; (C) the Participation has been outstanding for more than
ninety (90) days; (D) a representation or warranty contained or
provided for in Section 8 or 9 of this Agreement has been breached;
(E) the Mortgage Loan has become more than thirty (30) days
delinquent; or (F) foreclosure proceedings are being started with
respect to the Mortgage Loan. If the Participant permits such
repurchase, which it may do in its sole discretion, upon receipt of
the Repurchase Amount, the Participant shall return to the
Mortgage Originator (or such other party as the Mortgage Originator
may direct) the related note, mortgage, and assignment of mortgage, to
the extent such documents were delivered to the Participant and have
not previously been redelivered to the Mortgage Originator.
(e) For purposes hereof, the "Repurchase Amount" means the amount set
forth in Section 13(c).
3. Restrictions on Transfer by Mortgage Originator. The Mortgage Originator
shall not sell, Transfer or assign its retained interest in the Mortgage
Loans without the prior written consent of the Participant.
4. Required Repurchases. The Participant, in its sole discretion, may require
the Mortgage Originator to repurchase a Participation, in accordance with
Section 2( d) above, (i) if any Mortgage Loan underlying a Participation
becomes more than thirty (30) days delinquent, (ii) if any representation
or warranty pertaining to a Mortgage Loan is untrue, (iii) if any legal
action is initiated or threatened which, if successful, would in any way
impair the value of Participant's interest in the Participation, as
determined by the Participant in its sole judgment, or (iv) if a
PaI1icipation has been outstanding for a period of more than ninety (90)
days. In the event that Participant requires Mortgage Originator to
repurchase a Participation, the Repurchase Amount must be received by
Participant within ten (10) days after Participant sends notice to Mortgage
Originator .
5. Applications of Unscheduled Payments and Takeout Proceeds. If a Mortgage
Loan is foreclosed upon or is otherwise liquidated or if the Mortgage Loan
is to be sold to a takeout investor, the related Participation shall be
repaid in full, together with any accrued interest thereon, from the
proceeds of such liquidation, foreclosure or takeout sale prior to the
payment of any amount to the Mortgage Originator with respect to such
Mortgage Loan.
6. Servicing. In consideration of the Participant's agreement to purchase
Participations from the Mortgage Originator, the Mortgage Originator hereby
agrees to act as the servicer of the Mortgage Loans subject to each
Participation. So long as any indebtedness remains outstanding on any of
the Mortgage Loans, the Mortgage Originator shall service such Mortgage
Loans until all payments due with respect to the related Participation are
paid in full, and to that end will, by way of illustration only and without
limitation:
(a) Proceed with reasonable diligence to collect all payments on the
Mortgage Loans as and when they shall become due and payable,
exercising the same standard of care and using the same methods that
the Mortgage Originator would use in servicing mortgage loans held in
its portfolio or, if higher, the standard of care and methods used in
the mortgage loan servicing industry for the servicing of loans held
by others;
(b) Remit to the Participant on or before the tenth day of each month,
except as Participant may change this due day in any billing schedule
or other written notice sent to the Mortgage Originator, (i) the
Participant's pro rata share of the amount of principal collected on
each of the outstanding Mortgage Loans during the previous month and
(ii) accrued interest on the outstanding Participation Principal
Balance for each Participation as set forth in Section 1 above;
provided, however, that if any collections on a Mortgage Loan are due
to foreclosure or other liquidation of the Mortgage Loan, then such
collections shall be applied in accordance with Section 5 above;
(c) Cause the related mortgagor to maintain hazard insurance policies,
including but not limited to policies of flood insurance if required,
covering the mortgaged premises in an amount at least equal to the
outstanding mortgage balance;
(d) Keep records pertaining to each mortgage note and the collections
thereon and permit the Participant to examine these and other records
pertaining to each of the Mortgage Loans at such times as the
Participant may elect during the Mortgage Originators business hours;
and
(e) Cause the taxes on the mortgaged premises securing each Mortgage Loan
to be examined annually and report any delinquent taxes to the
Participant.
7. Servicing Compensation. The Mortgage Originator shall be entitled to
retain, as its sole compensation for servicing the Mortgage Loans subject
to Participations hereunder, all late charges payable and collected under
the terms of the Mortgage Loans. The Mortgage Originator shall not be
entitled to any additional fees for the performance of its duties as
servicer of any Mortgage Loan.
8. Representations and Warranties with Respect to Mortgage Loans. The Mortgage
Originator represents and warrants to the Participant as to each Mortgage
Loan as of the date of the purchase of the related Participation that:
(a) proceeds equal to the note amount have been disbursed to or for the
account of the mortgagor;
(b) it holds a mortgagee title insurance policy or a valid first lien
letter from a title insurance company acceptable to Participant with
an insured closing letter from the underwriter, showing the related
mortgage to be a first mortgage lien on the mortgaged premises subject
only to such easements, restrictions, title irregularities and similar
matters which do not have any adverse effect on the ownership,
appraised value or use of the mortgaged premises;
(c) no more than thirty (30) days have elapsed between the closing of the
Mortgage Loan and the related Participation being presented to
Participant for purchase;
(d) the note and mortgage are genuine instruments binding and enforceable
against the mortgagor and subject to no defenses of any kind or
nature;
(e) there are no defaults existing under the note or mortgage;
(f) the mortgage has been duly recorded or has been forwarded to the
proper governmental office (and is in the proper form and accompanied
by appropriate fees) for recording;
(g) the principal balance remaining unpaid is the amount shown on the
Mortgage Loan Schedule attached to the related Participation
Certificate;
(h) it holds a policy of insurance covering the mortgaged premises
insuring against loss or damage by fire and other hazards not less
extensive than extended coverage insurance. with an appropriate
mortgagee loss payable endorsement in favor of the Mortgage Originator
and its assigns as mortgagee;
(i) at all times each Mortgage Loan and each party was in compliance with
all of the applicable provisions of applicable federal and state law
and regulations: by way of illustration and not limitation, all
Mortgage Loans which are subject to Section 226.32 of Federal Reserve
Regulation Z have been accurately identified, accurate disclosures
have been provided to the Mortgagor and Participant with respect to
such Mortgage Loans, such Mortgage Loans do not contain any prohibited
terms as specified in Section 226.32(d) and the Mortgage Originator
has not engaged in any prohibited acts or practices as specified in
specified in Section 226.32(e);
(j) all information provided to the Participant with respect to each
Mortgage Loan is true, complete and accurate and no person or entity
involved in the origination or servicing of the Mortgage Loan has made
any false representation or has failed to provide information that is
true, complete and accurate in connection with such transaction;
(k) the mortgage securing the Mortgage Loan is a valid, existing and
enforceable first lien on the mortgaged property;
(l) the Mortgage Originator has no knowledge of any circumstances or
condition with respect to the Mortgage Loan or the related mortgagor's
credit standing that can reasonably be expected to cause the Mortgage
Loan to become an unacceptable investment or delinquent or to
adversely affect the value of any Participation;
(m) the Mortgage Originator is the sole owner and holder of the Mortgage
Loan, the Mortgage Originator has not assigned or pledged the Mortgage
Loan to secure any obligation other than the related Participation and
the Mortgage Originator has good and marketable title to the Mortgage
Loan;
(n) the Mortgage Loan is subject to a contractual arrangement between the
Mortgage Originator and a takeout investor, the arrangement and
takeout investor both being acceptable to the Participant in its sole
discretion (including an agency of the United States government, a
seller-servicer approved by an agency of the United States government
or any other institutional investor) pursuant to which such purchaser
agrees to purchase such Mortgage Loan or guarantee another party's
purchase of the Mortgage Loan (a "Takeout Commitment");
(o) the Mortgage Loan has been underwritten in accordance with standard
underwriting requirements as specified by the Participant or the
related takeout investor, whichever are more stringent;
(p) the Mortgage Loan complies with all requirements set forth in the
Participant's seller-servicer guide as amended from time to time; and
(q) the Mortgage Loan is not subject to any right of rescission, setoff,
recoupment, abatement, counterclaim or defense (including the defense
of usury), other than any such rights provided under applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting the enforcement of
creditors rights in general and general principles of equity, and none
of the Mortgagor or takeout investor bas asserted or manifested an
intention to assert any right of rescission, setoff., recoupment,
counterclaim or defense, affecting any Mortgage Loan or Takeout
Commitment which is related to the Participation. The Mortgage
Originator covenants that it shall notify the Participant if it
receives notice that any Mortgagor or takeout investor asserts or
manifests any intention to assert any such right.
9. Further Assurances. The Mortgage Originator agrees to make such further
representations and warranties with respect to each Mortgage Loan and to
take such actions in connection with each Mortgage Loan (including the
reaffirmation of the representations and warranties contained herein) as
the Participant may require.
10. Delivery of Documents. Simultaneously with the purchase of any
Participation, or, in the case of a Wet Funding, no later than five (5)
days after the closing of the Mortgage Loan, the Mortgage Originator shall
deliver to the Participant, or the settlement agent in accordance with
Section 2(b) hereof), with respect to each Mortgage Loan, the following
documents:
(a) The original, fully executed mortgage note for such Mortgage Loan,
endorsed in blank without recourse, which note is hereby pledged to
the Participant to secure the performance of all of the Mortgage
Originator's obligations to the Participant incurred hereunder. The
Participant will from time to time, at the request of the Mortgage
Originator and in accordance with this Agreement, return to the
Mortgage Originator such notes as have been paid by the mortgagor or,
as determined by Participant in its sole discretion, are othe1Wise
needed by the Mortgage Originator to facilitate the servicing of the
Mortgage Loans.
(b) The fully executed mortgage with respect to such Mortgage Loan, with
evidence of recording thereon, or, if such document has not been
returned by the applicable recording office, a certified true and
complete copy of such document.
(c) A fully executed assignment of mortgage in recordable form of the
individual mortgage which secures the Mortgage Loan. Assignments
delivered under this Agreement may be recorded by the Participant at
any time in the sole discretion of the Participant
(d) A copy of the Takeout Commitment relating to such Mortgage Loan, the
rights under such Takeout Commitment being hereby assigned to the
Participant.
(e) All title insurance, hazard and/or homeowners insurance, PMI, and
other policies (or copies thereof) relating to the Mortgage Loan.
11. Assignment of Rights. By the sale of each Participation to the Participant,
the Mortgage Originator hereby assigns to Participant those instruments and
documents set forth in Section 10 above (but, with respect to the Takeout
Commitment, only Mortgage Originator's rights therein), and all Mortgage
Originator's rights thereunder, and further conveys and transfers to the
Participant all right, title and interest in any property (real or
personal) including cash, deeds or titles received in exchange for all or
part of the Mortgage Loan.
12. Events of Default The Mortgage Originator shall be in default upon the
occurrence of any one or more of the following events (each, an "Event of
Default"):
(a) The Mortgage Originator shall fail to remit to the Participant any
principal or interest on a Participation as such amounts become due
and payable under the terms of this Agreement;
(b) The Mortgage Originator shall fail to timely repurchase a
Participation whose repurchase is required under Section 4 of this
Agreement;
(c) In the case of any Wet Funding, Participant shall not have received
the documents set forth in Section 10 within five (5) days after the
closing of the Mortgage Loan.
(d) The Mortgage Originator shall default in the performance of any other
agreement herein contained and such default continues for twenty-one
(21) days after written notice thereof shall be given the Mortgage
Originator by the Participant;
(e) The Mortgage Originator shall become insolvent or bankrupt, or make an
assignment for the benefit of its creditors, or a receiver or trustee
is appointed for the Mortgage Originator, or if bankruptcy,
reorganization or liquidation proceedings are instituted by or against
the Mortgage Originator; or
(f) Any license or registration reasonably necessary for the conduct of
the Mortgage Originator's business shall be revoked, suspended, or
otherwise limited by any state or federal regulatory, administrative,
or quasi-govemmental agency (including, without limitation, FNMA and
FHLMC), or any such state or federal regulatory, administrative, or
quasi- governmental agency in any way restricts Mortgage Originator's
authority to conduct its business in any state.
13. Remedies. Upon the occurrence of an Event ofDefault by the Mortgage
Originator:
(a) The Participant's commitment to purchase Participations under this
Agreement shall cease to be in effect.
(b) The Participant may, at its option, take record title to each Mortgage
Loan, may endorse the notes in its favor, may record the assignments
of mortgage and shall have the right to service each of the Mortgage
Loans. For such purposes, the Mortgage Originator agrees that upon
demand by the Participant, it will turn over to the Participant all of
its records pertaining to the Mortgage Loans and all documents
pertaining thereto, including, but not limited to, title insurance
policies, hazard insurance policies, mortgages, surveys and related
papers. In addition, the Mortgage Originator hereby grants full power
and authority to the Participant, acting in its name alone, or in its
name as attomey-in-fact for the Mortgage Originator, to do and perform
any and all of the undertakings of the Mortgage Originator hereunder,
and in addition hereto, the power and authority to demand, collect,
xxx for all monies due or to become due on any of the Mortgage Loans,
to foreclose any of the Mortgage Loans by exercise of the power of
sale. or by court action, and to exercise any and all other powers and
rights that the Mortgage Originator may now have or Ihereafter acquire
with respect to any of the Mortgage Loans. This power is declared to
be coupled with an interest and is irrevocable so long as the
Participant shall have any interest in a Participation hereunder.
(c) The Participant shall be entitled, at the Participant's option, to
require the Mortgage Originator to repurchase the Participation
Certificate relating to any Participation at an amount equal to the
related Participation Principal Balance as of the date of repurchase
plus (i) anyaccrued and unpaid interest on such Participation
Principal Balance, (ii) any accrued and unpaid fees owed to the
Participant, and (iii) any out-of-pocket expenses paid by the
Participant for which the Participant is entitled to be reimbursed
under the terms of this Agreement.
14. Operations Training Manual. Participant may provide to Mortgage Originator
from time to time an Operations Training Manual (the "Manual") setting
forth guidelines and conditions applicable to Mortgage Loans and to the
purchase and sale of Participations under this Agreement. Such guidelines
and conditions may include, without limitation, reporting and monitoring
requirements to be observed by Mortgage Originator and Participant's
reservation of rights to audit and verify information pertaining to the
purchase and sale of Participations under this Agreement. The Manual is
hereby incorporated into this Agreement. Participant may, in its
discretion, amend the Manual from time to time. The amended Manual shall
apply to all Mortgage Loans and to all matters relating to the purchase and
sale of Participations under this Agreement twenty-one (21) days after
Participant sends the amendment to the Mortgage Originator.
15. Guaranty and Security. The Mortgage Originator's obligations hereunder
shall be guarantied and secured in a manner satisfactory to the
Participant; provided that any guaranty shall be deemed satisfactory if
substantially in the form of Exhibit D.
16. Servicing by Participant. When the Participant is servicing the Mortgage
Loans or exercising the power and authority granted by Section 13 above, it
shall be entitled to receive the late charges referred to in Section 7
above.
17. Fees and Expenses. Upon the purchase or repurchase of a Participation, the
Mortgage Originator shall pay to the Participant the fees and expenses set
forth m the Terms Addendum.
18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF .
19. Entire Agreement: Severability . This Agreement shall supersede any
existing. agreement and shall constitute the entire agreement between the
parties relating to the subject matter hereof. Each provision and agreement
herein shall be treated as separate and independent from any other
provision or agreement herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement.
20. Notices and Other Communications. Any and all notices, statements, demands
or other communications hereunder may be given by a party to the other by
mail, facsimile, telegraph, messenger or otherwise to the address listed
below, or such other address as may be specified in a notice of change of
address hereafter received by the other:
MORTGAGE ORIGINATOR: Referral Xxxxxxx.xxx. Corp.
0000 Xx Xxxxx Xxxxx #000
Xxxxxx. XX 00000
Attention: Xxxxx La Pointe
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
PARTICIPANT: Sterling Bank and Trust, FSB
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: 000-000-0000
Facsimile: 248.948-8733
with copy to: Sterling Bank and Trust, FSB
Office of the General Counsel
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone: 248-351.3425
Facsimile: 000-000-0000
All notices, demands and requests hereunder may be made orally , to be confirmed
promptly in writing, or by other communication as specified in the preceding
sentence.
21. Waiver: Amendment. No express or implied waiver of any Event of Default by
either party shall constitute a waiver of any other Event of Default and no
exercise of any remedy hereunder by any party shall constitute a waiver of
its right to exercise any other remedy hereunder. No modification or waiver
of any provision of this Agreement and no consent by any party to a
departure herefrom shall be effective unless in writing and duly executed
by both of the parties hereto.
22. Termination of Agreement: Renewal(s).
(a) If this Agreement has not otherwise been terminated pursuant to its
terms or by an act of the Participant or Mortgage Originator, this
Agreement shall terminate SIX months from the date hereof. The
Mortgage Originator or Participant may terminate this Agreement by
written notice to the other of its intent to do so, which notice shall
take effect not sooner than ninety (90) days after such notice is
given. If either the Mortgage Originator or the Participant delivers
notice of intent to terminate this Agreement, or if the termination
date described in the first sentence of this Section passes without
renewal of this Agreement pursuant to Section 22(b), the Mortgage
Originator shall not be entitled to sell Participations after the
earlier of the date so described or the termination date specified in
such notice. Notwithstanding termination of this Agreement. however,
the Mortgage Originator's obligations hereunder shall not be
terminated until the Participant has received all amounts due with
respect to all Participations.
(b) This Agreement may be renewed in Participant's discretion for an
additional1ike period of time as set forth in Section 22(a) (A) upon
delivery by Mortgage Originator to Participant of (i) a complete copy
of Mortgage Originator's financial statements, (ii) copies of reports
arising from any regulatory audits conducted by any state or federal
regulatory, administrative, or quasi-governmental agency (including,
without limitation, FNMA and FHLMC), (iii) proof that the Mortgage
Originator has in full force and effect errors and omissions insurance
at a coverage level appropriate in light of the Mortgage Originator's
business activity and loss history, and (iv) such other documentation
and information as Participant may require; and (B) upon satisfaction
of such other conditions as Participant may require.
IN WITNESS WHEREOF. the parties hereto have caused this Participation Agreement
to be duly executed by their authorized officers the day and year first above
written.
Referral Xxxxxxx.xxx. Corp
as "Mortgage Originator"
by: /s/ Signature
-----------------------------
its: President
-----------------------------
Sterling Bank and Trust, FSB
as "Participant"
by: /s/ Signature
----------------------------
Xxxxxx X. Xxxxxx
its: Managing Director, Mortgage Banking Division
----------
TERMS ADDENDUM
Terms Addendum dated as of May 25, 2000 to that certain Participation Agreement
(the " Agreement") of even date between Referral Xxxxxxx.xxx, Corp. (the
"Mortgage Originator"), and STERLING BANK AND TRUST, FSB (the "Participant").
This Terms Addendum is hereby incorporated into and made a part of the Agreement
and shall be binding as if fully set forth therein. The purpose of this Terms
Addendum is to: (i) state the principal terms of the Participations that the
Participant may purchase and have outstanding at anyone time from Mortgage
Originator, (ii) separately state all fees and charges to be made by the
Participant to the Mortgage Originator during the effective tem1 of the
Agreement, and (iii) set forth further requirements for the eligibility of
Mortgage Loans in which Participations will be sold by Mortgage Originator to
Participant Mortgage Originator recognizes its responsibility for the fees and
charges stated and the right of Participant to debit any proceeds received on
behalf of Mortgage Originator or Mortgage Originator's Maintenance Account, as
such term is defined below, in the amount and at the time any such fee or charge
becomes due. Any capitalized term used and not defined herein shall have the
respective meaning given thereto in the Agreement This Terms Addendum supersedes
any other addendum that may have been incorporated into the Agreement
previously.
A. Principal terms of each Participation:
1. Maximum Participation Amount: $5.000.000.00.
2. Participation Percentage will be 98% of the Note Amount unless a
Sterling Bank & Trust account is opened for 1% of the Maximum
Participation amount in which case the Participation Percentage will
be 100% of the Take"out price not to exceed par.
3. Purchase price for any participation will be 100% of par of the
Participation Principal Balance.
B. The fees and charges are as follows:
1. Interest Rate:
(a) Shall be Prime plus 3.5 % per annum for Wet fundings, computed on
a daily basis from the date Participant wires funds to a closing
agent until such date as Participant receives in its possession
original executed documents, and shall be Prime plus 1.5 % per
annum thereafter .
(b) Shall be Prime plus U % per annum for Dry Fundings.
(c) Shall be Prime plus 3.5% for Second Mortgage.
Interest shall be computed on a daily basis with respect to the
amount outstanding under the Participation Certificate and, at
the discretion of Participant, may be billed monthly or debited
against any collections received in the Account, as such term is
defined below, for any Mortgage Loans listed on Schedule I of the
Participation Certificate.
Note: The Interest Rate and all interest charges shall be based
on the Prime Rate as published from time to time in the Money
Rates column of the Wall Street Journal (Eastern Edition) as
effective for each such day for which interest shall be
attributable plus the additional percentage as indicated above.
2. Default Rate: Shall be the applicable Interest Rate (Wet or Dry) plus
2.0% to be computed on a daily basis with respect to any Participation
that has not been repurchased and paid in full within the number of
days specified in Section 4 of the Agreement or that is otherwise
deemed to be in default by the Participant. The Default Rate shall
apply until payment thereof.
3. A $100 loan processing fee shall be payable with respect to each
Mortgage Loan package delivered to Participant which may at
Participant's option be debited against any collections received in
the Account for such Mortgage Loan, unless the loans is to be
delivered to Sterling Bank & Trust at which time a $50.00 processing
fee shall apply.
4. Participation Percentage shall be upgraded from 98% to 100% if loans
are sold to Sterling Bank & Trust.
5. A $100 fee for any Mortgage Loan submitted to Participant for review
and potential same day purchase, which may at Participant's option be
debited against any collections received in the Account for such
Mortgage Loan to be debited against any collections received in the
Account for such Mortgage Loan..
6. A $25 fee plus all shipping costs incurred by Participant with respect
to each Mortgage Loan for which the Mortgage Originator fails to
supply the appropriate shipping packages for shipment to a takeout
investor or such shipping cannot be charged to the Mortgage
Originator's account for any reason. which may at Participant's option
be debited against any collections received in the Account for such
Mortgage Loan.
7. Any other amounts due pursuant to the Agreement.
8. Any other charges incurred by Participant on behalf of the Mortgage
Originator.
9. Participant reserves the right to reduce the Maximum Participation
Amount based on the extent of Mortgage Originator's use of the
facility.
10. An additional administration fee of $100.00 per loan per month will be
charged for any loan on the facility for more than 90 days.
11. Any loan of the facility over 120 days will require an additional
principal payment of ten percent (10%) of the Note amount
C. No Mortgage Loan shall be considered to be an eligible Mortgage Loan under
the Agreement unless it (i) complies in all respects with the requirements
set forth herein and in the Agreement, and (ii) complies in all respects
with the following additional requirements:
1. The dollar amount of any individual Mortgage Loan shall not exceed
$350.00.
2. Is first lien secured by a residential 1-4 family.
3. Is deliverable to the Take-Out Investor issuing the corresponding
Take-Out Agreement within 90 days.
4. Is a second lien mortgage that when added to all other second lien
mortgage in the Participation Facility does not exceed the maximum
sublimit of 10% or $500,000.00. CLTV should not exceed 100%
In addition, a Mortgage Loan shall not qualify as an eligible Mortgage Loan
if any of the following statements is true with regard to such Mortgage
Loan:
1. Is a Mortgage Loan to an officer, principal, manager or Guarantor of
the Mortgage Originator.
2. The borrower(s) on the Mortgage Loan have two (2) loans outstanding
with this facility.
3. The Mortgage Loan is a construction or other "draw" type loan.
4. The Mortgage Loan property has deferred maintenance of more than 10%
of the appraised value.
5. Is a Mortgage Loan not generally saleable in the secondary market.
D. Mortgage Originator shall maintain at all times a balance in an account
(the "Maintenance Account") established by Participant at Sterling Bank &
Trust. or such other bank as Participant may from time to time designate,
of $S.000.00. Participant shall be entitled to debit, from time to time,
Mortgage Originator's balance in the Maintenance Account for any sum due
and owing Participant from Mortgage Originator.
IN WITNESS WHEREOF, the parties have caused this Terms Addendum to be executed
in their respective corporate names and their corporate seals to be affixed and
attested to by their respective duly authorized officers, as of the date first
set forth above.
Referral Xxxxxxx.xxx. Corp
as "Mortgage Originator"
by: /s/ Signature
------------------------------
its: President
-----------------------------
Sterling Bank and Trust, FSB
as "Participant"
by: /s/ Signature
------------------------------
Xxxxxx X. Xxxxxx
its: Managing Director, Mortgage Banking Division
