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EXHIBIT 6(f)
BULK CONTINUING LOAN PURCHASE AGREEMENT
BY AND BETWEEN
HOUSEHOLD FINANCIAL SERVICES, INC. and
JV MORTGAGE CAPITAL, L.P.
AND
AUSTIN FUNDING CORPORATION
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DATED AS OF 6/28/, 1999
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TABLE OF CONTENTS
Page No.
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SECTION I DEFINITIONS
Section 1.1 Defined Terms ..........................................................................................1
Section 1.2 Other Terms.............................................................................................6
SECTION 2 PURCHASE OF LOANS AND TRANSFER OF SERVICING
Section 2.1 Offer to Sell ..........................................................................................6
Section 2.2 Buyer's Response and Seller's Acceptance ...............................................................6
Section 2.3 Purchase of Loans and Servicing Rights .................................................................7
Section 2.4 Purchase Price .........................................................................................7
Section 2.5 Premium Rebate .........................................................................................7
Section 2.6 Transfer of Servicing ..................................................................................8
SECTION 3 SETTLEMENT
Section 3.1 Place and Time of Settlement ...........................................................................8
Section 3.2 Seller's Deliveries at Settlement ......................................................................8
Section 3.3 Buyer's Deliveries at Settlement .......................................................................8
SECTION 4 REPRESENTATIONS AND WARRANTIES
Section 4.1 General Representations and Warranties of Seller .......................................................9
Section 4.2 Representations and Warranties of Seller Regarding the Offered Loans ..................................11
Section 4.3 Representations and Warranties of Seller Regarding the Loans ..........................................12
Section 4.4 General Representations and Warranties of Buyer .......................................................20
SECTION 5 PRE-SETTLEMENT COVENANTS
Section 5.1 Continued Servicing ...................................................................................21
Section 5.2 Preparation of Assignments ............................................................................21
Section 5.3 IRS Reporting .........................................................................................21
Section 5.4 Compliance with Law ...................................................................................22
Section 5.5 No Sale of Assets .....................................................................................22
Section 5.6 Private Mortgage Insurance ............................................................................22
SECTION 6 POST-SETTLEMENT COVENANTS
Section 6.1 Notice of Servicing Transfer ..........................................................................22
Section 6.2 IRS Examination .......................................................................................22
Section 6.3 Tax on Sale ...........................................................................................23
Section 6.4 Books and Records .....................................................................................23
Section 6.5 On Site Audits ........................................................................................23
Section 6.6 Financial Statements ..................................................................................23
Section 6.7 Post-Sale Loan Payments ...............................................................................23
Section 6.8 Transfer of Servicing Rights ..........................................................................23
Section 6.9 Delivery of Mortgage Loan Documents ...................................................................23
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SECTION 7 CONDITIONS TO SETTLEMENT
Section 7.1 Conditions to Buyer's Obligations .....................................................................24
Section 7.2 Opinion of Counsel ....................................................................................25
Section 7.3 Conditions to Seller's Obligations ....................................................................25
SECTION 8 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES; REPURCHASE OBLIGATION OF SELLER........................26
SECTION 9 POST-SETTLEMENT AND ADJUSTMENTS
Section 9.1 Repurchase Obligations ................................................................................27
Section 9.2 Repurchase Price ......................................................................................27
Section 9.3 Remedy to Insure Accuracy of Real Estate Appraisals ...................................................28
Section 9.4 Post-Settlement Adjustment to Purchase Price ..........................................................28
SECTION 10 INDEMNIFICATION
Section 10.1 Seller's Indemnification .............................................................................28
Section 10.2 Buyer's Indemnification ..............................................................................29
Section 10.3 Indemnification Procedures ...........................................................................29
SECTION 11 TERMINATION
Section 11.1 Termination by Either Party ..........................................................................30
Section 11.2 Termination by Buyer .................................................................................31
Section 11.3 Effect of Termination ................................................................................31
SECTION 12 MISCELLANEOUS
Section 12.1 No Waiver ............................................................................................32
Section 12.2 Amendment and Modification ...........................................................................32
Section 12.3 Notices ..............................................................................................32
Section 12.4 Expenses .............................................................................................33
Section 12.5 No Remedy Exclusive ..................................................................................34
Section 12.6 Independent Contractor ...............................................................................34
Section 12.7 Severability .........................................................................................34
Section 12.8 Entire Agreement .....................................................................................34
Section 12.9 Assignment ...........................................................................................34
Section 12.10 Captions ............................................................................................34
Section 12.11 Governing Law .......................................................................................34
Section 12.12 Counterparts ........................................................................................35
Section 12.13 Drafting ............................................................................................35
Section 12.14 Choice of Forum .....................................................................................35
Section 12.15 WAIVER OF JURY TRIAL ................................................................................35
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EXHIBITS
Exhibit A - Contents of Legal File ....................................................................................E-1
Exhibit B - Contents of Credit File ...................................................................................E-3
SCHEDULES
Schedule 1 - Information to be Included in Offered Loan Schedule ......................................................S-1
Schedule 2 - Seller's Underwriting Standards for Mortgage Loans .......................................................S-3
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BULK CONTINUING LOAN PURCHASE AGREEMENT
THIS BULK CONTINUING LOAN PURCHASE AGREEMENT is made and entered into
this 28 day of June, 1999 by and between HOUSEHOLD FINANCIAL SERVICES, INC., a
Delaware corporation, and its affiliates, or JV MORTGAGE CAPITAL, L.P., a
Delaware limited partnership (respectively or collectively, "Buyer"), and
Austin Funding Corp., a Texas corporation ("Seller").
WHEREAS, Seller is engaged in the business of originating, acquiring
and servicing fixed and adjustable rate mortgage loans, and has proposed to
offer to sell portfolios of such loans to Buyer from time to time subject to
Buyer's review and acceptance of all or any part of each such portfolio; and
WHEREAS, Seller desires from time to time to sell to Buyer, and Buyer
desires from time to time to purchase from Seller certain loans due and to
become due thereunder.
NOW THEREFORE, in consideration of the promises and other covenants
contained herein, Buyer and Seller agree as follows:
SECTION 1 DEFINITIONS
Section 1.1 Defined Terms
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with the Person specified.
"Acceptance" means an acknowledgment that Seller has executed,
indicating Seller's acceptance of Buyer's proposal to purchase a portfolio of
Loans pursuant to the terms set forth in the Response.
"Accepted Servicing Practices" means with respect to any Loan, those
mortgage servicing practices of prudent mortgage lending institutions that
service mortgage loans of the same type as such Loan in the jurisdiction where
the related Mortgaged Property is located.
"Appraised Value" means the amount set forth in an appraisal in
connection with the origination of each Loan as the value of the Mortgaged
Property.
"Assignment of Mortgage" means an assignment of the Mortgage, notice
of transfer or equivalent instrument, in recordable form, which when recorded is
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage to the Buyer,
or its assignee.
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"Bid Percentage" means a percentage of the Pool Balance, determined by
Buyer in its sole discretion, on which the Purchase Price is based.
"Business Day" means any day other than (a) Saturday or Sunday, or (b)
a day on which financial institutions in the States of Delaware or Illinois are
authorized or required by law, executive order or governmental decree to be
closed.
"Buyer" means, respectively or collectively, Household Financial
Services, Inc. a Delaware corporation, and its affiliates, or JV Mortgage
Capital, L.P., a Delaware limited partnership.
"Credit File" means with respect to any Loan, the file containing
those items listed in Exhibit B annexed hereto, and any additional documents
required to be added thereto pursuant to this Agreement.
"Cut-off Date" means, with respect to each Offer, the date as of which
the Principal Balance and the Pool Balance are determined.
"Due Date" means the day of the month on which each Monthly Payment is
due on a Loan, exclusive of any days of grace.
"Due Diligence Period" means the period as agreed to by Buyer and
Seller and ending when Buyer submits a Response unless otherwise agreed to in
writing. During such period Seller shall make the Loan Documents and any
information, records and files pertaining to the Offered Loans available to
Buyer at its offices located in _______, _______ or at any other location
mutually agreed upon by Buyer and Seller.
"ECOA" means the Equal Credit Opportunity Act, 15 U.S.C. Section 1601.
"Escrow Payment" means with respect to any Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Obligor with the mortgagee pursuant to the Mortgage or any other document.
"Excluded Loans" means the Offered Loans owned by Seller and
offered for sale to Buyer pursuant to an Offer, which Offered Loans Buyer
elects not to purchase, and which Offered Loans shall be listed in Schedule
A to the Response.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"FNMA" means the Federal National Mortgage Association.
"First Mortgage Loan" means with respect to each Offer those Loans
secured by a valid Mortgage that represents a first lien.
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"GNMA" means the Governmental National Mortgage Association.
"Interest Rate Adjustment Date" means the date on which the Mortgage
Interest Rate is adjusted with respect to each Loan. The first Interest Rate
Adjustment Date is the date set forth on the Loan Schedule.
"IRS" means the Internal Revenue Service.
"Legal Fee" shall mean with respect to any indemnified party, any and
all fees, costs, and expenses of any kind reasonably incurred by such party or
its counsel investigating, preparing for, defending against, or providing
evidence, producing documents, or taking other action with respect to, any
threatened or asserted claim.
"Legal File" means with respect to any Mortgage Loan, the file
containing those items listed in Exhibit A annexed hereto, and any additional
documents required to be added thereto pursuant to this Agreement.
"Loan" means each loan selected by Buyer to purchase from the Offered
Loans owned by Seller and offered to Buyer pursuant to each Offer, which Loans
collectively, shall be listed in the Offered Loan Schedule.
"Loan Documents" means all of Seller's original agreements with any
Obligor of a Loan, and all of the following in the original (except as
other-wise noted) to the extent they exist in Seller's loan files, for any Loan
that Buyer proposes to buy pursuant to its Response: all loan applications,
correspondence, general credit information, file maintenance information,
payment histories, credit information files, records, executed notes (which may
be copies), documents, disclosures, receipts, drafts, instruments, notices,
acknowledgments, mortgages (which may be copies), deeds of trust (which may be
copies), security deeds (which may be copies), title insurance policies, title
opinions, property appraisals, property surveys, insurance policies, property
insurance policies, mortgage insurance policies, flood insurance policies,
guarantees, and any like and other information relating to the Loans that is
maintained in individual loan files or on a loan-by-loan basis, including such
data stored on microfilm, microfiche, magnetic tape, computer disc, or in any
other form.
"Loan Schedule" means the list of Loans, consisting of the Offered
Loans less any Excluded Loans.
"Loan-To-Value Ratio" or "LTV means" with respect to any Loan, the
ratio of the outstanding principal amount of the Loan and, if the Loan purchased
hereunder is secured by a second lien, any lien on the Mortgaged Property senior
to the lien of the Loan as of the origination date to the lesser of (a) the
Appraised Value of the Mortgaged Property and (b) if the Loan was made to
finance the acquisition of the related Mortgaged Property, the purchase price of
the Mortgaged Property, expressed as a percentage.
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"Monthly Payment" means the scheduled monthly payment of principal
and interest on a Loan.
"Mortgage" means, with respect to a Loan, any mortgage, deed of trust,
security deed, or other similar instrument creating a lien on residential real
property to secure repayment of such Loan, or a true and correct copy thereof.
"Mortgage File" means collectively, the Credit File and the Legal File
for any Loan.
"Mortgage Interest Rate" means the annual rate of interest borne on a
Note, net of any primary mortgage guaranty insurance premium.
"Mortgaged Property" means, with respect to each Mortgage, the
property subject to such Mortgage.
"Note" means, with respect to a Loan, the original promissory note
executed by the respective Obligor to evidence such Obligor's indebtedness under
such Loan.
"Obligor" means, with respect to an Offered Loan, any person obligated
for payment of such Offered Loan or who has transferred or assigned any property
Interest to Seller to secure payment of such Offered Loan.
"Offer" means each offer from Seller to Buyer to sell a portfolio of
Offered Loans and the right to service each such Offered Loan pursuant to the
procedures set forth in Section 2.1, which Offer shall include an Offered Loan
Schedule.
"Offer Date" means, with respect to each Offer, the date on which
Seller sends such Offer to Buyer.
"Offered Loan" means any mortgage loan that is secured by a first or
second position lien on completed, one-to-four family residential real estate,
and that Seller owns and offers to Buyer to purchase pursuant to an Offer.
"Offered Loan Schedule" means the schedule of Offered Loans attached
to the Offer, which lists to the extent and as available the mapping document
information relating to each Offered Loan required to be included in each Offer,
as set forth in Schedule I to this Agreement, and which shall be in electronic
format and, if requested by Buyer, hard copy.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Balance" means, with respect to each Offer and each portfolio of
Loans to be purchased pursuant to this Agreement, the aggregate outstanding
Principal Balance of the Loans in such portfolio as of the Cut-off Date.
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"Premium" means the product of the Principal Balance times the Bid
Percentage, minus the Principal Balance.
"Principal Balance" means, with respect to a Loan and a particular
Offer, the unpaid principal balance of such Loan as of the Cut-off Date, as
shown on the books and records of Seller, provided that the Principal Balance
shall not include any accrued but unpaid fees or charges.
"Purchase Price" means, the price paid by Buyer for the Loans acquired
pursuant to the Response, which shall be calculated according to the following
formula:
(a) the product of
(i) the Bid Percentage and
(ii) the Pool Balance minus the aggregate amount, if any, of all
payments of principal made to and retained by Seller on the
Loans acquired from the Cut-off Date up to, but not
including, the Settlement Date
(b) plus
(i) accrued but unpaid interest on each of the Loans at the
applicable per annum interest rate, as set forth on the Loan
Schedule from the paid-to-date of interest up to, but not
including the Settlement Date.
"RESPA" means the Real Estate Settlement Procedures Act, 12 U.S.C.
Section 2601 et seq.
"Response" means the letter from Buyer to Seller setting forth the Bid
Percentage and attaching as Schedule A, a list of any Excluded Loans.
"Second Mortgage Loan" means with respect to each Offer those Loans
secured by a Mortgage which represents a second lien.
"Seller" means Austin Funding, a Texas corporation.
"Service Transfer Date" means, unless otherwise agreed by the parties,
the date which is 15 days after the date on which Seller sends its notices
pursuant to Section 6.1 and on which Seller transfers to Buyer or Buyer's
designee all servicing responsibilities relating to all the Loans sold on the
corresponding Settlement Date pursuant to Section 2.6.
"Settlement" means, with respect to each portfolio of Loans to be sold
pursuant to this Agreement, the satisfaction of the conditions set forth in
Section 7, and the sale and purchase of, such portfolio of Loans.
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(c) By executing the Response, Seller agrees to sell the Loans, or
cause the Loans to be sold to Buyer pursuant to and in accordance with the terms
of the Response and this Agreement.
Section 2.3 Purchase of Loans and Servicing Rights.
(a) Subject to the terms and conditions set forth in this Agreement,
(i) Seller shall sell, transfer, assign, and convey to Buyer,
without recourse, but subject to the terms of this Agreement, and
Buyer shall purchase and take on the Settlement Date, all of Seller's
right, title, and interest in and to the Loans listed in the Response;
(ii) Seller shall sell, transfer, assign, and convey to Buyer,
and Buyer shall purchase and take on the Settlement Date, all of
Seller's right, title, and interest in and to all escrow deposits held
in connection with the Loans listed in the Response; and
(iii) Seller shall also irrevocably assign to Buyer, and Buyer
shall take on the Settlement Date, Seller's right to service each Loan
sold pursuant to the Response and to collect any servicing fee in
connection with such Loan.
Section 2.4 Purchase Price. The Purchase Price for the Loans purchased at
each Settlement shall be based on the Bid Percentage set forth in the Response
and shall be calculated according to the formula set forth in the definition of
the term Purchase Price.
Section 2.5 Premium Rebate. In the event that a Premium is paid by the
Buyer to the Seller on a Loan and such Loan is prepaid in full by the Borrower,
other than by a refinancing by the Buyer or any of its subsidiaries or
affiliates, within twelve (12) months of Settlement Date, the Seller shall, upon
demand by the Buyer, refund to the Buyer the Premium paid by the Buyer to the
Seller as follows: if prepayment in full is within one (1) month of the
Settlement Date, 12/12ths of the Premium shall be refunded; if prepayment in
full is between one (1) and two (2) months of the Settlement Date, 11/12ths of
the Premium shall be refunded; if prepayment in full is between two (2) and
three (3) months of the Settlement Date, 10/12ths of the Premium shall be
refunded; if prepayment in full is between three (3) and four (4) months of the
Settlement Date, 9/12ths of the Premium shall be refunded; if prepayment in full
is between four (4) and five (5) months of the Settlement Date, 8/12ths of the
Premium shall be refunded; if prepayment in full is between five (5) and six
(6) months of the Settlement Date, 7/12ths of the Premium shall be refunded; if
prepayment in full is between six (6) and seven (7) months of the Settlement
Date, 6/12ths of the Premium shall be refunded; if prepayment in full is
between seven (7) and eight (8) months of the Settlement Date, 5/12ths of the
Premium shall be refunded; if prepayment in full is between eight (8) and
nine (9) months of the Settlement Date, 4/12ths of the Premium shall be
refunded; if prepayment in full is between nine (9) and ten (10) months of the
Settlement Date, 3/12ths of the Premium shall be refunded; if prepayment in full
is between ten (10) and eleven (11) months of the Settlement Date, 2/12ths of
the Premium shall be refunded; if prepayment in full is between eleven (11) and
twelve (12) months of the Settlement Date, 1/12th of the Premium shall be
refunded. In the event any Loan
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is prepaid in full later than twelve (12) months from the Settlement Date of
such Loan, no refund shall be due. In the event the Note carries a prepayment
penalty, the Buyer agrees to recapture the Premium rebate from the proceeds of
the prepayment penalty and then from Seller, if there is any deficient balance
according to the refund calculation specified above.
Section 2.6 Transfer of Servicing. As of each Settlement Date, Seller shall
transfer to Buyer any and all rights to service the Loans sold on the related
Settlement Date, including but not limited to Seller's right to receive all
payments and receivables with respect to the Loans, ownership of Escrow
Payments, and all servicing rights as owner and holder of the Loans.
Notwithstanding the foregoing, Seller shall continue to service the Loans for
Buyer following the Settlement Date and until the corresponding Service Transfer
Date as set forth in Section 5.1, and Buyer shall assume responsibility for
servicing the Loans on and after such Service Transfer Date. Seller shall ensure
that all escrow balances are received by Buyer within three (3) days of the
Service Transfer Date. If such balances are not received by Buyer within three
(3) days, Seller shall remit to Buyer in immediately available funds, an amount
equal to said balances.
SECTION 3 SETTLEMENT
Section 3.1 Place and Time of Settlement. Each Settlement shall take place
via facsimile and wire transfer with original documents delivered via overnight
courier on the Settlement Date, which shall be within 2 Business Days of the
satisfaction of all conditions to Settlement, as set forth herein, or on such
other day as mutually agreed to by the parties.
Section 3.2 Seller's Deliveries at Settlement. On or before each
Settlement, Seller shall deliver the following to Buyer:
(a) the form of notice of servicing transfer, to be sent by Seller
pursuant to Section 6.1 for each Loan as required by RESPA, which form shall
indicate the date on which it shall be sent by Seller;
(b) the Mortgage File with respect to each Loan sold at such
Settlement, the contents of which are subject to the approval of Buyer and its
legal counsel as to proper form and execution provided, however, to the extent
Seller continues to service the Loans after Settlement, the Credit File shall be
retained by Seller and delivered to Buyer ten (10) days prior to the Service
Transfer Date, and
(c) all other documents, instruments and writings required to be
delivered by Seller prior to or at such Settlement pursuant to Section 7.1 of
this Agreement or as reasonably requested by Buyer.
Section 3.3 Buyer's Deliveries at Settlement. At each Settlement, Buyer
shall deliver the following to Seller:
(a) the Purchase Price for the Loans sold at such Settlement by wire
transfer of immediately available funds in U.S. dollars to the account
designated by Seller.
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SECTION 4 REPRESENTATIONS AND WARRANTIES
Section 4.1 General Representations and Warranties of Seller. As of the
date hereof, and as of each Settlement Date, Seller represents and warrants as
follows:
(a) Organization. Seller is a corporation, duly organized, validly
existing, and in good standing under the laws of the State of Texas, and is
qualified and authorized to transact business in, and is in good standing under
the laws of, each jurisdiction in which any Mortgaged Property is located or is
otherwise exempt under applicable law from such qualification. Seller has the
requisite corporate power and authority to own and operate its properties, to
carry on its business as it is now being conducted, and to consummate the
transactions contemplated by this Agreement.
(b) Authorization of this Agreement. Seller has the requisite
corporate power and authority to execute and deliver this Agreement, and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of Seller are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Seller and constitutes a legal, valid, and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except that such
enforcement may be affected by bankruptcy, by other insolvency laws, or by
general principles of equity.
(c) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of Seller,
and the transfer, assignment and conveyance of the Notes and the Mortgages by
Seller pursuant to this Agreement are not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable jurisdiction.
(d) No Conflict or Violation. The execution and delivery of this
Agreement by Seller does not, and the performance of this Agreement by Seller
will not, (i) result in a violation of or conflict with any provisions of the
charter or by-laws or equivalent governing instruments of Seller, (ii) violate
any law, rule, regulation, code, ordinance, judgment, injunction, order, writ,
decree, or ruling applicable to Seller, or (iii) conflict with or violate any
agreement, permit, concession, grant, franchise, license, or other governmental
authorization or approval necessary for sale of the Loans by Seller. No
regulatory approvals or consents are required with respect to Seller's
consummation of the transactions contemplated by this Agreement.
(e) Litigation. No action, suit, proceeding, or governmental
investigation or inquiry is currently pending, or to the knowledge of Seller,
threatened against Seller which, if adversely determined, would have a material
adverse effect on the business, combined assets or financial condition of Seller
or on the Loans or would prevent the consummation of the transactions
contemplated by this Agreement.
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(f) Financial Condition. Seller has previously furnished Buyer with
Seller's most recent audited financial statements, together with the respective
reports thereon of the Seller's independent public accountants, and Seller's
most recent unaudited financial statements, each of which has been prepared in
accordance with generally accepted accounting principles. Each of the balance
sheets included in the financial statements sets forth Seller's financial
condition as of the date thereof, and there have been no material adverse
changes in Seller's business or financial condition since that date.
(g) Accuracy of Statement. Neither this Agreement, nor any statement,
report, or other document furnished or to be furnished pursuant to this
Agreement, or in connection with the transaction contemplated hereby, contains
any untrue statement of fact by Seller, or omits to state a fact, necessary to
make the statements of Seller contained therein not misleading.
(h) Fidelity Bond. Upon request Seller will deliver to Buyer a true
and correct copy of Seller's Fidelity bond and Seller's errors and omissions
policy, as currently in effect, the amounts and coverages of both of which will
be acceptable to Buyer. Seller shall, at its own expense, maintain a fidelity
bond and an errors and omissions policy, in amounts at least as great as, and
with the coverages at least as broad as, those currently in effect. Seller shall
upon request furnish proof of such coverage at or before the first Settlement
and, upon request, annually thereafter.
(i) Ability to Perform: Solvency. Seller does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement. Seller is solvent and sale of the Mortgage
Loans will not cause Seller to become insolvent. The sale of the Loans is not
undertaken with the intent to hinder, delay or defraud any of the Seller's
creditors.
(j) No Consent Required. No consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by Seller of or compliance by Seller with this
Agreement or the Loans, or the sale of the Loans to the Buyer or the
consummation of the transactions contemplated by this Agreement, or if required,
such approval has been obtained prior to each Settlement Date.
(k) Selection Process. The Loans were not intentionally selected in a
manner so as to adversely affect the interests of the Buyer.
(1) Commissions to Third Parties. Seller has not dealt with any broker
or agent or other Person who might be entitled to a fee, commission or
compensation in connection with this transaction other than the Buyer except as
Seller has previously disclosed to Buyer in writing.
(m) Fair Consideration. The consideration received by Seller upon the
sale of the Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Loans,
(n) No Personal Solicitation. For a period of three (3) years from and
after each Settlement Date, Seller agrees that it will not take any action or
permit or cause any action to be
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taken by any of its agents and Affiliates, or by any independent contractors or
independent mortgage brokerage companies on Seller's behalf, to personally, by
telephone or mail, solicit the borrower or Obligor under any Loan for any
purpose whatsoever, including to refinance a Loan, in whole or in part, without
the prior written consent of the Buyer. It is understood and agreed that all
rights and benefits relating to the solicitation of any Obligors and the
attendant rights, title and interest in and to the list of such Obligors and
data relating to their mortgages (including insurance renewal dates) shall be
transferred to the Buyer pursuant hereto on each Settlement Date and Seller
shall take no action to undermine these rights and benefits. Notwithstanding the
foregoing, it is understood and agreed that promotions undertaken by Seller or
any affiliate of Seller which are directed to the general public at large,
including, without limitation, mass mailing based on commercially acquired
mailings lists, newspaper, radio and television advertisements shall not
constitute solicitation under this paragraph.
Section 4.2 Representations and Warranties of Seller Regarding the Offered
Loans. With respect to each Offer, Seller represents and warrants to, and
covenants with Buyer that, as of the corresponding Offer Date:
(a) Accuracy of Statements. The information contained in the Offered
Loan Schedule and all information provided regarding delinquencies in the
Offered Loans are true and correct in all respects, Neither the Offered Loan
Schedule nor the Loan Documents nor any other document furnished in connection
with the Offer contains any untrue statement of fact by Seller, or omits to
state a fact, necessary to make the statements of Seller contained therein not
materially misleading.
(b) Origination. Each of Offered Loans meets the underwriting
standards of Seller, which standards are set forth in Schedule 2 to this
Agreement, and were underwritten in strict accordance therewith. Each Loan was
originated by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Section 203 and 211 of the National Housing Act or a
savings and Loan association, a savings bank, a commercial bank, a credit union,
an insurance company, or similar institution which is supervised and examined by
a Federal or State authority. The Note, the Mortgage and all other documents
contained in the Legal Files are on FNMA or FHLMC uniform instruments or are on
forms acceptable to FNMA or FHLMC. The documents, instruments and agreements
submitted for loan underwriting were not falsified and contain no untrue
statement of material fact and do not omit to state a material fact required to
be stated therein or necessary to make the information and statements therein
not misleading. Seller has not made any representations to the Obligor that are
inconsistent with the mortgage instruments used.
(c) Genuineness of Signature. All Loan Documents are genuine and
contain genuine signatures. The Loan Documents that Buyer requires to be
original documents are original documents. All certified copies of original
documents are true copies and meet the applicable requirements and
specifications of this Agreement and any other requirements that Buyer has
reasonably made of Seller.
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Section 4.3 Representations and Warranties of Seller Regarding the Loans.
With respect to each Loan, Seller represents and warrants to, and covenants with
Buyer that, as of the Settlement Date on which such Loan is sold:
(a) Title to Loans. Seller has good title to and is the sole owner of
record and holder of the Loan and the indebtedness evidenced by each Note.
Unless otherwise disclosed in the Loan Documents or the Offered Loan Schedule,
Seller is the original mortgagee or assignee of the Mortgage, and there has been
no more than one prior assignment and no sale, or hypothecation by Seller of the
Loan. The Loan is not assigned or pledged, and Seller has good, indefeasible and
marketable title thereto, and has full right to transfer and sell the Loan to
the Buyer free and clear of any encumbrance, equity interest, participation
interest, lien, pledge, charge, claim or security interest, and has full right
and authority subject to no interest or participation of, or agreement with, any
other party, to sell and assign each Loan pursuant to this Agreement and
following the sale of each Loan, Buyer will own such Loan free and clear of any
encumbrance, equity interest, participation interest, lien, pledge, charge,
claim or security interest.
(b) Accuracy of the Offered Loan Schedule. The Loan is as described
in the Offered Loan Schedule delivered by Seller to Buyer, and the information
contained in the Offered Loan Schedule is true and correct as of the Settlement
Date.
(c) Payment. As of the Settlement Date, no loan is 30 or more days
delinquent (determined on a contractual basis), no Loan will have been 30 or
more days delinquent (determined on a contractual basis) more than once during
the 12 months preceding the Settlement Date and the borrower has made, or shall
make, as the case may be, the first monthly payment with respect to the Loan on
its Due Date.
(d) No Outstanding Charge. There are no defaults in complying with the
terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable.
Seller has not advanced funds, or induced or solicited or knowingly received any
advance of funds by a party other than the Obligor, direct or indirectly, for
the payment of any amount required under the Loan, except for interest accruing
from the date of the Note or date of disbursement of the Loan proceeds,
whichever occurred later, to the day which precedes by one month the Due Date of
the first Monthly Payment.
(e) Original Terms Unmodified. The terms of the Note and Mortgage have
not been impaired, waived, altered or modified in any respect, except by a
written instrument which has been recorded, if necessary to protect the
interests of the Buyer. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required by
the policy, and its terms are reflected on the Loan Schedule. No Obligor has
been released, in whole or in part, except in connection with an assumption
agreement approved by the title insurer, to the extent required by the policy,
and which assumption agreement is part of the Legal File.
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(f) Absence of Defenses. The Mortgage and the Note are not subject to
any right of rescission, set-off, counterclaim, or defense (including the
defense of usury), based on the invalidity or unenforceability of the Note
and/or Mortgage or on any conduct of Seller or any of its officers, employees,
representatives, or Affiliates in originating or servicing the Loan prior to the
Settlement Date. Nor will the operation of any of the terms of the Loan or Note,
or the exercise of any right thereunder, render the Loan or Note unenforceable,
in whole or in part, or subject to any right of rescission, set-off,
counterclaim, or defense (including the defense of usury) based on any such
invalidity, unenforceability or conduct. No right of rescission, set-off,
counterclaim, or defense with respect thereto has been asserted to Seller or, to
Seller's knowledge, has been asserted to any other person.
(g) Hazard insurance. Pursuant to the terms of the Mortgage, all
improvements upon the Mortgaged Property are insured by an insurer acceptable to
FNMA against loss by fire and such other risks (excluding mud slides and
earthquakes) as are usually insured against in the broad form of extended
coverage hazard insurance from time to time available, including flood hazards
if upon origination of the Loan, the Mortgaged Property was in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and if flood insurance was required by federal
regulation and such flood insurance has been made available). All such insurance
policies (collectively, the "hazard insurance policy") meet the requirements of
the current guidelines of the Federal Insurance Administration, conform to the
requirements of the FNMA Sellers' Guide and the FNMA Servicers' Guide, and are a
standard policy of insurance for the locale where the Mortgaged Property is
located. The amount of the insurance is at least in the amount of the full
insurable value of the Mortgaged Property on a replacement cost basis or the
unpaid balance of the Mortgage Loan, whichever is less. The hazard insurance
policy names (and will name) the Obligor as the insured and contains a standard
mortgagee loss payable clause in favor of Seller (or Seller's servicer) and its
successors and assigns. The Mortgage obligates the Obligor thereunder to
maintain the hazard insurance policy at the Obligor's cost and expense, and on
the Obligor's failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at such Obligor's cost and expense, and to seek
reimbursement therefor from the Obligor. Where required by state law or
regulation, the Obligor has been given an opportunity to choose the carrier of
the required hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering a condominium, or any hazard
insurance policy covering the common facilities of a planned unit development.
The hazard insurance policy is the valid and binding obligation of the insurer,
is in full force and effect, and will be in full force and effect and inure to
the benefit of the Buyer upon the consummation of the transactions contemplated
by this Agreement. Seller has not engaged in, and has no knowledge of the
Obligor's or any subservicer's having engaged in, any act or omission which
would impair the coverage of any such policy, the benefits of the endorsement
provided for therein, or the validity and binding effect of either. In
connection with the issuance of the hazard insurance policy, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind has
been or will be received, retained or realized by any attorney, firm or other
person or entity, and no such unlawful items have been received, retained or
realized by Seller.
(h) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures,
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consumer credit protection, equal credit opportunity or disclosure laws
applicable to the Loan have been complied with by Seller and, if Seller is not
the originator of any such Loan, by the originator of such Loan, and the
consummation of the transactions contemplated hereby will not involve the
violation of any such laws or regulations.
(i) No Satisfaction of Mortgage or Note. Neither the Mortgage nor the
Note has been satisfied, cancelled, subordinated or rescinded, in whole or in
part, and the Mortgaged Property has not been released from the lien of the
Mortgage, in whole or in part, nor has any instrument been executed that would
effect any such release, cancellation, subordination or rescission. Seller has
not waived the performance by the Obligor of any action, if the Obligor's
failure to perform such action would cause the Mortgage Loan to be in default,
nor has Seller waived any default resulting from any action or inaction by the
Obligor.
(j) Location and Type of Mortgaged Property. The Mortgaged Property
consists of a parcel of real property with a single family residence erected
thereon, or a two to four-family dwelling, or an individual condominium unit in
a low-rise or high-rise condominium project, or an individual unit in a planned
unit development. The Mortgaged Property is either a fee simple estate or a
long-term residential lease. If the Loan is secured by a long-term residential
lease, (A) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the assignment of the lease without the lessor's consent (or
the lessor's consent has been obtained and such consent is in the Mortgage File)
and the acquisition by the holder of the Mortgage of the rights of the lessee
upon foreclosure or assignment in lieu of foreclosure or provide the holder of
the Mortgage with substantially similar protection; (B) the terms of such lease
do not (i) allow the termination thereof upon the lessee's default without the
holder of the Mortgage being entitled to receive written notice of, and
opportunity to cure, such default, (ii) allow the termination of a lease in the
event of damage or destruction as long as the Mortgage is in existence or (iii)
prohibit the holder of the Mortgage from being insured under the hazard
insurance policy relating to the Mortgaged Property; (C) the original term of
such lease is not less than 15 years; (D) the term of such lease does not
terminate earlier than five years after the maturity date of the Note; and (E)
the Mortgaged Property is located in a jurisdiction in which the use of
leasehold estates for residential properties is a widely-accepted practice.
(k) Valid Lien. The Mortgage for any First Mortgage Loan creates a
valid, subsisting, enforceable and perfected first lien on the Mortgaged
Property, and the Mortgage for any Second Mortgage Loan creates a valid,
subsisting, enforceable and perfected second lien on the Mortgaged Property, and
in each case includes all buildings on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air conditioning
systems located in or annexed to such buildings, and all additions, alterations
and replacements made at any time with respect to the foregoing. The lien of the
Mortgage is subject only to "Permitted Exceptions," which consist of the
following:
(1) the lien of current real property taxes and assessments not yet
due and payable;
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(2) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording
acceptable to prudent mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered
to the originator of the Loan and referred to or otherwise considered in
the appraisal made for the originator of the Loan;
(3) other matters to which like properties are commonly subject which
do not materially interfere with the benefits of the security intended to
be provided by the Mortgage or the use, enjoyment, value or marketability
of the related Mortgaged Property; and
(4) a valid first lien in the case of Loans in a Second Mortgage Loan.
Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with a First Mortgage Loan establishes and creates a
valid, subsisting, enforceable and perfected first lien and first priority
security interest on the property described therein, and with respect to a
Second Mortgage Loan, a second priority security interest, and Seller has full
right to sell and assign the same to the Buyer. Except as noted on the Loan
Schedule, for any First Mortgage Loan the Mortgaged Property was not, as of the
respective date of origination of said First Mortgage Loan, subject to a
mortgage, deed of trust, deed to secure debt or other security instrument
creating a lien, subordinate to the lien of the Mortgage.
(1) Validity of Mortgage Documents. The Note and the Mortgage and
every other agreement, if any, executed and delivered by the Obligor in
connection with the Loan are genuine, and each is the legal, valid and binding
obligation of the maker thereof enforceable in accordance with its terms. All
parties to the Note, the Mortgage and each other such related agreement had
legal capacity to enter into the Loan and to execute and deliver the Note, the
Mortgage and each other such related agreement, and the Note, the Mortgage and
each other such related agreement have been duly and properly executed by the
respective Obligors. Seller has reviewed all of the documents constituting the
Mortgage File and has made such inquiries as it deems necessary to make and
confirm the accuracy of the representations set forth herein.
(m) Full Disbursement of Proceeds. The Loan has been closed, and in
the case of a First Mortgage Loan the proceeds of the Loan have been fully
disbursed and there is no requirement for future advances thereunder, and any
and all requirements as to completion of any on-site or off-site improvement and
as to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Loan and the
recording of the Mortgage were paid, and the Obligor is not entitled to any
refund of any amounts paid or due under the Note or Mortgage.
(n) Doing Business. All parties which have had an interest in the
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (1) in compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (2) (a) organized under the laws
of such state, or (b) qualified to do business in such state, or (c) federal
savings and loan
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associations, savings banks, or national banks having principal offices in such
state, or (d) not doing business in such state.
(o) LTV. The initial principal balance of each Loan was less than or
equal to 100% of the lesser of the Appraised Value of the Mortgaged Property at
the time the Loan was originated or the sales price of the Mortgaged Property.
(p) Title Insurance. The Loan is covered by either (a) an attorney's
opinion of title and abstract of title the form and substance of which is
acceptable to FNMA or (b) an ALTA lender's title insurance policy or other
generally acceptable form of policy of insurance issued by a title insurer
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring Seller, its successors and assigns, as to the first priority
lien of the Mortgage in the original principal amount of the First Mortgage
Loan, and as to the second priority lien on the Mortgage in the original
principal amount of the Second Mortgage Loan, subject only to the Permitted
Exceptions and against any loss by reason of the invalidity or unenforceability
of the lien resulting from the provisions of the Mortgage providing for
adjustment in the Mortgage Interest Rate and Monthly Payment. Additionally, such
lender's title insurance policy affirmatively Insures ingress and egress, and
against encroachments by or upon the Mortgaged Property or any interest
therein. Where required by state law or regulation, the Obligor has been given
the opportunity to choose the carrier of such lender's title insurance policy.
Seller, its successors and assigns are the sole insureds of such lender's title
Insurance policy, and such lender's title insurance policy is valid and remains
In full force and effect and will be in full force and effect upon the sale of
the Loan to the Buyer. No claims have been made under such lender's title
insurance policy, and no prior holder of the mortgage, including Seller, has
done, by act or omission, anything which would impair the coverage of such
lender's title Insurance policy. In connection with the issuance of such
lender's title insurance policy, no unlawful fee, commission, kickback or other
unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other person or entity, and no
such unlawful items have been received, retained or realized by Seller.
(q) No Defaults. There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Note or related documents and
no event which, with the passage of time or with notice and the expiration of
any applicable grace or cure period, would constitute a default, breach,
violation or event of acceleration, and neither Seller nor its predecessors have
waived any default, breach, violation or event of acceleration.
(r) No Mechanics' Liens. There are no mechanics' or similar liens or
claims which have been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage.
(s) Location of Improvements; No Encroachments. All improvements which
were considered in determining the Appraised Value of the Mortgaged Property lay
wholly within the boundaries and building restriction lines of the Mortgaged
Property and no improvements on adjoining properties encroach upon the Mortgaged
Property. No improvement located on or being part of the Mortgaged Property is
in violation of any applicable zoning law or regulation; provided,
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that in no event shall a legal non-conforming use of the Mortgaged Property be
considered a violation of any such zoning law or regulation,
(t) Payment Terms. For fixed-rate Loans, the Note is payable in equal
monthly installments (other than the last payment) of principal and interest.
For adjustable-rate Loans, the Mortgage Interest Rate is adjusted in accordance
with the terms of tile Note and the Note is payable each month and, during an
adjustment period or initial period, in equal monthly installments of principal
and interest. All required notices of interest rate and payment amount
adjustments have been sent to the Obligor on a timely basis and the computations
of such adjustments were properly calculated. Installments of interest are
subject to change due to the adjustments to the Mortgage Interest Rate of each
Interest Rate Adjustment, with interest calculated and payable in arrears,
sufficient to amortize the Mortgage Loan fully by the stated maturity date, over
an original term of not more than thirty years from commencement of
amortization. All Mortgage interest rate adjustments have been made in strict
compliance with state and federal law and the terms of the related Note. Any
interest required to be paid pursuant to state and local law has been properly
paid and credited.
(u) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (1) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure. Upon default by an Obligor on a Loan and foreclosure on,
or trustee's sale of, the Mortgaged Property pursuant to the proper procedures
the holder of the Loan will be able to deliver good and merchantable title to
the Mortgaged Property. There is no homestead or other exemption available to
the Obligor which would interfere with the right to sell the Mortgaged Property
at a trustee's sale or the right to foreclose the Mortgage subject to applicable
federal and state laws and judicial precedent with respect to bankruptcy and
right of redemption.
(v) Occupancy of the Mortgaged Property. All inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate authorities.
(w) No Additional Collateral. The Note is not and has not been secured
by any collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to in
the "Valid Lien" representation above.
(x) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Buyer to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Obligor.
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(y) Due on Sale. The Mortgage for a First Mortgage Loan contains a
provision for the acceleration of the payment of the unpaid principal balance of
the Loan in the event that the Mortgaged Property is sold or transferred without
the prior written consent of the mortgagee thereunder, at the option of the
mortgagee. This provision provides that the mortgagee cannot exercise its option
if either (a) the exercise of such option is prohibited by federal law or (b)(i)
the Obligor causes to be submitted to the mortgagee information required by the
mortgagee to evaluate the intended transferee as if a new loan were being made
to such transferee and (ii) the mortgagee reasonably determines that the
mortgagee's security will not be impaired by the assumption of such Loan by the
transferee and that the risk of breach of any covenant or agreement in the Loan
documents is acceptable to the mortgagee. To the best of Seller's knowledge,
such provision is enforceable.
(z) Transfer of Loans. Each of the Mortgage and the Assignment of
Mortgage is in recordable form and is acceptable for recording under the laws of
the jurisdiction in which the Mortgaged Property is located.
(aa) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Loan does not contain provisions pursuant to which Monthly
Payments are paid or partially paid with funds deposited in any separate account
established by Seller, the Obligor or anyone on behalf of the Obligor, or paid
by any source other than the Obligor nor does it contain any other similar
provisions currently in effect which may constitute a "buydown" provision. The
Loan is not a graduated payment mortgage loan and the Loan does not have a
shared appreciation or other contingent interest feature.
(bb) Consolidation of Future Advances. Any future advances made to the
Obligor prior to the Offer Date have been consolidated with the outstanding
principal amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The lien
of the Mortgage securing the consolidated principal amount is expressly insured
as having first lien priority, if a First Mortgage Loan, or as having a second
lien priority, if a Second Mortgage Loan, by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated interest or by
other title evidence acceptable to the Buyer. The consolidated principal amount
does not exceed the original principal amount of the Mortgage Loan.
(cc) Mortgaged Property Undamaged; No Condemnation Proceedings. There
is no proceeding pending or, to the best of Seller's knowledge upon reasonable
due inquiry and investigation, threatened for the total or partial condemnation
of the Mortgaged Property. The Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty so as
to affect adversely the value of the Mortgaged Property as security for the Loan
or the use for which the premises were intended and each Mortgaged Property is
in good repair. There have not been any condemnation proceedings with respect to
the Mortgaged Property and Seller has no knowledge of any such proceedings in
the future.
(dd) Collection Practices, Escrow Deposits. The origination, servicing
and collection practices used by Seller with respect to the Loan have been in
accordance with Accepted Servicing Practices and are in all respects in
compliance with all applicable laws and regulations, With respect
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to escrow deposits and Escrow Payments, all such payments are in possession of
Seller or the servicer of such Loan and there exist no deficiencies in
connection therewith for which customary arrangements for repayment thereof have
not been made. All Escrow Payments have been collected in full compliance with
state and federal law. Unless prohibited by applicable law, an escrow of funds
has been established in an amount sufficient to pay for every item which remains
unpaid and which has been assessed but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due Seller have been
capitalized under the Mortgage or the Note.
(ee) Appraisals. Seller has delivered to Buyer an appraisal of the
Mortgaged Property signed prior to the approval of the Mortgage application by a
qualified appraiser, who (i) is licensed in the state where the Mortgaged
Property is located, (ii) is acceptable to Buyer, (iii) has no interest, direct
or indirect, in the Mortgaged Property or in any loan on the security thereof,
and (iv) does not receive compensation that is affected by the approval or
disapproval of the Loan. The appraisal shall be completed in compliance with the
Uniform Standards of Professional Appraisal Practice, and all applicable federal
and state laws and regulations.
(ff) Soldiers' and Sailors' Relief Act. The Obligor has not notified
the Seller and the Seller has no knowledge of any relief requested or allowed
to, the Obligor under the Soldiers' and Sailors' Civil Relief Act of 1940.
(gg) Environmental Matters. To the best of the Seller's knowledge,
there exists no violation of any local, state or federal environmental law, rule
or regulation in respect of the Mortgaged Property which violation has or could
have a material adverse effect on the market value of such Mortgaged Property,
Seller has no knowledge of any pending action or proceeding directly involving
the related Mortgaged Property in which compliance with any environmental law,
rule or regulation is in issue, and, to the best of Seller's knowledge, nothing
further remains to be done to satisfy in full all requirements of each such law,
rule or regulation constituting a prerequisite to the use and enjoyment of such
Mortgaged Property.
(hh) Obligor Acknowledgment. The Obligor has executed a statement to
the effect that the Obligor has received all disclosure materials required by
applicable law with respect to the making of adjustable rate mortgage loans.
Seller shall maintain or cause to be maintained such statement in the Credit
File.
(ii) No Construction Loans. The Loan was not made in connection with
(a) the construction or rehabilitation of a Mortgaged Property or (b)
facilitating the trade-in or exchange of a Mortgaged Property, EXCEPT AS
DISCLOSED TO BUYER.
(jj) Selection. The Loans were not selected for inclusion under this
Agreement from among the Seller's mortgage loan portfolio on any basis which
would have an adverse affect on the interests of the Buyer.
(kk) Circumstances Affecting, Value, Marketability or Prepayment.
Except as otherwise disclosed to the Buyer, Seller has no knowledge of any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Obligor, or the Obligor's credit standing that
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could reasonably be expected to adversely affect the value or the marketability
of any Mortgaged Property or Loan, subject to the economic and geological
conditions generally and specifically to the area in which the Mortgaged
Property is located.
Section 4.4 General Representations and Warranties of Buyer. As of the date
hereof, and as of each Settlement Date, Buyer represents and warrants as
follows:
(a) Organization. Buyer is a corporation, duly organized, validly
existing, and in good standing under the laws of the state of its incorporation,
and is qualified and authorized to transact business in, and is in good standing
under the laws of, each jurisdiction in which any Mortgaged Property is located
or is otherwise exempt under applicable law from such qualification. Buyer has
the requisite corporate power and authority to own and operate its properties,
to carry on its business as it is now being conducted, and to consummate the
transactions contemplated by this Agreement.
(b) Authorization of this Agreement. Buyer has the requisite corporate
power and authority to execute and deliver this Agreement, and to consummate the
transactions contemplated hereby. The execution, delivery, and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporation action, and no
other corporate proceedings on the part of Buyer are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Buyer and constitutes a legal, valid,
and binding obligation of Buyer, enforceable against Buyer in accordance with
its terms, except that such enforcement may be affected by bankruptcy, by other
insolvency laws, or by general principles of equity.
(c) No Conflict or Violation. The execution and delivery of this
Agreement by Buyer does not, and the performance of this Agreement by Buyer will
not, (i) result in a violation of or conflict with any provisions of the charter
or by-laws or equivalent governing instruments of Buyer, (ii) violate any law,
rule, regulation, code, ordinance, judgment, injunction, order, writ, decree, or
ruling applicable to Buyer, or (iii) conflict with or violate any agreement,
permit, concession, grant, franchise, license, or other governmental
authorization or approval necessary for purchase of the Loans by Buyer. No
regulatory approvals or consents are required with respect to Buyer's
consummation of the transactions contemplated by this Agreement.
(d) Litigation. No action, suit, proceeding, or governmental
investigation or inquiry is currently pending, or to the knowledge of Buyer,
threatened against Buyer which, if adversely determined, would have a material
adverse effect on the business, combined assets or financial condition of Buyer
or on the Loans or would prevent the consummation of the transactions
contemplated by this Agreement.
(e) Financial Condition. Buyer has previously furnished Seller with
Buyer's most recent audited financial statements, together with the respective
reports thereon of the Buyer's independent public accountants, and Buyer's most
recent unaudited financial statements, each of which has been prepared in
accordance with generally accepted accounting principles. Each of the balance
sheets included in the financial statements set forth Buyer's financial
condition as of the date
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thereof, and there have been no material adverse changes in Buyer's business or
financial condition since that date.
(f) Accuracy of Statements. Neither this Agreement, nor any statement,
report, or other document furnished or to be furnished pursuant to this
Agreement, or in connection with the transaction contemplated hereby, contains
any untrue statement of fact by Buyer or omits to state a fact necessary to make
the statements of Buyer contained therein not misleading.
(g) Ability to Perform; Solvency. Buyer does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement. Buyer is solvent and the purchase of the
Mortgage Loans will not cause Buyer to become insolvent.
(h) No Consent Required. No consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by Buyer of or compliance by Buyer with this Agreement
or the Loans, or the purchase of the Loans by Buyer or the consummation of the
transactions contemplated by this Agreement, or if required, such approval has
been obtained prior to each Settlement Date.
(i) No Commissions to Third Parties. Buyer has not dealt with any
broker or agent or other Person who might be entitled to a fee, commission, or
compensation in connection with this transaction other than the Seller.
SECTION 5 PRE-SETTLEMENT COVENANTS
Seller covenants and agrees that:
Section 5.1 Continued Servicing. Seller shall continue servicing the Loans
to be sold on each Settlement Date, until the related Service Transfer Date,
unless otherwise agreed to in writing by the parties, on Seller's system in
conformance with all of the requirements of the Loan Documents and applicable
law and in accordance with Accepted Servicing Practices. Seller shall send out
at its expense the notice required to be provided to Obligors for any Interest
Rate Adjustment scheduled to occur up to 10 days after the Service Transfer
Date.
Section 5.2 Preparation of Assignments. Prior to each Settlement Date,
Seller shall, at its sole expense, prepare and deliver an Assignment of Mortgage
in form and substance acceptable to Buyer and its counsel and any other security
documents corresponding to each Loan to be sold on such Settlement Date. Each
such assignment shall be sufficient to perfect the transfer of Seller's security
interest in the corresponding Mortgaged Property.
Section 5.3 IRS Reporting. To the extent required by law, Seller shall
report to the IRS and each Obligor the amount of interest paid (including
without limitation, the obligations with respect to Forms 1098 and 1099 and back
up withholding with respect to same, if required) by such Obligor on the Loan on
which he is the Obligor from the date of the advance made by Seller to such
Obligor
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through and including the Service Transfer Date, and Buyer shall thereafter
report to the IRS and each Obligor the amount of interest paid by such Obligor
on the Loan on which he is the Obligor.
Section 5.4 Compliance with Law. From the date of this Agreement to each
Settlement Date, Seller shall comply with and use its best efforts to cause each
Obligor to comply with all applicable state and Federal rules and regulations
including those requiring the giving of notices, and where applicable, Seller
warrants that it will comply with the National Housing Act of 1934, as from time
to time amended, the Servicemen's Readjustment Act of 1944, as amended, and with
all rules and regulations issued under said either such act.
Section 5.5 No Sale of Assets. Without the prior written consent of Buyer,
Seller shall not sell, lease, assign, transfer, encumber or permit the
encumbrance of, or otherwise dispose of:
(a) any of the Offered Loans from the date of the Offer until the
earlier of (i) the day on which Seller receives Buyer's Response or (ii) the
close of business on the day after which the Due Diligence Period expires; and
(b) any of the Loans included in the Loan Schedule to Buyer's Response
from the date on which such Response is received until the Settlement Date.
Section 5.6 Private Mortgage Insurance. Seller shall provide any
notification to private mortgage insurance companies necessary to ensure
continuation of such insurance upon transfer of the Loans to Buyer.
SECTION 6 POST-SETTLEMENT COVENANTS
Section 6.1 Notice of Servicing Transfer. Seller and Buyer shall each
comply with, and Seller shall assist Buyer in complying with, the notice
requirements of the Xxxxxxxx Xxxxxxxx National Affordable Housing Act of 1990.
Such compliance by each party shall include, without limitation, sending its own
notices of the transfer of servicing from Seller to Buyer, at its sole expense.
For each Loan, Seller shall deposit such notice in the United States mail within
five (5) business days after the Settlement Date on which such Loan is sold.
Seller's notice to each Obligor shall state that any payments due from such
Obligor that are due 15 or more days after the date on which Seller sends such
notice shall be made to Buyer. Seller's assistance to Buyer shall include
providing Buyer with any information that Seller has or has access to and that
Buyer reasonably requires to complete its notices. Buyer shall approve any such
notices sent by Seller, and Seller shall have the right to approve any such
notices sent by Buyer, prior to the date mailed. To enable the parties to
determine the Service Transfer Date, Seller shall, with respect to all Loans
sold on each Settlement Date, send all notices pursuant to this Section 6.1 on
the same day, and shall, upon sending such notices, inform Buyer of the date on
which such notices are sent. Within 10 days of each Settlement Date, Seller
shall deliver to Buyer a copy of the notice sent with respect to each Loan sold
on such Settlement Date.
Section 6.2 IRS Examination. Buyer and Seller shall cooperate fully with
each other in connection with any examination conducted by any tax authority
after each Settlement Date,
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provided that nothing herein shall be construed as obligating Buyer or Seller to
disclose or furnish any tax information not related to the transfer of the
Loans. Buyer and Seller shall inform each other promptly of any material
developments in the course of any such examination, the results of any such
examination, and any proceeding related thereto.
Section 6.3 Tax on Sale. Each party shall promptly pay in full and when due
any tax or other governmental charge or fee imposed upon it under applicable law
on the sale of the Loans from Seller to Buyer pursuant to this Agreement.
Section 6.4 Books and Records. Seller agrees to keep and maintain such
books and records so as to meet and comply with all applicable laws, and the
requirements or recommendations of ECOA and TILA. The same shall be available to
Buyer at any time, upon reasonable notice, during business hours, for
examination and audit to the extent required to determine compliance with such
laws. Such records shall include a loan register documenting all loan
applications taken by Seller.
Section 6.5 On Site Reviews. Seller agrees, upon reasonable notice and
during regular business hours, to Meet with Buyer from time to time to discuss
Seller's business activities related to this Agreement.
Section 6.6 Financial Statements. Each party shall furnish to the other for
as long as this Agreement is in effect, (i) as soon as available, and in any
event within 90 days after the end of each fiscal year, audited or certified
financial statements consisting of a balance sheet as of the end of such fiscal
year, together with related statements of income or loss and reinvested earnings
and changes in financial position for such fiscal year, prepared by independent
certified public accountants in accordance with generally accepted accounting
principles, and (ii) if available, within 10 days after the end of each
quarterly period unaudited financial statements which may be satisfied by
furnishing a copy of the quarterly report filed with the Securities and Exchange
Commission. In addition, each party shall provide the other, from time to time,
upon reasonable request (which shall include a written statement describing the
reason therefor) and 60 days' notice, any other financial reports or statements
reasonably required by the requesting party.
Section 6.7 Post-Sale Loan Payments. Seller agrees that it will remit to
Buyer, within 48 hours after receipt, any payment on a Loan including, without
limitation, all payments of principal and interest, late charges, and bad check
charges received from an Obligor on or after the Settlement Date at the
following address: 000 Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx, 00000, Attn: CPI Cash,
Director of Wholesale Processing, or such other address as Buyer may designate.
Seller shall remit such payment via an overnight delivery service.
Section 6.8 Transfer of Servicing Rights and PMI. Seller shall use all
efforts to assist Buyer in the transfer from Seller to Buyer of servicing rights
for each Loan, including assisting Buyer with any notices to private mortgage
insurance companies.
Section 6.9 Delivery of Mortgage Loan Documents. With respect to each Loan,
the Seller shall cause by no later than sixty (60) days after the Settlement
Date, the original recorded Mortgage
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and, if applicable, the prior Assignment of Mortgage to be delivered to Buyer if
they have not yet been returned from the County Records Office. The Seller shall
pay the out-of-pocket costs incurred in connection with such acts.
SECTION 7 CONDITIONS TO SETTLEMENT
Section 7.1 Conditions to Buyer's Obligations. The obligations of Buyer to
purchase the Loans at each Settlement are subject to the satisfaction at or
prior to such Settlement, of each of the following conditions (any or all of
which may be waived by Buyer):
(a) Representations and Warranties Correct. Each of the
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects in accordance with their terms as of
the date of this Agreement, and on and as of such Settlement Date with the same
force and effect as though made on and as of such Settlement Date, and Seller
shall have delivered to Buyer a certificate to such effect signed on Seller's
behalf by its President or another appropriate officer.
(b) Compliance with Covenants. Seller shall have performed and be in
compliance with, in all material respects, all of its respective covenants,
acts, and obligations to be performed under this Agreement and Seller shall have
delivered to Buyer a certificate to such effect signed on Seller's behalf by its
President or another appropriate officer.
(c) Settlement Documents. Seller shall have executed and delivered
this Agreement and the Agreement shall not have been terminated, Seller shall
have delivered the Mortgage Files and in connection with the Loans to be
purchased on such Settlement Date, and executed all documents required to
transfer the Loans in accordance with the terms of this Agreement.
(d) Corporate Documents. On or before the Settlement Date, if Buyer so
requests, Seller shall have delivered to Buyer:
(i) a certificate of its jurisdiction of incorporation dated not
earlier than the date of the tenth day preceding the Settlement Date,
to the effect that Seller is a corporation validly existing and in
good standing (if applicable) under the laws of such jurisdiction as
of such date;
(ii) a certificate of the Secretary or Assistant Secretary of
Seller attaching (A) evidence of such corporate action or
authorization as is necessary to approve of this Agreement and the
authorization of the officers of Seller to sign this Agreement, which
action or authorization shall continue to be in force as of the
Settlement Date, and (B) specimen signatures of the officers of Seller
authorized to sign this Agreement;
(iii) a copy, certified as true by the Secretary or Assistant
Secretary of Seller, of the charter and the by-laws of Seller; and
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(iv) all other documents, instruments, and writing required to be
delivered by Seller pursuant to this Agreement.
(e) Corporate Actions. All corporate and other acts necessary to
authorize the execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereunder shall have been taken by
Seller.
(f) Access to Information; Due Diligence. Buyer and its
representatives shall have had access to such information and records of Seller
as Buyer shall have reasonably requested to ascertain Seller's compliance with
the Agreement, and all such information and records shall be satisfactory to
Buyer and its representatives in accordance with the terms of this Agreement.
(g) No Pending Litigation. There shall not be pending or threatened
any suit, action, injunction, investigation, inquiry, or other proceeding
against either of the parties before any court or government agency, which, in
Buyer's good faith judgment, has resulted or is reasonably likely to result in
an order staying or judgment restraining or prohibiting the transactions
contemplated hereby or subjecting a party to material liability on the grounds
that it has breached any law or regulation or otherwise acted improperly in
connection with the transactions contemplated hereby.
Section 7.2 Opinion of Counsel. The obligations of Buyer to purchase the
Loans at the first Settlement following execution of this Agreement are subject
to Buyer having received an opinion of Seller's legal counsel in form and
substance satisfactory to Buyer, as to such matters concerning this Agreement or
the Settlement as are reasonably requested by Buyer. Thereafter, at each
Settlement Seller's counsel may furnish a reliance letter relating to the
original opinion or may provide a new opinion.
Section 7.3 Conditions to Seller's Obligations. The obligations of Seller
to sell the Loans at each Settlement are subject to the satisfaction at or prior
to such Settlement, of each of the following conditions (any or all of which may
be waived by Seller):
(a) Purchase Price. The Purchase Price shall have been delivered to
Seller pursuant to Seller's reasonable instructions in accordance with Section
3.3.
(b) Representations and Warranties Correct. Each of the
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects in accordance with their terms as of
the date of this Agreement, and on and as of such Settlement Date with the same
force and effect as though made on and as of such Settlement Date, and if Seller
so requests, Buyer shall have delivered to Seller a certificate to such effect
signed on Buyer's behalf by its President or another appropriate officer.
(c) Compliance with Covenants. Buyer shall have performed and be in
compliance with, in all material respects, all of its respective covenants,
acts, and obligations to be performed under this Agreement, and if Seller so
requests, Buyer shall have delivered to Seller a certificate to such effect
signed on Buyer's behalf by its President or another appropriate officer.
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(d) Corporate Documents. On or before the Settlement Date, if Seller
so requests, Buyer shall have delivered to Seller:
(i) a certificate of its jurisdiction of incorporation dated not
earlier than the date of the tenth day preceding the Settlement Date,
to the effect that Buyer is a corporation validly existing and in good
standing (if applicable) under the laws of such Jurisdiction as of
such date;
(ii) a certificate of the Secretary or Assistant Secretary of
Seller attaching (A) evidence of such corporate action or
authorization as is necessary to approve this Agreement and the
authorization of the officers of Buyer to sign this Agreement, which
action or authorization shall continue to be in force as of the
Settlement Date, and (B) specimen signatures of the officers of Buyer
authorized to sign this Agreement,
(iii) a copy, certified as true by the Secretary or Assistant
Secretary of Buyer, of the charter and the by-laws of Buyer; and
(iv) all other documents, instruments and writings required to be
delivered by Buyer pursuant to this Agreement.
(e) Corporate Actions, All corporate and other acts necessary to
authorize the execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereunder shall have been taken by
Buyer.
(f) No Pending Litigation. There shall not be pending or, to the best
of Buyer's knowledge upon reasonable due inquiry and investigation, threatened
any suit, action, injunction, investigation, inquiry, or other proceeding
against either of the parties before any court or government agency, which, in
Seller's good faith judgment, has resulted or is reasonably likely to result in
an order staying or judgment restraining or prohibiting the transactions
contemplated hereby or subjecting a party to material liability on the grounds
that it has breached any law or regulation or otherwise acted improperly in
connection with the transactions contemplated hereby.
SECTION 8 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES; REPURCHASE
OBLIGATION OF SELLER.
It is understood and agreed that the covenants, representations and
warranties set forth in this Agreement shall survive delivery and release of the
Offered Loan Documents to Buyer for a period of ten (10) years from the date on
which such covenant, representation, or warranty is made. It is further
understood that the covenants, representations and warranties set forth in this
Agreement shall inure to the benefit of Buyer, or any holder of any endorsement
of any Note or any examination of the Offered Loan Documents.
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XXXXXXX 0 XXXX-XXXXXXXXXX XXXXXXXXXX AND ADJUSTMENTS
Section 9.1 Repurchase Obligations.
(a) In the event that
(i) Seller has failed to deliver to Buyer any document required
hereunder with respect to any Loan sold on a Settlement Date within
the applicable time period for delivery therefor and such failure has
materially and adversely affected Buyer's ability to service or obtain
payment on such Loan,
(ii) Seller has, with respect to any Loan, breached any warranty,
representation, or agreement contained in this Agreement, other than
those described in Section 9.1(a)(i) or,
(iii) Seller or any of Seller's representatives has acted
fraudulently, negligently, or with willful misconduct in the
origination or closing of any Loan.
Buyer shall give Seller notice of, and shall request that Seller cure, such
failure, breach, or action within 30 days of Seller's receipt of such notice.
With respect to 9.1(a)(i), failure to deliver the documents required by Section
6.9 shall be deemed to materially and adversely affect Buyer's ability to
service or obtain payment on a Loan.
(b) If Seller fails to cure such failure, breach or action within such
30-day period, Seller shall, not later than 30 days after its receipt of notice
thereof, repurchase such Loan at the Repurchase Price set forth in Section 9.2.
Section 9.2 Repurchase Price. In the event Seller repurchases a Loan from
Buyer pursuant to Section 9.1 above, the Repurchase Price shall be an amount
equal to
(a) the product of
(i) the Bid Percentage and
(ii) the Principal Balance of such Loan,
(b) minus the aggregate amount of principal paid to Buyer on such Loan
from the Settlement Date up to, but not including, the date of repurchase,
(c) plus accrued but unpaid interest up to and including the date of
repurchase,
(d) plus any reasonable and customary out-of-pocket expenses paid to
third parties relating to such Loan (the "Repurchase Price").
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Upon payment of the Repurchase Price as set forth herein, Buyer shall deliver
the Loan Documents relating to such repurchased Loan and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as shall be necessary to vest in Seller title to such repurchased Loan
on a servicing released basis. Seller shall pay all out-of-pocket costs incurred
in delivering the Mortgage File to the Seller. Except for the negligence or
willful misconduct of Buyer or Buyer's representative, the Buyer shall have no
liability for the failure by the courier to deliver the Mortgage File to the
Seller for any reason whatsoever.
Section 9.3 Remedy to Insure Accuracy of Real Estate Appraisals. Buyer may,
at its own expense, in order to verify the accuracy of real property appraisals
prepared for Seller, order a reappraisal of the property secured by a Mortgage
within 100 days of the applicable Settlement Date. If the reappraisal obtained
by Buyer indicates a fair market value of more than twelve (12%) percent less
than the original Appraisal Value, then upon receipt by Seller of a signed copy
of the reappraisal from Buyer, Seller shall repurchase the Loan at the
Repurchase Price and reimburse Buyer for the cost of the appraisal subject to
the following: if Seller disputes the validity of the reappraisal prepared by
Buyer's appraiser, Seller may at its own expense, request Buyer to obtain a
third appraisal, and only if such third appraisal is also more than twelve (12%)
percent less than the original Appraisal Value shall the Seller be required to
repurchase the Loan at the Repurchase Price and pay for the second appraisal.
Buyer shall choose the review appraiser with Seller's approval, which shall not
be unreasonably withheld, but such appraiser must possess the minimum
qualifications specified in the HFS Seller's Guide. The appraisal must be
performed in accordance with the standards of the appraising industry where the
property is located, by an independent appraiser unless otherwise agreed to by
the parties. In determining the appropriate appraisal value, the review
appraiser must determine the appraised value as of the original appraisal date
using comparable sales that were available as of the date of the original
appraisal.
Section 9.4 Post-Settlement Adjustments to Purchase Price. Within 60 days
after each Settlement Date, the first party shall notify the other party in
writing of any miscalculations, misapplied payments, unapplied payments or other
accounting errors (each, a "Discrepancy") which the first party has discovered
and which affects the Principal Balance of any of the Loans purchased on such
Settlement Date or the Purchase Price for the Loans purchased on such Settlement
Date. Notice to the other party under this Section 9.4 shall include copies of
documents sufficient to describe each Discrepancy. Buyer shall pay Seller or
Seller shall pay Buyer, as the case may be, an amount sufficient to correct such
Discrepancy, with all such adjustments calculated using the Premium. Any amounts
due hereunder shall be paid within 10 days of notice by the first party to the
other party.
SECTION 10 INDEMNIFICATION
Section 10.1 Seller's Indemnification.
(a) Seller agrees to indemnify and hold Buyer, its Affiliates,
officers, directors, employees, agents, successors, and assigns, and related
entities from and to reimburse them for, any loss, cost, expense, damage,
liability, or claim (including, without limitation, all Legal Fees) relating to,
arising out of, based upon, or resulting from:
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(i) Seller's ownership of or actions with respect to the Loans;
(ii) Seller's breach of any of its representations and warranties
contained in this Agreement; or
(iii) Seller's breach of or failure to perform any of its
covenants or agreements contained in or made pursuant to this
Agreement.
(b) The obligations of Seller under this Section shall survive the
transfer and delivery of the Loans to Buyer and the termination of this
Agreement.
(c) Notwithstanding the foregoing, Seller shall not have any liability
in respect of the representations or warranties on the part of Seller herein
contained to the extent such liability would not have arisen but for Buyer's own
willful misconduct or negligence.
Section 10.2 Buyer's Indemnification.
(a) Buyer agrees to indemnify and hold Seller, its Affiliates,
officers, directors, employees, agents, successors, and assigns, and related
entities from, and to reimburse them for, any loss, cost, expense, damage,
liability, or claim (including without limitation, all Legal Fees) relating to,
arising out of, based upon, or resulting from:
(i) Buyer's ownership of or actions with respect to the Loans;
(ii) Buyer's breach of any of its representations and warranties
contained in this Agreement; or
(iii) Buyer's breach of or failure to perform any of its
covenants or agreements contained in or made pursuant to this
Agreement.
(b) The obligations of Buyer under this Section shall survive the
transfer and delivery of the Loans to Buyer or the termination of this
Agreement.
(c) Notwithstanding the foregoing, Buyer shall not have any liability
in respect of the representations or warranties on the part of Buyer herein
contained to the extent such liability would not have arisen but for Seller's
own willful misconduct or negligence.
Section 10.3 Indemnification Procedures.
(a) Within 10 days after receipt by a party of a third party claim,
the indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under this Agreement, deliver a claim notice to the
indemnifying party; provided, however, that the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that the indemnifying party may have to the indemnified party otherwise than
under this subsection. In the
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event that any third party claim is made against the indemnified party and the
indemnified party notifies the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, to assume the defense thereof, with counsel
satisfactory to the indemnified party (who shall not, except with the consent of
the indemnified party, be counsel to the indemnifying party), which consent
shall not be unreasonably withheld. The indemnified party shall have the right
to employ separate counsel in any action or claim and to participate in the
defense thereof at the expense of the indemnifying party, if the retention of
such counsel has been specifically authorized by the indemnifying party, if such
counsel is retained because the indemnifying party does not notify the
indemnified party within 20 days after receipt of a claim notice that it elects
to undertake the defense thereof, or if there is a reasonable basis on which the
indemnified party's interests may differ from those of the indemnifying party.
(b) The indemnifying party shall remit payment for the amount of a
valid and substantiated claim for indemnification hereunder within 15 business
days of the receipt of a claim notice therefor. Upon the payment in full of any
claim hereunder, the indemnifying party shall be subrogated to the rights of the
indemnified party against any person with respect to the subject matter of such
claim. In the event of a dispute, the parties shall proceed in good faith to
negotiate a resolution of such dispute.
(c) The indemnified party shall have the right to reject any
settlement approved by the indemnifying party if the Indemnified party waives
its right to indemnification hereunder. The indemnified party shall have the
right to settle any third party claim over the objection of the indemnifying
party; provided, however, that if the indemnifying party is contesting such
claim in good faith and has assumed the defense of such claim from the
indemnified party, the indemnified party waives any right to indemnity therefor.
(d) In the event that the indemnifying party reimburses the
indemnified party with respect to any third party claim and the indemnified
party subsequently receives reimbursement from another person with respect to
that third party claim, then the indemnified party shall remit such
reimbursement from such other person to the indemnifying party within 30 days of
receipt thereof.
SECTION 11 TERMINATION
Section 11.1 Termination by Either Party.
(a) This Agreement may be terminated with or without cause by either
party upon 30 days' written notice to the other party, provided that the
delivery requirements and other terms of this Agreement have been fully complied
with as to prior Settlements.
(b) After termination pursuant to Section 11.1(a), the provisions of
this Agreement shall continue to apply to any Loans previously transferred from
Seller to Buyer pursuant to this Agreement.
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Section 11.2 Termination by Buyer. This Agreement may be immediately
terminated by Buyer, at Buyer's sole option, upon notice to Seller upon the
occurrence of any of the following events ("Termination Events"):
(a) Seller breaches or fails to comply with any term or condition of
this Agreement and falls to cure such breach or failure within 60 days of
receipt of notice thereof from Buyer;
(b) Any of Seller's representations or warranties in Section 4.1, 4.2,
or 4.3 of this Agreement is untrue in any material respect and is not cured by
Seller within 60 days of receipt of notice thereof from Buyer;
(c) Notwithstanding Section 11.2(a), Seller does not deliver the Loans
or any Loan Document relating to such Loans within the time periods stated in
this Agreement;
(d) Notwithstanding Sections 11.2(a) and 11.2(b), any document or
paper delivered hereunder is incorrect in any material respect or otherwise does
not comply with the terms and provisions of this Agreement;
(e) Any material reduction in Seller's net worth occurs, as determined
solely by Buyer;
(f) A petition for involuntary bankruptcy is filed against Seller, or
Seller is adjudged bankrupt or insolvent by a court of competent jurisdiction or
a regulatory agency, or a court of competent jurisdiction or a regulatory agency
appoints a receiver, liquidator, conservator, or trustee for Seller or all or
substantially all of its assets, or approves any petition filed against Seller
for its reorganization;
(g) Seller institutes proceedings for voluntary bankruptcy, files a
petition seeking reorganization under the Federal Bankruptcy Code, files under
any law for the relief of debtors, consents to the appointment of a receiver of
all or substantially all of its property, makes a general assignment for the
benefit of its creditors, or admits in writing its inability to pay its debts
generally as they become due;
(h) Seller merges with or consolidates into another corporation, sells
or otherwise disposes of all or substantially all of its property and assets, or
permits any change to occur in the stock ownership of Seller which would
transfer effective voting control from the persons now exercising such control
to others; and
(i) The placement of Seller on probation or restriction of its
activities in any manner by a Federal or state government agency, including
FHLMC, FNMA, or GNMA.
Section 11.3 Effect of Termination. Upon expiration of the 30 day notice
period pursuant to Section 11.1(a) or upon written notice to Seller, pursuant
to Section 11.2 that a Termination Event has occurred, this Agreement shall be
of no force and effect and the parties obligations to each other hereunder shall
cease; provided, however, that each party shall continue to have such
obligations as
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may remain with respect to all Loans acquired by Buyer in Settlements that have
occurred prior to the date on which this Agreement terminates.
SECTION 12 MISCELLANEOUS
Section 12.1 No Waiver. Failure or delay on the part of Buyer to audit any
Loan or to exercise any right provided for herein, shall not act as a waiver
thereof, nor shall any single or partial exercise of any right by Buyer or
Seller preclude any other or further exercise thereof. In no event shall a term
or provision of this Agreement be deemed to have been waived, modified or
amended, unless said waiver, modification or amendment is in writing and signed
by the parties hereto. Notwithstanding any investigation conducted before or
after the purchase of any Loan, and notwithstanding any actual or implied
knowledge or notice of any facts or circumstances which Buyer may have as a
result of such investigation or otherwise, Buyer shall be entitled to rely upon
the warranties, representations, and covenants of Seller in this Agreement, and
the obligations of Seller with respect thereto shall survive the purchase of
said Loans by Buyer and inure to the benefit of all future assignees of said
Loans.
Section 12.2 Amendment and Modification. Subject to applicable law, this
Agreement may not be amended, modified, or supplemented except in writing signed
by both parties. Notwithstanding the foregoing, Seller may unilaterally amend
the underwriting standards set forth in Section 4.2(b) upon the thirty (30)
days written notice to Buyer.
Section 12.3 Notices. All notices, requests, demands, consents, approvals,
agreements, or other communications to or by a party to this Agreement shall:
(a) be in writing addressed to the authorized address of the recipient
set out in Section 12.3(c) of this Agreement or to such other address as such
recipient may have notified the sender;
(b) be signed by an authorized officer of the sender; and
(c) be delivered in person or sent by registered or certified mail
return receipt requested, facsimile transmission, or by overnight courier and be
deemed to be duly given or made:
(i) in the case of delivery in person when delivered to the
recipient at such address;
(ii) in the case of registered or certified mail three days after
the date of mailing;
(iii) in the case of overnight courier two days after shipment or
the date of receipt, whichever is earlier; or
(iv) in the case of facsimile transmission when received in
legible form by the recipient at such address and in the event that
the recipient has been requested to
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acknowledge receipt of the entire facsimile transmission upon the
sending or receiving the acknowledgment of receipt (which
acknowledgment the recipient will promptly give);
but if such delivery or dispatch is later than 5:00 p.m. local time on a day on
which business is generally carried on in the place to which such communication
is sent or occurs on a day on which business is not generally carried on in the
place to which such communication is sent, it will be deemed to have been duly
given or made at the commencement of business on the next day on which business
is generally carried on in that place.
Notices may be sent
to Buyer: Household Financial Services, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: Vice President
Facsimile No.: (000) 000-0000
JV Mortgage Capital, L.P.
0000 Xxxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: Vice President
Facsimile No.: (000) 000-0000
with a copy to: Household Financial Services, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: General Counsel
Facsimile No.: (000) 000-0000
To Seller: Austin Funding Corporation
000 Xxxx Xxx Xx. # 000
Xxxx, Xxxxxxxx 00000
with a copy to: General Counsel
at the above address
or to such other address as Buyer and Seller shall have specified in writing to
each other.
Section 12.4 Expenses. Each party hereto shall bear its own expenses,
including the fees of any attorneys, accountants, or others engaged by such
party, in connection with this Agreement and the transactions contemplated
hereby, except as otherwise expressly provided herein.
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Section 12.5 No Remedy Exclusive. No remedy under this Agreement is
intended to be exclusive of any other available remedy, but each remedy shall be
cumulative and shall be in addition to other remedies under this Agreement or
existing at law or in equity.
Section 12.6 Independent Contractor. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture between Seller and
Buyer. In the performance of its duties or obligations under this Agreement or
any other contract, commitment, undertaking, or agreement made pursuant to this
Agreement, neither Seller nor Buyer shall be deemed to be, or permit itself to
be, understood to be the employee or agent of the other and shall at all times
take whatever measures as are necessary to insure that its status shall be that
of an independent contractor operating as a separate entity. None of Seller's or
Buyer's employees, agents or servants is entitled to the benefits that are
provided to the employees of the other party. Each party is solely interested in
the results obtained under this contract and therefore the manner and means of
conducting the other party's business affairs are under the sole control of such
other party and such other party shall be solely and entirely responsible for
its acts and for the acts of its agents, employees, and servants.
Section 12.7 Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal, or unenforceable, the validity,
legality, and enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each party
hereto waives any provision of law which renders any provision of this Agreement
invalid, illegal, or unenforceable in any respect, unless material to the
purpose of this Agreement.
Section 12.8 Entire Agreement. Seller and Buyer each acknowledges that no
representations, agreements, or promises were made to such party by the other
party or any of its employees other than those representations, agreements, or
promises specifically contained herein. This Agreement and any Schedules and
Exhibits hereto constitute the entire agreement and understanding of the parties
with respect to the matters and transactions contemplated hereby. This Agreement
supersedes any prior agreement and understanding with respect to these matters
and transactions.
Section 12.9 Assignment. Except as set forth in the following sentence,
neither party shall have the right to assign any of its duties, obligations, or
rights under this Agreement without the prior written consent of the other.
Buyer shall have the right to assign its rights under this Agreement to any
Affiliate or to any trust created to effect a securitization involving the
Loans, and in such event no such assignment shall relieve either party of any
liability under this Agreement.
Section 12.10 Captions. The captions in this Agreement are for convenience
only, do not form a part hereof, and do not in any way modify, interpret, or
construe the intentions of the parties hereto.
Section 12.11 Governing Law. This Agreement shall be governed by and be
construed in accordance with the laws of the State of Illinois, without regard
to the conflicts of laws rules thereof.
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Section 12.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which counterparts shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.
Section 12.13 Drafting. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement. The Parties therefore
stipulate that the rule of construction that ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement to favor any party against the other.
Section 12.14 Choice of Forum. Any judicial proceeding brought against any
of the parties hereto with respect to this Agreement shall be brought in any
court of competent jurisdiction in Xxxx County, Illinois or in the Federal
District Court for the Northern District of the State of Illinois irrespective
of where such party may be located at the time of such proceeding, and by
execution and delivery of this Agreement, each of the parties to this Agreement
hereby consents to the exclusive jurisdiction of any such court and waives any
defense or opposition to such jurisdiction.
Section 12.15 WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, Buyer and Seller have caused their respective duly
authorized representatives to execute this Agreement as of the date first above
written.
BUYER:
HOUSEHOLD FINANCIAL SERVICES, INC.
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
------------------------------
Title: Vice President
-----------------------------
JV MORTGAGE CAPITAL, L.P.
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
------------------------------
Title: Vice President
-----------------------------
SELLER:
Austin Funding Corporation
----------------------------------
By: /s/ XXXXX XXXXXXXX
-------------------------------
Name: Xxxxx XxXxxxxx
------------------------------
Title: President
-----------------------------
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