AMENDMENT NO. 1 TO PURCHASE, WARRANTIES AND SERVICING AGREEMENT
AMENDMENT
NO. 1 TO PURCHASE, WARRANTIES
THIS
AMENDMENT NO. 1, effective as of May 14, 2004, amends the Purchase, Warranties
and Servicing Agreement among EMC Mortgage Corporation (the “Purchaser”), First
Tennessee Mortgage Services, Inc., as servicer (the “Servicer”) and First
Horizon Home Loan Corporation (the “Seller”, and together with the Servicer, the
“Company”), previously entered into as of September 1, 2003 (the “Agreement”).
RECITALS
WHEREAS,
the Company sells to the Purchaser, and the Purchaser purchases from the
Company, from time to time, pursuant to the Agreement, certain conventional
residential Mortgage Loans on a servicing retained basis; and
WHEREAS,
in connection with future sales of Mortgage Loans to the Purchaser, the Company
and the Purchaser wish to amend the Agreement as set forth below.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants hereinafter
set forth and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Purchaser and the Company agree to amend
the Agreement as follows:
1. Section
3.02(h) of the Agreement shall be deleted in its entirety and replaced with
the
following:
(h) Each
Mortgage Loan complies with, and the Company has complied with, applicable
local, state and federal laws, regulations and other requirements including,
without limitation, usury, equal credit opportunity, real estate settlement
procedures, the Federal Truth-In-Lending Act, disclosure laws and all applicable
predatory and abusive lending laws and consummation of the transactions
contemplated hereby, including without limitation, the receipt of interest
by
the owner of such Mortgage Loan, will not involve the violation of any such
laws, rules or regulations. None
of
the Mortgage Loans are (a) Mortgage Loans subject to 12 CFR Part 226.31, 12
CFR
Part 226.32 or 226.34 of Regulation Z, the regulation implementing TILA, which
implements the Home Ownership and Equity Protection Act of 1994, as amended,
or
(b) except as may be provided in subparagraph (c) below, classified and/or
defined, as a “high cost”, “threshold”, “predatory” “high risk home loan” or
“covered” loan (or a similarly classified loan using different terminology under
a law imposing additional legal liability for mortgage loans having high
interest rates, points and or/fees) under any other applicable state, federal
or
local law including, but not limited to, the States of Georgia, New York, North
Carolina, Arkansas, Kentucky or New Mexico or (c) Mortgage Loans subject to
the
New Jersey Home Ownership Security Act of 2002 (the “Act”), unless such Mortgage
Loan is a (1) “Home Loan” as defined in the Act that is a first lien Mortgage
Loan, which is not a “High Cost Home Loan” as defined in the Act or (2) “Covered
Home Loan” as defined in the Act that is a first lien purchase money Mortgage
Loan, which is not a High Cost Home Loan under the Act. In addition to and
notwithstanding anything to the contrary herein, no Mortgage Loan for which
the
Mortgaged Property is located in New Jersey is a Home Loan as defined in the
Act
that was made, arranged, or assigned by a person selling either a manufactured
home or home improvements to the Mortgaged Property or was made by an originator
to whom the Mortgagor was referred by any such seller. Each
Mortgage Loan is being (and has been) serviced in accordance with Accepted
Servicing Practices and applicable state and federal laws, including, without
limitation, the Federal Truth-In-Lending Act and other consumer protection
laws,
real estate settlement procedures, usury, equal credit opportunity and
disclosure laws. Company shall maintain in its possession, available for the
Purchaser’s inspection, as appropriate, and shall deliver to the Purchaser or
its designee upon demand, evidence of compliance with all such
requirements.
2. The
following representations and warranties shall be added to Section 3.02 of
the
Agreement:
(yy)
There
is
no Mortgage Loan that was originated on or after October 1, 2002 and before
March 7, 2003, which is secured by property located in the State of
Georgia.
(zz)
No
proceeds from any Mortgage Loan were used to finance single premium credit
insurance policies.
(aaa)
No
borrower was encouraged or required to select a Mortgage Loan product offered
by
the Mortgage Loan’s originator which is a higher cost product designed for less
creditworthy borrowers, unless at the time of the Mortgage Loan’s origination,
such borrower did not qualify taking into account credit history and
debt-to-income ratios for a lower-cost credit product then offered by the
Mortgage Loan’s originator or any affiliate of the Mortgage Loan’s originator.
If, at the time of loan application, the borrower may have qualified for a
lower-cost credit product then offered by any mortgage lending affiliate of
the
Mortgage Loan’s originator, the Mortgage Loan’s originator referred the
borrower’s application to such affiliate for underwriting
consideration.
(bbb) The
methodology used in underwriting the extension of credit for each Mortgage
Loan
employs objective mathematical principles which relate the borrower’s income,
assets and liabilities to the proposed payment and such underwriting methodology
does not rely on the extent of the borrower’s equity in the collateral as the
principal determining factor in approving such credit extension. Such
underwriting methodology confirmed that at the time of origination
(application/approval) the borrower had a reasonable ability to make timely
payments on the Mortgage Loan.
(ccc) With
respect to any Mortgage Loan that contains a provision permitting imposition
of
a premium upon a prepayment prior to maturity: (i) prior to the loan’s
origination, the borrower agreed to such premium in exchange for a monetary
benefit, including but not limited to a rate or fee reduction, (ii) prior to
the
loan’s origination, the borrower was offered the option of obtaining a mortgage
loan that did not require payment of such a premium, (iii) the prepayment
premium is disclosed to the borrower in the loan documents pursuant to
applicable state and federal law, and (iv) notwithstanding any state or federal
law to the contrary, the Servicer shall not impose such prepayment premium
in
any instance when the mortgage debt is accelerated as the result of the
borrower’s default in making the loan payments.
(ddd) No
borrower was required to purchase any credit life, disability, accident or
health insurance product as a condition of obtaining the extension of credit.
No
borrower obtained a prepaid single-premium credit life, disability, accident
or
health insurance policy in connection with the origination of the Mortgage
Loan;
No proceeds from any Mortgage Loan were used to purchase single premium credit
insurance policies as part of the origination of, or as a condition to closing,
such Mortgage Loan.
(eee) The
Servicer will transmit full-file credit reporting data for each Mortgage Loan
pursuant to the Xxxxxx Xxx Selling Guide and that for each Mortgage Loan,
Servicer agrees it shall report one of the following statuses each month as
follows: new origination, current, delinquent (30-, 60-, 90-days, etc.),
foreclosed, or charged-off.
(fff) Any
Mortgage Loan with a Mortgaged Property in the State of Illinois complies with
the Illinois Interest Act.
3. The
following field shall be added to the definition of Mortgage
Loan Schedule:
“and
(28)
whether such Mortgage Loan is a “Home Loan”, “Covered Home Loan”, “Manufactured
Housing” or “Home Improvement Loan” as defined in the
New
Jersey Home Ownership Security Act of 2002.”
4. Section
6.04 of the Agreement shall be deleted in its entirety and replaced with the
following:
Section
6.04 Annual
Statement as to Compliance.
The
Company will deliver to the Purchaser not later than March 15th
of each
year, beginning March 15, 2005, an
executed Officers' Certificate acceptable to the Purchaser stating, as to each
signatory thereof, that (i) a review of the activities of the Company during
the
preceding calendar year and of performance under this Agreement has been made
under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Company has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been
a
default in the fulfillment of any such obligation, specifying each such default
known to such officers and the nature and status of cure provisions thereof.
Such Officers’ Certificate shall contain no restrictions or limitations on its
use. Copies of such statement shall be provided by the Company to the Purchaser
upon request.
If
the
Company does not timely comply with this Section 6.04, the Purchaser shall
give
prompt written notice to the Company. The Company shall have a period of five
(5) Business Days after receipt of such notice to provide what is required
hereunder. Failure of the Company to timely comply thereafter shall be deemed
an
Event of Default, automatically, without notice and without any cure period,
and
Purchaser may, in addition to whatever rights the Purchaser may have under
Sections 3.03 and 8.01 and at law or equity or to damages, including injunctive
relief and specific performance, terminate all the rights and obligations of
the
Company under this Agreement and in and to the Mortgage Loans and the proceeds
thereof without compensating the Company for the same, as provided in Section
9.01. Such termination shall be considered with cause pursuant to Section 10.01
of this Agreement. This paragraph shall supercede any other provision in this
Agreement or any other agreement to the contrary.
5. Section
6.05 of the Agreement shall be deleted in its entirety and replaced with the
following:
Section
6.05 Annual
Independent Certified Public Accountants' Servicing Report.
The
Company, at its expense and not later than March 15th
of each
year, beginning March 15, 2005, shall cause a firm of independent public
accountants which is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Purchaser acceptable to the Purchaser
to the effect that such firm has examined certain documents and records relating
to the Company's servicing of mortgage loans of the same type as the Mortgage
Loans pursuant to servicing agreements substantially similar to this Agreement,
which agreements may include this Agreement, and that, on the basis of such
an
examination, conducted substantially in the uniform single audit program for
mortgage bankers, such firm is of the opinion that the Company's servicing
has
been conducted in compliance with the agreements examined pursuant to this
Section 6.05, except for (i) such exceptions as such firm shall believe to
be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement. Such statement shall contain no restrictions or limitations on its
use. Copies of such statement shall be provided by the Company to the Purchaser.
In addition, on an annual basis, Company shall provide Purchaser with copies
of
its audited financial statements.
If
the
Company does not timely comply with this Section 6.05, the Purchaser shall
give
prompt written notice to the Company. The Company shall have a period of five
(5) Business Days after receipt of such notice to provide what is required
hereunder. Failure of the Company to timely comply thereafter shall be deemed
an
Event of Default, automatically, without notice and without any cure period,
and
Purchaser may, in addition to whatever rights the Purchaser may have under
Sections 3.03 and 8.01 and at law or equity or to damages, including injunctive
relief and specific performance, terminate all the rights and obligations of
the
Company under this Agreement and in and to the Mortgage Loans and the proceeds
thereof without compensating the Company for the same, as provided in Section
9.01. Such termination shall be considered with cause pursuant to Section 10.01
of this Agreement. This paragraph shall supercede any other provision in this
Agreement or any other agreement to the contrary.
6. All
other
terms and conditions of the Agreement remain unchanged and in full force and
effect.
7. Capitalized
terms used but not defined herein shall have the meanings ascribed to them
in
the Agreement.
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
EMC
MORTGAGE CORPORATON
Purchaser
By:________________________
Name:
Title:
FIRST
HORIZON HOME LOAN
CORPORATION
Seller
By:
_______________________
Name:
Title:
FIRST
TENNESSEE MORTGAGE
SERVICES,
INC.
Servicer
By:
_______________________
Name:
Title:
