EXECUTION COPY
RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.
as Purchaser,
and
RESIDENTIAL FUNDING CORPORATION
as Seller
REVOLVING CREDIT LOAN PURCHASE AGREEMENT
Dated as of January 29, 1998
Revolving Credit Loans
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TABLE OF CONTENTS
Page
ARTICLE IDEFINITIONS
Section 1.1. Definitions....................................1
ARTICLE IISALE OF REVOLVING CREDIT LOANS AND RELATED PROVISIONS
Section 2.1. Sale of Revolving Credit Loans.................2
Section 2.2. Payment of Purchase Price......................5
Section 2.3. Reserved.......................................5
Section 2.4. Variable Funding Notes on or after the Closing
Date...........................................6
Section 2.5. Draws After an Amortization Event..............6
ARTICLE IIIREPRESENTATIONS AND WARRANTIES;REMEDIES FOR BREACH
Section 3.1. Seller Representations and Warranties..........7
ARTICLE IVSELLER'S COVENANTS
Section 4.1. Covenants of the Seller.......................14
ARTICLE VSERVICING
Section 5.1. Servicing.....................................15
ARTICLE VIINDEMNIFICATION BY THE SELLERWITH RESPECT TO THE
REVOLVING CREDIT LOANS
Section 6.1. Indemnification With Respect to the Revolving
CreditLoans.......................................15
Section 6.2. Limitation on Liability of the Seller.........15
ARTICLE VIITERMINATION
Section 7.1. Termination...................................16
ARTICLE VIIIMISCELLANEOUS PROVISIONS
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Page
Section 8.1. Amendment.....................................16
Section 8.2. Governing Law.................................16
Section 8.3. Notices.......................................17
Section 8.4. Severability of Provisions....................17
Section 8.5. Relationship of Parties.......................17
Section 8.6. Counterparts..................................17
Section 8.7. Further Agreements............................18
Section 8.8. Intention of the Parties......................18
Section 8.9. Successors and Assigns; Assignment of This
Agreement....................................18
Section 8.10. Survival......................................19
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Exhibits
Exhibit 1 Revolving Credit Loan Schedule
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This REVOLVING CREDIT LOAN PURCHASE AGREEMENT (this "Agreement"), dated as
of January 29, 1998, is made between Residential Funding Corporation (the
"Seller") and Residential Funding Mortgage Securities II, Inc. (the
"Purchaser").
W I T N E S S E T H :
WHEREAS, the Seller owns Cut-off Date Loan Balances and the Related
Documents for the home equity lines of credit indicated on the Revolving Credit
Loan Schedule attached as Exhibit 1 hereto (collectively, the "Revolving Credit
Loans"), including rights to (a) any property acquired by foreclosure or deed in
lieu of foreclosure or otherwise, and (b) the proceeds of any insurance policies
covering the
Revolving Credit Loans;
WHEREAS, the parties hereto desire that the Seller sell the Cut-off
Date Loan Balances of the Revolving Credit Loans to the Purchaser pursuant to
the terms of this Agreement together with the Related Documents on the Closing
Date, and thereafter all Additional Balances created on or after the Cut-off
Date;
WHEREAS, pursuant to the terms of the Servicing Agreement, the Master
Servicer will service the Revolving Credit Loans directly or through one or more
Subservicers;
WHEREAS, pursuant to the terms of the Trust Agreement, the Purchaser
will sell the Revolving Credit Loans to the Issuer in exchange for the cash
proceeds of the Securities;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer will
issue and transfer to or at the direction of the Purchaser, the Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will issue and
transfer to or at the direction of the Purchaser, the Notes, secured by the
Revolving Credit Loans;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. For all purposes of this Revolving Credit Loan
Purchase Agreement, except as otherwise expressly provided herein or unless the
context otherwise requires, capitalized terms not otherwise defined herein shall
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have the meanings assigned to such terms in the Definitions contained in
Appendix A to the Indenture dated January 29, 1998 (the "Indenture"), between
Home Equity Loan Trust 1998-HS1, as issuer and The Chase Manhattan Bank, as
indenture trustee, which is incorporated by reference herein. All other
capitalized terms used herein shall
have the meanings specified herein.
ARTICLE II
SALE OF REVOLVING CREDIT LOANS AND RELATED PROVISIONS
Section 2.1. Sale of Revolving Credit Loans.
(a) The Seller, by the execution and delivery of this Agreement,
does hereby sell, assign, set over, and otherwise convey to the Purchaser,
without recourse, all of its right, title and interest in, to and under the
following, and wherever located: (i) the Revolving Credit Loans (including
without limitation the Cut-off Date Loan Balances and all Additional Balances;
provided, however, that following the occurrence of an Amortization Event, any
subsequent loan balance represented by each Draw and interest thereon will not
be deemed transferred to the Issuer, and the Seller (in such event) shall retain
ownership of each loan balance represented by each such Draw made thereafter and
interest thereon), all interest accruing thereon and all collections in respect
thereof received on or after the Cut-off Date; (ii) property which secured a
Revolving Credit Loan and which has been acquired by foreclosure or deed in lieu
of foreclosure; (iii) the interest of the Seller in any insurance policies in
respect of the Revolving Credit Loans; and (iv) all proceeds of the foregoing;
provided, however, that the Purchaser does not assume the obligation under each
Loan Agreement to fund Draws to the Mortgagor thereunder, and the Purchaser
shall not be obligated or permitted to fund any such Draws, it being agreed that
the Seller will retain the obligation to fund future Draws. Such conveyance
shall be deemed to be made: (1) with respect to the Cut-off Date Loan Balances,
as of the Closing Date; and (2) with respect to the amount of each Additional
Balance created on or after the Cutoff Date, as of the later of the Closing Date
and the date that the corresponding Draw was made pursuant to the related Loan
Agreement, subject to the receipt by the Seller of consideration therefor as
provided herein under clause (b) of Section 2.2.
(b) In connection with such conveyance, the Seller further agrees,
at its own expense, on or prior to the Closing Date with respect to the Loan
Balance of the Revolving Credit Loans to indicate in its books and records that
the Revolving Credit Loans have been sold to the Purchaser pursuant to this
Agreement and to deliver to the Purchaser true and complete lists of all of the
Revolving Credit Loans specifying for each Revolving Credit Loan (i) its account
number and (ii) its Cut-off Date Loan Balance. Such lists, which form part of
the Revolving Credit Loan
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Schedule, shall be marked as Exhibit 1 to this Agreement and are hereby
incorporated into and made a part of this Agreement.
(c) In connection with such conveyance by the Seller, the Seller
shall on behalf of the Purchaser deliver to, and deposit with the respective
Custodian, on or before the Closing Date, the following documents or instruments
with respect to each Revolving Credit Loan:
(i) the original Mortgage Note endorsed without recourse in
blank or, with respect to any Revolving Credit Loan as to which the
original Mortgage Note has been permanently lost or destroyed and has not
been replaced, a Lost Note Affidavit;
(ii) the original Mortgage with evidence of recording thereon,
or, if the original Mortgage has not yet been returned from the public
recording office, a copy of the original Mortgage certified by the public
recording office in which such original Mortgage has been recorded, or a
copy of such Mortgage certified by the recording office in the event the
recording office keeps the original or if the original is lost;
(iii) assignments (which may be included in one or more blanket
assignments if permitted by applicable law) of the Mortgage in recordable
form, in blank, executed by the Seller;
(iv) originals of any intervening assignments of the Mortgage,
with evidence of recording thereon, or, if the original of any such
intervening assignment has not yet been returned from the public recording
office, a copy of such original intervening assignment certified by the
public recording office in which such original intervening assignment has
been recorded; and
(v) a true and correct copy of each assumption, modification,
consolidation or substitution agreement, if any, relating to the Revolving
Credit Loan.
Within the time period for the review of each Mortgage File set
forth in Section 2.3 of the Custodial Agreement, if a material defect in any
Mortgage File is discovered which may materially and adversely affect the value
of the related Revolving Credit Loan, or the interests of the Indenture Trustee
(as pledgee of the Revolving Credit Loans), the Noteholders, the
Certificateholders or the Credit Enhancer in such Revolving Credit Loan,
including the Seller's failure to deliver any document required to be delivered
to the Custodian on behalf of the Indenture Trustee (provided that a Mortgage
File will not be deemed to contain a defect for an unrecorded
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assignment under clause (iii) above if the Seller has submitted such assignment
for recording or if such assignment is not required to be recorded pursuant to
the terms of the following paragraph), the Seller shall cure such defect,
repurchase the related Revolving Credit Loan at the Repurchase Price or
substitute an Eligible Substitute Loan for the related Revolving Credit Loan
upon the same terms and conditions set forth in Section 3.1 hereof for breaches
of representations and warranties as to the Revolving Credit Loans. With respect
to any missing Mortgage Notes referred to in Subsection 3.1(b)(xxxiv), the
Seller shall have 60 days from the Closing Date to deliver the documents
referred to in this Subsection 2.1(c). If such documents have not been delivered
within 60 days, the Seller shall repurchase the related Revolving Credit Loan or
substitute an Eligible Substitute Loan for the related Revolving Credit Loan
upon the same terms and conditions set forth in Section 3.1 hereof for breaches
of representations and warranties as to the Revolving Credit Loans.
Within 60 days after the receipt by the Master Servicer of the
recording information, the Seller at its own expense shall complete, or cause to
be completed, in the name of the Indenture Trustee, and shall submit for
recording in the appropriate public office for real property records each of the
assignments referred to in clause (iii) above. While such assignment to be
recorded is being recorded, the Custodian shall retain a photocopy of such
assignment. If any assignment is lost or returned unrecorded to the Custodian
because of any defect therein, the Seller is required to prepare a substitute
assignment or cure such defect, as the case may be, and the Seller shall cause
such assignment to be recorded in accordance with this paragraph.
Notwithstanding the foregoing, as to any Revolving Credit Loan where the Seller
is the assignee of record of the Mortgage, the assignment referred to in clause
(iii) above shall not be required to be completed and submitted for recording,
if an Opinion of Counsel is provided in form and substance satisfactory to the
Credit Enhancer and to each Rating Agency, to the effect that such recordation
of the assignment referred to in clause (iii) above (completed in the name of
the Indenture Trustee) is not required (i) to effect the sale and conveyance of
the Revolving Credit Loan by the Seller to the Depositor and by the Depositor to
the Issuer, or the granting and perfecting of the security interest in the
Revolving Credit Loan to the Indenture Trustee as provided in the Indenture or
(ii) to defeat any ownership, security interest or other adverse claim to the
Revolving Credit Loan by any creditor of the Seller or the Depositor by any
purported transferee of such Revolving Credit Loan in a purported transfer
thereof by the Seller or the Depositor subsequent to such sale and conveyance.
In instances where an original Mortgage or any original intervening
assignment of Mortgage was not, in accordance with clause (ii) or (iv) above,
delivered by the Seller to the respective Custodian prior to or concurrently
with the execution and delivery of this Agreement, the Seller will deliver or
cause to be delivered the originals of such documents to such Custodian promptly
upon receipt thereof.
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The Purchaser hereby acknowledges its acceptance of all right, title
and interest to the property, conveyed to it pursuant to this Section 2.1.
(d) The parties hereto intend that the transactions set forth herein
constitute a sale by the Seller to the Purchaser of all the Seller's right,
title and interest in and to the Revolving Credit Loans and other property as
and to the extent described above. In the event the transactions set forth
herein are deemed not to be a sale, the Seller hereby grants to the Purchaser a
security interest in all of the Seller's right, title and interest in, to and
under the Revolving Credit Loans and such other property, to secure all of the
Seller's obligations hereunder, and this Agreement shall constitute a security
agreement under applicable law. The Seller agrees to take or cause to be taken
such actions and to execute such documents, including without limitation the
filing of all necessary UCC-1 financing statements filed in the State of
Minnesota (which shall have been submitted for filing as of the Closing Date),
any continuation statements with respect thereto and any amendments thereto
required to reflect a change in the name or corporate structure of the Seller or
the filing of any additional UCC-1 financing statements due to the change in the
principal office of the Seller, as are necessary to perfect and protect the
Purchaser's interests in each Revolving Credit Loan and the proceeds thereof.
Section 2.2. Payment of Purchase Price.
(a) The "Purchase Price" for the Revolving Credit Loans (including
the Additional Balances) shall be (1) an amount equal to $510,226,290 in
immediately available funds, together with the Certificates, in respect of the
Cut-off Date Loan Balances thereof and (2) in the case of each Additional
Balance transferred hereunder created on or after the Cutoff Date, the principal
amount of the related Draw under the Loan Agreement on the later of the Closing
Date and the date of the creation of such Additional Balance.
(b) In consideration of the sale of the Revolving Credit Loans from
the Seller to the Purchaser on the Closing Date, the Purchaser shall pay to the
Seller on the Closing Date by wire transfer of immediately available funds to a
bank account designated by the Seller, the amount specified above in clause
(a)(1) for each Revolving Credit Loan; provided, that such payment may be on a
net funding basis if agreed by the Seller and the Purchaser. With respect to
each Additional Balance transferred hereunder with respect to any Revolving
Credit Loan, the Issuer as assignee of the Purchaser shall pay or cause to be
paid to the Seller or its designee the portion of the Purchase Price specified
above in clause (a)(2) for such Additional Balance in one of the following ways,
as applicable: (i) for any Collection Period during the Revolving Period, so
long as an Amortization Event has not occurred, (a) a cash payment pursuant to
Section 3.03(ii) of the Servicing Agreement and Section 2.2(a)(2) hereof in an
amount equal to the related Draw, if then available from Principal Collections
during the related Collection Period on the Revolving Credit Loans, and (b) to
the extent aggregate Draws exceed Principal Collections for such Collection
Period, an increase in the aggregate
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principal amount of the Variable Funding Notes or an issuance of new Variable
Funding Notes, as of the Payment Date corresponding to the Collection Period in
which such Additional Balances were created, equal to the amount by which
Additional Balances exceeded Principal Collections for such Collection Period,
and (ii) for any Collection Period after the end of the Revolving Period, so
long as an Amortization Event has not occurred, an increase in the aggregate
principal amount of Variable Funding Notes or an issuance of new Variable
Funding Notes as of each Payment Date in an aggregate amount equal to the total
of the related Draws for the corresponding Collection Period.
Section 2.3. Reserved.
Section 2.4. Variable Funding Notes on or after the Closing Date.
Subject to Section 4.02 of the Indenture, if at any time, the Seller
holds Variable Funding Notes that have reached their Maximum Variable Funding
Balance, and to the extent that the same are exchanged for Capped Funding Notes
in accordance with Section 4.02 of the Indenture, the Purchaser agrees that,
upon written request made by the Seller at any time, the Purchaser shall use its
best reasonable efforts to cause such Capped Funding Notes held by the Seller to
be registered for resale by the Seller pursuant to an effective registration
statement filed by the Purchaser in accordance with, and meeting all
requirements of, the Securities Act of 1933, as amended. The Purchaser shall use
its best reasonable efforts to cause such registration statement to become
effective with respect to such Capped Funding Notes as soon as practicable
within a mutually agreed reasonable time period after the Seller's request. It
is contemplated that such registration statement will be the shelf registration
statement pursuant to which the Term Notes issued on the Closing Date are to be
offered, or one substantially similar thereto. In connection with such
registration statement and offering, the Seller shall reimburse the Purchaser
for costs related thereto including registration fees, printing fees, rating
fees, legal fees, accountant's fees, blue sky registration fees and expenses (if
any), related expenses of the Credit Enhancer and other out-of-pocket costs, if
any. In connection with such registration statement and related prospectus, the
Seller shall provide the Purchaser with an updated Revolving Credit Loan
Schedule and all other information reasonably necessary to assure that the
statements in the prospectus with respect to the Revolving Credit Loans and the
Seller (including in its capacity as servicer of the Revolving Credit Loans) are
complete and correct in all material respects as of the date of sale of such
Capped Funding Notes by the Seller. The registration statement shall not include
any information with respect to the Credit Enhancer, except for information
approved by the Credit Enhancer for use therein.
Section 2.5. Draws After an Amortization Event.
In the event that an Amortization Event occurs, any Draws made on
the Revolving Credit Loans thereafter shall not be deemed to be "Additional
Balances" hereunder,
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and the ownership of the related balances shall be retained by the Seller.
Following an Amortization Event, on any Payment Date, with respect to the
related Collection Period, all Interest Collections and Principal Collections in
respect of each individual Revolving Credit Loan shall be allocated on a pro
rata basis as between the Issuer and the Seller, based on the relative
proportions of the Loan Balance and the Excluded Amount, respectively, as of the
end of the calendar month immediately prior to such Collection Period. Any
losses incurred with respect to any individual Revolving Credit Loan following
an Amortization Event shall be allocated on a pro rata basis between the Issuer
and the Seller, based on the Loan Balance and the Excluded Amount thereof as of
the date of liquidation of such Revolving Credit Loan. Notwithstanding any other
provision hereof or of the Servicing Agreement, the payments and collections
allocable to the Excluded Amount need not be deposited in the Custodial Account
and shall not be deposited in the Distribution Account or the Payment Account,
and shall be distributed by the Master Servicer to the Seller not less
frequently than monthly in accordance with reasonable instructions provided by
the Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES FOR BREACH
Section 3.1. Seller Representations and Warranties. The Seller represents
and warrants to the Purchaser, as of the Closing Date (or if otherwise specified
below, as of the date so specified):
(a) As to the Seller:
(i) The Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power to own its assets and to transact the business in which it is currently
engaged. The Seller is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires such
qualification and in which the failure to so qualify would have a material
adverse effect on the business, properties, assets or condition (financial or
other) of the Seller;
(ii) The Seller has the power and authority to make, execute,
deliver and perform its obligations under this Agreement and all of the
transactions contemplated under this Agreement, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered, this Agreement
will constitute the legal, valid and binding obligation of
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the Seller enforceable in accordance with its terms, except as enforcement
of such terms may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies;
(iii) The Seller is not required to obtain the consent of any
other Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement, except for such consents, license,
approvals or authorization, or registration or declaration, as shall have
been obtained or filed, as the case may be;
(iv) The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby by the Seller will not
violate any provision of any existing law or regulation or any order or
decree of any court applicable to the Seller or any provision of the
Certificate of Incorporation or Bylaws of the Seller, or constitute a
material breach of any mortgage, indenture, contract or other agreement to
which the Seller is a party or by which the Seller may be bound;
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the
knowledge of the Seller threatened, against the Seller or any of its
properties or with respect to this Agreement or the Certificates which in
the opinion of the Seller has a reasonable likelihood of resulting in a
material adverse effect on the transactions contemplated by this
Agreement;
(vi) This Agreement constitutes a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect affecting the enforcement of creditors' rights
in general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity);
(vii) This Agreement constitutes a valid transfer and assignment
to the Purchaser of all right, title and interest of the Seller in and to
the Cut-off Date Loan Balances with respect to the Revolving Credit Loans,
all monies due or to become due with respect thereto, and all proceeds of
such Cut-off Date Loan Balances with respect to the Revolving Credit Loans
and such funds as are from time to time deposited in the Custodial Account
(excluding any investment earnings thereon) as assets of the Trust and all
other property specified in the definition of "Trust" as being part of the
corpus of the Trust conveyed to the Purchaser by the Seller, and upon
payment for the Additional Balances, will constitute a valid transfer and
assignment to the Purchaser of all right, title and interest of the Seller
in and to the Additional Balances, all monies
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due or to become due with respect thereto, and all proceeds of such
Additional Balances and all other property specified in the definition of
"Trust" relating to the Additional Balances; and
(viii) The Seller is not in default with respect to any order or
decree of any court or any order, regulation or demand or any federal,
state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Master Servicer or its
properties or might have consequences that would materially adversely
affect its performance hereunder.
(b) As to the Revolving Credit Loans:
(i) The information set forth in the Revolving Credit Loan
Schedule for such Revolving Credit Loans is true and correct in all
material respects as of the date or dates respecting which such
information is furnished;
(ii) The Cut-off Date Loan Balances have not been assigned or
pledged, the Seller has good and marketable title thereto and the Seller
is the sole owner and holder of such Cut-off Date Loan Balances free and
clear of any and all liens, claims, encumbrances, participation interests,
equities, pledges, charges of security interests of any nature and has
full right and authority, under all governmental and regulatory bodies
having jurisdiction over the ownership of the applicable Revolving Credit
Loans to sell and assign the same pursuant to this Agreement;
(iii) The related Mortgage Note and the Mortgage have not been
assigned or pledged, the Seller has good and marketable title thereto and
the Seller is the sole owner and holder of the Revolving Credit Loan free
and clear of any and all liens, claims, encumbrances, participation
interests, equities, pledges, charges of security interests of any nature
and has full right and authority, under all governmental and regulatory
bodies having jurisdiction over the ownership of the applicable Revolving
Credit Loans to sell and assign the same pursuant to this Agreement;
(iv) To the best of Seller's knowledge, there is no valid offset,
defense or counterclaim of any obligor under any Loan Agreement or
Mortgage;
(v) To the best of Seller's knowledge, there is no delinquent
recording or other tax or fee or assessment lien against any related
Mortgaged Property;
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(vi) To the best of Seller's knowledge, there is no proceeding
pending or threatened for the total or partial condemnation of the related
Mortgaged Property;
(vii) To the best of Seller's knowledge, there are no mechanics'
or similar liens or claims which have been filed for work, labor or
material affecting the related Mortgaged Property which are, or may be
liens prior or equal to, or subordinate with, the lien of the related
Mortgage, except liens which are fully insured against by the title
insurance policy referred to in clause (xi);
(viii) As of the Cut-off Date, no Revolving Credit Loan was 30 days
or more delinquent;
(ix) For each Revolving Credit Loan, the related Mortgage File
contains each of the documents and instruments specified to be included
therein;
(x) The related Mortgage Note and the related Mortgage at the
time it was made complied in all material respects with applicable local,
state and federal laws;
(xi) A policy of title insurance in the form and amount required
by the related Seller's Agreement was effective as of the closing of each
Revolving Credit Loan and each such policy is valid and remains in full
force and effect, and with respect to each Revolving Credit Loan with a
Cut-off Date Loan Balance greater than or equal to $50,000 a title search
or other assurance of title customary in the relevant jurisdiction was
obtained as to which no title insurance policy or binder was issued and
with respect to the remainder of the Revolving Credit Loans as to which no
title insurance policy or binder was issued or title search obtained there
are no intervening liens affecting the Mortgaged Property;
(xii) None of the Mortgaged Properties is a mobile home or a
manufactured housing unit that is not permanently attached to its
foundation;
(xiii) No more than 56.8% of the Revolving Credit Loans, by Cut-off
Date Loan Balance, are secured by Mortgaged Properties located in
California;
(xiv) As of the Cut-off Date the Combined Loan-to-Value Ratio for
each Revolving Credit Loan was not in excess of 101%;
(xv) [Reserved];
(xvi) The Seller has not transferred the Revolving Credit Loans to
the Purchaser with any intent to hinder, delay or defraud any of its
creditors;
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(xvii) The minimum monthly payment with respect to any Revolving
Credit Loan is not less than the interest accrued at the applicable Loan
Rate on the average daily Loan Balance during the interest period relating
to the date on which such minimum monthly payment is due;
(xviii) The Seller will submit for filing or cause to be submitted
for filing UCC-1 financing statements in accordance with the terms of this
Agreement;
(xix) Each Loan Agreement and each Mortgage is substantially
similar to the other and is an enforceable obligation of the related
Mortgagor;
(xx) To the best of Seller's knowledge, the physical property
subject to each Mortgage is free of material damage and is in good repair;
(xxi) The Seller has not received a notice of default of any
senior mortgage loan related to a Mortgaged Property which has not been
cured by a party other than the related Subservicer;
(xxii) Each of the Mortgage Notes has a substantially similar
definition of Prime as the Index applicable to the Loan Rate;
(xxiii) None of the Revolving Credit Loans are reverse mortgage loans;
(xxiv) (A) No Revolving Credit Loan has an original term to
maturity in excess of 311 months. On each date that the Loan Rates have
been adjusted prior to the Cut-off Date interest rate adjustments on the
Revolving Credit Loans were made in compliance with the related Mortgage
and Mortgage Note and applicable law. Over the term of any Revolving
Credit Loan, the Loan Rate may not exceed the related Maximum Loan Rate,
if any. (B) The Revolving Credit Loans have Maximum Loan Rates which range
between 14.00% and 25.00%. The Gross Margins for the Revolving Credit
Loans range between 0.00% and 8.75%, and the weighted average Gross Margin
for the Revolving Credit Loans is approximately 2.48% as of the Cut-off
Date. As of the Cut-off Date, the Loan Rates on the Revolving Credit Loans
range between 5.99% and 17.25% and the weighted average Loan Rate is
approximately 9.9091%. The weighted average remaining term to scheduled
maturity of the Revolving Credit Loans on a contractual basis as of the
Cut-off Date Loan is approximately 226 months;
(xxv) (A) Each Mortgaged Property with respect to the Revolving
Credit Loans consists of a single parcel of real property with a single
family residence erected thereon, a two-to-four family residence erected
thereon, or improved by an individual condominium unit, planned unit
development, townhouse or manufactured home. (B) With respect to the
Revolving Credit Loans (i) approximately 18.6% (by Cut-off Date
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Loan Balance) are secured by real property improved by individual
condominium units, planned unit developments, townhouses or manufactured
homes, (ii) approximately 80.4% (by Cut-off Date Loan Balance) are secured
by real property with a single family residence erected thereon and (iii)
approximately 1.0% (by Cut-off Date Loan Balance) are secured by real
property with a two-to-four family residence;
(xxvi) As of the Cut-off Date, the Credit Limits on the Revolving
Credit Loans range between approximately $8,500 and $550,000 with an
average of $42,359. As of the Cut-off Date, no Revolving Credit Loan had a
principal balance in excess of $497,966 and the weighted average Credit
Limit Utilization Rate, based on the Credit Limits of the Revolving Credit
Loans is equal to approximately 78.1%;
(xxvii) Approximately 2.0% and 98.0% of the Revolving Credit Loans,
by aggregate principal balance as of the Cut-off Date are first and second
liens, respectively;
(xxviii) Each Subservicer meets all applicable requirements under
the Servicing Agreement, is properly qualified to service the Revolving
Credit Loans and has been servicing the Revolving Credit Loans prior to
the Cut-off Date in accordance with the terms of the respective
Subservicing Agreement;
(xxix) For each Revolving Credit Loan, hazard insurance and flood
insurance has been obtained which meets all applicable requirements of
Section 3.04 of the Servicing Agreement;
(xxx) There is no material default, breach, violation or event of
acceleration existing under the terms of any Mortgage Note or Mortgage and
no event which, with notice and expiration of any grace or cure period,
would constitute a material default, breach, violation or event of
acceleration under the terms of any Mortgage Note or Mortgage, and no such
material default, breach, violation or event of acceleration has been
waived by the Seller or by any other entity involved in originating or
servicing a Revolving Credit Loan;
(xxxi) No instrument of release or waiver has been executed in
connection with the Revolving Credit Loans, and no Mortgagor has been
released, in whole or in part from its obligations in connection with a
Revolving Credit Loan;
(xxxii) With respect to each Revolving Credit Loan that is a second
lien, either (i) no consent for the Revolving Credit Loan was required by
the holder of the related prior lien or (ii) such consent has been
obtained and is contained in the mortgage file;
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(xxxiii) The Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the
Revolving Credit Loan in the event the related Mortgaged Property is sold
without the prior consent of the mortgagee thereunder; and
(xxxiv) The Mortgage Notes for not more than 0.2% of the Revolving
Credit Loans, by Cut-off Date Loan Balance, are missing from the Mortgage
File.
Upon discovery by Seller or upon notice from the Purchaser, the
Credit Enhancer, the Issuer, the Owner Trustee, the Indenture Trustee or any
Custodian, as applicable, of a breach of any representation or warranty in
clause (a) above which materially and adversely affects the interests of the
Securityholders or the Credit Enhancer, as applicable, in any Revolving Credit
Loan, the Seller shall, within 45 days of its discovery or its receipt of notice
of such breach, either (i) cure such breach in all material respects or (ii) to
the extent that such breach is with respect to a Revolving Credit Loan or a
Related Document, either (A) repurchase such Revolving Credit Loan from the
Issuer at the Repurchase Price, or (B) substitute one or more Eligible
Substitute Loans for such Revolving Credit Loan, in each case in the manner and
subject to the conditions and limitations set forth below.
Upon discovery by the Seller or upon notice from the Purchaser, the
Credit Enhancer, the Issuer, the Owner Trustee, the Indenture Trustee or any
Custodian, as applicable, of a breach of any representation or warranty in this
clause (b) above with respect to any Revolving Credit Loan, or upon the
occurrence of a Repurchase Event, which materially and adversely affects the
interests of any Securityholders or the Credit Enhancer, as applicable, or of
the Purchaser in such Revolving Credit Loan (notice of which shall be given to
the Purchaser by the Seller, if it discovers the same), notwithstanding the
Seller's lack of knowledge with respect to the substance of such representation
and warranty, the Seller shall, within 90 days after the earlier of its
discovery or receipt of notice thereof, either cure such breach or Repurchase
Event in all material respects or either (i) repurchase such Revolving Credit
Loan from the Issuer at the Repurchase Price, or (ii) substitute one or more
Eligible Substitute Loans for such Revolving Credit Loan, in each case in the
manner and subject to the conditions set forth below. The Repurchase Price for
any such Revolving Credit Loan repurchased by the Seller shall be deposited or
caused to be deposited by the Master Servicer in the Custodial Account
maintained by it pursuant to Section 3.02 of the Servicing Agreement.
In the event that the Seller elects to substitute an Eligible
Substitute Loan or Loans for a Deleted Loan pursuant to this Section 3.1, the
Seller shall deliver to the Custodian on behalf of the Issuer, with respect to
such Eligible Substitute Loan or Loans, the original Mortgage Note and all other
documents and agreements as are required by Section 2.1(c), with the Mortgage
Note endorsed as required by Section 2.1(c). No substitution will be made in any
calendar month after the Determination Date for such month. Monthly Payments due
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with respect to Eligible Substitute Loans in the month of substitution shall not
be part of the Owner Trust and will be retained by the Master Servicer and
remitted by the Master Servicer to the Seller on the next succeeding Payment
Date, provided that a payment at least equal to the applicable Minimum Monthly
Payment for such month in respect of the Deleted Loan has been received by the
Owner Trust. For the month of substitution, distributions to the Distribution
Account pursuant to the Servicing Agreement will include the Monthly Payment due
on a Deleted Loan for such month and thereafter the Seller shall be entitled to
retain all amounts received in respect of such Deleted Loan. The Master Servicer
shall amend or cause to be amended the Revolving Credit Loan Schedule to reflect
the removal of such Deleted Loan and the substitution of the Eligible Substitute
Loan or Loans and the Master Servicer shall deliver the amended Revolving Credit
Loan Schedule to the Owner Trustee. Upon such substitution, the Eligible
Substitute Loan or Loans shall be subject to the terms of this Agreement and the
Servicing Agreement in all respects, the Seller shall be deemed to have made the
representations and warranties with respect to the Eligible Substitute Loan
contained herein set forth in Section 3.1(b) (other than clauses (viii), (xiii),
(xiv) (xxiv)(B), (xxv)(B), (xxvi), and (xxvii) thereof) as of the date of
substitution, and the Seller shall be obligated to repurchase or substitute for
any Eligible Substitute Loan as to which a Repurchase Event has occurred as
provided herein. In connection with the substitution of one or more Eligible
Substitute Loans for one or more Deleted Loans, the Master Servicer will
determine the amount (such amount, a "Substitution Adjustment Amount"), if any,
by which the aggregate principal balance of all such Eligible Substitute Loans
as of the date of substitution is less than the aggregate principal balance of
all such Deleted Loans (after application of the principal portion of the
Monthly Payments due in the month of substitution that are to be distributed to
the Payment Account in the month of substitution). The Seller shall deposit the
amount of such shortfall into the Custodial Account on the day of substitution,
without any reimbursement therefor.
Upon receipt by the Indenture Trustee on behalf of the Issuer and
the Custodian of written notification, signed by a Servicing Officer, of the
deposit of such Repurchase Price or of such substitution of an Eligible
Substitute Loan (together with the complete related Mortgage File) and deposit
of any applicable Substitution Adjustment Amount as provided above, the
Custodian, on behalf of the Indenture Trustee, shall release to the Seller the
related Mortgage File for the Revolving Credit Loan being repurchased or
substituted for and the Indenture Trustee on behalf of the Issuer shall execute
and deliver such instruments of transfer or assignment prepared by the Master
Servicer, in each case without recourse, as shall be necessary to vest in the
Seller or its designee such Revolving Credit Loan released pursuant hereto and
thereafter such Revolving Credit Loan shall not be an asset of the Issuer.
It is understood and agreed that the obligation of the Seller to
cure any breach, or to repurchase or substitute for, any Revolving Credit Loan
as to which such a breach has occurred and is continuing, shall, except to the
extent provided in Section 6.1 of this
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Agreement, constitute the sole remedy respecting such breach available to the
Purchaser, the Issuer, the Certificateholders (or the Owner Trustee on behalf of
the Certificateholders) and the Noteholders (or the Indenture Trustee on behalf
of the Noteholders) against the Seller.
It is understood and agreed that the representations and warranties
set forth in this Section 3.1 shall survive delivery of the respective Mortgage
Files to the Issuer, or the Custodian.
ARTICLE IV
SELLER'S COVENANTS
Section 4.1. Covenants of the Seller. The Seller hereby covenants
that, except for the transfer hereunder, the Seller will not sell, pledge,
assign or transfer to any other Person, or grant, create, incur or assume any
Lien on any Revolving Credit Loan, or any interest therein, except with respect
to any Excluded Amount; the Seller will notify the Issuer, as assignee of the
Purchaser, of the existence of any Lien (other than as provided above) on any
Revolving Credit Loan immediately upon discovery thereof; and the Seller will
defend the right, title and interest of the Issuer, as assignee of the
Purchaser, in, to and under the Revolving Credit Loans against all claims of
third parties claiming through or under the Seller; provided, however, that
nothing in this Section 4.1 shall be deemed to apply to any Liens for municipal
or other local taxes and other governmental charges if such taxes or
governmental charges shall not at the time be due and payable or if the Seller
shall currently be contesting the validity thereof in good faith by appropriate
proceedings.
ARTICLE V
SERVICING
Section 5.1. Servicing. The Seller will service the Revolving Credit
Loans pursuant to the terms and conditions of the Servicing Agreement and will
service the Revolving Credit Loans directly or through one or more sub-servicers
in accordance therewith.
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ARTICLE VI
INDEMNIFICATION BY THE SELLER
WITH RESPECT TO THE REVOLVING CREDIT LOANS
Section 6.1. Indemnification With Respect to the Revolving Credit
Loans. The Seller shall indemnify and hold harmless the Purchaser from and
against any loss, liability or expense arising from the breach by the Seller of
its representations and warranties in Section 3.1 of this Agreement which
materially and adversely affects the Purchaser's interest in any Revolving
Credit Loan or from the failure by the Seller to perform its obligations under
this Agreement in any material respect, provided that the Seller shall have no
obligation to indemnify the Purchaser in respect of any loss, liability or
expense that arises as a result of the Purchaser's willful malfeasance, bad
faith or negligence or as a result of the breach by the Purchaser of its
obligations hereunder.
Section 6.2. Limitation on Liability of the Seller. None of the
directors, officers, employees or agents of the Seller shall be under any
liability to the Purchaser, it being expressly understood that all such
liability is expressly waived and released as a condition of, and as
consideration for, the execution of this Agreement. Except as and to the extent
expressly provided in the Servicing Agreement, the Seller shall not be under any
liability to the Owner Trust, the Owner Trustee, the Indenture Trustee or the
Securityholders. The Seller and any director, officer, employee or agent of the
Seller may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
ARTICLE VII
TERMINATION
Section 7.1. Termination. The respective obligations and
responsibilities of the Seller and the Purchaser created hereby shall
terminate, except for the Seller's indemnity obligations as provided
herein, upon the termination of the Owner Trust pursuant to the terms of
the Trust Agreement.
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. Amendment. This Agreement may be amended from time to
time by the Seller and the Purchaser by written agreement signed by the Seller
and the Purchaser, with the consent of the Credit Enhancer (which consent shall
not be unreasonably withheld).
Section 8.2. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 8.3. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given
if personally delivered at or mailed by registered mail, postage prepaid,
addressed as follows:
(i) if to the Seller:
Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Home Equity Loan Trust 1998-HS1
or, such other address as may hereafter be furnished to the Purchaser
in writing by the Seller.
(ii) if to the Purchaser:
Residential Funding Mortgage Securities II, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Home Equity Loan Trust 1998-HS1
or such other address as may hereafter be furnished to the Seller in
writing by the Purchaser.
Section 8.4. Severability of Provisions. If any one or more of the
covenants, agreements, provisions of terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity of
enforceability of the other provisions of this Agreement.
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Section 8.5. Relationship of Parties. Nothing herein contained shall
be deemed or construed to create a partnership or joint venture between the
parties hereto, and the services of the Seller shall be rendered as an
independent contractor and not as agent for the Purchaser.
Section 8.6. Counterparts. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an
original and such counterparts, together, shall constitute one and the same
agreement.
Section 8.7. Further Agreements. The Purchaser and the Seller each
agree to execute and deliver to the other such additional documents,
instruments or agreements as may be necessary or appropriate to effectuate
the purposes of this Agreement.
Section 8.8. Intention of the Parties. It is the intention of the
parties that the Purchaser is purchasing, and the Seller is selling, the
Revolving Credit Loans, rather than a loan by the Purchaser to the Seller
secured by the Revolving Credit Loans. Accordingly, the parties hereto each
intend to treat the transaction for Federal income tax purposes as a sale by the
Seller, and a purchase by the Purchaser, of the Revolving Credit Loans. The
Purchaser will have the right to review the Revolving Credit Loans and the
Related Documents to determine the characteristics of the Revolving Credit Loans
which will affect the Federal income tax consequences of owning the Revolving
Credit Loans and the Seller will cooperate with all reasonable requests made by
the Purchaser in the course of such review.
Section 8.9. Successors and Assigns; Assignment of This Agreement.
This Agreement shall bind and inure to the benefit of and be enforceable by the
Seller, Purchaser and their respective successors and assigns. The obligations
of the Seller under this Agreement cannot be assigned or delegated to a third
party without the consent of the Credit Enhancer and the Purchaser, which
consent shall be at the Credit Enhancer's and the Purchaser's sole discretion,
except that the Purchaser and the Credit Enhancer acknowledge and agree that the
Seller may assign its obligations hereunder to any Affiliate of the Seller, to
any Person succeeding to the business of the Seller, to any Person into which
the Seller is merged and to any Person resulting from any merger, conversion or
consolidation to which the Seller is a party. The parties hereto acknowledge
that the Purchaser is acquiring the Revolving Credit Loans for the purpose of
contributing them to the Issuer. Pursuant to the terms of the Trust Agreement,
the Issuer will issue and transfer to or at the direction of the Purchaser, the
Certificates and pursuant to the terms of the Indenture, the Issuer will issue
and transfer to or at the direction of the Purchaser, the Notes secured by the
Revolving Credit Loans. As an inducement to the Purchaser to purchase the
Revolving Credit Loans, the Seller acknowledges and consents to (i) the
assignment by the Purchaser to the Issuer of all of the Purchaser's rights
against the Seller pursuant to this Agreement insofar as such rights relate to
Revolving Credit Loans transferred to the Issuer and to the enforcement or
exercise of any right or
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remedy against the Seller pursuant to this Agreement by the Issuer, (ii) the
enforcement or exercise of any right or remedy against the Seller pursuant to
this Agreement by or on behalf of the Issuer and (iii) the Issuer's pledge of
its interest in this Agreement to the Indenture Trustee and the enforcement by
the Indenture Trustee of any such right or remedy against the Seller following
an Event of Default under the Indenture. Such enforcement of a right or remedy
by the Issuer or the Indenture Trustee, as applicable, shall have the same force
and effect as if the right or remedy had been enforced or exercised by the
Purchaser directly.
Section 8.10. Survival. The representations and warranties made herein
by the Seller and the provisions of Article VI hereof shall survive the
purchase of the Revolving Credit Loans hereunder.
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed to this Revolving Credit Loan Purchase Agreement by their
respective officers thereunto duly authorized as of the day and year first above
written.
RESIDENTIAL FUNDING MORTGAGE
SECURITIES II, INC.
as Purchaser
By:
Name: Xxxxx Xxxx
Title: Vice President
RESIDENTIAL FUNDING CORPORATION
as Seller
By:
Name:
Title:
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Exhibit 1
REVOLVING CREDIT LOAN SCHEDULE
TO BE PROVIDED UPON REQUEST
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