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EXHIBIT 10.22
WHOLESALE MORTGAGE PURCHASE AGREEMENT
BETWEEN
E-LOAN INC.
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(Fill in Seller's Licensed Name)
AND
PHH MORTGAGE SERVICES CORPORATION
Tier VI
Revised Date: 12/30/97
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TIER VI
WHOLESALE MORTGAGE PURCHASE AGREEMENT
This Wholesale Mortgage Purchase Agreement ("Agreement") is entered
into as of the 1st day of June, 1998, between PHH MORTGAGE SERVICES CORPORATION
("PHH"), a New Jersey Corporation having an office at 0000 Xxxxxx Xxx, Xx.
Xxxxxx, Xxx Xxxxxx 00000, and E-Loan Inc. (the "Seller"), a California
Corporation having an office at 0000 Xxxxxxx Xxxxxxx, #000, Xxxxxx. XX 00000.
WHEREAS the Seller desires to originate, process and close both
government and conventional first mortgage loans ("Loans") with PHH and PHH
desires to purchase such Loans, pursuant to the terms of this Agreement, as
amended in writing from time to time.
NOW THEREFORE, in consideration of the mutual promises above and
covenants contained hereinafter, the parties agree as follows:
I. Manuals: The Seller acknowledges that it has received and read the PHH
Sales Manual and the PHH Wholesale Operations Manual ("Manuals"). All
provisions of the Manuals, as amended from time to time, are
incorporated by reference into this Agreement and shall be binding upon
both parties. All terms used herein shall have the same meaning as such
terms have in the Manuals, unless the context clearly requires
otherwise.
II. Mortgage Defined: It is understood that the word "mortgage", as used
herein, includes Notes, Bond, Mortgage/Deed of Trust, Extension
Agreement, Assumption of Indebtedness, and any other documents
constituting the basic instruments for a Loan secured by real and
personal property in the state in which the mortgaged premises is
located.
III. Eligible Loans: Only those loans complying with standards for
Conforming Conventional, Jumbo Conventional and Government Mortgage
Loan Programs as set forth in the Manuals are eligible for purchase
under this Agreement. All Loans shall be originated, processed, closed
and registered in conformance with the procedures set forth in the
Manuals.
IV. Loan Pricing:
A. Interest Rates/Points: The Seller shall sell Loans in
accordance with the price reflected on the daily PHH rate
sheet. PHH shall transmit, via electronic facsimile, the PHH
Rate Sheet to the Seller by 10:30 am Eastern Time every
business day. Seller may call PHH between the hours of 8:30 am
and 10:00 pm Eastern Time to obtain the latest price quotes.
Prices are subject to change without notice.
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B. Rate Lock Options: The Seller shall abide by all interest rate
lock options and provisions as outlined in the Manuals.
C. Best Efforts Delivery: All Loans purchased under this
Agreement shall be on a Best Efforts Basis, unless
specifically negotiated otherwise. Best Efforts delivery shall
mean a mandatory delivery of Loans registered with PHH if the
Loan closes. All locked Loans which are not declined by PHH
shall be delivered to PHH, if closed by the Seller. Seller
shall not deliver the Loan to any other lender and shall not
assist in closing the loan with any other lender. The Best
Efforts Delivery Policy will be closely monitored by the
Quality Control Department at PHH. In the event of the
settlement of any locked Loan by Seller and subsequent
non-delivery to PHH, Seller shall be subject to fees as
described in the Manuals.
V. Reciprocal Representations and Warranties Made by Each Party to This
Agreement:
A. Such party is duly organized, validly existing and in good
standing under the laws of its jurisdiction or organization.
In addition, such party has the requisite power and authority
to enter into this Agreement and all other agreements which
are contemplated hereunder and to carry out its obligations
under this Agreement.
B. This Agreement has been duly authorized, executed and
delivered by such party and constitutes a validly and legally
binding agreement of such party enforceable in accordance with
its terms.
C. There is no action, proceeding or investigation pending or
threatened, nor any basis therefor known to such party, that
questions the validity or prospective validity of this
Agreement.
D. Such party is not in violation of any charter, articles of
incorporation, by-laws, mortgage, indenture, indebtedness,
agreement, instrument, judgment, decree, order, statute, rule
or regulation and no such obligation adversely affects its
capacity to fulfill any of its promises or duties under this
Agreement. The execution of and performance pursuant to this
Agreement will not result in a violation of any of the
foregoing.
Failure by either party to comply with the aforementioned
representations and warranties shall be deemed a breach of
this Agreement and both parties hereby agree to indemnify and
hold harmless the other from any and all claims or damages
arising out of such breach.
VI. Seller's Obligations, Representations and Warranties with Respect to
Each Loan Sold Under This Agreement:
A. Each Loan shall be insured by an ALTA title insurance policy
acceptable to PHH evidencing that the Loan is a valid first
lien on the mortgaged property, and the mortgaged property is
free and clear of all encumbrances, including all mechanic's
or materialman's liens, except liens for real estate taxes and
special assessments not yet due and payable. All taxes due
within 30 days of purchase by PHH shall be paid by Seller.
B. All parties to the mortgage have the legal capacity to execute
the same.
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C. Each Loan shall be accompanied by an appraisal of the property
provided by a properly licensed and certified appraiser which
indicates that said property is free of substantial damage
(including but not limited to, any damage by fire, windstorm,
vandalism or other casualty) and is in good repair.
D. All federal and state laws, rules and regulations applicable
to the Loans have been complied with including but not limited
to: Regulation Z (Truth-in-Lending Act), Fair Credit Reporting
Act; Flood Disaster Protection Act of 1973; Real Estate
Settlement Procedures Act of 1974 (RESPA) and Regulation X, as
amended and Regulation B (Equal Credit Opportunity Act), as
amended.
E. Seller agrees, within 120 days of the Loan closing date to
execute, transmit and/or obtain any and all Final
Documentation over which said Seller can be reasonably
expected to have control and which PHH deems necessary to
properly complete a sale of any Loan, and/or to perfect a
first lien.
F. The Loan documents have been duly executed by the mortgagor,
acknowledged and sent for recordation by the closing agent;
and each Loan complies with the Underwriting Guidelines
contained in the Manuals. Provided, however, the Seller does
not make any representations or warranties regarding the
underwriting decision.
G. Seller is the sole owner of the Loan and has authority to
sell, transfer and assign the Loan on the terms set forth in
this Agreement.
H. The full principal amount of the Loan has been advanced to the
mortgagor, either by payment directly to such person or by
payment made on such person's request or approval. The unpaid
balance is as stated. All costs, fees and expenses incurred in
making, closing and recording the Loan have been paid. No part
of the mortgaged property has been released from the lien of
the Loan and the terms of the Loan have in no way been changed
or modified, and the Loan is current and not in default.
I. Each Loan requiring insurance or a guaranty is properly
insured or guaranteed. Any premiums, required to be paid under
such policies within 30 days of purchase by PHH, shall be paid
by Seller.
J. There is in force a hazard insurance policy and flood
insurance policy, where applicable, meeting the requirements
of PHH. Any premiums, required to be paid under such policies
within 30 days of purchase by PHH, shall be paid by Seller.
K. Seller shall submit a certified true copy of a completed
Assignment in the name of PHH Mortgage Services Corporation
with the Loan package prior to PHH funding the Loan. Once the
Loan is funded by PHH, the Seller shall have forty-eight (48)
hours to send the original Assignment for recordation. All
endorsements and assignments by Seller of promissory notes and
security interest shall be without recourse.
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L. The Seller has no knowledge of the borrower having any
set-offs, counter-claims or defenses to the Promissory Note or
Deed of Trust or Mortgage securing the Promissory Note arising
from the acts and/or omissions of Seller in the origination of
the Loan.
M. Seller has no knowledge of any improvement located on or being
part of the mortgaged property which is in violation of any
applicable zoning laws or regulations.
N. Seller has no knowledge of any circumstances or conditions
with respect to the Loan, mortgaged property, mortgagor or
mortgagor's credit standing that could be expected to cause a
reasonable investor to regard the Loan as an unacceptable
investment, cause the Loan to become delinquent or adversely
affect the value or marketability of the Loan.
O. All documents submitted to PHH are genuine, true, correct and
proper. All other representations, for which the Seller has
responsibility under this Agreement, are true and correct and
meet the requirements and specifications of this Agreement and
the Sales Manual.
P. The Seller states that the warranties and representations
required under Section III of this Agreement have been
satisfied. Provided, however, Seller does not make any
warranties or representations regarding the underwriting
decision, which is the responsibility of PHH, made on the
Loans.
All of the aforementioned warranties shall survive and inure to the
benefit of any person, partnership, firm or entity to which PHH may
assign or sell any of such Loans or Servicing Rights under this
Agreement.
Upon discovery of any breach of any of these representations and
warranties, PHH shall give prompt, written notice to the Seller. If the
breach is not cured within thirty (30) days of written notice, Seller
shall be in default under the terms of this Agreement and become
subject to repurchase of such Loan(s) as described in Section IX.
VII. Quality Control:
A. Seller shall maintain a Quality Control function acceptable to
PHH, FNMA, FHLMC and/or GNMA and shall, upon request, supply
the results of such Quality Control activities to PHH.
B. Seller agrees to supply to PHH copies of Quality Control
audits performed by Seller or the agencies listed in Paragraph
A of this Section and hereby indemnifies PHH against any
adverse action taken by these agencies that may affect PHH in
any way. If, in PHH's sole discretion, the Agency audits
determine the Quality Control function to be unacceptable, the
Seller shall be in default under this contract and PHH may
exercise any of the remedies described in Section VIII and IX.
C. At any time, PHH shall have the right to conduct quality
control audits to verify all documentation submitted by Seller
including full documentation of Loans closed as "no income"
Loans. Seller agrees to cooperate fully with these audits. If
it is discovered that there
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was improper documentation or documentation that does not
support the information supplied with the Loan submission, PHH
may exercise those remedies set forth in Sections VIII and IX.
If a Loan is determined to be fraudulent, Seller agrees to
indemnify and hold PHH harmless from all claims, liabilities,
losses, damages, expenses and lawsuits (including attorney's
fees), in connection therewith.
VIII. Seller's Repurchase Obligations: Seller agrees to repurchase any
Loan(s) sold to PHH under this Agreement within ten (10) business days
of written notice from PHH of any of the following:
A. Seller fails to observe or perform, or breaches, in any
material respect, any of the representations, warranties or
covenants contained in this Agreement and/or the Manuals with
respect to a particular Loan and such failure continues for
thirty (30) days following PHH's written notification of such
failure to Seller.
B. Seller fails to deliver to PHH within 270 calendar days from
the date each Loan was purchased, all of the Final Documents
as set forth in the Manuals.
C. PHH determines that there is evidence of fraud or
misrepresentation in the origination of the Loan or any matter
in the mortgage loan file is not true and correct.
D. Seller fails to observe or perform or breaches, in any
material respect, any of the representations, warranties or
agreements set forth in this Agreement.
IX. Repurchase Price: The price to be paid by Seller to PHH in the event of
a repurchase of a mortgage loan shall be an amount equal to the sum PHH
was required to pay in order to repurchase the loan from its investor
plus interest accrued but unpaid on the principal balance of the Loan
from the date of settlement through the date of repurchase plus any
premiums paid to Seller and any and all costs and expenses incurred by
PHH in connection with the repurchase.
Upon any such repurchase of Loans by Seller, PHH shall endorse the
Promissory Note(s) (without recourse) and shall forward an assignment
(without recourse and in recordable form) in any security interest to
Seller.
X. Delivery of Final Documents: Seller shall deliver all of the documents
listed on the Final Document Transmittal Form within 120 calendar days
from the date the Loan is purchased by PHH. However, failure by Seller
to deliver to PHH within 150 calendar days from the date a Loan was
purchased, one or more of the original documents listed on the Final
Document Transmittal Form shall result in assessment by PHH of a fee of
$50 per 30 days per loan for each 30 days, after the 150 day period,
during which one or more of such documents is outstanding. Such fees
shall be $50 regardless of the number of loan documents outstanding.
Seller shall be billed for such penalty. In the event Seller odes not
pay the penalty within thirty (30) days of receipt of invoice, then
such penalty shall be deducted out of the Seller's funds on the next
loan sold to PHH following expiration of the thirty (30) day period.
Provided, however, if Seller fails to deliver to PHH the Final
Documents within the 150 day period because such documents have not
been received from the applicable recorder's officer or the title
company respectively, and not because of any delay within Seller's
control, then PHH shall extend the
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150 day period for any reasonable time necessary for Seller to deliver
the documents and no penalty shall be assessed.
XI. Seller's Compensation: PHH shall purchase closed Loans for which it has
received full and correct Loan documentation. PHH shall disburse funds
to the Seller using the following calculations:
A. The Unpaid Principal Balance of the Loan at the price quoted
by PHH;
B. Plus, any accrued interest owed to the Seller;
C. Less, any accrued interest or fees owed to PHH;
D. Less, any other fees or costs as set forth in this Agreement
or in the Fee Structure contained in the Manuals.
XII. Servicing Rights: PHH shall own the Servicing Rights of all Loans
closed under this Agreement and is entitled to all escrow fees, buydown
funds and rights thereof. Such funds shall be netted out of the funds
paid to Seller as described in Section XI.
XIII. Termination:
A. This Agreement shall terminate upon the occurrence of any one
of the following events:
(1) In the event either party is required to discontinue
its performance of this Agreement because of an order
of any appropriate state or federal Court or
regulatory body to do so.
(2) To the extent permitted by applicable law, upon the
filing by a party of any action under any
reorganization, insolvency or moratorium law, or upon
the appointment of any receiver, trustee or
conservator to take possession of the properties of
such party.
(3) In the event PHH commits any breach of its terms,
conditions, representations or warranties under this
Agreement, and such breach is not cured within thirty
(30) days of PHH's receipt of written notice of such
breach.
(4) In the event Seller commits any breach of its terms,
conditions, representations or warranties under this
Agreement, and such breach is not cured within thirty
(30) days of Seller's receipt of written notice of
the breach.
(5) In the event of fraud on the part of Seller in
performing its duties hereunder, immediately upon
receipt by Seller of notice of termination.
(6) Upon thirty (30) days written notice by either party
to the other.
B. In the event of a breach of the representations and warranties
set forth in Section V and VI either party may terminate this
Agreement immediately upon providing written notice to the
other. In addition, such breach shall void all rate locks on
applicable loans.
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XIV. Fair Lending Compliance:
A. Seller agrees with and fully support the fair lending laws
including: the Equal Credit Opportunity Act, Fair Housing Act
and the Home Mortgage Disclosure Act. Specifically, Seller
shall not collect overages or price loans in violation of
applicable fair housing laws. To that end. Seller shall ensure
that all customers are reviewed and treated on the basis of
their qualifications as a borrower regardless of any non-merit
factors (i.e., race, religion or gender). Upon request, PHH
agrees to provide its own procedures which it utilizes in
fulfilling its fair lending goals. In addition, in the spirit
of promoting fair lending, the Seller agrees to make their
best efforts to maintain an employment staff that reflects the
racial, cultural and gender makeup of its local area.
B. In furtherance of its fair lending commitment, PHH and Seller
also agree to use their best efforts to utilize minority and
women owned businesses when selecting vendors and outside
services.
XV. Assignment: This Agreement may not be assigned or transferred, in whole
or in part, by the Seller without the prior written consent of PHH.
XVI. Notices: All notices required or permitted by this Agreement shall be
in writing and shall be given by certified mail, return receipt
requested or via overnight mail and sent to the address at the head of
the Agreement or such other address that a party specifies in writing
in accordance with this paragraph.
XVII. IRS Designation Clause: Pursuant to the requirements of the Internal
Revenue Procedures and in accordance with the applicable provisions of
the IRS Code, the Parties hereby desire to clarify the 1098 reporting
responsibilities of PHH and Seller.
PHH will provide a 1098 return for the amount of interest it actually
collects in each transaction. This reporting shall be limited to the
interest collected by PHH as servicer of the subject Loan. Seller shall
provide a 1098 return to the borrower for the amount of interest and
points collected by it prior to PHH taking over the servicing of the
Loan. The total of these two returns will equal the total fees paid by
the customer on each Loan.
The Parties agree that these provisions shall cover all loans sold by
Seller to PHH for the term of this Agreement. PHH and Seller agree that
individual designation agreements will not be drawn up on each
individual loan closing or on an annual basis covering Seller's volume.
XVIII. Non-Solicitation: The Seller agrees, for a period of 270 calendar days
from the date of purchase of a Loan by PHH from Seller, that Seller
shall be prohibited from refinancing such Loans. A refinancing shall
have occurred if the Loan closes within such 270 day period. In the
event Seller refinances any Loans closed within such 270 calendar days,
Seller shall pay to PHH a penalty equal to the service release premium
(calculated as 1% of the principal loan amount at closing on adjustable
rate loans and 1 1/2% on fixed rate loans) paid to Seller on the
original loan closing.
A. Provided, however, in the event a customer contacts Seller for
refinance and Seller can improve the customer's current
interest rate by at least 1/2% or an equivalent benefit in
points paid by the customer, Seller shall contact PHH's
Pricing Department for approval to refinance such Loan. If
such approval is granted, no penalty will be assessed.
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XIX. Indemnification: Seller agrees to defend, indemnify and hold harmless
PHH, its successors, assigns, stockholders, officers, directors,
employees, agents, attorneys, affiliates and subsidiaries from and
against any and all liabilities, damages or expenses whatsoever,
including, without limitation, attorney's fees, resulting, directly or
indirectly, from any actual or threatened claim or demand arising,
directly or indirectly, under, from or out of or in connection with (i)
any failure by Seller to perform its obligations under this Agreement,
(ii) Seller's negligence or willful misconduct in the performance of
its obligations under this Agreement, or (iii) Seller's failure to
comply fully with any and all federal, state and local laws, rules and
regulations governing the origination of mortgage loans.
PHH agrees to defend, indemnify and hold harmless Seller, its
successors, assigns, stockholders, officers, directors, employees,
agents, attorneys, affiliates and subsidiaries from and against any and
all liabilities, damages or expenses whatsoever, including, without
limitation attorneys' fees, resulting, directly or indirectly, from any
actual or threatened claim or demand arising, directly or indirectly,
under, from or out of or in connection with (i) any failure by PHH to
perform its obligations under this Agreement, (ii) PHH's negligence or
willful misconduct in the performance of its obligations under this
Agreement, or (iii) PHH's failure to comply fully with any and all
federal, state and local laws, rules and regulations governing the
processing, underwriting, closing or servicing of mortgage loans.
XX. Miscellaneous Provisions:
A. PHH makes no representation or warranty to Seller or its members
regarding the effect that this Agreement and the consummation of the
transactions contemplated hereby may have upon their foreign, federal,
state or local tax liabilities.
B. Seller shall promptly advise PHH of any changes of ownership, financial
condition or principal officers of the Company and/or Senior
Management.
C. In the case that any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired.
D. If any party hereto shall bring suit against the other as a result of
any alleged breach or failure by the other party to fulfill or perform
any covenants or obligations under this Agreement, then the prevailing
party obtaining final judgment in such action shall be entitled to
receive from the non-prevailing party reasonable attorneys' fees
incurred by reason of such action and all costs of suit and preparation
thereof at both trial and appellate levels. This Agreement shall be
governed by, and construed and enforced in accordance with applicable
federal law and the laws of the State of New Jersey without reference
to conflict of law provisions hereof.
E. This Agreement sets forth the complete terms of the Agreement between
PHH and Seller. No terms or conditions of this Agreement may be waived
or modified unless in writing by each party hereto.
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XXI. Force Majuer. Neither party shall be deemed to be in violation of this
Agreement if such party is prevented from performing its obligations
hereunder for any reason beyond its reasonable control, including,
without limitation, Acts of God or any public enemy, elements, floods
or strikes.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed this 1st day of June, 1998.
E. Loan, Inc. PHH MORTGAGE SERVICES CORPORATION
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SELLER'S LICENSED NAME
Signature: /s/ Xxxxx X. Xxxxxxx Signature: /s/ Signature Illegible
By: Xxxxxx X. Majetus By: Xxxxxxx Xxxxx
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Title: Director, Mortgage Banking Operations Title: Vice President
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