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EXHIBIT 10.3
GUARANTEED LOAN SALE AND SERVICING AGREEMENT
THIS GUARANTEED LOAN SALE AND SERVICING AGREEMENT ("Agreement") is entered into
by and among PACIFICAMERICA LENDING INC., A DELAWARE CORPORATION ("Seller"),
CALIFORNIA THRIFT & LOAN, INC., A CALIFORNIA CORPORATION ("Buyer"), PACIFIC
THRIFT AND LOAN COMPANY, A CALIFORNIA CORPORATION ("Servicer") and
PACIFICAMERICA MONEY CENTER, INC., A DELAWARE CORPORATION ("Guarantor") pursuant
to the following recitals, terms and conditions.
A. This Agreement governs the sale, assignment and transfer by Seller
to Buyer of the undivided ownership interests in the mortgage loans ("loan" or
"loans") identified in the Loan Certificate attached hereto as Exhibit "A" to
this Agreement, which by this reference is incorporated herein, together with
any future loan sales which will be governed by additional Loan Certificates.
This Agreement also governs Seller's responsibility for causing servicing to be
done by Servicer and other incidents, including those of trusteeship with
respect to the loans.
B. Seller's responsibilities, and the warranties and representations
made by Seller herein, are made for the benefit of Buyer and its successors and
assignees, and are intended to be binding upon Seller.
C. Guarantor is the parent company of Seller, and will unconditionally
guarantee that Buyer shall not suffer any financial loss as a result of the
transactions contemplated by this Agreement, whether as a result of non-payment
by a loan debtor, any environmental issue arising in connection with real
property which secures any loan, or otherwise, unless such loss is caused solely
as a result of Buyer's own misconduct or gross negligence. Such guarantee shall
include complete indemnification in the event Buyer (or any successor of Buyer),
shall be involved in any legal proceeding in connection with any loan, or the
real property securing such loan.
D. Seller and Buyer further agree and acknowledge that the loans are
serviced, and will continue to be serviced, by Servicer pursuant to that certain
Loan and REO Servicing Agreement between Seller and Servicer dated as of January
1, 1994 (the "Servicing Agreement"), which is attached hereto as Exhibit "B" and
is incorporated herein by this reference.
NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties agree to the following:
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ARTICLE I.
SALE AND TRANSFER OF UNDIVIDED OWNERSHIP INTEREST IN LOANS
SECTION 1.01.
(a) SALE AND IDENTIFICATION OF LOAN OWNERSHIP INTERESTS.
Seller hereby agrees to sell to Buyer and Buyer hereby agrees to buy from Seller
the undivided ownership interests in the loans and portions of loans identified
in Loan Certificate(s) issued pursuant to this Agreement. Each such Loan
Certificate, together with its attachment(s), shall specify, among other things,
the principal amount of each of the individual loans sold and accrued interest,
the name and account number of each of the loans sold, the loan-to-value ratio
of each loan, and the purchase price (as described in section 1.01 (b)), to be
paid to Seller.
(b) PURCHASE PRICE OF THE LOANS. Buyer shall pay to Seller the
principal amount outstanding, plus any accrued interest due and payable to
Seller, on each loan. Notwithstanding the foregoing, in the event the loan
amount is greater than the value of the property securing such loan, as set
forth in the Loan Certificate, the purchase price will be reduced to the gross
loan-to-value ratio equal to 100% of the value of the real property securing
such loan. Notwithstanding any other agreements between Buyer and Seller, in the
event Buyer under this Agreement is purchasing the remaining portion of any loan
in which it already owns an interest, Buyer is entitled to 100% of the yield due
on the underlying promissory note for such loan (less any applicable servicing
fee described in Section 3.08(a)).
(c) TIME AND NATURE OF THE SALE. Upon Buyer's payment of the
purchase price for any loan, Buyer shall immediately become vested in the
beneficial ownership of the interest in the loan. Seller will reflect the
transaction hereunder on its balance sheet and other financial statements as a
purchase of assets by Buyer and a sale of assets by Seller.
SECTION 1.02. WARRANTIES AND REPRESENTATIONS.
(a) SELLER'S OWNERSHIP OF LOANS AND COMPLIANCE WITH APPLICABLE
LAW. Seller hereby represents and warrants that as of the date Buyer buys an
ownership interest in any loan and is issued a Loan Certificate under this
Agreement in evidence thereof, all loan interests described in such Loan
Certificate are solely owned by Seller, such loans have been duly executed and
acknowledged by the loan debtor, and Seller's lien on the security property has
been recorded; such loans have been made or acquired by Seller pursuant to and
in compliance with all applicable federal and state laws, rules, and regulations
as from time to time amended; all conditions within the control of Seller and
Servicer including, without limitation, assurances that all applicable insurance
policies, as required under the loans, have been obtained, and such insurance is
valid and enforceable; and that all copies of any documents used in connection
with this transaction are accurate and complete.
(b) SELLER'S AUTHORITY; POSSESSION OF COPIES OF LOAN
DOCUMENTATION. Seller further represents and warrants that, without the need for
further approvals or authorizations,
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it is authorized to sell its entire loan interests described in the Loan
Certificate; that Seller will do all acts necessary to perfect ownership of the
loans sold under this Agreement in Buyer; and that Seller has in its possession
true copies of all documents representing each such loan and all records
required to be maintained for such loans, under applicable law and regulations,
including, but not limited to: (1) a loan application signed by loan debtor(s);
(2) a promissory note or other evidence of debt signed by loan debtor(s); (3) a
copy of the security instrument, including any modification agreement(s); (4) an
appraisal or signed report of certification of valuation of the real estate
collateral made in compliance with the requirements of all applicable laws and
regulations; (5) a copy of loan debtors financial statement(s) or written credit
report(s); (6) a title policy insuring the validity of Seller's lien position on
the real estate collateral; (7) copies of applicable tax, assessment and
insurance premium payment record(s); (8) a copy of the hazard insurance policy
in an amount representing coverage at least equal to the outstanding principal
balance or the full insurable value of the improvements, whichever is less,
which covers such perils as are commonly covered in policies described as
"Standard Fire and Extended Coverage," as well as other perils as to which
institutional lenders operating in the same area commonly require hazard
insurance, and which provides that Seller's hazard insurance is not invalidated
by acts of loan debtor(s); (9) documentation showing loan originator's and, if
applicable, Seller's, compliance with mortgage loan disclosure laws and
regulations; and (10) any flood insurance policy required under the Flood
Disaster Protection Act of 1973, as amended.
(c) DELIVERY OF COPIES OF LOAN DOCUMENTS. Seller promptly
shall deliver to Buyer copies of the following documents pertaining to each loan
or portion of loan sold under this Agreement: (1) loan application signed by
loan debtor(s); (2) an appraisal or signed report of certification of valuation
made in compliance with the requirements of the applicable laws and regulations;
(3) loan debtor's financial statement(s) or written credit report(s); (4) title
policy insuring the validity of Seller's lien; and (5) documentation showing
loan originator's and, if applicable, Seller's compliance with pertinent loan
disclosure laws and regulations.
(d) DELIVERY OF DOCUMENTS EVIDENCING THIS TRANSACTION TO
BUYER. In addition to the foregoing, Seller shall deliver to Buyer the original
of the following: (1) a properly signed duplicate original of this Agreement;
(2) a statement of each loan's current status as of the time of sale, including
a statement of the loan-to-value ratio of each loan; (3) the pertinent security
instrument, mortgage or deed of trust; (4) for each applicable deed of trust, an
original notarized assignment of deed of trust in recordable form, in form and
substance acceptable to Buyer, executed by Seller, assigning each loan to Buyer;
and (5) for each such note, an allonge in form and substance acceptable to
Buyer, which will endorse the loan interest to Buyer. Seller and Servicer shall
each retain a copy of each document described in this Section 1.02(d).
(e) RIGHTS OF INSPECTION. Buyer or its representative, or
Buyer's successors or assignees, including any examiners or supervisory agents
having jurisdiction, has the right at any reasonable time during normal business
hours to request, and have access to and examine any and all books, records and
documents relating to any loan in which Buyer has an ownership interest or
relating to any of the matters covered by this Agreement. In addition, Seller
shall fully cooperate and assist with any confidential quality control audit
that Buyer may wish to perform at Buyer's own expense.
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(f) OTHER WARRANTIES AND REPRESENTATIONS. Seller further
represents and warrants that, as of the date of the Loan Certificate: (1) no
loan is in arrears more than one calendar month; (2) to the best of Seller's
knowledge, there are no mechanics' liens on the security properties; (3) to the
best of Seller's knowledge, the security properties are free of substantial
damage and are in good repair; (4) none of the loans are pledged as collateral
for any loan or for any other purpose; and (5) each representation as to each
such loan is true and correct.
ARTICLE II.
RELATIONSHIP OF PARTIES AND GUARANTEE PROVISIONS
SECTION 2.01. RELATIONSHIP OF THE PARTIES. It is agreed that none of
Seller, Buyer, Servicer nor Guarantor are partners or joint venturers.
SECTION 2.02. GUARANTEE PROVISIONS. These provisions shall be in
addition to the repurchase provisions described in Section 6.01 of this
Agreement. Guarantor covenants to protect Buyer against any loss actually
incurred, or where it is reasonably likely that a loss will occur in connection
with any loan purchased pursuant to this Agreement in accordance with the terms
set forth in this Section 2.02. However, Guarantor shall not be liable for any
loss resulting solely from the misconduct or gross negligence of Buyer.
(a) LOAN LOSSES - BUYER ACQUIRES TITLE TO REAL PROPERTY
SECURITY. For the purposes of this subsection (a), a loss will have deemed to
occur at such time as legal title to the real property securing the applicable
loan(s) has been acquired by or on behalf of Buyer, or any assignee or nominee
of Buyer. Buyer shall market the real property security for such loan(s) as
Buyer deems appropriate. Once Buyer has received a bona fide written offer for
such real property, it shall so notify Guarantor, and Guarantor may, within ten
(10) days elect to purchase such real property. In that event, Guarantor shall,
within five (5) business days of Guarantor's election to purchase such real
property, accept a quit-claim deed without warranty of any kind, to such real
property from Buyer and concurrently pay to Buyer the amount Buyer paid to
Seller pursuant to Section 1.01(b) hereof, less any reduction of principal
actually received by Buyer, plus all accrued but unpaid interest due to Buyer,
plus any and all expenses, fees and costs incurred by Buyer in connection with
such loan (except for earned servicing fees described in Section 3.08 (a)
hereof). If Guarantor either does not elect to purchase the real property, or
does not respond within the ten (10) day election period, Buyer may convey the
real property to a third party, and Guarantor shall, within five (5) business
days of being provided the closing statement of the escrow for such property,
reimburse Buyer for any net loss to Buyer resulting from such disposal
(including all fees and costs associated with such disposition). In addition,
Guarantor covenants to completely indemnify and hold Buyer harmless from any
expense, claim, cause of action or other proceeding in which Buyer may be named
as a party as a result of the transaction contemplated by this Agreement.
Guarantor shall not be liable for any loss resulting solely from the misconduct
or gross negligence of Buyer.
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(b) LOAN LOSSES - BUYER DOES NOT ACQUIRE TITLE TO REAL
PROPERTY SECURITY. In the event of a loss where: (i) legal title to the real
property security for a loan(s) has been acquired by a holder of any senior
interest in the property; or (ii) Buyer, acting reasonably, determines that
legal title can not be acquired by Buyer, Servicer, Seller or Guarantor within
twelve (12) months of a default by the loan debtor(s) (as described in Section
3.10 hereof), within ten (10) days of such notice from Buyer, Guarantor shall
cause the loan(s) in question to be repurchased from Buyer for the amount Buyer
paid to Seller pursuant to Section 1.01(b) hereof, less any reduction of
principal actually received by Buyer, plus all accrued but unpaid interest due
to Buyer, plus any and all expenses, fees and costs incurred by Buyer in
connection with such loan (except for earned servicing fees described in Section
3.08 (a) hereof). Buyer shall reassign such loan(s) without warranty of any kind
to Guarantor (or assignee of Guarantor) concurrently with such payment. In
addition, Guarantor covenants to completely indemnify and hold Buyer harmless
from any expense, claim, cause of action or other proceeding in which Buyer may
be named as a party as a result of the transaction contemplated by this
Agreement. Guarantor shall not be liable for any loss resulting solely from the
misconduct or gross negligence of Buyer.
(c) ENVIRONMENTAL CLAIMS. In the event of any environmental
claim, or any claim arising from the environmental condition of real property
securing a loan, Servicer shall immediately notify Buyer, Seller and Guarantor
of such claim or other litigation. In the event Servicer either does not so
notify, or is not aware of any such claim, Buyer may give notice to Seller,
Servicer and Guarantor. Within ten (10) days of such notice, Guarantor shall
cause the loan(s) in question to be repurchased from Buyer for the amount Buyer
paid to Seller pursuant to Section 1.01(b) hereof, less any reduction of
principal actually received by Buyer, plus all accrued but unpaid interest due
to Buyer, plus any and all expenses, fees and costs incurred by Buyer in
connection with such loan (except for earned servicing fees described in Section
3.08 (a) hereof). In addition, Guarantor covenants to completely indemnify and
hold Buyer harmless from any expense, claim, cause of action or other proceeding
in which Buyer may be named as a party as a result of the transaction
contemplated by this Agreement. Guarantor shall not be liable for any loss
resulting solely from the misconduct or gross negligence of Buyer.
(d) OTHER LITIGATION CLAIMS. In the event of any claim, or
cause of action involving either any loan or real property securing any loan,
Guarantor covenants to completely indemnify and hold Buyer harmless from any
expense, claim, cause of action or other proceeding in which Buyer may be named
as a party as a result of the transaction contemplated by this Agreement.
Guarantor shall not be liable for any loss resulting solely from the misconduct
or gross negligence of Buyer.
(e) INACCURATE FINANCIAL INFORMATION. In the event Buyer
discovers it has been provided with materially incorrect financial information
whether consolidated, or for Seller, Servicer or Guarantor individually, which,
in Buyer's reasonable opinion, could impair any such entity or entities ability
to financially perform under this Agreement, (whether provided as a condition
precedent to this Agreement or pursuant to Section 3.01(c) hereof) Buyer shall
give notice to Guarantor. Within ten (10) days of such notice, Seller shall
repurchase all of the loans sold to Buyer hereunder at a purchase price equal to
the amount Buyer paid to Seller pursuant to Section 1.01(b) hereof, less any
reduction of principal actually
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received by Buyer, plus all accrued but unpaid interest due to Buyer, plus any
and all expenses, fees and costs incurred by Buyer in connection with such loan
(except for earned servicing fees described in Section 3.08 (a) hereof). In
addition, Guarantor hereby guarantees Seller's performance under this Section
2.02(c) and covenants to completely indemnify and hold Buyer harmless from any
expense, claim, cause of action or other proceeding in which Buyer may be named
as a party as a result of the transaction contemplated by this Agreement.
Guarantor shall not be liable for any loss resulting solely from the misconduct
or gross negligence of Buyer.
SECTION 2.03. GUARANTOR IS A PARTY TO THIS AGREEMENT. As a condition
precedent to this Agreement, Seller shall cause Guarantor to accept and agree to
the terms of this Agreement and to evidence same by causing Guarantor to execute
this Agreement in the space provided below for its signature.
ARTICLE III.
ADMINISTRATION AND SERVICING OF THE LOANS
SECTION 3.01. SERVICING RESPONSIBILITIES.
(a) Seller hereby assumes the responsibility for causing Servicer to
administer and service the loans specified in this Agreement and the Loan
Certificate, and shall retain such responsibility while this Agreement remains
in effect. A new Servicer may be designated only with the prior written consent
of Buyer and Seller or its respective designee, successor or assignee, or in
accordance with Section 5.01. Servicer shall not commingle with any of
Servicer's funds any part of Buyer's loan principal and interest collections and
other payments. Seller warrants that Servicer will administer and service the
loans sold hereunder consistent with prevailing good mortgage practice, and
applicable law and regulations.
(b) Seller has requested that Buyer look solely to Seller to ensure
Servicer complies with each and every requirement of this Agreement. Seller has
further requested that Buyer pay any sums due under this Agreement to Seller,
who shall have the sole responsibility to disburse, as appropriate and as agreed
upon between Seller and Servicer, any sums due to Servicer under this Agreement.
Seller shall be responsible for paying to Servicer all amounts due to Servicer
for all loans in accordance with the Servicing Agreement. Buyer shall not be
required to have any dealing with any party other than Seller, although Buyer
may, at its sole option, deal with Servicer, or make enquiries of Servicer
directly. Seller hereby indemnifies and holds Buyer, its directors, officers,
agents and employees free and harmless from any loss, fees, liability, expense
(including reasonable attorneys' fees and costs), claim or demand whatsoever
resulting from Seller's request that Buyer deal only with Seller in connection
with Servicer's rights and duties under this Agreement.
(c) Seller represents that it will provide Buyer or Buyer's successors
or assignees, as indicated on Seller/Servicer's books and records, with
Seller's, Servicer's, Guarantor's or their
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consolidated certified annual financial statements for that fiscal year within
fifteen (15) days of completion of such statement.
(d) Servicer shall be responsible for the execution of any and all
notices, and other acts necessary to transfer ownership of the loans sold under
this or any subsequent agreement to Buyer, Buyer's successors, or Buyer's
assignees, as the case may be, and for preserving all rights in said loans.
SECTION 3.02. REMITTANCE/APPLICATION OF PAYMENT.
(a) REMITTANCE OF PAYMENT. Servicer shall segregate, report
and remit to Buyer and its successors and assignees registered on Servicer's
books and records, on the fifteenth (15th) and last day of each month of the
year ("Remittance Date") Buyer's principal and interest collections (less any
money owed Servicer), as well as any prepayment in full of any loan received by
Servicer through the Cutoff Date for each loan subject to the Loan Certificate.
The Cutoff Date is the preceding Remittance Date through which all principal and
interest collections are accumulated and totaled for reporting and remittance
purposes under this Agreement. Should either the Cutoff Date or the Remittance
Date fall on a holiday, such date shall be deemed to be the business day
immediately preceding the actual Cutoff Date or Remittance Date. In the event
that such remittance is not received by Buyer, or its successors or assignees,
by the tenth (10th) day after the applicable Remittance Date, Seller shall be
subject to a late charge of 8% of the amount of such remittance not received;
and such charge shall be payable on demand by Buyer.
(b) APPLICATION OF PAYMENTS. For each loan, Servicer shall
apply each payment received by it as follows, and in the following order: (i) to
Seller, for the benefit of Servicer, the servicing fee more particularly
described in Section 3.08(a) (but not any other fees or charges); (ii) to Buyer
all sums owed to Buyer for any reason whatsoever; (iii) to Seller, any late
charge paid by a loan debtor; and (iv) to Seller or Servicer, as applicable, a
sum for all other fees or penalties payable to Servicer under the Servicing
Agreement for such loan. If a final payment is less than the total amount owed
to Buyer at the time of such pay-off, Servicer shall not accept payment without
the prior written consent of Buyer.
SECTION 3.03. REPORTING. Not less that once each month, pursuant to a
schedule to be determined between Buyer and Seller, Servicer shall provide a
monthly report to Buyer setting forth payments made, the outstanding principal
balance, accrued interest and the status of each loan subject to this Agreement,
segregated by the loans in each Loan Certificate issued hereunder. Such report
shall also indicate: (1) the number and aggregate principal amount of loans
delinquent one month and two or more months; (2) the value, as determined by an
appraisal made in compliance with applicable regulations, of any real estate
acquired through foreclosure, a deed in lieu of foreclosure or otherwise; (3)
the payment status of any senior lien; and (4) the aggregate principal amount of
loans in which Buyer or any successor or assignee is a participant, categorized
separately by the type of real estate security. In addition, not less than
quarterly, commencing three (3) months after the first purchase of loans under
this Agreement, Buyer and Servicer shall reconcile payments made to Buyer during
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quarter, as well as the principal balance, and accrued interest of the remainder
of each loan which is the subject of this Agreement.
SECTION 3.04. SERVICER'S AUTHORITY. It is agreed that the exclusive
rights to decide how the loans sold under this Agreement shall be serviced in
the ordinary course of business is hereby vested in Servicer, as trustee for
Buyer, subject to this Article III. Seller warrants that, except as authorized
by Section 3.11, Servicer will not waive or modify any right, term or provision
of any loan contract under this Agreement, including the release, exchange or
assumption of any loan or the real property securing any loan, without the prior
written consent of Buyer. Servicer shall not, without Buyer's consent, commingle
with any of Servicer's funds any part of Buyer's loan principal and interest
collections and other payments. Servicer shall deposit all such collections and
payments in a segregated trust or custodial demand deposit account in an
FDIC-insured institution.
SECTION 3.05. INDEXED LOAN ADJUSTMENTS. In the event the loans are
adjustable rate loans, Servicer is authorized and required to make loan
adjustments in compliance with the loan contract and any applicable regulatory
lending requirements which shall reflect the movement of the applicable loan
index, combination of indexes or a moving average of index values, or other
applicable formula or schedule. The pertinent loan adjustments shall be
implemented in accordance with the applicable lending regulations and the loan
contract. Servicer shall be responsible for the execution and timely delivery of
all appropriate notices required by the applicable lending and disclosure
regulations and loan contract regarding such adjustments. If the loan debtor on
any loan hereunder is in default at the time such notices are executed and
delivered to such loan debtor, Servicer also shall have the responsibility for
the timely execution and delivery to the loan debtor of notice that all
contractual rights under the applicable loan contract in regard to such default
are reserved even if the loan is adjusted. Even if Servicer has not made a loan
adjustment(s) as provided for by the loan contracts and as required above,
Servicer shall remit, in accordance with Section 3.02(a), an amount equal to
Buyer's principal and interest payments that would have been collected if
Servicer had made the loan adjustments in a timely fashion.
SECTION 3.06. RECORDS, MAINTENANCE AND REPORTING REQUIREMENTS. Servicer
shall be responsible for maintaining, or requiring the maintenance of, a
complete set of books and records, as to each of the loans subject to this
Agreement, including, but not limited to, a record of each receipt and each
disbursement. Such books and records shall be sufficient to enable Buyer to meet
all applicable regulatory requirements applicable to Buyer; and for making sure
that the required monthly and quarterly reports and remittances required
pursuant to Section 3.02(a) and Section 3.03 hereunder are furnished to Buyer.
SECTION 3.07. TAXES AND INSURANCE. It is agreed that Buyer shall make
additional advances on loans for taxes and insurance premiums to the extent
provided in the pertinent security instrument and to the extent necessary to
protect Buyer's interest in the real property collateral. Such advances and such
sums advanced (including any interest or penalty thereon), shall be deemed to be
part of the loan, and may be recovered from Guarantor pursuant to Section 2.02
hereof in the event of
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Buyer's loss under the applicable loan. Such amounts, where appropriate, shall
be added to the principal balance of the applicable loan.
SECTION 3.08. SERVICER'S FEES.
(a) SERVICING FEES PAYABLE. Buyer shall pay to Seller a
service fee of 75/100 OF ONE PERCENT (.75%) per annum of the then principal
balance of each loan for the servicing of the loans. On each Remittance Date,
Buyer shall pay to Seller such service fee, calculated and payable weekly in an
amount equal to ONE FIFTY SECOND (1/52) of the product of .75% times the
principal balance of each loan identified in a Loan Certificate as of the Cutoff
Date. In no event is Buyer to incur any further or additional cost for
Servicer's fees. Servicer shall also receive or retain any default penalties,
late charges, assumption fees and other penalties or fees paid by any loan
debtor, including prepayment penalties.
(b) "EXTRAORDINARY" FEES/EXPENSES. Although Seller is
responsible for causing Servicer to service the loans for such consideration as
is provided for in this Agreement, Buyer shall pay necessary extraordinary
services which may be proper under this Agreement, including, but not limited
to, the foreclosure of mortgages, property maintenance and improvement, property
management, attorneys' fees, trustee's fees and costs, the sale of any
foreclosed real estate and similar extraordinary expenses. These shall be
contracted for by Servicer for the customary and reasonable costs for such
services in the jurisdiction where the real estate is located. Servicer shall be
entitled to reimburse itself for such amounts as of the Remittance Date
following such expenditure. Such amounts, where appropriate, shall be added to
the principal balance of the applicable loan and may be recoverable from
Guarantor pursuant to Section 2.02 hereof.
SECTION 3.09. NOTIFICATION REQUIREMENTS. Seller shall have a duty to
use due diligence to ascertain, and forthwith to notify Buyer (or cause Buyer to
be notified), in any event within not more than thirty (30) days of discovery,
or, if prudent, such sooner date as a competent servicer would notify, either
directly or through Servicer, of any failure of any loan debtor to perform a
material obligation under the applicable loan, or of any of the following events
which might come to the attention of Seller or Servicer:
(a) The abandonment of the premises securing a loan subject to
this Agreement;
(b) The sale or transfer of premises securing a loan subject
to this Agreement;
(c) The death, bankruptcy, insolvency or other disability of
any loan debtor which might impair such loan debtor's ability
to repay the loan;
(d) Any loss or damage to the premises securing a loan subject
to this Agreement in excess of $10,000.00 in which event, in
addition to notifying Buyer, Seller shall cause the property
insurer concerned with the premises to be notified as required
under the applicable policy of insurance;
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(e) Any material lack of repair or any other material
deterioration or waste suffered or committed with respect to
the premises securing any loan;
(f) Any property tax with respect to any premises securing a
loan that is delinquent in excess of two (2) years; or
(g) Any event specified in Article V. hereof.
It is understood, however, that no notice need be given to Buyer of any facts
other than those of which Seller or Servicer shall have actual notice or, except
for its negligence, would or should have had notice.
SECTION 3.10. DEFAULT BY LOAN DEBTOR. For the purpose of this Section
3.10 a loan shall be in "default" or "defaulted" on the date which is the
earlier of the mailing or recording of a notice of default to a loan debtor, or
the date of filing (whether voluntarily or otherwise) of any petition under any
provision of bankruptcy law in connection with such loan debtor.
(a) SERVICER'S DUTIES. Servicer shall be responsible for
foreclosing upon the real property collateral securing any defaulted loan under
this Agreement by appropriate procedure to be determined by Servicer and Buyer.
If Servicer, Seller or Guarantor knows, or has reason to know, that there is an
environmental liability associated with real property securing a defaulted loan,
Servicer shall immediately so notify Buyer in writing. In no event shall
Servicer commence a foreclosure proceeding, foreclose, take a deed-in-lieu or
commence any other action intended to obtain title to real property underlying a
defaulted loan if Servicer, Seller or Guarantor knows, or has reason to know,
that there is an environmental liability associated with such real property
unless Buyer has agreed to such action in writing. Upon foreclosure (or other
taking of title) of the real property which had secured the loan, Guarantor
shall concurrently pay to Buyer the sums described in Section 2.02(a), together
with all fees and costs, including, without limitation, all necessary expenses
incurred in the payment of taxes, insurance premiums, waste and vandalism
prevention, repairs, maintenance, improvement, management, foreclosure,
attorneys' fees, and other similar expenses, including any interest or penalty
thereon, incurred by Buyer.
SECTION 3.11. OTHER AUTHORIZED ACTS. If, from time to time, any of the
loans covered under this Agreement are endorsed or insured, or the obligations
thereunder are further secured by other collateral, then it is agreed that
Seller shall (and that Seller is authorized to appoint Servicer as its agent),
act for Buyer. Upon Buyer's written consent, Seller is authorized to release
collateral security other than the real property described in the security
instrument, to waive or collect special fees or charges, and to agree to
substitution of personal liability, or to release persons secondarily liable.
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ARTICLE IV.
TRANSFERABILITY AND SALE TO THIRD PARTIES
SECTION 4.01. AUTHORITY TO TRANSFER LOANS. Buyer may sell or transfer
its ownership interests in loans subject to this Agreement to third parties.
SECTION 4.02. RIGHTS OF THIRD PARTIES ON RESALE. In the event Buyer or
any successor or assignee of Buyer resells to a third party or parties all or a
portion of its ownership interest in any loan(s), such resale may be evidenced
by a new Loan Certificate(s), which shall be issued by Buyer or its successor or
assignee in the same form as the Loan Certificate attached hereto and which
shall set forth the interest in the underlying loans being resold. All reselling
parties to such resale transactions may notify Seller, Servicer and Guarantor of
such resale by written instructions identifying the interest in the underlying
loan(s) being resold and the number of the Loan Certificates representing such
resold interests. Upon receipt of any such instructions, Seller will be
responsible for promptly causing Servicer to make notations in the books and
records to reflect the change ownership interests resulting from such resale and
segregate such third party's (or parties') portion of the amount of principal
and interest collected and causing monthly remittances and reports to be made to
the respective owners of such interests in a manner consistent with the
ownership interest then outstanding and the provisions of this Agreement,
subject to the provisions of Section 3.08; provided, however, that if Seller or
Servicer receives such a notification less than five (5) days before a
Remittance Date (as defined in Section 3.02(a)), Servicer's duties to remit and
report as required by this section shall begin with the next succeeding
Remittance Date.
Notwithstanding the foregoing, if such a third party is buying a whole loan(s),
it reserves the right to transfer servicing to any other person or entity. In
that event, Servicer shall, as soon as practicable, but in any event within
thirty (30) days, transfer the servicing of such loan, as directed by such third
party, together the copies of the note, deed of trust and title policy and a
statement of each such loan's current status as of the time of sale.
ARTICLE V.
INSOLVENCY (OF SELLER OR SERVICER)
AND BREACH OF CONTRACT
SECTION 5.01. TRANSFER OF SERVICING: TRIGGERING EVENTS. In the event of
any of the following (the occurrence of any of which Seller or Servicer
covenants to promptly notify Buyer of): (1) the insolvency of Servicer; (2) the
filing by or against Seller or Servicer of a petition under any provision of
bankruptcy law, or of an assignment for the benefit of creditors; (3) the
appointment by any public or supervisory authority of any person or firm in
charge of Seller or Servicer or the assets of either; (4) a material breach by
Seller or Servicer of any covenant or agreement herein or in any Loan
Certificate, except for the breach described in Section 5.02; (5) the
involuntary sale of any loans covered by this Agreement; or (6) the issuance by
an appropriate public monitoring or supervisory authority of a cease and desist
order or its equivalent against Seller or Servicer or any of their directors
and
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officers which, in Buyer's reasonable opinion, would materially affect the
ability of Seller or Servicer to service the loans as required by this
Agreement, it is agreed that Buyer, or its successor or assignee shall
automatically succeed to all rights, titles, status, and responsibilities which
Seller or Servicer may have regarding the holding and servicing of said loans
and advances. Buyer, or its successor or assignee, shall have the option to
designate itself or any person or firm in its discretion to exercise such powers
in a manner consistent with the respective interests of all owners hereunder as
such interests may appear. In such event, said loans and all records thereof
shall be delivered to Buyer, its successor, assignee or its designee or the
successor Servicer, as the case may be, together with necessary or proper
assignments, transfers, and documents of authority. In such event, Buyer or its
successor or assignee shall assume the duties of Servicer and Guarantor shall
have the same rights to notification under Section 3.09 hereof and to approval
under Section 3.11 hereof as are granted to Buyer pursuant to those sections.
SECTION 5.02. RIGHT TO CURE BREACH OF WARRANTY. In the event of a
breach of the warranty set forth in Section 1.02(f)(2), Seller shall have ten
(10) days to cure such breach after written notification is sent in accordance
with Section 6.05 to Seller by Buyer. In the event Seller has not cured such
breach to Buyer's satisfaction within such time frame, Seller shall repurchase
such loan(s) in accordance with Section 6.01(b).
SECTION 5.03 RIGHT OF BUYER TO CAUSE SERVICER TO BE REMOVED. If, in
Buyer's reasonable discretion, Buyer believes that Servicer has not performed
each of its obligations in accordance with the provisions of this Agreement, or
has charged excessive fees in connection with the servicing of the loans, Buyer
shall provide thirty (30) days written notice of such act, or failure to act, to
Seller. Seller and Servicer shall have a period of thirty (30) days to cure such
default(s) to the reasonable satisfaction of Buyer. If such default(s) have not
been so cured, Buyer shall have the immediate right to cause the servicing of
the loans to be transferred to another servicer of Buyer's selection. In that
event, Seller and Servicer shall fully cooperate with Buyer to cause the smooth
and timely transition of the servicing of the loans. In such event, Buyer or its
successor or assignee shall assume the duties of Servicer and Guarantor shall
have the same rights to notification under Section 3.09 hereof and to approval
under Section 3.11 hereof as are granted to Buyer pursuant to those sections.
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ARTICLE VI.
MISCELLANEOUS PROVISIONS
SECTION 6.01. REPURCHASE OF LOANS.
(a) MISSTATEMENT OF MATERIAL FACT. Seller agrees, upon Buyer's
written request, to repurchase Buyer's interest in any pertinent loan(s), if any
misstatement of material fact, intentional or otherwise which would materially
affect the value of the underlying collateral or the collectability of any loan,
by Seller or loan debtor(s), is disclosed by actual inspection by Buyer or its
representative, or otherwise. The repurchase price shall be for an amount equal
to the then unpaid balance of such loan(s), plus any accrued interest on such
unpaid balance, plus any costs or expenses incurred by Buyer in connection with
such loan(s). Seller shall repurchase such loan(s) within 15 days from the date
of Seller's receipt of Buyer's written repurchase request.
(b) BREACH OF REPRESENTATIONS, WARRANTIES OR COVENANT(S).
Subject to Section 5.02 of this Agreement, if Seller or Servicer breaches any
representation, warranty or covenant made in this Agreement regarding any loan
which Buyer has purchased, Seller shall repurchase such loan(s) within fifteen
(15) days from receipt of Buyer's written request for such repurchase. The
purchase price shall be for an amount equal to the then unpaid balance of such
loan(s), plus any accrued interest on such unpaid balance, plus any costs or
expenses incurred by Buyer in connection with such loan(s).
SECTION 6.02. EFFECT OF ARTICLE AND SECTION HEADINGS/ENTIRE AGREEMENT.
The Article and Section headings herein are for convenience only and shall not
affect the construction of this Agreement. This Agreement contains the entire
agreement between the parties hereto and cannot be modified in any respect
except by an agreement in writing.
SECTION 6.03 COUNTERPARTS. This Agreement may be executed
simultaneously or in counterparts, each of which shall be deemed an original,
but all of which taken together shall constitute one Agreement.
SECTION 6.04. SEVERABILITY. If any provision of this Agreement is held
to be invalid, the legality and enforceability of all remaining provisions shall
not in any way be affected or impaired, and this Agreement shall be interpreted
as if such invalid provision was not contained herein.
SECTION 6.05. NOTICE. Unless otherwise specified herein, any written
notice required to be given pursuant to this Agreement shall be sent by
first-class mail, personal delivery or facsimile transmission with confirmation
of receipt and shall be sent to the principal business office of Seller, Buyer
or Servicer at the following address:
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If to Buyer: California Thrift & Loan, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
If to Seller: PacificAmerica Lending Inc.
00000 Xxxxxxx Xxxx.
Xxxxxxxx Xxxxx, XX 00000-0000
Attention: Xx. Xxxx X. Xxxxxxx
If to Servicer: Pacific Thrift and Loan Company
00000 Xxxxxxx Xxxx.
Xxxxxxxx Xxxxx, XX 00000-0000
Attention: Xx. Xxxxx Xxxxxxxx
If to Guarantor: PacificAmerica Money Center, Inc.
00000 Xxxxxxx Xxxx.
Xxxxxxxx Xxxxx, XX 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxx
Notice shall be deemed to have been given as of the date such notice was
deposited in the United States mail, postage prepaid.
SECTION 6.06. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 6.07. ATTORNEYS' FEES. In any dispute between the parties,
whether or not resulting in litigation, the prevailing party shall be entitled
to recover from the other party reasonable costs, including, without limitation,
reasonable attorneys' fees. "Prevailing party" shall include, without
limitation, a party who dismisses an action for recovery in exchange for sums
allegedly due, performance for covenants allegedly breached or considerations
substantially equal to the relief sought in the action or which receives, in
connection with any dispute, performance from the other party substantially
equivalent to any of these.
SECTION 6.08. SELLER'S, SERVICER'S AND GUARANTOR'S BOARD OF DIRECTORS
TO CONSENT TO AGREEMENT. As a condition precedent to this Agreement, the Board
of Directors of each of Seller, Servicer and Guarantor shall approve the terms
of this Agreement, and the transaction contemplated hereby. Such action shall be
reflected in the meeting minutes of each such Board of Directors. Such
resolutions shall be attached hereto as Exhibit "C," and will be incorporated
herein by this reference. Failure by any party to provide such a written board
resolution shall cause this Agreement to be null and void at inception.
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SECTION 6.09. SELLER, SERVICER AND GUARANTOR COVENANTS RE ABILITY TO
PERFORM. Seller, Servicer and Guarantor hereby represent and warrant that there
are no agreements which affect, or could potentially affect, Buyer in connection
with the transaction contemplated by this Agreement. Seller, Servicer and
Guarantor (as applicable), hereby covenant to notify Buyer immediately of any
proposed modification, revision, amendment, restatement or supplement to the
Servicing Agreement and to provide Buyer with a copy of any new agreement within
five (5) business days of Seller's, Servicer's or Guarantor's execution of same.
SECTION 6.10 AUTHORIZED SIGNATURES. Any individual signing this
Agreement on behalf of an entity represents and warrants that he has full
authority to do so and that no person or entity other than such individual is
required to execute this Agreement in order to give it legal effect.
IN WITNESS WHEREOF, each party has caused its corporate seal to be affixed
hereto and this instrument to be signed in its corporate name on its behalf by
its proper officials duly authorized.
SELLER: BUYER:
PACIFICAMERICA LENDING, INC. CALIFORNIA THRIFT & LOAN, INC.
by: /s/ XXXX X. XXXXXXX by: /s/ XXXXXXX X. XXXXXXXX
--------------------------- ----------------------------
Xxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxx
President and CEO President
Date: January 14, 1997 Date: January 14, 1997
------------------------ -------------------------
SERVICER: GUARANTOR:
PACIFIC THRIFT AND LOAN PACIFICAMERICA MONEY CENTER, INC.
by: /s/ XXXXXXX X. XXXXX by: /s/ XXXX X. XXXXXXX
--------------------------- ----------------------------
Xxxxxxx X. Xxxxx Xxxx X. Xxxxxxx
President President and CEO
Date: January 14, 1997 Date: January 14, 1997
------------------------ -------------------------
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EXHIBIT "A"
LOAN CERTIFICATE
TO:______________________________________________________, Buyer
THIS CERTIFIES THAT THE UNDERSIGNED SELLER has received from the undersigned
Buyer the purchase price in the principal sum of $ ___________________. Seller
sells, conveys, assigns, transfers, and issues to Buyer under and subject to,
the Guaranteed Loan Sale and Servicing Agreement ("Agreement") dated__________,
19__, between Seller, Buyer, Servicer and Guarantor undivided ownership
interests in each of the loans or portions of loans described with
particularity, (including, without limitation, each such loan's remaining term,
interest rate, lien position and loan-to-value ratio) on the list attached
hereto and incorporated hereby into this Loan Certificate.
The total outstanding unpaid principal balance of said loans as of this date is
$______________.
It is agreed that Buyer shall receive a yield equal to the current interest rate
of each note, the unpaid principal balance from time to time as specified in
Sections 3.02 and 3.03 of the Agreement, plus the amount of any interest
collected pursuant to any increase in the interest rate on any of said loans.
Buyer's yield shall begin to accrue as of the date Buyer pays the purchase price
to Seller under the Agreement.
The rights and obligations of the parties to this Loan Certificate are governed
by the above-described Agreement, which is fully incorporated herein by
reference.
SELLER: BUYER:
PACIFICAMERICA LENDING, INC. CALIFORNIA THRIFT & LOAN, INC.
by: by:
--------------------------- ----------------------------
Xxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxx
President and CEO President
Date: Date:
------------------------ -------------------------
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