EXHIBIT 10.7
LOAN SALE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This LOAN SALE AGREEMENT dated as of _______________, 19__ is made and
entered into by and between Remodelers Investment Corporation, as purchaser
(together with its successors and assigns, being referred to herein as
"PURCHASER"), and __________________________, as seller (together with its
successors and assigns, being referred to herein as "SELLER").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of underwriting, originating
or acquiring property improvement and home equity loans secured by mortgages
on residential property;
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
purchase from Seller on a whole loan basis the Initial Mortgage Loans and all
monies due and to become due thereunder after the Cut-Off Date;
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
purchase from Seller on a whole loan basis the Subsequent Mortgage Loans and
all monies due and to become due thereunder after the related Subsequent
Cut-Off Date;
NOW, THEREFORE, in consideration of these premises and of the mutual
agreements herein set forth, Purchaser and Seller each agree as follows:
Section 1. REPRESENTATIONS AND WARRANTIES.
The Seller hereby represents and warrants to the Trust Fund, with
respect to each Subsequent Mortgage Loan, as of the applicable Subsequent
Transfer Date; and with respect to each Initial Mortgage Loan, as of the date
hereof (each, a "CLOSING DATE") and with respect to itself, as follows:
(a) MORTGAGE LOAN INFORMATION. The information with respect to each
Mortgage Loan set forth in the Mortgage Loan Schedule is true and correct in
all material respects as of the applicable Cut-Off Date.
(b) DELIVERY OF MORTGAGE LOAN DOCUMENTS. All of the original or
certified documentation required to be delivered to the Trustee or to the
Custodian on or prior to the Closing Date or the Subsequent Transfer Date, as
applicable, or as otherwise provided in this Agreement has or will be so
delivered.
(c) PAYMENTS CURRENT. No scheduled payments on the Mortgage Loans are
delinquent 90 days or more as of the applicable Cut-Off Date, based on the
terms under which the related Mortgages and Notes have been made. The Seller
has not advanced funds, or induced, solicited or
knowingly received any advance of funds from a party other than the related
borrower, directly or indirectly, for the payment of any amount required by
any Mortgage Loan.
(d) NO WAIVER OR MODIFICATION. The terms of each Note and Mortgage
have not been impaired, waived, altered or modified in any respect, except by
written instruments reflected in the Trustee's Mortgage Loan File and no
provision of any Mortgage or Note has been "xxxxxx out" or erased unless such
modification has been initialed by each of the parties to the related
Mortgage Loan. No instrument of waiver, alteration, modification or
assumption has been executed except for the instruments that are part of the
Trustee's Mortgage Loan File and the terms of which are reflected in the
Trustee's Mortgage Loan File.
(e) NO DEFENSES. No Note or Mortgage is subject to any set-off,
counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of any Note or Mortgage, or the exercise of any
right thereunder, render such Note or Mortgage unenforceable, in whole or in
part, or subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, and to the best of the Seller's
knowledge, no such right of rescission, set-off, counterclaim or defense has
been asserted in any proceeding or was asserted in any state or federal
bankruptcy or insolvency proceeding at the time the related Mortgage Loan was
originated.
(f) COMPLIANCE WITH LAWS. Any and all requirements of any federal,
state or local law applicable to each Mortgage Loan have been complied with
including, without limitation, all consumer, usury, truth-in-lending,
consumer credit protection, equal credit opportunity or disclosure laws
applicable to each Mortgage Loan, and with respect to the Title I Mortgage
Loans, the FHA Regulations; each Mortgage Loan was originated in compliance
with all applicable laws and no fraud or misrepresentation was committed by
any Person in connection therewith; any Mortgage Loan originated in the State
of Texas, was originated pursuant to Chapter 6 of the Texas Consumer Credit
Code.
(g) NO SATISFACTION OR RELEASE OF LIEN. No Mortgage has been
satisfied, canceled, subordinated or rescinded, in whole or in part. No
Mortgaged Property has been released from the lien of the related Mortgage,
in whole or in part, nor has any instrument been executed that would effect
any such release, cancellation, subordination or rescission, other than the
subordination of the lien of a Mortgage securing a Mortgage Loan (in the case
of a Title I Mortgage Loan, as permitted by FHA Regulations), with respect to
which a related Superior Lien was released in connection with the refinancing
of the mortgage loan relating to such Superior Lien.
(h) VALID LIEN. Each Note is secured by a Mortgage and each Mortgage
is or creates a valid, subsisting and enforceable lien on the related
Mortgaged Property, including, in the case of a Mortgage securing a property
improvement loan, the land and all buildings on the Mortgaged Property.
(i) VALIDITY OF MORTGAGE LOAN DOCUMENTS. Each Note and each Mortgage
is genuine and each is the legal, valid and binding obligation of the Obligor
thereof, enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights in general and by general principles of
equity. All parties to
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each Note and each Mortgage had legal capacity at the time to enter into the
related Mortgage Loan and to execute and deliver such Note and Mortgage, and
such Note and Mortgage have been duly and properly executed by such parties.
(j) FULL DISBURSEMENT OF PROCEEDS. As of the applicable Cut-Off Date
the proceeds of each Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder, all costs, fees and expenses
incurred in making or closing each Mortgage Loan and the recording of the
Mortgage were disbursed, the Obligor is not entitled to any refund of any
amounts paid or due under the Note or any related Mortgage and any and all
requirements set forth in the related Mortgage Loan documents have been
complied with.
(k) OWNERSHIP. The Seller has good and marketable title to each
Mortgage Loan, Note and Mortgage, is the sole owner thereof and has full
right to sell each Mortgage Loan, Note and Mortgage to the Purchaser and upon
the conveyance thereof by the Seller to the Purchaser, the Purchaser will
become the sole owner of each Mortgage Loan, Note and Mortgage free and clear
of any encumbrance, equity, lien, pledge, charge, claim or security interest.
(l) OWNERSHIP OF MORTGAGED PROPERTY. The related Servicer's Mortgage
Loan File contains a title document with respect to each Mortgage Loan
reflecting that title to the related Mortgaged Property is held at least 50%
by the Obligor under such Mortgage Loan.
(m) NO DEFAULTS. Except with respect to any delinquent scheduled
payment which is not more than 90 days delinquent as of the applicable
Cut-Off Date, there is no default, breach, violation or event of acceleration
existing under any Mortgage or any Note and there is no event which, with the
passage of time or with notice and/or the expiration of any grace or cure
period, would constitute such a default, breach, violation or event of
acceleration and neither the Seller nor its predecessors have waived any such
default, breach, violation or event of acceleration, except as set forth in
an instrument of waiver, alteration, modification or assumption that is
included in the Trustee's Mortgage Loan File.
(n) NO CONDEMNATION OR DAMAGE. To the best of the Seller's knowledge,
the physical condition of each Mortgaged Property has not deteriorated since
the date of origination of the related Mortgage Loan (normal wear and tear
excepted) and there is no proceeding pending for the total or partial
condemnation of any Mortgaged Property.
(o) MORTGAGE REMEDIES ADEQUATE. Each Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the related Mortgaged
Property of the benefits of the security provided thereby, including, (i) in
the case of a Mortgage designated as a deed of trust, by trustee's sale, and
(ii) otherwise, by judicial foreclosure.
(p) FHA INSURANCE COVERAGE. Each Title I Mortgage Loan is an FHA Title
I property improvement loan (as such term is defined in 24 C.F.R. Part 201.2)
underwritten by the originator thereof in accordance with such originator's
then current underwriting guidelines and all FHA requirements for the Title I
Program as set forth in the FHA Regulations, and has been or will be
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reported to and acknowledged by the FHA for FHA Insurance under the Seller's
Title I contract of insurance. The Seller has no knowledge of any event
which would invalidate or cancel the FHA Insurance for such Title I Mortgage
Loan.
(q) UNDERWRITING OF CONVENTIONAL MORTGAGE LOANS. Each Conventional
Mortgage Loan is either a property improvement and/or home equity loan or a
first or junior lien purchase money loan, and has been underwritten by the
originator thereof in accordance with such originator's then current
underwriting guidelines.
(r) TERMS OF MORTGAGE LOANS. Each Mortgage Loan is a fixed rate loan;
each Note has an original term to maturity of not less than 24 months nor
more than 20 years and 32 days from the date of origination; each Note is
payable in monthly installments of principal and interest, with interest
payable in arrears, and requires a monthly payment which is sufficient to
amortize the original principal balance over the original term and to pay
interest at the related Mortgage Loan Interest Rate; and no Note provides for
any extension of the original term.
(s) SECURITY. No Note is, or has been, secured by any collateral
except the lien of the related Mortgage.
(t) DEED OF TRUST. If a Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves as such and is named in the
Mortgage, or a valid substitution of trustee has been recorded or may be
recorded and no extraordinary fees or expenses are, or will become, payable
by the Seller to the trustee under the deed of trust, except in connection
with default proceedings and a trustee's sale after default by the related
Obligor.
(u) VALUE AND TITLE I INSURABILITY. Except with respect to conditions
and circumstances expressly permitted pursuant to the applicable underwriting
guidelines, the Seller has no knowledge of any conditions or circumstances
(that are not reflected in the Trustee's Mortgage Loan File or in the
Servicer's Mortgage Loan File) that could reasonably be expected to
materially and adversely affect the value of the related Mortgaged Property
with respect to any Conventional Mortgage Loan. Further, the Seller has no
knowledge of any conditions or circumstances that could reasonably be
expected to affect the FHA insurability with respect to any Title I Mortgage
Loan under the Title I Program.
(v) TYPES OF MORTGAGE LOANS. Each Mortgage Loan is (i) in respect of
(1) a property improvement and/or home equity loan, or (2) a first or junior
lien purchase money loan, and (ii) not a loan in respect of the purchase of a
manufactured home; provided that each Title I Mortgage Loan is only in
respect of a property improvement loan.
(w) COMPLETION OF IMPROVEMENTS. With respect to all Mortgage Loans
(except for such Mortgage Loans that are first lien or junior lien purchase
money loans, the proceeds of which have been used in part to improve the
related Mortgaged Property), all improvements to be made to each Mortgaged
Property with the proceeds of the related Mortgage Loan have been completed
and, except as to Mortgage Loans that are such purchase money loans or that
were made by the originator
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thereof directly to the owner of the property being improved, the Servicer's
Mortgage Loan File with respect to such Mortgage Loan contains a Completion
Certificate.
(x) ORIGINATION PRACTICES. The origination practices used by each
originator of the Mortgage Loans and the servicing and collection practices
used by the Seller with respect to each Mortgage Loan, and with respect to
each Title I Mortgage Loan the refinancing practices, if applicable, have
been in all material respects legal, proper, prudent and customary in the
property improvement and/or home equity loan origination and servicing
business and, in the case of Title I Mortgage Loans, in compliance with all
FHA Regulations.
(y) SERVICING PRACTICES. Each Mortgage Loan has been serviced in
accordance with all applicable laws and, to the best of the Seller's
knowledge, no fraud or misrepresentation was committed by any Person in
connection therewith.
(z) NO BULK TRANSFER. The sale, transfer, assignment, conveyance and
grant of the Notes and the Mortgages by the Seller to the Purchaser were not
subject to the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction.
(aa) DELINQUENCIES. As of the November 8, 1995 Cut-Off Date, none of
the Initial Mortgage Loans (by principal balance) and none of the Initial
Mortgage Loans (by number) were delinquent 31 days or more.
(bb) RELIEF ACT MATTERS. No Obligor has notified the Seller, and the
Seller has no knowledge of any relief requested or allowed to an Obligor
under the Soldiers' and Sailors' Civil Relief Act of 1940.
(cc) SELECTION CRITERIA. The Mortgage Loans were not selected by the
Seller for sale to the Purchaser or for inclusion in the Trust Fund on any
basis intended to adversely affect the Purchaser or the Trust Fund.
(dd) REMIC QUALIFICATION. With respect to each Mortgage Loan, either:
(i) the original principal balance of the Mortgage Loan as of the date of
origination thereof was less than 125% of the value of the Mortgaged Property
attributable to only the real property securing such Mortgage Loan less the
amount of all indebtedness secured by such Mortgaged Property which is senior
or pari passu with the lien of such Mortgage Loan; or (ii) substantially all
of the proceeds of such Mortgage Loan were used to acquire or to improve or
protect an interest in real property that, at the date of origination of such
Mortgage Loan, was the only security therefor.
(ee) APPRAISED MORTGAGE LOAN-TO-VALUE. At origination, each Title I
Mortgage Loan in excess of $15,000, that was not owner-occupied, had an
appraised loan-to-value ratio not in excess of 100%; provided that the FHA
Regulations in effect at the time of such origination required an appraisal
of the Mortgaged Property.
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(ff) TYPE OF MORTGAGED PROPERTIES. At the time of origination, each
Title I Mortgage Loan with a principal balance of $7,500 or greater was
secured by a lien on an owner-occupied one-to-four family dwelling.
(gg) SENIOR LIEN DELINQUENCIES. No lien senior to the lien created by a
Mortgage at the time of origination of the related Mortgage Loan was more
than 30 days past due.
Section 2. PURCHASE AND DELIVERY.
In consideration for the sale and transfer of the Mortgage Loans to
Purchaser by Seller, and upon transfer of such Mortgage Loans to Purchaser or
Purchaser's designee from Seller on the date hereof with respect to the
Initial Mortgage Loans, and on the applicable Subsequent Transfer Date with
respect to the Subsequent Mortgage Loans, the Purchaser shall pay Seller
$10.00 and other good and valuable consideration (the "PURCHASE PRICE"). The
transfer of funds from Purchaser to Seller for the Purchase Price for all
Mortgage Loans purchased shall be made by wire transfer of immediately
available funds to the bank account designated by Seller.
On the date hereof with respect to the Initial Mortgage Loans, and on
the Subsequent Transfer Date with respect to the Subsequent Mortgage Loans,
Seller shall transfer, assign and convey to Purchaser all of Seller's right,
title and interest in and to each Mortgage Loan and the related Trustee's
Mortgage Loan File. Seller shall, or shall cause its agent to deliver to
Purchaser or Purchaser's designee, the related Trustee's Mortgage Loan File.
On the date hereof with respect to the Initial Mortgage Loans, and on
the Subsequent Transfer Date with respect to the Subsequent Mortgage Loans,
Seller shall promptly transfer to Purchaser or its designee good title to the
related Mortgage, if applicable, pursuant to an Assignment of Mortgage and
legal title to the related Note pursuant to the endorsement thereof in the
name of the Purchaser or its designee; provided that such Assignment of
Mortgage, if applicable, and endorsement of such Note shall be prepared and
executed in the manner as spsecified in writing by the Purchaser. Seller
shall provide to Purchaser, at Seller's cost, a duly executed Assignment of
Mortgage, if applicable, and a blank endorsement of the related Note.
Purchaser shall bear the cost and expense of completing and recording such
Assignment of Mortgage, if applicable, and completing the endorsement of such
Note to the Purchaser or its designee.
Section 3. BINDING EFFECT. This Loan Sale Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the Purchaser
and the Seller.
Section 4. GOVERNING LAW. This Loan Sale Agreement shall be governed
by and construed under the laws of the State of Texas.
Section 5. CAPITALIZED TERMS. Capitalized terms used and not otherwise
defined herein have the meanings assigned to them in the Pooling and
Servicing Agreement, dated as of __________________, 19___ (the "POOLING AND
SERVICING AGREEMENT"), by and between the Purchaser, as Depositor, the
Seller, as Transferor and Servicer, Residential Funding Corporation, as
Standby Servicer, and First Trust of California, National Association, as
Trustee.
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IN WITNESS WHEREOF, the undersigned Purchaser and Seller have executed
this Loan Sale Agreement as of the ___th day of _______________, 19__ .
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as Seller
By:
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Name:
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Title:
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as Purchaser
By:
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Name:
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Title:
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