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EXHIBIT 10.7
SECOND AMENDMENT TO
CREDIT AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this
"Amendment") is entered into as of this 20th day of December 1996, by and
between WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware corporation
("Washington"), and WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED, a Delaware
corporation ("Xxxxxxx," Washington and Xxxxxxx are hereinafter collectively
referred to as the "Borrowers"), and RESIDENTIAL FUNDING CORPORATION, a
Delaware corporation (the "Lender").
WHEREAS, the Borrowers and the Lender have entered into a revolving
warehouse facility with a present Warehousing Commitment Amount of One Hundred
Fifty Million Dollars ($150,000,000), to finance the origination and
acquisition of Mortgage Loans as evidenced by a Warehousing Promissory Note in
the principal sum of One Hundred Fifty Million Dollars ($150,000,000), dated as
of June 14, 1996 (the "Warehousing Note"), and by a Credit and Security
Agreement dated as of June 14, 1996, as the same may have been amended or
supplemented (the "Agreement");
WHEREAS, the Borrowers and the Lender have entered into a servicing
facility with a present Servicing Facility Commitment Amount of Ten Million
Dollars ($10,000,000) as evidenced by a Servicing Facility Promissory Note in
the principal sum of Ten Million Dollars ($10,000,000), dated as of June 14,
1996, a Term Loan Promissory Note in the principal sum of Ten Million Dollars
($10,000,000), dated as of June 14, 1996, and the Agreement;
WHEREAS, the Borrowers have also entered into a term loan facility
with a present Term Loan Commitment Amount of Ten Million Dollars ($10,000,000)
as evidenced by a Term Loan Promissory Note in the principal sum of Ten Million
Dollars ($10,000,000), dated as of June 14, 1996, a Term Loan Promissory Note
in the principal sum of Ten Million Dollars ($10,000,000), dated as of June 14,
1996, and the Agreement;
WHEREAS, the Borrowers have requested the Lender to amend the
Agreement to allow for the warehousing of Conduit Mortgage Loans, and the
Lender has agreed to such amendment of the Agreement subject to the terms and
conditions of this Amendment;
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual covenants, agreements and conditions hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
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1. All capitalized terms used herein and not otherwise
defined shall have their respective meanings set forth in the
Agreement.
2. The effective date ("Effective Date") of this Amendment shall be
December 23, 1996, the date on which the Borrowers have complied with all the
terms and conditions of this Amendment.
3. Section 1.1 of the Agreement shall be amended by adding
the following definitions in the appropriate alphabetical order:
"Conduit Advance" means an Advance made against a
Conduit Mortgage Loan.
"Conduit Mortgage Loan" means a Multifamily Mortgage Loan
that is not subject to a Purchase Commitment, but that has been
underwritten in accordance with the Underwriting Guidelines and is
eligible for sale under FNMA's Multifamily Mortgage Loan conduit
program or under another conduit program acceptable to the Lender, in
its sole discretion.
"Conduit Rate" means a floating rate of interest which is
equal to one and three-quarters percent (1.75%) per annum over LIBOR.
The Conduit Rate will be adjusted as of the effective date of each
weekly change in LIBOR. The Lender's determination of the Conduit Rate
as of any date of determination shall be conclusive and binding,
absent manifest error.
"Hedging Arrangements" means, with respect to any Person, any
agreements or other arrangement (including, without limitation,
interest rate swap agreements, interest rate cap agreements and
forward sale agreements) entered into by such Person to protect itself
against changes in interest rates.
"Pledged Hedging Account" has the meaning set forth in
Section 3.1(g) hereof.
"Pledged Hedging Arrangement" has the meaning set forth
in Section 3.1(g) hereof.
"Property Debt Service Coverage Ratio" means, at any date of
determination for any Multifamily Property that secures a Mortgage
Loan pledged or to be pledged hereunder, the ratio of (a) the net
operating income of the Multifamily Property, as determined by the
Borrowers in accordance with Rating Agency guidelines, to (b)
projected interest expense and scheduled payments in respect of the
Multifamily Mortgage Loan for the twelve (12) months after such date
of determination.
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"Rating Agency" means a nationally recognized statistical
rating organization that rates securities backed by Mortgage Loans
similar to Conduit Mortgage Loans.
"Underwriting Guidelines" means any underwriting guidelines
adopted by FNMA in connection with its Multifamily Mortgage Loan
conduit program as in effect from time to time, or any underwriting
guidelines adopted by the sponsor of any other Multifamily Mortgage
Loan conduit program approved by the Lender as in effect from time to
time provided such underwriting guidelines have been approved by, or
conform to the standards of, at least two Rating Agencies.
4. Section 1.1 of the Agreement shall be amended to delete the
definitions of "Collateral Value" and "Warehousing Rate" in their entirety,
replacing them with the following definition:
"Collateral Value" means (a) with respect to any Mortgage
Loan as of the date of determination, the lesser of (i) the amount of
any Advance made against such Mortgage Loan under Section 2.1(c)
hereof or (ii) the Fair Market Value of such Mortgage Loan, (b) in the
event Pledged Mortgages have been exchanged for Pledged Securities,
the aggregate Fair Market Value of the Pledged Mortgages backing such
Pledged Securities, (c) with respect to Pledged Hedging Arrangements
held in the Pledged Hedging Account, the net amount payable to the
Borrowers, if any, under such Pledged Hedging Arrangements if the same
were terminated as of the date of determination and (d) with respect
to cash, the amount of such cash.
"Warehousing Rate" means a floating rate of interest which is
equal to three-quarters of one percent (0.75%) per annum over LIBOR.
The Warehousing Rate will be adjusted as of the effective date of each
weekly change in LIBOR. The Lender's determination of the Warehousing
Rate as of any date of determination shall be conclusive and binding,
absent manifest error.
5. Section 2.1(b)(1) of the Agreement shall be deleted in
its entirety and the following shall be substituted in lieu
thereof:
(1) No Warehousing Advance shall be made against a
Mortgage Loan, other than a Conduit Mortgage Loan, which is
not covered by a Purchase Commitment for either the Mortgage
Loan or the Mortgage-backed Securities or Participation
Certificates to be created on the basis of such Mortgage
Loan.
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6. Section 2.1(b) of the Agreement shall be further amended
to add the following sections after Section 2.1(b)(7):
(8) The aggregate amount of Conduit Advances
outstanding at any one time shall not exceed Fifty
Million Dollars ($50,000,000).
(9) No Advance shall be made against a Conduit
Mortgage Loan unless it (i) is underwritten in compliance
with the Underwriting Guidelines, (ii) is secured by a
Multifamily Property that has a Property Debt Service
Coverage Ratio of no less than 1.15 to 1.00 and (iii) has an
original Mortgage Note Amount not greater then eighty percent
(80%) of the lesser of (A) the value of the related Mortgage
Property, as determined by the appraisal thereof described in
Section 5.15(c)(5) hereof, or (B) if such Conduit Mortgage
Loan was used to finance the purchase of such Mortgage
Property, the purchase price thereof.
7. Section 2.1(c) of the Agreement shall be amended to add
the following section after Section 2.1(c)(6):
(7) A Warehousing Advance made against a Conduit
Mortgage Loan pledged hereunder, ninety-seven percent (97%) of
the Mortgage Note Amount.
8. Section 2.7(a) of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
2.7(a) Prior to the occurrence of an Event of Default, the
unpaid amount of each Warehousing Advance, other than a Conduit
Advance, shall bear interest, from the date of such Warehousing
Advance until paid in full, at the Warehousing Rate. Prior to the
occurrence of an Event of Default, the unpaid amount of each Conduit
Advance shall bear interest, from the date of such Conduit Advance
until paid in full, at the Conduit Rate.
9. The first two paragraphs of Section 2.7(d) of the
Agreement shall be deleted in their entirety and the following
shall be substituted in lieu thereof:
2.7(d) The Borrowers shall be entitled to receive certain
benefits based on the average monthly Eligible Balances of the
Borrowers maintained at a Designated Bank. For the purposes hereof,
all Advances shall be called the "Applicable Advances." After the end
of each calendar month, the Lender will calculate the interest due for
the applicable month, by electing a portion ("Balance Funded Portion")
of the Applicable Advances
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which is equal to the lesser of (a) the Applicable Advances
outstanding during such month or (b) the average amount of Eligible
Balances on deposit with a Designated Bank during such month. The
Balance Funded Portion of the Applicable Advances shall bear interest
at balance funded rates of (a) three-quarters of one percent (0.75%)
per annum for the Balance Funded Portion of Warehousing Advances other
than Conduit Advances, (b) three and one-half percent (3.50%) per
annum for the Balance Funded Portion of Servicing Facility Advances,
(c) three percent (3.00%) per annum for the Balance Funded Portion of
the Term Loan Advance, and (d) one and three-quarters percent (1.75%)
per annum for the Balance Funded Portion of Conduit Advances.
The Balance Funded Portion of the Applicable Advances
outstanding for a month shall be determined by (b) first, deducting
the average amount of the Term Loan Advance outstanding for a month
from the average amount of Eligible Balances during such month, but
only to the extent of the average amount of Eligible Balances, (b)
second, to the extent Eligible Balances remain for such month,
deducting the average amount of the Servicing Facility Advances
outstanding for a month from the remaining average amount of Eligible
Balances during such month, but only to the extent of the remaining
average amount of Eligible Balances, (c) third, to the extent Eligible
Balances remain for such month, deducting the average amount of
Conduit Advances outstanding for a month from the remaining average
amount of Eligible Balances during such month, but only to the extent
of the remaining average amount of Eligible Balances, and (d) fourth,
to the extent Eligible Balances remain for such month, deducting the
average amount of Warehousing Advances other than Conduit Advances
outstanding for a month from the remaining average amount of Eligible
Balances during such month, but only to the extent of the remaining
average amount of Eligible Balances.
10. Sections 2.8(f)(1) and (5) are deleted in their entirety
and the following are substituted therefor:
(1) For an FHA Construction Mortgage Loan, ninety
(90) days elapse from the date of each Advance made by the
Lender against such Pledged Mortgage, and for any other
Mortgage Loan other than a Pledged Mortgage to be exchanged
for a FNMA Mortgage-backed Security or a Conduit Mortgage
Loan, ninety (90) days elapse from the date of the initial
Advance made by the Lender against such Pledged Mortgage,
whether or not such Pledged Mortgage is included in an
Eligible Mortgage Pool.
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(5) For a Conventional Multifamily Mortgage Loan,
FNMA DUS Mortgage Loan, FHA Project Mortgage Loan, HUD 241
Mortgage Loan, FHA Construction Mortgage Loan, Conduit
Mortgage Loan or Conventional Health Care Mortgage Loan, one
(1) Business Day elapses from the date an Advance was made
against any Mortgage Loan, without receipt of those
Collateral Documents relating to such Mortgage Loan required
to be delivered on such date under Exhibit D-MF/CONV/DUS,
Exhibit D-MF/FHA, or Exhibit D-MF/BER hereto, or such
Collateral Documents, upon examination by the Lender, are
found not to be in compliance with the requirements of this
Agreement or the related Purchase Commitment.
11. Section 2.8(f) of the Agreement shall be further amended
to add the following section immediately after Section 2.8(f)(12):
(13) Two hundred seventy (270) days elapse from the
date of the initial Conduit Advance made by the Lender
against a Conduit Mortgage Loan, whether or not such Pledged
Mortgage is included in an Eligible Mortgage Pool.
12. Section 3.1 of the Agreement is hereby amended to reletter the
existing Sections 3.1(g), (h) and (i) as Sections 3.1(h), (i) and (j), and to
add the following section immediately after Section 3.1(i) and before the last
paragraph thereof:
3.1(g) All right, title and interest of the Borrowers in and
to any Hedging Arrangements entered into to protect the Borrowers
against changes in the value of the Pledged Mortgages and Pledged
Securities resulting from changes in interest rates (the "Pledged
Hedging Arrangements") and the Borrowers' accounts in which the
Pledged Hedging Arrangements are held (collectively, the "Pledged
Hedging Account"), including, without limitation, all rights to
payment arising under Pledged Hedging Arrangements or from the Pledged
Hedging Account.
13. Section 3.3 of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
3.3 Delivery of Additional Collateral or Mandatory
Prepayment. At any time that the aggregate Collateral Value of the
Pledged Mortgages, Pledged Securities, Hedging Arrangements that the
Lender has agreed to include in the calculation of Collateral Value
and cash then pledged hereunder is less than the aggregate amount of
the Warehousing Advances then outstanding hereunder, the Lender may
request, and the Borrowers shall within
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two (2) Business Days after Notice by the Lender (a) deliver to the
Lender for pledge hereunder additional Mortgage Loans, Mortgage-backed
Securities and/or cash, with a Collateral Value sufficient to cover
the difference between the Collateral Value of the Pledged Mortgages,
Pledged Securities, Hedging Arrangements and cash pledged and the
aggregate amount of Warehousing Advances outstanding hereunder, and/or
(b) repay the Warehousing Advances in an amount sufficient to reduce
the aggregate balance thereof outstanding to or below the Collateral
Value of the Pledged Mortgages, Pledged Securities, Hedging
Arrangements and cash pledged hereunder.
14. Section 5.13 of the Agreement is amended to add the
following after Section 5.13(e):
5.13(f) Washington is a FNMA approved and qualified lender,
seller and/or servicer under FNMA's Multifamily Mortgage Loan conduit
program.
15. Section 5.15(c)(6) of the Agreement shall be deleted in
its entirety and the following shall be substituted in lieu
thereof:
(6) complies and will continue to comply with the
terms of this Agreement and (i) if such Mortgage Loan is
subject to a Purchase Commitment, with the related Purchase
Commitment, or (ii) otherwise, with standard practice in the
secondary market for Multifamily Mortgage Loans to be used to
back Mortgage-backed Securities.
16. Section 6.2 of the Agreement shall be amended to add the
following after Section 6.2(j):
6.2(k) As soon as available and in any event within two (2)
Business Days after the end of each week, a hedging report (the
"Hedging Report") as of the end of such week, setting forth the
Company's portfolio of Conduit Mortgage Loans that are Pledged
Mortgages, the expected sale dates, the Hedging Arrangements relating
thereto, and such other information as the Lender may request relating
to the market risks of such Pledged Mortgages.
17. Section 6.13 of the Agreement shall be amended to add the
following after Section 6.13(g):
6.13(h) Maintain Hedging Arrangements with respect to the
risk that the market value of the Company's portfolio of Conduit
Mortgage Loans held for sale
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(including, without limitation, any such Mortgage Loans that are
Pledged Mortgages) will change as a result of changes in interest
rates prior to the sale of such Mortgage Loans effectively mitigating
the risk that the value of such Mortgage Loans will change as a result
of changes in interest rates. The Company shall maintain the Pledged
Hedging Arrangements with Persons satisfactory to the Lender and
shall, at the request of the Lender, enter into, and cause such
Persons to enter into, agreements satisfactory to the Lender with
respect to Lender's security interest in the Pledged Hedging
Arrangements.
18. Sections 7.6 and 7.7 of the Agreement shall be deleted in
their entirety and the following shall be substituted in lieu
thereof:
7.6 Debt to Adjusted Tangible Net Worth Ratio.
Permit the ratio of Debt to Adjusted Tangible Net Worth
of Washington and its Subsidiaries, on a consolidated
basis, at any time to exceed 15 to 1.
7.10 Minimum Adjusted Tangible Net Worth. Permit
Adjusted Tangible Net Worth of Washington and its
Subsidiaries, on a consolidated basis, at any time to be
less than Twenty-Five Million Dollars ($25,000,000).
19. Exhibits C-MF and D-MF/CONV/DUS to the Agreement are hereby
deleted in their entirety and replaced with the new Exhibits C-MF and
D-MF/CONV/DUS/COND attached to this Amendment. All references in the Agreement
to Exhibits C-MF and D-MF/CONV/DUS shall be deemed to refer to the new Exhibits
C-MF and DMF/CONV/DUS/COND.
20. Exhibit I-MF to the Agreement is deleted in its entirety and
replaced with the new Exhibit I-MF attached to this Amendment. All references
in this Amendment and the Agreement to Exhibit I-MF shall be deemed to refer to
the new Exhibit I-MF.
21. The Borrowers shall deliver to the Lender (a) an executed original
of this Amendment; an executed Certificate of Secretary with corporate
resolutions; and (b) a Two Hundred Fifty Dollar ($250) document production fee.
22. The Borrowers represent, warrant and agree that (a) there exists
no Default or Event of Default under the Loan Documents, (b) the Loan Documents
continue to be the legal, valid and binding agreements and obligations of the
Borrowers enforceable in accordance with their terms, as modified herein, (c)
the Lender is not in default under any of the Loan Documents and the Borrowers
have no offset or defense to its performance or obligations under any of the
Loan Documents, (d) the representations contained in the
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Loan Documents remain true and accurate in all respects, and (e) there has been
no material adverse change in the financial condition of the Borrowers from the
date of the Agreement to the date of this Amendment.
23. Except as hereby expressly modified, the Agreement shall otherwise
be unchanged and shall remain in full force and effect, and the Borrowers
ratify and reaffirm all of their obligations thereunder.
24. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the Borrowers and the Lender have caused this
Amendment to be duly executed on their behalf by their duly authorized officers
as of the day and year above written.
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By: /s/ XXXXXX XXXXXXXXXX
------------------------------------
Its: President/CEO
-----------------------------------
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By: /s/ XXXXXX XXXXXXXXXX
------------------------------------
Its: Chairman
-----------------------------------
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ XXXX X. XXXXXXX
------------------------------------
Its: Director
-----------------------------------
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STATE OF VIRGINIA )
) SS
COUNTY OF FAIRFAX )
On December 20, 1996, before me, a Notary Public, personally appeared
Xxxxxx Xxxxxxxxxx, the President/CEO of WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ XXXXXX X. XXXX
-------------------------------
Notary Public
(SEAL) My Commission Expires: 2/28/99
STATE OF VIRGINIA )
) SS
COUNTY OF FAIRFAX )
On December 20, 1996, before me, a Notary Public, personally appeared
Xxxxxx Xxxxxxxxxx, the Chairman of WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED, a
Delaware corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ XXXXXX X. XXXX
-------------------------------
Notary Public
(SEAL) My Commission Expires: 2/28/99
-00-
Xxxxxxxxxx/Xxxxxxx:00/00/00
00
XXXXX XX XXXXXXXX )
) SS
COUNTY OF XXXXXXXXXX )
On December 23rd, 1996, before me, a Notary Public, personally
appeared Xxxx X. Xxxxxxx, the Director of RESIDENTIAL FUNDING CORPORATION, a
Delaware corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that she executed the same in her authorized
capacity, and that by her signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ XXXXXX X. XXXXXXXX
-------------------------------
Notary Public
(SEAL) My Commission Expires: 10/31/00
XXXXX X. XXXXXXXX
NOTARY PUBLIC STATE OF MARYLAND
My Commission Expires October 31, 2000
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EXHIBIT C-MF
REQUEST FOR ADVANCE AGAINST MULTIFAMILY, HEALTH CARE
AND COMMERCIAL MORTGAGE LOANS
______ THIRD PARTY ORIGINATION
______ CONVENTIONAL MORTGAGE LOAN
______ FNMA _____ FHLMC ______ OTHER
REFUNDER
______ FNMA DUS MORTGAGE LOAN
______ REFUNDER
______ FHA PROJECT MORTGAGE LOAN _______ GNMA
______ SECOND
______ REFUNDER
______ FHA CONSTRUCTION MORTGAGE LOAN
______ COMMERCIAL MORTGAGE LOAN
______ CONDUIT MORTGAGE LOAN
Mortgage Company: WASHINGTON MORTGAGE FINANCIAL GROUP, LTD. and WMF/XXXXXXX, XXXXX
ASSOCIATES LIMITED
Loan No.:__________________________________________________________ Warehouse Date:________________________
Project Name:______________________________________________________ Contract/Pool No.:_____________________
Mortgage Note Amount:______________________________________________ Interest Rate:_________________________
Mortgage Note Date:________________________________________________
Advance Amount:____________________________________________________
Approved Warehouse Amt:____________________________________________ Endorsement Amt:______________________
Cumulative Endorsement Amt:________________________________________
Investor:__________________________________________________________ Expiration Date:______________________
Committed Purchase Price:__________________________________________
Title Company/Closing Agent:_______________________________________
Title Contact Person:______________________________________________ Phone No.:____________________________
Security Rate:_________ Issue Date:________________________________ Maturity Date:________________________
WIRE TRANSFER INFORMATION
Wire Amount:_______________________________________________________ Date of Wire:________________
Receiving Bank:____________________________________________________ ABA No.:________________
City & State:____________________________________________________________________________________________________________________
Credit Account Name:_______________________________________________ Number:_________________
Advise:____________________________________________________________ Phone:_________________
For new value this day received, and as collateral security for the
payment of any and all indebtedness and liability of the Mortgage Company under
that certain Credit and Security Agreement dated as of June 14, 1996, as may be
amended from time to time, by and between the Company and RESIDENTIAL FUNDING
CORPORATION (the "Lender"), the Company creates and grants in favor and for the
benefit of the Lender a security interest in and to the Mortgage Note evidencing
the Mortgage Loan described in this Advance Request.
The Company agrees to cause the Mortgage Note to be delivered to the
Lender, on the next Business Day following the date of the Advance made to fund
the Mortgage Loan.
AUTHORIZED SIGNATURE(S)
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EXHIBIT D-MF/CONV/DUS/COND
PROCEDURES AND DOCUMENTATION FOR WAREHOUSING
CONVENTIONAL MULTIFAMILY, FNMA DUS, HEALTH CARE AND COMMERCIAL
MORTGAGE LOANS
The following procedures and documentation requirements must
be observed in all respects by the Company. All documents must be
satisfactory to the Lender in its sole discretion. Terms used
below, which are not otherwise defined, shall have the meanings
given them in the Agreement. The FNMA and FHLMC form numbers
referred to herein are for convenience only and the Company shall
use the equivalent forms required at the time of delivery of the
Pledged Mortgage or Pledged Security.
I. AT LEAST THREE (3) BUSINESS DAYS PRIOR TO THE ADVANCE DATE:
The Lender must receive a letter signed by the Company
providing the following information on the Pledged Mortgage:
(1) Mortgagor's name;
(2) Project name;
(3) Company's case/loan number;
(4) Expected Advance date;
(5) Mortgage Note Amount;
(6) Name and address of title company or settlement attorney
and contact person.
II. AT LEAST ONE (1) BUSINESS DAY PRIOR TO THE DATE OF AN ADVANCE:
The Lender must receive the following:
(1) Original signed Request for Advance (Exhibit C-MF);
(2) For FHLMC-committed Conventional Mortgage Loans the
signed Conventional Multifamily Immediate Delivery
Purchase Contract and Prior Approval Conversion Amendment
(FHLMC Form 64A);
(3) For FNMA-committed Conventional Mortgage Loans, a copy of
the signed Mortgage Purchase and Delivery Commitment
(FNMA Form 4257);
(4) For FNMA DUS Mortgage Loans, a copy of the signed FNMA
Mandatory Delivery Commitment-Multifamily Delegated
Underwriting;
(5) For other Conventional Mortgage Loans, Health Care
Mortgage Loans and Commercial Mortgage Loans, a copy of
the Purchase Commitment for the Pledged Mortgage;
(6) If a Mortgage-backed Security is to be issued, a copy of
Purchase Commitment for the Pledged Security;
(7) If Participation Certificate is to be issued, a copy of
Participation and Servicing Agreement;
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(8) Original Lender escrow instructions letter to the title
company or the settlement attorney, countersigned by an
authorized representative of the title company or the
settlement attorney to be involved with the transaction;
(9) If the Company is not the mortgagee on the Mortgage, a
copy of the assignment of Mortgage by the mortgagee to
the Company which was sent for recordation on or before
the date of the Advance;
(10) Original assignment of the Mortgage to the Lender in
recordable form but unrecorded;
(11) Original assignment of the security agreement to the
Lender in recordable form but unrecorded;
(12) Original assignment of the UCC financing statements to
the Lender in recordable form but unrecorded; and
(13) Check payable to the Lender for the Warehousing Fee (if
applicable).
Upon receipt of the letter required under Section I above, in
form and substance satisfactory to the Lender, the Lender will
issue its escrow instruction letter to the title company or
the settlement attorney. The Advance, when wired by the
Lender to the title company or the settlement attorney, shall
be held in an escrow account of the title company or the
settlement attorney and disbursed in accordance with the
closing letter of the Company or its counsel when authorized
by the Lender in its escrow instruction letter. No Advance
will be made by the Lender prior to its receipt of all
Collateral Documents required under Section II above.
Disbursement will be authorized only after the title company
or settlement attorney takes possession, on behalf of the
Lender, of the signed Mortgage Note, endorsed by the Company
in blank and without recourse, and the title company has
issued its title insurance policy. Immediately after
disbursement, the title company or settlement attorney shall
be required to transmit the Mortgage Note and certified true
copy of the title insurance policy directly to the Lender. In
the event the Pledged Mortgage is not closed and the related
Mortgage recorded by 3:00 p.m. on the date of the Advance, the
title company or the settlement attorney is instructed to
return the Advance immediately to the Lender.
The foregoing arrangements, permitting funding of the Advance
when the Mortgage Note has been delivered to a third person on
behalf of, and as agent and bailee for the Lender, and before
the Mortgage Note is received by the Lender, are for the
convenience of the Company. All risk of loss or nondelivery
of the Mortgage Note is that of the Company, and the Lender
has no liability or responsibility therefor.
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III. ON NEXT BUSINESS DAY FOLLOWING THE ADVANCE DATE:
The Lender must receive the following:
(1) The original Mortgage Note, endorsed by the Company in
blank and without recourse. If the Company is not the
named holder of the Mortgage Note, the Mortgage Note must
bear an endorsement from the holder to the Company;
(2) A copy of the title insurance policy or the title
insurance commitment to issue a policy marked to show the
final policy exceptions, which:
(a) Names as insured the Company and/or the Investor,
and their successors and assigns, as their
interests may appear;
(b) Shows effective date and time which is on or after
the date and time of disbursement of the Advance
from escrow; and
(c) Sets forth an insured amount which is equal to or
greater than the Advance amount.
(3) If a Participation Certificate is issued, original
Participation Certificate evidencing one hundred percent
(100%) of the undivided interests in the pool of Pledged
Mortgages;
(4) If a Participation Certificate is issued, original signed
Stock/Bond Power or equivalent Assignment for the
Participation Certificate issued from the Company to the
Lender (or from the Investor to the Lender if the
Participation Certificate was issued in the name of the
Investor);
IV. AS SOON AS POSSIBLE FOLLOWING THE ADVANCE DATE, AND NO LATER
THAN ONE (1) BUSINESS DAY PRIOR TO THE DATE THE INVESTOR OR
THE APPROVED CUSTODIAN MUST RECEIVE THE PLEDGED MORTGAGE:
The Lender must receive the following:
(1) Signed shipping instructions for the delivery of the
Pledged Mortgage including the following:
(a) Name and address of the Investor or the Approved
Custodian to which the Collateral Documents are to
be shipped, the desired shipping date and the
preferred method of delivery;
(b) For delivery of the Participation Certificate, the
name and address of the Investor to which the
Participation Certificate is to be delivered;
(c) Name of project securing the Pledged Mortgage;
(d) Date the Investor or the Approved Custodian must
receive the Pledged Mortgage; and
(e) Instructions for endorsement of the Mortgage Note.
(2) For FHLMC-committed Conventional Mortgage Loans, the
following additional documents must be received:
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16
(a) Original Contract Delivery Summary (FHLMC Form 381)
marked to indicate that the mortgages being
delivered are subject to a security interest.
(b) For cash payments, the signed original Wire
Transfer Authorization for a Cash Warehouse
Delivery (FHLMC Form 987), showing the Lender as
warehouse lender and specifying the Cash Collateral
Account as the receiving account for loan purchase
proceeds.
(c) Completed, but not signed, Warehouse Lender Release
of Security Interest (FHLMC Form 996), to be signed
by the Lender.
(3) For FNMA-committed Conventional Mortgage Loans, FNMA DUS
Mortgage Loans and FNMA Conduit Mortgage Loans, the
following additional documents must be received:
(a) For cash payments, the signed original Wire
Transfer Request (FNMA Form 4639), specifying the
Cash Collateral Account as the receiving account
for loan purchase proceeds.
(b) Executed bailee letter with Schedule A (in form
approved by FNMA and the Lender).
(c) For Conduit Mortgage Loans, a copy of the signed
Mortgage Purchase and Delivery Commitment and, if
applicable, the Purchase Commitment for the related
Pledged Security.
(4) The remainder of the documents required for shipping to
the Investor as specified by the Investor or in the
applicable Seller/Servicer Guide.
The Lender exclusively shall deliver the Mortgage Note and
other original Collateral Documents evidencing the Pledged
Mortgage and related pool documents to an Investor or an
Approved Custodian, unless otherwise agreed in writing.
Payment for FNMA Conduit Mortgage Loans shall always be made
in cash.
V. IF A MORTGAGE-BACKED SECURITY IS TO BE ISSUED BY FNMA, AS SOON
AS POSSIBLE FOLLOWING CLOSING, BUT NO LATER THAN ONE (1)
BUSINESS DAY PRIOR TO SETTLEMENT DATE FOR A PLEDGED SECURITY
THE LENDER MUST RECEIVE:
(1) An original Delivery Schedule (FNMA Form 2014),
instructing FNMA to issue the Mortgage-backed Security in
the name of the Company, to deliver the Pledged Security
to the Lender's custody account at Chemical Bank NY
(CHEMICAL NYC/GEOCUST/XX0000000), and bearing the
following instructions: "These instructions may not be
changed without the prior written approval of Residential
Funding Corporation, Xxxxxxx X. Xxxxxx Director or Xxxxx
Xxxxx, Director."
(2) The signed Securities Delivery Instructions form attached
hereto as Schedule I.
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17
Upon instruction by the Company, the Lender shall complete the
endorsement of the Mortgage Note. If no Mortgage-backed Security is
to be issued, the Lender shall deliver the Mortgage Note and the
other documents required for shipping to the Investor as specified
by the Investor or in the applicable Seller/Servicer Guide with a
bailee letter to the Investor who issued the Purchase Commitment
for the Pledged Mortgage or to an Approved Custodian for such
Investor. If a Mortgage-backed Security is to be issued and in the
case of FNMA Conduit Mortgage Loans, the Lender shall deliver the
Mortgage Note, the other documents required for shipping and the
Delivery Schedule with a bailee letter to FNMA or to an Approved
Custodian for FNMA. If Participation Certificates are to be
issued, the Lender will retain possession of the original Mortgage
Note until the proceeds of the sale of all related Participation
Certificates have been received by the Lender.
Upon receipt of a Pledged Security, the Lender will deliver the
Pledged Security to the Investor which issued the Purchase
Commitment for the Pledged Security. The Pledged Security will be
released to the Investor only upon payment of the purchase proceeds
to the Lender. Cash proceeds of the sale of a Pledged Mortgage or
a Pledged Security shall be applied to the related Advance
outstanding under the Commitment. Provided no Default exists, the
Lender shall return any excess proceeds of the sale of a Pledged
Mortgage or a Pledged Security to the Company, unless otherwise
instructed in writing.
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SCHEDULE I
RESIDENTIAL FUNDING CORPORATION
WAREHOUSING LENDING DIVISION
Security Delivery Instructions
INSTRUCTIONS MUST BE RECEIVED TWO (2) BUSINESS DAYS IN ADVANCE OF
PICK-UP/DELIVERY
BOOK-ENTRY DATE: ______________________ SETTLEMENT DATE:__________________________________
ISSUER:________________________________ SECURITY: $_______________________________________
NO. OF CERTIFICATES: __________________ 1)__________________________
2)__________________________
3)__________________________
CUSIP #______________
Pool #_______________ MI#______________ Coupon Rate:_____________________________
Issue Date:(M/D/Y) _________________________ Maturity Date:(M/D/Y)____________________
POOL TYPE (circle one):
GNMA: GNMA I GNMA II
FHLMC: FIXED ARM DISCOUNT NOTE
FNMA: FIXED ARM DISCOUNT NOTE DEBENTURES REMIC
--------------------------------------------------------------------------------------------
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $_______________________________________
_______________________________ ( ) Free Delivery
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $_______________________________________
_______________________________ ( ) Free Delivery
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $_______________________________________
_______________________________ ( ) Free Delivery
--------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURE:________________________________________________________________________
TITLE: ___________________________________________________________________________
19
EXHIBIT I-MF
OFFICER'S CERTIFICATE
Reference is made to that certain Credit and Security Agreement
between WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware corporation
("Washington"), and WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED, a Delaware
corporation ("Xxxxxxx," Washington and Xxxxxxx are hereinafter collectively
referred to as the "Borrowers"), and RESIDENTIAL FUNDING CORPORATION, a
Delaware corporation (the "Lender"), dated as of June 14, 1996 (as the same may
be amended, modified, supplemented, renewed or restated from time to time, the
"Agreement"). All capitalized terms used herein and all Section numbers given
herein refer to those terms and Sections set forth in the Agreement. This
Officer's Certificate is submitted to the Lender pursuant to Section 6.2(c)
of the Agreement.
The undersigned hereby certifies to the Lender that as of the close of
business on __________, 19__ ("Statement Date",) and with respect to the
Borrowers and their Subsidiaries on a consolidated basis:
1. As illustrated in the attached calculations supporting this Officer's
Certificate, the Borrowers met the covenants set forth in Sections
7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12, and 7.13, or if the Borrowers
did not meet any of such covenants, a detailed explanation is attached
setting forth the nature and period of the existence of the Default
and the action the Borrowers have taken, are taking, and propose to
take with respect thereto.
2. No Servicing Contracts have been sold or pledged by the Borrowers
except as permitted under the terms of the Agreement.
3. No payments in advance of the scheduled maturity date have been made
with respect to any Subordinated Debt. The Borrowers have incurred no
Debt required to be subordinated pursuant to Section 6.10.
4. The Borrowers were in compliance with the applicable HUD, GNMA, and
Investor net worth requirements, and in good standing with VA, HUD,
GNMA, and each Investor.
5. I have reviewed the terms of the Agreement and have made, or caused to
be made under my supervision, a review in reasonable detail of the
transactions and conditions of the Borrowers (and, if applicable,
their Subsidiaries) and such review has not disclosed the existence,
and I have no knowledge of the existence, of any Default or Event of
Default, or if any
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Washington/Xxxxxxx:12/17/96
20
Default or Event of Default existed or exists, a detailed explanation
is attached specifying the nature and period of the existence of the
Default and the action the Borrowers have taken, are taking and
propose to take with respect thereto.
6. Pursuant to Section 6.2 of the Agreement, enclosed are the financial
statements of the Borrowers as of the Statement Date. The financial
statements for the period ending on the Statement Date fairly present
the financial condition and results of operations of the Borrowers
(and, if applicable, its Subsidiaries) as at the Statement Date.
Dated:
-----------------------------
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By:
------------------------------------
Its:
-----------------------------------
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By:
------------------------------------
Its:
-----------------------------------
Washington/Xxxxxxx:12/17/96 -2-
21
CALCULATIONS SUPPORTING OFFICER'S CERTIFICATE
Borrowers Names: WASHINGTON MORTGAGE FINANCIAL GROUP, LTD. and
WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED and its
Subsidiaries
Statement Date: ________________________________________________________________
All financial calculations set forth herein are as of the Statement Date.
I. TANGIBLE NET WORTH
Tangible Net Worth of Washington is:
Excess of total assets over total liabilities: $_________
Plus: Loan loss reserves: $_________
Plus: Subordinated Debt not due within one year
of the Statement Date (or any portion
thereof): $_________
Minus: Advances to owners, officers or
Affiliates: $_________
Minus: Investments in Affiliates: $_________
Minus: Assets pledged to secure liabilities
not included in Debt: $_________
Minus: Intangible assets: $_________
Minus: Any other HUD nonacceptable assets: $_________
Minus: Other assets unacceptable to the
Lender: $_________
TANGIBLE NET WORTH $_________
II. ADJUSTED TANGIBLE NET WORTH
A. Adjusted Tangible Net Worth of Washington is:
Tangible Net Worth (from IA above) $_________
Minus: Capitalized excess servicing fees: $_________
Minus: Capitalized servicing rights: $_________
Plus: Deferred taxes arising from capitalized
excess servicing fees and capitalized
servicing rights: $_________
Plus: .005 times Adjusted Servicing Portfolio
(from IIIA below): $_________
ADJUSTED TANGIBLE NET WORTH $_________
B. Requirements of Section 7.7 of the Agreement:
MINIMUM ADJUSTED TANGIBLE NET WORTH OF $25,000,000.
C. Covenant Satisfied: _______ Covenant Not Satisfied: _______
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III. ADJUSTED SERVICING PORTFOLIO
A. Adjusted Servicing Portfolio of the Borrowers is:
Servicing Portfolio owned by the Borrowers is: $_________
Minus: The unpaid principal balance of Mortgage Loans:
Past due 60 days or more: $_________
That are Commercial, FNMA DUS,
or FHA co-insured: $_________
Sold with recourse: $_________
For which the Servicing Contracts
are pledged: $_________
Serviced by Borrowers for others under
subservicing arrangements: $_________
ADJUSTED SERVICING PORTFOLIO $______________
B. Requirements of Section 7.10 of the Agreement:
ADJUSTED SERVICING PORTFOLIO OF $3,000,000,000.
C. COVENANT SATISFIED:_______ COVENANT NOT SATISFIED:____
IV. DEBT OF THE BORROWERS
Total liabilities $_________
Minus: Loan loss reserves: $_________
Minus: Subordinated Debt not due within one year
of the Statement Date (or any portion
thereof): $_________
Minus: Deferred taxes arising from capitalized
excess servicing fees and capitalized
servicing rights: $_________
DEBT $______________
V. RATIO OF DEBT TO ADJUSTED TANGIBLE NET WORTH
A. The ratio of Debt to Adjusted Tangible Net Worth (IV to
II.A) is: _______to 1
B. Requirements of Section 7.6 of the Agreement:
The ratio of Debt to Adjusted Tangible Net Worth shall not
exceed 15 to 1.
C. COVENANT SATISFIED:_______ COVENANT NOT SATISFIED:_______
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VI. LIQUID ASSETS OF THE BORROWERS
Unrestricted and Unencumbered Cash $_________
Plus: Funds on deposit in any United States bank $_________
Plus: Investment grade commercial paper $_________
Plus: Money market funds $_________
Plus: Marketable securities $_________
Plus: Mortgage Loans and Mortgage-backed Securities
held for sale $_________
Minus: Outstanding liabilities secured by Mortgage Loans
and Mortgage-backed Securities held for sale $_________
LIQUID ASSETS $_________
VII. LIQUIDITY
A. The ratio of Liquid Assets to Adjusted Tangible Net Worth
(V to II) is: ________to 1
B. Requirements of Section 7.8 of the Agreement:
The ratio of Liquid Assets to Adjusted Tangible Net Worth
shall not be less than twenty-five percent (25%).
C. COVENANT SATISFIED:_____ COVENANT NOT SATISFIED:_____
VIII. MAXIMUM PASS-THROUGHS
A. The aggregate cumulative outstanding amount of advances to or
on behalf of defaulting mortgagors paid or required to have
been paid by the Borrowers on Mortgage Loans and
Mortgage-backed Securities ("Pass-throughs") is:
$_________
B. The ratio of Pass-throughs to Adjusted Tangible Net Worth
(VII.A to II.A) is: ________to 1
C. Requirements of Section 7.9 of the Agreement:
The ratio of Pass-throughs to Adjusted Tangible Net Worth
shall not exceed thirty-five percent (35%).
D. COVENANT SATISFIED:_____ COVENANT NOT SATISFIED:_____
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Washington/Xxxxxxx:12/17/96
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IX. DEBT SERVICE COVERAGE RATIO
A. Net income for the previous four quarters: $_________
Plus: Income tax expenses: $_________
Minus: Income taxes paid: $_________
Plus: Depreciation, amortization and other non-cash
deductions: $_________
Minus: Non-cash revenue: $_________
Minus: Dividends and distributions: $_________
Plus: Term Loan/Servicing Facility interest
expenses: $_________
FUNDS FROM OPERATIONS $_________
B. Scheduled Term Loan/Servicing Facility principal payment
(following four quarters): $_________
Plus: Term Loan/Servicing Facility interest expenses
(previous four quarters):
$_________
Annual debt payments $_________
C. The ratio of XA to XB is: ________to 1.00
D. Requirements of Section 7.11 of the Agreement:
Permit the Debt Service Coverage Ratio, measured as of the
first day of any fiscal quarter, to be less than 1.50 to
1.00.
E. COVENANT SATISFIED:_____ COVENANT NOT SATISFIED:_____
X. DELINQUENCY RATIO
A. Unpaid Principal Balance of Mortgage Loans Serviced that
are:
30 or more days past due: $_________
Foreclosure: $_________
In Bankruptcy: $_________
TOTAL $_________
B. Unpaid Principal Balance of all Mortgage Loans Serviced
by Borrowers: $_________
C. The ratio of XIA to XIB (expressed as a percentage): __________%
D. Requirements of Section 7.12 of the Agreement:
The Delinquency Ratio shall not exceed 10%.
E. COVENANT SATISFIED:_____ COVENANT NOT SATISFIED: ______
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XI. TRANSACTIONS WITH AFFILIATES
A. Loans, advances, and extensions of credit made by the
Borrowers to their Affiliates total: $_________
B. Capital contributions made by the Borrowers to their
Affiliates total: $_________
C. Management fees paid to Affiliates during the current
fiscal year total: $_________
D. Transfers, sales, pledges, assignments or other
dispositions of assets made by the Borrowers to their
Affiliates total: $_________
E. Requirements of Section 7.13 of the Agreement:
1. No loans, advances or extensions of credit shall be
made by the Borrowers to Affiliates.
COVENANT SATISFIED:______ COVENANT NOT SATISFIED:______
2. No capital contributions shall be made by the
Borrowers to any Affiliate.
COVENANT SATISFIED:______ COVENANT NOT SATISFIED:______
3. No transfers, sales, pledges assignments or other
dispositions of assets by the Borrowers to
Affiliates.
COVENANT SATISFIED:______ COVENANT NOT SATISFIED:______
4. No Management fees shall be paid by the Borrowers
to Affiliates.
COVENANT SATISFIED:______ COVENANT NOT SATISFIED:______
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