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EXHIBIT 6(j)
RESIDENTIAL MORTGAGE SERVICES
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of Texas
October 14, 1998
Austin Funding Corporation
000 Xxxxxxxx Xxxxxx, Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxx X. XxXxxxxx
Mortgages Purchase Agreement
Dear Xx. XxXxxxxx:
OVERVIEW
Section 1. WAREHOUSE FACILITY. HSA Residential Mortgage Services of
Texas, Inc. ("RMST") has established a mortgage gestation facility with various
financial institutions pursuant to which the institutions, at the request of
RMST, will purchase certain mortgage loans which are originated to finance the
purchase or re-financing of owner-occupied and investor owned, 1-4 family
residential dwellings and the land on which they are situated.
Section 2. CERTAIN TERMS. We are pleased to advise you that RMST has
approved the participation by the Company in the Warehouse Facility on the terms
set forth in this agreement (as it may from time to time be supplemented,
amended or restated, this "Agreement"). The following are certain terms of the
Company's participation. (See Section 2(a) for additional defined terms.)
COMPANY Austin Funding Corporation
KEY PRINCIPALS Xxxxx X. XxXxxxxx, Xxxxx X. Xxxxxxxx & X.X. "Xxxx" Xxxxx,
Jr.
PURCHASE LIMIT Two Million Dollars, ($2,000,000.00)
SECOND LIEN SUB-LIMIT N/A
AGENCY RATE N/A
NON-AGENCY RATE Prime + 2%
DEFAULT RATE Prime + 3 (Non-Agency Rate)
LOAN SET UP FEE Fifty Dollars; $50.
BULK PURCHASE SUB-LIMIT Two Million Dollars, ($2,000,000.00)
BULK MORTGAGE TAKEOUT Two Hundred Thousand ($200,000.00) Certificate of Deposit
PROTECTION AMOUNT
(a) CERTAIN DEFINITIONS. The following terms shall have the meaning set
forth below in this Agreement:
(b) AFFECTED MORTGAGE. The term "AFFECTED MORTGAGE" is defined in
Section 22 and Section 25.
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(c) AGENCY MORTGAGE. An "AGENCY MORTGAGE" is a Mortgage that is
eligible for purchase by the Federal Home Loan Mortgage Association, the Federal
National Mortgage Corporation or the Government National Mortgage Association.
(d) AGENT. The person acting at the time as administrative agent and
collateral agent for the Warehouse Purchasers is referred to as the "AGENT."
All references to the Agent are to the Agent in its capacity as administrative
agent and collateral agent for the Warehouse Purchasers and not in its own
capacity or for its own account. The Agent currently is Chase Bank of Texas,
National Association. RMST will promptly advise the Company of any successor
Agent.
(e) APPLICABLE REPURCHASE AMOUNT. The term "APPLICABLE REPURCHASE
AMOUNT" means the payment to the Agent in good, collected Bank funds of the sum
of (y) an amount equal to the Minimum Net Share which would have been earned in
respect of that Mortgage if its purchase by the Investor provided for in the
Commitment represented by the Company to have most recently covered it (whether
or not it was actually so covered) were completed in strict accordance with its
terms and on its stated expiration date plus (z) (without duplication of any
payment) an amount equal to any increase in the Minimum Net Share due to the
passage of time or to RMST's or the Agent's having provided additional
custodial-type services since that expiration date.
(f) BANK PRIME. The "BANK PRIME" is the prime rate as announced by
Chase Bank of Texas, National Association from time to time. This rate is a
reference rate and does not necessarily represent its best or lowest rate and is
not necessarily a favored rate. Bank Prime shall be adjusted as of the effective
date of each change in the prime rate announced by Chase Bank of Texas, National
Association.
(g) BANK. The term "BANK" is defined in Section 18.
(h) BANKING BUSINESS DAY. The term "BANKING BUSINESS DAY" is defined in
the RMST Procedures.
(i) BULK MORTGAGE TAKEOUT PROTECTION ACCOUNT. The term "BULK MORTGAGE
TAKEOUT PROTECTION ACCOUNT" is defined in Section 32.
(j) BULK PURCHASE MORTGAGE TAKEOUT DATE. The term " BULK PURCHASE
MORTGAGE TAKEOUT DATE" is defined in Section 8.
(k) BULK PURCHASE MORTGAGE. A "BULK PURCHASE MORTGAGE" is an Eligible
Mortgage that meets RMST's criteria for funding without a Commitment.
(l) CLOSER. The term "CLOSER" is defined in Section 11.
(m) COMMITMENT. A "COMMITMENT" is a written commitment to purchase a
Mortgage as a whole loan obtained by the Company and approved in writing by
RMST, issued by a reputable investor or securities broker-dealer (the
"INVESTOR") acceptable to RMST and the Agent. In addition to any other criteria
established by RMST from time to time by notice given to the Company, each
Commitment shall be written, describe the types of Mortgages the Investor agrees
to purchase, state the settlement date, price (including any applicable
servicing release premium) and expiration date for the purchase, be (or be
endorsed to be) in favor of RMST and its assigns, be enforceable and be
irrevocable until a date shown on the Commitment.
(n) DEBTOR LAWS. The term "DEBTOR LAWS" is defined in Section 43.
(o) DEFAULT. The term "DEFAULT" is defined in Section 43.
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(p) DEFECTIVE MORTGAGE. A "DEFECTIVE MORTGAGE" is a Mortgage which has
been purchased by the Warehouse Purchasers but meets RMST's criteria for
Defective Mortgages which are attached as Appendix 7. RMST may change the
criteria by notice given to the Company.
(q) DOCUMENT FILE. The term "DOCUMENT FILE" is defined in Section 8.
(r) ELIGIBLE MORTGAGE. An "ELIGIBLE MORTGAGE" is Mortgage which meets
RMST's criteria for funding under the Warehouse Facility. RMST's current
criteria for Eligible Mortgages is attached as Appendix 8. RMST may change the
criteria by notice given to the Company.
(s) ENCLOSURES. The term "ENCLOSURES" is defined in Section 8.
(t) FAILURE DATE. The term "FAILURE DATE" is defined in Section 21.
(u) GUIDE. The term "GUIDE" is defined in Section 33.
(v) INCLUDES. Wherever the words "INCLUDING," "WHICH INCLUDES" or
any correlative appears in this Agreement, it shall be read to mean, "including
by way of example but not without limiting the generality of the subject or
concept referred to."
(w) INVESTOR. An "INVESTOR" is a person issuing a Commitment to the
Company or otherwise agreeing to purchase a Mortgage from the Warehouse
Purchasers.
(x) LOST COMMITMENT MORTGAGES. The term "LOST COMMITMENT MORTGAGES" is
defined in Section 19.
(y) MAKE WHOLE PAYMENT. The term "MAKE WHOLE PAYMENT" is defined in
Section 29.
(z) MINIMUM NET SHARE. The term "MINIMUM NET SHARE" is defined in
Section 16.
(aa) MORTGAGE DEFAULT DATE. The "MORTGAGE DEFAULT DATE" is defined in
Section 19, Section 21 and Section 23.
(bb) MORTGAGE PURCHASE COST. The term "MORTGAGE PURCHASE COST" is
defined in Section 16.
(cc) MORTGAGE. A "MORTGAGE" is a mortgage loan secured by residential
real property.
(dd) OFFER. The term "OFFER" is defined in Section 8.
(ee) PERIOD HELD. The term "PERIOD HELD" is defined in Section 16.
(ff) PROCEEDS ACCOUNT. The term "PROCEEDS ACCOUNT" is defined in
Section 18.
(gg) QUALIFIED SUBSTITUTE TAKEOUT. The term "QUALIFIED SUBSTITUTE
TAKEOUT" is defined in Section 19.
(hh) RMST ADVANCE. The term "RMST ADVANCE" is defined in Section 12.
(ii) RMST PROCEDURES. The "RMST PROCEDURES" are those procedures
promulgated by RMST from time to time specifying the times by which certain
actions are to be taken in connection with purchases under the Warehouse
Facility. The current RMST Procedures are attached as Appendix 2.
(jj) SALE PROCEEDS. The term "SALES PROCEEDS" is defined in Section 16.
(kk) SECOND LIEN MORTGAGE. A "SECOND LIEN MORTGAGE" is a Mortgage that
is secured by a second priority lien on the real property that secures it.
(ll) SETTLEMENT ACCOUNT. The term "SETTLEMENT ACCOUNT" is defined in
Section 18.
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(mm) SHORTFALL AMOUNT. The term "SHORTFALL AMOUNT" is defined in
Section 24.
(nn) SUBSTITUTE MORTGAGE. The term "SUBSTITUTE MORTGAGE" is defined in
Section 23.
(oo) WAREHOUSE FACILITY. The facility described in Section 1 as it may
be amended, supplemented, modified or replaced is referred to as the "WAREHOUSE
FACILITY."
(pp) WAREHOUSE PURCHASERS. The institutions purchasing Eligible
Mortgages under the Warehouse Facility from time to time are referred to
collectively as the "WAREHOUSE PURCHASERS," and individually as a" Warehouse
Purchaser."
(qq) VALUE REPLACEMENT PAYMENTS. The term "VALUE REPLACEMENT PAYMENTS"
is defined in Section 31.
(rr) YEAR 2000 COMPLIANT. The term "YEAR 2000 COMPLIANT" is defined in
Section 47(aa).
PURCHASE OF ELIGIBLE MORTGAGES
Section 3. REVOLVING PURCHASE FACILITY. Although the Company will offer
the Mortgages to RMST for purchase under the Warehouse Facility on a
case-by-case basis and RMST will evaluate each Mortgage to determine whether it
is an Eligible Mortgage, the Company and RMST mutually contemplate that this
will be a revolving purchase facility pursuant to which the Company will sell
Mortgages to the Warehouse Purchasers.
Section 4. NO OBLIGATION. THIS AGREEMENT DOES NOT OBLIGATE RMST TO
CAUSE THE WAREHOUSE PURCHASERS TO PURCHASE MORTGAGES FROM THE COMPANY. RMST, IN
ITS SOLE DISCRETION, MAY ELECT TO CAUSE THE WAREHOUSE PURCHASERS TO PURCHASE A
MORTGAGE FROM THE COMPANY OR MAY ELECT NOT TO CAUSE THEM TO PURCHASE THE
MORTGAGE.
Section 5. LIMITS. The outstanding balance of the aggregate purchase
prices paid to the Company by the Warehouse Purchasers for Eligible Mortgages
(including Second Lien Mortgages and Bulk Purchase Mortgages, if any) which have
not yet been sold to an Investor shall not exceed the Purchase Limit at any
time. The outstanding balance of the aggregate purchase prices paid to the
Company by the Warehouse Purchasers for Second Lien Mortgages which have not yet
been sold to an Investor shall not exceed the Second Lien Sub-Limit at any time.
The outstanding balance of the aggregate purchase prices paid to the Company by
the Warehouse Purchasers for Bulk Purchase Mortgages which have not yet been
sold to an Investor shall not exceed the Bulk Purchase Sub-Limit at any time.
RMST reserves the right to reduce the Purchase Limit, the Second Lien Sub-Limit
or Bulk Purchase Sub- Limit by giving sixty (60) days' written notice to the
Company specifying the new limit at any time and for any reason.
Section 6. PRIOR APPROVAL OF INVESTORS. Each Investor shall have been
approved by RMST and the Agent prior to the Offer of a Mortgage as to which the
Commitment applies. To be considered for approval by RMST, the Investor must, at
a minimum, meet the criteria set forth on Appendix 9. RMST may change the
minimum criteria for approval of an investor by notice given to the Company. The
approval of an Investor by RMST or the Agent shall not cause RMST or the Agent
to be a guarantor of the Investor's performance. Any dealings by the Company
with an Investor (whether or not approved by RMST or the Agent) shall be at the
sole risk of the Company.
Section 7. COMMITMENT. Each Eligible Mortgage acquired from the Company
under the Warehouse Facility except Bulk Purchase Mortgages shall have a
Commitment. The Company shall provide RMST a copy of the Commitment at the same
time the Company delivers to RMST the Document File. If RMST is dissatisfied, in
its sole discretion, with either the form or terms of any Commitment, it shall
have no obligation to cause the Warehouse Purchasers to acquire any Mortgage
covered by that Commitment.
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Section 8. OFFER. If the Company wishes to sell a Mortgage through RMST
to the Warehouse Purchasers under this Agreement, the Company shall submit a
written Offer to Sell Mortgages in the form attached as Appendix 1 to this
Agreement (the "OFFER") with all enclosures required by Appendix 4 to this
Agreement (the "ENCLOSURES"), and with all blocks and blanks in the Offer and
the Enclosures properly completed (the Offer and Enclosures together are called
the "DOCUMENT FILE"). Appendix 1 and Appendix 4 are subject to modification by
RMST by notice given to the Company. If the Mortgage is requested to be a Bulk
Purchase Mortgage, the Offer shall state the date by which an Investor will
purchase the Mortgage (the "BULK PURCHASE MORTGAGE TAKEOUT DATE"). The purchase
price for an Eligible Mortgage shall be the least of (i) the price the Investor
has promised to pay for the Mortgage pursuant to the Commitment (this factor is
inapplicable to a Bulk Purchase Mortgage); (ii) the face principal amount of the
promissory note evidencing the Mortgage; or (iii) the unpaid principal balance
of the promissory note. Upon acceptance of the Offer, any Commitment referred to
in the Offer shall be deemed assigned and transferred to RMST and its assigns
without any further act by the Company.
Section 9. ACCEPTANCE OR REJECTION. If RMST elects to accept an Offer,
then if the Mortgage is an Eligible Mortgage and the Company is in compliance
with all the terms of this Agreement, RMST will cause the Warehouse Purchasers
to pay the purchase price for the Eligible Mortgages stated in the Offer and,
upon that acceptance, to cause the Warehouse Purchasers to become the owner of
the Eligible Mortgages. RMST has no obligation to accept any Offer.
Section 10. ENDORSEMENT AND CLOSING INSTRUCTIONS. The Company shall
endorse in blank the promissory note to evidence each Eligible Mortgage which is
the subject of an accepted Offer when, or before, the note is executed by its
maker. The Company hereby declares its intent that each such endorsement be
effective as to each such note from such note's inception, regardless of when
the endorsement is actually made. The Company shall give the Closer of each
Eligible Mortgage the written instructions for the closing of the transaction
set forth on Appendix 5, and will not give any rescinding, inconsistent or
conflicting instructions. Appendix 5 is subject to modification by RMST by
notice given to the Company. The Company or the Closer shall deliver to RMST the
Eligible Mortgage and all of its related documentation (including for each
Eligible Mortgage the documents listed on Appendix 4) to be physically held by
the Agent until the Mortgages are either (i) shipped by the Agent to an Investor
or its document custodian for purchase or (ii) the Company repurchases the
Mortgage in accordance with its obligations stated in Section 19, Section 21 or
Section 23.
Section 11. PAYMENT BY WAREHOUSE PURCHASERS. The purchase price for
Eligible Mortgages shall be paid at the request of RMST by the Agent (i) to the
Company, in the case of Eligible Mortgages purchased after the Company has
closed them; or (ii) in all other instances, by providing money for the original
funding of the Mortgages directly to the title company or other person or entity
handling the closing (the "CLOSER"), net of origination, discount points, and
any other fees and other prepaid items the Company may stipulate. The payment
will be made at the time and in the manner specified in the RMST Procedures.
Section 12. ADVANCES BY RMST. In its sole discretion, RMST may advance
funds to the Company, in the case of Eligible Mortgages purchased after the
Company has closed them, or to the Closer, in all other instances, to pay
amounts relating to the origination of a Mortgage. These funds so advanced (an
"RMST ADVANCE") are a loan from RMST to the Company, are secured by the security
interest created by Section 38, bear interest at the Default Rate and are due on
demand unless earlier repaid in connection with the sale of the Mortgage to
which the RMST Advance relates.
SALE TO INVESTORS
Section 13. SALE TO INVESTORS. The Company will take all steps
necessary to cause:
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(a) all Eligible Mortgages and their related mortgage files to
be correctly closed, funded, documented and completed;
(b) the sale as whole loans of all Eligible Mortgages to be
timely completed in accordance with any related Commitment;
(c) the entire sale price due from Eligible Mortgages sold to
be transferred by Fed funds wire directly to the account of the Agent
at Chase Bank of Texas, National Association or at a bank designated by
RMST.
Section 14. INSTRUCTION TO INVESTORS. Promptly after any Eligible
Mortgages which is subject to a commitment is purchased by the Warehouse
Purchasers, the Company shall: (i) direct the Investor which issued the
Commitment to pay the entire amount of the purchase consideration for those
Eligible Mortgages directly to the Agent and to confirm receipt of that
direction directly with the Agent, with a copy to RMST; (ii) not issue any
conflicting instructions to the Investors; and (iii) not cause or permit any
cash proceeds of any of those Mortgages to be issued to, registered in the name
of, or paid to, anyone other than the Agent.
Section 15. SHIPMENT TO INVESTORS. Mortgages shipped to Investors for
purchase shall be shipped under letters substantially in the form of letter
attached as Appendix 10, in the case of Mortgages sold by the Agent, or Appendix
11, in the case of Mortgages sold by RMST. The letters may be revised by RMST by
notice given to the Company.
PAYMENT TO RMST AND DISTRIBUTION TO COMPANY
Section 16. MINIMUM NET SHARE. The Agent will retain, for the benefit
of the Warehouse Purchasers and RMST--or, in the case of Mortgages sold by RMST,
RMST will retain for its benefit--from the sale proceeds (the "SALE PROCEEDS")
received for and allocable to each Mortgage sold to an Investor hereunder an
amount (the "MINIMUM NET SHARE") equal to the sum of:
(i) the purchase price paid by the Warehouse Purchasers for the
Eligible Mortgage reduced by any amounts paid to the Warehouse
Purchasers by the obligor of the Mortgage as principal or interest on
the Mortgage and also reduced by any Value Replacement Payments made
with respect to the Mortgage (the "MORTGAGE PURCHASE COST");
plus (ii) a return on the daily balance of the Mortgage Purchase Cost which
accrues daily during the period (the "PERIOD HELD") consisting of the
actual number of days from (and including) the date on which the
Warehouse Purchasers funded the acquisition of the Mortgage to (but
excluding) the date on which the Agent (or RMST) receives the Sale
Proceeds for the Mortgage, at a per annum rate equal to the Agency Rate
if the Mortgage is an Agency Mortgage or equal to the Non-Agency Rate
if the Mortgage is not an Agency Mortgage. After the Mortgage Default
Date the per annum rate as to any Affected Mortgage shall be the
greater of (y) the Default Rate or (z) the annual interest rate stated
on the promissory note related to the Affected Mortgage. After the
occurrence of a Default, the per annum rate as to all Mortgages shall
be the Default Rate. The calculations based on the per annum rates
shall be made on a daily basis during the Period Held and on the basis
of a 360-day year;
plus (iii) any RMST Advance with respect to that Mortgage together with
interest on the RMST Advance at the Default Rate from the date on which
the RMST Advance was made to (but excluding) the date on which the
Agent (or RMST) receives the Sales Proceeds for the Mortgage;
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plus (iv) the Loan Set Up Fee for the Mortgage.
Section 17. INTEREST COLLECTED AND REMITTED. Interest on an Eligible
Mortgage collected by the Company and remitted to the Agent shall be treated as
part of the proceeds received for the sale of the Mortgage to the Investor for
purposes of determining the Minimum Net Share.
Section 18. BALANCE OF SALES PROCEEDS. Provided that the Company is not
then in default of any of its obligations under this Agreement, RMST shall
deposit the balance of the Sales Proceeds remaining after deducting the Minimum
Net Share in a demand deposit account maintained at Chase Bank of Texas,
National Association (in its capacity as a depository institution, the "BANK")
in the name of RMST for the benefit of the Company (the "PROCEEDS ACCOUNT"), but
as to which the Company shall have no rights of withdrawal. As long as the
Company is not then in default of any of its obligations under this Agreement,
RMST shall transfer the collected funds in the Proceeds Account to a demand
deposit account (the "SETTLEMENT ACCOUNT") maintained at the Bank in the name of
the Company and under the exclusive control of the Company. If, there is a
Default, then any amounts then remaining in the Proceeds Account shall be cash
collateral securing any rights RMST shall have pursuant to this Agreement and
the Company shall not withdraw any funds from the Settlement Account without the
prior consent of RMST.
FAILURE OF COMMITMENT
Section 19. LOSS OF COMMITMENT. If for any reason, except the willful
or grossly negligent act or omission of RMST, the Agent or the Warehouse
Purchasers, any Commitment in respect of any Eligible Mortgage is canceled,
paired off or revoked by any means, or if the Investor shall at any time have a
defense to performance of its obligations under the Commitment either on account
of offsetting obligations against the Company or for any other reason, or the
Commitment is terminated for any reason (other than expiration by the passage of
time) (collectively, these Mortgages are referred to as the "LOST COMMITMENT
MORTGAGES"), then, on or before the date (the "MORTGAGE DEFAULT DATE" for that
Mortgage) that is ten (10) days after the date on which the Commitment was
terminated or cancelled or otherwise lost, the Company shall either (i) obtain
and furnish to RMST for the Warehouse Purchasers a replacement Commitment
acceptable (and issued by an Investor acceptable) to RMST and the Agent and
having characteristics all of which can be satisfied by the Eligible Mortgage
and providing for the purchase of the Mortgage for no less than the Minimum Net
Share for that Mortgage (a "QUALIFIED SUBSTITUTE TAKEOUT"), or (ii) repurchase
the Lost Commitment Mortgage from the Warehouse Purchasers (or RMST if RMST has
purchased the Mortgage) for the Applicable Repurchase Amount.
Section 20. ASSISTANCE BY RMST. RMST will exert reasonable efforts to
assist the Company to obtain a Qualified Substitute Takeout, but RMST shall do
so only as an accommodation to the Company. RMST shall have no additional
obligation to the Company as a result of its efforts and no liability to the
Company for the results (or failure) of its efforts.
Section 21. FAILURE TO SELL. If for any reason, except the willful or
grossly negligent act or omission of RMST, the Agent or the Warehouse
Purchasers, the Company has not caused any Eligible Mortgage to be sold to an
Investor on or before the date (the "FAILURE DATE") that is the earlier of
(a) sixty (60) days after the Warehouse Purchasers purchased
the Eligible Mortgage or
(b) (i) in the case of Bulk Purchase Mortgages, the Bulk
Mortgage Takeout Date or, (ii) as to all other Eligible Mortgages, the
date the Commitment which relates to that Eligible Mortgage expires,
then, on or before the date (the "MORTGAGE DEFAULT DATE" for that Mortgage)
that is three (3) Banking Business Days after the Failure Date, the Company
shall repurchase the Eligible Mortgages from the
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Warehouse Purchasers (or RMST if RMST has purchased the Mortgage) for the
Applicable Repurchase Amount.
Section 22. EFFECT OF COMPANY'S FAILURE. If by the Mortgage Default
Date the Company has not repurchased the Lost Commitment Mortgage or obtained a
Qualified Substitute Takeout in the case of a failure under Section 19, or
repurchased the Mortgage in the case of a failure under Section 21, then the
Company shall be in default of its obligations under this Agreement with regard
to that Mortgage (which shall be "AFFECTED MORTGAGE" after that failure) and
shall have committed a breach of this Agreement.
DEFECTIVE MORTGAGES
Section 23. DEFECTIVE MORTGAGES. If RMST determines that any Eligible
Mortgage is a Defective Mortgage the Company shall wholly cure (to the
satisfaction of RMST and the Agent) such defects in the Mortgage upon notice
from RMST. If the Company fails to wholly cure such defects by the day which is
three (3) Banking Business Days after the notice to cure from RMST (the
"MORTGAGE DEFAULT DATE" for that Mortgage), then, by notice given to the
Company, RMST may require that by the close of the next Banking Business Day
following receipt of RMST's notice, the Company shall either (i) repurchase the
Defective Mortgage from the Warehouse Purchasers (or RMST if RMST has purchased
the Mortgage) for the Applicable Repurchase Amount, or (ii) substitute a new
Eligible Mortgage (the "SUBSTITUTE MORTGAGE"), which is in all respects
acceptable to RSMT and the Agent in their reasonable discretion.
Section 24. PAYMENT OF SHORTFALL AMOUNT. If the aggregate principal
balances of all Substitute Mortgages are less than the aggregate principal
balances of all Defective Mortgages being replaced, then the Company shall remit
with such Substitute Mortgages an amount equal to the difference (the "SHORTFALL
AMOUNT") between the aggregate principal balance of the Substitute Mortgages
and the Defective Mortgages, plus any fees that would have been earned under
this Agreement on the aggregate principal balance difference calculated as if,
on the date of such remittance, the Company were repurchasing a Mortgage in
principal amount equal to the Shortfall Amount and covered by the same
Commitment as the Defective Mortgages which were only partially replaced, with
the Period Held applicable to such hypothetical Mortgage being repurchased
ending on the date of such remittance. Absent manifest error, or if the Company
does not object in writing to RMST's calculation of a Shortfall Amount and fees
on or before thirty (30) days after RMST gives the Company written notice of
RMST's calculated value of that Shortfall Amount and fees, RMST's calculation of
the Shortfall Amount and fees shall be conclusive and binding.
Section 25. EFFECT OF COMPANY'S FAILURE. If by the close of the next
Banking Business Day after notice under Section 23 the Company has not delivered
a Substitute Mortgage or repurchased the Defective Mortgage, then the Company
shall be in default of its obligations under this Agreement with regard to that
Mortgage (which shall be "AFFECTED MORTGAGE" after that failure) and shall have
committed a breach of this Agreement.
REMEDIES--AFFECTED MORTGAGES
Section 26. EFFECT OF BREACH. Upon the occurrence of a breach under
Section 22 or Section 25, RMST, in addition to its rights otherwise provided for
under this Agreement, may elect then, or at any time thereafter, to: (i)
terminate the Company's rights and obligations to service the Affected Mortgage;
(ii) obtain a new Commitment from a third party to purchase the Affected
Mortgage; (iii) cause the Warehouse Purchasers to sell--or, if RMST has
purchased the Affected Mortgage, sell--the Affected Mortgage to a third party;
(iv) terminate this Agreement by giving notice to the Company in which event the
provisions of Section 44 shall apply; or (v) do any combination of those things.
Section 27. EFFECT ON VALUE REPLACEMENT OBLIGATIONS. The Company's
breach of this Agreement under Section 22 or Section 25 shall not terminate or
xxxxx the Company's value replacement
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obligations to RMST with regard to the Affected Mortgage, as provided for in
Section 31 of this Agreement, and the value replacement obligations to RMST
with regard to the Affected Mortgage shall only terminate upon (i) the sale of
the Affected Mortgage to a third party, or (ii) the repurchase by the Company of
the Affected Mortgage from the Warehouse Purchasers (or RMST if RMST has
purchased the Mortgage) for the Applicable Repurchase Amount.
Section 28. SALE TO THIRD PARTY. If RMST causes the Warehouse
Purchasers to sell any Affected Mortgage to a third party as permitted under
Section 26, then, in the absence of manifest error, the purchase price obtained
by the Warehouse Purchasers shall be conclusively presumed to be the fair market
value of that Affected Mortgage (which may or may not be the same as the quoted
market value for comparable mortgages as quoted on the quotation system which is
used for calculating the value replacement obligations to RMST as provided for
in Section 31).
Section 29. MAKE WHOLE PAYMENT. Upon the sale of any Affected Mortgage
to a third party, the Company shall promptly pay to the Agent an amount (the
"MAKE WHOLE PAYMENT") equal to the Minimum Net Share as of the sale date, less
the net proceeds realized by the Warehouse Purchasers upon the sale of the
Affected Mortgage. RMST may offset any value replacement previously paid by the
Company with respect to the to the Affected Mortgage against the Company's
obligation to pay the Make Whole Payment, and if there is any excess of value
replacement related to the Affected Mortgage after applying the value
replacement to the Make Whole Payment, RMST will refund such excess to the
Company, provided that the Company is not then in default in performance of any
of its obligations under this Agreement in any other respect. However,
application of the value replacement related to the Affected Mortgage to the
Make Whole Payment shall in no way limit or waive any rights RMST may possess
under or diminish any obligations of the Company with respect to, any provision
of the Agreement for any Mortgage, including the Affected Mortgage.
VALUE PROTECTION
Section 30. RELIANCE BY RMST. The Company acknowledges that when
arranging for the purchase of Mortgages, RMST will rely on the Company's
representations that: (i) the Commitment obtained by the Company in respect of
each Offer (other than an Offer relating to a Bulk Purchase Mortgage) will be
the source for RMST and the Warehouse Purchasers to recover the Minimum Net
Share in respect of the Mortgage and the Mortgage will be purchased by the
Investor no later than the date prescribed in the Commitment; and (ii) each Bulk
Purchase Mortgage will be acquired by Investors by its Bulk Purchase Mortgage
Takeout Date for an amount at least sufficient to permit RMST and the Warehouse
Purchasers to recover the Minimum Net Share with respect to the Mortgage.
Section 31. VALUE REPLACEMENT PAYMENT. If the Warehouse Purchasers or
RMST hold any Bulk Purchase Mortgages or if there are any Lost Commitment
Mortgages which have not been sold to Investors or repurchased by the Company,
then RMST may require the Company to make payments to the Warehouse
Purchasers--or to RMST if RMST holds the Bulk Purchase Mortgages or Lost
Commitment Mortgages--to reduce the purchase price for the Lost Commitment
Mortgages and the Bulk Purchase Mortgages ("VALUE REPLACEMENT PAYMENTS"). The
amount of the Value Replacement Payment on any day for a Bulk Purchase Mortgage
or Lost Commitment Mortgage is the amount, if greater than zero, sufficient to
cause (i) the Minimum Net Share for that day for that Mortgage based on the
purchase price paid by the Warehouse Purchasers for that Mortgage (reduced by
this and any prior Value Replacement Payment), to be no greater than (ii) the
value on that day of mortgage-backed securities based on and backed by mortgage
loans comparable to the Mortgage. In determining the Value Replacement Payment,
RMST may use such reasonable averaging, allocation and attribution methods as it
shall elect, and absent manifest error, the market value quoted for any such
security as quoted on the quotation system to which RMST subscribes (or any
comparable system to which RMST may hereafter
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MORTGAGES PURCHASE AGREEMENT PAGE 9
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subscribe and RMST may elect to use for the purposes of determining the market
value of mortgage backed securities) shall be conclusive evidence of the market
value of such security. The Company shall pay the Value Replacement Payment to
RMST no later than the next Banking Business Day after RMST makes demand by
notice to the Company.
Section 32. BULK MORTGAGE TAKEOUT PROTECTION. The Bank shall maintain
the Bulk Mortgage Protection Amount on deposit in an account (the "BULK MORTGAGE
TAKEOUT PROTECTION ACCOUNT") in a bank designed by RMST. The Bulk Mortgage
Takeout Protection Account shall be an account in the name of RMST for the
benefit of the Company but as to which the Company shall have no rights of
Withdrawal. If there is a Default, any amounts remaining in the Bulk Mortgage
Takeout Protection Account shall be cash collateral securing any rights RMST
shall have pursuant to this Agreement.
SERVICING
Section 33. SERVICING AFTER PURCHASE. After the Eligible Mortgages are
purchased, the Company agrees to service and administer the Eligible Mortgages
for the benefit of the Warehouse Purchasers in accordance with prudent mortgage
loan servicing standards and procedures generally accepted in the mortgage
banking industry and in accordance with the servicing provisions of the
applicable GNMA, FNMA or FHLMC mortgage-backed securities seller/servicer guide
("GUIDE") for the account, however, of the Warehouse Purchasers instead of
GNMA, FNMA or FHLMC, provided that the Company shall at all times comply with
applicable law, FHA regulations and VA regulations and the requirements of any
private mortgage insurer so that the FHA insurance, VA guarantee or any other
applicable insurance or guaranty applicable to any Mortgage is not voided or
reduced.
Section 34. REMITTANCES. As long as the Warehouse Purchasers own a
Mortgage, the Company agrees to remit to the Agent by the fifth (5th) day
following the day the Company receives any principal and interest payments and
principal prepayments all such sums received for deposit to an account for the
benefit of the Warehouse Purchasers.
Section 35. ESCROW ACCOUNTS. All escrow amounts relating to all
Eligible Mortgages shall be maintained on deposit in an individual custodial
account at a bank designated by RMST until the Eligible Mortgage is sold to an
Investor.
Section 36. NO CHARGE FOR SERVICES. The Company's services under
Section 33 shall be provided without charge.
Section 37. TERMINATION OF SERVICING. If RMST terminates the Company's
rights and obligations to service a Mortgage, the Company shall promptly deliver
all files and papers related to that Mortgage to RMST. Any ancillary income
received by RMST related to the servicing of the Mortgage shall not be applied
to or reduce the Minimum Net Share for the Mortgage.
SECURITY
Section 38. SECURITY AGREEMENT. To secure performance of all of the
Company's obligations under this Agreement and under each Offer, the Company
hereby grants to RMST, for itself, the Agent and the Warehouse Purchasers, a
security interest in all of the Company's present and future right, title and
interest in and to: (i) the Company's share of Sale Proceeds, if any; (ii) each
unexpired Commitment; (iii) the Settlement Account; (iv) the Proceeds Account;
and (v) the Bulk Mortgage Takeout Protection Account. All such security
interests granted hereby shall be first and prior and shall continue in full
force and effect, notwithstanding any termination of this Agreement, until all
of the Company's obligations to RMST, the Agent and the Warehouse Purchasers
under this Agreement and every accepted Offer have been fully performed and
satisfied. RMST shall have all of the rights of a secured party under the laws
of
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MORTGAGES PURCHASE AGREEMENT PAGE 10
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the state where such collateral is located, and shall have the express right to
transfer any collateral into its own name, either before or after default.
Section 39. RIGHT OF OFFSET. RMST shall also have a right of offset
against the Proceeds Account for, and to secure, any and all sums due RMST, the
Agent or the Warehouse Purchasers under this Agreement.
Section 40. SUBROGATION TO RIGHTS UNDER COMMITMENT. The Company
recognizes that by virtue of the Warehouse Purchasers' ownership of the
Mortgages and RMST's rights under this Agreement, RMST, the Agent and the
Warehouse Purchasers have a valuable property right in the Commitment, and to
secure that right the Company shall permit RMST to subrogate to all rights the
Company may have in the Commitment if the Company fails to perform any of its
obligations under this Agreement.
Section 41. CONSTRUCTION AS FINANCING. Without limiting any of the
foregoing provisions, if for any reason any court of competent jurisdiction
shall construe the purchase by the Warehouse Purchasers of any Eligible
Mortgages to be a loan or extension of credit rather than the absolute and
unconditional sale to the Warehouse Purchasers which the Company and RMST
expressly hereby declare that they intend it to be, then the provisions of this
Agreement shall be construed and given effect so as to create and perfect in
RMST, for itself, the Agent and the Warehouse Purchasers, a first, prior and
continuous security interest in all of the Company's interests in each of the
affected Eligible Mortgages and all proceeds from (1) the earlier of (a) the
date the Warehouse Purchasers give value for the Eligible Mortgage or (b) the
date the Company acquires (or reacquires) an interest in the Eligible Mortgage
until (2) the earlier of (x) the sale of the Eligible Mortgage to an Investor
pursuant to the terms of this Agreement or (y) complete fulfillment of all of
the Company's obligations to RMST under this Agreement. The term "proceeds"
shall be construed to include each Commitment related to the Mortgage. In the
event of such a construction, the amount of all fees and realizations owed to,
earned by or payable to RMST or the Warehouse Purchasers for the transaction or
transactions so construed shall be absolutely limited to the maximum
non-usurious amount of interest allowed by whichever of applicable Texas (or
other applicable state law) or federal laws permit the higher amount of interest
to be contracted for, reserved, charged or received (as applicable to the
circumstance), it being the intention of the parties to comply with, and not to
evade, all usury and other applicable laws.
INDEMNITY
Section 42. INDEMNIFICATION OF RMST AND OTHERS. The Company agrees to
and does hereby indemnify and hold harmless RMST, the Agent and the Warehouse
Purchasers against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, cost, expenses and disbursements
of any kind or nature whatsoever, which may be imposed on, incurred by, or
assessed against RMST, the Agent or the Warehouse Purchasers in any way related
to, or arising out of any of the loan papers or any of the transactions
contemplated therein, to the extent that any of the same results directly or
indirectly from any claims made or actions, suits or proceedings commenced by or
on behalf of any person other than RMST, the Agent or the Warehouse Purchasers,
provided that RMST, the Agent and the Warehouse Purchasers shall not have the
right to be indemnified hereunder for their own fraud or negligence. The
indemnities contained in this section shall survive the termination of this
Agreement.
DEFAULT
Section 43. DEFAULT. The following shall be a Default under this
Agreement:
(a) as to any FNMA, FHLMC, GNMA or HUD programs for which the
Company has, at any time, represented to RMST that the Company was
eligible to participate, the Company loses its eligibility to
participate in that program;
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MORTGAGES PURCHASE AGREEMENT PAGE 11
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(b) the Company's participation in a take out program is
suspended by the Investor offering that program for a reason other than
termination of the program as a whole by the Investor;
(c) any one of the Key Principals ceases to be actively
involved in the management of the Company for any reason (including
death, disability or retirement) or the ceases to own an equity
interest in the Company;
(d) any equity interest in the Company is issued to any person
who is not a Key Principal;
(e) there is, in the reasonable judgement of RMST, a material
adverse change in the Company's financial condition, the prospects for
the Company's timely and complete performance of its obligations under
this Agreement or the prospects for the Company's continuing in
business as a going concern;
(f) the Agent determines that the Company is no longer
eligible to participate in the Warehouse Facility;
(g) the fair value of the Company's assets do not exceed its
liabilities, or the Company does not have sufficient cash flow to
enable it to pay its debts as they mature or the Company has an
unreasonably small capital to conduct its business;
(h) the Company voluntarily seeks, consents to, or acquiesces
in the benefit of any liquidation, conservatorship, bankruptcy,
moratorium, arrangement, receivership, insolvency, reorganization or
similar laws from time to time in effect and affecting creditors'
rights generally (collectively "DEBTOR LAWS") or becomes a party to, or
is made the subject of, any proceeding provided for by any Debtor Law
(other than as a creditor or claimant) that could stay the enforcement
of RMST's rights or the rights of the Warehouse Purchasers;
(i) the Company is not, in the reasonable judgement of RMST,
able to comply with any of the material terms of this Agreement for any
reason;
(j) the Company is not, in the reasonable judgement of RMST,
able to comply with the underwriting, closing, delivery and funding
requirements of any of its institutional end-loan investors; or
(k) the Company commits a breach of this Agreement which is
not cured within five (5) Banking Business Days of the giving of the
notice of default by RMST provided there shall be no cure period for a
breach under Section 22 or Section 25.
Section 44. REMEDIES. Upon the occurrence of a Default, in addition to
its rights under Section 26, RMST may by notice given to the Company (i)
terminate the Company's rights and obligations to service any or all Eligible
Mortgages purchased by the Warehouse Purchasers; (ii) terminate any obligations
RMST has to cause future purchases to be funded under this Agreement; (iii)
cause the Warehouse Purchasers to sell--or, if RMST has purchased some or all of
the Eligible Mortgages, sell--any or all of the Eligible Mortgages to one or
more third parties; (iv) terminate this Agreement by giving notice to the
Company; or (v) do any combination of those things.
Section 45. EFFECT OF TERMINATION. Upon termination, this Agreement
will survive and otherwise remain in full force and effect with respect to all
of Company's obligations and responsibilities for Mortgages purchased hereunder
except that all monetary obligations of the Company to RMST, the Agent or the
Investors shall bear interest at the Default Rate and the determination of
Minimum Net Share shall be determined using the Default Rate for all periods
after the occurrence of the Default. The Company will, after such termination,
reasonably cooperate with RMST, the Agent, the Warehouse Purchasers and the
Investors in completing all transactions, documents, reports, payments and acts
contemplated or provided hereunder.
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MORTGAGES PURCHASE AGREEMENT PAGE 12
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Section 46. COSTS OF COLLECTION AND ENFORCEMENT. The Company shall pay
(i) all fees, charges, or taxes for the recording or filing of any document to
create or perfect the security interest created by Section 38; (ii) all amounts
reasonably expended, advanced or incurred by RMST, the Agent or the Warehouse
Purchasers to satisfy any obligation of the Company under this Agreement, to
collect the any obligations arising under this Agreement or to enforce the
rights of RMST, the Agent or the Warehouse Purchasers under this Agreement,
including all court costs, attorneys' fees (whether for trial, appeal, other
proceedings or otherwise), fees of auditors and accountants and investigation
expenses reasonably incurred by RMST, the Agent or the Warehouse Purchasers in
connection with any such matters; and (iii) interest at an annual interest rate
equal to the Default Rate on each item specified in clauses (i) and (ii) above
from ten (10) days after the date of written demand or request for reimbursement
to the date of reimbursement.
REPRESENTATIONS AND WARRANTIES; COVENANTS
Section 47. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants (and such representations and warranties shall be deemed remade at the
time any Mortgage is sold to the Warehouse Purchasers pursuant to this
Agreement) as set forth below.
(a) BLANK ASSIGNMENTS' VALIDITY. The written assignment of
each Mortgage in blank from the Company is valid and effective and RMST
or the Agent and each of its successors, substitutes and assigns are
each duly authorized to complete the blanks in each such assignment and
to take such other steps as are necessary or appropriate, in the
judgment of the person acting, to transfer the Mortgage and any related
Commitment, as contemplated by the Specific Power of Attorney form
attached as Appendix 3 (and the Company hereby agrees to execute one or
more originals of such Specific Power of Attorney and any supplement to
it which RMST may from time to time request from the Company.)
(b) DOCUMENTS GENUINE, STATEMENTS TRUE. All documents
submitted in connection with each Offer are genuine, the statements
contained in the Offer submitted to RMST and all other statements and
representations as to any such Mortgages are accurate, true and correct
in all material respects and meet each of the requirements and
specifications of this Agreement.
(c) DELIVERY RISK AND RESPONSIBILITY. All deliveries of all
Mortgage documents shall be at the Company's risk and (except only for
deliveries of Mortgages required to be made by the Agent as custodian
under the relevant GNMA, FNMA or FHLMC Guide) the Company's
responsibility, and the Company agrees to indemnify RMST, the Agent and
the Warehouse Purchasers and hold each of them harmless from all bona
fide and reasonable claims, loss, cost, damage or expense (including
reasonable attorneys' fees) arising out of or incurred in connection
therewith, including any resulting in whole or in part from RMST's, the
Agent's or the Warehouse Purchaser's own acts except only to the extent
that any such loss, cost or expense results solely from their negligent
acts or omissions or breach of this Agreement.
(d) EACH MORTGAGE VALID. Each Mortgage sold to the Warehouse
Purchasers has been duly executed by the mortgagor(s), acknowledged and
recorded (or duly sent by the Closer to be recorded) and is valid and
binding upon such mortgagor(s) and enforceable in accordance with its
terms.
(e) MORTGAGE GUARANTY AND INSURANCE. Each Mortgage that the
Company represents to be insurable by FHA or by a private mortgage
insurer, or sufficient to be guaranteed by the VA, is or will be so
insured or guaranteed as represented.
(f) MORTGAGES' CHARACTERISTICS. The full principal amount of
each Mortgage has been (or when funded by the Warehouse Purchasers if
so requested, will be) advanced to the mortgagor
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MORTGAGES PURCHASE AGREEMENT PAGE 13
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under the Mortgage, either by payment directly to the mortgagor or by
payment made on the mortgagor's request or approval; the unpaid
principal balance is as stated in the Offer; all costs, fees and
expenses incurred in making, closing and recording the Mortgage have
been paid (or will be paid at the closing); no part of the property
covered by the Mortgage has been or will be released from its lien; the
terms of the Mortgage have in no way been changed or modified and the
Mortgage is current and not in default.
(g) MORTGAGES COMPLY WITH LAW. As to each individual Mortgage
offered to or purchased by the Warehouse Purchasers, and all escrow
balances related to the Mortgages, all applicable federal, state and
local laws, rules and regulations have been complied with, including
the Real Estate Settlement Procedures Act, the Equal Credit Opportunity
Act, the Flood Disaster Protection Act, the Truth-in-Lending Act of
1968, the Depository Institutions Deregulatory and Monetary Control Act
of 1980, all as amended, and regulations issued pursuant to them; and
all usury laws and limitations, all conditions within the control of
the Company as to the validity of the insurance or guaranty required by
the National Housing Act of 1934, as amended, and the rules and
regulations thereunder, and the Servicemen's Readjustment Act of 1944,
as amended, and the rules and regulations thereunder, and all
requirements of the mortgage insurance companies or other insurers,
have been properly satisfied, and such insurance or guaranty is valid
or enforceable. All escrow balances have been calculated in accordance
with the contractual provisions of the Mortgage, or, if more
restrictive, in accordance with any applicable GNMA, FNMA or FHLMC
Guides.
(h) TITLE INSURANCE. There is in force a paid-up title
insurance policy on each Mortgage issued by an accredited title insurer
in an amount at least equal to the outstanding principal balance of
such Mortgage. The title insurance policy has been, or shall be, issued
by a title insurance underwriter duly authorized to issue title
insurance in the state where the real property covered by the Mortgage
is located.
(i) HAZARD INSURANCE. Hazard insurance policies meeting the
requirements of each the Mortgage and of the relevant GNMA, FNMA or
FHLMC Guide and the Investor's requirements are in force.
(j) SERVICING NOT OTHERWISE PLEDGED. If applicable, the
Company has not directly or indirectly pledged any servicing rights
with respect to any Mortgages offered to or purchased by the Warehouse
Purchasers under this Agreement to any person or entity other than the
Warehouse Purchasers pursuant to this Agreement, nor will the Company
do so without RMST's prior written approval.
(k) COMMITMENTS. The Company warrants that each Commitment is,
and will remain forever, free of any security interest, lien, claim, or
encumbrance of any kind and may be assigned by the Company to RMST and
its assigns.
(1) APPRAISALS SATISFY APPLICABLE REQUIREMENTS. A written
appraisal of the real property securing each Mortgage has been prepared
by a duly-licensed appraiser and satisfies all requirements for any
applicable VA guaranty, FHA insurance or private mortgage insurance and
all requirements imposed by the Investor which issued the Commitment
covering such Mortgage, as well as the requirements of 12 C.F.R., Part
323, as amended or replaced (if the Mortgage is two hundred fifty
thousand dollars ($250,000) or more).
(m) QUALITY CONTROL REPORTS. The Company agrees at its own
cost to provide periodic reports to RMST as requested by RMST from time
to time, of the Company's Mortgage loan
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MORTGAGES PURCHASE AGREEMENT PAGE 14
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origination, acquisition and servicing operations performed by the
quality-control reviewer, which is satisfactory to the applicable
governing agency and RMST.
(n) ELIGIBILITY. The Company will be approved, qualified and
in good standing as:
(i) an FHA-approved mortgage, eligible to originate,
purchase, hold, sell and service FHA loans;
(ii) a VA-approved (not VA automatic) mortgagee, eligible
to originate, purchase, hold, sell and service VA
loans;
prior to making an Offer for a FHA or VA loan, as the case may be, and
at the time of making that Offer meets all requirements applicable to
its status as such. The Company agrees not to take or omit to take any
act which would result in its losing its status as an eligible
mortgagee, seller and issuer as described above.
(o) ORGANIZATION; GOOD STANDING. The Company (i) is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation; (ii) has the
requisite legal power and authority to own its property and to carry on
its business as currently conducted and (iii) is duly qualified as a
foreign corporation to do business and is in good standing in each
jurisdiction in which the transaction of its business makes such
qualification necessary, except in jurisdictions, if any, where a
failure to be in good standing has no material adverse effect on its
financial condition.
(p) LICENSED. The Company is licensed and qualified to
transact the mortgage origination business in, and is in good standing
under, the laws of each state in which real estate which secures a
Mortgage is located or is otherwise exempt under applicable law from
such licensing and qualification. There has been no unsatisfied demand
made upon the Company by any state in which real estate which secures a
Mortgage is located that the Company be licensed or qualified to
transact the mortgage origination business under the laws of that
state. The Company is in compliance with the laws of all states
necessary to insure the enforceability of each Mortgage.
(q) AUTHORIZATION; NO CONFLICT. The Company has the power and
authority to execute, deliver and comply with the terms of this
Agreement. The Company's execution, delivery and performance of this
Agreement: (i) have been duly and validly authorized by all necessary
corporate action on the Company's part (none of which action has been
modified or rescinded and all of which is in full force and effect);
(ii) do not and will not: (1) conflict with or violate any laws or
court orders of which the Company is, or in the normal course of its
business should be, aware of, or the Company's articles of
incorporation or bylaws; (2) either conflict with, result in a breach
of, constitute a default under, require any consent under, or result in
the creation of any lien or security interest (other than the security
interest created by this Agreement) upon any of the Company's property
under any agreement, indenture or other papers to which the Company is
party or by which the Company or its property may be bound or affected;
and (iii) do not and will not result in, or permit the holder of any
such agreement, indenture or other papers to cause, the acceleration of
any of the Company's: (1) debt; (2) obligations in respect of letters
of credit, acceptances or similar obligations issued or created for the
Company's account; (3) direct or indirect guaranties of debt of others;
(4) liabilities secured by any lien or security interest existing on
property owned by the Company, including secured liabilities which have
not been assumed by the Company or with respect to which the Company is
not personally liable; or (5) liabilities in respect of unfunded and
vested benefits under ERISA plans.
(r) ENFORCEABILITY. This Agreement constitutes the valid and
binding obligation of the Company enforceable in accordance with its
terms, except as limited by (i) bankruptcy,
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MORTGAGES PURCHASE AGREEMENT PAGE 15
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insolvency or other similar laws now or hereafter in effect affecting
the enforcement of creditors' rights and (ii) the application of
equitable principles.
(s) APPROVALS. The Company's execution and delivery of this
Agreement and the Company's performance of its obligations do not
require any license, consent, approval or other action of any court or
other governmental authority other than those that the Company is, or
in the normal course of its business should be, aware of, other than
those which have been obtained and remain in full force and effect.
(t) FINANCIAL STATEMENTS. The Company's annual financial
statements for the most recent two fiscal years ending more than ninety
(90) days prior to the date of this Agreement have been furnished to
RMST. The annual financial statements are audited.
(u) PRESENTATION. The financial statements furnished as
described in (t) above and any financial statements provided to RMST
pursuant to Section 48 fairly present the Company's financial condition
and the results of the Company's operations as of and for the fiscal
period ended on the respective dates of such financial statements. On
the dates of such financial statements, the Company was, and on the
date of any sale of any Mortgage hereunder is, solvent (i.e., able to
pay its debts as they mature and having assets with value greater than
its liabilities). Such financial statements were prepared in accordance
with generally-accepted accounting principles. Since the date of such
financial statements, nothing has occurred which has had a material
adverse effect on the Company's operations or financial condition nor
is the Company aware of any state of facts which (with or without
notice or lapse of time or both) would or could result in such a
material adverse effect, and the Company is solvent as of the date of
this Agreement and will maintain its solvency on a continuing basis.
Notwithstanding any of the aforementioned the Company further agrees to
maintain its tangible net worth at a minimum of $250,000.
(v) LITIGATION. There are no actions, claims, suits or
proceedings pending, or to the Company's knowledge, threatened or
reasonably anticipated, against or affecting the Company by any person,
entity or governmental authority, other than those disclosed in (i) its
most recent audited annual financial statements or (ii) as listed on
APPENDIX 6 which, if adversely determined, may reasonably be expected
to result in a material adverse effect on the Company's operations or
financial condition.
(w) PAYMENT OF TAXES. The Company has filed or caused to be
filed all of the Company's federal, state and other tax returns
required to be filed, all such returns are true and correct and the
Company has paid (or caused to be paid) all material taxes that are due
and payable as shown on such returns, including all applicable FICA
payments and withholding taxes, except taxes being contested in good
faith. The amounts reserved as a liability for taxes payable in the
financial statements described above are sufficient for payment of all
of the Company's unpaid taxes, whether or not disputed, accrued for or
applicable to the period and on the dates of such financial statements
and all years and periods prior to them and for which the Company may
be liable in its own right or as transferee of the assets of, or as
successor to, any other person or entity.
(x) VA AND FHA LOANS. The Company has complied, and will
continue to comply, with all applicable laws in respect of the FHA
insurance or VA guaranty of each Mortgage offered or sold to the
Warehouse Purchasers and designated by the Company as an FHA loan or a
VA loan, respectively, and such insurance or guaranty is and will
continue to be in full force and effect. All such FHA loans or VA loans
comply and will continue to comply in all respects with all applicable
requirements for purchase under the industry standard forms of selling
contracts for FHA loans or VA loans, respectively, and any supplement
to them then in effect. All Mortgages
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MORTGAGES PURCHASE AGREEMENT PAGE 16
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offered to the Warehouse Purchasers under this Agreement and
represented to be (i) VA loans are currently guaranteed by VA or (ii)
FHA loans are currently insured by FHA. With respect to Mortgages not
yet endorsed by FHA for insurance and Mortgages for which the Company
has not yet obtained evidence of guaranty from VA or insurance from
FHA, the Company shall proceed diligently and promptly to comply with
the documentation requirements and all other applicable requirements in
order to procure the FHA endorsement for insurance or evidence of VA
guaranty or FHA insurance, as the case may be and, in the event that
the Company ever has reason to believe that any such endorsement or
evidence will not be forthcoming, the Company shall promptly so notify
RMST and repurchase the related FHA loan or VA loan.
(y) FIRE AND CASUALTY POLICIES. All fire and casualty policies
covering the premises encumbered by each Mortgage offered to or
purchased by the Warehouse Purchasers under this Agreement: (i)
presently name and will continue to name the Company "and its
successors and/or assigns in interest as they may appear" of each as
the insured under a standard mortgage clause or, for newly funded
Mortgages, a notice for an endorsement changing the named mortgagee has
been submitted to the carrier and will be pursued diligently until
issued; (ii) are and will continue to be in full force and effect; and
(iii) afford and will continue to afford insurance against fire and
such other risks as are usually insured against in the broad form of
extended coverage insurance from time-to-time available, as well as
insurance against flood hazards if it is required by FHA, VA or any
applicable law, court or other governmental authority.
(z) FLOOD INSURANCE. Mortgages offered to or purchased by the
Warehouse Purchasers under this Agreement which are secured by premises
located in a special flood hazard are designated as such by the
Secretary of HUD which require flood insurance are and shall continue
to be covered by special flood insurance under the National Flood
Insurance Program.
(aa) YEAR 2000. The Company has undertaken a detailed
inventory, review, and assessment of all areas within and affecting the
Company's business and operations that could be adversely affected by
the failure of the Company to be Year 2000 Compliant on a timely basis;
has developed a detailed plan and time line for becoming Year 2000
Compliant on a timely basis; and, to date, has implemented that plan in
accordance with the specified timetable in all material respects. The
Company has made written inquiry of each of the Company's key
suppliers, vendors and customers as to whether they will be Year 2000
Compliant in all material respects on a timely basis and on the basis
of that inquiry believes that all of them will be so compliant. As used
herein, "YEAR 2000 COMPLIANT" shall mean that all software, embedded
microchips and other processing capabilities utilized by the Company or
the Company's key suppliers, vendors and customers will correctly
process, sequence, and calculate, without interruption, all date and
date related data for all dates to, through and after January 1, 2000,
including leap year calculations, and recognize, store and transmit
date data in a format which clearly indicates the correct century. As
used herein, "key suppliers, vendors and customers" means those
suppliers, vendors, and customers of the Company whose business failure
or material business disruption would, in RMST's judgment, be
reasonably likely to result in a material adverse change in the
business, properties, condition (financial or otherwise), or prospects
of the Company.
Section 48. COVENANTS.
(a) SERVICING. The Company agrees to service (or cause to be
serviced) all Mortgages purchased by the Warehouse Purchasers under
this Agreement which the Company has the right to service, in
accordance with the servicing standards stated above in this Agreement
and all applicable GNMA, FNMA, FHLMC, FHA and VA requirements,
including taking all actions necessary to enforce the obligations of
the obligors under such Mortgage.
--------------------------------------------------------------------------------
MORTGAGES PURCHASE AGREEMENT PAGE 17
18
(b) COMPLY WITH COMMITMENTS. The Company agrees to timely
comply in all respects with all terms and conditions of all Commitments
covering any Eligible Mortgage (and any renewals, extensions, or
modifications of them or substitutions for them), and cause the
Mortgages covered by and intended to be sold under each Commitment to
be so sold before its expiration date and in the manner and order
contemplated by the Commitment.
(c) MAINTAIN COMMITMENTS. The Company agrees to maintain each
Commitment and all of the Company's rights and obligations under it in
full force and effect, not to pair off or otherwise cause or acquiesce
in the effective partial or complete cancellation of any Commitment
without RMST's specific written consent, not to suffer or permit any
default under any Commitment, and to enforce performance by the issuer
of each Commitment. Without limitation, the Company expressly agrees to
timely deliver any and all margin required by the terms of each
Commitment.
(d) CHANGE IN STATUS. The Company agrees to give prompt
written notice to RMST of any change in its status as such or in the
relationship between the Company and any Investor approved by RMST.
(e) NOTIFICATION OF MORTGAGE DEFAULTS. The Company agrees to
immediately notify RMST upon learning of any default under any of the
Mortgages purchased (or agreed to be purchased) by the Warehouse
Purchasers, or of the institution of any proceeding before any court or
other governmental authority in respect of a claimed violation by the
Company or any other person of any statute, rule or regulation relating
to any the Mortgage or a claimed defense or offset to any Mortgage.
(f) LOAN DOCUMENTS. The Company agrees to maintain - at the
Company's principal office or in the office of a computer service
bureau engaged by the Company - the originals (or copies in any case
where the original has been delivered to RMST or the Agent) of all
promissory notes and mortgages or deeds of trust for the Mortgages, and
all Commitments related to them, and all related papers, as well as
files, surveys, certificates, correspondence, appraisals, computer
programs, tapes, disks, cards, accounting records and other information
and data relating to such Mortgages for a period not to exceed one
year. Upon RMST's written request, the Company will promptly make them
conveniently available to RMST.
(g) CURRENT FINANCIAL INFORMATION. The Company agrees to
furnish RMST, within ninety (90) days after the end of the Company's
fiscal year, audited annual financial statements for that year end,
reflecting the corresponding figures for the preceding fiscal year in
comparative form, accompanied by the related report acceptable to RMST
prepared by the Company's independent certified public accountants
stating that the statements were prepared according to generally
accepted account principles applied on a basis consistent with prior
periods except for such changes in generally accepted accounting
principles concurred in by the Company's independent public
accountants. Promptly when available and least within forty five (45)
days after the end of each of the first three fiscal quarters in the
Company's fiscal year, the Company shall furnish RMST its financial
statements for that quarter and the year to date, each reflecting the
corresponding figures for the same quarter in the preceding fiscal year
in comparative form. If requested by RMST, the Company will provide
RMST monthly financial statements no later than twenty (20) days after
the close of each month in its fiscal year.
(h) YEAR 2000. The Company shall deliver to RMST promptly
after they become available the Company's Year 2000 plan and time line,
all periodic internally and externally prepared evaluations and
progress reports concerning the Company's Year 2000 plan and Year 2000
readiness, any management or other letters from the Company's
accountants addressing or mentioning the Company's Year 2000
Compliance, and such other information, documentation
--------------------------------------------------------------------------------
MORTGAGES PURCHASE AGREEMENT PAGE 18
19
and materials as RMST may reasonably request from time to time in order
to confirm that the Company is Year 2000 Compliant and the methods used
by the Company to become Year 2000 Compliant.
(i) OTHER INFORMATION. Promptly upon request, the Company
agrees to furnish such other information as RMST may request concerning
the Company, its business affairs, the Mortgages and its relationship
with any Investor.
Section 49. ADJUSTMENT TO LOAN SET UP FEE. RMST may elect to increase
or decrease the Loan Set Up Fee from time to time by giving the Company written
notice of the change specifying a date when the change will become effective
which is at least thirty (30) days after the notice. Any change in the Loan Set
Up Fee shall be effective only as to Mortgages acquired by the Warehouse
Purchasers on or after the effective date of the change.
MISCELLANEOUS
Section 50. ASSIGNMENT PROHIBITED. This Agreement may not be assigned
by the Company.
Section 51. NOTICES. All notices, demands, consents, requests and other
communications required or permitted to be given or made hereunder shall be in
writing and shall be delivered in person or telecopied (with an additional copy
to be mailed as provided herein) or mailed, first class, return receipt
requested, postage prepaid, addressed to the respective parties hereto at their
respective addresses hereinafter set forth or, as to any such party, at such
other address as may be designated by it in a notice to the other given in the
manner provided in this Section. All notices shall be conclusively deemed to
have been properly given or made when duly delivered, in person, to a Vice
President or more senior officer of the addressee, or if mailed, on the first
Banking Business Day after being deposited in the mails or if telecopied when
transmitted, addressed as follows:
IF TO THE COMPANY: Xxxxx X. Xxxxxxxx, Xxxxx X. XxXxxxxx & X.X. Xxxxx, Xx.
Austin Funding Corporation
000 Xxxxxxxx Xxxxxx, Xxx 000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
IF TO RMST: HSA Residential Mortgage Services of Texas, Inc.
0000 Xxxx Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
No notice to or demand on the Company or any other person shall entitle the
Company or any other person to any other or further notice or demand in similar
or other circumstances.
Section 52. NO FINANCING INTENDED. This Agreement evidences a facility
for the sale of Mortgages to the Warehouse Purchasers, and is not intended by
the Company or RMST to evidence a financing arrangement. The Company will report
the sale of the Mortgages under generally accepted accounting principles and for
federal income tax purposes as a sale of the entire mortgage, subject to a
limited right of RMST to require the repurchase of Defective Mortgages, and
subject to a Make Whole Payment for breach of the warranties, representations or
covenants given by the Company in this Agreement. The consideration received by
the Company upon the sale of each Mortgage will constitute reasonably equivalent
value and fair consideration for the transfer of ownership of the Mortgages. The
--------------------------------------------------------------------------------
MORTGAGES PURCHASE AGREEMENT PAGE 19
20
Company warrants and covenants that it is solvent at all times relevant to the
sale of any Mortgage, and will not be made insolvent by the sale of any
Mortgage. The Company will not sell any Mortgage to the Warehouse Purchasers
with any intent to hinder, delay or defraud any of the Company's creditors.
Section 53. CONFIDENTIAL/PROPRIETARY INFORMATION. This Agreement is
considered the confidential and proprietary information of RMST, and the Company
may not reveal this Agreement or its contents to any person other than employees
of the Company who need to have knowledge of its content to perform their
duties, or to the attorneys and auditors of the Company solely in connection
with their representation of the Company. This Agreement is subject to the
copyright of RMST and may not be reproduced without the express permission of
RMST.
Section 54. UNILATERAL AMENDMENT. RMST reserves the right to
unilaterally amend this Agreement in its sole discretion to comply (to the sole
satisfaction of RMST) with any law, rule or regulation affecting RMST in effect
now or hereafter. Any such amendment shall be effective immediately. However,
and notwithstanding any other provision of this Agreement, in the event of a
unilateral amendment, the Company shall have the right to terminate this
Agreement by written notice to RMST within ten (10) days of the Company's
receipt of notice of such amendment. Termination shall not affect any obligation
of the Company incurred prior to RMST's receipt of notice of termination.
Section 55. BINDING. This Agreement supersedes and replaces entirely
any and all similar agreements and arrangements heretofore existing between the
Agent and the Company or between RMST and the Company and shall bind and benefit
the Company, RMST and their respective successors, trustees, receivers and
permitted assigns.
Section 56. GOVERNING LAW; VENUE. This Agreement shall be governed by
applicable United States and Texas law with specific venue in Xxxxxx County,
Texas.
Section 57. HEADINGS. The headings and captions used in this Agreement
are for convenience only and shall not be deemed to limit, amplify or modify the
terms of this Agreement, nor shall they effect their meaning.
Section 58. NUMBER; GENDER. Whenever the singular number is used
herein, it includes the plural where appropriate, and words of any gender shall
include each other gender where appropriate.
Section 59. COUNTERPARTS. This Agreement may be executed in
counterparts each of which shall constitute an original instrument.
Section 60. SEVERABILITY. if any provision of this Agreement is held
invalid, illegal or unenforceable, the remaining provisions shall be enforced
and shall not be affected or impaired thereby.
Section 61. INCORPORATED DOCUMENTS. Each reference made in this
Agreement to any Appendix, Exhibit, Schedule or Annex shall be read as a
reference to that Appendix, Exhibit, Schedule or Annex to this Agreement except
where otherwise expressly specified, and each Appendix, Exhibit, Schedule and
Annex to this Agreement is hereby incorporated into this Agreement as if set
forth verbatim at each place in this Agreement where it is referred to. Each
Appendix, Exhibit, Schedule or Annex which is a form to be completed, executed
and delivered pursuant to this Agreement may be completed in accordance with
this Agreement by either the Company or RMST before, when or after it is
executed and delivered.
--------------------------------------------------------------------------------
MORTGAGES PURCHASE AGREEMENT PAGE 20
21
Section 62. ENTIRE AGREEMENT. This Agreement represent the final
agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
AUSTIN FUNDING CORPORATION HSA RESIDENTIAL MORTGAGE SERVICES OF
TEXAS, INC.
By: /s/ Xxxxx X. XxXxxxxx By: /s/ Xxx Xxx Xxxxxxx
------------------------------- -------------------------------------
Name: Xxxxx X. XxXxxxxx Name: Xxx Xxx Xxxxxxx
Title: CEO/President Title: Vice-President
Date: 1-15-99 Date: 10-14-98
----------------------------- -----------------------------------
ATTACHED:
Appendix 1 Offer to Sell Mortgage
Appendix 2 RMST Procedures
Appendix 3 Specific Power of Attorney
Appendix 4 Collateral/Credit Documents
Appendix 5 Special Closing Instructions
Appendix 6 Pending or Threatened Litigation
Appendix 7 Defective Mortgage Criteria
Appendix 8 Eligible Mortgage Criteria
Appendix 9 Minimum Criteria for Investors
Appendix 10 Bailee Letter (from Agent)
Appendix 11 Bailee Letter (from RMST)
--------------------------------------------------------------------------------
MORTGAGES PURCHASE AGREEMENT PAGE 21
22
APPENDIX 1
OFFER TO SELL MORTGAGE
HSA Residential Mortgage Services of
Texas, Inc. (RMST) RMST Loan # __________________________
0000 Xxxx Xxx Xxxxx Xxxxx, Xxxxx 000 Investor # ___________________________
Xxxxxxx, Xxxxx 00000 Funding Date: ________________________
ATTN: Xxxxxxxx X. Xxxxxxx Check # ______________________________
MORTGAGE INFORMATION
COMPANY
BORROWER
INVESTOR
COMMITMENT DATE
COMMITMENT EXPIRATION DATE
BULK MORTGAGE TAKEOUT DATE
SERVICE RELEASE PREMIUM (IF ANY)
COMMITMENT AMOUNT
MORTGAGE FACE AMOUNT
MORTGAGE UNPAID BALANCE
PURCHASE PRICE
CLOSER NAME AND ADDRESS
Pursuant to our Mortgages Purchase Agreement with you ("RMST") dated
October 14, 1998, as it may have been supplemented, amended or restated the
Company has completed this Offer to Sell Mortgage (except for the RMST's
certification and signature blocks) and hereby offers to sell to the Warehouse
Purchasers through Chase Bank of Texas, National Association (as administrative
agent and collateral agent for various purchasers), the Mortgage described above
for a cash price equal to the amount set forth above, which is the least of (i)
the price the Investor has promised to pay for the Mortgage pursuant to the
Commitment; (ii) the face principal amount of the promissory note evidencing the
Mortgage; or (iii) the unpaid principal balance of the promissory note.
Upon acceptance of this Offer, the Company will instruct the Closer
identified for the Mortgage listed above to comply with the requirements and
instructions in Appendix 5 to the Mortgages Purchase Agreement. The Company
hereby promises to deliver, or cause to be delivered, to RMST for transmission
to the Agent all other documents, with all necessary endorsements, required to
satisfy all the requirements of the applicable Commitment for each such
Mortgage.
If the Mortgage, is to be sold as a whole loan pursuant to the
Commitment, the Company hereby agrees to timely provide all remaining documents
and to take all remaining steps necessary or appropriate to enable the Warehouse
Purchasers to sell the Mortgage to the Investor as a whole loan.
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APPENDIX 1 Page i
23
The Company hereby agrees to timely complete the sale of the Mortgage
on or before the Expiration Date stated in the Commitment and to require of the
Investor, and to ensure, that the entire proceeds of their sale are paid
directly to the Agent for the account of the Warehouse Purchasers by the
Investor on the settlement date.
This Offer is made upon and subject to the terms of the Mortgages
Purchase Agreement which is hereby incorporated herein (and all capitalized
terms used in this letter which are defined in the Mortgages Purchase Agreement
and not specifically defined in this letter shall have the same means here as
there), and the Company hereby reaffirms its covenants under the Mortgages
Purchase Agreement and reconfirms all of its representations and warranties
stated in the Mortgages Purchase Agreement as being current, true and correct in
all material respects and hereby republishes all of them.
Austin Funding Corporation
By: /s/ XXXXX XXXXXXXX
--------------------------------------
Name: Xxxxx XxXxxxxx
-----------------------------------
Title: President
----------------------------------
Date: 1-15-99
-----------------------------------
Enclosures:
1003 or HUD equivalent Investor Commitment
Pages 1 and 2 of Appraisal Underwriting Approval
Credit Report Disbursement Sheet
MI Certificate or Equivalent, if applicable
[ ] RMST hereby accepts Austin Funding Corporation Offer dated ____________, and
on _______________________ will fund/wire the purchase price(s) specified in the
Offer to the Closer named in the Offer on the closing dates specified in the
Offer.
[ ] RMST hereby respectfully declines your Offer.
HSA RESIDENTIAL MORTGAGE SERVICES OF
TEXAS, INC.
By:
-------------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: President
Date: Time:
------------- --------------
Title Co. Closer:
-----------------
Title Company:
--------------------
Title Co. Address:
----------------
----------------
Title Co. Phone #
-----------------
Title Co. Fax #
-------------------
GF #:
-----------------------------
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APPENDIX 1 Page ii
24
APPENDIX 2
RMST PROCEDURES
BANKING BUSINESS DAY
A "BANKING BUSINESS DAY" is any Monday through Friday when national
banks domiciled in Xxxxxx County, Texas are open to conduct regular commercial
banking business and wire transfers may be made.
MORTGAGE PURCHASES
RMST will accept or reject an Offer on the Banking Business Day on
which it is delivered to RMST and, if RMST elects to accept an Offer, cause the
Warehouse Purchasers to purchase the related Eligible Mortgage on that Banking
Business Day so long as:
(i) the Company has given RMST written notice by Noon on that
Banking Business Day of the amount which the Company wishes to have
wired to the Closer (no prior notice is required if the disbursement is
to be by check); and
(ii) the Company delivers the Document File to RMST no later
than 1:00 p.m. on that Banking Business Day.
If the Company fails to give notice or deliver the Document File to RMST by the
above times, RMST shall have no obligation to cause the Warehouse Purchasers to
purchase the Mortgage on that Banking Business Day, but RMST agrees to use
reasonable efforts to cause the Warehouse Purchasers to do so.
FUNDING
RMST will cause the Warehouse Purchasers to fund the purchase of an
Eligible Mortgage on the Banking Business Day determined as provided under
"Mortgage Purchases" either:
(i) by a bank wire transmitted on that Banking Business Day if
the Company requested that the purchase be by bank wire, or
(ii) by a check authorized to be drawn on that Banking
Business Day if the Company requested that the purchase be by check.
The date on which the wire is transferred or on which the check is authorized to
be drawn is the date on which the Warehouse Purchasers are deemed to have funded
the acquisition of the Mortgage for the purpose of determining the Period Held
even if the actual date of purchase of the Eligible Mortgage is a later date.
MORTGAGE NOT PURCHASED
If a bank wire is transmitted or a check is authorized to be drawn and
the Mortgage is not purchased for any reason other than the willful or grossly
negligent act or omission of RMST, the Agent or the Warehouse Purchasers, then
the amount of the bank wire or the check shall be deemed to be an RMST Advance
made on the Banking Business Day the wire was transmitted or the check was
authorized to be drawn.
TIME OF PAYMENT
Any payments made by the Company to RMST shall be deemed received when
made in immediately available funds.
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APPENDIX 2 Page i
25
APPENDIX 3
SPECIFIC POWER OF ATTORNEY
Austin Funding, Corporation, (the "COMPANY"), a Texas corporation,
hereby irrevocably designates and appoints HSA RESIDENTIAL MORTGAGE SERVICES OF
TEXAS, INC. ("RMST") and its successors and assigns as the Company's true and
lawful agent and attorney-in-fact with full power of substitution and with the
power and authority:
(i) to endorse and deliver, negotiate or otherwise transfer to
itself or any other person any promissory notes; and
(ii) to prepare, complete, execute, deliver and record any
assignment, transfer or release to itself, to any investor in Mortgages
(an "INVESTOR") or any other person of any assignments of mortgages,
deeds of trust, deeds to secure debt and other mortgage instruments of
all kinds and descriptions ("MORTGAGES") and any security agreement,
collateral assignment or other security instrument of any kind,
securing any Mortgage, any insurance contract, claim, right or interest
relating to it or any indemnity or suretyship contract relating to it,
or any of its documents related to the Mortgage; and
(iii) to cancel any endorsement or assignment previously made
by or on behalf of the Company to any person or in blank, on or in
respect of any Mortgage, any promissory note evidencing it or any of
its other documents related to the Mortgage; and
(iv) to endorse and deliver to any person any order, check,
instrument or other document or paper received or obtained by RMST that
represents payment in respect of any Mortgage,
(v) to commence, prosecute, settle, discontinue, defend or
otherwise dispose of any claim relating to any Mortgage; and
(vi) to execute and deliver any and all other papers as RMST
or its substitutes shall deem necessary, appropriate or incidental to
the administration and execution of any of the covenants, agreements or
transactions provided for in or contemplated by the agreement dated
October 14, 1998 between the Company and RMST, as it may have been or
may hereafter be supplemented, amended or restated (the "MORTGAGES
PURCHASE AGREEMENT") to which reference is hereby made; and
(vii) to sign the Company's name wherever RMST shall deem it
necessary, appropriate or desirable to effect performance of the
Mortgages Purchase Agreement, any related documents or any act
authorized hereby;
for all purposes in the Company's name, place and stead and at any time and from
time-to-time, in each instance acting by and through any person who is at the
time an officer of RMST or its substitute and any such act by RMST, its
successors, substitutes or assigns, shall have the same force and effect as if
done by the Company itself pursuant to a duly adopted resolution of its
then-incumbent board of directors. (Notwithstanding the reference in the
preceding sentence to the Mortgages Purchase Agreement, no Investor or other
person or entity dealing with RMST shall be required to look beyond this
Specific Power of Attorney itself or shall be charged with knowledge of the
provisions of the Mortgages Purchase Agreement or any other instrument, but
instead may rely upon, and shall be fully protected by the Company in relying
upon, this Specific Power of Attorney and RMST's authority as set forth herein
or reasonably inferable wherefrom as incidental to the authority expressly
stated herein.) Without limiting its authority to otherwise assign or delegate
its powers to others or to substitute others for it hereunder, RMST is expressly
authorized to delegate its powers under this Specific Power of Attorney to Chase
Bank of Texas, National Association, the Agent identified in the Mortgages
Purchase Agreement. This
--------------------------------------------------------------------------------
APPENDIX 3 Page i
26
Bank of Texas, National Association, the Agent identified in the Mortgages
Purchase Agreement. This power is coupled with an interest and shall remain in
force for so long as the Company has or may have any unperformed obligation to
RMST, its successors or assigns, under or in respect of the Mortgages Purchase
Agreement, and shall be irrevocable during that time. This Specific Power of
Attorney is expressly limited to the purposes set forth above, shall not be
interpreted as a general power of attorney, and shall have no force or effect
except as to matters pertaining to the Mortgages Purchase Agreement, although it
shall be broadly construed as to those matters.
Austin Funding Corporation
By: /s/ XXXXX X. XXXXXXXX
-------------------------------------
Name: Xxxxx X. XxXxxxxx
Title: CEO/President
Date: 1-15-99
-----------------------------------
State of Texas )
)
County of Xxxxxx )
This instrument was acknowledged before me on this 15th day of January,
1999 by Xxxxx X. XxXxxxxx as CEO/President of Austin Funding Corporation.
/s/ XXXXX X. XXXXXXXX
-----------------------------------------
(Signature of notarial officer)
(Seal, if any)
-----------------------------------------
Title
[SEAL] My Commission Expires:
---------------------------------------
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APPENDIX 3 Page ii
27
APPENDIX 4
COLLATERAL/CREDIT DOCUMENTS
1. Commitment from an RMST-approved Investor
2. Underwriting approval from investor or delegated underwriters from Company
3. Certified copy of the borrower's credit application (FNMA form 1003) or HUD
equivalent
4. Credit Report
5. Proof of mortgage insurance or guaranty, or FHA insurance approval if
applicable
6. Appraisal - Pages 1 and 2 Only
7. Closing Statement or HUD-1
(1) Required at closing and funding
(2) Required as part of Offer to Sell Mortgages
8. Note
9. Certified Copy of the Deed of Trust
10. Truth-In-Lending
11. Hazard Insurance
12. Power of Attorney (if applicable)
13. Flood Insurance (if applicable)
14. Title Commitment
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APPENDIX 4 Page i
28
APPENDIX 5
(INSTRUCTIONS TO MORTGAGE LOAN CLOSER)
SPECIAL CLOSING INSTRUCTIONS
FOR LOAN FUNDS WHICH ARE
PROVIDED TO
--------------------------------------
BY CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, AS AGENT
FOR THE _______________________ LOAN
GF# ___________________________
1. The money to fund this loan is expected to be provided to you by Chase
Bank of Texas, National Association, (in its capacity as agent for
various purchasers (the "PURCHASERS") under a Master Purchase Agreement
between them and HSA Residential Mortgage Services of Texas, Inc.) which
will purchase this loan from Austin Funding Corporation (the "COMPANY")
when it is closed. If for any reason this loan does not close as
scheduled, you agree to notify Xxxxx Xxxxxxx or Xxxxxx X. Xxxxx of HSA
Residential Mortgage Services of Texas, Inc. immediately at 000-000-0000
and return the funds by wire transfer to our account within twenty-four
(24) hours.
2. Accordingly, this is notice that you will be the "bailee" of the
Purchasers under Section 8.305 of the Uniform Commercial Code for the
promissory note and all other papers for this loan which come into your
possessions, from the instant the promissory note for this loan is
executed and delivered until you have delivered them to HSA Residential
Mortgages Services of Texas, Inc. for the account of Chase Bank of Texas,
National Association, as agent.
3. FAX to HSA Residential Mortgage Services of Texas, Inc. at (713)
[COORDINATOR FAX], marked to the attention of [Loan Coordinator] (Phone:
(713) [COORDINATOR PHONE]) the following items:
(1) A certified copy of the HUD-I or Closing Statement prepared by your
company and executed at the closing by the borrower;
(2) A certified copy of this bailee letter with the blanks in the block
below completed and signed by your company.
YOU ARE NOT AUTHORIZED TO FUND THIS LOAN UNTIL YOU HAVE RECEIVED A FUNDING
NUMBER FROM AUSTIN FUNDING CORPORATION AND A CORRESPONDING RMST TRANSACTION
NUMBER FROM [LOAN COORDINATOR]. YOU MUST CALL [LOAN COORDINATOR] TO OBTAIN A
VERBAL AUTHORIZATION NUMBER.
4. SEND by courier within TWENTY-FOUR (24) HOURS after funding, the
original note and the other closing papers listed below to HSA
Residential Mortgage Services of Texas, Inc. at 0000 Xxxx Xxx Xxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attention: [Loan Coordinator].
a. ORIGINAL PROMISSORY NOTE executed by the borrower(s) and ONE CERTIFIED
COPY.
b. ONE CERTIFIED COPY OF THE MORTGAGE OR DEED OF TRUST certified that the
original has been sent for recording or registration.
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APPENDIX 5 Page i
29
c. COPY OF ANY APPLICABLE POWER OF ATTORNEY FOR ANY MORTGAGOR OR NOTE
MAKER certified a true copy of the original and that the original has
been sent for recording or registration.
d. ONE CERTIFIED COPY OF THE HAZARD INSURANCE POLICY.
e. ONE CERTIFIED COPY OF THE TITLE COMMITMENT.
f. ONE CERTIFIED COPY OF THE EXECUTED TRUTH-IN-LENDING.
g. ONE CERTIFIED COPY OF THE FLOOD INSURANCE (IF APPLICABLE).
h. ONE CERTIFIED COPY OF ANY POWER OF ATTORNEY USED BY THE BUYERS (IF
APPLICABLE).
i. After the original deed of trust and, if applicable, power of attorney
have been recorded, they should be sent to AUSTIN FUNDING CORPORATION
or their Investor. The Title Policy, when issued, should also be sent
to AUSTIN FUNDING CORPORATION, for delivery to their Investor.
j. Special provisions:
(i) A FUNDING NUMBER MUST BE OBTAINED FROM AUSTIN FUNDING CORPORATION
and conveyed to HSA Residential Mortgage Services of Texas, Inc.
prior to any release of funds.
(ii) Please contact Xxxxxx X. Xxxxx at (000) 000-0000 regarding any
excess monies collected at closing.
______________________ hereby acknowledges receipt of the foregoing
notice that it is bailee for the Purchasers in respect of the promissory note,
executed by ____________________ and payable to the order of (or endorsed by its
payee to be payable to the order of) AUSTIN FUNDING CORPORATION and which has
been endorsed by AUSTIN FUNDING CORPORATION in blank. We are today mailing the
original executed and properly endorsed note to HSA Residential Mortgage
Services of Texas, Inc. with the other papers listed above.
-----------------------------------------
(Title Company)
By:
-------------------------------------
Name:
-----------------------------------
Title: Closer
Date:
-----------------------------------
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APPENDIX 5 Page ii
30
APPENDIX 6
PENDING OR THREATENED LITIGATION
--------------------------------------------------------------------------------
APPENDIX 6 Page i
31
APPENDIX 7
DEFECTIVE MORTGAGE CRITERIA
Defective Mortgage means any Mortgage:
(i) the Enclosures for which are incomplete in any material respect;
(ii) for which any required Enclosures are, in the reasonable opinion
of RMST or (in the case of a Mortgage covered by a Commitment) the applicable
Investor, defective or inaccurate in any material respect considered in light of
the requirements of the relevant Commitment or (for any Bulk Purchase Mortgage)
secondary market investors' requirements therefor reasonably anticipated by
RMST;
(iii) for which any material Enclosure is, in the reasonable opinion of
RMST or the Investor, not valid and binding;
(iv) that is in default as to payment of principal, interest or both
and past due more than thirty (30) days as of the day the Warehouse Purchasers
(acting through Agent) purchased the Mortgage;
(v) as to which any representation of the Company that is specific to
that Mortgage (whether by itself or together with others) is false or misleading
in any material respect;
(vi) with respect to which the Company shall have breached any warranty
that is specific to that Mortgage (whether by itself or together with others) in
any material respect;
(vii) with respect to which any fraud was committed by any mortgagor,
guarantor, title or closing agent, any other material party to the origination
or funding thereof or any holder or endorser thereof,
(viii) which contains documentary exceptions which RMST has declared to
be defective;
(ix) that does not meet, or for any reason has ceased to meet, the
applicable conditions for eligibility as an Eligible Mortgage;
(x) as to which seven (7) Banking Business Days have elapsed since its
purchase without RMST having received its Enclosures; or
(xi) that the Company fails to service in accordance with this
Agreement and as to which the Company fails to correct all such servicing errors
on or before thirty (30) days after receipt of written notice from RMST setting
forth the nature of the servicing errors in reasonable detail.
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APPENDIX 7 Page i
32
APPENDIX 8
ELIGIBLE MORTGAGE CRITERIA
Eligible Mortgage means a Mortgage that, at the time of its purchase,
meets the following conditions:
1. It is a conventional Mortgage, FHA Mortgage or VA Mortgage or
subprime Mortgage, except that the dollar limitations on the maximum amount of
principal to be eligible for participation in a program offered by GNMA, FNMA,
VA or FHLMC may be exceeded so long as no Mortgage exceeds Seven Hundred Fifty
Thousand Dollars ($750,000) in original principal amount without Agent's prior
approval on a case-by-case basis.
2. The promissory note evidencing it (a) is the standard form approved
by GNMA, VA, FHA, FNMA or FHLMC or a form otherwise acceptable to RMST, (b) has
a maturity within thirty (30) years of its origination, (c) is payable or
endorsed by the Company (without restriction or limitation) in blank, (d) is
fully funded and (e) is valid and enforceable without offset, counterclaim,
defense or right of rescission or avoidance of any kind other than for valid
payments made on it and any exceptions to enforceability under Debtor Laws.
3. No default in the payment of principal or interest or any other
default on it has continued uncured for thirty (30) calendar days, no
foreclosure or other similar proceedings have commenced and no claim for any
credit, allowance or adjustment exists.
4. It is secured by a mortgage, deed of trust or trust deed that (a) is
the standard form approved by VA, GNMA, FHA, FNMA or FHLMC or a form otherwise
acceptable to RMST and (b) grants a first priority lien on residential real
property described therein that either has been perfected by recording or will
be perfected upon recording; provided that the mortgage, deed of trust or trust
deed securing a Second Lien Mortgage may grant a second priority lien on such
real estate.
5. It has been fully and finally funded and is not subject to any
unexpired right of rescission provided for by any applicable federal or other
laws.
6. The underlying residential real property securing it (a) consists of
land and (i) a one- to four-family dwelling, (ii) a condominium unit that is
ready for occupancy or (iii) a manufactured home unit, but is not a mobile home,
a co-op or a multifamily dwelling for more than four (4) families, (b) is, if
required by applicable appraisal laws, covered by an appraisal and (c) is
insured against loss or damage by fire and all other hazards normally included
in standard extended coverage insurance (including flood insurance if the
property is in a federally-designated flood hazard area) in accordance with the
Enclosures for it and the Company (as servicer) or Agent has the right to be
named as the loss payee for that insurance.
7. Unless it is a Bulk Purchase Mortgage, it conforms in all material
respects with all of the requirements of a valid and enforceable Commitment
issued by an Investor and duly assigned to RMST and its assigns and is covered
by the Commitment (including the requirements that such Commitment (i) has not
been "paired off" or otherwise presently or prospectively terminated, (ii) has
not been reduced by takeout purchases of other mortgage loans so that it is
insufficient to cover the subject Mortgage and each other Mortgage that has been
purchased, or is being proposed by the Company for purchase, by Warehouse
Purchasers with an express or implied representation by the Company that it is
covered by the Commitment and (iii) is in full force and effect and enforceable
in accordance with its terms); provided that a Mortgage that was covered by a
Commitment when sold to the Warehouse Purchasers but thereafter loses such
coverage shall not be considered a Lost Commitment Mortgage unless and until ten
(10) days shall have elapsed after such coverage is lost within which the
Company has not caused the Mortgage to be again covered by a Commitment duly
assigned and delivered to RMST and its assigns.
--------------------------------------------------------------------------------
APPENDIX 8 PAGE i
33
For this purpose coverage shall not be deemed lost until the expiration of any
grace period to deliver the Mortgage.
8. If it is a Bulk Purchase Mortgage, (i) the Company currently and
reasonably believes in good faith that it satisfies all underwriting policies
and criteria of a specific secondary mortgage market investor in subprime
mortgage loans and, if requested to do so, that investor would in fact purchase
it, and (ii) its loan-to-collateral-value ratio does not exceed one hundred
percent (100%) and foreclosure proceedings have not been initiated in respect of
any property securing it.
9. The Enclosures for it are (a) delivered to RMST as required by the
provisions of this Agreement, (b) in compliance with all laws, (c) otherwise in
compliance with the requirements of this Agreement and otherwise in form and
substance acceptable to RMST and (d) subject to no liens.
10. The Enclosures together with the recorded deed of trust and the
policy of title insurance are delivered to RMST as required by the provisions of
any applicable commitment and, in any event, within sixty (60) calendar days
after the date of the related promissory note.
11. It has been owned by Warehouse Purchasers for no more than sixty
(60) calendar days.
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APPENDIX 8 PAGE ii
34
APPENDIX 9
MINIMUM CRITERIA FOR INVESTORS
--------------------------------------------------------------------------------
APPENDIX 9 PAGE i
35
APPENDIX 10
BAILEE LETTER (FROM AGENT)
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
000 XXXX XXXXXX XXXX
XXXXXXX, XXXXX 00000
TELEPHONE (000) 000-0000
TELECOPY (000) 000-0000
-----------------------------------
-----------------------------------
-----------------------------------
Re: [Mortgagor(s) name(s) and loan no.] originated by [name of originator] (the
"ORIGINATOR")
Beneficial ownership of the mortgage loans (the "LOANS") listed on the
attached list and the enclosed mortgage notes and other documents (the "MORTGAGE
DOCUMENTS") for them has been purchased by Chase Bank of Texas, National
Association ("AGENT") for itself and the other Buyers under the Master Purchase
Agreement dated as of September 18, 1998 (as renewed, extended, amended, or
restated, the "MASTER PURCHASE AGREEMENT") between (i) HSA Residential Mortgages
Services of Texas, Inc. ("RMST") and American General Finance, Inc. and (ii)
Agent and the Buyers named therein.
Agent herewith delivers the Mortgage Documents to you for purchase
[INCLUDE THIS TEXT ONLY FOR MORTGAGE LOANS COVERED BY TAKEOUT COMMITMENTS: under
the forward purchase agreement or takeout commitment (the "TAKEOUT COMMITMENT")
that you issued to the Originator.] If you purchase the Loans, (i) your purchase
will be without recourse against either Agent or any of the other Buyers under
the Master Purchase Agreement, and without express or implied warranty or
representation from any of them, except that Agent, on behalf of the Buyers,
will warrant that Agent has the power and authority to deliver the Loans to you
and that the Buyers and Agent have neither conveyed the Loans them to anyone
other than you nor encumbered them, and (ii) any claim you may have in respect
of the purchase other than for violation of such express special warranty will
accordingly be required to be made against the Originator to whom you issued
your Takeout commitment. Within twenty-one (21) days after the date of this
letter, Agent must receive either (i) payment in full for the Mortgage Documents
or (ii) the returned Mortgaged Documents themselves. "Payment in full" means
payment of the purchase price for the Loans [USE THIS TEXT FOR MORTGAGE LOANS
COVERED BY TAKEOUT COMMITMENTS: DETERMINED IN ACCORDANCE WITH THE TERMS OF YOUR
TAKEOUT COMMITMENT] [USE THIS TEXT FOR MORTGAGE LOANS THAT ARE NOT COVERED BY
TAKEOUT COMMITMENTS: AS YOU HAVE AGREED WITH THE ORIGINATOR] plus accrued
interest to the date of purchase, BUT IN NO EVENT LESS THAN THE "MINIMUM PRICE"
STATED FOR EACH MORTGAGE LOAN ON THE ATTACHED LIST. Until Agent has received
either the Mortgage Documents or payment in full for them, you shall be deemed
to be holding the Mortgage Documents IN TRUST for Buyers as their beneficial
owners, and as Buyers' bailee pursuant to - or as otherwise provided in
accordance with - applicable provisions of the Uniform Commercial Code. No
property interests in the Mortgage Documents are or will be transferred to you
until payment in full has been received by Agent. If you receive conflicting
instructions regarding the Mortgage Documents from RMST or Buyers, you agree to
act in accordance with Agent's instructions. AGENT RESERVES THE RIGHT, AT ANY
TIME BEFORE IT RECEIVES FULL PAYMENT, TO REQUIRE BY NOTICE TO YOU THAT YOU
RETURN THE MORTGAGE DOCUMENTS, AND IF YOU RECEIVE SUCH A NOTICE, YOU AGREE TO
IMMEDIATELY RETURN THEM TO AGENT AND TO INDEMNIFY AGENT AND HOLD AGENT AND THE
BUYERS HARMLESS AGAINST ANY LOSS, COST,
--------------------------------------------------------------------------------
APPENDIX 10 PAGE i
36
DAMAGE, CLAIM OR EXPENSE THAT THEY MAY INCUR IF THE LOAN IS NEITHER PURCHASED
NOR RETURNED TO AGENT AS HEREIN PROVIDED.
-----------------------------------------------------------
IF YOU FAIL TO MAKE FULL PAYMENT TO AGENT WITHIN TWENTY-ONE
(21) DAYS AFTER THE DATE OF THIS LETTER, YOU ARE INSTRUCTED
TO RETURN ALL OF THE MORTGAGE DOCUMENTS TO AGENT.
-----------------------------------------------------------
Payment for the Mortgage Documents must be made by wire transfer of immediately
available funds to:
Chase Bank of Texas, National Association
ABA Number 0000-0000-0
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
For Credit to HSA RMST, Inc. Settlement Account no. 00103196573
Ref: [Mortgagors' names and loan nos.]
BY ACCEPTING THE MORTGAGE DOCUMENTS DELIVERED TO YOU WITH THIS LETTER, YOU
CONSENT TO BE BUYERS' TRUSTEE AND BAILEE ON THE TERMS DESCRIBED IN THIS LETTER.
AGENT REQUESTS THAT YOU ACKNOWLEDGE RECEIPT OF THE ENCLOSED MORTGAGE DOCUMENTS
AND THIS LETTER AND CONFIRM YOUR AGREEMENTS AS SET FORTH IN THIS LETTER BY
SIGNING AND RETURNING TO AGENT THE ENCLOSED COPY OF THIS LETTER, ALTHOUGH YOUR
FAILURE TO DO SO SHALL NOT DIMINISH, AFFECT OR IMPAIR ANY TERM OR CONDITION OF
THIS LETTER, YOUR AGREEMENTS STATED HEREIN (WHICH ARISE AUTOMATICALLY ON YOUR
ACCEPTANCE OF THIS LETTER AND THE ENCLOSED MORTGAGE DOCUMENTS) OR THEIR BINDING
EFFECTS ON YOU. The preceding provision shall in no way affect or impair any
claim or cause of action against you in respect of your [USE THIS TEXT FOR
MORTGAGE LOANS COVERED BY TAKEOUT COMMITMENTS: TAKEOUT COMMITMENT] [USE THIS
TEXT FOR MORTGAGE LOANS THAT ARE NOT COVERED BY TAKEOUT COMMITMENTS: AGREEMENTS
WITH THE ORIGINATOR].
This letter shall bind you and your successors, assigns, trustees, conservators
and receivers and shall benefit Buyers and their respective successors and
assigns.
Very truly yours,
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Accepted and agreed to:
-----------------------------------
By:
-------------------------------
--------------------------------------------------------------------------------
APPENDIX 10 PAGE ii
37
Name:
-----------------------------
Title:
----------------------------
Date:
-----------------------------
--------------------------------------------------------------------------------
APPENDIX 10 PAGE iii
38
APPENDIX 11
BAILEE LETTER (FROM RMST)
HSA RESIDENTIAL MORTGAGES SERVICES OF TEXAS, INC.
0000 XXXX XXX XXXXX XXXXX
XXXXX 000
XXXXXXX, XXXXX 00000
TELEPHONE (000) 000-0000
TELECOPY (000) 000-0000
-----------------------------------
-----------------------------------
-----------------------------------
Re: [Mortgagor(s) name(s) and loan no.] originated by [name of originator] (the
"ORIGINATOR")
Beneficial ownership of the mortgage loans (the "LOANS") listed on the
attached list and the enclosed mortgage notes and other documents (the "MORTGAGE
DOCUMENTS") for them has been purchased by HSA Residential Mortgages Services of
Texas, Inc. ("RMST").
RMST herewith delivers the Mortgage Documents to you for purchase
[INCLUDE THIS TEXT ONLY FOR MORTGAGE LOANS COVERED BY COMMITMENTS: under the
forward purchase agreement or takeout commitment (the "COMMITMENT") that you
issued to the Originator.] If you purchase the Loans, (i) your purchase will be
without recourse against RMST, and without express or implied warranty or
representation from it, except that RMST will warrant that RMST has the power
and authority to deliver the Loans to you and that the RMST has neither conveyed
the Loans to anyone other than you nor encumbered them, and (ii) any claim you
may have in respect of the purchase other than for violation of such express
special warranty will accordingly be required to be made against the Originator
to whom you issued your Commitment. Within twenty-one (21) days after the date
of this letter, RMST must receive either (i) payment in full for the Mortgage
Documents or (ii) the returned Mortgaged Documents themselves. "Payment in full"
means payment of the purchase price for the Loans [USE THIS TEXT FOR MORTGAGE
LOANS COVERED BY COMMITMENTS: DETERMINED IN ACCORDANCE WITH THE TERMS OF YOUR
COMMITMENT] [USE THIS TEXT FOR MORTGAGE LOANS THAT ARE NOT COVERED BY
COMMITMENTS: AS YOU HAVE AGREED WITH THE ORIGINATOR] plus accrued interest to
the date of purchase, BUT IN NO EVENT LESS THAN THE "MINIMUM PRICE" STATED FOR
EACH MORTGAGE LOAN ON THE ATTACHED LIST. Until RMST has received either the
Mortgage Documents or payment in full for them, you shall be deemed to be
holding the Mortgage Documents IN TRUST for RMST as their beneficial owner, and
as RMST's bailee pursuant to - or as otherwise provided in accordance with -
applicable provisions of the Uniform Commercial Code. No property interests in
the Mortgage Documents are or will be transferred to you until payment in full
has been received by RMST. RMST RESERVES THE RIGHT, AT ANY TIME BEFORE IT
RECEIVES FULL PAYMENT, TO REQUIRE BY NOTICE TO YOU THAT YOU RETURN THE MORTGAGE
DOCUMENTS, AND IF YOU RECEIVE SUCH A NOTICE, YOU AGREE TO IMMEDIATELY RETURN
THEM TO RMST AND TO INDEMNIFY RMST AND HOLD RMST HARMLESS AGAINST ANY LOSS,
COST, DAMAGE, CLAIM OR EXPENSE THAT IT MAY INCUR IF THE LOAN IS NEITHER
PURCHASED NOR RETURNED TO RMST AS HEREIN PROVIDED.
--------------------------------------------------------------------------------
APPENDIX 11 PAGE i
39
-----------------------------------------------------------
IF YOU FAIL TO MAKE FULL PAYMENT TO RMST WITHIN TWENTY-ONE
(21) DAYS AFTER THE DATE OF THIS LETTER, YOU ARE INSTRUCTED
TO RETURN ALL OF THE MORTGAGE DOCUMENTS TO RMST.
-----------------------------------------------------------
Payment for the Mortgage Documents must be made by wire transfer of immediately
available funds to:
---------------------------------------
ABA Number
------------------------
Attention:
------------------------
Telephone: (713)
------------------
Fax: (713)
------------------------
For Credit to - Account no.
------------------------ -------------------------
Ref: [Mortgagors' names and loan nos.]
BY ACCEPTING THE MORTGAGE DOCUMENTS DELIVERED TO YOU WITH THIS LETTER, YOU
CONSENT TO BE RMST'S TRUSTEE AND BAILEE ON THE TERMS DESCRIBED IN THIS LETTER.
RMST REQUESTS THAT YOU ACKNOWLEDGE RECEIPT OF THE ENCLOSED MORTGAGE DOCUMENTS
AND THIS LETTER AND CONFIRM YOUR AGREEMENTS AS SET FORTH IN THIS LETTER BY
SIGNING AND RETURNING TO RMST THE ENCLOSED COPY OF THIS LETTER, ALTHOUGH YOUR
FAILURE TO DO SO SHALL NOT DIMINISH, AFFECT OR IMPAIR ANY TERM OR CONDITION OF
THIS LETTER, YOUR AGREEMENTS STATED HEREIN (WHICH ARISE AUTOMATICALLY ON YOUR
ACCEPTANCE OF THIS LETTER AND THE ENCLOSED MORTGAGE DOCUMENTS) OR THEIR BINDING
EFFECTS ON YOU. The preceding provision shall in no way affect or impair any
claim or cause of action against you in respect of your [USE THIS TEXT FOR
MORTGAGE LOANS COVERED BY COMMITMENTS: COMMITMENT] [USE THIS TEXT FOR MORTGAGE
LOANS THAT ARE NOT COVERED BY TAKEOUT COMMITMENTS: AGREEMENTS WITH THE
ORIGINATOR].
This letter shall bind you and your successors, assigns, trustees, conservators
and receivers and shall benefit RMST and its successors and assigns.
Very truly yours,
HSA RESIDENTIAL MORTGAGES SERVICES OF
TEXAS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Accepted and agreed to:
-----------------------------------
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Date:
-----------------------------
--------------------------------------------------------------------------------
APPENDIX 11 PAGE ii
