UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2012
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
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Commission file number: 001-35449
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Nationstar Mortgage Holdings Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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45-2156869
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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350 Highland Drive
Lewisville, TX
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75067
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
(469) 549-2000
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Name of each exchange on which registered
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Common Stock, $.01 par value per share
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12(b)-2 of the Exchange Act (check one)
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Large Accelerated Filer
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Accelerated Filer
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Non-Accelerated Filer
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(Do not check if a smaller reporting company.)
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Smaller reporting company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes
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Number of shares of common stock, $0.01 par value, outstanding as of March 4, 2013: 90,449,140
As of June 30, 2012, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was approximately $441,408,900 based on the closing sale price of $21.52 as reported on the New York Stock Exchange.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of our definitive Proxy Statement, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days of the Company's fiscal year-end, are incorporated by reference into Part III, Items 10-14 of this Annual Report on Form 10-K.
NATIONSTAR MORTGAGE HOLDINGS INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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CAUTIONS REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements include, without limitation, statements concerning plans, objectives, goals, projections, strategies, future events or performance, and underlying assumptions and other statements, which are not statements of historical facts. When used in this discussion, the words "anticipate," "appears," "believe," "foresee," "intend," "should," "expect," "estimate," "project," "plan," "may," "could," "will," "are likely" and similar expressions are intended to identify forward-looking statements. These statements involve predictions of our future financial condition, performance, plans and strategies, and are thus dependent on a number of factors including, without limitation, assumptions and data that may be imprecise or incorrect. Specific factors that may impact performance or other predictions of future actions have, in many but not all cases, been identified in connection with specific forward-looking statements.
There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to:
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the delay in our foreclosure proceedings due to inquiries by certain state Attorneys General, court administrators, and state and federal government agencies;
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the impact of the ongoing implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), including rules issued by the Consumer Financial Protection Bureau (CFPB) relating to mortgage servicing and originations and the continuing examination of our business begun by the CFPB, on our business activities and practices, costs of operations and overall results of operations;
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the impact on our servicing practices of enforcement consent orders against, and agreements entered into by certain federal and state agencies with, the largest mortgage servicers and ongoing inquiries regarding other non-bank mortgage servicers;
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increased legal proceedings and related costs;
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the continued uncertainty of the residential mortgage market, increase in monthly payments on adjustable rate mortgage loans, adverse economic conditions, decrease in property values and increase in delinquencies and defaults;
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the deterioration of the market for reverse mortgages and increase in foreclosure rates for reverse mortgages;
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our ability to efficiently service higher risk loans;
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our ability to mitigate the increased risks related to servicing reverse mortgages;
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our ability to compete successfully in the mortgage loan servicing and mortgage loan originations industries;
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our ability to maintain or grow the size of our servicing portfolio and realize our significant investments in personnel and our technology platform by successfully identifying attractive acquisition opportunities, including mortgage servicing rights (MSRs), subservicing contracts, servicing platforms and originations platforms;
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our ability to scale-up appropriately and integrate our acquisitions to realize the anticipated benefits of any such potential future acquisitions, including potentially significant acquisitions;
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our substantial indebtedness may limit our financial and operating activities and our ability to incur additional debt to fund future needs;
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our ability to obtain sufficient capital to meet our financing requirements;
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our ability to grow our loan originations volume;
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the termination of our servicing rights and subservicing contracts;
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changes to federal, state and local laws and regulations concerning loan servicing, loan origination, loan modification or the licensing of entities that engage in these activities;
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changes in state and federal laws that are adverse to mortgage servicers which increase costs and operational complexity and impose significant penalties for violation;
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loss of our licenses;
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our ability to meet certain criteria or characteristics under the indentures governing our securitized pools of loans;
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our ability to follow the specific guidelines of government-sponsored enterprises (GSEs) or a significant change in such guidelines;
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delays in our ability to collect or be reimbursed for servicing advances;
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changes to Home Affordable Modification Program (HAMP), Home Affordable Refinance Program, Making Home Affordable Plan or other similar government programs;
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changes in our business relationships with the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (“Freddie Mac”), the Government National Mortgage Association (“Ginnie Mae”) and others that facilitate the issuance of mortgage-backed securities (MBS);
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changes to the nature of the guarantees of Fannie Mae and Freddie Mac and the market implications of such changes;
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errors in our financial models or changes in assumptions;
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requirements to write down the value of certain assets;
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changes in prevailing interest rates;
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our ability to successfully mitigate our risks through hedging strategies;
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changes to our servicer ratings;
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the accuracy and completeness of information about borrowers and counterparties;
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our ability to maintain our technology systems and our ability to adapt such systems for future operating environments;
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failure of our internal security measures or breach of our privacy protections;
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failure of our vendors to comply with servicing criteria;
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the loss of the services of our senior managers;
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failure to attract and retain a highly skilled work force;
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changes in public opinion concerning mortgage originators or debt collectors;
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changes in accounting standards; and
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conflicts of interest with our principal stockholder.
All of the factors are difficult to predict, contain uncertainties that may materially affect actual results, and may be beyond our control. New factors emerge from time to time, and it is not possible for our management to predict all such factors or to assess the effect of each such new factor on our business. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore any of these statements included herein may prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. Please refer to Item 1A. Risk Factors to Part I of this report for further information on these and other factors affecting us.
PART I.
Item 1.
Business
General
Nationstar Mortgage Holdings Inc. (Nationstar Inc.) is a Delaware corporation formed in 2011. When we use the terms the "Company," "we," "us," and "our" we are referring to Nationstar Inc. and our consolidated subsidiaries, including Nationstar Mortgage LLC (Nationstar). Through our subsidiaries, we are a real estate services company engaged primarily in the servicing of residential mortgage loans for others and the origination and selling or securitization of single-family conforming mortgage loans to government-sponsored entities (GSE) or other third-party investors in the secondary market. Nationstar, Nationstar Inc.'s principal operating subsidiary, is one of the largest high touch non-bank servicers in the United States.
Nationstar's history began in 1994 in Denver, Colorado as Nova Credit Corporation, a Nevada corporation. In 1997, the executive offices and primary operations were moved to Dallas, Texas and the name was changed to Centex Credit Corporation. In 2001, Centex Credit Corporation was merged into Centex Home Equity Company, LLC (CHEC), a Delaware limited liability company. In 2006, FIF HE Holdings LLC (FIF), acquired all of the outstanding membership interests in CHEC, and changed the name to Nationstar Mortgage LLC. FIF is a subsidiary of Fortress Private Equity Funds III and IV (Fortress).
On February 24, 2012, Nationstar Inc. filed a registration statement on Form S-1 for the offering of 19,166,667 shares of our common stock. The registration statement became effective on March 7, 2012. Under the terms of the offering, all of the equity interests in Nationstar transferred from FIF HE Holdings LLC to two direct, wholly-owned subsidiaries and Nationstar Inc. issued 19,166,667 shares of $0.01 par value common stock at an initial offering price of $14.00 per share. FIF contributed certain assets to Nationstar and also exchanged its equity in Nationstar for 70,000,000 shares of common stock in Nationstar Inc. The offering transformed Nationstar Inc. into a publicly-traded company.
In conjunction with the initial public offering of Nationstar Inc., in March 2012 Nationstar became a wholly-owned indirect subsidiary of Nationstar Inc., which was formed solely for the purpose of reorganizing the structure of FIF and Nationstar so that the common stock issuer was a corporation rather than a limited liability company. As such, investors own common stock rather than equity interests in a limited liability company.
As a result of our reorganization from the initial public offering, we continue to report the results of Nationstar prior to the initial public offering on a combined basis as a combination between entities under common control. Our financial results for 2012 have been reported as though the transfer of net assets had occurred at the beginning of the period and include the results of operations of both Nationstar Inc. and Nationstar as if the combination had occurred as of January 1, 2012. Additionally, we have presented our operating results for periods prior to January 1, 2012 combining both Nationstar Inc. and Nationstar.
Material 2012 Transaction
On March 6, 2012, Nationstar entered into an asset purchase agreement with Aurora Bank FSB and Aurora Loan Services LLC (collectively, Aurora). Nationstar and Aurora closed the asset purchase in June 2012 (the Aurora Purchase). In connection with the transaction, Nationstar paid Aurora approximately $2.0 billion including approximately $271.5 million for mortgage servicing rights and approximately $1.7 billion for servicing advance receivables. As a part of the Aurora Purchase, certain other assets and liabilities were also acquired. The mortgage servicing rights related to approximately 300,000 residential mortgage loans with an unpaid principal balance of over $63 billion as of March 6, 2012. As of the closing date, Nationstar entered into certain financing arrangements amounting to approximately $1.3 billion for the servicing advance receivables. Nationstar also received co-investment proceeds of $176.5 million from Newcastle Investment Corp. (Newcastle) and certain funds managed by Fortress. The reminder of the purchase price was funded with Nationstar cash.
Recent Developments
On January 6, 2013, we entered into a mortgage servicing rights purchase and sale agreement (the Purchase Agreement) with Bank of America, National Association. Under the Purchase Agreement, we agreed to purchase the rights to service approximately 1.3 million residential mortgage loans with a total UPB of approximately $215 billion, and approximately $5.8 billion of related servicing advance receivables. Approximately 47% of these loans (by UPB) are owned, insured or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae, and the remaining 53% of these loans are non-conforming loans in private label securitizations.
The aggregate purchase price is approximately $7.1 billion, which we expect to fund through a combination of investable cash, the proceeds of a co-investment by Newcastle Investment Corp., and certain funds managed by Fortress, the proceeds of advance financing facilities, and/or other issuances of debt. On January 31, 2013, we closed on the MSRs with respect to those loans owned, insured or guaranteed by Fannie Mae (Fannie MSRs) and Freddie Mac (Freddie MSRs). On February 1, 2013, we
closed on the MSRs with respect to those loans owned, insured or guaranteed by Ginnie Mae (Ginnie MSRs). Subject to customary closing conditions, we expect to close on the majority of the remaining MSRs in stages during the second quarter of 2013. On February 18, 2013, we boarded a portion of the Freddie MSRs. We expect to board the remaining Freddie MSRs, Fannie MSRs and Ginnie MSRs pursuant to an agreed upon schedule that begins in March and is to be completed in early June with the remaining private label securitization portfolios scheduled to board onto our servicing system through September 2013. We will pay for the servicing advance receivables included with this transaction in accordance with an agreed upon schedule that follows the boarding of the associated MSRs.
On January 28, 2013, the Company announced the pricing of $300 million in asset-backed term notes (Asset-Backed Notes) to be issued by Nationstar Agency Advance Funding Trust, one of our securitization subsidiaries. The issuance and sale of the Asset-Backed Notes closed on January 31, 2013.
On February 7, 2013, Nationstar and Nationstar Capital Corporation, as co-issuers, completed the offering of $400 million aggregate principal amount of 6.5% senior notes due 2021 (2021 Notes) in a private placement transaction. The 2021 Notes were issued at par and pay interest semi-annually. The 2021 Notes are guaranteed on an unsecured senior basis by Nationstar's current and future domestic subsidiaries other than its securitization and certain finance subsidiaries, certain other restricted subsidiaries and subsidiaries that in the future Nationstar designates as excluded, restricted and unrestricted subsidiaries, and Nationstar Inc., Nationstar Sub 1 LLC and Nationstar Sub 2 LLC.
We believe there are opportunities to grow our business through acquisitions, and we actively explore potential acquisition opportunities in the ordinary course of our business. Potential acquisitions may include MSRs relating to residential mortgage loans, subservicing contracts, servicing platforms and originations platforms, as well as other assets and liabilities or businesses in related lines of business. We may fund these potential acquisitions through a combination of cash on hand, the proceeds of a co-investment by Newcastle Investment Corp., and certain funds managed by Fortress, the proceeds of advance financing facilities, and/or other issuances of debt.
Overview
We are a leading residential mortgage loan servicer and one of the largest non-bank servicers in the United States as measured by aggregate unpaid principal balance of loans serviced. Our servicing portfolio consists of over 1.1 million loans with an aggregate unpaid principal balance of $207.8 billion as of December 31, 2012. We service mortgage loans in all 50 states, and we are licensed as a residential mortgage loan servicer/originator and debt collector in all states that require such licensing. In addition to our core servicing business, we currently originate primarily conventional agency (Fannie Mae and Freddie Mac, collectively the government-sponsored enterprises or GSEs) and government (Federal Housing Administration and Department of Veterans Affairs) residential mortgage loans, and we are licensed to originate residential mortgage loans in 49 states and the District of Columbia.
We offer a broad array of servicing capabilities across the residential mortgage spectrum including servicing, origination, and real estate services provided to financial institutions and consumers. Our integrated loan origination business mitigates servicing portfolio runoff and improves credit performance for investors. Additionally, our suite of ancillary businesses, which we call Solutionstar offers asset management, settlement, and processing services.
Our headquarters and operations are based in Lewisville, Texas. As of December 31, 2012, we had a total of 4,672 employees. Our business primarily consists of our Servicing platform and adjacent businesses, and is complemented by our Originations segment.
For financial information concerning our reportable segments see Note 24 to the Consolidated Financial Statements.
Loan Servicing
We are one of the largest non-bank servicers in the United States (based on total aggregate unpaid principal balance), and we have established significant relationships with leading mortgage investors. These investors include the GSEs, regulatory agencies, major banks, private investment funds and other financial institutions and investors that expect to benefit from lower delinquencies and losses on portfolios that we service on their behalf. We believe that our demonstrated performance in servicing loans facilitated our acquisitions and transfers of mortgage servicing rights. These portfolios were previously serviced by other servicers. These acquisitions helped us grow our servicing portfolio from $12.7 billion as of December 31, 2007, to $207.8 billion as of December 31, 2012, representing a compound annual growth rate of 74.9%. We have diversified our portfolio as a result of these acquisitions and transfers. Additionally, our growth is the result of multiple transfers from our client base, which evidences our ability to exceed client performance expectations. We expect to continue to grow our Servicing portfolio and are currently pursuing opportunities to acquire mortgage servicing rights or enter into subservicing agreements.
Loan servicing primarily involves the calculation, collection and remittance of principal and interest payments, the administration of mortgage escrow accounts, the collection of insurance claims, the administration of foreclosure procedures, the management of real estate owned (REO), and the disbursement of required protective advances. Loan servicers service on behalf of the owners of the loans and are therefore exposed to minimal credit risk. We utilize a flexible, customer-centric mortgage servicing model that focuses on asset performance through increased personal contact with borrowers and loss mitigation tools designed to decrease borrower delinquencies and defaults and to increase borrower repayment performance with a goal of home ownership preservation. Our operating culture emphasizes individual default specialist accountability (what we refer to as credit loss ownership) for improved asset performance and cash flow and reduced credit losses. Our servicing model and operating culture have proven even more valuable in the current challenging residential mortgage market, and we have established an excellent track record servicing credit-sensitive loans.
Our Servicing segment produces recurring, fee-based revenues based upon contractually established servicing fees. Servicing fees consist of an amount based on either the unpaid principal balance of the loans serviced or a per-loan fee amount and also include ancillary fees such as late fees. In addition, we earn interest income on amounts deposited in collection accounts and amounts held in escrow to pay property taxes and insurance, which we refer to as float income. We also generate incentive fees from owners of the loans that we service for meeting certain delinquency and loss goals and for arranging successful loss mitigation programs. Moreover, we earn incentive fees from the U.S. Treasury for loans that we successfully modify within the parameters of the HAMP and other assistance programs it sponsors.
We service loans as the owner of mortgage servicing rights (MSRs), which we refer to as “primary servicing,” and we also service loans on behalf of other MSR or mortgage owners, which we refer to as “subservicing.” We also service reverse mortgages. As of December 31, 2012, our primary servicing and subservicing portfolios represented 64.7% and 21.6%, respectively, of our total servicing portfolio with 13.7% of our outstanding servicing portfolio consisting of reverse mortgages.
Primary servicers act as servicers on behalf of mortgage owners and directly own the MSRs, which represent the contractual right to a stream of cash flows (expressed as a percentage of UPB) in exchange for performing specified mortgage servicing functions and temporarily advancing funds to cover payments on delinquent and defaulted mortgages.
We have grown our primary servicing portfolio to $134.5 billion in UPB as of December 31, 2012 from $12.7 billion in UPB as of December 31, 2007, representing a compound annual growth rate of 60.3%. We plan to continue growing our primary servicing portfolio principally by acquiring MSRs from banks and other financial institutions under pressure to exit or reduce their exposure to the mortgage servicing business. As the servicing industry paradigm continues to shift from bank to non-bank servicers, we have capitalized on this significant opportunity and increased our market share of the servicing business.
We acquire MSRs on a standalone basis and have also developed an innovative model for investing on a capital light basis by co-investing with financial partners in “excess MSRs.” Excess MSRs are the servicing fee cash flows (excess fees) on a portfolio of mortgage loans after payment of a basic servicing fee. In these transactions, we provide all servicing functions in exchange for the basic servicing fee, then share the excess fee with our co-investment partner on a pro rata basis. Through December 31, 2012, we had $88.7 billion of loan servicing UPB through excess MSRs and expect to continue to deploy this co-investment strategy in the future.
Subservicers act on behalf of MSR or mortgage owners that choose to outsource the loan servicing function. In our subservicing portfolio, we earn a contractual fee per loan we service. The loans we subservice often include pools of underperforming mortgage loans requiring high touch servicing capabilities. Many of our recent subservicing transfers have been facilitated by GSEs and other large mortgage owners that are seeking to improve loan performance through servicer upgrades. Subservicing represents another capital light means of growing our servicing business, as subservicing contracts are typically awarded on a no-cost basis and do not require substantial capital.
Our subservicing portfolio stands at $44.9 billion in UPB as of December 31, 2012. We expect to enter into additional subservicing arrangements as mortgage owners seek to transfer credit-stressed loans to high-touch subservicers with proven track records and the infrastructure and expertise to improve loan performance.
In 2012 we acquired the mortgage servicing rights related to several portfolios of reverse residential mortgage loans. At December 31, 2012, our reverse mortgage servicing portfolio amounted to $28.4 billion in unpaid principal balance. Reverse mortgages provide seniors (62 years and older) with a loan secured by their home. The majority of reverse mortgages are secured by the Federal Housing Administration (FHA) and are referred to as "HECMs" or Home Equity Conversion Mortgages. Like a typical home equity loan, reverse mortgages are designed to enable seniors to borrow against the value of their home. Unlike a typical home equity loan, no payment of principal or interest is required until the death of the borrower or sale of the home and the amount of the loan is dependent on the appraised value of the home at the time of origination, the interest rate on
the loan, and the borrower's age. Reverse mortgages may be either fully funded (fixed rate loan) or can provide for a line of credit that can be drawn periodically (adjustable rate "ARM" loan).
In addition to our core servicing business, we also operate a fully integrated suite of adjacent businesses, which we call Solutionstar, designed to meet the changing needs of the mortgage industry. These businesses offer an array of ancillary services, including providing services for delinquent loans, managing loans in the foreclosure/real estate owned (REO) process and providing title insurance agency, loan settlement and valuation services on newly originated and re-originated loans. We offer these adjacent services in connection with loans we currently service, as well as on a third-party basis in exchange for base and/or incentive fees. In February 2013 we announced the acquisition of Equifax Settlement Services, a provider of appraisal, title insurance and settlement services that serves a broad array of blue chip clients, including the largest financial institutions in the United States. Nationstar is rebranding the acquired entity as Solutionstar Settlement Services. Solutionstar broadens our product offerings by providing mortgage-related services spanning the life cycle of a mortgage loan. We believe our integrated approach, together with the strength and diversity of our servicing operations and our strategies for growing substantial portions of our business with minimal capital outlays (which we refer to as our “capital light” approach), position us to take advantage of the major structural changes currently occurring across the mortgage industry.
Loan Originations
In addition to our servicing and ancillary businesses, we operate a fully integrated loan originations platform which complements and enhances our servicing business by allowing us to replenish our servicing portfolio as loans pay off over time. We believe our integrated approach, together with the strength and diversity of our servicing operations and our strategies for growing substantial portions of our business with minimal capital outlays, position us to take advantage of the major structural changes currently occurring across the mortgage industry. Our originations business provides (i) a servicing portfolio retention source by providing refinancing services to our existing servicing customers; (ii) an organic source of servicing assets at attractive pricing; and (iii) a loss mitigation solution for our servicing clients and customers by offering refinancing options to borrowers allowing them to lower their monthly payments which may lower their risk of defaulting.
We primarily originate conventional agency and government mortgage loans, and we are licensed to originate residential mortgage loans in 49 states and the District of Columbia. In the years ending December 31, 2012, 2011 and 2010, we originated conventional loans in aggregate principal balance of $7.9 billion, $3.4 billion and $2.8 billion, respectively.
As an additional component of our integrated approach, we have recently expanded our originations business by developing third-party correspondent relationships. These relationships will provide us with an additional source of organic servicing growth and originations revenue. In correspondent lending, there are two types of pricing. In what is known as “mandatory” correspondent pricing, we partner with another originator in an agreement to purchase a set portion of their monthly production at a predetermined price. In the other type of pricing, known as “best efforts”, we can purchase loans at time of sale negotiated volumes and pricing. In both types of pricing, the purchased loans are closed by the originator prior to our purchase and follow an internal review process. The purchased loans are then sold or securitized by us in the same manner as production from our direct to consumer or wholesale business lines.
Our originations strategy is predicated on creating loans that are readily sold into a liquid market either through securitizations backed by the GSEs on a servicing retained basis, or through servicing released whole loans sales to major conduit investors. Loans are typically securitized or sold within 30 days of origination and not intended to be held on our balance sheet on a long-term basis. The interest rate risk inherent in the originations process is mitigated through a hedging program intended to minimize exposure to changes in underlying interest rates.
Legacy Assets and Other
We also have a legacy asset portfolio, which consists primarily of non-prime and nonconforming residential mortgage loans, most of which we originated from April to July 2007. In November 2009, we term-financed our legacy assets with nonrecourse debt that requires no additional capital or equity contributions. In conjunction with the transaction, we reclassified our legacy assets to “held for investment” on our consolidated balance sheet, which allowed us to eliminate further mark-to-market accounting exposure on these assets. We continue to service these loans using our high-touch servicing model. Additionally, we have in the past consolidated certain securitization trusts where it was determined that we had both the power to direct the activities that most significantly impact the Variable Interest Entity's (VIE's) economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE pursuant to consolidation accounting guidance.
In December 2011, Nationstar sold its remaining variable interest in a securitization trust that had been a consolidated VIE since January 1, 2010 and deconsolidated the variable interest. Upon deconsolidation of this VIE, we derecognized the securitized mortgage loans held for investment, subject to ABS nonrecourse debt, the related ABS nonrecourse debt, as well as
certain other assets and liabilities of the securitization trust, and recognized any mortgage servicing rights on the consolidated balance sheet.
The analysis of our financial condition and results of operations as discussed herein is primarily focused on the combined results of our two Operating Segments: the Servicing Segment and the Originations Segment.
Competition
In our Servicing Segment, we compete with large financial institutions and with other non-bank servicers. Our ability to differentiate ourselves from other loan servicers through our high touch servicing model and culture of credit loss ownership largely determines our competitive position within the mortgage loan servicing industry.
In our Originations Segment, we compete with large financial institutions and local and regional mortgage bankers and lenders. Our ability to differentiate the value of our financial products primarily through our customer service, mortgage loan offerings, rates, and fees determines our competitive position within the mortgage loan originations industry.
Additional Information
Our executive offices are located at 350 Highland Drive, Lewisville, Texas 75067, and our telephone number is (469) 549-2000.
Our corporate website is located at
www.nationstarholdings.com
. We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”) available free of charge through our website as soon as reasonably practicable after we electronically file the reports with, or furnish them to, the Securities and Exchange Commission (“SEC”). Our website also provides access to reports filed by our directors, executive officers and certain significant stockholders pursuant to Section 16 of the Exchange Act. In addition, our Corporate Governance Guidelines, Amended and Restated Code of Business Conduct and Ethics, Code of Ethics for the Chief Executive Officer and Senior Financial Officers, and charters for the standing committees of our Board of Directors are available on our website. The information on our website is not incorporated by reference into this report and is provided as an inactive textual reference only. In addition, the SEC maintains a website,
www.sec.gov
that contains reports, proxy and information statements and other information that we file electronically with the SEC.
Executive Officers of the Registrant
The following is a list, as of March 7, 2013, of the names and ages of the executive officers of Nationstar Inc. and of the offices held by each of these persons with Nationstar Inc.
Name
Positions with the Company
Age
Jay Bray
Chief Executive Officer
46
David C. Hisey
Executive Vice President and Chief Financial Officer
52
Harold Lewis
President and Chief Operating Officer
52
Robert L. Appel
Executive Vice President of Servicing
51
Douglas Krueger
Executive Vice President of Capital Markets
44
Ramesh Lakshminarayanan
Executive Vice President and Chief Risk Officer
50
Amar R. Patel
Executive Vice President of Portfolio Management
41
Lisa A. Rogers
Executive Vice President of Retail Production
49
Anthony W. Villani
Executive Vice President and General Counsel
56
Jay Bray
Mr. Bray has served as Nationstar Inc.'s Chief Executive Officer since 2012. He also served as Nationstar Inc.'s Executive Vice President and Chief Financial Officer from May 2011 to February 2012. In addition he has served as the President of Nationstar Inc.'s wholly-owned subsidiary, Nationstar, since July 2011, as the Chief Executive Officer of Nationstar since October 2011, as the Chief Financial Officer of Nationstar from the time he joined Nationstar in May 2000 until September
2012, as a Manager of Nationstar since October 2011, and as a Director of another subsidiary, Nationstar Capital Corporation, since March 2010. Mr. Bray has over 22 years of experience in the mortgage servicing and originations industry. From 1988 to 1994, Mr. Bray worked with Arthur Andersen, where he served as an audit manager from 1992 to 1994. From 1994 to 2000, Mr. Bray held a variety of leadership roles at Bank of America and predecessor entities, where he managed the Asset Backed Securitization process for mortgage related products, developed and implemented a secondary execution strategy and profitability plan and managed investment banking relationships, secondary marketing operations and investor relations. Additionally, Mr. Bray led the portfolio acquisition, pricing and modeling group.
David C. Hisey
Mr. Hisey joined Nationstar Inc. in February 2012 as its Executive Vice President and Chief Financial Officer. He also has held the same position at Nationstar since September 2012. Mr. Hisey was previously the Executive Vice President and Deputy Chief Financial Officer for Fannie Mae, a role he held from 2008 to 2012. From 2005 to 2008 he served as Senior Vice President and Controller for Fannie Mae. Prior to his most recent assignment at Fannie Mae, he also briefly served as Executive Vice President and Chief Financial Officer. Prior to joining Fannie Mae, Mr. Hisey was Corporate Vice President of Financial Services Consulting, Managing Director and practice leader of the Lending and Leasing Group of BearingPoint, Inc., a management consulting and systems integration company. Prior to joining BearingPoint in 2001, Mr. Hisey was an audit partner with KPMG, LLP; his tenure at KPMG spanned 19 years from 1982 to 2001.
Harold Lewis
Mr. Lewis joined Nationstar Inc. in February 2012 as its President and Chief Operating Officer. He also has held the same position at Nationstar since September 2012. Mr. Lewis was previously the Chief Operating Officer at CitiMortgage. Mr. Lewis joined CitiMortgage in April 2009 as head of the Citi Homeowner Assistance Program. Prior to CitiMortgage, Mr. Lewis held executive positions at Fannie Mae for seven years, most recently as Senior Vice President of National Servicing. Mr. Lewis has also held senior management roles with Resource Bancshares Mortgage Group, Nations Credit, Bank of America/Barnett Bank, Cardinal Bank Shares and Union Planter National Bank.
Robert L. Appel
Mr. Appel has served as Nationstar Inc.'s Executive Vice President of Servicing since 2011. He holds the same position at Nationstar and has served in this capacity since joining Nationstar in February 2008. Mr. Appel has over 21 years of experience in the mortgage industry and five years of public accounting experience. From 1985 to 1989, he served as an audit manager with Ernst and Young LLP. From 1990 to 1992, he held a position as Vice President of Control for Tyler Cabot Mortgage Securities Fund, a NYSE listed bond fund. From 1992 to 1999, Mr. Appel held a position at Capstead Mortgage where he started a master servicing organization and later became Senior Vice President of Default Management for Capstead's primary servicer. From 1999 to 2003, he was Managing Director for GMAC's Master Servicing operation. From 2003 to 2005, Mr. Appel was Chief Executive Officer of GMAC's United Kingdom mortgage lending business. From 2005 to 2008, he served as Servicing Manager of GMAC's $100 billion non-prime residential servicing platform.
Douglas Krueger
Mr. Krueger has served as Nationstar Inc.'s Executive Vice President of Capital Markets since 2011. He holds the same position at Nationstar and has served in this capacity since joining Nationstar in February 2009. Mr. Krueger has over 20 years of experience in the mortgage industry. For five years, Mr. Krueger held various senior leadership roles with CitiMortgage managing the secondary marketing and master servicing areas. Mr. Krueger also served as Senior Vice President with Principal Residential Mortgage for 13 years.
Ramesh Lakshminarayanan
Mr. Lakshminarayanan joined Nationstar Inc. in 2012 as its Executive Vice President and Chief Risk Officer. He also holds the same position at Nationstar. He has over 20 years of experience managing credit risk, with over 10 years of experience in risk management specific to the mortgage industry. Prior to joining Nationstar, Mr. Lakshminarayanan worked for JPMorgan Chase from 2006 to December 2011, where he served as Chief Risk Officer Retail/Chief Risk Officer of Chase Home Lending and from January 2012 to June 2012 as Head of Capital Market Operations for Mortgage Banking. From 2001 to 2004, Mr. Lakshminarayanan worked for CitiFinancial as Chief Risk Officer of CitiFinancial Mortgages and from 2004 to 2006 as Group Chief Risk Officer of Consumer Finance North America.
Amar R. Patel
Mr. Patel
has served as Nationstar Inc.'s Executive Vice President of Portfolio Investments since 2011. He holds the same position at Nationstar and has served in this capacity since joining Nationstar in June 2006. Mr. Patel has over 20 years of experience in the mortgage industry. From 1993 to 2006, Mr. Patel held various management roles at Capstead Mortgage Corporation, last serving as Senior Vice President of Asset and Liability Management.
Lisa A. Rogers
Ms. Rogers
has served as Nationstar Inc.'s Executive Vice President of Retail Production since 2012. She holds the same position at Nationstar. Ms. Rogers has over 20 years of leadership experience in the mortgage industry. Prior to joining Nationstar in September 2011, Ms. Rogers was Senior Vice President, National Wholesale Operations and Support Manager for Wells Fargo Home Mortgage. Ms. Rogers had been with Wells Fargo since 1993 in a variety of roles including production risk management and strategic development.
Anthony W. Villani
Mr. Villani has served as Nationstar Inc.'s Executive Vice President and General Counsel since 2012. He also holds the same position at Nationstar, which he joined in October 2011 as an Executive Vice President. Mr. Villani also served as the Company's Secretary from February to August of 2012. Prior to joining Nationstar, Mr. Villani was Vice President and Associate General Counsel of Goldman, Sachs & Co. where he served as the managing attorney for Litton Loan Servicing LP, a Goldman Sachs company, from June 2008 until September 2011. He has also served as Executive Vice President and General Counsel of EMC Mortgage Corporation, a wholly-owned subsidiary of The Bear Stearns Companies Inc.
Item 1A.
Risk Factors
The following discussion sets forth some of the most important risk factors that could materially affect our financial condition and operations. However, factors besides those discussed below, in MD&A or elsewhere in this or other reports that we filed or furnished with the SEC, also could adversely affect us. Readers should not consider any descriptions of such factors to be a complete set of all potential risks that could affect us. Each of these factors could by itself, or together with one or more other factors, adversely affect our business, results of operations and /or financial condition. We are subject to other general risks that are not specifically enumerated which may have a material effect on our financial condition and operations. The following risk factors are not necessarily listed in order of importance.
Our foreclosure proceedings in certain states have been delayed due to inquiries by certain state Attorneys General, court administrators and state and federal government agencies, the outcome of which could have a negative effect on our operations, earnings or liquidity.
Allegations of irregularities in foreclosure processes, including so-called “robo-signing” by mortgage loan servicers, have gained the attention of the Department of Justice, regulatory agencies, state Attorneys General and the media, among other parties. On December 1, 2011, the Massachusetts Attorney General filed a lawsuit against five large mortgage providers alleging unfair and deceptive business practices, including the use of so-called “robo-signers.” In response, one of the mortgage providers temporarily halted most of its lending in Massachusetts. A $25 billion settlement among banks, federal agencies and the state attorneys general from 49 states and the District of Columbia settled the claims made as a part of the Massachusetts Attorney General's case and claims from other states' Attorneys General. Certain state Attorneys General, court administrators and government agencies, as well as representatives of the federal government, have issued letters of inquiry to mortgage servicers, including us, requesting written responses to questions regarding policies and procedures, especially with respect to notarization and affidavit procedures. These requests or any subsequent administrative, judicial or legislative actions taken by these regulators, court administrators or other government entities may subject us to fines and other sanctions, including a foreclosure moratorium or suspension. Additionally, because we do business in all fifty states, our operations may be affected by regulatory actions or court decisions that are taken at the individual state level.
In addition to these inquiries, several state Attorneys General have requested that certain mortgage servicers, including us, suspend foreclosure proceedings pending internal review to ensure compliance with applicable law, and we have received requests from four such state Attorneys General. Pursuant to these requests and in light of industry-wide press coverage regarding mortgage foreclosure documentation practices, we, as a precaution, had already delayed foreclosure proceedings in 23 states, so that we may evaluate our foreclosure practices and underlying documentation. Upon completion of our internal review and after responding to such inquiries, we resumed these previously delayed proceedings. Such inquiries, however, as well as continued court backlog and emerging court processes may cause an extended delay in the foreclosure process in certain states.
Even in states where we have not suspended foreclosure proceedings or where we have lifted or will soon lift any such delayed foreclosures, we have faced, and may continue to face, increased delays and costs in the foreclosure process. For example, we have incurred, and may continue to incur, additional costs related to the re-execution and re-filing of certain documents. We may also be required to take other action in our capacity as a mortgage servicer in connection with pending foreclosures. In addition, the current legislative and regulatory climate could lead borrowers to contest foreclosures that they would not otherwise have contested under ordinary circumstances, and we may incur increased litigation costs if the validity of a foreclosure action is challenged by a borrower. Delays in foreclosure proceedings could also require us to make additional servicing advances by drawing on our servicing advance facilities, or delay the recovery of advances, all or any of which could materially affect our earnings and liquidity and increase our need for capital.
The ongoing implementation of the Dodd-Frank Act will increase our regulatory compliance burden and associated costs and place restrictions on certain originations and servicing operations, all of which could adversely affect our business, financial condition and results of operations.
The Dodd-Frank Act represents a comprehensive overhaul of the financial services industry in the United States. The Dodd-Frank Act includes, among other things: (i) the creation of a Financial Stability Oversight Council to identify emerging systemic risks posed by financial firms, activities and practices, and to improve cooperation among federal agencies; (ii) the creation of a Bureau of Consumer Financial Protection (CFPB) authorized to promulgate and enforce consumer protection regulations relating to financial products; (iii) the establishment of strengthened capital and prudential standards for banks and bank holding companies; (iv) enhanced regulation of financial markets, including the derivatives and securitization markets; and (v) amendments to the Truth in Lending Act aimed at improving consumer protections with respect to mortgage originations, including originator compensation, minimum repayment standards and prepayment considerations.
On January 10, 2013, the CFPB announced a rule to implement certain provisions of the Dodd-Frank Act relating to mortgage originations. Under the new originations rule, before originating a mortgage loan, lenders must determine on the basis of certain information and according to specified criteria that the prospective borrower has the ability to repay the loan. Lenders that issue loans meeting certain requirements will be presumed to comply with the new rule with respect to these loans. On January 17, 2013, the CFPB announced rules to implement certain provisions of the Dodd-Frank Act relating to mortgage servicing. The new servicing rules require servicers to meet certain benchmarks for customer service. Servicers must provide periodic billing statements and certain required notices and acknowledgments, promptly credit borrowers' accounts for payments received and promptly investigate complaints by borrowers and are required to take additional steps before purchasing insurance to protect the lender's interest in the property. The new servicing rules also call for additional notice, review and timing requirements with respect to delinquent borrowers, including early intervention, ongoing access to servicer personnel and specific loss mitigation and foreclosure procedures. Both the originations and servicing rules will take effect on January 10, 2014. The CFPB also issued guidelines on October 13, 2011 and January 11, 2012 indicating that it would send examiners to banks and other institutions that service and/or originate mortgages to assess whether consumers' interests are protected. The CFPB is conducting an examination of our business pursuant to these guidelines.
The ongoing implementation of the Dodd-Frank Act, including the implementation of the new originations and servicing rules by the CFPB and the CFPB's continuing examination of our business, will increase our regulatory compliance burden and associated costs and place restrictions on our servicing operations, which could in turn adversely affect our business, financial condition and results of operations.
The enforcement consent orders by, agreements with, and settlements of, certain federal and state agencies against the largest mortgage servicers related to foreclosure practices could impose additional compliance costs on our servicing business, which could materially and adversely affect our financial condition and results of operations.
On April 13, 2011, the federal agencies overseeing certain aspects of the mortgage market, the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) entered into enforcement consent orders with 13 of the largest mortgage servicers in the United States regarding foreclosure practices. The enforcement consent orders require the servicers, among other things to: (i) promptly correct deficiencies in residential mortgage loan servicing and foreclosure practices; (ii) make significant modifications in practices for residential mortgage loan servicing and foreclosure processing, including communications with borrowers and limitations on dual-tracking, which occurs when servicers continue to pursue foreclosure during the loan modification process; (iii) ensure that foreclosures are not pursued once a mortgage has been approved for modification and establish a single point of contact for borrowers throughout the loan modification and foreclosure processes; and (iv) establish robust oversight and controls pertaining to their third party vendors, including outside legal counsel, that provide default management or foreclosure services. On January 7, 2013, ten of the mortgage servicers reached an agreement in principle with the OCC and the Federal Reserve to pay more than $8.5 billion in cash payments and other assistance to borrowers. While these enforcement consent orders are considered not to be preemptive of the state actions, it is currently unclear how state actions and proceedings will be affected by the federal consents.
On February 9, 2012, federal and state agencies announced a $25 billion settlement with five large banks that resulted from investigations of foreclosure practices. As part of the settlement, the banks have agreed to comply with various servicing standards relating to foreclosure and bankruptcy proceedings, documentation of borrowers’ account balances, chain of title, and evaluation of borrowers for loan modifications and short sales as well as servicing fees and the use of lender-placed insurance. The settlement also provides for certain financial relief to homeowners. As a result, there have been $46 billion worth of loan modifications, short-sales, refinancings and forbearance.
Although we are not a party to the above enforcement consent orders and settlements, we could become subject to the terms of the consent orders and settlements if (i) we subservice loans for the mortgage servicers that are parties to the enforcement consent orders and settlements; (ii) the agencies begin to enforce the consent orders and settlements by looking downstream to our arrangement with certain mortgage servicers; (iii) the mortgage servicers for which we subservice loans request that we comply with certain aspects of the consent orders and settlements, or (iv) we otherwise find it prudent to comply with certain aspects of the consent orders and settlements. In addition, the practices set forth in such consent orders and settlements may be adopted by the industry as a whole, forcing us to comply with them in order to follow standard industry practices, or may become required by our servicing agreements. While we have made and continue to make changes to our operating policies and procedures in light of the consent orders and settlements, further changes could be required and changes to our servicing practices will increase compliance costs for our servicing business, which could materially and adversely affect our financial condition or results of operations.
On September 1, 2011, November 10, 2011, and December 2012, the New York State Department of Financial Services entered into agreements regarding mortgage servicing practices with seven financial institutions. The additional requirements provided for in these agreements will increase operational complexity and the cost of servicing loans in New York. Other servicers, including us, could be required to enter into similar agreements. In addition, other states may also require mortgage servicers to enter into similar agreements. These additional costs could also materially and adversely affect our financial condition and results of operations.
Legal proceedings, state or federal governmental examinations or enforcement actions and related costs could have a material adverse effect on our liquidity, financial position and results of operations.
We are routinely and currently involved in legal proceedings concerning matters that arise in the ordinary course of our business. These legal proceedings range from actions involving a single plaintiff to class action lawsuits with potentially tens of thousands of class members. These actions and proceedings are generally based on alleged violations of consumer protection, securities, employment, contract and other laws, including the Fair Debt Collection Practices Act. Additionally, along with others in our industry, we are subject to repurchase claims and may continue to receive claims in the future, including from our Legacy Portfolio. Our business in general exposes us to both formal and informal periodic inquiries, from various state and federal agencies as part of those agencies' oversight of the mortgage servicing sector. Such inquiries may include those into servicer foreclosure processes and procedures and lender placed insurance. An adverse result in governmental investigations or examinations or private lawsuits, including purported class action lawsuits, may adversely affect our financial results. In addition, a number of participants in our industry, including us, have been the subject of purported class action lawsuits and regulatory actions by state regulators, and other industry participants have been the subject of actions by state Attorneys General. Although we believe we have meritorious legal and factual defenses to the lawsuits in which we are currently involved, the ultimate outcomes with respect to these matters remain uncertain. Litigation and other proceedings may require that we pay settlement costs, legal fees, damages, penalties or other charges, any or all of which could adversely affect our financial results. In particular, ongoing and other legal proceedings brought under state consumer protection statutes may result in a separate fine for each violation of the statute, which, particularly in the case of class action lawsuits, could result in damages substantially in excess of the amounts we earned from the underlying activities and that could have a material adverse effect on our liquidity, financial position and results of operations.
Governmental investigations, both state and federal, can be either formal or informal. The costs of responding to the investigations can be substantial. In addition, government-mandated changes to servicing practices could lead to higher costs and additional administrative burdens, in particular regarding record retention and informational obligations.
The continued deterioration of the residential mortgage market may adversely affect our business, financial condition and results of operations.
Adverse economic conditions, including high unemployment, have impacted the residential mortgage market, resulting in unprecedented delinquency, default and foreclosure rates, all of which have led to increased loss severities on all types of residential mortgage loans due to sharp declines in residential real estate values. Falling home prices have resulted in higher loan-to-value ratios (LTVs), lower recoveries in foreclosure and an increase in loss severities above those that would have been realized had property values remained the same or continued to increase. As LTVs increase, borrowers are left with equity in their homes that is not sufficient to permit them to refinance their existing loans. This may also provide borrowers an incentive to default on their mortgage loan even if they have the ability to make principal and interest payments, which we refer to as strategic defaults. Increased mortgage defaults negatively impact our Servicing Segment because they increase the costs to service the underlying loans and may ultimately reduce the number of mortgages we service. While home prices have increased in most parts of the country and the number of foreclosures has generally declined since 2007, the housing market has not fully recovered from the economic crisis. Any deterioration from its current state could adversely affect our business, financial condition and results of operations.
Adverse economic conditions may also impact our Originations Segment. Declining home prices and increasing LTVs may preclude many potential borrowers, including borrowers whose existing loans we service, from refinancing their existing loans. An increase in prevailing interest rates could decrease our originations volume through our Consumer Direct Retail originations channel, our largest originations channel by volume from December 31, 2006 to December 31, 2012, because this channel focuses predominantly on refinancing existing mortgage loans.
A continued deterioration or a delay in any recovery in the residential mortgage market may reduce the number of mortgages we service or new mortgages we originate, reduce the profitability of mortgages currently serviced by us, adversely affect our ability to sell mortgage loans originated by us or increase delinquency rates. Any of the foregoing could adversely affect our business, financial condition and results of operations.
We may experience serious financial difficulties as some mortgage servicers and originators have experienced, which could adversely affect our business, financial condition and results of operations.
Since late 2006, a number of mortgage servicers and originators of residential mortgage loans have experienced serious financial difficulties and, in some cases, have gone out of business. These difficulties have resulted, in part, from declining markets for their mortgage loans as well as from claims for repurchases of mortgage loans previously sold under provisions requiring repurchase in the event of early payment defaults or breaches of representations and warranties regarding loan quality and certain other loan characteristics. Higher delinquencies and defaults may contribute to these difficulties by reducing the value of mortgage loan portfolios and requiring originators to sell their portfolios at greater discounts to par. In addition, the cost of servicing an increasingly delinquent mortgage loan portfolio may rise without a corresponding increase in servicing compensation. The value of many residual interests retained by sellers of mortgage loans in the securitization market has also been declining. Overall originations volumes are down significantly in the current economic environment. According to Inside Mortgage Finance, total U.S. residential mortgage originations volume decreased from $3.0 trillion in 2006 to $1.8 trillion in 2012. Any of the foregoing could adversely affect our business, financial condition and results of operations.
We service reverse mortgages, which subjects us to additional risks and could have a material adverse effect on our business, liquidity, financial condition and results of operations.
In 2012, we purchased the servicing rights to certain reverse mortgages. The reverse mortgage business is subject to substantial risks, including market, credit, interest rate, liquidity, operational, reputational and legal risks. A reverse mortgage is a loan available to seniors aged 62 or older that allows homeowners to borrow money against the value of their home. No repayment of the mortgage is required until the borrower dies or the home is sold. A deterioration of the market for reverse mortgages may reduce the number of reverse mortgages we service, reduce the profitability of reverse mortgages currently serviced by us and adversely affect our ability to sell reverse mortgages in the market. Although foreclosures involving reverse mortgages generally occur less frequently than forward mortgages, loan defaults on reverse mortgages leading to foreclosures may occur if borrowers fail to meet maintenance obligations, such as payment of taxes or home insurance premiums. An increase in foreclosure rates may increase our cost of servicing. As a reverse mortgage servicer, we will also be responsible for funding any payments due to borrowers in a timely manner, remitting to investors interest accrued, and paying for interest shortfalls. Advances on reverse mortgages are typically greater than advances on forward residential mortgages. They are typically recovered upon weekly or monthly reimbursement or from sale in the market. In the event we receive requests for advances in excess of amounts we are able to fund, we may not be able to fund these advance requests, which could materially and adversely affect our liquidity. Finally, we are subject to negative headline risk in the event that loan defaults on reverse mortgages lead to foreclosures or even evictions of elderly homeowners. All of the above factors could have a material adverse effect on our business, liquidity, financial condition and results of operations.
Borrowers with adjustable rate mortgage loans are especially exposed to increases in monthly payments and they may not be able to refinance their loans, which could cause delinquency, default and foreclosure and therefore adversely affect our business.
Borrowers with adjustable rate mortgage loans are exposed to increased monthly payments when the related mortgage loan’s interest rate adjusts upward from an initial fixed rate or a low introductory rate, as applicable, to the rate computed in accordance with the applicable index and margin. Borrowers with adjustable rate mortgage loans seeking to refinance their mortgage loans to avoid increased monthly payments as a result of an upward adjustment of the mortgage loan’s interest rate may no longer be able to find available replacement loans at comparably low interest rates. This increase in borrowers’ monthly payments, together with any increase in prevailing market interest rates, may result in significantly increased monthly payments for borrowers with adjustable rate mortgage loans, which may cause delinquency, default and foreclosure. Increased mortgage defaults and foreclosures may adversely affect our business as they reduce the number of mortgages we service.
We principally service higher risk loans, which exposes us to a number of different risks.
A significant percentage of the mortgage loans we service are higher risk loans, meaning that the loans are to less creditworthy borrowers or for properties the value of which has decreased. These loans are more expensive to service because they require more frequent interaction with customers and greater monitoring and oversight. As a result, these loans tend to have higher delinquency and default rates, which can have a significant impact on our revenues, expenses and the valuation of our MSRs. Private-label mortgage loans are at greater risk of such delinquency than GSE and government agency-insured mortgage loans. Therefore, as we increase the percentage of private-label mortgages in our servicing portfolio as measured by UPB our servicing portfolio may become increasingly delinquent. It may also be more difficult for us to recover advances we are required to make with respect to higher risk loans. In connection with the ongoing mortgage market reform and regulatory
developments, servicers of higher risk loans may be subject to increased scrutiny by state and federal regulators or may experience higher compliance costs, which could result in higher servicing costs. We may not be able to pass along any incremental costs we incur to our servicing clients. All of the foregoing factors could therefore adversely affect our business, financial condition and results of operations.
A significant change in delinquencies for the loans we service could adversely affect our business, financial condition and results of operations.
Delinquency rates have a significant impact on our revenues, our expenses and on the valuation of our MSRs as follows:
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Revenue. An increase in delinquencies will result in lower revenue for loans we service for GSEs because we only collect servicing fees from GSEs for performing loans. Additionally, while increased delinquencies generate higher ancillary fees, including late fees, these fees are not likely to be recoverable in the event that the related loan is liquidated. In addition, an increase in delinquencies lowers the interest income we receive on cash held in collection and other accounts.
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Expenses. An increase in delinquencies will result in a higher cost to service due to the increased time and effort required to collect payments from delinquent borrowers. It may also result in an increase in interest expense as a result of an increase in our advancing obligations.
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Liquidity. An increase in delinquencies could also negatively impact our liquidity because of an increase in borrowing under our advance facilities.
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Valuation of MSRs. We base the price we pay for MSRs on, among other things, our projections of the cash flows from the related pool of mortgage loans. Our expectation of delinquencies is a significant assumption underlying those cash flow projections. If delinquencies were significantly greater than expected, the estimated fair value of our MSRs could be diminished. If the estimated fair value of MSRs is reduced, we could suffer a loss, which has a negative impact on our financial results.
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A further increase in delinquency rates could therefore adversely affect our business, financial condition and results of operations.
Decreases in property values have caused increases in LTVs, resulting in borrowers having little or negative equity in their property, which may reduce new loan originations and provide incentive to borrowers to strategically default on their loans.
We believe that borrowers with negative equity in their properties are more likely to strategically default on mortgage loans, which could materially affect our business. Also, with the exception of loans modified under the Making Home Affordable plan (MHA), we are generally unable to refinance loans with high LTVs. Increased LTVs could reduce our ability to originate loans for borrowers with low or negative equity and could adversely affect our business, financial condition and results of operations.
The industry in which we operate is highly competitive and our inability to compete successfully could adversely affect our business, financial condition and results of operations.
We operate in a highly competitive industry that could become even more competitive as a result of economic, legislative, regulatory and technological changes. In the servicing industry, we face competition in areas such as fees and performance in reducing delinquencies and entering successful modifications. Competition to service mortgage loans comes primarily from large commercial banks and savings institutions. These financial institutions generally have significantly greater resources and access to capital than we do, which gives them the benefit of a lower cost of funds. Additionally, our servicing competitors may decide to modify their servicing model to compete more directly with our servicing model, or our servicing model may generate lower margins as a result of competition or as overall economic conditions improve.
In the mortgage loan originations industry, we face competition in such areas as mortgage loan offerings, rates, fees and customer service. Competition to originate mortgage loans comes primarily from large commercial banks and savings institutions. These financial institutions generally have significantly greater resources and access to capital than we do, which gives them the benefit of a lower cost of funds.
In addition, technological advances and heightened e-commerce activities have increased consumers’ accessibility to products and services. This has intensified competition among banks and non-banks in offering mortgage loans and loan servicing. We may be unable to compete successfully in our industries and this could adversely affect our business, financial condition and results of operations.
We may not be able to maintain or grow our business if we cannot identify and acquire MSRs or enter into additional subservicing agreements on favorable terms.
Our servicing portfolio is subject to “run off,” meaning that mortgage loans serviced by us may be prepaid prior to maturity, refinanced with a mortgage not serviced by us or liquidated through foreclosure, deed-in-lieu of foreclosure or other liquidation process or repaid through standard amortization of principal. As a result, our ability to maintain the size of our servicing portfolio depends on our ability to originate additional mortgages or to acquire the right to service additional pools of residential mortgages. We may not be able to acquire MSRs or enter into additional subservicing agreements on terms favorable to us or at all, which could adversely affect our business, financial condition and results of operations. In determining the purchase price for MSRs and subservicing agreements, management makes certain assumptions, many of which are beyond our control, including, among other things:
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the rates of prepayment and repayment within the underlying pools of mortgage loans;
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projected rates of delinquencies, defaults and liquidations;
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our cost to service the loans;
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ancillary fee income; and
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amounts of future servicing advances.
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We may not be able to recover our significant investments in personnel and our technology platform if we cannot identify and acquire MSRs or enter into additional subservicing agreements on favorable terms, which could adversely affect our business, financial condition and results of operations.
We have made, and expect to continue to make, significant investments in personnel and our technology platform to allow us to service additional loans. In particular, prior to acquiring a large portfolio of MSRs or entering into a large subservicing contract, we invest significant resources in recruiting, training, technology and systems. We may not realize the expected benefits of these investments to the extent we are unable to increase the pool of residential mortgages serviced, we are delayed in obtaining the right to service such loans or we do not appropriately value the MSRs that we do purchase or the subservicing agreements we enter into. Any of the foregoing could adversely affect our business, financial condition and results of operations.
We may not realize all of the anticipated benefits of potential future acquisitions, which could adversely affect our business, financial condition and results of operations.
Our ability to realize the anticipated benefits of potential future acquisitions of servicing portfolios, originations platforms or companies will depend, in part, on our ability to scale-up to appropriately service any such assets, and integrate the businesses of such acquired companies with our business. The process of acquiring assets or companies may disrupt our business and may not result in the full benefits expected. The risks associated with acquisitions include, among others:
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uncoordinated market functions;
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unanticipated issues in integrating information, communications and other systems;
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unanticipated incompatibility of purchasing, logistics, marketing and administration methods;
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not retaining key employees; and
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the diversion of management’s attention from ongoing business concerns.
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In the event that we acquire a servicing or originations platform, we may elect to operate this platform in addition to our current platform for a period of time or indefinitely. These transactions could vary in size. Individually or collectively, these transactions could substantially increase the UPB, or alter the composition of the portfolio, of mortgage loans that we service or have an otherwise significant impact on our business. We can provide no assurances that we will enter into any such agreement or as to the timing of any potential acquisition. Additionally, we may make or have made potentially significant acquisitions which could expose us to greater risks than we currently experience in servicing our current portfolio and adversely affect our business, financial condition and results of operations. We also may not realize all of the anticipated benefits of potential future acquisitions, which could adversely affect our business, financial condition and results of operations.
Any future acquisitions could require substantial additional capital in excess of cash from operations. Therefore, we may fund acquisitions with a combination of excess MSR co-investments, nonrecourse securitization debt, warehouse financing, servicer advance facilities, additional corporate indebtedness or equity financing. Where we can obtain such financing on attractive terms, we typically attempt to finance our acquisitions on a nonrecourse basis. In addition, we could enter into such acquisition arrangements on a standalone basis or on a co-investment or other basis with one or more of our affiliates. We can provide no assurances, however, as to the availability or terms of funding for future acquisitions or our ability to enter into such arrangements with our affiliates. If we fail to obtain adequate financing or otherwise enter into satisfactory arrangements with our affiliates, we could be exposed to significant risks, including risks that we may not be able to complete the acquisition on alternative terms or at all and risks that we may have to pay damages.
Moreover, the success of any acquisition will depend upon our ability to effectively integrate the acquired servicing portfolios, originations platforms or businesses. The acquired servicing portfolios, originations platforms or businesses may not contribute to our revenues or earnings to any material extent, and cost savings and synergies we expect at the time of an acquisition may not be realized once the acquisition has been completed. If we inappropriately value the assets we acquire or the value of the assets we acquire declines after we acquire them, the resulting charges may negatively affect the carrying value of the assets on our balance sheet and our earnings. See “—We use financial models and estimates in determining the fair value of certain assets, such as MSRs and investments in debt securities. If our estimates or assumptions prove to be incorrect, we may be required to record impairment charges, which could adversely affect our earnings.” Furthermore, if we incur additional indebtedness to finance an acquisition, the acquired business may not be able to generate sufficient cash flow to service that additional indebtedness. Unsuitable or unsuccessful acquisitions could adversely affect our business, financial condition and results of operations.
Our substantial indebtedness may limit our financial and operating activities and our ability to incur additional debt to fund future needs.
As of December 31, 2012, we and our guarantors for our unsecured senior notes had approximately $3.1 billion of total indebtedness and unfunded availability of approximately $1.4 billion under our various financing facilities. Our substantial indebtedness and any future indebtedness we incur could:
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require us to dedicate a substantial portion of cash flow from operations to the payment of principal and interest on indebtedness, including indebtedness we may incur in the future, thereby reducing the funds available for other purposes;
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make it more difficult for us to satisfy and comply with our obligations with respect to the unsecured senior notes;
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subject us to increased sensitivity to increases in prevailing interest rates;
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place us at a competitive disadvantage to competitors with relatively less debt in economic downturns, adverse industry conditions or catastrophic external events; or
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reduce our flexibility in planning for or responding to changing business, industry and economic conditions.
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In addition, our substantial level of indebtedness could limit our ability to obtain additional financing on acceptable terms or at all to fund future acquisitions, working capital, capital expenditures, debt service requirements, general corporate and other purposes, which would have a material effect on our business and financial condition. Our liquidity needs could vary significantly and may be affected by general economic conditions, industry trends, performance and many other factors not within our control. Our substantial obligations could have other important consequences. For example, our failure to comply with the restrictive covenants in the agreements governing our indebtedness, which limit our ability to incur liens, to incur debt and to sell assets, could result in an event of default that, if not cured or waived, could harm our business or prospects and could result in our bankruptcy.
We may incur more debt, which could limit our financial and operating activities.
We and our subsidiaries are able to incur additional indebtedness in the future, subject to the limitations contained in the agreements governing our indebtedness. Although these agreements generally restrict us and our restricted subsidiaries from incurring additional indebtedness, these restrictions are subject to important exceptions and qualifications. If we or our subsidiaries incur additional debt, the related risks could be magnified and could limit our financial and operating activities.
We may be unable to obtain sufficient capital to meet the financing requirements of our business.
Our financing strategy includes the use of significant leverage. Accordingly, our ability to finance our operations and repay maturing obligations rests in large part on our ability to borrow money. We are generally required to renew our financing arrangements each year, which exposes us to refinancing and interest rate risks. See Note 12 - Indebtedness, to Consolidated Financial Statements. Our ability to refinance existing debt and borrow additional funds is affected by a variety of factors including:
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limitations imposed on us under the indentures governing our unsecured senior notes and other financing agreements that contain restrictive covenants and borrowing conditions that may limit our ability to raise additional debt;
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the decrease in liquidity in the credit markets;
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prevailing interest rates;
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the strength of the lenders from which we borrow;
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limitations on borrowings on advance facilities imposed by the amount of eligible collateral pledged, which may be less than the borrowing capacity of the advance facility; and
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accounting changes that may impact calculations of covenants in our debt agreements.
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In the ordinary course of our business, we periodically borrow money or sell newly-originated loans to fund our servicing and originations operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources.” Our ability to fund current operations and meet our service advance obligations depends on our ability to secure these types of financings on acceptable terms and to renew or replace existing financings as they expire. Such financings may not be available with the GSEs or other counterparties on acceptable terms or at all.
An event of default, a negative ratings action by a rating agency, an adverse action by a regulatory authority or a general deterioration in the economy that constricts the availability of credit–similar to the market conditions that we have experienced during the last several years–may increase our cost of funds and make it difficult for us to renew existing credit facilities or obtain new lines of credit. We intend to continue to seek opportunities to acquire loan servicing portfolios and/or businesses that engage in loan servicing and/or loan originations. Our liquidity and capital resources may be diminished by any such transactions. Additionally, we believe that a significant acquisition may require us to raise additional capital to facilitate such a transaction, which may not be available on acceptable terms or at all.
In June 2011, the Basel Committee on Banking Supervision of the Bank of International Settlements announced the final framework for strengthening capital requirements, known as Basel III, which if implemented as proposed by U.S. bank regulatory agencies in their June 2012 notices of proposed rulemaking, is expected to materially increase the cost of funding for banking institutions that we rely on for financing. Such Basel III requirements on banking institutions could reduce our sources of funding and increase the costs of originating and servicing mortgage loans. If we are unable to obtain sufficient capital on acceptable terms for any of the foregoing reasons, this could adversely affect our business, financial condition and results of operations.
We may not be able to continue to grow our loan originations volume, which could adversely affect our business, financial condition and results of operations.
Our loan originations business consists primarily of refinancing existing loans. While we intend to use sales lead aggregators and Internet marketing to reach new borrowers, our Consumer Direct Retail originations platform may not succeed because of the referral-driven nature of our industry. Further, our largest customer base consists of borrowers whose existing loans we service. Because we primarily service credit-sensitive loans, many of our existing servicing customers may not be able to qualify for conventional mortgage loans with us or may pose a higher credit risk than other consumers. Furthermore, our Consumer Direct Retail originations platform focuses predominantly on refinancing existing mortgage loans. This type of originations activity is sensitive to increases in interest rates.
Our loan originations business also consists of providing purchase money loans to homebuyers. The origination of purchase money mortgage loans is greatly influenced by traditional business clients in the home buying process such as realtors and builders. As a result, our ability to secure relationships with such traditional business clients will influence our ability to grow our purchase money mortgage loan volume and, thus, our loan originations business.
Our wholesale originations business operates largely through third party mortgage brokers who are not contractually obligated to do business with us. Further, our competitors also have relationships with our brokers and actively compete with us in our efforts to expand our broker networks. Accordingly, we may not be successful in maintaining our existing relationships or
expanding our broker networks. If we are unable to continue to grow our loan originations business, this could adversely affect our business, financial condition and results of operations.
Our counterparties may terminate our servicing rights and subservicing contracts, which could adversely affect our business, financial condition and results of operations.
The owners of the loans we service and the primary servicers of the loans we subservice, may, under certain circumstances, terminate our MSRs or subservicing contracts, respectively.
As is standard in the industry, under the terms of our master servicing agreement with GSEs, GSEs have the right to terminate us as servicer of the loans we service on their behalf at any time and also have the right to cause us to sell the MSRs to a third party. In addition, failure to comply with servicing standards could result in termination of our agreements with GSEs. Because we are required to follow the guidelines of the GSEs with which we do business and are not able to negotiate our fees with these entities for the purchase of our loans, our competitors may be able to sell their loans on more favorable terms. Some GSEs may also have the right to require us to assign the MSRs to a subsidiary and sell our equity interest in the subsidiary to a third party. Under our subservicing contracts, the primary servicers for which we conduct subservicing activities have the right to terminate our subservicing rights with or without cause, with little notice and little to no compensation. We expect to continue to acquire subservicing rights, which could exacerbate these risks.
If we were to have our servicing or subservicing rights terminated on a material portion of our servicing portfolio, this could adversely affect our business, financial condition and results of operations.
Federal, state and local laws and regulations could materially adversely affect our business, financial condition and results of operations.
Federal, state and local governments have recently proposed or enacted numerous laws, regulations and rules related to mortgage loans generally and foreclosure actions in particular. These laws, regulations and rules may result in delays in the foreclosure process, reduced payments by borrowers, modification of the original terms of mortgage loans, permanent forgiveness of debt and increased servicing advances. In some cases, local governments have ordered moratoriums on foreclosure activity, which prevent a servicer or trustee, as applicable, from exercising any remedies they might have in respect of liquidating a severely delinquent mortgage loan. Several courts also have taken unprecedented steps to slow the foreclosure process or prevent foreclosure altogether.
In addition, in January 2011, the Federal Housing Finance Agency (FHFA) proposed changes to mortgage servicing compensation structures, including cutting servicing fees and channeling funds toward reserve accounts for delinquent loans. Due to the highly regulated nature of the residential mortgage industry, we are required to comply with a wide array of federal, state and local laws and regulations that regulate, among other things, the manner in which we conduct our servicing and originations business and the fees we may charge. These regulations directly impact our business and require constant compliance, monitoring and internal and external audits. A material failure to comply with any of these laws or regulations could subject us to lawsuits or governmental actions, which could materially adversely affect our business, financial condition and results of operations.
In addition, there continue to be changes in legislation and licensing in an effort to simplify the consumer mortgage experience, which require technology changes and additional implementation costs for loan originators. We expect legislative changes will continue in the foreseeable future, which may increase our operating expenses.
Furthermore, there continue to be changes in state law that are adverse to mortgage servicers that increase costs and operational complexity of our business and impose significant penalties for violation.
Any of these changes in the law could adversely affect our business, financial condition and results of operations.
Unlike competitors that are banks, we are subject to state licensing and operational requirements that result in substantial compliance costs.
Because we are not a depository institution, we do not benefit from a federal exemption to state mortgage banking, loan servicing or debt collection licensing and regulatory requirements. We must comply with state licensing requirements and varying compliance requirements in all fifty states and the District of Columbia, and we are sensitive to regulatory changes that may increase our costs through stricter licensing laws, disclosure laws or increased fees or that may impose conditions to licensing that we or our personnel are unable to meet. In addition, we are subject to periodic examinations by state regulators,
which can result in refunds to borrowers of certain fees earned by us, and we may be required to pay substantial penalties imposed by state regulators due to compliance errors. Future state legislation and changes in existing regulation may significantly increase our compliance costs or reduce the amount of ancillary fees, including late fees, that we may charge to borrowers. This could make our business cost-prohibitive in the affected state or states and could materially affect our business.
Federal and state legislative and agency initiatives in mortgage-backed securities (MBS) and securitization may adversely affect our financial condition and results of operations.
There are federal and state legislative and agency initiatives that could, once fully implemented, adversely affect our business. For instance, the risk retention requirement under the Dodd-Frank Act requires securitizers to retain a minimum beneficial interest in MBS they sell through a securitization, absent certain qualified residential mortgage (QRM) exemptions. Once implemented, the risk retention requirement may result in higher costs of certain originations operations and impose on us additional compliance requirements to meet servicing and originations criteria for QRMs. Additionally, the amendments to Regulation AB relating to the registration statement required to be filed by asset-backed securities (ABS) issuers adopted in March 2011 by the SEC pursuant to the Dodd-Frank Act would increase compliance costs for ABS issuers, which could in turn increase our cost of funding and operations. Lastly, certain proposed federal legislation would permit borrowers in bankruptcy to restructure mortgage loans secured by primary residences. Bankruptcy courts could, if this legislation is enacted, reduce the principal balance of a mortgage loan that is secured by a lien on mortgaged property, reduce the mortgage interest rate, extend the term to maturity or otherwise modify the terms of a bankrupt borrower’s mortgage loan. Any of the foregoing could materially affect our financial condition and results of operations.
Our business would be adversely affected if we lose our licenses.
Our operations are subject to regulation, supervision and licensing under various federal, state and local statutes, ordinances and regulations. In most states in which we operate, a regulatory agency regulates and enforces laws relating to mortgage servicing companies and mortgage originations companies such as us. These rules and regulations generally provide for licensing as a mortgage servicing company, mortgage originations company or third party debt default specialist, requirements as to the form and content of contracts and other documentation, licensing of our employees and employee hiring background checks, licensing of independent contractors with which we contract, restrictions on collection practices, disclosure and record-keeping requirements and enforcement of borrowers’ rights. In certain states, we are subject to periodic examination by state regulatory authorities. Some states in which we operate require special licensing or provide extensive regulation of our business.
We believe that we maintain all material licenses and permits required for our current operations and are in substantial compliance with all applicable federal, state and local regulations. We may not be able to maintain all requisite licenses and permits, and the failure to satisfy those and other regulatory requirements could result in a default under our servicing agreements and have a material adverse effect on our operations. The states that currently do not provide extensive regulation of our business may later choose to do so, and if such states so act, we may not be able to obtain or maintain all requisite licenses and permits. The failure to satisfy those and other regulatory requirements could result in a default under our servicing agreements and have a material adverse effect on our operations. Furthermore, the adoption of additional, or the revision of existing, rules and regulations could adversely affect our business, financial condition and results of operations.
We may be required to indemnify or repurchase loans we originated, or will originate, if our loans fail to meet certain criteria or characteristics or under other circumstances.
The indentures governing our securitized pools of loans and our contracts with purchasers of our whole loans contain provisions that require us to indemnify or repurchase the related loans under certain circumstances. While our contracts vary, they contain provisions that require us to repurchase loans if:
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our representations and warranties concerning loan quality and loan circumstances are inaccurate, including representations concerning the licensing of a mortgage broker;
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we fail to secure adequate mortgage insurance within a certain period after closing;
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a mortgage insurance provider denies coverage; or
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we fail to comply, at the individual loan level or otherwise, with regulatory requirements in the current dynamic regulatory environment.
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We believe that, as a result of the current market environment, many purchasers of residential mortgage loans are particularly aware of the conditions under which originators must indemnify or repurchase loans and would benefit from enforcing any repurchase remedies they may have. Along with others in the industry, we are subject to repurchase claims and may continue to receive claims in the future. We believe that our exposure to repurchases under our representations and warranties includes the current unpaid balance of all loans we have sold. In the years ended December 31, 2008 through 2012, we sold an aggregate of $14.3 billion of loans. To recognize the potential loan repurchase or indemnification losses, we have recorded a reserve of $18.5 million as of December 31, 2012. Because of the increase in our loan originations since 2008, we expect that repurchase requests are likely to increase. Should home values continue to decrease, our realized loan losses from loan repurchases and indemnifications may increase as well. As such, our reserve for repurchases may increase beyond our current expectations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Analysis of Items on Consolidated Balance Sheet–Liabilities and Stockholders' Equity”. If we are required to indemnify or repurchase loans that we originate and sell or securitize that result in losses that exceed our reserve, this could adversely affect our business, financial condition and results of operations.
We may incur increased litigation costs and related losses if a borrower challenges the validity of a foreclosure action or if a court overturns a foreclosure, which could adversely affect our liquidity, business, financial condition and results of operations.
We may incur costs if we are required to, or if we elect to, execute or re-file documents or take other action in our capacity as a servicer in connection with pending or completed foreclosures. We may incur litigation costs if the validity of a foreclosure action is challenged by a borrower. If a court overturns a foreclosure because of errors or deficiencies in the foreclosure process, we may have liability to a title insurer or the purchaser of the property sold in foreclosure. These costs and liabilities may not be legally or otherwise reimbursable to us, particularly to the extent they relate to securitized mortgage loans. In addition, if certain documents required for a foreclosure action are missing or defective, we could be obligated to cure the defect or repurchase the loan. A significant increase in litigation costs could adversely affect our liquidity, and our inability to be reimbursed for an advance could adversely affect our business, financial condition and results of operations.
Because we are required to follow the guidelines of the GSEs with which we do business and are not able to negotiate our fees with these entities for the purchase of our loans, our competitors may be able to sell their loans to GSEs on more favorable terms.
Even though we currently originate conventional agency and government conforming loans, because we previously originated non-prime mortgage loans, we believe we are required to pay a higher fee to access the secondary market for selling our loans to GSEs. We believe that because many of our competitors have always originated conventional loans, they are able to sell newly originated loans on more favorable terms than us. As a result, these competitors are able to earn higher margins than we earn on originated loans, which could materially impact our business.
In our transactions with the GSEs, we are required to follow specific guidelines that impact the way we service and originate mortgage loans including:
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our staffing levels and other servicing practices;
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the servicing and ancillary fees that we may charge;
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our modification standards and procedures; and
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the amount of non-reimbursable advances.
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In particular, the FHFA has directed GSEs to align their guidelines for servicing delinquent mortgages they own or guarantee, which can result in monetary incentives for servicers that perform well and penalties for those that do not. In addition, FHFA has directed Fannie Mae to assess compensatory fees against servicers in connection with delinquent loans, foreclosure delays, and other breaches of servicing obligations.
We cannot negotiate these terms with the GSEs and they are subject to change at any time. A significant change in these guidelines that has the effect of decreasing our fees or requires us to expend additional resources in providing mortgage services could decrease our revenues or increase our costs, which could adversely affect our business, financial condition and results of operations.
We are required to make servicing advances that can be subject to delays in recovery or may not be recoverable in certain circumstances, which could adversely affect our liquidity, business, financial condition and results of operations.
During any period in which a borrower is not making payments, we are required under most of our servicing agreements to advance our own funds to meet contractual principal and interest remittance requirements for investors, pay property taxes and insurance premiums, legal expenses and other protective advances. We also advance funds to maintain, repair and market real estate properties on behalf of investors. As home values change, we may have to reconsider certain of the assumptions underlying our decisions to make advances and, in certain situations, our contractual obligations may require us to make certain advances for which we may not be reimbursed. In addition, in the event a mortgage loan serviced by us defaults or becomes delinquent, the repayment to us of the advance may be delayed until the mortgage loan is repaid or refinanced or a liquidation occurs. As a reverse mortgage servicer, we will also be responsible for funding any payments due to borrowers in a timely manner, remitting to investors interest accrued and paying for interest shortfalls. Advances on reverse mortgages are typically greater than advances on forward residential mortgages. They are typically recovered upon weekly or monthly reimbursement or from sale in the market. In the event we receive requests for advances in excess of amounts we are able to fund, we may not be able to fund these advance requests, which could materially and adversely affect our liquidity. A delay in our ability to collect an advance may adversely affect our liquidity, and our inability to be reimbursed for an advance could adversely affect our business, financial condition and results of operations.
Changes to government mortgage modification programs could adversely affect future incremental revenues.
Under HAMP and similar government programs, a participating servicer may be entitled to receive financial incentives in connection with any modification plans it enters into with eligible borrowers and subsequent success fees to the extent that a borrower remains current in any agreed upon loan modification. While we participate in and dedicate numerous resources to HAMP, we may not continue to participate in or realize future revenues from HAMP or any other government mortgage modification program. Changes in legislation or regulation regarding HAMP that result in the modification of outstanding mortgage loans and changes in the requirements necessary to qualify for refinancing mortgage loans may impact the extent to which we participate in and receive financial benefits from such programs, or may increase the expense of our participation in such programs. Changes in government loan modification programs could also result in an increase to our costs.
HAMP is currently scheduled to expire on December 31, 2013. If HAMP is not extended, this could decrease our revenues, which would adversely affect our business, financial condition and results of operations.
Under the MHA, a participating servicer may receive a financial incentive to modify qualifying loans, in accordance with the plan’s guidelines and requirements. The MHA also allows us to refinance loans with a high LTV of up to 125%. This allows us to refinance loans to existing borrowers who have little or negative equity in their homes. Changes in legislation or regulations regarding the MHA could reduce our volume of refinancing originations to borrowers with little or negative equity in their homes. Changes to HAMP, the MHA and other similar programs could adversely affect future incremental revenues.
We are highly dependent upon programs administered by GSEs such as Fannie Mae and Freddie Mac to generate revenues through mortgage loan sales to institutional investors. Any changes in existing U.S. government-sponsored mortgage programs could materially and adversely affect our business, liquidity, financial position and results of operations.
In February 2011, the Obama Administration delivered a report to Congress regarding a proposal to reform the housing finance markets in the United States. The report, among other things, outlined various potential proposals to wind down the GSEs and reduce or eliminate over time the role of the GSEs in guaranteeing mortgages and providing funding for mortgage loans, as well as proposals to implement reforms relating to borrowers, lenders and investors in the mortgage market, including reducing the maximum size of loans that the GSEs can guarantee, phasing in a minimum down payment requirement for borrowers, improving underwriting standards and increasing accountability and transparency in the securitization process.
Our ability to generate revenues through mortgage loan sales to institutional investors depends to a significant degree on programs administered by the GSEs, such as Fannie Mae and Freddie Mac, a government agency, Ginnie Mae, and others that facilitate the issuance of MBS in the secondary market. These GSEs play a critical role in the residential mortgage industry and we have significant business relationships with many of them. Almost all of the conforming loans we originate qualify under existing standards for inclusion in guaranteed mortgage securities backed by GSEs. We also derive other material financial benefits from these relationships, including the assumption of credit risk by these GSEs on loans included in such mortgage securities in exchange for our payment of guarantee fees and the ability to avoid certain loan inventory finance costs through streamlined loan funding and sale procedures.
Any discontinuation of, or significant reduction in, the operation of these GSEs or any significant adverse change in the level of activity in the secondary mortgage market or the underwriting criteria of these GSEs could materially and adversely affect our business, liquidity, financial position and results of operations.
The conservatorship of Fannie Mae and Freddie Mac and related efforts, along with any changes in laws and regulations affecting the relationship between Fannie Mae and Freddie Mac and the U.S. federal government, could adversely affect our business and prospects.
Due to increased market concerns about the ability of Fannie Mae and Freddie Mac to withstand future credit losses associated with securities held in their investment portfolios, and on which they provide guarantees without the direct support of the U.S. federal government, on July 30, 2008, the U.S. government passed the Housing and Economic Recovery Act of 2008. On September 7, 2008, the FHFA, placed Fannie Mae and Freddie Mac into conservatorship and, together with the U.S. Treasury, established a program designed to boost investor confidence in their respective debt and MBS. As the conservator of Fannie Mae and Freddie Mac, the FHFA controls and directs the operations of Fannie Mae and Freddie Mac and may (i) take over the assets and operations of Fannie Mae and Freddie Mac with all the powers of the stockholders, the directors and the officers of Fannie Mae and Freddie Mac and conduct all business of Fannie Mae and Freddie Mac; (ii) collect all obligations and money due to Fannie Mae and Freddie Mac; (iii) perform all functions of Fannie Mae and Freddie Mac which are consistent with the conservator’s appointment; (iv) preserve and conserve the assets and property of Fannie Mae and Freddie Mac; and (v) contract for assistance in fulfilling any function, activity, action or duty of the conservator.
In addition to the FHFA becoming the conservator of Fannie Mae and Freddie Mac, the U.S. Treasury and the FHFA have entered into preferred stock purchase agreements among the U.S. Treasury, Fannie Mae and Freddie Mac pursuant to which the U.S. Treasury will ensure that each of Fannie Mae and Freddie Mac maintains a positive net worth.
Although the U.S. Treasury has committed capital to Fannie Mae and Freddie Mac, these actions may not be adequate for their needs. If these actions are inadequate, Fannie Mae and Freddie Mac could continue to suffer losses and could fail to honor their guarantees and other obligations. The future roles of Fannie Mae and Freddie Mac could be significantly reduced and the nature of their guarantees could be considerably limited relative to historical measurements. Any changes to the nature of the guarantees provided by Fannie Mae and Freddie Mac could redefine what constitute agency and government conforming MBS and could have broad adverse market implications. Such market implications could adversely affect our business and prospects.
The geographic concentration of our servicing portfolio may result in a higher rate of delinquencies, which could adversely affect our business, financial condition and results of operations.
As of December 31, 2012, approximately 23.5% and 10.4% of the aggregate outstanding loan balance in our forward servicing portfolio was secured by properties located in California and Florida, respectively. Some of these states have experienced severe declines in property values and are experiencing a disproportionately high rate of delinquencies and foreclosures relative to other states. To the extent these states continue to experience weaker economic conditions or greater rates of decline in real estate values than the United States generally, the concentration of loans we service in those regions may increase the effect of the risks listed in this “Risk Factors” section. The impact of property value declines may increase in magnitude and it may continue for a long period of time. Additionally, if states in which we have greater concentrations of business were to change their licensing or other regulatory requirements to make our business cost-prohibitive, we may be required to stop doing business in those states or may be subject to higher cost of doing business in those states, which could adversely affect our business, financial condition and results of operations.
We use financial models and estimates in determining the fair value of certain assets, such as MSRs. If our estimates or assumptions prove to be incorrect, we may be required to record impairment charges, which could adversely affect our earnings.
We use internal financial models that utilize, wherever possible, market participant data to value certain of our assets, including our MSRs, newly originated loans held for sale and investments in debt securities for purposes of financial reporting. These models are complex and use asset-specific collateral data and market inputs for interest and discount rates. In addition, the modeling requirements of MSRs are complex because of the high number of variables that drive cash flows associated with MSRs. Even if the general accuracy of our valuation models is validated, valuations are highly dependent upon the reasonableness of our assumptions and the predictability of the relationships that drive the results of the models. If loan loss levels are higher than anticipated, due to an increase in delinquencies or prepayment speeds, or financial market illiquidity continues beyond our estimate, the value of certain of our assets may decrease. We may be required to record impairment charges, which could impact our ability to satisfy minimum net worth covenants of $424.4 million and borrowing conditions in our debt agreements and adversely affect our business, financial condition or results of operations. Errors in our financial models or changes in assumptions could adversely affect our earnings. See “We may not realize all of the anticipated benefits of potential future acquisitions, which could adversely affect our business, financial condition and results of operations.”
Our earnings may decrease because of changes in prevailing interest rates.
Our profitability is directly affected by changes in prevailing interest rates. The following are the material risks we face related to changes in prevailing interest rates:
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an increase in prevailing interest rates could generate an increase in delinquency, default and foreclosure rates resulting in an increase in both operating expenses and interest expense and could cause a reduction in the value of our assets;
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an increase in prevailing interest rates could adversely affect our loan originations volume because refinancing an existing loan would be less attractive for homeowners and qualifying for a loan may be more difficult for consumers;
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an increase in prevailing interest rates would increase the cost of servicing our outstanding debt, including our ability to finance servicing advances and loan originations;
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a decrease in prevailing interest rates may require us to record a decrease in the value of our MSRs; and
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a decrease in prevailing interest rates could reduce our earnings from our custodial deposit accounts.
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Our hedging strategies may not be successful in mitigating our risks associated with interest rates.
From time to time, we have used various derivative financial instruments to provide a level of protection against interest rate risks, but no hedging strategy can protect us completely. The derivative financial instruments that we select may not have the effect of reducing our interest rate risks. In addition, the nature and timing of hedging transactions may influence the effectiveness of these strategies. Poorly designed strategies, improperly executed and documented transactions or inaccurate assumptions could actually increase our risks and losses. In addition, hedging strategies involve transaction and other costs. Our hedging strategies and the derivatives that we use may not be able to adequately offset the risks of interest rate volatility and our hedging transactions may result in or magnify losses. Furthermore, interest rate derivatives may not be available on favorable terms or at all, particularly during economic downturns. Any of the foregoing risks could adversely affect our business, financial condition and results of operations.
A downgrade in our servicer ratings could have an adverse effect on our business, financial condition and results of operations.
Standard & Poor’s and Fitch rate us as a residential loan servicer. Our current favorable ratings from the rating agencies are important to the conduct of our loan servicing business. These ratings may be downgraded in the future. Any such downgrade could adversely affect our business, financial condition and results of operations.
We depend on the accuracy and completeness of information about borrowers and counterparties and any misrepresented information could adversely affect our business, financial condition and results of operations.
In deciding whether to extend credit or to enter into other transactions with borrowers and counterparties, we may rely on information furnished to us by or on behalf of borrowers and counterparties, including financial statements and other financial information. We also may rely on representations of borrowers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. We additionally rely on representations from public officials concerning the licensing and good standing of the third party mortgage brokers through which we do business. While we have a practice of independently verifying the borrower information that we use in deciding whether to extend credit or to agree to a loan modification, including employment, assets, income and credit score, if any of this information is intentionally or negligently misrepresented and such misrepresentation is not detected prior to loan funding, the value of the loan may be significantly lower than expected. Whether a misrepresentation is made by the loan applicant, the mortgage broker, another third party or one of our employees, we generally bear the risk of loss associated with the misrepresentation. We have controls and processes designed to help us identify misrepresented information in our loan originations operations. We, however, may not have detected or may not detect all misrepresented information in our loan originations or from our business clients. Any such misrepresented information could adversely affect our business, financial condition and results of operations.
Technology failures could damage our business operations and increase our costs, which could adversely affect our business, financial condition and results of operations.
The financial services industry as a whole is characterized by rapidly changing technologies, and system disruptions and failures caused by fire, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural disasters and other similar events may interrupt or delay our ability to provide services to our borrowers. Security breaches, acts of vandalism and developments in computer capabilities could result in a compromise or breach of the technology that we use to protect our borrowers’ personal information and transaction data.
Despite our efforts to ensure the integrity of our systems, it is possible that we may not be able to anticipate or implement effective preventive measures against all security breaches, especially because the techniques used change frequently or are not recognized until launched, and because security attacks can originate from a wide variety of sources, including third parties such as persons involved with organized crime or associated with external service providers. Those parties may also attempt to fraudulently induce employees, customers or other users of our systems to disclose sensitive information in order to gain access to our data or that of our customers or clients. These risks may increase in the future as we continue to increase our reliance on the internet and use of web-based product offerings and on the use of cybersecurity.
A successful penetration or circumvention of the security of our systems or a defect in the integrity of our systems or cybersecurity could cause serious negative consequences for our business, including significant disruption of our operations, misappropriation of our confidential information or that of our customers, or damage to our computers or operating systems and to those of our customers and counterparties. Any of the foregoing events could result in violations of applicable privacy and other laws, financial loss to us or to our customers, loss of confidence in our security measures, customer dissatisfaction, significant litigation exposure and harm to our reputation, all of which could adversely affect our business, financial condition and results of operations.
The success and growth of our business will depend upon our ability to adapt to and implement technological changes.
Our mortgage loan originations business is currently dependent upon our ability to effectively interface with our brokers, borrowers and other third parties and to efficiently process loan applications and closings. The originations process is becoming more dependent upon technological advancement, such as our continued ability to process applications over the Internet, accept electronic signatures, provide process status updates instantly and other borrower-expected conveniences. Maintaining and improving this new technology and becoming proficient with it may also require significant capital expenditures. As these requirements increase in the future, we will have to fully develop these technological capabilities to remain competitive and any failure to do so could adversely affect our business, financial condition and results of operations.
Any failure of our internal security measures or breach of our privacy protections could cause harm to our reputation and subject us to liability, any of which could adversely affect our business, financial condition and results of operations.
In the ordinary course of our business, we receive and store certain confidential information concerning borrowers. Additionally, we enter into third party relationships to assist with various aspects of our business, some of which require the exchange of confidential borrower information. If a third party were to compromise or breach our security measures or those of the vendors, through electronic, physical or other means, and misappropriate such information, it could cause interruptions in our operations and expose us to significant liabilities, reporting obligations, remediation costs and damage to our reputation. Any of the foregoing risks could adversely affect our business, financial condition and results of operations. See also “—Technology failures could damage our business operations and increase our costs, which could adversely affect our business, financial condition and results of operations.”
Our vendor relationships subject us to a variety of risks.
We have significant vendors that, among other things, provide us with financial, technology and other services to support our servicing and originations businesses. With respect to vendors engaged to perform activities required by servicing criteria, we have elected to take responsibility for assessing compliance with the applicable servicing criteria for the applicable vendor and are required to have procedures in place to provide reasonable assurance that the vendor’s activities comply in all material respects with servicing criteria applicable to the vendor. In the event that a vendor’s activities do not comply with the servicing criteria, it could negatively impact our servicing agreements. In addition, if our current vendors were to stop providing services to us on acceptable terms, including as a result of one or more vendor bankruptcies due to poor economic conditions, we may be unable to procure alternatives from other vendors in a timely and efficient manner and on acceptable terms, or at all. Further, we may incur significant costs to resolve any such disruptions in service and this could adversely affect our business, financial condition and results of operations.
The loss of the services of our senior managers could adversely affect our business.
The experience of our senior managers is a valuable asset to us. Our management team has significant experience in the residential mortgage originations and servicing industry. We do not maintain key life insurance policies relating to our senior managers. The loss of the services of our senior managers could adversely affect our business.
Our business could suffer if we fail to attract and retain a highly skilled workforce.
Our future success will depend on our ability to identify, hire, develop, motivate and retain highly qualified personnel for all areas of our organization, in particular skilled managers, loan servicers, debt default specialists, loan officers and underwriters. Trained and experienced personnel are in high demand and may be in short supply in some areas. Many of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. In addition, we invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. We may not be able to attract, develop and maintain an adequate skilled workforce necessary to operate our businesses and labor expenses may increase as a result of a shortage in the supply of qualified personnel. If we are unable to attract and retain such personnel, we may not be able to take advantage of acquisitions and other growth opportunities that may be presented to us and this could materially affect our business, financial condition and results of operations.
Negative public opinion could damage our reputation and adversely affect our earnings.
Reputation risk, or the risk to our business, earnings and capital from negative public opinion, is inherent in our business. Negative public opinion can result from our actual or alleged conduct in any number of activities, including lending and debt collection practices, technology failures, corporate governance, and actions taken by government regulators and community organizations in response to those activities. Negative public opinion can also result from media coverage, whether accurate or not. Negative public opinion can adversely affect our ability to attract and retain customers, trading counterparties and employees and can expose us to litigation and regulatory action. Although we take steps to minimize reputation risk in dealing with our customers and communities, this risk will always be present in our organization.
If the ownership of our common stock continues to be highly concentrated, it may
prevent new investors from influencing significant corporate
decisions and may result in conflicts of interest.
FIF HE Holdings LLC (FIF), which is primarily owned by certain private equity funds managed by an affiliate of Fortress Investment Group LLC (Fortress), owns approximately 75.3% of our outstanding common stock as of February 28, 2013. As a result, FIF owns shares sufficient for the majority vote over all matters requiring a stockholder vote, including: the election of directors; mergers, consolidations and acquisitions; the sale of all or substantially all of our assets and other decisions affecting our capital structure; the amendment of its certificate of incorporation and our bylaws; and its winding up and dissolution. This concentration of ownership may delay, deter or prevent acts that would be favored by other stockholders. The interests of FIF may not always coincide with our interests or the interests of other stockholders. This concentration of ownership may also have the effect of delaying, preventing or deterring a change in control of us. Also, FIF may seek to cause us to take courses of action that, in its judgment, could enhance its investment in us, but which might involve risks to other stockholders or adversely affect us or other stockholders. As a result, the market price of our common stock could decline or stockholders might not receive a premium over the then-current market price of our common stock upon a change in control. In addition, this concentration of share ownership may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning shares in a company with significant stockholders.
Nationstar Inc. is a holding company with no operations and will rely on its operating subsidiaries to provide it with funds necessary to meet its financial obligations and to pay dividends.
Nationstar Inc. is a holding company with no material direct operations. Our principal assets are the equity interests we directly or indirectly hold in our operating subsidiaries, which own our operating assets. As a result, we will be dependent on loans, dividends and other payments from our subsidiaries to generate the funds necessary to meet our financial obligations and to pay dividends on our common stock. Our subsidiaries are legally distinct from us and may be prohibited or restricted from paying dividends or otherwise making funds available to us under certain conditions. If we are unable to obtain funds from our subsidiaries, we may be unable to, or our board may exercise its discretion not to, pay dividends.
We do not expect to declare or pay any cash or other dividends in the foreseeable future on our common stock because we intend to use cash flow generated by operations to grow our business. The indenture governing our senior notes restricts our ability to pay cash dividends on our common stock. We may also enter into credit agreements or other borrowing arrangements in the future that restrict or limit our ability to pay cash dividends on our common stock.
Certain provisions of the Stockholders Agreement, our amended and restated certificate of incorporation and our amended and restated bylaws could hinder, delay or prevent a change in control of us, which could adversely affect the price of our common stock.
Certain provisions of our stockholders agreement with FIF (Stockholders Agreement), our amended and restated certificate of incorporation and our amended and restated bylaws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors or FIF. These provisions provide for:
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•
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a classified board of directors with staggered three-year terms;
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•
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removal of directors only for cause and only with the affirmative vote of at least 80% of the voting interest of stockholders entitled to vote (provided, however, that for so long as FIF and certain other affiliates of Fortress and permitted transferees (collectively, the Fortress Stockholders) beneficially own at least 40% of our issued and outstanding common stock, directors may be removed with or without cause with the affirmative vote of a majority of the voting interest of stockholders entitled to vote);
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•
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provisions in our amended and restated certificate of incorporation and amended and restated bylaws prevent stockholders from calling special meetings of our stockholders (provided, however, that for so long as the Fortress Stockholders beneficially own at least 25% of our issued and outstanding common stock, any stockholders that collectively beneficially own at least 25% of our issued and outstanding common stock may call special meetings of our stockholders);
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•
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advance notice requirements by stockholders with respect to director nominations and actions to be taken at annual meetings;
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•
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certain rights to the Fortress Stockholders with respect to the designation of directors for nomination and election to our board of directors, including the ability to appoint a majority of the members of our board of directors for so long as the Fortress Stockholders continue to beneficially own at least 40% of our issued and outstanding common stock;
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•
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no provision in our amended and restated certificate of incorporation or amended and restated bylaws for cumulative voting in the election of directors, which means that the holders of a majority of the outstanding shares of our common stock can elect all the directors standing for election;
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•
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our amended and restated certificate of incorporation and our amended and restated bylaws only permit action by our stockholders outside a meeting by unanimous written consent, provided, however, that for so long as the Fortress Stockholders beneficially own at least 25% of our issued and outstanding common stock, our stockholders may act without a meeting by written consent of a majority of our stockholders; and
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•
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under our amended and restated certificate of incorporation, our board of directors has authority to cause the issuance of preferred stock from time to time in one or more series and to establish the terms, preferences and rights of any such series of preferred stock, all without approval of our stockholders. Nothing in our amended and restated certificate of incorporation precludes future issuances without stockholder approval of the authorized but unissued shares of our common stock.
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In addition, these provisions may make it difficult and expensive for a third party to pursue a tender offer, change in control or takeover attempt that is opposed by FIF, our management or our board of directors. Public stockholders who might desire to participate in these types of transactions may not have an opportunity to do so, even if the transaction is favorable to stockholders. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or change our management and board of directors and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium.
Certain of our stockholders have the right to engage or invest in the same or similar businesses as us.
The Fortress Stockholders have other investments and business activities in addition to their ownership of us. Under our amended and restated certificate of incorporation, the Fortress Stockholders have the right, and have no duty to abstain from exercising such right, to engage or invest in the same or similar businesses as us, do business with any of our clients, customers or vendors or employ or otherwise engage any of our officers, directors or employees. If the Fortress Stockholders or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty, to the fullest extent permitted by law, to offer such corporate opportunity to us, our stockholders or our affiliates.
In the event that any of our directors and officers who is also a director, officer or employee of any of the Fortress Stockholders acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person's capacity as our director or officer and such person acts in good faith, then to the fullest extent
permitted by law such person is deemed to have fully satisfied such person's fiduciary duties owed to us and is not liable to us, if the Fortress Stockholder pursues or acquires the corporate opportunity or if the Fortress Stockholder does not present the corporate opportunity to us.
Additionally, we may make co-investments with Fortress and their affiliates in transactions in the future to deploy our capital light approach to acquiring excess MSRs.
Item 1B.
Unresolved Staff Comments
None.
Item 2.
Properties
The following table sets forth information relating to our primary facilities at December 31, 2012. In addition to the facilities listed in the table below, we also lease small offices throughout the United States.
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Location
|
Owned /
Leased
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Square
Footage
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|
Principal executive office
:
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|
|
Lewisville, Texas – Corporate Headquarters
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Leased
|
160,910
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|
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Business operations and support offices:
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Lewisville, Texas
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Leased
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244,886
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Irving, Texas
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Leased
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187,429
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|
|
Scottsbluff, Nebraska
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Owned
|
177,225
|
|
|
Littleton, Colorado
|
Leased
|
161,218
|
|
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Houston, Texas
|
Leased
|
53,258
|
|
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Indianapolis, Indiana
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Leased
|
44,160
|
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Item 3.
Legal Proceedings
From time to time, we are party to various legal proceedings that have arisen in the normal course of conducting business, including putative class actions and other litigation. These actions and proceedings are generally based on alleged violations of consumer protection, securities, employment, contract and other laws, including the Fair Debt Collection Practices Act. Additionally, along with others in our industry, we are subject to repurchase claims and may continue to receive claims in the future, including through securitization vehicles and master servicing arrangements that we have acquired and from our Legacy Portfolio. Furthermore, the certification of any putative class action could substantially increase our exposure to damages.
Although the outcome of these proceedings cannot be predicted with certainty, management does not currently expect any of the proceedings pending against us, individually or in the aggregate, to have a material effect on our business, financial condition and results of operations (see Note 21 - Commitments and Contingencies). On March 7, 2013, a purported investor filed a complaint with the Supreme Court of the State of New York (the trial court), alleging that Nationstar sold loans for six trusts where Nationstar acts as master servicer, in violation of the underlying pooling and servicing agreements. The Supreme Court has temporarily enjoined Nationstar from further sales of loans in response to the complaint. Nationstar intends to vigorously defend itself in this action and does not expect this action to have a material adverse effect on its financial position or results of operations.
Item 4.
Mine Safety Disclosures
Not applicable.
PART II.
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information and Stockholders
Our common stock has been traded on the New York Stock Exchange under the symbol “NSM” since March 8, 2012. Our initial public offering was priced at $14.00 per share on March 7, 2012. The following table sets forth for the quarters indicated the high and low sales prices of our common stock, as reported in the consolidated transaction reporting system.
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Prices
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Quarter ended
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High
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Low
|
|
March 31, 2012 (from March 8, 2012)
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|
$
|
14.94
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|
|
$
|
13.02
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|
|
June 30, 2012
|
|
$
|
21.64
|
|
|
$
|
13.00
|
|
|
September 30, 2012
|
|
$
|
34.90
|
|
|
$
|
20.90
|
|
|
December 31, 2012
|
|
$
|
37.20
|
|
|
$
|
23.53
|
|
On February 28, 2013, there were 90,449,140 shares outstanding and 128 stockholders of record of Nationstar Inc. common stock. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions.
Dividends
We have never declared or paid cash dividends on our common stock and we currently do not expect to declare or pay any cash dividends in the foreseeable future. The timing and amount of any future dividends will be determined by our Board of Directors and will depend, among other factors, upon our earnings, financial condition, cash requirements, the capital requirements of subsidiaries and investment opportunities at the time any such payment is considered. The indentures governing our senior notes restrict our ability to pay cash dividends on our common stock. Our other finance arrangements may also, under certain circumstances, restrict our ability to pay cash dividends. In addition, we may also enter into credit agreements or other borrowing arrangements in the future that restrict or limit our ability to pay cash dividends on our common stock.
Performance Graph
The following graph shows a comparison of the cumulative total stockholder return for our common stock, S&P North American Financial Services Sector Index and S&P 500 Index from March 8, 2012 (the date our common stock began trading on the NYSE) through December 31, 2012. This data assumes an investment of $100 on March 8, 2012.
Item 6.
Selected Financial Data
The following financial data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8, “Financial Statements and Supplementary Data.” The table below presents, as of and for the dates indicated, selected historical financial information for us (in thousands, except for earnings per share amounts). Note that the selected consolidated statement of operations data for the years ended December 31, 2010, 2011 and 2012 and the selected consolidated balance sheet data at December 31, 2011 and 2012 have been derived from our audited financial statements included elsewhere in this annual report. The selected consolidated statement of operations data and other data for the years ended December 31, 2008 and 2009 and the selected consolidated balance sheet data at December 31, 2008, 2009 and 2010 have been derived from Nationstar's audited consolidated financial statements that are not included in this Annual Report.
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Year ended December 31,
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
Consolidated Balance Sheets Data:
|
(in thousands, except earnings per share amounts)
|
|
Cash and cash equivalents
|
$
|
152,649
|
|
|
$
|
62,445
|
|
|
$
|
21,223
|
|
|
$
|
41,645
|
|
|
$
|
9,357
|
|
|
Accounts receivable
|
3,043,606
|
|
|
562,300
|
|
|
441,275
|
|
|
513,939
|
|
|
355,975
|
|
|
Mortgage loans held for sale
|
1,480,537
|
|
|
458,626
|
|
|
369,617
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|
|
203,131
|
|
|
560,354
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|
|
Mortgage servicing rights (at fair value)
|
635,860
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|
|
251,050
|
|
|
145,062
|
|
|
114,605
|
|
|
110,808
|
|
|
Total assets
|
7,126,143
|
|
|
1,787,931
|
|
|
1,947,181
|
|
|
1,280,185
|
|
|
1,122,001
|
|
|
Notes payable
|
3,601,586
|
|
|
873,179
|
|
|
709,758
|
|
|
771,857
|
|
|
810,041
|
|
|
Unsecured senior notes
|
1,062,635
|
|
|
280,199
|
|
|
244,061
|
|
|
—
|
|
|
—
|
|
|
Nonrecourse debt-legacy assets
|
100,620
|
|
|
112,490
|
|
|
138,662
|
|
|
177,675
|
|
|
—
|
|
|
Excess spread financing (at fair value)
|
288,089
|
|
|
44,595
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
ABS nonrecourse debt (at fair value)
|
—
|
|
|
—
|
|
|
496,692
|
|
|
—
|
|
|
—
|
|
|
Total liabilities
|
6,368,461
|
|
|
1,506,622
|
|
|
1,690,809
|
|
|
1,016,362
|
|
|
866,079
|
|
|
Total equity
|
757,682
|
|
|
281,309
|
|
|
256,372
|
|
|
263,823
|
|
|
255,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$
|
984,315
|
|
|
$
|
377,841
|
|
|
$
|
261,428
|
|
|
$
|
78,869
|
|
|
$
|
(12,656
|
)
|
|
Total expenses and impairments
|
582,045
|
|
|
306,183
|
|
|
220,976
|
|
|
142,367
|
|
|
147,777
|
|
|
Total other (expense) income
|
(125,687
|
)
|
|
(50,771
|
)
|
|
(50,366
|
)
|
|
(17,379
|
)
|
|
2,823
|
|
|
Income (loss) before taxes
|
276,583
|
|
|
20,887
|
|
|
(9,914
|
)
|
|
(80,877
|
)
|
|
(157,610
|
)
|
|
Total income tax expense
|
71,296
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Net income (loss)
|
205,287
|
|
|
20,887
|
|
|
(9,914
|
)
|
|
(80,877
|
)
|
|
(157,610
|
)
|
|
Reclassification of loss of investment in debt securities due to other than temporary impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,903
|
|
|
Change in value of designated cash flow hedges
|
—
|
|
|
(1,071
|
)
|
|
1,071
|
|
|
—
|
|
|
—
|
|
|
Comprehensive income (loss)
|
$
|
205,287
|
|
|
$
|
19,816
|
|
|
$
|
(8,843
|
)
|
|
$
|
(80,877
|
)
|
|
$
|
(153,707
|
)
|
|
Earnings (loss) per share data:
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
$
|
2.41
|
|
|
$
|
0.30
|
|
|
$
|
(0.14
|
)
|
|
$
|
(1.16
|
)
|
|
$
|
(2.25
|
)
|
|
Dilutive earnings (loss) per share
|
$
|
2.40
|
|
|
$
|
0.30
|
|
|
$
|
(0.14
|
)
|
|
$
|
(1.16
|
)
|
|
$
|
(2.25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by / (used in):
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
$
|
(1,958,116
|
)
|
|
$
|
(28,903
|
)
|
|
$
|
(101,653
|
)
|
|
$
|
(83,641
|
)
|
|
$
|
40,212
|
|
|
Investing activities
|
(2,157,292
|
)
|
|
(81,879
|
)
|
|
101,197
|
|
|
29,983
|
|
|
(34,643
|
)
|
|
Financing activities
|
4,205,612
|
|
|
152,004
|
|
|
(19,966
|
)
|
|
85,946
|
|
|
(37,463
|
)
|
|
Adjusted EBITDA
(1)
(non-GAAP measure)
|
456,439
|
|
|
135,968
|
|
|
65,306
|
|
|
46,422
|
|
|
21,634
|
|
|
Operating Segments:
|
|
|
|
|
|
|
|
|
|
|
Interest expense from unsecured notes
|
63,879
|
|
|
30,464
|
|
|
24,628
|
|
|
—
|
|
|
—
|
|
|
Change in fair value of mortgage servicing rights
|
68,242
|
|
|
39,000
|
|
|
6,043
|
|
|
27,915
|
|
|
11,701
|
|
|
Depreciation and amortization
|
8,880
|
|
|
3,395
|
|
|
1,873
|
|
|
1,542
|
|
|
1,172
|
|
|
Share-based compensation
|
14,045
|
|
|
14,764
|
|
|
8,999
|
|
|
579
|
|
|
1,633
|
|
|
|
|
|
(1)
|
Adjusted EBITDA is a key performance measure used by management in evaluating the performance of our segments. Adjusted EBITDA represents our Operating Segments' income, and excludes income and expenses that relate to the financing of the unsecured senior notes, depreciable (or amortizable) asset base of the business, income taxes, exit costs from our
2007
restructuring and certain non-cash items. Adjusted EBITDA also excludes results from our legacy
|
asset portfolio and certain securitization trusts that were consolidated upon adoption of the accounting guidance eliminating the concept of a QSPE.
Adjusted EBITDA
Adjusted EBITDA provides us with a key measure of our Operating Segments’ performance as it assists us in comparing our Operating Segments’ performance on a consistent basis. Management believes Adjusted EBITDA is useful in assessing the profitability of our core business and uses Adjusted EBITDA in evaluating our operating performance as follows:
|
|
|
|
•
|
Financing arrangements for our Operating Segments are secured by assets that are allocated to these segments. Interest expense that relates to the financing of our unsecured senior notes is not considered in evaluating our operating performance because this obligation is serviced by the excess earnings from our Operating Segments after the debt obligations that are secured by their assets.
|
|
|
|
|
•
|
To monitor operating costs of each Operating Segment excluding the impact from depreciation, amortization and fair value change of the asset base, exit costs from our restructuring and non-cash operating expense, such as share-based compensation. Operating costs are analyzed to manage costs per our operating plan and to assess staffing levels, implementation of technology based solutions, rent and other general and administrative costs.
|
Management does not assess the growth prospects and the profitability of our legacy asset portfolio and certain securitization trusts that were consolidated upon adoption of the new accounting guidance, except to the extent necessary to assess whether cash flows from the assets in the legacy asset portfolio are sufficient to service its debt obligations.
We also use Adjusted EBITDA (with additional adjustments) to measure our compliance with covenants such as leverage coverage ratios for our unsecured senior notes.
Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
|
|
|
|
•
|
Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
|
|
|
|
|
•
|
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
|
|
|
|
•
|
Adjusted EBITDA does not reflect the cash requirements necessary to service principal payments related to the financing of the business;
|
|
|
|
|
•
|
Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our corporate debt;
|
|
|
|
|
•
|
although depreciation and amortization and changes in fair value of MSRs are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
|
|
|
|
|
•
|
other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
|
Because of these and other limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. Adjusted EBITDA is presented to provide additional information about our operations. Adjusted EBITDA is a non-GAAP measure and should be considered in addition to, but not as a substitute for or superior to, operating income, net income, operating cash flow and other measures of financial performance prepared in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
|
|
Net Income/(Loss) from Operating Segments to Adjusted
EBITDA Reconciliation (dollars in thousands):
|
2012
|
|
2011
|
|
2010
|
|
Net income/(loss)
|
$
|
205,287
|
|
|
$
|
20,887
|
|
|
$
|
(9,914
|
)
|
|
Plus:
|
|
|
|
|
|
|
Net loss from Legacy Portfolio and Other
|
20,483
|
|
|
24,892
|
|
|
24,806
|
|
|
Income Tax Expense
|
71,296
|
|
|
—
|
|
|
—
|
|
|
Income from Operating Segments
|
297,066
|
|
|
45,779
|
|
|
14,892
|
|
|
Adjust for:
|
|
|
|
|
|
|
Interest expense from unsecured senior notes
|
63,879
|
|
|
30,464
|
|
|
24,628
|
|
|
Depreciation and amortization
|
8,880
|
|
|
3,395
|
|
|
1,873
|
|
|
Change in fair value of mortgage servicing rights
|
68,242
|
|
|
39,000
|
|
|
6,043
|
|
|
Amortization of mortgage servicing rights/obligations - at amortized cost
|
(5,120
|
)
|
|
—
|
|
|
—
|
|
|
Exit costs
(2)
|
—
|
|
|
1,836
|
|
|
—
|
|
|
Share-based compensation
|
14,045
|
|
|
14,764
|
|
|
8,999
|
|
|
Fair value changes on excess spread financing
|
10,684
|
|
|
3,060
|
|
|
—
|
|
|
Fair value changes on interest rate swap
(1)
|
(1,237
|
)
|
|
(298
|
)
|
|
9,801
|
|
|
Ineffective portion of cash flow hedge
|
—
|
|
|
(2,032
|
)
|
|
(930
|
)
|
|
Adjusted EBITDA
|
$
|
456,439
|
|
|
$
|
135,968
|
|
|
$
|
65,306
|
|
|
|
|
|
(1)
|
Relates to an interest rate swap agreement which was treated as an economic hedge under ASC 815.
|
|
|
|
|
(2)
|
Exit costs for the year ended December 31, 2011, are primarily due to reserves on future lease payments related to a restructuring program initiated in November 2011, which included closing several offices and the termination of a portion of our workforce.
|
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
Our Business
We are a real estate services company engaged primarily in the servicing of residential loans for others and the origination and selling or securitization of single-family conforming mortgage loans to GSEs or other third-party investors in the secondary market. Nationstar, our principal operating subsidiary, is a leading high touch non-bank residential mortgage servicer with a broad array of servicing capabilities across the residential mortgage product spectrum. We have been the fastest growing mortgage servicer since 2007 as measured by annual percentage growth in UPB, having grown 74.9% annually on a compounded basis. As of December 31, 2012, we serviced over 1.1 million residential mortgage loans with an aggregate UPB of $207.8 billion, making us the largest non-bank servicer in the United States as of December 31, 2012.
We service loans as the owner of the MSRs, which we refer to as “primary servicing,” and we also service loans on behalf of other MSR or mortgage owners, which we refer to as “subservicing.” We acquire MSRs on a standalone basis and have also developed an innovative model for investing on a capital light basis by co-investing with financial partners in “excess MSRs.” Subservicing represents another capital light means of growing our servicing business, as subservicing contracts are typically awarded on a no-cost basis and do not require substantial capital. As of
December 31, 2012
, our primary servicing and subservicing, represented 64.7% and 21.6%, respectively of our total servicing portfolio, with 13.7% of our outstanding servicing portfolio consisting of reverse residential mortgage loans. In addition, we operate several adjacent real estate services businesses designed to meet the changing needs of the mortgage industry which we have named Solutionstar. These businesses offer an array of ancillary services, including providing services for delinquent loans, managing loans in the foreclosure/REO (real-estate owned) process and providing title insurance agency, loan settlement and valuation services on newly originated and re-originated loans.
We operate a fully integrated loan originations platform to complement and enhance our servicing business. We originate primarily conventional agency (GSE) and government-insured residential mortgage loans and, to mitigate risk, typically sell these loans within 30 days while retaining the associated servicing rights. Our originations efforts are primarily focused on “re-origination,” which involves actively working with existing borrowers to refinance their mortgage loans. By re-originating loans for existing borrowers, we retain the servicing rights, thereby extending the longevity of the servicing cash flows, which we refer to as “recapture.”
We also have a legacy asset portfolio, which consists primarily of non-prime and nonconforming residential mortgage loans, most of which we originated from April to July 2007. In November 2009, we engaged in a transaction through which we term-financed our legacy assets with a nonrecourse loan that requires no additional capital or equity contributions. Additionally, we consolidated certain securitization trusts where it was determined that we had both the power to direct the activities that most significantly impact the variable interest entities’ (VIE) economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE pursuant to consolidation accounting guidance related to VIEs adopted on January 1, 2010.
The analysis of our financial condition and results of operations as discussed herein is primarily focused on the combined results of our two Operating Segments: the Servicing Segment and the Originations Segment.
Critical Accounting Policies
Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, we have identified four policies that, due to the judgment, estimates and assumptions inherent in those policies, are critical to an understanding of our consolidated financial statements. These policies relate to: (a) fair value measurements (b) sale of mortgage loans (c) accounting for mortgage loans held for investment, subject to nonrecourse debt and (d) valuation of deferred tax asset. We believe that the judgment, estimates and assumptions used in the preparation of our consolidated financial statements are appropriate given the factual circumstances at the time. However, given the sensitivity of our consolidated financial statements to these critical accounting policies, the use of other judgments, estimates and assumptions could result in material differences in our results of operations or financial condition. Fair value measurements include (i) the valuation of mortgage loans held for sale, (ii) the valuation of mortgage loans held for investment, subject to ABS nonrecourse debt, (iii) the valuation of MSRs, (iv) the valuation of derivative instruments, (v) the valuation of ABS nonrecourse debt, and (vi) the valuation of excess spread financing.
Fair Value Measurements
|
|
|
|
(i)
|
Mortgage Loans Held for Sale –
We have elected to measure newly originated conventional residential mortgage loans held for sale at fair value. We estimate fair value by evaluating a variety of market indicators including recent trades and outstanding commitments to purchase loans, calculated on an aggregate basis.
|
|
|
|
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(ii)
|
Mortgage Loans Held for Investment, Subject to ABS Nonrecourse Debt
– We determine the fair value on loans held for investment, subject to ABS nonrecourse debt using internally developed valuation models. These valuation models estimate the exit price we expect to receive in the loan’s principal market. Although we utilize and give priority to observable market inputs, such as interest rates and market spreads within these models, we typically are required to utilize internal inputs, such as prepayment speeds, credit losses and discount rates. These internal inputs require the use of our judgment and can have a significant impact on the determination of the loan’s fair value. In December 2011, we sold our remaining variable interest in a securitization trust that had been a consolidated VIE since January 1, 2010 and deconsolidated the VIE. Upon deconsolidation of this VIE, we derecognized the securitized mortgage loans held for investment, subject to ABS nonrecourse debt.
|
|
|
|
|
(iii)
|
MSRs at Fair Value
– We recognize MSRs related to all existing forward residential mortgage loans transferred to a third party in a transfer that meets the requirements for sale accounting. Additionally, we may acquire the rights to service forward residential mortgage loans through the purchase of these rights from third parties. We apply fair value accounting to this class of MSRs, with all changes in fair value recorded as a charge or credit to servicing fee income in the consolidated statement of operations. We estimate the fair value of these MSRs using a process that combines the use of a discounted cash flow model and analysis of current market data to arrive at an estimate of fair value. The cash flow assumptions and prepayment assumptions used in the model are based on various factors, with the key assumptions being mortgage prepayment speeds, discount rates and credit losses.
|
We use internal financial models that use, wherever possible, market participant data to value these MSRs. These models are complex and use asset-specific collateral data and market inputs for interest and discount rates. In addition, the modeling requirements of MSRs are complex because of the high number of variables that drive cash flows associated with MSRs. Even if the general accuracy of our valuation models is validated, valuations are highly dependent upon the reasonableness of our assumptions and the predictability of the relationships that drive the results of the models. On a periodic basis, a majority of these MSRs are reviewed by an outside valuation expert.
|
|
|
|
(iv)
|
Derivative Financial Instruments
– We utilize certain derivative instruments in the ordinary course of our business to manage our exposure to changes in interest rates. These derivative instruments include forward sales of MBS, forward loan sale commitments and interest rate swaps and caps. We also issue interest rate lock commitments (IRLCs) to borrowers in connection with single family mortgage loan originations we intend to sell. We recognize all derivative instruments on our consolidated statement of financial position at fair value. The estimated fair values of forward sales of MBS and interest rate swaps and caps are based on the exchange price or dealer market price and are recorded as other assets or derivative financial instruments liabilities in the consolidated balance sheet. The initial and subsequent changes in value on forward sales of MBS are a component of gain on mortgage loans held for sale in the consolidated statement of operations and comprehensive income. The estimated fair values of IRLCs, loan purchase commitments (LPCs), and forward sale commitments are based on the fair value of related mortgage loans which is based on observable market date. Fair value amounts of IRLCs are adjusted for expected execution of outstanding loan commitments. IRLCs and LPC's are recorded in other assets and forward sale commitments are recorded as a component of mortgage loans held for sale in the consolidated balance sheet. The initial and subsequent changes in value of IRLCs, LPCs, and forward sale commitments are a component of gain on mortgage loans held for sale in the consolidated statement of operations and comprehensive income.
|
|
|
|
|
(v)
|
ABS Nonrecourse Debt
– Effective January 1, 2010, accounting guidance related to VIEs eliminated the concept of a qualifying special purpose entity (QSPE), and all existing special purpose entities (SPEs) are subject to the new consolidation guidance. Upon adoption of this new accounting guidance, we identified certain securitization trusts where we, through our affiliates, continued to hold beneficial interests in these trusts. These retained beneficial interests obligate us to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant. In addition, as master servicer on the related mortgage loans, we retain the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE. When it is determined that we have both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE, the assets and liabilities of these VIEs are included in our consolidated financial statements. Upon consolidation of these VIEs, we
|
derecognized all previously recognized beneficial interests obtained as part of the securitization, including any retained investment in debt securities, and any remaining residual interests. In addition, we recognized the securitized mortgage loans as mortgage loans held for investment, subject to ABS nonrecourse debt, and the related asset-backed certificates acquired by third parties as ABS nonrecourse debt on our consolidated balance sheet.
We estimate the fair value of ABS nonrecourse debt based on the present value of future expected discounted cash flows with the discount rate approximating current market value for similar financial instruments. In December 2011, we sold our remaining variable interest in a securitization trust that had been a consolidated VIE since January 1, 2010 and deconsolidated the variable interest. Upon deconsolidation of this VIE in 2011, we derecognized the related ABS nonrecourse debt.
|
|
|
|
(vi)
|
Excess Spread Financing
– In conjunction with the acquisition of certain of our MSRs, we enter into a sale and assignment agreements, which we treat as a financing with an affiliated entity of Fortress Investment Group, whereby we sell the right to receive a portion of the excess cash flow generated from a certain underlying MSR portfolio after receipt of a fixed basic servicing fee per loan. We retain all ancillary income associated with servicing the portfolio and the remaining portion of the excess cash flow after receipt of the fixed basic servicing fee. We measure this financing arrangement at fair value to more accurately represent the future economic performance of the acquired MSRs and related excess servicing financing. We estimate the fair value of this financing using a process that combines the use of a discounted cash flow model and analysis of current market data based on the value of the underlying MSRs.
|
Sale of Mortgage Loans
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered by us. Control over transferred assets is deemed to be surrendered when (i) the assets have been isolated from us, (ii) the transferee has the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (iii) we do not maintain effective control over the transferred assets through either (a) an agreement that entitles and obligates us to repurchase or redeem them before their maturity or (b) the ability to unilaterally cause the holder to return specific assets. Loan securitizations structured as sales as well as whole loan sales are accounted for as sales of mortgage loans and the resulting gains or losses on such sales, net of any accrual for standard representations and warranties, are reported in operating results as a component of gain on mortgage loans held for sale in the consolidated statement of operations during the period in which the securitization closes or the sale occurs.
Mortgage Loans Held for Investment, Subject to Nonrecourse Debt
We account for the loans that were transferred to held for investment from held for sale during October 2009 in a manner that is required by ASC 310-30,
Loans and Debt Securities Acquired with Deteriorated Credit Quality.
At the date of transfer, we evaluated such loans to determine whether there was evidence of deterioration of credit quality since acquisition and if it was probable that we would be unable to collect all amounts due according to the loan’s contractual terms. The transferred loans were aggregated into separate pools of loans based on common risk characteristics (loan delinquency). We consider expected prepayments, and estimate the amount and timing of undiscounted expected principal, interest, and other cash flows for each aggregated pool of loans. The determination of expected cash flows utilizes internal inputs such as prepayment speeds and credit losses. These internal inputs require the use of judgment and can have a significant impact on the accretion of income and/or valuation allowance. We determine the excess of the pool’s scheduled contractual principal and contractual interest payments over all cash flows expected as of the transfer date as an amount that should not be accreted (nonaccretable difference). The remaining amount is accreted into interest income over the remaining life of the pool of loans (accretable yield). The difference between the undiscounted cash flows expected and the investment in the loan is recognized as interest income on a level-yield method over the life of the loan. Increases in expected cash flows subsequent to the transfer are recognized prospectively through an adjustment of the yield on the loans over the remaining life. Decreases in expected cash flows subsequent to transfer are recognized as a valuation allowance.
Valuation of Deferred Tax Asset
Our provision for income taxes is calculated using the liability method, which requires the recognition of deferred income taxes. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain changes in the valuation allowance. We provide a valuation allowance against deferred tax assets if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. In determining the adequacy of the valuation allowance, we consider all forms of evidence, including: (1) historic earnings or losses; (2) the ability to realize deferred tax assets through carry back to prior periods; (3) anticipated taxable income resulting from the reversal of taxable temporary
differences; (4) tax planning strategies; and (5) anticipated future earnings exclusive of the reversal of taxable temporary differences.
Results of Operations
Below is a summarization of our consolidated operating results for the periods indicated. We provide further discussion of our results of operations for each of our reportable segments under “Segment Results” below. Certain income and expenses not allocated to our reportable segments are presented under “Legacy Portfolio and Other” below and discussed in Note 24 - Business Segment Reporting in the accompanying Notes to Consolidated Financial Statements.
The following table summarizes our consolidated operating results for the periods indicated (in thousands, except per share amounts).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
Revenues:
|
|
|
|
|
|
|
|
Servicing fee income
|
|
$
|
462,495
|
|
|
$
|
233,411
|
|
|
$
|
167,126
|
|
|
Other fee income
|
|
34,656
|
|
|
35,294
|
|
|
16,958
|
|
|
Total fee income
|
|
497,151
|
|
|
268,705
|
|
|
184,084
|
|
|
Gain on mortgage loans held for sale
|
|
487,164
|
|
|
109,136
|
|
|
77,344
|
|
|
Total revenues
|
|
984,315
|
|
|
377,841
|
|
|
261,428
|
|
|
Expenses and impairments:
|
|
|
|
|
|
|
|
Salaries, wages and benefits
|
|
358,455
|
|
|
202,290
|
|
|
149,115
|
|
|
General and administrative
|
|
201,587
|
|
|
82,183
|
|
|
58,913
|
|
|
Provision for loan losses
|
|
2,353
|
|
|
3,537
|
|
|
3,298
|
|
|
Loss on foreclosed real estate and other
|
|
2,864
|
|
|
6,833
|
|
|
205
|
|
|
Occupancy
|
|
16,786
|
|
|
11,340
|
|
|
9,445
|
|
|
Total expenses and impairments
|
|
582,045
|
|
|
306,183
|
|
|
220,976
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
Interest income
|
|
71,586
|
|
|
66,802
|
|
|
98,895
|
|
|
Interest expense
|
|
(197,308
|
)
|
|
(105,375
|
)
|
|
(116,163
|
)
|
|
Contract termination fees
|
|
15,600
|
|
|
—
|
|
|
—
|
|
|
Loss on equity method investments
|
|
(14,571
|
)
|
|
(107
|
)
|
|
—
|
|
|
Gain/(loss) on interest rate swaps and caps
|
|
(994
|
)
|
|
298
|
|
|
(9,801
|
)
|
|
Fair value changes in ABS securitizations
|
|
—
|
|
|
(12,389
|
)
|
|
(23,297
|
)
|
|
Total other (expense)
|
|
(125,687
|
)
|
|
(50,771
|
)
|
|
(50,366
|
)
|
|
Income (loss) before taxes
|
|
276,583
|
|
|
20,887
|
|
|
(9,914
|
)
|
|
Income tax expense
|
|
71,296
|
|
|
—
|
|
|
—
|
|
|
Net income / (loss)
|
|
205,287
|
|
|
20,887
|
|
|
(9,914
|
)
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
Change in value of designated cash flow hedges
|
|
—
|
|
|
(1,071
|
)
|
|
1,071
|
|
|
Comprehensive income (loss)
|
|
$
|
205,287
|
|
|
$
|
19,816
|
|
|
$
|
(8,843
|
)
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
2.41
|
|
|
$
|
0.30
|
|
|
$
|
(0.14
|
)
|
|
Diluted earnings (loss) per share
|
|
$
|
2.40
|
|
|
$
|
0.30
|
|
|
$
|
(0.14
|
)
|
Comparison of Consolidated Results for the Years Ended December 31, 2012 and 2011
Revenues increased $606.5 million from
$377.8 million
for the year ended December 31, 2011 to
$984.3 million
for the year ended December 31, 2012, due to increases in both our total fee income and our gain on mortgage loans held for sale offset by MSR fair value adjustments amounting to $68.2 million for the year ended December 31, 2012, as compared to $39.0 million for the comparable 2011 period. The increase in our total fee income was primarily the result of our higher average forward servicing portfolio balance of $136.4 billion for the year ended December 31, 2012, compared to $81.5 billion for the year ended December 31, 2011, and an increase in modification fees earned from HAMP and other non-HAMP modifications. Also included in our 2012 results was $40.4 million in reverse mortgage service fee income. There was no reverse mortgage service fee income in 2011 and 2010. The increase in the gain on loans held for sale was a result of the $4.5 billion, or 132.4%, increase in the amount of loans originated during the 2012 period compared to the 2011 period and higher margins earned on the sale of residential mortgage loans during the period.
Expenses and impairments increased $275.8 million from $306.2 million for the year ended December 31, 2011 to $582.0 million for the year ended December 31, 2012, primarily due to the increase in compensation expenses related to increased staffing levels in order to accommodate our larger servicing portfolio and originations volumes as well as other related increases in general and administrative expenses.
Other expense increased $74.9 million from $50.8 million for the year ended December 31, 2011 to $125.7 million for the year ended December 31, 2012, primarily due to a decrease in our net interest margin resulting from higher average outstanding balances on our outstanding warehouse and advance facilities and the interest expense related to the increase in our unsecured senior notes during 2012. Additionally, we recognized a loss on equity investment of $14.6 million during 2012 compared to $0.1 million in 2011. The increase in the loss relates to the decision to wind down the operation of the underlying entity. (see Note 27 - Related Party Disclosure). These amounts were partially offset by our recording of a $15.6 million contract termination fee related to a potential acquisition of certain assets of a financial services company in bankruptcy. Because we were not the highest bidder in the bankruptcy auction, we earned a break-up fee. We recorded this fee net of the amount we paid our co-investment partner in the potential acquisition.
Income tax expense amounted to $71.3 million for the year ended December 31, 2012 with no corresponding amount for the year ended December 31, 2011. We became a taxable entity during 2012 in conjunction with our initial public offering and reorganization (see Note 15 - Income Taxes).
Comparison of Consolidated Results for the Years Ended December 31, 2011 and 2010
Revenues increased $116.4 million from $261.4 million for the year ended December 31, 2010 to $377.8 million for the year ended December 31, 2011, due to increases in both our total fee income and our gain on mortgage loans held for sale offset by MSR fair value adjustments amounting to $39.0 million for the year ended December 31, 2012, as compared to $16.0 million for the comparable 2010 period. The increase in our total fee income was primarily the result of our higher average servicing portfolio balance of $81.5 billion for the year ended December 31, 2011, compared to $38.7 billion for the year ended December 31, 2010, and an increase in modification fees earned from HAMP and other non-HAMP modifications. The increase in the gain on loans held for sale was a result of the $0.6 billion, or 21.4%, increase in the amount of loans originated during the 2011 period compared to the 2010 period and higher margins earned on the sale of residential mortgage loans during the period.
Expenses and impairments increased $85.2 million from $221.0 million for the year ended December 31, 2010 to $306.2 million for the year ended December 31, 2011, primarily due to the increase in compensation expenses related to increased staffing levels in order to accommodate our larger servicing portfolio and originations volumes as well as other related increases in general and administrative expenses.
Other expense increased $0.4 million from $50.4 million for the year ended December 31, 2010 to $50.8 million for the year ended December 31, 2011, primarily due to a decrease in our net interest margin resulting from higher average outstanding balances on our outstanding warehouse and advance facilities. This amount was partially offset by the impact of our fair value mark-to-market losses that were realized on our 2009-ABS interest rate swap for $9.8 million for the year ended December 31, 2010, compared to a $0.3 million gain recognized for the year ended December 31, 2011.
Segment Results
Our primary business strategy is to generate recurring, stable income from managing and growing our servicing portfolio. We operate through two business segments: the Servicing Segment and the Originations Segment, which we refer to collectively as our Operating Segments. We report the activity not related to either operating segment in Legacy Portfolio and Other. Legacy Portfolio and Other includes primarily all subprime mortgage loans (i) originated mostly from April to July 2007 or (ii) acquired from CHEC, and VIEs which were consolidated pursuant to the January 1, 2010 adoption of consolidation guidance related to VIEs. As of December 31, 2011 and thereafter, we had no consolidated VIEs.
The accounting policies of each reportable segment are the same as those of the consolidated financial statements except for (i) expenses for consolidated back-office operations and general overhead expenses such as executive administration and accounting, (ii) revenues generated on inter-segment services performed, and (iii) interest expense on unsecured senior notes. Expenses are allocated to individual segments based on the estimated value of services performed, including total revenue contributions, personnel headcount, and the equity invested in each segment. Revenues generated or inter-segment services performed are valued based on similar services provided to external parties.
All tables in this section are presented in thousands unless otherwise indicated.
Servicing Segment
The Servicing Segment provides loan servicing on our primary and subservicing portfolios, including the collection of principal and interest payments and the generation of ancillary fees related to the servicing of mortgage loans.
The following table summarizes our consolidated pre-tax operating results for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
2012
|
|
2011
|
|
2010
|
|
Revenues:
|
|
|
|
|
|
|
Servicing fee income
|
$
|
462,001
|
|
|
$
|
238,394
|
|
|
$
|
175,569
|
|
|
Other fee income
|
35,133
|
|
|
17,189
|
|
|
7,273
|
|
|
Total fee income
|
497,134
|
|
|
255,583
|
|
|
182,842
|
|
|
Gain on mortgage loans held for sale
|
—
|
|
|
—
|
|
|
—
|
|
|
Total revenues
|
497,134
|
|
|
255,583
|
|
|
182,842
|
|
|
Expenses and impairments:
|
|
|
|
|
|
|
Salaries, wages and benefits
|
195,446
|
|
|
123,655
|
|
|
78,269
|
|
|
General and administrative
|
130,727
|
|
|
48,611
|
|
|
24,664
|
|
|
Occupancy
|
11,521
|
|
|
5,664
|
|
|
4,350
|
|
|
Loss on foreclosed real estate and other
|
463
|
|
|
—
|
|
|
—
|
|
|
Total expenses and impairments
|
338,157
|
|
|
177,930
|
|
|
107,283
|
|
|
Other income (expense):
|
|
|
|
|
|
|
Interest income
|
30,936
|
|
|
2,263
|
|
|
263
|
|
|
Interest expense
|
(156,817
|
)
|
|
(58,024
|
)
|
|
(51,791
|
)
|
|
Contract termination fee
|
15,600
|
|
|
—
|
|
|
—
|
|
|
Loss on equity method investments
|
(14,571
|
)
|
|
(107
|
)
|
|
—
|
|
|
Gain (loss) on interest rate swaps and caps
|
1,237
|
|
|
298
|
|
|
(9,801
|
)
|
|
Total other (expense)
|
(123,615
|
)
|
|
(55,570
|
)
|
|
(61,329
|
)
|
|
Income before taxes
|
$
|
35,362
|
|
|
$
|
22,083
|
|
|
$
|
14,230
|
|
Increase in aggregate UPB of our servicing portfolio primarily governs the increase in revenues, expenses and other income (expense) of our Servicing Segment.
The table below provides detail of the characteristics of our servicing portfolio at the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
2010
|
|
Servicing Portfolio ($ in millions)
|
|
|
|
|
|
|
Unpaid principal balance:
|
|
|
|
|
|
|
Special Servicing
|
$
|
10,775
|
|
|
$
|
10,165
|
|
|
$
|
4,893
|
|
|
Government-sponsored enterprises
|
109,867
|
|
|
69,772
|
|
|
52,194
|
|
|
Non-Agency Securitizations
|
53,294
|
|
|
18,868
|
|
|
7,089
|
|
|
Total boarded forward servicing portfolio
|
173,936
|
|
|
98,805
|
|
|
64,176
|
|
|
Acquired Servicing Rights owned - serviced by others
|
4,946
|
|
|
—
|
|
|
—
|
|
|
Acquired Servicing Rights owned - serviced by predecessor
|
550
|
|
|
—
|
|
|
—
|
|
|
Total forward servicing portfolio
|
179,432
|
|
|
98,805
|
|
|
64,176
|
|
|
Reverse mortgage servicing
|
28,382
|
|
|
—
|
|
|
—
|
|
|
Reverse mortgage servicing under contract
|
—
|
|
|
7,781
|
|
|
—
|
|
|
Total servicing portfolio unpaid principal balance
|
$
|
207,814
|
|
|
$
|
106,586
|
|
|
$
|
64,176
|
|
The table below provides detail of the characteristics and key performance metrics of our forward servicing portfolio (excluding loans serviced by others and predecessors) for the years ended December 31,
2012
,
2011
, and
2010
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
($ in millions, except for average loan amount)
|
|
Loan count-servicing
|
979,414
|
|
|
596,011
|
|
|
389,172
|
|
|
Ending unpaid principal balance
|
$
|
173,936
|
|
|
$
|
98,805
|
|
|
$
|
64,176
|
|
|
Average unpaid principal balance
|
$
|
136,371
|
|
|
$
|
81,491
|
|
|
$
|
38,653
|
|
|
Average loan amount
|
$
|
177,592
|
|
|
$
|
165,778
|
|
|
$
|
164,904
|
|
|
Average coupon
|
5.34
|
%
|
|
5.43
|
%
|
|
5.74
|
%
|
|
Average FICO
|
671
|
|
|
627
|
|
|
631
|
|
|
60+ delinquent (% of loans)
(1)
|
14.1
|
%
|
|
14.7
|
%
|
|
17.0
|
%
|
|
Total prepayment speed (12 month constant pre-payment rate)
|
15.7
|
%
|
|
13.4
|
%
|
|
13.3
|
%
|
|
|
|
|
(1)
|
Loan delinquency is based on the current contractual due date of the loan. In the case of a completed loan modification, delinquency is based on the modified due date of the loan.
|
The table below provides detail of the characteristics and key performance metrics of our reverse servicing portfolio at December 31, 2012. We had no reverse servicing portfolio prior to 2012.
|
|
|
|
|
|
|
|
|
December 31,
|
|
($ in millions, except for average loan amount)
|
2012
|
|
Loan count
|
170,463
|
|
|
Ending unpaid principal balance
|
$
|
28,382
|
|
|
Average loan amount
|
$
|
166,498
|
|
|
Average borrower age
|
76
|
|
Servicing Segment for the Years Ended December 31, 2012 and 2011
Servicing fee income consists of the following for the periods indicated (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
2012
|
|
2011
|
|
Servicing fee income
|
$
|
376,497
|
|
|
$
|
207,102
|
|
|
Loss mitigation and performance-based incentive fees
|
28,821
|
|
|
15,671
|
|
|
Modification fees
|
48,511
|
|
|
32,552
|
|
|
Reverse mortgage service fees
|
40,450
|
|
|
—
|
|
|
Late fees and other ancillary charges
|
31,930
|
|
|
23,728
|
|
|
Other servicing fee related revenues
|
9,598
|
|
|
1,401
|
|
|
Total servicing fee income before MSR fair value adjustments
|
535,807
|
|
|
280,454
|
|
|
Fair value adjustments on excess spread financing
|
(10,684
|
)
|
|
(3,060
|
)
|
|
Reverse mortgage servicing amortization/accretion
|
5,120
|
|
|
—
|
|
|
Fair value adjustments on MSR
|
(68,242
|
)
|
|
(39,000
|
)
|
|
Total servicing fee income
|
$
|
462,001
|
|
|
$
|
238,394
|
|
The following tables provide servicing fee income and UPB by primary servicing, subservicing and reverse servicing for and at the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
2012
|
|
2011
|
|
Servicing Fee Income
|
(in thousands)
|
|
Primary servicing
|
$
|
350,829
|
|
|
$
|
164,096
|
|
|
Subservicing
|
144,528
|
|
|
116,358
|
|
|
Reverse servicing
|
40,450
|
|
|
—
|
|
|
Total servicing fee income before MSR fair value adjustments
|
$
|
535,807
|
|
|
$
|
280,454
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
Unpaid Principal Balance
|
(in millions)
|
|
Primary servicing
|
$
|
134,511
|
|
|
$
|
45,817
|
|
|
Subservicing
|
44,921
|
|
|
52,988
|
|
|
Reverse servicing
|
28,382
|
|
|
—
|
|
|
Total unpaid principal balance
|
$
|
207,814
|
|
|
$
|
98,805
|
|
Servicing fee income was
$462.0 million
for the year ended December 31,
2012
compared to
$238.4 million
for the year ended December 31,
2011
, an increase of
$223.6 million
, or
93.8%
, primarily due to the net effect of the following:
|
|
|
|
•
|
Increase of $169.4 million due to higher average UPB of $136.4 billion in 2012 compared to $81.5 billion in 2011. The increase in our servicing portfolio was primarily driven by an increase in average UPB for loans serviced for GSEs and other subservicing contracts for third party investors to $89.8 billion in the year ended December 31, 2012 from $61.0 billion in the comparable 2011 period. In addition, we also experienced an increase in average UPB for our private asset-backed securitizations portfolio, which increased to $36.1 billion in the year ended December 31, 2012 compared to $13.0 billion in the comparable 2011 period.
|
|
|
|
|
•
|
Increase of $40.5 million from fees earned from our reverse mortgage portfolio for which we began servicing in January 2012.
|
|
|
|
|
•
|
Increase of $15.9 million due to higher modification fees earned from HAMP and non-HAMP modifications.
|
|
|
|
|
•
|
Increase of $13.1 million due to higher loss mitigation and performance-based incentive fees earned from a GSE.
|
|
|
|
|
•
|
Increase of $8.2 million from increased collections from late fees and other ancillary charges.
|
|
|
|
|
•
|
Increase of $8.2 million in other servicing fee income due to our June 2012 Aurora servicing portfolio acquisition. In conjunction with this acquisition, we acquired a master servicing portfolio of over $4.9 billion. Revenues related to the master servicing portfolio are included in other servicing fee income.
|
|
|
|
|
•
|
Decrease of $29.2 million from change in fair value on MSRs which was recognized in servicing fee income. The fair value of our MSRs is based upon the present value of the expected future cash flows related to servicing these loans. The revenue components of the cash flows are servicing fees, interest earned on custodial accounts, and other ancillary income. The expense components include operating costs related to servicing the loans (including delinquency and foreclosure costs) and interest expenses on servicing advances. The expected future cash flows are primarily impacted by prepayment estimates, delinquencies, and market discount rates. Generally, the value of MSRs increases when interest rates increase and decreases when interest rates decline due to the effect those changes in interest rates have on prepayment estimates. Other factors affecting the MSR value includes the estimated effects of loan modifications on expected cash flows. Such modifications tend to positively impact cash flows by extending the expected life of the affected MSR and potentially producing additional revenue opportunities depending on the type of modification. In valuing the MSRs, we believe our assumptions are consistent with the assumptions other major market participants use. These assumptions include a level of future modification activity that we believe major market participants would use in their valuation of MSRs. Internally, we have modification goals that exceed the assumptions utilized in our valuation model. Nevertheless, were we to apply an assumption of a level of future modifications consistent with our internal goals to our MSR valuation, we do not believe the resulting increase in value would be material. Additionally, several state Attorneys General have requested that certain mortgage servicers, including us, suspend foreclosure proceedings pending internal review to ensure compliance with applicable law, and we received requests from four such state Attorneys General. Although we have resumed those previously delayed proceedings, changes in the foreclosure process that may be required by government or regulatory bodies could increase the cost of servicing and diminish the value of our MSRs. We utilize assumptions of servicing costs that include delinquency and foreclosure costs that we believe major market participants would use to value their MSRs. We periodically compare our internal MSR valuation to third party valuation of our MSRs to help substantiate our market assumptions. We have considered the costs related to the delayed proceedings in our assumptions and we do not believe that any resulting decrease in the MSR was material given the expected short-term nature of the issue.
|
|
|
|
|
•
|
Increase of $5.1 million from the net impact of accretion/amortization on our mortgage servicing rights related to acquisitions of reverse mortgage portfolios during 2012 with no comparable accretion/amortization recorded during the twelve months ended December 31, 2011.
|
|
|
|
|
•
|
Decrease of $7.6 million from the change in fair value of our excess spread financing arrangements. In conjunction with various MSR acquisitions, we have entered into sale and assignment agreements, which we treated as financings. Within these agreements, we sell the right to receive a portion of the excess cash flow generated from certain underlying MSR portfolios after receipt of a fixed basic servicing fee per loan. We measure these financing arrangements at fair value.
|
Other fee income was
$35.1 million
for the year ended December 31,
2012
compared to
$17.2 million
for the year ended December 31,
2011
, an increase of
$17.9 million
, or 104.1% due to higher commissions earned on lender placed insurance and higher REO sales commissions.
The following table provides other fee income by primary servicing, subservicing and adjacent businesses for the periods indicated (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
Other Fee Income
|
2012
|
|
2011
|
|
Primary servicing
|
$
|
3,670
|
|
|
$
|
5,520
|
|
|
Subservicing
|
185
|
|
|
3,038
|
|
|
Adjacent businesses
|
31,278
|
|
|
8,631
|
|
|
Total other fee income
|
$
|
35,133
|
|
|
$
|
17,189
|
|
Expenses and impairments were $338.2 million for the year ended December 31, 2012 compared to $177.9 million for the year ended December 31, 2011, an increase of $160.3 or 90.1%, primarily due to the increase of $71.7 million in salaries, wages and benefits expense resulting primarily from an increase in average headcount from 1,966 in 2011 to 2,400 in 2012 and an increase of $82.1 million in general and administrative expenses associated with increased headcount and growth in the servicing portfolio. In addition, occupancy expense increased from $5.7 million in 2011 to $11.5 million in 2012. This increase was due to the expense related to the additional locations required to house our growing servicing headcount due to the increase in the UPB of loans that we service.
The following table provides primary servicing, subservicing, reverse servicing, adjacent businesses and other Servicing Segment expenses for the periods indicated (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
Expenses and impairments
|
2012
|
|
2011
|
|
Primary servicing
|
$
|
154,732
|
|
|
$
|
70,549
|
|
|
Subservicing
|
118,901
|
|
|
82,938
|
|
|
Reverse servicing
|
30,525
|
|
|
—
|
|
|
Adjacent businesses
|
18,429
|
|
|
9,100
|
|
|
Other servicing segment expenses
|
15,570
|
|
|
15,343
|
|
|
Total expenses and impairments
|
$
|
338,157
|
|
|
$
|
177,930
|
|
Total other income (expense) was
$(123.6) million
for the year ended December 31, 2012 compared to
$(55.6) million
for the year ended December 31, 2011, an increase in expense, net of income, of $68.0 million, or 122.3%, primarily due to the net effect of the following:
|
|
|
|
•
|
Interest expense was $156.8 million for the year ended December 31, 2012 compared to $58.0 million for the year ended December 31, 2011, an increase of $98.8 million, or 170.3%, primarily due to higher average outstanding debt (excluding unsecured senior notes) of $1,334.5 million in the year ended December 31, 2012 compared to $642.9 million in the comparable 2011 period. Interest expense from the unsecured senior notes was $57.7 million and $30.3 million, respectively, for the years ended December 31, 2012 and 2011. In 2011, interest expense also includes gains for the ineffective portion of cash flow hedge of $2.0 million.
|
|
|
|
|
•
|
Interest income was $30.9 million for the year ended December 31, 2012 compared to $2.3 million for the year ended December 31, 2011, an increase of $28.6 million, due in part to interest earned on our participating interests in reverse mortgages combined with accretion recognized related to discounts recorded on acquired servicer advances. During 2012, in conjunction with an MSR acquisition, we allocated a discount to the related servicer advances. This discount is realized as the underlying servicer advances are collected. We recognized $11.3 million of the discount in 2012 related to collections on the servicer advances.
|
|
|
|
|
•
|
We recorded $15.6 million of contract termination fees for the year ended December 31, 2012. During 2012, we pursued a potential acquisition of the mortgage servicing rights and other assets of a financial services company in bankruptcy and received the right to receive a breakup fee in the event that we did not win the bankruptcy auction for these assets. We were not the highest bidder in the auction and subsequently received the breakup fee which was recorded in contract termination fees, net of the portion payable to Nationstar's co-investment partner in the potential acquisition. We did not recognize any contract termination fees in 2011 or 2010.
|
|
|
|
|
•
|
We recognized a loss on equity investment of $14.6 million during 2012 compared to $0.1 million in 2011. The large increase in the loss relates to the decision to wind down the operation of the underlying entity. (see Note 27- Related Party Disclosure).
|
Servicing Segment for the Years Ended December 31, 2011 and 2010
Servicing fee income consists of the following for the periods indicated (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
2011
|
|
2010
|
|
Servicing fee income
|
$
|
207,102
|
|
|
$
|
118,443
|
|
|
Loss mitigation and performance-based incentive fees
|
15,671
|
|
|
16,621
|
|
|
Modification fees
|
32,552
|
|
|
21,792
|
|
|
Late fees and other ancillary charges
|
23,728
|
|
|
22,828
|
|
|
Other servicing fee related revenues
|
1,401
|
|
|
1,928
|
|
|
Total servicing fee income before MSR fair value adjustments
|
280,454
|
|
|
181,612
|
|
|
Fair value adjustments on excess spread financing
|
(3,060
|
)
|
|
—
|
|
|
Fair value adjustments on MSR
|
(39,000
|
)
|
|
(6,043
|
)
|
|
Total servicing fee income
|
$
|
238,394
|
|
|
$
|
175,569
|
|
The following tables provide servicing fee income and UPB by primary servicing and subservicing for and at the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
Servicing Fee Income
|
|
|
|
|
Year ended December 31,
|
2011
|
|
2010
|
|
Primary servicing
|
$
|
164,096
|
|
|
$
|
161,312
|
|
|
Subservicing
|
116,358
|
|
|
20,300
|
|
|
Total servicing fee income before MSR fair value adjustments
|
$
|
280,454
|
|
|
$
|
181,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UPB (in millions)
|
|
|
|
|
December 31,
|
2011
|
|
2010
|
|
Primary servicing
|
$
|
45,817
|
|
|
$
|
34,404
|
|
|
Subservicing
|
52,988
|
|
|
29,772
|
|
|
Total unpaid principal balance
|
$
|
98,805
|
|
|
$
|
64,176
|
|
Servicing fee income was $238.4 million for the year ended December 31, 2011 compared to $175.6 million for the year ended December 31, 2010, an increase of $62.8 million, or 35.8%, primarily due to the net effect of the following:
|
|
|
|
(a)
|
Increase of $88.7 million due to higher average UPB of $81.5 billion in the 2011 period compared to $38.7 billion in the comparable 2010 period. The increase in our servicing portfolio was primarily driven by an increase in average UPB for loans serviced for GSEs and other subservicing contracts for third party investors of $61.0 billion in the 2011 period compared to $28.0 billion in the comparable 2010 period. In addition, we also experienced an increase in average UPB for our private asset-backed securitizations portfolio, which increased to $13.0 billion in the year ended December 31, 2011 compared to $7.4 billion in the comparable 2010 period.
|
|
|
|
|
(b)
|
Increase of $10.8 million due to higher modification fees earned from HAMP and non-HAMP modifications.
|
|
|
|
|
(c)
|
Decrease of $0.9 million due to decreased loss mitigation and performance-based incentive fees earned from a GSE.
|
|
|
|
|
(d)
|
Decrease of $33.0 million from change in fair value on MSRs which was recognized in servicing fee income. The fair value of our MSRs is based upon the present value of the expected future cash flows related to servicing these loans. The revenue components of the cash flows are servicing fees, interest earned on custodial accounts, and other ancillary income. The expense components include operating costs related to servicing the loans (including delinquency and foreclosure costs) and interest expenses on servicing advances. The expected future cash flows are primarily impacted by prepayment estimates, delinquencies, and market discount rates. Generally, the value of MSRs increases when interest rates increase and decreases when interest rates decline due to the effect those changes in interest rates have on prepayment estimates. Other factors affecting the MSR value includes the estimated effects of loan modifications on expected cash flows. Such modifications tend to positively impact cash flows by extending the expected life of the
|
affected MSR and potentially producing additional revenue opportunities depending on the type of modification. In valuing the MSRs, we believe our assumptions are consistent with the assumptions other major market participants use. These assumptions include a level of future modification activity that we believe major market participants would use in their valuation of MSRs. Internally, we have modification goals that exceed the assumptions utilized in our valuation model. Nevertheless, were we to apply an assumption of a level of future modifications consistent with our internal goals to our MSR valuation, we do not believe the resulting increase in value would be material. Additionally, several state Attorneys General have requested that certain mortgage servicers, including us, suspend foreclosure proceedings pending internal review to ensure compliance with applicable law, and we received requests from four such state Attorneys General. Although we have resumed those previously delayed proceedings, changes in the foreclosure process that may be required by government or regulatory bodies could increase the cost of servicing and diminish the value of our MSRs. We utilize assumptions of servicing costs that include delinquency and foreclosure costs that we believe major market participants would use to value their MSRs. We periodically compare our internal MSR valuation to third party valuation of our MSRs to help substantiate our market assumptions. We have considered the costs related to the delayed proceedings in our assumptions and we do not believe that any resulting decrease in the MSR was material given the expected short-term nature of the issue.
Other fee income was $17.2 million for the year ended December 31, 2011 compared to $7.3 million for the year ended December 31, 2010, an increase of $9.9 million, or 135.6%, due to higher commissions earned on lender placed insurance and higher REO sales commissions from the growth of the servicing portfolio.
The following table provides other fee income by primary servicing, subservicing and adjacent businesses for the periods indicated (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
Other Fee Income
|
|
|
|
|
Year ended December 31,
|
2011
|
|
2010
|
|
Primary servicing
|
$
|
5,520
|
|
|
$
|
6,865
|
|
|
Subservicing
|
3,038
|
|
|
408
|
|
|
Adjacent businesses
|
8,631
|
|
|
—
|
|
|
Total other fee income
|
$
|
17,189
|
|
|
$
|
7,273
|
|
Expenses and impairments were $177.9 million for the year ended December 31, 2011 compared to $107.3 million for the year ended December 31, 2010, an increase of $70.6 million, or 65.8%, primarily due to the increase of $45.4 million in salaries, wages and benefits expense resulting primarily from an increase in average headcount from 1,178 in 2010 to 1,966 in 2011 and an increase of $25.2 million in general and administrative and occupancy-related expenses associated with increased headcount and growth in the servicing portfolio. Our 2011 operating results include an $8.2 million increase in share-based compensation expense from revised compensation arrangements executed with certain members of our executive team during the third quarter of 2010.
The following table provides key primary servicing, subservicing, adjacent businesses and other Servicing Segment expenses for the periods indicated (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
Expenses and impairments
|
|
|
|
|
Year ended December 31,
|
2011
|
|
2010
|
|
Primary servicing
|
$
|
70,549
|
|
|
$
|
82,772
|
|
|
Subservicing
|
82,938
|
|
|
18,276
|
|
|
Adjacent businesses
|
9,100
|
|
|
—
|
|
|
Other Servicing Segment expenses
|
15,343
|
|
|
6,235
|
|
|
Total expenses and impairments
|
$
|
177,930
|
|
|
$
|
107,283
|
|
Other Servicing Segment expenses primarily include share-based compensation expenses.
Total other income (expense) was $(55.6) million for the year ended December 31, 2011 compared to $(61.3) million for the year ended December 31, 2010, a decrease in expense, net of income, of $5.7 million, or 9.3%, primarily due to the net effect of the following:
|
|
|
|
•
|
Interest income was $2.3 million for the year ended December 31, 2011 compared to $0.3 million for the year ended December 31, 2010, an increase of $2.0 million, due to higher average outstanding custodial cash deposit balances on custodial cash accounts as a result of the growth in our servicing portfolio.
|
|
|
|
|
•
|
Interest expense was $58.0 million for the year ended December 31, 2011 compared to $51.8 million for the year ended December 31, 2010, an increase of $6.2 million, or 12.0%, primarily due to higher average outstanding debt of $642.9 million in the year ended December 31, 2011 compared to $638.6 million in the comparable 2010 period. The impact of the higher debt balances is partially offset by lower interest rates due to declines in the base LIBOR and decreases in the overall index margin on outstanding servicer advance facilities. Interest expense from the senior notes was $30.3 million and $22.1 million, respectively, for the years ended December 31, 2011 and 2010. Interest expense also includes gains for the ineffective portion of cash flow hedge of $2.0 million and $0.9 million, respectively, for the years ended December 31, 2011 and 2010.
|
|
|
|
|
•
|
Loss on interest rate swaps and caps was $9.8 million for the year ended December 31, 2010 compared to a $0.3 million gain for the year ended December 31, 2011. Effective October 1, 2010, we designated an existing interest rate swap as a cash flow hedge against outstanding floating rate financing associated with one of our outstanding servicer advance facilities. This interest rate swap is recorded at fair value, with any changes in fair value related to the effective portion of the hedge being recorded as an adjustment to other comprehensive income. Prior to this designation, any changes in fair value were recorded as a loss on interest rate swaps and caps on our statement of operations. In conjunction with our October 2011 amendment to our 2010-ABS Advance Financing Facility, we paid off our 2009-ABS Advance Financing Facility and transferred the related collateral to the 2010-ABS Advance Financing Facility. Concurrently with the repayment of the 2009-ABS Advance Financing Facility, we de-designated the underlying interest rate swap on our 2009-ABS Advance Financing Facility. Our outstanding 2010-ABS interest rate swap served as an economic hedge during the period it was outstanding for the year ended December 31, 2011.
|
Originations Segment
The Originations Segment involves the origination, packaging, and sale of GSE mortgage loans into the secondary markets via whole loan sales or securitizations.
The following table summarizes our consolidated pre-tax operating results for the periods indicated (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
2012
|
|
2011
|
|
2010
|
|
Revenues:
|
|
|
|
|
|
|
Servicing fee income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other fee income (expense)
|
(291
|
)
|
|
14,109
|
|
|
7,042
|
|
|
Total fee income (expense)
|
(291
|
)
|
|
14,109
|
|
|
7,042
|
|
|
Gain on mortgage loans held for sale
|
487,142
|
|
|
109,431
|
|
|
77,498
|
|
|
Total revenues
|
486,851
|
|
|
123,540
|
|
|
84,540
|
|
|
Expenses and impairments:
|
|
|
|
|
|
|
Salaries, wages and benefits
|
152,254
|
|
|
71,697
|
|
|
57,852
|
|
|
General and administrative
|
62,607
|
|
|
26,344
|
|
|
26,761
|
|
|
Occupancy
|
4,882
|
|
|
3,566
|
|
|
2,307
|
|
|
Total expenses and impairments
|
219,743
|
|
|
101,607
|
|
|
86,920
|
|
|
Other income (expense):
|
|
|
|
|
|
|
Interest income
|
20,426
|
|
|
12,718
|
|
|
11,848
|
|
|
Interest expense
|
(25,830
|
)
|
|
(10,955
|
)
|
|
(8,806
|
)
|
|
Total other income (expense)
|
(5,404
|
)
|
|
1,763
|
|
|
3,042
|
|
|
Income before taxes
|
$
|
261,704
|
|
|
$
|
23,696
|
|
|
$
|
662
|
|
Increase in originations volume is a primary driver of the increase in revenues, expenses and other income (expense) of our Originations Segment. The table below provides detail of the loan characteristics of loans originated for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
Originations Volume (in millions):
|
2012
|
|
2011
|
|
2010
|
|
Retail
|
$
|
4,361
|
|
|
$
|
2,200
|
|
|
$
|
1,608
|
|
|
Wholesale
|
2,966
|
|
|
1,212
|
|
|
1,184
|
|
|
Correspondent
|
569
|
|
|
—
|
|
|
—
|
|
|
Total Originations
|
$
|
7,896
|
|
|
$
|
3,412
|
|
|
$
|
2,792
|
|
Originations Segment for the Years Ended December 31, 2012 and 2011
Total revenues were
$486.9 million
for the year ended December 31, 2012 compared to
$123.5 million
for the year ended December 31, 2011, an increase of $363.4 million, or 294.3%, primarily due to the net effect of the following:
|
|
|
|
•
|
Other fee income (expense) was $(0.3) million for the year ended December 31, 2012 compared to $14.1 million for the year ended December 31, 2011, a decrease of $14.4 million, or (102.1)%, primarily due to lower points and fees collected as a result of product mix changes in originations from 2011 to 2012, combined with an increase in fees paid to third party mortgage brokers.
|
Gain on mortgage loans held for sale consists of the following for the periods indicated (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
2012
|
|
2011
|
|
Gain on sale
|
$
|
288,766
|
|
|
$
|
68,567
|
|
|
Provision for repurchases
|
(13,121
|
)
|
|
(5,534
|
)
|
|
Capitalized servicing rights
|
58,607
|
|
|
36,474
|
|
|
Fair value mark-to-market adjustments
|
18,368
|
|
|
11,159
|
|
|
Mark-to-market on derivatives/hedges
|
134,522
|
|
|
(1,235
|
)
|
|
Total gain on mortgage loans held for sale
|
$
|
487,142
|
|
|
$
|
109,431
|
|
Gain on mortgage loans held for sale was $487.1 million for the year ended December 31, 2012, compared to $109.4 million for the year ended December 31, 2011, an increase of $377.7 million, or 345.2%, primarily due to the net effect of the following:
|
|
|
|
•
|
Increase of $220.2 million from larger volume of originations, which increased from $3.4 billion in 2011 to $7.9 billion in 2012, and higher margins earned on the sale of residential mortgage loans during the period.
|
|
|
|
|
•
|
Increase of $135.7 million from change in unrealized gains/losses on derivative financial instruments. These include IRLCs, LPCs, and forward sales of MBS.
|
|
|
|
|
•
|
Increase of $22.1 million from capitalized MSRs due to the larger volume of originations and subsequent retention of MSRs.
|
|
|
|
|
•
|
Increase of $7.2 million resulting from the change in fair value on newly-originated loans.
|
|
|
|
|
•
|
Decrease of $7.6 million from a larger provision for repurchases as a result of the increase in our loan sale volume.
|
Expenses and impairments were
$219.7 million
for the year ended December 31, 2012 compared to
$101.6 million
for the year ended December 31, 2011, an increase of
$118.1 million
, or 116.2%, primarily due to the net effect of the following:
|
|
|
|
•
|
Increase of $80.6 million in salaries, wages and benefits expense from increase in average headcount of 988 in 2011 to 1,157 in 2012 and increases in performance-based compensation due to the large increase in originations volume.
|
|
|
|
|
•
|
Increase of $37.6 million in general and administrative and occupancy expense primarily due to an increase in our overhead expenses from the higher originations volume in the 2012 period.
|
Total other income (expense) was $(5.4) million for the year ended December 31, 2012 compared to $1.8 million for the year ended December 31, 2011, a decrease in income, net of expense, of $7.2 million, or 400.0%, primarily due to the net effect of the following:
|
|
|
|
•
|
Interest income was $20.4 million for the year ended December 31, 2012 compared to $12.7 million for the year ended December 31, 2011, an increase of $7.7 million, or 60.6%, representing interest earned from originated loans prior to sale or securitization. The increase is primarily due to the increase in the volume of originations. Loans are typically sold within 30 days of origination.
|
|
|
|
|
•
|
Interest expense was $25.8 million for the year ended December 31, 2012 compared to $11.0 million for the year ended December 31, 2011, an increase of $14.8 million, or 134.5%, primarily due to an increase in originations volume in 2012 and associated financing required to originate these loans, including interest expense attributable to the originations segment on our unsecured senior notes, combined with $6.2 million of interest expense on senior unsecured notes. During 2012, we allocated a portion of our interest expense from these unsecured notes to our Originations segment to match the benefit this segment will receive from future portfolio acquisitions due to the ability to recapture portfolio runoff.
|
Originations Segment for the Years Ended December 31, 2011 and 2010
Total revenues were $123.5 million for the year ended December 31, 2011 compared to $84.5 million for the year ended
December 31, 2010, an increase of $39.0 million, or 46.2%, primarily due to the net effect of the following:
|
|
|
|
•
|
Other fee income was $14.1 million for the year ended December 31, 2011 compared to $7.0 million for the year ended
|
December 31, 2010, an increase of $7.1 million, or 101.4%, primarily due to higher points and fees collected as a result of
the $620.6 million increase in loan originations volume, combined with a decrease in fees paid to third party mortgage
brokers.
Gain on mortgage loans held for sale consists of the following for the periods indicated (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
2011
|
|
2010
|
|
Gain on sale
|
$
|
68,567
|
|
|
$
|
51,839
|
|
|
Provision for repurchases
|
(5,534
|
)
|
|
(4,649
|
)
|
|
Capitalized servicing rights
|
36,474
|
|
|
26,253
|
|
|
Fair value mark-to-market adjustments
|
11,159
|
|
|
2,301
|
|
|
Mark-to-market on derivatives/hedges
|
(1,235
|
)
|
|
1,754
|
|
|
Total gain on mortgage loans held for sale
|
$
|
109,431
|
|
|
$
|
77,498
|
|
Gain on mortgage loans held for sale was $109.4 million for the year ended December 31, 2011, compared to $77.5 million for the year ended December 31, 2010, an increase of $31.9 million, or 41.2%, primarily due to the net effect of the following:
|
|
|
|
•
|
Increase of $16.8 million from larger volume of originations, which increased from $2.8 billion in 2010 to $3.4 billion in 2011, and higher margins earned on the sale of residential mortgage loans during the period.
|
|
|
|
|
•
|
Increase of $10.2 million from capitalized MSRs due to the larger volume of originations and subsequent retention of MSRs.
|
|
|
|
|
•
|
Increase of $8.9 million resulting from the change in fair value on newly-originated loans.
|
|
|
|
|
•
|
Decrease of $3.0 million from change in unrealized gains/losses on derivative financial instruments. These include IRLCs and forward sales of MBS.
|
|
|
|
|
•
|
Decrease of $0.9 million from an increase in our provision for repurchases as a result of the increase in our loan sale volume.
|
Expenses and impairments were $101.6 million for the year ended December 31, 2011 compared to $86.9 million for the year ended December 31, 2010, an increase of $14.7 million, or 16.9%, primarily due to the net effect of the following:
|
|
|
|
•
|
Increase of $13.8 million in salaries, wages and benefits expense from increase in average headcount of 688 in 2010 to
|
988 in 2011 and increases in performance-based compensation due to increases in originations volume.
|
|
|
|
•
|
Increase of $0.8 million in general and administrative and occupancy expense primarily due to an increase in our
|
overhead expenses from the higher originations volume in the 2011 period. Additionally we recorded total charges in
November 2011 of $1.8 million related to our strategic decision to refocus our strategy with respect to our originations
platform.
Total other income (expense) was $1.8 million for the year ended December 31, 2011 compared to $3.0 million for the year ended December 31, 2010, an increase in income, net of expense, of $1.2 million, or 40.0%, primarily due to the net effect of the following:
|
|
|
|
•
|
Interest income was $12.7 million for the year ended December 31, 2011 compared to $11.8 million for the year ended
|
December 31, 2010, an increase of $0.9 million, or 7.6%, representing interest earned from originated loans prior to sale
or securitization. The increase is primarily due to the increase in the volume of originations. Loans are typically sold
within 30 days of origination.
|
|
|
|
•
|
Interest expense was $11.0 million for the year ended December 31, 2011 compared to $8.8 million for the year ended
|
December 31, 2010, an increase of $2.2 million, or 25.0%, primarily due to an increase in originations volume in 2011
and associated financing required to originate these loans, combined with a slight increase in outstanding average days
in warehouse on newly originated loans.
Legacy Portfolio and Other
Through December 2009, our Legacy Portfolio and Other consisted primarily of non-prime and nonconforming residential mortgage loans that we primarily originated from April to July 2007. Revenues and expenses are primarily a result of mortgage loans transferred to securitization trusts that were structured as secured borrowings, resulting in carrying the securitized loans as mortgage loans on our consolidated balance sheets and recognizing the asset-backed certificates as nonrecourse debt. Prior to September 2009, these residential mortgage loans were classified as mortgage loans held for sale on our consolidated balance sheet and carried at the lower of cost or fair value and financed through a combination of our existing warehouse facilities and our corporate note. These loans were transferred on October 1, 2009, from mortgage loans held for sale to a held-for-investment classification at fair value on the transfer date. Subsequent to the transfer date, we completed the securitization of the mortgage loans, which was structured as a secured borrowing. This structure resulted in carrying the securitized loans as mortgages on our consolidated balance sheet and recognizing the asset-backed certificates acquired by third parties as nonrecourse debt.
Effective January 1, 2010, accounting guidance eliminated the concept of a QSPE. Consequently, all existing securitization trusts are considered VIEs and are now subject to the new consolidation guidance. Upon consolidation of certain of these VIEs, we recognized the securitized mortgage loans related to these securitization trusts as mortgage loans held for investment, subject to ABS nonrecourse debt. See Note 3 – Variable Interest Entities and Securitizations to our Consolidated Financial Statements. Additionally, we elected the fair value option provided for by ASC 825-10,
Financial Instruments-Overall
. Assets and liabilities related to these VIEs are included in Legacy Assets and Other in our segmented results.
In December 2011, we sold our remaining variable interest in a securitization trust that had been a consolidated VIE since January 1, 2010 and deconsolidated the variable interest. Upon deconsolidation of this VIE, we derecognized the related mortgage loans held for investment, subject to ABS nonrecourse debt and the ABS nonrecourse debt.
The following table summarizes our consolidated pre-tax operating results for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
2012
|
|
2011
|
|
2010
|
|
Revenues:
|
|
|
|
|
|
|
Servicing fee income
|
$
|
2,287
|
|
|
$
|
1,972
|
|
|
$
|
820
|
|
|
Other fee income
|
(186
|
)
|
|
3,996
|
|
|
2,643
|
|
|
Total fee income
|
2,101
|
|
|
5,968
|
|
|
3,463
|
|
|
Gain on mortgage loans held for sale
|
—
|
|
|
—
|
|
|
—
|
|
|
Total revenues
|
2,101
|
|
|
5,968
|
|
|
3,463
|
|
|
Expenses and impairments:
|
|
|
|
|
|
|
Salaries, wages and benefits
|
10,757
|
|
|
7,233
|
|
|
13,148
|
|
|
General and administrative
|
8,251
|
|
|
7,228
|
|
|
7,488
|
|
|
Provision for loan losses
|
1,890
|
|
|
3,537
|
|
|
3,298
|
|
|
Loss on sale of foreclosed real estate and other
|
2,864
|
|
|
6,833
|
|
|
205
|
|
|
Occupancy
|
383
|
|
|
2,110
|
|
|
2,788
|
|
|
Total expenses and impairments
|
24,145
|
|
|
26,941
|
|
|
26,927
|
|
|
Other income (expense):
|
|
|
|
|
|
|
Interest income
|
18,431
|
|
|
44,866
|
|
|
77,521
|
|
|
Interest expense
|
(14,639
|
)
|
|
(36,396
|
)
|
|
(55,566
|
)
|
|
Loss on interest rate swaps and caps
|
(2,231
|
)
|
|
—
|
|
|
—
|
|
|
Fair value of changes in ABS securitizations
|
—
|
|
|
(12,389
|
)
|
|
(23,297
|
)
|
|
Total other income (expense)
|
1,561
|
|
|
(3,919
|
)
|
|
(1,342
|
)
|
|
Loss before taxes
|
$
|
(20,483
|
)
|
|
$
|
(24,892
|
)
|
|
$
|
(24,806
|
)
|
The table below provides detail of the characteristics of our securitization trusts included in Legacy Portfolio and other for the periods indicated (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
2012
|
|
2011
|
|
|
2010
|
(1)
|
|
Performing – UPB
|
$
|
260,219
|
|
|
$
|
279,730
|
|
|
$
|
1,037,201
|
|
|
Nonperforming (90+ Delinquency) - UPB
|
93,935
|
|
|
90,641
|
|
|
337,779
|
|
|
REO - Estimated Fair Value
|
10,467
|
|
|
3,668
|
|
|
27,337
|
|
|
Total Legacy Portfolio and Other – UPB
|
$
|
364,621
|
|
|
$
|
374,039
|
|
|
$
|
1,402,317
|
|
|
|
|
|
(1)
|
Amounts include one previously off-balance sheet securitization which was consolidated upon adoption of ASC 810,
Consolidation
, related to consolidation of certain VIEs.
|
Legacy Portfolio and Other Segment for the Years Ended December 31, 2012 and 2011
Total revenues were $2.1 million for the year ended December 31, 2012 compared to $6.0 million for the year ended December 31, 2011, a decrease of $3.9 million. This decrease was primarily a result of lower ancillary income on our legacy portfolio.
Total expenses and impairments decreased by $2.8 million to $24.1 million for the year ended December 31, 2012 compared to $26.9 million for the year ended December 31, 2011. This decrease was primarily the result of decreases in loss on sale of foreclosed real estate and occupancy partially offset by increases in salaries, wages and benefits and general and administrative expenses. Also, in December 2011, we deconsolidated VIEs in which we were no longer the primary beneficiary of any variable interests associated with the consolidated trusts.
Interest income, net of interest expense, decreased to $3.8 million for the year ended December 31, 2012 as compared to $8.5 million for the year ended December 31, 2011. The decrease in net interest income was primarily due to the effects of the derecognition of a previously consolidated VIE as of July 1, 2010.
There were no fair value changes in ABS securitizations for the year ended December 31, 2012 as compared to a $12.4 million decrease for the year ended December 31, 2011. Fair value changes in ABS securitizations is the net result of the reductions in the fair value of the assets (Mortgage loans held for investment and REO) and the reductions in the fair value of the liabilities (ABS nonrecourse debt).
Legacy Portfolio and Other Segment for the Years Ended December 31, 2011 and 2010
Total revenues were $6.0 million for the year ended December 31, 2011 compared to $3.5 million for the year ended December 31, 2010, an increase of $2.5 million. This increase was primarily a result of higher ancillary income on our legacy portfolio.
Interest income, net of interest expense, decreased to $8.5 million for the year ended December 31, 2011 as compared to $21.9 million for the year ended December 31, 2010. The decrease in net interest income was primarily due to the effects of the derecognition of a previously consolidated VIE as of July 1, 2010.
Fair value changes in ABS securitizations were $12.4 million for the year ended December 31, 2011 as compared to a $23.3 million decrease for the year ended December 31, 2010. Fair value changes in ABS securitizations is the net result of the reductions in the fair value of the assets (Mortgage loans held for investment and REO) and the reductions in the fair value of the liabilities (ABS nonrecourse debt).
Analysis of Items on Consolidated Balance Sheet
The following table presents our consolidated balance sheet for the periods indicated (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
December 31,
2011
|
|
Assets
|
|
|
Cash and cash equivalents
|
$
|
152,649
|
|
|
$
|
62,445
|
|
|
Restricted cash
|
393,190
|
|
|
71,499
|
|
|
Accounts receivable
|
3,043,606
|
|
|
562,300
|
|
|
Mortgage loans held for sale
|
1,480,537
|
|
|
458,626
|
|
|
Mortgage loans held for investment, subject to nonrecourse debt - Legacy Assets, net of allowance for loan losses of $4,390 and $5,824
|
238,907
|
|
|
243,480
|
|
|
Reverse mortgage interests
|
750,273
|
|
|
—
|
|
|
Receivables from affiliates
|
12,604
|
|
|
4,609
|
|
|
Mortgage servicing rights – fair value
|
635,860
|
|
|
251,050
|
|
|
Mortgage servicing rights – amortized cost
|
10,973
|
|
|
—
|
|
|
Property and equipment, net of accumulated depreciation of $48,806 and $39,201, respectively
|
75,026
|
|
|
24,073
|
|
|
Real estate owned (REO), net
|
10,467
|
|
|
3,668
|
|
|
Other assets
|
322,051
|
|
|
106,181
|
|
|
Total assets
|
$
|
7,126,143
|
|
|
$
|
1,787,931
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
Notes payable
|
$
|
3,601,586
|
|
|
$
|
873,179
|
|
|
Unsecured senior notes
|
1,062,635
|
|
|
280,199
|
|
|
Payables and accrued liabilities
|
631,431
|
|
|
183,789
|
|
|
Derivative financial instruments
|
20,026
|
|
|
12,370
|
|
|
Mortgage servicing liabilities
|
83,238
|
|
|
—
|
|
|
Nonrecourse debt - Legacy Assets
|
100,620
|
|
|
112,490
|
|
|
Excess spread financing - fair value
|
288,089
|
|
|
44,595
|
|
|
Participating interest financing
|
580,836
|
|
|
—
|
|
|
Total liabilities
|
6,368,461
|
|
|
1,506,622
|
|
|
|
|
|
|
|
Members’ units related to Nationstar Mortgage LLC
|
—
|
|
|
281,309
|
|
|
Preferred stock at $0.01 par value - 300,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
|
Common stock at $0.01 par value - 1,000,000 shares authorized, 90,480 shares issued at December 31, 2012
|
905
|
|
|
—
|
|
|
Additional paid-in-capital
|
556,056
|
|
|
—
|
|
|
Retained earnings
|
205,287
|
|
|
—
|
|
|
Common shares held by subsidiary
|
(4,566
|
)
|
|
—
|
|
|
Total equity
|
757,682
|
|
|
281,309
|
|
|
Total liabilities and equity
|
$
|
7,126,143
|
|
|
$
|
1,787,931
|
|
Assets
Restricted cash consists of certain custodial accounts related to collections on certain mortgage loans and mortgage loan advances that have been pledged to debt counterparties under various master repurchase agreements (MRAs). Restricted cash
was
$393.2 million
at December 31, 2012, an increase of $321.7 million from December 31, 2011, primarily a result of increased servicer advance reimbursement amounts driven primarily by the significant increase in our servicing portfolio during 2012.
Accounts receivable consists primarily of accrued interest receivable on mortgage loans and securitizations, collateral deposits on surety bonds and advances made to nonconsolidated securitization trusts, as required under various servicing agreements related to delinquent loans, which are ultimately paid back to us from the securitization trusts. Accounts receivable increased $2,481.3 million to
$3,043.6 million
at December 31, 2012, primarily due to our significantly larger outstanding servicing portfolio, which resulted in a $2,289.0 million increase in net servicer advances.
Mortgage loans held for sale are carried at fair value. We estimate fair value by evaluating a variety of market indicators including recent trades and outstanding commitments. Mortgage loans held for sale were
$1,480.5 million
at December 31, 2012, an increase of $1,021.9 million from December 31, 2011, primarily due to $6.9 billion in mortgage loan sales offset by $7.9 billion in loan originations during the year ended December 31, 2012. Our origination volume more than doubled in 2012 as compared to 2011.
Mortgage loans held for investment, subject to nonrecourse debt – Legacy Assets consist of nonconforming or subprime mortgage loans securitized which serve as collateral for the nonrecourse debt. Mortgage loans held for investment, subject to nonrecourse debt – Legacy Assets was
$238.9 million
at December 31, 2012, a decrease of $4.6 million from December 31, 2011.
In 2012, we purchased the servicing rights to certain reverse mortgages. As servicer of these reverse mortgages, we are required to fund certain amounts related to the underlying loans. Reverse mortgage interests consists of scheduled and unscheduled draws on reverse residential mortgage loans, capitalized interest and servicing fees, and fees paid to taxing authorities to cover unpaid taxes and insurance. Reverse mortgage interests were
$750.3 million
at
December 31, 2012
, with no corresponding balance at December 31, 2011.
Receivables from affiliates consist of periodic transactions with Nationstar Regular Holdings, Ltd., a subsidiary of FIF. These transactions typically involve the monthly payment of principal and interest advances that are required to be remitted to securitization trusts as required under various Pooling and Servicing Agreements. These amounts are later repaid to us when principal and interest advances are recovered from the respective borrowers. Receivables from affiliates were
$12.6 million
at
December 31, 2012
, an increase of $8.0 million from December 31, 2011. Prior to our March 2012 restructuring in conjunction with our initial public offering, FIF contributed a portion of the outstanding balance in receivables from affiliates related to outstanding interest rate swap settlements to us eliminating this payable amount.
MSRs at fair value consist of servicing assets related to all existing forward residential mortgage loans transferred to a third party in a transfer that meets the requirements for sale accounting or through the acquisition of the right to service residential mortgage loans that do not relate to our assets. MSRs at fair value were
$635.9 million
at December 31, 2012, an increase of $384.9 million over December 31, 2011, primarily a result of the purchase of servicing portfolios for $394.4 million combined with capitalization of $58.6 million newly created MSRs, partially offset by a $68.2 million decrease in the fair value of our MSRs.
MSRs at amortized cost consists of certain reverse mortgage MSRs acquired during 2012. The initial carrying amount of these MSRs is based on the relative fair value of the purchased assets and liabilities including reverse mortgage interests. These MSRs are subsequently accounted for using the amortization method. Amortization / accretion is recorded as service fee income on the statement of operations and comprehensive income. As of December 31, 2012, MSRs at amortized costs were carried at $11.0 million, with no balance as of December 31, 2011.
Property and equipment, net is comprised of land, building, furniture, fixtures, leasehold improvements, computer software, computer hardware, and software in development and other. These assets are stated at cost less accumulated depreciation. Property and equipment, net increased $50.9 million from December 31, 2011 to
$75.0 million
at December 31, 2012, as we invested in information technology systems to support volume growth in both our Servicing and Originations Segments, as well as the addition of certain property acquired during 2012.
REO, net represents property we acquired as a result of foreclosures on delinquent mortgage loans. REO, net is recorded at estimated fair value, less costs to sell, at the date of foreclosure. Any subsequent operating activity and declines in value are charged to earnings. REO, net was
$10.5 million
at December 31, 2012, an increase of $6.8 million from December 31, 2011. This change was primarily due to the transfer of $4.3 million of mortgage loans held for investment to REO, offset by liquidations.
Other assets include deferred financing costs, derivative financial instruments, prepaid expenses, loans subject to repurchase rights from Ginnie Mae. Other assets increased $215.9 million from December 31, 2011 to
$322.1 million
at December 31, 2012 primarily due to an increase of $140.9 million in derivative financial instruments, $36.5 million increase in loans subject to repurchase rights from Ginnie Mae, and an increase in deferred financing costs of $34.7 million (see Note 9 - Other Assets). Other assets also increased due to a deferred tax asset of $23.7 million that was recognized in 2012 (see Note 15 - Income Taxes). There was no deferred tax asset in 2011.
Liabilities and Stockholders’ Equity
At December 31, 2012, total liabilities were $6,368.5 million, a $4,861.9 million increase from December 31, 2011. The increase was primarily due to a $2.73 billion increase in notes payable and our issuance of $775 million in unsecured senior notes in 2012. In addition, we had an increase in payables and accrued liabilities of $447.6 million, an increase in excess spread financing of $243.5 million, and participating interest financing which relates to our reverse mortgage activities of $580.8 million. The increases are generally the result of our acquisitions of MSR portfolios, including Aurora, the increase in our mortgage origination business and our entry into servicing reverse mortgages.
Included in our payables and accrued liabilities caption on our balance sheet is our reserve for repurchases and indemnifications of $18.5 million and $10.0 million at December 31, 2012 and 2011, respectively. This liability represents our (i) estimate of losses to be incurred on the repurchase of certain loans that we previously sold and (ii) estimate of losses to be incurred for indemnification of losses incurred by purchasers or insurers with respect to loans that we sold. Certain sale contracts include provisions requiring us to repurchase a loan or indemnify the purchaser or insurer for losses if a borrower fails to make certain initial loan payments due to the acquirer or if the accompanying mortgage loan fails to meet certain customary representations and warranties. These representations and warranties are made to the loan purchasers or insurers about various characteristics of the loans, such as the manner of origination, the nature and extent of underwriting standards applied and the types of documentation being provided and typically are in place for the life of the loan. Although the representations and warranties are in place for the life of the loan, we believe that most repurchase requests occur within the first five years of the loan. In the event of a breach of the representations and warranties, we may be required to either repurchase the loan or indemnify the purchaser for losses it sustains on the loan. In addition, an investor may request that we refund a portion of the premium paid on the sale of mortgage loans if a loan is prepaid within a certain amount of time from the date of sale. We record a provision for estimated repurchases, loss indemnification and premium recapture on loans sold, which is charged to gain on mortgage loans held for sale.
The activity of our outstanding repurchase reserves were as follows for the periods indicated (dollars in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
2012
|
|
2011
|
|
2010
|
|
Repurchase reserves, beginning of period
|
$
|
10,026
|
|
|
$
|
7,321
|
|
|
$
|
3,648
|
|
|
Additions
|
13,121
|
|
|
5,534
|
|
|
4,649
|
|
|
Charge-offs
|
(4,636
|
)
|
|
(2,829
|
)
|
|
(976
|
)
|
|
Repurchase reserves, end of period
|
$
|
18,511
|
|
|
$
|
10,026
|
|
|
$
|
7,321
|
|
The following table summarizes the changes in UPB and loan count related to unresolved repurchase and indemnification requests for the periods indicated (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
2012
|
|
2011
|
|
2010
|
|
|
UPB
|
|
Count
|
|
UPB
|
|
Count
|
|
UPB
|
|
Count
|
|
Beginning balance
|
$
|
12.9
|
|
|
61
|
|
|
$
|
4.3
|
|
|
21
|
|
|
$
|
1.3
|
|
|
8
|
|
|
Repurchases and indemnifications
|
(5.5
|
)
|
|
(26
|
)
|
|
(6.9
|
)
|
|
(37
|
)
|
|
(1.9
|
)
|
|
(8
|
)
|
|
Claims initiated
|
24.3
|
|
|
132
|
|
|
32.4
|
|
|
154
|
|
|
10.8
|
|
|
53
|
|
|
Rescinded
|
(17.7
|
)
|
|
(88
|
)
|
|
(16.9
|
)
|
|
(77
|
)
|
|
(5.9
|
)
|
|
(32
|
)
|
|
Ending balance
|
$
|
14.0
|
|
|
79
|
|
|
$
|
12.9
|
|
|
61
|
|
|
$
|
4.3
|
|
|
21
|
|
The following five year table details our loan sales by period (dollars in billions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
Total
|
|
|
$
|
|
Count
|
|
$
|
|
Count
|
|
$
|
|
Count
|
|
$
|
|
Count
|
|
$
|
|
Count
|
|
$
|
|
Count
|
|
Loan Sales
|
$
|
6.9
|
|
|
31,261
|
|
|
$
|
3.3
|
|
|
16,629
|
|
|
$
|
2.6
|
|
|
13,090
|
|
|
$
|
1.0
|
|
|
5,344
|
|
|
$
|
0.5
|
|
|
3,412
|
|
|
$
|
14.3
|
|
|
69,736
|
|
We increase the reserve by applying an estimated loss factor to the principal balance of loan sales. Secondarily, the reserve may be increased based on outstanding claims received. We have observed an increase in repurchase requests in the last several years. We believe that because of the increase in our loan originations since 2008, repurchase requests are likely to increase. Should home values decrease, our realized loan losses from loan repurchases and indemnifications may increase as well. As such, our reserve for repurchases may increase beyond our current expectations. While the ultimate amount of repurchases and premium recapture is an estimate, we consider the liability to be adequate at each balance sheet date.
At December 31, 2012, outstanding equity was
$757.7 million
, a $476.4 million increase from December 31, 2011, which is primarily attributable to net income of $205.3 million in the 2012 period, $246.7 million in IPO proceeds, contributions of $12.8 million from FIF, and $13.3 million in share-based compensation.
Impact of Inflation and Changing Prices
Our consolidated financial statements and notes thereto presented herein have been prepared in accordance with GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike most industrial companies, nearly all of our assets and liabilities are monetary in nature. As a result, interest rates have a greater impact on our performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.
Recent Accounting Developments
See Note 2 - Significant Accounting Policies in the Consolidated Financial Statements in Item 8 Financial Statements and Supplementary Data herein for details of recently issued accounting pronouncements and their expected impact on our consolidated financial statements.
Liquidity and Capital Resources
Liquidity measures our ability to meet potential cash requirements, including the funding of servicing advances, the payment of operating expenses, the originations of loans and the repayment of borrowings. Our cash balance increased from $62.4 million as of December 31, 2011 to $152.6 million as of December 31, 2012, due to cash inflows in our financing activities, partially offset by cash outflows from operating and investing activities. Our cash balance increased from $21.2 million as of December 31, 2010 to $62.4 million as of December 31, 2011, primarily due to greater cash inflows from our financing activities, partially offset by the outflow from operating and investing activities.
We grew our servicing portfolio from $106.6 billion in UPB as of December 31, 2011 (including $7.8 billion of servicing under contract) to
$207.8 billion
in UPB as of
December 31, 2012
. We shifted our strategy after 2007 to leverage our industry-leading servicing capabilities and capitalize on the opportunities to grow our originations platform which has led to the strengthening of our liquidity position. As a part of our shift in strategy, we ceased originating non-prime loans in 2007, and new originations have been focused on loans that are eligible to be sold to GSEs. Since 2008, substantially all originated loans have either been sold or are pending sale.
As
part of the normal course of our business, we borrow money periodically to fund servicing advances and loan originations. The loans we originate are financed through several warehouse lines on a short-term basis. We typically hold the loans for approximately 30 days and then sell the loans or place them in government securitizations and repay the borrowings under the warehouse lines. We rely upon several counterparties to provide us with financing facilities to fund a portion of our servicing advances and to fund our loan originations on a short-term basis. Our ability to fund current operations depends upon our ability to secure these types of short-term financings on acceptable terms and to renew or replace the financings as they expire.
In 2012, we acquired the servicing rights of approximately $28.4 billion in unpaid principal balance in reverse mortgage loans. As servicer for these reverse mortgage loans, among other things, we are required to make advances to borrowers as required. These advances are temporarily financed through our reverse participations and max claim buyouts financing facility. We typically hold the loans for approximately 30 days and then pool the loans into a government securitization and repay the financing facility. At December 31, 2012 our maximum unfunded advance obligation related to these reverse mortgage loans was approximately $4.7 billion.
From 2010 through 2012, we have completed offerings of $1.1 billion of unsecured senior notes, with maturity dates ranging from April 2015 to October 2020. We pay interest semi-annually to the note holders of these notes at interest rates ranging from 7.875% to 10.875%. In February 2013 we completed an additional offering of $400.0 million of unsecured senior notes. These notes also pay interest semi-annually at an interest rate of 6.5% and mature in July 2021. We use a significant portion of the proceeds from these offerings to fund newly originated loans until these funds are ultimately deployed towards the purchase of mortgage servicing rights or other purposes.
At this time, we see no material negative trends that we believe would affect our access to long-term borrowings, short-term borrowings or bank credit lines sufficient to maintain our current operations, or would likely cause us to cease to be in compliance with any applicable covenants in our indebtedness or that would inhibit our ability to fund operations and capital commitments for the next 12 months.
Our primary sources of funds for liquidity include: (i) lines of credit, other secured borrowings and the unsecured senior notes; (ii) servicing fees and ancillary fees; (iii) payments received from sale or securitization of loans; (iv) payments received from mortgage loans held for sale; and (v) payments from the liquidation or securitization of our outstanding participating interests in reverse mortgage loans.
Our primary uses of funds for liquidity include: (i) funding of servicing advances; (ii) originations of loans; (iii) payment of interest expenses; (iv) payment of operating expenses; (v) repayment of borrowings; (vi) payments for acquisitions of MSRs; and (vii) scheduled and unscheduled draws on our serviced reverse residential mortgage loans.
Our servicing agreements impose on us various rights and obligations that affect our liquidity. Among the most significant of these obligations is the requirement that we advance our own funds to meet contractual principal and interest payments for certain investors and to pay taxes, insurance, foreclosure costs and various other items that are required to preserve the assets being serviced. Delinquency rates and prepayment speed affect the size of servicing advance balances. As a result our purchases of the servicing rights to certain reverse mortgages in 2012, we are required to fund payments due to borrowers, which advances are typically greater than advances on forward residential mortgages. These advances are typically recovered upon weekly or monthly reimbursement or from sale in the market.
We intend to continue to seek opportunities to acquire loan servicing portfolios and/or businesses that engage in loan servicing and/or loan originations. Any future acquisitions could require substantial additional capital in excess of cash from operations. We would expect to finance the capital required for acquisitions through a combination of additional issuances of equity, corporate indebtedness, asset backed acquisition financing and/or cash from operations.
Operating Activities
Our operating activities used $1,958.1 million and $28.9 million of cash flow for the years ended December 31, 2012 and 2011, respectively. The decrease of $1,929.2 million was primarily due to the net effect of the following:
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•
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Operating cash decreased $4,491.9 million due to higher volume in our originations segment. We originated $7,904.1 million in residential mortgage loans during 2012, compared to $3,412.2 million during 2011. This decrease was partially offset by an increase of $3,794.3 million in our cash inflows from proceeds received from the sale of our residential mortgage loans and payments received on mortgage loans. We received $7,197.7 million in cash proceeds from loan sales and principal collections during 2012, compared to $3,403.4 million during 2011.
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|
|
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•
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Decrease of $1,075.4 million in cash outflows used by working capital which used $1,097.1 million during 2012 compared to $21.7 million during 2011.
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Our operating activities used ($28.9) million of cash flow for the year ended December 31, 2011 compared to ($101.7) million of cash flow for the same period in the prior year. The decrease in cash used in operating activities of $72.8 million during the 2011 period was primarily due to higher volume sales of residential mortgage loans offset by higher cash outflows for working capital. The improvement was primarily due to the net effect of the following:
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•
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$718.6 million improvement in proceeds received from sale of originated loans, which provided $3,339.9 million and $2,621.3 million for the years ending December 31, 2011 and 2010, respectively, partially offset by a $620.6 million increase in cash used to originate loans. Mortgage loans originated and purchased, net of fees, used $3,412.2 million and $2,791.6 million in the years ending December 31, 2011 and 2010, respectively.
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•
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$74.1 million decrease in cash outflows used for working capital, which used ($21.7) million cash for the year ended December 31, 2011 and provided $52.4 million during the same period in the prior year.
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Investing Activities
Our investing activities used $2,157.3 million and $81.9 million of cash flow for the years ending
December 31, 2012
and 2011, respectively. The $2,075.4 million decrease in cash flows used by investing activities from the 2011 period to the 2012 period was primarily a result of our two significant MSR acquisitions. In May 2012, we acquired the servicing rights of a $10.4 billion forward residential servicing portfolio, which transferred in July 2012. Additionally in June 2012, we acquired the servicing rights of another $63 billion forward residential servicing portfolio, which primarily transferred in July 2012. Total cash used in the acquisition of our 2012 MSR acquisitions, which includes the related advances, was approximately $2.0 billion.
Our investing activities used $81.9 million and provided $101.2 million of cash flow for the years ended December 31, 2011 and 2010, respectively. The $183.1 million decrease in cash flows used by investing activities from the 2010 period to the 2011 period was primarily a result of a $78.7 million increase in total purchases and deposits on MSRs, a $26.9 million cash outflow for the purchase of reverse mortgage servicing rights, combined with a $46.3 million decrease in cash proceeds from sales of REO. Also, in March 2011, we acquired a 22% interest in ANC for an initial investment of $6.6 million. ANC is the parent company of National Real Estate Information Services, LP (NREIS) a real estate services company.
Financing Activities
Our financing activities provided $4,205.6 million and $152.0 million of cash flow during the years ended December 31, 2012 and December 31, 2011, respectively. The increase in cash flow from financing activities of $4,053.6 million was primarily the result of a $2,565.0 million increase in notes payable related to additional borrowings to finance the growth in our servicing and originations business as well as the increase in senior notes of $735.5 million over the comparable period in 2011.
Our financing activities provided $152.0 million of cash flow during the year ended December 31, 2011 and used $(20.0) million of cash flow for the years ended December 31, 2010. During the year ended December 31, 2011, we provided $172.0 million more cash as a result of additional borrowings to finance the growth in our servicing and originations business compared to the 2010 period. During the year ended December 31, 2011, we used $58.1 million to repay ABS nonrecourse debt, used $3.5 million for debt financing costs and borrowed an additional $163.4 million from our existing warehouse and debt facilities as we expanded both our servicing and originations platforms. The primary source of financing cash flow during the year ended December 31, 2010 was $243.0 million proceeds from offering the unsecured senior notes. During the year ended December 31, 2010, we used $103.5 million to repay ABS nonrecourse debt, used $14.9 million for debt financing costs and used $62.1 million to repay the outstanding notes payable.
Contractual Obligations
The table below sets forth our contractual obligations, excluding our legacy asset securitized debt, our excess spread financing, and our participating interest financing at December 31, 2012 (in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Less than 1 Year
|
|
1-3 Years
|
|
|
3-5 Years
|
|
More than 5 Years
|
|
Total
|
|
Unsecured Senior Notes
|
$
|
—
|
|
|
$
|
285,000
|
|
|
$
|
—
|
|
|
$
|
775,000
|
|
|
$
|
1,060,000
|
|
|
Interest expense from Unsecured Senior Notes
|
99,105
|
|
|
181,599
|
|
|
135,188
|
|
|
148,664
|
|
|
564,556
|
|
|
MBS Advance Financing Facility
|
185,817
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
185,817
|
|
|
Securities Repurchase Facility (2011)
|
11,774
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,774
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|
|
2010-ABS Advance Financing Facility
|
—
|
|
|
194,833
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|
|
—
|
|
|
—
|
|
|
194,833
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|
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2011-Agency Advance Financing Facility
|
476,091
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|
|
—
|
|
|
—
|
|
|
—
|
|
|
476,091
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|
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MSR Note
|
4,627
|
|
|
—
|
|
|
—
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|
|
—
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|
|
4,627
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|
|
2012-AW agency advance financing facility
|
100,000
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|
|
—
|
|
|
—
|
|
|
—
|
|
|
100,000
|
|
|
2012-C ABS advance financing facility
|
657,027
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|
|
—
|
|
|
—
|
|
|
—
|
|
|
657,027
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|
|
2012-R ABS advance financing facility
|
374,739
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
374,739
|
|
|
2012-W ABS advance financing facility
|
492,235
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|
|
—
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|
|
—
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|
|
—
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|
|
492,235
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$375 million warehouse facility
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—
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|
245,287
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|
|
—
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|
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—
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|
|
245,287
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$150 million warehouse facility
|
224,790
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|
|
—
|
|
|
—
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|
|
—
|
|
|
224,790
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|
|
$250 million warehouse facility (2011)
|
356,104
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|
|
—
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|
|
—
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|
|
—
|
|
|
356,104
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|
|
$100 million warehouse facility (2009)
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87,747
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|
|
—
|
|
|
—
|
|
|
—
|
|
|
87,747
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|
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ASAP+ Short-Term Financing Facility
|
124,572
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|
|
—
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|
|
—
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|
|
—
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|
|
124,572
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Lease Obligations
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24,459
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|
|
40,874
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|
12,949
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|
|
7,638
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|
|
85,920
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Total
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$
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3,219,087
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|
$
|
947,593
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|
$
|
148,137
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$
|
931,302
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$
|
5,246,119
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In addition to the above contractual obligations, we have also been involved with several securitizations of ABS, which were structured as secured borrowings. These structures resulted in us carrying the securitized loans as mortgages on our consolidated balance sheet and recognizing the asset-backed certificates acquired by third parties as nonrecourse debt. The timing of the principal payments on this nonrecourse debt is dependent on the payments received on the underlying mortgage loans and liquidation of REO. The outstanding principal balance on our Nonrecourse Debt–Legacy Assets and was $100.6 million, at December 31, 2012. The repayment of our excess spread financing is based on amounts received on the underlying mortgage loans. As such, we have excluded the financing from the table above. The fair value of our excess spread financing was
$288.1 million
at December 31, 2012. The repayment of our participating interest financing is based on amounts received related to our reverse mortgage interests and as such we have excluded this financing from the table above. The recorded amount of our participating interest financing was $580.8 million at December 31, 2012.
Description of Certain Indebtedness
Unsecured Senior Notes
In March 2010, Nationstar and Nationstar Capital Corporation, as co-issuer, completed the offering of $250.0 million of unsecured senior notes, which were issued with an issue discount of $7.0 million for net cash proceeds before issuance costs of $243.0 million, with a maturity date of April 2015. In December 2011, Nationstar and Nationstar Capital Corporation, as co-issuer, completed an additional offering of $35.0 million of unsecured senior notes. The additional offering was issued with an issue discount of $0.3 million for net cash proceeds before issuance costs of $34.7 million, with a maturity date of April 2015. These unsecured senior notes pay interest semi-annually at an interest rate of 10.875%. These unsecured senior notes were issued in a private placement and were subsequently exchanged for an equal principal amount of senior notes registered under the Securities Act of 1933, as amended with substantially identical terms.
In April 2012, Nationstar and Nationstar Capital Corporation, as co-issuer, completed the offering of $275.0 million of unsecured senior notes at par for net cash proceeds before issuance costs of $275.0 million, with a maturity date of May 2019. In July 2012, Nationstar and Nationstar Capital Corporation, as co-issuer, completed an additional offering of $100 million of unsecured senior notes. This additional offering was issued with an issue premium of $5.5 million for net cash proceeds before issuance costs of $105.5 million. These unsecured senior notes pay interest semi-annually at an interest rate of 9.625%. These unsecured senior notes were issued in a private placement and have not been registered under the Securities Act of 1933, as amended.
In September 2012, Nationstar and Nationstar Capital Corporation, as co-issuer, completed the offering of $300.0 million of unsecured senior notes, with a maturity date of October 2020. The notes were issued at par. In September 2012, Nationstar and Nationstar Capital Corporation, as co-issuer, completed an additional offering of $100.0 million of unsecured senior notes. These notes were issued with an issue premium of $0.8 million for net cash proceeds before issuance costs of $100.8 million. Under the terms of these unsecured senior notes, we pay interest semiannually to the note holders at an interest rate of 7.875%. These unsecured senior notes were issued in a private placement and have not been registered under the Securities Act of 1933, as amended.
In February 2013, Nationstar and Nationstar Capital Corporation, as co-issuer, completed the offering of $400.0 million principal amount of unsecured senior notes, with a maturity date of July 2021. The notes were issued at par. Under the terms of these unsecured senior notes, we pay interest semiannually to the note holders at an interest rate of 6.500%. These unsecured senior notes were issued in a private placement and have not been registered under the Securities Act of 1933, as amended.
The indentures contain certain events of default, including (subject, in some cases, to customary cure periods and materiality thresholds) defaults based on (i) the failure to make payments under the indenture when due, (ii) breach of covenants, (iii) cross-defaults to certain other indebtedness, (iv) certain bankruptcy or insolvency events, (v) material judgments and (vi) invalidity of material guarantees.
The ratios included in the indentures for the senior notes are incurrence based compared to the customary ratio covenants that are often found in credit agreements that require a company to maintain a certain ratio.
Servicing
Our Servicing Segment’s debt consists of unsecured senior notes, advance financing facilities, MSR Note, participating interest financing, and excess spread financing at fair value.
Advance Financing Facilities
Our advance financing facilities are used to finance our obligations to pay advances as required by our servicing agreements. These servicing agreements may require us to advance certain payments to the owners of the mortgage loans we service, including P&I advances, T&I advances, legal fees, maintenance and preservation costs, or corporate advances. We draw on one or more of our advance financing facilities periodically throughout the month, as necessary, and we repay any facilities on which we have drawn when advances are recovered through liquidations, prepayments and reimbursement of advances from modifications.
MBS advance financing facility
- We have a
one
-year committed facility agreement with a GSE, under which we may transfer to the GSE certain servicing advance receivables against the transfer of funds by the GSE. This facility has the capacity to purchase up to
$325.0 million
in eligible servicing advance receivables. The interest rate is based on
LIBOR
plus a spread of
2.50%
to 4.00%. The maturity date of this facility is currently December 2013. As of December 31, 2012, this facility had an outstanding balance of $185.8 million.
Securities repurchase facility (2011)
- In
December 2011
, we entered into a securities repurchase facility with a financial services company that was amended to extend the expiration to
March 2013
. The master repurchase agreement (MRA) states that we may from time to time transfer to the financial services company eligible securities against the transfer of funds by the financial services company, with a simultaneous agreement by the financial services company to transfer such securities to us at a certain date, or on demand by us, against the transfer of funds by us. Additionally, the financial services company may elect to extend the transfer date for an additional
90
days at mutually agreed upon terms. The interest rate is based on
LIBOR
plus a margin of
3.50%
. As of
December 31, 2012
, we have pledged the Company’s
$55.6 million
outstanding retained interest in the outstanding Nonrecourse debt—Legacy Assets securitization, which was structured as a financing. As of December 31, 2012, this facility had an outstanding balance of $11.8 million.
2010-ABS advance financing facility
- In
December 2010
, we executed the 2010-ABS Advance Financing Facility with a financial institution. This facility has the capacity to purchase up to
$300.0 million
of advance receivables and the interest rate is based on
LIBOR
plus a spread of
3.00%
. This facility matures in
May 2014
. This debt is nonrecourse to us. As of December 31, 2012, this facility had an outstanding balance of $194.8 million.
2011-1 Agency advance financing facility
- In
October 2011
, we executed the 2011-1 Agency Advance Financing Facility with a financial institution. This facility has the capacity to borrow up to
$600.0 million
and the interest rate is based on
LIBOR
plus a
spread of 2.50% to 6.50% depending upon class of the note
. The maturity date of this facility is
October 2013
. This facility is secured by servicing advance receivables and is nonrecourse to us. As of December 31, 2012, this facility had an outstanding
balance of $476.1 million. In January 2013, we amended this facility and issued an additional $300 million in asset backed term notes with a weighted average fixed interest rate of 1.46% and a weighted average term of 3 years. (See Note 29 - Subsequent Events).
MSR note
- In connection with an
October 2009
MSR acquisition, we executed a
four
-year note agreement with a GSE. As collateral for this note, we have pledged our rights, title, and interest in the acquired servicing portfolio. The interest rate is based on
LIBOR
plus
2.50%
. The maturity date of this facility is
October 2013
. As of December 31, 2012, the outstanding balance on this note was of $4.6 million.
2012-AW agency advance financing facility
- In
June 2012
, we executed the 2012-AW Agency Advance Financing Facility with a financial institution. This facility has the capacity to borrow up to
$100.0 million
and the interest rate is based on
LIBOR plus a spread of 2.50%
. The maturity date of this facility is
June 2013
. This facility is secured by servicing advance receivables and is nonrecourse to us. As of December 31, 2012, this facility had an outstanding balance of $100.0 million. On January 31, 2013, we terminated this revolving financing receivable and repaid all outstanding balances as of the termination date.
2012-C ABS advance financing facility
- In
June 2012
, we executed the 2012-C ABS Advance Financing Facility with a financial institution. This facility, amended in November 2012, has the capacity to borrow up to
$700.0 million
and the interest rate is based on
LIBOR plus a spread of 3.25% to 4.25%
. The maturity date of this facility is
November 2013
. This facility is secured by servicing advance receivables and is nonrecourse to us. As of December 31, 2012, this facility had an outstanding balance of $657.0 million.
2012-R ABS advance financing facility
- In
June 2012
, we executed the 2012-R ABS Advance Financing Facility with a financial institution. This facility, amended in December 2012, has a borrowing capacity of up to
$400.0 million
and the interest rate is based on
LIBOR plus a spread of 3.37% to 8.00%
. The maturity date of this facility is
June 2014
. This facility is secured by servicing advance receivables and is nonrecourse to us. As of December 31, 2012, this facility had an outstanding balance of $374.7 million.
2012-W ABS advance financing facility
- In
June 2012
, we executed the 2012-W ABS Advance Financing Facility with a financial institution. This facility, amended in December 2012, has the capacity to borrow up to
$500.0 million
and the interest rate is based on
LIBOR plus a spread of 3.75%
. The maturity date of this facility is
June 2013
. This facility is secured by servicing advance receivables and is nonrecourse to us. As of December 31, 2012, this facility had an outstanding balance of $492.2 million.
Reverse participations and max claim buyouts financing facility -
In June 2012, we executed a reverse participations and max claim buyouts financing facility with a financial institution. This facility has capacity to borrow up to
$150 million
and the interest rate is based on
LIBOR
plus a spread of
4.00%
. The maturity date of this facility is June 2014. This facility is partially secured by reverse mortgage loans. As of December 31, 2012, this facility had an outstanding balance of $65.9 million.
MBS advance financing facility (2012)
- In December 2012, we executed a MBS Advance Financing Facility with a financial institution. This facility has the capacity to borrow up to $125.0 million through April 14, 2013, $100.0 million for the period April 15, 2013 through July 14, 2013 and $50.0 million for any date thereafter. The interest rate is LIBOR plus a spread of 3.50%. The maturity date of this facility is January 2014. This facility is secured by servicing advance receivables and is nonrecourse to us. As of December 31, 2012, this facility had no outstanding balance.
Participating Interest Financing
Participating interest financing represent the issuance of pools of Home Equity Conversion Mortgage Backed Securities (HMBS) to third-party security holders which are guaranteed by certain GSEs. We have accounted for the transfer of these advances in the related Home Equity Conversion Mortgages (HECM) loans as secured borrowings, retaining the initial reverse mortgage interests on our consolidated balance sheet, and recording the pooled HMBS as participating interest financing liabilities on our consolidated balance sheet. Monthly cash flows generated from the HECM loans are used to service the HMBS. The interest rate is based on the underlying HMBS rate with a range of
0.53%
to
7.17%
. The participating interest financing was
$580.8 million
at December 31, 2012. There were
none
outstanding at December 31, 2011.
Excess Spread Financing Debt at Fair Value
In conjunction with Nationstar's acquisitions of certain mortgage servicing rights on various pools of residential mortgage loans (the Portfolios), we have entered into sale and assignment agreements which are treated as financings with certain entities formed by Newcastle, in which Newcastle and/or certain funds managed by Fortress own an interest. We, in transactions accounted for as financing arrangements, sold to such entities the right to receive a specified percentage of the excess cash flow generated from the Portfolios after receipt of a fixed basic servicing fee per loan.
We retain all ancillary income associated with servicing the Portfolios and the remaining portion of the excess cash flow after receipt of the fixed basic servicing fee. We continue to be the servicer of the Portfolios and provide all servicing and advancing functions. Such entities have no prior or ongoing obligations associated with the Portfolios.
Contemporaneous with the above, we entered into refinanced loan agreements with such entities. Should we refinance any loan in the Portfolios, subject to certain limitations, we will be required to transfer the new loan or a replacement loan of similar economic characteristics into the Portfolios. The new or replacement loan will be governed by the
same terms set forth in the sale and assignment agreement described above.
The total carrying amount of the outstanding excess spread financing agreements was
$288.1 million
and
$44.6 million
at
December 31, 2012
and 2011, respectively.
Originations
Our Originations Segment’s debt consists of warehouse facilities and our ASAP+ Short-Term Financing Facility.
Warehouse Facilities
Our warehouse facilities are used to finance our loan originations on a short-term basis. In the ordinary course, we originate mortgage loans on a near-daily basis, and we use a combination of our four warehouse facilities and cash to fund the loans. We agree to transfer to our counterparty certain mortgage loans against the transfer of funds by the counterparty, with a simultaneous agreement by the counterparty to transfer the loans back to us at a date certain, or on demand by us, against the transfer of funds from us. We typically renegotiate our warehouse facilities on an annual basis. We sell our newly originated mortgage loans to our counterparty to finance the originations of our mortgage loans and typically repurchase the loans within 30 days of origination when we sell the loans to a GSE or into a government securitization.
$375 million warehouse facility
- In
February 2010
, we executed an MRA with a financial institution which will expire in January 2014. The MRA states that from time to time we may enter into transactions, for an aggregate amount of
$375.0 million
, in which we agree to transfer to the same financial institution certain mortgage loans against the transfer of funds by the same financial institution, with a simultaneous agreement by the same financial institution to transfer such mortgage loans to us at a date certain, or on demand by us, against the transfer of funds by us. In January 2013, we amended the agreement to increase the borrowing capacity from
$375.0 million
to
$750.0 million
. The interest rate is based on
LIBOR
plus a spread ranging from
1.75%
to
2.50%
. As of December 31, 2012, this facility had an outstanding balance of $245.3 million. See Note 29 - Subsequent Events.
$150 million warehouse facility
- We have an MRA with a financial services company, which was amended in
February 2012
to expire in
August 2013
and reduce the committed amount from
$300.0 million
to
$150.0 million
. The facility also has an uncommitted amount of $150 million that can be granted at the discretion of the financial institution. The MRA states that from time to time we may enter into transactions in which we agree to transfer to the financial services company certain mortgage loans or MBS against the transfer of funds by the financial services company, with a simultaneous agreement by the financial services company to transfer such mortgage loans or MBS to us at a certain date, or on demand by us, against the transfer of funds by us. The interest rate is based on
LIBOR
plus a margin of
3.25%
. As of December 31, 2012, this facility had an outstanding balance of $224.8 million.
$250 million warehouse facility (2011)
- In
March 2011
, as amended, we executed an MRA with a financial institution, under which we may enter into transactions, for an aggregate amount of
$750.0 million
in which we agree to transfer to the same financial institution certain mortgage loans and certain securities against the transfer of funds by the same financial institution, with a simultaneous agreement by the same financial institution to transfer such mortgage loans and securities to us at a date certain, or on demand by us, against the transfer of funds by us. The maturity is
August 2013
with the interest rate based on
LIBOR
plus a spread of
2.25%
to
3.00%
, which varies based on the underlying transferred collateral. As of December 31, 2012, this facility had an outstanding balance of $356.1 million.
$100 million warehouse facility (2009)
- In
October 2009
, we executed a MRA with a financial institution. This MRA states that from time to time we may enter into transactions, for an aggregate amount of
$100.0 million
, in which we agree to transfer to the financial institution certain mortgage loans against the transfer of funds by the financial institution, with a simultaneous agreement by the financial institution to transfer such mortgage loans to us at a certain date, or on demand by us, against the transfer of funds by us. The interest rate is based on
LIBOR
plus a spread of
3.25%
. The maturity date of this MRA with the financial institution was extended to March 2013. As of December 31, 2012, this facility had an outstanding balance of $87.7 million.
ASAP + facility
- During 2009, we began executing As Soon As Pooled Plus agreements with a GSE, under which we transfer to the GSE eligible mortgage loans that are to be pooled into the GSE MBS against the transfer of funds by the GSE. The interest rate is based on
LIBOR
plus a spread of
1.50%
. These agreements typically have a maturity of up to
45
days. As of December 31, 2012, this facility had an outstanding balance of $124.6 million.
Legacy Assets and Other
Legacy Asset Term-Funded Notes
In
November 2009
, we completed the securitization of approximately
$222.0 million
of ABS, which was structured as a secured borrowing. This structure resulted in us carrying the securitized loans as mortgages on our consolidated bal
ance sheet and recognizing the asset-backed certificates acquired by third parties as nonrecourse debt, totaling approximately
$100.6 million
and
$112.5 million
at
December 31, 2012
and 2011, respectively. The principal and interest on these notes are paid using the cash flows from the underlying mortgage loans, which serve as collateral for the debt. The interest rate paid on the outstanding securities is
7.50%
, which is subject to an available funds cap. The total outstanding principal balance on the underlying mortgage loans serving as collateral for the debt was approximately
$336.9 million
and
$373.1 million
at
December 31, 2012
and 2011, respectively. Accordingly, the timing of the principal payments on this nonrecourse debt is dependent on the payments received on the underlying mortgage loans. The unpaid principal balance on the outstanding notes was
$117.1 million
and
$130.8 million
at
December 31, 2012
and 2011, respectively.
Variable Interest Entities and Off Balance Sheet Arrangements
See Note 3 - Variable Interest Entities and Securitizations, of the notes of the consolidated financial statements for a summary of Nationstar’s transactions with VIEs and unconsolidated balances details of their impact on our consolidated financial statements.
Derivatives
See Note 11 - Derivative Financial Instruments, of the notes of the consolidated financial statements for a summary of Nationstar’s derivative transactions.
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to a variety of market risks which include interest rate risk, consumer credit risk and counterparty credit risk.
Interest Rate Risk
Changes in interest rates affect our operations primarily as follows:
Servicing Segment
|
|
|
|
•
|
an increase in interest rates would increase our costs of servicing our outstanding debt, including our ability to finance servicing advances;
|
|
|
|
|
•
|
a decrease (increase) in interest rates would generally increase (decrease) prepayment rates and may require us to report a decrease (increase) in the value of our MSRs;
|
|
|
|
|
•
|
a change in prevailing interest rates could impact our earnings from our custodial deposit accounts; and
|
|
|
|
|
•
|
an increase in interest rates could generate an increase in delinquency, default and foreclosure rates resulting in an increase in both operating expenses and interest expense and could cause a reduction in the value of our assets.
|
Originations Segment
|
|
|
|
•
|
a substantial and sustained increase in prevailing interest rates could adversely affect our loan originations volume because refinancing an existing loan would be less attractive and qualifying for a loan may be more difficult; and
|
|
|
|
|
•
|
an increase in interest rates would increase our costs of servicing our outstanding debt, including our ability to finance loan originations;
|
We actively manage the risk profiles of IRLCs and mortgage loans held for sale on a daily basis and enter into forward sales of MBS in an amount equal to the portion of the IRLC expected to close, assuming no change in mortgage interest rates. In addition, to manage the interest rate risk associated with mortgage loans held for sale, we enter into forward sales of MBS to deliver mortgage loan inventory to investors.
Consumer Credit Risk
We sell our loans on a nonrecourse basis. We also provide representations and warranties to purchasers and insurers of the loans sold that typically are in place for the life of the loan. In the event of a breach of these representations and warranties, we may be required to repurchase a mortgage loan or indemnify the purchaser, and any subsequent loss on the mortgage loan may be borne by us. If there is no breach of a representation and warranty provision, we have no obligation to repurchase the loan or indemnify the investor against loss. The outstanding UPB of loans sold by us represents the maximum potential exposure related to representation and warranty provisions.
We maintain a reserve for losses on loans repurchased or indemnified as a result of breaches of representations and warranties on our sold loans. Our estimate is based on our most recent data regarding loan repurchases and indemnity payments, actual credit losses on repurchased loans, recovery history, among other factors. Our assumptions are affected by factors both internal and external in nature. Internal factors include, among other things, level of loan sales, as well as to whom the loans are sold, the expectation of credit loss on repurchases and indemnifications, our success rate at appealing repurchase demands and our ability to recover any losses from third parties. External factors that may affect our estimate include, among other things, the overall economic condition in the housing market, the economic condition of borrowers, the political environment at investor agencies and the overall U.S. and world economy. Many of the factors are beyond our control and may lead to judgments that are susceptible to change.
Counterparty Credit Risk
We are exposed to counterparty credit risk in the event of non-performance by counterparties to various agreements. We monitor the credit ratings of our counterparties and do not anticipate losses due to counterparty non-performance.
Sensitivity Analysis
We assess our market risk based on changes in interest rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact on fair values based on hypothetical changes (increases and decreases) in interest rates.
We use a duration-based model in determining the impact of interest rate shifts on our loan portfolio, certain other interest-bearing liabilities measured at fair value and interest rate derivatives portfolios. The primary assumption used in these models is that an increase or decrease in the benchmark interest rate produces a parallel shift in the yield curve across all maturities.
We utilize a discounted cash flow analysis to determine the fair value of MSRs and the impact of parallel interest rate shifts on MSRs. The primary assumptions in this model are prepayment speeds and market discount rates. However, this analysis ignores the impact of interest rate changes on certain material variables, such as the benefit or detriment on the value of future loan originations, non-parallel shifts in the spread relationships between MBS, swaps and U.S. Treasury rates and changes in primary and secondary mortgage market spreads. For mortgage loans, IRLCs and forward delivery commitments on MBS, we rely on a model in determining the impact of interest rate shifts. In addition, for IRLCs, the borrower’s propensity to close their mortgage loans under the commitment is used as a primary assumption.
Our total market risk is influenced by a wide variety of factors including market volatility and the liquidity of the markets. There are certain limitations inherent in the sensitivity analysis presented, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.
We used December 31, 2012 market rates on our instruments to perform the sensitivity analysis. The estimates are based on the market risk sensitive portfolios described in the preceding paragraphs and assume instantaneous, parallel shifts in interest rate yield curves. These sensitivities are hypothetical and presented for illustrative purposes only. Changes in fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in fair value may not be linear.
The following table summarizes the estimated change in the fair value of our assets and liabilities sensitive to interest rates as of December 31, 2012 given hypothetical instantaneous parallel shifts in the yield curve:
|
|
|
|
|
|
|
|
|
|
|
|
Change in Fair Value
|
December 31, 2012
|
|
(in thousands)
|
Down 25 bps
|
|
Up 25 bps
|
|
Increase (decrease) in assets
|
|
|
|
|
Mortgage loans held for sale
|
$
|
14,490
|
|
|
$
|
(17,010
|
)
|
|
Mortgage servicing rights – fair value
|
(3,922
|
)
|
|
4,638
|
|
|
Other assets (derivatives)
|
|
|
|
|
Interest Rate Lock Commitments
|
20,042
|
|
|
(27,241
|
)
|
|
Total change in assets
|
30,610
|
|
|
(39,613
|
)
|
|
Increase (decrease) in liabilities
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
Interest rate swaps and caps
|
(1,579
|
)
|
|
1,572
|
|
|
Forward MBS trades
|
41,737
|
|
|
(50,093
|
)
|
|
Excess spread financing (at fair value)
|
(720
|
)
|
|
853
|
|
|
Total change in liabilities
|
39,438
|
|
|
(47,668
|
)
|
|
Total, net change
|
$
|
(8,828
|
)
|
|
$
|
8,055
|
|
Item 8.
Financial Statements and Supplementary Data
Index to Consolidated Financial Statements:
Management’s Report
Our management is responsible for the integrity and objectivity of the information contained in this document. Management is responsible for the consistency of reporting this information and for ensuring that accounting principles generally accepted in the United States of America are used.
In discharging this responsibility, management maintains a comprehensive system of internal controls and supports an extensive program of internal audits, has made organizational arrangements providing appropriate divisions of responsibility and has established communication programs aimed at assuring that its policies, procedures and principles of business conduct are understood and practiced by its employees.
The consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flow for the years ending December 31, 2012, 2011, and 2010, as well as the related balance sheets as of December 31, 2012 and 2011 included in this document have been audited by Ernst and Young LLP, an independent registered public accounting firm. All audits were conducted using standards of the Public Company Accounting Oversight Board (United States) and the independent registered public accounting firms’ reports are included herein.
/s/ Jay Bray
Chief Executive Officer
March 15, 2013
/s/ David Hisey
Chief Financial Officer
March 15, 2013
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Nationstar Mortgage Holdings Inc.
We have audited the accompanying consolidated balance sheets of Nationstar Mortgage Holdings Inc. and subsidiaries (the Company) as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Nationstar Mortgage Holdings Inc. and subsidiaries at December 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Dallas, Texas
March 15, 2013
Consolidated Financial Statements
NATIONSTAR MORTGAGE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
December 31,
2011
|
|
Assets
|
|
|
Cash and cash equivalents
|
$
|
152,649
|
|
|
$
|
62,445
|
|
|
Restricted cash
|
393,190
|
|
|
71,499
|
|
|
Accounts receivable
|
3,043,606
|
|
|
562,300
|
|
|
Mortgage loans held for sale
|
1,480,537
|
|
|
458,626
|
|
|
Mortgage loans held for investment, subject to nonrecourse debt - Legacy Assets, net of allowance for loan losses of $4,390 and $5,824, respectively
|
238,907
|
|
|
243,480
|
|
|
Reverse mortgage interests
|
750,273
|
|
|
—
|
|
|
Receivables from affiliates
|
12,604
|
|
|
4,609
|
|
|
Mortgage servicing rights – fair value
|
635,860
|
|
|
251,050
|
|
|
Mortgage servicing rights – amortized cost
|
10,973
|
|
|
—
|
|
|
Property and equipment, net of accumulated depreciation of $48,806 and $39,201, respectively
|
75,026
|
|
|
24,073
|
|
|
Real estate owned (REO), net
|
10,467
|
|
|
3,668
|
|
|
Other assets
|
322,051
|
|
|
106,181
|
|
|
Total assets
|
$
|
7,126,143
|
|
|
$
|
1,787,931
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
Notes payable
|
$
|
3,601,586
|
|
|
$
|
873,179
|
|
|
Unsecured senior notes
|
1,062,635
|
|
|
280,199
|
|
|
Payables and accrued liabilities
|
631,431
|
|
|
183,789
|
|
|
Derivative financial instruments
|
20,026
|
|
|
12,370
|
|
|
Mortgage servicing liabilities
|
83,238
|
|
|
—
|
|
|
Nonrecourse debt - Legacy Assets
|
100,620
|
|
|
112,490
|
|
|
Excess spread financing - fair value
|
288,089
|
|
|
44,595
|
|
|
Participating interest financing
|
580,836
|
|
|
—
|
|
|
Total liabilities
|
6,368,461
|
|
|
1,506,622
|
|
|
Commitments and contingencies – See Note 21
|
—
|
|
|
—
|
|
|
Members’ units related to Nationstar Mortgage LLC
|
—
|
|
|
281,309
|
|
|
Preferred stock at $0.01 par value - 300,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
|
Common stock at $0.01 par value - 1,000,000 shares authorized, 90,480 shares issued at December 31, 2012
|
905
|
|
|
—
|
|
|
Additional paid-in-capital
|
556,056
|
|
|
—
|
|
|
Retained earnings
|
205,287
|
|
|
—
|
|
|
Common shares held by subsidiary
|
(4,566
|
)
|
|
—
|
|
|
Total equity
|
757,682
|
|
|
281,309
|
|
|
Total liabilities and equity
|
$
|
7,126,143
|
|
|
$
|
1,787,931
|
|
See accompanying notes to the consolidated financial statements.
NATIONSTAR MORTGAGE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(amounts in thousands, except earnings per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
Revenues:
|
|
|
|
|
|
|
|
Servicing fee income
|
|
$
|
462,495
|
|
|
$
|
233,411
|
|
|
$
|
167,126
|
|
|
Other fee income
|
|
34,656
|
|
|
35,294
|
|
|
16,958
|
|
|
Total fee income
|
|
497,151
|
|
|
268,705
|
|
|
184,084
|
|
|
Gain on mortgage loans held for sale
|
|
487,164
|
|
|
109,136
|
|
|
77,344
|
|
|
Total revenues
|
|
984,315
|
|
|
377,841
|
|
|
261,428
|
|
|
Expenses and impairments:
|
|
|
|
|
|
|
|
Salaries, wages and benefits
|
|
358,455
|
|
|
202,290
|
|
|
149,115
|
|
|
General and administrative
|
|
201,587
|
|
|
82,183
|
|
|
58,913
|
|
|
Provision for loan losses
|
|
2,353
|
|
|
3,537
|
|
|
3,298
|
|
|
Loss on foreclosed real estate and other
|
|
2,864
|
|
|
6,833
|
|
|
205
|
|
|
Occupancy
|
|
16,786
|
|
|
11,340
|
|
|
9,445
|
|
|
Total expenses and impairments
|
|
582,045
|
|
|
306,183
|
|
|
220,976
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
Interest income
|
|
71,586
|
|
|
66,802
|
|
|
98,895
|
|
|
Interest expense
|
|
(197,308
|
)
|
|
(105,375
|
)
|
|
(116,163
|
)
|
|
Contract termination fees
|
|
15,600
|
|
|
—
|
|
|
—
|
|
|
Loss on equity method investments
|
|
(14,571
|
)
|
|
(107
|
)
|
|
—
|
|
|
Gain/(loss) on interest rate swaps and caps
|
|
(994
|
)
|
|
298
|
|
|
(9,801
|
)
|
|
Fair value changes in ABS securitizations
|
|
—
|
|
|
(12,389
|
)
|
|
(23,297
|
)
|
|
Total other (expense)
|
|
(125,687
|
)
|
|
(50,771
|
)
|
|
(50,366
|
)
|
|
Income (loss) before taxes
|
|
276,583
|
|
|
20,887
|
|
|
(9,914
|
)
|
|
Income tax expense
|
|
71,296
|
|
|
—
|
|
|
—
|
|
|
Net income / (loss)
|
|
205,287
|
|
|
20,887
|
|
|
(9,914
|
)
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
Change in value of designated cash flow hedges
|
|
—
|
|
|
(1,071
|
)
|
|
1,071
|
|
|
Comprehensive income (loss)
|
|
$
|
205,287
|
|
|
$
|
19,816
|
|
|
$
|
(8,843
|
)
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
2.41
|
|
|
$
|
0.30
|
|
|
$
|
(0.14
|
)
|
|
Diluted earnings (loss) per share
|
|
$
|
2.40
|
|
|
$
|
0.30
|
|
|
$
|
(0.14
|
)
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
Basic
|
|
85,328
|
|
|
70,000
|
|
|
70,000
|
|
|
Dilutive effect of stock awards
|
|
196
|
|
|
—
|
|
|
—
|
|
|
Diluted
|
|
85,524
|
|
|
70,000
|
|
|
70,000
|
|
|
Dividends declared per share
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
See accompanying notes to the consolidated financial statements.
NATIONSTAR MORTGAGE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares Outstanding
|
|
Members’
Units
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Other
Comprehensive Loss
|
|
Retained Earnings
|
|
Common shares held by subsidiary
|
|
Total
Stockholders’
Units and Equity
|
|
Balance at December 31, 2009
|
—
|
|
|
$
|
263,823
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
263,823
|
|
|
Cumulative effect of change in accounting principles as of January 1, 2010 related to adoption of new accounting guidance on consolidation of variable interest entities
|
—
|
|
|
(8,068
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,068
|
)
|
|
Share based compensation
|
—
|
|
|
12,856
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,856
|
|
|
Tax related share-based settlement of units by members
|
—
|
|
|
(3,396
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,396
|
)
|
|
Net Loss
|
—
|
|
|
(9,914
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,914
|
)
|
|
Change in value of cash flow hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,071
|
|
|
—
|
|
|
—
|
|
|
1,071
|
|
|
Balance at December 31, 2010
|
—
|
|
|
255,301
|
|
|
—
|
|
|
—
|
|
|
1,071
|
|
|
—
|
|
|
—
|
|
|
256,372
|
|
|
Share-based compensation
|
—
|
|
|
14,815
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,815
|
|
|
Distributions to parent
|
—
|
|
|
(4,348
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,348
|
)
|
|
Tax related share-based settlement of units by members
|
—
|
|
|
(5,346
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,346
|
)
|
|
Net income
|
—
|
|
|
20,887
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,887
|
|
|
Change in value of cash flow hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,071
|
)
|
|
—
|
|
|
—
|
|
|
(1,071
|
)
|
|
Balance at December 31, 2011
|
—
|
|
|
281,309
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
281,309
|
|
|
Contributions from parent – FIF HE
|
—
|
|
|
12,764
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,764
|
|
|
LLC conversion of equity to common shares
|
70,000
|
|
|
(294,073
|
)
|
|
700
|
|
|
293,373
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Common stock issuance
|
19,167
|
|
|
—
|
|
|
192
|
|
|
246,508
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
246,700
|
|
|
Shares issued under incentive plan
|
1,293
|
|
|
—
|
|
|
13
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
13,342
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,342
|
|
|
Excess tax benefit from share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
2,846
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,846
|
|
|
Withholding tax related to share based settlement of common stock by management
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,566
|
)
|
|
(4,566
|
)
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
205,287
|
|
|
—
|
|
|
205,287
|
|
|
Balance at December 31, 2012
|
90,460
|
|
|
$
|
—
|
|
|
$
|
905
|
|
|
$
|
556,056
|
|
|
$
|
—
|
|
|
$
|
205,287
|
|
|
$
|
(4,566
|
)
|
|
$
|
757,682
|
|
See accompanying notes to the consolidated financial statements.
NATIONSTAR MORTGAGE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
|
|
|
2012
|
|
2011
|
|
2010
|
|
Operating activities
|
|
|
|
|
|
|
Net income / (loss)
|
$
|
205,287
|
|
|
$
|
20,887
|
|
|
$
|
(9,914
|
)
|
|
Adjustments to reconcile net income / (loss) to net cash used in operating activities:
|
|
|
|
|
|
|
Share-based compensation
|
13,342
|
|
|
14,815
|
|
|
12,856
|
|
|
Gain on mortgage loans held for sale
|
(487,164
|
)
|
|
(109,136
|
)
|
|
(77,344
|
)
|
|
Provision for loan losses
|
2,353
|
|
|
3,537
|
|
|
3,298
|
|
|
Loss on foreclosed real estate
|
2,864
|
|
|
6,833
|
|
|
205
|
|
|
Loss on equity method investments
|
14,571
|
|
|
107
|
|
|
—
|
|
|
(Gain) / loss on derivatives including ineffectiveness on interest rate swaps and caps
|
994
|
|
|
(2,331
|
)
|
|
8,872
|
|
|
Fair value changes in ABS securitizations
|
—
|
|
|
12,389
|
|
|
23,297
|
|
|
Fair value changes in excess spread financing
|
10,683
|
|
|
3,060
|
|
|
—
|
|
|
Depreciation and amortization
|
9,620
|
|
|
4,063
|
|
|
2,117
|
|
|
Fair value changes in mortgage servicing rights
|
68,242
|
|
|
39,000
|
|
|
6,043
|
|
|
Amortization/accretion of mortgage servicing rights at amortized cost
|
(5,120
|
)
|
|
—
|
|
|
—
|
|
|
Amortization of debt discount
|
25,385
|
|
|
13,331
|
|
|
18,731
|
|
|
Amortization (accretion) of premiums/discounts
|
(15,750
|
)
|
|
(5,042
|
)
|
|
(4,526
|
)
|
|
Mortgage loans originated and purchased, net of fees
|
(7,904,052
|
)
|
|
(3,412,185
|
)
|
|
(2,791,639
|
)
|
|
Cost of loans sold and principal payments and prepayments, and other changes in mortgage loans originated as held for sale, net of fees
|
7,197,722
|
|
|
3,403,437
|
|
|
2,653,943
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable, net
|
(752,507
|
)
|
|
(83,133
|
)
|
|
41,148
|
|
|
Net tax effect of stock grants issued
|
(2,846
|
)
|
|
—
|
|
|
—
|
|
|
Receivables from affiliates
|
1,350
|
|
|
4,384
|
|
|
3,958
|
|
|
Reverse funded advances
|
(608,085
|
)
|
|
—
|
|
|
—
|
|
|
Other assets
|
(34,306
|
)
|
|
(44,576
|
)
|
|
(861
|
)
|
|
Payables and accrued liabilities
|
299,301
|
|
|
101,657
|
|
|
8,163
|
|
|
Net cash used in operating activities
|
(1,958,116
|
)
|
|
(28,903
|
)
|
|
(101,653
|
)
|
Continued on following page.
NATIONSTAR MORTGAGE HOLDINGS INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
|
|
|
2012
|
|
2011
|
|
2010
|
|
Investing activities
|
|
|
|
|
|
|
Principal payments received and other changes on mortgage loans held for investment, subject to ABS nonrecourse debt
|
—
|
|
|
40,000
|
|
|
48,838
|
|
|
Property and equipment additions, net of disposals
|
(25,356
|
)
|
|
(19,742
|
)
|
|
(3,936
|
)
|
|
Acquisition of equity method investee
|
—
|
|
|
(6,600
|
)
|
|
—
|
|
|
Deposits on reverse mortgage servicing rights, net
|
(37,911
|
)
|
|
(26,893
|
)
|
|
—
|
|
|
Deposits on / purchase of forward mortgage servicing rights, net of liabilities incurred
|
(2,070,375
|
)
|
|
(96,467
|
)
|
|
(17,812
|
)
|
|
Loan repurchases from Ginnie Mae
|
(24,329
|
)
|
|
—
|
|
|
—
|
|
|
Proceeds from sales of REO
|
679
|
|
|
27,823
|
|
|
74,107
|
|
|
Net cash (used in) / provided by investing activities
|
(2,157,292
|
)
|
|
(81,879
|
)
|
|
101,197
|
|
|
Financing activities
|
|
|
|
|
|
|
Issuance of Senior Unsecured Notes, net
|
770,699
|
|
|
35,166
|
|
|
243,013
|
|
|
Transfers (to) / from restricted cash, net
|
(321,691
|
)
|
|
16,812
|
|
|
(33,731
|
)
|
|
Issuance of common stock, net of IPO issuance costs
|
246,700
|
|
|
—
|
|
|
—
|
|
|
Issuance of participating interest financing
|
582,897
|
|
|
—
|
|
|
—
|
|
|
Issuance of excess spread financing
|
272,617
|
|
|
40,492
|
|
|
—
|
|
|
Increase in notes payable
|
2,728,407
|
|
|
163,421
|
|
|
(62,099
|
)
|
|
Repayment of nonrecourse debt – Legacy assets
|
(13,785
|
)
|
|
(30,433
|
)
|
|
(45,364
|
)
|
|
Repayment of ABS nonrecourse debt
|
—
|
|
|
(58,091
|
)
|
|
(103,466
|
)
|
|
Repayment of excess servicing spread financing
|
(39,865
|
)
|
|
(2,207
|
)
|
|
—
|
|
|
Distributions to parent – FIF
|
—
|
|
|
(4,348
|
)
|
|
—
|
|
|
Net tax benefit for stock grants issued
|
2,846
|
|
|
—
|
|
|
—
|
|
|
Debt financing costs
|
(23,213
|
)
|
|
(3,462
|
)
|
|
(14,923
|
)
|
|
Tax related share-based settlement of units by members
|
—
|
|
|
(5,346
|
)
|
|
(3,396
|
)
|
|
Net cash provided by / (used in) financing activities
|
4,205,612
|
|
|
152,004
|
|
|
(19,966
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
90,204
|
|
|
41,222
|
|
|
(20,422
|
)
|
|
Cash and cash equivalents at beginning of period
|
62,445
|
|
|
21,223
|
|
|
41,645
|
|
|
Cash and cash equivalents at end of period
|
$
|
152,649
|
|
|
$
|
62,445
|
|
|
$
|
21,223
|
|
|
Supplemental disclosures of non-cash activities
|
|
|
|
|
|
|
Transfer of mortgage loans held for sale to REO at fair value
|
$
|
—
|
|
|
$
|
90
|
|
|
$
|
352
|
|
|
Transfer of mortgage loans held for investment to REO at fair value
|
4,295
|
|
|
6,291
|
|
|
18,928
|
|
|
Transfer of mortgage loans held for investment, subject to ABS nonrecourse debt to REO at fair value
|
—
|
|
|
17,528
|
|
|
37,127
|
|
|
Change in value of cash flow hedge–accumulated other comprehensive income
|
—
|
|
|
(1,071
|
)
|
|
1,071
|
|
|
Mortgage servicing rights resulting from sale or securitization of mortgage loans
|
58,607
|
|
|
36,474
|
|
|
26,253
|
|
|
Tax related share-based settlement of common stock
|
4,566
|
|
|
—
|
|
|
—
|
|
|
Liabilities incurred from purchase of forward mortgage servicing rights
|
48,146
|
|
|
6,333
|
|
|
—
|
|
See accompanying notes to the consolidated financial statements.
NATIONSTAR MORTGAGE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, unless otherwise stated)
1. Nature of Business, Corporate Reorganization, Basis of Presentation and Material Transaction During 2012
Nature of Business
Nationstar Mortgage Holdings Inc. (Nationstar Inc. or the Company) is a Delaware corporation. Nationstar Inc. is a holding company that conducts no operating activities and owns no significant assets other than through its interests in its subsidiaries. Through its subsidiaries, Nationstar Inc. is engaged primarily in the servicing of residential mortgage loans for others and the origination and selling or securitization of single-family conforming mortgage loans to government-sponsored entities (GSE) or other third-party investors in the secondary market. Nationstar Mortgage LLC (Nationstar), the Company's principal operating subsidiary, is one of the largest high touch non-bank servicers in the United States.
Corporate Reorganization
On February 24, 2012, the Company filed a registration statement on Form S-1, for the offering of
19,166,667
shares of its common stock. The registration statement became effective on March 7, 2012. Under the terms of the offering, all of the equity interests in the Company transferred from FIF HE Holdings LLC to
two
direct, wholly-owned subsidiaries and the Company issued
19,166,667
shares of
$0.01
par value common stock at an initial offering price of
$14.00
per share. The offering transformed the Company into a publicly-traded company.
In conjunction with the initial public offering of Nationstar Inc., in March 2012 Nationstar became a wholly-owned indirect subsidiary of Nationstar Inc. Prior to the reorganization and initial public offering (Reorganization), Nationstar was a wholly-owned subsidiary of FIF HE Holdings LLC (FIF), a subsidiary of Fortress Private Equity Funds III and IV (Fortress). Nationstar Inc. was formed solely for the purpose of reorganizing the structure of FIF and Nationstar so that the common stock issuer was a corporation rather than a limited liability company. As such, investors own common stock rather than equity interests in a limited liability company. Upon completion of the initial public offering and Reorganization, all of the equity interests in Nationstar were transferred from FIF to
two
direct wholly-owned subsidiaries of Nationstar Inc. In conjunction with the Reorganization, FIF contributed certain assets to Nationstar. The Reorganization has been accounted for as a reorganization under common control and, accordingly, there was no change in the basis of the assets and liabilities. As part of the Reorganization, FIF exchanged its equity in Nationstar for
70,000,000
shares of common stock in Nationstar Inc.
Basis of Presentation
The consolidated financial statements include the accounts of Nationstar Inc. and its wholly-owned subsidiaries and those variable interest entities (VIEs) where Nationstar Inc.'s wholly-owned subsidiaries are the primary beneficiaries. Nationstar Inc. applies the equity method of accounting to investments when the entity is not a VIE and Nationstar Inc. is able to exercise significant influence, but not control, over the policies and procedures of the entity but owns less than 50% of the voting interests. Intercompany balances and transactions have been eliminated. Results of operations, assets and liabilities of VIEs are included from the date that Nationstar Inc. became the primary beneficiary through the date Nationstar Inc. ceases to be the primary beneficiary. Nationstar Inc. evaluated subsequent events through the date these consolidated financial statements were issued.
Material Transaction During 2012
On March 6, 2012, Nationstar entered into an asset purchase agreement with Aurora Bank FSB and Aurora Loan Services LLC, (collectively Aurora). Nationstar and Aurora closed the asset purchase in June 2012. Nationstar paid Aurora approximately
$2.0 billion
that included mortgage servicing rights of approximately
$271.5 million
and servicing advance receivables of approximately
$1.7 billion
. As a part of the asset purchase, certain other assets and liabilities were also acquired. The mortgage servicing rights relate to approximately
300,000
residential mortgage loans with an unpaid principal balance (UPB) of approximately
$63 billion
. As of the closing date, Nationstar entered into certain financing arrangements amounting to approximately
$1.3 billion
for the servicing advance receivables and
$176.5 million
for excess spread financing related to the mortgage servicing rights. The remainder of the purchase price was funded with Nationstar cash.
2. Significant Accounting Policies
Use of Estimates in Preparation of Consolidated Financial Statements
The accompanying consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States (GAAP). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates due to factors such as adverse changes in the economy, increases in interest rates, changes in prepayment assumptions, declines in home prices or discrete events adversely affecting specific borrowers, and such differences could be material.
Reclassification Adjustments
Certain prior-period amounts have been reclassified to conform to the current-period presentation.
Cash and Cash Equivalents
Cash and cash equivalents include unrestricted cash on hand and other highly liquid investments having an original maturity of less than three months.
Restricted Cash
Restricted cash consists of certain custodial accounts related to Nationstar’s portfolio securitizations or to collections on certain mortgage loans and mortgage loan advances that have been pledged to various advance financing facilities under master repurchase agreements. Restricted cash also includes certain fees collected on mortgage loan payments that are required to be remitted to a GSE to settle outstanding guarantee fee requirements.
Accounts Receivable
Accounts receivable consists primarily of accrued interest receivable on mortgage loans and securitizations, collateral deposits on surety bonds and advances made to nonconsolidated securitization trusts, as required under various servicing agreements related to delinquent loans, which are ultimately repaid from the securitization trusts.
When Nationstar has determined that, based on all available information, it is probable that a loss has been incurred, and that all contractual amounts due will not be recovered, an impairment is recognized through the recording of a valuation allowance. Any changes to the valuation allowance are recorded through general and administrative expenses.
Occasionally, Nationstar may acquire servicer advances in conjunction with the acquisition of mortgage servicing rights. Acquired servicer advances are recorded at their relative fair value amounts on the acquisition date, and any recorded discounts are accreted into interest income on a cost recovery method as the related servicer advances are recovered either through repayment from the borrower, liquidation of the underlying mortgage loans, or through a modification and recovery of the outstanding servicer advance balance from the securitization trust.
Mortgage Loans Held for Sale
Nationstar maintains a strategy of originating mortgage loan products primarily for the purpose of selling to GSEs or other third party investors in the secondary market. Generally, all newly originated mortgage loans held for sale are delivered to third party purchasers or securitized within three months after origination.
Nationstar has elected to measure newly originated prime residential mortgage loans held for sale at fair value, as permitted under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 825,
Financial Instruments
. Nationstar estimates fair value by evaluating a variety of market indicators, including recent trades and outstanding commitments, calculated on an aggregate basis (see Note 17 – Fair Value Measurements). In connection with Nationstar’s election to measure mortgage loans held for sale at fair value, Nationstar is not permitted to defer the loan originations fees, net of direct loan originations costs associated with these loans.
Mortgage Loans Held for Investment, Subject to Nonrecourse Debt – Legacy Assets, Net
Mortgage loans held for investment, subject to nonrecourse debt – Legacy Assets principally consist of nonconforming or subprime mortgage loans securitized which serve as collateral for the issued debt. These loans were transferred in 2009 from mortgage loans held for sale at fair value on the transfer date, as determined by the present value of expected future cash flows, with no valuation allowance recorded. The difference between the undiscounted cash flows expected and the investment in the loan is recognized as interest income on a level-yield method over the life of the loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at transfer are not recognized as a yield adjustment or as a loss accrual or a valuation allowance. Increases in expected cash flows subsequent to the transfer are recognized
prospectively through adjustment of the yield on the loans over the remaining life. Decreases in expected cash flows subsequent to transfer are recognized as a valuation allowance.
Allowance for Loan Losses on Mortgage Loans Held for Investment
An allowance for loan losses is established by recording a provision for loan losses in the consolidated statement of operations when management believes a loss has occurred on a loan held for investment. When management determines that a loan held for investment is partially or fully uncollectible, the estimated loss is charged against the allowance for loan losses. Recoveries on losses previously charged to the allowance are credited to the allowance at the time the recovery is collected.
Nationstar accounts for the loans that were transferred to held for investment from held for sale during 2009 in a manner similar to ASC 310-30,
Loans and Debt Securities Acquired with Deteriorated Credit Quality
. At the date of transfer, management evaluated such loans to determine whether there was evidence of deterioration of credit quality since acquisition and if it was probable that Nationstar would be unable to collect all amounts due according to the loan’s contractual terms. The transferred loans were aggregated into separate pools of loans based on common risk characteristics (loan delinquency). Nationstar considers expected prepayments, and estimates the amount and timing of undiscounted expected principal, interest, and other cash flows for each aggregated pool of loans. The determination of expected cash flows utilizes internal inputs such as prepayment speeds and credit losses. These internal inputs require the use of judgment and can have a significant impact on the accretion of income and/or valuation allowance. Nationstar determines the excess of the pool’s scheduled contractual principal and contractual interest payments over all cash flows expected as of the transfer date as an amount that should not be accreted (nonaccretable difference). The remaining amount is accreted into interest income over the remaining life of the pool of loans (accretable yield).
Over the life of the transferred loans, management continues to estimate cash flows expected to be collected. Nationstar evaluates at the balance sheet date whether the present value of the loans determined using the effective interest rates has decreased, and if so, records an allowance for loan loss. The present value of any subsequent increase in the transferred loans cash flows expected to be collected is used first to reverse any existing allowance for loan loss related to such loans. Any remaining increase in cash flows expected to be collected is used to adjust the amount of accretable yield recognized on a prospective basis over the remaining life of the loans.
Nationstar accounts for its allowance for loan losses for all other mortgage loans held for investment in accordance with ASC 450-20,
Loss Contingencies
. The allowance for loan losses represents management’s best estimate of probable losses inherent in the loans held for investment portfolio. The mortgage loans held for investment portfolio is comprised primarily of large groups of homogeneous residential mortgage loans. These loans are evaluated based on the loan’s present delinquency status. The estimate of probable losses on these loans considers the rate of default of the loans and the amount of loss in the event of default. The rate of default is based on historical experience related to the migration of these from each delinquency category to default over a twelve month period. The entire allowance is available to absorb probable credit losses from the entire held for investment portfolio.
Mortgage Loans Held for Investment, Subject to ABS Nonrecourse Debt, Net
Effective January 1, 2010, new accounting guidance eliminated the concept of a Qualifying Special Purpose Entity (QSPE) and all existing securitization trusts are considered VIEs and are subject to consolidation guidance provided in ASC 810. Upon consolidation of any VIEs, Nationstar recognized the securitized mortgage loans related to these securitization trusts as mortgage loans held for investment, subject to ABS nonrecourse debt (see Note 3 – Variable Interest Entities and Securitizations). Additionally, Nationstar elected the fair value option provided for by ASC 825-10.
In December 2011, Nationstar sold its remaining variable interest in a securitization trust that has been a consolidated VIE since January 1, 2010 and deconsolidated the VIE. Upon deconsolidation of this VIE, Nationstar derecognized the securitized mortgage loans held for investment, subject to ABS nonrecourse debt, the related ABS nonrecourse debt, as well as certain other assets and liabilities of the securitization trust, and recognized any mortgage servicing rights on the consolidated balance sheet.
Reverse Mortgage Interests
Reverse mortgages (known as Home Equity Conversion Mortgages or HECMs) provide seniors (
62
and older) with a loan secured by their home. During 2012, Nationstar acquired reverse mortgage servicing rights and funded but unsecuritized advances from third-parties. Nationstar recorded the assets acquired and obligations assumed at relative fair value on the acquisition date, which included the funded advances and a servicing asset or liability, net of cash paid or received. Any premium or discount associated with the recording of the funded advances is accreted into interest income as the underlying HECMs are liquidated.
As part of the acquisition of the reverse mortgage servicing rights, Nationstar is obligated in its capacity as servicer to fund future borrower advances, which include fees paid to taxing authorities for borrowers' unpaid taxes and insurance, mortgage insurance premiums and payments made to borrowers for line of credit draws on reverse mortgages. In addition, Nationstar capitalizes the servicing fees it earns for servicing the reverse mortgage interests. All advances funded by Nationstar and the acquired funded advances are recorded as reverse mortgage interests on the Company's consolidated balance sheet. Nationstar includes the cash outflow from funding these advances as operating activities and the securitization cash inflow as a financing activity in the consolidated statement of cash flows.
Nationstar periodically securitizes certain of these funded advances through issuance of Home Equity Conversion Mortgage Backed Securities (HMBS) to third-party security holders which are guaranteed by certain GSEs. These transfers of funded advances into HMBS are accounted for as secured borrowings with the HMBS presented as participating interest financing on the Company's consolidated balance sheet.
Nationstar receives a monthly servicing fee, which is recorded as either interest income or servicing fee income on the consolidated statement of operations and comprehensive income (loss) based upon if the related advance was either funded by or acquired by Nationstar. Interest income is accrued monthly based upon the borrower interest rate applied to the HECM outstanding principal balance of reverse mortgage interests. Interest income and other unpaid taxes and fees are capitalized as part of the outstanding principal balance. Interest expense on the participating interest financing is accrued monthly based upon the underlying HMBS rates and is recorded to interest expense in the consolidated statement of operations and comprehensive income (loss).
When Nationstar determines that a loss on the advance balance is probable and that the carrying balance may be partially or fully uncollectible, an allowance for loan loss is established by recording a provision for loan losses in the consolidated statement of operations and comprehensive income (loss).
Receivables from Affiliates
Nationstar engages in periodic transactions with Nationstar Regular Holdings, Ltd., a subsidiary of FIF. These transactions typically involve the monthly payment of principal and interest advances that are required to be remitted to the securitization trusts as required under various Pooling and Servicing Agreements. These amounts are later repaid to Nationstar when principal and interest advances are recovered from the respective borrowers.
Mortgage Servicing Rights (MSRs)
Nationstar recognizes MSRs related to all existing residential mortgage loans transferred to a third party in a transfer that meets the requirements for sale accounting and for which the servicing rights are retained. Additionally, Nationstar may acquire the rights to service residential mortgage loans that do not relate to assets transferred by Nationstar through the purchase of these rights from third parties.
Nationstar identifies MSRs related to all existing forward residential mortgage loans transferred to a third party in a transfer that meets the requirements for sale accounting or through the acquisition of rights to service forward residential mortgage loans that do not relate to assets transferred by Nationstar through the purchase of these rights from third parties as a class of MSR. Nationstar applies fair value accounting to this class of MSRs, with all changes in fair value recorded as charges or credits to servicing fee income in accordance with ASC 860-50,
Servicing Assets and Liabilities
.
Additionally in 2012, Nationstar acquired servicing rights for reverse mortgage loans. For this class of servicing rights, Nationstar applies the amortization method (i.e., lower of cost or market) with the capitalized cost of the MSRs amortized in proportion and over the period of the estimated net future servicing income and recognized as an adjustment to servicing fee income. The expected period of the estimated net servicing income is based, in part, on the expected prepayment period of the underlying reverse mortgages. This class of MSRs is periodically evaluated for impairment. For purposes of measuring impairment, MSRs will be stratified based on predominant risk characteristics of the underlying serviced loans. These risk characteristics include loan type (fixed or adjustable rate), term and interest rate. Impairment, if any, represents the excess of amortized cost of an individual stratum over its estimated fair value and is recognized through a valuation allowance.
Property and Equipment, Net
Property and equipment, net is comprised of land, building, furniture, fixtures, leasehold improvements, computer software, and computer hardware. These assets are stated at cost less accumulated depreciation. Repairs and maintenance are expensed as incurred. Depreciation, which includes depreciation and amortization on capital leases, is recorded using the straight-line method over the estimated useful lives of the related assets. Cost and accumulated depreciation applicable to assets retired or sold are eliminated from the accounts, and any resulting gains or losses are recognized at such time through a charge or credit to general and administrative expenses.
Real Estate Owned (REO), Net
Nationstar holds REO as a result of foreclosures on delinquent mortgage loans. REO is recorded at estimated fair value less costs to sell at the date of foreclosure. Any subsequent declines in fair value are credited to a valuation allowance and charged to operations as incurred.
Variable Interest Entities (VIE)
Nationstar has been the transferor in connection with a number of securitizations or asset-backed financing arrangements, from which Nationstar has continuing involvement with the underlying transferred financial assets. Nationstar aggregates these securitizations or asset-backed financing arrangements into two groups: 1) securitizations of residential mortgage loans that were accounted for as sales and 2) financings accounted for as secured borrowings.
On securitizations of residential mortgage loans, Nationstar’s continuing involvement typically includes acting as servicer for the mortgage loans held by the trust and holding beneficial interests in the trust. Nationstar’s responsibilities as servicer include, among other things, collecting monthly payments, maintaining escrow accounts, providing periodic reports and managing insurance in exchange for a contractually specified servicing fee. The beneficial interests held consist of both subordinate and residual securities that were retained at the time of the securitization. Prior to January 1, 2010, each of these securitization trusts was considered QSPEs, and these trusts were excluded from Nationstar’s consolidated financial statements.
Nationstar also maintains various agreements with special purpose entities (SPEs), under which Nationstar transfers mortgage loans and/or advances on residential mortgage loans in exchange for cash. These SPEs issue debt supported by collections on the transferred mortgage loans and/or advances. These transfers do not qualify for sale treatment because Nationstar continues to retain control over the transferred assets. As a result, Nationstar accounts for these transfers as financings and continues to carry the transferred assets and recognizes the related liabilities on Nationstar’s consolidated balance sheets. Collections on the mortgage loans and/or advances pledged to the SPEs are used to repay principal and interest and to pay the expenses of the entity. The holders of these beneficial interests issued by these SPEs do not have recourse to Nationstar and can only look to the assets of the SPEs themselves for satisfaction of the debt.
Effective January 1, 2010, accounting guidance eliminated the concept of a QSPE and all existing SPEs were subject to consolidation guidance. Upon adoption of this accounting guidance, Nationstar identified certain securitization trusts where Nationstar, or through its affiliates, continued to hold beneficial interests in these trusts. These retained beneficial interests obligate Nationstar to absorb losses of the VIE that could potentially be significant to the VIE, or affords Nationstar the right to receive benefits from the VIE that could potentially be significant. In addition, Nationstar as Master Servicer on the related mortgage loans, retains the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE. When it is determined that Nationstar has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE, the assets and liabilities of these VIEs are included in Nationstar’s consolidated financial statements. Upon consolidation of these VIEs, Nationstar derecognized all previously recognized beneficial interests obtained as part of the securitization, including any retained investment in debt securities, mortgage servicing rights, and any remaining residual interests. In addition, Nationstar recognized the securitized mortgage loans as mortgage loans held for investment, subject to ABS nonrecourse debt, and the related asset-backed certificates (ABS nonrecourse debt) acquired by third parties as ABS nonrecourse debt on Nationstar’s consolidated balance sheet.
As a result of market conditions and deteriorating credit performance on these consolidated VIEs, Nationstar expected minimal to no future cash flows on the economic residual. Under existing GAAP, Nationstar would be required to provide for additional allowances for loan losses on the securitization collateral as credit performance deteriorated, with no offsetting reduction in the securitization’s debt balances, even though any nonperformance of the assets would ultimately pass through as a reduction of amounts owed to the debt holders, once they were extinguished. Therefore, Nationstar would be required to record accounting losses beyond its economic exposure.
Nationstar elected the fair value option provided for by ASC 825-10,
Financial Instruments-Overall
. This option was applied to all eligible items within the VIE, including mortgage loans held for investment, subject to ABS nonrecourse debt, and the related ABS nonrecourse debt.
Subsequent to this fair value election, Nationstar does not record an allowance for loan loss on mortgage loans held for investment, subject to ABS nonrecourse debt. Nationstar records interest income in Nationstar’s consolidated statement of operations on these fair value elected loans until they are placed on a nonaccrual status when they are 90 days or more past due. The fair value adjustment recorded for the mortgage loans held for investment is classified within fair value changes of ABS securitizations in Nationstar’s consolidated statement of operations.
Subsequent to the fair value election for ABS nonrecourse debt, Nationstar records interest expense in Nationstar’s consolidated statement of operations on the fair value elected ABS nonrecourse debt. The fair value adjustment recorded for the ABS nonrecourse debt is classified within fair value changes of ABS securitizations in Nationstar’s consolidated statement of operations.
Under the existing pooling and servicing agreements of these securitization trusts, the principal and interest cash flows on the underlying securitized loans are used to service the asset-backed certificates. Accordingly, the timing of the principal payments on this nonrecourse debt is dependent on the payments received on the underlying mortgage loans and liquidation of REO.
Nationstar consolidates the SPEs created for the purpose of issuing debt supported by collections on loans and advances that have been transferred to it as VIEs, and Nationstar is the primary beneficiary of these VIEs. Nationstar consolidates the assets and liabilities of the VIEs onto its consolidated financial statements.
In December 2011, Nationstar sold its remaining variable interest in a securitization trust that had been a consolidated VIE since January 1, 2010 and deconsolidated the VIE. In accordance with ASC 810,
Consolidation
, Nationstar evaluated this securitization trust and determined that Nationstar no longer had both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Consequently, this securitization trust was derecognized as of December 31, 2011. Upon deconsolidation of this VIE, Nationstar derecognized the securitized mortgage loans held for investment, subject to ABS nonrecourse debt, the related ABS nonrecourse debt, as well as certain other assets and liabilities of the securitization trust, and recognized any mortgage servicing rights on the consolidated balance sheet. The impact of this derecognition on Nationstar’s consolidated statement of operations was recognized in 2011 in the fair value changes in ABS securitizations line item.
Derivative Financial Instruments
Nationstar enters into interest rate lock commitments (IRLCs) with prospective borrowers. These commitments are carried at fair value in accordance with ASC 815,
Derivatives and Hedging
. ASC 815 clarifies that the expected net future cash flows related to the associated servicing of a loan should be included in the measurement of all written loan commitments that are accounted for at fair value through earnings. The estimated fair values of IRLCs are based on the fair value of the related mortgage loans which is based on observable market data and is recorded in other assets in the consolidated balance sheets. The initial and subsequent changes in the value of IRLCs are a component of gain on mortgage loans held for sale.
Nationstar actively manages the risk profiles of its IRLCs and mortgage loans held for sale on a daily basis. To manage the price risk associated with IRLCs, Nationstar enters into forward sales of MBS in an amount equal to the portion of the IRLC expected to close, assuming no change in mortgage interest rates. In addition, to manage the interest rate risk associated with mortgage loans held for sale, Nationstar enters into forward sales of MBS to deliver mortgage loan inventory to investors. The estimated fair values of forward sales of MBS and forward sale commitments are based on exchange prices or the dealer market price and are recorded as a component of other assets and mortgage loans held for sale, respectively, in the consolidated balance sheets. The initial and subsequent changes in value on forward sales of MBS and forward sale commitments are a component of gain on mortgage loans held for sale.
Nationstar may occasionally enter into contracts with other mortgage lenders to purchase residential mortgage loans at a future date, which is referred to as Loan Purchase Commitments (LPCs). LPCs are accounted for as derivatives under ASC 815, and recorded at fair value in other assets on Nationstar's balance sheet. Subsequent changes in LPCs are recorded as a charge or credit to gain on mortgage loans held for sale.
Periodically, Nationstar has entered into interest rate swap agreements to hedge the interest payment on the warehouse debt and securitization of its mortgage loans held for sale. These interest rate swap agreements generally require Nationstar to pay a fixed interest rate and receive a variable interest rate based on LIBOR. Unless designated as an accounting hedge, Nationstar records gains and losses on interest rate swaps as a component of gain/(loss) on interest rate swaps and caps in Nationstar’s consolidated statements of operations and comprehensive income. Unrealized losses on undesignated interest rate derivatives are separately disclosed under operating activities in the consolidated statements of cash flows.
On October 1, 2010, the Company designated an existing interest rate swap as a cash flow hedge against outstanding floating rate financing associated with the Nationstar Mortgage Advance Receivables Trust 2009-ABS financing. This interest rate swap was a cash flow hedge under ASC 815 and was recorded at fair value on the Company’s consolidated balance sheet, with any changes in fair value being recorded as an adjustment to other comprehensive income. To qualify as a cash flow hedge, the hedge must be highly effective at reducing the risk associated with the exposure being hedged and must be formally designated at hedge inception. Nationstar considers a hedge to be highly effective if the change in fair value of the derivative hedging instrument is within 80% to 125% of the opposite change in the fair value of the hedged item attributable to the hedged risk.
Ineffective portions of the cash flow hedge are reflected in earnings as they occur as a component of interest expense. In conjunction with the October 2011 amendment to the 2010-ABS Advance Financing Facility, Nationstar paid off its 2009-ABS Advance Financing Facility and transferred the related collateral to the 2010-ABS Advance Financing Facility. Concurrently with the repayment of 2009-ABS Advance Financing Facility Nationstar de-designated the underlying interest rate swap on the 2009-ABS Advance Financing Facility. The interest rate swap associated with the 2010-ABS Advance Financing Facility served as an economic hedge for the remainder of 2011.
During 2008, Nationstar entered into interest rate cap agreements to hedge the interest payment on the servicing advance facility. These interest rate cap agreements generally require an upfront payment and receive cash flow only when a variable rate based on LIBOR exceeds a defined interest rate. These interest rate cap agreements are not designated as hedging instruments, and unrealized gains and losses are recorded in loss on interest rate swaps and caps in Nationstar’s consolidated statements of operations.
Excess Spread Financing
In conjunction with Nationstar's acquisition of certain mortgage servicing rights on various pools of residential mortgage loans (the Portfolios), Nationstar has entered into sale and assignment agreements which are treated as financings. Under these agreements, Nationstar sold to Newcastle Investment Corporation and related wholly owned subsidiaries (Newcastle) the right to receive a portion of the excess cash flow generated from the Portfolios after receipt of a fixed basic servicing fee per loan. Nationstar accounts for the excess spread financing arrangements as financings as required under ASC 470,
Debt
.
Nationstar has elected to measure the outstanding financings related to the excess spread financing agreements at fair value, as permitted under ASC 825,
Financial Instruments
, with all changes in fair value recorded as a charge or credit to servicing fee income in the consolidated statement of operations and comprehensive income (loss). The fair value on excess spread financing is based on the present value of future expected discounted cash flows with the discount rate approximating current market value for similar financial instruments.
Interest Income
Interest income is recognized using the interest method. Revenue accruals for individual loans are suspended and accrued amounts reversed when the mortgage loan becomes contractually delinquent for 90 days or more. Delinquency payment status is based on the most recently received payment from the borrower. The accrual is resumed when the individual mortgage loan becomes less than 90 days contractually delinquent. For individual loans that have been modified, a period of six timely payments is required before the loan is returned to an accrual basis. Interest income also includes (1) interest earned on custodial cash deposits associated with the mortgage loans serviced; (2) deferred originations income, net of deferred originations costs and other revenues derived from the origination of mortgage loans, which is deferred and recognized over the life of a mortgage loan or recognized when the related loan is sold to a third party purchaser; and (3) amounts recognized from accretion of discounts on acquired servicer advances as the related servicer advances are recovered.
Servicing Fee Income
Servicing fees include contractually specified servicing fees, late charges, prepayment penalties and other ancillary charges. Servicing encompasses, among other activities, the following processes: billing, collection of payments, movement of cash to the payment clearing bank accounts, investor reporting, customer service, recovery of delinquent payments, instituting foreclosure, and liquidation of the underlying collateral.
Nationstar recognizes servicing and ancillary fees as they are earned, which is generally upon collection of the payments from the borrower. In addition, Nationstar also receives various fees in the course of providing servicing on its various portfolios. These fees include modification fees for modifications performed outside of government programs, modification fees for modifications pursuant to various government programs, and incentive fees for servicing performance on specific GSE portfolios.
Fees recorded on modifications of mortgage loans held for investment performed outside of government programs are deferred and recognized as an adjustment to the loans held for investment. These fees are accreted into interest income as an adjustment to the loan yield over the life of the loan. Fees recorded on modifications of mortgage loans serviced by Nationstar for others are recognized on collection and are recorded as a component of service fee income. Fees recorded on modifications pursuant to various government programs are recognized when Nationstar has completed all necessary steps and the loans have performed for the minimum required time frame to establish eligibility for the fee. Revenue earned on modifications pursuant to various government programs is included as a component of service fee income. Incentive fees for servicing performance on specific GSE portfolios are recognized as various incentive standards are achieved and are recorded as a component of service fee income.
Sale of Mortgage Loans
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (i) the assets have been isolated from Nationstar, (ii) the transferee has the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (iii) Nationstar does not maintain effective control over the transferred assets through either (a) an agreement that entitles and obligates Nationstar to repurchase or redeem them before their maturity or (b) the ability to unilaterally cause the holder to return specific assets.
Loan securitizations structured as sales, as well as whole loan sales, are accounted for in accordance with ASC 860,
Transfers and Servicing
, and the resulting gains on such sales, net of any accrual for recourse obligations, are reported in operating results during the period in which the securitization closes or the sale occurs.
Share-Based Compensation Expense
Share-based compensation is recognized in accordance with ASC 718,
Compensation–Stock Compensation
. This guidance requires all share-based payments to employees to be recognized as an expense in the consolidated statements of operations, based on their fair values. The amount of compensation is measured at the fair value of the awards when granted and this cost is expensed over the required service period, which is normally the vesting period of the award.
Advertising Costs
Advertising costs are expensed as incurred and are included as part of general and administrative expenses.
Income Taxes
Deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.
The Company regularly reviews the carrying amount of its deferred tax assets to determine if the establishment of valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company's deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets.
In evaluating this available evidence, management considers, among other things, historical financial performance, expectation of future earnings, the ability to carry back losses to recoup taxes previously paid, length of statutory carryforward periods, experience with operating loss and tax credit carryforwards not expiring unused, tax planning strategies and timing of reversals of temporary differences. The Company's evaluation is based on current tax laws as well as management's expectations of future performance.
The Company is subject to the income tax laws of the U.S., its states and municipalities. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. The Company adopted accounting guidance related to uncertainty in income taxes. The guidance prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under the guidance, tax positions shall initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. The guidance also revises disclosure requirements to include an annual tabular roll forward of unrecognized tax benefits. In establishing a provision for income tax expense, the Company must make judgments and interpretations about the application of these inherently complex tax laws within the framework of existing GAAP. The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expenses.
Earnings Per Share
Net income per share is computed under the provisions of ASC 260,
Earnings Per Share
. Basic net income per share is computed based on the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed based on the weighted-average number of common shares plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares represent outstanding restricted stock.
Our initial public offering and restructuring in 2012 were accounted for as a business combination under common control as permitted under ASC 805,
Business Combinations
. As a result of the Company's 2012 restructuring, Nationstar Inc. affected a
70,000
to 1 stock split. The Company's basic and diluted earnings per share amounts presented on the face of the consolidated statement of operations and comprehensive income (loss) and in Note 19 - Earnings per Share have been retrospectively adjusted for all prior periods presented as required under ASC 260.
Recent Accounting Developments
Accounting Standards Update No 2011-08,
Intangibles - Goodwill and Other: Testing Goodwill for Impairment
was created in order to reduce costs and complexity of testing assets with indefinite lives for impairment. The prior accounting standard outlined a process in which an entity must test all intangible assets for impairment on at least an annual basis. This update allows entities to bypass impairment testing on intangible assets if it is more likely than not (more than 50%), based on qualitative factors, that the asset will not be impaired. The amendments in this update are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of update 2011-08 did not have a material impact on our financial condition, liquidity or results of operations.
Accounting Standards Update No 2013-01,
Balance Sheet: Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities
was created to address issues caused when putting Accounting Standard Update 2011-11 into place and eliminate diversity in practice. The update clarifies that Accounting Standard Update 2011-11 applies to entities that are accounting for derivatives under Topic 815 including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are offset under Section 210-20-45 or Section 815-10-45, an enforceable master netting arrangement or similar agreement. This update will become effective for fiscal years beginning on or after January 1, 2013. The adoption of update 2013-01 will not have a material impact on our financial condition, liquidity or results of operations.
Accounting Standards Update No 2013-02,
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
was issued to improve reporting of reclassification of items out of accumulated other comprehensive income by requiring entities to report the effect of any significant reclassifications on the respective line items on the income statement when the amount is required to be reclassified in its entirety in the same reporting period. Additionally, for items that are not required to be reclassified completely to net income, the entity will be required to cross reference other disclosures that provide additional information about the amounts. The information provided about amounts that are reclassified out of accumulated other comprehensive income must be reported by component. The amendments of this update are effective beginning December 15, 2012. The adoption of update 2013-02 did not have a material impact on our financial condition, liquidity or results of operations.
3. Variable Interest Entities and Securitizations
A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary, which is the entity that, through its variable interests has both the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.
Effective January 1, 2010, new accounting guidance eliminated the concept of a QSPE. All existing SPEs are subject to new consolidation guidance. Upon adoption of this new accounting guidance, Nationstar identified certain loan securitization trusts where Nationstar had both the power to direct the activities that most significantly impacted the VIE's economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The assets and liabilities of these VIEs were included in Nationstar's consolidated financial statements. The net effect of the accounting change on January 1, 2010 member's equity was an
$8.1 million
charge to members' equity.
In
December 2011
, Nationstar sold its remaining variable interest in a loan securitization trust that had been a consolidated VIE since
January 1, 2010
and deconsolidated the VIE. In accordance with ASC 810 Nationstar has evaluated this securitization trust and determined that Nationstar no longer has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE, and this securitization trust was derecognized as of
December 31, 2011
. Upon deconsolidation of this VIE, Nationstar derecognized the securitized mortgage loans held for investment, subject to ABS nonrecourse debt, the related ABS nonrecourse debt, as well as certain other assets and liabilities of the securitization trust, and recognized any MSRs on the consolidated balance sheet. The impact of this derecognition on the Company’s consolidated statement of operations was recognized in the fourth quarter of
2011
in the fair value changes in ABS securitizations line item.
A summary of the assets and liabilities of Nationstar’s transactions with VIEs included in the Company’s consolidated financial statements as of
December 31, 2012
and
2011
is presented in the following tables (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
|
Transfers
Accounted for as
Secured
Borrowings
|
|
Transfers
Accounted for as
Secured
Borrowings
|
|
ASSETS
|
|
|
|
|
Restricted cash
|
$
|
247,531
|
|
|
$
|
22,316
|
|
|
Reverse mortgage interests
|
542,037
|
|
|
—
|
|
|
Accounts receivable
|
2,656,277
|
|
|
279,414
|
|
|
Mortgage loans held for investment, subject to nonrecourse debt
|
224,207
|
|
|
237,496
|
|
|
REO
|
2,039
|
|
|
3,668
|
|
|
Total Assets
|
$
|
3,672,091
|
|
|
$
|
542,894
|
|
|
LIABILITIES
|
|
|
|
|
Notes payable
|
$
|
2,294,925
|
|
|
$
|
244,574
|
|
|
Payables and accrued liabilities
|
3,415
|
|
|
977
|
|
|
Derivative financial instruments
|
6,118
|
|
|
—
|
|
|
Nonrecourse debt–Legacy Assets
|
100,620
|
|
|
112,490
|
|
|
Participating interest financing
|
580,836
|
|
|
—
|
|
|
Total Liabilities
|
$
|
2,985,914
|
|
|
$
|
358,041
|
|
A summary of the outstanding collateral and certificate balances for securitization trusts, including any retained beneficial interests and MSRs, that were not consolidated by Nationstar for the periods indicated are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
Total collateral balances
|
$
|
4,134,513
|
|
|
$
|
4,579,142
|
|
|
Total certificate balances
|
4,136,316
|
|
|
4,582,598
|
|
|
Total mortgage servicing rights at fair value
|
30,940
|
|
|
28,635
|
|
Nationstar has not retained any variable interests in the unconsolidated securitization trusts that were outstanding as of
December 31, 2012
or
2011
, and therefore does not have a significant maximum exposure to loss related to these unconsolidated VIEs. A summary of mortgage loans transferred to unconsolidated securitization trusts that are 60 days or more past due and the credit losses incurred in the unconsolidated securitization trusts are presented below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended,
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
|
|
Principal
Amount
of Loans
60 Days or
More Past Due
|
|
Credit
Losses
|
|
Principal
Amount
of Loans
60 Days or
More Past Due
|
|
Credit
Losses
|
|
Principal
Amount of
Loans
60 Days or
More Past Due
|
|
Credit
Losses
|
|
Total securitization trusts
|
$
|
1,180,133
|
|
|
$
|
273,817
|
|
|
$
|
1,066,130
|
|
|
$
|
335,221
|
|
|
$
|
830,953
|
|
|
$
|
242,905
|
|
Certain cash flows received from securitization trusts related to the transfer of mortgage loans accounted for as sales for the dates indicated were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended,
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
|
|
Servicing Fees
Received
|
|
Loan
Repurchases
|
|
Servicing Fees
Received
|
|
Loan
Repurchases
|
|
Servicing Fees
Received
|
|
Loan
Repurchases
|
|
Total securitization trusts
|
$
|
28,049
|
|
|
$
|
—
|
|
|
$
|
28,569
|
|
|
$
|
—
|
|
|
$
|
29,129
|
|
|
$
|
—
|
|
4. Consolidated Statement of Cash Flows-Supplemental Disclosure
Total interest paid for the
year ended December 31, 2012
,
2011
, and
2010
was approximately
$154.9 million
,
$90.8 million
and
$91.8 million
, respectively. Income taxes paid for the
year ended December 31, 2012
were
$42.6 million
. There were
no
income taxes paid for the years ended
December 31, 2011
or 2010.
5. Accounts Receivable
Accounts receivable consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
Servicer advances, net of initial purchase discount
|
$
|
2,800,690
|
|
|
$
|
511,725
|
|
|
Accrued servicing fees
|
90,231
|
|
|
20,865
|
|
|
Receivables from trusts
|
39,029
|
|
|
4,664
|
|
|
Reverse mortgage - other
|
28,448
|
|
|
—
|
|
|
Accrued interest
|
3,801
|
|
|
1,512
|
|
|
Other
|
81,407
|
|
|
23,534
|
|
|
Total accounts receivable
|
$
|
3,043,606
|
|
|
$
|
562,300
|
|
In conjunction with Nationstar's June 2012 acquisition of mortgage servicing rights from Aurora, the Company acquired approximately
$1.7 billion
of servicer advances. Based on the acquisition date relative fair values of these acquired servicer advances, Nationstar recorded an
$81.8 million
purchase discount. Nationstar accretes this purchase discount into interest income as the related servicer advances are recovered. During 2012, the Company accreted
$11.3 million
of initial purchase discount from recovered servicer advances.
6. Mortgage Loans Held for Sale and Investment
Mortgage loans held for sale
Mortgage loans held for sale consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
2012
|
|
2011
|
|
Mortgage loans held for sale – unpaid principal balance
|
$
|
1,426,182
|
|
|
$
|
442,596
|
|
|
Mark-to-market adjustment
|
54,355
|
|
|
16,030
|
|
|
Total mortgage loans held for sale
|
$
|
1,480,537
|
|
|
$
|
458,626
|
|
Mortgage loans held for sale on a nonaccrual status are presented in the following table for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
2012
|
|
2011
|
|
2010
|
|
Mortgage loans held for sale – Non-performing
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
371
|
|
A reconciliation of the changes in mortgage loans held for sale to the amounts presented in the consolidated statements of cash flows for the dates indicated is presented in the following table (in thousands) :
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
|
2012
|
|
2011
|
|
Mortgage loans held for sale – beginning balance
|
$
|
458,626
|
|
|
$
|
369,617
|
|
|
Mortgage loans originated and purchased, net of fees
|
7,904,052
|
|
|
3,412,185
|
|
|
Cost of loans sold, net of fees
|
(6,917,892
|
)
|
|
(3,339,859
|
)
|
|
Principal payments received on mortgage loans held for sale and other changes
|
37,205
|
|
|
19,668
|
|
|
Transfer of mortgage loans held for sale to held for investment due to bankruptcy and pending foreclosures
|
(1,454
|
)
|
|
(2,697
|
)
|
|
Transfer of mortgage loans held for sale to REO
|
—
|
|
|
(288
|
)
|
|
Mortgage loans held for sale – ending balance
|
$
|
1,480,537
|
|
|
$
|
458,626
|
|
Mortgage loans held for investment, subject to nonrecourse debt- Legacy Assets, net
Mortgage loans held for investment, subject to nonrecourse debt- Legacy Assets, net as of the dates indicated include (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
2012
|
|
2011
|
|
Mortgage loans held for investment, subject to nonrecourse debt- Legacy Assets, net – unpaid principal balance
|
$
|
354,154
|
|
|
$
|
375,720
|
|
|
Transfer discount
|
|
|
|
|
Accretable
|
(19,749
|
)
|
|
(22,392
|
)
|
|
Non-accretable
|
(91,108
|
)
|
|
(104,024
|
)
|
|
Allowance for loan losses
|
(4,390
|
)
|
|
(5,824
|
)
|
|
Total mortgage loans held for investment, subject to nonrecourse debt-legacy assets, net
|
$
|
238,907
|
|
|
$
|
243,480
|
|
The changes in accretable yield on loans transferred to mortgage loans held for investment, subject to nonrecourse debt- Legacy Assets were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Accretable Yield
|
Year ended
December 31, 2012
|
|
Year ended
December 31, 2011
|
|
Balance at the beginning of the period
|
$
|
22,392
|
|
|
$
|
25,219
|
|
|
Additions
|
—
|
|
|
—
|
|
|
Accretion
|
(3,548
|
)
|
|
(4,131
|
)
|
|
Reclassifications from nonaccretable discount
|
905
|
|
|
1,304
|
|
|
Disposals
|
—
|
|
|
—
|
|
|
Balance at the end of the period
|
$
|
19,749
|
|
|
$
|
22,392
|
|
Nationstar may periodically modify the terms of any outstanding mortgage loans held for investment, subject to nonrecourse debt-legacy assets, net for loans that are either in default or in imminent default. Modifications often involve reduced payments by borrowers, modification of the original terms of the mortgage loans, forgiveness of debt and/or increased servicing advances. As a result of the volume of modification agreements entered into, the estimated average outstanding life in this pool of mortgage loans has been extended. Nationstar records interest income on the transferred loans on a level-yield method. To maintain a level-yield on these transferred loans over the estimated extended life, Nationstar reclassified approximately
$0.9 million
, and
$1.3 million
for the years ended December 31, 2012 and 2011, respectively, from nonaccretable difference. Furthermore, Nationstar considers the decrease in principal, interest, and other cash flows expected to be collected arising from the transferred loans as an impairment. Nationstar recorded provisions for loan losses of
$1.9 million
for the year ended December 31, 2012, and
$3.5 million
for the year ended December 31, 2011 on the transferred loans to reflect this impairment.
Nationstar collectively evaluates all mortgage loans held for investment, subject to nonrecourse debt-legacy assets for impairment. The changes in the allowance for loan losses on mortgage loans held for investment, subject to nonrecourse debt-legacy assets, net were as follows (in thousands) for the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2012
|
|
|
Performing
|
|
Non-Performing
|
|
Total
|
|
Balance at the beginning of the period
|
$
|
1,641
|
|
|
$
|
4,183
|
|
|
$
|
5,824
|
|
|
Provision for loan losses
|
1,365
|
|
|
525
|
|
|
1,890
|
|
|
Recoveries on loans previously charged-off
|
—
|
|
|
—
|
|
|
—
|
|
|
Charge-offs
|
(2,235
|
)
|
|
(1,089
|
)
|
|
(3,324
|
)
|
|
Balance at the end of the period
|
$
|
771
|
|
|
$
|
3,619
|
|
|
$
|
4,390
|
|
|
Ending UPB – Collectively evaluated for impairment
|
$
|
260,219
|
|
|
$
|
93,935
|
|
|
$
|
354,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2011
|
|
|
Performing
|
|
Non-Performing
|
|
Total
|
|
Balance at the beginning of the period
|
$
|
829
|
|
|
$
|
2,469
|
|
|
$
|
3,298
|
|
|
Provision for loan losses
|
1,346
|
|
|
2,191
|
|
|
3,537
|
|
|
Recoveries on loans previously charged-off
|
—
|
|
|
—
|
|
|
—
|
|
|
Charge-offs
|
(534
|
)
|
|
(477
|
)
|
|
(1,011
|
)
|
|
Balance at the end of the period
|
$
|
1,641
|
|
|
$
|
4,183
|
|
|
$
|
5,824
|
|
|
Ending UPB – Collectively evaluated for impairment
|
$
|
283,770
|
|
|
$
|
91,950
|
|
|
$
|
375,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2010
|
|
|
Performing
|
|
Non-Performing
|
|
Total
|
|
Balance at the beginning of the period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Provision for loan losses
|
829
|
|
|
2,469
|
|
|
3,298
|
|
|
Recoveries on loans previously charged-off
|
—
|
|
|
—
|
|
|
—
|
|
|
Charge-offs
|
—
|
|
|
—
|
|
|
—
|
|
|
Balance at the end of the period
|
$
|
829
|
|
|
$
|
2,469
|
|
|
$
|
3,298
|
|
|
Ending balance – Collectively evaluated for impairment
|
$
|
310,730
|
|
|
$
|
101,148
|
|
|
$
|
411,878
|
|
Loan delinquency and Loan-to-Value Ratio (LTV) are common credit quality indicators that Nationstar monitors and utilizes in its evaluation of the adequacy of the allowance for loan losses, of which the primary indicator of credit quality is loan delinquency. LTV refers to the ratio of comparing the loan’s unpaid principal balance to the property’s collateral value. Loan delinquencies and unpaid principal balances are updated monthly based upon collection activity. Collateral values are updated from third party providers on a periodic basis. The collateral values used to derive the LTV’s shown below were obtained at various dates, but the majority were within the last twenty-four months. For an event requiring a decision based at least in part on the collateral value, the Company takes its last known value provided by a third party and then adjusts the value based on the applicable home price index.
The following table provides the outstanding unpaid principal balance of Nationstar’s mortgage loans held for investment by credit quality indicators for the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
|
(in thousands)
|
|
Credit Quality by Delinquency Status
|
|
|
|
|
Performing
|
$
|
260,219
|
|
|
$
|
283,770
|
|
|
Non-Performing
|
93,935
|
|
|
91,950
|
|
|
Total
|
$
|
354,154
|
|
|
$
|
375,720
|
|
|
Credit Quality by Loan-to-Value Ratio
|
|
|
|
|
Less than 60
|
$
|
39,436
|
|
|
$
|
42,438
|
|
|
Less than 70 and more than 60
|
16,581
|
|
|
15,968
|
|
|
Less than 80 and more than 70
|
20,890
|
|
|
25,190
|
|
|
Less than 90 and more than 80
|
27,988
|
|
|
32,620
|
|
|
Less than 100 and more than 90
|
32,570
|
|
|
33,708
|
|
|
Greater than 100
|
216,689
|
|
|
225,796
|
|
|
Total
|
$
|
354,154
|
|
|
$
|
375,720
|
|
Performing loans refer to loans that are less than 90 days delinquent. Non-performing loans refer to loans that are contractually greater than 90 days delinquent.
Reverse mortgage interests
Reverse mortgage interests as of the dates indicated include (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
2012
|
|
2011
|
|
UPB of advances previously securitized by Nationstar
|
$
|
542,037
|
|
|
$
|
—
|
|
|
UPB of advances unsecuritized
|
208,699
|
|
|
—
|
|
|
Allowance for losses - reverse mortgage interests
|
(463
|
)
|
|
—
|
|
|
Total reverse mortgage interests
|
$
|
750,273
|
|
|
$
|
—
|
|
Nationstar collectively evaluates all reverse mortgage interest assets for impairment. During 2012, Nationstar recorded a provision for loan losses related to its reverse mortgage interests of
$0.5 million
. At December 31, 2012, the valuation allowance amounted to
$0.5 million
. There was
no
allowance for loan losses as of December 31, 2011.
7. Mortgage Servicing Rights (MSRs)
MSRs at fair value
MSRs arise from contractual agreements between Nationstar and investors in mortgage securities and mortgage loans. Nationstar records MSR assets when it sells loans on a servicing-retained basis, at the time of securitization or through the acquisition or assumption of the right to service a financial asset. Under these contracts, Nationstar performs loan servicing functions in exchange for fees and other remuneration.
The fair value of the MSRs is based upon the present value of the expected future cash flows related to servicing these loans. Nationstar receives a base servicing fee ranging from
0.25%
to
0.50%
annually on the remaining outstanding principal balances of the loans. The servicing fees are collected from investors. Nationstar determines the fair value of the MSRs by the use of a discounted cash flow model that incorporates prepayment speeds, discount rate, credit losses and other assumptions (including servicing costs) that management believes are consistent with the assumptions other major market participants use in valuing the MSRs. The nature of the forward loans underlying the MSRs affects the assumptions that management believes other major market participants use in valuing the MSRs. Nationstar obtains third-party valuations for a large portion of its MSRs to assess the reasonableness of the fair value calculated by the cash flow model.
Certain of the forward loans underlying the MSRs carried at fair value that are owned by Nationstar are credit sensitive in nature and the value of these MSRs are more likely to be affected from changes in credit losses than from interest rate movement. The remaining forward loans underlying Nationstar’s MSRs held at fair value are prime agency and government conforming residential mortgage loans for which the value of these MSRs are more likely to be affected from interest rate movement than changes in credit losses.
Nationstar used the following weighted average assumptions in estimating the fair value of MSRs for the dates indicated:
|
|
|
|
|
|
|
|
|
|
Credit Sensitive MSRs
|
December 31, 2012
|
|
December 31, 2011
|
|
Discount rate
|
18.11
|
%
|
|
25.71
|
%
|
|
Total prepayment speeds
|
22.42
|
%
|
|
15.80
|
%
|
|
Expected weighted-average life
|
4.12 years
|
|
|
5.15 years
|
|
|
Credit losses
|
24.68
|
%
|
|
35.42
|
%
|
|
Interest Rate Sensitive MSRs
|
December 31, 2012
|
|
December 31, 2011
|
|
Discount rate
|
10.62
|
%
|
|
10.46
|
%
|
|
Total prepayment speeds
|
17.08
|
%
|
|
19.02
|
%
|
|
Expected weighted-average life
|
5.19 years
|
|
|
5.04 years
|
|
|
Credit losses
|
11.09
|
%
|
|
9.73
|
%
|
The activity of MSRs carried at fair value is as follows for the dates indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2012
|
|
Year ended December 31, 2011
|
|
Fair value at the beginning of the period
|
$
|
251,050
|
|
|
$
|
145,062
|
|
|
Additions:
|
|
|
|
|
Servicing resulting from transfers of financial assets
|
58,607
|
|
|
36,474
|
|
|
Recognition of servicing assets from derecognition of variable interest entities
|
—
|
|
|
5,714
|
|
|
Purchases of servicing assets
|
394,445
|
|
|
102,800
|
|
|
Changes in fair value:
|
|
|
|
|
Due to changes in valuation inputs or assumptions used in the valuation model
|
5,500
|
|
|
(14,207
|
)
|
|
Other changes in fair value
|
(73,742
|
)
|
|
(24,793
|
)
|
|
Fair value at the end of the period
|
$
|
635,860
|
|
|
$
|
251,050
|
|
|
Unpaid principal balance of forward loans serviced for others
|
|
|
|
|
Credit sensitive loans
|
$
|
114,629,399
|
|
|
$
|
32,408,623
|
|
|
Interest sensitive loans
|
16,494,985
|
|
|
11,844,831
|
|
|
Total owned loans
|
$
|
131,124,384
|
|
|
$
|
44,253,454
|
|
The following table shows the hypothetical effect on the fair value of the MSRs using various unfavorable variations of the expected levels of certain key assumptions used in valuing these assets at
December 31, 2012
and 2011 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount Rate
|
|
Total Prepayment
Speeds
|
|
Credit Losses
|
|
|
100 bps
Adverse
Change
|
200 bps
Adverse
Change
|
|
10%
Adverse
Change
|
20%
Adverse
Change
|
|
10%
Adverse
Change
|
20%
Adverse
Change
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
Mortgage servicing rights
|
$
|
(17,060
|
)
|
$
|
(34,419
|
)
|
|
$
|
(66,037
|
)
|
$
|
(124,995
|
)
|
|
$
|
(77,072
|
)
|
$
|
(157,433
|
)
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
Mortgage servicing rights
|
$
|
(6,640
|
)
|
$
|
(12,929
|
)
|
|
$
|
(13,281
|
)
|
$
|
(25,215
|
)
|
|
$
|
(5,081
|
)
|
$
|
(10,944
|
)
|
These sensitivities are hypothetical and should be evaluated with care. The effect on fair value of a 10% variation in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors (e.g., a decrease in total prepayment speeds may result in an increase in credit losses), which could impact the above hypothetical effects.
MSRs at amortized cost
As of
December 31, 2012
, Nationstar owns the right to service certain reverse mortgage MSRs with an unpaid principal balance of
$28.4 billion
. The initial carrying amount of these MSRs is based on the relative fair value of the purchased assets and liabilities including reverse mortgage interests. These MSRs are subsequently accounted for using the amortization method. Amortization / accretion is recorded as service fee income on the statement of operations and comprehensive income. Nationstar utilizes a variety of assumptions in assessing the fair value of its servicing assets or liabilities, with the primary assumptions including discount rates, prepayment speeds and the expected weighted average life. At
December 31, 2012
, no impairment was identified. Interest and servicing fees collected on reverse mortgage interests are included as a component of either interest or service fee income.
The activity of MSRs carried at amortized cost is as follows for the date indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
December 31, 2012
|
|
|
Assets
|
|
Liabilities
|
|
Activity of MSRs at amortized cost
|
|
|
|
|
Balance at the beginning of the period
|
$
|
—
|
|
|
$
|
—
|
|
|
Additions:
|
|
|
|
|
Purchase /Assumptions of servicing rights/obligations
|
12,415
|
|
|
89,800
|
|
|
Deductions:
|
|
|
|
|
Amortization/Accretion
|
(1,442
|
)
|
|
(6,562
|
)
|
|
Balance at end of the period
|
$
|
10,973
|
|
|
$
|
83,238
|
|
Subserviced loans
In addition to the
two
classes of MSRs that Nationstar services for others, Nationstar also subservices loans on behalf of owners of MSRs or loans for a fee. Nationstar has no recorded value for its subservicing arrangements. At
December 31, 2012
and
December 31, 2011
, the unpaid principal balances under subservicing arrangements were
$45.7 billion
and
$53.7 billion
, respectively.
Total servicing and ancillary fees from Nationstar’s servicing portfolio of residential mortgage loans are presented in the following table for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31,
|
|
|
2012
|
|
2011
|
|
2010
|
|
Servicing fees
|
$
|
348,915
|
|
|
$
|
191,652
|
|
|
$
|
103,690
|
|
|
Ancillary fees
|
123,318
|
|
|
82,099
|
|
|
70,130
|
|
|
Total servicing and ancillary fees
|
$
|
472,233
|
|
|
$
|
273,751
|
|
|
$
|
173,820
|
|
8. Property and Equipment, Net
Property and equipment, net (in thousands), and the corresponding ranges of estimated useful lives were as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
December 31,
2011
|
|
Range of Estimated
Useful Life
|
|
Furniture, fixtures and equipment
|
$
|
47,620
|
|
|
$
|
33,334
|
|
|
3 - 5 years
|
|
Capitalized software costs
|
24,431
|
|
|
14,356
|
|
|
5 years
|
|
Long-term capital leases - computer equipment
|
24,917
|
|
|
—
|
|
|
5 years
|
|
Building and leasehold improvements
|
10,556
|
|
|
7,887
|
|
|
Varies
|
|
Software in development and other
|
12,713
|
|
|
6,862
|
|
|
|
|
|
120,237
|
|
|
62,439
|
|
|
|
|
Less: Accumulated depreciation and amortization
|
(48,806
|
)
|
|
(39,201
|
)
|
|
|
|
Plus: Land
|
3,595
|
|
|
835
|
|
|
|
|
Total property and equipment, net
|
$
|
75,026
|
|
|
$
|
24,073
|
|
|
|
Nationstar has entered into various lease agreements for computer equipment which are classified as capital leases. All of the capital leases expire over the next five years. A majority of these lease agreements contain bargain purchase options.
As of December 31, 2012, future minimum payments for Nationstar's capital leases is presented in table below:
|
|
|
|
|
|
|
|
Future Minimum Lease Payments
|
|
2013
|
$
|
7,585
|
|
|
2014
|
7,503
|
|
|
2015
|
6,084
|
|
|
Thereafter
|
—
|
|
|
Total future lease payments
|
21,172
|
|
|
Less: Imputed interest
|
(1,917
|
)
|
|
Net capital lease liability
|
$
|
19,255
|
|
9. Other Assets
Other assets consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
Derivative financial instruments (see Note 11)
|
$
|
152,189
|
|
|
$
|
11,302
|
|
|
Loans subject to repurchase right from Ginnie Mae
|
72,156
|
|
|
35,735
|
|
|
Deferred financing costs
|
46,780
|
|
|
12,059
|
|
|
Deferred tax asset (see Note 15)
|
23,737
|
|
|
—
|
|
|
Margin call deposits (see Note 11)
|
10,920
|
|
|
4,518
|
|
|
Equity method investment (see Note 27)
|
—
|
|
|
6,493
|
|
|
Prepaid expenses
|
6,083
|
|
|
4,286
|
|
|
Deposits pending on mortgage servicing rights acquisitions
|
2,040
|
|
|
28,904
|
|
|
Other
|
8,146
|
|
|
2,884
|
|
|
Total other assets
|
$
|
322,051
|
|
|
$
|
106,181
|
|
For certain loans sold to GNMA (Ginnie Mae), Nationstar as the servicer has the unilateral right to repurchase without Ginnie Mae’s prior authorization any individual loan in a Ginnie Mae securitization pool if that loan meets certain criteria, including being delinquent greater than 90 days. Once Nationstar has the unilateral right to repurchase a delinquent loan, Nationstar has effectively regained control over the loan, and under GAAP, must re-recognize the loan on its balance sheet and establish a corresponding repurchase liability regardless of Nationstar’s intention to repurchase the loan. Nationstar’s re-recognized loans included in other assets and the corresponding liability in payables and accrued liabilities was
$72.2 million
at December 31, 2012 and
$35.7 million
at December 31, 2011.
Deposits pending on mortgage servicing rights acquisitions primarily consist of amounts transferred to third parties for the future acquisition of mortgage servicing rights. In
December 2011
, Nationstar entered into an agreement with a financial institution to acquire the rights to service reverse mortgages with an unpaid principal balance of approximately
$9.5 billion
, of which the underlying reverse mortgages are currently owned by an unaffiliated GSE. The purchase of these servicing rights was completed upon the approval of the GSE which was received in
June 2012
. Upon execut
ion of the purchase, Nationstar assumed responsibility for advance obligations on the underlying reverse mortgage loans. Na
tionstar paid
$9.0 million
for the purchase of these servicing rights which had previously been deposited with the financial institution. Also, as of
December 31, 2011
, Nationstar had placed in escrow
$17.9 million
relating to the purchase of the mortgage servicing rights and related outstanding advance balances with the same financial institution. Such purchase was completed in
January 2012
and these escrow amounts were released. In addition, Nationstar has entered into separate agreements to purchase forward mortgage servicing rights. These amounts are carried as deposits on acquired servicing rights acquisitions until the underlying forward residential mortgage loan balances are transferred to Nationstar. Nationstar has deposits with a counterparty for servicing rights on forward mortgages for
$2.0 million
as of
December 31, 2012
that are substantially expected to be originated and transferred to Nationstar during the first half of fiscal year 2013, and
$2.0 million
as of
December 31, 2011
that were originated and transferred to Nationstar during the first quarter of
2012
.
10. Payables and Accrued Liabilities
Payables and accrued liabilities consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
Reverse mortgage payables
|
$
|
103,068
|
|
|
$
|
—
|
|
|
Mortgage insurance premiums and reserves
|
77,967
|
|
|
19,308
|
|
|
Servicing payables
|
73,967
|
|
|
5,801
|
|
|
Loans subject to repurchase from Ginnie Mae
|
72,156
|
|
|
35,735
|
|
|
Accrued bonus and payroll
|
58,083
|
|
|
21,791
|
|
|
Current taxes
|
50,908
|
|
|
154
|
|
|
Accrued interest
|
31,938
|
|
|
10,225
|
|
|
Lease payables
|
29,553
|
|
|
2,856
|
|
|
Legal and professional fees
|
27,860
|
|
|
6,713
|
|
|
Government-sponsored entities
|
27,071
|
|
|
27,801
|
|
|
Repurchase reserves
|
18,511
|
|
|
10,026
|
|
|
MSR purchases payable including advances
|
14,243
|
|
|
8,204
|
|
|
Payables to securitization trusts
|
7,946
|
|
|
4,263
|
|
|
Cancelled lease reserves
|
7,188
|
|
|
9,160
|
|
|
Other
|
30,972
|
|
|
21,752
|
|
|
Total payables and accrued liabilities
|
$
|
631,431
|
|
|
$
|
183,789
|
|
11. Derivative Financial Instruments
The following table shows the effect of derivative financial instruments that were designated as accounting hedges for the years ended
December 31, 2012
, 2011, and 2010.
The Effect of Derivative Instruments on the Statement of Operations and Comprehensive Income (Loss)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives in ASC 815 Cash Flow Hedging Relationships
|
|
Amount of
Gain (Loss)
Recognized
in OCI on
Derivative
(Effective
Portion)
|
|
Location of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
|
|
Amount of
Gain (Loss)
Reclassified
from
Accumulated
OCI into
Income
(Effective
Portion)
|
|
Location of Gain
(Loss) Recognized
in Income on
Derivative
(Ineffective
Portion and
Amount Excluded
from
Effectiveness
Testing)
|
|
Amount of Gain (Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion)
|
|
For the year ended December 31, 2012
|
|
Interest Rate Swap
|
|
$
|
—
|
|
|
Interest Expense
|
|
$
|
—
|
|
|
Interest Expense
|
|
$
|
—
|
|
|
For the year ended December 31, 2011
|
|
Interest Rate Swap
|
|
$
|
(1,071
|
)
|
|
Interest Expense
|
|
$
|
165
|
|
|
Interest Expense
|
|
$
|
2,032
|
|
|
For the year ended December 31, 2010
|
|
Interest Rate Swap
|
|
$
|
1,071
|
|
|
Interest Expense
|
|
$
|
—
|
|
|
Interest Expense
|
|
$
|
930
|
|
In conjunction with the Reorganization, FIF contributed outstanding interest rate swaps in March 2012 to Nationstar. These interest rate swaps on ABS debt generally require Nationstar to pay a fixed interest rate and receive a variable interest rate based on LIBOR. The outstanding interest rate swaps have not been designated as accounting hedges during the year ended December 31, 2012. Any changes in fair value are recorded as a component of gains or losses on interest rate swaps and caps in the Company's consolidated statement of operations and comprehensive income.
Associated with the Company's derivatives is
$10.9 million
in margin call deposits recorded in other assets on the Company's balance sheet as of December 31, 2012.
The following tables provide the outstanding notional balances and fair values of outstanding positions for the dates indicated, and recorded gains/(losses) during the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expiration
Dates
|
|
Outstanding
Notional
|
|
Fair
Value
|
|
Recorded
Gains /
(Losses)
|
|
For the year ended December 31, 2012
|
|
|
|
|
|
|
|
|
MORTGAGE LOANS HELD FOR SALE
|
|
|
|
|
|
|
|
|
Loan sale commitments
|
2013
|
|
$
|
445
|
|
|
$
|
21
|
|
|
$
|
(613
|
)
|
|
OTHER ASSETS
|
|
|
|
|
|
|
|
|
IRLCs
|
2013
|
|
4,921,963
|
|
|
150,048
|
|
|
138,746
|
|
|
Forward MBS trades
|
2013
|
|
977,900
|
|
|
888
|
|
|
888
|
|
|
LPCs
|
2013
|
|
112,624
|
|
|
1,253
|
|
|
1,253
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Interest rate swaps and caps
|
2013-2015
|
|
726,168
|
|
|
6,120
|
|
|
420
|
|
|
Interest rate swaps on ABS debt
(1)
|
2013-2017
|
|
654,192
|
|
|
1,846
|
|
|
(1,414
|
)
|
|
Forward MBS trades
|
2013
|
|
3,964,721
|
|
|
11,974
|
|
|
(6,144
|
)
|
|
LPCs
|
2013
|
|
78,839
|
|
|
86
|
|
|
(86
|
)
|
|
|
|
|
|
|
|
|
|
|
For the year ending December 31, 2011
|
|
|
|
|
|
|
|
|
MORTGAGE LOANS HELD FOR SALE
|
|
|
|
|
|
|
|
|
Loan sale commitments
|
2012
|
|
$
|
28,047
|
|
|
$
|
634
|
|
|
$
|
592
|
|
|
OTHER ASSETS
|
|
|
|
|
|
|
|
|
IRLCs
|
2012
|
|
736,377
|
|
|
11,302
|
|
|
6,598
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Interest rate swaps and caps
|
2012-2015
|
|
193,500
|
|
|
6,540
|
|
|
1,261
|
|
|
Forward MBS trades
|
2012
|
|
691,725
|
|
|
5,830
|
|
|
(9,792
|
)
|
|
Interest rate swap, subject to ABS nonrecourse debt
(2)
|
—
|
|
—
|
|
|
—
|
|
|
(8,058
|
)
|
|
|
|
|
(1)
|
In
March 2012
, Nationstar received interest rate swaps from FIF as a part of the Reorganization.
|
|
|
|
|
(2)
|
In
December 2011
, Nationstar sold its remaining variable interest in a securitization trust that had been a consolidated VIE since
January 1, 2010
and deconsolidated the VIE. Upon deconsolidation of this VIE, Nationstar derecognized the related ABS nonrecourse debt and therefore the underlying interest rate swap, subject to ABS nonrecourse debt.
|
12. Indebtedness
Notes Payable
A summary of the balances of notes payable for the dates indicated is presented below (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
|
Outstanding
|
|
Collateral
Pledged
|
|
Outstanding
|
|
Collateral
Pledged
|
|
Servicing Segment Notes Payable
|
|
|
|
|
|
|
|
|
MBS advance financing facility
|
$
|
185,817
|
|
|
$
|
206,622
|
|
|
$
|
179,904
|
|
|
$
|
182,096
|
|
|
Securities repurchase facility (2011)
|
11,774
|
|
|
55,603
|
|
|
11,774
|
|
|
55,603
|
|
|
2010-ABS advance financing facility
|
194,833
|
|
|
233,208
|
|
|
219,563
|
|
|
249,499
|
|
|
2011-1 Agency advance financing facility
|
476,091
|
|
|
549,284
|
|
|
25,011
|
|
|
28,811
|
|
|
MSR note
|
4,627
|
|
|
12,328
|
|
|
10,180
|
|
|
16,230
|
|
|
2012-AW agency advance financing facility
|
100,000
|
|
|
135,343
|
|
|
—
|
|
|
—
|
|
|
2012-C ABS advance financing facility
|
657,027
|
|
|
742,238
|
|
|
—
|
|
|
—
|
|
|
2012-R ABS advance financing facility
|
374,739
|
|
|
428,758
|
|
|
—
|
|
|
—
|
|
|
2012-W ABS advance financing facility
|
492,235
|
|
|
566,332
|
|
|
—
|
|
|
—
|
|
|
Reverse participations and max claim buyouts financing facility
|
65,943
|
|
|
76,455
|
|
|
—
|
|
|
—
|
|
|
MBS advance financing facility (2012)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Originations Segment Notes Payable
|
|
|
|
|
|
|
|
|
$375 million warehouse facility
|
245,287
|
|
|
285,281
|
|
|
46,810
|
|
|
51,040
|
|
|
$150 million warehouse facility
|
224,790
|
|
|
241,867
|
|
|
251,722
|
|
|
265,083
|
|
|
$250 million warehouse facility (2011)
|
356,104
|
|
|
371,836
|
|
|
7,310
|
|
|
7,672
|
|
|
$100 million warehouse facility (2009)
|
87,747
|
|
|
91,403
|
|
|
16,047
|
|
|
16,715
|
|
|
ASAP+ facility
|
124,572
|
|
|
124,596
|
|
|
104,858
|
|
|
104,006
|
|
|
Total notes payable
|
$
|
3,601,586
|
|
|
$
|
4,121,154
|
|
|
$
|
873,179
|
|
|
$
|
976,755
|
|
Servicing Segment Notes Payable
MBS advance financing facility
- Nationstar has a
one
-year committed facility agreement with a GSE, under which Nationstar may transfer to the GSE certain servicing advance receivables against the transfer of funds by the GSE. This facility has the capacity to purchase up to
$325.0 million
in eligible servicing advance receivables. The interest rate is based on
LIBOR
plus a spread of
2.50%
to
4.00%
. The maturity date of this facility is December 2013.
Securities repurchase facility (2011)
- In
December 2011
, Nationstar entered into a securities repurchase facility with a financial services company that was amended to extend the expiration to
March 2013
. The master repurchase agreement (MRA) states that Nationstar may from time to time transfer to the financial services company eligible securities against the transfer of funds by the financial services company, with a simultaneous agreement by the financial services company to transfer such securities to Nationstar at a certain date, or on demand by Nationstar, against the transfer of funds from Nationstar. Additionally, the financial services company may elect to extend the transfer date for an additional
90
days at mutually agreed upon terms. The interest rate is based on
LIBOR
plus a margin of
3.50%
. As of
December 31, 2012
, Nationstar has pledged the Company’s
$55.6 million
outstanding retained interest in the outstanding Nonrecourse debt—Legacy Assets securitization, which was structured as a financing.
2010-ABS advance financing facility
- In
December 2010
, Nationstar executed the 2010-ABS Advance Financing Facility with a financial institution. This facility has the capacity to borrow up to
$300.0 million
of advance receivables and the interest rate is based on
LIBOR
plus a spread of
3.00%
. This facility matures in
May 2014
. This debt is nonrecourse to Nationstar.
2011-1 Agency advance financing facility
- In
October 2011
, Nationstar executed the 2011-1 Agency Advance Financing Facility with a financial institution. This facility has the capacity to borrow up to
$600.0 million
and the interest rate is based on
LIBOR
plus a
spread of 2.50% to 6.50% depending upon class of the note
. The maturity date of this facility is
October 2013
. This facility is secured by servicing advance receivables and is nonrecourse to Nationstar. In January 2013, Nationstar
amended this facility and issued an additional
$300 million
in asset backed term notes with a weighted average fixed interest rate of
1.46%
and a weighted average term of
3 years
. (See Note 29 - Subsequent Events).
MSR note
- In connection with an
October 2009
MSR acquisition, Nationstar executed a
four
-year note agreement with a GSE. As collateral for this note, Nationstar has pledged Nationstar’s rights, title, and interest in the acquired servicing portfolio. The interest rate is based on
LIBOR
plus
2.50%
. The maturity date of this facility is
October 2013
.
2012-AW agency advance financing facility
- In
June 2012
, Nationstar executed the 2012-AW Agency Advance Financing Facility with a financial institution. This facility has the capacity to borrow up to
$100.0 million
and the interest rate is based on
LIBOR plus a spread of 2.50%
. The maturity date of this facility is
June 2013
. This facility is secured by servicing advance receivables and is nonrecourse to Nationstar. On January 31, 2013, Nationstar terminated this revolving financing receivable and repaid all outstanding balances as of the termination date.
2012-C ABS advance financing facility
- In
June 2012
, Nationstar executed the 2012-C ABS Advance Financing Facility with a financial institution. This facility, amended in November 2012, has the capacity to borrow up to
$700.0 million
and the interest rate is based on
LIBOR plus a spread of 3.25% to 4.25%
. The maturity date of this facility is
November 2013
. This facility is secured by servicing advance receivables and is nonrecourse to Nationstar.
2012-R ABS advance financing facility
- In
June 2012
, Nationstar executed the 2012-R ABS Advance Financing Facility with a financial institution. This facility, amended in December 2012, has a borrowing capacity of up to
$400.0 million
and the interest rate is based on
LIBOR plus a spread of 3.37% to 8.00%
. The maturity date of this facility is
June 2014
. This facility is secured by servicing advance receivables and is nonrecourse to Nationstar.
2012-W ABS advance financing facility
- In
June 2012
, Nationstar executed the 2012-W ABS Advance Financing Facility with a financial institution. This facility, amended in December 2012, has the capacity to borrow up to
$500.0 million
and the interest rate is based on
LIBOR plus a spread of 3.75%
. The maturity date of this facility is
June 2013
. This facility is secured by servicing advance receivables and is nonrecourse to Nationstar.
Reverse participations and max claim buyouts financing facility -
In June 2012, Nationstar executed a reverse participations and max claim buyouts financing facility with a financial institution. This facility has capacity to borrow up to
$150.0 million
and the interest rate is based on
LIBOR
plus a spread of
4.00%
. The maturity date of this facility is June 2014. This facility is partially secured by reverse mortgage loans.
MBS advance financing facility (2012)
- In December 2012, Nationstar executed a MBS Advance Financing Facility with a financial institution. This facility has the capacity to borrow up to
$125.0 million
through April 14, 2013,
$100.0 million
for the period April 15, 2013 through July 14, 2013 and
$50.0 million
for any date thereafter. The interest rate is LIBOR plus a spread of
3.50%
. The maturity date of this facility is January 2014. This facility is secured by servicing advance receivables and is nonrecourse to Nationstar.
Originations Segment Notes Payable
$375 million warehouse facility
- In
February 2010
, Nationstar executed a MRA with a financial institution which will expire in January 2014. The MRA states that from time to time Nationstar may enter into transactions, for an aggregate amount of
$375.0 million
, in which Nationstar agrees to transfer to the same financial institution certain mortgage loans against the transfer of funds by the same financial institution, with a simultaneous agreement by the same financial institution to transfer such mortgage loans to Nationstar at a date certain, or on demand by Nationstar, against the transfer of funds from Nationstar. In January 2013, Nationstar amended the agreement to increase the borrowing capacity from
$375.0 million
to
$750.0 million
. The interest rate is based on
LIBOR
plus a spread ranging from
1.75%
to
2.50%
. See Note 29 - Subsequent Events.
$150 million warehouse facility
- Nationstar has a MRA with a financial services company, which was amended in
February 2012
to expire in
August 2013
and reduce the committed amount from
$300.0 million
to
$150.0 million
. The facility also has an uncommitted amount of $150 million that can be granted at the discretion of the financial institution. The MRA states that from time to time Nationstar may enter into transactions in which Nationstar agrees to transfer to the financial services company certain mortgage loans or MBS against the transfer of funds by the financial services company, with a simultaneous agreement by the financial services company to transfer such mortgage loans or MBS to Nationstar at a certain date, or on demand by Nationstar, against the transfer of funds from Nationstar. The interest rate is based on
LIBOR
plus a spread of
3.25%
.
$250 million warehouse facility (2011)
- In
March 2011
, Nationstar executed an MRA with a financial institution, under which Nationstar may enter into transactions, for an aggregate amount of
$750.0 million
in which Nationstar agrees to transfer to the same financial institution certain mortgage loans and certain securities against the transfer of funds by the same financial
institution, with a simultaneous agreement by the same financial institution to transfer such mortgage loans and securities to Nationstar at a date certain, or on demand by Nationstar, against the transfer of funds from Nationstar. The maturity is
August 2013
with the interest rate based on
LIBOR
plus a spread of
2.25%
to
3.00%
, which varies based on the underlying transferred collateral.
$100 million warehouse facility (2009)
- In
October 2009
, Nationstar executed a MRA with a financial institution. This MRA states that from time to time Nationstar may enter into transactions, for an aggregate amount of
$100.0 million
, in which Nationstar agrees to transfer to the financial institution certain mortgage loans against the transfer of funds by the financial institution, with a simultaneous agreement by the financial institution to transfer such mortgage loans to Nationstar at a certain date, or on demand by Nationstar, against the transfer of funds from Nationstar. The interest rate is based on
LIBOR
plus a spread of
3.25%
. The maturity date of this MRA with the financial institution was extended to March 2013.
ASAP + facility
- During 2009, Nationstar began executing As Soon As Pooled Plus agreements with a GSE, under which Nationstar transfers to the GSE eligible mortgage loans that are to be pooled into the GSE MBS against the transfer of funds by the GSE. The interest rate is based on
LIBOR
plus a spread of
1.50%
. These agreements typically have a maturity of up to
45
days.
Unsecured Senior Notes
A summary of the balances of unsecured senior notes is presented below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
|
$285 million face value, 10.875% interest rate payable semi-annually, due April 2015
|
$
|
281,676
|
|
|
$
|
280,199
|
|
|
$375 million face value, 9.625% interest rate payable semi-annually, due May 2019
|
380,232
|
|
|
—
|
|
|
$400 million face value, 7.875% interest rate payable semi-annually, due October 2020
|
$
|
400,727
|
|
|
$
|
—
|
|
|
Total
|
$
|
1,062,635
|
|
|
$
|
280,199
|
|
The indentures for the unsecured senior notes contain various covenants and restrictions that limit the Company's, Nationstar's, or certain of its subsidiaries’, ability to incur additional indebtedness, pay dividends, make certain investments, create liens, consolidate, merge or sell substantially all of their assets, or enter into certain transactions with affiliates.
The expected maturities of Nationstar's senior unsecured notes based on contractual maturities are as follows (in thousands).
|
|
|
|
|
|
|
|
Year
|
Amount
|
|
2013
|
$
|
—
|
|
|
2014
|
—
|
|
|
2015
|
285,000
|
|
|
2016
|
—
|
|
|
2017
|
—
|
|
|
Thereafter
|
775,000
|
|
|
Total
|
$
|
1,060,000
|
|
Legacy Asset and Other Financing
Nonrecourse Debt–Legacy Assets
In
November 2009
, Nationstar completed the securitization of approximately
$222.0 million
of ABS, which was structured as a secured borrowing. This structure resulted in Nationstar carrying the securitized loans as mortgages on Nationstar’s consolidated bal
ance sheet and recognizing the asset-backed certificates acquired by third parties as nonrecourse debt, totaling approximately
$100.6 million
and
$112.5 million
at
December 31, 2012
and 2011, respectively. The principal and interest on these notes are paid using the cash flows from the underlying mortgage loans, which serve as collateral for the debt. The interest rate paid on the outstanding securities is
7.50%
, which is subject to an available funds cap. The total outstanding
principal balance on the underlying mortgage loans serving as collateral for the debt was approximately
$336.9 million
and
$373.1 million
at
December 31, 2012
and 2011, respectively. Accordingly, the timing of the principal payments on this nonrecourse debt is dependent on the payments received on the underlying mortgage loans. The unpaid principal balance on the outstanding notes was
$117.1 million
and
$130.8 million
at
December 31, 2012
and 2011, respectively.
Excess Spread Financing Debt at Fair Value
In conjunction with Nationstar's acquisitions of certain mortgage servicing rights on various pools of residential mortgage loans (the Portfolios), Nationstar has entered into sale and assignment agreements which are treated as financings with certain entities formed by Newcastle, in which Newcastle and/or certain funds managed by Fortress own an interest. Nationstar, in transactions accounted for as financing arrangements, sold to such entities the right to receive a specified percentage of the excess cash flow generated from the Portfolios after receipt of a fixed basic servicing fee per loan.
Nationstar retains all ancillary income associated with servicing the Portfolios and the remaining portion of the excess cash flow after receipt of the fixed basic servicing fee. Nationstar continues to be the servicer of the Portfolios and provides all servicing and advancing functions. Such entities have no prior or ongoing obligations associated with the Portfolios.
Contemporaneous with the above, Nationstar entered into refinanced loan agreements with such entities. Should Nationstar refinance any loan in the Portfolios, subject to certain limitations, Nationstar will be required to transfer the new loan or a replacement loan of similar economic characteristics into the Portfolios. The new or replacement loan will be governed by the
same terms set forth in the sale and assignment agreement described above.
Nationstar has elected fair value accounting for these financing agreements. The total carrying amount of the outstanding excess spread financing agreements was
$288.1 million
and
$44.6 million
at
December 31, 2012
and 2011, respectively.
The following table shows the hypothetical effect on the fair value of excess spread financing using various unfavorable variations of the expected levels of certain key assumptions used in valuing these liabilities at
December 31, 2012
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount Rate
|
|
Total Prepayment
Speeds
|
|
Credit Losses
|
|
|
100 bps
Adverse
Change
|
200 bps
Adverse
Change
|
|
10%
Adverse
Change
|
20%
Adverse
Change
|
|
10%
Adverse
Change
|
20%
Adverse
Change
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
Excess spread financing
|
$
|
7,978
|
|
$
|
16,404
|
|
|
$
|
10,654
|
|
$
|
22,240
|
|
|
$
|
5,538
|
|
$
|
11,075
|
|
As the fair value on the outstanding excess spread financing is linked to the future economic performance of certain acquired MSRs, any adverse changes in the acquired MSRs would inherently benefit the net carrying amount of the excess spread financing, while any beneficial changes in certain key assumptions used in valuing the acquired MSRs would negatively impact the net carrying amount of the excess spread financing.
These sensitivities are hypothetical and should be evaluated with care. The effect on fair value of a 10% variation in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors (e.g., a decrease in total prepayment speeds may result in an increase in credit losses), which could impact the above hypothetical effects.
Participating Interest Financing
Participating interest financing represent the issuance of pools of Home Equity Conversion Mortgage Backed Securities (HMBS) to third-party security holders which are guaranteed by certain GSEs. Nationstar has accounted for the transfer of these advances in the related Home Equity Conversion Mortgages (HECM) loans as secured borrowings, retaining the initial reverse mortgage interests on its consolidated balance sheet, and recording the pooled HMBS as participating interest financing liabilities on the Company’s consolidated balance sheet. Monthly cash flows generated from the HECM loans are used to
service the HMBS. The interest rate is based on the underlying HMBS rate with a range of
0.53%
to
7.17%
. The participating interest financing was
$580.8 million
at December 31, 2012. There was
none
outstanding at December 31, 2011.
Financial Covenants
As of
December 31, 2012
, Nationstar was in compliance with its covenants on its borrowing arrangements and credit facilities. These covenants generally relate to Nationstar’s tangible net worth, liquidity reserves, and leverage requirements.
13. Repurchase Reserves
Certain whole loan sale contracts include provisions requiring Nationstar to repurchase a loan if a borrower fails to make certain initial loan payments due to the acquirer or if the accompanying mortgage loan fails to meet customary representations and warranties. These representations and warranties are made to the loan purchasers about various characteristics of the loans, such as manner of origination, the nature and extent of underwriting standards applied and the types of documentation being provided and typically are in place for the life of the loan. In the event of a breach of the representations and warranties, the Company may be required to either repurchase the loan or indemnify the purchaser for losses it sustains on the loan. In addition, an investor may request that Nationstar refund a portion of the premium paid on the sale of mortgage loans if a loan is prepaid within a certain amount of time from the date of sale. Nationstar records a provision for estimated repurchases and premium recapture on loans sold, which is charged to gain on mortgage loans held for sale. The reserve for repurchases is included as a component of payables and accrued liabilities. The current unpaid principal balance of loans sold by Nationstar represents the maximum potential exposure to repurchases related to representations and warranties. Reserve levels are a function of expected losses based on actual pending and expected claims, repurchase requests, historical experience, and loan volume. While the amount of repurchases and premium recapture is uncertain, Nationstar considers the liability to be appropriate.
The activity of the outstanding repurchase reserves were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
2010
|
|
Repurchase reserves, beginning of period
|
$
|
10,026
|
|
|
$
|
7,321
|
|
|
$
|
3,648
|
|
|
Additions
|
13,121
|
|
|
5,534
|
|
|
4,649
|
|
|
Charge-offs
|
(4,636
|
)
|
|
(2,829
|
)
|
|
(976
|
)
|
|
Repurchase reserves, end of period
|
$
|
18,511
|
|
|
$
|
10,026
|
|
|
$
|
7,321
|
|
14. General and Administrative Expenses
General and administrative expenses consist of the following for the dates indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
|
|
|
2012
|
|
2011
|
|
2010
|
|
Servicing
|
$
|
58,840
|
|
|
$
|
18,396
|
|
|
$
|
10,528
|
|
|
Legal and professional fees
|
52,673
|
|
|
17,607
|
|
|
14,741
|
|
|
Outsourcing
|
18,199
|
|
|
2,557
|
|
|
1,049
|
|
|
Depreciation and amortization
|
9,620
|
|
|
4,063
|
|
|
2,117
|
|
|
Equipment
|
8,222
|
|
|
4,605
|
|
|
3,862
|
|
|
Travel
|
8,014
|
|
|
3,388
|
|
|
2,152
|
|
|
Postage
|
7,582
|
|
|
5,978
|
|
|
4,220
|
|
|
Dues and fees
|
7,522
|
|
|
5,588
|
|
|
4,114
|
|
|
Loan processing charges
|
6,956
|
|
|
3,508
|
|
|
3,197
|
|
|
Telecommunications and technology
|
6,700
|
|
|
3,832
|
|
|
2,347
|
|
|
Stationary and office supplies
|
5,309
|
|
|
3,964
|
|
|
2,594
|
|
|
Advertising
|
5,300
|
|
|
4,723
|
|
|
4,559
|
|
|
Other
|
6,650
|
|
|
3,974
|
|
|
3,433
|
|
|
Total general and administrative expenses
|
$
|
201,587
|
|
|
$
|
82,183
|
|
|
$
|
58,913
|
|
15. Income Taxes
The consolidated financial statements through December 31, 2011 and for the period January 1, 2012 up to the Reorganization date (March 7, 2012) do not include income tax expense or benefit or any deferred tax assets or liabilities. Nationstar Inc.'s corporate subsidiaries were subject to income taxes prior to the Reorganization, however, income tax expense (primarily state) and related tax liabilities were not material for presentation purposes. As a result of the Reorganization, Nationstar Inc. and its subsidiaries, including Nationstar, became a new corporate consolidated group for income tax purposes. As a result of the change in income tax status, the Company recorded deferred taxes on the difference between book and tax bases in assets and liabilities as of the Reorganization date. The net deferred tax asset or liability is recorded through the consolidated statement of operations and comprehensive income as a component of income tax expense. As of the Reorganization date, the Company recorded a deferred tax asset for net operating and other loss carryforwards inherited as a result of the Reorganization, a deferred tax liability related to basis differences in Nationstar's assets and liabilities and a valuation allowance for deferred tax assets that management concluded would likely not be realized.
The components of income tax expense (benefit) on continuing operations were as follows (in thousands):
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2012
|
|
Current
|
|
|
Federal
|
$
|
82,120
|
|
|
State
|
10,126
|
|
|
|
92,246
|
|
|
|
|
|
Deferred
|
|
|
Federal
|
(18,721
|
)
|
|
State
|
(2,229
|
)
|
|
|
(20,950
|
)
|
|
Total
|
$
|
71,296
|
|
Income tax expense differs from the amounts computed by applying the U.S. Federal corporate tax rate of
35%
as follows for the period indicated (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended
December 31, 2012
|
|
|
(in dollars)
|
|
(in percentages)
|
|
|
|
|
|
|
Tax expense at federal statutory rate
|
$
|
96,804
|
|
|
35.0
|
%
|
|
Effect of:
|
|
|
|
|
Initial recording of deferred tax asset/liability, net of valuation allowance
|
—
|
|
|
—
|
%
|
|
State taxes, net of federal benefit
|
6,129
|
|
|
2.2
|
%
|
|
Pre-reorganization earnings
|
(14,302
|
)
|
|
(5.2
|
)%
|
|
Release of valuation allowance
|
(17,767
|
)
|
|
(6.4
|
)%
|
|
Other, net
|
432
|
|
|
0.2
|
%
|
|
Total income tax expense
|
$
|
71,296
|
|
|
25.8
|
%
|
Deferred income tax amounts at December 31, 2012, reflect the effect of basis differences in assets and liabilities for financial reporting and income tax purposes and tax attribute carryforwards.
Temporary differences and carryforwards that give rise to deferred tax assets and liabilities are comprised of the following (in thousands):
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
Deferred Tax Assets
|
|
|
Effect of:
|
|
|
Loss carryforwards (federal, state & capital)
|
$
|
74,335
|
|
|
MSR fair value adjustments
|
61,837
|
|
|
Reverse mortgage premiums
|
15,248
|
|
|
Loss reserves
|
10,256
|
|
|
Rent expense
|
4,206
|
|
|
Equity in earnings of unconsolidated group for tax
|
3,662
|
|
|
Restricted share based compensation
|
3,401
|
|
|
Impairment
|
2,661
|
|
|
Other, net
|
275
|
|
|
Total Deferred Tax Assets
|
175,881
|
|
|
|
|
|
Deferred Tax Liabilities
|
|
|
Originated MSR gain on sale
|
(67,975
|
)
|
|
Purchased MSR amortization
|
(26,136
|
)
|
|
Depreciation and amortization, net
|
(10,018
|
)
|
|
Co-investment fair value adjustments
|
(1,222
|
)
|
|
Prepaid assets
|
(1,161
|
)
|
|
Other, net
|
(65
|
)
|
|
Total Deferred Tax Liabilities
|
(106,577
|
)
|
|
Valuation Allowance
|
(45,567
|
)
|
|
Net Deferred Tax Asset
|
$
|
23,737
|
|
The federal net operating loss carryforwards (NOL) amount to approximately
$200.1 million
at December 31, 2012. It is expected that these NOL's will begin to expire in 2027, if unused. The Company also has net capital loss and state NOL carryforwards of approximately
$4.7 million
and
$102.1 million
that begin to expire in 2015 and 2013, respectively.
The Company regularly reviews the carrying amount of its deferred tax assets to determine if a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company's deferred tax assets will not be realized in future periods, a valuation allowance is established. Consideration is given to all positive and negative evidence related to the realization of the deferred tax assets.
Management considers all available evidence in evaluating the need for a valuation allowance. Significant judgment is required in assessing future earning trends and the timing of reversals of temporary differences. The Company's evaluation is based on current tax laws as well as management's expectations of future performance. Furthermore, in conjunction with the Reorganization, the Company incurred a change in control within the meaning of Section 382 and 383 of the Internal Revenue Code. As a result, federal tax law places an annual limitation on the amount of the Company's federal net operating loss carryforward that may be used.
In particular, additional scrutiny must be given to deferred tax assets of an entity that has incurred pre-tax losses during the three most recent years because it is significant negative evidence that is objective and verifiable and therefore difficult to overcome. The Company had significant pre-tax losses for 2009 and 2010, and at the Reorganization date, the Company's management considered this factor in its analysis of deferred tax assets. Considering the Company's 2011 pre-tax income, the Company had a significant three year cumulative pre-tax loss. Additionally, the Company incurred significant losses for the periods 2006 through 2008.
In conjunction with the Company's initial public offering and Reorganization, the Company became a taxable entity, inherited certain tax attributes, including net operating losses, and recorded the effects of the Company's temporary differences. At the Reorganization date, the Company recorded a net deferred tax asset which was primarily caused by the net operating loss
carryforward. Simultaneously, the Company recorded a valuation allowance against the net deferred tax asset. The principle reason for the valuation allowance was the cumulative losses for the 2009 - 2011 period and the Company's overall history of losses. Although the Company was profitable in 2011, as of the Reorganization date management concluded it would be inappropriate to rely on future income projections to conclude the net deferred tax asset would be realized.
The Company generated significantly increased revenues in 2012, adding approximately
$100 billion
in UPB to its mortgage servicing portfolio, more than doubling its mortgage loan originations and recognizing significant pre-tax income. Management believes that the increase in the size of the Company will continue in the near term. The Company expects to add approximately
$215 billion
in UPB to its mortgage servicing portfolio in 2013 (see Note 29 - Subsequent Events). Because of the increase in the size of the Company, management has forecasted significant earnings for the foreseeable future.
The Company's NOL is limited by Section 382 of the Internal Revenue Code. Because of this limitation, the Company will to utilize the NOL over a
19
year period. Earnings during this extended period are difficult to forecast with any certainty. These factors, among others, caused management to release a portion of the valuation allowance at year end 2012. However, because forecasted income generally becomes less reliable over time, a full release of the valuation allowance was not determined to be appropriate at year end.
16. Earnings Per Share
The computation of basic and diluted net income (loss) attributable to Nationstar Inc. is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2012
|
|
|
Net Income
|
|
Average Shares Outstanding
|
|
Earnings Per Share
|
|
|
(in thousands, except share amounts)
|
|
Net income attributable to Nationstar Inc. — basic
|
$
|
205,287
|
|
|
85,328
|
|
|
$
|
2.41
|
|
|
|
|
|
|
|
|
|
Effect of dilutive stock awards
|
—
|
|
|
196
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Nationstar Inc. — diluted
|
$
|
205,287
|
|
|
85,524
|
|
|
$
|
2.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2011
|
|
|
Net Income
|
|
Average Shares Outstanding
|
|
Earnings Per Share
|
|
|
(in thousands, except share amounts)
|
|
Net income attributable to Nationstar Inc. — basic
|
$
|
20,887
|
|
|
70,000
|
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
Effect of dilutive stock awards
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Nationstar Inc. — diluted
|
$
|
20,887
|
|
|
70,000
|
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2010
|
|
|
Net Loss
|
|
Average Shares Outstanding
|
|
Earnings Per Share
|
|
|
(in thousands, except share amounts)
|
|
Net loss attributable to Nationstar Inc. — basic
|
$
|
(9,914
|
)
|
|
70,000
|
|
|
$
|
(0.14
|
)
|
|
|
|
|
|
|
|
|
Effect of dilutive stock awards
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Nationstar Inc. — diluted
|
$
|
(9,914
|
)
|
|
70,000
|
|
|
$
|
(0.14
|
)
|
17. Fair Value Measurements
ASC 820,
Fair Value Measurements and Disclosures (ASC 820),
provides a definition of fair value, establishes a framework for measuring fair value, and requires expanded disclosures about fair value measurements. The standard applies when GAAP requires or allows assets or liabilities to be measured at fair value and, therefore, does not expand the use of fair value in any new circumstance.
ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tiered fair value hierarchy based on the level of observable inputs used in the measurement of fair value (e.g., Level 1 representing quoted prices for identical assets or liabilities in an active market; Level 2 representing values using observable inputs other than quoted prices included within Level 1; and Level 3 representing estimated values based on significant unobservable inputs). In addition, ASC 820 requires an entity to consider all aspects of nonperformance risk, including its own credit standing, when measuring the fair value of a liability. Under ASC 820, related disclosures are segregated for assets and liabilities measured at fair value based on the level used within the hierarchy to determine their fair values.
The following describes the methods and assumptions used by Nationstar in estimating fair values:
Cash and Cash Equivalents, Restricted Cash –
The carrying amount reported in the consolidated balance sheets approximates fair value.
Mortgage Loans Held for Sale –
Nationstar originates mortgage loans in the U.S. that it intends to sell to Fannie Mae, Freddie Mac, and Ginnie Mae. Additionally, Nationstar holds mortgage loans that it intends to sell into the secondary markets via whole loan sales or securitizations. Nationstar measures newly originated prime residential mortgage loans held for sale at fair value.
Mortgage loans held for sale are valued using a market approach by utilizing either: (i) the fair value of securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to mortgage servicing and credit risk, (ii) current commitments to purchase loans or (iii) recent observable market trades for similar loans, adjusted for credit risk and other individual loan characteristics. Nationstar classifies these valuations as Level 2 in the fair value disclosures.
Mortgage Loans Held for Investment, subject to nonrecourse debt – Legacy Assets –
Nationstar determines the fair value of loans held for investment, subject to nonrecourse debt – Legacy Assets using internally developed valuation models. These valuation models estimate the exit price Nationstar expects to receive in the loan’s principal market. Although Nationstar utilizes and gives priority to observable market inputs such as interest rates and market spreads within these models, Nationstar typically is required to utilize internal inputs, such as prepayment speeds, credit losses, and discount rates. These internal inputs require the use of judgment by Nationstar and can have a significant impact on the determination of the loan’s fair value. As these prices are derived from a combination of internally developed valuation models and quoted market prices, Nationstar classifies these valuations as Level 3 in the fair value disclosures.
Mortgage Servicing Rights – Fair Value –
Nationstar recognizes MSRs related to all existing residential mortgage loans transferred to a third party in a transfer that meets the requirements for sale accounting and for which the servicing rights are retained. Additionally, Nationstar may acquire the rights to service forward residential mortgage loans that do not relate to assets transferred by Nationstar through the purchase of these rights from third parties. Nationstar estimates the fair value of its forward MSRs using a process that combines the use of a discounted cash flow model and analysis of current market data to
arrive at an estimate of fair value. The cash flow assumptions and prepayment assumptions used in the model are based on various factors, with the key assumptions being mortgage prepayment speeds, discount rates, and credit losses. These assumptions are generated and applied based on collateral stratifications including product type, remittance type, geography, delinquency and coupon dispersion. These assumptions require the use of judgment by Nationstar and can have a significant impact on the determination of the MSR’s fair value. Periodically, management obtains third party valuations of a portion of the portfolio to assess the reasonableness of the fair value calculations provided by the cash flow model. Because of the nature of the valuation inputs, Nationstar classifies these valuations as Level 3 in the fair value disclosures.
Reverse Mortgage Interests –
Nationstar’s reverse mortgage interests consist of fees paid to taxing authorities for borrowers' unpaid taxes and insurance, and payments made to borrowers for line of credit draws on reverse mortgages. These advances include due and payable advances, which are recovered upon the foreclosure and sale of the subject property, and defaulted advances that can be securitized. Nationstar estimates the fair value using a market approach by utilizing the fair value of securities backed by similar advances on reverse mortgage loans, adjusted for certain factors. Nationstar classifies these valuations as Level 2 in the fair value disclosures.
REO –
Nationstar determines the fair value of REO properties through the use of third-party appraisals and broker price opinions, adjusted for estimated selling costs. Such estimated selling costs include realtor fees and other anticipated closing costs. These values are adjusted to take into account factors that could cause the actual liquidation value of foreclosed properties to be different than the appraised values. This valuation adjustment is based upon Nationstar’s historical experience with REO. REO is classified as Level 3 in the fair value disclosures.
Derivative Instruments –
Nationstar enters into a variety of derivative financial instruments as part of its hedging strategy. The majority of these derivatives are exchange-traded or traded within highly active dealer markets. In order to determine the fair value of these instruments, Nationstar utilizes the exchange price or dealer market price for the particular derivative contract; therefore, these contracts are classified as Level 2. In addition, Nationstar enters into IRLCs and LPCs with prospective borrowers and other loan originators. These commitments are carried at fair value based on the fair value of related mortgage loans which are based on observable market data. Nationstar adjusts the outstanding IRLCs with prospective borrowers based on an expectation that it will be exercised and the loan will be funded. IRLCs and LPCs are recorded in other assets or derivative financial instruments in the consolidated balance sheets. These commitments are classified as Level 2 in the fair value disclosures.
Notes Payable –
Notes payable consists of outstanding borrowings on Nationstar's warehouse and advance financing facilities. As the underlying warehouse and advance finance facilities bear interest at a rate that is periodically adjusted based on a market index, the carrying amount reported on the consolidated balance sheet approximates fair value. Nationstar classifies these valuations as Level 3 in the fair value disclosures.
Unsecured Senior Notes –
The fair value of unsecured senior notes is based on quoted market prices and is considered Level 1 from the market observable inputs used to determine fair value.
Nonrecourse Debt – Legacy Assets –
Nationstar estimates fair value based on the present value of future expected discounted cash flows with the discount rate approximating current market value for similar financial instruments. These prices are derived from a combination of internally developed valuation models and quoted market prices, and are classified as Level 3.
Excess Spread Financing –
Nationstar estimates fair value based on the present value of future expected discounted cash flows with the discount rate approximating current market value for similar financial instruments. The cash flow assumptions and prepayment assumptions used in the model are based on various factors, with the key assumptions at
December 31, 2012
being mortgage prepayment speeds of
14.0%
, average life of
4.2
years, and discount rate of
15.0%
. Changes in fair value to the excess spread financing are recorded as a component of service fee income in Nationstar's consolidated statement of operations and comprehensive income. As these prices are derived from a combination of internally developed valuation models and quoted market prices based on the value of the underlying MSRs, Nationstar classifies these valuations as Level 3 in the fair value disclosures.
The range of various assumptions used in Nationstar's valuation of Excess Spread financing were as follows:
|
|
|
|
|
|
|
|
Excess Spread financing
|
Prepayment Speeds
|
Average Life (years)
|
Discount Rate
|
|
Low
|
9.4%
|
3.0 years
|
13.6%
|
|
High
|
22.4%
|
4.5 years
|
15.5%
|
Participating Interest Financing –
Nationstar estimates the fair value using a market approach by utilizing the fair value of securities backed by similar participating interests in reverse mortgage loans. Nationstar classifies these valuations as Level 2 in the fair value disclosures.
The estimated carrying amount and fair value of Nationstar’s financial instruments and other assets and liabilities measured at fair value on a recurring basis is as follows for the dates indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
Recurring Fair Value Measurements
|
|
|
Total Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Mortgage loans held for sale
(1)
|
$
|
1,480,537
|
|
|
$
|
—
|
|
|
$
|
1,480,537
|
|
|
$
|
—
|
|
|
Mortgage servicing rights – fair value
(1)
|
635,860
|
|
|
—
|
|
|
—
|
|
|
635,860
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
IRLCs
|
150,048
|
|
|
—
|
|
|
150,048
|
|
|
—
|
|
|
Forward MBS trades
|
888
|
|
|
—
|
|
|
888
|
|
|
—
|
|
|
Loan Purchase Commitments (LPCs)
|
1,253
|
|
|
—
|
|
|
1,253
|
|
|
—
|
|
|
Total assets
|
$
|
2,268,586
|
|
|
$
|
—
|
|
|
$
|
1,632,726
|
|
|
$
|
635,860
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
|
|
|
Interest rate swaps and caps
|
$
|
6,120
|
|
|
$
|
—
|
|
|
$
|
6,120
|
|
|
$
|
—
|
|
|
Interest rate swaps on ABS debt
|
1,846
|
|
|
—
|
|
|
1,846
|
|
|
—
|
|
|
Forward MBS trades
|
11,974
|
|
|
—
|
|
|
11,974
|
|
|
—
|
|
|
LPCs
|
86
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
Excess spread financing (at fair value)
|
288,089
|
|
|
—
|
|
|
—
|
|
|
288,089
|
|
|
Total liabilities
|
$
|
308,115
|
|
|
$
|
—
|
|
|
$
|
20,026
|
|
|
$
|
288,089
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
Recurring Fair Value Measurements
|
|
|
Total Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Mortgage loans held for sale
(1)
|
$
|
458,626
|
|
|
$
|
—
|
|
|
$
|
458,626
|
|
|
$
|
—
|
|
|
Mortgage servicing rights – fair value
(1)
|
251,050
|
|
|
—
|
|
|
—
|
|
|
251,050
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
IRLCs
|
11,302
|
|
|
—
|
|
|
11,302
|
|
|
—
|
|
|
Total assets
|
$
|
720,978
|
|
|
$
|
—
|
|
|
$
|
469,928
|
|
|
$
|
251,050
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
|
|
|
Interest rate swaps and caps
|
$
|
6,540
|
|
|
$
|
—
|
|
|
$
|
6,540
|
|
|
$
|
—
|
|
|
Forward MBS trades
|
5,830
|
|
|
—
|
|
|
5,830
|
|
|
—
|
|
|
Excess spread financing (at fair value)
|
44,595
|
|
|
—
|
|
|
—
|
|
|
44,595
|
|
|
Total liabilities
|
$
|
56,965
|
|
|
$
|
—
|
|
|
$
|
12,370
|
|
|
$
|
44,595
|
|
|
|
|
|
(1)
|
Based on the nature and risks of these assets and liabilities, the Company has determined that presenting them as a single class is appropriate.
|
The table below presents a reconciliation for all of Nationstar’s Level 3 assets and liabilities measured at fair value on a recurring basis for the dates indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
LIABILITIES
|
|
For the year ended December 31, 2012
|
|
Mortgage
servicing rights
|
|
Excess spread
financing
|
|
Beginning balance
|
|
$
|
251,050
|
|
|
$
|
44,595
|
|
|
Transfers into Level 3
|
|
—
|
|
|
—
|
|
|
Transfers out of Level 3
|
|
—
|
|
|
—
|
|
|
Total gains or losses
|
|
|
|
—
|
|
|
Included in earnings
|
|
(68,242
|
)
|
|
10,683
|
|
|
Included in other comprehensive income
|
|
—
|
|
|
—
|
|
|
Purchases, issuances, sales and settlements
|
|
|
|
|
|
Purchases
|
|
394,445
|
|
|
—
|
|
|
Issuances
|
|
58,607
|
|
|
272,676
|
|
|
Sales
|
|
—
|
|
|
—
|
|
|
Settlements
|
|
—
|
|
|
(39,865
|
)
|
|
Ending balance
|
|
$
|
635,860
|
|
|
$
|
288,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
LIABILITIES
|
|
For the year ending December 31, 2011
|
|
Mortgage
servicing rights
|
|
Excess spread
financing
|
|
Beginning balance
|
|
$
|
145,062
|
|
|
$
|
—
|
|
|
Transfers into Level 3
|
|
—
|
|
|
—
|
|
|
Transfers out of Level 3
|
|
—
|
|
|
—
|
|
|
Total gains or losses
|
|
|
|
|
|
Included in earnings
|
|
(39,000
|
)
|
|
3,060
|
|
|
Included in other comprehensive income
|
|
—
|
|
|
—
|
|
|
Purchases, issuances, sales and settlements
|
|
|
|
|
|
Purchases
|
|
102,800
|
|
|
—
|
|
|
Issuances
|
|
36,474
|
|
|
43,742
|
|
|
Sales
|
|
—
|
|
|
—
|
|
|
Settlements
|
|
5,714
|
|
|
(2,207
|
)
|
|
Ending balance
|
|
$
|
251,050
|
|
|
$
|
44,595
|
|
The table below presents the items which Nationstar measures at fair value on a nonrecurring basis (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonrecurring Fair Value
Measurements
|
|
Total Estimated
Fair Value
|
|
Total Gain
(Loss) Included
in Earnings
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
|
Year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
REO
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,467
|
|
|
$
|
10,467
|
|
|
$
|
(2,864
|
)
|
|
Total assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,467
|
|
|
$
|
10,467
|
|
|
$
|
(2,864
|
)
|
|
Year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
REO
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,668
|
|
|
$
|
3,668
|
|
|
$
|
(6,833
|
)
|
|
Total assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,668
|
|
|
$
|
3,668
|
|
|
$
|
(6,833
|
)
|
|
|
|
|
(1)
|
Based on the nature and risks of these assets and liabilities, the Company has determined that presenting them as a single class is appropriate.
|
The table below presents a summary of the estimated carrying amount and fair value of Nationstar’s financial instruments (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
Carrying
Amount
|
|
Fair Value
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
152,649
|
|
|
$
|
152,649
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Restricted cash
|
393,190
|
|
|
393,190
|
|
|
—
|
|
|
—
|
|
|
Mortgage loans held for sale
|
1,480,537
|
|
|
—
|
|
|
1,480,537
|
|
|
—
|
|
|
Mortgage loans held for investment, subject to nonrecourse debt – Legacy assets
|
238,907
|
|
|
—
|
|
|
—
|
|
|
220,755
|
|
|
Reverse mortgage interests
|
750,273
|
|
|
—
|
|
|
805,650
|
|
|
—
|
|
|
Derivative instruments
|
152,189
|
|
|
—
|
|
|
152,189
|
|
|
—
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
Notes payable
|
3,601,586
|
|
|
—
|
|
|
—
|
|
|
3,601,586
|
|
|
Unsecured senior notes
|
1,062,635
|
|
|
1,151,997
|
|
|
—
|
|
|
—
|
|
|
Derivative financial instruments
|
20,026
|
|
|
—
|
|
|
20,026
|
|
|
—
|
|
|
Nonrecourse debt - Legacy assets
|
100,620
|
|
|
—
|
|
|
—
|
|
|
102,492
|
|
|
Excess spread financing
|
288,089
|
|
|
—
|
|
|
—
|
|
|
288,089
|
|
|
Participating interest financing
|
580,836
|
|
|
—
|
|
|
593,741
|
|
|
—
|
|
|
|
December 31, 2011
|
|
|
Carrying
Amount
|
|
Fair Value
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
62,445
|
|
|
$
|
62,445
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Restricted cash
|
71,499
|
|
|
71,499
|
|
|
—
|
|
|
—
|
|
|
Mortgage loans held for sale
|
458,626
|
|
|
—
|
|
|
458,626
|
|
|
—
|
|
|
Mortgage loans held for investment, subject to nonrecourse debt – Legacy assets
|
243,480
|
|
|
—
|
|
|
—
|
|
|
226,890
|
|
|
Derivative instruments
|
11,302
|
|
|
—
|
|
|
11,302
|
|
|
—
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
Notes payable
|
873,179
|
|
|
—
|
|
|
—
|
|
|
873,179
|
|
|
Unsecured senior notes
|
280,199
|
|
|
282,150
|
|
|
—
|
|
|
—
|
|
|
Derivative financial instruments
|
12,370
|
|
|
—
|
|
|
12,370
|
|
|
—
|
|
|
Nonrecourse debt - Legacy assets
|
112,490
|
|
|
—
|
|
|
—
|
|
|
114,037
|
|
|
Excess spread financing
|
44,595
|
|
|
—
|
|
|
—
|
|
|
44,595
|
|
18. Employee Benefits
Nationstar holds a contributory defined contribution plan (401(k) plan) that covers substantially all full-time employees. Nationstar matches
50%
of participant contributions, up to
6%
of each participant’s total eligible annual base compensation. Matching contributions totaled approximately
$3.7 million
,
$2.3 million
, and $
1.5 million
for the years ended December 31, 2012, 2011, and 2010, respectively.
19. Share-Based Compensation
Nationstar Inc. has adopted the 2012 Incentive Compensation Plan (2012 Plan), that offers equity-based awards to certain key employees of Nationstar, consultants, and non-employee directors. In connection with the initial public offering, on
March 7, 2012
, Nationstar Inc. made grants of restricted stock to management of
1,191,117
shares and also to non-employee directors of
85,716
shares.
The following table summarizes information about the restricted stock as of December 31, 2012 under the 2012 Plan (shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Grant Date Fair Value
|
|
Remaining Contractual Term
|
|
Restricted Stock outstanding at January 1, 2012
|
—
|
|
$—
|
|
0
|
|
Granted in March 2012
|
1,277
|
|
$14.00
|
|
2.2
|
|
Grants issued subsequent to initial public offering
|
69
|
|
$29.95
|
|
2.3
|
|
Forfeited
|
(53)
|
|
|
|
|
|
Restricted Stock outstanding at December 31, 2012
|
1,293
|
|
|
|
|
|
Restricted Stock unvested and expected to vest
|
1,283
|
|
|
|
|
|
Restricted Stock vested and payable at December 31, 2012
|
—
|
|
|
|
|
The following table summarizes the vesting schedule of the restricted stock grants:
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2014
|
|
2015
|
|
Restricted Stock expected to vest
|
431,560
|
|
425,560
|
|
426,836
|
In addition to the 2012 Plan, Nationstar management also had interests in certain of the predecessor parent company FIF’s restricted preferred units which fully vested on
June 30, 2012
. The weighted average grant date fair value of these units was
$4.23
. In conjunction with the final vesting under this plan, certain participants remitted a portion of their Nationstar Inc. common stock to Nationstar in payment of a portion of their federal tax withholdings on their vested shares. The participants paid the remainder of their required tax payments with cash. As a result of the above activity, Nationstar holds
212,156
shares of Nationstar Inc. common shares at their cost of
$4.6 million
. These shares are reflected in Nationstar's consolidated balance sheet as common shares held by subsidiary, a contra equity account. The shares are expected to be held by Nationstar until they can be distributed to Nationstar Inc.
A total of
100,887
Class A Units were granted to certain management members on the date of Nationstar’s acquisition by FIF. No consideration was paid for the Class A Units, and these units vest in accordance with the Vesting Schedule per the FIF HE Holding LLC Amended and Restated Limited Liability Agreement, generally in years
three
through
five
after grant date. All of these outstanding units were completely vested as of
July 11, 2011
.
Effective
September 17, 2010,
FIF HE Holdings LLC executed the FIF HE Holdings LLC Fifth Amended and Restated Limited Liability Company Agreement (the Fifth Agreement). This Fifth Agreement provided for a total of
457,526
Class A Units to be granted to certain management members. No consideration was paid for the granted units, and the units vest in accordance with the Vesting Schedule per the Fifth Agreement.
Simultaneously with the execution of the Fifth Agreement, FIF HE Holdings LLC executed several Restricted Series I Preferred Stock Unit Award Agreements (PRSU Agreements). These Agreements provided for a total of
3,304,000
Class C Units and
3,348,000
Class D Units to be granted to certain management members. No consideration was paid for the granted units, and the units vest in accordance with the Vesting Schedule per the PRSU Agreements.
Total share-based compensation expense, net of forfeitures, for both the 2012 Plan and the predecessor plan recognized for the year ended
December 31, 2012
was
$13.3 million
. Total share-based compensation expense, net of forfeitures, for the predecessor plan
for the years ended
December 31, 2011
and 2010, was
$14.8 million
and
$12.9 million
, respectively. Nationstar expects to recognize
$6.9 million
of compensation expense in 2013,
$2.8 million
in 2014, and
$0.5 million
in 2015 in conjunction with its 2012 Plan.
20. Capital Requirements
Certain of Nationstar’s secondary market investors require various capital adequacy requirements, as specified in the respective selling and servicing agreements. To the extent that these mandatory, imposed capital requirements are not met, Nationstar’s secondary market investors may ultimately terminate Nationstar’s selling and servicing agreements, which would prohibit Nationstar from further originating or securitizing these specific types of mortgage loans. In addition, these secondary market investors may impose additional net worth or financial condition requirements based on an assessment of market conditions or other relevant factors.
Among Nationstar’s various capital requirements related to its outstanding selling and servicing agreements, the most restrictive of these requires Nationstar to maintain a minimum adjusted net worth balance of
$426.1 million
. As of
December 31, 2012
, Nationstar was in compliance with all of its selling and servicing capital requirements.
Additionally, Nationstar is required to maintain a minimum tangible net worth of at least
$350.0 million
as of each quarter-end related to its outstanding Master Repurchase Agreements on its outstanding repurchase facilities. As of
December 31, 2012
, Nationstar was in compliance with these minimum tangible net worth requirements.
21. Commitments and Contingencies
Litigation and Regulatory Matters
In the ordinary course of business, Nationstar Inc. and its subsidiaries are routinely named as defendants in or parties to many pending and threatened legal actions and proceedings, including putative class actions and other litigation. These actions and proceedings are generally based on alleged violations of consumer protection, securities, employment, contract and other laws. The certification of any putative class action could substantially increase our exposure to damages. These actions and proceedings are generally based on alleged violations of consumer protection, securities, employment, contract and other laws, including the Fair Debt Collection Practices Act. Additionally, along with others in our industry, we are subject to repurchase claims and may continue to receive claims in the future, including through securitization vehicles and master servicing arrangements that we have acquired and from our Legacy Portfolio. Certain of the actual or threatened legal actions include claims for substantial compensatory, punitive and/or, statutory damages or claims for an indeterminate amount of damages.
Further, in the ordinary course of business the Company and its subsidiaries can be or are involved in governmental and regulatory examinations, information gathering requests, investigations and proceedings (both formal and informal), regarding the Company’s business, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. Such inquiries may include those into servicer foreclosure processes and procedures and lender-placed insurance. In particular, ongoing and other legal proceedings brought under state consumer protection statues may result in a separate fine for each violation of the statute, which, particularly in the case of class action lawsuits, could result in damages substantially in excess of the amounts we earned form the underlying activities and that could have a material adverse effect on our liquidity and financial position.
The Company seeks to resolve all litigation and regulatory matters in the manner management believes is in the best interest of the Company and contests liability, allegations of wrongdoing and, where applicable, the amount of damages or scope of any penalties or other relief sought as appropriate in each pending matter. On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with outstanding legal and regulatory proceedings utilizing the latest information available. Where available information indicates that it is probable a liability has been incurred and the Company can reasonably estimate the amount of that loss an accrued liability is established. The actual costs of resolving these proceedings may be substantially higher or lower than the amounts accrued.
When a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. As a litigation or regulatory matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. If, at the time of evaluation, the loss contingency is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable. Once the matter is deemed to be both probable and estimable, the Company will establish an accrued liability and record a corresponding amount to litigation related expense. The Company will continue to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established. Litigation related expense, which includes the fees paid to external legal service providers, of
$15.0 million
,
$9.3 million
, and
$9.4 million
for the years ended December 31, 2012, 2011, and 2010 respectively,
were included in general and administrative expense on the consolidated statements of operations and comprehensive income (loss).
For a number of matters for which a loss is probable or reasonably possible in future periods, whether in excess of a related accrued liability or where there is no accrued liability, the Company may be able to estimate a range of possible loss. In determining whether it is possible to provide an estimate of loss or range of possible loss, the Company reviews and evaluates its material litigation and regulatory matters on an ongoing basis, in conjunction with any outside counsel handling the matter. For those matters for which an estimate is possible, management currently believes the aggregate range of reasonably possible loss is
$1.0 million
to
$4.8 million
in excess of the accrued liability (if any) related to those matters. This estimated range of possible loss is based upon currently available information and is subject to significant judgment, numerous assumptions and known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary substantially from the current estimate. Those matters for which an estimate is not possible are not included within the estimated range. Therefore, this estimated range of possible loss represents what management believes to be an estimate of possible loss only for certain matters meeting these criteria. It does not represent the Company's maximum loss exposure.
Based on current knowledge, and after consultation with counsel, management believes that the current legal accrued liability is appropriate, and the amount of any incremental liability arising from these matters is not expected to have a material adverse effect on the consolidated financial condition of the Company, although the outcome of such proceedings could be material to the Company’s operating results and cash flows for a particular period depending, on among other things, the level of the Company’s revenues or income for such period. However, in the event of significant developments on existing cases, it is possible that the ultimate resolution, if unfavorable, may be material to the Company’s consolidated financial statements.
Operating Lease Commitments
Nationstar leases various office facilities under non-cancelable lease agreements with primary terms extending through 2019. These lease agreements generally provide for market-rate renewal options, and may provide for escalations in minimum rentals over the lease term (see Note 22 - Restructuring Charges). Minimum annual rental commitments for office leases with unrelated parties and with initial or remaining terms of one year or more, net of sublease payments, are presented below (in thousands).
|
|
|
|
|
|
|
|
Year
|
Amount
|
|
2013
|
$
|
16,874
|
|
|
2014
|
15,028
|
|
|
2015
|
12,259
|
|
|
2016
|
8,474
|
|
|
2017
|
4,475
|
|
|
Thereafter
|
7,638
|
|
|
Total
|
$
|
64,748
|
|
Loan and Other Commitments
Nationstar enters into IRLCs with prospective borrowers whereby the Company commits to lend a certain loan amount under specific terms and interest rates to the borrower. In addition, Nationstar began entering into LPCs with prospective sellers in November 2012. These loan commitments are treated as derivatives and are carried at fair value (See Note 11-Derivative Financial Instruments).
In 2012, Nationstar completed its acquisitions of certain MSRs related to approximately
$28.4 billion
of unpaid principal balance in reverse mortgage loans from financial services companies. As servicer for these reverse mortgage loans, among other things, the Company is obligated to make advances to the loan customers as required. At December 31, 2012, the Company’s maximum unfunded advance obligation related to these MSRs was approximately
$4.7 billion
. Upon funding any portion of these advances, the Company expects to securitize and sell the advances in transactions that will be accounted for as financing arrangements.
Other Contingencies
In June 2011, Nationstar entered into an agreement to subservice loans for a financial services company. Nationstar began to subservice these loans in July and August 2011. This subservicing agreement included, among other things, a loss incentive and sharing arrangement. Under this arrangement, Nationstar can earn incentive fees of up to
$2.5 million
for successfully mitigating losses within a specific subserviced population of loans. This incentive fee would be recognized when earned. For this same population of loans, Nationstar is subject to loss sharing under certain conditions. Should losses in this population of loans exceed a specified level, Nationstar would be required to share a portion of the losses on such loans up to a maximum of
$10.0 million
. Losses under this arrangement would be recognized at the point at which Nationstar determines that a liability is expected to be incurred. At
December 31, 2012
and 2011, Nationstar has estimated no liability under this agreement.
During December 2009, Nationstar entered into a strategic relationship with a major mortgage market participant, which
contemplates, among other things, significant mortgage servicing rights and subservicing transfers to Nationstar upon terms to be determined. Under this arrangement, if certain delivery thresholds have been met, the market participant may require Nationstar to establish an operating division or newly created subsidiary with separate, dedicated employees within a specified timeline to service such mortgage servicing rights and subservicing. After a specified time period, this market participant may purchase the subsidiary at an agreed upon price. Since December 2010, all of the required delivery thresholds with this market participant have been met, but the market participant has not required the Company to establish an operating division or newly created subsidiary with separate, dedicated employees.
22. Restructuring Charges
To respond to the decreased demand in the home equity mortgage market and other market conditions, Nationstar initiated a program to reduce costs and improve operating effectiveness in 2007. This program included the closing of several offices and the termination of a large portion of Nationstar’s workforce. As part of this plan, Nationstar expected to incur lease and other contract termination costs.
Nationstar recorded restructuring charges totaling
$0.5 million
,
$1.1 million
, and
$2.3 million
for the years ended December 31, 2012, 2011, and 2010, respectively, related to cancelled lease expenses that are reflected in general and administrative expenses. The following table summarizes, by category, the Company’s restructuring charge activity for the periods noted below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability
Balance at January 1
|
|
Restructuring
Adjustments
|
|
Restructuring
Settlements
|
|
Liability
Balance at December 31
|
|
Year-ended December 31, 2010
|
|
|
|
|
|
|
|
|
Restructuring charges:
|
|
|
|
|
|
|
|
|
Lease terminations
|
$
|
9,465
|
|
|
$
|
2,287
|
|
|
$
|
(2,569
|
)
|
|
$
|
9,183
|
|
|
Total
|
$
|
9,465
|
|
|
$
|
2,287
|
|
|
$
|
(2,569
|
)
|
|
$
|
9,183
|
|
|
Year-ended December 31, 2011
|
|
|
|
|
|
|
|
|
Restructuring charges:
|
|
|
|
|
|
|
|
|
Lease terminations
|
$
|
9,183
|
|
|
$
|
1,084
|
|
|
$
|
(1,807
|
)
|
|
$
|
8,460
|
|
|
Total
|
$
|
9,183
|
|
|
$
|
1,084
|
|
|
$
|
(1,807
|
)
|
|
$
|
8,460
|
|
|
Year-ended December 31, 2012
|
|
|
|
|
|
|
|
|
Restructuring charges:
|
|
|
|
|
|
|
|
|
Lease terminations
|
$
|
8,460
|
|
|
$
|
500
|
|
|
$
|
(1,774
|
)
|
|
$
|
7,186
|
|
|
Total
|
$
|
8,460
|
|
|
$
|
500
|
|
|
$
|
(1,774
|
)
|
|
$
|
7,186
|
|
23. Concentrations of Credit Risk
Properties collateralizing mortgage loans held for investment and REO were geographically disbursed throughout the United States (measured by principal balance and expressed as a percent of the total outstanding mortgage loans held for investment and REO).
The following table details the geographical concentration of mortgage loans held for investment and REO by state for the dates indicated (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
State
|
Unpaid
Principal
Balance
|
|
% of
Total
Outstanding
|
|
Unpaid
Principal
Balance
|
|
% of
Total
Outstanding
|
|
Texas
|
$
|
49,814
|
|
|
13.8
|
%
|
|
$
|
52,620
|
|
|
13.7
|
%
|
|
Florida
|
47,751
|
|
|
13.2
|
%
|
|
54,199
|
|
|
14.2
|
%
|
|
California
|
29,194
|
|
|
8.1
|
%
|
|
32,684
|
|
|
8.5
|
%
|
|
Pennsylvania
|
18,670
|
|
|
5.2
|
%
|
|
18,471
|
|
|
4.8
|
%
|
|
All other states
(1)
|
215,356
|
|
|
59.7
|
%
|
|
224,906
|
|
|
58.8
|
%
|
|
|
$
|
360,785
|
|
|
100.0
|
%
|
|
$
|
382,880
|
|
|
100.0
|
%
|
|
|
|
|
(1)
|
No other state contains more than
5.0%
of the total outstanding.
|
Additionally, within mortgage loans held for investment, certain loan products’ contractual terms may give rise to a concentration of credit risk and increase Nationstar’s exposure to risk of nonpayment or realization.
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
Amortizing Adjustable Rate Mortgages (ARMs):
|
|
|
|
|
2/28
|
$
|
56,849
|
|
|
$
|
68,993
|
|
|
3/27
|
5,046
|
|
|
6,402
|
|
|
All other ARMs
|
3,459
|
|
|
14,343
|
|
|
|
$
|
65,354
|
|
|
$
|
89,738
|
|
24. Business Segment Reporting
Nationstar currently conducts business in
two
separate operating segments: Servicing and Originations. The Servicing segment provides loan servicing on Nationstar’s total servicing portfolio, including the collection of principal and interest payments and the assessment of ancillary fees related to the servicing of mortgage loans. The Originations segment involves the origination, packaging, and sale of agency mortgage loans into the secondary markets via whole loan sales or securitizations. Nationstar reports the activity not related to either operating segment in the Legacy Portfolio and Other column. The Legacy Portfolio and Other column includes primarily all subprime mortgage loans originated in the latter portion of 2006 and during 2007 or acquired from Nationstar’s predecessor and consolidated VIEs which were consolidated pursuant to the adoption of new consolidation guidance related to VIEs adopted on January 1, 2010.
Nationstar’s segments are based upon Nationstar’s organizational structure which focuses primarily on the services offered. The accounting policies of each reportable segment are the same as those of Nationstar except for 1) expenses for consolidated back-office operations and general overhead-type expenses such as executive administration and accounting, 2) revenues generated on inter-segment services performed, and 3) interest expense on unsecured senior notes. Expenses are allocated to individual segments based on the estimated value of services performed, including estimated utilization of square footage and corporate personnel as well as the equity invested in each segment. Revenues generated on inter-segment services performed are valued based on similar services provided to external parties.
To reconcile to Nationstar’s consolidated results, certain inter-segment revenues and expenses are eliminated in the “Elimination” column in the following tables.
The following tables are a presentation of financial information by segment for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2012
|
|
|
Servicing
|
|
Originations
|
|
Operating
Segments
|
|
Legacy
Portfolio
and Other
|
|
Eliminations
|
|
Consolidated
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Servicing fee income
|
$
|
462,001
|
|
|
$
|
—
|
|
|
$
|
462,001
|
|
|
$
|
2,287
|
|
|
$
|
(1,793
|
)
|
|
$
|
462,495
|
|
|
Other fee income
|
35,133
|
|
|
(291
|
)
|
|
34,842
|
|
|
(186
|
)
|
|
—
|
|
|
34,656
|
|
|
Total fee income
|
497,134
|
|
|
(291
|
)
|
|
496,843
|
|
|
2,101
|
|
|
(1,793
|
)
|
|
497,151
|
|
|
Gain/(loss) on mortgage loans held for sale
|
—
|
|
|
487,142
|
|
|
487,142
|
|
|
—
|
|
|
22
|
|
|
487,164
|
|
|
Total revenues
|
497,134
|
|
|
486,851
|
|
|
983,985
|
|
|
2,101
|
|
|
(1,771
|
)
|
|
984,315
|
|
|
Total expenses and impairments
|
338,157
|
|
|
219,743
|
|
|
557,900
|
|
|
24,145
|
|
|
—
|
|
|
582,045
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
30,936
|
|
|
20,426
|
|
|
51,362
|
|
|
18,431
|
|
|
1,793
|
|
|
71,586
|
|
|
Interest expense
|
(156,817
|
)
|
|
(25,830
|
)
|
|
(182,647
|
)
|
|
(14,639
|
)
|
|
(22
|
)
|
|
(197,308
|
)
|
|
Contract termination fees, net
|
15,600
|
|
|
—
|
|
|
15,600
|
|
|
—
|
|
|
—
|
|
|
15,600
|
|
|
Loss on equity method investment
|
(14,571
|
)
|
|
—
|
|
|
(14,571
|
)
|
|
—
|
|
|
—
|
|
|
(14,571
|
)
|
|
Loss on interest rate swaps and caps
|
1,237
|
|
|
—
|
|
|
1,237
|
|
|
(2,231
|
)
|
|
—
|
|
|
(994
|
)
|
|
Total other income (expense)
|
(123,615
|
)
|
|
(5,404
|
)
|
|
(129,019
|
)
|
|
1,561
|
|
|
1,771
|
|
|
(125,687
|
)
|
|
Income (loss) before taxes
|
$
|
35,362
|
|
|
$
|
261,704
|
|
|
$
|
297,066
|
|
|
$
|
(20,483
|
)
|
|
$
|
—
|
|
|
$
|
276,583
|
|
|
Depreciation and amortization
|
$
|
6,126
|
|
|
$
|
2,754
|
|
|
$
|
8,880
|
|
|
$
|
740
|
|
|
$
|
—
|
|
|
$
|
9,620
|
|
|
Total assets
|
4,938,330
|
|
|
1,845,979
|
|
|
6,784,309
|
|
|
341,834
|
|
|
—
|
|
|
7,126,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2011
|
|
|
Servicing
|
|
Originations
|
|
Operating
Segments
|
|
Legacy
Portfolio
and Other
|
|
Eliminations
|
|
Consolidated
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Servicing fee income
|
$
|
238,394
|
|
|
$
|
—
|
|
|
$
|
238,394
|
|
|
$
|
1,972
|
|
|
$
|
(6,955
|
)
|
|
$
|
233,411
|
|
|
Other fee income
|
17,189
|
|
|
14,109
|
|
|
31,298
|
|
|
3,996
|
|
|
—
|
|
|
35,294
|
|
|
Total fee income
|
255,583
|
|
|
14,109
|
|
|
269,692
|
|
|
5,968
|
|
|
(6,955
|
)
|
|
268,705
|
|
|
Gain (loss) on mortgage loans held for sale
|
—
|
|
|
109,431
|
|
|
109,431
|
|
|
—
|
|
|
(295
|
)
|
|
109,136
|
|
|
Total revenues
|
255,583
|
|
|
123,540
|
|
|
379,123
|
|
|
5,968
|
|
|
(7,250
|
)
|
|
377,841
|
|
|
Total expenses and impairments
|
177,930
|
|
|
101,607
|
|
|
279,537
|
|
|
26,941
|
|
|
(295
|
)
|
|
306,183
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
2,263
|
|
|
12,718
|
|
|
14,981
|
|
|
44,866
|
|
|
6,955
|
|
|
66,802
|
|
|
Interest expense
|
(58,024
|
)
|
|
(10,955
|
)
|
|
(68,979
|
)
|
|
(36,396
|
)
|
|
—
|
|
|
(105,375
|
)
|
|
Loss on equity method investment
|
(107
|
)
|
|
—
|
|
|
(107
|
)
|
|
—
|
|
|
—
|
|
|
(107
|
)
|
|
Loss on interest rate swaps
|
298
|
|
|
—
|
|
|
298
|
|
|
—
|
|
|
—
|
|
|
298
|
|
|
Fair value changes - ABS securitizations
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,389
|
)
|
|
—
|
|
|
(12,389
|
)
|
|
Total other income (expense)
|
(55,570
|
)
|
|
1,763
|
|
|
(53,807
|
)
|
|
(3,919
|
)
|
|
6,955
|
|
|
(50,771
|
)
|
|
Income (loss) before taxes
|
$
|
22,083
|
|
|
$
|
23,696
|
|
|
$
|
45,779
|
|
|
$
|
(24,892
|
)
|
|
$
|
—
|
|
|
$
|
20,887
|
|
|
Depreciation and amortization
|
$
|
2,089
|
|
|
$
|
1,306
|
|
|
$
|
3,395
|
|
|
$
|
668
|
|
|
$
|
—
|
|
|
$
|
4,063
|
|
|
Total assets
|
909,992
|
|
|
600,105
|
|
|
1,510,097
|
|
|
277,834
|
|
|
—
|
|
|
1,787,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2010
|
|
|
Servicing
|
|
Originations
|
|
Operating
Segments
|
|
Legacy
Portfolio
and Other
|
|
Eliminations
|
|
Consolidated
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Servicing fee income
|
$
|
175,569
|
|
|
$
|
—
|
|
|
$
|
175,569
|
|
|
$
|
820
|
|
|
$
|
(9,263
|
)
|
|
$
|
167,126
|
|
|
Other fee income
|
7,273
|
|
|
7,042
|
|
|
14,315
|
|
|
2,643
|
|
|
—
|
|
|
16,958
|
|
|
Total fee income
|
182,842
|
|
|
7,042
|
|
|
189,884
|
|
|
3,463
|
|
|
(9,263
|
)
|
|
184,084
|
|
|
Gain (loss) on mortgage loans held for sale
|
—
|
|
|
77,498
|
|
|
77,498
|
|
|
—
|
|
|
(154
|
)
|
|
77,344
|
|
|
Total revenues
|
182,842
|
|
|
84,540
|
|
|
267,382
|
|
|
3,463
|
|
|
(9,417
|
)
|
|
261,428
|
|
|
Total expenses and impairments
|
107,283
|
|
|
86,920
|
|
|
194,203
|
|
|
26,927
|
|
|
(154
|
)
|
|
220,976
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
263
|
|
|
11,848
|
|
|
12,111
|
|
|
77,521
|
|
|
9,263
|
|
|
98,895
|
|
|
Interest expense
|
(51,791
|
)
|
|
(8,806
|
)
|
|
(60,597
|
)
|
|
(55,566
|
)
|
|
—
|
|
|
(116,163
|
)
|
|
Loss on interest rate swaps
|
(9,801
|
)
|
|
—
|
|
|
(9,801
|
)
|
|
—
|
|
|
—
|
|
|
(9,801
|
)
|
|
Fair value changes - ABS securitizations
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,297
|
)
|
|
—
|
|
|
(23,297
|
)
|
|
Total other income (expense)
|
(61,329
|
)
|
|
3,042
|
|
|
(58,287
|
)
|
|
(1,342
|
)
|
|
9,263
|
|
|
(50,366
|
)
|
|
Income (loss) before taxes
|
$
|
14,230
|
|
|
$
|
662
|
|
|
$
|
14,892
|
|
|
$
|
(24,806
|
)
|
|
$
|
—
|
|
|
$
|
(9,914
|
)
|
|
Depreciation and amortization
|
$
|
1,092
|
|
|
$
|
781
|
|
|
$
|
1,873
|
|
|
$
|
244
|
|
|
$
|
—
|
|
|
$
|
2,117
|
|
|
Total assets
|
689,923
|
|
|
402,627
|
|
|
1,092,550
|
|
|
854,631
|
|
|
—
|
|
|
1,947,181
|
|
25. Guarantor Financial Statement Information
As of December 31, 2012, Nationstar and Nationstar Capital Corporation have issued
$1.1 billion
in aggregate principal amount of unsecured senior notes which mature on various dates through October 1, 2020. The notes are jointly and severally guaranteed on an unsecured senior basis by all of Nationstar’s existing and future domestic subsidiaries, other than its securitization and certain finance subsidiaries, certain other restricted subsidiaries and subsidiaries that in the future Nationstar designates as excluded restricted and unrestricted subsidiaries. All guarantor subsidiaries are 100% owned by Nationstar. Effective June 30, 2012, Nationstar Inc. and its
two
direct wholly-owned subsidiaries became guarantors of the unsecured senior notes as well. Presented below are consolidating financial statements of Nationstar Inc., Nationstar and the guarantor subsidiaries for the periods indicated.
|
NATIONSTAR MORTGAGE HOLDINGS INC.
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2012
(IN THOUSANDS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
Nationstar Inc.
|
|
Issuer
|
|
Guarantor
(Subsidiaries)
|
|
Non-Guarantor
(Subsidiaries)
|
|
Eliminations
|
|
Consolidated
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
152,248
|
|
|
$
|
401
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
152,649
|
|
|
Restricted cash
|
—
|
|
|
145,657
|
|
|
3
|
|
|
247,530
|
|
|
—
|
|
|
393,190
|
|
|
Accounts receivable, net
|
—
|
|
|
3,040,666
|
|
|
1,826
|
|
|
1,114
|
|
|
—
|
|
|
3,043,606
|
|
|
Mortgage loans held for sale
|
—
|
|
|
1,480,537
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,480,537
|
|
|
Mortgage loans held for investment, subject to nonrecourse debt–Legacy Asset, net
|
—
|
|
|
14,700
|
|
|
—
|
|
|
224,207
|
|
|
—
|
|
|
238,907
|
|
|
Participating interest in reverse mortgages
|
—
|
|
|
750,273
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
750,273
|
|
|
Receivables from affiliates
|
—
|
|
|
—
|
|
|
92,373
|
|
|
1,983,997
|
|
|
(2,063,766
|
)
|
|
12,604
|
|
|
Mortgage servicing rights – fair value
|
—
|
|
|
635,860
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
635,860
|
|
|
Investment in subsidiaries
|
728,908
|
|
|
149,188
|
|
|
—
|
|
|
—
|
|
|
(878,096
|
)
|
|
—
|
|
|
Mortgage servicing rights – amortized cost
|
—
|
|
|
10,973
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,973
|
|
|
Property and equipment, net
|
—
|
|
|
74,191
|
|
|
835
|
|
|
—
|
|
|
—
|
|
|
75,026
|
|
|
REO, net
|
—
|
|
|
8,428
|
|
|
—
|
|
|
2,039
|
|
|
—
|
|
|
10,467
|
|
|
Other assets
|
28,774
|
|
|
303,737
|
|
|
1,829
|
|
|
1,847
|
|
|
(14,136
|
)
|
|
322,051
|
|
|
Total assets
|
$
|
757,682
|
|
|
$
|
6,766,458
|
|
|
$
|
97,267
|
|
|
$
|
2,460,734
|
|
|
$
|
(2,955,998
|
)
|
|
$
|
7,126,143
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable
|
$
|
—
|
|
|
$
|
1,306,557
|
|
|
$
|
—
|
|
|
$
|
2,295,029
|
|
|
$
|
—
|
|
|
$
|
3,601,586
|
|
|
Unsecured senior notes
|
—
|
|
|
1,062,635
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,062,635
|
|
|
Payables and accrued liabilities
|
—
|
|
|
640,369
|
|
|
1,815
|
|
|
3,383
|
|
|
(14,136
|
)
|
|
631,431
|
|
|
Payables to affiliates
|
—
|
|
|
2,063,766
|
|
|
—
|
|
|
—
|
|
|
(2,063,766
|
)
|
|
—
|
|
|
Derivative financial instruments
|
—
|
|
|
12,060
|
|
|
—
|
|
|
7,966
|
|
|
—
|
|
|
20,026
|
|
|
Mortgage Servicing Liability
|
—
|
|
|
83,238
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83,238
|
|
|
Nonrecourse debt–Legacy Assets
|
—
|
|
|
—
|
|
|
—
|
|
|
100,620
|
|
|
—
|
|
|
100,620
|
|
|
Excess spread financing - at fair value
|
—
|
|
|
288,089
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
288,089
|
|
|
Participating interest financing
|
—
|
|
|
580,836
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
580,836
|
|
|
Total liabilities
|
—
|
|
|
6,037,550
|
|
|
1,815
|
|
|
2,406,998
|
|
|
(2,077,902
|
)
|
|
6,368,461
|
|
|
Total stockholders’ equity
|
757,682
|
|
|
728,908
|
|
|
95,452
|
|
|
53,736
|
|
|
(878,096
|
)
|
|
757,682
|
|
|
Total liabilities and stockholders’ equity
|
$
|
757,682
|
|
|
$
|
6,766,458
|
|
|
$
|
97,267
|
|
|
$
|
2,460,734
|
|
|
$
|
(2,955,998
|
)
|
|
$
|
7,126,143
|
|
|
NATIONSTAR MORTGAGE HOLDINGS INC.
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31, 2012
(IN THOUSANDS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nationstar Inc.
|
|
Issuer
|
|
Guarantor
(Subsidiaries)
|
|
Non-Guarantor
(Subsidiaries)
|
|
Eliminations
|
|
Consolidated
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Servicing fee income
|
$
|
—
|
|
|
$
|
462,980
|
|
|
$
|
1,308
|
|
|
$
|
—
|
|
|
$
|
(1,793
|
)
|
|
$
|
462,495
|
|
|
Other fee income (expense)
|
—
|
|
|
(395
|
)
|
|
34,583
|
|
|
468
|
|
|
—
|
|
|
34,656
|
|
|
Total fee income
|
—
|
|
|
462,585
|
|
|
35,891
|
|
|
468
|
|
|
(1,793
|
)
|
|
497,151
|
|
|
Gain on mortgage loans held for sale
|
—
|
|
|
487,164
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
487,164
|
|
|
Total Revenues
|
—
|
|
|
949,749
|
|
|
35,891
|
|
|
468
|
|
|
(1,793
|
)
|
|
984,315
|
|
|
Expenses and impairments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and benefits
|
—
|
|
|
349,012
|
|
|
9,443
|
|
|
—
|
|
|
—
|
|
|
358,455
|
|
|
General and administrative
|
—
|
|
|
198,948
|
|
|
2,625
|
|
|
14
|
|
|
—
|
|
|
201,587
|
|
|
Provision for loan losses
|
—
|
|
|
463
|
|
|
—
|
|
|
1,890
|
|
|
—
|
|
|
2,353
|
|
|
Loss (gain) on foreclosed real estate and other
|
—
|
|
|
(1,497
|
)
|
|
—
|
|
|
4,361
|
|
|
—
|
|
|
2,864
|
|
|
Occupancy
|
—
|
|
|
16,734
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
16,786
|
|
|
Total expenses and impairments
|
—
|
|
|
563,660
|
|
|
12,120
|
|
|
6,265
|
|
|
—
|
|
|
582,045
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
—
|
|
|
51,307
|
|
|
—
|
|
|
18,486
|
|
|
1,793
|
|
|
71,586
|
|
|
Interest expense
|
—
|
|
|
(137,638
|
)
|
|
—
|
|
|
(59,670
|
)
|
|
—
|
|
|
(197,308
|
)
|
|
Contract termination fees, net
|
—
|
|
|
15,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,600
|
|
|
Loss on equity method investments
|
—
|
|
|
(14,571
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,571
|
)
|
|
Gain/(Loss) on interest rate swaps and caps
|
—
|
|
|
(1,415
|
)
|
|
—
|
|
|
421
|
|
|
—
|
|
|
(994
|
)
|
|
Gain/(loss) from subsidiaries
|
179,359
|
|
|
(22,789
|
)
|
|
—
|
|
|
—
|
|
|
(156,570
|
)
|
|
—
|
|
|
Total other income (expense)
|
179,359
|
|
|
(109,506
|
)
|
|
—
|
|
|
(40,763
|
)
|
|
(154,777
|
)
|
|
(125,687
|
)
|
|
Income before taxes
|
179,359
|
|
|
276,583
|
|
|
23,771
|
|
|
(46,560
|
)
|
|
(156,570
|
)
|
|
276,583
|
|
|
Income tax expense/(benefit)
|
(25,928
|
)
|
|
97,224
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
71,296
|
|
|
Net income/(loss)
|
$
|
205,287
|
|
|
$
|
179,359
|
|
|
$
|
23,771
|
|
|
$
|
(46,560
|
)
|
|
$
|
(156,570
|
)
|
|
$
|
205,287
|
|
|
NATIONSTAR MORTGAGE HOLDINGS INC.
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2012
(IN THOUSANDS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nationstar Inc.
|
|
Issuer
|
|
Guarantor
(Subsidiaries)
|
|
Non-Guarantor
(Subsidiaries)
|
|
Eliminations
|
|
Consolidated
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
|
$
|
205,287
|
|
|
$
|
179,359
|
|
|
$
|
23,771
|
|
|
$
|
(46,560
|
)
|
|
$
|
(156,570
|
)
|
|
$
|
205,287
|
|
|
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Gain)/loss from subsidiaries
|
(179,359
|
)
|
|
22,789
|
|
|
—
|
|
|
—
|
|
|
156,570
|
|
|
—
|
|
|
Share-based compensation
|
—
|
|
|
13,342
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,342
|
|
|
Gain on mortgage loans held for sale
|
—
|
|
|
(487,164
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(487,164
|
)
|
|
Provision for loan losses
|
—
|
|
|
463
|
|
|
—
|
|
|
1,890
|
|
|
—
|
|
|
2,353
|
|
|
Loss (gain) on foreclosed real estate and other
|
—
|
|
|
(1,497
|
)
|
|
—
|
|
|
4,361
|
|
|
—
|
|
|
2,864
|
|
|
Loss on equity method investments
|
—
|
|
|
14,571
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,571
|
|
|
(Gain)/loss on ineffectiveness on interest rate swaps and cap
|
—
|
|
|
1,415
|
|
|
—
|
|
|
(421
|
)
|
|
—
|
|
|
994
|
|
|
Fair value changes in excess spread financing
|
—
|
|
|
10,683
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,683
|
|
|
Depreciation and amortization
|
—
|
|
|
9,620
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,620
|
|
|
Change in fair value of mortgage servicing rights
|
—
|
|
|
68,242
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
68,242
|
|
|
Accretion of mortgage servicing liability
|
—
|
|
|
(5,120
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,120
|
)
|
|
Amortization of debt discount
|
—
|
|
|
25,385
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,385
|
|
|
Amortization of premiums/(discounts)
|
—
|
|
|
(12,382
|
)
|
|
—
|
|
|
(3,368
|
)
|
|
—
|
|
|
(15,750
|
)
|
|
Mortgage loans originated and purchased, net of fees
|
—
|
|
|
(7,904,052
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,904,052
|
)
|
|
Cost of loans sold and principal payments and prepayments, and other changes in mortgage loans originated as held for sale, net of fees
|
—
|
|
|
7,185,335
|
|
|
—
|
|
|
12,387
|
|
|
—
|
|
|
7,197,722
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
—
|
|
|
(1,030,084
|
)
|
|
(1,819
|
)
|
|
279,396
|
|
|
—
|
|
|
(752,507
|
)
|
|
Receivables from/(payables to) affiliates
|
—
|
|
|
2,084,031
|
|
|
(21,837
|
)
|
|
(2,060,844
|
)
|
|
—
|
|
|
1,350
|
|
|
Net tax effect of stock grants issued
|
—
|
|
|
(2,846
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,846
|
)
|
|
Reverse funded advances
|
—
|
|
|
(608,085
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(608,085
|
)
|
|
Other assets
|
(28,774
|
)
|
|
(17,895
|
)
|
|
(1,773
|
)
|
|
—
|
|
|
14,136
|
|
|
(34,306
|
)
|
|
Accounts payable and accrued liabilities
|
2,846
|
|
|
308,636
|
|
|
1,815
|
|
|
140
|
|
|
(14,136
|
)
|
|
299,301
|
|
|
Net cash provided by/(used in) operating activities
|
—
|
|
|
(145,254
|
)
|
|
157
|
|
|
(1,813,019
|
)
|
|
—
|
|
|
(1,958,116
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nationstar Inc.
|
|
Issuer
|
|
Guarantor
(Subsidiaries)
|
|
Non-Guarantor
(Subsidiaries)
|
|
Eliminations
|
|
Consolidated
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment additions, net of disposals
|
—
|
|
|
(25,356
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,356
|
)
|
|
Loan repurchases from Ginnie Mae
|
—
|
|
|
(24,329
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,329
|
)
|
|
Deposit on reverse mortgage servicing rights, net
|
—
|
|
|
(37,911
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,911
|
)
|
|
Deposit on / purchase of mortgage servicing rights, net of liabilities incurred
|
—
|
|
|
(2,070,375
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,070,375
|
)
|
|
Proceeds from sales of REO
|
—
|
|
|
(884
|
)
|
|
—
|
|
|
1,563
|
|
|
—
|
|
|
679
|
|
|
Net cash provided by/(used in) investing activities
|
—
|
|
|
(2,158,855
|
)
|
|
—
|
|
|
1,563
|
|
|
—
|
|
|
(2,157,292
|
)
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Senior Unsecured Notes
|
—
|
|
|
770,699
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
770,699
|
|
|
Transfers to/from restricted cash
|
—
|
|
|
(96,477
|
)
|
|
—
|
|
|
(225,214
|
)
|
|
—
|
|
|
(321,691
|
)
|
|
Issuance of common stock, net of IPO issuance costs
|
246,700
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
246,700
|
|
|
Issuance of participating interest financing
|
—
|
|
|
582,897
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
582,897
|
|
|
Issuance of excess spread financing
|
—
|
|
|
272,617
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
272,617
|
|
|
Increase (decrease) in notes payable, net
|
—
|
|
|
677,952
|
|
|
—
|
|
|
2,050,455
|
|
|
—
|
|
|
2,728,407
|
|
|
Repayment of nonrecourse debt–Legacy assets
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,785
|
)
|
|
—
|
|
|
(13,785
|
)
|
|
Repayment of excess servicing spread financing
|
—
|
|
|
(39,865
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39,865
|
)
|
|
Net tax benefit for stock grants issued
|
—
|
|
|
2,846
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,846
|
|
|
Distribution to subsidiaries
|
(246,700
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
246,700
|
|
|
—
|
|
|
Contributions of parent
|
—
|
|
|
246,700
|
|
|
—
|
|
|
—
|
|
|
(246,700
|
)
|
|
—
|
|
|
Debt financing costs
|
—
|
|
|
(23,213
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,213
|
)
|
|
Net cash provided by/(used in) financing activities
|
—
|
|
|
2,394,156
|
|
|
—
|
|
|
1,811,456
|
|
|
—
|
|
|
4,205,612
|
|
|
Net increase/(decrease) in cash
|
—
|
|
|
90,047
|
|
|
157
|
|
|
—
|
|
|
—
|
|
|
90,204
|
|
|
Cash and cash equivalents at beginning of period
|
—
|
|
|
62,201
|
|
|
244
|
|
|
—
|
|
|
—
|
|
|
62,445
|
|
|
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
152,248
|
|
|
$
|
401
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
152,649
|
|
|
NATIONSTAR MORTGAGE LLC
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2011
(IN THOUSANDS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuer
(Parent)
|
|
Guarantor
(Subsidiaries)
|
|
Non-Guarantor
(Subsidiaries)
|
|
Eliminations
|
|
Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
62,201
|
|
|
$
|
244
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
62,445
|
|
|
Restricted cash
|
49,180
|
|
|
3
|
|
|
22,316
|
|
|
—
|
|
|
71,499
|
|
|
Accounts receivable, net
|
281,782
|
|
|
7
|
|
|
280,511
|
|
|
—
|
|
|
562,300
|
|
|
Mortgage loans held for sale
|
458,626
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
458,626
|
|
|
Mortgage loans held for investment, subject to nonrecourse debt–Legacy Asset, net
|
5,984
|
|
|
—
|
|
|
237,496
|
|
|
—
|
|
|
243,480
|
|
|
Receivables from affiliates
|
41,961
|
|
|
70,541
|
|
|
—
|
|
|
(107,893
|
)
|
|
4,609
|
|
|
Mortgage servicing rights – fair value
|
251,050
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
251,050
|
|
|
Investment in subsidiaries
|
140,880
|
|
|
—
|
|
|
—
|
|
|
(140,880
|
)
|
|
—
|
|
|
Property and equipment, net
|
23,238
|
|
|
835
|
|
|
—
|
|
|
—
|
|
|
24,073
|
|
|
REO, net
|
—
|
|
|
—
|
|
|
3,668
|
|
|
—
|
|
|
3,668
|
|
|
Other assets
|
106,181
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
106,181
|
|
|
Total assets
|
$
|
1,421,083
|
|
|
$
|
71,630
|
|
|
$
|
543,991
|
|
|
$
|
(248,773
|
)
|
|
$
|
1,787,931
|
|
|
Liabilities and members’ equity
|
|
|
|
|
|
|
|
|
|
|
Notes payable
|
$
|
628,605
|
|
|
$
|
—
|
|
|
$
|
244,574
|
|
|
$
|
—
|
|
|
$
|
873,179
|
|
|
Unsecured senior notes
|
280,199
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
280,199
|
|
|
Payables and accrued liabilities
|
180,545
|
|
|
—
|
|
|
3,244
|
|
|
—
|
|
|
183,789
|
|
|
Payables to affiliates
|
—
|
|
|
—
|
|
|
107,893
|
|
|
(107,893
|
)
|
|
—
|
|
|
Derivative financial instruments
|
5,830
|
|
|
—
|
|
|
6,540
|
|
|
—
|
|
|
12,370
|
|
|
Derivative financial instruments, subject to ABS nonrecourse debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Nonrecourse debt–Legacy Assets
|
—
|
|
|
—
|
|
|
112,490
|
|
|
—
|
|
|
112,490
|
|
|
Excess spread financing – fair value
|
44,595
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,595
|
|
|
ABS nonrecourse – fair value
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total liabilities
|
1,139,774
|
|
|
—
|
|
|
474,741
|
|
|
(107,893
|
)
|
|
1,506,622
|
|
|
Total members’ equity
|
281,309
|
|
|
71,630
|
|
|
69,250
|
|
|
(140,880
|
)
|
|
281,309
|
|
|
Total liabilities and members’ equity
|
$
|
1,421,083
|
|
|
$
|
71,630
|
|
|
$
|
543,991
|
|
|
$
|
(248,773
|
)
|
|
$
|
1,787,931
|
|
NATIONSTAR MORTGAGE LLC
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2011
(IN THOUSANDS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuer (Parent)
|
|
Guarantor
(Subsidiaries)
|
|
Non-
Guarantor
(Subsidiaries)
|
|
Eliminations
|
|
Consolidated
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Servicing fee income
|
$
|
234,135
|
|
|
$
|
—
|
|
|
$
|
6,231
|
|
|
$
|
(6,955
|
)
|
|
$
|
233,411
|
|
|
Other fee income
|
17,889
|
|
|
15,313
|
|
|
2,092
|
|
|
—
|
|
|
35,294
|
|
|
Total fee income
|
252,024
|
|
|
15,313
|
|
|
8,323
|
|
|
(6,955
|
)
|
|
268,705
|
|
|
Gain on mortgage loans held for sale
|
109,136
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
109,136
|
|
|
Total Revenues
|
361,160
|
|
|
15,313
|
|
|
8,323
|
|
|
(6,955
|
)
|
|
377,841
|
|
|
Expenses and impairments:
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and benefits
|
198,703
|
|
|
3,587
|
|
|
—
|
|
|
—
|
|
|
202,290
|
|
|
General and administrative
|
72,654
|
|
|
3,207
|
|
|
6,322
|
|
|
—
|
|
|
82,183
|
|
|
Provision for loan losses
|
1,346
|
|
|
—
|
|
|
2,191
|
|
|
—
|
|
|
3,537
|
|
|
Loss on foreclosed real estate and other
|
2,613
|
|
|
—
|
|
|
4,220
|
|
|
—
|
|
|
6,833
|
|
|
Occupancy
|
11,163
|
|
|
177
|
|
|
—
|
|
|
—
|
|
|
11,340
|
|
|
Total expenses and impairments
|
286,479
|
|
|
6,971
|
|
|
12,733
|
|
|
—
|
|
|
306,183
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
14,880
|
|
|
—
|
|
|
44,967
|
|
|
6,955
|
|
|
66,802
|
|
|
Interest expense
|
(58,452
|
)
|
|
—
|
|
|
(46,923
|
)
|
|
—
|
|
|
(105,375
|
)
|
|
Loss on equity method investments
|
(107
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(107
|
)
|
|
Gain/(Loss) on interest rate swaps and caps
|
—
|
|
|
—
|
|
|
298
|
|
|
—
|
|
|
298
|
|
|
Fair value changes in ABS securitizations
|
7,695
|
|
|
—
|
|
|
(20,084
|
)
|
|
—
|
|
|
(12,389
|
)
|
|
Gain/(loss) from subsidiaries
|
(17,810
|
)
|
|
—
|
|
|
—
|
|
|
17,810
|
|
|
—
|
|
|
Total other income (expense)
|
(53,794
|
)
|
|
—
|
|
|
(21,742
|
)
|
|
24,765
|
|
|
(50,771
|
)
|
|
Net income/(loss)
|
20,887
|
|
|
8,342
|
|
|
(26,152
|
)
|
|
17,810
|
|
|
20,887
|
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
Change in value of cash flow hedges
|
(1,071
|
)
|
|
—
|
|
|
(1,071
|
)
|
|
1,071
|
|
|
(1,071
|
)
|
|
Reclassification adjustments for gain (loss) included in earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Comprehensive income / (loss)
|
$
|
19,816
|
|
|
$
|
8,342
|
|
|
$
|
(27,223
|
)
|
|
$
|
18,881
|
|
|
$
|
19,816
|
|
NATIONSTAR MORTGAGE LLC
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2011
(IN THOUSANDS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuer
(Parent)
|
|
Guarantor
(Subsidiaries)
|
|
Non-
Guarantor
(Subsidiaries)
|
|
Eliminations
|
|
Consolidated
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
|
$
|
20,887
|
|
|
$
|
8,342
|
|
|
$
|
(26,152
|
)
|
|
$
|
17,810
|
|
|
$
|
20,887
|
|
|
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
Loss from subsidiaries
|
17,810
|
|
|
—
|
|
|
—
|
|
|
(17,810
|
)
|
|
—
|
|
|
Share-based compensation
|
14,815
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,815
|
|
|
(Gain)/loss on mortgage loans held for sale
|
(109,136
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(109,136
|
)
|
|
Provision for loan losses
|
1,346
|
|
|
—
|
|
|
2,191
|
|
|
—
|
|
|
3,537
|
|
|
Loss on foreclosed real estate and other
|
2,613
|
|
|
—
|
|
|
4,220
|
|
|
—
|
|
|
6,833
|
|
|
Loss on equity method investments
|
107
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
107
|
|
|
(Gain)/loss on ineffectiveness on interest rate swaps and cap
|
—
|
|
|
—
|
|
|
(2,331
|
)
|
|
—
|
|
|
(2,331
|
)
|
|
Fair value changes in ABS securitizations
|
(7,695
|
)
|
|
—
|
|
|
20,084
|
|
|
—
|
|
|
12,389
|
|
|
Fair value changes in excess spread financing
|
3,060
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,060
|
|
|
Depreciation and amortization
|
4,063
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,063
|
|
|
Change in fair value of mortgage servicing rights
|
39,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,000
|
|
|
Amortization of debt discount
|
9,070
|
|
|
—
|
|
|
4,261
|
|
|
—
|
|
|
13,331
|
|
|
Amortization of premiums/(discounts)
|
—
|
|
|
—
|
|
|
(5,042
|
)
|
|
—
|
|
|
(5,042
|
)
|
|
Mortgage loans originated and purchased, net of fees
|
(3,412,185
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,412,185
|
)
|
|
Cost of loans sold and principal payments and prepayments, and other changes in mortgage loans originated as held for sale, net of fees
|
3,376,778
|
|
|
—
|
|
|
26,659
|
|
|
—
|
|
|
3,403,437
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
162,980
|
|
|
(7
|
)
|
|
(246,106
|
)
|
|
—
|
|
|
(83,133
|
)
|
|
Receivables from/(payables to) affiliates
|
(227,455
|
)
|
|
(8,407
|
)
|
|
240,246
|
|
|
—
|
|
|
4,384
|
|
|
Other assets
|
(44,576
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44,576
|
)
|
|
Accounts payable and accrued liabilities
|
99,602
|
|
|
—
|
|
|
2,055
|
|
|
—
|
|
|
101,657
|
|
|
Net cash provided by/(used in) operating activities
|
(48,916
|
)
|
|
(72
|
)
|
|
20,085
|
|
|
—
|
|
|
(28,903
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows continued
|
Issuer
(Parent)
|
|
Guarantor
(Subsidiaries)
|
|
Non-
Guarantor
(Subsidiaries)
|
|
Eliminations
|
|
Consolidated
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
Principal payments received and other changes on mortgage loans held for investment, subject to ABS nonrecourse debt
|
—
|
|
|
—
|
|
|
40,000
|
|
|
—
|
|
|
40,000
|
|
|
Property and equipment additions, net of disposals
|
(19,742
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,742
|
)
|
|
Acquisition of equity method investment
|
(6,600
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,600
|
)
|
|
Deposit on reverse mortgage servicing rights
|
(26,893
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,893
|
)
|
|
Deposit on / purchase of mortgage servicing rights
|
(96,467
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(96,467
|
)
|
|
Proceeds from sales of REO
|
15,566
|
|
|
—
|
|
|
12,257
|
|
|
—
|
|
|
27,823
|
|
|
Net cash provided by/(used in) investing activities
|
(134,136
|
)
|
|
—
|
|
|
52,257
|
|
|
—
|
|
|
(81,879
|
)
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
Transfers to/from restricted cash
|
8,399
|
|
|
(3
|
)
|
|
8,416
|
|
|
—
|
|
|
16,812
|
|
|
Issuance of unsecured senior notes
|
35,166
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,166
|
|
|
Issuance of excess spread financing
|
40,492
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,492
|
|
|
Decrease in notes payable, net
|
155,655
|
|
|
—
|
|
|
7,766
|
|
|
—
|
|
|
163,421
|
|
|
Repayment of nonrecourse debt–Legacy assets
|
—
|
|
|
—
|
|
|
(30,433
|
)
|
|
—
|
|
|
(30,433
|
)
|
|
Repayment of ABS nonrecourse debt
|
—
|
|
|
—
|
|
|
(58,091
|
)
|
|
—
|
|
|
(58,091
|
)
|
|
Repayment of excess servicing spread financing
|
(2,207
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,207
|
)
|
|
Distribution to parent
|
(4,348
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,348
|
)
|
|
Debt financing costs
|
(3,462
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,462
|
)
|
|
Tax related share-based settlement of units by members
|
(5,346
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,346
|
)
|
|
Net cash provided by/(used in) financing activities
|
224,349
|
|
|
(3
|
)
|
|
(72,342
|
)
|
|
—
|
|
|
152,004
|
|
|
Net increase/(decrease) in cash
|
41,297
|
|
|
(75
|
)
|
|
—
|
|
|
—
|
|
|
41,222
|
|
|
Cash and cash equivalents at beginning of period
|
20,904
|
|
|
319
|
|
|
—
|
|
|
—
|
|
|
21,223
|
|
|
Cash and cash equivalents at end of period
|
$
|
62,201
|
|
|
$
|
244
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
62,445
|
|
NATIONSTAR MORTGAGE LLC
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2010
(IN THOUSANDS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuer
(Parent)
|
|
Guarantor
(Subsidiaries)
|
|
Non-
Guarantor
(Subsidiaries)
|
|
Eliminations
|
|
Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
20,904
|
|
|
$
|
319
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,223
|
|
|
Restricted cash
|
57,579
|
|
|
—
|
|
|
33,546
|
|
|
—
|
|
|
91,125
|
|
|
Accounts receivable, net
|
437,300
|
|
|
—
|
|
|
3,975
|
|
|
—
|
|
|
441,275
|
|
|
Mortgage loans held for sale
|
369,617
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
369,617
|
|
|
Mortgage loans held for investment, subject to nonrecourse debt, Legacy Assets, net
|
5,016
|
|
|
—
|
|
|
261,304
|
|
|
—
|
|
|
266,320
|
|
|
Mortgage loans held for investment, subject to ABS nonrecourse debt (at fair value)
|
—
|
|
|
—
|
|
|
538,440
|
|
|
—
|
|
|
538,440
|
|
|
Investment in debt securities–available-for-sale
|
597
|
|
|
—
|
|
|
—
|
|
|
(597
|
)
|
|
—
|
|
|
Investment in subsidiaries
|
158,276
|
|
|
—
|
|
|
—
|
|
|
(158,276
|
)
|
|
—
|
|
|
Receivables from affiliates
|
—
|
|
|
62,171
|
|
|
132,353
|
|
|
(185,531
|
)
|
|
8,993
|
|
|
Mortgage servicing rights
|
145,062
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
145,062
|
|
|
Property and equipment, net
|
7,559
|
|
|
835
|
|
|
—
|
|
|
—
|
|
|
8,394
|
|
|
REO, net
|
323
|
|
|
—
|
|
|
27,014
|
|
|
—
|
|
|
27,337
|
|
|
Other assets
|
29,395
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,395
|
|
|
Total Assets
|
$
|
1,231,628
|
|
|
$
|
63,325
|
|
|
$
|
996,632
|
|
|
$
|
(344,404
|
)
|
|
$
|
1,947,181
|
|
|
Liabilities and members’ equity
|
|
|
|
|
|
|
|
|
|
|
Notes payable
|
$
|
472,950
|
|
|
$
|
—
|
|
|
$
|
236,808
|
|
|
$
|
—
|
|
|
$
|
709,758
|
|
|
Unsecured senior notes
|
244,061
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
244,061
|
|
|
Payables and accrued liabilities
|
73,785
|
|
|
—
|
|
|
1,269
|
|
|
—
|
|
|
75,054
|
|
|
Payables to affiliates
|
185,531
|
|
|
—
|
|
|
—
|
|
|
(185,531
|
)
|
|
—
|
|
|
Derivative financial instruments
|
—
|
|
|
—
|
|
|
7,801
|
|
|
—
|
|
|
7,801
|
|
|
Derivative financial instruments, subject to ABS nonrecourse debt
|
—
|
|
|
—
|
|
|
18,781
|
|
|
—
|
|
|
18,781
|
|
|
Nonrecourse debt–Legacy Assets
|
—
|
|
|
—
|
|
|
138,662
|
|
|
—
|
|
|
138,662
|
|
|
ABS nonrecourse debt (at fair value)
|
—
|
|
|
—
|
|
|
497,289
|
|
|
(597
|
)
|
|
496,692
|
|
|
Total liabilities
|
976,327
|
|
|
—
|
|
|
900,610
|
|
|
(186,128
|
)
|
|
1,690,809
|
|
|
Total members’ equity
|
255,301
|
|
|
63,325
|
|
|
96,022
|
|
|
(158,276
|
)
|
|
256,372
|
|
|
Total liabilities and members’ equity
|
$
|
1,231,628
|
|
|
$
|
63,325
|
|
|
$
|
996,632
|
|
|
$
|
(344,404
|
)
|
|
$
|
1,947,181
|
|
NATIONSTAR MORTGAGE LLC
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31, 2010
(IN THOUSANDS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuer
(Parent)
|
|
Guarantor
(Subsidiaries)
|
|
Non-
Guarantor (Subsidiaries)
|
|
Eliminations
|
|
Consolidated
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Servicing fee income
|
$
|
174,660
|
|
|
$
|
1,730
|
|
|
$
|
—
|
|
|
$
|
(9,264
|
)
|
|
$
|
167,126
|
|
|
Other fee income
|
8,259
|
|
|
7,551
|
|
|
1,148
|
|
|
—
|
|
|
16,958
|
|
|
Total fee income
|
182,919
|
|
|
9,281
|
|
|
1,148
|
|
|
(9,264
|
)
|
|
184,084
|
|
|
Gain on mortgage loans held for sale
|
77,344
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77,344
|
|
|
Total Revenues
|
260,263
|
|
|
9,281
|
|
|
1,148
|
|
|
(9,264
|
)
|
|
261,428
|
|
|
Expenses and impairments:
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and benefits
|
146,746
|
|
|
2,369
|
|
|
—
|
|
|
—
|
|
|
149,115
|
|
|
General and administrative
|
57,329
|
|
|
1,642
|
|
|
(58
|
)
|
|
—
|
|
|
58,913
|
|
|
Provision for loan losses
|
1,558
|
|
|
—
|
|
|
1,740
|
|
|
—
|
|
|
3,298
|
|
|
Loss on foreclosed real estate and other
|
—
|
|
|
—
|
|
|
205
|
|
|
—
|
|
|
205
|
|
|
Occupancy
|
9,289
|
|
|
156
|
|
|
—
|
|
|
—
|
|
|
9,445
|
|
|
Total expenses and impairments
|
214,922
|
|
|
4,167
|
|
|
1,887
|
|
|
—
|
|
|
220,976
|
|
|
Other income / (expense):
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
17,019
|
|
|
6
|
|
|
72,606
|
|
|
9,264
|
|
|
98,895
|
|
|
Interest expense
|
(54,075
|
)
|
|
—
|
|
|
(62,088
|
)
|
|
—
|
|
|
(116,163
|
)
|
|
Loss on interest rate swaps and caps
|
—
|
|
|
—
|
|
|
(9,801
|
)
|
|
—
|
|
|
(9,801
|
)
|
|
Fair value changes in ABS securitizations
|
—
|
|
|
—
|
|
|
(23,748
|
)
|
|
451
|
|
|
(23,297
|
)
|
|
Gain / (loss) from subsidiaries
|
(18,650
|
)
|
|
—
|
|
|
—
|
|
|
18,650
|
|
|
—
|
|
|
Total other income / (expense)
|
(55,706
|
)
|
|
6
|
|
|
(23,031
|
)
|
|
28,365
|
|
|
(50,366
|
)
|
|
Net income / (loss)
|
(10,365
|
)
|
|
5,120
|
|
|
(23,770
|
)
|
|
19,101
|
|
|
(9,914
|
)
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
Change in value of cash flow hedges
|
1,071
|
|
|
—
|
|
|
1,071
|
|
|
(1,071
|
)
|
|
1,071
|
|
|
Reclassification adjustments for gain (loss) included in earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Comprehensive income / (loss)
|
$
|
(9,294
|
)
|
|
$
|
5,120
|
|
|
$
|
(22,699
|
)
|
|
$
|
18,030
|
|
|
$
|
(8,843
|
)
|
NATIONSTAR MORTGAGE LLC
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2010
(IN THOUSANDS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuer
(Parent)
|
|
Guarantor
(Subsidiaries)
|
|
Non-
Guarantor
(Subsidiaries)
|
|
Eliminations
|
|
Consolidated
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
|
$
|
(10,365
|
)
|
|
$
|
5,120
|
|
|
$
|
(23,770
|
)
|
|
$
|
19,101
|
|
|
$
|
(9,914
|
)
|
|
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
12,856
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,856
|
|
|
Gain on mortgage loans held for sale
|
(77,344
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(77,344
|
)
|
|
Provision for loan losses
|
1,558
|
|
|
—
|
|
|
1,740
|
|
|
—
|
|
|
3,298
|
|
|
Loss on foreclosed real estate and other
|
—
|
|
|
—
|
|
|
205
|
|
|
—
|
|
|
205
|
|
|
(Gain)/loss on ineffectiveness on interest rate swaps and cap
|
—
|
|
|
—
|
|
|
8,872
|
|
|
—
|
|
|
8,872
|
|
|
Fair value changes in ABS securitizations
|
—
|
|
|
—
|
|
|
23,297
|
|
|
—
|
|
|
23,297
|
|
|
Loss from subsidiaries
|
18,650
|
|
|
—
|
|
|
—
|
|
|
(18,650
|
)
|
|
—
|
|
|
Depreciation and amortization
|
2,104
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
2,117
|
|
|
Change in fair value of mortgage servicing rights
|
6,043
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,043
|
|
|
Amortization of debt discount
|
12,380
|
|
|
—
|
|
|
6,351
|
|
|
—
|
|
|
18,731
|
|
|
Amortization of premiums/(discounts)
|
—
|
|
|
—
|
|
|
(4,526
|
)
|
|
—
|
|
|
(4,526
|
)
|
|
Mortgage loans originated and purchased, net of fees
|
(2,791,639
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,791,639
|
)
|
|
Cost of loans sold and principal payments and prepayments, and other changes in mortgage loans originated as held for sale, net of fees
|
2,670,577
|
|
|
—
|
|
|
(16,634
|
)
|
|
—
|
|
|
2,653,943
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
73,124
|
|
|
3
|
|
|
(31,979
|
)
|
|
—
|
|
|
41,148
|
|
|
Receivables from/(payables to) affiliates
|
(52,594
|
)
|
|
(5,110
|
)
|
|
61,662
|
|
|
—
|
|
|
3,958
|
|
|
Other assets
|
(861
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(861
|
)
|
|
Accounts payable and accrued liabilities
|
8,444
|
|
|
(96
|
)
|
|
(185
|
)
|
|
—
|
|
|
8,163
|
|
|
Net cash provided by/(used) in operating activities
|
(127,067
|
)
|
|
(70
|
)
|
|
25,033
|
|
|
451
|
|
|
(101,653
|
)
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
Principal payments received and other changes on mortgage loans held for investment, subject to ABS nonrecourse debt
|
—
|
|
|
—
|
|
|
48,838
|
|
|
—
|
|
|
48,838
|
|
|
Property and equipment additions, net of disposals
|
(3,923
|
)
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(3,936
|
)
|
|
Purchase of mortgage servicing rights
|
(17,812
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,812
|
)
|
|
Proceeds from sales of REO
|
504
|
|
|
—
|
|
|
73,603
|
|
|
—
|
|
|
74,107
|
|
|
Net cash provided by/(used) in investing activities
|
(21,231
|
)
|
|
(13
|
)
|
|
122,441
|
|
|
—
|
|
|
101,197
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
Transfers to/from restricted cash
|
(38,617
|
)
|
|
—
|
|
|
4,886
|
|
|
—
|
|
|
(33,731
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuer
(Parent)
|
|
Guarantor
(Subsidiaries)
|
|
Non-
Guarantor
(Subsidiaries)
|
|
Eliminations
|
|
Consolidated
|
|
Issuance of unsecured notes, net of issue discount
|
243,013
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
243,013
|
|
|
Decrease in notes payable, net
|
(57,972
|
)
|
|
—
|
|
|
(4,127
|
)
|
|
—
|
|
|
(62,099
|
)
|
|
Repayment of nonrecourse debt–Legacy assets
|
—
|
|
|
—
|
|
|
(45,364
|
)
|
|
—
|
|
|
(45,364
|
)
|
|
Repayment of ABS nonrecourse debt
|
(146
|
)
|
|
—
|
|
|
(102,869
|
)
|
|
(451
|
)
|
|
(103,466
|
)
|
|
Debt financing costs
|
(14,923
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,923
|
)
|
|
Tax related share-based settlement of units by members
|
(3,396
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,396
|
)
|
|
Net cash provided by/(used) in financing activities
|
127,959
|
|
|
—
|
|
|
(147,474
|
)
|
|
(451
|
)
|
|
(19,966
|
)
|
|
Net increase/(decrease) in cash
|
(20,339
|
)
|
|
(83
|
)
|
|
—
|
|
|
—
|
|
|
(20,422
|
)
|
|
Cash and cash equivalents at beginning of period
|
41,243
|
|
|
402
|
|
|
—
|
|
|
—
|
|
|
41,645
|
|
|
Cash and cash equivalents at end of period
|
$
|
20,904
|
|
|
$
|
319
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,223
|
|
26. Disclosures Related to Transactions with Affiliates of Fortress Investment Group LLC
In September 2010, Nationstar entered into a marketing agreement with Springleaf Home Equity, Inc., formerly known as American General Home Equity, Inc., Springleaf General Financial Services of Arkansas, Inc., formerly known as American General Financial Services of Arkansas, Inc. and MorEquity, Inc. (collectively “Springleaf”), each of which are indirectly owned by investment funds managed by affiliates of Fortress Investment Group LLC. Pursuant to this agreement, Nationstar markets mortgage originations products to customers of Springleaf, and is compensated by the originations fees of loans that Nationstar refinances.
Additionally, in
January 2011
, Nationstar entered into
three
agreements to act as the loan subservicer for Springleaf for a whole loan portfolio and
two
securitized loan portfolios totaling
$4.4 billion
for which Nationstar receives a monthly per loan subservicing fee and other performance incentive fees subject to the agreements with Springleaf. For the
year ended December 31, 2012
and
2011
, Nationstar recognized revenue of
$9.8 million
and
$9.9 million
, respectively, in additional servicing and other performance incentive fees related to these portfolios. At
December 31, 2012
and 2011, Nationstar had an outstanding receivable from Springleaf of
$0.7 million
and
$0.6 million
, respectively, which was included as a component of accounts receivable.
Nationstar is the loan servicer for
two
securitized loan portfolios managed by Newcastle, which is managed by an affiliate of Fortress Investment Group LLC, for which Nationstar receives a monthly net servicing fee equal to
0.50%
per annum on the unpaid principal balance of the portfolios, which was
$1.0 billion
,
$1.1 billion
and
$1.2 billion
, as of
December 31, 2012
, 2011, and 2010, respectively.
For the year ended December 31,
2012
, 2011 and 2010, Nationstar received servicing fees and other performance incentive fees of
$5.2 million
,
$5.8 million
and
$6.5 million
, respectively.
Additionally, since
December 2011
, Nationstar entered into several agreements with Newcastle, where Nationstar sold to Newcastle the right to receive a portion of the excess cash flow generated from certain acquired MSRs after receipt of a fixed basic servicing fee per loan. Nationstar will retain all ancillary income associated with servicing such MSRs and the remaining portion of the excess cash flow after receipt of the fixed basic servicing fee. Nationstar will continue to be the servicer of the loans and provide all servicing and advancing functions for the portfolio. Newcastle will not have prior or ongoing obligations associated with these MSR portfolios. Furthermore, should Nationstar refinance any loan in such portfolios, subject to certain limitations, Nationstar will be required to transfer the new loan or a replacement loan of similar economic characteristics into the portfolios. The new or replacement loan will be governed by the same terms set forth in the agreements described above.
In addition, Nationstar has paid
$8.8 million
to Newcastle for delinquent service fees above the contractual amount. This amount will be ultimately netted against future remittances as related to service fee amounts. This amount is recorded as an offset to outstanding excess spread financing in our financial statements. Additionally, Nationstar recorded
$1.0 million
of accounts payable to Newcastle for the legal expenses incurred in connection with the potential ResCap acquisition.
The fair value on the outstanding liability related to these agreements was
$288.1 million
and
$44.6 million
at
December 31, 2012
and 2011, respectively.
27. Related Party Disclosure
In
March 2011
, Nationstar acquired a
22%
interest in ANC Acquisition LLC (ANC) for an initial investment of
$6.6 million
. ANC is the parent company of National Real Estate Information Services, LP (NREIS), a real estate services company. In
March 2012
, FIF contributed its
13%
investment in ANC to Nationstar, increasing the overall investment to
35%
. As Nationstar is able to exercise significant influence, but not control, over the policies and procedures of the entity, and Nationstar owns less than
50%
of the voting interests, Nationstar applies the equity method of accounting. NREIS, an ancillary real estate services and vendor management company, offers comprehensive settlement and property valuation services for both originations and default management channels. Direct or indirect product and service offerings include title insurance agency, tax searches, flood certification, default valuations, full appraisals and broker price opinions. Nationstar disbursed servicing-related advances of
$16.9 million
and
$4.9 million
for the years ended
December 31, 2012
and 2011, respectively.
Nationstar recorded a net charge to earnings related to its loss on NREIS of
$0.1 million
for
December 31, 2011
, which is included in the loss on equity method investment line item in Nationstar’s consolidated statement of operations. Through the third quarter of 2012, Nationstar had recognized its portion of NREIS' loss on equity method investment of
$1.3 million
. During the fourth quarter of 2012, the management of NREIS made the decision to wind down its operations due to continuing poor financial results. Because of the decision to wind down operations and the financial condition of NREIS, Nationstar recorded additional losses amounting to
$9.0 million
. In addition to its initial investment, Nationstar, during May 2012, advanced NREIS
$2.0 million
for future services. Nationstar determined that these deposits would not be recovered and fully impaired this additional deposit. In order to effect an orderly wind down of the operation, Nationstar, together with the majority owners of ANC, agreed to fund a portion of the expected wind down costs. As such, Nationstar recorded
$2.3 million
of losses in excess of its investment at December 31, 2012. These losses are expected to be funded in early 2013.
28. Quarterly Financial Data (Unaudited)
The following is a summary of the quarterly consolidated results of operations for the years ended December 31, 2012, 2011 and 2010 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total fee income
|
$
|
93,560
|
|
|
$
|
100,414
|
|
|
$
|
145,611
|
|
|
$
|
157,566
|
|
|
Gain on mortgage loans held for sale
|
70,512
|
|
|
102,345
|
|
|
139,259
|
|
|
175,048
|
|
|
Total revenues
|
164,072
|
|
|
202,759
|
|
|
284,870
|
|
|
332,614
|
|
|
Total expenses and impairments
|
96,577
|
|
|
130,372
|
|
|
154,828
|
|
|
200,268
|
|
|
Total other income/(expense)
|
(14,164
|
)
|
|
(23,332
|
)
|
|
(50,261
|
)
|
|
(37,930
|
)
|
|
Income before taxes
|
53,331
|
|
|
49,055
|
|
|
79,781
|
|
|
94,416
|
|
|
Income taxes
|
3,145
|
|
|
12,780
|
|
|
24,714
|
|
|
30,657
|
|
|
Net income
|
$
|
50,186
|
|
|
$
|
36,275
|
|
|
$
|
55,067
|
|
|
$
|
63,759
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
$
|
0.67
|
|
|
$
|
0.41
|
|
|
$
|
0.62
|
|
|
$
|
0.72
|
|
|
Diluted earnings per share
|
$
|
0.67
|
|
|
$
|
0.41
|
|
|
$
|
0.61
|
|
|
$
|
0.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total fee income
|
$
|
64,686
|
|
|
$
|
59,898
|
|
|
$
|
61,141
|
|
|
$
|
82,980
|
|
|
Gain on mortgage loans held for sale
|
20,506
|
|
|
22,822
|
|
|
30,232
|
|
|
35,576
|
|
|
Total revenues
|
85,192
|
|
|
82,720
|
|
|
91,373
|
|
|
118,556
|
|
|
Total expenses and impairments
|
68,121
|
|
|
68,402
|
|
|
83,194
|
|
|
86,466
|
|
|
Total other income/(expense)
|
(9,702
|
)
|
|
(12,592
|
)
|
|
(11,279
|
)
|
|
(17,198
|
)
|
|
Net income/(loss)
|
$
|
7,369
|
|
|
$
|
1,726
|
|
|
$
|
(3,100
|
)
|
|
$
|
14,892
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
$
|
0.11
|
|
|
$
|
0.02
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.21
|
|
|
Diluted earnings (loss) per share
|
$
|
0.11
|
|
|
$
|
0.02
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total fee income
|
$
|
38,750
|
|
|
$
|
44,878
|
|
|
$
|
39,142
|
|
|
$
|
61,314
|
|
|
Gain on mortgage loans held for sale
|
12,429
|
|
|
13,489
|
|
|
25,836
|
|
|
25,590
|
|
|
Total revenues
|
51,179
|
|
|
58,367
|
|
|
64,978
|
|
|
86,904
|
|
|
Total expenses and impairments
|
40,110
|
|
|
45,999
|
|
|
59,513
|
|
|
75,354
|
|
|
Total other income/(expense)
|
(10,337
|
)
|
|
(14,694
|
)
|
|
(11,280
|
)
|
|
(14,055
|
)
|
|
Net income/(loss)
|
$
|
732
|
|
|
$
|
(2,326
|
)
|
|
$
|
(5,815
|
)
|
|
$
|
(2,505
|
)
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
$
|
0.01
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.04
|
)
|
|
Diluted earnings (loss) per share
|
$
|
0.01
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.04
|
)
|
During 2012, Nationstar reclassified amounts previously recorded in other income/(expense) during the first three quarters of 2012 into total fee income. This reclassification was performed to more accurately portray the nature of the services provided by Nationstar related to reverse mortgage loans. This reclassification did not have an impact on the Net income/(loss) amounts previously reported on SEC Form 10-Q for the impacted periods.
29. Subsequent Events
On January 6, 2013, Nationstar entered into a mortgage servicing rights purchase and sale agreement (the Purchase Agreement) with a financial institution. Under the Purchase Agreement, the Company agreed to purchase the rights to service approximately
1.3 million
residential mortgage loans with a total UPB of approximately
$215 billion
, and approximately
$5.8 billion
of related servicing advance receivables. Approximately
47%
of these loans (by UPB) are owned, insured or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae, and the remaining
53%
of these loans are non-conforming loans in private label securitizations.
The aggregate purchase price is approximately
$7.1 billion
, which is expected to be funded through a combination of cash on hand, the proceeds of a co-investment by Newcastle Investment Corp., and certain funds managed by Fortress, the proceeds of advance financing facilities, and/or other issuances of debt. On January 31, 2013, Nationstar closed on the MSRs and associated servicing advance receivables with respect to those loans owned, insured or guaranteed by Fannie Mae and Freddie Mac. On February 1, 2013, Nationstar closed on the MSRs and associated servicing advance receivables with respect to those loans owned, insured or guaranteed by Ginnie Mae. Subject to customary closing conditions, the Company expects to close on the majority of the remaining MSRs in stages during the second quarter of 2013. The Company expects to have completed the boarding on the acquired Fannie Mae, Freddie Mac, and Ginnie Mae portfolios from February to June 2013, with the remaining private label securitization portfolios scheduled to board onto the servicing system through September 2013.
On January 28, 2013, Nationstar amended the 2011-1 Agency advance financing facility. The amended agreement permits the facility to issue additional asset-backed term notes of
$300 million
, raising the total capacity for this facility to
$900 million
.
The Notes carry a weighted average fixed interest rate of
1.46%
and a weighted average term of
3 years
. This facility is secured by servicing advance receivables and is nonrecourse to Nationstar.
In January 2013, Nationstar amended the MRA of the
$375 million
warehouse facility to increase the borrowing capacity from
$375.0 million
to
$750.0 million
.
On February 7, 2013, Nationstar completed the offering of
$400 million
aggregate principal amount of
6.5%
senior notes due 2021 in a private placement transaction. The notes were issued at par and pay interest semi-annually.
In February 2013, Nationstar amended the $100 million warehouse facility (2009) and Securities repurchase facility (2011) extending the maturity dates to March 2013.
On March 7, 2013, a purported investor filed a complaint with the Supreme Court of the State of New York (the trial court), alleging that Nationstar sold loans for six trusts where Nationstar acts as master servicer, in violation of the underlying pooling and servicing agreements. The Supreme Court has temporarily enjoined Nationstar from further sales of loans in response to the complaint. Nationstar intends to vigorously defend itself in this action and does not expect this action to have a material adverse effect on its financial position or results of operations.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (Exchange Act), as of December 31, 2012.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2012, our disclosure controls and procedures are effective. Disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Management’s Report on Internal control over Financial Reporting
This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Item 9B.
Other Information
None.
PART III.
Item 10.
Directors, Executive Officers and Corporate Governance
Information required by Item 10 with respect to executive officers is included within Item 1 in Part I of this Annual Report on Form 10-K under the caption “Executive Officers of the Registrant.”
Information required by Item 10 for matters other than executive officers is included under the captions “Board of Directors,” “Election of Directors,” “Corporate Governance” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Company's definitive proxy statement for the 2013 Annual Meeting of Stockholders (Proxy Statement), which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days of the Company's fiscal year-end and is incorporated herein by reference.
Item 11. Executive Compensation
Information required by Item 11 is included under the captions "Committees of the Board of Directors", "Executive Compensation", and "Compensation Committee Report" in the Proxy Statement, which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days of the Company's fiscal year-end and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Information required by Item 12 is included under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the Proxy Statement, which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days of the Company's fiscal year-end and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information required by Item 13 is included under the captions “Certain Relationships and Related Party Transactions” and “Board of Directors” in the Proxy Statement, which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days of the Company's fiscal year-end and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
Information required by Item 14 under the caption “Audit Function” in the Proxy Statement, which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days of the Company's fiscal year-end and is incorporated herein by reference.
Item 15. Exhibits and Financial Statement Schedules
Documents filed as part of this Annual Report on Form 10-K:
Our consolidated financial statements at December 31, 2012 and 2011 and for each of the three years in the period ended December 31, 2012 and the notes thereto, together with the report of the independent registered public accounting firm on those consolidated financial statements are filed within Item 8 in Part II as part of this Annual Report on Form 10-K.
|
|
|
|
2.
|
Financial Statement Schedules:
|
No financial statement schedules are presented since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and accompanying notes.
EXHIBIT INDEX
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
Exhibit Number
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
2.1
|
Master Pre-IPO Restructuring Agreement, dated as of February 17, 2012, by and among FIF HE Holdings LLC, Nationstar Mortgage Holdings Inc., Nationstar Mortgage LLC and the other parties thereto
|
S-1/A
|
333-174246
|
2.1
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
2.2+
|
Mortgage Servicing Rights Purchase and Sale Agreement, dated as of January 6, 2013, between Nationstar Mortgage LLC and Bank of America, National Association
|
8-K
|
001-35449
|
2.1
|
1/10/2013
|
|
|
|
|
|
|
|
|
|
|
3.1
|
Amended and Restated Certificate of Incorporation of Nationstar Mortgage Holdings Inc.
|
S-1/A
|
333-174246
|
3.1
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
3.2
|
Amended and Restated Bylaws of Nationstar Mortgage Holdings Inc.
|
S-1/A
|
333-174246
|
3.2
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
4.1
|
Form of Stock Certificate
|
S-1/A
|
333-174246
|
4.8
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
4.2
|
Stockholders Agreement, dated as of February 17, 2012, between Nationstar Mortgage Holdings Inc. and FIF HE Holdings LLC
|
S-1/A
|
333-174246
|
4.1
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
4.3
|
Indenture, dated as of March 26, 2010, among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
S-4
|
333-171370
|
4.1
|
12/23/2010
|
|
|
|
|
|
|
|
|
|
|
4.4
|
Supplemental Indenture, dated as of August 31, 2010, between NSM Recovery Services Inc. and Wells Fargo Bank, National Association, as trustee
|
S-4
|
333-171370
|
4.2
|
12/23/2010
|
|
|
|
|
|
|
|
|
|
|
4.5
|
Supplemental Indenture, dated as of December 13, 2010, between NSM Foreclosure Services Inc. and Wells Fargo Bank, National Association, as trustee
|
S-4
|
333-171370
|
4.3
|
12/23/2010
|
|
|
|
|
|
|
|
|
|
|
4.6
|
Third Supplemental Indenture, dated as of December 19, 2011, among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
333-171370
|
4.1
|
12/19/2011
|
|
|
|
|
|
|
|
|
|
|
4.7
|
Fourth Supplemental Indenture, dated as of August 9, 2012, among Nationstar Mortgage Holdings Inc., Nationstar Sub1 LLC, Nationstar Sub2 LLC and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.1
|
8/9/2012
|
|
|
|
|
|
|
|
|
|
|
4.8
|
Fifth Supplemental Indenture, dated as of August 30, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.1
|
9/4/2012
|
|
|
|
|
|
|
|
|
|
|
4.9
|
Sixth Supplemental Indenture, dated as of December 10, 2012, between Champion Mortgage LLC and Wells Fargo Bank, National Association, as trustee
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
Exhibit Number
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
4.10
|
Indenture, dated as of September 24, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.1
|
9/24/2012
|
|
|
|
|
|
|
|
|
|
|
4.11
|
First Supplemental Indenture, dated as of September 28, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.2
|
9/28/2012
|
|
|
|
|
|
|
|
|
|
|
4.12
|
Second Supplemental Indenture, dated as of December 10, 2012, between Champion Mortgage LLC and Wells Fargo Bank, National Association, as trustee
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
4.13
|
Indenture, dated as of April 25, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.1
|
4/25/2012
|
|
|
|
|
|
|
|
|
|
|
4.14
|
First Supplemental Indenture, dated as of July 24, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.2
|
7/24/2012
|
|
|
|
|
|
|
|
|
|
|
4.15
|
Second Supplemental Indenture, dated as of August 9, 2012, among Nationstar Mortgage Holdings Inc., Nationstar Sub1 LLC, Nationstar Sub2 LLC and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.2
|
8/9/2012
|
|
|
|
|
|
|
|
|
|
|
4.16
|
Third Supplemental Indenture, dated as of December 10, 2012, between Champion Mortgage LLC and Wells Fargo Bank, National Association, as trustee
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
4.17
|
Indenture, dated as of February 7, 2013, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.1
|
2/7/2013
|
|
|
|
|
|
|
|
|
|
|
4.18
±
|
Indenture, dated as of June 12, 2012, between Nationstar Agency Advance Funding Trust 2012-AW and Wells Fargo Bank, National Association, as indenture trustee
|
10-Q
|
001-35449
|
4.2
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
4.19
±
|
Indenture, dated as of June 26, 2012, between Nationstar Advance Funding Trust 2012-W and Wells Fargo Bank, National Association, as indenture trustee
|
10-Q
|
001-35449
|
4.3
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
4.20
±
|
Indenture, dated as of June 26, 2012, between Nationstar Advance Funding Trust 2012-R and Wells Fargo Bank, National Association, as indenture trustee
|
10-Q
|
001-35449
|
4.4
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
4.21
±
|
Indenture, dated as of June 26, 2012, between Nationstar Advance Funding Trust 2012-C and Wells Fargo Bank, National Association, as indenture trustee
|
10-Q
|
001-35449
|
4.5
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
Exhibit Number
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
4.22*
|
Amendment No. 1, dated July 18, 2012, to Indenture, dated as of June 26, 2012, between Nationstar Advance Funding Trust 2012-C and Wells Fargo Bank, National Association, as indenture trustee
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
4.23*
|
Amendment No. 2, dated August 24, 2012, to Indenture, dated as of June 26, 2012, between Nationstar Advance Funding Trust 2012-C and Wells Fargo Bank, National Association, as indenture trustee
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
4.24*
|
Amendment No. 3, dated November 30, 2012, to Indenture, dated as of June 26, 2012, between Nationstar Advance Funding Trust 2012-C and Wells Fargo Bank, National Association, as indenture trustee
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
4.25
|
Fourth Amended and Restated Indenture, dated January 31, 2013, among Nationstar Agency Advance Funding Trust, as issuer, The Bank of New York Mellon, as indenture trustee, calculation agent, paying agent and securities intermediary, Nationstar Mortgage LLC, as servicer and as administrator, and Barclays Bank PLC, as administrative agent
|
8-K
|
001-35449
|
10.1
|
2/6/2013
|
|
|
|
|
|
|
|
|
|
|
4.26
|
Series 2013-VF1 Indenture Supplement to Fourth Amended and Restated Indenture, dated January 31, 2013, among Nationstar Agency Advance Funding Trust, as issuer, The Bank of New York Mellon, as indenture trustee, calculation agent, paying agent and securities intermediary, Nationstar Mortgage LLC, as administrator and as servicer, and Barclays Bank PLC, as administrative agent
|
8-K
|
001-35449
|
10.2
|
2/6/2013
|
|
|
|
|
|
|
|
|
|
|
4.27
|
Series 2013-T1 Indenture Supplement to Fourth Amended and Restated Indenture, dated January 31, 2013, among Nationstar Agency Advance Funding Trust, as issuer, The Bank of New York Mellon, as indenture trustee, calculation agent, paying agent and securities intermediary, Nationstar Mortgage LLC, as administrator and as servicer, and Barclays Bank PLC, as administrative agent
|
8-K
|
001-35449
|
10.3
|
2/6/2013
|
|
|
|
|
|
|
|
|
|
|
4.28
|
Series 2013-T2 Indenture Supplement to Fourth Amended and Restated Indenture, dated January 31, 2013, among Nationstar Agency Advance Funding Trust, as issuer, The Bank of New York Mellon, as indenture trustee, calculation agent, paying agent and securities intermediary, Nationstar Mortgage LLC, as administrator and as servicer, and Barclays Bank PLC, as administrative agent
|
8-K
|
001-35449
|
10.4
|
2/6/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
Exhibit Number
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
10.1
|
Registration Rights Agreement, dated as of April 25, 2012, among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, Barclays Capital Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers
|
8-K
|
001-35449
|
10.1
|
4/25/2012
|
|
|
|
|
|
|
|
|
|
|
10.2
|
Registration Rights Agreement, dated as of July 24, 2012, among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers
|
8-K
|
001-35449
|
10.1
|
7/24/2012
|
|
|
|
|
|
|
|
|
|
|
10.3
|
Registration Rights Agreement, dated as of September 24, 2012, among the issuers, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers
|
8-K
|
001-35449
|
10.1
|
9/24/2012
|
|
|
|
|
|
|
|
|
|
|
10.4
|
Registration Rights Agreement, dated as of September 28, 2012, among the issuers, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers
|
8-K
|
001-35449
|
10.1
|
9/28/2012
|
|
|
|
|
|
|
|
|
|
|
10.5
|
Registration Rights Agreement, dated February 7, 2013, among the issuers, the guarantors party thereto, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse Securities (USA) LLC, Barclays Capital Inc., Wells Fargo Securities, LLC and RBS Securities Inc., as representatives of the several initial purchasers
|
8-K
|
001-35449
|
10.1
|
2/7/2013
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|
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10.6
|
Amended and Restated Receivables Pooling Agreement, dated January 31, 2013, between Nationstar Agency Advance Funding LLC (depositor) and Nationstar Agency Advance Funding Trust (issuer)
|
8-K
|
001-35449
|
10.5
|
2/6/2013
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|
|
10.7
|
Amended and Restated Receivables Sale Agreement, dated January 31, 2013, between Nationstar Mortgage LLC (receivables seller and servicer) and Nationstar Agency Advance Funding LLC (depositor)
|
8-K
|
001-35449
|
10.6
|
2/6/2013
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|
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|
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10.8
|
Asset Purchase Agreement, dated as of May 13, 2012, among Nationstar Mortgage LLC and Residential Capital, LLC, Residential Funding Company, LLC, GMAC Mortgage, LLC, Executive Trustee Services, LLC, ETS of Washington, Inc., EPRE LLC and the additional Sellers identified on Schedule A thereto
|
8-K
|
001-35449
|
10.1
|
5/16/2012
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Incorporated by Reference
|
|
|
Exhibit Number
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
10.9
|
Amended and Restated Asset Purchase Agreement, dated as of June 28, 2012, among Nationstar Mortgage LLC and Residential Capital, LLC, Residential Funding Company, LLC, GMAC Mortgage, LLC, Executive Trustee Services LLC, ETS of Washington, Inc., EPRE LLC, GMACM Borrower LLC and RFC Borrower LLC
|
8-K
|
001-35449
|
2.1
|
7/5/2012
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|
10.10*
|
Addendum to Mortgage Selling and Servicing Contract (Early Advance Funding Agreement), dated December 20, 2012, between Fannie Mae and Nationstar Mortgage LLC (restates and supersedes prior EAF facility)
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X
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|
10.11*
|
First Amendment, dated January 31, 2013, to the Addendum to Mortgage Selling and Servicing Contract (Early Advance Funding Agreement), dated December 20, 2012, between Fannie Mae and Nationstar Mortgage LLC
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X
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10.12
|
Master Repurchase Agreement, dated March 25, 2011, between Barclays Bank, PLC and Nationstar Mortgage LLC
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X
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10.13
|
Amendment and Waiver, dated February 21, 2012, to the Master Repurchase Agreement, dated March 25, 2011, and the Mortgage Loan Participation Purchase and Sale Agreement, dated March 25, 2011, between Barclays Bank, PLC and Nationstar Mortgage LLC
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|
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X
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|
10.14
|
Amendment Number One, dated February 29, 2012, to the Master Repurchase Agreement, dated March 25, 2011, between Barclays Bank, PLC and Nationstar Mortgage LLC
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|
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X
|
|
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|
10.15
|
Amendment Number Two, dated June 28, 2012, to the Master Repurchase Agreement, dated March 25, 2011, between Barclays Bank, PLC and Nationstar Mortgage LLC
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X
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10.16
|
Amendment Number Three, dated August 28, 2012, to the Master Repurchase Agreement, dated March 25, 2011, between Barclays Bank, PLC and Nationstar Mortgage LLC
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X
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10.17
|
Amendment Number Four, dated December 24, 2012, to the Master Repurchase Agreement, dated March 25, 2011, between Barclays Bank, PLC and Nationstar Mortgage LLC
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X
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|
10.18
|
Mortgage Loan Participation Purchase and Sale Agreement, dated March 25, 2011, between Barclays Bank PLC and Nationstar Mortgage LLC
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|
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X
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|
10.19
|
Amendment Number One, dated February 29, 2012, to the Mortgage Loan Participation Purchase and Sale Agreement, dated March 25, 2011, between Barclays Bank PLC and Nationstar Mortgage LLC
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X
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|
Incorporated by Reference
|
|
|
Exhibit Number
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
10.20
|
Amendment Number Two, dated August 28, 2012, to the Mortgage Loan Participation Purchase and Sale Agreement, dated March 25, 2011, among Barclays Bank PLC and Nationstar Mortgage LLC
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X
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10.21
|
Amendment Number Three, dated December 24, 2012, to the Mortgage Loan Participation Purchase and Sale Agreement, dated March 25, 2012, between Barclays Bank PLC and Nationstar Mortgage LLC
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X
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|
10.22
|
Asset Purchase Agreement, dated as of March 6, 2012, among Aurora Bank FSB, Aurora Loan Services LLC and Nationstar Mortgage LLC
|
8-K
|
333-171370
|
10.1
|
3/6/2012
|
|
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|
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|
|
10.23
|
Amended and Restated Asset Purchase Agreement, dated as of June 12, 2012, among Aurora Bank FSB, Aurora Loan Services LLC and Nationstar Mortgage LLC
|
8-K
|
001-35449
|
10.1
|
6/14/2012
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|
10.24
|
First Letter Agreement, dated as of June 1, 2012, among Aurora Bank FSB, Aurora Loan Services LLC and Nationstar Mortgage LLC
|
8-K
|
001-35449
|
10.1
|
6/7/2012
|
|
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10.25
|
Second Letter Agreement, dated as of June 1, 2012, among Aurora Bank FSB, Aurora Loan Services LLC and Nationstar Mortgage LLC
|
8-K
|
001-35449
|
10.2
|
6/7/2012
|
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|
10.26
|
Mortgage Selling and Servicing Contract, dated July 31, 1997, between Fannie Mae and Centex Home Equity Corp.
|
S-1/A
|
333-174246
|
10.37
|
1/20/2012
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|
10.27
|
Future Spread Agreement for FNMA Mortgage Loans, dated March 6, 2012, between Nationstar Mortgage LLC and NIC MSR II LLC
|
8-K
|
333-171370
|
10.3
|
3/6/2012
|
|
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|
10.28
|
Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, dated as of March 6, 2012, between Nationstar Mortgage LLC and NIC MSR II LLC
|
8-K
|
333-171370
|
10.2
|
3/6/2012
|
|
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|
|
|
|
|
|
|
|
10.29
|
Future Spread Agreement for FHLMC Mortgage Loans, dated March 6, 2012, between Nationstar Mortgage LLC and NIC MSR II LLC
|
8-K
|
333-171370
|
10.5
|
3/6/2012
|
|
|
|
|
|
|
|
|
|
|
10.30
|
Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, dated as of March 6, 2012, between Nationstar Mortgage LLC and NIC MSR II LLC
|
8-K
|
333-171370
|
10.4
|
3/6/2012
|
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|
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|
|
|
|
|
10.31
|
Future Spread Agreement for Non-Agency Mortgage Loans, dated March 6, 2012, between Nationstar Mortgage LLC and NIC MSR II LLC
|
8-K
|
333-171370
|
10.7
|
3/6/2012
|
|
|
|
|
|
|
|
|
|
|
10.32
|
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, dated as of March 6, 2012, between Nationstar Mortgage LLC and NIC MSR II LLC
|
8-K
|
333-171370
|
10.6
|
3/6/2012
|
|
|
|
|
|
|
|
|
|
|
10.33
|
Future Spread Agreement for FHLMC Mortgage Loans, dated May 13, 2012, between Nationstar Mortgage LLC and NIC MSR IV LLC
|
8-K
|
001-35449
|
10.5
|
5/16/2012
|
|
|
|
|
|
|
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|
|
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|
|
Incorporated by Reference
|
|
|
Exhibit Number
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
10.34
|
Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, dated as of May 13, 2012, between Nationstar Mortgage LLC and NIC MSR IV LLC
|
8-K
|
001-35449
|
10.4
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.35
|
Amended and Restated Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, dated as of June 28, 2012, between Nationstar Mortgage LLC and NIC MSR IV LLC
|
8-K
|
001-35449
|
10.2
|
7/5/2012
|
|
|
|
|
|
|
|
|
|
|
10.36
|
Future Spread Agreement for FNMA Mortgage Loans, dated May 13, 2012, between Nationstar Mortgage LLC and NIC MSR V LLC
|
8-K
|
001-35449
|
10.3
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.37
|
Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, dated as of May 13, 2012, between Nationstar Mortgage LLC and NIC MSR V LLC
|
8-K
|
001-35449
|
10.2
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.38
|
Amended and Restated Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, dated as of June 28, 2012, between Nationstar Mortgage LLC and NIC MSR V LLC
|
8-K
|
001-35449
|
10.1
|
7/5/2012
|
|
|
|
|
|
|
|
|
|
|
10.39
|
Future Spread Agreement for Non-Agency Mortgage Loans, dated May 13, 2012, between Nationstar Mortgage LLC and NIC MSR VI LLC
|
8-K
|
001-35449
|
10.7
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.40
|
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, dated as of May 13, 2012, between Nationstar Mortgage LLC and NIC MSR VI LLC
|
8-K
|
001-35449
|
10.6
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.41
|
Amended and Restated Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, dated as of June 28, 2012, between Nationstar Mortgage LLC and NIC MSR VI LLC
|
8-K
|
001-35449
|
10.3
|
7/5/2012
|
|
|
|
|
|
|
|
|
|
|
10.42
|
Future Spread Agreement for GNMA Mortgage Loans, dated May 13, 2012, between Nationstar Mortgage LLC and NIC MSR VII LLC
|
8-K
|
001-35449
|
10.9
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.43
|
Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans, dated as of May 13, 2012, between Nationstar Mortgage LLC and NIC MSR VII LLC
|
8-K
|
001-35449
|
10.8
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.44
|
Amended and Restated Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans, dated as of June 28, 2012, between Nationstar Mortgage LLC and NIC MSR VII LLC
|
8-K
|
001-35449
|
10.4
|
7/5/2012
|
|
|
|
|
|
|
|
|
|
|
10.45
|
Future Spread Agreement for Non-Agency Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR XIII LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.46
|
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR XIII LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
Exhibit Number
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
10.47
|
Future Spread Agreement for FHLMC Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR IX LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.48
|
Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR IX LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.49
|
Future Spread Agreement for FNMA Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR X LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.50
|
Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR X LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.51
|
Future Spread Agreement for GNMA Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR XI LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.52
|
Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR XI LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.53
|
Future Spread Agreement for Non-Agency Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR XII LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.54
|
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR XII LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.55
|
Receivables Purchase Agreement, dated as of June 12, 2012, among Nationstar Agency Advance Funding Trust 2012-AW, Nationstar Agency Advance Funding 2012-AW, LLC and Nationstar Mortgage LLC
|
10-Q
|
001-35449
|
10.19
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
10.56
|
Receivables Purchase Agreement, dated as of June 26, 2012, among Nationstar Advance Funding Trust 2012-W, Nationstar Advance Funding 2012-W, LLC and Nationstar Mortgage LLC
|
10-Q
|
001-35449
|
10.22
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
10.57
|
Receivables Purchase Agreement, dated as of June 26, 2012, among Nationstar Advance Funding Trust 2012-R, Nationstar Advance Funding 2012-R, LLC and Nationstar Mortgage LLC
|
10-Q
|
001-35449
|
10.21
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
10.58
|
Receivables Purchase Agreement, dated as of June 26, 2012, among Nationstar Advance Funding Trust 2012-C, Nationstar Advance Funding 2012-C, LLC and Nationstar Mortgage LLC
|
10-Q
|
001-35449
|
10.20
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
10.59
|
Amended and Restated Master Repurchase Agreement, dated October 21, 2010, between Bank of America, N.A. and Nationstar Mortgage LLC
|
S-1/A
|
333-174246
|
10.31
|
1/20/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
Exhibit Number
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
10.60
|
Amendment and Waiver to the Amended and Restated Master Repurchase Agreement and the Transition Subservicing Agreement, dated as of February 21, 2012, between Nationstar Mortgage LLC and Bank of America, N.A.
|
S-1/A
|
333-174246
|
10.50
|
2/242012
|
|
|
|
|
|
|
|
|
|
|
10.61
|
Amendment Number One, dated November 24, 2010, to the Amended and Restated Master Repurchase Agreement, dated October 21, 2010, between Bank of America, N.A. and Nationstar Mortgage LLC
|
S-1/A
|
333-174246
|
10.33
|
1/20/2012
|
|
|
|
|
|
|
|
|
|
|
10.62
|
Amendment Number Two, dated October 20, 2011, to the Amended and Restated Master Repurchase Agreement, dated October 21, 2010, between Bank of America, N.A. and Nationstar Mortgage LLC
|
S-1/A
|
333-174246
|
10.34
|
1/20/2012
|
|
|
|
|
|
|
|
|
|
|
10.63
|
Amendment Number Three to the Amended and Restated Master Repurchase Agreement, dated January 17, 2012, between Bank of America, N.A., as buyer, and Nationstar Mortgage LLC, as seller
|
S-1/A
|
333-174246
|
10.35
|
1/20/2012
|
|
|
|
|
|
|
|
|
|
|
10.64
|
Amendment Number Four to the Amended and Restated Master Repurchase Agreement, dated June 1, 2012, between Nationstar Mortgage LLC and Bank of America, N.A.
|
8-K
|
001-35449
|
10.1
|
9/4/2012
|
|
|
|
|
|
|
|
|
|
|
10.65
|
Request for Temporary Increase, dated June 26, 2012, between Bank of America, N.A. and Nationstar Mortgage LLC
|
8-K
|
001-35449
|
10.2
|
9/4/2012
|
|
|
|
|
|
|
|
|
|
|
10.66
|
Amendment Number Five, dated January 30, 2013, to the Amended and Restated Master Repurchase Agreement, dated October 21, 2010, between Bank of America, N.A. and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.67*
|
Transaction Terms Letter for Amended and Restated Master Repurchase Agreement, dated January 30, 2013, between Bank of America, N.A. and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.68
|
Amendment to the Fifth Amended and Restated Master Repurchase Agreement, dated as of February 21, 2012, between Nationstar Mortgage LLC and The Royal Bank of Scotland plc
|
S-1/A
|
333-174246
|
10.49
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
10.69
|
Amendment Number Four to Fifth Amended and Restated Master Repurchase Agreement, dated as of February 25, 2012, between The Royal Bank of Scotland plc and Nationstar Mortgage LLC
|
S-1/A
|
333-174246
|
10.58
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
10.70**
|
Employment Agreement, dated as of January 29, 2008, between Nationstar Mortgage LLC and Robert L. Appel
|
S-4
|
333-171370
|
10.5
|
12/23/2010
|
|
|
|
|
|
|
|
|
|
|
10.71**
|
Amendment, dated as of September 17, 2010, to Employment Agreement, dated January 29, 2008, between Nationstar Mortgage LLC and Robert L. Appel
|
S-4
|
333-171370
|
10.6
|
12/23/2010
|
|
|
|
|
|
|
|
|
|
|
10.72**
|
Employment Agreement between David Hisey and Nationstar Mortgage Holdings Inc.
|
8-K
|
001-35449
|
10.1
|
2/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
Exhibit Number
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
10.73**
|
Employment Agreement between Harold Lewis and Nationstar Mortgage Holdings Inc.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.74**
|
Employment Agreement between Ramesh
Lakshminarayanan and
Nationstar Mortgage Holdings Inc.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.75**
|
Nationstar Mortgage Holdings Inc.
2012 Incentive Compensation Plan
|
S-1/A
|
333-174246
|
10.57
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
10.76**
|
Form of Restricted Stock Grant Agreement for Employees (IPO) under the 2012 Incentive Compensation Plan
|
8-K
|
001-35449
|
10.1
|
11/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.77**
|
Form of Restricted Stock Grant Agreement for Employees under the 2012 Incentive Compensation Plan
|
8-K
|
001-35449
|
10.2
|
11/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.78**
|
Form of Restricted Stock Grant Agreement for Non-Employee Directors (IPO) under the 2012 Incentive Compensation Plan
|
8-K
|
001-35449
|
10.3
|
11/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.79**
|
Form of Restricted Stock Grant Agreement for Non-Employee Directors under the 2012 Incentive Compensation Plan
|
8-K
|
001-35449
|
10.4
|
11/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.80**
|
Form of Cash Award Agreement for Employees under the 2012 Incentive Compensation Plan
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.81**
|
Nationstar Mortgage LLC Annual Incentive Compensation Plan
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.82**
|
Nationstar Mortgage LLC Management Incentive Plan (MIP)
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.83**
|
Nationstar Mortgage LLC Long-Term Incentive Plan
|
S-4
|
333-171370
|
10.16
|
12/23/2010
|
|
|
|
|
|
|
|
|
|
|
10.84**
|
Amendment Number Two to Nationstar Mortgage LLC Long-Term Incentive Plan
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.85
|
Form of Indemnification Agreement with directors and officers
|
S-1/A
|
333-174246
|
10.52
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
21.1
|
Subsidiaries of the Registrant
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
23.1
|
Consent of Ernst & Young LLP
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
31.1
|
Certification by Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
31.2
|
Certification by Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.1
|
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.2
|
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
Exhibit Number
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
101.INS
|
XBRL Instance Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
X
|
|
|
|
|
*
|
Certain portions of this exhibit have been omitted and have been filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2 as promulgated with the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
±
|
Certain portions of this exhibit have been omitted pursuant to confidential treatment granted by the SEC under Rule 24b-2 as promulgated with the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
**
|
Management contract, compensatory plan or arrangement.
|
|
|
|
|
+
|
Pursuant to Item 601(b)(2) of Regulation S-K, the registrant hereby undertakes to furnish supplementally a copy of any referenced schedule to the SEC upon request.
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Nationstar Mortgage Holdings Inc.
By:
/s/ Jay Bray
Jay Bray
Chief Executive Officer
March 15, 2013
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
|
|
|
|
|
|
|
|
/s/ Jay Bray
|
March 15, 2013
|
|
Jay Bray, Chief Executive Officer and Director (Principal Executive Officer)
|
|
|
|
|
|
/s/ David C. Hisey
|
March 15, 2013
|
|
David C. Hisey, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
|
|
|
|
/s/ Wesley R. Edens
|
March 15, 2013
|
|
Wesley R. Edens, Chairman of the Board of Directors
|
|
|
|
|
|
/s/ Robert Gidel
|
March 15, 2013
|
|
Robert Gidel, Director
|
|
|
|
|
|
/s/ Roy Guthrie
|
March 15, 2013
|
|
Roy Guthrie, Director
|
|
|
|
|
|
/s/ Brett Hawkins
|
March 15, 2013
|
|
Brett Hawkins, Director
|
|
|
|
|
|
/s/ Michael D. Malone
|
March 15, 2013
|
|
Michael D. Malone, Director
|
|
EXHIBIT INDEX
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
Exhibit Number
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
2.1
|
Master Pre-IPO Restructuring Agreement, dated as of February 17, 2012, by and among FIF HE Holdings LLC, Nationstar Mortgage Holdings Inc., Nationstar Mortgage LLC and the other parties thereto
|
S-1/A
|
333-174246
|
2.1
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
2.2+
|
Mortgage Servicing Rights Purchase and Sale Agreement, dated as of January 6, 2013, between Nationstar Mortgage LLC and Bank of America, National Association
|
8-K
|
001-35449
|
2.1
|
1/10/2013
|
|
|
|
|
|
|
|
|
|
|
3.1
|
Amended and Restated Certificate of Incorporation of Nationstar Mortgage Holdings Inc.
|
S-1/A
|
333-174246
|
3.1
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
3.2
|
Amended and Restated Bylaws of Nationstar Mortgage Holdings Inc.
|
S-1/A
|
333-174246
|
3.2
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
4.1
|
Form of Stock Certificate
|
S-1/A
|
333-174246
|
4.8
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
4.2
|
Stockholders Agreement, dated as of February 17, 2012, between Nationstar Mortgage Holdings Inc. and FIF HE Holdings LLC
|
S-1/A
|
333-174246
|
4.1
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
4.3
|
Indenture, dated as of March 26, 2010, among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
S-4
|
333-171370
|
4.1
|
12/23/2010
|
|
|
|
|
|
|
|
|
|
|
4.4
|
Supplemental Indenture, dated as of August 31, 2010, between NSM Recovery Services Inc. and Wells Fargo Bank, National Association, as trustee
|
S-4
|
333-171370
|
4.2
|
12/23/2010
|
|
|
|
|
|
|
|
|
|
|
4.5
|
Supplemental Indenture, dated as of December 13, 2010, between NSM Foreclosure Services Inc. and Wells Fargo Bank, National Association, as trustee
|
S-4
|
333-171370
|
4.3
|
12/23/2010
|
|
|
|
|
|
|
|
|
|
|
4.6
|
Third Supplemental Indenture, dated as of December 19, 2011, among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
333-171370
|
4.1
|
12/19/2011
|
|
|
|
|
|
|
|
|
|
|
4.7
|
Fourth Supplemental Indenture, dated as of August 9, 2012, among Nationstar Mortgage Holdings Inc., Nationstar Sub1 LLC, Nationstar Sub2 LLC and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.1
|
8/9/2012
|
|
|
|
|
|
|
|
|
|
|
4.8
|
Fifth Supplemental Indenture, dated as of August 30, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.1
|
9/4/2012
|
|
|
|
|
|
|
|
|
|
|
4.9
|
Sixth Supplemental Indenture, dated as of December 10, 2012, between Champion Mortgage LLC and Wells Fargo Bank, National Association, as trustee
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
4.10
|
Indenture, dated as of September 24, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.1
|
9/24/2012
|
|
|
|
|
|
|
|
|
|
|
4.11
|
First Supplemental Indenture, dated as of September 28, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.2
|
9/28/2012
|
|
|
|
|
|
|
|
|
|
|
4.12
|
Second Supplemental Indenture, dated as of December 10, 2012, between Champion Mortgage LLC and Wells Fargo Bank, National Association, as trustee
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
4.13
|
Indenture, dated as of April 25, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.1
|
4/25/2012
|
|
|
|
|
|
|
|
|
|
|
4.14
|
First Supplemental Indenture, dated as of July 24, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.2
|
7/24/2012
|
|
|
|
|
|
|
|
|
|
|
4.15
|
Second Supplemental Indenture, dated as of August 9, 2012, among Nationstar Mortgage Holdings Inc., Nationstar Sub1 LLC, Nationstar Sub2 LLC and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.2
|
8/9/2012
|
|
|
|
|
|
|
|
|
|
|
4.16
|
Third Supplemental Indenture, dated as of December 10, 2012, between Champion Mortgage LLC and Wells Fargo Bank, National Association, as trustee
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
4.17
|
Indenture, dated as of February 7, 2013, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee
|
8-K
|
001-35449
|
4.1
|
2/7/2013
|
|
|
|
|
|
|
|
|
|
|
4.18
±
|
Indenture, dated as of June 12, 2012, between Nationstar Agency Advance Funding Trust 2012-AW and Wells Fargo Bank, National Association, as indenture trustee
|
10-Q
|
001-35449
|
4.2
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
4.19
±
|
Indenture, dated as of June 26, 2012, between Nationstar Advance Funding Trust 2012-W and Wells Fargo Bank, National Association, as indenture trustee
|
10-Q
|
001-35449
|
4.3
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
4.20
±
|
Indenture, dated as of June 26, 2012, between Nationstar Advance Funding Trust 2012-R and Wells Fargo Bank, National Association, as indenture trustee
|
10-Q
|
001-35449
|
4.4
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
4.21
±
|
Indenture, dated as of June 26, 2012, between Nationstar Advance Funding Trust 2012-C and Wells Fargo Bank, National Association, as indenture trustee
|
10-Q
|
001-35449
|
4.5
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
4.22*
|
Amendment No. 1, dated July 18, 2012, to Indenture, dated as of June 26, 2012, between Nationstar Advance Funding Trust 2012-C and Wells Fargo Bank, National Association, as indenture trustee
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
4.23*
|
Amendment No. 2, dated August 24, 2012, to Indenture, dated as of June 26, 2012, between Nationstar Advance Funding Trust 2012-C and Wells Fargo Bank, National Association, as indenture trustee
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
4.24*
|
Amendment No. 3, dated November 30, 2012, to Indenture, dated as of June 26, 2012, between Nationstar Advance Funding Trust 2012-C and Wells Fargo Bank, National Association, as indenture trustee
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
4.25
|
Fourth Amended and Restated Indenture, dated January 31, 2013, among Nationstar Agency Advance Funding Trust, as issuer, The Bank of New York Mellon, as indenture trustee, calculation agent, paying agent and securities intermediary, Nationstar Mortgage LLC, as servicer and as administrator, and Barclays Bank PLC, as administrative agent
|
8-K
|
001-35449
|
10.1
|
2/6/2013
|
|
|
|
|
|
|
|
|
|
|
4.26
|
Series 2013-VF1 Indenture Supplement to Fourth Amended and Restated Indenture, dated January 31, 2013, among Nationstar Agency Advance Funding Trust, as issuer, The Bank of New York Mellon, as indenture trustee, calculation agent, paying agent and securities intermediary, Nationstar Mortgage LLC, as administrator and as servicer, and Barclays Bank PLC, as administrative agent
|
8-K
|
001-35449
|
10.2
|
2/6/2013
|
|
|
|
|
|
|
|
|
|
|
4.27
|
Series 2013-T1 Indenture Supplement to Fourth Amended and Restated Indenture, dated January 31, 2013, among Nationstar Agency Advance Funding Trust, as issuer, The Bank of New York Mellon, as indenture trustee, calculation agent, paying agent and securities intermediary, Nationstar Mortgage LLC, as administrator and as servicer, and Barclays Bank PLC, as administrative agent
|
8-K
|
001-35449
|
10.3
|
2/6/2013
|
|
|
|
|
|
|
|
|
|
|
4.28
|
Series 2013-T2 Indenture Supplement to Fourth Amended and Restated Indenture, dated January 31, 2013, among Nationstar Agency Advance Funding Trust, as issuer, The Bank of New York Mellon, as indenture trustee, calculation agent, paying agent and securities intermediary, Nationstar Mortgage LLC, as administrator and as servicer, and Barclays Bank PLC, as administrative agent
|
8-K
|
001-35449
|
10.4
|
2/6/2013
|
|
|
|
|
|
|
|
|
|
|
10.1
|
Registration Rights Agreement, dated as of April 25, 2012, among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, Barclays Capital Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers
|
8-K
|
001-35449
|
10.1
|
4/25/2012
|
|
|
|
|
|
|
|
|
|
|
10.2
|
Registration Rights Agreement, dated as of July 24, 2012, among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers
|
8-K
|
001-35449
|
10.1
|
7/24/2012
|
|
|
|
|
|
|
|
|
|
|
10.3
|
Registration Rights Agreement, dated as of September 24, 2012, among the issuers, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers
|
8-K
|
001-35449
|
10.1
|
9/24/2012
|
|
|
|
|
|
|
|
|
|
|
10.4
|
Registration Rights Agreement, dated as of September 28, 2012, among the issuers, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers
|
8-K
|
001-35449
|
10.1
|
9/28/2012
|
|
|
|
|
|
|
|
|
|
|
10.5
|
Registration Rights Agreement, dated February 7, 2013, among the issuers, the guarantors party thereto, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse Securities (USA) LLC, Barclays Capital Inc., Wells Fargo Securities, LLC and RBS Securities Inc., as representatives of the several initial purchasers
|
8-K
|
001-35449
|
10.1
|
2/7/2013
|
|
|
|
|
|
|
|
|
|
|
10.6
|
Amended and Restated Receivables Pooling Agreement, dated January 31, 2013, between Nationstar Agency Advance Funding LLC (depositor) and Nationstar Agency Advance Funding Trust (issuer)
|
8-K
|
001-35449
|
10.5
|
2/6/2013
|
|
|
|
|
|
|
|
|
|
|
10.7
|
Amended and Restated Receivables Sale Agreement, dated January 31, 2013, between Nationstar Mortgage LLC (receivables seller and servicer) and Nationstar Agency Advance Funding LLC (depositor)
|
8-K
|
001-35449
|
10.6
|
2/6/2013
|
|
|
|
|
|
|
|
|
|
|
10.8
|
Asset Purchase Agreement, dated as of May 13, 2012, among Nationstar Mortgage LLC and Residential Capital, LLC, Residential Funding Company, LLC, GMAC Mortgage, LLC, Executive Trustee Services, LLC, ETS of Washington, Inc., EPRE LLC and the additional Sellers identified on Schedule A thereto
|
8-K
|
001-35449
|
10.1
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.9
|
Amended and Restated Asset Purchase Agreement, dated as of June 28, 2012, among Nationstar Mortgage LLC and Residential Capital, LLC, Residential Funding Company, LLC, GMAC Mortgage, LLC, Executive Trustee Services LLC, ETS of Washington, Inc., EPRE LLC, GMACM Borrower LLC and RFC Borrower LLC
|
8-K
|
001-35449
|
2.1
|
7/5/2012
|
|
|
|
|
|
|
|
|
|
|
10.10*
|
Addendum to Mortgage Selling and Servicing Contract (Early Advance Funding Agreement), dated December 20, 2012, between Fannie Mae and Nationstar Mortgage LLC (restates and supersedes prior EAF facility)
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.11*
|
First Amendment, dated January 31, 2013, to the Addendum to Mortgage Selling and Servicing Contract (Early Advance Funding Agreement), dated December 20, 2012, between Fannie Mae and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.12
|
Master Repurchase Agreement, dated March 25, 2011, between Barclays Bank, PLC and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.13
|
Amendment and Waiver, dated February 21, 2012, to the Master Repurchase Agreement, dated March 25, 2011, and the Mortgage Loan Participation Purchase and Sale Agreement, dated March 25, 2011, between Barclays Bank, PLC and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.14
|
Amendment Number One, dated February 29, 2012, to the Master Repurchase Agreement, dated March 25, 2011, between Barclays Bank, PLC and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.15
|
Amendment Number Two, dated June 28, 2012, to the Master Repurchase Agreement, dated March 25, 2011, between Barclays Bank, PLC and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.16
|
Amendment Number Three, dated August 28, 2012, to the Master Repurchase Agreement, dated March 25, 2011, between Barclays Bank, PLC and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.17
|
Amendment Number Four, dated December 24, 2012, to the Master Repurchase Agreement, dated March 25, 2011, between Barclays Bank, PLC and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.18
|
Mortgage Loan Participation Purchase and Sale Agreement, dated March 25, 2011, between Barclays Bank PLC and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.19
|
Amendment Number One, dated February 29, 2012, to the Mortgage Loan Participation Purchase and Sale Agreement, dated March 25, 2011, between Barclays Bank PLC and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.20
|
Amendment Number Two, dated August 28, 2012, to the Mortgage Loan Participation Purchase and Sale Agreement, dated March 25, 2011, among Barclays Bank PLC and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.21
|
Amendment Number Three, dated December 24, 2012, to the Mortgage Loan Participation Purchase and Sale Agreement, dated March 25, 2012, between Barclays Bank PLC and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.22
|
Asset Purchase Agreement, dated as of March 6, 2012, among Aurora Bank FSB, Aurora Loan Services LLC and Nationstar Mortgage LLC
|
8-K
|
333-171370
|
10.1
|
3/6/2012
|
|
|
|
|
|
|
|
|
|
|
10.23
|
Amended and Restated Asset Purchase Agreement, dated as of June 12, 2012, among Aurora Bank FSB, Aurora Loan Services LLC and Nationstar Mortgage LLC
|
8-K
|
001-35449
|
10.1
|
6/14/2012
|
|
|
|
|
|
|
|
|
|
|
10.24
|
First Letter Agreement, dated as of June 1, 2012, among Aurora Bank FSB, Aurora Loan Services LLC and Nationstar Mortgage LLC
|
8-K
|
001-35449
|
10.1
|
6/7/2012
|
|
|
|
|
|
|
|
|
|
|
10.25
|
Second Letter Agreement, dated as of June 1, 2012, among Aurora Bank FSB, Aurora Loan Services LLC and Nationstar Mortgage LLC
|
8-K
|
001-35449
|
10.2
|
6/7/2012
|
|
|
|
|
|
|
|
|
|
|
10.26
|
Mortgage Selling and Servicing Contract, dated July 31, 1997, between Fannie Mae and Centex Home Equity Corp.
|
S-1/A
|
333-174246
|
10.37
|
1/20/2012
|
|
|
|
|
|
|
|
|
|
|
10.27
|
Future Spread Agreement for FNMA Mortgage Loans, dated March 6, 2012, between Nationstar Mortgage LLC and NIC MSR II LLC
|
8-K
|
333-171370
|
10.3
|
3/6/2012
|
|
|
|
|
|
|
|
|
|
|
10.28
|
Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, dated as of March 6, 2012, between Nationstar Mortgage LLC and NIC MSR II LLC
|
8-K
|
333-171370
|
10.2
|
3/6/2012
|
|
|
|
|
|
|
|
|
|
|
10.29
|
Future Spread Agreement for FHLMC Mortgage Loans, dated March 6, 2012, between Nationstar Mortgage LLC and NIC MSR II LLC
|
8-K
|
333-171370
|
10.5
|
3/6/2012
|
|
|
|
|
|
|
|
|
|
|
10.30
|
Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, dated as of March 6, 2012, between Nationstar Mortgage LLC and NIC MSR II LLC
|
8-K
|
333-171370
|
10.4
|
3/6/2012
|
|
|
|
|
|
|
|
|
|
|
10.31
|
Future Spread Agreement for Non-Agency Mortgage Loans, dated March 6, 2012, between Nationstar Mortgage LLC and NIC MSR II LLC
|
8-K
|
333-171370
|
10.7
|
3/6/2012
|
|
|
|
|
|
|
|
|
|
|
10.32
|
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, dated as of March 6, 2012, between Nationstar Mortgage LLC and NIC MSR II LLC
|
8-K
|
333-171370
|
10.6
|
3/6/2012
|
|
|
|
|
|
|
|
|
|
|
10.33
|
Future Spread Agreement for FHLMC Mortgage Loans, dated May 13, 2012, between Nationstar Mortgage LLC and NIC MSR IV LLC
|
8-K
|
001-35449
|
10.5
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.34
|
Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, dated as of May 13, 2012, between Nationstar Mortgage LLC and NIC MSR IV LLC
|
8-K
|
001-35449
|
10.4
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.35
|
Amended and Restated Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, dated as of June 28, 2012, between Nationstar Mortgage LLC and NIC MSR IV LLC
|
8-K
|
001-35449
|
10.2
|
7/5/2012
|
|
|
|
|
|
|
|
|
|
|
10.36
|
Future Spread Agreement for FNMA Mortgage Loans, dated May 13, 2012, between Nationstar Mortgage LLC and NIC MSR V LLC
|
8-K
|
001-35449
|
10.3
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.37
|
Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, dated as of May 13, 2012, between Nationstar Mortgage LLC and NIC MSR V LLC
|
8-K
|
001-35449
|
10.2
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.38
|
Amended and Restated Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, dated as of June 28, 2012, between Nationstar Mortgage LLC and NIC MSR V LLC
|
8-K
|
001-35449
|
10.1
|
7/5/2012
|
|
|
|
|
|
|
|
|
|
|
10.39
|
Future Spread Agreement for Non-Agency Mortgage Loans, dated May 13, 2012, between Nationstar Mortgage LLC and NIC MSR VI LLC
|
8-K
|
001-35449
|
10.7
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.40
|
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, dated as of May 13, 2012, between Nationstar Mortgage LLC and NIC MSR VI LLC
|
8-K
|
001-35449
|
10.6
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.41
|
Amended and Restated Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, dated as of June 28, 2012, between Nationstar Mortgage LLC and NIC MSR VI LLC
|
8-K
|
001-35449
|
10.3
|
7/5/2012
|
|
|
|
|
|
|
|
|
|
|
10.42
|
Future Spread Agreement for GNMA Mortgage Loans, dated May 13, 2012, between Nationstar Mortgage LLC and NIC MSR VII LLC
|
8-K
|
001-35449
|
10.9
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.43
|
Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans, dated as of May 13, 2012, between Nationstar Mortgage LLC and NIC MSR VII LLC
|
8-K
|
001-35449
|
10.8
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.44
|
Amended and Restated Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans, dated as of June 28, 2012, between Nationstar Mortgage LLC and NIC MSR VII LLC
|
8-K
|
001-35449
|
10.4
|
7/5/2012
|
|
|
|
|
|
|
|
|
|
|
10.45
|
Future Spread Agreement for Non-Agency Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR XIII LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.46
|
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR XIII LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.47
|
Future Spread Agreement for FHLMC Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR IX LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.48
|
Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR IX LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.49
|
Future Spread Agreement for FNMA Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR X LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.50
|
Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR X LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.51
|
Future Spread Agreement for GNMA Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR XI LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.52
|
Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR XI LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.53
|
Future Spread Agreement for Non-Agency Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR XII LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.54
|
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, dated as of January 6, 2013, between Nationstar Mortgage LLC and MSR XII LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.55
|
Receivables Purchase Agreement, dated as of June 12, 2012, among Nationstar Agency Advance Funding Trust 2012-AW, Nationstar Agency Advance Funding 2012-AW, LLC and Nationstar Mortgage LLC
|
10-Q
|
001-35449
|
10.19
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
10.56
|
Receivables Purchase Agreement, dated as of June 26, 2012, among Nationstar Advance Funding Trust 2012-W, Nationstar Advance Funding 2012-W, LLC and Nationstar Mortgage LLC
|
10-Q
|
001-35449
|
10.22
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
10.57
|
Receivables Purchase Agreement, dated as of June 26, 2012, among Nationstar Advance Funding Trust 2012-R, Nationstar Advance Funding 2012-R, LLC and Nationstar Mortgage LLC
|
10-Q
|
001-35449
|
10.21
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
10.58
|
Receivables Purchase Agreement, dated as of June 26, 2012, among Nationstar Advance Funding Trust 2012-C, Nationstar Advance Funding 2012-C, LLC and Nationstar Mortgage LLC
|
10-Q
|
001-35449
|
10.20
|
8/14/2012
|
|
|
|
|
|
|
|
|
|
|
10.59
|
Amended and Restated Master Repurchase Agreement, dated October 21, 2010, between Bank of America, N.A. and Nationstar Mortgage LLC
|
S-1/A
|
333-174246
|
10.31
|
1/20/2012
|
|
|
|
|
|
|
|
|
|
|
10.60
|
Amendment and Waiver to the Amended and Restated Master Repurchase Agreement and the Transition Subservicing Agreement, dated as of February 21, 2012, between Nationstar Mortgage LLC and Bank of America, N.A.
|
S-1/A
|
333-174246
|
10.50
|
2/242012
|
|
|
|
|
|
|
|
|
|
|
10.61
|
Amendment Number One, dated November 24, 2010, to the Amended and Restated Master Repurchase Agreement, dated October 21, 2010, between Bank of America, N.A. and Nationstar Mortgage LLC
|
S-1/A
|
333-174246
|
10.33
|
1/20/2012
|
|
|
|
|
|
|
|
|
|
|
10.62
|
Amendment Number Two, dated October 20, 2011, to the Amended and Restated Master Repurchase Agreement, dated October 21, 2010, between Bank of America, N.A. and Nationstar Mortgage LLC
|
S-1/A
|
333-174246
|
10.34
|
1/20/2012
|
|
|
|
|
|
|
|
|
|
|
10.63
|
Amendment Number Three to the Amended and Restated Master Repurchase Agreement, dated January 17, 2012, between Bank of America, N.A., as buyer, and Nationstar Mortgage LLC, as seller
|
S-1/A
|
333-174246
|
10.35
|
1/20/2012
|
|
|
|
|
|
|
|
|
|
|
10.64
|
Amendment Number Four to the Amended and Restated Master Repurchase Agreement, dated June 1, 2012, between Nationstar Mortgage LLC and Bank of America, N.A.
|
8-K
|
001-35449
|
10.1
|
9/4/2012
|
|
|
|
|
|
|
|
|
|
|
10.65
|
Request for Temporary Increase, dated June 26, 2012, between Bank of America, N.A. and Nationstar Mortgage LLC
|
8-K
|
001-35449
|
10.2
|
9/4/2012
|
|
|
|
|
|
|
|
|
|
|
10.66
|
Amendment Number Five, dated January 30, 2013, to the Amended and Restated Master Repurchase Agreement, dated October 21, 2010, between Bank of America, N.A. and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.67*
|
Transaction Terms Letter for Amended and Restated Master Repurchase Agreement, dated January 30, 2013, between Bank of America, N.A. and Nationstar Mortgage LLC
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.68
|
Amendment to the Fifth Amended and Restated Master Repurchase Agreement, dated as of February 21, 2012, between Nationstar Mortgage LLC and The Royal Bank of Scotland plc
|
S-1/A
|
333-174246
|
10.49
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
10.69
|
Amendment Number Four to Fifth Amended and Restated Master Repurchase Agreement, dated as of February 25, 2012, between The Royal Bank of Scotland plc and Nationstar Mortgage LLC
|
S-1/A
|
333-174246
|
10.58
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
10.70**
|
Employment Agreement, dated as of January 29, 2008, between Nationstar Mortgage LLC and Robert L. Appel
|
S-4
|
333-171370
|
10.5
|
12/23/2010
|
|
|
|
|
|
|
|
|
|
|
10.71**
|
Amendment, dated as of September 17, 2010, to Employment Agreement, dated January 29, 2008, between Nationstar Mortgage LLC and Robert L. Appel
|
S-4
|
333-171370
|
10.6
|
12/23/2010
|
|
|
|
|
|
|
|
|
|
|
10.72**
|
Employment Agreement between David Hisey and Nationstar Mortgage Holdings Inc.
|
8-K
|
001-35449
|
10.1
|
2/21/2013
|
|
|
|
|
|
|
|
|
|
|
10.73**
|
Employment Agreement between Harold Lewis and Nationstar Mortgage Holdings Inc.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.74**
|
Employment Agreement between Ramesh
Lakshminarayanan and
Nationstar Mortgage Holdings Inc.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.75**
|
Nationstar Mortgage Holdings Inc.
2012 Incentive Compensation Plan
|
S-1/A
|
333-174246
|
10.57
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
10.76**
|
Form of Restricted Stock Grant Agreement for Employees (IPO) under the 2012 Incentive Compensation Plan
|
8-K
|
001-35449
|
10.1
|
11/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.77**
|
Form of Restricted Stock Grant Agreement for Employees under the 2012 Incentive Compensation Plan
|
8-K
|
001-35449
|
10.2
|
11/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.78**
|
Form of Restricted Stock Grant Agreement for Non-Employee Directors (IPO) under the 2012 Incentive Compensation Plan
|
8-K
|
001-35449
|
10.3
|
11/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.79**
|
Form of Restricted Stock Grant Agreement for Non-Employee Directors under the 2012 Incentive Compensation Plan
|
8-K
|
001-35449
|
10.4
|
11/16/2012
|
|
|
|
|
|
|
|
|
|
|
10.80**
|
Form of Cash Award Agreement for Employees under the 2012 Incentive Compensation Plan
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.81**
|
Nationstar Mortgage LLC Annual Incentive Compensation Plan
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.82**
|
Nationstar Mortgage LLC Management Incentive Plan (MIP)
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.83**
|
Nationstar Mortgage LLC Long-Term Incentive Plan
|
S-4
|
333-171370
|
10.16
|
12/23/2010
|
|
|
|
|
|
|
|
|
|
|
10.84**
|
Amendment Number Two to Nationstar Mortgage LLC Long-Term Incentive Plan
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
10.85
|
Form of Indemnification Agreement with directors and officers
|
S-1/A
|
333-174246
|
10.52
|
2/24/2012
|
|
|
|
|
|
|
|
|
|
|
21.1
|
Subsidiaries of the Registrant
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
23.1
|
Consent of Ernst & Young, LLP
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
31.1
|
Certification by Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
31.2
|
Certification by Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.1
|
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.2
|
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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X
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*
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Certain portions of this exhibit have been omitted and have been filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2 as promulgated with the Securities Exchange Act of 1934, as amended.
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±
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Certain portions of this exhibit have been omitted pursuant to confidential treatment granted by the SEC under Rule 24b-2 as promulgated with the Securities Exchange Act of 1934, as amended.
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**
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Management contract, compensatory plan or arrangement.
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+
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Pursuant to Item 601(b)(2) of Regulation S-K, the registrant hereby undertakes to furnish supplementally a copy of any referenced schedule to the SEC upon request.
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SIXTH SUPPLEMENTAL INDENTURE
Sixth Supplemental Indenture (this “
Sixth Supplemental Indenture
”), dated as of December 10, 2012, among Champion Mortgage LLC (the “
Guaranteeing Subsidiary
”), a subsidiary of Nationstar Mortgage LLC, a Delaware limited liability company (the “
Company
”), Nationstar Capital Corporation (the “
Co-Issuer
” and, together with the Company, the “
Issuers
”) and Wells Fargo Bank, National Association, as trustee (the “
Trustee
”).
W I T N E S S E T H
WHEREAS, the Issuers and each of the Guarantors (as defined in the Indenture referred to below) have heretofore executed and delivered to the Trustee an indenture (the “
Indenture
”), dated as of March 26, 2010, providing for the issuance of 10.875% Senior Notes due 2015 (the “
Notes
”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuers' Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “
Note Guarantee
”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Sixth Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
(1)
Capitalized Terms
. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
(2)
Agreement to Guarantee
. The Guaranteeing Subsidiary hereby agrees as follows:
(a)
Along with all other Guarantors named in the Indenture (including pursuant to any supplemental indentures), to jointly and severally unconditionally guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its respective successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Issuers hereunder or thereunder, that:
(i)
the principal of, interest, premium, if any, and Additional Interest, if any, on the Notes shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Issuers to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and
(ii)
in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors and the Guaranteeing Subsidiary shall be jointly and severally obligated to pay the same immediately. This is a guarantee of payment and not a guarantee of collection.
(b)
The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuers or any Guarantors, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor.
(c)
The Guaranteeing Subsidiary hereby waives: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuers, any right to require a proceeding first against the Issuers, protest, notice and all demands whatsoever.
(d)
This Note Guarantee shall not be discharged except by full payment or complete performance of the obligations contained in the Notes, the Indenture and this Sixth Supplemental Indenture, and the Guaranteeing Subsidiary accepts all obligations of a Guarantor under the Indenture, including Article X of the Indenture (which is deemed incorporated in this Sixth Supplemental Indenture and applicable to this Guarantee). The Guaranteeing Subsidiary acknowledges that by executing this Sixth Supplemental Indenture, it will become a Guarantor under the Indenture and subject to all the terms and conditions applicable to Guarantors contained therein.
(e)
If any Holder or the Trustee is required by any court or otherwise to return to the Issuers, the Guarantors (including the Guaranteeing Subsidiary), or any custodian, trustee, liquidator or other similar official acting in relation to either the Issuers or the Guarantors, any amount paid either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.
(f)
The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby.
(g)
As between the Guaranteeing Subsidiary, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article VI of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guaranteeing Subsidiary for the purpose of this Note Guarantee.
(h)
The Guaranteeing Subsidiary shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under this Note Guarantee.
(i)
Pursuant to Section 10.02 of the Indenture, the obligations of the Guaranteeing Subsidiary shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guaranteeing Subsidiary that are relevant under any applicable Bankruptcy Law or fraudulent conveyance laws and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article X of the Indenture, result in the obligations of such Guaranteeing Subsidiary under this Note Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law.
(j)
This Note Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Issuers for liquidation, reorganization, should the Issuers become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Issuers' assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes and Note Guarantee, whether as a “voidable preference”, “fraudulent transfer” or otherwise, all as though such payment or performance had not been made. In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Note shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
(k)
In case any provision of this Note Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
(l)
This Note Guarantee shall be a general unsecured senior obligation of such Guaranteeing Subsidiary, ranking
pari passu
with any other future unsubordinated Indebtedness of the Guaranteeing Subsidiary, if any.
(m)
Each payment to be made by the Guaranteeing Subsidiary in respect of this Note Guarantee shall be made without set-off, counterclaim, reduction or diminution of any kind or nature.
(3)
Execution and Delivery
. The Guaranteeing Subsidiary agrees that the Note Guarantee shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Note Guarantee on the Notes.
(4)
Merger, Consolidation or Sale of All or Substantially All Assets
.
(a)
The Guaranteeing Subsidiary may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guaranteeing Subsidiary is the surviving Person), another Person, other than the Issuers or another Guarantor, unless:
(i)
except in the case of a merger entered into solely for the purpose of reincorporating a Guaranteeing Subsidiary in another jurisdiction, immediately after giving effect to that transaction, no Default or Event of Default shall have occurred and be continuing; and
(ii)
either:
(A)
the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (if not the Guaranteeing Subsidiary) assumes all the obligations of that Guaranteeing Subsidiary under the Indenture, its Note Guarantee and the applicable Registration Rights Agreement pursuant to this Sixth Supplemental Indenture; or
(B)
the Net Proceeds of such sale or other disposition are either (i) applied in accordance with Section 4.10(d) of the Indenture or (ii) not required to be applied in accordance with any provision of the Indenture.
(5)
Releases
.
The Note Guarantee of the Guaranteeing Subsidiary shall be automatically and unconditionally released and discharged, and no further action by the Guaranteeing Subsidiary, the Issuers or the Trustee is required for the release of the Guaranteeing Subsidiary's Note Guarantee, in the following circumstances:
(a)
in connection with any sale, transfer or other disposition of all or substantially all of the assets of that Guaranteeing Subsidiary (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale or other disposition does not violate Section 4.10 of the Indenture;
(b)
in connection with any sale, transfer or other disposition of all of the Capital Stock of the Guaranteeing Subsidiary (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale or other disposition does not violate Section 4.10 of the Indenture;
(c)
if the Company designates any Restricted Subsidiary of the Company that is a Guarantor to be an Unrestricted Subsidiary of the Company in accordance with Section 4.17 of the Indenture; or
(d)
upon the exercise of Legal Defeasance by the Issuers or pursuant to Article XI of the Indenture; and
in connection with such release, either of the Issuers shall deliver to the Trustee an Officers' Certificate of such Guarantor confirming the effective date of such release and stating that all conditions precedent provided for in this Indenture relating to such transaction have been complied with.
(6)
No Recourse Against Others
. No director, officer, employee, incorporator or stockholder of the Guaranteeing Subsidiary shall have any liability for any obligations of the Issuers or the Guarantors (including the Guaranteeing Subsidiary), respectively, under the Notes, the Note Guarantees, the Indenture or this Sixth Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation;
provided
that the foregoing shall not limit any Guarantor's obligations under its Note Guarantees. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
(7)
Governing Law
. THIS SIXTH SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(8)
Counterparts
. The parties may sign any number of copies of this Sixth Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
(9)
Effect of Headings
. The Section headings herein are for convenience only and shall not affect the construction hereof.
(10)
The Trustee
. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Sixth Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary.
(11)
Subrogation
. The Guaranteeing Subsidiary shall be subrogated to all rights of Holders of Notes against the Issuers in respect of any amounts paid by the Guaranteeing Subsidiary pursuant to the provisions of Section 2 hereof and Section 10.01 of the Indenture;
provided
that, if an Event of Default has occurred and is continuing, the Guaranteeing Subsidiary shall not be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Issuers under the Indenture or the Notes shall have been paid in full.
(12)
Benefits Acknowledged
. The Guaranteeing Subsidiary's Note Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Sixth Supplemental Indenture and that the guarantee and waivers made by it pursuant to this Note Guarantee are knowingly made in contemplation of such benefits.
(13)
Successors
. All agreements of the Guaranteeing Subsidiary in this Sixth Supplemental Indenture shall bind its Successors, except as otherwise in this Sixth Supplemental Indenture. All agreements of the Trustee in this Sixth Supplemental Indenture shall bind its successors.
IN WITNESS WHEREOF, the parties hereto have caused this Sixth Supplemental Indenture to be duly executed, all as of the date first above written.
Champion Mortgage LLC
By:
/s/ Jay Bray
Name: Jay Bray
Title: Chief Executive Officer
Wells Fargo Bank, National Association, as Trustee
By:
/s/ Martin Reed
Name: Martin Reed
Title: Vice President
SECOND SUPPLEMENTAL INDENTURE
Second Supplemental Indenture (this “
Second Supplemental Indenture
”), dated as of December 10, 2012, among Champion Mortgage LLC (the “
Guaranteeing Subsidiary
”), a subsidiary of Nationstar Mortgage LLC, a Delaware limited liability company (the “
Company
”), Nationstar Capital Corporation (the “
Co-Issuer
” and, together with the Company, the “
Issuers
”) and Wells Fargo Bank, National Association, as trustee (the “
Trustee
”).
W I T N E S S E T H
WHEREAS, the Issuers and each of the Guarantors (as defined in the Indenture referred to below) have heretofore executed and delivered to the Trustee an indenture (the “
Indenture
”), dated as of September 24, 2012, providing for the issuance of 7.875% Senior Notes due 2020 (the “
Notes
”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuers' Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “
Note Guarantee
”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Second Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
(1)
Capitalized Terms
. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
(2)
Agreement to Guarantee
. The Guaranteeing Subsidiary hereby agrees as follows:
(a)
Along with all other Guarantors named in the Indenture (including pursuant to any supplemental indentures), to jointly and severally unconditionally guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its respective successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Issuers hereunder or thereunder, that:
(i)
the principal of, interest, premium, if any, and Additional Interest, if any, on the Notes shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Issuers to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and
(ii)
in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors and the Guaranteeing Subsidiary shall be jointly and severally obligated to pay the same immediately. This is a guarantee of payment and not a guarantee of collection.
(b)
The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuers or any Guarantors, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor.
(c)
The Guaranteeing Subsidiary hereby waives: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuers, any right to require a proceeding first against the Issuers, protest, notice and all demands whatsoever.
(d)
This Note Guarantee shall not be discharged except by full payment or complete performance of the obligations contained in the Notes, the Indenture and this Second Supplemental Indenture, and the Guaranteeing Subsidiary accepts all obligations of a Guarantor under the Indenture, including Article X of the Indenture (which is deemed incorporated in this Second Supplemental Indenture and applicable to this Guarantee). The Guaranteeing Subsidiary acknowledges that by executing this Second Supplemental Indenture, it will become a Guarantor under the Indenture and subject to all the terms and conditions applicable to Guarantors contained therein.
(e)
If any Holder or the Trustee is required by any court or otherwise to return to the Issuers, the Guarantors (including the Guaranteeing Subsidiary), or any custodian, trustee, liquidator or other similar official acting in relation to either the Issuers or the Guarantors, any amount paid either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.
(f)
The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby.
(g)
As between the Guaranteeing Subsidiary, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article VI of the Indenture
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guaranteeing Subsidiary for the purpose of this Note Guarantee.
(h)
The Guaranteeing Subsidiary shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under this Note Guarantee.
(i)
Pursuant to Section 10.02 of the Indenture, the obligations of the Guaranteeing Subsidiary shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guaranteeing Subsidiary that are relevant under any applicable Bankruptcy Law or fraudulent conveyance laws and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article X of the Indenture, result in the obligations of such Guaranteeing Subsidiary under this Note Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law.
(j)
This Note Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Issuers for liquidation, reorganization, should the Issuers become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Issuers' assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes and Note Guarantee, whether as a “voidable preference”, “fraudulent transfer” or otherwise, all as though such payment or performance had not been made. In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Note shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
(k)
In case any provision of this Note Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
(l)
This Note Guarantee shall be a general unsecured senior obligation of such Guaranteeing Subsidiary, ranking
pari passu
with any other future unsubordinated Indebtedness of the Guaranteeing Subsidiary, if any.
(m)
Each payment to be made by the Guaranteeing Subsidiary in respect of this Note Guarantee shall be made without set-off, counterclaim, reduction or diminution of any kind or nature.
(3)
Execution and Delivery
. The Guaranteeing Subsidiary agrees that the Note Guarantee shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Note Guarantee on the Notes.
(4)
Merger, Consolidation or Sale of All or Substantially All Assets
.
(a)
The Guaranteeing Subsidiary may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guaranteeing Subsidiary is the surviving Person), another Person, other than the Issuers or another Guarantor, unless:
(i)
except in the case of a merger entered into solely for the purpose of reincorporating a Guaranteeing Subsidiary in another jurisdiction, immediately after giving effect to that transaction, no Default or Event of Default shall have occurred and be continuing; and
(ii)
either:
(A)
the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (if not the Guaranteeing Subsidiary) assumes all the obligations of that Guaranteeing Subsidiary under the Indenture, its Note Guarantee and the applicable Registration Rights Agreement pursuant to this supplemental indenture; or
(B)
the Net Proceeds of such sale or other disposition are either (i) applied in accordance with Section 4.10(d) of the Indenture or (ii) not required to be applied in accordance with any provision of the Indenture.
(5)
Releases
.
The Note Guarantee of the Guaranteeing Subsidiary shall be automatically and unconditionally released and discharged, and no further action by the Guaranteeing Subsidiary, the Issuers or the Trustee is required for the release of the Guaranteeing Subsidiary's Note Guarantee, in the following circumstances:
(a)
in connection with any sale, transfer or other disposition of all or substantially all of the assets of that Guaranteeing Subsidiary (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale or other disposition does not violate Section 4.10 of the Indenture;
(b)
in connection with any sale, transfer or other disposition of all of the Capital Stock of the Guaranteeing Subsidiary (including by way of merger
or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale or other disposition does not violate Section 4.10 of the Indenture;
(c)
if the Company designates any Restricted Subsidiary of the Company that is a Guarantor to be an Unrestricted Subsidiary of the Company in accordance with Section 4.17 of the Indenture; or
(d)
upon the exercise of Legal Defeasance by the Issuers or pursuant to Article XI of the Indenture; and
in connection with such release, either of the Issuers shall deliver to the Trustee an Officers' Certificate of such Guarantor confirming the effective date of such release and stating that all conditions precedent provided for in this Indenture relating to such transaction have been complied with.
(6)
No Recourse Against Others
. No director, officer, employee, incorporator or stockholder of the Guaranteeing Subsidiary shall have any liability for any obligations of the Issuers or the Guarantors (including the Guaranteeing Subsidiary), respectively, under the Notes, the Note Guarantees, the Indenture or this Second Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation;
provided
that the foregoing shall not limit any Guarantor's obligations under its Note Guarantees. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
(7)
Governing Law
. THIS SECOND SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(8)
Counterparts
. The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
(9)
Effect of Headings
. The Section headings herein are for convenience only and shall not affect the construction hereof.
(10)
The Trustee
. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Second Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary.
(11)
Subrogation
. The Guaranteeing Subsidiary shall be subrogated to all rights of Holders of Notes against the Issuers in respect of any amounts paid by the Guaranteeing Subsidiary pursuant to the provisions of Section 2 hereof and Section 10.01 of the Indenture;
provided
that, if an Event of Default has occurred and is continuing, the Guaranteeing Subsidiary shall not be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Issuers under the Indenture or the Notes shall have been paid in full.
(12)
Benefits Acknowledged
. The Guaranteeing Subsidiary's Note Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Second Supplemental Indenture and that the guarantee and waivers made by it pursuant to this Note Guarantee are knowingly made in contemplation of such benefits.
(13)
Successors
. All agreements of the Guaranteeing Subsidiary in this Second Supplemental Indenture shall bind its Successors, except as otherwise in this Second Supplemental Indenture. All agreements of the Trustee in this Second Supplemental Indenture shall bind its successors.
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, all as of the date first above written.
Champion Mortgage LLC
By:
/s/ Jay Bray
Name: Jay Bray
Title: Chief Executive Officer
Wells Fargo Bank, National Association, as Trustee
By:
/s/ Martin Reed
Name: Martin Reed
Title: Vice President
THIRD SUPPLEMENTAL INDENTURE
Third Supplemental Indenture (this “
Third Supplemental Indenture
”), dated as of December 10, 2012, among Champion Mortgage LLC (the “
Guaranteeing Subsidiary
”), a subsidiary of Nationstar Mortgage LLC, a Delaware limited liability company (the “
Company
”), Nationstar Capital Corporation (the “
Co-Issuer
” and, together with the Company, the “
Issuers
”) and Wells Fargo Bank, National Association, as trustee (the “
Trustee
”).
W I T N E S S E T H
WHEREAS, the Issuers and each of the Guarantors (as defined in the Indenture referred to below) have heretofore executed and delivered to the Trustee an indenture (the “
Indenture
”), dated as of April 25, 2012, providing for the issuance of 9.625% Senior Notes due 2019 (the “
Notes
”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuers' Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “
Note Guarantee
”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Third Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
(1)
Capitalized Terms
. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
(2)
Agreement to Guarantee
. The Guaranteeing Subsidiary hereby agrees as follows:
(a)
Along with all other Guarantors named in the Indenture (including pursuant to any supplemental indentures), to jointly and severally unconditionally guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its respective successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Issuers hereunder or thereunder, that:
(i)
the principal of, interest, premium, if any, and Additional Interest, if any, on the Notes shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Issuers to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and
(ii)
in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors and the Guaranteeing Subsidiary shall be jointly and severally obligated to pay the same immediately. This is a guarantee of payment and not a guarantee of collection.
(b)
The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuers or any Guarantors, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor.
(c)
The Guaranteeing Subsidiary hereby waives: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuers, any right to require a proceeding first against the Issuers, protest, notice and all demands whatsoever.
(d)
This Note Guarantee shall not be discharged except by full payment or complete performance of the obligations contained in the Notes, the Indenture and this Third Supplemental Indenture, and the Guaranteeing Subsidiary accepts all obligations of a Guarantor under the Indenture, including Article X of the Indenture (which is deemed incorporated in this Third Supplemental Indenture and applicable to this Guarantee). The Guaranteeing Subsidiary acknowledges that by executing this Third Supplemental Indenture, it will become a Guarantor under the Indenture and subject to all the terms and conditions applicable to Guarantors contained therein.
(e)
If any Holder or the Trustee is required by any court or otherwise to return to the Issuers, the Guarantors (including the Guaranteeing Subsidiary), or any custodian, trustee, liquidator or other similar official acting in relation to either the Issuers or the Guarantors, any amount paid either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.
(f)
The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby.
(g)
As between the Guaranteeing Subsidiary, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article VI of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guaranteeing Subsidiary for the purpose of this Note Guarantee.
(h)
The Guaranteeing Subsidiary shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under this Note Guarantee.
(i)
Pursuant to Section 10.02 of the Indenture, the obligations of the Guaranteeing Subsidiary shall be limited to the maximum amount as will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of such Guaranteeing Subsidiary that are relevant under any applicable Bankruptcy Law or fraudulent conveyance laws and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article X of the Indenture, result in the obligations of such Guaranteeing Subsidiary under this Note Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law.
(j)
This Note Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Issuers for liquidation, reorganization, should the Issuers become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Issuers' assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes and Note Guarantee, whether as a “voidable preference”, “fraudulent transfer” or otherwise, all as though such payment or performance had not been made. In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Note shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
(k)
In case any provision of this Note Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
(l)
This Note Guarantee shall be a general unsecured senior obligation of such Guaranteeing Subsidiary, ranking
pari passu
with any other future unsubordinated Indebtedness of the Guaranteeing Subsidiary, if any.
(m)
Each payment to be made by the Guaranteeing Subsidiary in respect of this Note Guarantee shall be made without set-off, counterclaim, reduction or diminution of any kind or nature.
(3)
Execution and Delivery
. The Guaranteeing Subsidiary agrees that the Note Guarantee shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Note Guarantee on the Notes.
(4)
Merger, Consolidation or Sale of All or Substantially All Assets
.
(a)
The Guaranteeing Subsidiary may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guaranteeing Subsidiary is the surviving Person), another Person, other than the Issuers or another Guarantor, unless:
(i)
except in the case of a merger entered into solely for the purpose of reincorporating a Guaranteeing Subsidiary in another jurisdiction, immediately after giving effect to that transaction, no Default or Event of Default shall have occurred and be continuing; and
(ii)
either:
(A)
the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (if not the Guaranteeing Subsidiary) assumes all the obligations of that Guaranteeing Subsidiary under the Indenture, its Note Guarantee and the applicable Registration Rights Agreement pursuant to this Third Supplemental Indenture; or
(B)
the Net Proceeds of such sale or other disposition are either (i) applied in accordance with Section 4.10(d) of the Indenture or (ii) not required to be applied in accordance with any provision of the Indenture.
(5)
Releases
.
The Note Guarantee of the Guaranteeing Subsidiary shall be automatically and unconditionally released and discharged, and no further action by the Guaranteeing Subsidiary, the Issuers or the Trustee is required for the release of the Guaranteeing Subsidiary's Note Guarantee, in the following circumstances:
(a)
in connection with any sale, transfer or other disposition of all or substantially all of the assets of that Guaranteeing Subsidiary (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale or other disposition does not violate Section 4.10 of the Indenture;
(b)
in connection with any sale, transfer or other disposition of all of the Capital Stock of the Guaranteeing Subsidiary (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale or other disposition does not violate Section 4.10 of the Indenture;
(c)
if the Company designates any Restricted Subsidiary of the Company that is a Guarantor to be an Unrestricted Subsidiary of the Company in accordance with Section 4.17 of the Indenture; or
(d)
upon the exercise of Legal Defeasance by the Issuers or pursuant to Article XI of the Indenture; and
in connection with such release, either of the Issuers shall deliver to the Trustee an Officers' Certificate of such Guarantor confirming the effective date of such release and stating that all conditions precedent provided for in this Indenture relating to such transaction have been complied with.
(6)
No Recourse Against Others
. No director, officer, employee, incorporator or stockholder of the Guaranteeing Subsidiary shall have any liability for any obligations of the Issuers or the Guarantors (including the Guaranteeing Subsidiary), respectively, under the Notes, the Note Guarantees, the Indenture or this Third Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation;
provided
that the foregoing shall not limit any Guarantor's obligations under its Note Guarantees. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
(7)
Governing Law
. THIS THIRD SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(8)
Counterparts
. The parties may sign any number of copies of this Third Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
(9)
Effect of Headings
. The Section headings herein are for convenience only and shall not affect the construction hereof.
(10)
The Trustee
. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Third Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary.
(11)
Subrogation
. The Guaranteeing Subsidiary shall be subrogated to all rights of Holders of Notes against the Issuers in respect of any amounts paid by the Guaranteeing Subsidiary pursuant to the provisions of Section 2 hereof and Section 10.01 of the Indenture;
provided
that, if an Event of Default has occurred and is continuing, the Guaranteeing Subsidiary shall not be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Issuers under the Indenture or the Notes shall have been paid in full.
(12)
Benefits Acknowledged
. The Guaranteeing Subsidiary's Note Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Third Supplemental Indenture and that the guarantee and waivers made by it pursuant to this Note Guarantee are knowingly made in contemplation of such benefits.
(13)
Successors
. All agreements of the Guaranteeing Subsidiary in this Third Supplemental Indenture shall bind its Successors, except as otherwise in this Third Supplemental Indenture. All agreements of the Trustee in this Third Supplemental Indenture shall bind its successors.
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, all as of the date first above written.
Champion Mortgage LLC
By:
/s/ Jay Bray
Name: Jay Bray
Title: Chief Executive Officer
Wells Fargo Bank, National Association, as Trustee
By:
/s/ Martin Reed
Name: Martin Reed
Title: Vice President
===================================================================
NATIONSTAR ADVANCE FUNDING TRUST 2012-C,
as Issuer
and
WELLS FARGO BANK, N. A.,
as Indenture Trustee
__________
AMENDMENT NO. 1
Dated as of July 18, 2012
to the
INDENTURE
Dated as of June 26, 2012
__________
NATIONSTAR ADVANCE FUNDING TRUST 2012-C
Servicer Advance Receivables Backed Notes, Series 2012-C
===================================================================
This Amendment No. 1, dated as of July 18, 2012 (this “
Amendment
”), to the Indenture, dated as of June 26, 2012 (as amended, restated or otherwise modified as of the date hereof, the “
Indenture
”), is made by and between NATIONSTAR ADVANCE FUNDING TRUST 2012-C, a Delaware statutory trust, as issuer (the “
Issuer
”), and WELLS FARGO BANK, N.A., a national banking association, not in its individual capacity, but solely as indenture trustee (the “
Indenture Trustee
”).
WHEREAS, pursuant to Section 8.02 of the Indenture, with the consent of the Required Noteholders, Nationstar (for so long as it holds any interest in the trust), the Issuer, the Indenture Trustee, and each Hedge Provider may enter into one or more amendments to the Indenture, for the purpose of adding any provisions thereto, changing in any manner or eliminating any of the provisions thereof, or modifying in any manner the rights of the Noteholders thereunder;
WHEREAS, the parties hereto have agreed to amend the Indenture in accordance with the provisions of Section 8.02 of the Indenture and the terms of this Amendment;
WHEREAS, as of the date hereof, there are no Hedge Providers;
WHEREAS, Credit Suisse AG, Cayman Islands Branch, and Alpine Securitization Corp. hold at least 66 2/3% in aggregate of the Commitments set forth in the Note Purchase Agreement; and
NOW, THEREFORE, pursuant to the provisions of the Indenture concerning amendment thereof, and in consideration of the amendments, agreements and other provisions herein contained and of certain other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by the parties hereto, it is hereby agreed between the parties hereto, as follows:
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Section 1.
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Defined Terms.
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As used in this Amendment, capitalized terms have the meanings assigned thereto in the Indenture.
(a) Section 1.01 of the Indenture is hereby amended by the addition of the following clauses (c) and (d) of the definition of Discount Factor Reduction Event and the deletion of the existing clauses (c) and (d) of the same term:
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(c) with respect to Receivables related to Delinquency Ratio Securitization Trusts;
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(d) (i) on any date of determination on or prior October 15, 2012, with respect to Receivables related to Phase I WAMO Securitization Trusts; and
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(ii) on any date of determination following October 15, 2012, with respect to Receivables related to Phase II WAMO Securitization Trusts.
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(b) Section 1.01 of the Indenture is hereby amended by the addition of clause (j) of the definition of “Eligible Servicing Contract” as follows and the deletion of the existing clause (j) of the same term:
“(j) the Weighted Average Months Outstanding with respect to such Servicing Contract is no greater than 18 months; provided, that, notwithstanding the foregoing, (1) as of any date of determination on or prior to October 15, 2012, if the Weighted Average Months Outstanding with respect to such Servicing Contract is greater than or equal to 18 months but not greater than 28 months (a “
Phase I WAMO Securitization Trust
”), and the aggregate Receivables Balance with respect to such Phase I WAMO Securitization Trust, when added to the aggregate Receivables Balance of all Phase I WAMO Securitization Trusts, does not cause the aggregate Receivables Balance with respect to Phase I WAMO Securitization Trusts to exceed [***] of the Note Principal Balance, then such Servicing Contract shall nonetheless remain an “Eligible Servicing Contract” under this clause (j), and (2) as of any date of determination following October 15, 2012, if the Weighted Average Months Outstanding with respect to such Servicing Contract is greater than or equal to 18 months but not greater than 24 months (a “
Phase II WAMO Securitization Trust
”), and the aggregate Receivables Balance with respect to such Phase II WAMO Securitization Trust, when added to the aggregate Receivables Balance of all Phase II WAMO Securitization Trusts, does not cause the aggregate Receivables Balance with respect to Phase II WAMO Securitization Trusts to exceed [***] of the Note Principal Balance, then such Servicing Contract shall nonetheless remain an “Eligible Servicing Contract” under this clause (j);”
(c) Section 1.01 of the Indenture is hereby amended by the addition of the definition of “Sublimit Portion” as follows and the deletion of the existing definition of the same term:
““Sublimit Portion”: With respect to any date of determination, a dollar amount equal to the product of:
(1) the Note Principal Balance; and
(2) a percentage, (A) the numerator of which is equal to the sum, without duplication, of (i) the aggregate Receivables Balance of all Eligible Receivables that are Sublimit Receivables and (ii) with respect to any such date of determination on or prior to October 15, 2012, the aggregate Receivables Balance of all Eligible Receivables that are related to Phase I WAMO Securitization Trusts, and (B) the denominator of which is the aggregate Receivables Balance of all Eligible Receivables.”
Nationstar and the Required Noteholders hereby waive and instruct the Indenture Trustee to waive the following: (i) Section 8.02 of the Indenture requiring the delivery of a Tax Opinion with respect to this Amendment and Section 8.04 of the Indenture requiring the delivery of an Opinion of Counsel stating that the execution of this Amendment is authorized or permitted by the Indenture and (ii) the delivery of an Opinion of Counsel stating that the execution of this Amendment is authorized or permitted by the Indenture.
The Issuer and Seller hereby agree that in addition to any costs otherwise required to be paid pursuant to the Transaction Documents, the Issuer and Seller shall pay the reasonable and documented legal fees and out-of-pocket expenses of legal counsel to the Agent, the Noteholders, the Owner Trustee and the Indenture Trustee incurred in connection with the consummation of this Amendment and all other documents executed or delivered in connection therewith.
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Section 5.
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Ratification of the Indenture.
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The parties hereto ratify all terms of the existing Indenture other than those amended hereby, and ratify those provisions as amended hereby.
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Section 6.
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Successors and Assigns.
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This Amendment shall be binding upon the parties hereto and their respective successors and assigns.
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Section 7.
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Governing Law.
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THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES EXCEPT AS PROVIDED IN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
The Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.
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Section 9.
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Entire Agreement.
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The Indenture, as amended by this Amendment, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof, and fully supersedes any prior or contemporaneous agreements relating to such subject matter.
IN WITNESS WHEREOF
, the parties hereto have caused this Amendment to be duly executed by their respective signatories thereunto duly authorized and their respective signatures duly attested all as of the day and year first above written.
NATIONSTAR ADVANCE FUNDING TRUST 2012-C
, as Issuer
By: Nationstar Mortgage LLC, as its Administrator
By:
/s/ Gregory A. Oniu_______________________
Name: Gregory A. Oniu
Title: Senior Vice President
WELLS FARGO BANK, N. A.
,
as Indenture Trustee and not in its individual capacity
By:
/s/Kristen Ann Cronin_____________________
Name: Kristen Ann Cronin
Title: Vice President
Consented and Agreed to as of the date first above written:
CREDIT SUISSE AG, NEW YORK BRANCH
as Agent
By:
/s/ Jason Ruchelsman____________
Name: Jason Ruchelsman
Title: Vice President
By:
/s/ Fred Mastromarino____________
Name: Fred Mastromarino
Title: Vice President
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
as Committed Purchaser
By:
/s/ Jason Ruchelsman____________
Name: Jason Ruchelsman
Title: Vice President
By:
/s/ Fred Mastromarino____________
Name: Fred Mastromarino
Title: Vice President
ALPINE SECURITIZATION CORP.
as Conduit Purchaser
By: Credit Suisse AG, New York Branch,
as its attorney-in-fact
By:
/s/ Jason Ruchelsman______________
Name: Jason Ruchelsman
Title: Vice President
By:
/s/ Fred Mastromarino
Name: Fred Mastromarino
Title: Vice President
NATIONSTAR MORTGAGE LLC
as Seller
By:
/s/ Gregory A. Oniu_______________
Name: Gregory A. Oniu
Title: Senior Vice President
===================================================================
NATIONSTAR ADVANCE FUNDING TRUST 2012-C,
as Issuer
and
WELLS FARGO BANK, N. A.,
as Indenture Trustee
__________
AMENDMENT NO. 2
Dated as of August 24, 2012
to the
INDENTURE
Dated as of June 26, 2012
__________
NATIONSTAR ADVANCE FUNDING TRUST 2012-C
Servicer Advance Receivables Backed Notes, Series 2012-C
===================================================================
This Amendment No. 2, dated as of August 24, 2012 (this “
Amendment
”), to the Indenture, dated as of June 26, 2012 (as amended, restated or otherwise modified as of the date hereof, the “
Indenture
”), is made by and between NATIONSTAR ADVANCE FUNDING TRUST 2012-C, a Delaware statutory trust, as issuer (the “
Issuer
”), and WELLS FARGO BANK, N.A., a national banking association, not in its individual capacity, but solely as indenture trustee (the “
Indenture Trustee
”).
WHEREAS, pursuant to Section 8.02 of the Indenture, with the consent of the Required Noteholders, Nationstar (for so long as it holds any interest in the trust), the Issuer, the Indenture Trustee, and each Hedge Provider may enter into one or more amendments to the Indenture, for the purpose of adding any provisions thereto, changing in any manner or eliminating any of the provisions thereof, or modifying in any manner the rights of the Noteholders thereunder;
WHEREAS, the parties hereto have agreed to amend the Indenture in accordance with the provisions of Section 8.02 of the Indenture and the terms of this Amendment;
WHEREAS, as of the date hereof, there are no Hedge Providers;
WHEREAS, Credit Suisse AG, Cayman Islands Branch, and Alpine Securitization Corp. hold at least 66 2/3% in aggregate of the Commitments set forth in the Note Purchase Agreement and are the Holders of 100% of the Notes; and
NOW, THEREFORE, pursuant to the provisions of the Indenture concerning amendment thereof, and in consideration of the amendments, agreements and other provisions herein contained and of certain other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by the parties hereto, it is hereby agreed between the parties hereto, as follows:
Section 1.
Defined Terms.
As used in this Amendment, capitalized terms have the meanings assigned thereto in the Indenture.
Section 2. Amendments.
(a)
Section 1.01 of the Indenture is hereby amended by the addition of the following clauses (c) and (d) of the definition of Discount Factor Reduction Event and the deletion of the existing clauses (c) and (d) of the same term:
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(c) with respect to Receivables related to Delinquency Ratio Securitization Trusts;
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(d) (i) on any date of determination on or prior October 27, 2012, with respect to Receivables related to Phase I WAMO Securitization Trusts;
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(ii) (A) on any date of determination following October 27, 2012 and on or prior to January 27, 2013, with respect to Receivables related to Phase II WAMO Securitization Trusts, to the extent the aggregate Receivables Balance with respect to such Phase II WAMO Securitization Trust, when added to the aggregate Receivables Balance of all Phase II WAMO
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Securitization Trusts, does not cause the aggregate Receivables Balance with respect to Phase II WAMO Securitization Trusts to exceed 20% of the Note Principal Balance; Securitization Trusts to exceed 20% of the Note Principal Balance;
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(ii) (B) on any date of determination following October 27, 2012 and on or prior to January 27, 2013, with respect to Receivables related to Phase II WAMO Securitization Trusts, to the extent the aggregate Receivables Balance with respect to such Phase II WAMO Securitization Trust, when added to the aggregate Receivables Balance of all Phase II WAMO Securitization Trusts, causes the aggregate Receivables Balance with respect to Phase II WAMO Securitization Trusts to exceed 20% of the Note Principal Balance but does not cause the aggregate Receivables Balance with respect to Phase II WAMO Securitization Trusts to exceed 40% of the Note Principal Balance;
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(iii) on any date of determination following January 27, 2013 (or such earlier time as the Seller and the Agent may mutually agree), with respect to Receivables related to Phase III WAMO Securitization Trusts; and
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(iv) on any date of determination following January 27, 2013 (or such earlier time as the Seller and the Agent may mutually agree), with respect to Receivables related to Phase IV WAMO Securitization Trusts.
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(b)
Section 1.01 of the Indenture is hereby amended by the addition of clause (j) of the definition of “Eligible Servicing Contract” as follows and the deletion of the existing clause (j) of the same term:
“(j)
the Weighted Average Months Outstanding with respect to such Servicing Contract is no greater than 19 months; provided, that, notwithstanding the foregoing,
(1) as of any date of determination on or prior to October 27, 2012, if the Weighted Average Months Outstanding with respect to such Servicing Contract is greater than or equal to 19 months but not greater than 28 months (a “
Phase I WAMO Securitization Trust
”), and the aggregate Receivables Balance with respect to such Phase I WAMO Securitization Trust, when added to the aggregate Receivables Balance of all Phase I WAMO Securitization Trusts, does not cause the aggregate Receivables Balance with respect to Phase I WAMO Securitization Trusts to exceed [***] of the Note Principal Balance, then such Servicing Contract shall nonetheless remain an “Eligible Servicing Contract” under this clause (j),
(2) as of any date of determination following October 27, 2012 and on or prior to January 27, 2013, if the Weighted Average Months Outstanding with respect to such Servicing Contract is greater than or equal to 19 months but not greater than 28 months (a “
Phase II WAMO Securitization Trust
”), and the aggregate Receivables Balance with respect to such Phase II WAMO Securitization Trust, when added to the aggregate Receivables Balance of all Phase II WAMO Securitization Trusts, does not cause the aggregate Receivables Balance with respect to Phase II WAMO Securitization Trusts to exceed [***] of the Note Principal Balance, then such Servicing Contract shall nonetheless remain an “Eligible Servicing Contract” under this clause (j),
(3) as of any date of determination following January 27, 2013 (or such earlier time as the Seller and the Agent may mutually agree), if the Weighted Average Months Outstanding with respect to such Servicing Contract is greater than or equal to 19 months but not greater than 25 months (a “
Phase III WAMO Securitization Trust
”), and the aggregate Receivables Balance with respect to such Phase III WAMO Securitization Trust, when added to the aggregate Receivables Balance of all Phase III WAMO Securitization Trusts, does not cause the aggregate Receivables Balance with respect to Phase III WAMO Securitization Trusts to exceed [***] of the Note Principal Balance, then such Servicing Contract shall nonetheless remain an “Eligible Servicing Contract” under this clause (j), and
(4) as of any date of determination following January 27, 2013 (or such earlier time as the Seller and the Agent may mutually agree), if the Weighted Average Months Outstanding with respect to such Servicing Contract is greater than or equal to 25 months but not greater than 28 months (a “
Phase IV WAMO Securitization Trust
”; each of the Phase I WAMO Securitization Trusts, Phase II WAMO Securitization Trusts, Phase III WAMO Securitization Trusts and Phase IV WAMO Securitization Trusts, “
WAMO Securitization Trusts
”), and the aggregate Receivables Balance with respect to such Phase III WAMO Securitization Trust, when added to the aggregate Receivables Balance of all Phase III WAMO Securitization Trusts, does not cause the aggregate Receivables Balance with respect to Phase III WAMO Securitization Trusts to exceed [***] of the Note Principal Balance, then such Servicing Contract shall nonetheless remain an “Eligible Servicing Contract” under this clause (j),”
(c)
Section 1.01 of the Indenture is hereby amended by the addition of the definition of “Sublimit Portion” as follows and the deletion of the existing definition of the same term:
““Sublimit Portion”: With respect to any date of determination, a dollar amount equal to the product of:
(1) the Note Principal Balance; and
(2) a percentage, (A) the numerator of which is equal to the sum, without duplication, of (i) the aggregate Receivables Balance of all Eligible Receivables that are Sublimit Receivables and (ii) the aggregate Receivables Balance of all Eligible Receivables that are related to WAMO Securitization Trusts, and (B) the denominator of which is the aggregate Receivables Balance of all Eligible Receivables.”
Section 3. Waiver.
Nationstar and Credit Suisse AG, Cayman Islands Branch and Alpine Securitization Corp. as the Required Noteholders (who are also the Holders of 100% of the Notes) hereby waive and instruct the Indenture Trustee to waive the following: Section 8.02 of the Indenture requiring the delivery of a Tax Opinion with respect to this Amendment and Section 8.04 of the Indenture requiring the delivery of an Opinion of Counsel stating that the execution of this Amendment is authorized or permitted by the Indenture.
Section 4. Expenses.
The Issuer and Seller hereby agree that in addition to any costs otherwise required to be paid pursuant to the Transaction Documents, the Issuer and Seller shall pay the reasonable and documented legal fees and out-of-pocket expenses of legal counsel to the Agent, the Noteholders, the Owner Trustee and the Indenture Trustee incurred in connection with the consummation of this Amendment and all other documents executed or delivered in connection therewith.
Section 5. Ratification of the Indenture.
The parties hereto ratify all terms of the existing Indenture other than those amended hereby, and ratify those provisions as amended hereby.
Section 6. Successors and Assigns.
This Amendment shall be binding upon the parties hereto and their respective successors and assigns.
Section 7. Governing Law.
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES EXCEPT AS PROVIDED IN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 8. Counterparts.
The Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.
Section 9. Entire Agreement.
The Indenture, as amended by this Amendment, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof, and fully supersedes any prior or contemporaneous agreements relating to such subject matter.
IN WITNESS WHEREOF
, the parties hereto have caused this Amendment to be duly executed by their respective signatories thereunto duly authorized and their respective signatures duly attested all as of the day and year first above written.
NATIONSTAR ADVANCE FUNDING TRUST 2012-C
, as Issuer
By: Nationstar Mortgage LLC, as its Administrator
By:
/s/ Gregory A. Oniu_____________________
Name:
Gregory A. Oniu
Title: Senior Vice President
WELLS FARGO BANK, N. A.
,
as Indenture Trustee and not in its individual capacity
By:
/s/ Mark DeFabio_______________________
Name: Mark DeFabio
Title: Vice President
Consented and Agreed to as of the date first above written:
CREDIT SUISSE AG, NEW YORK BRANCH
as Agent
By:
/s/ Jason Ruchelsman_____________
Name:
Jason Ruchelsman
Title:
Vice President
By:
/s/ Fred Mastromarino_____________
Name:
Fred Mastromarino
Title:
Vice President
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
as Committed Purchaser
By:
/s/ Jason Ruchelsman_____________
Name:
Jason Ruchelsman
Title: Vice President
By:
/s/ Fred Mastromarino_____________
Name:
Fred Mastromarino
Title:
Vice President
ALPINE SECURITIZATION CORP.
as Conduit Purchaser
By: Credit Suisse AG, New York Branch,
as its attorney-in-fact
By:
/s/ Jason Ruchelsman______________
Name:
Jason Ruchelsman
Title: Vice President
By:
/s/ Fred Mastromarino______________
Name:
Fred Mastromarino
Title: Vice President
NATIONSTAR MORTGAGE LLC
as Seller
By:
/s/ Gregory A. Oniu_____________
Name: Gregory A. Oniu
Title: Senior Vice President
===================================================================
NATIONSTAR ADVANCE FUNDING TRUST 2012-C,
as Issuer
and
WELLS FARGO BANK, N. A.,
as Indenture Trustee
__________
AMENDMENT NO. 3
Dated as of November 30, 2012
to the
INDENTURE
Dated as of June 26, 2012
__________
NATIONSTAR ADVANCE FUNDING TRUST 2012-C
Servicer Advance Receivables Backed Notes, Series 2012-C
===================================================================
This Amendment No. 3, dated as of November 30, 2012 (this “
Amendment
”), to the Indenture, dated as of June 26, 2012 (as amended, restated or otherwise modified as of the date hereof, the “
Indenture
”), is made by and between NATIONSTAR ADVANCE FUNDING TRUST 2012-C, a Delaware statutory trust, as issuer (the “
Issuer
”), and WELLS FARGO BANK, N.A., a national banking association, not in its individual capacity, but solely as indenture trustee (the “
Indenture Trustee
”).
WHEREAS, pursuant to Section 8.02 of the Indenture, with the consent of the Required Noteholders, Nationstar (for so long as it holds any interest in the trust), the Issuer, the Indenture Trustee, and each Hedge Provider may enter into one or more amendments to the Indenture, for the purpose of adding any provisions thereto, changing in any manner or eliminating any of the provisions thereof, or modifying in any manner the rights of the Noteholders thereunder;
WHEREAS, the parties hereto have agreed to amend the Indenture in accordance with the provisions of Section 8.02 of the Indenture and the terms of this Amendment;
WHEREAS, as of the date hereof, there are no Hedge Providers;
WHEREAS, Credit Suisse AG, Cayman Islands Branch, and Alpine Securitization Corp. hold at least 66 2/3% in aggregate of the Commitments set forth in the Note Purchase Agreement and are the Holders of 100% of the Notes; and
NOW, THEREFORE, pursuant to the provisions of the Indenture concerning amendment thereof, and in consideration of the amendments, agreements and other provisions herein contained and of certain other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by the parties hereto, it is hereby agreed between the parties hereto, as follows:
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Section 1.
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Defined Terms.
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As used in this Amendment, capitalized terms have the meanings assigned thereto in the Indenture.
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Section 2.
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Amendments to the Indenture.
|
(a) Section 1.01 of the Indenture is hereby amended by the addition of the definition of “Anticipated Repayment Date” as follows and the deletion of the existing definition of the same term:
“Anticipated Repayment Date”: The first Payment Date following November 15, 2013.”
(b) Section 1.01 of the Indenture is hereby amended by the addition of the following clauses (c) and (d) of the definition of Discount Factor Reduction Event and the deletion of the existing clauses (c) and (d) of the same term:
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(c) with respect to Receivables related to Delinquency Ratio Securitization Trusts;
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[***]
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(d) (i) on any date of determination on or prior October 27, 2012, with respect to Sublimit Receivables related to Phase I WAMO Securitization Trusts;
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[***]
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(ii) (A) on any date of determination following October 27, 2012 and on or prior to January 27, 2013, with respect to Sublimit Receivables related to Phase II WAMO Securitization Trusts, to the extent the aggregate Sublimit Receivables Balance with respect to such Phase II WAMO Securitization Trust, when added to the aggregate Sublimit Receivables Balance of all Phase II WAMO Securitization Trusts, does not cause the aggregate Sublimit Receivables Balance with respect to Phase II WAMO Securitization Trusts to exceed 20% of the aggregate Sublimit Receivables Balances of all Sublimit Servicing Contracts;
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[***]
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(ii) (B) on any date of determination following October 27, 2012 and on or prior to January 27, 2013, with respect to Sublimit Receivables related to Phase II WAMO Securitization Trusts, to the extent the aggregate Sublimit Receivables Balance with respect to such Phase II WAMO Securitization Trust, when added to the aggregate Sublimit Receivables Balance of all Phase II WAMO Securitization Trusts, causes the aggregate Sublimit Receivables Balance with respect to Phase II WAMO Securitization Trusts to exceed 20% of the aggregate Sublimit Receivables Balances of all Sublimit Servicing Contracts but does not cause the aggregate Sublimit Receivables Balance with respect to Phase II WAMO Securitization Trusts to exceed 40% of the aggregate Sublimit Receivables Balances of all Sublimit Servicing Contracts;
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[***]
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(iii) on any date of determination following January 27, 2013 (or such earlier time as the Seller and the Agent may mutually agree), with respect to Sublimit Receivables related to Phase III WAMO Securitization Trusts; and
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[***]
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(iv) on any date of determination following January 27, 2013 (or such earlier time as the Seller and the Agent may mutually agree), with respect to Sublimit Receivables related to Phase IV WAMO Securitization Trusts.
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[***]
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(c) Section 1.01 of the Indenture is hereby amended by the addition of the following clauses (h)and (j) of the definition of “Eligible Servicing Contract” as follows and the deletion of the existing clauses (h) and (j) of the same term:
““(h) the Delinquency Ratio with respect to such Servicing Contract that relates to any Sublimit Receivables (a “
Sublimit Servicing Contract
”) is no greater than [***]; provided, that, notwithstanding the foregoing, if the Delinquency Ratio with respect to such Sublimit Servicing Contract is greater than or equal to [***] but less than [***] (a “
Delinquency Ratio Securitization Trust
”), and the aggregate Receivables Balance of such Sublimit Receivables (“
Sublimit Receivables Balance
”) with respect to such Delinquency Ratio Securitization Trust, when added to the aggregate Sublimit Receivables Balance of all Delinquency Ratio Securitization Trusts, does not cause the aggregate Sublimit Receivables Balance with respect to Delinquency Ratio Securitization Trusts to exceed [***] of the aggregate Sublimit Receivables Balances of all Sublimit
Servicing Contracts, then such Sublimit Servicing Contract shall nonetheless remain an “Eligible Servicing Contract” under this clause (h);
(j) the Weighted Average Months Outstanding with respect to such Sublimit Servicing Contract is no greater than 19 months; provided, that, notwithstanding the foregoing,
(1) as of any date of determination on or prior to October 27, 2012, if the Weighted Average Months Outstanding with respect to such Sublimit Servicing Contract is greater than or equal to 19 months but not greater than 28 months (a “
Phase I WAMO Securitization Trust
”), and the aggregate Sublimit Receivables Balance with respect to such Phase I WAMO Securitization Trust, when added to the aggregate Sublimit Receivables Balance of all Phase I WAMO Securitization Trusts, does not cause the aggregate Sublimit Receivables Balance with respect to Phase I WAMO Securitization Trusts to exceed [***] of the aggregate Sublimit Receivables Balances of all Sublimit Servicing Contracts, then such Sublimit Servicing Contract shall nonetheless remain an “Eligible Servicing Contract” under this clause (j),
(2) as of any date of determination following October 27, 2012 and on or prior to January 27, 2013, if the Weighted Average Months Outstanding with respect to such Sublimit Servicing Contract is greater than or equal to 19 months but not greater than 28 months (a “
Phase II WAMO Securitization Trust
”), and the aggregate Sublimit Receivables Balance with respect to such Phase II WAMO Securitization Trust, when added to the aggregate Sublimit Receivables Balance of all Phase II WAMO Securitization Trusts, does not cause the aggregate Sublimit Receivables Balance with respect to Phase II WAMO Securitization Trusts to exceed [***] of the aggregate Sublimit Receivables Balances of all Sublimit Servicing Contracts, then such Sublimit Servicing Contract shall nonetheless remain an “Eligible Servicing Contract” under this clause (j),
(3) as of any date of determination following January 27, 2013 (or such earlier time as the Seller and the Agent may mutually agree), if the Weighted Average Months Outstanding with respect to such Sublimit Servicing Contract is greater than or equal to 19 months but not greater than 25 months (a “
Phase III WAMO Securitization Trust
”), and the aggregate Sublimit Receivables Balance with respect to such Phase III WAMO Securitization Trust, when added to the aggregate Sublimit Receivables Balance of all Phase III WAMO Securitization Trusts, does not cause the aggregate Sublimit Receivables Balance with respect to Phase III WAMO Securitization Trusts to exceed [***] of the aggregate Sublimit Receivables Balances of all Sublimit Servicing Contracts, then such Sublimit Servicing Contract shall nonetheless remain an “Eligible Servicing Contract” under this clause (j), and
(4) as of any date of determination following January 27, 2013 (or such earlier time as the Seller and the Agent may mutually agree), if the Weighted Average Months Outstanding with respect to such Sublimit Servicing Contract is greater than or equal to 25 months but not greater than 28 months (a “
Phase IV WAMO Securitization Trust
”; each of the Phase I WAMO Securitization Trusts, Phase II WAMO Securitization Trusts, Phase III WAMO Securitization Trusts and Phase IV WAMO Securitization Trusts, “
WAMO Securitization
Trusts
”), and the aggregate Sublimit Receivables Balance with respect to such Phase III WAMO Securitization Trust, when added to the aggregate Sublimit Receivables Balance of all Phase III WAMO Securitization Trusts, does not cause the aggregate Sublimit Receivables Balance with respect to Phase III WAMO Securitization Trusts to exceed [***] of the aggregate Sublimit Receivables Balances of all Sublimit Servicing Contracts, then such Sublimit Servicing Contract shall nonetheless remain an “Eligible Servicing Contract” under this clause (j);”
(d) Section 1.01 of the Indenture is hereby amended by the addition of the definition of “Stated Maturity” as follows and the deletion of the existing definition of the same term:
““Stated Maturity”: With respect to the Notes, the first Payment Date following November 15, 2013, as of which date the principal of and accrued but unpaid interest on the Notes shall become due and payable as herein provided.”
(e) Section 1.01 of the Indenture is hereby amended by the addition of the definition of “UPB Ratio” as follows and the deletion of the existing definition of the same term:
““UPB Ratio”: With respect to any Securitization Trust and any date, a ratio, expressed as a percentage, the numerator of which is the aggregate Receivables Balance of all Eligible Receivables relating to such Securitization Trust, and the denominator of which is the aggregate outstanding principal balance of all Mortgage Loans owned by such Securitization Trust.”
(f) Section 1.01 of the Indenture is hereby amended by the addition of the definitions of (i) “Variable Funding Note Discount Factor”, (ii) “Variable Funding Note Floating Rate” and (iii) “Variable Funding Note Maximum Balance” as follows and the deletion of the existing definitions of the same terms:
(i) ““Variable Funding Note Discount Factor”:
A. As of the date hereof and ending upon the earlier to occur of (a) March 31, 2013 and (b) the issuance of term notes with respect to a servicing advance facility collateralized by Collateral (among other collateral) subject to the Lien of this Indenture (including but not limited to Eligible Receivables) with a funded amount under the related term note securitization documents equal to at least $400,000,000 (a “
Term Note Securitization
”):
I. With respect to any Receivables other than Sublimit Receivables, (A) with respect to Pool-Level Advances, [***], (B) with respect to Loan-Level Delinquency Advances (Non-Judicial States), [***], (C) with respect to Loan-Level Delinquency Advances (Judicial States), [***], (D) with respect to Escrow Advances (Non-Judicial States), 90.00%, (E) with respect to Escrow Advances (Judicial States), [***], (F) with respect to Corporate Advances (Non-Judicial States), [***], (G) with respect to Corporate Advances (Judicial States), [***], (H) with respect to any Legacy Deferred Servicing
Fees (Non-Judicial States), [***], and (I) with respect to any Legacy Deferred Servicing Fees (Judicial States), [***].
II. With respect to any Non-FIFO Receivables, (A) with respect to Pool-Level Advances, [***], (B) with respect to Loan-Level Delinquency Advances (Non-Judicial States), [***], (C) with respect to Loan-Level Delinquency Advances (Judicial States), [***], (D) with respect to Escrow Advances (Non-Judicial States), [***], (E) with respect to Escrow Advances (Judicial States), [***], (F) with respect to Corporate Advances (Non-Judicial States), [***], (G) with respect to Corporate Advances (Judicial States), [***], (H) with respect to any Legacy Deferred Servicing Fees (Non-Judicial States), [***], and (I) with respect to any Legacy Deferred Servicing Fees (Judicial States), [***].
III. With respect to any Non-Backstopped Receivables and RALI Receivables, (A) with respect to Pool-Level Advances, [***], (B) with respect to Loan-Level Delinquency Advances (Non-Judicial States), [***], (C) with respect to Loan-Level Delinquency Advances (Judicial States), [***], (D) with respect to Escrow Advances (Non-Judicial States), [***], (E) with respect to Escrow Advances (Judicial States), [***], (F) with respect to Corporate Advances (Non-Judicial States), [***], (G) with respect to Corporate Advances (Judicial States), [***], (H) with respect to any Legacy Deferred Servicing Fees (Non-Judicial States), [***], (I) with respect to any Legacy Deferred Servicing Fees (Judicial States), [***].
B. Following the occurrence of a Term Note Securitization on any date prior to March 31, 2013, with respect to any Receivables, the advance rates shall be agreed upon by the Agent in its sole and absolute discretion.
C. If a Term Note Securitization shall not have occurred on or prior to March 31, 2013:
I.
With respect to any Receivables other than Sublimit Receivables, (A) with respect to Pool-Level Advances, [***], (B) with respect to Loan-Level Delinquency Advances (Non-Judicial States), [***], (C) with respect to Loan-Level Delinquency Advances (Judicial States), [***], (D) with respect to Escrow Advances (Non-Judicial States), [***], (E) with respect to Escrow Advances (Judicial States), [***], (F) with respect to Corporate Advances (Non-Judicial States), [***], (G) with respect to Corporate Advances (Judicial States), [***], (H) with respect to any Legacy Deferred Servicing Fees (Non-Judicial States), [***], and (I) with respect to any Legacy Deferred Servicing Fees (Judicial States), [***].
II.
With respect to any Non-FIFO Receivables, (A) with respect to Pool-Level Advances, [***], (B) with respect to Loan-Level Delinquency Advances (Non-Judicial States), [***], (C) with respect to Loan-Level Delinquency Advances (Judicial States), [***], (D) with respect to Escrow Advances (Non-Judicial States), [***], (E) with respect to Escrow Advances (Judicial States), [***], (F) with respect to Corporate Advances (Non-Judicial States), [***], (G) with respect to Corporate Advances (Judicial States), [***], (H) with respect to any Legacy Deferred Servicing Fees (Non-Judicial States), [***], and (I) with respect to any Legacy Deferred Servicing Fees (Judicial States), [***].
III.
With respect to any Non-Backstopped Receivables and RALI Receivables, (A) with respect to Pool-Level Advances, [***], (B) with respect to Loan-Level Delinquency Advances (Non-Judicial States), [***], (C) with respect to Loan-Level Delinquency Advances (Judicial States), [***], (D) with respect to Escrow Advances (Non-Judicial States), [***], (E) with respect to Escrow Advances (Judicial States), [***], (F) with respect to Corporate Advances (Non-Judicial States), [***], (G) with respect to Corporate Advances (Judicial States), [***], (H) with respect to any Legacy Deferred Servicing Fees (Non-Judicial States), [***], (I) with respect to any Legacy Deferred Servicing Fees (Judicial States), [***].
If, on any Funding Date, a Discount Factor Reduction Event shall have occurred and be continuing with respect to the related Securitization Trust, each percentage set forth in this definition with respect to any such Receivables immediately above shall be decreased by an amount equal to the product of (A) the applicable Discount Factor Reduction Percentage and (B) the applicable Discount Factor Proportional Weighting Ratio.”
(ii) ““Variable Funding Note Floating Rate”: With respect to any day of any Accrual Period and the Variable Funding Notes, the per annum rate equal to the sum of
(a) the product of:
(i) the percentage equivalent of the Non-Sublimit Portion of the applicable Variable Funding Note Principal Balance; and
(ii) the sum of the related Cost of Funds Rate plus [***], and
(b) the product of:
(i) the percentage equivalent of the Sublimit Portion of the applicable Variable Funding Note Principal Balance; and
(ii) the sum of the related Cost of Funds Rate plus [***];”
and
(iii) ““Variable Funding Note Maximum Balance”: On any date of determination, $700,000,000.”
(g) Section 1.01 of the Indenture is hereby amended by deleting the following terms in their entirety: (i) “Daily Interest Amount (“Post-Stepdown”); (ii) “Stepdown Date”; (iii) “Variable Funding Note Post-Stepdown Additional Rate”; (iv) “Variable Funding Note Post-Stepdown Additional Interest Distributable Amount”; and (v) “Variable Funding Note Post-Stepdown Additional Interest Carryover Shortfall Amount.”
(h) Section 4.01(u) of the Indenture is hereby amended by the deletion of the existing clause (ii) of such Section.
(i) Schedule III-A of the Indenture is hereby amended by deleting the existing Schedule III-A in its entirety and replacing it with the Schedule III-A attached hereto as
Exhibit A
.
Section 3.
Amendment to the Note Purchase Agreement.
The parties hereto agree that Schedule II of the Note Purchase Agreement is hereby amended to be deleted and replaced in its entirety by Schedule II attached hereto as
Exhibit B
.
Section 4.
Omnibus Change.
The parties hereto agree that, with respect to each Transaction Document (as defined in the Indenture), any and all references to “Daily Interest Amount (Post-Stepdown),” “Stepdown Date,” “Variable Funding Note Post-Stepdown Additional Rate,” “Variable Funding Note Post-Stepdown Additional Interest Distributable Amount” and “Variable Funding Note Post-Stepdown Additional Interest Carryover Shortfall” in the terms and provisions of such Transaction Document shall be of no further force and effect.
Section 5.
Waiver.
Nationstar and Credit Suisse AG, Cayman Islands Branch and Alpine Securitization Corp. as the Required Noteholders (who are also the Holders of 100% of the Notes) hereby waive and instruct the Indenture Trustee to waive the following: (i) Section 8.02 of the Indenture requiring the delivery of a Tax Opinion with respect to this Amendment; and (ii) Section 8.04 of the Indenture requiring the delivery of an Opinion of Counsel stating that the execution of this Amendment is authorized or permitted by the Indenture.
Section 6.
Amendment Fee.
The Issuer agrees that, in consideration for Credit Suisse AG, New York Branch (“
CS
”) entering into this Amendment, it shall pay to CS on each Payment Date an amount equal to the product of (i) [***] and (ii) 1/12 (the “
Amendment Fee
”), payable in twelve (12) monthly installments on each Payment Date, commencing on the Payment Date in December 2012;
provided
,
that
, if the Funding Period ends prior to the Anticipated Repayment Date, on such date the Issuer shall pay an amount equal to the difference between (1) [***] and (2) all amounts previously paid to CS pursuant to this
Section 6
. The Issuer further agrees that the Amendment Fee shall be both fully earned as of the date hereof and nonrefundable for any reason whatsoever when paid and shall be in addition to any other fees, costs and expenses payable pursuant to the execution of the Amendment or the other documents and agreements entered into in connection with the transactions described herein.
Section 7.
Expenses.
The Issuer and Seller hereby agree that in addition to any costs otherwise required to be paid pursuant to the Transaction Documents, the Issuer and Seller shall pay the reasonable and documented legal fees and out-of-pocket expenses of legal counsel to the Agent, the Noteholders, the Owner Trustee and the Indenture Trustee incurred in connection with the consummation of this Amendment and all other documents executed or delivered in connection therewith.
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Section 8.
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Ratification of the Indenture.
|
The parties hereto ratify all terms of the existing Indenture other than those amended hereby, and ratify those provisions as amended hereby.
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Section 9.
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Successors and Assigns.
|
This Amendment shall be binding upon the parties hereto and their respective successors and assigns.
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Section 10.
|
Governing Law.
|
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES EXCEPT AS PROVIDED IN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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Section 11.
|
Counterparts.
|
The Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.
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Section 12.
|
Entire Agreement.
|
The Indenture, as amended by this Amendment, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof, and fully supersedes any prior or contemporaneous agreements relating to such subject matter.
IN WITNESS WHEREOF
, the parties hereto have caused this Amendment to be duly executed by their respective signatories thereunto duly authorized and their respective signatures duly attested all as of the day and year first above written.
NATIONSTAR ADVANCE FUNDING TRUST 2012-C
, as Issuer
By: Nationstar Mortgage LLC, as its Administrator
By:
/s/ Amar Patel___________________________
Name:
Amar Patel
Title: Executive Vice President
WELLS FARGO BANK, N. A.
,
as Indenture Trustee and not in its individual capacity
By:
/s/ Mark Defabio________________________
Name: Mark Defabio
Title: Vice President
Consented and Agreed to as of the date first above written:
CREDIT SUISSE AG, NEW YORK BRANCH
as Agent
By:
/s/ Michelangelo Raimondi__________
Name:
Michelangelo Raimondi
Title:
Associate
By:
/s/ Jason Ruchelsman_______________
Name:
Jason Ruchelsman
Title:
Vice President
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
as Committed Purchaser
By:
/s/ Michelangelo Raimondi__________
Name:
Michelangelo Raimondi
Title: Authorized Signatory
By:
/s/ Jason Ruchelsman_______________
Name:
Jason Ruchelsman
Title:
Authorized Signatory
ALPINE SECURITIZATION CORP.
as Conduit Purchaser
By: Credit Suisse AG, New York Branch,
as its attorney-in-fact
By:
Michelangelo Raimondi____________
Name:
Michelangelo Raimondi
Title: Associate
By:
/s/ Jason Ruchelsman_______________
Name:
Jason Ruchelsman
Title: Vice President
NATIONSTAR MORTGAGE LLC
as Seller
By:
Amar Patel____________________
Name: Amar Patel
Title: Executive Vice President
EXHIBIT A TO AMENDMENT NO. 3
Schedule III-A to Indenture
SCHEDULE OF NON-BACKSTOPPED SECURITIZATION TRUSTS
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NO.
|
INVESTOR
|
DELINQUENCY ADVANCE
|
SERVICING ADVANCE
|
|
E44
|
Bank of America 2005-4
|
X
|
|
|
M81
|
QUAKER 2001 WL-1
|
X
|
X
|
|
J26
|
GSR 2007-OA2 (Option ARM's)
|
|
X
|
|
J27
|
GSR 2007-OA1 (Option ARM's)
|
|
X
|
|
J31
|
HARBORVIEW 2007-7 (Option ARM's)
|
|
X
|
|
J33
|
LUMINENT 2007-2
|
|
X
|
|
J35
|
MARM 2006-OA2
|
|
X
|
|
J54
|
WACHOVIA 2009-1/ Non-pledged loans (F16,F17, F18)
|
|
X
|
|
J55
|
DEUTSCHE 2007-OA1
|
|
X
|
|
J83
|
SASCO 2002-12
|
|
X
|
|
L18
|
Sasco 2003-18XS
|
|
X
|
|
L62
|
Sasco 2003-32
|
|
X
|
|
L64
|
Sasco 2003-34A
|
|
X
|
|
L68
|
Sail 2003-BC11
|
|
X
|
|
L84
|
Sasco 2003-40A
|
|
X
|
|
L87
|
SAIL 2004-1
|
|
X
|
|
L89
|
SARM 2004-1
|
|
X
|
|
M29
|
SASCO 2002-NP1
|
|
X
|
|
M57
|
SASCO 2003-3XS
|
|
X
|
|
M84
|
SASCO 2001-19
|
|
X
|
|
|
|
|
|
|
|
|
M97
|
SASCO 2002-6
|
|
X
|
|
N82
|
SASCO ALS 2001-1
|
X
|
X
|
|
N86
|
SASCO 2001-2 ALS
|
X
|
X
|
|
N95
|
SASCO 2001-8A
|
X
|
X
|
|
R68
|
SASCO 1997-2
|
X
|
|
|
M67
|
SASCO 2003-7H
|
|
X
|
|
R79
|
SASCO FHA/VA 98 RF-2
|
X
|
X
|
|
R81
|
Sasco 1998-6
|
|
X
|
|
R82
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SASCO 98-8
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X
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R89
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SASCO FHA / VA RF-4
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X
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X
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EXHIBIT B TO AMENDMENT NO. 3
Schedule II to Note Purchase Agreement
VARIABLE FUNDING NOTE PURCHASER COMMITMENT INFORMATION
Credit Suisse AG, Cayman Islands Branch
Commitment: $700,000,000
ADDENDUM
TO
MORTGAGE SELLING AND SERVICING CONTRACT
(Early Advance Funding Agreement)
This Addendum (the “EAF Agreement”) to that Mortgage Selling and Servicing Contract dated December 20, 2012 (the "MSSC”) is made by and between Fannie Mae (“Fannie Mae”), a corporation organized and existing under the laws of the United States, and Nationstar Mortgage LLC, a limited liability company organized and existing under the laws of the State of Delaware and is effective December 31, 2012.
WHEREAS, Servicer services, on behalf of Fannie Mae, certain residential mortgage loans and real estate owned (REO) properties owned or securitized by Fannie Mae, in accordance with the MSSC and Fannie Mae Servicing Guide; and
WHEREAS, Fannie Mae has agreed to provide to Servicer early reimbursement of certain Advances.
NOW, THEREFORE, in consideration of the mutual premises, covenants and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
I.
Addendum to MSSC
. Fannie Mae agrees to provide to Servicer early reimbursement of certain Advances relating to loans and REO properties serviced under the MSSC, any Master Agreement and Fannie Mae Servicing Guide pursuant to and subject to the conditions of the attached Exhibit A.
II.
Applicable Laws
. This EAF Agreement will be construed in accordance with federal law and the laws of New York, without reference to the choice of law principles under the laws of New York.
III.
Entire Agreement
. All other terms, conditions, provisions, and covenants in the MSSC and Fannie Mae Selling and Servicing Guides, as may be updated or amended from time to time, shall remain unaltered and in full force and effect, except as modified by this EAF Agreement.
IV.
Counterparts
. This EAF Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which when taken together shall constitute a single agreement.
IN WITNESS WHEREOF, each of the undersigned parties to this EAF Agreement has caused this EAF Agreement to be duly executed in its name by one of its duly authorized officers, all as of the date first above written.
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Fannie Mae
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Nationstar Mortgage LLC (Servicer)
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By:
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/s/ William L Wilson, Jr.
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By:
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/s/ Gregory Oniu
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Name:
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William L. Wilson, Jr.
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Name:
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Gregory Oniu
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Title:
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Vice President
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Title:
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Senior Vice President
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Date:
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December 20, 2012
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Date:
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December 20, 2012
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EXHIBIT A
EARLY ADVANCE FUNDING AGREEMENT
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EARLY REIMBURSEMENT PERIOD:
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The period (“Early Reimbursement Period”) during which Fannie Mae will make payments of Periodic Early Reimbursement Amounts (as defined below) in respect of Eligible Advances (as defined below), which will commence on the Closing Date and end on the first to occur of:
(1) December 31, 2013 (unless extended or renewed in writing by Fannie Mae and Servicer); or
(2) a Stop Event that is not waived by Fannie Mae
During the Early Reimbursement Period, Fannie Mae will make payments of Periodic Early Reimbursement Amounts as provided herein. Upon termination of the Early Reimbursement Period, Fannie Mae will no longer pay Periodic Early Reimbursement Amounts and the Recoupment Period will commence.
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ELIGIBLE ADVANCES FOR EARLY REIMBURSEMENT
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Except as provided below, “Eligible Advance” shall include all of the following advances required to be made by the Servicer with respect to mortgage loans and real estate owned (REO) serviced by the Servicer (“Mortgage Loans”) pursuant to the MSSC and Fannie Mae Servicing Guide (the “Guide”) for which Servicer has not been repaid or reimbursed as of such date:
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1.
“P&I Delinquency Advances” which are advances of principal or interest payments, including a “Foreclosure Buyout”). A “Foreclosure Buyout” is an advance required to be remitted as the result of an action taken during the preceding month with respect to a property reported under Fannie Mae Action Codes 70, 71 or 72 at the start of the month in which the advance is due.
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2. “T&I Escrow Advances” which are advances for the payment of taxes, assessments, insurance premiums, ground rents, and other similar items and charges, and
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3. “Corporate Servicing Advances” which are advances other than P&I Delinquency Advances and T&I Escrow Advances.
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Eligible Advances shall also include any outstanding servicing advances previously paid or reimbursed by Servicer and identified on Schedule C in connection with a servicing transfer to the Servicer. Each such advance shall be deemed a “Legacy Servicing Advance”.
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Notwithstanding the foregoing and except as identified in Schedule C, Eligible Advances shall not include servicing advances paid or reimbursed by Servicer a) in connection with a servicing transfer to the Servicer, including servicing transfers after the date of this EAF Agreement, or b) relating to Mortgage Loans the servicing to which was acquired from a third party. However, the parties may by written agreement add additional Eligible Advances to Schedule C, which Eligible Advances shall be deemed incorporated into the EAF Agreement.
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Eligible Advances also shall not include advances applicable to the payment of any guaranty or excess servicing fees or lender paid mortgage insurance premiums. Eligible Advances must have been actually incurred by the Servicer, and T&I Escrow Advances and Corporate Servicing Advances must fall under one of the 571 Codes in the Fannie Mae 571 Claims Guide.
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Notwithstanding anything to the contrary herein, after the date on which the underlying real estate/collateral is sold or disposed, the loan or REO property is otherwise “liquidated” (including as a result of an event reported as Fannie Mae Action Code of 70, 71 or 72), or loans have a zero UPB as a result of an event reported as Fannie Mae Action Code of 60 or 65 (the “Final Liquidation Date”), no Periodic Early Reimbursement Amounts will be paid by Fannie Mae for advances made by the Servicer after the Final Liquidation Date on that Mortgage Loan. In addition, all Periodic Early Reimbursement Amounts must be repaid within 120 days after the Final Liquidation Date of the related loan, regardless of whether recoveries have actually been collected.
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PERIODIC EARLY REIMBURSEMENT AMOUNT:
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For any Reporting Cycle (as defined below), an amount equal to the Funding Value (as defined below) of Eligible Advances, subject to the Early Reimbursement Amount Limit (as defined below).
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If the Early Reimbursement Amount Limit is reached in a particular Reporting Cycle, Fannie Mae shall reimburse P&I Delinquency Advances before T&I Escrow Advances or Corporate Servicing Advances and, within each category, Eligible Advances applicable to Mortgage Loans held directly by Fannie Mae (“MRS Advances”) prior to those Mortgage Loans held in an MBS trust (“MBS Advances”.)
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AGGREGATE EARLY REIMBURSEMENT AMOUNT:
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As of any date of determination, the excess, if any, of (i) the total Periodic Early Reimbursement Amounts previously paid to Servicer by Fannie Mae prior to such date over (ii) the aggregate, cumulative amount of Collections (as defined below) recouped by Fannie Mae prior to such date. In no event shall Fannie Mae be obligated to make payment of any Periodic Early Reimbursement Amount that would result in the Aggregate Early Reimbursement Amount exceeding the Early Reimbursement Amount Limit.
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FUNDING VALUE:
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With respect to any Eligible Advance as of any date of determination, the product of (x) the outstanding balance of such Eligible Advance as of such date and (y) the applicable Early Reimbursement Rate.
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EARLY REIMBURSEMENT RATE:
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P&I Delinquency Advances: [***].
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T&I Escrow Advances: [***]
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Corporate Servicing Advances: [***]
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Legacy Servicing Advances: See Schedule C
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The Early Reimbursement Rate for T&I Escrow Advances, Corporate Servicing Advances and applicable Legacy Servicing Advances will be recalculated on the first day of each calendar month based on the cumulative Curtailment Rate for the immediately preceding three (3) calendar months as follows:
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Curtailment Rate
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Early Reimbursement Rate
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80% - 100%
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[***]
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70% - <80%
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[***]
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Less than 70%
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[***]
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For purposes of this calculation, “Curtailment Rate” shall mean the percentage of the amount of T&I Escrow Advances, Corporate Servicing Advances and Legacy Servicing Advances requested by Servicer to be reimbursed under this EAF Agreement which Fannie Mae determines are Eligible Advances and subject to reimbursement by Fannie Mae hereunder. A Curtailment Rate of less than 60% may be considered a Stop Event by Fannie Mae.
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Notwithstanding the foregoing, the Early Reimbursement Rate for Legacy Servicing Advances attributable to the servicing transferred from Aurora Bank FSB shall be 60%.
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Any revised Early Reimbursement Rate shall become effective for the Periodic Early Reimbursement Amount applicable to the next Reporting Cycle.
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EARLY REIMBURSEMENT AMOUNT LIMIT:
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Fannie Mae's obligation to make payment of Periodic Early Reimbursement Amounts will not exceed a maximum Aggregate Early Reimbursement Amount of Three Hundred Twenty Five Million ($325,000,000) dollars, provided that the total of such amount attributable to Legacy Advances applicable to servicing transferred from Aurora Bank FSB shall not exceed Sixty-Three Million ($63,000,000) dollars.
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DEFICIENCY AMOUNT:
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A Deficiency Amount shall exist on any date if, and to the extent that, on such date, the Aggregate Early Reimbursement Amount exceeds the Funding Value of all Eligible Advances. If a Deficiency Amount exists, the party that becomes aware of such event shall immediately notify the other party of the existence of any Deficiency Amount. Any such Deficiency Amount shall be cured by the Servicer within three business days of the Servicer becoming aware of the existence of a Deficiency Amount. Any Deficiency Amount attributable to the reduction of an Early Reimbursement Rate as provided herein shall be due and payable by Servicer no later than the Draft Date associated with the next Reporting Cycle.
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FANNIE MAE DESIGNATED ACCOUNT:
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“Designated Account” shall mean an account created by Fannie Mae in its name and under its control at a financial institution of Fannie Mae's choosing. A Designated Account may relate to either MBS Advances or MRS Advances but not both.
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The Servicer hereby acknowledges and agrees that it has no right, title, interest or claim in or to any Designated Account or any funds or other assets therein (whether or not deposited by the Servicer), or any interest earned or accrued on the foregoing (notwithstanding anything to the contrary contained in the Guide or in any other agreement), all of which shall be the exclusive property of Fannie Mae.
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ONGOING RECONCILIATION PERIOD:
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Anytime an Eligible Advance is requested by Servicer hereunder, Servicer shall provide Fannie Mae an Advance Request Form, a sample of which is attached hereto as Schedule A, and shall deliver such request form via e-mail to “
advance_facilities_data@fanniemae.com
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Beginning in the month of the effective date of this EAF Agreement, Servicer shall deliver the Reports (as defined below) as required in the Data Dictionary
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The calendar month covered by a Report, as applicable, shall constitute a “Reporting Cycle.”
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P&I Delinquency Advances
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No later than the second business day following the receipt by Fannie Mae of the Report applicable to P&I Delinquency Advances, Fannie Mae will notify the Servicer of any discrepancies, including any discrepancies between the (a) the sum of all reported loan-level P&I Delinquency Advances and (b) the aggregate P&I Delinquency Advances requested by the Servicer.
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On the business day each month prior to the draft date applicable to the standard Fannie Mae MBS remittance cycle (the “Draft Date”) published in the Guide, the following actions shall occur:
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(i)
to the extent a Periodic Early Reimbursement Amount is required to be distributed, Fannie Mae shall deposit (such deposit shall be contingent on the fact that no discrepancy regarding the requested P&I Delinquency Advances remains outstanding) into the Designated Account the Periodic Early Reimbursement Amount relating to the P&I Delinquency Advances for the related Reporting Cycle; and
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(i)
by 10:00 AM (Eastern Time) on such date, the Servicer shall deposit all remaining principal and interest required to be remitted on the Draft Date for all Fannie Mae MBS Mortgage Loans serviced by the Servicer.
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On the Draft Date, Fannie Mae shall draft from the Designated Account, in lieu of the Servicer's custodial account or accounts, the Required P&I and any amounts deposited by Fannie Mae as Periodic Early Reimbursement Amounts.
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The Servicer shall deposit into the Collections Account on the Draft Date any principal and interest reported as “uncollected” on the Report, and received between the business day immediately preceding the Report Date and the Draft Date.
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T&I Escrow Advances and Corporate Servicing Advances.
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No later than the second business day following the Report Date applicable to T&I Escrow Advance and Corporate Servicing Advances, Fannie Mae will notify the Servicer of any discrepancies regarding T&I Escrow Advance and Corporate Servicing Advances.
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Servicer may also receive Periodic Early Reimbursement Amounts at month end by submitting to Fannie Mae a Report applicable T&I Escrow Advance and Corporate Servicing Advances six business days prior to month end. No later than the second business day following receipt of this Report Fannie Mae will notify the Servicer of any discrepancies regarding T&I Escrow Advance and Corporate Servicing Advances.
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On the business day immediately preceding both the Draft Date and the last business day of the month, Fannie Mae shall fund (to the extent a Periodic Early Reimbursement Amount is required to be distributed) the Periodic Early Reimbursement Amount for T&I Escrow Advance and Corporate Servicing Advances (as requested by the Servicer on an Advance Request Form) to the Servicer. Such funding shall be contingent on the fact that no discrepancy regarding the requested T&I Escrow Advances and Corporate Servicing Advances remains outstanding.
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Subject to the conditions identified below, Fannie Mae additionally agrees that it will reimburse Servicer for T&I Escrow Advance and Corporate Servicing Advances on a daily basis as may be requested by Servicer and agreed to by Fannie Mae. Therefore in addition to the reporting requirements identified herein, not later than the fifth (5
th
) business day prior to the business day on which Servicer requests that Fannie Mae make reimbursement to Servicer (or such other time period as mutually agreed to by the parties), Servicer shall deliver to Fannie Mae or its designee a Report applicable to T&I Escrow Advance and Corporate Servicing Advances. Fannie Mae and/or its designee will reconcile the same within two (2) business days, and if it determines that an amount is due and owing by Fannie Mae to Servicer, such amount shall be reimbursed to Servicer by Fannie Mae on the date requested by Servicer, or at such time as may otherwise be mutually agreed to by Fannie Mae and Servicer. Applicable to each reimbursement of T&I Escrow Advances and Corporate Servicing Advances made by Fannie Mae herein, Servicer shall pay Fannie Mae a fee equal to the greater of 1) $1,000, or 2) the Compensation Rate divided by twenty-four (24), multiplied by the T&I Escrow Advance and Corporate Servicing Advances reimbursed by Fannie Mae. Servicer will not be required to pay such administrative fee for the reimbursements made 1) on the business day immediately preceding the Draft Date, and 2) one business day prior to the last business day of each calendar month. Fannie Mae will provide to Servicer an invoice for such administrative fees on or about the tenth (10
th
) day of each calendar month, and within thirty days of receipt of the invoice Servicer agrees to wire to Fannie Mae such invoiced amount as directed in the invoice, or as otherwise directed by Fannie Mae.
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At any time Fannie Mae may notify the Servicer of any material discrepancy between the P&I Delinquency Advances, T&I Escrow Advances or Corporate Servicing Advances
as previously reported by the Servicer and the amounts reflected in Fannie Mae's internal systems of record. Such discrepancies shall constitute a material Due Diligence issue and the Servicer and Fannie Mae will work in good faith to resolve any such material discrepancies.
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REPORTS:
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In addition to any required reporting obligations in the Guide, during the periods identified in the section herein titled “Ongoing Reconciliation Period” Servicer shall deliver to Fannie Mae or its designee reports and loan level listings (each a “Report”) in a format reasonably acceptable to Fannie Mae containing the data and within the time periods identified in
Schedule B
(“EAF Data Dictionary”) to this EAF Agreement (as such Attachment may be modified by Fannie Mae in writing from time to time), including (i) such reason codes to conform to information and codes required by Fannie Mae Form 571 (Cash Disbursement Request) and (ii) upon request, reconciliations and supporting documentation (including invoices) of general ledger receivables applicable to Eligible Advances.
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The Servicer shall also provide to Fannie Mae by the 25th day of each month for the time period directed by Fannie Mae (i) provided that a P&I Delinquency Advance was made (excluding Foreclosure Buyouts), a completed Fannie Mae Form 496 (“Principal and Interest (P&I) Custodial Account Analysis”), including all applicable schedules, and (ii) Fannie Mae Form 496a (“Taxes and Insurance (T&I) Custodial Account Analysis”), including all applicable schedules.
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COLLECTIONS ACCOUNT OVER COLLECTION:
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All collections and reimbursements related to Eligible Advances, other than Foreclosure Buyouts, received on the related Mortgage Loans by the Servicer from Fannie Mae, mortgagors or as liquidation proceeds or other recoveries (in the aggregate, the “Collections”), must be deposited by the Servicer into a Collections Account established by Fannie Mae and under Fannie Mae's control no later than 6:00 pm ET on the second business day following Servicer's receipt thereof, subject to the following:
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(i)
During the Early Reimbursement Period the Servicer may retain any Collections in excess of the Periodic Early Reimbursement Amount outstanding with respect to the related Mortgage Loan; and
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(i)
During the period between the final disbursement of a Periodic Early Reimbursement Amount and the last day for recoupment as provided below, the Servicer may retain any Collections in excess of the Aggregate Early Reimbursement Amount.
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All Periodic Early Reimbursement Amounts related to Foreclosure Buyouts shall be repaid to the Collections Account within one business day after the Servicer receives a monthly reimbursement of foreclosure advances from Fannie Mae, without regard to the amount actually reimbursed. Further, all Periodic Early Reimbursement Amounts for P&I Delinquency Advances and applicable to Mortgage Loans which have undergone a reclassification as provided in the Guide shall be repaid to the Collections Account within two business days of such reclassification.
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However, following the occurrence of, and during the continuance of, a Stop Event that has not been waived by Fannie Mae, clauses (i) and (ii) above shall not apply and further, all reimbursements of Eligible Advances due from Fannie Mae shall be deposited directly into the Collections Account by Fannie Mae.
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Servicer shall notify Fannie Mae in the event it determines that any Periodic Early Reimbursement Amount relates to an advance other than an Eligible Advance. In addition, Fannie Mae shall provide Servicer with a monthly report listing any Periodic Early Reimbursement Amounts outstanding on advances it has determined to be ineligible, including any relating to loans more than 90 days past their Final Liquidation Date. Servicer shall deposit any such amounts into the Collections Account within 15 calendar days after the date of such determination or report, regardless of whether recoveries have actually been collected.
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If the amount in the Collections Account exceeds the Aggregate Early Reimbursement Amount (“Over Collection”), then simultaneously with the first to occur of the payment of the next Periodic Early Reimbursement Amount or the commencement of the Recoupment Period, the Over Collection amount shall be applied to reduce the Aggregate Early Reimbursement Amount outstanding. Any amount by which the Over Collection exceeds such Aggregate Early Reimbursement Amount will be returned to the Servicer within five business days following the date the Aggregate Early Reimbursement Amount is reduced to zero.
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MONTHLY SETTLEMENTS / SETTLEMENT DATES:
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On the third business day of each month, Fannie Mae shall notify Servicer of the Early Reimbursement Compensation amount. On the fifth business day of each calendar month, Servicer shall fund to an account designated by Fannie Mae the Early Reimbursement Compensation. Such date shall be deemed a “Settlement Date.”
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In the event that Fannie Mae does not timely receive such funding, on the following business day Fannie Mae may withdraw an amount equal to such unpaid Early Reimbursement Compensation directly from the Collections Account prior to the calculation of the Periodic Early Reimbursement Amount for that month. Such withdrawal will not avoid the occurrence of a Stop Event.
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Following the occurrence of, and during the continuance of, a Stop Event that has not been waived by Fannie Mae, a Settlement Dates shall occur with such frequency (
e.g.
,
weekly or daily) as Fannie Mae shall direct.
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EARLY REIMBURSEMENT COMPENSATION:
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In consideration of Fannie Mae's reimbursing to Servicer Eligible Advances earlier than as provided under the MSSC and Guide, the Servicer will pay Fannie Mae a monthly compensation amount equal to the aggregate amount obtained by daily application of the Compensation Rate to the amount of the Aggregate Early Reimbursement Amount on a 360 day per year basis for the actual number of days elapsed since the prior Settlement Date (or, with respect to the first Settlement Date following the Closing Date, since the Closing Date). The Servicer will pay the Early Reimbursement Compensation to Fannie Mae on each Settlement Date.
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COMPENSATION RATE:
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[***] basis points over One-Month LIBOR. LIBOR will be set as of the last business day of the second month preceding the month in which the Settlement Date occurs. (
For example, if the Settlement Date is August 3
rd
, LIBOR will be as of the last business day in June.
) Notwithstanding the foregoing, the Compensation Rate shall be [***] basis points over One-Month LIBOR on Eligible Advances related to those mortgage servicing rights acquired by Servicer (i) from Flagstar Capital Markets Corporation on September 15, 2009; (ii) from Flagstar Capital Markets Corporation on September 1, 2011; and (iii) from GMAC Mortgage, LLC on November 14, 2008.
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FACILITY RENEWAL/AMENDMENT FEE:
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On the Closing Date Servicer shall pay [***] of the Early Reimbursement Amount Limit. If extended or renewed in writing by Fannie Mae and Servicer, [***] of the Early Reimbursement Amount Limit shall thereafter be payable as a renewal fee annually. If the Early Reimbursement Amount Limit is increased, [***] of the additional amount shall be payable as an Amendment Fee on the first business day following the effective date of the increase and pro rated from such effective date to the scheduled end of the Early Reimbursement Period.
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CLOSING DATE:
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December 31, 2012
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RECOUPMENT:
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Periodic Early Reimbursement Amounts shall be recouped by Fannie Mae primarily through Collections, however the Servicer can pay any or all outstanding amounts due at any time, and is obligated to pay, if applicable, the outstanding Aggregate Early Reimbursement Amount on or prior to the completion of an eighteen (18) month period starting on the earlier of (i) the first day of the month following the end of the Early Reimbursement Period or (ii) the occurrence of a Stop Event. Such eighteen (18) month period is referred to herein as the “Recoupment Period.”
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STOP EVENTS:
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Unless otherwise waived by Fannie Mae, Stop Events are as follows:
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1.
Failure of Servicer to comply with the terms or conditions of this EAF Agreement, specifically including but not limited to,
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a.
Failure of the Servicer to pay any Early Reimbursement Compensation amount or any Deficiency Amount when due.
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b.
Failure of the Servicer to deposit Collections into the Collection Account by 6:00 pm ET on the second business day following the receipt thereof by Servicer.
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c. Failure of the Servicer to repay in a timely manner any portion of the Aggregate Early Reimbursement Amount relating to an advance that is not an Eligible Advance.
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2.
Failure of the Servicer to be an approved Fannie Mae Servicer.
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3.
Occurrence of a change in the Servicer's organization as described in the Part I, Chapter 2, Section 204 of the Guide.
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4.
Failure of the Servicer to resolve a material Due Diligence issue within 30 business days of notification, unless the parties mutually agree to extend such cure period, it being understood that (a) Fannie Mae has the option to suspend funding of Periodic Early Reimbursement Amounts while a material Due Diligence issue remains unresolved, even if no Stop Event has occurred, and (b) Fannie Mae will act in good faith to determine materiality of Due Diligence issues.
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5.
Insolvency, Receivership or Bankruptcy of the Servicer, as established by a court of competent jurisdiction.
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6.
Failure of the Servicer to submit any required Reports or other reporting and such failure continues for 5 business days.
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7.
The occurrence of an Event of Default by the Servicer under any Master Agreement or the MSSC, as applicable, which has not been waived or cured as may be allowed under such agreement or contract, if applicable.
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8.
Failure by the Servicer to deposit into the Designated Account all principal and interest as provided herein; provided, however, that such failure shall be subject to a cure period of one business day; provided, further, however, that such cure period shall be unavailable if such failure occurs more than once in any four-month period or more than twice in any twelve-month period.
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9. 120 days after written notice by Fannie Mae.
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10.
The earlier of 120 days or such earlier date as set forth in such Proceeding following written notice by Fannie Mae or Servicer, as applicable, that either Fannie Mae or Servicer, as applicable, becomes subject to any order, or litigation, claim, action, suit, arbitration, inquiry, proceeding, investigation or similar proceeding initiated by a governmental authority (a “Proceeding”) which impairs such party's ability to discharge its obligations hereunder in any material respect.
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Upon occurrence of a Stop Event not waived by Fannie Mae, the Early Reimbursement Period may be terminated.
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DUE DILIGENCE REQUIREMENTS:
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Fannie Mae has the right to perform due diligence activities related to Eligible Advances and Periodic Early Reimbursement Amounts prior to the Closing Date and at any such time thereafter (“Due Diligence”). Promptly upon Fannie Mae's (or its agent's) request, the Servicer is required to provide reasonable access to Servicer's system's and personnel, books and records whether stored in tangible or electronic form. Failure of the Servicer to provide such access will constitute a material Due Diligence issue and a Stop Event. Servicer shall bear all reasonable costs and expenses of Fannie Mae associated with any Due Diligence, including without limitation third-party vendor fees.
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In the event non-material issues are discovered during the Due Diligence process, the Servicer will be notified in writing by Fannie Mae or its agent and will have a reasonable amount of time to cure such issues. However, failure to cure will constitute a material Due Diligence event.
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SERVICING TRANSFER:
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Unless consented to in a writing by Fannie Mae specifically referencing this EAF Agreement, no servicing of Mortgage Loans for which there exists any outstanding Periodic Early Reimbursement Amount shall be transferred to another servicer unless the Periodic Early Reimbursement Amount applicable to such Mortgage Loan is deposited into the Collections Account, or the Servicer otherwise makes a payment to Fannie Mae in an amount equal to such Periodic Early Reimbursement Amount.
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FANNIE MAE SERVICING REQUIREMENTS:
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Except as specifically set forth herein, entering into this EAF Agreement does not alter or diminish any obligations or duties required of the Servicer according to the MSSC and the Fannie Mae Selling and Servicing Guides, as applicable.
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ASSIGNMENT:
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Neither Fannie Mae nor the Servicer may assign, transfer or participate its rights under this EAF Agreement.
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TERMINATION:
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Fannie Mae may terminate this EAF Agreement:
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(i) after the Early Reimbursement Period is completed;
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(ii) and the Aggregate Early Reimbursement Amount is zero;
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(iii) for the convenience (i.e., for any reason or no reason) of Fannie Mae, upon 120 days prior written notice to Servicer; or
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(iv) on the occurrence of a Stop Event not waived by Fannie Mae.
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Except for a termination under clause (iii) or a termination under clause (iv) due to a subsection 9 or 10 Stop Event, upon termination of this EAF Agreement, all outstanding Periodic Early Reimbursement Amounts shall be immediately due and payable to Fannie Mae.
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SCHEDULE A
(Advance Request Form)
For the [Month/Day/Year] [EAF/SUB] funding, ABC Mortgage Company submitted the following files. I certify that to the best of my knowledge these advances are all either borrower recoverable or 571 claimable expenses. Should it be determined that these advances are not recoverable or claimable, we will abide by the terms of the contract for repayment.
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File Name
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Number of Files Submitted
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Total FNMA Advance Amount
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Advance Dates From
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Advance Dates To
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Bank Name
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Account#
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Routing#
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P&I Advance Detail
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Corp/Escrow Advance Detail
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Total
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[Name]
[Title] (Must be an Officer of the company)
[Company]
SCHEDULE B
(EAF Data Dictionary)
SCHEDULE C
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Original Advancing Servicer
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Legacy
Advance Type: Early Reimbursement Rate
(except as may be modified as provided herein)
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Transfer Date
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AmTrust
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P&I Delinquency Advance: [***]
T&I Escrow Advances: [***]
Corporate Servicing Advances: [***]
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December 10, 2010
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Flagstar Capital Markets Corporation
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P&I Delinquency Advance: [***]
T&I Escrow Advances: [***]
Corporate Servicing Advances: [***]
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May 1, 2010
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Flagstar Capital Markets Corporation
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P&I Delinquency Advance: [***]
T&I Escrow Advances: [***]
Corporate Servicing Advances: [***]
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September 1, 2011
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Aurora Bank FSB
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P&I Delinquency Advance: [***]
T&I Escrow Advances: [***]
Corporate Servicing Advances: [***]
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June 30, 2012
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GMAC Mortgage
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Not Applicable
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Advances made by Servicer relating to Mortgage Loans in each of the above referenced acquired portfolios after the applicable Transfer date shall be Eligible Advances.
*** Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.
FIRST AMENDMENT TO ADDENDUM TO MORTGAGE SELLING AND SERVICING CONTRACT (EAF Agreement)
This First Amendment (the “First Amendment”) to that Addendum To Mortgage Selling and Servicing Contract
dated effective as of December 31, 2012 (the “EAF Agreement”) by and between FANNIE MAE, a corporation organized and existing under the laws of the United States (“Fannie Mae”) and Nationstar Mortgage LLC, a limited liability company organized and existing under the laws of the State of Delaware (“Servicer”), is hereby mutually agreed upon and entered into effective January 31, 2013.
WITNESSETH:
WHEREAS
, Fannie Mae and Servicer desire to include as Eligible Advances under the EAF Agreement certain advances applicable to those mortgage serving rights relating to Fannie Mae loans to be acquired by Servicer from Bank of America, National Association on or about January 31, 2013.
NOW, THEREFORE
, in consideration of the mutual premises, covenants and conditions and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and upon terms and subject to the conditions set forth herein, the Fannie Mae and Servicer agree as follows:
Section 1.
Defined Terms
. Unless otherwise defined herein, capitalized terms which are defined in the EAF Agreement, as amended hereby, are used herein as therein defined.
Section 2.
Early Reimbursement Amount Limit
. The Section of the EAF Agreement titled “Early Reimbursement Amount Limit” shall be amended and restated to provide as follows:
Fannie Mae's obligation to make payment of Periodic Early Reimbursement Amounts will not exceed a maximum Aggregate Early Reimbursement Amount of Three Hundred Twenty Five Million ($325,000,000) dollars or such other amount as increased in accordance with the following sentence, provided that the total of such amount attributable to Legacy Servicing Advances applicable to servicing transferred from Aurora Bank FSB shall not exceed Sixty-Three Million ($63,000,000) dollars. The Aggregate Early Reimbursement Amount shall be increased to accommodate the Eligible Advances applicable to the Mortgage Loans the mortgage servicing rights to which Servicer acquires from Bank of America, National Association on or about January 31, 2013, including applicable Legacy Servicing Advances.
Section 3.
Schedule C
. Schedule C to the EAF Agreement shall be
shall be amended and restated to provide as follows:
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Original Advancing Servicer
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Legacy
Advance Type: Early Reimbursement Rate
(except as may be modified as provided herein)
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Transfer Date
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AmTrust
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P&I Delinquency Advance: [***]
T&I Escrow Advances: [***]
Corporate Servicing Advances: [***]
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December 10, 2010
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Flagstar Capital Markets Corporation
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P&I Delinquency Advance: [***]
T&I Escrow Advances: [***]
Corporate Servicing Advances: [***]
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May 1, 2010
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Flagstar Capital Markets Corporation
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P&I Delinquency Advance: [***]
T&I Escrow Advances: [***]
Corporate Servicing Advances: [***]
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September 1, 2011
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Aurora Bank FSB
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P&I Delinquency Advance: [***]
T&I Escrow Advances: [***]
Corporate Servicing Advances: [***]
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June 30, 2012
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GMAC Mortgage
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Not Applicable
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Bank of America, National Association
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P&I Delinquency Advance: [***]
T&I Escrow Advances: [***]
Corporate Servicing Advances: [***]
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(Various - 2013)
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Advances made by Servicer relating to Mortgage Loans in each of the above referenced acquired portfolios after the applicable Transfer date shall be Eligible Advances.
Section 4.
Facility Amendment Fee
.
[***][***] per annum of the amount the Early Reimbursement Amount Limit is increased as provided in Section 2 of this First Amendment shall be payable as an Amendment Fee on the first business day following the effective date of the increase and pro rated from such effective date to the scheduled end of the Early Reimbursement Period. The Section of the EAF Agreement titled “Facility Renewal/Amendment Fee” shall also be amended and restated to provide as follows:
If extended or renewed in writing by Fannie Mae and Servicer, [***] of the Early Reimbursement Amount Limit shall thereafter be payable as a renewal fee annually on the first business day after December 31 each year. If the Early Reimbursement Amount Limit is increased. [***] of the additional amount shall be payable as an Amendment Fee on the first business day following the effective date of the increase and pro rated from such effective date to the scheduled end of the Early Reimbursement Period.
Section 5.
Due Diligence.
Notwithstanding anything to the contrary in the EAF Agreement, Servicer shall be responsible for all
reasonable out-of-pocket costs and expenses of Fannie Mae, including without limitation third party vendor fees, relating to Due Diligence reviews (anticipated to be performed monthly) applicable to
the mortgage servicing rights which Servicer acquires from Bank of America, National Association on or about January 31, 2013.
Section 6.
Continuing Effect of the EAF Agreement
. Except as expressly amended hereby, the provisions of the EAF Agreement are and shall remain in full force and effect.
Section 7.
Counterparts
. This First Amendment to EAF Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the undersigned parties has caused this First Amendment to EAF Agreement to be duly executed in its name by one of its duly authorized officers, all as of the date first above written.
FANNIE MAE
By:
/s/ Leslie Peeler________
____
Name:
Leslie Peeler_______
_______
Title:
Senior Vice President_______
NATIONSTAR MORTGAGE LLC
By:
/s/ Amar Patel_________________
Name:
Amar Patel____________________
Title:
Executive Vice President_________
MASTER REPURCHASE AGREEMENT
Between
BARCLAYS BANK PLC, as Purchaser and Agent
and
NATIONSTAR MORTGAGE LLC, as Seller
Dated as of March 25, 2011
TABLE OF CONTENT
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1
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APPLICABILITY
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1
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2
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DEFINITIONS AND INTERPRETATION
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1
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3
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THE TRANSACTIONS
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18
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4
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CONFRIMATION
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21
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5
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TAKEOUT COMMITMENTS
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21
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6
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PAYMENT AND TRANSFERS
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21
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7
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MARGIN MAINTENANCE
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21
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8
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TAXES; TAX TREATMENT
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22
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9
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SECURITY INTEREST; PURCHASER'S APPOINTMENT AS ATTORNEY-IN-FACT
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23
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10
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CONDITIONS PRECEDENT
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25
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11
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RELEASE OF PURCHASED ASSETS
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28
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12
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RELIANCE
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28
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13
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REPRESENTATIONS AND WARRANTIES
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28
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14
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COVENANTS OF SELLER
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31
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15
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REPURCHASE OF PURCHASED ASSETS
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38
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16
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SERVICING OF THE MORTGAGE LOANS' SERVICER TERMINATION
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38
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17
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EVENTS OF DEFAULT
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41
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18
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REMEDIES
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43
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19
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DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE
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45
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20
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USE OF EMPLOYEE PLAN ASSETS
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46
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21
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INDEMNITY
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46
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22
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WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS
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47
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23
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REIMBURSEMENT; SET-OFF
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47
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24
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FURTHER ASSURANCES
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48
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25
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ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION
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48
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26
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TERMINATION
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48
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27
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REHYPOTHECATION; ASSIGNMENT
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49
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28
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AMENDMENTS, ETC.
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49
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29
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SERVERBILITY
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50
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30
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BINDING EFFECT; GOVERNING LAW
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50
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31
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WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION AND VENUE; SERVICE OF PROCESS
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50
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32
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SINGLE AGREEMENT
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50
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33
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INTENT
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51
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34
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NOTICES AND OTHER COMMUNICATIONS
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51
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35
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CONFIDENTIALITY
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53
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36
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DUE DILIGENCE
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53
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SCHEDULES AND EXHIBITS
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EXHIBIT A
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MONTHLY CERTIFICATION
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EXHIBIT B
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REPRESENTATIONS AND WARRANTIES WITH RESPECT TO MORTGAGE LOANS
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EXHIBIT C
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FORM OF TRANSACTION NOTICE
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EXHIBIT D
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FORM OF GOODBYE LETTER
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EXHIBIT E
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FORM OF WAREHOUSE LENDER'S RELEASE
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EXHIBIT H FORM OF SELLER MORTGAGE LOAN SCHEDULE
MASTER REPURCHASE AGREEMENT
Dated as of March 25, 2011
BETWEEN:
BARCLAYS BANK PLC, in its capacity as purchaser (“
Purchaser
”) and agent pursuant hereto (“
Agent
”),
and
NATIONSTAR MORTGAGE LLC (“
Seller
”).
Purchaser may from time to time, upon the terms and conditions set forth herein, agree to enter into transactions on a committed basis with respect to the Committed Amount and an uncommitted basis with respect to the Uncommitted Amount, in which Seller sells to Purchaser Eligible Mortgage Loans, on a servicing-released basis, against the transfer of funds by Purchaser, with a simultaneous agreement by Purchaser to transfer to Seller such Purchased Assets on a date certain not later than one year following such transfer, against the transfer of funds by Seller;
provided
,
that
the Aggregate MRA Purchase Price shall not exceed, as of any date of determination, the lesser of (a) the Maximum Aggregate Purchase Price (less the Aggregate EPF Purchase Price) and (b) the Asset Base. Each such transaction shall be referred to herein as a “
Transaction
,” and shall be governed by this Agreement. This Agreement is not a commitment by Purchaser to enter into Transactions with Seller but rather sets forth the procedures to be used in connection with periodic requests for Purchaser to enter into Transactions with Seller. Seller hereby acknowledges that Purchaser is under no obligation to enter into, any Transaction pursuant to this Agreement with respect to the Uncommitted Amount.
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2.
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DEFINITIONS AND INTERPRETATION
|
(a)
Defined Terms.
“
30+ Day Delinquent Mortgage Loan
” means any Mortgage Loan at any time the Monthly Payment for which was not received within twenty-nine (29) days after its Due Date.
“
Accepted Servicing Practices
” means with respect to any Mortgage Loan, those accepted, customary and prudent mortgage servicing practices (including collection procedures) of prudent mortgage banking institutions that service mortgage loans of the same type as the Mortgage Loans in the jurisdiction where the related Mortgaged Property is located, and which are in accordance with the requirements of each Agency Program, applicable law, FHA regulations and VA regulations, if applicable, and the requirements of any private mortgage insurer so that the FHA insurance, VA guarantee or any other applicable insurance or guarantee in respect of any Mortgage Loan is not voided or reduced.
“
Accrual Period
” means, with respect to each Monthly Payment Date for any Transaction, the period from and including the immediately prior Monthly Payment Date to but excluding such Monthly Payment Date; provided that with respect to the first Monthly Payment Date of a Transaction following the related Purchase Date, the Accrual Period shall commence on the related Purchase Date.
“
Act of Insolvency
” means, with respect to any Person,
(i)
the filing of a voluntary petition (or the consent by such Person to the filing of any such petition against it), commencing, or authorizing the commencement of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law relating to the protection of creditors, or suffering any such petition or proceeding to be commenced by another; or such Person shall consent or seek to the appointment of or taking possession by a custodian, receiver, conservator, trustee, liquidator, sequestrator or similar official of such Person, or for any substantial part of its Property, or any general assignment for the benefit of creditors;
(ii)
a proceeding shall have been instituted against such Person under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution, moratorium, delinquency or liquidation law of any jurisdiction, whether now or subsequently in effect, or a custodian, receiver, conservator, liquidator, trustee, sequestrator or similar official for such Person or such Person's Property (as a debtor or creditor protection procedure) is appointed by any Governmental Authority having the jurisdiction to do so or takes possession of such Property and any such proceeding is not dismissed within sixty (60) days of filing; provided, that if, under any other agreement for Indebtedness, Seller is subject to a shorter time period to dismiss any such proceeding, such shorter time period shall be automatically incorporated into this Agreement as if fully set forth herein without the need of any further action on the part of any party;
(iii)
that such Person or any Affiliate shall become insolvent;
(iv)
that such Person shall (a) admit in writing its inability to pay or discharge its debts or obligations generally as they become due or mature, (b) admit in writing its inability to, or intention not to, perform any of its material obligations, or (c) generally fail to pay any of its debts or obligations as they become due or mature;
(v)
any Governmental Authority shall have seized or appropriated, or assumed custody or control of, all or any substantial part of the Property of such Person, or shall have taken any action to displace the executive management of such Person; or
(vi)
the audited annual financial statements of Person or the notes thereto or other opinions or conclusions stated therein shall be qualified or limited by reference to the status of such Person as a “going concern” or a reference of similar import or shall indicate that such Person has a negative net worth or is insolvent; or
(vii)
if such Person or any Affiliate is a corporation, such Person or any Affiliate or any of their Subsidiaries, shall take any corporate action in furtherance of, or the action of which would result in any of the foregoing actions.
“
Additional Eligible Loan Criteria
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Additional Purchased Mortgage Loans
” shall have the meaning assigned thereto in Section 7(b) hereof.
“
Adjustable Rate Mortgage Loan
” means a Mortgage Loan which provides for the adjustment of the Mortgage Interest Rate payable in respect thereto.
“
Affiliate
” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise and the terms “controlling,” “controlled by” and “under common control with” have meanings correlative to the meaning of “control.”
“
Aged Mortgage Loan
” means a Mortgage Loan, which is subject to a Transaction for more than (i) thirty (30) days, with respect to Fannie Mae Mortgage Loans and Freddie Mac Mortgage Loans, and (ii) forty-five (45) days, with respect to Ginnie Mae Mortgage Loans.
“
Agency
” means Freddie Mac, Fannie Mae or Ginnie Mae, as applicable.
“
Agency Guide
” means the Freddie Mac Guide, the Fannie Mae Guide, or the Ginnie Mae Guide, as applicable.
“
Agency Program
” means the Freddie Mac Program, the Fannie Mae Program, or the Ginnie Mae Program, as applicable.
“
Agent
” means Barclays Bank PLC and its successors in interest, as administrative agent for Purchaser and any additional purchasers that may become a party hereto.
“
Aggregate EPF Purchase Price
” means as of any date of determination, an amount equal to the aggregate Purchase Price (as defined in the Mortgage Loan Participation Purchase and Sale Agreement) for all Participation Certificates (as defined in the Mortgage Loan Participation Purchase and Sale Agreement) then owned by Purchaser under the Mortgage Loan Participation Purchase and Sale Agreement.
“
Aggregate MRA Purchase Price
” means as of any date of determination, an amount equal to the aggregate Purchase Price for all Mortgage Loans then subject to Transactions under this Agreement.
“
Agreement
” means this Master Repurchase Agreement (including all exhibits, schedules and other addenda thereto), as it may be amended, further supplemented or otherwise modified from time to time.
“
Allowable Variance
” shall have the meaning assigned thereto in Section 3(c) hereof.
“
Applicable Margin
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Applicable Agency
” means Ginnie Mae, Fannie Mae, or Freddie Mac, as applicable.
“
Approvals
” means with respect to Seller and Servicer the approvals obtained from the Applicable Agency or HUD in designation of Seller and/or Servicer as a Ginnie Mae-approved issuer, an FHA-approved mortgagee, a VA-approved lender, a Fannie Mae-approved lender or a Freddie Mac-approved Seller/Servicer, as applicable, in good standing.
“
Asset Base
” means, on any date of determination and with respect to all Purchased Assets then subject to Transactions and, to the extent applicable, all Eligible Mortgage Loans proposed to be sold to the Purchaser as of such date of determination, the lesser of (i) 98% of the unpaid principal balance of such Purchased Assets and Eligible Mortgage Loans as of such date of determination and (ii) the product of the applicable Purchase Price Percentage multiplied by the Market Value of such Purchased Assets and Eligible Mortgage Loans.
“
Assignment and Acceptance
” shall have the meaning assigned thereto in Section 27(b).
“
Assignment of Mortgage
” means, with respect to any Mortgage, an assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the assignment of the Mortgage to Purchaser.
“
Backup Servicer Agreement
” means any backup servicing agreement among Purchaser, Seller and a backup servicer appointed pursuant to Section 16(d), as the same may be amended, modified or supplemented from time to time.
“
Bank
” means (i) Wells Fargo Bank, National Association and its successors and permitted assigns or (ii) such other bank as may be mutually acceptable to the Seller and the Purchaser.
“
Bankruptcy Code
” means 11 U.S.C. Section 101
et seq.
,
as amended from time to time.
“
Breakage Costs
” shall have the meaning assigned thereto in Section 3(h).
“
Business Day
” means any day other than (i) a Saturday or Sunday, (ii) a day upon which the New York Stock Exchange or the Federal Reserve Bank of New York is closed or (iii) with respect to any day on which the parties hereto have obligations to the Custodian or on which the Custodian has obligations to any party hereto, a day upon which the Custodian's offices are closed.
“
Capital Lease Obligations
” shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.
“
Cash Equivalents
” shall mean (a) securities with maturities of ninety (90) days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of ninety (90) days or less from the date of acquisition and overnight bank deposits of any commercial bank having capital and surplus in excess of $500,000,000 unless otherwise approved by Purchaser in writing in its sole discretion, (c) repurchase obligations of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven (7) days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) commercial paper of a domestic issuer rated at least A-1 or the equivalent thereof by Standard and Poor's Ratings Group (“
S&P
”) or P-1 or the equivalent thereof by Moody's Investors Service, Inc. (“
Moody's
”) and in either case maturing within ninety (90) days after the day of acquisition, (e) securities with maturities of ninety (90) days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody's, (f) securities with maturities of ninety (90) days or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (b) of this definition or, (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition.
“
Certified Mortgage Loan Trust Receipt
” shall have the meaning assigned thereto in the Custodial Agreement.
“
Change in Control
” shall mean: (a) any transaction or event as a result of which FIF HE Holdings LLC ceases to own, beneficially or of record, 100% of the membership interests of Seller, (b) the sale, transfer, or other disposition of all or substantially all of Seller's assets (excluding any such action taken in connection with any securitization transaction or routine sales of Mortgage Loans), or (c) the consummation of a merger or consolidation of Seller with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity's equity outstanding immediately after such merger, consolidation or such other reorganization is owned by persons who were not equityholders of the Seller immediately prior to such merger, consolidation or other reorganization;
provided
that
none of the foregoing events shall constitute a “Change in Control” if at the time of such event, or as a result thereof, the Seller has a class of its equity securities registered under Section 12 of the Securities Exchange Act of 1934, as amended.
“
Change in Law
” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by Purchaser (or any Affiliate thereof) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.
“
Closing Instruction Letter
” shall mean, with respect to any Wet-Ink Mortgage Loan that becomes subject to a Transaction, the closing instruction letter delivered by Seller to the related Settlement Agent which sets forth the procedures to be followed by such Settlement Agent in connection with the origination of such Wet-Ink Mortgage Loan, which closing instruction letter shall include, without limitation, (i) instructions that govern the execution, retention and delivery of the underlying Mortgage Loan Documents by such Settlement Agent to Seller or its designee, (ii) instructions with respect to the disbursement of funds by such Settlement Agent, and (iii) any other conditions precedent required by the Seller in connection with the origination and/or closing of such Wet-Ink Mortgage Loan.
“
Closing Protection Letter
” shall mean, with respect to any Wet-Ink Mortgage Loan that becomes subject to a Transaction, a letter of indemnification (which may be in the form of a blanket letter) addressed to Seller in any jurisdiction where insured closing letters are permitted under applicable law and regulation, that (i) is issued by a title company approved by Purchaser, in its sole discretion, (ii) is fully assignable to Purchaser, with coverage that is customarily acceptable to Persons engaged in the origination of mortgage loans, (iii) identifies the Settlement Agent covered thereby, and (iv) indemnifies Seller for losses incurred in connection with the such Settlement Agent's (a) failure to follow the instructions of Seller with respect to obtaining the related Mortgage Loan Documents and/or disbursing any amounts in connection with the origination of the related Wet-Ink Mortgage Loan, and (b) fraud or dishonesty with respect to obtaining the related Mortgage Loan Documents and/or disbursing any amounts in connection with the origination of the related Wet-Ink Mortgage Loan.
“
Code
” means the Internal Revenue Code of 1986, as amended from time to time.
“
Collection Account
” means the following account established by the Seller in accordance with Section 16(e) for the benefit of the Purchaser, Account Number: 4122119035, ABA: # 121000248.
“
Collection Account Control Agreement
” means that certain Deposit Account Control Agreement (Collection Account), dated as of March 25, 2011, by and among the Purchaser, the Seller and Bank, in form and substance acceptable to the Purchaser to be entered into with respect to the Collection Account, as the same may be amended, modified or supplemented from time to time.
“
Confirmation
” shall have the meaning assigned thereto in Section 4 hereof.
“
Custodial Agreement
” means that certain Custodial Agreement, dated as of March 25, 2011, among Seller, Purchaser, and Custodian, entered into in connection with this Agreement and the Mortgage Loan Participation Purchase and Sale Agreement, as the same may be amended, modified or supplemented from time to time.
“
Custodian
” means Bank of New York Mellon Trust Company, N.A., and its successors and permitted assigns.
“
Default
” means any event that, with the giving of notice or the passage of time or both, would constitute an Event of Default.
“
Default Rate
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Diligence Sample Set
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Dollars
” or “
$
” means, unless otherwise expressly stated, lawful money of the United States of America.
“
Due Date
” means the day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.
“
Due Diligence Review Percentage
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Effective Date
” means March 25, 2011.
“
Electronic Tracking Agreement
” means the electronic tracking agreement in form and substance acceptable to Purchaser and Seller, dated as of March 25, 2011 among Purchaser, Seller, MERSCORP, Inc. and Mortgage Electronic Registration, Systems, Inc., entered into in connection with this Agreement and the Mortgage Loan Participation Purchase and Sale Agreement, as the same may be amended, modified or supplemented from time to time.
“
Electronic Transmission
” means the delivery of information in an electronic format acceptable to the applicable recipient thereof. An Electronic Transmission shall be considered written notice for all purposes hereof (except when a request or notice by its terms requires execution).
“
Eligible Mortgage Loan
” means a Mortgage Loan that (i) satisfies each of the representations and warranties in
Exhibit B
to the Agreement in all material respects, (ii) is in Strict Compliance with the eligibility requirements of the Ginnie Mae Program, Fannie Mae Program, or Freddie Mac Program, as applicable, (iii) contains all required documents in the Mortgage Loan File without exceptions unless otherwise waived by Purchaser or permitted below, and (iv) meets each of the applicable Additional Eligible Loan Criteria.
“
EPF Custodial Account Control Agreement
” means that certain Deposit Account Control Agreement (Custodial Account), dated as of March 25, 2011, among Seller, Purchaser and Bank entered into in connection with the Mortgage Loan Participation Purchase and Sale Agreement, as the same shall be amended, supplemented or otherwise modified from time to time.
“
EPF Pricing Side Letter
” means that certain Pricing Side Letter, dated as of March 25, 2011, between Seller and Purchaser entered into in connection with the Mortgage Loan Participation Purchase and Sale Agreement, as the same shall be amended, supplemented or otherwise modified from time to time.
“
EPF Program Documents
” means the Mortgage Loan Participation Purchase and Sale Agreement, the EPF Pricing Side Letter, the EPF Custodial Account Control Agreement and all other agreements, documents and instruments entered into by Seller on the one hand, and Purchaser or one of its Affiliates (or Custodian on its behalf) and/or Agent or one of its Affiliates on the other, in connection herewith or therewith with respect to the transactions contemplated hereunder or thereunder and all amendments, restatements, modifications or supplements thereto.
the eligibility requirements specified for the applicable Fannie Mae Program described in the Fannie Mae Guide.
“
Fannie Mae Program
” means the Fannie Mae Guaranteed Mortgage-Backed Securities Programs, as described in the Fannie Mae Guide.
“
Fannie Mae Security
” means an ownership interest in a pool of Fannie Mae Mortgage Loans, evidenced by a book-entry account in a depository institution having book-entry accounts at the Federal Reserve Bank of New York, issued and guaranteed, with respect to timely payment of interest and ultimate payment of principal, by Fannie Mae and backed by a pool of Fannie Mae Mortgage Loans, in substantially the principal amount and with substantially the other terms as specified with respect to such Fannie Mae Security in the related Takeout Commitment, if any.
“
FDIC
” means the Federal Deposit Insurance Corporation or any successor thereto.
“
FHA
” means the Federal Housing Administration, an agency within HUD, or any successor thereto, and including the Federal Housing Commissioner and the Secretary of Housing and Urban Development where appropriate under the FHA regulations.
“
FICO Score
” means the credit score of the Mortgagor provided by Fair, Isaac & Company, Inc. or such other organization providing credit scores on the Origination Date of a Mortgage Loan.
“
Foreign Purchaser
” shall have the meaning assigned thereto in Section 8(d).
“
Freddie Mac
” means Freddie Mac, and its successors in interest.
“
Freddie Mac Agreement
” means that certain Repurchase Addendum to Freddie Mac Forms 996 and 996E, dated the date hereof, by and among the Purchaser, Seller, the Custodian and Freddie Mac.
“
Freddie Mac Guide
” means the Freddie Mac Sellers' and Servicers' Guide, as such Guide may hereafter from time to time be amended.
“
Freddie Mac Mortgage Loan
” means a mortgage loan that is in Strict Compliance on the related Purchase Date with the eligibility requirements specified for the applicable Freddie Mac Program described in the Freddie Mac Guide.
“
Freddie Mac Program
” means the Freddie Mac Home Mortgage Guarantor Program or the Freddie Mac FHA/VA Home Mortgage Guarantor Program, as described in the Freddie Mac Guide.
“
Freddie Mac Security
” means a modified pass-through mortgage-backed participation certificate, evidenced by a book-entry account in a depository institution having book-entry accounts at the Federal Reserve Bank of New York, issued and guaranteed, with respect to timely payment of interest and ultimate payment of principal, by Freddie Mac and backed by a pool of Freddie Mac Mortgage Loans, in substantially the principal amount and with substantially the other terms as specified with respect to such Freddie Mac Security in the related Takeout Commitment, if any.
“
GAAP
” means generally accepted accounting principles as in effect from time to time in the United States of America.
“
Ginnie Mae
” means the Government National Mortgage Association and its successors in interest, a wholly-owned corporate instrumentality of the government of the United States of America.
“
Ginnie Mae Guide
” means the Ginnie Mae Mortgage-Backed Securities Guide, as such Guide may hereafter from time to time be amended.
“
Ginnie Mae Mortgage Loan
” means a mortgage loan that is in Strict Compliance on the related Purchase Date with the eligibility requirements specified for the applicable Ginnie Mae Program in the applicable Ginnie Mae Guide.
“
Ginnie Mae Program
” means the Ginnie Mae Mortgage-Backed Securities Programs, as described in the Ginnie Mae Guide.
“
Ginnie Mae Security
” means a fully-modified pass-through mortgage-backed certificate guaranteed by Ginnie Mae, evidenced by a book-entry account in a depository institution having book-entry accounts at the Federal Reserve Bank of New York and backed by a pool of Ginnie Mae Mortgage Loans, in substantially the principal amount and with substantially the other terms as specified with respect to such Ginnie Mae Security in the related Takeout Commitment.
“
Governmental Authority
” means any nation or government, any state or other political subdivision, agency or instrumentality thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over Seller any of its Subsidiaries or any of their Property.
“
Hedge Instrument
” means any interest rate cap agreement, interest rate floor agreement, interest rate swap agreement or other interest rate hedging agreement entered into by Seller with a counterparty reasonably acceptable to Agent, in each case with respect to the Mortgage Loans.
“
High Cost Mortgage Loan
” means a Mortgage Loan that is (a) subject to, covered by or in violation of the provisions of the Homeownership and Equity Protection Act of 1994, as amended, (b) a “high cost,” “covered,” “abusive,” “predatory” or “high risk” mortgage loan under any federal, state or local law, or any similarly classified loan using different terminology under any law imposing heightened regulation, scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees, or any other state or other regulation providing assignee liability to holders of such mortgage loans, (c) subject to or in violation of any such or comparable federal, state or local statutes or regulations, or (d) a “High Cost Loan” or “Covered Loan,” as applicable, as such terms are defined in the current version of the Standard & Poor's LEVELS® Glossary Revised, Appendix E.
“
HUD
” means the Department of Housing and Urban Development, or any federal agency or official thereof which may from time to time succeed to the functions thereof with regard to FHA mortgage insurance. The term “HUD,” for purposes of this Agreement, is also deemed to include subdivisions thereof such as the FHA and Government National Mortgage Association.
“
Income
” means, with respect to any Purchased Asset at any time, any principal and/or interest thereon and all dividends, sale proceeds and all other proceeds as defined in Section 9‑102(a)(64) of the Uniform Commercial Code and all other collections and distributions thereon (including, without limitation, any proceeds received in respect of mortgage insurance).
“
Indebtedness
” means, for any Person: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within ninety (90) days of the date the respective goods are delivered or the respective services are rendered; (c) indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (e) obligations of such Person under Capital Lease Obligations; (f) obligations of such Person under repurchase agreements or like arrangements; (g) indebtedness of others guaranteed by such Person; (h) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; (i) indebtedness of general partnerships of which such Person is a general partner; and (j) any other indebtedness of such Person by a note, bond, debenture or similar instrument.
“
Indemnified Party
” shall have the meaning assigned thereto in Section 21(a).
“
Investment Company Act
” means the Investment Company Act of 1940, as amended, including all rules and regulations promulgated thereunder.
“
LIBOR
” means for each day, the rate (adjusted for statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits for a period equal to one month appearing on Bloomberg Screen US 0001M Page or if such rate ceases to appear on Bloomberg Screen US 0001M Page, or any other service providing comparable rate quotations at approximately 11:00 a.m., London time, on the applicable date of determination, or such interpolated rate as determined by the Agent.
“
Lien
” means any mortgage, deed of trust, lien, claim, pledge, charge, security interest or similar encumbrance.
“
Liquidity
” means, as of any date, the sum of (a) Seller's Unrestricted Cash and (b) the aggregate amount of unused committed capacity available to Seller (taking into account applicable haircuts) under mortgage loan warehouse and servicer advance facilities (other than the facilities provided under the Program Documents) for which Seller has unencumbered eligible collateral to pledge thereunder.
“
Margin Call
” shall have the meaning assigned thereto in Section 7(b) hereof.
“
Margin Deficit
” shall have the meaning assigned thereto in Section 7(b) hereof.
“
Market Value
” means, with respect to any Transaction and as of any date of determination, (i) the value ascribed to a Purchased Asset or a Mortgage Loan by Agent in its sole good faith discretion, using methodology and parameters customarily used by Agent to value similar assets, as may be as marked to market daily, and (ii) zero, with respect to any Mortgage Loan that is not an Eligible Mortgage Loan.
“
Master Netting Agreement
” means that certain Global Netting and Security Agreement, dated as of March 25, 2011, among Purchaser, Seller and certain Affiliates and Subsidiaries of Purchaser and/or Seller, entered into in connection with this Agreement and the Mortgage Loan Participation Purchase and Sale Agreement, as the same shall be amended, supplemented or otherwise modified from time to time.
“
Material Adverse Change
” means, with respect to a Person, any material adverse change in the business, condition (financial or otherwise), operations, performance or Property of such Person including the insolvency of such Person or its Parent Company, if applicable.
“
Material Adverse Effect
” means (a) a Material Adverse Change with respect to Seller, Servicer or any of their respective Affiliates; (b) a material impairment of the ability of Seller, Servicer or any of their respective Affiliates that is a party to any Program Document to perform under any Program Document to which it is a party; (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Program Document against Seller, Servicer or any of their respective Affiliates that is a party to any Program Document; (d) a material adverse effect on the Market Value of the Purchased Assets; or (e) a material adverse effect on the Approvals of Seller or Servicer.
“
Maturity Date
” means March 23, 2012.
“
Maximum Aggregate Purchase Price
” means, with respect to this Agreement and the Mortgage Loan Participation Purchase and Sale Agreement in the aggregate, an amount equal to the sum of the Committed Amount and the Uncommitted Amount
“
Maximum Error Rate
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Maximum Time on Facility
” means for each Eligible Mortgage Loan (other than Wet-Ink Mortgage Loans), the maximum number of days such Eligible Mortgage Loan may be subject to a Transaction (whether or not continuous) is (i) forty-five (45) days for Fannie Mae Mortgage Loans and Freddie Mac Mortgage Loans, and (ii) sixty (60) days for Ginnie Mae Mortgage Loans. Wet-Ink Mortgage Loans shall have the aging restrictions set forth in the Pricing Side Letter.
“
MERS
” means Mortgage Electronic Registration Systems, Inc., a Delaware corporation, or any successor in interest thereto.
“
MERS Designated Mortgage Loan
” means any Mortgage Loan as to which the related Mortgage or Assignment of Mortgage, has been recorded in the name of MERS, as agent for the holder from time to time of the Mortgage Note.
“
MERS Identification Number
” shall have the meaning assigned thereto in the Custodial Agreement.
“
Monthly Payment
” shall mean the scheduled monthly payment of principal and interest on a Mortgage Loan as adjusted in accordance with changes in the mortgage interest rate pursuant to the provisions of the Mortgage Note for an Adjustable Rate Mortgage Loan.
“
Monthly Payment Date
” means the twentieth (20th) day of each calendar month beginning with April 2011; provided that if such day is not a Business Day, the next succeeding Business Day.
“
Mortgage
” means a mortgage, deed of trust, or other security instrument, securing a Mortgage Note.
“
Mortgage Loan File
” shall have the meaning assigned thereto in the Custodial Agreement.
“
Mortgage Interest Rate
” means, with respect to each Mortgage Loan, the annual rate at which interest accrues on such Mortgage Loan from time to time in accordance with the provisions of the related Mortgage Note.
“
Mortgage Loan
” means a Ginnie Mae Mortgage Loan, a Fannie Mae Mortgage Loan or a Freddie Mac Mortgage Loan.
“
Mortgage Loan Participation Purchase and Sale Agreement
” means that certain Mortgage Loan Participation Purchase and Sale Agreement, dated as of March 25, 2011, between Purchaser and Seller, as the same may be amended, modified or supplemented from time to time.
“
Mortgage Note
” means a promissory note or other evidence of indebtedness of the obligor thereunder, evidencing a Mortgage Loan, and secured by the related Mortgage.
“
Mortgaged Property
” means the real property (or leasehold estate, if applicable) securing repayment of the debt evidenced by a Mortgage Note.
“
Mortgagee
” means the record holder of a Mortgage Note secured by a Mortgage.
“
Mortgagor
” means the obligor or obligors on a Mortgage Note, including any person who has assumed or guaranteed the obligations of the obligor thereunder.
“
Negative Amortization
” means the portion of interest accrued at the Mortgage Interest Rate in any month which exceeds the Monthly Payment on the related Mortgage Loan for such month and which, pursuant to the terms of the Mortgage Note, is added to the principal balance of the Mortgage Loan.
“
Notice Date
” shall have the meaning assigned thereto in Section 3(b) hereof.
“
Obligations
” means (a) all amounts due an payable by Seller to Purchaser in connection with a Transaction hereunder, together with interest thereon (including interest which would be payable as post‑petition interest in connection with any bankruptcy or similar proceeding) and other obligations and liabilities of Seller to Purchaser arising under, or in connection with, the Program Documents or directly related to the Purchased Assets, whether now existing or hereafter arising; (b) any and all sums paid by Purchaser or on behalf of Purchaser pursuant to the Program Documents in order to preserve any Purchased Asset or its interest therein; (c) in the event of any proceeding for the collection or enforcement of any of Seller's indebtedness, obligations or liabilities referred to in clause (a), the reasonable expenses of retaking, holding, collecting, preparing for sale, selling or otherwise disposing of or realizing on any Purchased Asset, or of any exercise by Purchaser of its rights under the Program Documents, including without limitation, reasonable attorneys' fees and disbursements and court costs; and (d) all of Seller's indemnity obligations to Purchaser pursuant to the Program Documents.
“
Originator
” means Seller or any other third party originator as mutually agreed upon by Agent and Seller.
“
Origination Date
” means the date on which a Mortgage Loan was originated.
“
Other Taxes
” shall have the meaning assigned thereto in Section 8(b).
“
OTS
” means Office of Thrift Supervision or any successor thereto.
“
Parent Company
”: A corporation or other entity owning at least 50% of the outstanding shares of voting stock of Seller.
“
Person
” means any legal person, including any individual, corporation, partnership, association, joint stock company, trust, limited liability company, unincorporated organization, governmental entity or other entity of similar nature.
“
Price Differential
” means, with respect to any Purchased Asset or Transaction as of any date of determination, an amount equal to the product of (A) the Pricing Rate (or during the continuation of an Event of Default, by daily application of the Default Spread) and (B) the Purchase Price for such Purchased Asset or Transaction. Price Differential will be calculated in accordance with Section 3(e) herein for the actual number of days elapsed during the applicable Accrual Period on a 360‑day basis.
“
Price Differential Determination Date
” means, with respect to any Monthly Payment Date, the second (2
nd
) Business Day preceding such date.
“
Pricing Rate
” means, as of any date of determination and with respect to an Accrual Period for any Purchased Asset or Transaction, an amount equal to the sum of (i) LIBOR
plus
(ii) the Applicable Margin.
“
Pricing Side Letter
” means that certain Pricing Side Letter, dated as of March 25, 2011, between Seller and Purchaser, entered into in connection with this Agreement, as the same may be amended, modified or supplemented from time to time.
“
Program Documents
” means
this Agreement, the Pricing Side Letter, the Custodial Agreement, the Collection Account Control Agreement, any assignment of Hedge Instrument, the Electronic Tracking Agreement, the Master Netting Agreement, the Fannie Mae Agreement, the Freddie Mac Agreement, the Wire Confirmation, any Backup Servicer Agreement, the EPF Program Documents and all other agreements, documents and instruments entered into by Seller on the one hand, and Purchaser or one of its Affiliates (or Custodian on its behalf) and/or Agent or one of its Affiliates on the other, in connection herewith or therewith with respect to the transactions contemplated hereunder or thereunder and all amendments, restatements, modifications or supplements thereto.
“
Property
” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.
“
Purchase Date
” means, with respect to each Transaction, the date on which Purchased Assets are sold by Seller to the Purchaser or its designee hereunder.
“
Purchase Price
” means the price at which Purchased Assets subject to a Transaction are sold by Seller to Purchaser or its designee on a Purchase Date (which includes a mutually negotiated premium allocable to the portion of the related Purchased Assets that constitutes the related Servicing Rights), which shall (unless otherwise agreed to by the Seller and Purchaser) be equal to the lesser of (i) 98% of the unpaid principal balance of such Purchased Assets as of such date of determination and (ii) the product of the applicable Purchase Price Percentage multiplied by the Market Value of such Purchased Assets as of such date of determination.
“
Purchase Price Percentage
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Purchased Assets
” means all of the following Eligible Mortgage Loans sold by Seller to Purchaser in a Transaction, whether now existing or hereafter acquired: (i) the Mortgage Loans, (ii) the Servicing Rights, (iii) Seller's rights under any related Hedge Instruments to the extent related to the Mortgage Loans, (iv) such other Property, rights, titles or interest as are specified on the related Transaction Notice, (v) all mortgage guarantees and insurance relating to the individual Mortgage Loans (issued by governmental agencies or otherwise) or the related Mortgaged Property and any mortgage insurance certificate or other document evidencing such mortgage guarantees or insurance and all claims and payments related to the Mortgage Loans, (vi) all guarantees or other support for the Mortgage Loans, (vii) all rights to Income and the rights to enforce such payments arising from the Mortgage Loans and any other contract rights, payments, rights to payment (including payments of interest or finance charges) with respect thereto, (viii) all Takeout Commitments and Trade Assignments (including the rights to receive the related purchase price related therefor), (ix) the Collection Account and all amounts on deposit therein, (x) all Additional Purchased Mortgage Loans, (xi) all “accounts,” “deposit accounts,” “securities accounts,” “chattel paper,” “commercial tort claims,” “deposit accounts,” “documents,” “general intangibles,” “instruments,” “investment property,” and “securities accounts,” relating to the foregoing as each of those terms is defined in the Uniform Commercial Code and all cash and cash equivalents and all products and proceeds relating to or constituting any or all of the foregoing, (xii) any purchase
agreements or other agreements or contracts relating to or constituting any or all of the foregoing, (xiii) any other collateral pledged or otherwise relating to any or all of the foregoing, together with all files, material documents, instruments, surveys (if available), certificates, correspondence, appraisals, computer records, computer storage media, accounting records and other books and records relating to the foregoing, and (xiv) any and all replacements, substitutions, distributions on, or proceeds with respect to, any of the foregoing. The term “Purchased Assets” with respect to any Transaction at any time also shall include Additional Purchased Mortgage Loans delivered pursuant to Section 7(b) hereof.
“
Purchaser
” shall have the meaning set forth in the preamble hereof.
“
Purchaser's Wire Instructions
” shall have the meaning set forth in the Pricing Side Letter.
“
Records
” means all instruments, agreements and other books, records, and reports and data generated by other media for the storage of information maintained by Seller or any other person or entity with respect to a Purchased Asset. Records shall include, without limitation, the Mortgage Notes, any Mortgages, the Mortgage Loan Files, the Servicing Files, and any other instruments necessary to document or service an Asset that is a Purchased Asset, including, without limitation, the complete payment and modification history of each Asset that is a Purchased Asset.
“
REO Property
” means a residential real property including land and improvements, together with all buildings, fixtures and attachments thereto, all insurance proceeds, liquidation proceeds, condemnation proceeds, and all other rights, benefits, proceeds and obligations arising from or in connection therewith.
“
Repurchase Date
” means, with respect to any Transaction, the earliest of (i) the Termination Date, (ii) the date set forth in the related Transaction Notice as the scheduled Repurchase Date, (iii) the second Business Day following Seller's written notice to Purchaser requesting a repurchase of such Transaction or (iv) at the conclusion of the Maximum Time on Facility for each such Transaction, or if such day is not a Business Day, the immediately following Business Day.
“
Repurchase Price
” means the price at which Purchased Assets are to be transferred from Purchaser or its designee to Seller upon termination of a Transaction, which will be determined in each case as the sum of: (i) any portion of the Purchase Price not yet repaid to Purchaser, (ii) the Price Differential accrued and unpaid thereon, (iii) Breakage Costs, if any, and (iv) any accrued and unpaid fees or expenses or indemnity amounts and any other outstanding amounts owing under the Program Documents from Seller to Purchaser.
“
Request for Release of Documents
” shall mean the Request for Release of Documents set forth as
Exhibit 15
to the Custodial Agreement, as applicable.
“
Requirement of Law
” means as to any Person, the certificate of incorporation and by‑laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.
“
Restricted Mortgage Loan
” means (i) a “Growing Equity Loan,” “Manufactured Home Loan,” “Graduated Payment Loan,” “Buydown Loan,” “Project Loan,” “Construction Loan” or “HECM Loan,” each as defined in the applicable Agency Guide, (ii) a 30+ Day Delinquent Mortgage Loan, (iii) a Mortgage Loan for which the related Escrow Payments have not been made by the next succeeding Due Date, or (iv) a High Cost Mortgage Loan.
“
SEC
” shall have the meaning ascribed thereto in Section 35.
“
Section 404 Notice
” means the notice required pursuant to Section 404 of the Helping Families Save Their Homes Act of 2009 (P.L. 111-22), which amends 15 U.S.C. Section 1641
et seq.
, to be delivered by a creditor that is an owner or an assignee of a Mortgage Loan to the related Mortgagor within thirty (30) days after the date on which such Mortgage Loan is sold or assigned to such creditor.
“
Security
” means a Ginnie Mae Security, a Fannie Mae Security or a Freddie Mac Security, as applicable.
“
Seller
” shall have the meaning set forth in the preamble hereof.
“
Seller Mortgage Loan Schedule
” means the list of Purchased Assets proposed to be purchased by Purchaser, in the form of
Exhibit H
hereto, that will be delivered in an excel spreadsheet format by Seller to Purchaser and Custodian together with each Transaction Notice and attached by the Custodian to the related Certified Mortgage Loan Trust Receipt.
“
Servicer
” means any servicer approved by Agent in its sole discretion, which may be Seller.
“
Servicing File
” means with respect to each Mortgage Loan, the file retained by Seller or its designee consisting of all documents that a prudent originator and servicer would include (including copies of the Mortgage Loan File), all documents necessary to document and service the Mortgage Loans and any and all documents required to be delivered in connection with any transfer of servicing pursuant to the Program Documents.
“
Servicing Records
” means with respect to a Mortgage Loan, the related servicing records, including but not limited to any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of such Mortgage Loan.
“
Servicing Rights
” means contractual, possessory or other rights of Seller or any other Person to administer or service a Mortgage Loan or to possess the Servicing File.
“
Servicing Term
” shall have the meaning assigned thereto in Section 16(b).
“
Set Off Eligible Agreement
” means any lending or hedging agreement (including, without limitation, the Master Repurchase Agreement) entered into between Seller or any of its Subsidiaries on the one hand, and Purchaser or any of its Affiliates on the other hand. For avoidance of doubt, Purchaser agrees that any flow agreement for the purchase and sale of Mortgage Loans (other than the Mortgage Loan Participation Purchase and Sale Agreement) or any securitization, debt or equity transaction with respect to which Purchaser or any of its Affiliates acts as underwriter, placement agent, securities administrator or in a similar capacity shall not constitute a Set Off Eligible Agreement.
“
Settlement Agent
” means, with respect to any Transaction the subject of which is a Wet-Ink Mortgage Loan, the entity approved by Agent, in its sole good-faith discretion, which may be a title company, escrow company or attorney in accordance with local law and practice in the jurisdiction where the related Wet-Ink Mortgage Loan is being originated.
“
Settlement Date
” means the date specified in a Takeout Commitment upon which the related Security is scheduled to be delivered to the specified Takeout Investor on a “delivery versus payment” basis.
“
Strict Compliance
” means compliance of Seller and the Mortgage Loans with the requirements of the Agency Guide as amended by any agreements between Seller and the Applicable Agency, sufficient to enable Seller to issue and to service and Ginnie Mae to guarantee or Fannie Mae or Freddie Mac to issue and guarantee a Security; provided, that until copies of any such agreements between Seller and the Applicable Agency have been provided to Agent by Seller and agreed to by Agent, such agreements shall be deemed, as between Seller and Purchaser, not to amend the requirements of the Agency Guide.
“
Structuring Fee
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Subsidiary
” means, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or
classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“
Takeout Commitment
” means a fully executed trade confirmation from the related Takeout Investor to Seller confirming the details of a forward trade between the Takeout Investor and Seller with respect to one or more Purchased Assets, which trade confirmation shall be enforceable and in full force and effect, and shall be validly and effectively assigned to Purchaser pursuant to a Trade Assignment, and relate to pools of Mortgage Loans that satisfy the “good delivery standards” of the Securities Industry and Financial Markets Association as set forth in the Securities Industry and Financial Markets Association Uniform Practices Manual, as amended from time to time.
“
Takeout Investor
” means either (i) Barclays Capital, Inc., or any successor thereto, or (ii) any other Person approved by Agent in its sole discretion
“
Taxes
” shall have the meaning assigned thereto in Section 8(a).
“
Tangible Net Worth
” means, with respect to any Person at any date of determination, (i) the Net Worth of such Person and its consolidated Subsidiaries, determined in accordance with GAAP, minus (ii) all intangibles determined in accordance with GAAP (including, without limitation, goodwill, capitalized financing costs and capitalized administration costs but excluding originated and purchased mortgage servicing rights and retained residual securities) and any and all advances to, investments in and receivables held from Affiliates; provided, however, that the non-cash effect (gain or loss) of any mark-to-market adjustments made directly to stockholders' equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the calculation of Tangible Net Worth.
“
Termination Date
” means the earliest to occur of (i) the Maturity Date, (ii) the termination of the Mortgage Loan Participation Purchase and Sale Agreement, (iii) at the option of Purchaser, the occurrence of an Event of Default under this Agreement after the expiration of any applicable grace period and (iv) with respect to the Uncommitted Amount, the fifteenth (15
th
) Business Day after the Purchaser delivers a notice of termination to the Seller.
“
Trade Assignment
” means an assignment to Purchaser of a forward trade between the Takeout Investor and Seller with respect to one or more Purchased Assets, together with the related trade confirmation from the Takeout Investor to Seller that has been fully executed, is enforceable and is in full force and effect and confirms the details of such forward trade.
“
Transaction
” has the meaning assigned thereto in Section 1.
“
Transaction Notice
” means a written request of Seller to enter into a Transaction in a form attached as
Exhibit C
hereto or such other form as shall be mutually agreed upon between Seller and Purchaser, which is delivered to the Purchaser in accordance with Section 3(c) herein.
“
Uncommitted Amount
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Uniform Commercial Code
” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non-perfection of the security interest in any Purchased Assets or the continuation, renewal or enforcement thereof is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection.
“
Unrestricted Cash
” means, as of any date of determination, the sum of (i) Seller's cash, (ii) Seller's Cash Equivalents that are not, in either case, subject to a Lien in favor of any Person or that are not required to be reserved by Seller in a restricted escrow arrangement or other similarly restricted arrangement pursuant to a contractual agreement or requirement of law.
“
Warehouse Lender
” means any lender providing financing to Seller for the purpose of warehousing, originating or purchasing a Mortgage Loan, which lender has a security interest in such Mortgage Loan to be purchased by Purchaser.
“
Warehouse Lender's Release
” means a letter, in the form of
Exhibit E
, from a Warehouse Lender to Purchaser, unconditionally releasing all of Warehouse Lender's right, title and interest in certain Mortgage Loans identified therein upon payment to the Warehouse Lender.
“
Wet-Ink Mortgage Loan
” means a Mortgage Loan that Seller is selling to Purchaser simultaneously with the origination thereof that is funded as part, either directly or indirectly, with the Purchase Price paid by Purchaser hereunder and prior to receipt by Purchaser or its Custodian of the original Mortgage Note.
“
Wet-Ink Mortgage Loan Document Receipt Date
” means for any Wet-Ink Mortgage Loan, the date that the Custodian executes an original trust receipt without exceptions.
“
Wet-Ink Mortgage Loan Funding Report
” means a report generated by Seller and delivered to Purchaser and Bank no later than 2:00 p.m. (New York City time) on the Purchase Date with respect to which Wet-Ink Mortgage Loans are proposed to be sold hereunder, which sets forth the wire instructions and federal reference numbers relating to Seller's remittance of the full loan amount to the closing table for such Wet-Ink Mortgage Loans, and any other information reasonably requested by Purchaser or Agent and Bank.
“
Wet-Ink Mortgage Loan Funding Confirmation
” means a confirmation generated by Bank and delivered to Purchaser, Seller and Custodian in connection with each purchase of Wet-Ink Mortgage Loans, which confirms that Seller has remitted the full loan amount to the closing table with respect to up to five (5) such Wet-Ink Mortgage Loans.
“
Wet-Ink Mortgage Loan Sublimit
” shall have the meaning assigned thereto in the Pricing Side Letter.
(a)
Interpretation
.
Headings are for convenience only and do not affect interpretation. The following rules of this subsection (b) apply unless the context requires otherwise. The singular includes the plural and conversely. A gender includes all genders. Where a word or phrase is defined, its other grammatical forms have a corresponding meaning. A reference to a subsection, Section, Annex or Exhibit is, unless otherwise specified, a reference to a section of, or annex or exhibit to, this Agreement. A reference to a party to this Agreement or another agreement or document includes the party's successors and permitted substitutes or assigns. A reference to an agreement or document is to the agreement or document as amended, modified, novated, supplemented or replaced, except to the extent prohibited by any Program Document. A reference to legislation or to a provision of legislation includes any modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it. A reference to writing includes a facsimile transmission and any means of reproducing words in a tangible and permanently visible form. A reference to conduct includes, without limitation, an omission, statement or undertaking, whether or not in writing. An Event of Default exists until it has been waived in writing by Purchaser or has been cured. The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “including” is not limiting and means “including without limitation.” In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including,” the words “to” and “until” each mean “to but excluding,” and the word “through” means “to and including.” This Agreement may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms. Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied. References herein to “fiscal year” and “fiscal quarter” refer to such fiscal periods of Seller.
Except where otherwise provided in this Agreement, any determination, consent, approval, statement or certificate made or confirmed in writing with notice to Seller by Purchaser or an authorized officer of Purchaser as required by this Agreement is conclusive in the absence of manifest error. A reference to an agreement includes a
security interest, guarantee, agreement or legally enforceable arrangement whether or not in writing related to such agreement.
A reference to a document includes an agreement in writing or a certificate, notice, instrument or document, or any information recorded in electronic form. Where Seller is required to provide any document to Purchaser under the terms of this Agreement, the relevant document shall be provided in writing or printed form unless Purchaser requests otherwise.
This Agreement is the result of negotiations among, and has been reviewed by counsel to, Purchaser and Seller, and is the product of all parties. In the interpretation of this Agreement, no rule of construction shall apply to disadvantage one party on the ground that such party proposed or was involved in the preparation of any particular provision of this Agreement or this Agreement itself. Except where otherwise expressly stated, Purchaser may give or withhold, or give conditionally, approvals and consents and may form opinions and make determinations in its absolute sole discretion. Except as specifically required herein, any requirement of good faith, discretion or judgment by Purchaser or Agent shall not be construed to require Purchaser to request or await receipt of information or documentation not immediately available from or with respect to Seller, any other Person or the Purchased Assets themselves.
(a)
It is acknowledged and agreed that, notwithstanding any other provision of this Agreement to the contrary, the facility provided under this Agreement is (i) a committed facility with respect to the Committed Amount and (ii) an uncommitted facility with respect to the Uncommitted Amount, and Purchaser shall have no obligation to enter into any Transactions hereunder with respect to the Uncommitted Amount. All purchases of Mortgage Loans hereunder shall be first deemed committed up to the Committed Amount and then the remainder, if any, shall be deemed uncommitted up the Uncommitted Amount.
(b)
Subject to the terms and conditions of the Program Documents, Purchaser may enter into Transactions
provided
,
that
the Aggregate MRA Purchase Price shall not exceed, as of any date of determination, the lesser of (a) the Maximum Aggregate Purchase Price (less the Aggregate EPF Purchase Price) and (b) the Asset Base.
(c)
With respect to the purchase of any Eligible Mortgage Loans (other than Wet-Ink Mortgage Loans) Seller shall deliver, no later than 3:00 p.m. (New York City time) one (1) Business Day prior to the proposed Purchase Date (and with respect to Wet-Ink Mortgage Loans, Seller shall deliver, no later than 2:00 p.m. (New York City time) on the proposed Purchase Date) (the date on which such notice is so given, the “
Notice Date
;” provided, that with respect to any such Eligible Mortgage Loans, if such notice is given after 3:00 p.m. (New York City time) one (1) Business Day prior to the proposed Purchase Date or 2:00 p.m. (New York City time) on the proposed Purchase Date, respectively, the Notice Date shall be deemed to be the next succeeding Business Day and the proposed Purchase Date shall be no earlier than one (1) Business Day after the date on which such notice is given), the following:
(i)
with respect to Eligible Mortgage Loans, a Seller Mortgage Loan Schedule to Purchaser and Custodian;
(ii)
with respect to Eligible Mortgage Loans, a Transaction Notice to Purchaser and Custodian;
(iii)
with respect to Eligible Mortgage Loans that are Wet-Ink Mortgage Loans, a Wet-Ink Mortgage Funding Report Purchaser and Bank; and
(iv)
with respect to Eligible Mortgage Loans that are not Wet-Ink Mortgage Loans, the complete Mortgage Loan Files to Custodian for each Mortgage Loan subject to such Transaction. With respect to each Wet-Ink Mortgage Loan, immediately following the Purchase Date, Seller shall cause the related Settlement Agent to deliver to the Custodian the remaining documents in the Mortgage Loan File.
In addition, with respect to the purchase of any Eligible Mortgage Loans that are Wet-Ink Mortgage Loans, Seller shall deliver to Purchaser and Custodian, no later than 5:00 p.m. (New York City time) one (1) Business Day prior to the proposed Purchase Date, the estimated Purchase Price (the “
Estimated Purchase Price
”) of the Wet-Ink Mortgage Loans to be purchased on such Purchase Date within a variance not to exceed $5,000,000 of the actual Purchase Price on such Purchase Date (the “
Allowable Variance
”).
(d) Upon Seller's request to enter into a Transaction pursuant to Section 3(c) and assuming all conditions precedent set forth in this Section 3 and in Sections 10(a) and (b) have been met, and provided no Default or Event of Default shall have occurred and be continuing, on the requested Purchase Date, Purchaser shall, in the case of a Transaction with respect to the Committed Amount and may, in its sole discretion, in the case of a Transaction with respect to the Uncommitted Amount, purchase the Eligible Mortgage Loans included in the related Transaction Notice by transferring the Purchase Price (net of any related Structuring Fee or any other fees and expense then due and payable by Seller to Purchaser pursuant to the Agreement) in accordance with the following wire instructions or as otherwise provided:
Receiving Bank:
ABA#:
Account Name:
Account Number:
Attention:
Seller acknowledges and agrees that the Purchase Price includes a mutually negotiated premium allocable to the portion of the Purchased Assets that constitutes the related Servicing Rights.
(e) On the related Price Differential Determination Date, Agent shall calculate the Price Differential for each outstanding Transaction payable on the Monthly Payment Date utilizing the Pricing Rate. Not less than two (2) Business Days prior to each Monthly Payment Date, Agent shall provide Seller with an invoice for the amount of the Price Differential due and payable with respect to all outstanding Transactions, setting forth the calculations thereof in reasonable detail and all accrued fees and expenses then due and owing to Purchaser. On the earliest of (1) the Monthly Payment Date or (2) the Termination Date, Seller shall pay to Purchaser the Price Differential then due and payable for (x) all outstanding Transactions and (y) Purchased Assets for which Purchaser has received the related Repurchase Price (other than Price Differential) pursuant to Section 3(f).
(f) With respect to a Transaction, upon the earliest of (1) the Repurchase Date and (2) the Termination Date, Seller shall pay to Purchaser the related Repurchase Price (other than the related accrued Price Differential) together with any other Obligations then due and payable, and shall repurchase all Purchased Assets then subject to such Transaction. The Repurchase Price shall be transferred directly to Purchaser.
(g) If Agent determines in its sole discretion that any Change in Law or any change in accounting rules regarding capital requirements has the effect of reducing the rate of return on Purchaser's capital or on the capital of any Affiliate of Purchaser under this Agreement as a consequence of such Change in Law or change in accounting rules, then from time to time Seller will compensate Purchaser or Purchaser's Affiliate, as applicable, for such reduced rate of return suffered as a consequence of such Change in Law or change in accounting rules on terms similar to those imposed by Purchaser. Further, if due to the introduction of, any change in, or the compliance by Purchaser with (i) any eurocurrency reserve requirement, or (ii) the interpretation of any law, regulation or any guideline or request from any central bank or other Governmental Authority whether or not having the force of law, there shall be an increase in the cost to Purchaser or any Affiliate of Purchaser in engaging in the present or any future Transactions, then Seller shall, from time to time and upon demand by Purchaser, compensate Purchaser or Purchaser's Affiliate for such increased costs, and such amounts shall be deemed a part of the Obligations hereunder. Purchaser shall provide Seller with notice as to any such Change in Law, change in accounting rules or change in compliance promptly following Purchaser's receipt of actual knowledge thereof.
(h) Seller shall indemnify the Purchaser and hold the Purchaser harmless from any losses, costs and/or expenses which the Purchaser may sustain or incur as a result of Seller's termination of any Transaction on or before a Repurchase Date arising from the reemployment of funds obtained by the Purchaser hereunder or from actual out of pocket fees and expenses payable to terminate the deposits from which such funds were obtained (“
Breakage Costs
”). Purchaser and Agent shall use good faith efforts to mitigate all Breakage Costs. The Agent shall deliver to Seller a statement setting forth the amount and basis of determination of any Breakage Costs in such detail as determined in good faith by the Purchaser to be adequate, it being agreed that such statement and the method of its calculation shall be adequate and shall be conclusive and binding upon Seller, absent manifest error. The provisions of this Section 3(h) shall survive termination of this Agreement.
4.
CONFIRMATION
In the event that parties hereto desire to enter into a Transaction on terms other than as set forth in this Agreement, the parties shall execute a confirmation prior to entering into such Transaction, which confirmation shall be in a form that is mutually acceptable to Purchaser and Seller and shall specify such terms, including, without limitation, the Purchase Date, the Purchase Price, the Pricing Rate therefor and the Repurchase Date (a “
Confirmation
”). Any such Confirmation and the related Transaction Notice, together with this Agreement, shall constitute conclusive evidence of the terms agreed to between Purchaser and Seller with respect to the Transaction to which the Confirmation relates. In the event of any conflict between this Agreement and a Confirmation, the terms of the Confirmation shall control with respect to the related Transaction.
5.
TAKEOUT COMMITMENTS
Seller hereby assigns to Purchaser, free of any security interest, lien, claim or encumbrance of any kind, Seller's rights under each Takeout Commitment to deliver the Purchased Assets specified therein to the related Takeout Investor and to receive the purchase price therefor from such Takeout Investor. Seller shall deliver to Purchaser a duly executed and enforceable Trade Assignment on the date such Trade Assignment is executed by the related Takeout Investor. Subject to Purchaser's rights hereunder, Purchaser agrees that it will satisfy the obligation under the Takeout Commitment to deliver the related Purchased Assets to the Takeout Investor on the date specified therein. Seller understands that, as a result of this Section 5 and each Trade Assignment, Purchaser will succeed to the rights and obligations of Seller with respect to each Takeout Commitment subject to a Trade Assignment, and that in satisfying each such Takeout Commitment, Purchaser, will stand in the shoes of Seller and, consequently, will be acting as a non-dealer in exercising its rights and fulfilling its obligations assigned pursuant to this Section 5 and each Trade Assignment. Each Trade Assignment delivered by Seller to Purchaser shall be delivered by Seller in a timely manner sufficient to enable Purchaser to facilitate the settlement of the related trade on the trade date in accordance with “good delivery standards” of the Securities Industry and Financial Markets Association as set forth in the Securities Industry and Financial Markets Association Uniform Practices Manual, as amended from time to time.
6.
PAYMENT AND TRANSFER
(a)
Unless otherwise agreed by Seller and Purchaser, all transfers of funds hereunder shall be in Dollars in immediately available funds. Seller shall remit (or, if applicable, shall cause to be remitted) directly to Purchaser all payments required to be made by it to Purchaser hereunder or under any other Program Document in accordance with wire instructions provided by Purchaser. Any payments received by Purchaser after 5:00 p.m. (New York City time) shall be applied on the next succeeding Business Day.
7.
MARGIN MAINTENANCE
(a) Agent shall determine the Market Value of the Purchased Assets on a daily basis as determined by Agent in its sole good faith discretion.
(b)
If, as of any date of determination, the product of (i) the lesser of (x) 98% of the unpaid principal balance as of such date of all Purchased Assets then subject to all Transactions and (y) the aggregate Market Value of all Purchased Assets then subject to all Transactions, taking into account the cash then on deposit in the Collection Account, multiplied by (ii) the applicable Purchase Price Percentage is less than the Repurchase Price (less the related Price Differential) for all such Transactions (a “
Margin Deficit
”), then Agent may, by notice to the Seller (as such notice is more particularly set forth below, a “
Margin Call
”), require Seller to transfer to Purchaser or its designee cash or, at Purchaser's option (and provided Seller has additional Eligible Mortgage Loans), additional Eligible Mortgage Loans to Purchaser (“
Additional Purchased Mortgage Loans
”) to cure the Margin Deficit. If the Agent delivers a Margin Call to the Seller on or prior to 11:00 a.m. (New York City time) on any Business Day, then the Seller shall transfer cash or Additional Purchased Mortgage Loans to Purchaser or its designee no later than (i) 5:00 p.m. (New York City time) on the same Business Day. In the event the Agent delivers a Margin Call to Seller after 11:00 a.m. (New York City time) on any Business Day, Seller shall be required to transfer cash or Additional Purchased Mortgage Loans no later than (i) 12:00 p.m. (New York City time) on the next succeeding Business Day.
(c)
Any cash transferred to Purchaser or its designee pursuant to Section 16(f)(ii) herein shall reduce the Repurchase Price of the related Transactions.
(d)
The failure of Purchaser, on any one or more occasions, to exercise its rights hereunder, shall not change or alter the terms and conditions of this Agreement or limit the right of the Purchaser to do so at a later date. Seller and Purchaser each agree that a failure or delay by a Purchaser to exercise its rights hereunder shall not limit or waive Purchaser's rights under this Agreement or otherwise existing by law or in any way create additional rights for Seller.
(e)
For the avoidance of doubt, it is hereby understood and agreed that Seller shall be responsible for satisfying any Margin Deficit existing as a result of any cram down of the unpaid principal balance of any Purchased Asset pursuant to any action by any bankruptcy court.
8.
TAXES; TAX TREATMENT
(a)
All payments made by Seller under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest and additions to tax) with respect thereto imposed by any Governmental Authority therewith or thereon, excluding income taxes, branch profits taxes, franchise taxes or any other tax imposed on net income by the United States, a state or a foreign jurisdiction under the laws of which the Purchaser is organized or of its applicable lending office, or a state or foreign jurisdiction with respect to which Purchaser has a present or former connection, or any political subdivision thereof (collectively, “
Taxes
”), all of which shall be paid by Seller for its own account not later than the date when due. If Seller is required by law or regulation to deduct or withhold any Taxes from or in respect of any amount payable hereunder, it shall: (a) make such deduction or withholding, (b) pay the amount so deducted or withheld to the appropriate Governmental Authority not later than the date when due, (c) deliver to the Purchaser, promptly, original tax receipts and other evidence satisfactory to Purchaser of the payment when due of the full amount of such Taxes; and (d) pay to the Purchaser such additional amounts as may be necessary so that the Purchaser receives, free and clear of all Taxes, a net amount equal to the amount it would have received under this Agreement, as if no such deduction or withholding had been made.
(b)
In addition, Seller agrees to pay to the relevant Governmental Authority in accordance with applicable law any current or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies (including, without limitation, mortgage recording taxes, transfer taxes and similar fees) imposed by the United States or any taxing authority thereof or therein that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement (“
Other Taxes
”).
(c)
Seller agrees to indemnify Purchaser for the full amount of Taxes (including additional amounts with respect thereto) and Other Taxes, and the full amount of Taxes of any kind imposed by any jurisdiction on amounts payable under this Section 8, and any liability (including penalties, interest and expenses arising thereon or with respect thereto) arising therefrom or with respect thereto, provided that Purchaser shall have provided Seller with evidence, reasonably satisfactory to Seller, of payment of Taxes or Other Taxes, as the case may be.
(d)
Agent and any Purchaser that either (i) is not incorporated under the laws of the United States, any State thereof, or the District of Columbia or (ii) whose name does not include “Incorporated,” “inc.,” “Corporation,” “Corp.,” “P.C.,” “insurance company,” or “assurance company” (a “Foreign Purchaser”) shall provide Seller and Agent with original properly completed and duly executed United States Internal Revenue Service (“IRS”) Forms W-8BEN or W-8ECI or any successor form prescribed by the IRS, certifying that such Person is entitled to benefits under an income tax treaty to which the United States is a party which eliminates withholding tax on payments to it or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States on or prior to the date upon which each such Foreign Purchaser becomes a Purchaser. In addition, the Agent shall be a “qualified intermediary” (as defined in Treasury regulation section 1.1441-1(e)(5)) and provide the Seller with an original properly completed and duly executed IRS Form W-8IMY with “qualified intermediary” checked in Part I and Part II properly completed to provide that the Agent is a “qualified intermediary” for Purchaser with respect to payments under this Agreement and the other Program Documents (with all appropriate attachments) for any amount received on behalf of a Purchaser which eliminates withholding tax on payments to it on or prior to the date it becomes an Agent. Agent and each Foreign Purchaser will resubmit the appropriate form eliminating withholding tax on payments to it on the earliest of (A) the third anniversary of the prior submission, or (B) on or before the expiration of th TAXES; TAX TREATMENT.
(e)
Without prejudice to the survival or any other agreement of Seller hereunder, the agreements and obligations of Seller contained in this Section 8 shall survive the termination of this Agreement. Nothing contained in this Section 8 shall require Purchaser to make available any of their tax returns or other information that it deems to be confidential or proprietary.
(f)
Each party to this Agreement acknowledges that it is its intent solely for purposes of U.S. federal, state and local income and franchise taxes to treat each Transaction as indebtedness of Seller that is secured by the Purchased Assets and that the Purchased Assets are owned by Seller in the absence of an Event of Default by Seller. All parties to this Agreement agree to such treatment and agree to take no action inconsistent with this treatment, unless required by law.
9.
SECURITY INTEREST; PURCHASER'S APPOINTMENT AS ATTORNEY-IN-FACT
(a)
Seller and Purchaser intend that (other than for tax and accounting purposes) the Transactions hereunder be sales to Purchaser of the Purchased Assets and not loans from Purchaser to Seller secured by the Purchased Assets. However, in order to preserve Purchaser's rights under this Agreement in the event that a court or other forum recharacterizes the Transactions hereunder as other than sales, and as security for Seller's performance of all of its Obligations, Seller hereby grants to Purchaser a first priority security interest in the Purchased Assets. Seller acknowledges and agrees that its rights with respect to the Purchased Assets are and shall continue to be at all times junior and subordinate to the rights of Purchaser hereunder.
(b)
Seller hereby irrevocably constitutes and appoints Purchaser and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Seller and in the name of Seller or in its own name, from time to time in Purchaser's discretion, to file such financing statement or statements relating to the Purchased Assets as Purchaser at its option may deem appropriate, and if an Event of Default shall have occurred and be continuing, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be reasonably necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, Seller hereby gives Purchaser the power and right, on behalf of Seller, without assent by, but with
notice to, Seller, to do the following if an Event of Default shall have occurred and be continuing and Purchaser has elected to exercise its remedies pursuant to Section 18 hereof:
(i)
in the name of Seller, or in its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due with respect to any Purchased Assets and to file any claim or to take any other action or initiate and maintain any appropriate proceeding in any appropriate court of law or equity or otherwise deemed appropriate by Purchaser for the purpose of collecting any and all such moneys due with respect to any Purchased Assets whenever payable;
(ii)
to pay or discharge taxes and Liens levied or placed on or threatened against the Purchased Assets;
(iii)
(A) to direct any party liable for any payment under any Purchased Assets to make payment of any and all moneys due or to become due thereunder directly to Purchaser or as Purchaser shall direct, (B) in the name of Seller, or in its own name, or otherwise as appropriate, to directly send or cause the applicable servicer to send “hello” letters, “goodbye” letters in the form of
Exhibit D
, and Section 404 Notices; (C) to ask or demand for, collect, receive payment of and receipt for any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Purchased Assets; (D) to sign and endorse any invoices, assignments, verifications, notices and other documents in connection with any Purchased Assets; (E) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Purchased Assets or any proceeds thereof and to enforce any other right in respect of any Purchased Assets; (F) to defend any suit, action or proceeding brought against Seller with respect to any Purchased Assets; (G) to settle, compromise or adjust any suit, action or proceeding described in clause (F) above and, in connection therewith, to give such discharges or releases as Purchaser may deem appropriate; and (H) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any Purchased Assets as fully and completely as though Purchaser was the absolute owner thereof for all purposes, and to do, at Purchaser's option and Seller's expense, at any time, and from time to time, all acts and things which Purchaser deems necessary to protect, preserve or realize upon the Purchased Assets and Purchaser's Liens thereon and to effect the intent of this Agreement, all as fully and effectively as Seller might do.
Seller hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.
Seller also authorizes Purchaser, from time to time if an Event of Default shall have occurred and be continuing, to execute any endorsements, assignments or other instruments of conveyance or transfer with respect to the Purchased Assets in connection with any sale provided for in Section 18 hereof.
The powers conferred on Purchaser hereunder are solely to protect Purchaser's interests in the Purchased Assets and shall not impose any duty upon it to exercise any such powers. Purchaser shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither Purchaser nor any of its officers, directors, employees or agents shall be responsible to Seller for any act or failure to act hereunder.
10.
CONDITIONS PRECEDENT
(a)
As conditions precedent to the initial Transaction, Purchaser shall have received on or before the related Purchase Date each of the following, in form and substance satisfactory to Purchaser and duly executed by each party thereto (as applicable):
(i)
Each of the Program Documents duly executed and delivered by the parties thereto and being in full force and effect, free of any modification, breach or waiver;
(ii)
Certificates of an officer of Seller attaching certified copies of Seller's certificate of formation, operating agreement and manager resolutions, as applicable, approving the Program Documents and
Transactions thereunder (either specifically or by general resolution), and all documents evidencing other necessary corporate action or governmental approvals as may be required in connection with the Program Documents;
(iii)
Certified copies of good standing certificates from the jurisdictions of organization of Seller, dated as of no earlier than the date which is ten (10) Business Days prior to the Purchase Date with respect to the initial Transaction hereunder;
(iv)
An incumbency certificate of the secretary of Seller certifying the names, true signatures and titles of Seller's representatives who are duly authorized to request Transactions hereunder and to execute the Program Documents and the other documents to be delivered thereunder;
(v)
An opinion of Seller's counsel as to such matters as Purchaser or Agent may reasonably request including, without limitation, with respect to Purchaser's first priority lien on and perfected security interest in the Purchased Assets, a no material litigation, non-contravention, enforceability and corporate opinion with respect to Seller, an opinion with respect to the inapplicability of the Investment Company Act of 1940 to Seller and its Subsidiaries, an opinion that this Agreement constitutes a “repurchase agreement” and a “securities contract” within the meaning of the Bankruptcy Code and an opinion that no Transaction constitutes an avoidable transfer under Section 546(f) of the Bankruptcy Code, in form and substance acceptable to Purchaser and Agent in their reasonable discretion, and from nationally recognized outside counsel acceptable to Purchaser and Agent in their reasonable discretion;
(vi)
Seller shall have paid to Purchaser and Purchaser shall have received all accrued and unpaid fees and expenses owed to Purchaser in accordance with the Program Documents, including without limitation, the Structuring Fee then due and owing pursuant to Section 2 of the Pricing Side Letter, in each case, in immediately available funds, and without deduction, set-off or counterclaim;
(vii)
A copy of the insurance policies required by Section 14(q) of this Agreement;
(viii)
Purchaser and/or Agent shall have completed the due diligence review pursuant to Section 36, and such review shall be satisfactory to Purchaser and Agent in their sole discretion;
(ix)
Evidence that all other actions necessary to perfect and protect Purchaser's interest in the Purchased Assets have been taken, including, without limitation, the establishment of the Collection Account, and duly executed and filed Uniform Commercial Code financing statements acceptable to Purchaser and covering the Purchased Assets on Form UCC1;
(x)
Seller shall have provided evidence, satisfactory to Purchaser and Agent, that Seller's Approvals are in good standing; and
(xi)
Any other documents reasonably requested by Purchaser or Agent.
(b) As conditions precedent to each Transaction (including the initial Transaction), each of the following conditions shall have been satisfied:
(i) Purchaser or its designee shall have received on or before the Purchase Date with respect to Eligible Mortgage Loans that are to be the subject of such Transaction (unless otherwise specified in this Agreement) the following, in form and substance satisfactory to Purchaser and (if applicable) duly executed:
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(A)
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Seller shall have paid to Purchaser and Purchaser shall have received all accrued and unpaid fees and expenses owed to Purchaser in accordance with the Program Documents in immediately available funds, and without deduction, set-off or counterclaim;
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(B)
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The Transaction Notice and Seller Mortgage Loan Schedule with respect to such Purchased Assets, delivered pursuant to Section 3(c);
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(C)
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Such certificates, customary opinions of counsel or other documents as Purchaser or Agent may reasonably request, provided that such opinions of counsel shall not be required routinely in connection with each Transaction but shall only be required from time to time as deemed necessary by Purchaser in its commercially reasonable judgment;
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(D)
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Purchaser shall have received the Structuring Fee in respect of such Transaction then due and owing pursuant to Section 2 of the Pricing Side Letter, in immediately available funds, and without deduction, set-off or counterclaim;
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(E)
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With respect to Mortgage Loans that are not Wet-Ink Mortgage Loans, an original trust receipt executed by the Custodian without exceptions;
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(F)
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Such other certifications of Custodian as are required under Sections 2 and 4 of the Custodial Agreement;
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(G)
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With respect to any table-funded Wet-Ink Mortgage Loan that is the subject of such Transaction, (i) a copy of the Closing Instruction Letter delivered to the applicable Settlement Agent and (ii)(a) a copy of the Closing Protection Letter from the applicable title company, or (b) a copy of the Escrow Instruction Letter signed by the applicable Settlement Agent;
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(H)
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With respect to any Transaction with respect to which there are Wet-Ink Mortgage Loans proposed to be sold, a Wet-Ink Mortgage Loan Funding Confirmation from Bank; and
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(I)
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a duly executed Warehouse Lender's Release from any Warehouse Lender (including any party that has a precautionary security interest in a Mortgage Loan) having a security interest in any Mortgage Loans, substantially in the form of
Exhibit E
, addressed to Purchaser, releasing any and all of its right, title and interest in, to and under such Mortgage Loan (including, without limitation, any security interest that such secured party or secured party's agent may have by virtue of its possession, custody or control thereof) and, to the extent applicable, has filed Uniform Commercial Code termination statements in respect of any Uniform Commercial Code filings made in respect of such Mortgage Loan, and each such Warehouse Lender's Release and Uniform Commercial Code termination statement has been delivered to Purchaser prior to such Transaction and to the Custodian as part of the Mortgage Loan File.
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(ii) No Default or Event of Default shall have occurred and be continuing;
(iii) Purchaser shall not have reasonably determined that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any requirement of law applicable to Purchaser has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Purchaser to enter into Transactions with the applicable Pricing Rate;
(iv) All representations and warranties in the Program Documents shall be true and correct on the date of such Transaction and Seller is in compliance with the terms and conditions of the Program Documents, other than as may be expressly waived by the Purchaser;
(v) The then Aggregate MRA Purchase Price when added to the Purchase Price for the requested Transaction, shall not exceed the lesser of (a) the Maximum Aggregate Purchase Price (less the Aggregate EPF Purchase Price) and (b) the Asset Base;
(vi) The Purchase Price for the requested Transaction shall not be less than $1,000,000;
(vii) Satisfaction of any conditions precedent to the initial Transaction as set forth in clause (a) of this Section 10 that were not satisfied prior to such initial Purchase Date;
(viii) Purchaser shall have determined that all actions necessary to maintain Purchaser's perfected security interest in the Purchased Assets have been taken;
(ix) Purchaser or its designee shall have received any other documents reasonably requested by Purchaser; and
(x) There is no Margin Deficit at the time immediately prior to entering into a new Transaction (other than a Margin Deficit that will be cured contemporaneous with such Transaction in accordance with the provisions of Section 7 hereof).
11.
RELEASE OF PURCHASED ASSETS
Upon timely payment in full of the Repurchase Price and all other Obligations (if any) then owing with respect to a Purchased Asset pursuant to Section 3(f) hereof, unless a Margin Deficit or an Event of Default shall have occurred and be continuing: (a) Purchaser shall be deemed to have terminated any security interest that Purchaser may have in such Purchased Asset, (b) all of Purchaser's right, title and interest in such Purchased Assets shall automatically transfer to Seller, and (c) with respect to such Purchased Asset, Purchaser shall or shall direct Custodian to release such Purchased Asset to Seller. Except as set forth in Sections 16(f)(ii) and 15, Seller shall give at least two (2) Business Days prior written notice to Purchaser if such repurchase shall occur on any date other than the Repurchase Date.
If such a Margin Deficit is applicable, Purchaser shall notify Seller of the amount thereof and Seller may thereupon satisfy the Margin Call in the manner specified in Section 7.
12.
RELIANCE
With respect to any Transaction, Purchaser may conclusively rely upon, and shall incur no liability to Seller in acting upon, any request or other communication that Purchaser reasonably believe to have been given or made by a person authorized to enter into a Transaction on Seller's behalf.
13.
REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants to Purchaser and Agent, and shall on and as of the Purchase Date for any Transaction and on and as of each date thereafter through and including the related Repurchase Date be deemed to represent and warrant to Purchaser and Agent that:
(a)
Due Organization, Qualification, Power, Authority and Due Authorization
. Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and it has qualified to do business in each jurisdiction in which it is legally required to do so. Seller has the power and authority under its certificate of formation, operating agreement and applicable law to enter into this Agreement and the Program Documents and to perform all acts contemplated hereby and thereby or in connection herewith and therewith; this Agreement and the Program Documents and the transactions contemplated hereby and thereby have been duly authorized by all necessary action and do not require any additional approvals or consents or other action by, or any notice to or filing with, any Person other than any that have heretofore been obtained, given or made.
(b)
Noncontravention
. The consummation of the transactions contemplated by this Agreement and Program Documents are in the ordinary course of business of Seller and will not conflict with, result in the breach of or violate any provision of the certificate of formation and operating agreement of Seller or result in the breach of any provision of, or conflict with or constitute a default under or result in the acceleration of any obligation under, any agreement, indenture, loan or credit agreement or other instrument to which Seller, the Mortgage Loans or any of Seller's Property is or may be subject to, or result in the violation of any law, rule, regulation, order, judgment or decree to which Seller, the Mortgage Loans or Seller's Property is subject. Without limiting the generality of the foregoing, the consummation of the transactions contemplated herein or therein will not violate any policy, regulation or guideline of the FHA or VA or result in the voiding or reduction of the FHA insurance, VA guarantee or any other insurance or guarantee in respect of any Mortgage Loan, and such FHA insurance or VA guarantee is in full force and effect or shall be in full force and effect as required by the applicable Agency Guide.
(c)
Legal Proceeding
. There is no action, suit, proceeding, inquiry or investigation, at law or in equity, or before or by any court, public board or body pending or, to Seller's knowledge, threatened against or affecting Seller (or, to Seller's knowledge, any basis therefor) wherein an unfavorable decision, ruling or finding would adversely affect the validity or enforceability of this Agreement, the Program Documents or any agreement or instrument to which Seller is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby, would adversely affect the proceedings of Seller in connection herewith or would or could materially and adversely affect Seller's ability to carry out its obligations hereunder.
(d)
Valid and Binding Obligations
. This Agreement, the Program Documents and every other document to be executed by Seller in connection with this Agreement is and will be legal, valid, binding and subsisting obligations of Seller, enforceable in accordance with their respective terms, except that (A) the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors' rights generally and (B) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
(e)
Financial Statements
. The financial statements of Seller, copies of which have been furnished to Purchaser, (i) are, as of the dates and for the periods referred to therein, complete and correct in all material respects, (ii) present fairly the financial condition and results of operations of Seller as of the dates and for the periods indicated and (iii) have been prepared in accordance with GAAP consistently applied, except as noted therein (subject as to interim statements to normal year‑end adjustments). Since the date of the most recent financial statements, there has been no Material Adverse Change with respect to Seller. Except as disclosed in such financial statements or pursuant to Section 14(i) hereof, Seller is not subject to any contingent liabilities or commitments that, individually or in the aggregate, have a material possibility of causing a Material Adverse Change with respect to Seller.
(f)
Accuracy of Information
. Neither this Agreement nor any representations and warranties or information relating to Seller that Seller has delivered or caused to be delivered to Purchaser, including, but not limited to, all documents related to this Agreement, the Program Documents or Seller's financial statements, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made therein or herein in light of the circumstances under which they were made, not misleading. Since the furnishing of such documents or information, there has been no change, nor any development or event involving a prospective change that would render any of such documents or information untrue or misleading in any material respect.
(g)
No Consents
. No consent, license, approval or authorization from, or registration, filing or declaration with, any regulatory body, administrative agency or other governmental instrumentality, nor any consent, approval, waiver or notification of any creditor, lessor or other non‑governmental Person, is required in connection with the execution, delivery and performance by Seller of this Agreement or any other Program Document, other than any that have heretofore been obtained, given or made.
(h)
Compliance With Law, Etc.
No practice, procedure or policy employed or proposed to be employed by Seller in the conduct of its businesses violates any law, regulation, judgment, agreement, regulatory consent, order or decree applicable to it which, if enforced, would result in a Material Adverse Effect.
(i)
Solvency
. Seller is solvent and will not be rendered insolvent by any Transaction and, after giving effect to each such Transaction, Seller will not be left with an unreasonably small amount of capital with which to engage in its business. Seller does not intend to incur, nor believes that it has incurred, debts beyond its ability to pay such debts as they mature. Seller is not contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of Seller or any of its assets.
(j)
Fraudulent Conveyance.
The amount of consideration being received by Seller in respect of each Transaction, taken as a whole, constitutes reasonably equivalent value and fair consideration for the related Purchased Assets. Seller is not transferring any Purchased Assets with any intent to hinder, delay or defraud any of its creditors. The Agreement and the Program Documents, any other document contemplated hereby or thereby and each transaction have not been entered into fraudulently by Seller hereunder, or with the intent to hinder, delay or defraud any creditor or Purchaser.
(k)
Investment Company Act Compliance
. Neither Seller nor any of its Subsidiaries is required to be registered as an “investment company” as defined under the Investment Company Act or as an entity under the control of an entity required to be registered as an “investment company” as defined under the Investment Company Act.
(l)
Taxes
. Seller has filed all federal and state tax returns which are required to be filed and paid all taxes, including any assessments received by it, to the extent that such taxes have become due (other than for taxes that are being contested in good faith or for which it has established adequate reserves). Any taxes, fees and other governmental charges payable by Seller in connection with a Transaction and the execution and delivery of the Program Documents have been paid.
(m)
Additional Representations
. With respect to each Asset to be sold hereunder by Seller to Purchaser, Seller hereby makes all of the applicable representations and warranties set forth in
Exhibit B
as of the date the related Mortgage Loan File is delivered to Purchaser or the Custodian with respect to the Assets and continuously while such Asset is subject to a Transaction. Further, as of each Purchase Date, Seller shall be deemed to have represented and warranted in like manner that Seller has no knowledge that any such representation or warranty may have ceased to be true in a material respect as of such date, except as otherwise stated in a Transaction Notice, any such exception to identify the applicable representation or warranty and specify in reasonable detail the related knowledge of Seller.
(n)
No Broker
. Seller has not dealt with any broker, investment banker, agent, or other person, except for Purchaser, who may be entitled to any commission or compensation in connection with the sale of Purchased Assets pursuant to this Agreement;
provided
, that if Seller has dealt with any broker, investment banker, agent, or other person, except for Purchaser, who may be entitled to any commission or compensation in connection with the sale of Purchased Assets pursuant to this Agreement, such commission or compensation shall have been paid in full by Seller.
(o)
Good Title
. Seller has not sold, assigned, transferred, pledged or hypothecated any interest in any individual Mortgage Loan to any person other than any sale, assignment, transfer, pledge or hypothecation that is released in conjunction with the sale to Purchaser hereunder, and upon delivery of a Purchased Asset to Purchaser, Purchaser will be the sole owner thereof (other than for tax and accounting purposes), free and clear of any lien, claim or encumbrance other than those arising under this Agreement.
(p)
Approvals
. Seller has all requisite Approvals.
(q)
Custodian
. The Custodian is an eligible custodian under each Agency Guide and each Agency Program, and is not an Affiliate of Seller.
(r)
No Adverse Actions
. Seller has not received from any Agency a notice of extinguishment or a notice indicating material breach, default or material non-compliance which the Agent reasonably determines may entitle an Agency to terminate, suspend, sanction or levy penalties against the Seller, or a notice from any Agency, HUD, FHA
or VA indicating any adverse fact or circumstance in respect of Seller which the Agent reasonably determines may entitle such Agency, HUD, FHA or VA, as the case may be, to revoke any Approval or otherwise terminate, suspend Seller as an Agency approved issuer or servicer, or with respect to which such adverse fact or circumstance has caused any Agency, HUD, FHA or VA, as the case may be, to terminate Seller, without any subsequent rescission thereof in such notice.
(s)
Mortgage Recordation
. Seller has submitted the original Mortgage in respect of each Mortgage Loan for recordation in the appropriate public recording office in the applicable jurisdictions wherein such recordation is necessary to perfect the lien thereof as against creditors of the applicable Mortgagor.
(t)
Affiliated Parties
. Seller is not an Affiliate of the Custodian, Settlement Agent or any other party to a Program Document hereunder other than the Agent.
The representations and warranties set forth in this Agreement shall survive transfer of the Purchased Assets to Purchaser and shall continue for so long as the Purchased Assets are subject to this Agreement.
14.
COVENANTS OF SELLER
Seller hereby covenants and agrees with Purchaser and Agent as follows:
(a)
Defense of Title
. Seller warrants and will defend the right, title and interest of Purchaser in and to all Purchased Assets against all adverse claims and demands.
(b)
No Amendment or Compromise
. None of Seller or those acting on Seller's behalf shall amend, modify, or waive any term or condition of, or settle or compromise any claim in respect of, any item of the Purchased Assets, any related rights or any of the Program Documents without the prior written consent of Purchaser, unless such amendment or modification does not (i) affect the amount or timing of any payment of principal or interest payable with respect to a Purchased Asset, extend its scheduled maturity date, modify its interest rate, or constitute a cancellation or discharge of its outstanding principal balance or (ii) materially and adversely affect the security afforded by the real property, furnishings, fixtures, or equipment securing the Purchased Asset. Notwithstanding the foregoing, the Seller may amend, modify or waive any term or condition of the individual Mortgage Loans in accordance with Accepted Servicing Practices and the Agency Guides; provided, that Seller shall promptly notify Purchaser of any amendment, modification or waiver that causes any Mortgage Loan to cease to be an Eligible Mortgage Loan.
(c)
No Assignment
. Except as permitted herein, Seller shall not sell, assign, transfer or otherwise dispose of, or grant any option with respect to, or pledge, hypothecate or grant a security interest in, or Lien on or otherwise encumber (except pursuant to the Program Documents) any of the Purchased Assets or any interest therein,
provided
that this Section 14(c) shall not prevent any of the following: any contribution, sale, assignment, transfer or conveyance of Purchased Assets in accordance with the Program Documents and any forward purchase commitment or other type of take out commitment for the Purchased Assets (without vesting rights in the related purchasers as against Purchaser).
(d)
No Economic Interest
. Neither Seller nor any affiliate thereof will acquire any economic interest in or obligation with respect to any Mortgage Loan except for record title to the Mortgage relating to the Mortgage Loan and the right and obligation to repurchase the Mortgage Loan hereunder.
(e)
Preservation of Purchased Assets
. Seller shall take all actions necessary or, in the opinion of Purchaser, desirable, to preserve the Purchased Assets so that they remain subject to a first priority perfected security interest hereunder and deliver evidence that such actions have been taken, including, without limitation, duly executed and filed Uniform Commercial Code financing statements on Form UCC1. Without limiting the foregoing, Seller will comply with all applicable laws, rules, regulations and other laws of any Governmental Authority applicable to Seller relating to the Purchased Assets and cause the Purchased Assets to comply with all applicable laws, rules, regulations and other laws of any such Governmental Authority. Seller will not allow any default to occur for which Seller is
responsible under any Purchased Assets or any Program Documents and Seller shall fully perform or cause to be performed when due all of its obligations under any Purchased Assets or the Program Documents.
(f)
Maintenance of Papers, Records and Files
(i)
Seller shall maintain all Records relating to the Purchased Assets not in the possession of Custodian in good and complete condition in accordance with industry practices and preserve them against loss. Seller
shall collect and maintain or cause to be collected and maintained all such Records in accordance with industry custom and practice, and all such Records shall be in Purchaser's or Custodian's possession unless Purchaser otherwise approves in writing. Seller will not cause or authorize any such papers, records or files that are an original or an only copy to leave Custodian's possession, except for individual items removed in connection with servicing a specific Mortgage Loan, in which event Seller will obtain or cause to be obtained a receipt from the Custodian for any such paper, record or file, or as otherwise permitted under the Custodial Agreement.
(ii)
For so long as Purchaser has an interest in or Lien on any Purchased Asset, Seller will hold or cause to be held all related Records for the sole benefit of Purchaser.
(iii)
Upon reasonable advance notice from Custodian or Purchaser, Seller shall (x) make any and all such Records available to Custodian or Agent for examination, either by its own officers or employees, or by agents or contractors, or both, and make copies of all or any portion thereof, (y) permit Agent or its authorized agents to discuss the affairs, finances and accounts of Seller with its chief operating officer and chief financial officer and to discuss the affairs, finances and accounts of Seller with its independent certified public accountants.
(g)
Financial Statements and Other Information; Financial Covenants
(i)
Seller shall keep or cause to be kept in reasonable detail books and records setting forth an account of its assets and business and, as applicable, shall clearly reflect therein the transfer of Purchased Assets to Purchaser. Seller shall furnish or cause to be furnished to Purchaser the following:
(1)
Within ninety (90) days after the end of each fiscal year of Seller, the consolidated audited balance sheets of Seller and its consolidated Subsidiaries, which will be in conformity with GAAP, and the related consolidated audited statements of income and changes in equity showing the financial condition of Seller, and its consolidated Subsidiaries as of the close of such fiscal year and the results of operations during such year, and consolidated audited statements of cash flows, as of the close of such fiscal year, setting forth, in each case, in comparative form the corresponding figures for the preceding year. The foregoing consolidated financial statements are to be reported on by, and to carry the unqualified report (acceptable in form and content to Purchaser and Agent) of, an independent public accountant of national standing acceptable to Purchaser and Agent, which shall include KPMG LLP, PricewaterhouseCoopers LLP, Deloitte LLP, and any other similarly situated independent public account;
(2)
Within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of Seller, consolidated unaudited balance sheets and consolidated statements of income and changes in equity and unaudited statement of cash flows, all to be in a form acceptable to Purchaser and Agent, showing the financial condition and results of operations of Seller and its consolidated Subsidiaries, each on a consolidated basis as of the end of each such quarter and for the then elapsed portion of the fiscal year, setting forth, in each case, in comparative form the corresponding figures for the corresponding periods of the preceding fiscal year, certified by a financial officer of Seller (acceptable to Purchaser and Agent) as presenting fairly the financial position and results of
operations of Seller and its consolidated Subsidiaries and as having been prepared in accordance with GAAP consistently applied, in each case, subject to normal year-end audit adjustments;
(3)
Within forty-five (45) days after the end of each month, consolidated unaudited balance sheets and consolidated statements of income and changes in equity and unaudited statement of cash flows, all to be in a form acceptable to Purchaser and Agent, showing the financial condition and results of operations of Seller and its consolidated Subsidiaries on a consolidated basis as of the end of each such month and for the then elapsed portion of the fiscal year, setting forth, in each case, in comparative form the corresponding figures for the corresponding month of the preceding fiscal year, certified by a financial officer of Seller (acceptable to Purchaser and Agent) as presenting fairly the financial position and results of operations of Seller and its consolidated Subsidiaries and as having been prepared in accordance with GAAP consistently applied, in each case, subject to normal year-end audit adjustments;
(4)
Promptly upon receipt thereof, a copy of each other report submitted to Seller by its independent public accountants in connection with any annual, interim or special audit of Seller;
(5)
Promptly upon becoming available, copies of all financial statements, reports, notices and proxy statements sent by Seller's Parent Company, Seller or any of Seller's consolidated Subsidiaries in a general mailing to their respective stockholders and of all reports and other material (including copies of all registration statements under the Securities Act of 1933, as amended) filed by any of them with any securities exchange or with the SEC or any governmental authority succeeding to any or all of the functions of the SEC;
(6)
Promptly upon becoming available, copies of any press releases issued by Seller's Parent Company or Seller and copies of any annual and quarterly financial reports and any reports on Form H-(b)12 that Seller's Parent Company or Seller may be required to file with the SEC, the FDIC or the OTS or comparable reports which such Parent Company or Seller may be required to file with the SEC, the FDIC or the OTS or any other federal banking agency containing such financial statements and other information concerning such Parent Company's or Seller's business and affairs as is required to be included in such reports in accordance with the rules and regulations of the SEC, the OTS, the FDIC or such other banking agency, as may be promulgated from time to time;
(7)
Such supplements to the aforementioned documents and such other information regarding the operations, business, affairs and financial condition of Seller's Parent Company, Seller or any of Seller's consolidated Subsidiaries as Purchaser may request.
Seller's obligation to deliver any report or other document under this Section 14(g)(i)(A) shall be deemed to have been satisfied if, and as of the date, such report or other document is filed with the SEC pursuant to the SEC's Electronic Data Gathering & Analysis Recovery system.
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(A)
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Warehouse Capacity
. On or prior to the date on which Seller is required to deliver the monthly financial report required Section 14(g)(i)(A)(iii), Seller shall provide to Agent a report detailing its total warehouse capacity and utilization for the prior calendar month. Such warehouse capacity shall be (i) issued directly to Seller, (ii) adequate to fund Seller's average sixty (60) day origination production pipeline and (iii) in an amount equal to or greater than $1,000,000 or such other amount as may be required by a Governmental Authority.
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(B)
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Other Information
. Upon the request of Purchaser or Agent, such other information or reports as Purchaser or Agent may from time to time reasonably request.
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(ii)
Seller shall comply with the following financial covenants:
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(A)
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Seller's Tangible Net Worth shall at all times exceed $150,000,000;
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(B)
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the ratio of Seller's total Indebtedness to Tangible Net Worth shall not at any time exceed 12:1; and
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(C)
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Seller's Liquidity shall not be less than $20,000,000 as of the last day of any calendar month.
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(iii)
Certifications
. Seller shall execute and deliver a monthly certification substantially in the form of
Exhibit A
attached hereto within ten (10) days after the end of each calendar month.
(h)
Agency Reporting
. Seller shall comply with the reporting requirements of each Agency Guide.
(i)
Notice of Material Events
. Seller shall promptly inform Purchaser and Agent in writing of any of the following:
(i)
any Default, Event of Default by Seller or any other Person (other than Purchaser or Purchaser's Affiliates) of any material
obligation under any Program Document, or the occurrence or existence of any event or circumstance that Seller reasonably expects will with the passage of time become a Default, Event of Default by Seller or any other Person;
(ii)
any material change in the insurance coverage of Seller as required to be maintained pursuant to Section 14(q) hereof, or any other Person pursuant to any Program Document, with copy of evidence of same attached;
(iii)
the commencement of, or any determination in, any material dispute, litigation, investigation, proceeding, sanctions or suspension between Seller or its Parent Company, on the one hand, and any Governmental Authority or any other Person, on the other;
(iv)
any material change in accounting policies or financial reporting practices of Seller which could reasonably be expected to have a Material Adverse Effect;
(v)
any event, circumstance or condition that has resulted, or has a reasonable likelihood of resulting in either a Material Adverse Change or a Material Adverse Effect with respect to Seller;
(vi)
any material modifications to the Seller's underwriting or acquisition guidelines;
(vii)
any financial covenants or margin maintenance requirements Seller becomes subject to or any change or modification to, or waiver of compliance with, any financial covenants or margin maintenance requirements Seller is obligated to comply with, in either case, under any agreement for Indebtedness;
(viii)
any penalties, sanctions or charges levied, or threatened to be levied, against Seller or any change, or threatened change, in Approval status, or actions taken, or threatened to be taken, against Seller by or disputes between Seller and any Applicable Agency, or any supervisory or regulatory Government Authority (including, but not limited to HUD, FHA and VA) supervising or regulating the origination or servicing of mortgage loans by, or the issuer status of, Seller;
(ix)
any Change in Control of Seller; or
(x)
promptly after Seller becoming aware of any termination or threatened termination by an Agency of the Custodian as an eligible custodian.
(j)
Maintenance of Approvals
. Seller shall take all necessary actions to maintain its Approvals at all times during the term of this Agreement. If, for any reason, Seller ceases to maintain any such Approval, Seller shall so notify Purchaser and Agent immediately.
(k)
Maintenance of Licenses
. Seller shall (i) maintain all licenses, permits or other approvals necessary for Seller to conduct its business and to perform its obligations under the Program Documents, (ii) remain in good standing under, and comply in all material respects with, all laws of each state in which it conducts business or any Mortgaged Property is located, and (iii) conduct its business strictly in accordance with applicable law.
(l)
Taxes, Etc
. Seller shall pay and discharge or cause to be paid and discharged, when due all taxes, assessments and governmental charges or levies imposed upon it or upon its income and profits or upon any of its Property, real, personal or mixed (including without limitation, the Purchased Assets) or upon any part thereof, as well as any other lawful claims which, if unpaid, might become a Lien upon such properties or any part thereof, except for any such taxes, assessments and governmental charges, levies or claims as are appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves are provided. Seller shall file on a timely basis all federal, and state and local tax and information returns, reports and any other information statements or schedules required to be filed by or in respect of it.
(m)
Nature of Business
. Seller shall not make any material change in the nature of its business as carried on at the date hereof.
(n)
Limitation on Distributions
. Seller shall have the right to pay dividends so long as Seller remains in compliance with the financial covenants set forth in Section 14(g)(ii) immediately following such dividend distribution. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing, Seller shall not make any payment of any dividends or make distributions on account of, or set apart assets for a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of, any capital stock, senior or subordinate debt of Seller or other equity interests, respectively, thereof, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or Property or in obligations of Seller.
(o)
Use of Custodian
. Without the prior written consent of Purchaser, Seller shall use no third party custodian as document custodian other than the Custodian for the Mortgage Loan File relating to the Mortgage Loans.
(p)
Merger of Seller
. Seller shall not, at any time, directly or indirectly (i) liquidate or dissolve or enter into any consolidation or merger or be subject to a Change in Control or sell all or substantially all of its Property (other than in connection with an asset-based financing or other secondary market transaction related to the Seller's assets in the ordinary course of the Seller's business) without providing Purchaser with not less than forty-five (45) days' prior written notice of such event; (ii) form or enter into any partnership, joint venture, syndicate or other combination which would have a Material Adverse Effect with respect to Seller; or (iii) make any Material Adverse Change with respect to Seller.
(q)
Insurance
. Seller shall obtain and maintain insurance with responsible companies in such amounts and against such risks as are customarily carried by business entities engaged in similar businesses similarly situated, including without limitation, the insurance required to be obtained and maintained by each Agency pursuant to the Agency Guides, and will furnish Purchaser on request full information as to all such insurance, and provide within fifteen (15) days after receipt of such request the certificates or other documents evidencing renewal of each such policy. Seller shall continue to maintain coverage, for itself and its Subsidiaries, that encompasses employee dishonesty, forgery or alteration, theft, disappearance and destruction, robbery and safe burglary, Property (other than money and securities), and computer fraud in an aggregate amount of at least such amount as is required by each Agency.
(r)
Affiliate Transaction
. Seller shall not, at any time, directly or indirectly, sell, lease or otherwise transfer any Property or assets to, or otherwise acquire any Property or assets from, or otherwise engage in any transactions with, any of its Affiliates unless the terms thereof are no less favorable to Seller, than those that could be obtained at the time of such transaction in an arm's length transaction with a Person who is not such an Affiliate.
(s)
Change of Fiscal Year
. Seller shall not, at any time, directly or indirectly, except upon ninety (90) days' prior written notice to Purchaser, change the date on which its fiscal year begins from its current fiscal year beginning date.
(t)
Transfer of Servicing Rights, Servicing Files and Servicing
. With respect to the Servicing Rights of each Mortgage Loan, Seller shall transfer such Servicing Rights to Purchaser or its designee on the related Purchase Date. With respect to the Servicing Files and the physical and contractual servicing of each Mortgage Loan to the extent in the possession of Seller, Seller shall deliver such Servicing Files and the physical and contractual servicing to Purchaser or its designee upon the expiration of the Servicing Term unless either such Servicing Term is renewed by Purchaser or the termination of the Seller as servicer pursuant to Section 16. Seller's transfer of the Servicing Rights, Servicing Files and the physical and contractual servicing under this Section shall be in accordance with customary standards in the industry including the transfer of the gross amount of all escrows held for the related Mortgagors (without reduction for unreimbursed advances or “negative escrows”).
(u)
Audit and Approval Maintenance
. Seller shall (i) at all times maintain copies of relevant portions of all final written Agency audits, examinations, evaluations, monitoring reviews and reports of its origination and servicing operations (including those prepared on a contract basis for any such agency) in which there are material adverse findings, including without limitation notices of defaults, notices of termination of approved status, notices of imposition of supervisory agreements or interim servicing agreements, and notices of probation, suspension, or non-renewal, and all necessary approvals from each Agency, (ii) promptly provide Agent with copies of such audits, examinations, evaluations, monitoring reviews and reports promptly upon receipt from any Agency or agent of any Agency, and (iii) take all actions necessary to maintain its respective Approvals.
(v)
MERS
. The Seller is a member of MERS in good standing and current in the payment of all fees and assessments imposed by MERS, and has complied with all rules and procedures of MERS. In connection with the assignment of any Mortgage Loan registered on the MERS System, the Seller agrees that at the request of the Purchaser it will, at the Purchaser's cost and expense prior to the occurrence of an Event of Default, but at the Seller's cost and expense following the occurrence and during the continuance of an Event of Default, cause the MERS System to indicate that such Mortgage Loan has been transferred to the Purchaser in accordance with the terms of this Agreement by including in MERS' computer files (a) the code in the field which identifies the specific owner of the Mortgage Loans and (b) the code in the field “Pool Field” which identifies the series in which such Mortgage Loans were sold. The Seller further agrees that it will not alter codes referenced in this paragraph with respect to any Mortgage Loan at any time that such Mortgage Loan is subject to this Agreement, and the Seller shall retain its membership in MERS at all times during the term of this Agreement.
(w)
Fees and Expenses
. Seller shall timely pay to Purchaser all fees and actual out of pocket expenses required to be paid by Seller hereunder and under any other Program Document to Purchaser in immediately available funds, and without deduction, set-off or counterclaim in accordance with Purchaser's Wire Instructions.
(x)
Agency Status
. Once the Seller or any of its subservicers has obtained any status with an Agency mortgage loan pools for which Seller is issuer or servicer, Seller shall not take or omit to take any act that (i) would result in the suspension or loss of any of such status, or (ii) after which Seller or any such relevant subservicer would no longer be in good standing with respect to such status, or (iii) after which Seller or any such relevant subservicer would no longer satisfy all applicable Agency net worth requirements, if both (x) all of the material effects of such act or omission shall not have been cured by Seller or waived by the applicable Agency before termination of such status and (y) the termination of such status could reasonably be expected to have a Material Adverse Effect.
(y)
Further Documents
. Seller shall, upon request of Purchaser or Agent, promptly execute and deliver to Purchaser or Agent all such other and further documents and instruments of transfer, conveyance and assignment, and shall take such other action as Purchaser or Agent may require more effectively to transfer, convey, assign to and vest in Purchaser and to put Purchaser in possession of the Property to be transferred, conveyed, assigned and delivered hereunder and otherwise to carry out more effectively the intent of the provisions under this Agreement.
(z)
Due Diligence
. Subject to the limitations contained in the Pricing Side Letter and the EPF Pricing Side Letter, Seller will permit Purchaser, Agent or their respective agents or designees to perform due diligence reviews on the Mortgage Loans subject to each Transaction hereunder up to the Due Diligence Review Percentage and within thirty (30) days following the related Purchase Date. Seller shall cooperate in all respects with such diligence and shall provide Purchaser, Agent or their respective agents or designees with all loan files and other information (including, without limitation, Seller's quality control procedures and results) reasonably requested by Purchaser, Agent or their respective agents or designees and shall bear all costs and expenses associated with such due diligence identified in this Section 14(z).
(aa)
Error Rate
. Seller shall at all times maintain an Error Rate as set forth in the Pricing Side Letter.
15.
REPURCHASE OF PURCHASED ASSETS
Upon discovery by Seller of a breach of any of the representations and warranties set forth on
Exhibit B
to this Agreement, Seller shall give prompt written notice thereof to Purchaser. Upon any such discovery by Purchaser, Purchaser will notify Seller. It is understood and agreed that the representations and warranties set forth in
Exhibit B
to this Agreement with respect to the Purchased Assets shall survive delivery of the respective Mortgage Loan Files to the Purchaser or Custodian with respect to the Purchased Assets and shall inure to the benefit of Purchaser. The fact that Purchaser has conducted or have failed to conduct any partial or complete due diligence investigation in connection with their purchase of any Purchased Asset shall not affect Purchaser's right to demand repurchase or any other remedy as provided under this Agreement. Seller shall, within five (5) Business Days of the earlier of Seller's discovery or receipt of notice with respect to any Purchased Asset of (i) any breach of a representation or warranty contained in
Exhibit B
of this Agreement or (ii) any failure to deliver any of the items required to be delivered as part of the Mortgage Loan File within the time period required for delivery pursuant to the Custodial Agreement, promptly cure such breach or delivery failure in all material respects. If within five (5) Business Days after the earlier of Seller's discovery of such breach or delivery failure or receipt of notice thereof that such breach or delivery failure has not been remedied by Seller, Seller shall promptly upon receipt of written instructions from Purchaser, at Purchaser's option, repurchase such Purchased Asset at a purchase price equal to the Repurchase Price with respect to such Purchased Asset by wire transfer to the account designated by Purchaser.
16.
SERVICING OF THE MORTGAGE LOANS; SERVICER TERMINATION
(a)
Seller to Subservice
(i)
Upon payment of the Purchase Price, Purchaser shall own the servicing rights related to the Mortgage Loans including the Mortgage Loan File. Seller and Purchaser each agreed and acknowledges that the Mortgage Loans sold hereunder shall be sold to Purchaser on a servicing released basis, and that Purchaser is engaging and hereby does engage Seller to provide subservicing of each Mortgage Loan for the benefit of Purchaser.
(ii)
So long as a Mortgage Loan is outstanding, Seller shall neither assign, encumber or pledge its obligation to subservice the Mortgage Loans in whole or in part, nor delegate its rights or duties under this Agreement (to other than a subservicer) without the prior written consent of Purchaser, the granting of which consent shall be in the sole discretion of Purchaser. Seller hereby acknowledges and agrees that (i) Purchaser is entering into this Agreement in reliance upon Seller's representations as to the adequacy of its financial standing, servicing facilities, personnel, records, procedures, reputation and integrity, and the continuance thereof; and (ii) Seller's engagement hereunder to provide mortgage servicing for the benefit of Purchaser is
intended by the parties to be a “personal service contract” and Seller is hereunder intended by the parties to be an “independent contractor”.
(iii)
Seller shall subservice and administer the Mortgage Loans on behalf of Purchaser in accordance with Accepted Servicing Practices. Seller shall have no right to modify or alter the terms of any Mortgage Loan or consent to the modification or alteration of the terms of any Mortgage Loan except in Strict Compliance with the related Agency Program. Seller shall at all times maintain accurate and complete records of its servicing of the Mortgage Loans, and Agent may, at any time during Seller's business hours on reasonable notice, examine and make copies of such Servicing Records. Seller agrees that Purchaser is the 100% beneficial owner of all Servicing Records relating to the Mortgage Loans. Seller covenants to hold such Servicing Records for the benefit of Purchaser and to safeguard such Servicing Records and to deliver them promptly to Agent or its designee (including the Custodian) at Agent's request or otherwise as required by operation of this Section 16.
(b)
Servicing Term
. Seller shall subservice such Mortgage Loans for a term of thirty (30) days commencing as of the
related Purchase Date, which term may be extended in writing by Purchaser in its sole discretion, for an additional thirty-day period (each, a “
Servicing Term
”); provided, that Purchaser shall have the right to immediately terminate the Servicer at any time following the occurrence of a Servicer Termination Event. If such Servicing Term is not extended by Purchaser or if Purchaser has terminated Seller as a result of a Servicer Termination Event, Seller shall transfer such servicing to Purchaser or its designee at no cost or expense to Purchaser as provided in Section 14(t). Seller shall hold or cause to be held all Escrow Payments collected with respect to the Mortgage Loans in segregated accounts for the sole benefit of the Mortgagor and shall apply the same for the purposes for which such funds were collected. If Seller should discover that, for any reason whatsoever, it has failed to perform its servicing obligations in any material respect with respect to the Mortgage Loans, Seller shall promptly notify Purchaser.
(c)
Servicing Reports
. On or prior to the date on which Seller is required to deliver the monthly financial report required Section 14(g)(i)(A)(iii), and as requested by Purchaser from time to time, Seller shall furnish to Purchaser reports in form and scope satisfactory to Purchaser, setting forth (i) data regarding the performance of the individual Mortgage Loans, (ii) a summary report of all Mortgage Loans serviced by the Seller and originated pursuant to an Agency Guide, HUD and/or FHA guidelines (on a portfolio basis), in each case, for the immediately preceding month, including, without limitation, all collections, delinquencies, defaults, defects, claim rates, losses and recoveries, and (iii) any other information reasonably requested by Purchaser or Agent.
(d)
Backup Servicer
. The Agent, in its sole discretion, may appoint a backup servicer at any time during the term of this Agreement. In such event, Seller shall commence monthly delivery to such backup servicer of the servicing information required to be delivered to Purchaser pursuant to Section 16(d) hereof and any other information reasonably requested by backup servicer, all in a format that is reasonably acceptable to such backup servicer. Purchaser shall pay all costs and expenses of such backup servicer, including, but not limited to all fees of such backup servicer in connection with the processing of such information and the maintenance of a servicing file with respect to the Purchased Assets. Seller shall cooperate fully with such backup servicer in the event of a transfer of servicing hereunder and will provide such backup servicer with all documents and information necessary for such backup servicer to assume the servicing of the Purchased Assets.
(e)
Collection Account
. Prior to the initial Purchase Date, Seller shall establish and maintain a separate account (the “
Collection Account
”) with the Bank in the Agent's name for the sole and exclusive benefit of the Purchaser. Such account shall be subject to the Collection Account Control Agreement. The Seller shall deposit or credit to the Collection Account all amounts collected on account of the Mortgage Loans within two (2) Business Days of receipt and such amounts shall be deposited or credited irrespective of any right of setoff or counterclaim arising in favor of Seller (or any third party claiming through it) under any other agreement or arrangement. Amounts on deposit in the Collection Account shall be distributed as provided in Section 16(f). Seller shall have the right to withdraw amounts on deposit therein at any time subject to the restrictions set forth in subsections 16(f)(ii) and (iv); provided, that Agent shall have the right to block such withdrawals at any time by providing written notice thereof to Seller and Bank in
accordance with the terms of the Collection Account Control Agreement. Seller shall deliver, or cause Bank to deliver, to Purchaser, daily account statements in respect of the Collection Account.
(f)
Income Payments
(i)
Where a particular term of a Transaction extends over the date on which Income is paid in respect of any Purchased Asset subject to that Transaction, (i) Seller shall deposit or cause to be deposited such Income into the Collection Account no later than two (2) Business Days after receipt thereof, and (ii) such Income shall be the Property of Purchaser subject to subsections 16(f)(ii), (iii) and (iv) below.
(ii)
Seller shall have the right to withdraw from the Collection Account up to $25,000 in the aggregate on any day without Purchaser's prior written consent, which consent may be given or withheld by Purchaser in its sole discretion and a copy of which shall be delivered by Purchaser to the Bank (the “
Daily Withdrawal Limit
”). If, on any day, the amounts on deposit in the Collection Account exceed $25,000 (such excess amounts, the “
Excess Funds
”), unless Purchaser shall have consented to Seller's withdrawal as provided in the foregoing sentence, Seller shall cause the Bank to disburse such Excess Funds to Purchaser, which amounts shall be applied by Purchaser in the following order of priority (i) to reduce outstanding Price Differential due and payable in respect of Purchased Assets for which Purchaser has received the related Repurchase Price (other than Price Differential) pursuant to Section 3(f) during the prior calendar month, (ii) to reduce the Repurchase Price for all outstanding Transactions, and (iii) to pay all other Obligations then due and payable to Purchaser.
(iii)
Notwithstanding anything herein or in the Collection Account Control Agreement to the contrary, Seller shall in no event be permitted to withdraw funds from the Collection Account to the extent that such action would result in the creation of a Margin Deficit (unless prior thereto or simultaneously therewith Seller cures such Margin Deficit in accordance with Section 16), or if an Event of Default is then continuing. Further, if an uncured Margin Deficit exists as of such Monthly Payment Date, Seller shall cause the Bank to disburse the Income related to the Transaction for which the Margin Deficit exists to Purchaser (up to the amount of such Margin Deficit), which amounts shall be applied by Purchaser to reduce the related Repurchase Price.
(iv)
If Successor Servicer takes delivery of such Mortgage Loans either under the circumstances set forth in Section 16(i) or otherwise, all amounts deposited in the Custodial Account shall be paid to Purchaser promptly upon such delivery.
(g)
Reserved
.
(h)
Reserved
.
(i)
Servicer Termination
. Purchaser, in its sole discretion, may terminate Seller's rights and obligations as subservicer of the affected Mortgage Loans and require Seller to deliver the related Servicing Records to Purchaser or its designee upon the occurrence of (i) an Event of Default or (ii) upon the expiration of the Servicing Term as set forth in Section 16(b) by delivering written notice to Seller requiring such termination. Such termination shall be effective upon Seller's receipt of such written notice;
provided
,
that
Seller's subservicing rights shall be terminated immediately upon the occurrence of any event described in Section 17(t), regardless of whether notice of such event shall have been given to or by Purchaser or Seller. Upon any such termination, all authority and power of Seller respecting its rights to subservice and duties under this Agreement relating thereto, shall pass to and be vested in the successor servicer appointed by Purchaser and Purchaser is hereby authorized and empowered to transfer such rights to subservice the Mortgage Loans for such price and on such terms and conditions as Purchaser shall reasonably determine. Seller shall promptly take such actions and furnish to Purchaser such documents that Purchaser deems necessary or appropriate to enable Purchaser to enforce such Mortgage Loans and shall perform all acts and take all actions so that the Mortgage Loans and all files and documents relating to such Mortgage Loans held by Seller, together with all escrow amounts relating to such Mortgage Loans, are delivered to Successor Servicer, including but not limited
to preparing, executing and delivering to the Successor Servicer any and all documents and other instruments, placing in the Successor Servicer's possession all Servicing Records pertaining to such Mortgage Loans and doing or causing to be done, all at Seller's sole expense. To the extent that the approval of the Applicable Agency is required for any such sale or transfer, Seller shall fully cooperate with Purchaser to obtain such approval. All amounts paid by any purchaser of such rights to service or subservice the Mortgage Loans shall be the Property of Purchaser. The subservicing rights required to be delivered to Successor Servicer in accordance with this Section 16(i) shall be delivered free of any servicing rights in favor of Seller or any third party (other than Purchaser) and free of any title, interest, lien, encumbrance or claim of any kind of Seller other than record title to the Mortgages relating to the Mortgage Loans and the right and obligation to repurchase the Mortgage Loans hereunder. No exercise by Purchaser of its rights under this Section 16(i) shall relieve Seller of responsibility or liability for any breach of this Agreement.
17.
EVENTS OF DEFAULT
With respect to any Transactions covered by or related to this Agreement, the occurrence of any of the following events shall constitute an “
Event of Default
”:
(a)
Seller fails to transfer the Purchased Assets to the applicable Purchaser on the applicable Purchase Date (provided the Purchaser has tendered the related Purchase Price);
(b)
Seller either fails to repurchase the Purchased Assets on the applicable Repurchase Date or fails to perform its obligations under Section 7 or the last sentence of Section 15;
(c)
Seller shall fail to (i) remit to Purchaser when due any payment required to be made under the terms of this Agreement, any of the other Program Documents or any other contracts or agreements delivered in connection herewith or therewith, or (ii) perform, observe or comply with any material term, condition, covenant or agreement contained in this Agreement or any of the other Program Documents (other than the other “Events of Default” set forth in this Section 17) or any other contracts or agreements delivered in connection herewith or therewith, and such failure is not cured within the time period expressly provided for therein, or, if no such cure period is provided, within two (2) Business Days of the earlier of (x) Seller's receipt of written notice from Purchaser or Custodian of such breach or (y) the date on which Seller obtains notice or knowledge of the facts giving rise to such breach;
(d)
Any representation or warranty made by Seller (or any of Seller's officers) in the Program Documents or in any other document delivered in connection therewith, or in any other contract or agreement, shall have been incorrect or untrue in any material respect when made or repeated or deemed by the terms thereof to have been made or repeated (other than the representations or warranties in
Exhibit B
which shall be considered solely for the purpose of determining whether the related Purchased Asset is an Eligible Mortgage Loan, unless (i) Seller shall have made any such representation or warranty with the knowledge that it was materially false or misleading at the time made or repeated or deemed to have been made or repeated, or (ii) any such representation or warranty shall have been determined by Purchaser in its sole discretion to be materially false or misleading on a regular basis);
(e)
Seller or any of its Affiliates or Subsidiaries shall be in default under, or fail to perform as requested under, or shall otherwise breach, beyond any applicable cure period, the (i) the terms of any warehouse, credit, repurchase, line of credit, financing or other similar agreement relating to any Indebtedness between Seller or any of its Affiliates or Subsidiaries, on the one hand, and any Person, on the other, which default or failure entitles any party to require acceleration or prepayment of any Indebtedness thereunder; (ii) any payment obligation under any other material agreement between Seller or any of its Affiliates or Subsidiaries, on the one hand, and any Person, on the other (it being understood that an agreement is material if the payment obligations thereunder exceed $1,000,000 in the aggregate, over the term of such agreement).
(f)
Any Act of Insolvency of the Seller or any of its Affiliates;
(g)
Any final judgment or order for the payment of money in excess of $2,000,000 in the aggregate (to the extent that it is, in the reasonable determination of Purchaser, uninsured and provided that any insurance or other credit posted in connection with an appeal shall not be deemed insurance for these purposes) shall be rendered against
Seller or any of Seller's Affiliates by one or more courts, administrative tribunals or other bodies having jurisdiction over them and the same shall not be discharged (or provisions shall not be made for such discharge) satisfied, or bonded, or a stay of execution thereof shall not be procured, within sixty (60) days from the date of entry thereof and Seller or any of Seller's Affiliates, as applicable, shall not, within said period of sixty (60) days, or such longer period during which execution of the same shall have been stayed or bonded, appeal therefrom and cause the execution thereof to be stayed during such appeal;
(h)
Any Governmental Authority or any person, agency or entity acting or purporting to act under governmental authority (i) shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the Property of Seller or any of Seller's Affiliates, or shall have taken any action to displace the management of Seller or any of Seller's Affiliates or to curtail its authority in the conduct of the business of Seller or any of Seller's Affiliates, or (ii) takes any action in the nature of enforcement to remove, limit or restrict the approval of Seller or any of Seller's Affiliates as an issuer, Purchaser or a seller/servicer of Mortgage Loans or securities backed thereby;
(i)
Seller, shall fail to comply with any of the financial covenants set forth in Section 14(g)(ii);
(j)
Any Material Adverse Effect shall have occurred;
(k)
This Agreement shall for any reason cease to create a valid first priority security interest or ownership interest upon transfer in any material portion of the Purchased Assets purported to be covered hereby;
(l)
A Change in Control of Seller shall have occurred that has not been approved by Agent;
(m)
Purchaser or Agent shall reasonably request, specifying the reasons for such request, reasonable information, and/or written responses to such requests, regarding the financial well‑being of Seller, and such reasonable information and/or responses shall not have been provided within ten (10) Business Days of such request;
(n)
A default by Seller or any of its Affiliates or Subsidiaries shall have occurred and be continuing beyond the expiration of any applicable cure periods under any material agreement (including, without limitation, the Program Documents and the EPF Program Documents) or obligation entered into between such Person and Purchaser or any of its Affiliates;
(o)
The Seller ceases to be a member of MERS in good standing for any reason (unless MERS is no longer acting in such capacity);
(p)
Change of Servicer without consent of Agent;
(q)
Failure of Servicer to service the Mortgage Loans in accordance with Accepted Servicing Practices;
(r)
Failure of Servicer to meet the qualifications to maintain all requisite Approvals, such Approvals are revoked or such Approvals are materially modified;
(s)
If, at any time, Servicer's HUD ranking falls below “Tier 2” lender;
(t)
Failure by Servicer to remit when due Income payments required to be made under the terms of this Agreement or such Mortgage Loan; or
(u)
Servicer or any of its Affiliates fails to operate or conduct its business operations or any material portion thereof in the ordinary course.
18.
REMEDIES
Upon the occurrence of an Event of Default, the Purchaser, at its option, shall have the right to exercise any or all of the following rights and remedies:
(a)
(i)
The Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (except that, in the event that the Purchase Date for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such Transaction shall be deemed immediately canceled). Seller's Obligations hereunder, to repurchase all Purchased Assets at the Repurchase Price therefor on the Repurchase Date in such Transactions shall thereupon become immediately due and payable; all Income paid after such exercise or deemed exercise shall be remitted to and retained by Purchaser and applied to the aggregate Repurchase Prices and any other amounts owing by Seller hereunder; Seller shall immediately deliver to Purchaser or its designee any and all original papers, records and files relating to the Purchased Assets subject to such Transaction then in its possession and/or control; and all right, title and interest in and entitlement to such Purchased Assets and Servicing Rights thereon shall become Property of Purchaser.
(ii)
Purchaser may (A) sell, on or following the Business Day following the date on which the Repurchase Price becomes due and payable pursuant to Section 18(a)(i) without notice or demand of any kind, at a public or private sale and at such price or prices as Purchaser may reasonably deem satisfactory, any or all or portions of the Purchased Assets on a servicing-released or servicing-retained basis, as Purchaser may determine in its sole discretion and/or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Assets, to give Seller credit for such Purchased Assets (including the Servicing Rights in respect of sales on a servicing-retained basis) in an amount equal to the Market Value of the Purchased Assets against the aggregate unpaid Repurchase Price and any other amounts owing by Seller hereunder. Seller shall remain liable to Purchaser for any amounts that remain owing to Purchaser following a sale and/or credit under the preceding sentence. The proceeds of any disposition of Purchased Assets shall be applied
first
to the reasonable costs and expenses including but not limited to legal fees incurred by Purchaser in connection with or as a result of an Event of Default;
second
to costs of cover and/or related hedging transactions;
third
to the aggregate Repurchase Prices; and
fourth
to all other Obligations.
(iii)
The parties recognize that it may not be possible to purchase or sell all of the Purchased Assets on a particular Business Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Assets may not be liquid. In view of these characteristics of the Purchased Assets, the parties agree that liquidation of a Transaction or the underlying Purchased Assets does not require a public purchase or sale and that a good faith private purchase or sale shall be deemed to have been made in a commercially reasonable manner. Accordingly, Purchaser may elect the time and manner of liquidating any Purchased Asset and nothing contained herein shall obligate Purchaser to liquidate any Purchased Asset upon the occurrence of an Event of Default or to liquidate all Purchased Assets in the same manner or on the same Business Day or shall constitute a waiver of any right or remedy of Purchaser. Notwithstanding the foregoing, the parties to this Agreement agree that the Transactions have been entered into in consideration of and in reliance upon the fact that all Transactions hereunder constitute a single business and contractual obligation and that each Transaction has been entered into in consideration of the other Transactions.
(iv)
The Purchaser may terminate the Agreement.
(b) Seller hereby acknowledges, admits and agrees that Seller's obligations under this Agreement are recourse obligations of Seller. In addition to their rights hereunder, Purchaser shall have the right to proceed against any of Seller's assets which may be in the possession of Purchaser, any of Purchaser's Affiliates or their designee (including the Custodian), including the right to liquidate such assets and to set‑off the proceeds against monies owed by Seller to Purchaser pursuant to this Agreement. Purchaser may set off cash, the proceeds of the liquidation of the Purchased Assets and Additional Purchased Mortgage Loans and all other sums or obligations owed by Purchaser to
Seller or against all of Seller's Obligations to Purchaser, or Seller's obligations to Purchaser under any other agreement between the parties, or otherwise, whether or not such obligations are then due, without prejudice to Purchaser's right to recover any deficiency.
(c) Purchaser shall have the right to obtain physical possession of the Records and all other files of Seller relating to the Purchased Assets and all documents relating to the Purchased Assets which are then or may thereafter come into the possession of Seller or any third party acting for Seller and Seller shall deliver to Purchaser such assignments as Purchaser shall request.
(d) Purchaser shall have the right to direct all Persons servicing the Purchased Assets to take such action with respect to the Purchased Assets as Purchaser determines appropriate, including, without limitation, using its rights under a power of attorney granted pursuant to Section 9(b) hereof.
(e) Purchaser shall, without regard to the adequacy of the security for the Obligations, be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession of and protect, collect, manage, liquidate, and sell the Purchased Assets or any portion thereof, collect the payments due with respect to the Purchased Assets or any portion thereof, and do anything that Purchaser is authorized hereunder to do. Seller shall pay all costs and expenses incurred by Purchaser in connection with the appointment and activities of such receiver, and such shall be deemed part of the Obligations hereunder.
(f) Purchaser may, at its option, enter into one or more hedging transactions covering all or a portion of the Purchased Assets, and Seller shall be responsible for all damages, judgments, costs and expenses of any kind which may be imposed on, incurred by or asserted against Purchaser relating to or arising out of such hedging transactions; including without limitation any losses resulting from such hedging transactions, and such shall be deemed part of the Obligations hereunder.
(g) In addition to all the rights and remedies specifically provided herein, Purchaser shall have all other rights and remedies provided by applicable federal, state, foreign and local laws, whether existing at law, in equity or by statute, including, without limitation, all rights and remedies available to a purchaser/secured party under the Uniform Commercial Code.
Except as otherwise expressly provided in this Agreement, Purchaser shall have the right to exercise any of their rights and/or remedies without presentment, demand, protest or further notice of any kind, other than as expressly set forth herein, all of which are hereby expressly waived by Seller.
Purchaser may enforce its rights and remedies hereunder without prior judicial process or hearing, and Seller hereby expressly waives, to the extent permitted by law, any right Seller might otherwise have to require Purchaser to enforce its rights by judicial process. Seller also waives, to the extent permitted by law, any defense Seller might otherwise have to the Obligations, or any guaranty thereof, arising from use of nonjudicial process, enforcement and sale of all or any portion of the Purchased Assets or from any other election of remedies. Seller recognizes that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm's length.
Seller shall cause all sums received by it with respect to the Purchased Assets to be deposited promptly upon receipt thereof but in no event later than twenty-four (24) hours thereafter. Seller shall be liable to Purchaser for the amount of all losses, costs and/or expenses (plus interest thereon at a rate equal to the Default Rate) which Purchaser may sustain or incur in connection with hedging transactions relating to the Purchased Assets, conduit advances and payments for mortgage insurance.
19.
DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE
No failure on the part of Purchaser to exercise, and no delay by Purchaser in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Purchaser of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All rights and remedies of Purchaser provided for herein are cumulative and in addition to any and all other rights and remedies provided by law, the Program Documents and the other instruments and agreements contemplated hereby and thereby, and are not conditional or contingent on any attempt by Purchaser to exercise any of its rights under any other related document. Purchaser may exercise at any time after the occurrence of an Event of Default one or more remedies permitted hereunder, as it so desires, and may thereafter at any time and from time to time exercise any other remedy or remedies permitted hereunder.
20.
USE OF EMPLOYEE PLAN ASSETS
No assets of an employee benefit plan subject to any provision of ERISA shall be used by either party hereto in a Transaction.
21.
INDEMNITY
(a)
Seller agrees to indemnify and hold harmless Purchaser, Agent and their Affiliates and their respective officers, directors, employees, agents and advisors (each, an “
Indemnified Party
”) from and against (and will reimburse each Indemnified Party as the same is incurred within thirty (30) days following receipt of an invoice therefor) any and all claims, damages, losses, liabilities, taxes, increased costs and all other expenses including out-of-pocket expenses (including, without limitation, reasonable fees and expenses of outside counsel and audit and due diligence fees) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including without limitation, in connection with) (i) any investigation, litigation or other proceeding (whether or not such Indemnified Party is a party thereto) relating to, resulting from or arising out of any of the Program Documents and all other documents related thereto, any breach by Seller of any representation or warranty or covenant in this Agreement or any other Program Document, and all actions taken pursuant thereto, (ii) the Transactions, the actual or proposed use of the proceeds of the Transactions, this Agreement or any of the transactions contemplated thereby, including, without limitation, any acquisition or proposed acquisition, or any indemnity payable under the servicing agreement or other servicing arrangement, (iii) the actual or alleged presence of hazardous materials on any Property or any environmental action relating in any way to any Property, (iv) the actual or alleged violation of any federal, state, municipal or local predatory lending laws, or (v) the reduction of the unpaid principal balance due to a cram down or similar action authorized by any bankruptcy proceeding or other case arising out of or relating to any petition under the Bankruptcy Code, in each case, except to the extent such claim, damage, loss, liability or expense is found in a final, non‑appealable judgment by a court of competent jurisdiction to have resulted directly from such Indemnified Party's gross negligence or willful misconduct or is the result of a claim made by Seller against the Indemnified Party, and Seller is ultimately the successful party in any resulting litigation or arbitration. Seller hereby agrees not to assert any claim against Purchaser or any of its Affiliates, or any of their respective officers, directors, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Program Documents, the actual or proposed use of the proceeds of the Transactions, this Agreement or any of the transactions contemplated thereby. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.
(b)
If Seller fails to pay when due any costs, expenses or other amounts payable by it under this Agreement, including, without limitation, reasonable fees and expenses of counsel and indemnities, such amount may be paid on behalf of Seller by Purchaser, in its sole discretion and Seller shall remain liable for any such payments by Purchaser and such amounts shall be deemed part of the Obligations hereunder. No such payment by Purchaser shall be deemed a waiver of any of Purchaser's rights under the Program Documents.
Without prejudice to the survival of any other agreement of Seller hereunder, the covenants and obligations of Seller contained in this Section 21 shall survive the payment in full of the Repurchase Price and all other amounts payable hereunder and delivery of the Purchased Assets by Purchaser against full payment therefor.
22.
WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS
Seller hereby expressly waives, to the fullest extent permitted by law, every statute of limitation on a deficiency judgment, any reduction in the proceeds of any Purchased Assets as a result of restrictions upon Purchaser or Custodian contained in the Program Documents or any other instrument delivered in connection therewith, and any right that they may have to direct the order in which any of the Purchased Assets shall be disposed of in the event of any disposition pursuant hereto.
23.
REIMBURSEMENT; SET-OFF
(a)
Seller agrees to pay on demand all reasonable out‑of‑pocket costs and expenses of Purchaser in connection with the initial and subsequent negotiation, modification, renewal and amendment of the Program Documents (including, without limitation, (A) all collateral review and UCC search and filing fees and expenses and (B) the reasonable fees and expenses of outside counsel for Purchaser with respect to advising Purchaser as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under this Agreement and any other Program Document, with respect to negotiations with Seller or with other creditors of Seller arising out of any Default or any events or circumstances that may give rise to a Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditors' rights generally and any proceeding ancillary thereto). Seller agrees to pay on demand, with interest at the Default Rate to the extent that an Event of Default has occurred, all costs and expenses, including without limitation, reasonable attorneys' fees and disbursements (and fees and disbursements of Purchaser's outside counsel) expended or incurred by Purchaser and/or Custodian in connection with the modification, renewal, amendment and enforcement (including any waivers) of the Program Documents (regardless of whether a Transaction is entered into hereunder), the taking of any action, including legal action, required or permitted to be taken by Purchaser (without duplication to Purchaser) and/or Custodian pursuant thereto or by refinancing or restructuring in the nature of a “workout.” Further, Seller agrees to pay, with interest at the Default Rate to the extent that an Event of Default has occurred, all costs and expenses, including without limitation, reasonable attorneys' fees and disbursements (and fees and disbursements of Purchaser's outside counsel) expended or incurred by Purchaser in connection with (a) the rendering of legal advice as to Purchaser's rights, remedies and obligations under any of the Program Documents, (b) the collection of any sum which becomes due to Purchaser under any Program Document, (c) any proceeding for declaratory relief, any counterclaim to any proceeding, or any appeal, or (d) the protection, preservation or enforcement of any rights of Purchaser. For the purposes of this Section 23(a), attorneys' fees shall include, without limitation, fees incurred in connection with the following: (1) discovery; (2) any motion, proceeding or other activity of any kind in connection with a bankruptcy proceeding or case arising out of or relating to any petition under Title 11 of the United States Code, as the same shall be in effect from time to time, or any similar law; (3) garnishment, levy, and debtor and third party examinations; and (4) post-judgment motions and proceedings of any kind, including without limitation any activity taken to collect or enforce any judgment. Any and all of the foregoing amounts referred to in this Section 23(a) shall be deemed a part of the Obligations hereunder. Without prejudice to the survival of any other agreement of Seller hereunder, the covenants and obligations of Seller contained in this Section 23(a) shall survive the payment in full of the Repurchase Price and all other amounts payable hereunder and delivery of the Purchased Assets by Purchaser against full payment therefor.
(b)
In addition to any rights and remedies of Purchaser under this Agreement and by law, Purchaser and its Affiliates shall have the right, without prior notice to Seller, any such notice being expressly waived by Seller to the extent permitted by applicable law, upon any amount becoming due and payable (whether at the stated maturity, by acceleration or otherwise) by Seller hereunder or under any Set Off Eligible Agreement, to set-off and appropriate and apply against such amount (subject to any existing limitations on recourse) any and all Property and deposits (general or special, time or demand, provisional or final), in any currency, or any other credits, indebtedness or claims, in any currency, or any other collateral (in the case of collateral not in the form of cash or such other marketable or
negotiable form, by selling such collateral in a recognized market therefor or as otherwise permitted by law or as may be in accordance with custom, usage or trade practice), in each case, whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Purchaser or any Affiliate thereof to or for the credit or the account of Seller or any of its Subsidiaries (including, without limitation, the amount of any accrued and unpaid Completion Fees) except and to the extent that any of the same are held by Seller or such Subsidiary for the account of another Person. Purchaser may also (subject to any existing limitations on recourse) set-off cash and all other sums or obligations owed by Purchaser or its Affiliates to Seller or its Subsidiaries hereunder or under any Set Off Eligible Agreement against all of Seller's obligations to Purchaser or its Affiliates hereunder or under any Set Off Eligible Agreement, whether or not such obligations are then due. The exercise of any such right of set-off shall be without prejudice to Purchaser's or its Affiliate's right to recover any deficiency. Purchaser agrees to promptly notify Seller after any such set‑off and application made by Purchaser; provided that the failure to give such notice shall not affect the validity of such set‑off and application.
24.
FURTHER ASSURANCES
Seller agrees to do such further acts and things and to execute and deliver to Purchaser such additional assignments, acknowledgments, agreements, powers and instruments as are reasonably required by Purchaser and Agent to carry into effect the intent and purposes of this Agreement, to perfect the interests of Purchaser in the Purchased Assets or to better assure and confirm unto Purchaser its rights, powers and remedies hereunder.
25.
ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION
This Agreement supersedes and integrates all previous negotiations, contracts, agreements and understandings between the parties relating to a sale and repurchase of Purchased Assets and Additional Purchased Mortgage Loans, and it, together with the other Program Documents, and the other documents delivered pursuant hereto or thereto, contains the entire final agreement of the parties. No prior negotiation, agreement, understanding or prior contract shall have any validity hereafter.
26.
TERMINATION
This Agreement shall remain in effect until the Termination Date. However, no such termination shall affect Seller's outstanding obligations to Purchaser at the time of such termination. Seller's obligations to indemnify Purchaser pursuant to this Agreement and the other Program Documents shall survive the termination hereof.
27.
REHYPOTHECATION; ASSIGNMENT
(a)
Purchaser may, in its sole election, and without the consent of the Seller engage in repurchase transactions with the Purchased Assets or otherwise pledge, hypothecate, assign, transfer or otherwise convey the Purchased Assets with a counterparty of Purchaser's choice, in all cases subject to Purchaser's obligation to reconvey the Purchased Assets (and not substitutes therefor) on the Repurchase Date, all at no cost to the Seller. In the event Purchaser engages in a repurchase transaction with any of the Purchased Assets or otherwise pledges or hypothecates any of the Purchased Assets, Purchaser shall have the right to assign to Purchaser's counterparty any of the applicable representations or warranties in
Exhibit B
to this Agreement and the remedies for breach thereof, as they relate to the Purchased Assets that are subject to such repurchase transaction.
(b)
The Program Documents and the Seller's rights and obligations thereunder are not assignable by Seller without the prior written consent of Purchaser. Any Person into which Seller may be merged or consolidated, or any corporation resulting from any merger, conversion or consolidation to which Seller shall be a party, or any Person succeeding to the business of Seller, shall be the successor of Seller hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Without any requirement for further consent of the Seller and at no cost or expense to the Seller, each of Purchaser and Agent
may, in its sole election, assign or participate all or a portion of its rights and obligations under this Agreement and the Program Documents with a counterparty of Purchaser's or Agent's choice. Purchaser or Agent shall notify Seller of any such assignment and participation and shall maintain, for review by Seller upon written request, a register of assignees and participants and a copy of any executed assignment and acceptance by Purchaser or Agent and assignee (“
Assignment and Acceptance
”), specifying the percentage or portion of such rights and obligations assigned. The Seller agrees that, for any such permitted assignment, Seller will cooperate with the prompt execution and delivery of documents reasonably necessary for such assignment process to the extent that Seller incurs no cost or expense that is not paid by the Purchaser or Agent, as applicable. Upon such assignment, (a) such assignee shall be a party hereto and to each Program Document to the extent of the percentage or portion set forth in the Assignment and Acceptance, and shall succeed to the applicable rights and obligations of Purchaser or Agent hereunder, and (b) Purchaser or Agent shall, to the extent that such rights and obligations have been so assigned by it to either (i) an Affiliate of Purchaser or Agent which assumes the obligations of Purchaser or Agent hereunder or (ii) to another Person which assumes the obligations of Purchaser or Agent hereunder, be released from their obligations hereunder accruing thereafter and under the Program Documents.
(c)
Purchaser and Agent may distribute to any prospective assignee, participant or pledgee any document or other information delivered to Purchaser by Seller subject to the confidentiality restrictions contained in Section 35 hereof; accordingly, such prospective assignee, participant or pledgee shall be required to agree to confidentiality provisions similar to those set forth in Section 35.
28.
AMENDMENTS, ETC.
No amendment or waiver of any provision of this Agreement nor any consent to any failure to comply herewith or therewith shall in any event be effective unless the same shall be in writing and signed by Seller, Purchaser and Agent, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
29.
SEVERABILITY
If any provision of any Program Document is declared invalid by any court of competent jurisdiction, such invalidity shall not affect any other provision of the Program Documents, and each Program Document shall be enforced to the fullest extent permitted by law.
30.
BINDING EFFECT; GOVERNING LAW
This Agreement shall be binding and inure to the benefit of the parties hereto and their respective successors and assigns. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
31.
WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION AND VENUE; SERVICE OF PROCESS
SELLER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE PROGRAM DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS, ON BEHALF OF ITSELF AND ITS PROPERTY, TO THE NON‑EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS IN ANY ACTION OR PROCEEDING. SELLER HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION IT MAY HAVE TO, NON‑EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS. SELLER HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY ANOTHER PARTY IN CONNECTION WITH THIS AGREEMENT OR THE OTHER PROGRAM DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF ITSELF OR ITS PROPERTY, IN THE MANNER SPECIFIED IN THIS SECTION 31 AND TO SUCH PARTY'S ADDRESS SPECIFIED IN SECTION 34 OR SUCH OTHER ADDRESS AS SUCH PARTY SHALL HAVE PROVIDED IN WRITING TO THE OTHER PARTIES HERETO. NOTHING IN THIS SECTION 31 SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO (I) SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW, OR (II) BRING ANY ACTION OR PROCEEDING AGAINST ANY OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.
32.
SINGLE AGREEMENT
Seller, Purchaser and Agent acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, Seller, Purchaser and Agent each agree (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, and (ii) that payments, deliveries and other transfers made by any of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transaction hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.
33.
INTENT
Seller, Purchaser and Agent recognize that each of the Transactions and this Agreement is a “repurchase agreement” as that term is defined in Section 101 of the Bankruptcy Code, and a “securities contract” as that term is defined in Section 741 of the Bankruptcy Code, or a “qualified financial contract” as that term is defined in the Federal Deposit Insurance Act, as applicable, and a “master netting agreement” as that term is defined in Section 101 of the Bankruptcy Code.
It is understood that Purchaser's right to liquidate, the Purchased Assets and terminate and accelerate the Transactions and this Agreement or to exercise any other remedies pursuant to Section 18 hereof is a contractual right to liquidate, terminate and accelerate the Transactions under a repurchase agreement, a securities contract, a master netting agreement, and a qualified financial contract as described in Sections 559, 555 and 561 of the Bankruptcy Code and Section 1821(e)(8)(A)(i) of the Federal Deposit Insurance Act, as applicable, and a contractual right to offset under a master netting agreement and across contracts, as described in Section 561 of the Bankruptcy Code. It is understood that Seller's right to accelerate the Repurchase Date with respect to the Purchased Assets and any Transaction hereunder pursuant to Section 22 hereof is a contractual right to liquidate, terminate and accelerate the Transactions under a
repurchase agreement, a securities contract, a master netting agreement, and a qualified financial contract as described in Sections 559, 555 and 561 of the Bankruptcy Code and Section 1821(e)(8)(A)(i) of the Federal Deposit Insurance Act, as applicable.
The parties hereby intend that any provisions hereof or in any other document, agreement or instrument that is related in any way to the servicing of the individual Mortgage Loans shall be deemed “related to” this Agreement within the meaning of Sections 101(38A)(A) and 101(47)(A)(v) of the Bankruptcy Code and part of the “contract” as such term is used in Section 741 of the Bankruptcy Code.
34.
NOTICES AND OTHER COMMUNICATIONS
Except as provided herein, all notices required or permitted by this Agreement shall be in writing (including without limitation by Electronic Transmission, email or facsimile) and shall be effective and deemed delivered only when received by the party to which it is sent; provided that notices of Events of Default and exercise of remedies or under Sections 6 or 18 shall be sent via overnight mail and by electronic transmission. Any such notice shall be sent to a party at the address, electronic mail or facsimile transmission number set forth below:
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if to Seller:
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Nationstar Mortgage LLC
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350 Highland Drive
Lewisville, Texas 75067
Attention: General Counsel
Telephone: (469)-549-2000
Facsimile: (469)-549-2085
E-mail:
annesutherland@nationstarmail.com
if to Purchaser:
Barclays Bank PLC - Mortgage Finance
745 Seventh Avenue, 4th Floor
New York, New York 10019
Attention: Joseph O'Doherty
Telephone: (212) 412-7990
Facsimile: (212) 412-7333
E-mail: joseph.o'doherty@barclayscapital.com
With a copy to:
Barclays Bank PLC - Legal Department
745 Seventh Avenue, 20th Floor
New York, New York 10019
Telephone: (212) 412-1494
Facsimile: (212) 412-1288
Barclays Capital - Operations
70 Hudson Street -7th Floor
Jersey City, New Jersey 07302
Attention: Hánsel Nieves
Telephone: (201) 499-2269
Facsimile: (646) 845-6464
Email: hansel.nieves@barclayscapital.com
if to Agent:
Barclays Bank PLC - Mortgage Finance
745 Seventh Avenue, 4th Floor
New York, New York 10019
Attention: Joseph O'Doherty
Telephone: (212) 412-7990
Facsimile: (212) 412-7333
E-mail: joseph.o'doherty@barclayscapital.com
With a copy to:
Barclays Bank PLC - Legal Department
745 Seventh Avenue, 20th Floor
New York, New York 10019
Telephone: (212) 412-1494
Facsimile: (212) 412-1288
Barclays Capital - Operations
70 Hudson Street -7th Floor
Jersey City, New Jersey 07302
Attention: Hánsel Nieves
Telephone: (201) 499-2269
Facsimile: (646) 845-6464
Email: hansel.nieves@barclayscapital.com
or to such other address, e-mail address or facsimile number as either party may notify to the others in writing from time to time.
35.
CONFIDENTIALITY
Seller, Purchaser and Agent each hereby acknowledge and agree that all written or computer-readable information provided by one party to the other in connection with the Program Documents or the Transactions contemplated thereby, including without limitation, Seller's Mortgagor information in the possession of Purchaser (the “
Confidential Terms
”) shall be kept confidential and shall not be divulged to any party without the prior written consent of such other party except for (i) disclosure to Seller's direct and indirect parent companies, directors, attorneys, agents or accountants, provided that such attorneys or accountants likewise agree to be bound by this covenant of confidentiality, or are otherwise subject to confidentiality restrictions or (ii) with prior (if feasible) written notice to Purchaser, disclosure required by law, rule, regulation or order of a court or other regulatory body or (iii) with prior (if feasible) written notice to Purchaser, disclosure to any approved hedge counterparty to the extent necessary to obtain any Hedge Instrument hereunder or (iv) with prior (if feasible) written notice to Purchaser, any disclosures or filing required under Securities and Exchange Commission (“
SEC
”) or state securities' laws; provided that in the case of clause (iv), Seller shall not file the Pricing Side Letter. Notwithstanding anything herein to the contrary, except as reasonably necessary to comply with applicable securities laws, each party (and each employee, representative, or other agent of each party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure. For this purpose, tax treatment and tax structure shall not include (i) the identity of any existing or future party (or any Affiliate of such party) to this Agreement or (ii) any specific pricing information or other commercial terms, including the amount of any fees, expenses, rates or payments arising in connection with the transactions contemplated by this Agreement.
36.
DUE DILIGENCE
Subject to Section 14(z) and the limitations contained in the Pricing Side Letter and the EPF Pricing Side Letter, (i) Purchaser, Agent or any of their respective agents, representatives or permitted assigns shall have the right, upon reasonable prior notice and during normal business hours, to conduct inspection and perform continuing due diligence reviews of (x) Seller and its Affiliates, directors, officers, employees and significant shareholders, including, without limitation, their respective financial condition and performance of its obligations under the Program Documents, and (y) the Servicing File and the Purchased Assets and (ii) Seller agrees promptly to provide Purchaser, Agent and their respective agents with access to, copies of and extracts from any and all documents, records, agreements, instruments or information (including, without limitation, any of the foregoing in computer data banks and computer software systems) relating to Seller's respective business, operations, servicing, financial condition, performance of their obligations under the Program Documents, the documents contained in the Servicing Files or the Purchased Assets or assets proposed to be sold hereunder in the possession, or under the control, of Seller. In addition, Seller shall also make available to Purchaser and/or Agent, upon reasonable prior notice and during normal business hours, a knowledgeable financial or accounting officer of Seller for the purpose of answering questions respecting any of the foregoing. Without limiting the generality of the foregoing, Seller acknowledges that Purchaser shall enter into transactions with Seller based solely upon the information provided by Seller to Purchaser and/or Agent and the representations, warranties and covenants contained herein, and that Purchaser and/or Agent, at its option, shall have the right at any time to conduct itself or through its agents, or require Seller to conduct quality reviews and underwriting compliance reviews of the individual Mortgage Loans at the expense of Seller. Any such diligence conducted by Purchaser and/or Agent shall not reduce or limit the Seller's representations, warranties and covenants set forth herein. Seller agrees to reimburse Purchaser and/or Agent for all reasonable out‑of‑pocket due diligence costs and expenses incurred pursuant to this Section 36.
1041
4689
IN WITNESS WHEREOF, Seller, Agent and Purchaser have caused their names to be signed to this Master Repurchase Agreement by their respective officers thereunto duly authorized as of the date first above written.
NATIONSTAR MORTGAGE LLC, as Seller
By:
/s/ Ron Fountain
Name: Ron Fountain
Title: Vice President
BARCLAYS BANK PLC, as Purchaser and Agent
By:
/s/ Joseph O'Doherty
Name: Joseph O'Doherty
Title: Director
EXHIBIT A
MONTHLY CERTIFICATION
I,
,
of Nationstar Mortgage LLC (the “
Seller
”), in accordance with that certain Master Repurchase Agreement (“
Agreement
”), dated as of March 25, 2011, by and between Barclays Bank PLC and Seller do hereby certify that:
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(i)
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To the best of my knowledge, no Default or Event of Default has occurred and is continuing;
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(ii)
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Attached hereto as
Schedule One
is a schedule of each financial covenant that the Seller is subject to under any agreement (other than this Agreement), and a calculation which demonstrates compliance with each such financial covenant; and
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(iii)
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The Seller has complied with each of the covenants set forth in Section 14(g)(ii), as evidenced by the worksheet attached hereto as
Schedule Two
.
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[Signature Page Follows]
Capitalized terms used but not defined herein shall have the meanings assigned thereto in the Agreement.
IN WITNESS WHEREOF, I have signed this certificate.
Date:
, 201[
]
NATIONSTAR MORTGAGE LLC
By:_________________________
Name:
Title:
[SEAL]
I, ________________________, ___________________ of Seller, do hereby certify that _____________________ is the duly elected or appointed, qualified and acting __________________of Seller, and the signature set forth above is the genuine signature of such officer on the date hereof.
SCHEDULE ONE TO EXHIBIT A
OTHER FINANCIAL COVENANTS
SCHEDULE TWO TO EXHIBIT B
FINANCIAL COVENANTS WORKSHEET
EXHIBIT B
REPRESENTATIONS AND WARRANTIES
with respect to Mortgage Loans
Capitalized terms used but not defined in this
Exhibit B
have the meanings assigned to such terms in the Master Repurchase Agreement dated as of March 25, 2011 (the “
Agreement
”), by and between Barclays Bank PLC, (“
Purchaser
” or “
Agent
”) and Nationstar Mortgage LLC (“
Seller
”). Seller hereby represents and warrants to the Purchaser and Agent that, for each Mortgage Loan as of the related Purchase Date and the related Repurchase Date and on each date that such Mortgage Loan is subject to a Transaction:
(a)
All information provided to Purchaser by Seller, including without limitation the information set forth in the Seller Mortgage Loan Schedule, with respect to the Mortgage Loan is true and correct in all material respects;
(b)
Such Mortgage Loan is an Eligible Mortgage Loan;
(c)
Such Mortgage Loan was owned solely by Seller, is not subject to any lien, claim or encumbrance, including, without limitation, any such interest pursuant to a loan or credit agreement for warehousing mortgage loans, and was originated or acquired by Seller from an Originator, underwritten and serviced in Strict Compliance with all applicable law and regulations, including without limitation the Federal Truth-in-Lending Act, the Real Estate Settlement Procedures Act, regulations issued pursuant to any of the aforesaid, and any and all rules, requirements, guidelines and announcements of each Agency, and, as applicable, the FHA and VA, as the same may be amended from time to time;
(d)
The improvements on the land securing such Mortgage Loan are and will be kept insured at all times by responsible insurance companies reasonably acceptable to Purchaser and the Applicable Agency against fire and extended coverage hazards under policies, binders or certificates of insurance with a standard mortgagee clause in favor of Seller and its assigns, providing that such policy may not be canceled without prior notice to Seller. Any proceeds of such insurance shall be held in trust for the benefit of Purchaser. The scope and amount of such insurance shall satisfy the rules, requirements, guidelines and announcements of the Applicable Agency, and shall in all cases be at least equal to the lesser of (A) the principal amount of such Mortgage Loan or (B) the maximum amount permitted by applicable law, and shall not be subject to reduction below such amount through the operation of a coinsurance, reduced rate contribution or similar clause;
(e)
Each Mortgage is a valid first lien on the Mortgaged Property and is covered by an attorney's opinion of title acceptable to the Applicable Agency or by a policy of title insurance on a standard ALTA or similar lender's form (or a binding commitment therefor) in favor of Seller and its assigns, subject only to exceptions permitted by the applicable Agency Program. Seller shall hold for the benefit of Purchaser such policy of title insurance, and, upon request of Purchaser, shall immediately deliver such policy to Purchaser or to the Custodian on behalf of Purchaser;
(f)
Such Mortgage Loan is either (i) insured by the FHA under the National Housing Act, guaranteed by the VA under the Servicemen's Readjustment Act of 1944 or (ii) with respect to Fannie Mae Mortgage Loans and Freddie Mac Mortgage Loans, is otherwise eligible to be insured or guaranteed in accordance with the requirements of the applicable Agency Program and, in either case, such Mortgage Loan is not subject to any defect that would prevent recovery in full or in part against the FHA, VA or other insurer or guarantor, as the case may be;
(g)
A mortgage identification number (“
MIN
”) has been assigned by MERS and such MIN is accurately provided on the Seller Mortgage Loan Schedule. Either the Mortgage is in favor of MERS or an Assignment of Mortgage to MERS has been duly and properly recorded;
(h)
Seller has not received any notice of liens or legal actions with respect to such Mortgage Loan and no such notices have been electronically posted by MERS;
(i)
Each Mortgage Loan is eligible for sale to the Applicable Agency and fully complies with all of the terms and conditions, including any covenants, representations and warranties, in the applicable Agency Guide and eligible for securitization by and/or sale to Fannie Mae, Freddie Mac or eligible for inclusion in a Ginnie Mae MBS pool;
(j)
There are no restrictions, contractual or governmental, which would impair the ability of Seller from servicing the Mortgage Loans;
(k)
Such Mortgage Loan may not result in Negative Amortization;
(l)
The Mortgagor is one or more natural persons and/or trustees for an Illinois land trust or a trustee under a “living trust” and such “living trust” is in compliance with Applicable Agency guidelines for such trusts;
(m)
Such Mortgage Loan is not a High Cost Mortgage Loan;
(n)
No predatory, abusive or deceptive lending practices, including but not limited to, the extension of credit to a Mortgagor without regard for the Mortgagor's ability to repay the Mortgage Loan and the extension of credit to a Mortgagor which has no tangible net benefit to the Mortgagor, were employed in connection with the origination of the Mortgage Loan. Such Mortgage Loan is in compliance with the anti predatory lending eligibility for purchase requirements of the Fannie Mae Guide;
(o)
On the Origination Date the related Mortgagor's FICO Score was equal to or greater than 550 (for this purpose, it being acknowledge that the related Mortgagor shall be deemed to have a FICO Score of zero where no FICO Score is available);
(p)
If such Mortgage Loan was pledged to another warehouse, credit, repurchase or other financing facility immediately prior to the related Purchase Date, (i) such pledge has been released immediately prior to, or concurrently with, the related Purchase Date hereunder and (ii) Purchaser has received a Warehouse Lender's Release Letter in respect of such Mortgage Loan;
(q)
Such Mortgage Loan has not been released from the possession of the Custodian under Section 9 of the Custodial Agreement to Seller or its bailee for a period in excess of fifteen (15) calendar days (or if such fifteenth day is not a Business Day, the next succeeding Business Day) or such earlier time period as indicated on the related Request for Release of Documents;
(r)
[Reserved];
(s)
Such Mortgage Loan is a MERS Designated Mortgage Loan;
(t)
With respect to each Mortgage Loan that is a Wet-Ink Mortgage Loan, the Settlement Agent has been instructed in writing by Seller to hold the related Mortgage Loan File as agent and bailee for Purchaser or Agent and to promptly forward such Mortgage Loan File in accordance with the provisions of the Custodial Agreement and the Escrow Instruction Letter (if applicable);
(u)
Each Mortgage Loan has been fully disbursed and is secured by a first lien on an underlying property as a “closed-end” Mortgage Loan with no further disbursements required by any party;
(v)
The Mortgage Loan does not have a loan-to-value ratio in excess of what is permitted under the Pricing Side Letter or the Agency Guides for mortgage loans of the same type as the Mortgage Loans;
(w)
The Mortgage Loan is not secured by property located in (a) a state where the Seller is not licensed as a lender/mortgage banker or (b) a state that the Purchaser has notified Seller is unacceptable due to a high cost, predatory lending or other law in such state;
(x)
The Mortgage Loan has not been converted to an ownership interest in real property through foreclosure or deed-in-lieu of foreclosure;
(y)
The Mortgage Loan relates to Mortgaged Property that consists of (i) a detached single family dwelling, (ii) a two-to-four family dwelling, (iii) a one-family dwelling unit in a Freddie Mac eligible condominium project, (iv) a townhouse, or (v) a detached single family dwelling in a planned unit development none of which is a cooperative or commercial property; and is not related to Mortgaged Property that consists of (a) mixed use properties, (b) log homes, (c) earthen homes, (d) underground homes, (e) mobile homes or manufactured housing units (whether or not secured by real property), (f) any dwelling situated on more than ten acres of property or (h) any dwelling situated on a leasehold estate;
(z)
The Mortgage Loan is not a Restricted Mortgage Loan; and
(aa)
The Mortgage Loan made its first scheduled Monthly Payment when it was due (inclusive of any applicable grace period), unless such time frame has not occurred yet.
EXHIBIT C
FORM Of TRANSACTION NOTICE
[insert date]
Barclays Bank PLC
745 Seventh Avenue, 4th Floor
New York, New York 10019
Attention: Mary Logan
|
|
|
|
Re:
|
Master Repurchase Agreement, dated as of March 25, 2011 by and between Barclays Bank PLC (“
Purchaser
” and “
Agent
”) and Nationstar Mortgage LLC (“
Seller
”)
|
Ladies/Gentlemen:
Reference is made to the above-referenced Master Repurchase Agreement (the “Repurchase Agreement”; capitalized terms used but not otherwise defined herein shall have the meaning given them in the Repurchase Agreement).
In accordance with Section 3(c) of the Repurchase Agreement, the undersigned Seller hereby requests, and the Purchaser, agrees to enter into a Transaction with us, in connection with our delivery of Eligible Mortgage Loans and all related Servicing Rights, on ____________________ [insert requested Purchase Date, which must be at least one (1) Business Day following the date of the request] (the “
Purchase Date
”), in connection with which we shall sell to you such Eligible Mortgage Loans on the Seller Mortgage Loan Schedule attached hereto. The unpaid principal balance of the Eligible Mortgage Loans is $________ and the Purchase Price shall be ______ [insert applicable Purchase Price]. The Purchaser shall transfer to the Seller an amount equal to $ _______ [insert amount which represents the Purchase Price net of any related Structuring Fee or any other fees then due and payable by Seller to Purchaser pursuant to the Agreement]. Seller agrees to repurchase such Purchased Asset on the Repurchase Date(s) at the Repurchase Price(s) listed below.
The Eligible Mortgage Loans have the characteristics on the electronic file or computer tape or disc delivered by Seller to Purchaser with respect thereto in connection with this Transaction Notice.
The Seller hereby certifies, as of such Purchase Date, that:
(1)
no Default or Event of Default has occurred and is continuing on the date hereof (or to the extent existing, shall be cured after giving effect to such Transaction) nor will occur after giving effect to such Transaction as a result of such Transaction;
(2)
each of the representations and warranties made by the Seller in or pursuant to the Program Documents is true and correct in all material respects on and as of such date as if made on and as of the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);
(3)
the Seller is in compliance with all governmental licenses and authorizations and are qualified to do business and are in good standing in all required jurisdictions, except as would not be reasonably likely to have a Material Adverse Effect;
(4)
Seller has all requisite Approvals; and
(5)
the Seller has satisfied all applicable conditions precedent in Sections 10(a) and (b) of the Repurchase Agreement and all other requirements of the Program Documents.
The undersigned duly authorized officer of Seller further represents and warrants that (1) (a) with respect to the Eligible Mortgage Loans subject to the Transaction requested herein that are not Wet-Ink Mortgage Loans, the documents constituting the Mortgage Loan Files (as defined in the Custodial Agreement) and (b) with respect to Eligible Mortgage Loans that are Wet-Ink Mortgage Loans, the Transaction Notice and the Seller Mortgage Loan Schedule, in each case as more specifically identified on the Seller Mortgage Loan Schedule delivered to the Purchaser and the Custodian in connection herewith (the “
Receipted Assets
”), have been or are hereby submitted to Custodian and such required documents are to be held by the Custodian for the Purchaser, (2) all other documents related to such Receipted Assets (including, but not limited to, mortgages, insurance policies, loan applications and appraisals) have been or will be created and held by Seller for Purchaser, (3) all documents related to such Receipted Assets withdrawn from Custodian shall be held by Seller for Purchaser, and (4) upon Purchaser's wiring of the Purchase Price pursuant to Section 3(b) of the Repurchase Agreement, Purchaser will have agreed to the terms of the Transaction as set forth herein and purchased the Receipted Assets from the Seller.
Seller hereby represents and warrants that (x) the Receipted Assets have an unpaid principal balance as of the date hereof of $__________ and (y) the number of Receipted Assets is ______.
Very truly yours,
NATIONSTAR MORTGAGE LLC
By:
Name:
Title:
EXHIBIT D
FORM OF GOODBYE LETTER
«Primary_Borrower»
[_______] [__], 201[ ]
«Mailing_address_line_1»
«Mail_city», «Mail_state» «Mail_zip»
RE:
Transfer of Mortgage Loan Servicing
Mortgage Loan «Account_number»
Dear Customer:
Nationstar Mortgage LLC is the present servicer of your mortgage loan. Effective [Date] the servicing of your mortgage will be transferred to _______. This transfer does not affect the terms and conditions of your mortgage, other than those directly related to servicing. Because of the change in servicer, we are required to provide you with this disclosure.
Nationstar Mortgage LLC cannot accept any payments received after [Date]. Effective [Date], all payments are to be made to __________. Any payments received by Nationstar Mortgage LLC after [Date] will be forwarded to _________________. ___________________ will be contacting you shortly with payment instructions. Please make future payments to:
________________________
Attn: ___________
[Address]
If you currently make payments by an automatic checking or savings account deduction, that service will discontinue effective with the transfer date. After the servicing transfer, you may request this service from _____________.
In [Date], you will receive a statement from Nationstar Mortgage LLC reflecting the amount, if any, of the interest and taxes paid on your behalf in 201[ ]. A similar statement will be sent __________________ for the period beginning [Date] through year-end. Both statements must be added together for income tax purposes.
If you have any questions concerning your account through [Date], you should continue to contact Nationstar Mortgage LLC, at <Seller's Phone Number>, <HOURS OF OPERATION>. Questions after the transfer date should be directed to ___________________Customer Service Department at 1‑800-_____________, Monday - Friday, 7 a.m. - 7 p.m. EST.
Sincerely,
Loan Servicing Department
Nationstar Mortgage LLC
NOTICE OF ASSIGNMENT, SALE OR TRANSFER
OF SERVICING RIGHTS
You are hereby notified that the servicing of your mortgage loan, that is the right to collect payments from you, is being assigned, sold or transferred.
The assignment, sale or transfer of the servicing of the mortgage loan does not affect any term or condition of the mortgage instruments, other than the terms directly related to the servicing of your loan.
Except in limited circumstances, the law requires that your present servicer send you a notice at least 15 days before the effective date, or at closing. Your new servicer must also send you this notice no later than 15 days after this effective date.
This notification is a requirement of Section 6 of the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. 2605). You should also be aware of the following information, which is set out in more detail in Section 6 of RESPA (12 U.S.C. 2605).
During the 60 day period following the effective date of the transfer of the loan servicing, a loan payment received by your old servicer before its due date may not be treated by the new loan servicer as late, and a late fee may not be imposed upon you.
Section 6 of RESPA (12 U.S.C. 2605) gives you certain consumer rights. If you send a
“qualified written
request”
to you loan servicer concerning the servicing of your loan, your servicer must provide you with a written acknowledgement within 20 Business Days of receipt of your request. A
“qualified written request”
is written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, which includes your name and account number and your reasons for the request. If you want to send a
“qualified written request”
regarding the servicing of your loan, it must be sent to this address:
___________________
[Address]
No later than 60 Business Days after receiving your request, your servicer must make any appropriate corrections to your account, and must provide you with a written clarification regarding any dispute. During this 60 Business Day period, your servicer may not provide information to a consumer reporting agency concerning any overdue payment related to such period or qualified written request. However,
this does not prevent the servicer from initiating foreclosure
if proper grounds exist under the mortgage documents.
A Business Day is any day excluding legal public holidays (State or federal), Saturday and Sunday.
Section 6 of RESPA also provides for damages and costs for individuals or classes of individuals, in circumstances where servicers are shown to have violated the requirements of that Section. You should seek legal advice if you believe your rights have been violated.
MIRANDA DISCLOSURE - For your protection, please be advised that we are attempting to collect a debt and any information obtained will be used for that purpose. Calls will be monitored and recorded for quality assurance purposes. If you do not wish for your call to be recorded please notify the customer service associate when calling.
BANKRUPTCY INSTRUCTION - Attention to any customer in Bankruptcy or who has received a bankruptcy discharge of this debt. Please be advised that this letter constitutes neither a demand for payment of the captioned debt nor a notice of personal liability to any recipient hereof who might have received a discharge of such debt in accordance with applicable bankruptcy laws or who might be subject to the automatic stay of Section 362 of the United States Bankruptcy Code. However, it may be a notice of possible enforcement of our lien against the collateral property, which has not been discharged in your bankruptcy.
EXHIBIT E
FORM OF WAREHOUSE LENDER'S RELEASE
(Date)
Barclays Bank PLC - Mortgage Finance
745 Seventh Avenue, 4th Floor
New York, New York 10019
Attention: Joseph O'Doherty
Barclays Bank PLC - Legal Department
745 Seventh Avenue, 20th Floor
New York, New York 10019
Barclays Capital - Operations
70 Hudson Street -7th Floor
Jersey City, New Jersey 07302
Attention: Hánsel Nieves
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attention: General Counsel
Re:
Certain Assets Identified on Schedule A hereto and owned by Nationstar
Mortgage LLC
Capitalized terms used herein but not defined herein shall have the meanings ascribed to such terms in the Master Repurchase Agreement, dated as of March 25, 2011 (the “Repurchase Agreement”), between Barclays Bank, PLC and Nationstar Mortgage LLC.
The undersigned hereby releases all right, interest, lien or claim of any kind with respect to the Mortgage Loan described in the attached
Schedule A
, such release to be effective automatically without any further action by any party upon receipt by Barclays Bank, PLC in immediately available funds of $__________________, in accordance with the following wire instructions:
[
]
Very truly yours,
[WAREHOUSE LENDER]
By:
Name:
Title:
[Schedule A to exhibit E - List of Assets to be Released]
EXHIBIT F
[RES[Schedule A to exhibit E - List of Assets to be Released]
EXHIBIT G
[RESERVED]
EXHIBIT H
form of SELLER mortgage loan schedule
[See attached excel spreadsheet]
AMENDMENT AND WAIVER, dated as of February 21, 2012 (this “
Amendment and Waiver
”), to the Master Repurchase Agreement dated as of March 25, 2011, as amended from time to time (the “
MRA
”), and the Mortgage Loan Participation Purchase and Sale Agreement dated as of March 25, 2011 (as amended from time to time, the “
PSA
” and, collectively with the MRA, the “
Agreements
”), in each case between Nationstar Mortgage LLC., a Delaware limited liability company, as seller (the “
Company
”), and Barclays Bank PLC, as purchaser and agent (the “
Bank
”).
WHEREAS, FIF HE Holdings LLC (“
FIF
”), a wholly-owned subsidiary of Fortress Investment Group LLC, owns 100% of the equity interests in the Company;
WHEREAS, FIF owns 100% of the equity interests in Nationstar Mortgage Holdings Inc., a newly formed Delaware corporation (“
NMH
” or “
Nationstar
”), which in turn owns 100% of the equity interests in Nationstar Sub1 LLC (“
Sub 1
”) and Nationstar Sub2 LLC (“
Sub 2
”), each of which is a Delaware limited liability company (collectively, the “
Subsidiary LLCs
”);
WHEREAS, NMH expects to effect a registered initial public offering of its common stock pursuant to a registration statement on Form S-1 (the “
IPO
”);
WHEREAS, in connection with the IPO, FIF expects to transfer all of its equity interests in the Company to the Subsidiary LLCs (the “
Restructuring
” and, collectively with the IPO, the “
Transactions
”), such that Sub 1 and Sub 2, collectively, will own 100% of the Company following the Restructuring;
NOW, THEREFORE, in consideration of the premises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
I.
Amendment of the Agreements
.
The definitions of “Change in Control” set forth in Section 2(a) of the MRA and Section 1 of the PSA are hereby deleted in their entirety and replaced with the following:
“
Change of Control
” means:
(a) at any time prior to consummation of the Transactions, less than 100% of the Company's equity securities are owned, directly or indirectly, by FIF, (b) at any time upon or after the consummation of the Transactions, less than 100% of the Company's equity securities are owned, directly or indirectly, by Nationstar, (c) at any time upon or after the consummation of an initial public offering of common equity interests pursuant to a registration statement on Form S‑1or any comparable successor form by Seller or any direct or indirect parent of Seller, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person and its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than one or more Permitted Holders, becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under such Act), of more than the greater of (x) 35% of the then-outstanding voting power of Seller's voting equity interests and (y) the percentage of the then-outstanding voting power of Seller's voting equity interests owned, in the aggregate, directly or indirectly, beneficially and of record, by the Permitted Holders, determined after such person's or group's most recent acquisition of outstanding voting power of Nationstar's voting equity interests; unless the Permitted Holders have, at such time, the right or the ability by voting power, contract or otherwise to elect or designate for election at least a majority of Seller's board of directors, or (d) the sale, transfer, or other disposition of all or substantially all of Seller's assets (excluding any such action taken in connection
with any securitization transaction or routine sales of Mortgage Loans), provided that none of the foregoing events in this clause (d) shall constitute a “Change in Control” if at the time of such event, or as a result thereof, Seller or any direct or indirect parent of Seller has a class of its equity securities registered under Section 12 of the Securities Exchange Act of 1934, as amended.
“
Permitted Holders
” means Fortress Investment Group LLC and any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, Fortress Investment Group LLC. For purposes of this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative of the foregoing.
II.
Waivers under the Agreements.
The Bank hereby consents to the Transactions, waives any claim the Bank may now, or in the future, have for breach of Sections 14(p)(i),14(i)(ix) or 17(l) of the MRA or Section 6(e)(xiii) of the PSA as a result of the Transactions and any default, Default as that term is defined in the MRA, event of default, Event of Default as that term is defined in the MRA, which breach directly relates to or arises out of the Transactions.
III.
Notice of Transactions
. The Company shall provide prompt written notice to the Bank of the consummation of the Restructuring and the Transactions.
IV.
Representations and Warranties.
The Company represents and warrants to the
Bank that as of the date hereof:
A.
The execution, delivery and performance of this Amendment and Waiver have been duly authorized by all necessary corporate action by the Company, and do not and will not (i) contravene the terms of the Company's organizational documents, (ii) result in any breach or contravention of any contractual obligation to which the Company is a party or any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which the Company is subject; or (iii) violate any applicable law; except with respect to any breach, contravention or violation referred to in clauses (ii) and (iii), to the extent that such breach, contravention or violation would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
B.
The Agreements, as amended and waived hereby, constitute valid and binding agreements of the Company, enforceable against the Company in accordance with the terms thereof, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity.
C.
The representations and warranties of the Company contained in the Agreements are true and correct in all material respects;
provided
that, to the extent that such representations and warranties specifically refer to an earlier date, they are true and correct in all material respects as of such earlier date;
provided
,
further
, that, any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language is true and correct (after giving effect to any qualification therein) in all respects on such respective dates.
D.
The Company is in full compliance in all material respects with all of the terms and conditions of the Agreements (and the Program Documents referred to therein) and remains bound by the terms thereof.
E.
No default, Default, event of default or Event of Default has occurred or is continuing under the Agreements.
V.
Applicable Law
. THIS AMENDMENT AND WAIVER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL GOVERN).
VI.
Effect of Amendment and Waiver.
Except as expressly set forth in this Amendment and Waiver, (a) nothing herein shall by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Bank under the Agreements, or alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Agreements, all of which are ratified and affirmed in all respects and shall continue in full force and effect, (b) the failure of the Bank at any time hereafter to require strict performance by the Company of any of the provisions, warranties, terms or conditions contained in the Agreements shall not waive, modify, diminish or otherwise affect any right of the Bank at any time thereafter to demand strict performance thereof, and (c) no rights of the Bank under the Agreements shall be deemed to have been waived or modified by any act or knowledge of the Bank, or the Bank's respective officers or employees, unless such waiver or modification is contained in an instrument in writing signed by the appropriate officers of the Bank and directed to the Company specifying such waiver or modification.
VII.
Miscellaneous
A.
The headings of this Amendment and Waiver are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
B.
This Amendment and Waiver may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all of which when taken together shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Amendment and Waiver by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart hereof.
C.
Terms used but not otherwise defined herein shall have the meaning ascribed to them in the Agreements.
D.
By executing this Amendment and Waiver, the Bank hereby consents to any disclosure and filing of this Amendment and Waiver required by law; provided that the Company shall give the Counterparties prompt notice of any such disclosure.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Waiver to be duly executed as of the date first above written.
NATIONSTAR MORTGAGE LLC
By:
/s/ Anthony W. Villani
Name: Anthony W. Villani
Title: Executive Vice President & General
Counsel
BARCLAYS BANK PLC
By:
/s/ Ellen V. Kiernan
Name: Ellen V. Kiernan
Title: Director
AMENDMENT NUMBER ONE
to the
MASTER REPURCHASE AGREEMENT
dated as of March 25, 2011
between
BARCLAYS BANK PLC
and
NATIONSTAR MORTGAGE LLC
This AMENDMENT NUMBER ONE (this “
Amendment
”) is made as of this 29th day of February, 2012, by and between Barclays Bank PLC (“
Purchaser
” and “
Agent
”) and Nationstar Mortgage LLC (“
Seller
”), to that certain Master Repurchase Agreement, dated as of March 25, 2011 (as amended by that certain Amendment and Waiver, dated as of February 17, 2012, by and between Purchaser and Seller, and as further amended, restated, supplemented or otherwise modified from time to time, the “
Repurchase Agreement
”), by and between Purchaser and Seller.
WHEREAS, Purchaser, Agent and Seller have agreed to amend the Repurchase Agreement as more particularly set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1.
Amendments
. Effective as of February 29, 2012 (the “
Effective Date
”), the Repurchase Agreement is hereby amended as follows:
(a)
Section 2(a)
of the Repurchase Agreement is hereby amended by deleting the definition of “Maturity Date” in its entirety and replacing it with the following (modified text underlined for review purposes):
“
Maturity Date
” means
Feburary 27, 2013
.
(b)
Section 2(a)
of the Repurchase Agreement is hereby amended by deleting the definition of “Maximum Time on Facility” in its entirety and replacing it with the following (modified text underlined for review purposes):
“
Maximum Time on Facility
” means for each Eligible Mortgage Loan (other than Wet-Ink Mortgage Loans), the maximum number of days such Eligible Mortgage Loan may be subject to a Transaction (whether or not continuous) is (i) forty-five (45) days for Fannie Mae Mortgage Loans and Freddie Mac Mortgage Loans, (ii) sixty (60) days for Ginnie Mae Mortgage Loans
, and (iii) ninety (90) days for Jumbo Mortgage Loans
. Wet-Ink Mortgage Loans shall have the aging restrictions set forth in the Pricing Side Letter.
(c)
Section 2(a)
of the Repurchase Agreement is hereby amended by deleting the definition of “Mortgage Loan” in its entirety and replacing it with the following (modified text underlined for review purposes):
“
Mortgage Loan
” means
a Jumbo Mortgage Loan,
a Ginnie Mae Mortgage Loan, a Fannie Mae Mortgage Loan or a Freddie Mac Mortgage Loan.
(d)
Section 2(a)
of the Repurchase Agreement is hereby amended by deleting the definition of “Wet-Ink Mortgage Loan” in its entirety and replacing it with the following (modified text underlined for review purposes):
“
Wet-Ink Mortgage Loan
” means a Mortgage Loan
(other than a Jumbo Mortgage Loan)
that Seller is selling to Purchaser simultaneously with the origination thereof that is funded as part, either directly or indirectly, with the Purchase Price paid by Purchaser hereunder and prior to receipt by Purchaser or its Custodian of the original Mortgage Note.
(e)
Section 2(a)
of the Repurchase Agreement is hereby amended by inserting the following new definitions in the appropriate alphabetical order:
“
Jumbo Mortgage Loan
” means a first lien mortgage loan that is underwritten as a jumbo mortgage loan in compliance with Purchaser's underwriting guidelines.
“
Streamline Mortgage Loans
” means any Mortgage Loan that is refinanced pursuant to the U.S. government's Home Affordable Refinance Program, the FHA Streamline Refinance program or the VA Interest Rate Reduction Refinancing program.
(f)
Exhibit B
to the Repurchase Agreement is hereby amended by deleting clause “(f)” thereof in its entirety and replacing it with the following (modified text underlined for review purposes):
(f)
Such Mortgage Loan
(other than a Jumbo Mortgage Loan)
is either (i) insured by the FHA under the National Housing Act, guaranteed by the VA under the Servicemen's Readjustment Act of 1944 or (ii) with respect to Fannie Mae Mortgage Loans and Freddie Mac Mortgage Loans, is otherwise eligible to be insured or guaranteed in accordance with the requirements of the applicable Agency Program and, in either case, such Mortgage Loan is not subject to any defect that would prevent recovery in full or in part against the FHA, VA or other insurer or guarantor, as the case may be;
(g)
Exhibit B
to the Repurchase Agreement is hereby amended by deleting clause “(i)” thereof in its entirety and replacing it with the following (modified text underlined for review purposes):
(i)
Each Mortgage Loan
(other than a Jumbo Mortgage Loan)
is eligible for sale to the Applicable Agency and fully complies with all of the terms and conditions, including any covenants, representations and warranties, in the applicable Agency Guide and eligible for securitization by and/or sale to Fannie Mae, Freddie Mac or eligible for inclusion in a Ginnie Mae MBS pool;
(h)
Exhibit B
to the Repurchase Agreement is hereby amended by deleting clause “(o)” thereof in its entirety and replacing it with the following (modified text underlined for review purposes):
(o)
With respect to any Mortgage Loan (other than a Streamline Mortgage Loan),
on the Origination Date the related Mortgagor's FICO Score was equal to or greater than 550 (for this purpose, it being acknowledged that the related Mortgagor shall be deemed to have a FICO Score of zero where no FICO Score is available);
(i)
Exhibit B
to the Repurchase Agreement is hereby amended by deleting clause “(r)” thereof in its entirety and replacing it with the following:
(r)
Each Streamline Mortgage Loan fully complies with all applicable terms and conditions, including any covenants, representations and warranties, of the related Agency Guide, the FHA regulations and the VA regulations, as applicable, unless the Seller has obtained a waiver in respect of any such noncompliance from the related Agency, FHA or VA, as applicable;
(j)
Exhibit B
to the Repurchase Agreement is hereby amended by deleting clause “(v)” thereof in its entirety and replacing it with the following (modified text underlined for review purposes):
(v)
The Mortgage Loan does not have a loan-to-value ratio in excess of what is permitted under the Pricing Side Letter or the Agency Guides for mortgage loans of the same type as the Mortgage Loans;
provided, that if any Mortgage Loan fails to comply with any loan-to-value representations and warranties required by any Agency, then Seller has obtained a waiver in respect of any such noncompliance from such Agency
;
(k)
Section 14(g)(ii)
of the Repurchase Agreement is hereby amended by deleting clause “(A)” thereof in its entirety and replacing it with the following (modified text underlined for review purposes):
(A)
Seller's Tangible Net Worth shall at all times exceed $
175,000,000
;
SECTION 2.
Fees and Expenses
. Seller agrees to pay to Purchaser all fees and out of pocket expenses incurred by Purchaser and Agent in connection with this Amendment, including all reasonable fees and out of pocket costs and expenses of the legal counsel to Purchaser and Agent incurred in connection with this Amendment, in accordance with
Section 23(a)
of the Repurchase Agreement. In addition, as condition precedent to the effectiveness of this Amendment, Seller shall have paid to Purchaser the Structuring Fee in an amount equal to $980,000 in accordance with
Section 2
of the MRA Pricing Side Letter.
SECTION 3.
Defined Terms
. Any terms capitalized but not otherwise defined herein should have the respective meanings set forth in the Repurchase Agreement.
SECTION 4.
Limited Effect
. Except as amended hereby, the Repurchase Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment need not be made in the Repurchase Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Repurchase Agreement, any reference in any of such items to the Repurchase Agreement being sufficient to refer to the Repurchase Agreement as amended hereby.
SECTION 5.
Representations
. In order to induce Purchaser and Agent to execute and deliver this Amendment, Seller hereby represents to Purchaser and Agent that as of the date hereof, (i) Seller is in full compliance with all of the terms and conditions of the Program Documents and remains bound by the terms thereof, and (ii) no Default or Event of Default has occurred and is continuing under the Program Documents.
SECTION 6.
Governing Law
. This Amendment and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of New York, without regard to principles of conflicts of laws (other than Sections 5-1401 and 5‑1402 of the New York General Obligations Law which shall be applicable).
SECTION 7.
Counterparts
. For the purpose of facilitating the execution of this Amendment, and for other purposes, this Amendment may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Purchaser, Agent and Seller have caused their names to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.
BARCLAYS BANK PLC,
Purchaser and Agent
By:
/s/ Ellen V. Kiernan__________________
Name: Ellen V. Kiernan
Title: Director
NATIONSTAR MORTGAGE LLC,
Seller
By:
/s/ Gregory A. Oniu___________________
Name: Gregory A. Oniu
Title: Senior Vice President
AMENDMENT NUMBER TWO
to the
MASTER REPURCHASE AGREEMENT
dated as of March 25, 2011
between
BARCLAYS BANK PLC
and
NATIONSTAR MORTGAGE LLC
This AMENDMENT NUMBER TWO (this “
Amendment
”) is made as of this 28th day of June, 2012, by and between Barclays Bank PLC (“
Purchaser
” and “
Agent
”) and Nationstar Mortgage LLC (“
Seller
”), to that certain Master Repurchase Agreement, dated as of March 25, 2011 (as amended by that certain (i) Amendment and Waiver, dated as of February 17, 2012, and (ii) Amendment Number One to the Master Repurchase Agreement, dated as of February 29, 2012, each by and between Purchaser and Seller, and as further amended, restated, supplemented or otherwise modified from time to time, the “
Repurchase Agreement
”), by and between Purchaser and Seller.
WHEREAS, Purchaser, Agent and Seller have agreed to amend the Repurchase Agreement as more particularly set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1.
Amendments
. Effective as of June 28, 2012 (the “
Effective Date
”), the Repurchase Agreement is hereby amended as follows:
(a)
Section 2(a)
of the Repurchase Agreement is hereby amended by deleting the definition of “
Streamline Mortgage Loan
” in its entirety and replacing it with the following:
“
Streamline Mortgage Loan
” means any Mortgage Loan that is refinanced pursuant to the FHA Streamline Refinance program or the VA Interest Rate Reduction Refinancing program.
(b)
Section 2(a)
of the Repurchase Agreement is hereby amended by inserting the following new definition in the appropriate alphabetical order:
“
HARP Mortgage Loan
” means a Fannie Mae Mortgage Loan or a Freddie Mac Mortgage Loan that fully conforms to the Home Affordable Refinance Program (as such program is amended, supplemented or otherwise modified, from time to time), and is referred to by Fannie Mae as a “Refi Plus mortgage loan” or “DU Refi Plus mortgage loan”, and by Freddie Mac as a “Relief Refinance Mortgage,” respectively.
(c)
Exhibit B
to the Repurchase Agreement is hereby amended by deleting clause “(o)” thereof in its entirety and replacing it with the following (modified text underlined for review purposes):
(o)
With respect to any Mortgage Loan (other than a Streamline Mortgage Loan
, a Mortgage Loan guaranteed by the VA under the Servicemen's Readjustment Act of 1944, a HARP Mortgage Loan, and any other Mortgage Loan underwritten and originated in accordance with a program sponsored and/or administered by a Governmental Authority; provided, that such program has been approved by Purchaser in its sole discretion
), on the Origination Date the related Mortgagor's FICO Score was equal to or greater than 550 (for this purpose, it being
acknowledged
that the related Mortgagor shall be deemed to have a FICO Score of zero where no FICO Score is available);
(d)
Exhibit B
to the Repurchase Agreement is hereby amended by deleting clause “(r)” thereof in its entirety and replacing it with the following (modified text underlined for review purposes):
(r)
Each Streamline Mortgage Loan
and HARP Mortgage Loan
fully complies with all applicable terms and conditions, including any covenants, representations and warranties, of the related Agency Guide, the FHA regulations and the VA regulations,
and the guidance issued by the Federal Housing Finance Authority, Fannie Mae and Freddie Mac for origination of mortgage loans under the Home Affordable Refinance Program
, as applicable, unless the Seller has obtained a waiver in respect of any such noncompliance from the related Agency, FHA, VA
or the Federal Housing Finance Authority
, as applicable;
SECTION 2.
Fees and Expenses
. Seller agrees to pay to Purchaser all fees and out of pocket expenses incurred by Purchaser and Agent in connection with this Amendment, including all reasonable fees and out of pocket costs and expenses of the legal counsel to Purchaser and Agent incurred in connection with this Amendment, in accordance with
Section 23(a)
of the Repurchase Agreement. In addition, as a condition precedent to the effectiveness of this Amendment, Seller shall have paid to Purchaser the fee set forth in
Section 2
of Amendment Number Two to the Pricing Side Letter (Master Repurchase Agreement), dated as of June 28, 2012, by and between Seller and Purchaser.
SECTION 3.
Defined Terms
. Any terms capitalized but not otherwise defined herein should have the respective meanings set forth in the Repurchase Agreement.
SECTION 4.
Limited Effect
. Except as amended hereby, the Repurchase Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment need not be made in the Repurchase Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Repurchase Agreement, any reference in any of such items to the Repurchase Agreement being sufficient to refer to the Repurchase Agreement as amended hereby.
SECTION 5.
Representations
. In order to induce Purchaser and Agent to execute and deliver this Amendment, Seller hereby represents to Purchaser and Agent that as of the date hereof, (i) Seller is in full compliance with all of the terms and conditions of the Program Documents and remains bound by the terms thereof, and (ii) no Default or Event of Default has occurred and is continuing under the Program Documents.
SECTION 6.
Governing Law
. This Amendment and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of New York, without regard to principles of conflicts of laws (other than Sections 5-1401 and 5‑1402 of the New York General Obligations Law which shall be applicable).
SECTION 7.
Counterparts
. For the purpose of facilitating the execution of this Amendment, and for other purposes, this Amendment may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Purchaser, Agent and Seller have caused their names to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.
BARCLAYS BANK PLC,
Purchaser and Agent
By:
/s/ Ellen V. Kiernan____________________
Name: Ellen V. Kiernan
Title: Director
NATIONSTAR MORTGAGE LLC,
Seller
By:
/s/ Gregory A. Oniu_____________________
Name: Gregory A. Oniu
Title: Senior Vice President
AMENDMENT NUMBER THREE
to the
MASTER REPURCHASE AGREEMENT
dated as of March 25, 2011
between
BARCLAYS BANK PLC
and
NATIONSTAR MORTGAGE LLC
This AMENDMENT NUMBER THREE (this “
Amendment
”) is made as of this 28th day of August, 2012, by and between Barclays Bank PLC (“
Purchaser
” and “
Agent
”) and Nationstar Mortgage LLC (“
Seller
”), to that certain Master Repurchase Agreement, dated as of March 25, 2011 (as amended by that certain (i) Amendment and Waiver, dated as of February 17, 2012, (ii) Amendment Number One to the Master Repurchase Agreement, dated as of February 29, 2012, and (iii) Amendment Number Two to the Master Repurchase Agreement, dated as of June 28, 201, each by and between Purchaser and Seller, and as further amended, restated, supplemented or otherwise modified from time to time, the “
Repurchase Agreement
”), by and between Purchaser and Seller.
WHEREAS, Purchaser, Agent and Seller have agreed to amend the Repurchase Agreement as more particularly set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1.
Amendments
. Effective as of August 28, 2012 (the “
Effective Date
”), the Repurchase Agreement is hereby amended as follows:
(a)
Section 2(a)
of the Repurchase Agreement is hereby amended by deleting the definition of “
Maturity Date
” in its entirety and replacing it with the following (modified text underlined for review purposes):
“
Maturity Date
” means
August 27
, 2013.
SECTION 2.
Fees and Expenses
. Seller agrees to pay to Purchaser all fees and out of pocket expenses incurred by Purchaser and Agent in connection with this Amendment, including all reasonable fees and out of pocket costs and expenses of the legal counsel to Purchaser and Agent incurred in connection with this Amendment, in accordance with
Section 23(a)
of the Repurchase Agreement. In addition, as a condition precedent to the effectiveness of this Amendment, Seller shall have paid to Purchaser the fee set forth in
Section 2
of Amendment Number Three to the Pricing Side Letter (Master Repurchase Agreement), dated as of August 28, 2012, by and between Seller and Purchaser.
SECTION 3.
Defined Terms
. Any terms capitalized but not otherwise defined herein should have the respective meanings set forth in the Repurchase Agreement.
SECTION 4.
Limited Effect
. Except as amended hereby, the Repurchase Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment need not be made in the Repurchase Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Repurchase Agreement, any reference in any of such items to the Repurchase Agreement being sufficient to refer to the Repurchase Agreement as amended hereby.
SECTION 5.
Representations
. In order to induce Purchaser and Agent to execute and deliver this Amendment, Seller hereby represents to Purchaser and Agent that as of the date hereof, (i) Seller is in full compliance with all of the terms and conditions of the Program Documents and remains bound by the terms thereof, and (ii) no Default or Event of Default has occurred and is continuing under the Program Documents.
SECTION 6.
Governing Law
. This Amendment and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of New York, without regard to principles of conflicts of laws (other than Sections 5-1401 and 5‑1402 of the New York General Obligations Law which shall be applicable).
SECTION 7.
Counterparts
. For the purpose of facilitating the execution of this Amendment, and for other purposes, this Amendment may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Purchaser, Agent and Seller have caused their names to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.
BARCLAYS BANK PLC,
Purchaser and Agent
By:
/s/ Ellen V. Kiernan
Name: Ellen V. Kiernan
Title: Director
NATIONSTAR MORTGAGE LLC,
Seller
By:
/s/ Larry Brown
Name: Larry Brown
Title: Vice President
AMENDMENT NUMBER FOUR
to the
MASTER REPURCHASE AGREEMENT
dated as of March 25, 2011
between
BARCLAYS BANK PLC
and
NATIONSTAR MORTGAGE LLC
This AMENDMENT NUMBER FOUR (this “
Amendment
”) is made as of this 24th day of December, 2012, by and between Barclays Bank PLC (“
Purchaser
” and “
Agent
”) and Nationstar Mortgage LLC (“
Seller
”), to that certain Master Repurchase Agreement, dated as of March 25, 2011 (as amended by that certain (i) Amendment and Waiver, dated as of February 17, 2012, (ii) Amendment Number One to the Master Repurchase Agreement, dated as of February 29, 2012, (iii) Amendment Number Two to the Master Repurchase Agreement, dated as of June 28, 2012, and (iv) Amendment Number Three to the Master Repurchase Agreement, dated as of August 28, 2012, each by and between Purchaser and Seller, and as further amended, restated, supplemented or otherwise modified from time to time, the “
Repurchase Agreement
”), by and between Purchaser and Seller.
WHEREAS, Purchaser, Agent and Seller have agreed to amend the Repurchase Agreement as more particularly set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1.
Amendments
. Effective as of December 24, 2012 (the “
Effective Date
”), the Repurchase Agreement is hereby amended as follows:
(a)
Section 14(g)(ii)
of the Repurchase Agreement is hereby amended by deleting clauses (A), (B) and (C) thereof in their entirety and replacing them with the following:
(A)
Seller's Tangible Net Worth shall at all times exceed $350,000,000;
(B)
the ratio of Seller's total Indebtedness to Tangible Net Worth shall not at any time exceed 12:1; and
(C)
Seller's Liquidity shall not be less than $45,000,000 as of the last day of any calendar month.
SECTION 2.
Fees and Expenses
. Seller agrees to pay to Purchaser all fees and out of pocket expenses incurred by Purchaser and Agent in connection with this Amendment, including all reasonable fees and out of pocket costs and expenses of the legal counsel to Purchaser and Agent incurred in connection with this Amendment, in accordance with
Section 23(a)
of the Repurchase Agreement. In addition, as a condition precedent to the effectiveness of this Amendment, Seller shall have paid to Purchaser the fee set forth in
Section 2
of Amendment Number Four to the Pricing Side Letter (Master Repurchase Agreement), dated as of December 24, 2012, by and between Seller and Purchaser.
SECTION 3.
Defined Terms
. Any terms capitalized but not otherwise defined herein should have the respective meanings set forth in the Repurchase Agreement.
SECTION 4.
Limited Effect
. Except as amended hereby, the Repurchase Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment need not be made in the Repurchase Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Repurchase Agreement, any reference in any of such items to the Repurchase Agreement being sufficient to refer to the Repurchase Agreement as amended hereby.
SECTION 5.
Representations
. In order to induce Purchaser and Agent to execute and deliver this Amendment, Seller hereby represents to Purchaser and Agent that as of the date hereof, (i) Seller is in full compliance with all of the terms and conditions of the Program Documents and remains bound by the terms thereof, and (ii) no Default or Event of Default has occurred and is continuing under the Program Documents.
SECTION 6.
Governing Law
. This Amendment and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of New York, without regard to principles of conflicts of laws (other than Sections 5-1401 and 5‑1402 of the New York General Obligations Law which shall be applicable).
SECTION 7.
Counterparts
. For the purpose of facilitating the execution of this Amendment, and for other purposes, this Amendment may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Purchaser, Agent and Seller have caused their names to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.
BARCLAYS BANK PLC,
Purchaser and Agent
By:
/s/ Ellen V. Kiernan
Name: Ellen V. Kiernan
Title: Director
NATIONSTAR MORTGAGE LLC,
Seller
By
/s/ Larry Brown
Name: Larry Brown
Title: Vice President
MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT
between
NATIONSTAR MORTGAGE LLC
Seller
and
BARCLAYS BANK PLC
Purchaser and Agent
Dated March 25, 2011
TABLE OF CONTENTS
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Page
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Section 1.
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Definitions
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2
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Section 2.
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Procedures for Purchases of Participation Certificate
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15
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Section 3.
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Takeout Commitments
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16
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Section 4.
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Completion Fee
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17
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Section 5.
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Issuance of Securities
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17
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Section 6.
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Servicing of the Mortgage Loans; Servicer Termination; Backup Servicer
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19
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Section 7.
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Transfers of Participation Certificates and Securities by Purchase
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23
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Section 8.
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Record Title to Mortgage Loans; Intent of Parties; Security Interest
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24
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Section 9.
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Representations and Warranties
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25
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Section 10.
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Covenants of Seller
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29
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Section 11.
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Term
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33
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Section 12.
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Set-Off
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33
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Section 13.
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Indemnification
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33
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Section 14.
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Exclusive Benefit of Parties; Assignment
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34
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Section 15.
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Amendments; Waivers; Cumulative Rights
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34
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Section 16.
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Execution in Counterparts
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34
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Section 17.
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Effect of Invalidity of Provisions
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35
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Section 18.
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Governing Law
|
35
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Section 19.
|
Notices
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35
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Section 20.
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Entire Agreement
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35
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Section 21.
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Costs of Enforcement
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36
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Section 22.
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Securities Contract; Netting Agreement
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36
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Section 23.
|
Consent to Service
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37
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Section 24.
|
Construction
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37
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Section 25.
|
Further Assurances
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37
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Section 26.
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Due Diligence
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37
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EXHIBITS
Exhibit A
Participation Certificate
Exhibit B
Trade Assignment
Exhibit C
Document List
Exhibit D
Warehouse Lender's Release
Exhibit E
Assignment
Exhibit F
Form of Confirmation
Exhibit G
Seller's Officer's Certificate
Exhibit H
Seller's Officer's Certificate
Annex A
Seller's Delivery Instructions
Annex B
Purchaser Notices
MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT
This is a MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT (“
Agreement
”), dated as of March 25, 2011, between Barclays Bank PLC, as administrative agent (“
Agent
”) and purchaser (“
Purchaser
”) and Nationstar Mortgage LLC, as Seller (“
Seller
”).
PRELIMINARY STATEMENT
Seller desires to sell to Purchaser from time to time all of Seller's beneficial right, title and interest in and to designated pools of fully amortizing first lien residential Mortgage Loans eligible in the aggregate to back Securities, and the servicing rights relating thereto, with the terms described in related Takeout Commitments, each in the form of a 100% undivided beneficial ownership interest evidenced by a Participation Certificate.
Purchaser desires and (i) shall, subject to satisfaction of certain conditions precedent, purchase such Participation Certificates with an aggregate Purchase Price not to exceed the Committed Amount, and (ii) may, in its sole discretion, purchase such Participation Certificates with an aggregate Purchase Price not to exceed the Uncommitted Amount, in each case, from Seller in accordance with the terms and conditions set forth in this Agreement. Seller, subject to the terms hereof, will cause (a) the Related Mortgage Loans to back a Security issued by Seller and guaranteed by the Applicable Agency, and (b) Delivery of such Security by the Applicable Agency to Purchaser or its designee in exchange for the Related Participation Certificate, which Security will be purchased by a Takeout Investor.
Purchaser's agreement to purchase any Participation Certificate evidencing a beneficial interest in the Related Mortgage Loans and the servicing rights related thereto is based on Purchaser's expectation, in reliance upon Seller's representations, warranties and agreements herein, that (a) such Mortgage Loans in the aggregate, constitute a pool or pools of mortgage loans that are eligible to back a Security, (b) such Mortgage Loans are sufficient for Seller to issue and the Applicable Agency to guarantee the Security, (c) such Security will be issued in the amount and with the terms described in the related Takeout Commitment, (d) Purchaser's broker-dealer affiliate, Barclays Capital, Inc. (“
BCI
”) will receive Delivery of such Security on the specified Anticipated Delivery Date on behalf of Purchaser, and (e) such Security will be purchased by the related Takeout Investor.
The amount of the Purchase Price and the Completion Fee to be paid by Purchaser to Seller with respect to each Participation Certificate will be calculated on the expectation of Purchaser, which expectation is acknowledged and confirmed by Seller, that Purchaser or BCI, on behalf of Purchaser, will receive Delivery of the Security to be backed by the Related Mortgage Loans on the specified Anticipated Delivery Date, that failure to receive such Delivery will result in a material decrease in the market value of the Participation Certificate and the Related Mortgage Loans considered as a whole and that the related Takeout Investor will purchase the Security from Purchaser or BCI, on behalf of Purchaser. During the period from the purchase of a Participation Certificate to Delivery of the related Security, Purchaser expects to rely entirely upon Seller to subservice the Related Mortgage Loans for the benefit of Purchaser, it being acknowledged that the continued effectiveness of Seller's Approvals during such period constitutes an essential factor in the calculation by Agent of the Purchase Price and the Completion Fee paid to Seller for the Related Participation Certificate and that loss of such Approvals by Seller would result in a material decrease in the market value of the Participation Certificate and the Related Mortgage Loans considered as a whole.
In consideration of the mutual promises and agreements herein contained the receipt and sufficiency of which are hereby acknowledged, the parties hereto as follows:
Section 1.
Definitions
.
Capitalized terms used but not defined herein shall have the meanings set forth in the Custodial Agreement. As used in this Agreement, the following terms shall have the following meanings:
“
30+ Day Delinquent Mortgage Loan
” means any Mortgage Loan for which the Monthly Payment for which was not received within 29 days after its Due Date.
“
Accepted Servicing Practices
” means, with respect to any Related Mortgage Loan, those accepted and prudent mortgage servicing practices and procedures (including collection procedures) of prudent mortgage lending institutions which service mortgage loans of the same type as the Mortgage Loans in the jurisdiction where the related Mortgaged Property is located, and which are in accordance with the requirements of each Agency Program, applicable law, FHA regulations and VA regulations and the requirements of any private mortgage insurer so that the FHA insurance, VA guarantee or any other applicable insurance or guarantee in respect of any Mortgage Loan is not voided or reduced.
“
Act of Insolvency
” means, with respect to any Person,
(i)
the filing of a voluntary petition (or the consent by such Person to the filing of any such petition against it), commencing, or authorizing the commencement of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law relating to the protection of creditors, or suffering any such petition or proceeding to be commenced by another; or such Person shall consent or seek to the appointment of or taking possession by a custodian, receiver, conservator, trustee, liquidator, sequestrator or similar official of such Person, or for any substantial part of its Property, or any general assignment for the benefit of creditors;
(ii)
a proceeding shall have been instituted against such Person under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution, moratorium, delinquency or liquidation law of any jurisdiction, whether now or subsequently in effect, or a custodian, receiver, conservator, liquidator, trustee, sequestrator or similar official for such Person or such Person's Property (as a debtor or creditor protection procedure) is appointed by any Governmental Authority having the jurisdiction to do so or takes possession of such Property and any such proceeding is not dismissed within sixty (60) days of filing; provided, that if, under any other agreement for Indebtedness, Seller is subject to a shorter time period to dismiss any such proceeding, such shorter time period shall be automatically incorporated into this Agreement as if fully set forth herein without the need of any further action on the part of any party;
(iii)
that such Person or any Affiliate shall become insolvent;
(iv)
that such Person shall (a) admit in writing its inability to pay or discharge its debts or obligations generally as they become due or mature, (b) admit in writing its inability to, or intention not to, perform any of its material obligations, or (c) generally fail to pay any of its debts or obligations as they become due or mature;
(v)
any Governmental Authority shall have seized or appropriated, or assumed custody or control of, all or any substantial part of the Property of such Person, or shall have taken any action to displace the executive management of such Person; or
(vi)
the audited annual financial statements of such Person or the notes thereto or other opinions or conclusions stated therein shall be qualified or limited by reference to the status of such Person as a “going concern” or a reference of similar import or shall indicate that such Person has a negative net worth or is insolvent; or
(vii)
if such Person or any Affiliate is a corporation, such Person or any Affiliate or any of their Subsidiaries, shall take any corporate action in furtherance of, or the action of which would result in any of the foregoing actions.
“
Adjustable Rate Mortgage Loan
” means a Mortgage Loan which provides for the adjustment of the Mortgage Interest Rate payable in respect thereto.
“
Affiliate
” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting equity, by contract or otherwise.
“
Agency Guide
” means the Freddie Mac Guide, the Fannie Mae Guide, or the Ginnie Mae Guide, as applicable.
“
Agency Program
” means the Freddie Mac Program, the Fannie Mae Program, or the Ginnie Mae Program, as applicable.
“
Agent
” means Barclays Bank PLC and its successors in interest, as administrative agent for Purchaser and any additional purchasers that may become a party hereto.
“
Aggregate EPF Purchase Price
” means, as of any date of determination, an amount equal to the aggregate Purchase Price for all Participation Certificates then owned by Purchaser and subject to the terms of this Agreement.
“
Aggregate MRA Purchase Price
” means as of any date of determination, an amount equal to the aggregate Purchase Price (as defined in the Master Repurchase Agreement) for all Mortgage Loans then subject to Transactions (as defined in the Master Repurchase Agreement) under the Master Repurchase Agreement.
“
Anticipated Delivery Date
” means, with respect to a Security, the date specified in the related Form HUD 11705 (Schedule of Subscribers), Fannie Mae Form 2014 (Delivery Schedule) or Freddie Mac Form 939 (Settlement and Information Multiple Registration Form), as applicable, on which it is anticipated that Delivery of the Security by the Applicable Agency will be made, which date shall be no more than sixty (60) days after the Purchase Date of the underlying Participation Certificate.
“
Applicable Agency
” means Ginnie Mae, Fannie Mae, or Freddie Mac, as applicable.
“
Applicable Margin
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Approvals
” means, with respect to Seller and Servicer, the approvals obtained from the Applicable Agency, or HUD in designation of Seller and/or Servicer as a Ginnie Mae-approved issuer, a Ginnie Mae-approved servicer, a FHA-approved mortgagee, a VA-approved lender, a Fannie Mae-approved lender or a Freddie Mac-approved Seller/Servicer, as applicable, in good standing.
“
Assignee
” shall have the meaning assigned thereto in
Section 7
.
“
Assignment of Mortgage
” means an assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the sale of the beneficial interest in the Mortgage to the Purchaser.
“
Backup Servicer Agreement
” means any backup servicing agreement among Purchaser, Seller and a backup servicer appointed pursuant to
Section 6(h)
, as the same may be amended, modified or supplemented from time to time.
“
Bank
” means (i) Wells Fargo Bank, National Association and its successors and permitted assigns or (ii) such other bank as may be mutually acceptable to the Seller and the Purchaser
“
Bankruptcy Code
” means Title 11 United States Code, Section 101
et seq.
,
as amended from time to time.
“
BCI
” means Barclays Capital Inc., and its successors in interest.
“
Business Day
” means any day other than (i) a Saturday or Sunday, (ii) a day upon which the New York Stock Exchange or the Federal Reserve Bank of New York is closed or (iii) with respect to any day on which the parties hereto have obligations to the Custodian or on which the Custodian has obligations to any party hereto, a day upon which the Custodian's offices are closed.
“
Capital Lease Obligations
” shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.
“
Cash Equivalents
” means (a) securities with maturities of ninety (90) days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of ninety (90) days or less from the date of acquisition and overnight bank deposits of any commercial bank having capital and surplus in excess of $500,000,000 unless otherwise approved by Purchaser in writing in its sole discretion,
(c) repurchase obligations of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven (7) days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) commercial paper of a domestic issuer rated at least A-1 or the equivalent thereof by Standard and Poor's Ratings Group (“
S&P
”) or P-1 or the equivalent thereof by Moody's Investors Service, Inc. (“
Moody's
”) and in either case maturing within ninety (90) days after the day of acquisition, (e) securities with maturities of ninety (90) days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody's, (f) securities with maturities of ninety (90) days or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (b) of this definition or, (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition.
“
Change in Control
” shall mean: (a) any transaction or event as a result of which FIF HE Holdings LLC ceases to own, beneficially or of record, 100% of the stock of Seller, (b) the sale, transfer, or other disposition of all or substantially all of Seller's assets (excluding any such action taken in connection with any securitization transaction or routine sales of Mortgage Loans), or (c) the consummation of a merger or consolidation of Seller with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity's equity outstanding immediately after such merger, consolidation or such other reorganization is owned by persons who were not equityholders of the Seller immediately prior to such merger, consolidation or other reorganization; provided that none of the foregoing events shall constitute a “Change in Control” if at the time of such event, or as a result thereof, the Seller has a class of its equity securities registered under Section 12 of the Securities Exchange Act of 1934, as amended.
“
Collateral
” shall have the meaning assigned thereto in
Section 8(c)
.
“
Committed Amount
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Completion Fee
” means, with respect to each Participation Certificate, an amount equal to the Final Purchase Price Installment plus the Net Carry Adjustment, less any reduction pursuant to
Section 5(b)
, which amount shall be payable to Seller by Purchaser in two installments as provided in
Section 4(a)
, the Initial Completion Fee Installment and the Final Completion Fee Installment, as compensation to Seller for its services in connection with the issuance of the related Security and performance of its obligations under this Agreement.
“
Confirmation
” means a written confirmation of Purchaser's intent to purchase a Participation Certificate, which written confirmation shall be substantially in the form attached hereto as
Exhibit F
.
“
Custodial Account
” shall have the meaning assigned thereto in
Section 6(c)
.
“
Custodial Account Control Agreement
” means the Deposit Account Control Agreement (Custodial Account), dated of even date herewith, among Seller, Purchaser and Bank entered into in connection with this Agreement, as amended, supplemented or otherwise modified from time to time.
“
Custodial Agreement
” means the Custodial Agreement, dated of even date herewith, among Seller, Purchaser and Custodian entered into in connection with this Agreement and the Master Repurchase Agreement, as the same may be amended, modified or supplemented from time to time.
“
Custodian
” means Bank of New York Mellon Trust Company, N.A. (which, under the appropriate circumstances, may include Freddie Mac as Custodian) and its permitted successors under the Custodial Agreement.
“
Daily Completion Fee Reduction Amount
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Defective Mortgage Loan
” means, with respect to a Participation Certificate, a Related Mortgage Loan that is not in Strict Compliance with the Ginnie Mae Program, Fannie Mae Program, or Freddie Mac Program, as applicable.
“
Delinquent
” means, with respect to any Mortgage Loan, that a monthly payment due thereon is not made by the close of business on the Due Date.
“
Delivery
” means the later to occur of (a) the issuance of the related Security and (b) the transfer of all of the right, title and ownership interest in that Security to Purchaser or its designee.
“
Diligence Sample Set
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Discount
” means, with respect to each Participation Certificate, the portion of the Trade Principal of the related Security agreed upon by Seller and Purchaser, as set forth in the Pricing Side Letter, to reserve for the possibility that Seller may be unable to perform its obligations under this Agreement in accordance with their terms.
“
Due Date
” means the day of the month on which the Monthly Payment is due on a Loan, exclusive of any days of grace.
“
Due Diligence Review Percentage
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Effective Date
” shall have the meaning assigned thereto in the Master Repurchase Agreement.
“
Electronic Agent
” shall have the meaning assigned thereto in
Section 2
of the Electronic Tracking Agreement.
“
Electronic Tracking Agreement
” means the Electronic Tracking Agreement, dated as of the date hereof, among the Purchaser, the Seller, the Electronic Agent and MERS entered into in connection with this Agreement and the Master Repurchase Agreement, as the same shall be amended, supplemented or otherwise modified from time to time.
“
Error Rate
” shall have the meaning assigned thereto the Pricing Side Letter.
“
Escrow Payments
” means, with respect to a Mortgage Loan, the amounts constituting ground rents, taxes, assessments, water charges, sewer rents, municipal charges, mortgage insurance premiums, fire and hazard insurance premiums, condominium charges and other payments as may be required to be escrowed by the Mortgagor with the Mortgagee pursuant to the terms of the Mortgage or any other document.
“
Fannie Mae
” means Fannie Mae or any successor thereto.
“
Fannie Mae Agreement
” means that certain Wiring Instruction and Release of Interest Agreement, dated the date hereof, by and among the Purchaser, Seller, the Custodian and Fannie Mae.
“
Fannie Mae Guide
” means the Fannie Mae MBS Selling and Servicing Guide, as such Guide may hereafter from time to time be amended.
“
Fannie Mae Mortgage Loan
” means, with respect to any Fannie Mae Participation Certificate or any Fannie Mae Security, a mortgage loan that is in Strict Compliance on the related Purchase Date with the eligibility requirements specified for the applicable Fannie Mae Program described in the Fannie Mae Guide.
“
Fannie Mae Participation Certificate
” means, with respect to the Fannie Mae Program, a certificate, in the form of
Exhibit A
, evidencing the 100% undivided beneficial ownership interest in the Mortgage Loans set forth on Fannie Mae Form 2005 (Schedule of Mortgages).
“
Fannie Mae Program
” means the Fannie Mae Guaranteed Mortgage-Backed Securities Programs, as described in the Fannie Mae Guide.
“
Fannie Mae Security
” means an ownership interest in a pool of Fannie Mae Mortgage Loans, evidenced by a book-entry account in a depository institution having book-entry accounts at the Federal Reserve Bank of New York, in substantially the principal amount and with substantially the other terms as specified with respect to such Fannie Mae Security in the related Takeout Commitment, if any.
“
FDIA
” means Title 12 United States Code, Section 1811
et seq.
,
as amended from time to time.
“
FDIC
” means the Federal Deposit Insurance Corporation or any successor thereto.
“
FHA
” means the Federal Housing Administration or any successor thereto.
“
Final Completion Fee Installment
” means the amount equal to the difference between the Completion Fee and the Initial Completion Fee Installment.
“
Final Purchase Price Installment
” means the amount equal to the difference between the Trade Principal and the Initial Purchase Price Installment.
“
Freddie Mac
” means Freddie Mac or any successor thereto.
“
Freddie Mac Agreement
” means that certain Repurchase Addendum to Freddie Mac Forms 996 and 996E, dated the date hereof, by and among the Purchaser, Seller, the Custodian and Freddie Mac.
“
Freddie Mac as Custodian
” means, with respect to Freddie Mac Participation Certificates, the circumstances in which Seller elects to appoint Freddie Mac (as opposed to some other third party as permitted by the Freddie Mac Guide) as Custodian for the Freddie Mac Mortgage Loans subject to the Freddie Mac Participation Certificates to be purchased by Purchaser hereunder.
“
Freddie Mac Guide
” means the Freddie Mac Sellers' and Servicers' Guide, as such Guide may hereafter from time to time be amended.
“
Freddie Mac Mortgage Loan
” means, with respect to any Freddie Mac Participation Certificate or any Freddie Mac Security, a mortgage loan that is in Strict Compliance on the related Purchase Date with the eligibility requirements specified for the applicable Freddie Mac Program described in the Freddie Mac Guide.
“
Freddie Mac Participation Certificate
” means, with respect to the Freddie Mac Program, a certificate, in the form of
Exhibit A
, issued by Seller, evidencing the 100% undivided beneficial ownership interest in the Mortgage Loans that are either (a) set forth on a copy of the Freddie Mac Form 1034 (Fixed-Rate Custodial Certification Schedule) attached to such Participation Certificate or (b) identified on a computer tape compatible with Selling System as belonging to the mortgage loan pool described in such Participation Certificate.
“
Freddie Mac Program
” means the Freddie Mac Home Mortgage Guarantor Program or the Freddie Mac FHA/VA Home Mortgage Guarantor Program, as described in the Freddie Mac Guide.
“
Freddie Mac Security
” means a modified pass-through mortgage-backed participation certificate, evidenced by a book-entry account in a depository institution having book-entry accounts at the Federal Reserve Bank of New York, issued and guaranteed, with respect to timely payment of interest and ultimate payment of principal, by Freddie Mac and backed by a pool of Freddie Mac Mortgage Loans, in substantially the principal amount and with substantially the other terms as specified with respect to such Freddie Mac Security in the related Takeout Commitment, if any.
“
GAAP
” means generally accepted accounting principles as in effect from time to time in the United States of America.
“
Ginnie Mae
” means Government National Mortgage Association or any successor thereto.
“
Ginnie Mae Guide
” means the Ginnie Mae Mortgage-Backed Securities Guide, as such Guide may hereafter from time to time be amended.
“
Ginnie Mae Mortgage Loan
” means, with respect to any Ginnie Mae Participation Certificate or any Ginnie Mae Security, a mortgage loan that is in Strict Compliance on the related Purchase Date with the eligibility requirements specified for the applicable Ginnie Mae Program in the applicable Ginnie Mae Guide.
“
Ginnie Mae Participation Certificate
” means, with respect to the Ginnie Mae Program, a certificate, in the form of
Exhibit A
, issued by Seller, evidencing the 100% undivided beneficial ownership interest in the Mortgage Loans set forth on the Form HUD 11706 (Schedule of Pooled Mortgages).
“
Ginnie Mae Program
” means the Ginnie Mae Mortgage-Backed Securities Programs, as described in a Ginnie Mae Guide.
“
Ginnie Mae Security
” means a fully-modified pass-through mortgage-backed certificate guaranteed by Ginnie Mae, evidenced by a book-entry account in a depository institution having book-entry accounts at the Federal Reserve Bank of New York and backed by a pool of Ginnie Mae Mortgage Loans, in substantially the principal amount and with substantially the other terms as specified with respect to such Ginnie Mae Security in the related Takeout Commitment.
“
Governmental Authority
” means any nation or government, any state or other political subdivision, agency or instrumentality thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over Seller, any of its Subsidiaries or any of their Property.
“
High Cost Mortgage Loan
” means a Mortgage Loan that is (a) subject to, covered by or in violation of the provisions of the Homeownership and Equity Protection Act of 1994, as amended, (b) a “high cost,” “covered,” “abusive,” “predatory” or “high risk” mortgage loan under any federal, state or local law, or any similarly classified loan using different terminology under any law imposing heightened regulation, scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees, or any other state or other regulation providing assignee liability to holders of such mortgage loans, (c) subject to or in violation of any such or comparable federal, state or local statutes or regulations, or (d) a “High Cost Loan” or “Covered Loan,” as applicable, as such terms are defined in the current version of the Standard & Poor's LEVELS® Glossary Revised, Appendix E.
“
HUD
” means United States Department of Housing and Urban Development or any successor thereto.
“
Indebtedness
” means, for any Person: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person);
(b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within ninety (90) days of the date the respective goods are delivered or the respective services are rendered; (c) indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (e) obligations of such Person under Capital Lease Obligations; (f) obligations of such Person under repurchase agreements or like arrangements; (g) indebtedness of others guaranteed by such Person; (h) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; (i) indebtedness of general partnerships of which such Person is a general partner; and (j) any other indebtedness of such Person by a note, bond, debenture or similar instrument.
“
Initial Completion Fee Installment
” shall have the meaning assigned thereto the Pricing Side Letter.
“
Initial Purchase Price Installment
” means, with respect to any Participation Certificate, the excess of the related Trade Principal over the Discount.
“
Investment Company Act
” means the Investment Company Act of 1940, as amended, including all rules and regulations promulgated thereunder.
“
Issuance Date
” means, with respect to a Security, the first day of the month in which the Security is issued.
“
LIBOR
” means the rate (adjusted for statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits for a period equal to one month appearing on Bloomberg Screen US 0001M Page or if such rate ceases to appear on Bloomberg Screen US 0001M Page, or any other service providing comparable rate quotations at approximately 11:00 a.m., London time, on the applicable date of determination, or such interpolated rate as determined by the Agent.
“
Lien
” means any mortgage, deed of trust, lien, claim, pledge, charge, security interest or similar encumbrance.
“
Liquidity
” means, as of any date, the sum of (a) Seller's Unrestricted Cash and (b) the aggregate amount of unused committed capacity available to Seller (taking into account applicable haircuts) under mortgage loan warehouse and servicer advance facilities (other than the facilities provided under the Program Documents) for which Seller has unencumbered eligible collateral to pledge thereunder.
“
Losses
” means any and all losses, claims, judgments, taxes, damages, liabilities, costs or expenses (including lost interest and reasonable attorney's fees) imposed on, incurred by or asserted against any Person specified.
“
Master Netting Agreement
” means that certain Global Netting and Security Agreement, dated as of March 25, 2011, among Purchaser, Seller and certain Affiliates and Subsidiaries of Purchaser and/or Seller, entered into in connection with this Agreement and the Master Repurchase Agreement, as the same shall be amended, supplemented or otherwise modified from time to time.
“
Master Repurchase Agreement
” means that certain Master Repurchase Agreement, dated as of March 25, 2011, by and between Purchaser and Seller, as the same shall be amended, supplemented or otherwise modified from time to time.
“
Material Adverse Change
” means, with respect to a Person, any material adverse change in the business, condition (financial or otherwise), operations, performance, or Property of such Person including the insolvency of such Person or its Parent Company, if applicable.
“
Material Adverse Effect
” means: (a) a Material Adverse Change with respect to Seller or any of its Affiliates; (b) a material impairment of the ability of Seller or any of its Affiliates that is a party to any Program Document to perform under any Program Document to which it is a party; (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Program Document against Seller or any of its Affiliates that is a party to any Program Document; (d) a material adverse effect on the Approvals of Seller.
“
Maturity Date
” means March 23, 2012.
“
Maximum Aggregate Purchase Price
” means, with respect to this Agreement and the Master Repurchase Agreement in the aggregate, an amount equal to the sum of the Committed Amount and the Uncommitted Amount.
“
Maximum Error Rate
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
MERS
” means Mortgage Electronic Registration Systems, Inc., a Delaware corporation, or any successor in interest thereto.
“
MERS Mortgage Loan
” means any Mortgage Loan as to which the related Mortgage or Assignment of Mortgage, has been recorded in the name of MERS, as agent for the holder from time to time of the Mortgage Note and which is identified as a MERS Mortgage Loan on the related schedule attached to the Related Participation Certificate.
“
MIN
” means the mortgage identification number of Mortgage Loans registered with MERS on the MERS System.
“
Monthly Payment
” means the scheduled monthly payment of principal and interest on a Mortgage Loan as adjusted in accordance with changes in the Mortgage Interest Rate pursuant to the provisions of the Mortgage Note for an Adjustable Rate Mortgage Loan.
“
Monthly Payment Date
” means the twentieth (20th) day of each calendar month beginning with February 2011; provided that if such day is not a Business Day, the next succeeding Business Day.
“
Mortgage
” means a mortgage, deed of trust or other security instrument, securing a Mortgage Note.
“
Mortgage File
” shall have the meaning assigned thereto in the Custodial Agreement.
“
Mortgage Interest Rate
” means, with respect to each Mortgage Loan, the annual rate at which interest accrues on such Mortgage Loan from time to time in accordance with the provisions of the related Mortgage Note.
“
Mortgage Loan
” means a Ginnie Mae Mortgage Loan, a Fannie Mae Mortgage Loan or a Freddie Mac Mortgage Loan.
“
Mortgage Note
” means a promissory note or other evidence of indebtedness of the obligor thereunder, evidencing a Mortgage Loan, and secured by the related Mortgage.
“
Mortgaged Property
” means the real property (or leasehold estate, if applicable) securing repayment of the debt evidenced by a Mortgage Note.
“
Mortgagor
” means the obligor or obligors on a Mortgage Note, including any person who has assumed or guaranteed the obligations of the obligor thereunder.
“
MRA Collection Account Control Agreement
” means that certain Deposit Account Control Agreement (Collection Account), dated as of March 25, 2011, among Seller, Purchaser and Bank entered into in connection with the Master Repurchase Agreement, as the same shall be amended, supplemented or otherwise modified from time to time.
“
MRA Pricing Side Letter
” means the Pricing Side Letter, dated as of March 25, 2011, among between Seller and Purchaser entered into in connection with the Master Repurchase Agreement, as the same shall be amended, supplemented or otherwise modified from time to time.
“
MRA Program Documents
” means the Master Repurchase Agreement, the MRA Pricing Side Letter, the MRA Collection Account Control Agreement, and all other agreements, documents and instruments entered into by Seller on the one hand, and Purchaser or one of its Affiliates (or Custodian on its behalf) and/or Agent or one of its Affiliates on the other, in connection herewith or therewith with respect to the transactions contemplated hereunder or thereunder and all amendments, restatements, modifications or supplements thereto.
“
Negative Amortization
” means the portion of interest accrued at the Mortgage Interest Rate in any month which exceeds the Monthly Payment on the related Mortgage Loan for such month and which, pursuant to the terms of the Mortgage Note, is added to the principal balance of the Mortgage Loan.
“
Net Carry Adjustment
” means an amount (which may be a negative number) equal to the difference obtained by subtracting (i) the product of (A) the rate of interest to be borne by the related Security multiplied by the aggregate principal amount of the Related Mortgage Loans evidenced by the related Participation Certificate, and (B) the number of days in the period from and including the Issuance Date of such Security through but excluding the related Settlement Date, divided by 360, from (ii) the product of (A) the applicable Transaction Rate multiplied by the initial principal amount of related Security, and (B) the number of days in the period from and including the date of the purchase of the related Participation Certificate under this Agreement through but excluding the related Settlement Date, divided by 360.
“
Net Worth
” means, with respect to Seller, the excess of total assets of Seller, over Total Liabilities of Seller, determined in accordance with GAAP.
“
Non-Utilization Fee
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Origination Date
” means the date on which a Mortgage Loan was originated.
“
Originator
” means Seller or any other third party originator as mutually agreed upon by Agent and Seller.
“
OTS
” means Office of Thrift Supervision or any successor thereto.
“
Pass Through Rate
” means with respect to a Security, the rate of interest to be borne by such Security, which rate or rates shall be set forth in the related Confirmation.
“
Parent Company
” means a corporation or other entity owning at least 50% of the outstanding shares of voting securities of Seller.
“
Participation Certificate
” means a Ginnie Mae Participation Certificate, a Fannie Mae Participation Certificate or a Freddie Mac Participation Certificate, as applicable.
“
Person
” means any individual, corporation, company, voluntary association, partnership, joint venture, limited liability company, trust, unincorporated association or government (or any agency, instrumentality or political subdivision thereof).
“
Pricing Side Letter
” means the Pricing Side Letter, dated as of even date herewith, between Seller and Purchaser entered into in connection with this Agreement, as amended, supplemented or otherwise modified from time to time.
“
Program Documents
” means this Agreement, the Pricing Side Letter, the Custodial Agreement, the Electronic Tracking Agreement, the Custodial Account Control Agreement, the Master Netting Agreement, the Fannie Mae Agreement, the Freddie Mac Agreement, the Participation Certificates, the MRA Program Documents and all
other agreements, documents and instruments entered into by Seller on the one hand, and Purchaser or one of its Affiliates (or Custodian on its behalf) and/or Agent or one of its Affiliates on the other, in connection herewith or therewith with respect to the transactions contemplated hereunder or thereunder and all amendments, restatements, modifications or supplements thereto.
“
Property
” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.
“
Purchase Date
” means, with respect to a Participation Certificate, the date on which such Participation Certificate is purchased by Purchaser.
“
Purchase Price
” means, with respect to each Participation Certificate, the Trade Principal of the Security to be backed by the Related Mortgage Loans. Such Purchase Price shall be payable (i) on the Purchase Date in an amount equal to the Initial Purchase Price Installment, and (ii) on the Settlement Date in an amount equal to the Final Purchase Price Installment. Accrued interest shall be allocated in accordance with
Section 4(c)
.
“
Purchaser
” means Barclays Bank PLC and its successors in interest, including, but not limited to, any lender, designee or assignee to whom a Participation Certificate or a Security shall be pledged or assigned.
“
Related Mortgage Loan
” means a Mortgage Loan in which a Participation Certificate evidences the 100% undivided beneficial ownership interest.
“
Related Participation Certificate
” means the Participation Certificate relating to a pool of Mortgage Loans.
“
Request for Release of Documents
” means the Request for Release of Documents set forth as
Exhibit 15
to the Custodial Agreement, as applicable.
“
Restricted Mortgage Loan
” means (i) a “Growing Equity Loan,” “Manufactured Home Loan,” “Graduated Payment Loan,” “Buydown Loan,” “Project Loan,” “Construction Loan” or “HECM Loan, each as defined in the applicable Agency Guide, (ii) a 30+ Day Delinquent Mortgage Loan, (iii) a Mortgage Loan for which the related Escrow Payments have not been made by the next succeeding Due Date, or (iv) a High Cost Mortgage Loan.
“
SEC
” means the Securities Exchange Commission or any successor thereto.
“
Security
” means a Ginnie Mae Security, a Fannie Mae Security or a Freddie Mac Security, as applicable.
“
Security Issuance Failure
” means failure of the Security to be issued for any reason whatsoever on or before the Anticipated Delivery Date.
“
Selling System
” means the Freddie Mac automated system by which sellers and servicers of mortgage loans to Freddie Mac transfer mortgage summary and record data or mortgage accounting and servicing information from their computer system or service bureau to Freddie Mac, as more fully described in the Freddie Mac Guide.
“
Servicing File
” means, with respect to each Mortgage Loan, the file retained by Seller or its designee consisting of all documents that a prudent originator and servicer would include (including copies of the Mortgage File), all documents necessary to document and service the Mortgage Loans and any and all documents required to be delivered in connection with any transfer of servicing pursuant to the Program Documents.
“
Servicing Records
” means, with respect to a Related Mortgage Loan, the related servicing records, including but not limited to any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of such Related Mortgage Loan.
“
Servicing Term
” shall have the meaning assigned thereto in
Section 6(a)
.
“
Servicing Termination Events
” shall have the meaning assigned thereto in
Section 6(e)
.
“
Set Off Eligible Agreement
” means any lending or hedging agreement (including, without limitation, the Master Repurchase Agreement) entered into between Seller or any of its Subsidiaries on the one hand, and Purchaser or any of its Affiliates on the other hand. For avoidance of doubt, Purchaser agrees that any flow agreement for the purchase and sale of Mortgage Loans (other than the Mortgage Loan Participation Purchase and Sale Agreement) or any securitization, debt or equity transaction with respect to which Purchaser or any of its Affiliates acts as underwriter, placement agent, securities administrator or in a similar capacity shall not constitute a Set Off Eligible Agreement.
“
Settlement Date
” means the date specified in a Takeout Commitment upon which the related Security is scheduled to be delivered to the specified Takeout Investor on a “delivery versus payment” basis.
“
Strict Compliance
” means compliance of Seller and the Related Mortgage Loans with the requirements of the Agency Guide as amended by any agreements between Seller and the Applicable Agency, sufficient to enable Seller to issue and Ginnie Mae to guarantee or Fannie Mae or Freddie Mac to issue and guarantee a Security; provided, that until copies of any such agreements between Seller and the Applicable Agency have been provided to Agent by Seller and agreed to by Agent, such agreements shall be deemed, as between Seller and Purchaser, not to amend the requirements of the Agency Guide.
“
Structuring Fee
” shall have the meaning assigned thereto in the Master Repurchase Agreement.
“
Subsidiary
” means, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“
Successor Servicer
” means an entity with the necessary Approvals, as the circumstances may require, and designated by Purchaser, in conformity with
Section 6(f)
, to replace Seller as issuer and subservicer, mortgagee or seller/servicer of the Related Mortgage Loans or the Securities related thereto.
“
Takeout Commitment
” means a fully executed trade confirmation from the related Takeout Investor to Seller confirming the details of a forward trade between the Takeout Investor and Seller with respect to one or more Securities relating to a Participation Certificate, which trade confirmation shall be enforceable and in full force and effect, and shall be validly and effectively assigned to BCI pursuant to a Trade Assignment, and relate to pools of Related Mortgage Loans that satisfy the “good delivery standards” of the Securities Industry and Financial Markets Association as set forth in the Securities Industry and Financial Markets Association Uniform Practices Manual, as amended from time to time.
“
Takeout Investor
” means either (i) BCI, or (ii) any other Person approved by Agent in its sole good faith discretion.
“
Tangible Net Worth
” means, with respect to any Person at any date of determination, (i) the Net Worth of such Person and its consolidated Subsidiaries, determined in accordance with GAAP, minus (ii) all intangibles determined in accordance with GAAP (including, without limitation, goodwill, capitalized financing costs and capitalized administration costs but excluding originated and purchased mortgage servicing rights and retained residual securities) and any and all advances to, investments in and receivables held from Affiliates; provided, however, that the non-cash effect (gain or loss) of any mark-to-market adjustments made directly to stockholders' equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the calculation of Tangible Net Worth.
“
Termination Date
” means the earliest to occur of (i) the Maturity Date, (ii) the termination of the Master Repurchase Agreement, (iii) at the option of Agent, the occurrence of a Servicing Termination Event under this Agreement after the expiration of any applicable grace period, and (iv) with respect to the Uncommitted Amount, the fifteenth (15th) Business Day after the Purchaser delivers a notice of termination to the Seller, provided that if such day is not a Business Day, the immediately preceding Business Day.
“
Trade Assignment
” means a letter substantially in the form of
Exhibit B
.
“
Trade Price
” means the price (expressed as a percentage of the initial principal amount of the Security), as specified in the related Takeout Commitment at which the related Takeout Investor is obligated to purchase such Security as specified in such Takeout Commitment.
“
Trade Principal
” means an amount equal to the product of (a) the Trade Price and (b) the initial principal amount of the related Security, as specified in the related Takeout Commitment.
“
Transaction Rate
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Uncommitted Amount
” shall have the meaning assigned thereto in the Pricing Side Letter.
“
Unrestricted Cash
” means, as of any date of determination, the sum of (i) Seller's cash, (ii) Seller's Cash Equivalents that are not, in either case, subject to a Lien in favor of any Person or that are not required to be reserved by Seller in a restricted escrow arrangement or other similarly restricted arrangement pursuant to a contractual agreement or requirement of law.
“
VA
” means the United States Department of Veterans Affairs or any successor thereto.
“
Warehouse Lender
” means any lender providing financing to Seller for the purpose of originating Mortgage Loans, which prior to the Purchase Date has a security interest in such Mortgage Loans as collateral for the obligations of Seller to such lender.
“
Warehouse Lender's Release
” means a letter, in the form of
Exhibit D
, from a Warehouse Lender to Purchaser, unconditionally releasing all of Warehouse Lender's right, title and interest in certain Mortgage Loans identified therein upon payment to the Warehouse Lender.
“
Wire Instructions
” means the wire instructions set forth opposite the name of the Warehouse Lender in a letter, in the form of
Exhibit 18
to the Custodial Agreement, executed by Seller and Custodian, receipt of which has been acknowledged by Agent.
Section 2.
Procedures for Purchases of Participation Certificates
.
(a)
Purchaser (x) shall, until the Termination Date, but subject to satisfaction of certain conditions precedent set forth herein, purchase one or more Participation Certificates from Seller with an aggregate Purchase Price not to exceed the Committed Amount, and (y) may, in its sole discretion from time to time until the Termination Date, purchase, but shall have no obligation to, purchase one or more Participation Certificates from Seller with an aggregate Purchase Price not to exceed the Uncommitted Amount;
provided
,
that
the sum of (i) the Aggregate MRA Purchase Price and (ii) the Aggregate EPF Purchase Price, shall not exceed, as of any date of determination, the Maximum Aggregate Purchase Price. All purchases of Participation Certificates hereunder shall be first deemed committed up to the Committed Amount and then the remainder, if any, shall be deemed uncommitted up the Uncommitted Amount. In connection with Purchaser's purchase of any such Participation Certificate, Seller, on behalf of Purchaser, shall arrange for the Delivery to BCI of a Security backed by the Related Mortgage Loans, which Security shall be subject to a Takeout Commitment. The purchase of any Participation Certificate shall be subject to the receipt by Purchaser of the documents listed in
Exhibit C
from Seller, in form and substance satisfactory to Agent, and the
execution of the Custodial Agreement relating to the Participation Certificate by Seller and Custodian and the Electronic Tracking Agreement relating to the Related Mortgage Loans by Seller, MERS and Electronic Agent, and delivery thereof to Purchaser. In accordance with the provisions of the Electronic Tracking Agreement, the Seller shall, at its sole cost and expense, (1) cause each Related Mortgage Loan with respect to which a Participation Certificate is to be sold to the Purchaser on a Purchase Date, the Mortgage for which is recorded in the name of MERS, to be designated a MERS Mortgage Loan and (2) cause the Purchaser to be designated an Associated Member (as defined in the Electronic Tracking Agreement) with respect to each such MERS Mortgage Loan. Notwithstanding the satisfaction of the conditions specified in this
Section 2(a)
or anything else herein or in any other Program Document to the contrary, Purchaser is not obligated to purchase any Participation Certificate offered to it hereunder in respect of the Uncommitted Amount.
(b)
If on or before the related Purchase Date or as soon as practicable after such Purchase Date, Purchaser shall deliver to Seller a completed Confirmation with respect to the Participation Certificate to be purchased hereunder on such Purchase Date reflecting the agreed-upon terms of the transaction. In addition, Purchaser shall pay to Seller, on the Purchase Date, the amount of the Initial Purchase Price Installment for such Participation Certificate upon receipt of a duly executed and properly completed original Participation Certificate. Effective upon execution and delivery of such Participation Certificate to Purchaser, Seller hereby assigns to Purchaser all of Seller's right, title and interest in and to such Participation Certificate and a 100% undivided beneficial interest in the Related Mortgage Loans. In the event that Purchaser does not transmit the Initial Purchase Price Installment, (i) any Participation Certificate delivered by Custodian to Purchaser in anticipation of such purchase shall automatically be null and void, (ii) Purchaser will not consummate the transactions contemplated in the applicable Trade Assignment and (iii) to the extent that Purchaser shall nevertheless receive the Security backed by the Related Mortgage Loans prior to its becoming null and void as provided in clause (i) above, Purchaser shall take all reasonable actions necessary to ensure that such Security shall be delivered in accordance with Seller's delivery instructions specified in
Annex A
.
(c)
The terms and conditions of the purchase of each Participation Certificate shall be as set forth in this Agreement. Each Participation Certificate shall be deemed to incorporate, and Seller shall be deemed to make as of the applicable dates specified in
Section 9
, for the benefit of Purchaser and each Assignee of such Participation Certificate, the representations and warranties set forth in
Section 9
.
(d)
In the event of any conflict between the terms of a Confirmation and this Agreement, the Confirmation shall prevail.
(e)
For the avoidance of any doubt, it is hereby understood and agreed that Purchaser's purchase of the beneficial ownership interest in and to Related Mortgage Loans, as evidenced by a Participation Certificate, shall include all of the servicing rights relating to such Mortgage Loans.
Section 3.
Takeout Commitments
.
Seller hereby assigns to BCI, free of any security interest, lien, claim or encumbrance of any kind, Seller's rights under each Takeout Commitment to deliver the Security specified therein to the related Takeout Investor and to receive the purchase price therefor from such Takeout Investor. Subject to Purchaser's rights hereunder, Purchaser agrees that it will cause BCI to satisfy the obligation under the Takeout Commitment to deliver the Security to the Takeout Investor on the Settlement Date specified therein. Seller understands that, as a result of this
Section 3
and each Trade Assignment, BCI will succeed to the rights and obligations of Seller with respect to each Takeout Commitment subject to a Trade Assignment, and that in satisfying each such Takeout Commitment, BCI will stand in the shoes of Seller and, consequently, will be acting as a non-dealer in exercising its rights and fulfilling its obligations assigned pursuant to this
Section 3
and each Trade Assignment. Each Trade Assignment delivered by Seller to Purchaser shall be delivered by Seller in a timely manner sufficient to enable BCI to facilitate the settlement of the related trade on the trade date in accordance with Chapter 8 of the Securities Industry and Financial Markets Association's Uniform Practices for the Clearance and Settlement of Mortgage Backed Securities and other Related Securities, as amended from time to time.
Section 4.
Completion Fee
.
(a)
Subject to the terms of this Agreement, Purchaser shall pay to Seller the Completion Fee for each Participation Certificate purchased hereunder as follows: (i) the Initial Completion Fee Installment shall be paid on the date of Delivery of the related Security and (ii) the Final Completion Fee Installment shall be paid on the later of the Settlement Date of the related Security and the date of receipt by BCI of the Trade Price with respect to such related Security.
(b)
Except as otherwise provided in this
Section 4
and in
Section 5(b)
, and subject to Purchaser's right of set-off set forth in
Section 12
, the Completion Fee owed by Purchaser with respect to a Participation Certificate, if any, shall be paid by Purchaser to Seller in full by not later than the Settlement Date of the related Security.
(c)
Upon exercise by Purchaser of its remedies under
Section 6(f)
, Purchaser's obligation to pay and Seller's right to receive any portion of the Completion Fee relating to a Participation Certificate shall automatically be canceled and become null and void;
provided
,
that
such cancellation shall in no way relieve Seller or otherwise affect the obligation of Seller to indemnify and hold Purchaser and Agent harmless as specified in
Section 13
. At no time shall Seller shall have any beneficial interest in the servicing rights with respect to Related Mortgage Loans while the related Participation Certificate is outstanding.
(d)
If a Participation Certificate is purchased by Purchaser after the first day of the month in which the Settlement Date occurs, Purchaser shall also pay to Seller on the date of Delivery to Purchaser of the Security backed by the related Mortgage Loans an amount equal to the accrued interest on the related Security at the rate specified in the related Takeout Commitment from the first day of such month to and including the day immediately preceding the date Purchaser purchased such Participation Certificate. If a Participation Certificate is purchased by Purchaser in the month prior to the month in which the Settlement Date occurs, the Completion Fee shall be reduced by an amount equal to all interest payments which accrue on such Participation Certificate during the period from the date of purchase of such Participation Certificate through and including the last day of the month prior to the month in which such Settlement Date occurs.
Section 5.
Issuance of Securities
.
(a)
(i) In connection with the purchase of a Participation Certificate, Seller shall instruct (and, if Seller fails to instruct, then Agent may instruct) Custodian to deliver to the Applicable Agency, the documents listed in
Exhibit 19-A
,
19-B
or
19-C
of the Custodial Agreement, as applicable, in respect of the Related Mortgage Loans, in the manner and at the time set forth in the Custodial Agreement. Seller shall thereafter promptly deliver to the Applicable Agency any and all additional documents requested by the Applicable Agency to enable the Applicable Agency to make Delivery to Purchaser of a Security backed by such Mortgage Loans on the related Anticipated Delivery Date. Seller shall not revoke such instructions to Custodian and shall not revoke its instructions to the Applicable Agency to make Delivery to Purchaser or its designee of a Security backed by such Mortgage Loans.
(ii) Seller shall notify Purchaser, not later than 3:00 p.m., Eastern Time, on the first (1st) Business Day prior to the applicable Settlement Date (a) of the amount of any change in the principal amount of the Mortgage Loans backing each such Security related to such Settlement Date and (b) with respect to Freddie Mac Securities, the Freddie Mac mortgage loan pool number applicable to each Security to which such Settlement Date relates. Upon Delivery of such Security to Purchaser or its designee, Purchaser shall cease to have any interest under such Participation Certificate and in exchange shall have a 100% ownership interest in the related Security. It is understood and agreed that for so long as Seller is subservicing Related Mortgage Loans, Seller shall retain only record title to the Mortgages (and not an equitable interest) in all such Mortgage Loans (other than MERS Mortgage Loans) for the sole purpose of subservicing such Mortgage Loans on a servicing-released basis.
(b)
If Delivery of a Security backed by the Mortgage Loans evidenced by a Participation Certificate purchased hereunder does not occur by 12:00 noon (Eastern Time) on the related Settlement Date (whether as a result of a Security Issuance Failure or otherwise), then subject to the exercise by Purchaser of its rights set forth in
Section 4(c)
, the Completion Fee relating to such Participation Certificate shall be reduced on each day during the period from the Settlement Date to (but not including) the earlier of (x) the date of Delivery of such Security, and (y) the date of satisfaction of the obligations of Seller pursuant to the exercise by Purchaser of any remedial election authorized by this
Section 5
, by an amount equal to the Daily Completion Fee Reduction Amount. The Completion Fee (reduced the applicable Daily Completion Fee Reduction Amounts) relating to such Participation Certificate, if any, shall not be payable until the end of the period specified in the preceding sentence.
(c)
If a breach by Seller of this Agreement results in any Related Mortgage Loan being a Defective Mortgage Loan on the Purchase Date of the related Participation Certificate, Agent in its sole discretion may require that Seller to, upon receipt of notice from Purchaser or Agent of its exercise of such right, either (x) immediately repurchase Purchaser's beneficial ownership interest in such Defective Mortgage Loan by remitting to Purchaser the allocable amount paid by Purchaser for such beneficial interest plus accrued interest at the rate specified in the related Mortgage Note on the principal amount thereof from the date of Purchaser's purchase of such Participation Certificate to the date of such repurchase together with any Losses suffered by Purchaser relating to such repurchase (including, without limitation, any Losses incurred by Purchaser resulting from adjustments to the trade required by the Takeout Investor), or (y) deliver to Custodian a Mortgage Loan eligible to back such Security in exchange for such Defective Mortgage Loan, which newly delivered Mortgage Loan shall be in all respects acceptable to Agent in Agent's sole discretion, and such newly delivered Mortgage Loan will thereupon become one of the Related Mortgage Loans relating to the Participation Certificate. If the aggregate principal balance of any Mortgage Loans that are accepted by Purchaser pursuant to clause (y) of the immediately preceding sentence is less than the aggregate principal balance of any Defective Mortgage Loan that is being replaced by such Mortgage Loan, Seller shall remit with such Mortgage Loan to Purchaser an amount equal to the difference between the aggregate principal balance of the new Mortgage Loan accepted by Purchaser and the aggregate principal balance of the Defective Mortgage Loan being replaced thereby plus accrued interest on such Defective Mortgage Loan at the rate specified in the related Mortgage Note on the principal amount thereof from the Purchase Date of Purchaser's purchase of such Participation Certificate to the date of substitution. If any Related Mortgage Loan becomes thirty (30) or more days past due with respect to the first scheduled monthly payment due Purchaser after the date on which such Related Mortgage Loan was originated and prior to the Anticipated
Delivery Date, Seller shall repurchase the beneficial interest in such Related Mortgage Loan as if it were a Defective Mortgage Loan upon direction by Agent given no later than one hundred twenty (120) days after the Purchase Date.
(d)
No exercise by Purchaser or Agent of their respective rights under this
Section 5
shall relieve Seller of responsibility or liability for any breach of this Agreement.
Section 6
Servicing of the Mortgage Loans; Servicer Termination; Backup Servicer
.
(a)
Upon payment of the Purchase Price (subject to
Section 4
), Purchaser shall own a 100% undivided beneficial interest in the servicing rights related to the Related Mortgage Loans and all source files, documents, agreements and papers related to servicing the Related Mortgage Loans and shall own all derivative information created by Seller or other third party used or useful in servicing such Mortgage Loans. Seller and Purchaser each agrees and acknowledges that a 100% undivided beneficial interest in Related Mortgage Loans shall be sold to Purchaser on a servicing released basis, and that Purchaser is engaging and hereby does engage Seller to provide subservicing of each Related Mortgage Loan for the benefit of Purchaser (and any other registered holder of the related Participation Certificate) for a term of forty-five (45) days from the related Purchase Date (subject to the termination rights provided in this Agreement, including, without limitation,
Section 6(f)
of this Agreement), which term may be extended in writing by Agent, in its sole discretion, for an additional forty-five (45) period (each, a “
Servicing Term
”). If such Servicing Term is not extended by Purchaser or if Purchaser has terminated Seller as a result of a Servicer Termination Event, Seller shall transfer such servicing to Purchaser or its designee at no cost or expense to Purchaser as provided in
Section 6(g)
of this Agreement. Seller shall hold or cause to be held all Escrow Payments collected with respect to the Related Mortgage Loans in segregated accounts for the sole benefit of the Mortgagor and shall apply the same for the purposes for which such funds were collected. If Seller should discover that, for any reason whatsoever, it has failed to perform fully its servicing obligations with respect to the Related Mortgage Loans, Seller shall promptly notify Purchaser.
For so long as a Participation Certificate is outstanding, Seller shall neither assign, encumber or pledge its obligation to subservice the Related Mortgage Loans in whole or in part, nor delegate its rights or duties under this Agreement without the prior written consent of Agent, the granting of which consent shall be in the sole discretion of Agent. Seller hereby acknowledges and agrees that (i) Purchaser is entering into this Agreement in reliance upon Seller's representations as to the adequacy of its financial standing, servicing facilities, personnel, records, procedures, reputation and integrity, and the continuance thereof; and (ii) Seller's engagement hereunder to provide mortgage servicing for the benefit of Purchaser (and any other registered holder of the Participation Certificate) is intended by the parties to be a “personal service contract” and Seller is hereunder intended by the parties to be an “independent contractor”.
(b)
(i) Seller shall subservice and administer the Related Mortgage Loans relating to a Participation Certificate on behalf of Purchaser in accordance with Accepted Servicing Practices. Seller shall have no right to modify or alter the terms of any Related Mortgage Loan or consent to the modification or alteration of the terms of any Related Mortgage Loan except in Strict Compliance with the related Agency Program. Seller shall at all times maintain accurate and complete records of its servicing of the Related Mortgage Loans, and Agent may, at any time during Seller's business hours on reasonable notice, examine and make copies of such Servicing Records. Seller agrees that Purchaser is the 100% beneficial owner of all Servicing Records relating to the Related Mortgage Loans. Seller covenants to hold such Servicing Records for the benefit of Purchaser and to safeguard such Servicing Records and to deliver them promptly to Agent or its designee (including the Custodian) at Agent's request or otherwise as required by operation of this
Section 6
.
(ii) If Delivery of a Security is not made to Purchaser on or before the Anticipated Delivery Date, Seller shall deliver to Purchaser monthly reports regarding the status of those Related Mortgage Loans for which a Security has not yet been issued, which reports shall include, but shall not be limited to, a description of those Related Mortgage Loans in default for more than thirty (30) days, and such other circumstances with
respect to any Related Mortgage Loans (whether or not such Related Mortgage Loans are included in the foregoing list) that could materially adversely affect any of such Related Mortgage Loans, Purchaser's beneficial interest in such Related Mortgage Loans or the collateral securing any of such Related Mortgage Loans. Seller shall deliver such a report to Purchaser on the last day of each month until (i) Delivery of the related Security to Purchaser or (ii) the exercise by Purchaser of any remedial election pursuant to
Section 5
. In no event shall Seller delegate any of its subservicing duties hereunder to any other Person without first obtaining the prior written consent of Purchaser.
At the time of the delivery of the related monthly report required to be delivered to Purchaser pursuant to
Section 10(b)(iii)
, and as requested by Purchaser or Agent from time to time, Seller shall furnish to Purchaser and Agent reports in form and scope satisfactory to Agent, setting forth (i) data regarding the performance of the individual Mortgage Loans, (ii) a summary report of all Related Mortgage Loans serviced by the Seller and originated pursuant to an Agency Guide, HUD and/or FHA guidelines (on a portfolio basis), in each case, for the immediately preceding month, including, without limitation, all collections, delinquencies, defaults, defects, claim rates, losses and recoveries, and (iii) any other information reasonably requested by Purchaser or Agent.
(c)
Seller, as servicer, shall establish and maintain a separate custodial account (the “
Custodial Account
”) with Bank entitled “Seller Custodial Account, for the benefit of Barclays Bank PLC and its assignees under the Mortgage Loan Participation Purchase and Sale Agreement dated as of March 25, 2011” and shall deposit into such account in the form received within two (2) Business Days' receipt thereof, with any necessary endorsements, all collections received in respect of the Related Mortgage Loans relating to Participation Certificates purchased by Purchaser hereunder, and such amounts shall be deposited or credited irrespective of any right of setoff or counterclaim arising in favor of Seller (or any third party claiming through it) under any other agreement or arrangement. Seller shall deliver, or cause Bank to deliver, to Purchaser, daily account statements in respect of the Custodial Account. The Custodial Account shall be subject to the terms and conditions of the Custodial Account Control Agreement.
(d)
Amounts deposited in the Custodial Account with respect to any Related Mortgage Loan relating to Participation Certificates purchased by Purchaser hereunder shall be held for the benefit of Purchaser and shall be released only as follows:
(i)
Except as otherwise provided in
Section 6(d)(ii)
, amounts deposited in the Custodial Account shall be released to Seller upon either (x) the Settlement Date (unless there is a Securities Issuance Failure), (y) if earlier, on the date required by the Applicable Agency Guide or (z) at any time, subject to the restrictions set forth in
Section 6(d)(i)(A)
and
Section 6(d)(ii)
; provided, that Agent shall have the right to block such withdrawals at any time by providing written notice thereof to Seller and Bank in accordance with the terms of the Custodial Account Control Agreement.
(A)
Seller shall have the right to withdraw from the Custodial Account up to $25,000 in the aggregate on any day without Purchaser's prior written consent, which consent may be given or withheld by Purchaser in its sole discretion and a copy of which shall be delivered by Purchaser to the Bank (the “
Daily Withdrawal Limit
”). If, on any day, the amounts on deposit in the Custodial Account exceed $25,000 (such excess amounts, the “
Excess Funds
”), unless Purchaser shall have consented to Seller's withdrawal as provided in the foregoing sentence, Seller shall cause the Bank to disburse such Excess Funds to Purchaser, which amounts shall be applied by Purchaser in the following order of priority (i) to reduce the Purchase Price for the Related Participation Certificate or the Completion Fee and (ii) to reduce any outstanding fees or expenses due and owing by Seller to Purchaser hereunder.
(B)
Notwithstanding the foregoing, all amounts relating to Participation Certificates purchased by Purchaser hereunder and deposited in the Custodial Account shall be released to Seller upon the Settlement Date of the related Security (unless there is a Securities Issuance
Failure) only if, and to the extent that, the amounts due and payable to Purchaser hereunder have been set-off against the Purchase Price for the Related Participation Certificate or the Completion Fee. The amounts paid to Seller (if any) pursuant to this
Section 6(d)(i)
shall constitute Seller's sole compensation for subservicing the Related Mortgage Loans as provided in this
Section 6
.
(ii)
If the servicing of the Related Mortgage Loans is transferred to a Successor Servicer either under the circumstances set forth in
Section 6(f)
or otherwise, all amounts deposited in the Custodial Account shall be paid to Purchaser promptly upon such transfer.
(iii)
If a Security is not issued solely as a result of a Security Issuance Failure during the month in which the related Settlement Date occurs, in any period thereafter during which Seller remains as subservicer, all amounts deposited in the Custodial Account shall be released only in accordance with Agent's written instructions.
(e)
Purchaser (or any other registered holder of the Related Participation Certificate) shall be entitled to effect termination of Seller's subservicing rights and obligations respecting the affected Related Mortgage Loans in the event any of the following circumstances or events (“
Servicing Termination Events
”) occur and are continuing:
(i)
any failure by Seller to remit to Purchaser (or other registered holder of the Participation Certificate) when due any payment required to be made under the terms of this Agreement or such Participation Certificate; or
(ii)
failure by Seller duly to observe or perform in any material respect any of Seller's other covenants or agreements set forth in this Agreement or in the Custodial Agreement which continues unremedied for a period of two (2) Business Days of the earlier of (x) Seller's receipt of written notice from Purchaser, Agent or Custodian of such breach or (y) the date on which Seller obtains notice or knowledge of the facts giving rise to such breach; or
(iii)
any representation, warranty or certification made or deemed made herein or in the Custodial Agreement by Seller or any certificate furnished to Purchaser pursuant to the provisions thereof, shall prove to have been false or misleading in any material respect as of the time made or furnished; or
(iv)
an Act of Insolvency occurs; or
(v)
Seller ceases to meet the qualifications for maintaining all Approvals, such Approvals are revoked or such Approvals are modified in a manner materially adverse to Seller; or
(vi)
Seller attempts to assign its right to servicing compensation hereunder or to resell an ownership interest in a Related Mortgage Loan in a manner inconsistent with the terms hereof, or Seller attempts without the consent of Agent to sell or otherwise dispose of all or substantially all of its Property or assets or to assign, encumber or pledge its obligation to subservice the Related Mortgage Loans in whole or in part, or delegate its rights or duties under this Agreement (to other than a subservicer) without the prior written consent of Agent, the granting of which consent shall be in the sole discretion of Agent; or
(vii)
Seller or any of its Affiliates fails to operate or conduct its business operations or any material portion thereof in the ordinary course, or Seller experiences any other Material Adverse Effect; or
(viii)
Seller ceases to be a member of MERS in good standing for any reason (unless MERS is no longer acting in such capacity) or Seller shall fail to enter into the Electronic Tracking Agreement with the Purchaser; or
(ix)
A default by Seller or any of its Affiliates or Subsidiaries shall have occurred and be continuing beyond the expiration of any applicable cure periods under any material agreement (including, without limitation, the Program Documents and the MRA Program Documents) or obligation entered into between such Person and Purchaser or any of its Affiliates; or
(x)
failure by the Seller to be in compliance with the “doing business” or licensing laws of any jurisdiction where a Mortgaged Property is located; or
(xi)
in the event of a Security Issuance Failure; or
(xii)
Seller or any of its Affiliates or Subsidiaries shall be in default under, or fail to perform as requested under, or shall otherwise breach, beyond any applicable cure period, the (i) the terms of any warehouse, credit, repurchase, line of credit, financing or other similar agreement relating to any Indebtedness between Seller or any of its Affiliates or Subsidiaries, on the one hand, and any Person, on the other, which default or failure entitles any party to require acceleration or prepayment of any Indebtedness thereunder; (ii) any payment obligation under any other material agreement between Seller or any of its Affiliates or Subsidiaries, on the one hand, and any Person, on the other (it being understood that an agreement is material if the payment obligations thereunder exceed $1,000,000 in the aggregate, over the term of such agreement).
(xiii)
A Change in Control of Seller shall have occurred that has not been approved by Agent.
(f)
Purchaser, in its sole discretion, may terminate Seller's rights and obligations as subservicer of the affected Related Mortgage Loans and require Seller to deliver the related Servicing Records to Purchaser or its designee upon the occurrence of (i) a Servicing Termination Event, (ii) Seller's failure to comply with any of its obligations set forth in
Section 5(c)
, or (iii) Seller's breach of
Sections 9(a)(xi)
or
9(b)(xi)
, by delivering written notice to Seller requiring such termination. Such termination shall be effective upon Seller's receipt of such written notice;
provided
,
that
Seller's subservicing rights shall be terminated immediately upon the occurrence of any event described in
Section 6(e)(iv)
, regardless of whether notice of such event shall have been given to or by Purchaser or Seller. Upon any such termination, all authority and power of Seller respecting its rights to subservice and duties under this Agreement relating thereto, shall pass to and be vested in the Successor Servicer appointed by Purchaser and Purchaser is hereby authorized and empowered to transfer such rights to subservice the Related Mortgage Loans for such price and on such terms and conditions as Purchaser shall reasonably determine;
provided
,
that
to the extent the Applicable Agency proceeds to issue a Security with respect to the Related Mortgage Loans, Purchaser shall convey the servicing rights and the rights to subservice such Mortgage Loans in accordance with such Applicable Agency's instructions. Seller shall promptly take such actions and furnish to Purchaser such documents that Purchaser deems necessary or appropriate to enable Purchaser to obtain a Security backed by such Mortgage Loans or to enforce such Mortgage Loans, as appropriate, and shall perform all acts and take all actions so that the Related Mortgage Loans and all files and documents relating to such Mortgage Loans held by Seller, together with all escrow amounts relating to such Mortgage Loans, are delivered to Successor Servicer, including but not limited to preparing, executing and delivering to the Successor Servicer any and all documents and other instruments, placing in the Successor Servicer's possession all Servicing Records pertaining to such Mortgage Loans and doing or causing to be done, all at Seller's sole expense. To the extent that the approval of the Applicable Agency is required for any such sale or transfer, Seller shall fully cooperate with Purchaser to obtain such approval. All amounts paid by any purchaser of such rights to service or subservice the Related Mortgage Loans shall be the Property of Purchaser. The subservicing rights required to be delivered to Successor Servicer in accordance with this
Section 6(f)
shall be delivered free of any servicing rights in favor of Seller or any third party (other than Purchaser) and free of any title, interest, lien, encumbrance or claim of any kind of Seller other than record title to the Mortgages relating to the Related Mortgage Loans. No exercise by Purchaser of its rights under this
Section 6(f)
shall relieve Seller of responsibility or liability for any breach of this Agreement.
(g)
With respect to the Servicing Files and the physical and contractual servicing of each Mortgage Loan to the extent in the possession of Seller, Seller shall deliver such Servicing Files and the physical and contractual servicing to Purchaser or its designee upon the expiration of the Servicing Term (unless such Servicing Term is renewed
by Purchaser) or the termination of the Seller as subservicer pursuant to this
Section 6
. Seller's transfer of the servicing rights, Servicing Files and the physical and contractual servicing under this
Section 6(g)
shall be in accordance with customary standards in the industry including the transfer of the gross amount of all escrows held for the related Mortgagors (without reduction for unreimbursed advances or “negative escrows”).
(h)
The Agent, in its sole discretion, may appoint a backup servicer at any time during the term of this Agreement. In such event, Seller shall commence monthly delivery to such backup servicer of the servicing information required to be delivered to Purchaser pursuant to
Section 6(b)(ii)
and any other information reasonably requested by backup servicer, all in a format that is reasonably acceptable to such backup servicer. Seller shall pay all costs and expenses of such backup servicer, including, but not limited to all fees of such backup servicer in connection with the processing of such information and the maintenance of a servicing file with respect to the Related Mortgage Loans. Seller shall cooperate fully with such backup servicer in the event of a transfer of servicing hereunder and will provide such backup servicer with all documents and information necessary for such backup servicer to assume the servicing of the Related Mortgage Loans.
Section 7
Transfers of Participation Certificates and Securities by Purchaser
. Purchaser may, in its sole discretion and without the consent of Seller, sell, assign or otherwise transfer all of its right, title and interest or grant a security interest in any Participation Certificate, any Mortgage Note, Mortgage and Assignment of Mortgage and the related servicing rights, each Security in respect thereof of which Delivery is made to Purchaser and all rights of Purchaser under this Agreement (including, but not limited to, the Custodial Account) in respect of such Participation Certificate, any Mortgage Note, Mortgage, Assignment of Mortgage and such Security, to any person (an “
Assignee
”), subject only to an obligation on the part of the Assignee to deliver each such Security to the Takeout Investor or to Purchaser to permit Purchaser or its designee to make delivery thereof to the Takeout Investor. Assignment by Purchaser of a Participation Certificate and the related servicing rights as provided in this
Section 7
will not release Purchaser from its obligations otherwise under this Agreement.
Without limitation of the foregoing, an assignment of a Participation Certificate and the related servicing rights to an Assignee, as described in this
Section 7
, shall be effective upon delivery of the Participation Certificate to the Assignee or its designee, together with a duly executed Assignment substantially in the form of
Exhibit E
(with a copy to Seller).
Section 8
Record Title to Mortgage Loans; Intent of Parties; Security Interest
.
(a)
From and after the issuance and delivery of the Related Participation Certificate, and subject to the remedies of Purchaser in
Section 5
, Seller as subservicer shall remain the last named payee or endorsee of each Mortgage Note and the mortgagee or assignee of record of each Mortgage (except with respect to any MERS Mortgage Loan) and shall retain only record title to the Mortgages (and not an equitable interest) in the Related Mortgage Loan, all for the benefit of Purchaser for the sole purpose of facilitating the subservicing of such Mortgage Loan and the issuance of a Security backed by such Mortgage Loan. Where Seller has appointed Freddie Mac as Custodian, the parties hereto acknowledge that the Mortgage Notes acquired hereunder have been deposited with Freddie Mac to facilitate the issuance of Freddie Mac Securities with respect thereto and that prior to such issuance Freddie Mac is holding such Mortgage Notes as Custodian for Purchaser.
(b)
Seller shall maintain a complete set of books and records for each Related Mortgage Loan which shall be clearly marked to reflect the beneficial ownership interest in each Related Mortgage Loan of the holder of the Related Participation Certificate. Seller shall notify MERS of the beneficial ownership interest of Purchaser in each MERS Mortgage Loan through the MORNET system or any other comparable system acceptable to MERS.
(c)
Purchaser and Seller confirm that the transactions contemplated herein are intended to be sales of the Participation Certificates by Seller to Purchaser rather than borrowings secured by the Participation Certificates. In the event, for any reason, any transaction is construed by any court or regulatory authority as a borrowing rather than as a sale, Seller and Purchaser intend that Purchaser or its Assignee, as the case may be, shall have a perfected first priority security interest in the Participation Certificates, and all of Seller's interest in all of the servicing rights
with respect to the Related Mortgage Loans, the Custodial Account and all amounts on deposit therein, the Related Mortgage Loans subject to each Participation Certificate, all documents, records (including Servicing Records), instruments and data evidencing the Related Mortgage Loans and the servicing thereof, the Securities to be issued as contemplated hereunder, all principal and interest collected thereon and all proceeds thereof, the Takeout Commitments and the proceeds of any and all of the foregoing (collectively, the “
Collateral
”), free and clear of adverse claims. In such case, Seller shall be deemed to have hereby granted to Purchaser or its Assignee, as the case may be, a first priority security interest in and lien upon the Collateral, free and clear of adverse claims. In such event, this Agreement shall constitute a security agreement, the Custodian shall be deemed to be an independent custodian for purposes of perfection of the security interest herein granted to Purchaser, and Purchaser or each such Assignee shall have all of the rights of a secured party under applicable law.
Upon request of Purchaser, Seller shall prepare and deliver to MERS an Assignment of Mortgage from MERS to Purchaser or its designee. Upon due execution by MERS, Seller shall cause such Assignment of Mortgage to be recorded in the public land records upon request of Purchaser. Purchaser shall bear the costs and expenses associated with the preparation, delivery and recordation of any such Assignments of Mortgage; provided, however, that Seller shall bear such costs and expenses after the occurrence of a Servicing Termination Event.
Section 9
Representations and Warranties
.
(a)
Seller hereby represents and warrants to Purchaser and Agent as of the date hereof and with the respect to the Related Mortgage Loans as of the date of each issuance and delivery of a Participation Certificate that:
(i)
Seller is solvent and will not be rendered insolvent by any transaction contemplated by this Agreement and, after giving effect to each such transaction, Seller will not be left with an unreasonably small amount of capital with which to engage in its business. Seller does not intend to incur, nor believes that it has incurred, debts beyond its ability to pay such debts as they mature. Seller is not contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of Seller or any of its assets.
(ii)
The consideration received by Seller upon the sale of each Participation Certificate will constitute reasonably equivalent value and fair consideration for the beneficial ownership interest in the Mortgage Loans evidenced by that Participation Certificate;
(iii)
Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and it has qualified to do business in each jurisdiction in which it is legally required to do so. Seller has the power and authority under its certificate of formation, operating agreement and applicable law to enter into this Agreement and the Program Documents and to perform all acts contemplated hereby and thereby or in connection herewith and therewith; this Agreement, the Program Documents and the transactions contemplated hereby and thereby have been duly authorized by all necessary action and do not require any additional approvals or consents or other action by, or any notice to or filing with, any Person other than any that have heretofore been obtained, given or made;
(iv)
The consummation of the transactions contemplated by this Agreement and the Custodial Agreement are in the ordinary course of business of Seller and will not conflict with, result in the breach of or violate any provision of the certificate of formation or operating agreement of Seller or result in the breach of any provision of, or conflict with or constitute a default under or result in the acceleration of any obligation under, any agreement, indenture, loan or credit agreement or other instrument to which Seller, the Related Mortgage Loans or any of Seller's Property is subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which Seller, the Related Mortgage Loans or Seller's Property is or may be subject to. Without limiting the generality of the foregoing, the consummation of the transactions contemplated herein or therein will not violate any policy, regulation or guideline of the FHA or VA or result in the voiding or reduction of the FHA insurance, VA guarantee or any other insurance or guarantee in respect
of any Mortgage Loan, or otherwise render such Mortgage Loans, individually or in the aggregate, ineligible (pursuant to the applicable Agency Guide or otherwise) for inclusion in a pool of mortgages supporting a Security, and such FHA insurance or VA guarantee is in full force and effect or shall be in full force and effect as required by the applicable Agency Guide;
(v)
No practice, procedure or policy employed or proposed to be employed by Seller in the conduct of its businesses violates any law, regulation, judgment, agreement, regulatory consent, order or decree applicable to it which, if enforced, would result in a Material Adverse Effect.
(vi)
This Agreement, the Custodial Agreement and every document to be executed by Seller in connection with this Agreement is and will be legal, valid, binding and subsisting obligations of Seller, enforceable in accordance with their respective terms, except that (A) the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors' rights generally and (B) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought;
(vii)
No consent, license, approval or authorization from, or registration, filing or declaration with, any regulatory body, administrative agency or other governmental instrumentality, nor any consent, approval, waiver or notification of any creditor, lessor or other non‑governmental Person, is required in connection with the execution, delivery and performance by Seller or its Parent Company, if any, of this Agreement or any other Program Document, other than any that have heretofore been obtained, given or made
(viii)
Seller has not sold, assigned, transferred, pledged or hypothecated any interest in any Participation Certificate or Related Mortgage Loan to any person other than any sale, assignment, transfer, pledge or hypothecation that is released in conjunction with the sale to Purchaser pursuant to the Master Repurchase Agreement or hereunder, and upon delivery of a Participation Certificate to Purchaser, Purchaser will be the sole owner thereof, free and clear of any lien, claim or encumbrance other than those arising under this Agreement;
(ix)
Neither this Agreement nor any representations and warranties or information relating to Seller that Seller has delivered or caused to be delivered to Purchaser, including, but not limited to, all documents related to this Agreement, the Custodial Agreement or Seller's financial statements, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made therein or herein in light of the circumstances under which they were made, not misleading. Since the furnishing of such documents or information, there has been no change, nor any development or event involving a prospective change that would render any of such documents or information untrue or misleading in any material respect;
(x)
There is no action, suit, proceeding, inquiry or investigation, at law or in equity, or before or by any court, public board or body pending or, to Seller's knowledge, threatened against or affecting Seller (or, to Seller's knowledge, any basis therefor) wherein an unfavorable decision, ruling or finding would adversely affect the validity or enforceability of this Agreement, the Custodial Agreement or any agreement or instrument to which Seller is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby, would adversely affect the proceedings of Seller in connection herewith or would or could materially and adversely affect Seller's ability to carry out its obligations hereunder;
(xi)
Seller has all requisite Approvals;
(xii)
The Custodian is an eligible custodian under each Agency Guide and each Agency Program, and is not an Affiliate of Seller;
(xiii)
The Bank is not an Affiliate of Seller;
(xiv)
The Agreement and the Custodial Agreement, any other document contemplated hereby or thereby and each transaction have not been entered into fraudulently by Seller hereunder or the Custodian, or with the intent to hinder, delay or defraud any creditor or Purchaser;
(xv)
Neither Seller nor any of its Subsidiaries is required to be registered as an “investment company” as defined under the Investment Company Act or as an entity under the control of an entity required to be registered as an “investment company” as defined under the Investment Company Act;
(xvi)
[Reserved];
(xvii)
Seller has not received from any Agency a notice of extinguishment or a notice indicating material breach, default or material non-compliance which the Agent reasonably determines may entitle an Agency to terminate, suspend, sanction or levy penalties against the Seller, or a notice from any Agency, HUD, FHA or VA indicating any adverse fact or circumstance in respect of Seller which the Agent reasonably determines may entitle such Agency, HUD, FHA or VA, as the case may be, to revoke any Approval or otherwise terminate, suspend Seller as an Agency approved issuer or servicer, or with respect to which such adverse fact or circumstance has caused any Agency, HUD, FHA or VA, as the case may be, to terminate Seller, without any subsequent rescission thereof in such notice; and
(xviii)
Seller has submitted the original Mortgage in respect of each Mortgage Loan for recordation in the appropriate public recording office in the applicable jurisdictions wherein such recordation is necessary to perfect the lien thereof as against creditors the related Mortgagor.
(b)
Seller hereby represents and warrants to Purchaser and Agent with respect to each Related Mortgage Loan as of the Purchase Date for the Related Participation Certificate that:
(i)
Such Mortgage Loan was, immediately prior to the sale to Purchaser of the Related Participation Certificate, owned solely by Seller, is not subject to any lien, claim or encumbrance, including, without limitation, any such interest pursuant to a loan or credit agreement for warehousing mortgage loans, and was originated or acquired by Seller from an Originator, underwritten and serviced in Strict Compliance and at all times remain in compliance with all applicable law and regulations, including without limitation the Federal Truth-in-Lending Act, the Real Estate Settlement Procedures Act, regulations issued pursuant to any of the aforesaid, and any and all rules, requirements, guidelines and announcements of the Applicable Agency, and, as applicable, the FHA and VA, as the same may be amended from time to time;
(ii)
The improvements on the land securing such Mortgage Loan are and will be kept insured at all times by responsible insurance companies reasonably acceptable to the applicable Agency against fire and extended coverage hazards under policies, binders or certificates of insurance with a standard mortgagee clause in favor of Seller and its assigns, providing that such policy may not be canceled without prior notice to Seller. Any proceeds of such insurance shall be held in trust for the benefit of Purchaser. The scope and amount of such insurance shall satisfy the rules, requirements, guidelines and announcements of the Applicable Agency, and shall in all cases be at least equal to the lesser of (A) the principal amount of such Mortgage Loan or (B) the maximum amount permitted by applicable law, and shall not be subject to reduction below such amount through the operation of a coinsurance, reduced rate contribution or similar clause;
(iii)
The related Mortgage is a valid first lien on the Mortgaged Property and is covered by an attorney's opinion of title acceptable to the Applicable Agency or by a policy of title insurance (or a binding commitment therefor) on a standard ALTA or similar lender's form in favor of Seller and its assigns, subject only to exceptions permitted by the applicable Agency Program. Seller shall hold for the benefit of Purchaser such policy of title insurance, and, upon request of Purchaser, shall immediately deliver such policy to Purchaser or to the Custodian on behalf of Purchaser;
(iv)
Such Mortgage Loan is or will be either insured by the FHA under the National Housing Act, guaranteed by the VA under the Servicemen's Readjustment Act of 1944 or is or will be otherwise insured or guaranteed in accordance with the requirements of the applicable Agency Program and is not subject to any defect that would prevent recovery in full or in part against the FHA, VA or other insurer or guarantor, as the case may be;
(v)
Such Mortgage Loan is in Strict Compliance with the requirements and specifications (including, without limitation, all representations and warranties required in respect thereof) set forth in the applicable Agency Guide;
(vi)
Such Mortgage Loan conforms in all respects with all requirements of the Takeout Commitment applicable to the Security to be backed by such Mortgage Loan and such Takeout Commitment is subject to a Trade Assignment in favor of BCI. Each Takeout Commitment is valid and enforceable as against the related Takeout Investor and Seller has no knowledge that Takeout Investor will not be able to perform under the terms of such Takeout Commitment;
(vii)
Such Mortgage Loan is a MERS Designated Mortgage Loan;
(viii)
A MIN has been assigned by MERS and such MIN is accurately provided on the schedule of Mortgage Loans attached to the Related Participation Certificate;
(ix)
Seller has not received any notice of liens or legal actions with respect to such Mortgage Loan and no such notices have been electronically posted by MERS;
(x)
Such Mortgage Loan is being serviced by a mortgage sub-servicer having all Approvals necessary to make such Mortgage Loan eligible to back a Security;
(xi)
Such Mortgage Loan is eligible for sale to, securitization by or guarantee by the Applicable Agency, and fully complies with all of the terms and conditions, including any covenants, representations and warranties, in the applicable Agency Guide;
(xii)
No servicing agreement has been entered into with respect to the Mortgage Loan, or any such servicing agreement has been terminated and there are no restrictions, contractual or governmental, which would impair the ability of Purchaser or Purchaser's designees from servicing the Mortgage Loans;
(xiii)
The Purchase Price of the Participation Certificate to which such Mortgage Loan relates, when added to the Aggregate MRA Purchase Price and the Aggregate EPF Purchase Price, does not exceed, the Maximum Aggregate Purchase Price;
(xiv)
The Mortgage Loan shall not have been thirty (30) or more days Delinquent at any time during the twenty four (24) month period prior to the related Purchase Date; and
(xv)
Such Mortgage Loan is not a Restricted Mortgage Loan.
The representations and warranties of Seller in this
Section 9
are unaffected by and supersede any provision in any endorsement of any Related Mortgage Loan or in any assignment with respect to such Mortgage Loan to the effect that such endorsement or assignment is without recourse or without representation or warranty.
Section 10
Covenants of Seller
. Seller hereby covenants and agrees with Purchaser and Agent for so long as any Participation Certificate remains outstanding as follows:
(a)
Seller shall keep or cause to be kept in reasonable detail books and records setting forth an account of its assets and business and, as applicable, shall clearly reflect therein the transfer Seller's beneficial right, title and interest in and to the Related Mortgage Loans.
(b)
Seller shall deliver to Purchaser and Agent :
(i)
Within ninety (90) days after the end of each fiscal year of Seller, the consolidated audited balance sheets of Seller and its consolidated Subsidiaries, which will be in conformity with GAAP, and the related consolidated audited statements of income and change in equity showing the financial condition of Seller and its consolidated Subsidiaries as of the close of such fiscal year and the results of operations during such year, and a consolidated audited statement of cash flows, as of the close of such fiscal year, setting forth, in each case, in comparative form the corresponding figures for the preceding year. The foregoing consolidated financial statements are to be reported on by, and to carry the unqualified report (acceptable in form and content to Purchaser and Agent) of, an independent public accountant of national standing, which shall include KPMG LLP, PricewaterhouseCoopers LLP, Deloitte LLP, and any other similarly situated independent public account;
(ii)
Within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of Seller, unaudited consolidated balance sheets and consolidated statements of income and changes in equity and unaudited statement of cash flows, all to be in a form acceptable to Purchaser and Agent, showing the financial condition and results of operations of Seller and its consolidated Subsidiaries on a consolidated basis as of the end of each such quarter and for the then elapsed portion of the fiscal year, setting forth, in each case, in comparative form the corresponding figures for the corresponding periods of the preceding fiscal year, certified by a financial officer of Seller (acceptable to Purchaser and Agent) as presenting fairly the financial position and results of operations of Seller and its consolidated Subsidiaries and as having been prepared in accordance with GAAP consistently applied, in each case, subject to normal year-end audit adjustments;
(iii)
Within forty-five (45) days after the end of each month, consolidated unaudited balance sheets and consolidated statements of income and changes in equity and unaudited statement of cash flows, all to be in a form acceptable to Purchaser and Agent, showing the financial condition and results of operations of Seller and its consolidated Subsidiaries on a consolidated basis as of the end of each such month and for the then elapsed portion of the fiscal year, setting forth, in each case, in comparative form the corresponding figures for the corresponding month of the preceding fiscal year, certified by a financial officer of Seller (acceptable to Purchaser and Agent) as presenting fairly the financial position and results of operations of Seller and its consolidated Subsidiaries and as having been prepared in accordance with GAAP consistently applied, in each case, subject to normal year-end audit adjustments;
(iv)
Promptly upon receipt thereof, a copy of each other report submitted to Seller by its independent public accountants in connection with any annual, interim or special audit of Seller;
(v)
Promptly upon becoming aware thereof, notice of (i) the commencement of, or any determination in, any legal, judicial or regulatory proceedings, (ii) any dispute between Seller or its Parent Company and any governmental or regulatory body, (iii) any event or condition, which, in any case of (i) or (ii), if adversely determined, would constitute a Material Adverse Effect;
(vi)
Promptly upon becoming available, copies of all financial statements, reports, notices and proxy statements sent by its Parent Company, Seller or any of Seller's consolidated Subsidiaries in a general mailing to their respective stockholders and of all reports and other material (including copies of all registration statements under the Securities Act of 1933, as amended) filed by any of them with any securities exchange or with the SEC or any governmental authority succeeding to any or all of the functions of the SEC;
(vii)
Promptly upon becoming available, copies of any press releases issued by its Parent Company or Seller and copies of any annual and quarterly financial reports and any reports on Form H-(b)12 which its Parent Company or Seller may be required to file with the SEC, the FDIC or the OTS or comparable reports which a Parent Company or Seller may be required to file with the SEC, the FDIC or the OTS or any other federal banking agency containing such financial statements and other information concerning such Parent Company's or Seller's business and affairs as is required to be included in such reports in accordance with the rules and regulations of the SEC, the OTS, the FDIC or such other banking agency, as may be promulgated from time to time;
(viii)
Such supplements to the aforementioned documents and such other information regarding the operations, business, affairs and financial condition of its Parent Company, Seller or any of Seller's consolidated Subsidiaries as Purchaser or Agent may request;
(ix)
Prior to the first Purchase Date hereunder and at the promptly request of Purchaser and Agent at any time thereafter, a copy of an Officer's Certificate in the form attached hereto as
Exhibit G
together with (1) the certificate of formation of Seller and any amendments thereto, certified by the Secretary of State of Seller's state of formation, (2) a copy of Seller's operating agreement, together with any amendments thereto, (3) a copy of the resolutions adopted by Seller's Board of Directors authorizing Seller to enter into this Agreement and the Custodial Agreement and authorizing one or more of Seller's officers to execute the documents related to this Agreement and the Custodial Agreement and (4) an opinion of Seller's counsel as to such matters as Purchaser or Agent may reasonably request (including, without limitation, with respect to Purchaser's first priority lien on and perfected security interest in the Related Mortgage Loans, a no material litigation, non-contravention, enforceability and corporate opinion with respect to Seller, an opinion that each sale of a Participation Certificate hereunder constitutes a legal true sale, an opinion with respect to the inapplicability of the Investment Company Act to Seller and its Subsidiaries, an opinion that this Agreement constitutes a “securities contract” within the meaning of the Bankruptcy Code and an opinion that no transaction constitutes an avoidable transfer under Section 546(f) of the Bankruptcy Code, in form and substance acceptable to Purchaser and Agent in their discretion and from nationally recognized counsel acceptable to Purchaser and Agent in their sole reasonable discretion. In addition, on each Purchase Date hereunder, Seller shall provide to Purchaser an Officer's Certificate in the form attached hereto as
Exhibit H
; and
(x)
Prior to the first Purchase Date hereunder, evidence that all other actions necessary or, in the opinion of Agent, desirable to perfect and protect Purchaser's interest in the Related Mortgage Loans and other Collateral have been taken, including, without limitation, duly executed and filed Uniform Commercial Code financing statements on Form UCC-1.
(xi)
Prior to the first Purchase Date hereunder with respect to a Fannie Mae Participation Certificate, Purchaser shall have received the Fannie Mae Agreement, duly executed and delivered by the parties thereto and in full force and effect, free of any modification, breach or waiver. Prior to the first Purchase Date hereunder with respect to a Freddie Mac Participation Certificate, Purchaser shall have received the Freddie Mac Agreement, duly executed and delivered by the parties thereto and in full force and effect, free of any modification, breach or waiver.
Seller's obligation to deliver any report or other document under this Section 10(b) shall be deemed to have been satisfied if, and as of the date, such report or other document is filed with the SEC pursuant to the SEC's Electronic Data Gathering & Analysis Recovery system.
(c)
Neither Seller nor any Affiliate thereof will acquire at any time any Participation Certificate or any other economic interest in or obligation with respect to any Related Mortgage Loan except for the subservicing rights relating thereto and record title to the Mortgage relating to any Related Mortgage Loan.
(d)
Seller shall pay to Purchaser the following fees:
(i)
As a condition precedent to the closing and effectiveness of this Agreement, if not otherwise paid pursuant to the Master Repurchase Agreement, Seller shall remit the Structuring Fee to the Purchaser on the Effective Date (as defined in the Master Repurchase Agreement).
(ii)
Seller shall pay to Purchaser on the last Business Day of such quarter or Termination Date, as applicable, the Non-Utilization Fee if required under
Section 2
of the Pricing Side Letter.
(iii)
All payments shall be made to Purchaser in U.S. dollars, in immediately available funds, without deduction, setoff or counterclaim. Purchaser may, in its sole discretion, net the Structuring Fee and any Non-Utilization Fee from the proceeds of any Purchase Price paid by Purchaser to Seller.
(e)
Seller will be solvent at all relevant times prior to, and will not be rendered insolvent by, any sale of a Participation Certificate to Purchaser.
(f)
Seller will not sell any Participation Certificate to Purchaser with any intent to hinder, delay or defraud any of Seller's creditors.
(g)
Seller shall take all necessary actions to maintain its Approvals at all times during the term of this Agreement. If, for any reason, Seller ceases to maintain such Approvals, Seller shall so notify Purchaser immediately.
(h)
Seller shall (i) maintain all licenses, permits or other approvals necessary for Seller to conduct its business and to perform its obligations under the Program Documents, (ii) remain in good standing under, and comply in all material respects with, all laws of each state in which it conducts business or any Mortgaged Property is located, and (iii) conduct its business in compliance in all material respects with applicable law.
(i)
Seller shall, upon request of Purchaser or Agent, promptly execute and deliver to Purchaser all such other and further documents and instruments of transfer, conveyance and assignment, and shall take such other action as Purchaser or Agent may require more effectively to transfer, convey, assign to and vest in Purchaser and to put Purchaser in possession of the property to be transferred, conveyed, assigned and delivered hereunder and otherwise to carry out more effectively the intent of the provisions under this Agreement.
(j)
The Seller is a member of MERS in good standing and current in the payment of all fees and assessments imposed by MERS, and has complied with all rules and procedures of MERS. In connection with the assignment of any Related Mortgage Loan registered on the MERS System, the Seller agrees that at the request of the Purchaser or Agent it will, at the Seller's own cost and expense, cause the MERS System to indicate that a beneficial interest in such Mortgage Loan has been transferred to the Purchaser in accordance with the terms of this Agreement by including in MERS' computer files (a) the code in the field which identifies the specific owner of the Related Mortgage Loans and (b) the code in the field “Pool Field” which identifies the series in which such Mortgage Loans were sold. The Seller further agrees that it will not alter codes referenced in this paragraph with respect to any Related Mortgage Loan at any time that such Mortgage Loan is subject to this Agreement, and the Seller shall retain its membership in MERS at all times during the term of this Agreement.
(k)
Subject to the limits contained in the Pricing Side Letter and the MRA Pricing Side Letter, Seller will permit Purchaser, Agent or their respective agents or designees to perform due diligence reviews on the Related Mortgage Loans subject to each Participation Certificate purchased up to the Due Diligence Review Percentage and within thirty (30) days following the related Purchase Date. Seller shall cooperate in all respects with such diligence and shall provide Purchaser, Agent or their respective agents or designees with all loan files and other information (including, without limitation, Seller's quality control procedures and results) reasonably requested by Purchaser, Agent or their respective agents or designees. Purchaser shall bear all costs and expenses associated with such due diligence identified in this Section 10(k).
(l)
Seller shall at all times maintain an Error Rate as set forth in the Pricing Side Letter.
(m)
Seller shall comply with the following financial covenants:
(i)
Seller's Tangible Net Worth shall at all times exceed $150,000,000;
(ii)
the ratio of Seller's total Indebtedness to Tangible Net Worth shall not at any time exceed 12:1; and
(iii)
Seller's Liquidity shall not be less than $20,000,000 as of the last day of any calendar month.
(n)
Seller shall (i) at all times maintain copies of relevant portions of all final written Agency audits, examinations, evaluations, monitoring reviews and reports of its origination and servicing operations (including those prepared on a contract basis for any such agency) in which there are material adverse findings, including without limitation notices of defaults, notices of termination of approved status, notices of imposition of supervisory agreements or interim servicing agreements, and notices of probation, suspension, or non-renewal, and all necessary approvals from each Agency, and (ii) provide Agent with copies of such audits, examinations, evaluations, monitoring reviews and reports promptly upon receipt from any Agency or agent of any Agency.
(o)
Seller shall take all actions necessary to maintain its respective Approvals.
(p)
Seller shall timely pay to Purchaser all fees and actual out of pocket expenses required to be paid by Seller hereunder and under any other Program Document to Purchaser in immediately available funds, and without deduction, set-off or counterclaim in accordance with Purchaser's Wire Instructions.
Section 11
Term
This Agreement shall continue in effect until terminated as to future transactions on the Termination Date;
provided
,
that
no termination will affect the obligations hereunder as to any of the Participation Certificates then outstanding hereunder or any Security not yet delivered to the related Takeout Investor. Seller's obligations to indemnify Purchaser and Agent pursuant to this Agreement and the other Program Documents shall survive the termination hereof.
Section 12
Set-Off
In addition to any rights and remedies of Purchaser provided by this Agreement and by law, Purchaser and its Affiliates shall have the right, without prior notice to Seller, any such notice being expressly waived by Seller to the extent permitted by applicable law, upon any amount becoming due and payable (whether at the stated maturity, by acceleration or otherwise) by Seller hereunder or under any Set Off Eligible Agreement, to set-off and appropriate and apply against such amount (subject to any existing limitations on recourse in connection with this Agreement) any and all Property and deposits (general or special, time or demand, provisional or final), in any currency, or any other credits, indebtedness or claims, in any currency, or any other collateral (in the case of collateral not in the form of cash or such other marketable or negotiable form, by selling such collateral in a recognized market therefor or as otherwise permitted by law or as may be in accordance with custom, usage or trade practice), in each case, whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Purchaser or any Affiliate thereof to or for the credit or the account of Seller or any of its Subsidiaries (including, without limitation, the amount of any accrued and unpaid Completion Fees) except and to the extent that any of the same are held by Seller or such Subsidiary for the account of another Person. Purchaser may also (subject to any existing limitations on recourse in connection with this Agreement) set-off cash and all other sums or obligations owed by Purchaser or its Affiliates to Seller or its Subsidiaries hereunder or under any Set Off Eligible Agreement against all of Seller's obligations to Purchaser or its Affiliates hereunder or under any Set Off Eligible Agreement, whether or not such obligations are then due. The exercise of any such right of set-off shall be without prejudice to Purchaser's or its Affiliate's right to recover any deficiency. Purchaser agrees to promptly notify Seller after any such set‑off and application made by Purchaser;
provided
that
the failure to give such notice shall not affect the validity of such set‑off and application.
Section 13
Indemnification
Seller shall indemnify and hold Purchaser and Agent harmless against any and all Losses (including, without limitation, Losses incurred by Purchaser on account of fees paid by Purchaser to the Applicable Agency to cause the Securities to be issued or any Losses in connection with any indemnification by Purchaser of the Applicable Agency) resulting from, relating to or otherwise arising in connection with the breach or failure of Seller to perform any representation, warranty, covenant, term or condition made or obligation to be performed by Seller under this Agreement (including, without limitation, any failure to perform servicing obligations) in strict compliance with the terms of this Agreement. Without prejudice to the survival of any other agreement of Seller hereunder, the covenants and obligations of Seller contained in this
Section 13
shall survive the termination of this Agreement.
Section 14
Exclusive Benefit of Parties; Assignment
This Agreement is for the exclusive benefit of the parties hereto and their respective successors and assigns and shall not be deemed to give any legal or equitable right to any other person, including any Takeout Investor or the Custodian. In addition to the rights of Purchaser as provided in
Section 7
, without any requirement for further consent of the Seller and at no cost or expense to the Seller, each of Purchaser and Agent may, in its sole election, assign or participate all or a portion of its rights and obligations under this Agreement and the Program Documents with a counterparty of Purchaser's or Agent's choice. Purchaser or Agent shall notify Seller of any such assignment and participation and shall maintain, for review by Seller upon written request, a register of assignees and participants and a copy of any executed assignment and acceptance by Purchaser or Agent and assignee (“
Assignment and Acceptance
”), specifying the percentage or portion of such rights and obligations assigned. The Seller agrees that, for any such permitted assignment, Seller will cooperate with the prompt execution and delivery of documents reasonably necessary for such assignment process to the extent that Seller incurs no cost or expense that is not paid by the Purchaser or Agent, as applicable. Upon such assignment, (a) such assignee shall be a party hereto and to each Program Document to the extent of the percentage or portion set forth in the Assignment and Acceptance, and shall succeed to the applicable rights and obligations of Purchaser or Agent hereunder, and (b) Purchaser or Agent shall, to the extent that such rights and obligations have been so assigned by it to either (i) an Affiliate of Purchaser or Agent which assumes the obligations of Purchaser or Agent hereunder or (ii) to another Person which assumes the obligations of Purchaser or Agent hereunder, be released from their obligations hereunder accruing thereafter and under the Program Documents.
The Program Documents and the Seller's rights and obligations thereunder are not assignable by Seller without the prior written consent of Purchaser and Agent. Any Person into which Seller may be merged or consolidated, or any corporation resulting from any merger, conversion or consolidation to which Seller shall be a party, or any Person succeeding to the business of Seller, shall be the successor of Seller hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
Section 15
Amendments; Waivers; Cumulative Rights
This Agreement may be amended from time to time only by written agreement of Seller, Purchaser and Agent. Any forbearance, failure or delay by either party in exercising any right, power or remedy hereunder shall not be deemed to be a waiver thereof, and any single or partial exercise by either party of any right, power or remedy hereunder shall not preclude the further exercise thereof. Every right, power and remedy of either party shall continue in full force and effect until specifically waived by such party in writing. No right, power or remedy shall be exclusive, and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred hereby or hereafter available at law or in equity or by statute or otherwise.
Section 16
Execution in Counterparts
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. The parties agree that this Agreement, any documents to be delivered pursuant to this Agreement and any notices hereunder may be transmitted between them by email and/or by facsimile. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested.
Section 17
Effect of Invalidity of Provisions
In case any one or more of the provisions contained in this Agreement should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall in no way be affected, prejudiced or disturbed thereby.
Section 18
Governing Law
. THE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISIONS (EXCEPT FOR SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW.
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A)
SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B)
CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C)
AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN
SECTION 19
; AND
(D)
AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.
Section 19
Notices
. Any notices, consents, elections, directions and other communications given under this Agreement shall be in writing and shall be deemed to have been duly given when telecopied or delivered by overnight courier to, personally delivered to, or on the third day following the placing thereof in the mail, first class postage prepaid to, the parties hereto at the related address set forth in
Annex B
or to such other address as either party shall give notice to the other party pursuant to this Section. Notices to any Assignee shall be given to such address as the Assignee shall provide to Seller in writing.
Section 20
Entire Agreement
. This Agreement, the Participation Certificates and the Custodial Agreement contain the entire agreement between the parties hereto with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements between them, oral or written, of any nature whatsoever with respect to the subject matter hereof.
Section 21.
Costs of Enforcement
. (a) In addition to any other indemnity specified in this Agreement, Seller agrees to pay as and when billed by Purchaser or Agent all of the out-of pocket costs and expenses incurred by Purchaser and Agent in connection with the development, preparation, and execution of, and any amendment, supplement or modification to, and enforcement of this Agreement, any other related document or any other documents prepared in connection herewith or therewith. Sellers agree to pay as and when billed by Purchaser or Agent all of the out-of-pocket costs and expenses incurred in connection with the consummation, monitoring and administration of the transactions contemplated hereby and thereby including, without limitation, (i) all the reasonable fees, disbursements and expenses of counsel to Purchaser and Agent and (ii) all the due diligence, inspection, testing and review costs and expenses incurred by Purchaser and Agent with respect to the Related Mortgage Loans under this Agreement.
(b) If Seller fails to pay when due any costs, expenses or other amounts payable by it under this Agreement, including, without limitation, reasonable fees and expenses of counsel and indemnities, such amount may be paid on behalf of Seller by Purchaser or Agent, in its sole discretion and Sellers shall remain liable for any such payments by Purchaser or Agent, as applicable. No such payment by Purchaser or Agent shall be deemed a waiver of any of Purchaser's or Agent's respective rights under this Agreement.
(c) In addition to any other indemnity specified in this Agreement, in the event of a breach by Seller of this Agreement, the Custodial Agreement, a Participation Certificate or a Takeout Commitment, Sellers agrees to pay the reasonable attorneys' fees and expenses of Purchaser, Agent and/or any Assignee incurred as a consequence of such breach.
Section 22.
Securities Contract; Netting Agreement
(a)
Seller, Purchaser and Agent recognize that each sale of a Participation Certificate (including and the related servicing rights) under this Agreement is a “securities contract” and a “master netting agreement” as those terms are defined in Section 741 and Section 101(38A)(A) of the Bankruptcy Code, respectively, and a “qualified financial contract” as that term is defined in the FDIA. Seller and Purchaser further recognize that the beneficial interest in the Related Mortgage Loans evidenced by a Participation Certificate shall constitute an “interest in a mortgage loan” as that term is used in Section and 741(7)(A)(i) of Bankruptcy Code.
(b)
It is understood that the Purchaser shall have the right to liquidate, terminate and accelerate, or exercise any other remedies permitted upon the occurrence of any Servicing Termination Event, and that such liquidation, termination and acceleration rights constitute contractual rights to liquidate, terminate and accelerate the transactions under a “securities contract” and a “master netting agreement” as described in Section 555 and Section 561 of the Bankruptcy Code, respectively, and a “qualified financial contract” as described Section 1821(e)(8)(A)(i) of the FDIA.
(c)
The parties hereto agree and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the FDIA, then each transaction hereunder is a “qualified financial contract,” as that term is defined in the FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such transaction would render such definition inapplicable).
(d)
It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“
FDICIA
”) and each payment entitlement and payment obligation hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation,” respectively, as defined in and subject to FDICIA.
Section 23
Consent to Service
. Each party irrevocably consents to the service of process by registered or certified mail, postage prepaid, to it at its address provided pursuant to
Section 19
.
*** Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.
Section 24
Construction
. The headings in this Agreement are for convenience only and are not intended to influence its construction. References to Sections, Exhibits and Annexes in this Agreement are to the Sections of and Exhibits and Annexes to this Agreement. The Exhibits and Annexes are part of this Agreement. In this Agreement, the singular includes the plural, the plural the singular, and the words “and” and “or” are used in the conjunctive or disjunctive as the sense and circumstances may require.
Section 25
Further Assurances
. Seller, Purchaser and Agent each agree to execute and deliver to the other such reasonable and appropriate additional documents, instruments or agreements as may be necessary or appropriate to effectuate the purposes of this Agreement.
Section 26
Due Diligence
. Subject to Section 10(k) and the limits contained in the Pricing Side Letter and the MRA Pricing Side Letter, (i) Purchaser, Agent or any of their respective agents, representatives or permitted assigns shall have the right, upon reasonable prior notice and during normal business hours, to conduct inspection and perform continuing due diligence reviews of (x) Seller and its Affiliates, directors, officers, employees and significant shareholders, including, without limitation, their respective financial condition and performance of its obligations under the Program Documents, and (y) the Servicing File and the Related Mortgage Loans and (ii) Seller agrees promptly to provide Purchaser, Agent and their respective agents with access to, copies of and extracts from any and all documents, records, agreements, instruments or information (including, without limitation, any of the foregoing in computer data banks and computer software systems) relating to Seller's respective business, operations, servicing, financial condition, performance of their obligations under the Program Documents, the documents contained in the Servicing Files or the Related Mortgage Loans or assets proposed to be sold hereunder in the possession, or under the control, of Seller. In addition, Seller shall also make available to Purchaser and/or Agent, upon reasonable prior notice and during normal business hours, a knowledgeable financial or accounting officer of Seller for the purpose of answering questions respecting any of the foregoing. Without limiting the generality of the foregoing, Seller acknowledges that Purchaser shall enter into transactions with Seller based solely upon the information provided by Seller to Purchaser and/or Agent and the representations, warranties and covenants contained herein, and that Purchaser and/or Agent, at its option, shall have the right at any time to conduct itself or through its agents, or require Seller to conduct quality reviews and underwriting compliance reviews of the individual Related Mortgage Loans at the expense of Seller. Any such diligence conducted by Purchaser and/or Agent shall not reduce or limit the Seller's representations, warranties and covenants set forth herein. Seller agrees to reimburse Purchaser and/or Agent for all reasonable out‑of‑pocket due diligence costs and expenses incurred pursuant to this
Section 26
.
[signature page follows]
IN WITNESS WHEREOF, Purchaser, Agent and Seller have duly executed this Agreement as of the date and year set forth on the cover page hereof.
BARCLAYS BANK PLC
By:
/s/ Joseph O'Doherty
Name: Joseph O'Doherty
Title: Director
NATIONSTAR MORTGAGE LLC
By:
/s/ Ron Fountain
Name: Ron Fountain
Title: Vice President
Acknowledged and Agreed with respect to
Section 3
:
BARCLAYS CAPITAL, INC.
By:
/s/ Ellen V. Kiernan
Name: Ellen V. Kiernan
Tit
Exhibit A
PARTICIPATION CERTIFICATE
POOL NO. (or Freddie Mac CONTRACT NO.):
This Participation Certificate evidences a one hundred percent (100%) undivided beneficial ownership interest in (including the right to receive the payments of principal of and interest on) the Mortgage Loans (the “
Participation
”) identified:
(Check Box)
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(a)
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Form HUD 11706 (Schedule of Pooled Mortgages);
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(b)
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Fannie Mae Form 2005 (Schedule of Mortgages); or
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(c)
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Freddie Mac Form 1034 (Fixed-Rate Custodial Certification Schedule) or Selling System computer tape.
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The Participation has been sold to Purchaser pursuant to the terms of that certain Mortgage Loan Participation Purchase and Sale Agreement, dated March 25, 2011 (the “
Agreement
”) between Nationstar Mortgage LLC, as Seller, and Barclays Bank PLC, as Purchaser and Agent. Capitalized terms used but not defined herein shall have the meanings set forth in the Agreement, the terms of which are hereby incorporated by reference and made a part of this Participation Certificate.
Upon Delivery of the related Security to Purchaser or its Assignee, Purchaser's beneficial ownership interest in the Mortgage Loans evidenced in this Participation Certificate shall terminate in exchange for such Security, and this Participation Certificate shall be void and of no further effect.
This Participation Certificate may be amended only by a written agreement between Seller, Purchaser and Agent.
NATIONSTAR MORTGAGE LLC
By:
Its:
Date:
AGGREGATE PRINCIPAL BALANCES OF THE MORTGAGE LOANS (GIVING EFFECT TO PAYMENTS MADE AS OF _______, ____): $_____________________
TRADE ASSIGNMENT
__________ (“
Takeout Investor
”)
(Address)
Attention
:
Fax No.:
Dear Sirs:
Attached hereto is a correct and complete copy of your confirmation of commitment (the “
Commitment
”), trade-dated _________ __, ____, to purchase $______ of __% ___ year,
(Check Box)
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Government National Mortgage Association;
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Federal National Mortgage Association; or
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Federal Home Loan Mortgage Corporation.
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mortgage-backed pass-through securities (“
Securities
”) at a purchase price of ___________ from _________ on (insert Settlement Date). Our intention is to assign $_____ of this Commitment's full amount, which assignment shall be effective and shall be fully enforceable by the assignee on the Settlement Date. This is to confirm that (i) the form of this assignment conforms to the SIFMA guidelines, (ii) the Commitment is in full force and effect, (iii) effective as of the Settlement Date, the Commitment is hereby assigned to Barclays Capital Inc. (“
BCI
”), whose acceptance of such assignment is indicated below, (iv) you will accept delivery of such Securities directly from BCI, (v) you will pay BCI for such Securities, (vi) effective as of the Settlement Date and provided the Securities have been issued, BCI is obligated to make delivery of such Securities to you in accordance with the attached Commitment and (vii) effective as of the Settlement Date and provided the Securities have been issued, you have released Seller from its obligation to deliver the Securities to you under the Commitment. Payment will be made “delivery versus payment (DVP)” to BCI in immediately available funds.Please acknowledge your acceptance of the foregoing by countersigning below and delivering an executed copy of this Trade Assignment to _______________ at fax # (___) ___-____. Notification of incorrect information or rejection of this Trade Assignment or any questions regarding this Trade Assignment should be immediately made to [_____].
Very truly yours,
NATIONSTAR MORTGAGE LLC
By:
Title:
Date:
Acknowledged and agreed to
:
BARCLAYS CAPITAL INC.
By:________________________
Title:______________________
Date:______________________
Provided the Securities have been issued, notice of delivery and confirmation of receipt will be the obligations of Barclays.
Acknowledged and agreed to
:
[TAKEOUT INVESTOR]
By:________________________
Title:______________________
Date:______________________
Exhibit C
DOCUMENT LIST
Seller shall deliver or cause to be delivered the following documents to Purchaser:
(i)
the fully completed and executed Participation Certificate together with the related Certified Mortgage Loan Trust Receipt (as defined in the Custodial Agreement);
(ii)
a Trade Assignment (unless Purchaser is the Takeout Investor), fully completed and duly executed by Seller and the related Takeout Investor, together with either (a) a copy of a Takeout Commitment with respect to the Security to be backed by the Mortgage Loans evidenced by such Participation Certificate or (b) a letter from Seller confirming the details of such Takeout Commitment; and
(iii)
a letter from any warehouse lender having a security interest in the Related Mortgage Loans, substantially in the form of
Exhibit D
, addressed to Purchaser, releasing any and all right, title and interest in such Mortgage Loans.
Exhibit D
WAREHOUSE LENDER'S RELEASE
Barclays Bank PLC
745 7th Avenue, 4th Floor
New York, New York 10019
Attention:
Gentlemen:
Capitalized terms used herein but not defined herein shall have the meanings ascribed to such terms in the Custodial Agreement, dated as of March 25, 2011, among Barclays Bank PLC, Nationstar Mortgage LLC and Bank of New York Mellon Trust Company, N.A.
We hereby release all right, interest or claim of any kind, including any security interest or lien, with respect to the mortgage loans referenced in the attached schedule (Ginnie Mae/Fannie Mae/Freddie Mac Pool/Contract #__________), such release to be effective automatically without any further action by any party, upon payment, in one or more installments, from Barclays Bank PLC, in accordance with the Wire Instructions in effect on the date of such payment, in immediately available funds, of an aggregate amount equal to the product of A multiplied by B (such product being rounded to the nearest $0.01) multiplied by C.*
Very truly yours,
[WAREHOUSE LENDER]
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*A = weighted average Trade Price (expressed as a percentage of the initial aggregate principal balance of the Mortgage Loans)
B = principal amount of the Mortgage Loans
backing the Security
C = 1 minus the Discount
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Exhibit E
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s) and assign(s) and transfer(s) unto
(Please print or typewrite name and address, including postal zip code of assignee)
an undivided Participation Interest Equal to % of the beneficial interest in the Mortgage Loans relating to the within Participation Certificate, Pool No. (Freddie Mac Contract No.) , Pass-Through Rate , Discount and hereby authorize(s) the transfer of registration of such interest to assignee.
[Assignor]
By:
Name:
Title:
Dated:________________
Exhibit F
FORM OF CONFIRMATION
TO:
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attn: General Counsel
Email:
annesutherland@nationstarmail.com
DATE:
RE:
Confirmation of Purchase of a beneficial interest in
Mortgage Loans relating to a Participation Certificate
Barclays Bank PLC (“
Purchaser
” and “
Agent
”) is pleased to confirm its agreement to purchase and your agreement to sell a 100% undivided, beneficial interest in the Mortgage Loans relating to a Participation Certificate relating to the pool number (or Freddie Mac Contract Number) referred to herein, pursuant to the Mortgage Loan Participation Purchase and Sale Agreement, dated as of March 25, 2011 (the “
Agreement
”), between Purchaser, Agent and Seller, under the following terms and conditions.
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Pool No. (or Freddie Mac Contract No.)
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Applicable Agency
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Purchase Date
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Anticipated Delivery Date
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Settlement Date
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Trade Price
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Purchase Price:
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Initial Purchase Price Installment
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Final Purchase Price Installment
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Face Amount of the Security_________________________
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Pass Through Rate
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[Other information TBD]
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Capitalized terms used and not otherwise defined herein shall have the meanings ascribed in the Agreement.
Very truly yours,
BARCLAYS BANK PLC
By:
Name:
Title:
Exhibit G
SELLER'S OFFICER'S CERTIFICATE
I, ___________, hereby certify that I am the duly elected ______________ of Nationstar Mortgage LLC, a Delaware limited liability company (“
Seller
”), and further certify, on behalf of Seller as follows:
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1.
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Attached hereto as Attachment I is a true and correct copy of the certificate of formation and operating agreement of Seller as are in full force and effect on the date hereof.
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2.
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Attached hereto as Attachment II is a Certificate of Good Standing of Seller, issued by the Secretary of the State of Delaware dated _______, ____. No event has occurred since _______, ____ which has affected the good standing of Seller under the laws of the State of Delaware.
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3.
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Each person who, as an officer or attorney-in-fact of Seller, signed (a) the Mortgage Repurchase Agreement (the “Repurchase Agreement”) dated as of March 25, 2011 by and between Seller and Barclays Bank PLC (“
Purchaser
” and “
Agent
”), (b) the Mortgage Loan Participation Purchase and Sale Agreement (the “
Purchase Agreement
”), dated as of March 25, 2011, by and between Seller and Purchaser and Agent; (c) the Custodial Agreement (the “
Custodial Agreement
”), dated as of March 25, 2011, by and among Seller, the Purchaser and Bank of New York Mellon Trust Company, N.A.; and (d) any other document delivered prior hereto or on the date hereof in connection with transactions contemplated in the Repurchase Agreement or the Purchase Agreement was, at the respective times of such signing and delivery, and is as of the date hereof, duly elected or appointed, qualified and acting as such officer or attorney-in-fact, and the signatures of such persons appearing on such documents are their genuine signatures.
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4.
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Attached hereto as Attachment III is a true and correct copy of the resolutions duly adopted by the board of directors of Seller on __________, ____ (the “
Resolutions
”) with respect to the authorization and approval of the transactions contemplated in the Repurchase Agreement and the Purchase Agreement; said Resolutions have not been amended, modified, annulled or revoked and are in full force and effect on the date hereof.
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5.
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All of the representations and warranties of Seller contained in the Repurchase Agreement and the Purchase Agreement were true and correct in all material respects as of the date thereof and are true and correct in all material respects as of the date hereof.
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6.
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Seller has performed all of its duties and has satisfied all the material conditions on its part to be performed or satisfied pursuant to the Repurchase Agreement and the Purchase Agreement on or prior to the date hereof.
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7.
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There are no actions, suits or proceedings pending or, to my knowledge, threatened, against or affecting Seller which, if adversely determined either individually or in the aggregate, would adversely affect Seller's obligations under the Repurchase Agreement , the Purchase Agreement or the Custodial Agreement.
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8.
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No proceedings that could result in the liquidation or dissolution of Seller are pending or contemplated.
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9.
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Incumbency of Officers
. The below named persons have been duly elected or appointed, and have been duly qualified as officers of Seller holding the respective office below set opposite his or her name, and the signature below set opposite his or her name is his or her genuine signature.
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All capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of Seller.
Dated: _________ __, ____
[Seal]
NATIONSTAR MORTGAGE LLC
By:
Name:
Title:
I, ___________________, _________ of ______________, hereby certify that ________________ is the duly elected, qualified and acting _______________ of __________ and that the signature appearing above is the genuine signature of such person.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: ____________ __, ____
[Seal
By:________________________________
Name:
Title:
Exhibit H
SELLER'S OFFICER'S CERTIFICATE
I, ________________, hereby certify that I am the duly elected ________________ of Nationstar Mortgage LLC, a Delaware limited liability company (“
Seller
”), and further certify, on behalf of Seller as follows:
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1.
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There has been no change in the certificate of formation and operating agreement of Seller since the date such documents were provided to the Purchaser and Agent and such documents are in full force and effect on the date hereof.
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2.
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No event has occurred since the date of the last good standing certificate of Seller provided to the Purchaser and Agent which has affected the good standing of Seller under the laws of the State of Delaware.
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3.
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All of the representations and warranties of Seller contained in
Section 9(a)
of the Purchase Agreement, are true and correct in all material respects as of the date hereof and all of the representations and warranties of Seller contained in
Section 9(b)
of the Purchase Agreement are true and correct in all material respects as to the Related Mortgage Loans subject to the Participation Certificate being sold to Purchaser on the date hereof.
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4.
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Seller has performed all of its duties and has satisfied all the material conditions on its part to be performed or satisfied pursuant to the Purchase Agreement on or prior to the date hereof.
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5.
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There are no actions, suits or proceedings pending or, to my knowledge, threatened, against or affecting Seller which, if adversely determined either individually or in the aggregate, would adversely affect Seller's obligations under the Purchase Agreement or the Custodial Agreement.
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6.
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No proceedings that could result in the liquidation or dissolution of Seller are pending or contemplated.
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7.
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Under generally accepted and regulatory accounting principles (“
GAAP
”) and for federal income tax purposes, Seller will report the sale of each Participation Certificate to the Purchaser as a sale of the 100% undivided beneficial ownership interest in the Mortgage Loans evidenced by that Participation Certificate. Seller has been advised by, or has confirmed with, its independent public accountants that the foregoing transactions will be so classified.
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8.
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Each Mortgage Loan that is subject to a Participation Certificate to be sold to the Purchaser on the date hereof was originated or by Seller or purchased from an Originator not more than (i) forty-five (45) days prior to the date hereof, with respect to Fannie Mae Mortgage Loans and Freddie Mac Mortgage Loans, and (ii) sixty (60) days prior to the date hereof, with respect to Ginnie Mae Mortgage Loans. No Related Mortgage Loan was rejected for purchase or financing by any third party.
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All capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of Seller.
Dated: _________ __, ____
[Seal]
NATIONSTAR MORTGAGE LLC
By:
Name
Title:
I, ___________________, _________ of ______________, hereby certify that ________________ is the duly elected, qualified and acting _______________ of __________ and that the signature appearing above is the genuine signature of such person.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: _________ __, ____
[Seal]
By:
Name
Title:
Annex A
SELLER'S DELIVERY INSTRUCTIONS
(1)
In the case of certificated Securities, Purchaser will pick up the Securities upon receipt of notification of issuance from Seller and promptly deliver such Securities in negotiable form to:
(2)
In the case of book-entry Securities, upon receipt by Purchaser of such Securities, Purchaser will wire the Securities to:
Annex B
PURCHASER NOTICES
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Name:
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Barclays Bank PLC - Mortgage Finance
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Address:
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745 Seventh Avenue, 4th Floor
New York, New York 10019
Attention: Joseph O'Doherty
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Telephone:
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(212) 412-7990
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Telecopy:
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(212) 412-7333
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Email:
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joseph.o'doherty@barclayscapital.com
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With a copy to:
Barclays Bank PLC - Legal Department
745 Seventh Avenue, 20th Floor
New York, New York 10019
Telephone: (212) 412-1494
Facsimile: (212) 412-1288
Barclays Capital - Operations
70 Hudson Street -7th Floor
Jersey City, New Jersey 07302
Attention: Hánsel Nieves
Telephone: (201) 499-2269
Facsimile: (646) 845-6464
Email: hansel.nieves@barclayscapital.com
AGENT NOTICES
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Name:
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Barclays Bank PLC - Mortgage Finance
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Address:
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745 Seventh Avenue, 4th Floor
New York, New York 10019
Attention: Joseph O'Doherty
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Telephone:
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(212) 412-7990
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Telecopy:
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(212) 412-7333
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Email:
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joseph.o'doherty@barclayscapital.com
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With a copy to:
Barclays Bank PLC - Legal Department
745 Seventh Avenue, 20th Floor
New York, New York 10019
Telephone: (212) 412-1494
Facsimile: (212) 412-1288
Barclays Capital - Operations
70 Hudson Street -7th Floor
Jersey City, New Jersey 07302
Attention: Hánsel Nieves
Telephone: (201) 499-2269
Facsimile: (646) 845-6464
Email: hansel.nieves@barclayscapital.com
NATIONSTAR MORTGAGE LLC
SELLER NOTICES
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Name:
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Nationstar Mortgage LLC
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Address:
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350 Highland Drive
Lewisville, Texas 75067
Attention: General Counsel
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Telephone:
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(469) 549-2000
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Telecopy:
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(469) 549-2085
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AMENDMENT NUMBER ONE
to the
MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT
dated as of March 25, 2011
between
BARCLAYS BANK PLC
and
NATIONSTAR MORTGAGE LLC
This AMENDMENT NUMBER ONE (this “
Amendment
”) is made as of this 29th day of February, 2012, by and between Barclays Bank PLC (“
Purchaser
” and “
Agent
”) and Nationstar Mortgage LLC (“
Seller
”), to that certain Mortgage Loan Participation Purchase and Sale Agreement, dated as of March 25, 2011 (as amended by that certain Amendment and Waiver, dated as of February 17, 2012, by and between Purchaser and Seller, and as further amended, restated, supplemented or otherwise modified from time to time, the “
Purchase Agreement
”), by and between Purchaser and Seller.
WHEREAS, Purchaser, Agent and Seller have agreed to amend the Purchase Agreement as more particularly set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:
SECTION1.
Amendments
. Effective as of February 29, 2012 (the “
Effective Date
”), the Purchase Agreement is hereby amended as follows:
(a)
Section 1
of the Purchase Agreement is hereby amended by deleting the definition of “Maturity Date” in its entirety and replacing it with the following (modified text underlined for review purposes):
“
Maturity Date
” means
February 27, 2013
.
(b)
Section 10(m)
of the Purchase Agreement is hereby amended by deleting clause “(i)” thereof in its entirety and replacing it with the following (modified text underlined for review purposes):
(i)
Seller's Tangible Net Worth shall at all times exceed $
175,000,000
;
SECTION 2.
Fees and Expenses
. Seller agrees to pay to Purchaser all fees and out of pocket expenses incurred by Purchaser and Agent in connection with this Amendment, including all reasonable fees and out of pocket costs and expenses of the legal counsel to Purchaser and Agent incurred in connection with this Amendment, in accordance with
Section 21
of the Purchase Agreement. In addition, as condition precedent to the effectiveness of this Amendment, Seller shall have paid to Purchaser the Structuring Fee in an amount equal to $980,000 in accordance with
Section 2
of the MRA Pricing Side Letter.
SECTION 3.
Defined Terms
. Any terms capitalized but not otherwise defined herein should have the respective meanings set forth in the Purchase Agreement.
SECTION 4.
Limited Effect
. Except as amended hereby, the Purchase Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment need not be made in the Purchase Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Purchase Agreement, any reference in any of such items to the Purchase Agreement being sufficient to refer to the Purchase Agreement as amended hereby.
SECTION 5.
Representations
. In order to induce Purchaser and Agent to execute and deliver this Amendment, Seller hereby represents to Purchaser and Agent that as of the date hereof, (i) Seller is in full compliance with all of the terms and conditions of the Program Documents and remains bound by the terms thereof, (ii) no default or event of default has occurred and is continuing under the Program Documents, and (iii) no Servicing Termination Event has occurred and is continuing under the Purchase Agreement.
SECTION 6.
Governing Law
. This Amendment and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of New York, without regard to principles of conflicts of laws (other than Sections 5-1401 and 5‑1402 of the New York General Obligations Law which shall be applicable).
SECTION 7.
Counterparts
. For the purpose of facilitating the execution of this Amendment, and for other purposes, this Amendment may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Purchaser, Agent and Seller have caused their names to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.
BARCLAYS BANK PLC,
Purchaser and Agent
By:
/s/ Ellen V. Kiernan
Name: Ellen V. Kiernan
Title: Director
NATIONSTAR MORTGAGE LLC,
Seller
By:
/s/ Gregory A. Oniu
Name: Gregory A. Oniu
Title: Senior Vice President
AMENDMENT NUMBER TWO
to the
MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT
dated as of March 25, 2011
between
BARCLAYS BANK PLC
and
NATIONSTAR MORTGAGE LLC
This AMENDMENT NUMBER TWO (this “
Amendment
”) is made as of this 28th day of August, 2012, by and between Barclays Bank PLC (“
Purchaser
” and “
Agent
”) and Nationstar Mortgage LLC (“
Seller
”), to that certain Mortgage Loan Participation Purchase and Sale Agreement, dated as of March 25, 2011 (as amended by that certain (i) Amendment and Waiver, dated as of February 17, 2012, and (ii) Amendment Number One to the Mortgage Loan Participation Purchase and Sale Agreement, dated as of February 29, 2012, each by and between Purchaser and Seller, and as further amended, restated, supplemented or otherwise modified from time to time, the “
Purchase Agreement
”), by and between Purchaser and Seller.
WHEREAS, Purchaser, Agent and Seller have agreed to amend the Purchase Agreement as more particularly set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1
Amendments
. Effective as of August 28, 2012 (the “
Effective Date
”), the Purchase Agreement is hereby amended as follows:
(a)
Section 1
of the Purchase Agreement is hereby amended by deleting the definition of “
Maturity Date
” in its entirety and replacing it with the following (modified text underlined for review purposes):
“
Maturity Date
” means
August 27
, 2013.
SECTION 2
Fees and Expenses
. Seller agrees to pay to Purchaser all fees and out of pocket expenses incurred by Purchaser and Agent in connection with this Amendment, including all reasonable fees and out of pocket costs and expenses of the legal counsel to Purchaser and Agent incurred in connection with this Amendment, in accordance with
Section 21
of the Purchase Agreement. In addition, as a condition precedent to the effectiveness of this Amendment, Seller shall have paid to Purchaser the fee set forth in
Section 2
of Amendment Number Three to the Pricing Side Letter (Master Repurchase Agreement), dated as of August 28, 2012, by and between Seller and Purchaser.
SECTION 3
Defined Terms
. Any terms capitalized but not otherwise defined herein should have the respective meanings set forth in the Purchase Agreement.
SECTION 4
Limited Effect
. Except as amended hereby, the Purchase Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment need not be made in the Purchase Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Purchase Agreement, any reference in any of such items to the Purchase Agreement being sufficient to refer to the Purchase Agreement as amended hereby.
SECTION 5
Representations
. In order to induce Purchaser and Agent to execute and deliver this Amendment, Seller hereby represents to Purchaser and Agent that as of the date hereof, (i) Seller is in full compliance with all of the terms and conditions of the Program Documents and remains bound by the terms thereof, (ii) no default or event of default has occurred and is continuing under the Program Documents, and (iii) no Servicing Termination Event has occurred and is continuing under the Purchase Agreement.
SECTION 6
Governing Law
. This Amendment and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of New York, without regard to principles of conflicts of laws (other than Sections 5-1401 and 5‑1402 of the New York General Obligations Law which shall be applicable).
SECTION 7
Counterparts
. For the purpose of facilitating the execution of this Amendment, and for other purposes, this Amendment may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to
be an original, and all such counterparts shall constitute one and the same instrument. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Purchaser, Agent and Seller have caused their names to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.
BARCLAYS BANK PLC,
Purchaser and Agent
By:
/s/ Ellen V. Kienan
Name: Ellen V. Kiernan
Title: Director
NATIONSTAR MORTGAGE LLC,
Seller
By:
/s/ Larry Brown
Name: Larry Brown
Title: Vice President
AMENDMENT NUMBER THREE
to the
MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT
dated as of March 25, 2011
between
BARCLAYS BANK PLC
and
NATIONSTAR MORTGAGE LLC
This AMENDMENT NUMBER THREE (this “
Amendment
”) is made as of this 24th day of December, 2012, by and between Barclays Bank PLC (“
Purchaser
” and “
Agent
”) and Nationstar Mortgage LLC (“
Seller
”), to that certain Mortgage Loan Participation Purchase and Sale Agreement, dated as of March 25, 2011 (as amended by that certain (i) Amendment and Waiver, dated as of February 17, 2012, (ii) Amendment Number One to the Mortgage Loan Participation Purchase and Sale Agreement, dated as of February 29, 2012, and (iii) Amendment Number Two to the Mortgage Loan Participation Purchase and Sale Agreement, dated as of August 28, 2012, each by and between Purchaser and Seller, and as further amended, restated, supplemented or otherwise modified from time to time, the “
Purchase Agreement
”), by and between Purchaser and Seller.
WHEREAS, Purchaser, Agent and Seller have agreed to amend the Purchase Agreement as more particularly set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1.
Amendments
. Effective as of December 24, 2012 (the “
Effective Date
”), the Purchase Agreement is hereby amended as follows:
(a)
Section 10(m)
of the Purchase Agreement is hereby amended by deleting clauses (i), (ii) and (iii) thereof in their entirety and replacing them with the following:
(i)
Seller's Tangible Net Worth shall at all times exceed $350,000,000;
(ii)
the ratio of Seller's total Indebtedness to Tangible Net Worth shall not at any time exceed 12:1; and
(iii)
Seller's Liquidity shall not be less than $45,000,000 as of the last day of any calendar month.
SECTION 1.
Fees and Expenses
. Seller agrees to pay to Purchaser all fees and out of pocket
expenses incurred by Purchaser and Agent in connection with this Amendment, including all reasonable fees and out of pocket costs and expenses of the legal counsel to Purchaser and Agent incurred in connection with this Amendment, in accordance with
Section 21
of the Purchase Agreement. In addition, as a condition precedent to the effectiveness of this Amendment, Seller shall have paid to Purchaser the fee set forth in
Section 2
of Amendment Number Four to the Pricing Side Letter (Master Repurchase Agreement), dated as of December 24, 2012, by and between Seller and Purchaser.
SECTION 2.
Defined Terms
. Any terms capitalized but not otherwise defined herein should have the respective meanings set forth in the Purchase Agreement.
SECTION 3.
Limited Effect
. Except as amended hereby, the Purchase Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment need not be made in the Purchase Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Purchase Agreement, any reference in any of such items to the Purchase Agreement being sufficient to refer to the Purchase Agreement as amended hereby.
SECTION 4.
Representations
. In order to induce Purchaser and Agent to execute and deliver this Amendment, Seller hereby represents to Purchaser and Agent that as of the date hereof, (i) Seller is in full compliance with all of the terms and conditions of the Program Documents and remains bound by the terms thereof, (ii) no default or event of default has occurred and is continuing under the Program Documents, and (iii) no Servicing Termination Event has occurred and is continuing under the Purchase Agreement.
SECTION 5.
Governing Law
. This Amendment and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of New York, without regard to principles of conflicts of laws (other than Sections 5-1401 and 5‑1402 of the New York General Obligations Law which shall be applicable).
SECTION 6.
Counterparts
. For the purpose of facilitating the execution of this Amendment, and for other purposes, this Amendment may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Purchaser, Agent and Seller have caused their names to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.
BARCLAYS BANK PLC,
Purchaser and Agent
By:
/s/ Ellen V. Kiernan
Name: Ellen V. Kiernan
Title: Director
NATIONSTAR MORTGAGE LLC,
Seller
By:
/s/ Larry Brown
Name: Larry Brown
Title: Vice President
Exhibit 10.45
FUTURE SPREAD AGREEMENT FOR NON-AGENCY MORTGAGE LOANS
by and between
NATIONSTAR MORTGAGE LLC
(Seller)
and
MSR XIII LLC
(Purchaser) Dated and effective as of January 6, 2013
Table of Contents
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ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
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1
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Section 1.01
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Definitions
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1
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Section 1.02
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General Interpretive Principles
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12
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ARTICLE II ITEMS TO BE DELIVERED
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13
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Section 2.01
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Items to be Delivered
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13
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Section 2.02
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Grant of Security Interest
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14
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ARTICLE III REPLACEMENT OF MORTGAGE LOANS
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15
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Section 3.01
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Refinancing and Substitution of Mortgage Loans
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15
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Section 3.02
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Criteria for Mortgage Loans
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15
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Section 3.03
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Refinancing Incentives
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16
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Section 3.04
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Selection Procedures
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18
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Section 3.05
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Assignment of Future Excess Servicing Spread
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19
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ARTICLE IV PAYMENTS AND DISTRIBUTIONS
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19
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Section 4.01
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Purchase Price
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19
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Section 4.02
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Payments by Purchaser
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20
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Section 4.03
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Accounts
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20
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Section 4.04
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Priority of Payments
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22
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Section 4.05
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Withdrawals from the Future Spread Reserve Account
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23
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Section 4.06
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Payment to Seller of Base Servicing Fee
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23
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Section 4.07
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Correction of Principal Balance Error
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24
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Section 4.08
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Intent and Characterization
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24
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER
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24
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Section 5.01
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Due Organization and Good Standing
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25
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Section 5.02
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Authority and Capacity
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25
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Section 5.03
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Owner Consents
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25
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Section 5.04
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Title to the Mortgage Servicing Rights
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25
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Section 5.05
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Effective Agreements
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26
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Section 5.06
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No Accrued Liabilities
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26
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Section 5.07
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Seller/Servicer Standing
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26
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Section 5.08
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MERS Membership
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26
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Section 5.09
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Owner Set-off Rights
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26
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Section 5.10
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Ability to Perform; Solvency
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27
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Section 5.11
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Obligations with Respect to Origination
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27
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Section 5.12
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Purchase of Mortgage Servicing Rights
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27
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Section 5.13
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No Actions
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27
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i
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ARTICLE VI REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE LOANS AND SERVICING
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27
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Section 6.01
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Servicing Agreements; Applicable Laws
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27
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Section 6.02
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Related Escrow Accounts
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28
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Section 6.03
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No Purchaser Responsibility
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28
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Section 6.04
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Location of Credit Files
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28
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Section 6.05
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Representations Concerning the Future Excess Servicing Spread
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28
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ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER
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29
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Section 7.01
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Due Organization and Good Standing
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29
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Section 7.02
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Authority and Capacity
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29
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Section 7.03
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Effective Agreements
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29
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Section 7.04
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Sophisticated Investor
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30
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Section 7.05
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No Actions
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30
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ARTICLE VIII SELLER COVENANTS
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30
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Section 8.01
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Servicing Obligations
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30
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Section 8.02
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Cooperation; Further Assurances
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31
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Section 8.03
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Financing Statements
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31
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Section 8.04
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Supplemental Information
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31
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Section 8.05
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Access to Information
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31
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Section 8.06
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Home Affordable Modification Program
|
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32
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Section 8.07
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Distribution Date Data Tapes and Reports
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32
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Section 8.08
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Financial Statements and Officer’s Certificates
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34
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Section 8.09
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Monthly Management Calls
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34
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Section 8.10
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Timely Payment of Owner Obligations
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34
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Section 8.11
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Servicing Agreements
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34
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Section 8.12
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Transfer of Mortgage Servicing Rights
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35
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Section 8.13
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Consents to Transaction Documents
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35
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Section 8.14
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Accounts
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35
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Section 8.15
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Notification of Certain Events
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35
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Section 8.16
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Financing; Pledge of Future Excess Servicing Spread
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36
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Section 8.17
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Existence, etc
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36
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Section 8.18
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Consent to Sub-Servicing
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37
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Section 8.19
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Nonpetition Covenant
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37
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Section 8.20
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Schedule of Mortgage Loans
|
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37
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Section 8.21
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True Sale Opinion
|
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37
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Section 8.22
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Valuation
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38
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Section 8.23
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Material Documents
|
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38
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Section 8.24
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Insurance.
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38
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Section 8.25
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Defense of Title
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38
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Section 8.26
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Refinancing of Mortgage Loans.
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38
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ii
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ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
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38
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Section 9.01
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Correctness of Representations and Warranties
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38
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Section 9.02
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Compliance with Conditions
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39
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Section 9.03
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Corporate Resolution
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39
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Section 9.04
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No Material Adverse Change
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39
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Section 9.05
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Consents
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39
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Section 9.06
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Delivery of Transaction Documents
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39
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Section 9.07
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Certificate of Seller
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39
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Section 9.08
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Opinions of Counsel
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40
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Section 9.09
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Good Standing Certificate of Seller
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40
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Section 9.10
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No Actions or Proceedings
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40
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ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
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40
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Section 10.01
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Correctness of Representations and Warranties
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40
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Section 10.02
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Compliance with Conditions
|
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40
|
|
Section 10.03
|
|
Corporate Resolution
|
|
41
|
|
Section 10.04
|
|
No Material Adverse Change
|
|
41
|
|
Section 10.05
|
|
Certificate of Purchaser
|
|
41
|
|
Section 10.06
|
|
Good Standing Certificate of Purchaser
|
|
41
|
|
|
|
|
ARTICLE XI INDEMNIFICATION
|
|
41
|
|
Section 11.01
|
|
Indemnification by Seller
|
|
41
|
|
Section 11.02
|
|
Indemnification by Purchaser
|
|
43
|
|
Section 11.03
|
|
Other Rights
|
|
44
|
|
|
|
|
ARTICLE XII MISCELLANEOUS
|
|
44
|
|
Section 12.01
|
|
Costs and Expenses
|
|
44
|
|
Section 12.02
|
|
Confidentiality
|
|
44
|
|
Section 12.03
|
|
Broker’s Fees
|
|
45
|
|
Section 12.04
|
|
Relationship of Parties
|
|
45
|
|
Section 12.05
|
|
Survival of Representations and Warranties
|
|
45
|
|
Section 12.06
|
|
Notices
|
|
46
|
|
Section 12.07
|
|
Waivers
|
|
46
|
|
Section 12.08
|
|
Entire Agreement; Amendment
|
|
46
|
|
Section 12.09
|
|
Binding Effect
|
|
47
|
|
Section 12.10
|
|
Headings
|
|
47
|
|
Section 12.11
|
|
Applicable Law
|
|
47
|
|
Section 12.12
|
|
Incorporation of Exhibits
|
|
47
|
|
Section 12.13
|
|
Counterparts
|
|
47
|
|
Section 12.14
|
|
Severability of Provisions
|
|
47
|
|
Section 12.15
|
|
Assignment
|
|
48
|
|
Section 12.16
|
|
Termination
|
|
48
|
|
Section 12.17
|
|
Third Party Beneficiaries
|
|
48
|
iii
EXHIBITS
Exhibit A – Form of Assignment Agreement
Annex A
Exhibit B – Example of Calculations of Maximum Retained Refinancing Loan Amounts
Exhibit C – Schedule of Mortgage Loans
Exhibit D – Seller’s Officer’s
Certificate
Exhibit E – Purchaser’s Officer’s Certificate
Exhibit F – Location of Credit Files
Exhibit G – Form of Summary Remittance Report
Exhibit H – Form of Delinquency Report
Exhibit I – Form of Disbursement Report
Exhibit J – Seller Jurisdictions and Recording
Offices
iv
FUTURE SPREAD AGREEMENT FOR NON-AGENCY MORTGAGE LOANS
This FUTURE SPREAD AGREEMENT FOR NON-AGENCY MORTGAGE LOANS (as amended, restated, or otherwise modified and in effect from time to time,
this “
Agreement
”), dated as of January 6, 2013 (the “
Agreement Date
”), is by and between MSR XIII LLC, a Delaware limited liability company (together with its successors and assigns, the
“
Purchaser
”), and Nationstar Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) (the Purchaser and the Seller will collectively be referred to as the
“
Parties
” and each, a “
Party
”).
W I T N E S S E T H
:
WHEREAS
, Seller and Purchaser have entered into the Current Excess Servicing Spread Acquisition Agreement For Non-Agency Mortgage
Loans, dated as of the date hereof (as amended, restated, or otherwise modified and in effect, the “
Current Spread Agreement
”), pursuant to which Purchaser will purchase and assume all right, title and interest in the excess
servicing spread with respect to a pool of residential mortgage loans to be serviced by Seller;
WHEREAS
, Seller
desires to retain the right to refinance the residential mortgage loans in the pool, and Purchaser is willing to grant such right, as long as the excess servicing spread with respect to the newly-originated residential mortgage loans and replacement
residential mortgage loans is assigned to the Purchaser as described herein; and
WHEREAS
, Purchaser and Seller desire
to set forth the terms and conditions pursuant to which residential mortgage loans in the pool may be refinanced.
NOW,
THEREFORE
, in consideration of the mutual promises, covenants and conditions and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and upon the terms and subject to the conditions set forth
herein, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
Section 1.01
Definitions
.
Whenever used herein, the following
words and phrases, unless the context otherwise requires, shall have the following meanings:
Accepted Servicing
Practices
: With respect to any Mortgage Loan, those accepted and prudent mortgage servicing practices (including collection procedures) which are in accordance with the servicing practices and procedures as set forth in the applicable Servicing
Agreements, and in a manner at least equal in quality to the servicing that Seller provides to mortgage loans which it owns in its own portfolio.
1
Agency
: The entity formerly known as the Federal Home Loan Mortgage Corporation, or
any successor thereto, the Federal National Mortgage Association, or any successor thereto, the Government National Mortgage Association, or any successor thereto, the Federal Housing Administration of the United States Department of Housing and
Urban Development, or any successor thereto, the Department of Veterans Affairs, or any successor thereto.
Agreement
:
As defined in the preamble hereof.
Agreement Date
: As defined in the preamble hereof.
Ancillary Income
: All incidental servicing fees (such as late fees, assignment transfer fees, returned check fees, special
services fees, amortization schedule fees, HAMP fees, modification and incentive income and any interest or earnings on funds deposited in an account maintained by the Seller as servicer with respect to the Mortgage Loans, etc.) that are
supplemental to the servicing spread payable to the servicer pursuant to the Servicing Agreements.
Applicable Law
:
With reference to any Person, all laws (including common law), statutes, regulations, ordinances, treaties, judgments, decrees, injunctions, writs and orders of any court, governmental agency or authority and rules, regulations, orders, directives,
licenses and permits of any Governmental Authority applicable to such Person or its property or in respect of its operations.
Assignment Agreement
: An assignment agreement substantially in the form of
Exhibit A
to this Agreement or in such other
form as mutually agreed upon by the Parties.
Assignment Date
: With respect to a Refinanced Mortgage Loan and its
related Mortgage Loan, the Distribution Date in the third calendar month following the Refinanced Mortgage Loan’s Refinancing Date.
Available Portfolio
: As defined in
Section 3.04(a)
hereof.
Bank
: Wells Fargo Bank, National Association, or another financial institution mutually agreed upon by the Parties or any
successor thereto, each in its capacity as “Bank” under the Future Spread Custodial Account Control Agreement or the Future Spread Reserve Account Control Agreement, as applicable, or any third party custodian or trustee in similar
capacity under any replacement account control agreements.
Base Servicing Fee
: With respect to a Collection Period, an
amount equal to the product of (A) the aggregate outstanding principal balance of the Mortgage Loans as of the related Measurement Date, (B) the Base Servicing Fee Rate and (C) (i) in the case of the initial Collection Period, a
fraction, the numerator of which is the number of days in the period from and including the Initial Applicable Subsequent Sale Date to and including the last day of the initial Collection Period, and the denominator of which is 360, and (ii) in
the case of all other Collection Periods, 1/12;
provided
that the Base Servicing Fee with respect to any Mortgage Loan whose Servicing Agreement is terminated during a Collection Period shall be pro-rated to the actual number of days within
such Collection Period in which such Mortgage Loan was serviced by Seller.
2
Base Servicing Fee Rate
: With respect to the Mortgage Loans (other than GNMA Mortgage
Loans), 0.06% per annum and with respect to GNMA Mortgage Loans, 0.12% per annum.
Business Day
: Any day
other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the States of Texas or New York are authorized or obligated by law or by executive order to be closed or (c) such other days as agreed upon by the
Parties.
Carryover Retained Amount
: As defined in
Section 3.03
hereof.
Code
: The Internal Revenue Code of 1986, as amended from time to time.
Collateral
: As defined in
Section 2.02
hereof.
Collection Period
: With respect to any Distribution Date, the calendar month preceding the month in which such Distribution Date
occurs.
Consolidated Tangible Net Worth
: (i) The net worth of Seller and its consolidated subsidiaries, on a
combined basis, determined in accordance with GAAP,
minus
(ii) all intangibles determined in accordance with GAAP (including goodwill, capitalized financing costs and capitalized administration costs but excluding originated and
purchased mortgage servicing rights or retained residual securities) and any and all advances to, investments in and receivables held from affiliates;
provided
,
however
, that the non-cash effect (gain or loss) of any mark-to-market
adjustments made directly to stockholders’ equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the
calculation of Consolidated Tangible Net Worth.
Control
: The meaning specified in Section 8-106 of the UCC.
Credit File
: Those documents, which may be originals, copies or electronically imaged, pertaining to each Mortgage
Loan, held by or on behalf of Seller in connection with the servicing of the Mortgage Loan, which may include Mortgage Loan Documents and the credit documentation relating to the origination of such Mortgage Loan, and any documents gathered during
the servicing of a Mortgage Loan.
Current Mortgage Loan
: A residential mortgage loan that is a “Mortgage
Loan” under the Current Spread Agreement.
Current Spread Agreement
: As defined in the recitals to this Agreement.
Custodian
: A custodian of Credit Files or any part thereof as identified by the Seller to the Purchaser in writing on
or prior to the first Assignment Date as the same may be amended and supplemented from time to time by the Seller by providing a written notice of any such update to the Purchaser.
3
Distribution Date
: The 10th day of each calendar month, or if such day is not a
Business Day, the prior Business Day, beginning in the month following the first Assignment Date, or such other day as mutually agreed upon by Seller and Purchaser.
Electronic Data File
: A computer tape or other electronic medium generated by or on behalf of Seller and delivered or transmitted to or on behalf of Purchaser which provides information relating to
the Mortgage Loans.
Eligible Servicing Agreement
: Unless otherwise agreed to by the Purchaser, a Servicing Agreement
in respect of which the following eligibility requirements have been satisfied:
(a) the Owner Consents relating to such
Servicing Agreement have been obtained;
(b) such Servicing Agreement is in full force and effect, and is in all respects
genuine as appearing on its face or as represented in the books and records of Seller, and no event of default, early amortization event, termination event, or other event giving any party thereto (including with notice or lapse of time or both) the
right to terminate Seller as servicer thereunder for cause has occurred and is continuing; provided, however, that with respect to any Servicing Agreement and the occurrence of any event set forth in this clause (b) which is based on a breach
of a collateral performance test, such Servicing Agreement shall remain an Eligible Servicing Agreement so long as no notice of termination based on such breach has been given or threatened in writing and subject to the restrictions set forth
herein;
(c) Seller has not resigned or been terminated as servicer under such Servicing Agreement and has no actual knowledge
of any pending or threatened action to terminate Seller, as servicer (whether for cause or without cause); and
(d) with
respect to any Servicing Agreement relating to Non-Agency Mortgage Loans, an agreement pursuant to which the Seller as servicer may not be terminated without cause pursuant to such Servicing Agreement or if the Seller as servicer may be terminated
without cause, upon payment of a termination fee.
Entitlement Holder
: The meaning specified in
Section 8-102(a)(7) of the UCC.
Excess Refinancing Percentage
: As defined in
Section 3.03
hereof.
Expense Amount
: As defined in
Section 11.01(b)
hereof.
Expense Amount Accountant’s Letter
: As defined in
Section 11.01(b)
hereof.
Expense Amount Tax Opinion
: As defined in
Section 11.01(b)
hereof.
Expense Escrow Account
: As defined in
Section 11.01(b)
hereof.
Fannie Mae
: Federal National Mortgage Association, or any successor thereto.
Freddie Mac
: Federal Home Loan Mortgage Corporation, or any successor thereto.
4
FHLMC Acknowledgment Agreement
: The acknowledgment agreement by and among the entity
formerly known as the Federal Home Loan Mortgage Corporation, or any successor thereto, Seller and MSR IX LLC, in form and substance reasonably acceptable to MSR IX LLC, dated on or before the Sale Date, pursuant to which the entity formerly known
as the Federal Home Loan Mortgage Corporation, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
FNMA Acknowledgment Agreement
: The acknowledgment agreement by and among the Federal National Mortgage Association, or any successor thereto, Seller and MSR X LLC, in form and substance reasonably
acceptable to MSR X LLC, dated on or before the Sale Date, pursuant to which the Federal National Mortgage Association, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
Future Excess Servicing Spread
: The rights of Seller, severable from each (and all) of the other rights under the
applicable Servicing Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to the Future Excess Servicing Spread Percentage.
Future Excess Servicing Spread Assignment Obligation
: As defined in
Section 3.01
hereof.
Future Excess Servicing Spread Percentage
: A percentage equal to the Current Excess Servicing Spread Percentage in the Current Spread Agreement.
Future Excess Servicing Spread Rights
: As defined in
Section 3.01
hereof.
Future Spread Custodial Account Agreement
: The applicable deposit account agreement and other related account documentation
governing the Third Party Controlled Future Spread Custodial Account.
Future Spread Custodial Account Control
Agreement
: The account control agreement among Seller, Purchaser and Wells Fargo Bank, National Association, or any successor thereto, or any other institution agreed upon by the Parties, as Bank, dated as of the Initial Applicable Subsequent
Sale Date, entered into with respect to the Third Party Controlled Future Spread Custodial Account, as amended, restated, supplemented or otherwise modified from time to time.
Future Spread Reserve Account
: The account specified in the Future Spread Reserve Account Control Agreement and maintained by Wells Fargo Bank, National Association, or any successor thereto, or
another third party custodian or trustee selected by Purchaser.
Future Spread Reserve Account Agreement
: The
applicable deposit account agreement and other related account documentation governing the Future Spread Reserve Account.
Future Spread Reserve Account Control Agreement
: The account control agreement among Seller, Purchaser and Wells Fargo Bank,
National Association, or any successor thereto, or any other institution agreed upon by the Parties, as Bank, dated as of the Initial Applicable Subsequent Sale Date, entered into with respect to the Future Spread Reserve Account, as amended,
restated, supplemented or otherwise modified from time to time.
5
Future Spread Reserve Account Deposit Event
: As defined in
Section 4.03(c)
hereof.
Future Spread Reserve Account Required Amount
: As defined in
Section 4.03(c)
hereof.
GAAP
: Generally accepted accounting principles in the United States of America as
in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board,
or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, that are applicable to the circumstances as of the date of determination.
GNMA
: Government National Mortgage Association, or any successor thereto.
GNMA Acknowledgment Agreement
: The acknowledgment agreement by and among GNMA, or any successor thereto, Seller and MSR XI LLC, in
form and substance reasonably acceptable to MSR XI LLC, dated on or before the Sale Date, pursuant to which GNMA, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
GNMA Mortgage Loan
: A Mortgage Loan which is owned by GNMA, or any successor thereto.
Governmental Authority
: With respect to any Person, any nation or government, any state or other political subdivision, agency or
instrumentality thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over such Person, any of its subsidiaries or any
of its properties.
Grant
: To grant, bargain, sell, warrant, alienate, remise, demise, release, convey, assign,
transfer, mortgage, pledge, create and grant a security interest in and right of setoff against, deposit, set over or confirm.
HAMP
: As defined in
Section 8.06
hereof.
HAMP Loans
: As defined in
Section 8.06
hereof.
Holder
Register
: As defined in
Section 12.15(b)
hereof.
Indemnity Loan
: As defined in
Section 11.01(b)
hereof.
Indemnity Loan Agreement
: As defined in
Section 11.01(b)
hereof.
Initial Applicable Subsequent Sale Date
: As defined in the Current Spread Agreement.
IRS
: The United States Internal Revenue Service.
6
Lien
: Any mortgage, deed of trust, pledge, hypothecation, collateral assignment,
charge, deposit, arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness
or the performance of any other obligation, including any conditional sale or other title retention agreement.
Lockbox
Account
: An account maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser for the purpose of receiving Servicing Spread Collections.
Loss
or
Losses
: Any and all direct, actual and out-of-pocket losses (including any loss in the value in the Future Excess
Servicing Spread), damages, deficiencies, claims, costs or expenses, including reasonable attorneys’ fees and disbursements, excluding (i) any amounts attributable to or arising from overhead allocations, general or administrative costs
and expenses, or any cost for the time of any Party’s employees, (ii) consequential losses or damages consisting of speculative lost profits, lost investment or business opportunity, damage to reputation or operating losses, or
(iii) punitive or treble damages;
provided
,
however
, that the exclusions set forth in clauses (ii) and (iii) above do not apply if and to the extent any such amounts are actually incurred in payment to a third party or
government entity.
Maximum Retained Refinancing Loan Amount
: As defined in
Section 3.03
hereof.
Measurement Date
: With respect to any Collection Period, the first day of such Collection Period.
MERS
: Mortgage Electronic Registration Systems, Inc., or any successor thereto.
MI
: Insurance provided by private mortgage insurance companies to make payments on certain Mortgage Loans in the event that
the related Mortgagor defaults in its obligation in respect of the Mortgage.
Mortgage
: Each of those mortgages,
deeds of trust, security deeds or deeds to secure debt creating a first lien on or an interest in real property securing a Mortgage Note and related to a Mortgage Loan.
Mortgage Loan
: A residential mortgage loan that satisfies the conditions set forth in
Section 3.02
and whose Future Excess Servicing Spread is assigned to Purchaser hereunder in
satisfaction of Seller’s Future Excess Servicing Spread Assignment Obligation.
Mortgage Loan Documents
: With
respect to each Mortgage Loan, the documents and agreements related to such Mortgage Loan required to be held by the applicable Custodian, including, without limitation, the original Mortgage Note, and any other documents or agreements evidencing
and/or governing such Mortgage Loan.
Mortgage Loan Identification Date
: With respect to a Refinanced Mortgage Loan and
its related replacement Mortgage Loan, the 25th day of the second calendar month following the Refinanced Mortgage Loan’s Refinancing Date.
7
Mortgage Note
: With respect to any Mortgage Loan, the note or other evidence of
indebtedness of the Mortgagor, thereunder, including, if applicable, an allonge and lost note affidavit.
Mortgage
Servicing Rights
: The rights and responsibilities of Seller with respect to servicing the Mortgage Loans under the Servicing Agreements, including any and all of the following if and to the extent provided therein: (a) all rights to service
a Mortgage Loan; (b) all rights to receive servicing fees, Ancillary Income, reimbursements or indemnification for servicing the Mortgage Loan, and any payments received in respect of the foregoing and proceeds thereof; (c) the right to
collect, hold and disburse escrow payments or other payments with respect to the Mortgage Loan and any amounts actually collected with respect thereto and to receive interest income on such amounts to the extent permitted by Applicable Law;
(d) all accounts and other rights to payment related to any of the property described in this paragraph; (e) possession and use of any and all Credit Files pertaining to the Mortgage Loan or pertaining to the past, present or prospective
servicing of the Mortgage Loan; (f) to the extent applicable, all rights and benefits relating to the direct solicitation of the related Mortgagors for refinance or modification of the Mortgage Loans and attendant right, title and interest in
and to the list of such Mortgagors and data relating to their respective Mortgage Loans; and (g) all rights, powers and privileges incident to any of the foregoing.
Mortgaged Property
: The Mortgagor’s real property, securing repayment of a related Mortgage Note, consisting of an interest in a single parcel of real property, improved by a residential
dwelling.
Mortgagor
: An obligor under a residential mortgage loan.
New Mortgage Loan
: As defined in
Section 3.02(a)(i)(1)
hereof.
Non-Agency Mortgage Loan
: Any Mortgage Loan where the Owner is not an Agency.
Nonqualifying Income
: Any amount that is treated as gross income for purposes of Section 856 of the Code and which is not
Qualifying Income.
Objection Notice
: As defined in
Section 4.03(c)
hereof.
Opinion of Counsel
: One or more written opinions, in form and substance reasonably satisfactory to the recipient, of an attorney
at law admitted to practice in any state of the United States or the District of Columbia, which attorney may be counsel for Seller or Purchaser, as the case may be.
Owner
: With respect to a Mortgage Loan, the owner thereof.
Owner
Consent
: All agreements, including the FHLMC Acknowledgment Agreement, the FNMA Acknowledgment Agreement and GNMA Acknowledgment Agreement, if applicable, pursuant to which an Owner approves or consents to the sale of the Future Excess Servicing
Spread from Seller to Purchaser and any other consents, acknowledgements or similar instruments that may be required from an Owner in connection with the transactions contemplated herein.
8
Party
or
Parties
: As defined in the preamble hereof.
Permitted Liens
: Liens in favor of an Agency required pursuant to the applicable Servicing Agreements.
Person
: Any individual, partnership, corporation, limited liability company, limited liability partnership, business entity, joint
stock company, trust, business trust, unincorporated organization, association, enterprise, joint venture, government, any department or agency of any government or any other entity of whatever nature.
Power of Attorney
: A Power of Attorney delivered by the Seller to the Purchaser authorizing the Purchaser to enforce the right to
payment of the Future Excess Servicing Spread under the related Servicing Agreement solely in the event that the Seller fails to enforce such right within 30 days after receiving written notice of such failure from the Purchaser to the Seller.
Priority of Payments
: As defined in
Section 4.04
hereof.
Protected REIT
: Any entity that (i) has elected to be taxed as a real estate investment trust pursuant to Section 856 et
seq. of the Code, (ii) owns a direct or indirect equity interest in Purchaser, and (iii) is treated for purposes of Section 856 of the Code as owning all or a portion of the assets of the Purchaser or as receiving all or a portion of
the Purchaser’s income.
Purchase and Sale Agreement
: The Mortgage Servicing Rights Purchase and Sale Agreement,
dated as of January 6, 2013, by and between Nationstar Mortgage LLC, as purchaser, and Bank of America, National Association, as seller, together with all schedules and exhibits thereto, as the same may be amended, supplemented or otherwise
modified from time to time.
Purchase Price
: As defined in
Section 4.01
hereof.
Purchaser
: As defined in the preamble hereof.
Purchaser Indemnitees
: As defined in
Section 11.01(a)
hereof.
Qualifying Income
: Gross income that is described in Section 856(c)(2) or 856(c)(3) of the Code.
Quarterly Collection Period
: As defined in
Section 3.03
hereof.
Refinanced Mortgage Loan
: A Current Mortgage Loan or a Mortgage Loan that has been refinanced in whole or in part by Seller or an
affiliate thereof.
Refinancing Date
: The date on which a Current Mortgage Loan or Mortgage Loan is refinanced by
Seller or an affiliate thereof.
Refinancing Split Percentage
: As defined in
Section 3.03
hereof.
REIT Qualification Ruling
: As defined in
Section 11.01(b)
hereof.
9
REIT Requirements
: The requirements imposed on REITs pursuant to Sections 856 through
and including 860 of the Code.
Related Collection Period
: With respect to an Assignment Date, the Collection Period in
the third calendar month prior to such Assignment Date, and with respect to a Mortgage Loan Identification Date, the second calendar month prior to such Mortgage Loan Identification Date.
Related Escrow Accounts
: Mortgage Loan escrow/impound accounts maintained by Seller relating to the Mortgage Servicing Rights,
including accounts for buydown funds, real estate taxes and MI, flood and hazard insurance premiums.
Release Document
:
As defined in
Section 11.01(b)
hereof.
Remaining Expected Total Servicing Spread
: As defined in
Section 4.03(c)
hereof.
Replacement Portfolio
: As defined in
Section 3.04(a)
hereof.
Replacement Shortfall
: As defined in
Section 3.03
hereof.
Requirement of Law
: As to any Person, the certificate of incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its
property is subject.
Retained Portfolio
: As defined in
Section 3.04(a)
hereof.
Retained Servicing Spread
: The rights of Seller, severable from each (and all) of the other rights under the applicable Servicing
Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to 100%
minus
the Future Excess Servicing Spread Percentage.
Sale Date
: As defined in the Purchase and Sale Agreement.
Sales
Proceeds
: The proceeds received upon a sale (approved by the Parties) of the Total Servicing Spread (except without giving effect to clause (c) of the definition thereof), in whole or in part, including through a sale in accordance with
Section 8.12
.
Schedule of Mortgage Loans:
The list of Mortgage Loans whose Future Excess Servicing Spread
has been assigned to Purchaser pursuant to this Agreement as updated by the Seller and Purchaser on each Assignment Date and maintained as
Exhibit C
hereto.
Selection Period
: As defined in
Section 3.04(b)
hereof.
Seller
: As defined in the preamble hereof.
Seller Indemnitees
: As defined in
Section 11.02
hereof.
10
Servicing
: The responsibilities, with respect to servicing the Mortgage Loans, under
the Servicing Agreements.
Servicing Agreements
: The servicing agreements, as amended from time to time, and any
waivers, consent letters, acknowledgments and other agreements under which Seller is the servicer of the Mortgage Loans relating to the Mortgage Servicing Rights and governing the servicing of the Mortgage Loans, or with respect to Mortgage Loans
owned by the Seller, the credit and collection standards, policies, procedures and practices of Seller relating to residential mortgage loans owned and serviced by Seller.
Servicing Spread Collections
: For each Collection Period, the funds collected on the Mortgage Loans and allocated as the servicing compensation payable to Seller as servicer of the Mortgage Loans
with respect to such Collection Period pursuant to the applicable Servicing Agreements, other than Ancillary Income and, for the avoidance of doubt, other than reimbursements received for advances and other out-of-pocket expenditures from an Owner
by Seller in accordance with the Servicing Agreements.
Solvent
: With respect to any Person as of any date of
determination, (a) the value of the assets of such Person is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person as determined in accordance with GAAP, (b) such Person is able to
pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the
amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
Third Party Assignee
: As defined in
Section 12.15
hereof.
Third Party Assignment
: As defined in
Section 12.15
hereof.
Third Party Future Spread Agreement
: As defined in
Section 12.15
hereof.
Third Party Claim
: As defined in
Section 11.01
and
Section 11.02
, as applicable.
Third Party Controlled Future Spread Custodial Account
: The account specified in the Future Spread Custodial Account Control
Agreement and maintained by Wells Fargo Bank, National Association, or any successor thereto, or another third party custodian or trustee selected by Purchaser, into which all Servicing Spread Collections, all Sales Proceeds and all Servicing
Agreement termination payments in respect of the Mortgage Loans shall be deposited.
Total Servicing Spread
: For each
Collection Period on and after the Initial Applicable Subsequent Sale Date, the sum of the following: (a) the Servicing Spread Collections received during such Collection Period and remaining after payment of the Base Servicing Fee;
(b) all other amounts payable by an Owner to Seller (or Purchaser under an Owner Consent) with respect to the Mortgage Servicing Rights for Mortgage Loans, including any termination fees paid by an Owner to Seller for terminating Seller as the
servicer of any of the Mortgage Loans, but for the avoidance of doubt, excluding all Ancillary Income and reimbursements received for advances and other out-of-pocket expenditures from an Owner by Seller in accordance with the Servicing Agreements
and (c) all Sales Proceeds received during such Collection Period.
11
Transaction Documents
: The Future Spread Custodial Account Agreement, the
Future Spread Custodial Account Control Agreement, the Future Spread Reserve Account Agreement, the Future Spread Reserve Account Control Agreement, the Current Spread Agreement and this Agreement.
UCC
: The Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.
Section 1.02
General Interpretive Principles
.
For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other gender;
(b) Accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally accepted accounting principles;
(c) References
herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) A reference to a Subsection without further reference to a Section is a reference to such Subsection as
contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions;
(e) The words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; and
(f) The term “include” or “including” shall mean without limitation by reason of enumeration.
12
ARTICLE II
ITEMS TO BE DELIVERED
Section 2.01
Items to be
Delivered
.
(a) On the Agreement Date, subject to the satisfaction of the terms and conditions herein, each of
Seller and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
(i) This Agreement;
(ii) The Current Spread Agreement and all agreements, certificates, opinions and instruments required to be delivered under the Current Spread Agreement on the Agreement Date, if any;
(b) On the Initial Applicable Subsequent Sale Date, subject to the satisfaction of the terms and conditions herein, each of Seller and
Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
(i) The executed Future Spread Custodial Account Agreement;
(ii) The executed Future Spread Custodial Account Control Agreement;
(iii) The executed Future Spread Reserve Account Agreement;
(iv) The executed Future Spread Reserve Account Control Agreement;
(v) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser regarding due authorization, authority, and
enforceability of the applicable Transaction Documents to which Seller is a party, and regarding no conflicts with other material Seller agreements;
(vi) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the characterization of the transfer of the Future Excess Servicing Spread from Seller to Purchaser as a true sale for
bankruptcy purposes;
(vii) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the
perfection of the assignment of Future Excess Servicing Spread to Purchaser and the security interests granted hereunder;
(viii) The duly executed corporate certificate of Seller required by
Section 9.07
;
13
(ix) A certificate of good standing of Seller dated as of a date within
five (5) Business Days prior to the Initial Applicable Subsequent Sale Date to be delivered by Seller;
(x) A secretary’s certificate of Seller attaching its organizational documents, board resolutions and incumbency
certificates;
(xi) The duly executed corporate certificate of Purchaser required by
Section 10.05
;
(xii) A certificate of good standing of Purchaser dated as of a date within five
(5) Business Days prior to the Initial Applicable Subsequent Sale Date to be delivered by Purchaser;
(xiii) A UCC-1 financing statement relating to the sale of the Future Excess Servicing Spread and relating to the
security interest of Purchaser in the Third Party Controlled Future Spread Custodial Account and the Future Spread Reserve Account, in form and substance reasonably acceptable to Purchaser; and
(xiv) All agreements, certificates, opinions and instruments required to be delivered under the Current Spread Agreement
on the Initial Applicable Subsequent Sale Date.
(c) On or before the Assignment Date with respect to a Mortgage Loan, Seller
shall provide Purchaser with executed copies of the related Owner Consents, and any amendments thereto.
(d) On or before the
first Assignment Date, the executed Power of Attorney.
Section 2.02
Grant of Security Interest
.
In order to secure Seller’s obligations to deliver the Future Excess Servicing Spread and perform its obligations
hereunder, Seller hereby Grants to Purchaser a valid and continuing first priority and perfected Lien on and security interest in all of Seller’s right, title and interest in, to and under the Third Party Controlled Future Spread Custodial
Account and the Future Spread Reserve Account, together with all amounts deposited therein from time to time and all cash and non-cash proceeds thereof, in each case, whether now owned or existing, or hereafter acquired and arising (the
“
Collateral
”).
14
ARTICLE III
REPLACEMENT OF MORTGAGE LOANS
Section 3.01
Refinancing
and Substitution of Mortgage Loans
.
Subject to, and upon the terms and conditions of this Agreement, and, more
particularly, the conditions of this
ARTICLE III
, if Seller or any of its affiliates refinances any Current Mortgage Loan or Mortgage Loan, it shall designate a residential mortgage loan as a replacement Mortgage Loan pursuant to this
ARTICLE III
and assign the Future Excess Servicing Spread with respect to such replacement Mortgage Loan on the applicable Assignment Date to Purchaser as provided in this Agreement (such obligations of Seller, the “
Future Excess
Servicing Spread Assignment Obligation
“), and the rights of Purchaser to such Future Excess Servicing Spread, the “
Future Excess Servicing Spread Rights
“).
Section 3.02
Criteria for Mortgage Loans
.
(a) As of the applicable Assignment Date, unless otherwise agreed upon by Seller and Purchaser, either:
(i) The Mortgage Loan shall satisfy the following criteria:
(1)
The proceeds of such Mortgage Loan (the “
New Mortgage Loan
“) were use to repay the Refinanced Mortgage Loan in whole or in part;
(2) All consents, if any, required by the applicable Owner to assign the related Future Excess Servicing Spread with respect to the New Mortgage Loan shall have been obtained;
(3) The servicing fee rate for the New Mortgage Loan is not less than the lesser of (x) the servicing fee rate of
the Refinanced Mortgage Loan and (y) (A) 0.25% per annum if such New Mortgage Loan is owned by Fannie Mae or Freddie Mac, (B) 0.35% per annum if such New Mortgage Loan is a Non-Agency Mortgage Loan or
(C) 0.375% per annum if such New Mortgage Loan is owned by GNMA; and
(4) The New Mortgage Loan is
secured by the same property as the Refinanced Mortgage Loan; or
(ii) if Seller is unable to satisfy the
conditions in
Section 3.02(a)(i)
after using commercially reasonable efforts, Seller shall use its best efforts to substitute the New Mortgage Loan with a Mortgage Loan satisfying the following criteria:
(1) The servicing fee rate (which results in the Servicing Spread Collections) for the Mortgage Loan is equal to or
greater than the servicing fee rate of the New Mortgage Loan; provided however if the servicing fee rate of the New Mortgage Loan is less than the applicable rate set forth in
Section 3.02(a)(i)(3)
, the servicing fee rate on the Mortgage
Loan is not less than the lesser of (x) the servicing fee rate of the Refinanced Mortgage Loan and (y) (A) 0.25% per annum if such Mortgage Loan is owned by Fannie Mae or Freddie Mac, (B) 0.35% per annum if such
Mortgage Loan is a Non-Agency Mortgage Loan or (C) 0.375% per annum if such Mortgage Loan is owned by GNMA;
15
(2) The interest accrual rate per annum on the Mortgage Loan is within 12.5
basis points per annum of the interest accrual rate on the New Mortgage Loan;
(3) The final maturity date of
the Mortgage Loan is within six months of the final maturity date of the New Mortgage Loan;
(4) The principal
balance of the Mortgage Loan is no less than the principal balance of the Refinanced Mortgage Loan;
(5) The
remaining credit characteristics of the Mortgage Loan (other than as specified in
clauses (1)
,
(2)
,
(3)
and
(4)
above) are substantially the same as the credit characteristics of the New Mortgage Loan;
(6) The Mortgage Loan is current as of the applicable Assignment Date; and
(7) The Mortgage Loan is not subject to any foreclosure or similar proceeding as of the applicable Assignment Date; is
not in process of any modification, workout or other loss mitigation process; and is not involved in litigation.
(b) If a
New Mortgage Loan would otherwise meet the criteria set forth in
Section 3.02(a)(i)
and is still owned by Seller as of the Mortgage Loan Identification Date, in lieu of a substitution pursuant to
Section 3.02(a)(ii)
above,
the Seller may include such New Mortgage Loan as a Mortgage Loan in the Available Portfolio; provided (i) the servicing fee rate (which results in the Servicing Spread Collections) for such Mortgage Loan shall be deemed to be 0.30% per
annum and (ii) if at any time such Mortgage Loan fails to otherwise meet the criteria set forth in
Section 3.02(a)(i)
(e.g. the Mortgage Loan is sold to an Agency and the Seller is unable to obtain an Owner Consent), the Seller
shall be required to substitute a loan for such New Mortgage Loan pursuant to
Section 3.02(a)(ii)
above.
(c)
Notwithstanding the provisions of Section
3.02(a)(ii)(4)
, Seller shall not be in breach of
Section 3.01
on any Assignment Date if, after using best efforts to select residential mortgage loans to substitute New Mortgage Loans
pursuant to
Section 3.02(a)(ii)
, the aggregate outstanding principal balance of the residential mortgage loans in the Available Portfolio as of such Assignment Date is equal to or greater than 90% of the aggregate outstanding principal
balance of the New Mortgage Loans during the Related Collection Period as measured on the opening of business on their respective Refinancing Date.
Section 3.03
Refinancing Incentives
.
For any Assignment Date
beginning with the Assignment Date in the sixth calendar month after the Initial Applicable Subsequent Sale Date and subject to Section 4.04 hereof, Seller’s Future Excess Servicing Spread Assignment Obligation shall be reduced
by the Maximum Retained Refinancing Loan Amount for such Assignment Date. For purposes of this
Section 3.03
, the following definitions shall apply:
16
Replacement Shortfall:
With respect to any Assignment Date and the Related Collection
Period, the aggregate outstanding principal balance of the New Mortgage Loans that were originated by Seller or an affiliate thereof during the Related Collection Period as measured on the opening of business on their respective Refinancing Date,
minus
the aggregate outstanding principal balance of the residential mortgage loans in the Available Portfolio as of such Assignment Date.
Excess Refinancing Percentage
: With respect to any Assignment Date, a percentage equal to the excess, if any, of (a) a fraction, expressed as a percentage, the
numerator
of which is
equal to the aggregate principal balance of New Mortgage Loans that were originated by Seller or an affiliate thereof over the Related Collection Period and the two Collection Periods immediately prior to such Related Collection Period (the
“
Quarterly Collection Period
”) as measured on their respective Refinancing Date,
minus
the aggregate Replacement Shortfall over such Quarterly Collection Period, and the
denominator
of which is the aggregate principal
balance of all Mortgage Loans that voluntarily prepaid in full over the Quarterly Collection Period (measured as of the date of such prepayment),
over
(b) 35%.
Refinancing Split Percentage
: With respect to any Assignment Date, the Refinancing Split Percentage shown in the column of the table below corresponding to the Excess Refinancing Percentage
therein:
|
|
|
|
|
|
|
Three Month Average Recapture
Percentage
|
|
Excess Refinancing
Percentage
|
|
Refinancing Split
Percentage
|
|
35% or Less
|
|
0%
|
|
0%
|
|
> 35%, <= 40%
|
|
>0.00% and <=5.00%
|
|
25%
|
|
> 40%, <= 45%
|
|
>5.00% and <=10.00%
|
|
30%
|
|
> 45%, <= 50%
|
|
>10.00% and <=15.00%
|
|
35%
|
|
> 50%, <= 55%
|
|
>15.00% and <=20.00%
|
|
40%
|
|
> 55%, <= 60%
|
|
>20.00% and <=25.00%
|
|
45%
|
|
Greater than 60%
|
|
>25.00%
|
|
50%
|
Maximum Retained Refinancing Loan Amount
: With respect to any Assignment Date, an amount, not less
than zero, equal to the
sum
of (a) the
product
of (i) the Refinancing Split Percentage, if any, applicable to such Assignment Date, (ii) the Excess Refinancing Percentage applicable to such Assignment Date and
(iii) the aggregate principal balance of New Mortgage Loans that were refinanced with Seller or an affiliate thereof during the Related Collection Period,
plus
(b) the Carryover Retained Amount,
minus
(c) the applicable
Replacement Shortfall.
Carryover Retained Amount
: With respect to any Assignment Date beginning with the Assignment
Date in the seventh calendar month after the Initial Applicable Subsequent Sale Date, the
excess
, if any, of the Maximum Retained Refinancing Loan Amount for the prior Assignment Date
over
the aggregate outstanding principal balance of
the Mortgage Loans that were retained by Seller pursuant to this
Section 3.03
on the prior Assignment Date.
17
Section 3.04
Selection Procedures
.
(a) Not later than the Mortgage Loan Identification Date, Seller shall (i) notify Purchaser of the identity of each Current Mortgage
Loan and each Mortgage Loan that became a Refinanced Mortgage Loan during the Related Collection Period, (ii) calculate the Excess Refinancing Percentage, the Refinancing Split Percentage, the Maximum Retained Refinancing Loan Amount and the
Carryover Retained Amount for the following Assignment Date, and notify Purchaser of such amounts in writing, (iii) provide Purchaser with a list of potential Mortgage Loans (the “
Available Portfolio
”), selected on the basis
that the Excess Refinancing Percentage is equal to zero, and (iv) provide Purchaser with a list of residential mortgage loans selected from the Available Portfolio to be designated as Mortgage Loans (the “
Replacement
Portfolio
”) on the following Assignment Date and a list of residential mortgage loans selected from the Available Portfolio to be excluded from the pool of Mortgage Loans (the “
Retained Portfolio
”) on the following
Assignment Date in accordance with
Section 3.03
.
(b) Purchaser may submit an objection to the proposed Available
Portfolio, the proposed Replacement Portfolio or the proposed Retained Portfolio not later than five Business Days following receipt of the notice of the proposed portfolios pursuant to
Section 3.04(a)
. If Purchaser submits an objection,
Seller and Buyer shall work together in good faith over the next five Business Days (the “
Selection Period
”) to mutually agree on the Replacement Portfolio and the Retained Portfolio. During the Selection Period, Seller may suggest
alternative Mortgage Loans that meet the criteria of
Section 3.02
. If Seller and Purchaser are unable to agree on a Replacement Portfolio and a Retained Portfolio (if applicable) by close of business on the Business Day prior to the
Assignment Date, Seller and Purchaser may modify the percentages in the definitions of Future Excess Servicing Spread and Retained Servicing Spread and in the Priority of Payments, as applicable, to reflect the relative values that Seller and
Purchaser would have had in the Future Excess Servicing Spread and Retained Servicing Spread but for the inability of Seller and Purchaser to mutually agree on such portfolios.
(c) Unless mutually agreed upon by Seller and Purchaser, the Retained Portfolio and the Replacement Portfolio with respect to any
Assignment Date shall satisfy the following criteria:
(i) The aggregate outstanding principal balance of the
residential mortgage loans in the Retained Portfolio shall not exceed the Maximum Retained Refinancing Loan Amount;
(ii) The weighted average servicing fee rate for the residential mortgage loans in the Retained Portfolio shall be substantially equal to the weighted average servicing fee rate for the Mortgage Loans in
the Replacement Portfolio;
(iii) The weighted average interest accrual rate per annum of the residential
mortgage loans in the Retained Portfolio shall be within 12.5 basis points per annum of the weighted average interest rate of the Mortgage Loans in the Replacement Portfolio;
18
(iv) The weighted average final maturity date of the residential mortgage
loans in the Retained Portfolio shall be within six months of the weighted average final maturity date of the Mortgage Loans in the Replacement Portfolio; and
(v) The remaining credit characteristics of the pool of residential mortgage loans in the Retained Portfolio (other than as specified in
clauses (ii)
,
(iii)
and
(iv)
above)
shall be substantially the same as the credit characteristics of the pool of Mortgage Loans in the Replacement Portfolio.
(d)
Exhibit B
provides an example of the calculations to be made pursuant to Section 3.04(c)(i).
Section 3.05
Assignment of Future Excess Servicing Spread
.
Subject to the satisfaction of the terms and conditions in this Agreement, on each Assignment Date, Seller shall execute and deliver an
Assignment Agreement for the Future Excess Servicing Spread to be assigned on such Assignment Date with respect to the Mortgage Loans included in the applicable Replacement Portfolio;
provided
,
however
, that
(a) Purchaser shall be entitled to all Future Excess Servicing Spread and Seller shall be entitled to all Retained Servicing Spread
arising with respect to each such Mortgage Loan on and after the Refinancing Date with respect to the related Refinanced Mortgage Loan,
(b) Seller shall deposit all Servicing Spread Collections received with respect to such Mortgage Loans on and after the Refinancing Date with respect to the related Refinanced Mortgage Loans into the
Third Party Controlled Future Spread Custodial Account not later than the Assignment Date, and
(c) for each Mortgage Loan
that was originated on or after the Refinancing Date of the related Refinanced Mortgage Loan, Seller shall deposit all Servicing Spread Collections with respect to amounts prepaid at the time of closing of such Mortgage Loan, if applicable, into the
Third Party Controlled Future Spread Custodial Account not later than the Assignment Date.
ARTICLE IV
PAYMENTS AND DISTRIBUTIONS
Section 4.01
Purchase Price
.
In full consideration for
Purchaser’s right to receive any Future Excess Servicing Spread assigned to Purchaser, and upon the terms and conditions of this Agreement, Purchaser shall pay to Seller an amount (the “
Purchase Price
”) that shall be determined
by the Parties on the Initial Applicable Subsequent Sale Date in accordance with Section 3.01 of the Current Spread Agreement.
19
Section 4.02
Payments by Purchaser
.
Payment shall be made by Purchaser to Seller by wire transfer of immediately available federal funds, to an account designated by Seller.
Section 4.03
Accounts
.
(a)
Lockbox Account
. Seller shall inform the Mortgagors of Mortgage Loans to remit their mortgage payments to the Lockbox Account. Payments of all Servicing Spread Collections received on and after
the first Assignment Date shall be transferred from the Lockbox Account to the Third Party Controlled Future Spread Custodial Account within one Business Day of receipt and identification thereof and in any event, within two Business Days of receipt
thereof. If Seller receives any Servicing Spread Collections not remitted to the Lockbox Account, it shall hold such funds in trust for the benefit of the Purchaser and deposit such amounts to the Third Party Controlled Future Spread Account within
two Business Days of receipt thereof.
(b)
Third Party Controlled Future Spread Custodial Account
.
(i) The Third Party Controlled Future Spread Custodial Account will be established with Wells Fargo Bank, National
Association or with such other third party custodian or trustee selected by Purchaser, for the sole purpose of receiving and disbursing all Servicing Spread Collections, Sales Proceeds and Servicing Agreement termination payments with respect to the
Mortgage Loans. The Third Party Controlled Future Spread Custodial Account will be established pursuant to the Future Spread Custodial Account Control Agreement with respect to which Purchaser is an Entitlement Holder with Control. So long as
permitted by the Future Spread Custodial Account Control Agreement, Seller may direct the disposition of funds in the Third Party Controlled Future Spread Custodial Account strictly in accordance with the Priority of Payments. Upon any material
breach of a representation, warranty or covenant by Seller hereunder or during the occurrence and continuance of a Future Spread Reserve Account Deposit Event, Purchaser may elect to exercise Control over the Third Party Controlled Future Spread
Custodial Account. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Third Party Controlled Future Spread Custodial Account.
(ii) Seller shall inform each Owner to remit the applicable portion of any Servicing Agreement termination payments
payable with respect to the Mortgage Loans directly to the Third Party Controlled Future Spread Custodial Account. Any termination payment to be directed to the Third Party Controlled Future Spread Custodial Account shall be equal to the
pro
rata
amount by which the Mortgage Loans affected by such termination bear to all mortgage loans of Seller affected by such termination, based upon the method in which such termination payments are calculated in accordance with the applicable
Servicing Agreement.
20
(iii) If Seller is to receive any Sales Proceeds, Seller shall direct the
Person making such payments to deposit such payments into the Third Party Controlled Future Spread Custodial Account.
(iv) If Seller receives any amounts required to be deposited into the Third Party Controlled Future Spread Custodial Account in error, Seller shall promptly remit such funds to the Third Party Controlled
Future Spread Custodial Account.
(c)
Future Spread Reserve Account
. The Future Spread Reserve Account will be
established with Wells Fargo Bank, National Association or with such other third party custodian or trustee selected by Purchaser. The Future Spread Reserve Account will be established pursuant to the Future Spread Reserve Account Control Agreement
with respect to which Purchaser is an Entitlement Holder with Control. So long as permitted by the Future Spread Reserve Account Control Agreement, Seller may direct the disposition of funds in the Future Spread Reserve Account strictly in
accordance with
Section 4.05
. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Future Spread Reserve Account.
If at any time Seller’s Consolidated Tangible Net Worth falls below the sum of (x) $250,000,000 and (y) 50% of the
proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries or if Seller (considered together with its consolidated subsidiaries) defaults in any
indebtedness in excess of $10,000,000 (individually or in the aggregate) (each, a “
Future Spread Reserve Account Deposit Event
”), Seller shall immediately notify Purchaser in writing that a Future Spread Reserve Account Deposit
Event has occurred. On each Distribution Date upon which a Future Spread Reserve Account Deposit Event has occurred and is continuing, Seller shall be required to transfer funds in the Third Party Controlled Future Spread Custodial Account to the
Future Spread Reserve Account in accordance with the Priority of Payments until the amount of funds in the Future Spread Reserve Account is equal to the Future Spread Reserve Account Required Amount. The “
Future Spread Reserve Account
Required Amount
” is equal to 25% of the fair market value as of the date the Future Spread Reserve Account Deposit Event that is then-continuing first occurred of the Total Servicing Spread expected to be paid over the expected remaining
life of the Mortgage Loans (the “
Remaining Expected Total Servicing Spread
”) determined in accordance with the following paragraph. Seller shall immediately notify Purchaser in writing if a Future Spread Reserve Account Deposit
Event is no longer continuing. Any funds in the Future Spread Reserve Account in excess of the Future Spread Reserve Account Required Amount shall be released to Seller.
For purposes of determining the fair market value of the Remaining Expected Total Servicing Spread, Purchaser shall submit its claim for determination of the fair market value of the Remaining Expected
Total Servicing Spread, together with such back-up information it deems appropriate to justify such fair market value (which value shall be considered the fair market value of the Remaining Expected Total Servicing Spread for purposes of calculating
the Future Spread Reserve Account Required Amount until the final determination of such fair market value in accordance with this paragraph). Within five (5) Business Days of Seller’s receipt of such determination, Seller shall notify
Purchaser in writing of its acceptance or any
21
objection to such determination of such fair market value, and if Seller objects to such determination, such notice shall include its own determination of such fair market value and any back-up
information as it deems appropriate to justify such fair market value (an “
Objection Notice
”). In the event an Objection Notice is delivered, the parties shall negotiate in good faith a resolution to such objection. In the event
that Seller and Purchaser are unable to resolve such objection within five (5) Business Days of the delivery of such Objection Notice, Seller and Purchaser shall appoint a mutually acceptable nationally recognized valuation expert to determine
such fair market value of the Remaining Expected Total Servicing Spread. The determination of such valuation expert shall be binding on Seller and Purchaser and the fees of such valuation expert shall be borne by Seller.
Section 4.04
Priority of Payments
.
On each Business Day, subject to the terms and conditions of the Future Spread Custodial Account Control Agreement, Seller (or, after the delivery of an access termination notice pursuant to the Future
Spread Custodial Account Control Agreement, Purchaser) shall direct the Bank to apply the monies in the Third Party Controlled Future Spread Custodial Account in the following order of priority (the “
Priority of Payments
”), in every
case, after giving effect to each prior item in the Priority of Payments on such Distribution Date:
(a)
first
, from
amounts in the Third Party Controlled Future Spread Custodial Account attributable to Servicing Agreement termination payments paid by an Owner with respect to any Mortgage Loans,
pro
rata
, (A) the Future Excess Servicing Spread
Percentage of such termination payments to Purchaser, and (B) the Retained Excess Servicing Spread Percentage of such termination payments to Seller;
provided
, that (I) prior to the distribution to Purchaser of any termination
payments pursuant to
clause (A)
, such termination payments shall be applied to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to
Seller of any termination payments pursuant to
clause (B)
, such termination payments shall be applied
first
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
second
, for deposit to the Future Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Future Spread Reserve Account to equal the Future Spread Reserve Account
Required Amount;
(b)
second
, on any Business Day from and including the first Business Day of a calendar month to but
excluding the Distribution Date in such calendar month, at the option of Seller, the Base Servicing Fee payable with respect to a prior Collection Period for the Mortgage Loans to Seller; provided however, that, to the extent that (i) the
Seller is not permitted or is otherwise unable to advance servicing fees relating to the Total Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing Agreement does not
permit payment of servicing fees from general collections, and (iii) the related Servicing Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Future Spread Custodial
Account relating to the affected Mortgage Loans shall be made pursuant to clause (d) below prior to this clause (b);
22
(c)
third
, on each Distribution Date, to the extent not previously paid to Seller in
accordance with
Section 4.04(b)
, any accrued and unpaid Base Servicing Fee to Seller; provided however, that, to the extent that (i) the Seller is not permitted or is otherwise unable to advance servicing fees relating to the Total
Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing Agreement does not permit payment of servicing fees from general collections, and (iii) the related Servicing
Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Future Spread Custodial Account relating to the affected Mortgage Loans shall be made pursuant to clause (d) below
prior to this clause (c);
(d)
fourth
, on each Distribution Date,
pro
rata
, (A) to Purchaser, any
Future Excess Servicing Spread for the prior Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 4.04(a)
); and (B) to Seller, any Retained Servicing Spread for the prior
Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 4.04(a)
);
provided
, that (I) prior to the distribution to Purchaser of any Future Excess Servicing Spread pursuant
to
clause (A)
, the Future Excess Servicing Spread shall be applied to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to Seller of any
Retained Servicing Spread pursuant to
clause (B)
, the Retained Servicing Spread shall be applied
first
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
second
, for deposit to the Future Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Future Spread Reserve Account to equal the Future Spread Reserve Account Required Amount; and
(e)
fifth
, on each Distribution Date, to Seller, any other amounts remaining on deposit in the Third Party Controlled Future
Spread Custodial Account.
All payments to Purchaser or Seller shall be made by wire transfer of immediately available federal
funds to an account designated by Purchaser or Seller, as applicable.
Section 4.05
Withdrawals from the Future
Spread Reserve Account
.
On any Business Day, at the instruction of Purchaser, Seller shall direct the Bank to apply
funds in the Future Spread Reserve Account, if any, to the payment of indemnity payments payable to a Purchaser Indemnitee pursuant to
Section 11.01
. If on any Business Day a Future Spread Reserve Account Deposit Event is not then
continuing and all outstanding indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller may direct the Bank to distribute any remaining funds in the Future Spread Reserve Account to, or as directed by, Seller. If there are
any funds remaining in the Future Spread Reserve Account after the Future Excess Servicing Spread and all indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller shall direct the Bank to distribute such remaining funds to,
or as directed by, Seller.
Section 4.06
Payment to Seller of Base Servicing Fee
.
(a) Seller shall be entitled to payment of the Base Servicing Fee only to the extent funds are available therefor in the Third Party
Controlled Future Spread Custodial Account in accordance with the Priority of Payments. Under no circumstances shall Purchaser be liable to Seller for payment of the Base Servicing Fee. In the event servicing of the Mortgage
23
Loans is transferred to sub-servicers for any reason, the servicing fees and expenses of such sub-servicers shall be paid by Seller and in no event will the amount of Servicing Spread Collections
or termination payments otherwise allocable to the Future Excess Servicing Spread be reduced due to the payment of sub-servicing fees and expenses.
(b) The Base Servicing Fee with respect to a Mortgage Loan shall begin to accrue as of the Collection Period prior to the applicable Assignment Date. In no event shall Base Servicing Fees accrue
concurrently on any day for a Refinanced Mortgage Loan and for a Mortgage Loan.
Section 4.07
Correction of
Principal Balance Error
.
If, subsequent to the payment of any amounts due hereunder to either party, the outstanding
principal balance of any Mortgage Loan is found to be in error, the party benefiting from the error shall pay an amount sufficient to correct and reconcile such amounts and shall provide a reconciliation statement and other such documentation to
reasonably satisfy the other party concerning the accuracy of such reconciliation. Such amounts shall be paid by the proper party within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
Section 4.08
Intent and Characterization
.
(a) Seller and Purchaser intend that the assignments of the Future Excess Servicing Spread pursuant to this Agreement and each Assignment Agreement constitute valid sales of such Future Excess Servicing
Spread from Seller to Purchaser, conveying good title thereto free and clear of any Lien other than Permitted Liens, and that the beneficial interest in and title to such Future Excess Servicing Spread not be part of Seller’s estate in the
event of the bankruptcy of Seller. Seller and Purchaser intend and agree to treat the transfer and assignment of the Future Excess Servicing Spread as an absolute sale for tax purposes, and as an absolute and complete conveyance of title for
property law purposes. Except for financial accounting purposes, neither party intends the transactions contemplated hereby to be characterized as a loan from Purchaser to Seller.
(b) In the event (but only in the event) that the conveyance of the Future Excess Servicing Spread is characterized by a court or
governmental authority as security for a loan rather than a sale, Seller will be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Future
Excess Servicing Spread and all proceeds thereof as security for a loan in an amount equal to the aggregate Purchase Price (as defined in the Current Spread Agreement).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as of the
Agreement Date, the Sale Date, the Initial Applicable Subsequent Sale Date and as of each Assignment Date as follows (or as of the date specified below, as applicable):
24
Section 5.01
Due Organization and Good Standing
.
Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Seller is qualified to transact business in each jurisdiction in which such qualification is deemed necessary to service the Mortgage Loans. Seller has, in full force and effect (without notice of possible suspension, revocation or impairment), all
required permits, approvals, licenses, and registrations to conduct all activities in all states in which its activities with respect to the Mortgage Loans or the Mortgage Servicing Rights require it to be licensed, registered or approved in order
to service the Mortgage Loans and own the Mortgage Servicing Rights, unless the failure to obtain such permits, approvals, licenses and registrations would not reasonably be expected to have a material adverse effect on Seller’s ability to
perform its obligations under this Agreement or the other Transaction Documents to which it is a party.
Section 5.02
Authority and Capacity
.
Seller has all requisite limited liability company power, authority and capacity to
enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document and the
consummation of the transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company action. This Agreement and each other Transaction Document to which it is a party has been duly
executed and delivered by Seller. This Agreement constitutes, and each other applicable Transaction Document to which Seller is a party constitutes or will constitute, a valid and legally binding agreement of Seller enforceable in accordance with
its terms, and no offset, counterclaim or defense exists to the full performance by Seller of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting
the enforcement of creditors’ rights generally and by general equity principles.
Section 5.03
Owner
Consents
.
Prior to an Assignment Date, Seller has obtained all necessary and applicable Owner Consents.
Section 5.04
Title to the Mortgage Servicing Rights
.
As of an Assignment Date, Seller will be the lawful owner of the Mortgage Servicing Rights, will be responsible for the maintenance of
the Related Escrow Accounts, and will have the sole right and authority to transfer the Future Excess Servicing Spread as contemplated hereby. The transfer, assignment and delivery of the Future Excess Servicing Spread shall be free and clear of any
and all claims, charges, defenses, offsets, Liens and encumbrances of any kind or nature whatsoever other than Permitted Liens.
25
Section 5.05
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document by Seller, compliance with the terms hereof
and thereof and the consummation of the transactions contemplated hereby and thereby did not, and will not, violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its
certificate of formation or limited liability company agreement, any instrument or agreement to which it is a party or by which it is bound or which affects the Future Excess Servicing Spread, or any state or federal law, rule or regulation or any
judicial or administrative decree, order, ruling or regulation applicable to it or to the Future Excess Servicing Spread.
Section 5.06
No Accrued Liabilities
.
There are no accrued liabilities of Seller with respect to the Mortgage Loans or the Mortgage Servicing Rights or circumstances under which such accrued liabilities will arise against Purchaser as
purchaser of the Future Excess Servicing Spread.
Section 5.07
Seller/Servicer Standing
.
As of the applicable Assignment Date, Seller is approved by each applicable Agency as a seller/servicer in good standing with the
requisite financial criteria and adequate resources to complete the transactions contemplated hereby on the conditions stated herein. No event has occurred, including but not limited to a change in insurance coverage, which would make the Seller
unable to comply with the applicable Agency eligibility requirements or which would require notification to the applicable Agency. Furthermore, if at any time prior to the termination of this Agreement, the Seller is unable to comply with any of the
Agency eligibility requirements, it shall immediately notify the Purchaser that it is no longer an approved seller/servicer of mortgage loans for any Agency which is an Owner of a Mortgage Loan.
Section 5.08
MERS Membership
.
Seller is a member in good standing under the MERS system or another similar system reasonable acceptable to the Purchaser.
Section 5.09
Owner Set-off Rights
.
Seller has no actual
notice, including any notice received from an Owner, or any reason to believe, that, other than in the normal course of Seller’s business, any circumstances exist that would result in Seller being liable to an Owner for any amount due by reason
of: (i) any breach of servicing obligations or breach of mortgage selling warranty to an Owner under servicing agreements relating to Seller’s entire servicing portfolio for such Owner (including without limitation any unmet mortgage
repurchase obligation), (ii) any unperformed obligation with respect to mortgage loans that Seller is servicing for an Owner under the regular servicing option or other mortgages subject to recourse agreements, (iii) any loss or damage to
an Owner by reason of any inability to transfer to a purchaser of the servicing rights Seller’s selling and servicing representations, warranties and obligations, or (iv) any other unmet obligations to an Owner under a servicing contract
relating to Seller’s entire servicing portfolio with such Owner.
.
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Section 5.10
Ability to Perform; Solvency
.
Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in
this Agreement. Seller is Solvent and the sale of the Future Excess Servicing Spread will not cause Seller to become insolvent. The sale of the Future Excess Servicing Spread is not undertaken to hinder, delay or defraud any of the creditors of
Seller. The consideration received by Seller upon the sale of the Future Excess Servicing Spread constitutes fair consideration and reasonably equivalent value therefor.
Section 5.11
Obligations with Respect to Origination
.
Seller
shall remain liable for all obligations with respect to the origination of each Mortgage Loan and, if applicable, for all obligations with respect to the sale of such Mortgage Loan to the applicable Owner.
Section 5.12
Purchase of Mortgage Servicing Rights
.
Each agreement or arrangement that Seller enters into to purchase Mortgage Servicing Rights shall be entered into on an arm’s length
contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing Rights to be acquired thereby. Seller shall not enter into any agreement or arrangement with a third party intended to
encourage the refinancing of any Mortgage Loan by any Person other than Seller.
Section 5.13
No Actions
.
There have not been commenced or, to the best of Seller’s knowledge, threatened any action, suit or proceeding which
will likely materially and adversely affect the consummation of the transactions contemplated by any Transaction Document.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE
LOANS AND SERVICING
As further inducement to Purchaser to enter
into this Agreement, Seller represents and warrants to Purchaser, as of each Assignment Date (or as of the date specified below, as applicable), as follows:
Section 6.01
Servicing Agreements; Applicable Laws
.
Seller,
the originator of the Mortgage Loan and each prior owner of the Mortgage Servicing Rights has each performed its obligations in all material respects in accordance with the terms of the related Mortgage Note, Mortgage, Servicing Agreements and
Applicable Law.
.
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Section 6.02
Related Escrow Accounts
.
All Related Escrow Accounts are being, and have been, maintained in accordance with Applicable Law and in accordance with the Servicing
Agreements and the terms of the related Mortgages and other Mortgage Loan Documents; and, except as to payments which are past due under Mortgage Notes, all balances required by the Mortgages or other Mortgage Loan Documents to be paid to Seller for
the account of the Mortgagors are on deposit in the appropriate Related Escrow Account.
Section 6.03
No Purchaser
Responsibility
.
Purchaser shall have no responsibility, liability or other obligation whatsoever under any Servicing
Agreement or with respect to any Mortgage Loan, or to make any advance thereunder, or to pay any servicing fees.
Section 6.04
Location of Credit Files
.
All of the Mortgage Loan Documents are held by Custodians or, if held by Seller, in the locations specified in
Exhibit F
, unless temporarily removed for enforcement purposes in the normal course of
servicing. Seller will notify Purchaser in writing of any changes in locations of the Mortgage Loan Documents held by Seller in
Exhibit F
.
Section 6.05
Representations Concerning the Future Excess Servicing Spread
.
(a) Seller has not assigned, pledged, conveyed, or encumbered the Future Excess Servicing Spread to any other Person (other than Permitted Liens) and immediately prior to the sale of the Future Excess
Servicing Spread, Seller was the sole owner of the Future Excess Servicing Spread and had good and marketable title thereto (subject to the rights of the applicable Owner under the Servicing Agreements), free and clear of all Liens (other than
Permitted Liens), and no Person, other than Purchaser, has any Lien (other than Permitted Liens) on the Future Excess Servicing Spread. No security agreement, financing statement, equivalent security or lien instrument or continuation statement
covering all or any part of the Future Excess Servicing Spread which has been signed by Seller or which Seller has authorized any other Person to sign or file or record, is on file or of record with any public office, except such as may have been
terminated or filed by or on behalf of Purchaser.
(b) The sale and grant of a security interest by Seller to Purchaser of and
on the Future Excess Servicing Spread does not and will not violate any Requirement of Law, the effect of which violation is to render void or voidable such assignment.
(c) As contemplated under
Section 4.08(b)
, upon the filing of financing statements on Form UCC-1 naming Purchaser as “Secured Party” and Seller as “Debtor”, and describing
the Future Excess Servicing Spread, in the jurisdictions and recording offices listed on Exhibit J attached hereto, the sale and security interests granted hereunder in the Future Excess Servicing Spread will constitute perfected first priority
security interests under the UCC in all right, title and interest of Purchaser in, to and under the Future Excess Servicing Spread.
(d) Purchaser has and will continue to have the full right, power and authority to pledge the Future Excess Servicing Spread, and the Future Excess Servicing Spread may be further assigned without any
requirement, in each case, subject only to applicable Owner Consents.
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(e) Each Servicing Agreement constitutes an Eligible Servicing Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement, Purchaser represents and warrants to Seller as of the Agreement Date, the Initial Applicable Subsequent Sale Date, the Sale Date and as of each
Assignment Date as follows (or as of the date specified below, as applicable):
Section 7.01
Due Organization and
Good Standing
.
Purchaser is a limited liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware. Purchaser is qualified to transact business in each jurisdiction in which such qualification is deemed necessary.
Section 7.02
Authority and Capacity
.
Purchaser has all
requisite limited liability company power, authority and capacity to enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and
delivery of this Agreement and each other Transaction Document to which it is a party and the consummation of the transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company
action. This Agreement constitutes, and each other applicable Transaction Document to which Purchaser is a party constitutes or will constitute, a valid and legally binding agreement of Purchaser enforceable in accordance with its terms, and no
offset, counterclaim or defense exists to the full performance by Purchaser of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement
of creditors’ rights generally and by general equity principles.
Section 7.03
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party by
Purchaser, its compliance with the terms hereof and thereof and the consummation of the transactions contemplated hereby and thereby will not violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any
additional approval under its certificate of formation or limited liability company agreement, any instrument or agreement to which it is a party or by which it is bound, or any state or federal law, rule or regulation or any judicial or
administrative decree, order, ruling or regulation applicable to it, in each case which violation, conflict, breach or requirement would reasonably be expected to have a material adverse effect on Purchaser’s ability to perform its obligations
under this Agreement and any other Transaction Document to which it is a party.
29
Section 7.04
Sophisticated Investor
.
Purchaser is a sophisticated investor and its decision to acquire the Future Excess Servicing Spread is based upon Purchaser’s own
independent experience, knowledge, due diligence and evaluation of this transaction. Purchaser has relied solely on such experience, knowledge, due diligence and evaluation and has not relied on any oral or written information provided by Seller
other than the representations and warranties made by Seller herein.
Section 7.05
No Actions
.
There shall not have been commenced or, to the best of Purchaser’s knowledge, threatened any action, suit or proceeding against the
Purchaser that will likely materially and adversely affect the consummation of the transactions contemplated hereby.
ARTICLE VIII
SELLER COVENANTS
Seller covenants and agrees as follows:
Section 8.01
Servicing Obligations
.
(a) Seller shall pay, perform and discharge all liabilities and obligations relating to the Servicing, including all liabilities and
obligations under the Mortgage Loan Documents, Applicable Law and the Servicing Agreements; and shall pay, perform and discharge all the rights, obligations and duties with respect to the Related Escrow Accounts as required by the Servicing
Agreements, the Mortgage Loan Documents, all Applicable Law and, with respect to any Mortgage Loans owned by an Agency, such Agency.
(b) Under no circumstances shall Purchaser be responsible for the Servicing acts and omissions of Seller or any other servicer or any originator of the Mortgage Loans, or for any servicing related
obligations or liabilities of any servicer in the Servicing Agreements or of any Person under the Mortgage Loan Documents, or for any other obligations or liabilities of Seller.
(c) With respect to any Servicing Agreement relating to a Non-Agency Mortgage Loan, subject to a nonrecoverability determination made in
accordance with the related Servicing Agreement and to the extent the Seller as servicer has an obligation to advance principal and interest on delinquent Mortgage Loans, the Seller shall advance the full amount of principal and interest on
delinquent Mortgage Loans for each Collection Period, including the related servicing fee.
30
(d) Upon termination of any Servicing Agreement, Seller shall remain liable to Purchaser
and the applicable Owner for all liabilities and obligations incurred by the servicer or its designee while Seller or its designee was acting as the servicer thereunder.
(e) Seller shall conduct quality control reviews of its servicing operations in accordance with industry standards and the requirements of each Agency relating to the Mortgage Loans.
Section 8.02
Cooperation; Further Assurances
.
Seller shall cooperate with and assist Purchaser, as reasonably requested, in carrying out the purposes of this Agreement. Seller will
cooperate and assist Purchaser, as reasonably requested and at the reasonable expense of Purchaser, in obtaining consents from any Owner as may be required or advisable to assign, transfer, deliver, hypothecate, pledge, subdivide, finance or
otherwise deal with the Future Excess Servicing Spread. If Seller is terminated under any Servicing Agreement, Seller shall cooperate fully and at its own expense in transferring such Servicing. If Purchaser assigns all or any portion of its Future
Excess Servicing Spread or its other rights under this Agreement to a Third Party Assignee, Seller will cooperate and assist any Third Party Assignee in drafting and entering into a Third Party Future Spread Agreement in accordance with
Section 12.15
.
Section 8.03
Financing Statements
.
Seller hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements, in
any jurisdictions and with any filing offices as Purchaser may determine, in its sole discretion, are necessary or advisable to perfect the sale of the Future Excess Servicing Spread and the security interests granted to Purchaser in connection
herewith. Seller agrees to execute financing statements in form reasonably acceptable to Purchaser and Seller at the request of Purchaser in order to reflect Purchaser’s interest in the Future Excess Servicing Spread, the Third Party Controlled
Future Spread Custodial Account and the Future Spread Reserve Account.
Section 8.04
Supplemental
Information
.
From time to time after the applicable Assignment Date with respect to each Mortgage Loan, Seller
promptly shall furnish Purchaser such incidental information, which is reasonably available to Seller, supplemental to the information contained in the documents and schedules delivered pursuant to this Agreement, as may reasonably be requested to
monitor performance of the Mortgage Loans and the payment of the Future Excess Servicing Spread.
Section 8.05
Access to Information
.
From time to time, at such times as are reasonably convenient to Seller, Purchaser or
its designees may conduct audits or visit and inspect (a) any of the Mortgage Loans or places where the Credit Files are located, to examine the Credit Files, internal controls and procedures maintained by Seller and its agents, and take copies
and extracts therefrom, and to discuss Seller’s affairs with its officers, employees and, upon notice to Seller, independent accountants. Seller hereby authorizes such officers, employees and independent accountants to discuss with
31
Purchaser the affairs of Seller and (b) the Seller’s servicing facilities for the purpose of satisfying the Purchaser that Seller, has the ability to service the Mortgage Loans related
to Mortgage Servicing Rights in accordance with the standards set forth in the applicable Servicing Agreement. Any audit provided for herein will be conducted in accordance with Seller’s rules respecting safety and security on its premises, in
accordance with applicable privacy and confidentiality laws and without materially disrupting operations.
Section 8.06
Home Affordable Modification Program
.
With respect to any Mortgage Loans that have been modified or that are or
will be in a modification trial period as part of the U.S. Department of the Treasury’s Home Affordable Modification Program (“
HAMP
”) (such Mortgage Loans, the “
HAMP Loans
”), Seller represents and warrants that
it will continue to service such HAMP Loan in accordance with the HAMP terms and will ensure the timely compliance and filing of any appropriate HAMP documentation with the applicable regulator.
Section 8.07
Distribution Date Data Tapes and Reports
.
Seller shall deliver the following to Purchaser two Business Days prior to each Distribution Date:
(a) An Electronic Data File in form and substance acceptable to Purchaser containing, for each Current Mortgage Loan and each Mortgage
Loan, principal, interest and Servicing Spread Collections, and delinquency status (i.e. 30, 60, 90, FCL, REO) as of the last day of the prior Collection Period;
(b) A Summary Activity Report with respect to each of the pool of Current Mortgage Loans and the pool of Mortgage Loans with respect to the prior Collection Period containing:
(i) aggregate beginning principal balance as of the first and last date of the Collection Period,
(ii) aggregate regular principal collected,
(iii) aggregate noncash principal,
(iv) aggregate interest collected,
(v) aggregate liquidation principal,
(vi) aggregate curtailments,
(vii) liquidations,
(viii) short sales,
32
(ix) aggregate principal balance of Refinanced Mortgage Loans, and
(1) for each Refinanced Mortgage Loan, the principal balance, the applicable servicing spread, the final maturity date, the mortgage interest rate, the loan-to-value ratio and the FICO score, and (2) for each Current Mortgage Loan and each
Mortgage Loan that was refinanced by a lender other than Seller or an affiliate thereof, to the extent such information is known to Seller in the ordinary course of business and the collection and delivery of such information does not impose any
additional and undue burden on Seller, the name of such lender and the mortgage interest rate of the newly originated residential mortgage loan;
(c) A Delinquency Report with respect to the Current Mortgage Loans and Mortgage Loans containing:
(i) The aggregate outstanding principal balance of the pool of Current Mortgage Loans and the pool of Mortgage Loans and percentages of the aggregate outstanding principal balance of the pool of Current
Mortgage Loans and the pool of Mortgage Loans in each of the following categories as of the last day of the prior Collection Period:
(1) Non-delinquent Mortgage Loans,
(2) 0-29 days delinquent,
(3) 30-59 days delinquent,
(4) 60-89 days delinquent,
(5) 90 days or more delinquent,
(6) Current Mortgage Loans and
Mortgage Loans in Foreclosure,
(7) Current Mortgage Loans and Mortgage Loans with respect to which the
related Mortgaged Properties have become real estate owned properties, and
(8) Current Mortgage Loans and
Mortgage Loans in which the Mortgagor is in bankruptcy;
(ii) For each of the above categories, a roll report
showing the migration of Current Mortgage Loans and Mortgage Loans in such category from the last day of the second prior Collection Period;
(d) A Disbursement Report for such Distribution Date containing:
(i) The Servicing Spread Collections for the prior Collection Period,
33
(ii) The Base Servicing Fee paid to Seller,
(iii) The amount of the Future Excess Servicing Spread paid to Purchaser,
(iv) The amount of funds, if any, transferred to the Future Spread Reserve Account,
(v) The amount of Purchaser Indemnitees, if any, paid from each of the Third Party Controlled Future Spread Custodial
Account or the Future Spread Reserve Account, and
(vi) The amount of funds paid to Seller from the Future
Spread Reserve Account.
Section 8.08
Financial Statements and Officer’s Certificates
.
(a) If Seller’s financial statements are not filed with the U.S. Securities and Exchange Commission and are not publicly available,
Seller shall deliver to Purchaser copies of Seller’s most recent audited quarterly financial statements within 45 days of the end of each of Seller’s fiscal quarters and its most recent audited annual financial statements within 90 days of
the end of each of Seller’s fiscal years.
(b) Within 45 days of the end of each of Seller’s fiscal quarters, Seller
shall deliver to Purchaser a certificate from a duly authorized officer of Seller certifying (i) whether or not Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any
issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries (and shall provide a calculation of its determination of its Consolidated Tangible Net Worth) and
(ii) whether or not Seller (considered together with its consolidated subsidiaries) is in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
Section 8.09
Monthly Management Calls
.
Within five Business Days after each Distribution Date, Seller shall make its management team and other appropriate officers and employees available to Purchaser to discuss by telephone the performance of
the Current Mortgage Loans and Mortgage Loans and the performance of the parties under the Transaction Documents.
Section 8.10
Timely Payment of Owner Obligations
.
Seller shall pay all of its obligations to an Owner in a timely manner so as to avoid exercise of any right of set-off by any Owner
against Seller.
Section 8.11
Servicing Agreements
.
Seller will service the Mortgage Loans in accordance with Accepted Servicing Practices and will perform its obligations in all material
respects in accordance with the Servicing
34
Agreements and Applicable Law. In particular, Seller shall comply with any advancing obligation under the Servicing Agreements. Without the express written consent of Purchaser (which consent may
be withheld in its absolute discretion), Seller shall not (a) cancel, terminate or amend any Mortgage Servicing Rights, (b) expressly provide any required consent to any termination, amendment or modification of any Servicing Agreements
either verbally or in writing, (c) expressly provide any required consent to any termination, amendment or modification of any other servicing agreements or enter into any other agreement or arrangement with the applicable Owner that may be
reasonably material to Purchaser either verbally or in writing, (d) expressly or verbally waive any material default under or breach of any Servicing Agreement by the applicable Owner that may be material to the Purchaser (in Purchaser’s
reasonable determination) or (e) take any other action in connection with any such Servicing Agreement that would impair in any material respect the value of the interests or rights of the Purchaser hereunder. Seller shall conduct its business
and perform its obligations under the Servicing Agreements in a manner such that the applicable Owner will not have cause to terminate any Servicing Agreement. Notwithstanding the foregoing, in no event will the prohibitions contained in this
Section 8.11
apply to any amendments or modifications of the Servicing Agreements applicable to Current Mortgage Loans or Mortgage Loans owned by Seller which do not affect the Future Excess Servicing Spread with respect to such Current
Mortgage Loans or Mortgage Loans and are not reasonably material to the Purchaser.
Section 8.12
Transfer of
Mortgage Servicing Rights
.
If Seller intends to assign, transfer or sell any of its Mortgage Servicing Rights to a
replacement servicer, to the extent permitted by applicable law, (a) Seller shall consult with Purchaser and Purchaser shall participate in the assignment, transfer and sale of such Mortgage Servicing Rights, and (b) Seller shall obtain
the written consent of Purchaser, granted by the Purchaser in its sole discretion, prior to any assignment, transfer or sale thereof.
Section 8.13
Consents to Transaction Documents
.
Seller shall
not terminate, amend, amend and restate, modify or waive any conditions or provisions of any Transaction Document without the express written consent of Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned.
Section 8.14
Accounts
.
Seller shall inform the Mortgagors of Mortgage Loans at its own expense to remit their mortgage payments to the Lockbox Account, and any change in such instructions shall only be permitted with the
express written consent of Purchaser.
Section 8.15
Notification of Certain Events
.
Seller shall promptly notify Purchaser of any event which, with the passage of time, could reasonably be expected to result in a
termination of any servicing agreement between Seller and any Owner. Seller shall provide Purchaser with copies of any notices from the applicable Owner of any breach, potential breach, default or potential default by Seller under any servicing
agreement between Seller and the applicable Owner, and with copies of any notices from any Owner of any termination, potential termination or threatened termination of any
35
servicing agreement entered into between Seller and that Owner. Seller shall promptly forward copies of any material notices received from any Owner or from any Governmental Authority with
respect to the Mortgage Loans. Seller shall provide Purchaser with (a) copies of all amendments to the Transaction Documents, the Servicing Agreements (other than with respect to Mortgage Loans owned by Seller) and the agreements relating to
Seller’s acquisition of the Mortgage Servicing Rights, (b) with respect to Mortgage Loans owned by Seller, copies of all material amendments to the Servicing Agreements, and (c) copies of any other agreements Seller enters into with
any Owner that may be reasonably material to Purchaser, in each case, promptly after execution thereof.
Section 8.16
Financing; Pledge of Future Excess Servicing Spread
.
Seller shall not pledge, obtain financing for, or
otherwise permit any Lien of any creditor of Seller to exist on, any portion of the Servicing Spread Collections without the prior written consent of Purchaser. Seller’s financial statements shall contain footnotes indicating that the Future
Excess Servicing Spread has been sold, and Seller does not maintain any ownership interest therein.
Section 8.17
Existence, etc
.
Seller shall:
(a) preserve and maintain its legal existence, good standing and all of its material licenses required to service the Mortgage Loans;
(b) comply with the requirements of all Applicable Laws, rules, regulations and orders of Governmental Authorities (including, without
limitation, truth in lending and real estate settlement procedures) if failure to comply with such requirements could be reasonably likely (either individually or in the aggregate) to have a material adverse effect on its ability to perform its
obligations hereunder or under any other Transaction Document;
(c) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied, and maintain adequate accounts and reserves for all taxes (including income taxes), all depreciation, depletion, obsolescence and amortization of its properties, all
contingencies, and all other reserves;
(d) not move its chief executive office or chief operating office from the addresses
referred to in
Exhibit J
unless it shall have provided Purchaser not less than thirty (30) days prior written notice of such change;
(e) pay and discharge all material taxes, assessments and governmental charges or levies imposed on it or its income or profits or on any of its property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained. Seller and its subsidiaries shall file on a timely
basis all federal, and material state and local tax and information returns, reports and any other information statements or schedules required to be filed by or in respect of it;
36
(f) keep in full force and effect the provisions of its charter documents, by-laws,
operating agreements or similar organizational documents in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Documents;
(g) keep in full force and effect all agreements and instruments by which it or any of its properties may be bound and all applicable
decrees, orders and judgments, in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Document; and
(h) comply with its obligations under the Transaction Documents to which it is a party and each other agreement entered into with an Owner.
Section 8.18
Consent to Sub-Servicing
.
Subject to the rights of the Owners, Seller will not permit any Person other than Seller to service or sub-service the Mortgage Loans without the prior written consent of Purchaser, in each case other
than third-party vendors customarily employed by servicers in the ordinary course of business in accordance with prudent mortgage servicing practices.
Section 8.19
Nonpetition Covenant
.
Seller shall not, prior to
the date that is one year and one day after the payment in full of the Future Excess Servicing Spread, petition or otherwise invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against
Purchaser under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Purchaser or any substantial part of its property, or ordering the winding up or liquidation of the
affairs of Purchaser.
Section 8.20
Schedule of Mortgage Loans
.
Seller shall maintain the Schedule of Mortgage Loans, which shall be updated as of each Assignment Date. The information in the Schedule
of Mortgage Loans pertaining to the Mortgage Loans and the Mortgage Servicing Rights will be true and correct in all material respects as of the date specified.
Section 8.21
True Sale Opinion
.
Seller shall cause a written
opinion of counsel to be furnished, in form and substance satisfactory to Purchaser, dated the Initial Applicable Subsequent Sale Date with respect to the characterization of the transfer of the Future Excess Servicing Spread by Seller to Purchaser
as a true sale. Purchaser may request additional opinions regarding such characterization subsequent to the Initial Applicable Subsequent Sale Date as advised by Purchaser’s counsel in light of changes in law and other circumstances. To the
extent Seller is unable to provide such opinions with respect to any Mortgage Loans, Seller shall substitute such Mortgage Loans with residential mortgage loans have substantially the same credit characteristics.
37
Section 8.22
Valuation
.
As of the Initial Applicable Subsequent Sale Date, Purchaser shall have received an opinion reasonably satisfactory to Purchaser that the
Base Servicing Fee of the Mortgage Loans and the Purchase Price of the Future Excess Servicing Spread is fair and reasonable.
Section 8.23
Material Documents
.
Seller shall provide Purchaser with executed copies of all material agreements and documents, and any amendments thereto, as of each Assignment Date relating to Seller’s acquisition of the related
Mortgage Servicing Rights and the servicing of the Mortgage Loans assigned.
Section 8.24
Insurance.
The Seller shall maintain (a) general liability insurance, (b) errors and omission insurance or blanket bond
coverage and (c) fidelity bond insurance, in each case, from reputable companies with coverage in amounts customarily maintained by such similarly situated entities in the same jurisdiction and industry as the Seller.
Section 8.25
Defense of Title
.
The Seller warrants and will defend the right, title and interest of the Purchaser in and to all Future Excess Servicing Spread against all adverse claims and demands subject to Permitted Liens.
Section 8.26
Refinancing of Mortgage Loans.
Each agreement or arrangement that Seller enters into to purchase Mortgage Servicing Rights shall be entered into on an arm’s length
contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing Rights to be acquired thereby. Seller shall not enter into any agreement or arrangement with a third party intended to
encourage the refinancing of any Mortgage Loan by any Person other than Seller.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser under this Agreement are subject to the satisfaction of the following conditions as of the Sale Date and the Initial Applicable Subsequent Sale Date:
Section 9.01
Correctness of Representations and Warranties
.
The representations and warranties made by Seller in this Agreement and each other Transaction Document to which Seller is a party to be
made on or prior to the Initial Applicable Subsequent Sale Date are true and correct in all material respects.
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Section 9.02
Compliance with Conditions
.
All of the terms, covenants, conditions and obligations of this Agreement and each other Transaction Document required to be complied
with and performed by Seller on or prior to the Initial Applicable Subsequent Sale Date shall have been duly complied with and performed in all material respects.
Section 9.03
Corporate Resolution
.
Purchaser shall have
received from Seller a certified copy of the Seller’s corporate resolution approving the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby,
together with such other certificates of incumbency and other evidences of corporate authority as Purchaser or its counsel may reasonably request.
Section 9.04
No Material Adverse Change
.
From the Agreement
Date, there shall not have been any change to Seller’s financial or operating condition or in the Mortgage Servicing Rights, the Mortgage Loans, the Related Escrow Accounts or to Seller’s relationship with, or authority from, the Agency
that in each case will likely materially and adversely affect the consummation of the transactions contemplated hereby or the Future Excess Servicing Spread.
Section 9.05
Consents
.
The Seller shall have obtained all
consents, approvals or other requirements of third parties required for the consummation of the transactions contemplated by the Transaction Documents that are to be obtained on or prior to the Initial Applicable Subsequent Sale Date, and the Seller
shall have commenced servicing the Mortgage Loans under the applicable Servicing Agreement. All actions of all Governmental Authorities required to consummate the transactions contemplated by the Transaction Documents and the documents related
thereto shall have been obtained or made.
Section 9.06
Delivery of Transaction Documents
.
Seller shall have delivered to Purchaser copies of each executed Transaction Document that is to be entered on or prior to such date in
the form and substance acceptable to the Purchaser and each of the items required to be delivered pursuant to Section 2.01 hereof.
Section 9.07
Certificate of Seller
.
Seller shall have
provided Purchaser a certificate, substantially in the form attached hereto as
Exhibit D
, signed by an authorized officer of Seller dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that:
(a) each of Seller’s representations and warranties made in this Agreement and each other Transaction Document to which Seller is a party is true and correct in all material respects as of such date; (b) all of the terms, covenants,
conditions and obligations of this Agreement and each other Transaction Document to which Seller is a party that are required to be complied with and performed by
39
Seller at or prior to the Initial Applicable Subsequent Sale Date have been duly complied with and performed in all material respects; (c) the conditions set forth in
Section 9.04
and
Section 9.05
have been satisfied; and (d) as of the Initial Applicable Subsequent Sale Date, Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of
the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries, and the Seller (considered together with the Seller’s consolidated
subsidiaries) is not in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
Section 9.08
Opinions of Counsel
.
Seller’s counsel shall have delivered the Opinions of Counsel required pursuant to
Section 2.01(b)(v)
,
Section 2.01(b)(vi)
and
Section 2.01(b)(vii)
.
Section 9.09
Good Standing Certificate of Seller
.
Seller shall have provided Purchaser a certificate of good standing of Seller, dated as of a date within five (5) Business Days
prior to the Initial Applicable Subsequent Sale Date.
Section 9.10
No Actions or Proceedings
.
No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit
the consummation of, or to invalidate, any of the transactions contemplated by this Agreement and the documents related hereto in any material respect.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the satisfaction of the following conditions as of the
Initial Applicable Subsequent Sale Date:
Section 10.01
Correctness of Representations and Warranties
.
The representations and warranties made by Purchaser in this Agreement to be made on or prior to the Initial Applicable
Subsequent Sale Date are true and correct in all material respects.
Section 10.02
Compliance with
Conditions
.
All of the terms, conditions, covenants and obligations of this Agreement required to be complied with
and performed by Purchaser on or prior to the Initial Applicable Subsequent Sale Date shall have been duly complied with and performed in all material respects.
.
40
Section 10.03
Corporate Resolution
.
Seller shall have received from Purchaser a certified copy of its corporate resolution approving the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, together with such other certificates of incumbency and other evidences of corporate authority as Seller or its counsel may reasonably request.
Section 10.04
No Material Adverse Change
.
Since the Agreement Date, there shall not have been any change to Purchaser’s financial condition that will likely materially and adversely affect the consummation of the transactions contemplated
hereby.
Section 10.05
Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate, substantially in the form attached hereto as
Exhibit E
, signed by an
authorized officer of Purchaser dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each of Purchaser’s representations and warranties made in this Agreement is true and correct in
all material respects as of such date; (b) all of the terms, covenants, conditions and obligations of this Agreement required to be complied with and performed by Purchaser at or prior to the Agreement Date have been duly complied with and
performed in all material respects; and (c) the condition set forth in
Section 10.04
has been satisfied.
Section 10.06
Good Standing Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate of good standing of Purchaser, dated as of a date within five (5) Business Days
prior to the Initial Applicable Subsequent Sale Date.
ARTICLE XI
INDEMNIFICATION
Section 11.01
Indemnification by Seller
.
(a) Seller shall
indemnify, defend and hold Purchaser, its affiliates and its and their respective directors, managers, officers, employees, agents, representatives and advisors (the “
Purchaser Indemnitees
”) harmless from and shall reimburse the
applicable Purchaser Indemnitee for any Losses suffered or incurred by any Purchaser Indemnitee after the Agreement Date which result from:
(i) Any material breach of a representation or warranty by Seller, or non-fulfillment of any covenant or obligation of Seller, contained in this Agreement;
(ii) Any servicing act or omission of any prior servicer relating to any Mortgage Loan and any act or omission of any
party related to the origination of any Mortgage Loan;
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(iii) Any act, error or omission of Seller in servicing any of the Mortgage
Loans, including improper action or failure to act when required to do so;
(iv) Any exercise of any rights of
setoff or other netting arrangements by any Owner against Seller that results in a decrease in Servicing Agreement termination payments due to Seller with respect to the Mortgage Loans from such Owner or in a shortfall of funds to pay the Future
Excess Servicing Spread; and
(v) Litigation, proceedings, governmental investigations, orders, injunctions or
decrees resulting from any of the items described in
Section 11.01(a)(i)-(iv)
above;
provided
,
however
, that
the applicable Purchaser Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Seller, which such failure of
mitigation shall not relieve Seller of its indemnification obligations in this
Section 11.01(a)
but may affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Purchaser Indemnitee
pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be reimbursed by Seller as part of its indemnification obligations in this
Section 11.01(a)
. Purchaser shall notify
Seller promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations, orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a
“
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Seller shall have the right to assume the defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Purchaser
Indemnitee, but may not enter into any settlement without the prior written consent of the applicable Purchaser Indemnitee, which shall not be unreasonably withheld. A Purchaser Indemnitee shall have the right to select separate counsel and to
otherwise separately defend itself at its own expense but shall not consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of Seller, which consent shall not be
unreasonably withheld. Any exercise of such rights by a Purchaser Indemnitee shall not relieve Seller of its obligations and liabilities under this
Section 11.01(a)
or any other provision of this Agreement. With respect to any Third
Party Claim subject to indemnification under this Agreement, the applicable Purchaser Indemnitee shall be required to cooperate in good faith with Seller to ensure the proper and adequate defense of such Third-Party Claim. For the avoidance of
doubt, Seller’s obligations for Purchaser Indemnitees shall not be limited to funds available in the Third Party Controlled Future Spread Custodial Account or the Future Spread Reserve Account.
(b)
REIT Requirements
. Notwithstanding anything in
Section 11.01(a)
, in the event that counsel or independent
accountants for the Protected REIT determine that there exists a material risk that any amounts due to Purchaser under
Section 11.01(a)
hereof would be treated as Nonqualifying Income upon the payment of such amounts to Purchaser, the
amount paid to Purchaser pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to Purchaser in such year without causing the Protected REIT to fail to meet the REIT Requirements for such year, determined as
if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the Protected REIT. If the amount payable for any tax year under the preceding sentence is less than
42
the amount which Seller would otherwise be obligated to pay to Purchaser pursuant to
Section 11.01
of this Agreement (the “
Expense Amount
”), then: (1) Seller
shall place the Expense Amount into an escrow account (the “
Expense Escrow Account
”) using an escrow agent and agreement reasonably acceptable to Purchaser and shall not release any portion thereof to Purchaser, and Purchaser shall
not be entitled to any such amount, unless and until Purchaser delivers to Seller, at the sole option of the Protected REIT, (i) an opinion (an “
Expense Amount Tax Opinion
”) of the Protected REIT’s tax counsel to the
effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a letter (an “
Expense Amount Accountant’s Letter
”) from the Protected REIT’s independent accountants indicating the
maximum amount that can be paid at that time to Purchaser without causing the Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to the Protected REIT
indicating that the receipt of any Expense Amount hereunder will not cause the Protected REIT to fail to satisfy the REIT Requirements (a “
REIT Qualification Ruling
” and, collectively with an Expense Amount Tax Opinion and an
Expense Amount Accountant’s Letter, a “
Release Document
”); and (2) pending the delivery of a Release Document by Purchaser to Seller, Purchaser shall have the right, but not the obligation, to borrow the Expense Amount
from the Escrow Account pursuant to a loan agreement (an “
Indemnity Loan Agreement
”) reasonably acceptable to Purchaser that (i) requires Seller to lend Purchaser immediately available cash proceeds in an amount equal to the
Expense Amount (an “
Indemnity Loan
”), and (ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the credit standing and profile of Purchaser or any
guarantor of Purchaser, including the Protected REIT, at the time of such Loan, and (B) a 15 year maturity with no periodic amortization.
Section 11.02
Indemnification by Purchaser
.
Purchaser shall
indemnify, defend and hold Seller, its affiliates and its and their respective directors, managers, officers, employees, agents, representatives and advisors (the “
Seller Indemnitees
”) harmless from and shall reimburse the
applicable Seller Indemnitee for any Losses suffered or incurred by any Seller Indemnitee which result from:
(a) Any
material breach of a representation or warranty by Purchaser, or non-fulfillment of any covenant or obligation of Purchaser contained in this Agreement; and
(b) Litigation, proceedings, governmental investigations, orders, injunctions or decrees, the basis for which occurred after the Agreement Date, resulting from any of the items described in
Section 11.02(a)
above;
provided
,
however
, that the applicable Seller Indemnitee has taken all commercially
reasonable and appropriate actions to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Purchaser, which such failure of mitigation shall not relieve Purchaser of its indemnification
obligations in this
Section 11.02
but may affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Seller Indemnitee pursuant to any attempt to mitigate any such losses, damages,
deficiencies, claims, causes of action or expenses shall be reimbursed by Purchaser as part of its indemnification obligations in this
Section 11.02
. Seller shall notify Purchaser promptly after receiving written notice of the assertion
of any litigation, proceedings, governmental investigations, orders,
43
injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim,
Purchaser shall have the right to assume the defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Seller Indemnitee, but may not enter into any settlement without the prior written consent of
Purchaser, which shall not be unreasonably withheld. A Seller Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself but shall not consent to the entry of a judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of Purchaser, which consent shall not be unreasonably withheld. Any exercise of such rights by a Seller Indemnitee shall not relieve Purchaser of its obligations and liabilities
under this
Section 11.02
or any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Seller Indemnitee shall be required to cooperate in good faith with
Purchaser to ensure the proper and adequate defense of such Third-Party Claim.
Section 11.03
Other
Rights
.
The Seller hereby acknowledges that, in addition to its rights under this Agreement, the Purchaser is
entitled to exercise its rights under the related Owner Consent.
ARTICLE XII
MISCELLANEOUS
Section 12.01
Costs and Expenses
.
Purchaser and Seller shall
each pay the expenses incurred by it or its affiliates pursuant to the Current Spread Agreement in connection with the transactions contemplated hereby.
Section 12.02
Confidentiality
.
Each Party understands that in
connection with this transaction, it has been furnished and will be furnished Non-Public Personal Information and/or Personally Identifiable Financial Information (as those terms are defined in Sections 573.3(n) and (o) of the Office of Thrift
Supervision Regulations on Privacy of Consumer Information published at 12 C.F.R. Chapter V implementing Title V of the Gramm-Leach-Bliley Act), and other information regarding the policies and plans of the other Party and its affiliates that is and
has been designated as confidential and proprietary, and each Party agrees that it will maintain the confidentiality of such information and will not disclose it to others (except for its affiliates and its and their respective directors, managers,
officers, employees, financing sources, agents, representatives and advisors), or use it except in connection with the proposed acquisition contemplated by this Agreement, without the prior written consent of the Party furnishing such information.
Information which is generally known in the industry concerning a Party or among such Party’s creditors generally or which has been disclosed to the other Party by third parties who have a right to do so shall not be deemed confidential or
proprietary information for these purposes. If Purchaser, any of its affiliates or any officer, director, employee or agent of any of the foregoing
44
is at any time requested or required to disclose any information supplied to it in connection with the transactions contemplated hereby, Purchaser agrees to provide Seller with prompt notice of
such request(s) so that Seller may seek an appropriate protective order and/or waive Purchaser’s compliance with the terms of this
Section 12.02
. If Seller, any of its affiliates or any officer, director, employee or agent of any of
the foregoing is at any time requested or required to disclose any information supplied to it in connection with the transactions contemplated hereby, Seller agrees to provide Purchaser with prompt notice of such request(s) so that Purchaser may
seek an appropriate protective order and/or waive Seller’s compliance with the terms of this
Section 12.02
. Notwithstanding the terms of this
Section 12.02
, if, in the absence of a protective order or the receipt of a
waiver hereunder, Purchaser or Seller is nonetheless, in the opinion of its counsel, compelled to disclose information concerning the other Party to any tribunal or else stand liable for contempt or suffer other censure or penalty, Purchaser or
Seller may disclose such information to such tribunal without liability hereunder. If the proposed acquisition is not consummated, each Party agrees to promptly return to the other, promptly upon request, all confidential materials, and all copies
thereof, which have been furnished to it in connection with the transactions contemplated hereby. For the avoidance of doubt, either Party may provide its shareholders and creditors with a general description of this Agreement and any related
transactions, and, subject to the provisions of this
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.03
Broker’s Fees
.
Each party hereto
represents and warrants to the other that it has made no agreement to pay any finder’s, agent’s, broker’s or originator’s fee arising out of or in connection with the subject matter of this Agreement. In the event Purchaser has
entered or enters into an agreement to pay any finder’s, agent’s, broker’s, advisor’s or originator’s fee arising out of or in connection with the subject matter of this Agreement, Purchaser shall be solely responsible for
all such fees. The parties hereto shall indemnify and hold each other harmless from and against any such obligation or liability and any expense incurred in investigating or defending (including reasonable attorneys’ fees) any claim based upon
the other party’s actions in connection with such obligation.
Section 12.04
Relationship of Parties
.
The Parties intend that the transactions contemplated in the Transaction Documents constitute arms-length transactions among
third parties. Nothing contained in the Transaction Documents will establish any fiduciary, partnership, joint venture or similar relationship between or among the Parties except to the extent otherwise expressly stated therein.
Section 12.05
Survival of Representations and Warranties
.
Each party hereto covenants and agrees that the representations and warranties in this Agreement, and in any document delivered or to be
delivered pursuant hereto, shall survive the Agreement Date and each applicable Assignment Date.
45
Section 12.06
Notices
.
All notices, requests, demands and other communications which are required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been given if personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid or by prepaid overnight delivery service:
(a) If to Purchaser, to:
Fortress Investment Group LLC
1345 Avenue of the Americas
New York, NY 10105
Attn: Brian Sigman
Chief Financial Officer
(212) 479-5343
(b) If to Seller, to:
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attn: Amar Patel
or to such other address as Purchaser or Seller shall have specified in writing to the other.
Section 12.07
Waivers
.
Either Purchaser or Seller may, by written notice to the other:
(a) Extend the
time for the performance of any of the obligations or other transactions of the other; and
(b) Waive compliance with or
performance of any of the terms, conditions, covenants or obligations required to be complied with or performed by the other hereunder.
The waiver by Purchaser or Seller of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.
Section 12.08
Entire Agreement; Amendment
.
This Agreement and the related Transaction Documents constitute the entire agreement between the parties with respect to the transactions contemplated hereby and supersede all prior agreements with
respect thereto. This Agreement may be amended only in a written instrument signed by both Seller and Purchaser.
46
Section 12.09
Binding Effect
.
This Agreement shall inure to the benefit of and be binding upon the Parties and their successors and assigns. Nothing in this Agreement,
express or implied, is intended to confer on any Person other than the Parties and their successors and assigns, any rights, obligations, remedies or liabilities.
Section 12.10
Headings
.
Headings on the Articles and Sections
in this Agreement are for reference purposes only and shall not be deemed to have any substantive effect.
Section 12.11
Applicable Law
.
This Agreement shall be 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 the laws of the State of New York, except to the extent preempted by Federal law. This Agreement shall constitute a security agreement under the laws of
the State of New York. In addition to any other rights available under this Agreement or otherwise available at law or in equity but subject to the terms hereof, Purchaser shall have all rights and remedies of a secured party with respect to the
Collateral under the laws of the State of New York and under any other applicable law to enforce the assignments and security interests contained herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of
applicable law and the terms of this Agreement, to sell or apply any rights and other interests with respect to the Collateral assigned or pledged hereby in accordance with the terms hereof at public and private sale in accordance with the terms of
this Agreement. The parties agree to waive trial by jury in the event of any dispute under this Agreement.
Section 12.12
Incorporation of Exhibits
.
The Exhibits attached hereto shall be incorporated herein and shall be understood to be a part hereof as though included in the body of this Agreement.
Section 12.13
Counterparts
.
This Agreement may be executed in counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which, taken together, shall constitute one and the same
agreement.
Section 12.14
Severability of Provisions
.
If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid,
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 or enforceability of the other provisions of this
Agreement or of the rights of the parties hereto.
47
Section 12.15
Assignment
.
(a) Seller may not assign, transfer, sell or subcontract all or any part of this Agreement, any interest herein, or any of the
Seller’s interest in the Servicing Spread Collections, other than the interest in the Total Servicing Spread sold hereby, without the prior written consent of Purchaser,
provided
that any successor to Seller must assume Seller’s
obligations under this Agreement. Purchaser shall have the unrestricted right to further assign, transfer, deliver, hypothecate, pledge, subdivide or otherwise deal with its rights under this Agreement on whatever terms Purchaser shall determine
without the consent of Seller; including the right to assign all or any portion of the Future Excess Servicing Spread and to assign the related rights under this Agreement. If Purchaser assigns any rights under this Agreement to a third party (a
“
Third Party Assignment
“), such third party (a “
Third Party Assignee
“) shall enter into a new agreement (a “
Third Party Future Spread Agreement
“) with Seller or Seller’s assignee that provides
such Third Party Assignee with the same rights with respect to the Future Excess Servicing Spread that Purchaser would have had under this Agreement if the Third Party Assignment had not occurred.
(b) Seller shall maintain a register on which it enters the name and address of each holder of the Future Excess Servicing Spread and
each holder’s interest in the Future Excess Servicing Spread (the “
Holder Register
”) for each transaction described in Section 12.15(a). The entries in the Holder Register shall be conclusive absent manifest error, and
Seller shall treat each Person whose name is recorded in the Holder Register as an owner of the Future Excess Servicing Spread for all purposes of this Agreement notwithstanding any notice to the contrary.
Section 12.16
Termination
.
If the Current Spread Agreement is terminated on or prior to the Initial Applicable Subsequent Sale Date, this Agreement shall terminate and neither Party shall have any further obligations to the
other Party hereunder.
Section 12.17
Third Party Beneficiaries
.
This Agreement does not and is not intended to confer any rights or remedies upon any person or entity other than Purchaser and Seller,
except as provided in
Section 11.01
and in
Section 11.02
, provided that Purchaser and Seller reserve the right to modify any term of, or terminate, this Agreement, without the consent of any Purchaser Indemnitee or Seller
Indemnitee.
48
IN WITNESS WHEREOF, each of the undersigned parties to this Agreement has caused this
Agreement to be duly executed in its corporate name by one of its duly authorized officers, all as of the date first above written.
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MSR XIII LLC
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Purchaser
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By:
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/s/ Brian Sigman
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Name:
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Brian Sigman
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Title:
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Chief Financial Officer
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NATIONSTAR MORTGAGE LLC
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Seller
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By:
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/s/ Amar Patel
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Name:
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Amar Patel
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Title:
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Executive Vice President
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49
EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT FOR MORTGAGE LOANS
Subject to, and upon the terms and conditions of the Future Spread Agreement for Non-Agency Mortgage Loans, dated as of January 6, 2013 (the “
Agreement
”), by and between Nationstar
Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) and MSR XIII LLC, a Delaware limited liability company (together with its successors assigns, the
“
Purchaser
”), as may be amended, restated, or otherwise modified and in effect from time to time, Seller hereby assigns, transfers and delivers to Purchaser all of Seller’s right, title and interest in and to Future Excess
Servicing Spread for each of the Mortgage Loans set forth in Annex A attached hereto and all proceeds thereof, and agrees that as of the applicable Assignment Date, the applicable Mortgage Loan shall be deemed to be a “Mortgage Loan” for
all purposes of the Agreement. Capitalized terms used in this Assignment Agreement have the meanings given to such terms in, or incorporated by reference into, the Agreement.
In the event (but only in the event) that the conveyance of the Future Excess Servicing Spread is characterized by a court or governmental authority as security for a loan rather than a sale, Seller will
be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Future Excess Servicing Spread and all proceeds thereof as security for a loan in an
amount of the Purchase Price.
All of the terms, covenants, conditions and obligations of the Agreement required to be
complied with and performed by Seller on or prior to the date hereof have been duly complied with and performed in all material respects.
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NATIONSTAR MORTGAGE LLC
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Seller
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By:
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Name:
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Title:
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50
Annex A
[ATTACH ANNEX A, WHICH MAY BE ON COMPUTER TAPE, COMPACT DISK, OR MICROFICHE, CONTAINING THE INFORMATION SET FORTH BELOW]
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(a)
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(b)
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(c)
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(d)
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(e)
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(g)
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(h)
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(i)
(column (g) –
column (h))
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(j)
([ ]% of
column (i))
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Refinancing Date
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Loan #
of
Refinanced
Mortgage
Loan
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Principal
Balance
of
Refinanced
Mortgage
Loan
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Loan # of
Mortgage
Loan
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Principal
Balance of
Mortgage
Loan as
of
the
Assignment
Date
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Servicing
Spread Rate
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Base Servicing
Fee Rate
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Net Servicing
Spread Rate
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Future Excess
Servicing Spread
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51
EXHIBIT B
Example of calculations of Maximum Retained Refinancing Loan Amounts
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Recaptured Loan
Incentive
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Range of Loans Retained as a Percentage of Total
Recapture
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3 Month Avg Recapture
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Retained Percentage
(1)
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Nationstar
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Portfolio
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35% or Less
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0%
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0.00%
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100.00%
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> 35%, <= 40%
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25%
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0.00% to 1.25%
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100.00% to 98.75%
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> 40%, <= 45%
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30%
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1.50% to 3.00%
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98.50% to 97.00%
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> 45%, <= 50%
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35%
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3.50% to 5.25%
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96.50% to 94.75%
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> 50%, <= 55%
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40%
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6.00% to 8.00%
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94.00% to 92.00%
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> 55%, <= 60%
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45%
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9.00% to 11.25%
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91.00% to 88.75%
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> 60%, <= 65%
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50%
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12.50% to 15.00%
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87.50% to 85.00%
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> 65%, <= 70%
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50%
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15.00% to 17.50%
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85.00% to 82.50%
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> 70%, <= 75%
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50%
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17.50% to 20.00%
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82.50% to 80.00%
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Greater than 75%
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50%
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20.00% to 32.50%
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80.00% to 67.50%
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1
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Represents the percentage of loans Seller retains above 35% recapture.
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52
EXHIBIT C
SCHEDULE OF MORTGAGE LOANS
[SEPARATELY DELIVERED]
EXHIBIT D
SELLER’S OFFICER’S CERTIFICATE
(To be supplied on the Initial Applicable Subsequent Sale Date)
I,
, a [Vice President] of Nationstar Mortgage LLC (the “
Company
”), pursuant to
Section 9.07
of the
Future Spread Agreement for Non-Agency Mortgage Loans by and between MSR XIII LLC and the Company, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material
respects as of the date hereof;
(ii) All of the terms, covenants, conditions and obligations of the Agreement
required to be complied with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects;
(iii) The conditions set forth in
Section 9.04
and
Section 9.05
have been satisfied; and
(iv) As of the date hereof, the Company has a Consolidated Tangible Net Worth (as defined in the Agreement) of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance
of equity on or after the date of the Agreement by the Company, Nationstar Mortgage Holdings Inc. or any of the Company’s consolidated subsidiaries, and the Company (considered together with its consolidated subsidiaries)is not in default in
any indebtedness in excess of $10,000,000 (individually or in the aggregate).
IN WITNESS WHEREOF, the undersigned has
executed this Certificate as of [ ]
By:
EXHIBIT E
PURCHASER’S OFFICER’S CERTIFICATE
(To be supplied on the Initial Applicable Subsequent Sale Date)
I, , [POSITION]
of [ ], the sole member of MSR XIII LLC (the “
Company
”), pursuant to
Section 10.05
of the Future Spread Agreement for Non-Agency Mortgage Loans by
and between the Company and Nationstar Mortgage LLC, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material
respects as of the date hereof; and
(ii) All of the terms, covenants, conditions and obligations of the
Agreement required to be complied with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects; and
(iii) The condition set forth in
Section 10.04
have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
[ ].
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[ ]
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By: [ ], as member
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By:
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EXHIBIT F
LOCATION OF CREDIT FILES
350 Highland Drive
Lewisville, Texas 75067
EXHIBIT G
FORM OF SUMMARY REMITTANCE REPORT
[SEPARATELY DELIVERED]
EXHIBIT H
FORM OF DELINQUENCY REPORT
[SEPARATELY DELIVERED]
EXHIBIT I
FORM OF DISBURSEMENT REPORT
[SEPARATELY DELIVERED]
EXHIBIT J
SELLER JURISDICTIONS AND RECORDING OFFICES
Chief Executive Office:
350 Highland Drive
Lewisville, Texas 75067
Recording Office:
Secretary of
State, State of Delaware
Exhibit 10.46
CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT
FOR NON-AGENCY
MORTGAGE LOANS
by and between
NATIONSTAR MORTGAGE LLC
(Seller)
and
MSR XIII LLC
(Purchaser)
Dated and effective as of January 6, 2013
Table of Contents
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ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
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1
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Section 1.01
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Definitions
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1
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Section 1.02
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General Interpretive Principles
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13
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ARTICLE II PROCEDURES; ITEMS TO BE DELIVERED
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14
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Section 2.01
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Sale of Current Excess Servicing Spread
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14
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Section 2.02
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Grant of Security Interest
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14
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Section 2.03
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Items to be Delivered on the Agreement Date
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14
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Section 2.04
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Items to be Delivered on the Sale Date
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15
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Section 2.05
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Sale Date Transactions
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17
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ARTICLE III PAYMENTS AND DISTRIBUTIONS
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18
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Section 3.01
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Purchase Price
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18
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Section 3.02
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Payments by Purchaser
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19
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Section 3.03
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Accounts
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19
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Section 3.04
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Priority of Payments
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22
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Section 3.05
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Withdrawals from the Current Spread Reserve Account
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23
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Section 3.06
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Payment to Seller of Base Servicing Fee
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23
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Section 3.07
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Intent and Characterization
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24
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ARTICLE IV [RESERVED]
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24
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER
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24
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Section 5.01
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Due Organization and Good Standing
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24
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Section 5.02
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Authority and Capacity
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25
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Section 5.03
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Title to the Mortgage Servicing Rights; Owner Consents
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25
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Section 5.04
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Effective Agreements
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26
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Section 5.05
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No Accrued Liabilities
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26
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Section 5.06
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Seller/Servicer Standing
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26
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Section 5.07
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MERS Membership
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26
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Section 5.08
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Owner Set-off Rights
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26
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Section 5.09
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Ability to Perform; Solvency
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27
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Section 5.10
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Material Documents
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27
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Section 5.11
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Obligations with Respect to Origination
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27
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Section 5.12
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No Actions
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27
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ARTICLE VI REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE LOANS AND SERVICING
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27
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Section 6.01
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Servicing Agreements; Applicable Laws
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28
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Section 6.02
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Related Escrow Accounts
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28
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i
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Section 6.03
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Accuracy of Servicing Information
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28
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Section 6.04
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No Purchaser Responsibility
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28
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Section 6.05
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Location of Credit Files
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28
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Section 6.06
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Representations Concerning the Current Excess Servicing Spread
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28
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ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER
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29
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Section 7.01
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Due Organization and Good Standing
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29
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Section 7.02
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Authority and Capacity
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29
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Section 7.03
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Effective Agreements
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30
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Section 7.04
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Sophisticated Investor
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30
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Section 7.05
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No Actions
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30
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ARTICLE VIII SELLER COVENANTS
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31
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Section 8.01
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Servicing Obligations
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31
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Section 8.02
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Cooperation
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32
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Section 8.03
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Financing Statements
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32
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Section 8.04
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Supplemental Information
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32
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Section 8.05
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Access to Information
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32
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Section 8.06
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Home Affordable Modification Program
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33
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Section 8.07
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Distribution Date Data Tapes and Reports
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33
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Section 8.08
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Financial Statements and Officer’s Certificates
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35
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Section 8.09
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Monthly Management Calls
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36
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Section 8.10
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Timely Payment of Owner Obligations
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36
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Section 8.11
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Servicing Agreements
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36
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Section 8.12
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Transfer of Mortgage Servicing Rights
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37
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Section 8.13
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Consents to Transaction Documents
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37
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Section 8.14
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Accounts
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37
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Section 8.15
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Notification of Certain Events
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37
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Section 8.16
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Financing; Pledge of Current Excess Servicing Spread
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37
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Section 8.17
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Existence, etc
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37
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Section 8.18
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Consent to Sub-Servicing
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39
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Section 8.19
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Nonpetition Covenant
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39
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Section 8.20
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Data Tape; Schedule of Mortgage Loans
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39
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Section 8.21
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Insurance
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39
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Section 8.22
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Defense of Title
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39
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Section 8.23
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Refinancing of Mortgage Loans
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39
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ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
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40
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Section 9.01
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Correctness of Representations and Warranties
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40
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Section 9.02
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Compliance with Conditions
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40
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Section 9.03
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Corporate Resolution
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41
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ii
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Section 9.04
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No Material Adverse Change
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41
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Section 9.05
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Consents
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41
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Section 9.06
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Delivery of Transaction Documents
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41
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Section 9.07
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Certificate of Seller
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41
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Section 9.08
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Valuation
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42
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Section 9.09
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Opinions of Counsel
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42
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Section 9.10
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Acquisition of Mortgage Servicing Rights by Seller
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42
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Section 9.11
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Good Standing Certificate of Seller
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42
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Section 9.12
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No Actions or Proceedings
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42
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Section 9.13
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Fees, Costs and Expenses
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42
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ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
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43
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Section 10.01
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Correctness of Representations and Warranties
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43
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Section 10.02
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Compliance with Conditions
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43
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Section 10.03
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Corporate Resolution
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43
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Section 10.04
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No Material Adverse Change
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43
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Section 10.05
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Certificate of Purchaser
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43
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Section 10.06
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Good Standing Certificate of Purchaser
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44
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ARTICLE XI INDEMNIFICATION; CURE
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44
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Section 11.01
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Indemnification by Seller
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44
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Section 11.02
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Indemnification by Purchaser
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46
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Section 11.03
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Award of Damages
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47
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Section 11.04
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Other Rights
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48
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ARTICLE XII MISCELLANEOUS
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48
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Section 12.01
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Costs and Expenses
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48
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Section 12.02
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Confidentiality
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48
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Section 12.03
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Broker’s Fees
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49
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Section 12.04
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Relationship of Parties
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49
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Section 12.05
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Survival of Representations and Warranties
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49
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Section 12.06
|
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Notices
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50
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Section 12.07
|
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Waivers
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50
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Section 12.08
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Entire Agreement; Amendment
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51
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Section 12.09
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Binding Effect
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51
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Section 12.10
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Headings
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51
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Section 12.11
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Applicable Law
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51
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Section 12.12
|
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Incorporation of Exhibits
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51
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Section 12.13
|
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Counterparts
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52
|
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Section 12.14
|
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Severability of Provisions
|
|
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52
|
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Section 12.15
|
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Public Announcement
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52
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Section 12.16
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Assignment
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52
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Section 12.17
|
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Termination
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53
|
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Section 12.18
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|
Third Party Beneficiaries
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53
|
|
iii
EXHIBITS
Exhibit A — Form of Assignment Agreement
Exhibit B — Schedule of Mortgage Loans
Exhibit C — Seller’s Officer’s Certificate
Exhibit D — Purchaser’s Officer’s Certificate
Exhibit E — Location of Credit
Files
Exhibit F — Form of Summary Remittance Report
Exhibit G — Form of Delinquency Report
Exhibit H — Form of Disbursement Report
Exhibit I — Seller Jurisdictions and Recording Offices
Exhibit J — Servicing Agreements
iv
CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT FOR
NON-AGENCY MORTGAGE LOANS
This CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT FOR NON-AGENCY MORTGAGE LOANS (as amended, restated, or otherwise modified and in effect from time to time, this “
Agreement
”),
dated as of January 6, 2013 (the “
Agreement Date
”), is by and between MSR XIII LLC, a Delaware limited liability company (together with its successors and assigns, the “
Purchaser
”), and Nationstar Mortgage LLC,
a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) (the Purchaser and the Seller will collectively be referred to as the “
Parties
” and each, a “
Party
”).
W I T N E S S E T H
:
WHEREAS
, Seller and Bank of America, National Association (“Bank of America”) have entered into the Purchase and Sale Agreement, pursuant to which, among other things, Seller will acquire
and assume all right, title and interest in mortgage servicing rights to a portfolio of residential mortgage loans owned or securitized by the Owners (as defined herein);
WHEREAS
, by acquiring such mortgage servicing rights, Seller is entitled to a servicing spread and other incidental fees with respect to the related residential mortgage loans;
WHEREAS
, the servicing spread, together with the Ancillary Income (as defined below), exceeds the compensation that Seller
requires to service the related residential mortgage loans;
WHEREAS
, Seller desires to sell, and Purchaser desires to
purchase, a portion of the servicing spread that exceeds such required compensation amount; and
WHEREAS
, Purchaser and
Seller desire to set forth the terms and conditions pursuant to which Seller will sell, transfer and assign to Purchaser, all of Seller’s right, title and interest in and to a portion of the servicing spread, that exceeds the Seller’s
required compensation amount, and Purchaser will purchase all right, title and interest in and to such portion of the servicing spread;
NOW, THEREFORE
, in consideration of the mutual promises, covenants and conditions and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and
upon the terms and subject to the conditions set forth herein, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
Section 1.01
Definitions
.
Whenever used herein, the following words and phrases, unless the context otherwise requires, shall have the following meanings:
1
Accepted Servicing Practices
: With respect to any Mortgage Loan, those accepted and
prudent mortgage servicing practices (including collection procedures) which are in accordance with the servicing practices and procedures as set forth in the applicable Servicing Agreements, and in a manner at least equal in quality to the
servicing that Seller provides to mortgage loans which it owns in its own portfolio.
Agency
: Any of Fannie Mae,
Freddie Mac or Ginnie Mae, or any successor thereto.
Agreement
: As defined in the preamble hereof.
Agreement Date
: As defined in the preamble hereof.
Ancillary Income
: All incidental servicing fees (such as late fees, assignment transfer fees, returned check fees, special services fees, amortization schedule fees, HAMP fees, modification and
incentive income and any interest or earnings on funds deposited in an account maintained by the Seller as servicer with respect to the Mortgage Loans, etc.) that are supplemental to the servicing spread payable to the servicer pursuant to the
Servicing Agreements.
Applicable Law
: With reference to any Person, all laws (including common law), statutes,
regulations, ordinances, treaties, judgments, decrees, injunctions, writs and orders of any court, governmental agency or authority and rules, regulations, orders, directives, licenses and permits of any Governmental Authority applicable to such
Person or its property or in respect of its operations.
Assignment Agreement
: An agreement substantially in the form
of
Exhibit A
to this Agreement or in such other form as mutually agreed upon by the Parties.
Bank
: Wells Fargo
Bank, National Association, or any successor thereto, or another financial institution mutually agreed upon by the Parties or any successor thereto, each in its capacity as “Bank” under the Current Spread Custodial Account Control
Agreement or the Current Spread Reserve Account Control Agreement, as applicable, or any third party custodian or trustee in similar capacity under any replacement account control agreements.
Bank of America
: As defined in the recitals hereof.
Base Purchase Price
: The meaning given to such term in
Section 3.01
.
Base Servicing Fee
: With respect to a Collection Period, an amount equal to the sum for each Mortgage Loan of the product of (A) the outstanding principal balance of such Mortgage Loan with
respect to the related Measurement Date, (B) the Base Servicing Fee Rate and (C) (i) in the case of the initial Collection Period following the Subsequent Sale Date for such Mortgage Loan, a fraction, the numerator of which is the
number of days in the period from and including such Subsequent Sale Date to and including the last day of the such Collection Period, and the denominator of which is 360, and (ii) in the case of all other Collection Periods for a Mortgage
Loan, 1/12;
provided
that the Base Servicing Fee with respect to any Mortgage Loan whose Servicing Agreement is terminated during a Collection Period shall be pro-rated to the actual number of days within such Collection Period in which such
Mortgage Loan was serviced by Seller.
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Base Servicing Fee Rate
: 0.235% per annum, except that, for the period during
which the Interim Servicer is servicer of the Mortgage Loans, the Base Servicing Fee Rate shall be the lesser of (a) 0.235% per annum or (b) the interim servicing fee payable to the Interim Servicer.
Business Day
: Any day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the States of
Texas or New York are authorized or obligated by law or by executive order to be closed or (c) such other days as agreed upon by the Parties.
Code
: The Internal Revenue Code of 1986, as amended from time to time.
Collateral
: The meaning given to such term in
Section 2.02
.
Collection Period
: With respect to any Distribution Date, the calendar month preceding the month in which such Distribution Date
occurs.
Consolidated Tangible Net Worth
: (i) The net worth of Seller and its consolidated subsidiaries, on a
combined basis, determined in accordance with GAAP,
minus
(ii) all intangibles determined in accordance with GAAP (including goodwill, capitalized financing costs and capitalized administration costs but excluding originated and
purchased mortgage servicing rights or retained residual securities) and any and all advances to, investments in and receivables held from affiliates;
provided
,
however
, that the non-cash effect (gain or loss) of any mark-to-market
adjustments made directly to stockholders’ equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the
calculation of Consolidated Tangible Net Worth.
Control
: The meaning specified in Section 8-106 of the UCC.
Credit File
: Those documents, which may be originals, copies or electronically imaged, pertaining to each Mortgage
Loan, held by or on behalf of Seller in connection with the servicing of the Mortgage Loan, which may include Mortgage Loan Documents and the credit documentation relating to the origination of such Mortgage Loan, and any documents gathered during
the Servicing of a Mortgage Loan.
Current Excess Servicing Spread
: The rights of Seller, severable from each (and all)
of the other rights under the applicable Servicing Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to the Current Excess Servicing Spread Percentage.
Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans
: The current excess servicing spread acquisition
agreement for certain Freddie Mac mortgage loans, dated the date hereof, between the Seller and MSR IX LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans
: The current excess servicing spread acquisition
agreement for certain Fannie Mae mortgage loans, dated the date hereof, between the Seller and MSR X LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
3
Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans
: The
current excess servicing spread acquisition agreement for certain Ginnie Mae mortgage loans, dated the date hereof, between the Seller and MSR XI LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XII LLC
: The current excess servicing
spread acquisition agreement for certain Non-Agency Mortgage Loans, dated the date hereof, between the Seller and MSR XII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Percentage
: 66.67%.
Current Spread Custodial Account Agreement
: The applicable deposit account agreement and other related account documentation governing the Third Party Controlled Current Spread Custodial Account.
Current Spread Custodial Account Control Agreement
: The account control agreement among Seller, Purchaser and Wells
Fargo Bank, National Association, or any other institution agreed upon by the Parties, as Bank, dated as of the Initial Applicable Subsequent Sale Date, entered into with respect to the Third Party Controlled Current Spread Custodial Account, as
amended, restated, supplemented or otherwise modified from time to time.
Current Spread Reserve Account
: The account
specified in the Current Spread Reserve Account Control Agreement and maintained by Wells Fargo Bank, National Association, or any successor thereto, or any other third party custodian or trustee selected by Purchaser.
Current Spread Reserve Account Agreement
: The applicable deposit account agreement and other related account documentation
governing the Current Spread Reserve Account.
Current Spread Reserve Account Control Agreement
: The account control
agreement among Seller, Purchaser and Wells Fargo Bank, National Association, or any other institution agreed upon by the Parties, as Bank, dated on or before the Initial Applicable Subsequent Sale Date, entered into with respect to the Current
Spread Reserve Account, as amended, restated, supplemented or otherwise modified from time to time.
Current Spread Reserve
Account Deposit Event
: The meaning given to such term in
Section 3.03(c)
.
Current Spread Reserve Account
Required Amount
: The meaning given to such term in
Section 3.03(c)
.
Custodian
: A custodian of Credit
Files or any part thereof as identified by the Seller to the Purchaser in writing on or prior to the related Subsequent Sale Date, as the same may be amended and supplemented from time to time by the Seller by providing a written notice of any such
update to the Purchaser.
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Cut-Off Date
: With respect to each Mortgage Loan, the opening of business on the
related Subsequent Sale Date.
Data Tape
: The list of all mortgage loans, dated as of the date specified therein, whose
Mortgage Servicing Rights will be sold, or that are anticipated to be sold, as applicable, to Seller under the Purchase and Sale Agreement.
Deposit
: As defined in the Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XII LLC.
Distribution Date
: The 10th day of each calendar month, or if such day is not a Business Day, the prior Business Day, beginning in
the month following the Initial Applicable Subsequent Sale Date hereunder, or such other day as mutually agreed upon by Seller and Purchaser.
Electronic Data File
: A computer tape or other electronic medium generated by or on behalf of Seller and delivered or transmitted to or on behalf of Purchaser which provides information relating to
the Mortgage Loans.
Eligible Servicing Agreement
: Unless otherwise agreed to by the Purchaser, a Servicing Agreement
in respect of which the following eligibility requirements have been satisfied:
(a) either (i) the Owner Consents
relating to such Servicing Agreement have been obtained or (ii) a final order entered by the bankruptcy court providing that an Owner Consent with respect to such Servicing Agreement is not required has been obtained;
(b) such Servicing Agreement is an Eligible Servicing Agreement (as such term is defined in the Purchase and Sale Agreement);
(c) such Servicing Agreement is in full force and effect, and is in all respects genuine as appearing on its face or as represented in the
books and records of Seller, and no event of default, early amortization event, termination event, or other event giving any party thereto (including with notice or lapse of time or both) the right to terminate Seller as servicer thereunder for
cause has occurred and is continuing; provided, however, that with respect to any Servicing Agreement and the occurrence of any event set forth in this clause (c) which is based on a breach of a collateral performance test, such Servicing
Agreement shall remain an Eligible Servicing Agreement so long as no notice of termination based on such breach has been given or threatened in writing and subject to the restrictions set forth herein;
(d) Seller has not resigned or been terminated as servicer under such Servicing Agreement and has no actual knowledge of any pending or
threatened action to terminate Seller, as servicer (whether for cause or without cause); and
(e) the Seller as servicer may
not be terminated without cause pursuant to such Servicing Agreement or if the Seller as servicer may be terminated without cause, upon payment of a termination fee.
Entitlement Holder
: The meaning specified in Section 8-102(a)(7) of the UCC.
5
Expense Amount
: As defined in
Section 11.01(b)
hereof.
Expense Amount Accountant’s Letter
: As defined in
Section 11.01(b)
hereof.
Expense Amount Tax Opinion
: As defined in
Section 11.01(b)
hereof.
Expense Escrow Account
: As defined in
Section 11.01(b)
hereof.
Fannie Mae
: Federal National Mortgage Association, or any successor thereto.
FHLMC Mortgage Loans
: Each of those mortgage loans for which the current excess servicing spread has been sold and assigned to MSR
IX LLC pursuant to the Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans.
FNMA Mortgage
Loans
: Each of those mortgage loans for which the current excess servicing spread has been sold and assigned to MSR X LLC pursuant to the Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans.
Freddie Mac
: Federal Home Loan Mortgage Corporation, or any successor thereto.
Future Spread Agreements
: The Future Spread Agreement for FHLMC Mortgage Loans, the Future Spread Agreement for FNMA Mortgage
Loans, the Future Spread Agreement for GNMA Mortgage Loans, the Future Spread Agreement for Non-Agency Mortgage Loans for MSR XII LLC and the Future Spread Agreement for Non-Agency Mortgage Loans for MSR XIII LLC.
Future Spread Agreement for FHLMC Mortgage Loans
: The Future Spread Agreement for FHLMC Mortgage Loans, dated January 6,
2013, by and between Seller and MSR IX LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for FNMA Mortgage Loans
: The Future Spread Agreement for FNMA Mortgage Loans, dated January 6, 2013,
by and between Seller and MSR X LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for GNMA Mortgage Loans
: The Future Spread Agreement for GNMA Mortgage Loans, dated January 6, 2013,
by and between Seller and MSR XI LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for Non-Agency Mortgage Loans for MSR XII LLC
: The Future Spread Agreement for Non-Agency Mortgage Loans,
dated January 6, 2013, by and between Seller and MSR XII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for Non-Agency Mortgage Loans for MSR XIII LLC
: The Future Spread Agreement for Non-Agency Mortgage Loans, dated January 6, 2013, by and between Seller and Purchaser,
as may be amended, restated, or otherwise modified and in effect from time to time.
6
GAAP
: Generally accepted accounting principles in the United States of America as in
effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board, or
in such other statements by such other entity as may be in general use by significant segments of the accounting profession, that are applicable to the circumstances as of the date of determination.
Ginnie Mae
: Government National Mortgage Association, or any successor thereto.
GNMA Mortgage Loans
: Each of those mortgage loans for which the current excess servicing spread has been sold and assigned to MSR
XI LLC pursuant to the Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans.
Governmental
Authority
: With respect to any Person, any nation or government, any state or other political subdivision, agency or instrumentality thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction over such Person, any of its subsidiaries or any of its properties.
Grant
: To grant, bargain, sell, warrant, alienate, remise, demise, release, convey, assign, transfer, mortgage, pledge, create and grant a security interest in and right of setoff against, deposit,
set over or confirm.
HAMP
: The meaning given to such term in
Section 8.06
.
HAMP Loans
: The meaning given to such term in
Section 8.06
.
Holder Register
: As defined in
Section 12.16(b)
hereof.
Indemnity Loan
: As defined in
Section 11.01(b)
hereof.
Indemnity Loan Agreement
: As defined in
Section 11.01(b)
hereof.
Initial Applicable Subsequent Sale Date
: As defined in
Section 2.04
hereof.
Interim Servicer
: Bank of America or its successors or assigns acting as interim servicer with respect to the Mortgage Loans
pursuant to the interim servicing addendum of the Purchase and Sale Agreement.
IRS
: The United States Internal Revenue
Service.
Lien
: Any mortgage, deed of trust, pledge, hypothecation, collateral assignment, charge, deposit,
arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness or the performance
of any other obligation, including any conditional sale or other title retention agreement.
7
Lockbox Account
: An account maintained by Wells Fargo Bank, National Association or
another third party custodian or trustee selected by Purchaser for the purpose of receiving Servicing Spread Collections.
Loss
or
Losses
: Any and all direct, actual and out-of-pocket losses (including any loss in the value in the Current Excess
Servicing Spread), damages, deficiencies, claims, costs or expenses, including reasonable attorneys’ fees and disbursements, excluding (i) any amounts attributable to or arising from overhead allocations, general or administrative costs
and expenses, or any cost for the time of any Party’s employees, (ii) consequential losses or damages consisting of speculative lost profits, lost investment or business opportunity, damage to reputation or operating losses, or
(iii) punitive or treble damages;
provided
,
however
, that the exclusions set forth in clauses (ii) or (iii) above do not apply if and to the extent any such amounts are actually incurred in payment to a third party or
government entity.
Measurement Date
: With respect to any Collection Period, the first day of such Collection Period.
MERS
: Mortgage Electronic Registration Systems, Inc., or any successor thereto.
MI
: Insurance provided by private mortgage insurance companies to make payments on certain Mortgage Loans in the event that
the related Mortgagor defaults in its obligation in respect of the Mortgage.
Mortgage
: Each of those mortgages,
deeds of trust, security deeds or deeds to secure debt creating a first lien on or an interest in real property securing a Mortgage Note and related to a Mortgage Loan.
Mortgage Loan
: Each of those mortgage loans listed on the Schedule of Mortgage Loans.
Mortgage Loan Documents
: With respect to each Mortgage Loan, the documents and agreements related to such Mortgage Loan required to be held by the applicable Custodian, including, without
limitation, the original Mortgage Note, and any other documents or agreements evidencing and/or governing such Mortgage Loan.
Mortgage Note
: With respect to any Mortgage Loan, the note or other evidence of indebtedness of the Mortgagor, thereunder,
including, if applicable, an allonge and lost note affidavit.
Mortgage Servicing Rights
: The rights and
responsibilities of Seller with respect to servicing the Mortgage Loans under the Servicing Agreements, including any and all of the following if and to the extent provided therein: (a) all rights to service a Mortgage Loan; (b) all rights
to receive servicing fees, Ancillary Income, reimbursements or indemnification for servicing the Mortgage Loan, and any payments received in respect of the foregoing and proceeds thereof; (c) the right to collect, hold and disburse escrow
payments or other payments with respect to the Mortgage Loan and any amounts actually collected with respect thereto and to receive interest income on such amounts to the extent permitted by Applicable Law; (d) all accounts and other rights to
payment related to any of the property described in this paragraph; (e) possession and use of any and all Credit Files pertaining to the Mortgage Loan or pertaining to
8
the past, present or prospective servicing of the Mortgage Loan; (f) to the extent applicable, all rights and benefits relating to the direct solicitation of the related Mortgagors for
refinance or modification of the Mortgage Loans and attendant right, title and interest in and to the list of such Mortgagors and data relating to their respective Mortgage Loans; and (g) all rights, powers and privileges incident to any of the
foregoing.
Mortgaged Property
: The Mortgagor’s real property, securing repayment of a related Mortgage Note,
consisting of an interest in a single parcel of real property, improved by a residential dwelling.
Mortgagor
: An
obligor under a residential mortgage loan.
Net Servicing Fee
: As defined in the Purchase and Sale Agreement.
Non-Agency Mortgage Loans
: Each of the mortgage loans for which the current excess servicing spread has been sold and
assigned to MSR XII LLC or MSR XIII LLC pursuant to the applicable Sale Agreement.
Nonqualifying Income
: Any amount
that is treated as gross income for purposes of Section 856 of the Code and which is not Qualifying Income.
Objection
Notice
: The meaning given to such term in
Section 3.03(c)
.
Opinion of Counsel
: One or more written
opinions, in form and substance reasonably satisfactory to the recipient, of an attorney at law admitted to practice in any state of the United States or the District of Columbia, which attorney may be counsel for Seller or Purchaser, as the case
may be.
Owner
: With respect to a Mortgage Loan, the owner thereof.
Owner Consent
: All agreements, consents, approvals, confirmations and other items required pursuant to a Servicing Agreement to
complete the sale of the Mortgage Servicing Rights (including the Total Excess Spread) to Seller.
Party
or
Parties
: As defined in the preamble hereof.
Person
: Any individual, partnership, corporation, limited liability
company, limited liability partnership, business entity, joint stock company, trust, business trust, unincorporated organization, association, enterprise, joint venture, government, any department or agency of any government or any other entity of
whatever nature.
Power of Attorney
: A Power of Attorney delivered by the Seller to the Purchaser authorizing the
Purchaser to enforce the right to payment of the Current Excess Servicing Spread under the related Servicing Agreement solely in the event that the Seller fails to enforce such right within 30 days after receiving written notice of such failure from
the Purchaser to the Seller.
Priority of Payments
: The meaning given to such term in
Section 3.04
.
9
Protected REIT
: Any entity that (i) has elected to be taxed as a real estate
investment trust pursuant to Section 856 et seq. of the Code, (ii) owns a direct or indirect equity interest in Purchaser, and (iii) is treated for purposes of Section 856 of the Code as owning all or a portion of the assets of
the Purchaser or as receiving all or a portion of the Purchaser’s income.
Purchase and Sale Agreement
: The
Mortgage Servicing Rights Purchase and Sale Agreement, dated as of January 6, 2013, by and between Nationstar Mortgage LLC, as purchaser, and Bank of America, National Association, as seller, together with all schedules and exhibits thereto, as
the same may be amended, supplemented or otherwise modified from time to time.
Purchase Price
: The meaning given to
such term in
Section 3.01
.
Purchase Price Percentage
: 3.78 multiplied by the excess of (i) the Net
Servicing Fee (as such Net Servicing Fees are determined in accordance with Exhibit F to the Purchase and Sale Agreement), expressed as an annualized rate on the unpaid principal balances of the related Mortgage Loans as of the Subsequent Sale Date
over (ii) the Base Servicing Fee Rate.
Purchased Assets
: As defined in the Purchase and Sale Agreement.
Purchaser
: As defined in the preamble hereof.
Purchaser Enforcement Expenses
: An amount equal to the Current Excess Servicing Spread Percentage of the reasonable expenses,
including legal costs and expenses, incurred in the enforcement of any rights of Seller material to the value of the Total Servicing Spread under the Purchase and Sale Agreement and related documents, without duplication of any other such expenses
paid under any other Sale Agreement, which enforcement has been approved by Purchaser (such approval not to be unreasonably withheld).
Purchaser Indemnitees
: The meaning given to such term in
Section 11.01(a)
.
Qualifying Income
: Gross income that is described in Section 856(c)(2) or 856(c)(3) of the Code.
REIT Qualification Ruling
: As defined in
Section 11.01(b)
hereof.
REIT Requirements
: The requirements imposed on REITs pursuant to Sections 856 through and including 860 of the Code.
Related Escrow Accounts
: Mortgage Loan escrow/impound accounts maintained by Seller relating to the Mortgage Servicing Rights, including accounts for buydown funds, real estate taxes and MI, flood
and hazard insurance premiums.
Release Document
: As defined in
Section 11.01(b)
hereof.
Remaining Expected Total Servicing Spread
: The meaning given to such term in
Section 3.03(c)
.
Repurchase Price
: As defined in the Purchase and Sale Agreement.
10
Requirement of Law
: As to any Person, the certificate of incorporation and by-laws or
other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
Retained Servicing Spread
: The rights of Seller,
severable from each (and all) of the other rights under the applicable Servicing Agreements, to the Retained Servicing Spread Percentage of the Total Servicing Spread.
Retained Servicing Spread Percentage
: 100%
minus
the Current Excess Servicing Spread Percentage.
Sale Agreements
: This Agreement, the Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, the Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage
Loans, the Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans and the Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XII LLC.
Sale Date
: As defined in the Purchase and Sale Agreement.
Sales Proceeds
: The proceeds received upon a sale (approved by the Parties) of the Total Servicing Spread (except without giving
effect to clause (b) of the definition thereof), in whole or in part, including through a sale in accordance with
Section 8.12
.
Schedule of Mortgage Loans:
The list of Mortgage Loans whose Current Excess Servicing Spread has been assigned to Purchaser pursuant to this Agreement delivered initially accordance with
Section 2.04
, updated in accordance with
Section 3.01
and maintained as
Exhibit B
hereto.
Seller
: As defined in the preamble hereof.
Seller Enforcement Expenses
: An amount equal to the Retained Servicing Spread Percentage of the reasonable expenses, including legal costs and expenses, incurred in the enforcement of any rights of
Seller material to the value of the Total Servicing Spread under the Purchase and Sale Agreement and related documents, without duplication of any other such expenses paid under any other Sale Agreement, which enforcement has been approved by
Purchaser (such approval not to be unreasonably withheld).
Seller Indemnitees
: The meaning given to such term in
Section 11.02
.
Servicing
: The responsibilities, with respect to servicing the Mortgage Loans, under the
Servicing Agreements.
Servicing Agreements
: The servicing agreements, as amended from time to time, and any waivers,
consent letters, acknowledgments and other agreements under which Seller or the Interim Servicer is the servicer of the Mortgage Loans relating to the Mortgage Servicing Rights and governing the servicing of the Mortgage Loans.
11
Servicing Spread Collections
: For each Collection Period, the funds collected on the
Mortgage Loans and allocated as the servicing compensation payable to Seller as servicer of the Mortgage Loans with respect to such Collection Period pursuant to the applicable Servicing Agreements, other than Ancillary Income and, for the avoidance
of doubt, other than reimbursements received for advances and other out-of-pocket expenditures from an Owner by Seller in accordance with the Servicing Agreements.
Servicing Transfer Date
: As defined in the Purchase and Sale Agreement with respect to the Mortgage Loans.
Solvent
: With respect to any Person as of any date of determination, (a) the value of the assets of such Person is greater than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person as determined in accordance with GAAP, (b) such Person is able to pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In
computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability.
Subsequent Sale Date
: As defined in the Purchase and Sale
Agreement; provided that all conditions precedent to the execution and delivery of the related Assignment Agreement shall have been satisfied or waived on such date.
Termination Date
: As defined in the Purchase and Sale Agreement.
Third
Party Assignee
: The meaning given to such term in
Section 12.16
.
Third Party Assignment
: The meaning
given to such term in
Section 12.16
.
Third Party Current Spread Agreement
: The meaning given to such term
in
Section 12.16
.
Third Party Claim
: The meaning given to such term in
Section 11.01
and
Section 11.02
, as applicable.
Third Party Controlled Current Spread Custodial Account
: The account
specified in the Current Spread Custodial Account Control Agreement and maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser, into which all Servicing Spread Collections and all
Servicing Agreement termination payments in respect of the Mortgage Loans shall be deposited.
Total Servicing Spread
:
For each Collection Period on and after the Initial Applicable Subsequent Sale Date, the sum of the following: (a) the Servicing Spread Collections received during such Collection Period and remaining after payment of the Base Servicing Fee;
(b) all Sales Proceeds received during such Collection Period; (c) all Repurchase Prices received during such Collection Period; and (d) all other amounts payable by an Owner to Seller with respect to the Mortgage Servicing Rights for
Mortgage Loans, including any termination fees paid by the applicable Owner to Seller for terminating Seller as the servicer of any of the Mortgage Loans,
12
but for the avoidance of doubt, excluding all Ancillary Income and reimbursements received for advances and other out-of-pocket expenditures, if any, from the applicable Owner by Seller in
accordance with the Servicing Agreements.
Transaction Documents
: The Purchase and Sale Agreement (including any order,
bill of sale, assignment agreement or other transfer agreement related to the sale of the Mortgage Servicing Rights thereunder), the Owner Consents, the Current Spread Custodial Account Agreement, the Current Spread Custodial Account Control
Agreement, the Current Spread Reserve Account Agreement, the Current Spread Reserve Account Control Agreement, the Sale Agreements and the Future Spread Agreements.
UCC
: The Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.
Section 1.02
General Interpretive Principles
.
For purposes of this
Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this
Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender;
(b) Accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;
(c) References herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and other
subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Agreement;
(d) A reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions;
(e) The words “herein,” “hereof,” “hereunder” and other
words of similar import refer to this Agreement as a whole and not to any particular provision; and
(f) The term
“include” or “including” shall mean without limitation by reason of enumeration.
13
ARTICLE II
PROCEDURES; ITEMS TO BE DELIVERED
Section 2.01
Sale of
Current Excess Servicing Spread
.
Subject to, and upon the terms and conditions of this Agreement, on each Subsequent Sale
Date occurring more than ninety (90) days following the Sale Date, Seller will sell, transfer and assign to Purchaser, and Purchaser will acquire from Seller, all of Seller’s right, title and interest in and to the Current Excess Servicing
Spread and all proceeds thereof with respect to the related Mortgage Loans.
Section 2.02
Grant of Security
Interest
.
In order to secure Seller’s obligations to deliver the Current Excess Servicing Spread and perform its
obligations hereunder and under the Purchase and Sale Agreement, Seller hereby Grants to Purchaser a valid and continuing first priority and perfected Lien on and security interest in all of Seller’s right, title and interest in, to and under,
the Third Party Controlled Current Spread Custodial Account and the Current Spread Reserve Account, together with all amounts deposited therein from time to time and all cash and non-cash proceeds thereof, in each case, whether now owned or
existing, or hereafter acquired and arising (the “
Collateral
”).
Section 2.03
Items to be Delivered
on the Agreement Date
.
On the Agreement Date, each of Seller and Purchaser shall deliver or cause to be delivered duly
executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
(a) The Sale Agreements and all agreements, certificates, opinions and instruments required to be delivered under each Sale Agreement on the Agreement Date;
(b) The Future Spread Agreements and all agreements, certificates, opinions and instruments required to be delivered under each Future
Spread Agreement on the Agreement Date; and
(c) The executed Purchase and Sale Agreement.
14
Section 2.04
Items to be Delivered on the Initial Applicable Subsequent Sale
Date
.
(a) On the initial Subsequent Sale Date on which Current Excess Servicing Spread is sold by Seller to Purchaser in
accordance with
Section 2.01
(the “
Initial Applicable Subsequent Sale Date
”), subject to the satisfaction of the terms and conditions herein, each of Seller and Purchaser shall deliver or cause to be delivered duly
executed copies of the following documents to which they are a party or for which they are otherwise responsible:
(i) All agreements, certificates, opinions and instruments required to be delivered under each Sale Agreement and Future Spread Agreement on or prior to such Subsequent Sale Date;
(ii) All agreements, certificates, opinions and instruments required to be delivered under the executed Purchase and Sale
Agreement reasonably related to the transactions contemplated hereunder that are required to be delivered on or prior to such Subsequent Sale Date;
(iii) The executed Current Spread Custodial Account Agreement;
(iv) The executed Current Spread Custodial Account Control Agreement;
(v) The executed Current Spread Reserve Account Agreement;
(vi) The executed Current Spread Reserve Account Control Agreement;
(vii) An Opinion of Counsel of Seller reasonably acceptable to Purchaser regarding due authorization, authority, and
enforceability of the applicable Transaction Documents to which Seller is a party, and regarding no conflicts with other material Seller agreements;
(viii) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the characterization of the transfer of the Current Excess Servicing Spread from Seller to Purchaser as a true sale
for bankruptcy or receivership purposes, as applicable;
15
(ix) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser,
regarding the perfection of the assignment of Current Excess Servicing Spread to Purchaser and the security interests granted hereunder;
(x) A certificate of good standing of Seller dated as of a date within five (5) Business Days prior to the Initial Applicable Subsequent Sale Date to be delivered by Seller;
(xi) A secretary’s certificate of Seller attaching its organizational documents, board resolutions and incumbency
certificates;
(xii) An officer’s certificate of Seller that all conditions precedent to the purchase of
the Mortgage Servicing Rights under the Purchase and Sale Agreement have been satisfied (or if waived, such waiver has been approved by Purchaser);
(xiii) A duly executed corporate certificate of Seller required by
Section 9.07
dated as of the Initial Applicable Subsequent Sale Date;
(xiv) A duly executed corporate certificate of Purchaser required by
Section 10.05
dated as of the Initial
Applicable Subsequent Sale Date;
(xv) A certificate of good standing of Purchaser, dated as of a date within
five (5) Business Days prior to the Initial Applicable Subsequent Sale Date to be delivered by Purchaser; and
(xvi) A UCC-1 financing statement relating to the security interest of Purchaser in the Current Excess Servicing Spread, the Third Party Controlled Current Spread Custodial Account and the Current Spread
Reserve Account, in form and substance reasonably acceptable to Purchaser.
(b) On the Initial Applicable Subsequent Sale
Date, subject to the satisfaction of the terms and conditions herein, Seller shall provide Purchaser with copies of the following:
(i) Any amendments, modifications or restatements of the Purchase and Sale Agreement;
16
(ii) Each bill of sale, assignment agreement or other transfer agreement
pursuant to which Bank of America will transfer the Mortgage Servicing Rights to Seller pursuant to the Purchase and Sale Agreement; and
(iii) The executed Power of Attorney.
(c) On each Subsequent Sale Date, subject
to the satisfaction of the terms and conditions herein, each of Seller and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible:
(i) With respect to each related Mortgage Loan, either (i) an Owner Consent relating to the Servicing
Agreement for such Mortgage Loan or (ii) a final order entered by the bankruptcy court providing that such Owner Consent is not required;
(ii) Each bill of sale, assignment agreement or other transfer agreement pursuant to which Bank of America will transfer the Mortgage Servicing Rights to Seller; and
(iii) An Assignment Agreement with respect to such Subsequent Sale Date;
(iv) A preliminary Schedule of Mortgage Loans containing information with respect to the Mortgage Loans anticipated to be
included in this Agreement on such Subsequent Sale Date.
Section 2.05
Subsequent Sale Date Transactions
.
On each Subsequent Sale Date, subject to the satisfaction of the terms and conditions herein:
(a) The Parties shall execute and deliver the Assignment Agreement;
(b) Purchaser shall remit to Seller the Purchase Price; and
(c) Ownership of the Current Excess Servicing Spread shall be transferred to Purchaser.
17
ARTICLE III
PAYMENTS AND DISTRIBUTIONS
Section 3.01
Purchase
Price
.
MSR XIII LLC shall act as Purchaser for any Subsequent Sale Date occurring after 90 days following the Sale Date
with respect to purchases of current excess servicing spread relating to any Non-Agency Mortgage Loan pursuant to the Purchase and Sale Agreement until the Termination Date. For avoidance of doubt, the purchaser for the Sale Date and any Subsequent
Sale Date occurring within 90 days following the Sale Date will be MSR XII LLC and not MSR XIII LLC, and any related current excess servicing spread shall be sold pursuant to the Current Excess Servicing Spread Acquisition Agreement for Non-Agency
Mortgage Loans for MSR XII LLC and not this Agreement, and MSR XIII LLC shall not acquire any interest in such current excess servicing spread.
In full consideration for the purchase of the Current Excess Servicing Spread and the rights under the Future Spread Agreement for Non-Agency Mortgage Loans, and upon the terms and conditions of this
Agreement, Purchaser shall pay to Seller an amount (the “
Base Purchase Price
”) equal to the product of (x) the aggregate outstanding principal balance of the Mortgage Loans as of the Cut-Off Date, (y) the Purchase Price
Percentage and (z) the Current Excess Servicing Spread Percentage. The Base Purchase Price shall be allocated by the Parties on the related Subsequent Sale Date to reflect the consideration for the purchase of the Current Excess Servicing
Spread hereunder (the “
Purchase Price
”) and the consideration for the rights acquired by Purchaser under the Future Spread Agreement for Non-Agency Mortgage Loans.
The Base Purchase Price shall be payable by the Purchaser to the Seller as follows: (a) 50% of the estimated Base Purchase Price net
of the portion of the Deposit with respect to the applicable Servicing Agreements shall be payable on the related Subsequent Sale Date and (b) the portion of the Base Purchase Price with respect to the Mortgage Servicing Rights transferred on
such Servicing Transfer Date that has not been paid to Seller by Purchaser as of such date, including with respect to Mortgage Loans that have prepaid between either (x) the Subsequent Sale Date and the initial applicable Servicing Transfer
Date or (y) two Servicing Transfer Dates pertaining to the same Mortgage Servicing Rights, plus interest thereon at the Federal Funds Rate for the period from the Subsequent Sale Date to such Servicing Transfer Date or between such Servicing
Transfer Dates, shall be payable on the Servicing Transfer Date.
On the Initial Applicable Subsequent Sale Date, MSR XIII LLC
shall pay any unused portion of the Deposit to MSR XII LLC. On the Termination Date, any unused portion of the Deposit shall be paid by Seller to Purchaser.
The Seller shall deliver the Schedule of Mortgage Loans no later ten (10) Business Days after each Subsequent Sale Date following the Initial Applicable Subsequent Sale Date. In the event there is an
adjustment and reconciliation of the Seller’s purchase price pursuant to the terms of Section 3.01(d) of the Purchase and Sale Agreement, the Base Purchase Price shall be subject to a corresponding adjustment and any adjustment amounts
(including interest) shall be paid by Purchaser or the Seller, as applicable, to the other party within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
18
Section 3.02
Payments by Purchaser
.
(a) Payments shall be made by Purchaser to Seller by wire transfer of immediately available funds to an account designated by Seller.
(b) If, subsequent to the payment of the Purchase Price or the payment of any amounts due hereunder to either party, the
outstanding principal balance of any Mortgage Loan is found to be in error, or if for any reason the Purchase Price or such other amounts is found to be in error, the party benefiting from the error shall pay an amount sufficient to correct and
reconcile the Purchase Price or such other amounts and shall provide a reconciliation statement and other such documentation to reasonably satisfy the other party concerning the accuracy of such reconciliation. Such amounts shall be paid by the
proper party within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
Section 3.03
Accounts
.
(a)
Lockbox Account
. Seller shall inform the Mortgagors of Mortgage Loans to remit their mortgage payments due on or after the Servicing Transfer Date to the Lockbox Account. All amounts on deposit
in the Lockbox Account will be maintained and applied in accordance with the Servicing Agreement. Payments of all Servicing Spread Collections received on and after the Servicing Transfer Date shall be transferred from the Lockbox Account to the
Third Party Controlled Current Spread Custodial Account within one Business Day of receipt and identification thereof and in any event, within two Business Days of receipt thereof. If Seller receives any Servicing Spread Collections not remitted to
the Lockbox Account, it shall hold such funds in trust for the benefit of the Purchaser and deposit such amounts to the Third Party Controlled Current Spread Account within two Business Days of receipt thereof. Any deferred servicing fees purchased
by the Seller with respect to the Mortgage Loans under the Purchase and Sale Agreement shall only be retained by Seller after all Servicing Spread Collections with respect to the applicable Mortgage Loan for the related Collection Period (and any
unpaid Servicing Spread Collections from prior Collection Periods) have been remitted to the Third Party Controlled Current Spread Custodial Account.
(b)
Third Party Controlled Current Spread Custodial Account
.
(i) The Third Party Controlled Current Spread Custodial Account will be established with Wells Fargo Bank, National Association or with such other third party custodian or trustee selected by Purchaser,
for the sole purpose of receiving and disbursing all Servicing Spread Collections, Servicing Agreement termination payments with respect to the Mortgage Loans, Sales
19
Proceeds and Repurchase Prices. The Third Party Controlled Current Spread Custodial Account will be established pursuant to the Current Spread Custodial Account Control Agreement with respect to
which Purchaser is an Entitlement Holder with Control. So long as permitted by the Current Spread Custodial Account Control Agreement, Seller may direct the disposition of funds in the Third Party Controlled Current Spread Custodial Account strictly
in accordance with the Priority of Payments. Upon any material breach of a representation, warranty or covenant by Seller hereunder or during the occurrence and continuance of a Current Spread Reserve Account Deposit Event, Purchaser may elect to
exercise Control over the Third Party Controlled Current Spread Custodial Account. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Third
Party Controlled Current Spread Custodial Account.
(ii) Seller shall inform each Owner to remit the
applicable portion of any Servicing Agreement termination payments payable after the related Subsequent Sale Date directly to the Third Party Controlled Current Spread Custodial Account. Any termination payment to be directed to the Third Party
Controlled Current Spread Custodial Account shall be equal to the pro rata amount by which the Mortgage Loans affected by such termination bear to all mortgage loans of Seller affected by such termination, based upon the method in which such
termination payments are calculated in accordance with the applicable Servicing Agreement.
(iii) Seller shall
direct each payer of Sales Proceeds to remit such payments directly to the Third Party Controlled Current Spread Custodial Account.
(iv) Seller shall direct Bank of America to remit (i) Servicing Spread Collections received by it prior to the Servicing Transfer Date and (ii) any Repurchase Price under the Purchase and Sale
Agreement, directly to the Third Party Controlled Current Spread Custodial Account.
(v) If Seller receives
any amounts required to be deposited into the Third Party Controlled Current Spread Custodial Account in error, Seller shall promptly remit such funds to the Third Party Controlled Current Spread Custodial Account.
(c)
Current Spread Reserve Account
. The Current Spread Reserve Account will be established with Wells Fargo Bank, National
Association or with such other third party custodian or trustee selected by Purchaser. The Current Spread Reserve Account will be established pursuant to the Current Spread Reserve Account Control Agreement with respect to which Purchaser is an
Entitlement Holder with Control. So long as permitted by the Current
20
Spread Reserve Account Control Agreement, Seller may direct the disposition of funds in the Current Spread Reserve Account strictly in accordance with
Section 3.05
. Seller agrees to
take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Current Spread Reserve Account.
If at any time Seller’s Consolidated Tangible Net Worth falls below the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date hereof by
Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries or if Seller (considered together with its consolidated subsidiaries) defaults in any indebtedness in excess of $10,000,000 (individually or in the
aggregate) (each, a “
Current Spread Reserve Account Deposit Event
”), Seller shall immediately notify Purchaser in writing that a Current Spread Reserve Account Deposit Event has occurred. On each Distribution Date upon which a
Current Spread Reserve Account Deposit Event has occurred and is continuing, Seller shall be required to transfer funds in the Third Party Controlled Current Spread Custodial Account to the Current Spread Reserve Account in accordance with the
Priority of Payments until the amount of funds in the Current Spread Reserve Account is equal to the Current Spread Reserve Account Required Amount. The “
Current Spread Reserve Account Required Amount
” is equal to 25% of the fair
market value as of the date the Current Spread Reserve Account Deposit Event that is then-continuing first occurred of the Total Servicing Spread expected to be paid over the expected remaining life of the Mortgage Loans (the “
Remaining
Expected Total Servicing Spread
”) determined in accordance with the following paragraph. Seller shall immediately notify Purchaser in writing if a Current Spread Reserve Account Deposit Event is no longer continuing. Any funds in the
Current Spread Reserve Account in excess of the Current Spread Reserve Account Required Amount shall be released to Seller.
For purposes of determining the fair market value of the Remaining Expected Total Servicing Spread, Purchaser shall submit its claim for
determination of the fair market value of the Remaining Expected Total Servicing Spread, together with such back-up information it deems appropriate to justify such fair market value (which value shall be considered the fair market value of the
Remaining Expected Total Servicing Spread for purposes of calculating the Current Spread Reserve Account Required Amount until the final determination of such fair market value in accordance with this paragraph). Within five (5) Business Days
of Seller’s receipt of such determination, Seller shall notify Purchaser in writing of its acceptance or any objection to such determination of such fair market value, and if Seller objects to such determination, such notice shall include its
own determination of such fair market value and any back-up information as it deems appropriate to justify such fair market value (an “
Objection Notice
”). In the event an Objection Notice is delivered, the parties shall negotiate in
good faith a resolution to such objection. In the event that Seller and Purchaser are unable to resolve such objection within five (5) Business Days of the delivery of such Objection Notice, Seller and Purchaser shall appoint a mutually
acceptable nationally recognized valuation expert to determine such fair market value of the Remaining Expected Total Servicing Spread. The determination of such valuation expert shall be binding on Seller and Purchaser and the fees of such
valuation expert shall be borne by Seller.
21
Section 3.04
Priority of Payments
.
On each Business Day, subject to the terms and conditions of the Current Spread Custodial Account Control Agreement, Seller (or, after the
delivery of an access termination notice pursuant to the Current Spread Custodial Account Control Agreement, Purchaser) shall direct the Bank to apply the monies in the Third Party Controlled Current Spread Custodial Account in the following order
of priority (the “
Priority of Payments
”), in every case, after giving effect to each prior item in the Priority of Payments on such Distribution Date:
(a)
first
, from amounts in the Third Party Controlled Current Spread Custodial Account attributable to Servicing Agreement termination payments made by an Owner with respect to any Mortgage Loans,
pro
rata
, (A) the Current Excess Servicing Spread Percentage of such termination payments to Purchaser, and (B) the Retained Servicing Spread Percentage of such termination payments to Seller;
provided
, that
(I) prior to the distribution to Purchaser of any termination payments pursuant to
clause (A)
, such termination payments shall be applied
first
, to the payment to Seller of any Purchaser Enforcement Expenses then due and payable
and
then
, to the payment of any indemnity payments then due and payable, to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to Seller of any termination payments pursuant to
clause (B)
,
such termination payments shall be applied
first
, to the payment of any Seller Enforcement Expenses then due and payable,
second
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
third
, for deposit to the Current Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Current Spread Reserve Account to equal the Current Spread Reserve Account
Required Amount;
(b)
second
, on any Business Day from and including the first Business Day of a calendar month to but
excluding the Distribution Date in such calendar month, at the option of Seller, the Base Servicing Fee payable with respect to a prior Collection Period for the Mortgage Loans to Seller; provided however, that, to the extent that (i) the
Seller is not permitted or is otherwise unable to advance servicing fees relating to the Total Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing Agreement does not
permit payment of servicing fees from general collections, and (iii) the related Servicing Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Current Spread Custodial
Account relating to the affected Mortgage Loans shall be made pursuant to clause (d) below prior to this clause (b);
(c)
third
, on each Distribution Date, to the extent not previously paid to Seller in accordance with
Section 3.04(b)
, any accrued and unpaid Base Servicing Fee to Seller; provided however, that, to the extent that (i) the Seller
is not permitted or is otherwise unable to advance servicing fees relating to the Total Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing Agreement does not permit
payment of servicing fees from general collections, and (iii) the related Servicing Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Current Spread Custodial Account
relating to the affected Mortgage Loans shall be made pursuant to clause (d) below prior to this clause (c);
22
(d)
fourth,
on each Distribution Date,
pro rata
, (A) to Purchaser, any
Current Excess Servicing Spread for the prior Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 3.04(a)
); and (B) to Seller, any Retained Servicing Spread for the prior
Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 3.04(a)
);
provided
, that (I) prior to the distribution to Purchaser of any Current Excess Servicing Spread pursuant
to
clause (A)
, the Current Excess Servicing Spread shall be applied
first
, to the payment to Seller of any Purchaser Enforcement Expenses then due and payable and
then
, to the payment of any indemnity payments then due and
payable to a Seller Indemnitee pursuant to
Section 11.02
, and (II) prior to the distribution to Seller of any Retained Servicing Spread pursuant to
clause (B)
, the Retained Servicing Spread shall be applied
first
, to the
payment of any Seller Enforcement Expenses then due and payable,
second
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
third
, for deposit to
the Current Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Current Spread Reserve Account to equal the Current Spread Reserve Account Required Amount; and
(e)
fifth
, on each Distribution Date, to Seller, any other amounts remaining on deposit in the Third Party Controlled Current
Spread Custodial Account.
All payments to Purchaser or Seller shall be made by wire transfer of immediately available federal
funds to an account designated by Purchaser or Seller, as applicable.
Section 3.05
Withdrawals from the Current
Spread Reserve Account
.
On any Business Day, at the instruction of Purchaser, Seller shall direct the Bank to apply funds
in the Current Spread Reserve Account, if any, to the payment of indemnity payments payable to a Purchaser Indemnitee pursuant to
Section 11.01
. If on any Business Day a Current Spread Reserve Account Deposit Event is not then continuing
and all outstanding indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller may direct the Bank to distribute any remaining funds in the Current Spread Reserve Account to, or as directed by, Seller. If there are any funds
remaining in the Current Spread Reserve Account after the Current Excess Servicing Spread and all indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller shall direct the Bank to distribute such remaining funds to, or as
directed by, Seller.
Section 3.06
Payment to Seller of Base Servicing Fee
.
Seller shall be entitled to payment of the Base Servicing Fee only to the extent funds are available therefor in the Third Party
Controlled Current Spread Custodial Account in accordance with the Priority of Payments. Under no circumstances shall Purchaser be liable to Seller for payment of the Base Servicing Fee. In the event servicing of the Mortgage Loans is transferred
23
to sub-servicers for any reason, the servicing fees and expenses of such sub-servicers shall be paid by Seller and in no event will the amount of Servicing Spread Collections or termination
payments otherwise allocable to the Current Excess Servicing Spread be reduced due to the payment of sub-servicing fees and expenses.
Section 3.07
Intent and Characterization
.
(a) Seller and Purchaser
intend that the sale of the Current Excess Servicing Spread pursuant to this Agreement constitutes a valid sale of such Current Excess Servicing Spread from Seller to Purchaser, conveying good title thereto free and clear of any Lien, and that the
beneficial interest in and title to the Current Excess Servicing Spread not be part of Seller’s estate in the event of the bankruptcy of Seller. Seller and Purchaser intend and agree to treat the transfer and assignment of the Current Excess
Servicing Spread as an absolute sale for tax purposes, and as an absolute and complete conveyance of title for property law purposes. Except for financial accounting purposes, neither party intends the transactions contemplated hereby to be
characterized as a loan from Purchaser to Seller.
(b) In the event (but only in the event) that the conveyance of the Current
Excess Servicing Spread is characterized by a court or governmental authority as security for a loan rather than a sale, Seller will be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its
right, title and interest in, to and under the Current Excess Servicing Spread and all proceeds thereof as security for a loan in an amount equal to the Purchase Price.
ARTICLE IV
[RESERVED]
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as of the Agreement Date, the Sale Date and as of each Subsequent Sale Date (or as of the date
specified below, as applicable):
Section 5.01
Due Organization and Good Standing
.
Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Seller is qualified to transact business in each jurisdiction in which such qualification is deemed necessary to service the Mortgage Loans. Seller has, in full force and effect (without notice of possible suspension, revocation or
24
impairment), all required permits, approvals, licenses, and registrations to conduct all activities in all states in which its activities with respect to the Mortgage Loans or the Mortgage
Servicing Rights require it to be licensed, registered or approved in order to service the Mortgage Loans and own the Mortgage Servicing Rights, unless the failure to obtain such permits, approvals, licenses and registrations would not reasonably be
expected to have a material adverse effect on Seller’s ability to perform its obligations under this Agreement or the other Transaction Documents to which it is a party.
Section 5.02
Authority and Capacity
.
Seller has all requisite limited
liability company power, authority and capacity to enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this
Agreement and each other Transaction Document to which Seller is a party and the consummation of the transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary corporate action. This Agreement
constitutes, and each other applicable Transaction Document to which Seller is a party constitutes or will constitute, a valid and legally binding agreement of Seller enforceable in accordance with its terms, and no offset, counterclaim or defense
exists to the full performance by Seller of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally
and by general equity principles.
Section 5.03
Title to the Mortgage Servicing Rights; Owner Consents
(a) As of the Subsequent Sale Date, Seller will be the lawful owner of the related Mortgage Servicing Rights, will be responsible for the
maintenance of the Related Escrow Accounts, and will have the sole right and authority to transfer the Current Excess Servicing Spread as contemplated hereby. The transfer, assignment and delivery of the Current Excess Servicing Spread shall be free
and clear of any and all claims, charges, defenses, offsets, Liens and encumbrances of any kind or nature whatsoever.
(b) As
of the Subsequent Sale Date, Seller has obtained all related Owner Consents or, with respect to any Servicing Agreement relating to the Mortgage Loans for which an Owner Consent has not been obtained, a final order entered by the bankruptcy court
providing that such Owner Consent is not required.
25
Section 5.04
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document that has been executed by Seller, compliance
with the terms hereof and thereof and the consummation of the transactions contemplated hereby and thereby did not, and will not, violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional
approval under its certificate of formation or limited liability company agreement, any instrument or agreement to which it is a party or by which it is bound or which affects the Current Excess Servicing Spread, or any state or federal law, rule or
regulation or any judicial or administrative decree, order, ruling or regulation applicable to it or to the Current Excess Servicing Spread.
Section 5.05
No Accrued Liabilities
.
There are no accrued liabilities
of Seller with respect to the Mortgage Loans or the Mortgage Servicing Rights or circumstances under which such accrued liabilities will arise against Purchaser as purchaser of the Current Excess Servicing Spread.
Section 5.06
Seller/Servicer Standing
.
Seller is qualified to act as servicer under, and meets all eligibility criteria required by, each applicable Servicing Agreement, and has adequate resources to complete the transactions
contemplated hereby on the conditions stated herein. No event has occurred, including but not limited to a change in insurance coverage, which would make the Seller unable to comply with any such requirements or which would require
notification to the applicable Owner. Furthermore, if at any time prior to the termination of this Agreement, the Seller is unable to comply with any eligibility requirements under any Servicing Agreement, it shall immediately notify the
Purchaser.
Section 5.07
MERS Membership
.
Seller is a member in good standing under the MERS system.
Section 5.08
Owner Set-off Rights
.
Seller has no actual notice, including any notice received from an Owner, or any reason to
believe, that, other than in the normal course of Seller’s business, any circumstances exist that would result in Seller being liable to an Owner for any amount due by reason of: (i) any breach of servicing obligations or breach of
mortgage selling warranty to such Owner under servicing agreements relating to Seller’s entire servicing portfolio for such Owner (including any unmet mortgage repurchase obligation), (ii) any unperformed obligation with respect to
mortgage loans that Seller is servicing for such Owner under the regular servicing option or other mortgages subject to recourse agreements, (iii) any loss or damage to such Owner by reason of any inability to transfer to a purchaser of the
servicing rights Seller’s selling and servicing representations, warranties and obligations, or (iv) any other unmet obligations to such Owner under a servicing contract relating to Seller’s entire servicing portfolio with such Owner.
26
Section 5.09
Ability to Perform; Solvency
.
Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this
Agreement. Seller is Solvent and the sale of the Current Excess Servicing Spread will not cause Seller to become insolvent. The sale of the Current Excess Servicing Spread is not undertaken to hinder, delay or defraud any of the creditors of Seller.
The consideration received by Seller upon the sale of the Current Excess Servicing Spread constitutes fair consideration and reasonably equivalent value therefor.
Section 5.10
Material Documents
.
Seller has provided Purchaser with
executed copies of all material agreements and documents, and any amendments thereto, relating to Seller’s acquisition of the Mortgage Servicing Rights and the servicing of the Mortgage Loans.
Section 5.11
Obligations with Respect to Origination
.
Seller shall remain liable for all obligations with respect to the origination of each Mortgage Loan and, if applicable, for all
obligations with respect to the sale of such Mortgage Loan to the applicable Owner.
Section 5.12
No Actions
.
There have not been commenced or, to the best of Seller’s knowledge, threatened any action, suit or proceeding which will
likely materially and adversely affect the consummation of the transactions contemplated by any Transaction Document.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE
LOANS AND SERVICING
As further inducement to Purchaser to enter
into this Agreement, Seller represents and warrants to Purchaser, as of the Agreement Date and each Subsequent Sale Date on and after the Initial Applicable Subsequent Sale Date (or as of the date specified below, as applicable):
27
Section 6.01
Servicing Agreements; Applicable Laws
.
The originator of the Mortgage Loan and each prior owner of the Mortgage Servicing Rights has each performed its obligations in all
material respects in accordance with the terms of the related Mortgage Note, Mortgage, Servicing Agreements and Applicable Law.
Section 6.02
Related Escrow Accounts
.
All Related Escrow Accounts are being, and have been, maintained in accordance with Applicable Law and in accordance with the Servicing Agreements and the terms of the related Mortgages and other Mortgage
Loan documents; and, except as to payments which are past due under Mortgage Notes, all balances required by the Mortgages or other Mortgage Loan Documents to be paid to Seller for the account of the Mortgagors are on deposit in the appropriate
Related Escrow Account.
Section 6.03
Accuracy of Servicing Information
.
The information in the Data Tape dated as of November 30, 2012 is true and correct in all material respects as of the date specified
therein; provided that if there is no date specified in the Data Tape, as of November 30, 2012.
Section 6.04
No
Purchaser Responsibility
.
Purchaser shall have no responsibility, liability or other obligation whatsoever under any
Servicing Agreement or with respect to any Mortgage Loan, or to make any advance thereunder, or to pay any servicing fees.
Section 6.05
Location of Credit Files
.
All of the Mortgage Loan Documents are or upon delivery by Bank of America will be held by Custodians, or if held by the Seller, in the locations specified in
Exhibit E
, unless temporarily removed
for enforcement purposes in the normal course of servicing. Seller will notify Purchaser in writing of any changes in locations of the Mortgage Loan Documents held by the Seller in
Exhibit E
.
Section 6.06
Representations Concerning the Current Excess Servicing Spread
.
(a) Seller has not assigned, pledged, conveyed, or encumbered the Current Excess Servicing Spread to any other Person and immediately
prior to the sale of the Current Excess Servicing Spread on the related Subsequent Sale Date, Seller was the sole owner of the Current Excess Servicing Spread and had good and marketable title thereto, free and clear of all Liens, and no Person,
other than Purchaser, has any Lien on the Current Excess Servicing Spread. No security agreement, financing statement, equivalent security or lien instrument or
28
continuation statement covering all or any part of the Current Excess Servicing Spread which has been signed by Seller or which Seller has authorized any other Person to sign or file or record,
is on file or of record with any public office, except such as may have been terminated or filed by or on behalf of Purchaser.
(b) The sale and grant of a security interest by Seller to Purchaser of and on the Current Excess Servicing Spread does not and will not
violate any Requirement of Law, the effect of which violation is to render void or voidable such assignment.
(c) As
contemplated under
Section 3.07(b)
, upon the filing of financing statements on Form UCC-1 naming Purchaser as “Secured Party” and Seller as “Debtor”, and describing the Current Excess Servicing Spread, in the
jurisdictions and recording offices listed on
Exhibit I
attached hereto, the sale and security interests granted hereunder in the Current Excess Servicing Spread will constitute perfected first priority security interests under the UCC in all
right, title and interest of Purchaser in, to and under the Current Excess Servicing Spread.
(d) Purchaser has and will
continue to have the full right, power and authority to pledge the Current Excess Servicing Spread, and the Current Excess Servicing Spread may be further assigned without any requirement.
(e) Each Servicing Agreement constitutes an Eligible Servicing Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to
Seller to enter into this Agreement, Purchaser represents and warrants to Purchaser as of the Agreement Date and each Subsequent Sale Date on and after the Initial Applicable Subsequent Sale Date (or as of the date specified below, as applicable):
Section 7.01
Due Organization and Good Standing
.
Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Purchaser is qualified to transact business in each jurisdiction in which such qualification is deemed necessary.
Section 7.02
Authority and Capacity
.
Purchaser has all requisite limited liability company power, authority and capacity to enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations
required of it hereunder and thereunder. The execution and delivery of
29
this Agreement and each other Transaction Document to which it is a party and the consummation of the transactions contemplated hereby and thereby have each been duly and validly authorized by
all necessary limited liability company action. This Agreement constitutes, and each other applicable Transaction Document to which Purchaser is a party constitutes or will constitute, a valid and legally binding agreement of Purchaser enforceable
in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Purchaser of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and
similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
Section 7.03
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party by Purchaser, its compliance with the terms hereof and thereof and the consummation of
the transactions contemplated hereby and thereby will not violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited liability company
agreement, any instrument or agreement to which it is a party or by which it is bound, or any state or federal law, rule or regulation or any judicial or administrative decree, order, ruling or regulation applicable to it, in each case which
violation, conflict, breach or requirement would reasonably be expected to have a material adverse effect on Purchaser’s ability to perform its obligations under this Agreement and any other Transaction Document to which it is a party.
Section 7.04
Sophisticated Investor
.
Purchaser is a sophisticated investor and its decision to acquire the Current Excess Servicing Spread is based upon Purchaser’s own independent experience, knowledge, due diligence and evaluation of
this transaction. Purchaser has relied solely on such experience, knowledge, due diligence and evaluation and has not relied on any oral or written information provided by Seller other than the representations and warranties made by Seller herein.
Section 7.05
No Actions
.
There shall not have been commenced or, to the best of Purchaser’s knowledge, threatened any action, suit or proceeding against the Purchaser that will likely materially and adversely affect the
consummation of the transactions contemplated hereby.
30
ARTICLE VIII
SELLER COVENANTS
Seller covenants and agrees as follows:
Section 8.01
Servicing Obligations
.
(a) Seller shall (or, prior to the Servicing Transfer Date, shall cause the Interim Servicer to,) pay, perform and discharge all liabilities and obligations relating to the Servicing, including all
liabilities and obligations under the Mortgage Loan Documents, Applicable Law and the Servicing Agreements; and shall pay, perform and discharge all the rights, obligations and duties with respect to the Related Escrow Accounts as required by the
Servicing Agreements, the Mortgage Loan Documents, all Applicable Law and in accordance with the Purchase and Sale Agreement.
(b) Under no circumstances shall Purchaser be responsible for the Servicing acts and omissions of Seller or any other servicer or any
originator of the Mortgage Loans, or for any servicing related obligations or liabilities of any servicer in the Servicing Agreements or of any Person under the Mortgage Loan Documents, or for any other obligations or liabilities of Seller or Bank
of America.
(c) Any deferred servicing fees purchased by the Seller with respect to the Mortgage Loans under the Purchase and
Sale Agreement shall only be retained by Seller after all Servicing Spread Collections with respect to the applicable Mortgage Loan for the related Collection Period (and any unpaid Servicing Spread Collections from prior Collection Periods) have
been remitted to the Third Party Controlled Current Spread Custodial Account.
(d) Subject to a nonrecoverability
determination made pursuant to the related Servicing Agreement, the Seller shall advance the full amount of principal and interest on delinquent Mortgage Loans for each Collection Period, including the related servicing fee.
(e) Upon termination of any Servicing Agreement, Seller shall remain liable to Purchaser and the applicable Owner for all liabilities and
obligations incurred by the servicer or its designee while Seller or its designee was acting as the servicer thereunder.
(f)
Seller shall conduct quality control reviews of its servicing operations in accordance with industry standards.
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Section 8.02
Cooperation ; Further Assurances
.
Seller shall cooperate with and assist Purchaser, as reasonably requested, in carrying out the purposes of this Agreement. Seller will
cooperate and assist Purchaser, as reasonably requested and at the reasonable expense of Purchaser (except as otherwise provided in
Section 12.01
), in obtaining consents from any Owner as may be required or advisable to assign, transfer,
deliver, hypothecate, pledge, subdivide, finance or otherwise deal with the Current Excess Servicing Spread. If Seller is terminated under any Servicing Agreement, Seller shall cooperate fully and at its own expense in transferring such Servicing.
If Purchaser assigns all or any portion of the Current Excess Servicing Spread or its other rights under this Agreement to a Third Party Assignee, Seller will cooperate and assist any Third Party Assignee in drafting and entering into a Third Party
Current Spread Agreement in accordance with
Section 12.16
.
Section 8.03
Financing Statements
.
Seller hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing
statements, in any jurisdictions and with any filing offices as Purchaser may determine, in its sole discretion, are necessary or advisable to perfect the sale of the Current Excess Servicing Spread and the security interests granted to Purchaser in
connection herewith. Seller agrees to execute financing statements in form reasonably acceptable to Purchaser and Seller at the request of Purchaser in order to reflect Purchaser’s interest in the Current Excess Servicing Spread, the Third
Party Controlled Current Spread Custodial Account and the Current Spread Reserve Account.
Section 8.04
Supplemental
Information
.
From time to time after the Subsequent Sale Date, Seller promptly shall furnish Purchaser such incidental
information, which is reasonably available to Seller, supplemental to the information contained in the documents and schedules delivered pursuant to this Agreement, as may reasonably be requested to monitor performance of the related Mortgage Loans
and the payment of the related Current Excess Servicing Spread.
Section 8.05
Access to Information
.
From time to time, at such times as are reasonably convenient to Seller, Purchaser or its designees may conduct audits or visit and
inspect (a) any of the Mortgage Loans or places where the Credit Files are located, to examine the Credit Files, internal controls and procedures maintained by Seller and its agents, and take copies and extracts therefrom, and to discuss
Seller’s affairs with its officers, employees and, upon notice to Seller, independent accountants. Seller hereby authorizes such officers, employees and independent accountants to discuss with Purchaser the affairs of Seller and (b) the
Seller’s servicing facilities for the purpose of satisfying the Purchaser that Seller, has the ability to service the Mortgage Loans related to Mortgage Servicing Rights in accordance with the standards set forth in the applicable Servicing
Agreement. Any audit provided for herein will be conducted in accordance with Seller’s rules respecting safety and security on its premises, in accordance with applicable privacy and confidentiality laws and without materially disrupting
operations.
32
Section 8.06
Home Affordable Modification Program
.
With respect to any Mortgage Loans that have been modified or that are or will be in a modification trial period as part of the U.S.
Department of the Treasury’s Home Affordable Modification Program (“
HAMP
”) (such Mortgage Loans, the “
HAMP Loans
”), Seller represents and warrants that it will continue to service such HAMP Loan in accordance
with the HAMP terms and will ensure the timely compliance and filing of any appropriate HAMP documentation with the applicable regulator.
Section 8.07
Distribution Date Data Tapes and Reports
.
Seller shall
deliver the following to Purchaser two Business Days prior to each Distribution Date:
(a) An Electronic Data File in form and
substance acceptable to Purchaser containing, for each Mortgage Loan, principal, interest and Servicing Spread Collections, and delinquency status (i.e. 30, 60, 90, FCL, REO) as of the last day of the prior Collection Period;
(b) A Summary Activity Report with respect to the Mortgage Loans with respect to the prior Collection Period containing:
(i) aggregate beginning principal balance as of the first and last date of the Collection Period,
(ii) aggregate regular principal collected,
(iii) aggregate noncash principal,
(iv) aggregate interest collected,
(v) aggregate liquidation principal,
(vi) aggregate curtailments,
(vii) liquidations,
33
(viii) short sales,
(ix) (1) for each Mortgage Loan, the principal balance, the applicable servicing spread, the final maturity date, the
mortgage interest rate, the loan-to-value ratio and the FICO score, and (2) for each Mortgage Loan that was refinanced by a lender other than Seller or an affiliate thereof, to the extent such information is known to Seller in the ordinary
course of business and the collection and delivery of such information does not impose any additional and undue burden on Seller, the name of such lender and the mortgage interest rate of the newly originated residential mortgage loan;
(c) A Delinquency Report with respect to the Mortgage Loans containing:
(i) The aggregate outstanding principal balance of the Mortgage Loans and percentages of the aggregate outstanding
principal balance of the Mortgage Loans in each of the following categories as of the last day of the prior Collection Period:
(1) Current Mortgage Loans,
(2) 0-29 days delinquent,
(3) 30-59 days delinquent,
(4) 60-89 days delinquent,
(5) 90 days or more delinquent,
(6) Mortgage Loans in
Foreclosure,
(7) Mortgage Loans with respect to which the related Mortgaged Properties have become real
estate owned properties, and
(8) Mortgage Loans in which the Mortgagor is in bankruptcy;
34
(ii) For each of the above categories, a roll report showing the migration
of Mortgage Loans in such category from the last day of the second prior Collection Period;
(d) A Disbursement Report for
such Distribution Date containing:
(i) The Servicing Spread Collections for the prior Collection Period,
(ii) The Base Servicing Fee paid to Seller,
(iii) The amount of the Current Excess Servicing Spread paid to Purchaser,
(iv) The amount of funds, if any, transferred to the Current Spread Reserve Account,
(v) The amount of Purchaser Indemnitees, if any, paid from each of the Third Party Controlled Current Spread Custodial
Account or the Current Spread Reserve Account, and
(vi) The amount of funds paid to Seller from the Current
Spread Reserve Account.
Section 8.08
Financial Statements and Officer’s Certificates
.
(a) If Seller’s financial statements are not filed with the U.S. Securities and Exchange Commission and are not publicly available,
Seller shall deliver to Purchaser copies of Seller’s most recent audited quarterly financial statements within 45 days of the end of each of Seller’s fiscal quarters and its most recent audited annual financial statements within 90 days of
the end of each of Seller’s fiscal years.
(b) (b) Within 45 days of the end of each of Seller’s fiscal quarters,
Seller shall deliver to Purchaser a certificate from a duly authorized officer of Seller certifying (i) whether or not Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds
from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries (and shall provide a calculation of its determination of its Consolidated Tangible Net Worth) and
(ii) whether or not Seller (considered together with its consolidated subsidiaries) is in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
35
Section 8.09
Monthly Management Calls
.
Within five Business Days after each Distribution Date, Seller shall make its management team and other appropriate officers and employees
available to Purchaser to discuss by telephone the performance of the Mortgage Loans and the performance of the parties under the Transaction Documents.
Section 8.10
Timely Payment of Owner Obligations
.
Seller shall pay
all of its obligations to the Owners in a timely manner so as to avoid exercise of any right of set-off by any Owner against Seller.
Section 8.11
Servicing Agreements
.
After the Serving Transfer Date,
Seller will service the Mortgage Loans in accordance with Accepted Servicing Practices and will perform its obligations in all material respects in accordance with the Servicing Agreements and Applicable Law. In particular, after the Servicing
Transfer Date, Seller shall comply with any advancing obligation under the Servicing Agreements. Without the express written consent of Purchaser (which consent may be withheld in its absolute discretion), Seller shall not (a) cancel, terminate
or amend any Mortgage Servicing Rights, (b) expressly provide any required consent to any termination, amendment or modification of any Servicing Agreements either verbally or in writing, (c) expressly provide any required consent to any
termination, amendment or modification of any other servicing agreements or enter into any other agreement or arrangement with any Owner that may be reasonably material to Purchaser either verbally or in writing or (d) take any other action in
connection with any such Servicing Agreement that would impair in any material respect the value of the interests or rights of the Purchaser hereunder. Seller shall conduct its business and perform its obligations under the Servicing Agreements in a
manner such that no Owner will have cause to terminate any Servicing Agreement. Notwithstanding the foregoing, in no event will the prohibitions contained in this
Section 8.11
apply to any amendments or modifications of the Servicing
Agreements applicable to Mortgage Loans owned by Seller which do not affect the Current Excess Servicing Spread with respect to such Mortgage Loans and are not reasonably material to the Purchaser.
The Seller shall monitor the obligations of the Interim Servicer to service and administer the Mortgage Loans in accordance with the
terms of the Servicing Agreement.
36
Section 8.12
Transfer of Mortgage Servicing Rights
.
If Seller intends to assign, transfer or sell any of its Mortgage Servicing Rights to a replacement servicer, to the extent permitted by
applicable law, (a) Seller shall consult with Purchaser and Purchaser shall participate in the assignment, transfer and sale of such Mortgage Servicing Rights, and (b) Seller shall obtain the written consent of Purchaser, granted by the
Purchaser in its sole discretion, prior to any assignment, transfer or sale thereof.
Section 8.13
Consents to
Transaction Documents
.
Seller shall not terminate, amend, amend and restate, modify or waive any conditions or provisions
of any Transaction Document without the express written consent of Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned.
Section 8.14
Accounts
.
Seller shall inform the Mortgagors of Mortgage
Loans at its own expense to remit their mortgage payments to the Lockbox Account, and any change in such instructions shall only be permitted with the express written consent of Purchaser.
Section 8.15
Notification of Certain Events
.
Seller shall promptly notify Purchaser of any event which, with the passage of time, could reasonably be expected to result in a termination of any servicing agreement between Seller and any Owner. Seller
shall provide Purchaser with copies of any notices from any Owner of any breach, potential breach, default or potential default by Seller under any servicing agreement between Seller and such Owner, and with copies of any notices from any Owner of
any termination, potential termination or threatened termination of any servicing agreement entered into between Seller and such Owner. Seller shall promptly forward copies of any material notices received from any Owner or from any Governmental
Authority with respect to the Mortgage Loans. Seller shall provide Purchaser with (a) copies of all amendments to the Transaction Documents, the Servicing Agreements and the agreements relating to Seller’s acquisition of the Mortgage
Servicing Rights, and (b) copies of any other agreements Seller enters into with any Owner that may be reasonably material to Purchaser, in each case, promptly after execution thereof.
Section 8.16
Financing; Pledge of Current Excess Servicing Spread
.
Seller shall not pledge, obtain Seller financing for, or otherwise permit any Lien of any creditor of Seller to exist on, any portion of
the Servicing Spread Collections without the prior written consent of Purchaser. Seller’s financial statements shall contain footnotes indicating that the Current Excess Servicing Spread has been sold, and Seller does not maintain any ownership
interest therein.
Section 8.17
Existence, etc
.
Seller shall:
37
(a) preserve and maintain its legal existence, good standing and all of its material
licenses required to service the Mortgage Loans;
(b) comply with the requirements of all Applicable Laws, rules, regulations
and orders of Governmental Authorities (including, truth in lending and real estate settlement procedures) if failure to comply with such requirements could be reasonably likely (either individually or in the aggregate) to have a material adverse
effect on its ability to perform its obligations hereunder or under any other Transaction Document;
(c) keep adequate records
and books of account, in which complete entries will be made in accordance with GAAP consistently applied, and maintain adequate accounts and reserves for all taxes (including income taxes), all depreciation, depletion, obsolescence and amortization
of its properties, all contingencies, and all other reserves;
(d) not move its chief executive office or chief operating
office from the addresses referred to in
Exhibit I
unless it shall have provided Purchaser not less than thirty (30) days prior written notice of such change;
(e) pay and discharge all material taxes, assessments and governmental charges or levies imposed on it or its income or profits or on any of its property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained. Seller and its subsidiaries shall file on a timely
basis all federal, and material state and local tax and information returns, reports and any other information statements or schedules required to be filed by or in respect of it;
(f) keep in full force and effect the provisions of its charter documents, by-laws, operating agreements or similar organizational
documents in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Documents;
(g) keep in full force and effect all agreements and instruments by which it or any of its properties may be bound and all applicable decrees, orders and judgments, in each case to the extent reasonably
necessary to perform its obligations hereunder or under any other Transaction Document; and
(h) comply with its obligations
under the Transaction Documents to which it is a party.
38
Section 8.18
Consent to Sub-Servicing
.
Subject to the rights of the Owners, and except as contemplated under the Purchase and Sale Agreement with respect to transition services
hereunder, Seller will not permit any Person other than Seller to service or sub-service the Mortgage Loans without the prior written consent of Purchaser, in each case other than (i) the Interim Servicer (prior to the Servicing Transfer Date)
and (ii) third-party vendors customarily employed by servicers in the ordinary course of business in accordance with prudent mortgage servicing practices.
Section 8.19
Nonpetition Covenant
.
Seller shall not, prior to the
date that is one year and one day after the payment in full of the Current Excess Servicing Spread, petition or otherwise invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against Purchaser
under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Purchaser or any substantial part of its property, or ordering the winding up or liquidation of the affairs of
Purchaser.
Section 8.20
Data Tape; Schedule of Mortgage Loans
.
The information in the Data Tape delivered to Purchaser on the Subsequent Sale Date will be true and correct in all material respects as
of the date specified. Seller shall maintain the Schedule of Mortgage Loans, which shall be updated as of the Subsequent Sale Date. The information in the Schedule of Mortgage Loans pertaining to the related Mortgage Loans and the related Mortgage
Servicing Rights will be true and correct in all material respects as of the date specified.
Section 8.21
Insurance
.
The Seller shall maintain (a) general liability insurance, (b) errors and omission insurance or
blanket bond coverage and (c) fidelity bond insurance, in each case, from reputable companies with coverage in amounts customarily maintained by such similarly situated entities in the same jurisdiction and industry as the Seller.
Section 8.22
Defense of Title
.
The Seller warrants and will defend the right, title and interest of the Purchaser in and to the Current Excess Servicing Spread against all adverse claims and demands.
Section 8.23
Refinancing of Mortgage Loans
.
Each agreement or arrangement that Seller enters into to purchase Mortgage Servicing Rights shall be entered into on an arm’s length contractual basis in the ordinary course of business and shall
have market terms applicable for the type of Mortgage Servicing Rights to be acquired thereby. Seller shall not enter into any agreement or arrangement with a third party intended to encourage the refinancing of any Mortgage Loan by any Person other
than Seller.
39
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations
of Purchaser under this Agreement and under the Assignment Agreement are subject to the satisfaction of the following conditions as of each Subsequent Sale Date on and after the Initial Applicable Subsequent Sale Date:
Section 9.01
Correctness of Representations and Warranties
.
The representations and warranties made by Seller in this Agreement and each other Transaction Document to which Seller is a party to be
made on or prior to the Subsequent Sale Date are true and correct in all material respects; provided however, that, if the representations and warranties made in
Section 5.03(b)
and
6.06(e)
hereof with respect to any Servicing
Agreement are not true and correct in all material respects on the Subsequent Sale Date, unless otherwise agreed in writing by Purchaser, (a) the Current Excess Servicing Spread for the related Mortgage Loans relating to the affected Servicing
Agreements shall not be sold to Purchaser and (b) such Servicing Agreements shall be removed from the definition of Servicing Agreements. In the event that the representations and warranties made in
Section 5.03(b)
and
6.06(e)
hereof are not true and correct in all material respects on the Subsequent Sale Date with respect to a Servicing Agreement (a) unless the Purchaser elects to waive the failure of such representations and warranties with respect
to any such Servicing Agreement and purchase the related Current Excess Servicing Spread, Seller shall have no further obligations to Purchaser with respect to such Servicing Agreement or the related Mortgage Loans and (b) the failure of such
representations and warranties to be true and correct in all material respects on the related Subsequent Sale Date with respect to a Servicing Agreement or any number of Servicing Agreements shall not be considered a failure of the condition
precedent contained in this
Section 9.01
for the consummation of the transactions contemplated hereby with respect to those Servicing Agreements that do satisfy this condition.
Section 9.02
Compliance with Conditions
.
All of the terms, covenants, conditions and obligations of this Agreement and each other Transaction Document required to be complied with and performed by Seller and Bank of America on or prior to
Subsequent Sale Date shall have been duly complied with and performed in all material respects.
40
Section 9.03
Corporate Resolution
.
Receipt by the Purchaser of a certified copy of the Seller’s corporate resolution approving the execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, together with such other certificates of incumbency and other evidences of corporate authority as Purchaser or its counsel may
reasonably request.
Section 9.04
No Material Adverse Change
.
From the Agreement Date, there shall not have been any change to Seller’s financial or operating condition, or in the Mortgage
Servicing Rights, the Mortgage Loans or the Related Escrow Accounts that in each case will likely have a material adverse effect the consummation of the transactions contemplated hereby or the Current Excess Servicing Spread.
Section 9.05
Consents
.
Seller shall have obtained all consents, approvals or other requirements of third parties required for the consummation of the transactions contemplated by the Transaction Documents that are to be
obtained on or prior to the Subsequent Sale Date. No consents are required for the sale of the Current Excess Servicing Spread from Seller to Purchaser. All actions of all Governmental Authorities required to consummate the transactions contemplated
by the Transaction Documents and the documents related thereto shall have been obtained or made.
Section 9.06
Delivery of Transaction Documents
.
Seller shall have delivered to the Purchaser copies of each executed Transaction
Document that is to be entered into on or prior to such date and each of the items required to be delivered pursuant to
Section 2.04
hereof.
Section 9.07
Certificate of Seller
.
Seller shall have provided
Purchaser a certificate, substantially in the form attached hereto as
Exhibit C
, signed by an authorized officer of Seller dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each
of Seller’s representations and warranties made in this Agreement and each other Transaction Document to which Seller is a party is true and correct in all material respects as of such date; (b) all of the terms, covenants, conditions and
obligations of this Agreement and each other Transaction Document to which Seller is a party that are required to be complied with and performed by Seller at or prior to the related Subsequent Sale Date have been duly complied with and performed in
all material respects; (c) the conditions set forth in
Section 9.04
and
Section 9.05
have been satisfied; and (d) as of the related Subsequent Sale Date, Seller has a Consolidated Tangible Net Worth of at least the
sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or
41
any of Seller’s consolidated subsidiaries, and the Seller (considered together with the Seller’s consolidated subsidiaries) is not in default in any indebtedness in excess of
$10,000,000 (individually or in the aggregate).
Section 9.08
Valuation
.
Purchaser shall have received an opinion reasonably satisfactory to Purchaser that the Base Servicing Fee of the Mortgage Loans and the
Purchase Price of the Current Excess Servicing Spread is fair and reasonable.
Section 9.09
Opinions of Counsel
.
Seller’s counsel shall have delivered the Opinions of Counsel required pursuant to
Section 2.04(a)(vii)
,
Section 2.04(a)(viii)
and
Section 2.04(a)(ix)
.
Section 9.10
Acquisition of Mortgage Servicing
Rights by Seller
.
Seller shall have acquired the Mortgage Servicing Rights and the other Purchased Assets from Bank of
America pursuant to the Purchase and Sale Agreement as of the related Subsequent Sale Date.
Section 9.11
Good
Standing Certificate of Seller
Seller shall have provided Purchaser a certificate of good standing of Seller, dated as of
a date within five (5) Business Days prior to the related Subsequent Sale Date.
Section 9.12
No Actions or
Proceedings.
No action, suit, proceeding or investigation by or before any Governmental Authority shall have been
instituted to restrain or prohibit the consummation of, or to invalidate, any of the transactions contemplated by this Agreement and the documents related hereto in any material respect.
Section 9.13
Fees, Costs and Expenses.
The fees, costs and expenses payable by the Seller on or prior to the related Subsequent Sale Date, as applicable pursuant to
Section 12.01
hereof and any other Transaction Document shall have
been paid.
42
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of
Seller under this Agreement are subject to the satisfaction of the following conditions as of the Sale Date or the Subsequent Sale Date, as applicable:
Section 10.01
Correctness of Representations and Warranties
.
The
representations and warranties made by Purchaser in this Agreement to be made on or prior to the Agreement Date or the Subsequent Sale Date, are true and correct in all material respects as of the date thereof.
Section 10.02
Compliance with Conditions
.
All of the terms, conditions, covenants and obligations of this Agreement required to be complied with and performed by Purchaser on or prior to the related Subsequent Sale Date shall have been duly
complied with and performed in all material respects as of the date thereof.
Section 10.03
Corporate Resolution
.
As of the date hereof, Seller shall have received from Purchaser a certified copy of its corporate resolution approving the
execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, together with such other certificates of incumbency and other evidences of corporate authority as Seller or its counsel may reasonably request.
Section 10.04
No Material Adverse Change
.
Since the Agreement Date, there shall not have been any change to Purchaser’s financial condition that will likely materially and
adversely affect the consummation of the transactions contemplated hereby.
Section 10.05
Certificate of
Purchaser
.
Purchaser shall have provided Seller a certificate, substantially in the form attached hereto as
Exhibit
D
, signed by an authorized officer of Purchaser dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each of Purchaser’s representations and warranties made in this Agreement is
true and correct in all material respects as of such date; (b) all of the terms, covenants, conditions and obligations of this Agreement required to be complied with and performed by Purchaser at or prior to the related Subsequent Sale Date,
have been duly complied with and performed in all material respects; and (c) the condition set forth in
Section 10.04
has been satisfied.
43
Section 10.06
Good Standing Certificate of Purchaser.
Purchaser shall have provided Seller a certificate of good standing of Purchaser, dated as of a date within five (5) Business Days
prior to the related Subsequent Sale Date.
ARTICLE XI
INDEMNIFICATION; CURE
Section 11.01
Indemnification by Seller
.
(a) Seller shall indemnify,
defend and hold Purchaser, its affiliates and its and their respective directors, managers, officers, employees, agents, representatives and advisors (the “
Purchaser Indemnitees
”) harmless from and shall reimburse the applicable
Purchaser Indemnitee for any Losses suffered or incurred by any Purchaser Indemnitee after the related Subsequent Sale Date, which result from:
(i) Any material breach of a representation or warranty by Seller, or non-fulfillment of any covenant or obligation of Seller, contained in this Agreement or the Assignment Agreement;
(ii) Any servicing act or omission of any prior servicer relating to any Mortgage Loan and any act or omission of any
party related to the origination of any Mortgage Loan;
(iii) Any act, error or omission of Seller in
servicing any of the Mortgage Loans, including improper action or failure to act when required to do so;
(iv)
Any exercise of any rights of setoff or other netting arrangements by any Owner against Seller that results in a decrease in Servicing Agreements termination payments due to Seller with respect to the Mortgage Loans from such Owner or in a shortfall
of funds to pay the Current Excess Servicing Spread;
(v) Any breach by Seller of the Purchase and Sale
Agreement; and
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(vi) Litigation, proceedings, governmental investigations, orders,
injunctions or decrees resulting from any of the items described in
Section 11.01(a)(i) – (v)
above;
provided
,
however
, that the applicable Purchaser Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Seller, which
such failure of mitigation shall not relieve Seller of its indemnification obligations in this
Section 11.01
but may affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Purchaser
Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be reimbursed by Seller as part of its indemnification obligations in this
Section 11.01
. Purchaser shall
notify Seller promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations, orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a
“
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Seller shall have the right to assume the defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Purchaser
Indemnitee, but may not enter into any settlement without the prior written consent of the applicable Purchaser Indemnitee, which shall not be unreasonably withheld. A Purchaser Indemnitee shall have the right to select separate counsel and to
otherwise separately defend itself at its own expense but shall not consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of Seller, which consent shall not be
unreasonably withheld. Any exercise of such rights by a Purchaser Indemnitee shall not relieve Seller of its obligations and liabilities under this
Section 11.01
or any other provision of this Agreement. With respect to any Third Party
Claim subject to indemnification under this Agreement, the applicable Purchaser Indemnitee shall be required to cooperate in good faith with Seller to ensure the proper and adequate defense of such Third-Party Claim. For the avoidance of doubt,
Seller’s obligations for Purchaser Indemnitees shall not be limited to funds available in the Third Party Controlled Current Spread Custodial Account or the Current Spread Reserve Account.
(b)
REIT Requirements
. Notwithstanding anything in
Section 11.01(a)
above, in the event that counsel or independent
accountants for the Protected REIT determine that there exists a material risk that any amounts due to Purchaser under
ARTICLE XI
hereof would be treated as Nonqualifying Income upon the payment of such amounts to Purchaser, the amount paid
to Purchaser pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to Purchaser in such year without causing the Protected REIT to fail to meet the REIT Requirements for such year, determined as if the
payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the Protected REIT. If the amount payable for any tax year under the preceding sentence is less than the amount which Seller would otherwise
be obligated to pay to Purchaser pursuant to
ARTICLE XI
of this Agreement (the “
Expense Amount
”), then: (1) Seller shall place the Expense Amount into an escrow account (the “
Expense Escrow Account
”)
using an escrow agent and agreement reasonably acceptable to Purchaser and shall not release any portion thereof
45
to Purchaser, and Purchaser shall not be entitled to any such amount, unless and until Purchaser delivers to Seller, at the sole option of the Protected REIT, (i) an opinion (an
“
Expense Amount Tax Opinion
”) of the Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a letter (an “
Expense Amount
Accountant’s Letter
”) from the Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to Purchaser without causing the Protected REIT to fail to meet the REIT Requirements for any
relevant taxable year, or (iii) a private letter ruling issued by the IRS to the Protected REIT indicating that the receipt of any Expense Amount hereunder will not cause the Protected REIT to fail to satisfy the REIT Requirements (a
“
REIT Qualification Ruling
” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a “
Release Document
”); and (2) pending the delivery of a Release Document by
Purchaser to Seller, Purchaser shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement (an “
Indemnity Loan Agreement
”) reasonably acceptable to Purchaser that
(i) requires Seller to lend Purchaser immediately available cash proceeds in an amount equal to the Expense Amount (an “
Indemnity Loan
”), and (ii) provides for (A) a commercially reasonable interest rate and
commercially reasonable covenants, taking into account the credit standing and profile of Purchaser or any guarantor of Purchaser, including the Protected REIT, at the time of such Loan, and (B) a 15 year maturity with no periodic amortization.
Section 11.02
Indemnification by Purchaser
.
Purchaser shall indemnify, defend and hold Seller, its affiliates and its and their respective directors, managers, officers, employees,
agents, representatives and advisors (the “
Seller Indemnitees
”) harmless from and shall reimburse the applicable Seller Indemnitee for any Losses suffered or incurred by any Seller Indemnitee which result from:
(a) Any material breach of a representation or warranty by Purchaser, or non-fulfillment of any covenant or obligation of Purchaser
contained in this Agreement; and
(b) Litigation, proceedings, governmental investigations, orders, injunctions or decrees,
the basis for which occurred after the Agreement Date, resulting from any of the items described in
Section 11.02(a)
above;
provided
,
however
, that the applicable Seller Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any such
losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Purchaser, which such failure of mitigation shall not relieve Purchaser of its indemnification obligations in this
Section 11.02
but may
affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Seller Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be
reimbursed by Purchaser as part of its indemnification obligations in this
Section 11.02
. Seller shall notify Purchaser promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations,
orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Purchaser
46
shall have the right to assume the defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Seller Indemnitee, but may not enter into any settlement
without the prior written consent of Purchaser, which shall not be unreasonably withheld. A Seller Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself but shall not consent to the entry of a judgment
or enter into any settlement with respect to the Third Party Claim without the prior written consent of Purchaser, which consent shall not be unreasonably withheld. Any exercise of such rights by a Seller Indemnitee shall not relieve Purchaser of
its obligations and liabilities under this
Section 11.02
or any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Seller Indemnitee shall be required
to cooperate in good faith with Purchaser to ensure the proper and adequate defense of such Third-Party Claim.
Section 11.03
Award of Damages
.
(a)
(i) In the event that an award of damages or other payment
is received by a Party or a designee of a Party as a result of a claim, judgment, settlement or arbitration (including payment pursuant to a guaranty of Bank of America by any other Person) of a legal dispute that occurs either on or after the
execution of the Purchase and Sale Agreement in connection with the enforcement of the Purchase and Sale Agreement in the event of a breach by Bank of America of any representations and warranties or covenants where such breach had an adverse impact
on the value of the Total Servicing Spread, the Current Excess Servicing Spread Percentage of that award shall be distributed to Purchaser or its designee and the remainder of that award shall be distributed to Seller or its designee
(ii) In the event that an award of damages or other payment is received by a Party or a designee of a Party as a result
of a claim, judgment, settlement or arbitration (including payment pursuant to a guaranty of Bank of America by any other Person) of a legal dispute that occurs either on or after the execution of the Purchase and Sale Agreement in connection with
the enforcement of the Purchase and Sale Agreement in the event of a breach by Bank of America of any representations and warranties or covenants where such breach did not have an adverse impact on the value of the Total Servicing Spread, the
entirety of the award shall be distributed to Seller or its designee.
(b) In the event that a Party or designee of a Party
receives an award pursuant to
Sections 11.03(a)(i) or (ii)
and some or all of that amount is to be distributed to the other Party or a designee of the other Party pursuant to
Sections 11.03(a)(i) or (ii)
, the Party or the
Party’s designee in possession of the applicable amount shall promptly notify the other Party or the other Party’s designee as to the award’s existence and request that the other Party or other
47
Party’s designee, as applicable, designate an account to which the amount shall be remitted. Once the necessary account information has been provided by the appropriate Party or designee of
a Party, the applicable amount shall be remitted by wire transfer of immediately available federal funds to the account so designated.
(c) Two Business Days prior to each Distribution Date, the Seller shall, provide Purchaser with a monthly report of all claims and legal disputes made or pending with Bank of America during the prior
month, including the amounts of any claims made or resolved during such month.
Section 11.04
Other Rights
The Seller hereby acknowledges that, in addition to its rights under this Agreement, the Purchaser is entitled to exercise its
rights under the related Owner Consent.
ARTICLE XII
MISCELLANEOUS
Section 12.01
Costs and Expenses
.
Except as otherwise provided
herein, Purchaser and Seller shall share the expenses incurred by Seller and Purchaser or their respective affiliates in connection with the transactions contemplated hereby, with the expense allocation percentage to be mutually agreed upon by the
Parties.
Section 12.02
Confidentiality
.
Each Party understands that in connection with this transaction, it has been furnished and will be furnished Non-Public Personal Information and/or Personally Identifiable Financial Information (as those
terms are defined in Sections 573.3(n) and (o) of the Office of Thrift Supervision Regulations on Privacy of Consumer Information published at 12 C.F.R. Chapter V implementing Title V of the Gramm-Leach-Bliley Act), and other information
regarding the policies and plans of the other Party and its affiliates that is and has been designated as confidential and proprietary, and each Party agrees that it will maintain the confidentiality of such information and will not disclose it to
others (except for its affiliates and its and their respective directors, managers, officers, employees, financing sources, agents, representatives and advisors), or use it except in connection with the proposed acquisition contemplated by this
Agreement, without the prior written consent of the Party furnishing such information. Information which is generally known in the industry concerning a Party or among such Party’s creditors generally or which has been disclosed to the other
Party by third parties who have a right to do so shall not be deemed confidential or proprietary information for these purposes. If
48
Purchaser, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection
with the transactions contemplated hereby, Purchaser agrees to provide Seller with prompt notice of such request(s) so that Seller may seek an appropriate protective order and/or waive Purchaser’s compliance with the terms of this
Section 12.02
. If Seller, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with the transactions
contemplated hereby, Seller agrees to provide Purchaser with prompt notice of such request(s) so that Purchaser may seek an appropriate protective order and/or waive Seller’s compliance with the terms of this
Section 12.02
.
Notwithstanding the terms of this
Section 12.02
, if, in the absence of a protective order or the receipt of a waiver hereunder, Purchaser or Seller is nonetheless, in the opinion of its counsel, compelled to disclose information
concerning the other Party to any tribunal or else stand liable for contempt or suffer other censure or penalty, Purchaser or Seller may disclose such information to such tribunal without liability hereunder. If the proposed acquisition is not
consummated, each Party agrees to promptly return to the other, promptly upon request, all confidential materials, and all copies thereof, which have been furnished to it in connection with the transactions contemplated hereby. For the avoidance of
doubt, either Party may provide its shareholders and creditors with a general description of this Agreement and any related transactions, and, subject to the provisions of this
Section 12.02
, information obtained from the reports
provided by Seller pursuant to
Section 8.07
.
Section 12.03
Broker’s Fees
.
Each party hereto represents and warrants to the other that it has made no agreement to pay any finder’s, agent’s, broker’s
or originator’s fee arising out of or in connection with the subject matter of this Agreement. In the event Purchaser has entered or enters into an agreement to pay any finder’s, agent’s, broker’s, advisor’s or
originator’s fee arising out of or in connection with the subject matter of this Agreement, Purchaser shall be solely responsible for all such fees. The parties hereto shall indemnify and hold each other harmless from and against any such
obligation or liability and any expense incurred in investigating or defending (including reasonable attorneys’ fees) any claim based upon the other party’s actions in connection with such obligation.
Section 12.04
Relationship of Parties
.
The Parties intend that the transactions contemplated in the Transaction Documents constitute arms-length transactions among third parties. Nothing contained in the Transaction Documents will establish
any fiduciary, partnership, joint venture or similar relationship between or among the Parties except to the extent otherwise expressly stated therein.
Section 12.05
Survival of Representations and Warranties
.
Each party
hereto covenants and agrees that the representations and warranties in this Agreement, and in any document delivered or to be delivered pursuant hereto, shall survive the Agreement Date.
49
Section 12.06
Notices
.
All notices, requests, demands and other communications which are required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been given if personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid or by prepaid overnight delivery service:
(a) If to Purchaser, to:
Fortress Investment Group LLC
1345 Avenue of the Americas
New York, NY 10105
Attn: Brian Sigman
Chief Financial Officer
(212) 479-5343
(b) If to Seller, to:
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attn: Amar Patel
or to such other address as Purchaser or Seller shall have
specified in writing to the other.
Section 12.07
Waivers
.
Either Purchaser or Seller may, by written notice to the other:
(a) Extend the time for the performance of any of the obligations or other transactions of the other; and
(b) Waive compliance with or performance of any of the terms, conditions, covenants or obligations required to be complied with or performed by the other hereunder.
The waiver by Purchaser or Seller of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any
other subsequent breach.
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Section 12.08
Entire Agreement; Amendment
.
This Agreement and the related Transaction Documents constitute the entire agreement between the parties with respect to the transactions
contemplated hereby and supersede all prior agreements with respect thereto. This Agreement may be amended only in a written instrument signed by both Seller and Purchaser.
Section 12.09
Binding Effect
.
This Agreement shall inure to the
benefit of and be binding upon the Parties and their successors and assigns. Nothing in this Agreement, express or implied, is intended to confer on any Person other than the Parties and their successors and assigns, any rights, obligations,
remedies or liabilities.
Section 12.10
Headings
.
Headings on the Articles and Sections in this Agreement are for reference purposes only and shall not be deemed to have any substantive
effect.
Section 12.11
Applicable Law
.
This Agreement shall be 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 the laws of
the State of New York, except to the extent preempted by Federal law. This Agreement shall constitute a security agreement under the laws of the State of New York. In addition to any other rights available under this Agreement or otherwise available
at law or in equity but subject to the terms hereof, Purchaser shall have all rights and remedies of a secured party with respect to the Collateral under the laws of the State of New York and under any other applicable law to enforce the assignments
and security interests contained herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of applicable law and the terms of this Agreement, to sell or apply any rights and other interests with respect to
the Collateral assigned or pledged hereby in accordance with the terms hereof at public and private sale in accordance with the terms of this Agreement. The parties agree to waive trial by jury in the event of any dispute under this Agreement.
Section 12.12
Incorporation of Exhibits
.
The Exhibits attached hereto shall be incorporated herein and shall be understood to be a part hereof as though included in the body of this Agreement.
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Section 12.13
Counterparts
.
This Agreement may be executed in counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all
of which, taken together, shall constitute one and the same agreement.
Section 12.14
Severability of Provisions
.
If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held
invalid, 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 or enforceability of the other provisions
of this Agreement or of the rights of the parties hereto.
Section 12.15
Public Announcement
.
No public release or statement concerning the subject matter of this Agreement shall be made by either party without the express written
consent and approval of the other party, except as required by law or stock exchange rule, and provided that on and after the Agreement Date, either party may provide its shareholders and creditors with a general description of this Agreement and
any related transactions, and, subject to the provisions of
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.16
Assignment
.
(a) Seller may not assign, transfer, sell or subcontract all or any part of this Agreement, any interest herein, or any of the Seller’s interest in the Servicing Spread Collections, other than the
interest in the Total Servicing Spread sold hereby, without the prior written consent of Purchaser,
provided
that any successor to Seller must assume Seller’s obligations under this Agreement. Purchaser shall have the unrestricted right
to further assign, transfer, deliver, hypothecate, pledge, subdivide or otherwise deal with its rights under this Agreement on whatever terms Purchaser shall determine without the consent of Seller; including the right to assign all or any portion
of the Current Excess Servicing Spread and to assign the related rights under this Agreement. If Purchaser assigns any rights under this Agreement to a third party (a “
Third Party Assignment
“), such third party (a “
Third
Party Assignee
“) shall enter into a new agreement (a “
Third Party Current Spread Agreement
“) with Seller or Seller’s assignee that provides such Third Party Assignee with the same rights with respect to the Current
Excess Servicing Spread that Purchaser would have had under this Agreement if the Third Party Assignment had not occurred.
(b) Seller shall maintain a register on which it enters the name and address of each holder of the Current Excess Servicing Spread and
each holder’s interest in the Current Excess Servicing Spread (the “
Holder Register
”) for each transaction described
52
in
Section 12.16(a)
. The entries in the Holder Register shall be conclusive absent manifest error, and Seller shall treat each Person whose name is recorded in the Holder Register as
an owner of the Current Excess Servicing Spread for all purposes of this Agreement notwithstanding any notice to the contrary.
Section 12.17
Termination
.
If the Purchase and Sale Agreement is terminated, this Agreement shall be terminated concurrently therewith, without any further action of either Party. In the event this agreement is terminated as set
forth in the prior sentence or in
Section 8.13
, neither Party shall have any further obligations to the other Party hereunder except as expressly set forth herein. If all conditions to Purchaser’s or Seller’s obligations to
close set forth in
ARTICLE IX
and
ARTICLE X
, respectively, are not satisfied on the related Subsequent Sale Date, Purchaser or Seller, as applicable based on the condition or conditions not satisfied, may terminate this agreement by
written notice to the other party, and neither party shall have any further obligations to the other party hereunder, except as expressly set forth herein.
Section 12.18
Third Party Beneficiaries
.
This Agreement does not and
is not intended to confer any rights or remedies upon any person or entity other than Purchaser and Seller, except as provided in
Section 11.01
and in
Section 11.02
, provided that Purchaser and Seller reserve the right to
modify any term of, or terminate, this Agreement, without the consent of any Purchaser Indemnitee or Seller Indemnitee.
53
IN WITNESS WHEREOF, each of the undersigned parties to this Agreement has caused this
Agreement to be duly executed in its corporate name by one of its duly authorized officers, all as of the date first above written.
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MSR XIII LLC
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Purchaser
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By:
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/s/ Brian Sigman
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Name:
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Brian Sigman
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Title:
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Chief Financial Officer
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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/s/ Amar Patel
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Name:
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Amar Patel
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Title:
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Executive Vice President
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CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT FOR NON-AGENCY MORTGAGE LOANS
54
EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT FOR MORTGAGE LOANS
Subject to, and upon the terms and conditions of the Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, dated as of January 6, 2013 (the
“
Agreement
”), by and between Nationstar Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) and MSR XIII LLC, a Delaware limited liability company (together
with its successors assigns, the “
Purchaser
”), as may be amended, restated, or otherwise modified and in effect from time to time, Seller hereby assigns, transfers and delivers to Purchaser all of Seller’s right, title and
interest in and to Current Excess Servicing Spread for each of the Mortgage Loans set forth in Annex A attached hereto and all proceeds thereof, and agrees that as of the Subsequent Sale Date, the applicable Mortgage Loan shall be deemed to be a
“Mortgage Loan” for all purposes of the Agreement. Capitalized terms used in this Assignment Agreement have the meanings given to such terms in, or incorporated by reference into, the Agreement.
In the event (but only in the event) that the conveyance of the Current Excess Servicing Spread is characterized by a court or
governmental authority as security for a loan rather than a sale, Seller will be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Current
Excess Servicing Spread and all proceeds thereof as security for a loan in an amount of the Purchase Price..
All of the
terms, covenants, conditions and obligations of the Agreement required to be complied with and performed by Seller on or prior to the date hereof have been duly complied with and performed in all material respects.
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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Name:
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Title:
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55
Annex A
[ATTACH ANNEX A, WHICH MAY BE ON COMPUTER TAPE, COMPACT DISK, OR
MICROFICHE, CONTAINING THE INFORMATION SET FORTH BELOW]
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
(column (d) –
column (e))
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(g)
([ ]% of column
(f))
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Subsequent
Sale Date
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Loan # of
Mortgage
Loan
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Principal
Balance of
Mortgage
Loan as of the
Subsequent
Sale Date
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Servicing
Spread
Rate
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Base Servicing
Fee Rate
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Net Servicing
Spread Rate
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Current Excess
Servicing Spread
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EXHIBIT B
SCHEDULE OF MORTGAGE LOANS
[SEPARATELY DELIVERED]
EXHIBIT C
SELLER’S OFFICER’S CERTIFICATE
(To be supplied on the Subsequent Sale Date)
I,
, a [Vice President] of Nationstar Mortgage LLC (the “
Company
”), pursuant to
Section 9.07
of the Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans by and between MSR XIII LLC and the Company, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on
behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the
Agreement is true and correct in all material respects as of the date hereof;
(ii) All of the terms,
covenants, conditions and obligations of the Agreement required to be complied with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects;
(iii) The conditions set forth in
Sections 9.04
and
9.05
of the Agreement have been satisfied; and
(iv) As of the date hereof, the Company has a Consolidated Tangible Net Worth (as defined in the Agreement)
of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date of the Agreement by the Company, Nationstar Mortgage Holdings Inc. or any of Company’s consolidated subsidiaries, and
the Company (considered together with its consolidated subsidiaries) is not in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of [ ]
1viii
EXHIBIT D
PURCHASER’S OFFICER’S CERTIFICATE
(To be supplied on the Subsequent Sale Date)
I,
, [POSITION] of
[ ], the sole member of MSR XIII LLC (the “
Company
”), pursuant to
Section 10.05
of the Current Excess
Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans by and between the Company and Nationstar Mortgage LLC, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material
respects as of the date hereof; and
(ii) All of the terms, covenants, conditions and obligations of the Agreement required to
be complied with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects; and
(iii) All conditions set forth in
Section 10.04
have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
[ ].
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MSR XIII LLC
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By: [ ], as member
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By:
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EXHIBIT E
LOCATION OF CREDIT FILES
350 Highland Drive
Lewisville, Texas 75067
EXHIBIT F
FORM OF SUMMARY REMITTANCE REPORT
[DELIVERED SEPARATELY]
EXHIBIT G
FORM OF DELINQUENCY REPORT
[DELIVERED SEPARATELY]
EXHIBIT H
FORM OF DISBURSEMENT REPORT
[DELIVERED SEPARATELY]
EXHIBIT I
SELLER JURISDICTIONS AND RECORDING OFFICES
Chief Executive Office:
350 Highland Drive
Lewisville, Texas 75067
Recording Office:
Secretary of
State, State of Delaware
EXHIBIT J
SERVICING AGREEMENTS
[DELIVERED SEPARATELY]
65
Exhibit 10.47
FUTURE SPREAD AGREEMENT FOR FHLMC MORTGAGE LOANS
by and between
NATIONSTAR MORTGAGE LLC
(Seller)
and
MSR IX LLC
(Purchaser)
Dated and effective as of January 6, 2013
Table of Contents
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ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
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1
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Section 1.01
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Definitions
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1
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Section 1.02
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General Interpretive Principles
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12
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ARTICLE II ITEMS TO BE DELIVERED
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13
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Section 2.01
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Items to be Delivered
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13
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Section 2.02
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Grant of Security Interest
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14
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ARTICLE III REPLACEMENT OF MORTGAGE LOANS
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14
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Section 3.01
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Refinancing and Substitution of Mortgage Loans
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14
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Section 3.02
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Criteria for Mortgage Loans
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15
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Section 3.03
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Refinancing Incentives
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16
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Section 3.04
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Selection Procedures
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18
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Section 3.05
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Assignment of Future Excess Servicing Spread
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19
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ARTICLE IV PAYMENTS AND DISTRIBUTIONS
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19
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Section 4.01
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Purchase Price
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19
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Section 4.02
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Payments by Purchaser
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20
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Section 4.03
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Accounts
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20
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Section 4.04
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Priority of Payments
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22
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Section 4.05
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Withdrawals from the Future Spread Reserve Account
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23
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Section 4.06
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Payment to Seller of Base Servicing Fee
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24
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Section 4.07
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Correction of Principal Balance Error
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24
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Section 4.08
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Intent and Characterization
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24
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER
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25
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Section 5.01
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Due Organization and Good Standing
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25
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Section 5.02
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Authority and Capacity
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25
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Section 5.03
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Owner Consents
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25
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Section 5.04
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Title to the Mortgage Servicing Rights
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26
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Section 5.05
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Effective Agreements
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26
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Section 5.06
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No Accrued Liabilities
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26
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Section 5.07
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Seller/Servicer Standing
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26
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Section 5.08
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MERS Membership
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26
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Section 5.09
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Owner Set-off Rights
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26
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Section 5.10
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Ability to Perform; Solvency
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27
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Section 5.11
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Obligations with Respect to Origination
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27
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Section 5.12
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Purchase of Mortgage Servicing Rights
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27
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Section 5.13
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No Actions
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27
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i
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ARTICLE VI REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE LOANS AND SERVICING
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27
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Section 6.01
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Servicing Agreements; Applicable Laws
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28
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Section 6.02
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Related Escrow Accounts
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28
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Section 6.03
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No Purchaser Responsibility
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28
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Section 6.04
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Location of Credit Files
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28
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Section 6.05
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Representations Concerning the Future Excess Servicing Spread
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28
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ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER
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29
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Section 7.01
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Due Organization and Good Standing
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29
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Section 7.02
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Authority and Capacity
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29
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Section 7.03
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Effective Agreements
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30
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Section 7.04
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Sophisticated Investor
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30
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Section 7.05
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No Actions
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30
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ARTICLE VIII SELLER COVENANTS
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30
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Section 8.01
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Servicing Obligations
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30
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Section 8.02
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Cooperation; Further Assurances
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31
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Section 8.03
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Financing Statements
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31
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Section 8.04
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Supplemental Information
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31
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Section 8.05
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Access to Information
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32
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Section 8.06
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Home Affordable Modification Program
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32
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Section 8.07
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Distribution Date Data Tapes and Reports
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32
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Section 8.08
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Financial Statements and Officer’s Certificates
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34
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Section 8.09
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Monthly Management Calls
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34
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Section 8.10
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Timely Payment of Owner Obligations
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35
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Section 8.11
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Servicing Agreements
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35
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Section 8.12
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Transfer of Mortgage Servicing Rights
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35
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Section 8.13
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Consents to Transaction Documents
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35
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Section 8.14
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Accounts
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36
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Section 8.15
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Notification of Certain Events
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36
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Section 8.16
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Financing; Pledge of Future Excess Servicing Spread
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36
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Section 8.17
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Existence, etc
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36
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Section 8.18
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Consent to Sub-Servicing
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37
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Section 8.19
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Nonpetition Covenant
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37
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Section 8.20
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Schedule of Mortgage Loans
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37
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Section 8.21
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True Sale Opinion
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38
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Section 8.22
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Valuation
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38
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Section 8.23
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Material Documents
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38
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Section 8.24
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Insurance
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38
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Section 8.25
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Defense of Title
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38
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Section 8.26
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Refinancing of Mortgage Loans
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38
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ii
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ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
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39
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Section 9.01
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Correctness of Representations and Warranties
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39
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Section 9.02
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Compliance with Conditions
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39
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Section 9.03
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Corporate Resolution
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39
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Section 9.04
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No Material Adverse Change
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39
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Section 9.05
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Consents
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39
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Section 9.06
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Delivery of Transaction Documents
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40
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Section 9.07
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Certificate of Seller
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40
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Section 9.08
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Opinions of Counsel
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40
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Section 9.09
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Good Standing Certificate of Seller
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40
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Section 9.10
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No Actions or Proceedings
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40
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ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
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40
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Section 10.01
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Correctness of Representations and Warranties
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41
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Section 10.02
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Compliance with Conditions
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41
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Section 10.03
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Corporate Resolution
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41
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Section 10.04
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No Material Adverse Change
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41
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Section 10.05
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Certificate of Purchaser
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41
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Section 10.06
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Good Standing Certificate of Purchaser
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41
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ARTICLE XI INDEMNIFICATION
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42
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Section 11.01
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Indemnification by Seller
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42
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Section 11.02
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Indemnification by Purchaser
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43
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Section 11.03
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Other Rights
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44
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ARTICLE XII MISCELLANEOUS
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44
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Section 12.01
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Costs and Expenses
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44
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Section 12.02
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Confidentiality
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44
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Section 12.03
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Broker’s Fees
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45
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Section 12.04
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Relationship of Parties
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46
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Section 12.05
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Survival of Representations and Warranties
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46
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Section 12.06
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Notices
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46
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Section 12.07
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Waivers
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46
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Section 12.08
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Entire Agreement; Amendment
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47
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Section 12.09
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Binding Effect
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47
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Section 12.10
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Headings
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47
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Section 12.11
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Applicable Law
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47
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Section 12.12
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Incorporation of Exhibits
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47
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Section 12.13
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Counterparts
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48
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Section 12.14
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Severability of Provisions
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48
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Section 12.15
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Assignment
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48
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Section 12.16
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Termination
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48
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Section 12.17
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Third Party Beneficiaries
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49
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iii
EXHIBITS
Exhibit A – Form of Assignment Agreement
Annex A
Exhibit B – Example of Calculations of Maximum Retained Refinancing Loan Amounts Exhibit
C – Schedule of Mortgage Loans Exhibit
D – Seller’s Officer’s Certificate
Exhibit
E – Purchaser’s Officer’s Certificate Exhibit
F – Location of Credit Files Exhibit
G – Form of Summary Remittance Report Exhibit
H – Form of Delinquency Report Exhibit
I – Form of Disbursement Report Exhibit
J – Seller Jurisdictions and Recording Offices
iv
FUTURE SPREAD AGREEMENT FOR FHLMC MORTGAGE LOANS
This FUTURE SPREAD AGREEMENT FOR FHLMC MORTGAGE LOANS (as amended, restated, or otherwise modified and in effect from time to time, this
“
Agreement
”), dated as of January 6, 2013 (the “
Agreement Date
”), is by and between MSR IX LLC, a Delaware limited liability company (together with its successors and assigns, the “
Purchaser
”),
and Nationstar Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) (the Purchaser and the Seller will collectively be referred to as the “
Parties
” and each, a
“
Party
”).
W I T N E S S E T H
:
WHEREAS
, Seller and Purchaser have entered into the Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage
Loans, dated as of the date hereof (as amended, restated, or otherwise modified and in effect, the “
Current Spread Agreement
”), pursuant to which Purchaser will purchase and assume all right, title and interest in the excess
servicing spread with respect to a pool of residential mortgage loans to be serviced by Seller;
WHEREAS
, Seller
desires to retain the right to refinance the residential mortgage loans in the pool, and Purchaser is willing to grant such right, as long as the excess servicing spread with respect to the newly-originated residential mortgage loans and replacement
residential mortgage loans is assigned to the Purchaser as described herein; and
WHEREAS
, Purchaser and Seller desire
to set forth the terms and conditions pursuant to which residential mortgage loans in the pool may be refinanced.
NOW,
THEREFORE
, in consideration of the mutual promises, covenants and conditions and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and upon the terms and subject to the conditions set forth
herein, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
Section 1.01
Definitions
.
Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have the following meanings:
Accepted Servicing
Practices
: With respect to any Mortgage Loan, those accepted and prudent mortgage servicing practices (including collection procedures) which are in accordance with the servicing practices and procedures as set forth in the applicable Servicing
Agreements, and in a manner at least equal in quality to the servicing that Seller provides to mortgage loans which it owns in its own portfolio.
1
Agency
: The entity formerly known as the Federal Home Loan Mortgage Corporation, or
any successor thereto, the Federal National Mortgage Association, or any successor thereto, the Government National Mortgage Association, or any successor thereto, the Federal Housing Administration of the United States Department of Housing and
Urban Development, or any successor thereto, the Department of Veterans Affairs, or any successor thereto.
Agreement
:
As defined in the preamble hereof.
Agreement Date
: As defined in the preamble hereof.
Ancillary Income
: All incidental servicing fees (such as late fees, assignment transfer fees, returned check fees, special
services fees, amortization schedule fees, HAMP fees, modification and incentive income and any interest or earnings on funds deposited in an account maintained by the Seller as servicer with respect to the Mortgage Loans, etc.) that are
supplemental to the servicing spread payable to the servicer pursuant to the Servicing Agreements.
Applicable Law
:
With reference to any Person, all laws (including common law), statutes, regulations, ordinances, treaties, judgments, decrees, injunctions, writs and orders of any court, governmental agency or authority and rules, regulations, orders, directives,
licenses and permits of any Governmental Authority applicable to such Person or its property or in respect of its operations.
Assignment Agreement
: An assignment agreement substantially in the form of
Exhibit A
to this Agreement or in such other
form as mutually agreed upon by the Parties.
Assignment Date
: With respect to a Refinanced Mortgage Loan and its
related Mortgage Loan, the Distribution Date in the third calendar month following the Refinanced Mortgage Loan’s Refinancing Date.
Available Portfolio
: As defined in
Section 3.04(a)
hereof.
Bank
: Wells Fargo Bank, National Association, or another financial institution mutually agreed upon by the Parties or any
successor thereto, each in its capacity as “Bank” under the Future Spread Custodial Account Control Agreement or the Future Spread Reserve Account Control Agreement, as applicable, or any third party custodian or trustee in similar
capacity under any replacement account control agreements.
Base Servicing Fee
: With respect to a Collection Period, an
amount equal to the product of (A) the aggregate outstanding principal balance of the Mortgage Loans as of the related Measurement Date, (B) the Base Servicing Fee Rate and (C) (i) in the case of the initial Collection Period, a
fraction, the numerator of which is the number of days in the period from and including the Sale Date to and including the last day of the initial Collection Period, and the denominator of which is 360, and (ii) in the case of all other
Collection Periods, 1/12;
provided
that the Base Servicing Fee with respect to any Mortgage Loan whose Servicing Agreement is terminated during a Collection Period shall be pro-rated to the actual number of days within such Collection Period
in which such Mortgage Loan was serviced by Seller.
2
Base Servicing Fee Rate
: With respect to the Mortgage Loans (other than GNMA Mortgage
Loans), 0.06% per annum and with respect to GNMA Mortgage Loans, 0.12% per annum.
Business Day
: Any day
other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the States of Texas or New York are authorized or obligated by law or by executive order to be closed or (c) such other days as agreed upon by the
Parties.
Carryover Retained Amount
: As defined in
Section 3.03
hereof.
Code
: The Internal Revenue Code of 1986, as amended from time to time.
Collateral
: As defined in
Section 2.02
hereof.
Collection Period
: With respect to any Distribution Date, the calendar month preceding the month in which such Distribution Date
occurs.
Consolidated Tangible Net Worth
: (i) The net worth of Seller and its consolidated subsidiaries, on a
combined basis, determined in accordance with GAAP,
minus
(ii) all intangibles determined in accordance with GAAP (including goodwill, capitalized financing costs and capitalized administration costs but excluding originated and
purchased mortgage servicing rights or retained residual securities) and any and all advances to, investments in and receivables held from affiliates;
provided
,
however
, that the non-cash effect (gain or loss) of any mark-to-market
adjustments made directly to stockholders’ equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the
calculation of Consolidated Tangible Net Worth.
Control
: The meaning specified in Section 8-106 of the UCC.
Credit File
: Those documents, which may be originals, copies or electronically imaged, pertaining to each Mortgage
Loan, held by or on behalf of Seller in connection with the servicing of the Mortgage Loan, which may include Mortgage Loan Documents and the credit documentation relating to the origination of such Mortgage Loan, and any documents gathered during
the servicing of a Mortgage Loan.
Current Mortgage Loan
: A residential mortgage loan that is a “Mortgage
Loan” under the Current Spread Agreement.
Current Spread Agreement
: As defined in the recitals to this Agreement.
Custodian
: A custodian of Credit Files or any part thereof as identified by the Seller to the Purchaser in writing on
or prior to the first Assignment Date as the same may be amended and supplemented from time to time by the Seller by providing a written notice of any such update to the Purchaser.
3
Distribution Date
: The 10th day of each calendar month, or if such day is not a
Business Day, the prior Business Day, beginning in the month following the first Assignment Date, or such other day as mutually agreed upon by Seller and Purchaser.
Electronic Data File
: A computer tape or other electronic medium generated by or on behalf of Seller and delivered or transmitted to or on behalf of Purchaser which provides information relating to
the Mortgage Loans.
Eligible Servicing Agreement
: Unless otherwise agreed to by the Purchaser, a Servicing Agreement
in respect of which the following eligibility requirements have been satisfied:
(a) the Owner Consents relating to such
Servicing Agreement have been obtained;
(b) such Servicing Agreement is in full force and effect, and is in all respects
genuine as appearing on its face or as represented in the books and records of Seller, and no event of default, early amortization event, termination event, or other event giving any party thereto (including with notice or lapse of time or both) the
right to terminate Seller as servicer thereunder for cause has occurred and is continuing; provided, however, that with respect to any Servicing Agreement and the occurrence of any event set forth in this clause (b) which is based on a breach
of a collateral performance test, such Servicing Agreement shall remain an Eligible Servicing Agreement so long as no notice of termination based on such breach has been given or threatened in writing and subject to the restrictions set forth
herein;
(c) Seller has not resigned or been terminated as servicer under such Servicing Agreement and has no actual knowledge
of any pending or threatened action to terminate Seller, as servicer (whether for cause or without cause); and
(d) with
respect to any Servicing Agreement relating to Non-Agency Mortgage Loans, an agreement pursuant to which the Seller as servicer may not be terminated without cause pursuant to such Servicing Agreement or if the Seller as servicer may be terminated
without cause, upon payment of a termination fee.
Entitlement Holder
: The meaning specified in
Section 8-102(a)(7) of the UCC.
Excess Refinancing Percentage
: As defined in
Section 3.03
hereof.
Expense Amount
: As defined in
Section 11.01(b)
hereof.
Expense Amount Accountant’s Letter
: As defined in Section 11.01(b) hereof.
Expense Amount Tax Opinion
: As defined in
Section 11.01(b)
hereof.
Expense Escrow Account
: As defined in
Section 11.01(b)
hereof.
Fannie Mae
: Federal National Mortgage Association, or any successor thereto.
4
Freddie Mac
: Federal Home Loan Mortgage Corporation, or any successor thereto.
FHLMC Acknowledgment Agreement
: The acknowledgment agreement by and among the entity formerly known as the Federal
Home Loan Mortgage Corporation, or any successor thereto, Seller and Purchaser, in form and substance reasonably acceptable to Purchaser, dated on or before the Sale Date, pursuant to which the entity formerly known as the Federal Home Loan Mortgage
Corporation, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
FNMA Acknowledgment Agreement
: The acknowledgment agreement by and among the Federal National Mortgage Association, or any successor thereto, Seller and MSR X LLC, in form and substance reasonably
acceptable to MSR X LLC, dated on or before the Sale Date, pursuant to which the Federal National Mortgage Association, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
Future Excess Servicing Spread
: The rights of Seller, severable from each (and all) of the other rights under the
applicable Servicing Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to the Future Excess Servicing Spread Percentage.
Future Excess Servicing Spread Assignment Obligation
: As defined in
Section 3.01
hereof.
Future Excess Servicing Spread Percentage
: A percentage equal to the Current Excess Servicing Spread Percentage in the Current Spread Agreement.
Future Excess Servicing Spread Rights
: As defined in
Section 3.01
hereof.
Future Spread Custodial Account Agreement
: The applicable deposit account agreement and other related account documentation
governing the Third Party Controlled Future Spread Custodial Account.
Future Spread Custodial Account Control
Agreement
: The account control agreement among Seller, Purchaser and Wells Fargo Bank, National Association, or any successor thereto, or any other institution agreed upon by the Parties, as Bank, dated as of the Sale Date, entered into with
respect to the Third Party Controlled Future Spread Custodial Account, as amended, restated, supplemented or otherwise modified from time to time.
Future Spread Reserve Account
: The account specified in the Future Spread Reserve Account Control Agreement and maintained by Wells Fargo Bank, National Association, or any successor thereto, or
another third party custodian or trustee selected by Purchaser.
Future Spread Reserve Account Agreement
: The
applicable deposit account agreement and other related account documentation governing the Future Spread Reserve Account.
Future Spread Reserve Account Control Agreement
: The account control agreement among Seller, Purchaser and Wells Fargo Bank,
National Association, or any successor thereto, or any other institution agreed upon by the Parties, as Bank, dated as of the Sale Date, entered into with respect to the Future Spread Reserve Account, as amended, restated, supplemented or otherwise
modified from time to time.
5
Future Spread Reserve Account Deposit Event
: As defined in
Section 4.03(c)
hereof.
Future Spread Reserve Account Required Amount
: As defined in
Section 4.03(c)
hereof.
GAAP
: Generally accepted accounting principles in the United States of America as
in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board,
or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, that are applicable to the circumstances as of the date of determination.
GNMA
: Government National Mortgage Association, or any successor thereto.
GNMA Acknowledgment Agreement
: The acknowledgment agreement by and among GNMA, or any successor thereto, Seller and MSR XI LLC, in
form and substance reasonably acceptable to MSR XI LLC, dated on or before the Sale Date, pursuant to which GNMA, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
GNMA Mortgage Loan
: A Mortgage Loan which is owned by GNMA, or any successor thereto.
Governmental Authority
: With respect to any Person, any nation or government, any state or other political subdivision, agency or
instrumentality thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over such Person, any of its subsidiaries or any
of its properties.
Grant
: To grant, bargain, sell, warrant, alienate, remise, demise, release, convey, assign,
transfer, mortgage, pledge, create and grant a security interest in and right of setoff against, deposit, set over or confirm.
HAMP
: As defined in
Section 8.06
hereof.
HAMP Loans
: As defined in
Section 8.06
hereof.
Holder
Register
: As defined in
Section 12.15(b)
hereof.
Indemnity Loan
: As defined in
Section 11.01(b)
hereof.
Indemnity Loan Agreement
: As defined in
Section 11.01(b)
hereof.
IRS
: The United States Internal Revenue Service.
6
Lien
: Any mortgage, deed of trust, pledge, hypothecation, collateral assignment,
charge, deposit, arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness
or the performance of any other obligation, including any conditional sale or other title retention agreement.
Lockbox
Account
: An account maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser for the purpose of receiving Servicing Spread Collections.
Loss
or
Losses
: Any and all direct, actual and out-of-pocket losses (including any loss in the value in the Future Excess
Servicing Spread), damages, deficiencies, claims, costs or expenses, including reasonable attorneys’ fees and disbursements, excluding (i) any amounts attributable to or arising from overhead allocations, general or administrative costs
and expenses, or any cost for the time of any Party’s employees, (ii) consequential losses or damages consisting of speculative lost profits, lost investment or business opportunity, damage to reputation or operating losses, or
(iii) punitive or treble damages;
provided
,
however
, that the exclusions set forth in clauses (ii) and (iii) above do not apply if and to the extent any such amounts are actually incurred in payment to a third party or
government entity.
Maximum Retained Refinancing Loan Amount
: As defined in
Section 3.03
hereof.
Measurement Date
: With respect to any Collection Period, the first day of such Collection Period.
MERS
: Mortgage Electronic Registration Systems, Inc., or any successor thereto.
MI
: Insurance provided by private mortgage insurance companies to make payments on certain Mortgage Loans in the event that
the related Mortgagor defaults in its obligation in respect of the Mortgage.
Mortgage
: Each of those mortgages,
deeds of trust, security deeds or deeds to secure debt creating a first lien on or an interest in real property securing a Mortgage Note and related to a Mortgage Loan.
Mortgage Loan
: A residential mortgage loan that satisfies the conditions set forth in
Section 3.02
and whose Future Excess Servicing Spread is assigned to Purchaser hereunder in
satisfaction of Seller’s Future Excess Servicing Spread Assignment Obligation.
Mortgage Loan Documents
: With
respect to each Mortgage Loan, the documents and agreements related to such Mortgage Loan required to be held by the applicable Custodian, including, without limitation, the original Mortgage Note, and any other documents or agreements evidencing
and/or governing such Mortgage Loan.
Mortgage Loan Identification Date
: With respect to a Refinanced Mortgage Loan and
its related replacement Mortgage Loan, the 25th day of the second calendar month following the Refinanced Mortgage Loan’s Refinancing Date.
7
Mortgage Note
: With respect to any Mortgage Loan, the note or other evidence of
indebtedness of the Mortgagor, thereunder, including, if applicable, an allonge and lost note affidavit.
Mortgage
Servicing Rights
: The rights and responsibilities of Seller with respect to servicing the Mortgage Loans under the Servicing Agreements, including any and all of the following if and to the extent provided therein: (a) all rights to service
a Mortgage Loan; (b) all rights to receive servicing fees, Ancillary Income, reimbursements or indemnification for servicing the Mortgage Loan, and any payments received in respect of the foregoing and proceeds thereof; (c) the right to
collect, hold and disburse escrow payments or other payments with respect to the Mortgage Loan and any amounts actually collected with respect thereto and to receive interest income on such amounts to the extent permitted by Applicable Law;
(d) all accounts and other rights to payment related to any of the property described in this paragraph; (e) possession and use of any and all Credit Files pertaining to the Mortgage Loan or pertaining to the past, present or prospective
servicing of the Mortgage Loan; (f) to the extent applicable, all rights and benefits relating to the direct solicitation of the related Mortgagors for refinance or modification of the Mortgage Loans and attendant right, title and interest in
and to the list of such Mortgagors and data relating to their respective Mortgage Loans; and (g) all rights, powers and privileges incident to any of the foregoing.
Mortgaged Property
: The Mortgagor’s real property, securing repayment of a related Mortgage Note, consisting of an interest in a single parcel of real property, improved by a residential
dwelling.
Mortgagor
: An obligor under a residential mortgage loan.
New Mortgage Loan
: As defined in
Section 3.02(a)(i)(1)
hereof.
Non-Agency Mortgage Loan
: Any Mortgage Loan where the Owner is not an Agency.
Nonqualifying Income
: Any amount that is treated as gross income for purposes of Section 856 of the Code and which is not
Qualifying Income.
Objection Notice
: As defined in
Section 4.03(c)
hereof.
Opinion of Counsel
: One or more written opinions, in form and substance reasonably satisfactory to the recipient, of an attorney
at law admitted to practice in any state of the United States or the District of Columbia, which attorney may be counsel for Seller or Purchaser, as the case may be.
Owner
: With respect to a Mortgage Loan, the owner thereof.
Owner
Consent
: All agreements, including the FHLMC Acknowledgment Agreement, the FNMA Acknowledgment Agreement and GNMA Acknowledgment Agreement, if applicable, pursuant to which an Owner approves or consents to the sale of the Future Excess Servicing
Spread from Seller to Purchaser and any other consents, acknowledgements or similar instruments that may be required from an Owner in connection with the transactions contemplated herein.
8
Party
or
Parties
: As defined in the preamble hereof.
Permitted Liens
: Liens in favor of an Agency required pursuant to the applicable Servicing Agreements.
Person
: Any individual, partnership, corporation, limited liability company, limited liability partnership, business entity, joint
stock company, trust, business trust, unincorporated organization, association, enterprise, joint venture, government, any department or agency of any government or any other entity of whatever nature.
Power of Attorney
: A Power of Attorney delivered by the Seller to the Purchaser authorizing the Purchaser to enforce the
right to payment of the Future Excess Servicing Spread under the related Servicing Agreement solely in the event that the Seller fails to enforce such right within 30 days after receiving written notice of such failure from the Purchaser to the
Seller.
Priority of Payments
: As defined in
Section 4.04
hereof.
Protected REIT
: Any entity that (i) has elected to be taxed as a real estate investment trust pursuant to Section 856 et
seq. of the Code, (ii) owns a direct or indirect equity interest in Purchaser, and (iii) is treated for purposes of Section 856 of the Code as owning all or a portion of the assets of the Purchaser or as receiving all or a portion of
the Purchaser’s income.
Purchase and Sale Agreement
: The Mortgage Servicing Rights Purchase and Sale Agreement,
dated as of January 6, 2013, by and between Nationstar Mortgage LLC, as purchaser, and Bank of America, National Association, as seller, together with all schedules and exhibits thereto, as the same may be amended, supplemented or otherwise
modified from time to time.
Purchase Price
: As defined in
Section 4.01
hereof.
Purchaser
: As defined in the preamble hereof.
Purchaser Indemnitees
: As defined in
Section 11.01(a)
hereof.
Qualifying Income
: Gross income that is described in Section 856(c)(2) or 856(c)(3) of the Code.
Quarterly Collection Period
: As defined in
Section 3.03
hereof.
Refinanced Mortgage Loan
: A Current Mortgage Loan or a Mortgage Loan that has been refinanced in whole or in part by Seller or an
affiliate thereof.
Refinancing Date
: The date on which a Current Mortgage Loan or Mortgage Loan is refinanced by
Seller or an affiliate thereof.
Refinancing Split Percentage
: As defined in
Section 3.03
hereof.
9
REIT Qualification Ruling
: As defined in
Section 11.01(b)
hereof.
REIT Requirements
: The requirements imposed on REITs pursuant to Sections 856 through and including 860 of the Code.
Related Collection Period
: With respect to an Assignment Date, the Collection Period in the third calendar month prior
to such Assignment Date, and with respect to a Mortgage Loan Identification Date, the second calendar month prior to such Mortgage Loan Identification Date.
Related Escrow Accounts
: Mortgage Loan escrow/impound accounts maintained by Seller relating to the Mortgage Servicing Rights, including accounts for buydown funds, real estate taxes and MI, flood
and hazard insurance premiums.
Release Document
: As defined in
Section 11.01(b)
hereof.
Remaining Expected Total Servicing Spread
: As defined in
Section 4.03(c)
hereof.
Replacement Portfolio
: As defined in
Section 3.04(a)
hereof.
Replacement Shortfall
: As defined in
Section 3.03
hereof.
Requirement of Law
: As to any Person, the certificate of incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its
property is subject.
Retained Portfolio
: As defined in
Section 3.04(a)
hereof.
Retained Servicing Spread
: The rights of Seller, severable from each (and all) of the other rights under the applicable Servicing
Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to 100%
minus
the Future Excess Servicing Spread Percentage.
Sale Date
: As defined in the Purchase and Sale Agreement; provided that all conditions precedent to the execution and delivery of the related assignment agreement under the Current Spread Agreement
shall have been satisfied or waived on such date.
Sales Proceeds
: The proceeds received upon a sale (approved by the
Parties) of the Total Servicing Spread (except without giving effect to clause (c) of the definition thereof), in whole or in part, including through a sale in accordance with
Section 8.12
.
Schedule of Mortgage Loans:
The list of Mortgage Loans whose Future Excess Servicing Spread has been assigned to Purchaser
pursuant to this Agreement as updated by the Seller and Purchaser on each Assignment Date and maintained as
Exhibit C
hereto.
Selection Period
: As defined in
Section 3.04(b)
hereof.
10
Seller
: As defined in the preamble hereof.
Seller Indemnitees
: As defined in
Section 11.02
hereof.
Servicing
: The responsibilities, with respect to servicing the Mortgage Loans, under the Servicing Agreements.
Servicing Agreements
: The servicing agreements, as amended from time to time, and any waivers, consent letters, acknowledgments
and other agreements under which Seller is the servicer of the Mortgage Loans relating to the Mortgage Servicing Rights and governing the servicing of the Mortgage Loans, or with respect to Mortgage Loans owned by the Seller, the credit and
collection standards, policies, procedures and practices of Seller relating to residential mortgage loans owned and serviced by Seller.
Servicing Spread Collections
: For each Collection Period, the funds collected on the Mortgage Loans and allocated as the servicing compensation payable to Seller as servicer of the Mortgage Loans
with respect to such Collection Period pursuant to the applicable Servicing Agreements, other than Ancillary Income and, for the avoidance of doubt, other than reimbursements received for advances and other out-of-pocket expenditures from an Owner
by Seller in accordance with the Servicing Agreements.
Solvent
: With respect to any Person as of any date of
determination, (a) the value of the assets of such Person is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person as determined in accordance with GAAP, (b) such Person is able to
pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the
amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
Third Party Assignee
: As defined in
Section 12.15
hereof.
Third Party Assignment
: As defined in
Section 12.15
hereof.
Third Party Future Spread Agreement
: As defined in
Section 12.15
hereof.
Third Party Claim
: As defined in
Section 11.01
and
Section 11.02
, as applicable.
Third Party Controlled Future Spread Custodial Account
: The account specified in the Future Spread Custodial Account Control
Agreement and maintained by Wells Fargo Bank, National Association, or any successor thereto, or another third party custodian or trustee selected by Purchaser, into which all Servicing Spread Collections, all Sales Proceeds and all Servicing
Agreement termination payments in respect of the Mortgage Loans shall be deposited.
Total Servicing Spread
: For each
Collection Period on and after the Sale Date, the sum of the following: (a) the Servicing Spread Collections received during such Collection Period and remaining after payment of the Base Servicing Fee; (b) all other amounts payable by an
11
Owner to Seller (or Purchaser under an Owner Consent) with respect to the Mortgage Servicing Rights for Mortgage Loans, including any termination fees paid by an Owner to Seller for terminating
Seller as the servicer of any of the Mortgage Loans, but for the avoidance of doubt, excluding all Ancillary Income and reimbursements received for advances and other out-of-pocket expenditures from an Owner by Seller in accordance with the
Servicing Agreements and (c) all Sales Proceeds received during such Collection Period.
Transaction
Documents
: The Future Spread Custodial Account Agreement, the Future Spread Custodial Account Control Agreement, the Future Spread Reserve Account Agreement, the Future Spread Reserve Account Control Agreement, the Current Spread Agreement and
this Agreement.
UCC
: The Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.
Section 1.02
General Interpretive Principles
.
For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other gender;
(b) Accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally accepted accounting principles;
(c) References
herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) A reference to a Subsection without further reference to a Section is a reference to such Subsection as
contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions;
(e) The words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; and
(f) The term “include” or “including” shall mean without limitation by reason of enumeration.
12
ARTICLE II
ITEMS TO BE DELIVERED
Section 2.01
Items to be
Delivered
.
(a) On the Agreement Date, subject to the satisfaction of the terms and conditions herein, each of
Seller and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
(i) This Agreement;
(ii) The Current Spread Agreement and all agreements, certificates, opinions and instruments required to be delivered under the Current Spread Agreement on the Agreement Date, if any;
(b) On the Sale Date, subject to the satisfaction of the terms and conditions herein, each of Seller and Purchaser shall deliver or
cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
(i) The executed Future Spread Custodial Account Agreement;
(ii)
The executed Future Spread Custodial Account Control Agreement;
(iii) The executed Future Spread Reserve
Account Agreement;
(iv) The executed Future Spread Reserve Account Control Agreement;
(v) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser regarding due authorization, authority, and
enforceability of the applicable Transaction Documents to which Seller is a party, and regarding no conflicts with other material Seller agreements;
(vi) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the characterization of the transfer of the Future Excess Servicing Spread from Seller to Purchaser as a true sale for
bankruptcy purposes;
(vii) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the
perfection of the assignment of Future Excess Servicing Spread to Purchaser and the security interests granted hereunder;
(viii) The duly executed corporate certificate of Seller required by
Section 9.07
;
13
(ix) A certificate of good standing of Seller dated as of a date within
five (5) Business Days prior to the Sale Date to be delivered by Seller;
(x) A secretary’s
certificate of Seller attaching its organizational documents, board resolutions and incumbency certificates;
(xi) The duly executed corporate certificate of Purchaser required by
Section 10.05
;
(xii) A certificate of good standing of Purchaser dated as of a date within five (5) Business Days prior to the Sale
Date to be delivered by Purchaser;
(xiii) A UCC-1 financing statement relating to the sale of the Future
Excess Servicing Spread and relating to the security interest of Purchaser in the Third Party Controlled Future Spread Custodial Account and the Future Spread Reserve Account, in form and substance reasonably acceptable to Purchaser; and
(xiv) All agreements, certificates, opinions and instruments required to be delivered under the Current Spread Agreement
on the Sale Date.
(c) On or before the Assignment Date with respect to a Mortgage Loan, Seller shall provide Purchaser with
executed copies of the related Owner Consents, and any amendments thereto.
(d) On or before the first Assignment Date, the
executed Power of Attorney.
Section 2.02
Grant of Security Interest
.
In order to secure Seller’s obligations to deliver the Future Excess Servicing Spread and perform its obligations hereunder, Seller
hereby Grants to Purchaser a valid and continuing first priority and perfected Lien on and security interest in all of Seller’s right, title and interest in, to and under, the Third Party Controlled Future Spread Custodial Account and the
Future Spread Reserve Account, together with all amounts deposited therein from time to time and all cash and non-cash proceeds thereof, in each case, whether now owned or existing, or hereafter acquired and arising (the
“
Collateral
”).
ARTICLE III
REPLACEMENT OF MORTGAGE LOANS
Section 3.01
Refinancing
and Substitution of Mortgage Loans
.
Subject to, and upon the terms and conditions of this Agreement, and, more
particularly, the conditions of this
ARTICLE III
, if Seller or any of its affiliates refinances any Current Mortgage Loan or Mortgage Loan, it shall designate a residential mortgage loan as a replacement
14
Mortgage Loan pursuant to this
ARTICLE III
and assign the Future Excess Servicing Spread with respect to such replacement Mortgage Loan on the applicable Assignment Date to Purchaser as
provided in this Agreement (such obligations of Seller, the “
Future Excess Servicing Spread Assignment Obligation
“), and the rights of Purchaser to such Future Excess Servicing Spread, the “
Future Excess Servicing Spread
Rights
“).
Section 3.02
Criteria for Mortgage Loans
.
(a) As of the applicable Assignment Date, unless otherwise agreed upon by Seller and Purchaser, either:
(i) The Mortgage Loan shall satisfy the following criteria:
(1) The proceeds of such Mortgage Loan (the “
New Mortgage Loan
“) were use to repay the Refinanced
Mortgage Loan in whole or in part;
(2) All consents, if any, required by the applicable Owner to assign the
related Future Excess Servicing Spread with respect to the New Mortgage Loan shall have been obtained;
(3)
The servicing fee rate for the New Mortgage Loan is not less than the lesser of (x) the servicing fee rate of the Refinanced Mortgage Loan and (y) (A) 0.25% per annum if such New Mortgage Loan is owned by Fannie Mae or Freddie
Mac, (B) 0.35% per annum if such New Mortgage Loan is a Non-Agency Mortgage Loan or (C) 0.375% per annum if such New Mortgage Loan is owned by GNMA; and
(4) The New Mortgage Loan is secured by the same property as the Refinanced Mortgage Loan; or
(ii) if Seller is unable to satisfy the conditions in
Section 3.02(a)(i)
after using commercially reasonable
efforts, Seller shall use its best efforts to substitute the New Mortgage Loan with a Mortgage Loan satisfying the following criteria:
(1) The servicing fee rate (which results in the Servicing Spread Collections) for the Mortgage Loan is equal to or greater than the servicing fee rate of the New Mortgage Loan; provided however if the
servicing fee rate of the New Mortgage Loan is less than the applicable rate set forth in
Section 3.02(a)(i)(3)
, the servicing fee rate on the Mortgage Loan is not less than the lesser of (x) the servicing fee rate of the Refinanced
Mortgage Loan and (y) (A) 0.25% per annum if such Mortgage Loan is owned by Fannie Mae or Freddie Mac, (B) 0.35% per annum if such Mortgage Loan is a Non-Agency Mortgage Loan or (C) 0.375% per annum if such
Mortgage Loan is owned by GNMA;
(2) The interest accrual rate per annum on the Mortgage Loan is within 12.5
basis points per annum of the interest accrual rate on the New Mortgage Loan;
15
(3) The final maturity date of the Mortgage Loan is within six months of
the final maturity date of the New Mortgage Loan;
(4) The principal balance of the Mortgage Loan is no less
than the principal balance of the Refinanced Mortgage Loan;
(5) The remaining credit characteristics of the
Mortgage Loan (other than as specified in
clauses (1)
,
(2)
,
(3)
and
(4)
above) are substantially the same as the credit characteristics of the New Mortgage Loan;
(6) The Mortgage Loan is current as of the applicable Assignment Date; and
(7) The Mortgage Loan is not subject to any foreclosure or similar proceeding as of the applicable Assignment Date; is
not in process of any modification, workout or other loss mitigation process; and is not involved in litigation.
(b) If a
New Mortgage Loan would otherwise meet the criteria set forth in
Section 3.02(a)(i)
and is still owned by Seller as of the Mortgage Loan Identification Date, in lieu of a substitution pursuant to
Section 3.02(a)(ii)
above,
the Seller may include such New Mortgage Loan as a Mortgage Loan in the Available Portfolio; provided (i) the servicing fee rate (which results in the Servicing Spread Collections) for such Mortgage Loan shall be deemed to be 0.30% per
annum and (ii) if at any time such Mortgage Loan fails to otherwise meet the criteria set forth in
Section 3.02(a)(i)
(e.g. the Mortgage Loan is sold to an Agency and the Seller is unable to obtain an Owner Consent), the Seller
shall be required to substitute a loan for such New Mortgage Loan pursuant to
Section 3.02(a)(ii)
above.
(c)
Notwithstanding the provisions of Section
3.02(a)(ii)(4)
, Seller shall not be in breach of
Section 3.01
on any Assignment Date if, after using best efforts to select residential mortgage loans to substitute New Mortgage Loans
pursuant to
Section 3.02(a)(ii)
, the aggregate outstanding principal balance of the residential mortgage loans in the Available Portfolio as of such Assignment Date is equal to or greater than 90% of the aggregate outstanding principal
balance of the New Mortgage Loans during the Related Collection Period as measured on the opening of business on their respective Refinancing Date.
Section 3.03
Refinancing Incentives
.
For any
Assignment Date beginning with the Assignment Date in the sixth calendar month after the Sale Date and subject to Section 4.04 hereof, Seller’s Future Excess Servicing Spread Assignment Obligation shall be reduced by the Maximum
Retained Refinancing Loan Amount for such Assignment Date. For purposes of this
Section 3.03
, the following definitions shall apply:
Replacement Shortfall:
With respect to any Assignment Date and the Related Collection Period, the aggregate outstanding principal balance of the New Mortgage Loans that were originated by Seller or
an affiliate thereof during the Related Collection Period as measured on the opening of business on their respective Refinancing Date,
minus
the aggregate outstanding principal balance of the residential mortgage loans in the Available
Portfolio as of such Assignment Date.
16
Excess Refinancing Percentage
: With respect to any Assignment Date, a percentage
equal to the excess, if any, of (a) a fraction, expressed as a percentage, the
numerator
of which is equal to the aggregate principal balance of New Mortgage Loans that were originated by Seller or an affiliate thereof over the Related
Collection Period and the two Collection Periods immediately prior to such Related Collection Period (the “
Quarterly Collection Period
”) as measured on their respective Refinancing Date,
minus
the aggregate Replacement
Shortfall over such Quarterly Collection Period, and the
denominator
of which is the aggregate principal balance of all Mortgage Loans that voluntarily prepaid in full over the Quarterly Collection Period (measured as of the date of such
prepayment),
over
(b) 35%.
Refinancing Split Percentage
: With respect to any Assignment Date, the
Refinancing Split Percentage shown in the column of the table below corresponding to the Excess Refinancing Percentage therein:
|
|
|
|
|
|
|
Three Month Average Recapture
Percentage
|
|
Excess Refinancing
Percentage
|
|
Refinancing Split
Percentage
|
|
35% or Less
|
|
0%
|
|
0%
|
|
> 35%, <= 40%
|
|
>0.00% and <=5.00%
|
|
25%
|
|
> 40%, <= 45%
|
|
>5.00% and <=10.00%
|
|
30%
|
|
> 45%, <= 50%
|
|
>10.00% and <=15.00%
|
|
35%
|
|
> 50%, <= 55%
|
|
>15.00% and <=20.00%
|
|
40%
|
|
> 55%, <= 60%
|
|
>20.00% and <=25.00%
|
|
45%
|
|
Greater than 60%
|
|
>25.00%
|
|
50%
|
Maximum Retained Refinancing Loan Amount
: With respect to any Assignment Date, an amount, not less
than zero, equal to the
sum
of (a) the
product
of (i) the Refinancing Split Percentage, if any, applicable to such Assignment Date, (ii) the Excess Refinancing Percentage applicable to such Assignment Date and
(iii) the aggregate principal balance of New Mortgage Loans that were refinanced with Seller or an affiliate thereof during the Related Collection Period,
plus
(b) the Carryover Retained Amount,
minus
(c) the applicable
Replacement Shortfall.
Carryover Retained Amount
: With respect to any Assignment Date beginning with the Assignment
Date in the seventh calendar month after the Sale Date, the
excess
, if any, of the Maximum Retained Refinancing Loan Amount for the prior Assignment Date
over
the aggregate outstanding principal balance of the Mortgage Loans that were
retained by Seller pursuant to this
Section 3.03
on the prior Assignment Date.
17
Section 3.04
Selection Procedures
.
(a) Not later than the Mortgage Loan Identification Date, Seller shall (i) notify Purchaser of the identity of each Current
Mortgage Loan and each Mortgage Loan that became a Refinanced Mortgage Loan during the Related Collection Period, (ii) calculate the Excess Refinancing Percentage, the Refinancing Split Percentage, the Maximum Retained Refinancing Loan Amount
and the Carryover Retained Amount for the following Assignment Date, and notify Purchaser of such amounts in writing, (iii) provide Purchaser with a list of potential Mortgage Loans (the “
Available Portfolio
”), selected on the
basis that the Excess Refinancing Percentage is equal to zero, and (iv) provide Purchaser with a list of residential mortgage loans selected from the Available Portfolio to be designated as Mortgage Loans (the “
Replacement
Portfolio
”) on the following Assignment Date and a list of residential mortgage loans selected from the Available Portfolio to be excluded from the pool of Mortgage Loans (the “
Retained Portfolio
”) on the following
Assignment Date in accordance with
Section 3.03
.
(b) Purchaser may submit an objection to the proposed Available
Portfolio, the proposed Replacement Portfolio or the proposed Retained Portfolio not later than five Business Days following receipt of the notice of the proposed portfolios pursuant to
Section 3.04(a)
. If Purchaser submits an objection,
Seller and Buyer shall work together in good faith over the next five Business Days (the “
Selection Period
”) to mutually agree on the Replacement Portfolio and the Retained Portfolio. During the Selection Period, Seller may suggest
alternative Mortgage Loans that meet the criteria of
Section 3.02
. If Seller and Purchaser are unable to agree on a Replacement Portfolio and a Retained Portfolio (if applicable) by close of business on the Business Day prior to the
Assignment Date, Seller and Purchaser may modify the percentages in the definitions of Future Excess Servicing Spread and Retained Servicing Spread and in the Priority of Payments, as applicable, to reflect the relative values that Seller and
Purchaser would have had in the Future Excess Servicing Spread and Retained Servicing Spread but for the inability of Seller and Purchaser to mutually agree on such portfolios.
(c) Unless mutually agreed upon by Seller and Purchaser, the Retained Portfolio and the Replacement Portfolio with respect to any
Assignment Date shall satisfy the following criteria:
(i) The aggregate outstanding principal balance of the
residential mortgage loans in the Retained Portfolio shall not exceed the Maximum Retained Refinancing Loan Amount;
(ii) The weighted average servicing fee rate for the residential mortgage loans in the Retained Portfolio shall be substantially equal to the weighted average servicing fee rate for the Mortgage Loans in
the Replacement Portfolio;
(iii) The weighted average interest accrual rate per annum of the residential
mortgage loans in the Retained Portfolio shall be within 12.5 basis points per annum of the weighted average interest rate of the Mortgage Loans in the Replacement Portfolio;
18
(iv) The weighted average final maturity date of the residential mortgage
loans in the Retained Portfolio shall be within six months of the weighted average final maturity date of the Mortgage Loans in the Replacement Portfolio; and
(v) The remaining credit characteristics of the pool of residential mortgage loans in the Retained Portfolio (other than as specified in
clauses (ii)
,
(iii)
and
(iv)
above)
shall be substantially the same as the credit characteristics of the pool of Mortgage Loans in the Replacement Portfolio.
(d)
Exhibit B
provides an example of the calculations to be made pursuant to Section 3.04(c)(i).
Section 3.05
Assignment of Future Excess Servicing Spread
.
Subject to the satisfaction of the terms and conditions in
this Agreement, on each Assignment Date, Seller shall execute and deliver an Assignment Agreement for the Future Excess Servicing Spread to be assigned on such Assignment Date with respect to the Mortgage Loans included in the applicable Replacement
Portfolio;
provided
,
however
, that
(a) Purchaser shall be entitled to all Future Excess Servicing Spread and
Seller shall be entitled to all Retained Servicing Spread arising with respect to each such Mortgage Loan on and after the Refinancing Date with respect to the related Refinanced Mortgage Loan,
(b) Seller shall deposit all Servicing Spread Collections received with respect to such Mortgage Loans on and after the Refinancing Date
with respect to the related Refinanced Mortgage Loans into the Third Party Controlled Future Spread Custodial Account not later than the Assignment Date, and
(c) for each Mortgage Loan that was originated on or after the Refinancing Date of the related Refinanced Mortgage Loan, Seller shall deposit all Servicing Spread Collections with respect to amounts
prepaid at the time of closing of such Mortgage Loan, if applicable, into the Third Party Controlled Future Spread Custodial Account not later than the Assignment Date.
ARTICLE IV
PAYMENTS AND DISTRIBUTIONS
Section 4.01
Purchase Price
.
In full consideration for Purchaser’s right to receive any Future Excess Servicing Spread assigned to Purchaser, and upon the terms and conditions of this Agreement, Purchaser shall pay to Seller an
amount (the “
Purchase Price
”) that shall be determined by the Parties on the Sale Date in accordance with Section 3.01 of the Current Spread Agreement.
19
Section 4.02
Payments by Purchaser
.
Payment shall be made by Purchaser to Seller by wire transfer of immediately available federal funds, to an account designated by Seller.
Section 4.03
Accounts
.
(a)
Lockbox Account
. Seller shall inform the Mortgagors of Mortgage Loans to remit their mortgage payments to the Lockbox Account. Payments of all Servicing Spread Collections received on and after
the first Assignment Date shall be transferred from the Lockbox Account to the Third Party Controlled Future Spread Custodial Account within one Business Day of receipt and identification thereof and in any event, within two Business Days of receipt
thereof. If Seller receives any Servicing Spread Collections not remitted to the Lockbox Account, it shall hold such funds in trust for the benefit of the Purchaser and deposit such amounts to the Third Party Controlled Future Spread Account within
two Business Days of receipt thereof.
(b)
Third Party Controlled Future Spread Custodial Account
.
(i) The Third Party Controlled Future Spread Custodial Account will be established with Wells Fargo Bank, National
Association or with such other third party custodian or trustee selected by Purchaser, for the sole purpose of receiving and disbursing all Servicing Spread Collections, Sales Proceeds and Servicing Agreement termination payments with respect to the
Mortgage Loans. The Third Party Controlled Future Spread Custodial Account will be established pursuant to the Future Spread Custodial Account Control Agreement with respect to which Purchaser is an Entitlement Holder with Control. So long as
permitted by the Future Spread Custodial Account Control Agreement, Seller may direct the disposition of funds in the Third Party Controlled Future Spread Custodial Account strictly in accordance with the Priority of Payments. Upon any material
breach of a representation, warranty or covenant by Seller hereunder or during the occurrence and continuance of a Future Spread Reserve Account Deposit Event, Purchaser may elect to exercise Control over the Third Party Controlled Future Spread
Custodial Account. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Third Party Controlled Future Spread Custodial Account.
(ii) Seller shall inform each Owner to remit the applicable portion of any Servicing Agreement termination payments
payable with respect to the Mortgage Loans directly to the Third Party Controlled Future Spread Custodial Account. Any termination payment to be directed to the Third Party Controlled Future Spread Custodial Account shall be equal to the
pro
rata
amount by which the Mortgage Loans affected by such termination bear to all mortgage loans of Seller affected by such termination, based upon the method in which such termination payments are calculated in accordance with the applicable
Servicing Agreement.
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(iii) If Seller is to receive any Sales Proceeds, Seller shall direct the
Person making such payments to deposit such payments into the Third Party Controlled Future Spread Custodial Account.
(iv) If Seller receives any amounts required to be deposited into the Third Party Controlled Future Spread Custodial Account in error, Seller shall promptly remit such funds to the Third Party Controlled
Future Spread Custodial Account.
(c)
Future Spread Reserve Account
. The Future Spread Reserve Account will be
established with Wells Fargo Bank, National Association or with such other third party custodian or trustee selected by Purchaser. The Future Spread Reserve Account will be established pursuant to the Future Spread Reserve Account Control Agreement
with respect to which Purchaser is an Entitlement Holder with Control. So long as permitted by the Future Spread Reserve Account Control Agreement, Seller may direct the disposition of funds in the Future Spread Reserve Account strictly in
accordance with
Section 4.05
. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Future Spread Reserve Account.
If at any time Seller’s Consolidated Tangible Net Worth falls below the sum of (x) $250,000,000 and (y) 50% of the
proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries or if Seller (considered together with its consolidated subsidiaries) defaults in any
indebtedness in excess of $10,000,000 (individually or in the aggregate) (each, a “
Future Spread Reserve Account Deposit Event
”), Seller shall immediately notify Purchaser in writing that a Future Spread Reserve Account Deposit
Event has occurred. On each Distribution Date upon which a Future Spread Reserve Account Deposit Event has occurred and is continuing, Seller shall be required to transfer funds in the Third Party Controlled Future Spread Custodial Account to the
Future Spread Reserve Account in accordance with the Priority of Payments until the amount of funds in the Future Spread Reserve Account is equal to the Future Spread Reserve Account Required Amount. The “
Future Spread Reserve Account
Required Amount
” is equal to 25% of the fair market value as of the date the Future Spread Reserve Account Deposit Event that is then-continuing first occurred of the Total Servicing Spread expected to be paid over the expected remaining
life of the Mortgage Loans (the “
Remaining Expected Total Servicing Spread
”) determined in accordance with the following paragraph. Seller shall immediately notify Purchaser in writing if a Future Spread Reserve Account Deposit
Event is no longer continuing. Any funds in the Future Spread Reserve Account in excess of the Future Spread Reserve Account Required Amount shall be released to Seller.
For purposes of determining the fair market value of the Remaining Expected Total Servicing Spread, Purchaser shall submit its claim for determination of the fair market value of the Remaining Expected
Total Servicing Spread, together with such back-up information it deems appropriate to justify such fair market value (which value shall be considered the fair market value of the Remaining Expected Total Servicing Spread for purposes of calculating
the Future Spread Reserve Account Required Amount until the final determination of such fair market value in accordance with this paragraph). Within five (5) Business Days of Seller’s
21
receipt of such determination, Seller shall notify Purchaser in writing of its acceptance or any objection to such determination of such fair market value, and if Seller objects to such
determination, such notice shall include its own determination of such fair market value and any back-up information as it deems appropriate to justify such fair market value (an “
Objection Notice
”). In the event an Objection Notice
is delivered, the parties shall negotiate in good faith a resolution to such objection. In the event that Seller and Purchaser are unable to resolve such objection within five (5) Business Days of the delivery of such Objection Notice, Seller
and Purchaser shall appoint a mutually acceptable nationally recognized valuation expert to determine such fair market value of the Remaining Expected Total Servicing Spread. The determination of such valuation expert shall be binding on Seller and
Purchaser and the fees of such valuation expert shall be borne by Seller.
Section 4.04
Priority of
Payments
.
On each Business Day, subject to the terms and conditions of the Future Spread Custodial Account
Control Agreement, Seller (or, after the delivery of an access termination notice pursuant to the Future Spread Custodial Account Control Agreement, Purchaser) shall direct the Bank to apply the monies in the Third Party Controlled Future Spread
Custodial Account in the following order of priority (the “
Priority of Payments
”), in every case, after giving effect to each prior item in the Priority of Payments on such Distribution Date:
(a)
first
, from amounts in the Third Party Controlled Future Spread Custodial Account attributable to Servicing Agreement
termination payments paid by an Owner with respect to any Mortgage Loans,
pro rata
, (A) the Future Excess Servicing Spread Percentage of such termination payments to Purchaser, and (B) the Retained Excess Servicing Spread Percentage
of such termination payments to Seller;
provided
, that (I) prior to the distribution to Purchaser of any termination payments pursuant to
clause (A)
, such termination payments shall be applied to the payment of any indemnity
payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to Seller of any termination payments pursuant to
clause (B)
, such termination payments shall be applied
first
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
second
, for deposit to the Future Spread Reserve Account to the extent necessary to
cause the amount of funds on deposit in the Future Spread Reserve Account to equal the Future Spread Reserve Account Required Amount;
(b)
second
, on any Business Day from and including the first Business Day of a calendar month to but excluding the Distribution Date in such calendar month, at the option of Seller, the Base
Servicing Fee payable with respect to a prior Collection Period for the Mortgage Loans to Seller; provided however, that, to the extent that (i) the Seller is not permitted or is otherwise unable to advance servicing fees relating to the Total
Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing Agreement does not permit payment of servicing fees from general collections, and (iii) the related Servicing
Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Future Spread Custodial Account relating to the affected Mortgage Loans shall be made pursuant to clause (d) below
prior to this clause (b);
22
(c)
third
, on each Distribution Date, to the extent not previously paid to Seller in
accordance with
Section 4.04(b)
, any accrued and unpaid Base Servicing Fee to Seller; provided however, that, to the extent that (i) the Seller is not permitted or is otherwise unable to advance servicing fees relating to the Total
Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing Agreement does not permit payment of servicing fees from general collections, and (iii) the related Servicing
Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Future Spread Custodial Account relating to the affected Mortgage Loans shall be made pursuant to clause (d) below
prior to this clause (c);
(d)
fourth
, on each Distribution Date,
pro rata
, (A) to Purchaser, any Future
Excess Servicing Spread for the prior Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 4.04(a)
); and (B) to Seller, any Retained Servicing Spread for the prior Collection
Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 4.04(a)
);
provided
, that (I) prior to the distribution to Purchaser of any Future Excess Servicing Spread pursuant to
clause (A)
, the Future Excess Servicing Spread shall be applied to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to Seller of any
Retained Servicing Spread pursuant to
clause (B)
, the Retained Servicing Spread shall be applied
first
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
second
, for deposit to the Future Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Future Spread Reserve Account to equal the Future Spread Reserve Account Required Amount; and
(e)
fifth
, on each Distribution Date, to Seller, any other amounts remaining on deposit in the Third Party Controlled Future
Spread Custodial Account.
All payments to Purchaser or Seller shall be made by wire transfer of immediately available federal
funds to an account designated by Purchaser or Seller, as applicable.
Section 4.05
Withdrawals from the Future
Spread Reserve Account
.
On any Business Day, at the instruction of Purchaser, Seller shall direct the Bank to
apply funds in the Future Spread Reserve Account, if any, to the payment of indemnity payments payable to a Purchaser Indemnitee pursuant to
Section 11.01
. If on any Business Day a Future Spread Reserve Account Deposit Event is not then
continuing and all outstanding indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller may direct the Bank to distribute any remaining funds in the Future Spread Reserve Account to, or as directed by, Seller. If there are
any funds remaining in the Future Spread Reserve Account after the Future Excess Servicing Spread and all indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller shall direct the Bank to distribute such remaining funds to,
or as directed by, Seller.
23
Section 4.06
Payment to Seller of Base Servicing Fee
.
(a) Seller shall be entitled to payment of the Base Servicing Fee only to the extent funds are available therefor in the Third Party
Controlled Future Spread Custodial Account in accordance with the Priority of Payments. Under no circumstances shall Purchaser be liable to Seller for payment of the Base Servicing Fee. In the event servicing of the Mortgage Loans is transferred to
sub-servicers for any reason, the servicing fees and expenses of such sub-servicers shall be paid by Seller and in no event will the amount of Servicing Spread Collections or termination payments otherwise allocable to the Future Excess Servicing
Spread be reduced due to the payment of sub-servicing fees and expenses.
(b) The Base Servicing Fee with respect to a
Mortgage Loan shall begin to accrue as of the Collection Period prior to the applicable Assignment Date. In no event shall Base Servicing Fees accrue concurrently on any day for a Refinanced Mortgage Loan and for a Mortgage Loan.
Section 4.07
Correction of Principal Balance Error
.
If, subsequent to the payment of any amounts due hereunder to either party, the outstanding principal balance of any Mortgage Loan is
found to be in error, the party benefiting from the error shall pay an amount sufficient to correct and reconcile such amounts and shall provide a reconciliation statement and other such documentation to reasonably satisfy the other party concerning
the accuracy of such reconciliation. Such amounts shall be paid by the proper party within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
Section 4.08
Intent and Characterization
.
(a) Seller and Purchaser intend that the assignments of the Future Excess Servicing Spread pursuant to this Agreement and each
Assignment Agreement constitute valid sales of such Future Excess Servicing Spread from Seller to Purchaser, conveying good title thereto free and clear of any Lien other than Permitted Liens, and that the beneficial interest in and title to such
Future Excess Servicing Spread not be part of Seller’s estate in the event of the bankruptcy of Seller. Seller and Purchaser intend and agree to treat the transfer and assignment of the Future Excess Servicing Spread as an absolute sale for tax
purposes, and as an absolute and complete conveyance of title for property law purposes. Except for financial accounting purposes, neither party intends the transactions contemplated hereby to be characterized as a loan from Purchaser to Seller.
(b) In the event (but only in the event) that the conveyance of the Future Excess Servicing Spread is characterized by a
court or governmental authority as security for a loan rather than a sale, Seller will be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the
Future Excess Servicing Spread and all proceeds thereof as security for a loan in an amount equal to the aggregate Purchase Price (as defined in the Current Spread Agreement).
24
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to
Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as of the Agreement Date, the Sale Date and as of each Assignment Date as follows (or as of the date specified below, as applicable):
Section 5.01
Due Organization and Good Standing
.
Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Seller is qualified to transact business in each jurisdiction in which such qualification is deemed necessary to service the Mortgage Loans. Seller has, in full force and effect (without notice of possible suspension, revocation or impairment), all
required permits, approvals, licenses, and registrations to conduct all activities in all states in which its activities with respect to the Mortgage Loans or the Mortgage Servicing Rights require it to be licensed, registered or approved in order
to service the Mortgage Loans and own the Mortgage Servicing Rights, unless the failure to obtain such permits, approvals, licenses and registrations would not reasonably be expected to have a material adverse effect on Seller’s ability to
perform its obligations under this Agreement or the other Transaction Documents to which it is a party.
Section 5.02
Authority and Capacity
.
Seller has all requisite limited liability company power, authority and capacity
to enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document and the
consummation of the transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company action. This Agreement and each other Transaction Document to which it is a party has been duly
executed and delivered by Seller. This Agreement constitutes, and each other applicable Transaction Document to which Seller is a party constitutes or will constitute, a valid and legally binding agreement of Seller enforceable in accordance with
its terms, and no offset, counterclaim or defense exists to the full performance by Seller of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting
the enforcement of creditors’ rights generally and by general equity principles.
Section 5.03
Owner
Consents
.
Prior to an Assignment Date, Seller has obtained all necessary and applicable Owner Consents.
25
Section 5.04
Title to the Mortgage Servicing Rights
.
As of an Assignment Date, Seller will be the lawful owner of the Mortgage Servicing Rights, will be responsible for the maintenance of
the Related Escrow Accounts, and will have the sole right and authority to transfer the Future Excess Servicing Spread as contemplated hereby. The transfer, assignment and delivery of the Future Excess Servicing Spread shall be free and clear of any
and all claims, charges, defenses, offsets, Liens and encumbrances of any kind or nature whatsoever other than Permitted Liens.
Section 5.05
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document by Seller, compliance with the terms hereof and thereof and the consummation of the transactions contemplated
hereby and thereby did not, and will not, violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited liability company agreement, any
instrument or agreement to which it is a party or by which it is bound or which affects the Future Excess Servicing Spread, or any state or federal law, rule or regulation or any judicial or administrative decree, order, ruling or regulation
applicable to it or to the Future Excess Servicing Spread.
Section 5.06
No Accrued Liabilities
.
There are no accrued liabilities of Seller with respect to the Mortgage Loans or the Mortgage Servicing Rights or
circumstances under which such accrued liabilities will arise against Purchaser as purchaser of the Future Excess Servicing Spread.
Section 5.07
Seller/Servicer Standing
.
As of the
applicable Assignment Date, Seller is approved by each applicable Agency as a seller/servicer in good standing with the requisite financial criteria and adequate resources to complete the transactions contemplated hereby on the conditions stated
herein. No event has occurred, including but not limited to a change in insurance coverage, which would make the Seller unable to comply with the applicable Agency eligibility requirements or which would require notification to the applicable
Agency. Furthermore, if at any time prior to the termination of this Agreement, the Seller is unable to comply with any of the Agency eligibility requirements, it shall immediately notify the Purchaser that it is no longer an approved
seller/servicer of mortgage loans for any Agency which is an Owner of a Mortgage Loan.
Section 5.08
MERS
Membership
.
Seller is a member in good standing under the MERS system or another similar system reasonable
acceptable to the Purchaser.
Section 5.09
Owner Set-off Rights
.
Seller has no actual notice, including any notice received from an Owner, or any reason to believe, that, other than in the normal course
of Seller’s business, any circumstances exist that would result in Seller being liable to an Owner for any amount due by reason of: (i) any breach of servicing obligations or breach of mortgage selling warranty to an Owner under servicing
agreements relating to Seller’s entire servicing portfolio for such Owner (including without limitation any unmet mortgage repurchase obligation), (ii) any unperformed obligation with
26
respect to mortgage loans that Seller is servicing for an Owner under the regular servicing option or other mortgages subject to recourse agreements, (iii) any loss or damage to an Owner by
reason of any inability to transfer to a purchaser of the servicing rights Seller’s selling and servicing representations, warranties and obligations, or (iv) any other unmet obligations to an Owner under a servicing contract relating to
Seller’s entire servicing portfolio with such Owner.
Section 5.10
Ability to Perform;
Solvency
.
Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform
each and every covenant contained in this Agreement. Seller is Solvent and the sale of the Future Excess Servicing Spread will not cause Seller to become insolvent. The sale of the Future Excess Servicing Spread is not undertaken to hinder, delay or
defraud any of the creditors of Seller. The consideration received by Seller upon the sale of the Future Excess Servicing Spread constitutes fair consideration and reasonably equivalent value therefor.
Section 5.11
Obligations with Respect to Origination
.
Seller shall remain liable for all obligations with respect to the origination of each Mortgage Loan and, if applicable, for all
obligations with respect to the sale of such Mortgage Loan to the applicable Owner.
Section 5.12
Purchase of
Mortgage Servicing Rights
.
Each agreement or arrangement that Seller enters into to purchase Mortgage
Servicing Rights shall be entered into on an arm’s length contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing Rights to be acquired thereby. Seller shall not enter into
any agreement or arrangement with a third party intended to encourage the refinancing of any Mortgage Loan by any Person other than Seller.
Section 5.13
No Actions
.
There have not been commenced or, to
the best of Seller’s knowledge, threatened any action, suit or proceeding which will likely materially and adversely affect the consummation of the transactions contemplated by any Transaction Document.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE LOANS AND SERVICING
As further inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser, as of each Assignment Date
(or as of the date specified below, as applicable), as follows:
27
Section 6.01
Servicing Agreements; Applicable Laws
.
Seller, the originator of the Mortgage Loan and each prior owner of the Mortgage Servicing Rights has each performed its obligations in
all material respects in accordance with the terms of the related Mortgage Note, Mortgage, Servicing Agreements and Applicable Law.
Section 6.02
Related Escrow Accounts
.
All Related
Escrow Accounts are being, and have been, maintained in accordance with Applicable Law and in accordance with the Servicing Agreements and the terms of the related Mortgages and other Mortgage Loan Documents; and, except as to payments which are
past due under Mortgage Notes, all balances required by the Mortgages or other Mortgage Loan Documents to be paid to Seller for the account of the Mortgagors are on deposit in the appropriate Related Escrow Account.
Section 6.03
No Purchaser Responsibility
.
Purchaser shall have no responsibility, liability or other obligation whatsoever under any Servicing Agreement or with respect to any
Mortgage Loan, or to make any advance thereunder, or to pay any servicing fees.
Section 6.04
Location of Credit
Files
.
All of the Mortgage Loan Documents are held by Custodians or, if held by the Seller, in the locations
specified in
Exhibit F
, unless temporarily removed for enforcement purposes in the normal course of servicing. Seller will notify Purchaser in writing of any changes in locations of the Mortgage Loan Documents held by Seller in
Exhibit
F
.
Section 6.05
Representations Concerning the Future Excess Servicing Spread
.
(a) Seller has not assigned, pledged, conveyed, or encumbered the Future Excess Servicing Spread to any other Person (other than
Permitted Liens) and immediately prior to the sale of the Future Excess Servicing Spread, Seller was the sole owner of the Future Excess Servicing Spread and had good and marketable title thereto (subject to the rights of the applicable Owner under
the Servicing Agreements), free and clear of all Liens (other than Permitted Liens), and no Person, other than Purchaser, has any Lien (other than Permitted Liens) on the Future Excess Servicing Spread. No security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering all or any part of the Future Excess Servicing Spread which has been signed by Seller or which Seller has authorized any other Person to sign or file or record, is on file or
of record with any public office, except such as may have been terminated or filed by or on behalf of Purchaser.
(b) The
sale and grant of a security interest by Seller to Purchaser of and on the Future Excess Servicing Spread does not and will not violate any Requirement of Law, the effect of which violation is to render void or voidable such assignment.
28
(c) As contemplated under
Section 4.08(b)
, upon the filing of financing
statements on Form UCC-1 naming Purchaser as “Secured Party” and Seller as “Debtor”, and describing the Future Excess Servicing Spread, in the jurisdictions and recording offices listed on Exhibit J attached hereto, the sale and
security interests granted hereunder in the Future Excess Servicing Spread will constitute perfected first priority security interests under the UCC in all right, title and interest of Purchaser in, to and under the Future Excess Servicing Spread.
(d) Purchaser has and will continue to have the full right, power and authority to pledge the Future Excess Servicing
Spread, and the Future Excess Servicing Spread may be further assigned without any requirement, in each case, subject only to applicable Owner Consents.
(e) Each Servicing Agreement constitutes an Eligible Servicing Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement, Purchaser represents and warrants to Seller as of the Agreement Date, the Sale Date and as of each Assignment Date as follows (or as of the date
specified below, as applicable):
Section 7.01
Due Organization and Good Standing
.
Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Purchaser is qualified to transact business in each jurisdiction in which such qualification is deemed necessary.
Section 7.02
Authority and Capacity
.
Purchaser has all requisite limited liability company power, authority and capacity to enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations
required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document to which it is a party and the consummation of the transactions contemplated hereby and thereby have each been duly and validly
authorized by all necessary limited liability company action. This Agreement constitutes, and each other applicable Transaction Document to which Purchaser is a party constitutes or will constitute, a valid and legally binding agreement of Purchaser
enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Purchaser of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency,
reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
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Section 7.03
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party by Purchaser, its
compliance with the terms hereof and thereof and the consummation of the transactions contemplated hereby and thereby will not violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional
approval under its certificate of formation or limited liability company agreement, any instrument or agreement to which it is a party or by which it is bound, or any state or federal law, rule or regulation or any judicial or administrative decree,
order, ruling or regulation applicable to it, in each case which violation, conflict, breach or requirement would reasonably be expected to have a material adverse effect on Purchaser’s ability to perform its obligations under this Agreement
and any other Transaction Document to which it is a party.
Section 7.04
Sophisticated Investor
.
Purchaser is a sophisticated investor and its decision to acquire the Future Excess Servicing Spread is based upon
Purchaser’s own independent experience, knowledge, due diligence and evaluation of this transaction. Purchaser has relied solely on such experience, knowledge, due diligence and evaluation and has not relied on any oral or written information
provided by Seller other than the representations and warranties made by Seller herein.
Section 7.05
No
Actions
There shall not have been commenced or, to the best of Purchaser’s knowledge, threatened any action,
suit or proceeding against the Purchaser that will likely materially and adversely affect the consummation of the transactions contemplated hereby.
ARTICLE VIII
SELLER COVENANTS
Seller covenants and agrees as follows:
Section 8.01
Servicing Obligations
.
(a) Seller shall
pay, perform and discharge all liabilities and obligations relating to the Servicing, including all liabilities and obligations under the Mortgage Loan Documents, Applicable Law and the Servicing Agreements; and shall pay, perform and discharge all
the rights, obligations and duties with respect to the Related Escrow Accounts as required by the Servicing Agreements, the Mortgage Loan Documents, all Applicable Law and, with respect to any Mortgage Loans owned by an Agency, such Agency.
(b) Under no circumstances shall Purchaser be responsible for the Servicing acts and omissions of Seller or any other
servicer or any originator of the Mortgage Loans, or for any servicing related obligations or liabilities of any servicer in the Servicing Agreements or of any Person under the Mortgage Loan Documents, or for any other obligations or liabilities of
Seller.
30
(c) With respect to any Servicing Agreement relating to a Non-Agency Mortgage Loan, subject
to a nonrecoverability determination made in accordance with the related Servicing Agreement and to the extent the Seller as servicer has an obligation to advance principal and interest on delinquent Mortgage Loans, the Seller shall advance the full
amount of principal and interest on delinquent Mortgage Loans for each Collection Period, including the related servicing fee.
(d) Upon termination of any Servicing Agreement, Seller shall remain liable to Purchaser and the applicable Owner for all liabilities
and obligations incurred by the servicer or its designee while Seller or its designee was acting as the servicer thereunder.
(e) Seller shall conduct quality control reviews of its servicing operations in accordance with industry standards and the requirements
of each Agency relating to the Mortgage Loans.
Section 8.02
Cooperation; Further Assurances
Seller shall cooperate with and assist Purchaser, as reasonably requested, in carrying out the purposes of this Agreement. Seller will
cooperate and assist Purchaser, as reasonably requested and at the reasonable expense of Purchaser, in obtaining consents from any Owner as may be required or advisable to assign, transfer, deliver, hypothecate, pledge, subdivide, finance or
otherwise deal with the Future Excess Servicing Spread. If Seller is terminated under any Servicing Agreement, Seller shall cooperate fully and at its own expense in transferring such Servicing. If Purchaser assigns all or any portion of its Future
Excess Servicing Spread or its other rights under this Agreement to a Third Party Assignee, Seller will cooperate and assist any Third Party Assignee in drafting and entering into a Third Party Future Spread Agreement in accordance with
Section 12.15
.
Section 8.03
Financing Statements
.
Seller hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements, in
any jurisdictions and with any filing offices as Purchaser may determine, in its sole discretion, are necessary or advisable to perfect the sale of the Future Excess Servicing Spread and the security interests granted to Purchaser in connection
herewith. Seller agrees to execute financing statements in form reasonably acceptable to Purchaser and Seller at the request of Purchaser in order to reflect Purchaser’s interest in the Future Excess Servicing Spread, the Third Party Controlled
Future Spread Custodial Account and the Future Spread Reserve Account.
Section 8.04
Supplemental
Information
.
From time to time after the applicable Assignment Date with respect to each Mortgage Loan, Seller
promptly shall furnish Purchaser such incidental information, which is reasonably available to Seller, supplemental to the information contained in the documents and schedules delivered pursuant to this Agreement, as may reasonably be requested to
monitor performance of the Mortgage Loans and the payment of the Future Excess Servicing Spread.
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Section 8.05
Access to Information
.
From time to time, at such times as are reasonably convenient to Seller, Purchaser or its designees may conduct audits or visit and
inspect (a) any of the Mortgage Loans or places where the Credit Files are located, to examine the Credit Files, internal controls and procedures maintained by Seller and its agents, and take copies and extracts therefrom, and to discuss
Seller’s affairs with its officers, employees and, upon notice to Seller, independent accountants. Seller hereby authorizes such officers, employees and independent accountants to discuss with Purchaser the affairs of Seller and (b) the
Seller’s servicing facilities for the purpose of satisfying the Purchaser that Seller, has the ability to service the Mortgage Loans related to Mortgage Servicing Rights in accordance with the standards set forth in the applicable Servicing
Agreement. Any audit provided for herein will be conducted in accordance with Seller’s rules respecting safety and security on its premises, in accordance with applicable privacy and confidentiality laws and without materially disrupting
operations.
Section 8.06
Home Affordable Modification Program
.
With respect to any Mortgage Loans that have been modified or that are or will be in a modification trial period as part of the U.S.
Department of the Treasury’s Home Affordable Modification Program (“
HAMP
”) (such Mortgage Loans, the “
HAMP Loans
”), Seller represents and warrants that it will continue to service such HAMP Loan in accordance
with the HAMP terms and will ensure the timely compliance and filing of any appropriate HAMP documentation with the applicable regulator.
Section 8.07
Distribution Date Data Tapes and Reports
.
Seller shall deliver the following to Purchaser two Business Days prior to each Distribution Date:
(a) An Electronic Data File in form and substance acceptable to Purchaser containing, for each Current Mortgage Loan and each Mortgage
Loan, principal, interest and Servicing Spread Collections, and delinquency status (i.e. 30, 60, 90, FCL, REO) as of the last day of the prior Collection Period;
(b) A Summary Activity Report with respect to each of the pool of Current Mortgage Loans and the pool of Mortgage Loans with respect to the prior Collection Period containing:
(i) aggregate beginning principal balance as of the first and last date of the Collection Period,
(ii) aggregate regular principal collected,
(iii) aggregate noncash principal,
(iv) aggregate interest collected,
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(v) aggregate liquidation principal,
(vi) aggregate curtailments,
(vii) liquidations,
(viii) short sales,
(ix) aggregate principal balance of Refinanced Mortgage Loans, and (1) for each Refinanced Mortgage Loan, the
principal balance, the applicable servicing spread, the final maturity date, the mortgage interest rate, the loan-to-value ratio and the FICO score, and (2) for each Current Mortgage Loan and each Mortgage Loan that was refinanced by a lender
other than Seller or an affiliate thereof, to the extent such information is known to Seller in the ordinary course of business and the collection and delivery of such information does not impose any additional and undue burden on Seller, the name
of such lender and the mortgage interest rate of the newly originated residential mortgage loan;
(c) A Delinquency Report
with respect to the Current Mortgage Loans and Mortgage Loans containing:
(i) The aggregate outstanding
principal balance of the pool of Current Mortgage Loans and the pool of Mortgage Loans and percentages of the aggregate outstanding principal balance of the pool of Current Mortgage Loans and the pool of Mortgage Loans in each of the following
categories as of the last day of the prior Collection Period:
(1) Non-delinquent Mortgage Loans,
(2) 0-29 days delinquent,
(3) 30-59 days delinquent,
(4) 60-89 days delinquent,
(5) 90 days or more delinquent,
(6) Current Mortgage Loans and Mortgage Loans in Foreclosure,
(7) Current Mortgage Loans and Mortgage Loans with respect to which the related Mortgaged Properties have become real
estate owned properties, and
(8) Current Mortgage Loans and Mortgage Loans in which the Mortgagor is in
bankruptcy;
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(ii) For each of the above categories, a roll report showing the migration
of Current Mortgage Loans and Mortgage Loans in such category from the last day of the second prior Collection Period;
(d) A
Disbursement Report for such Distribution Date containing:
(i) The Servicing Spread Collections for the prior
Collection Period,
(ii) The Base Servicing Fee paid to Seller,
(iii) The amount of the Future Excess Servicing Spread paid to Purchaser,
(iv) The amount of funds, if any, transferred to the Future Spread Reserve Account,
(v) The amount of Purchaser Indemnitees, if any, paid from each of the Third Party Controlled Future Spread Custodial
Account or the Future Spread Reserve Account, and
(vi) The amount of funds paid to Seller from the Future
Spread Reserve Account.
Section 8.08
Financial Statements and Officer’s Certificates
.
(a) If Seller’s financial statements are not filed with the U.S. Securities and Exchange Commission and are not
publicly available, Seller shall deliver to Purchaser copies of Seller’s most recent audited quarterly financial statements within 45 days of the end of each of Seller’s fiscal quarters and its most recent audited annual financial
statements within 90 days of the end of each of Seller’s fiscal years.
(b) Within 45 days of the end of each of
Seller’s fiscal quarters, Seller shall deliver to Purchaser a certificate from a duly authorized officer of Seller certifying (i) whether or not Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and
(y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries (and shall provide a calculation of its determination of its
Consolidated Tangible Net Worth) and (ii) whether or not Seller (considered together with its consolidated subsidiaries) is in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
Section 8.09
Monthly Management Calls
.
Within five Business Days after each Distribution Date, Seller shall make its management team and other appropriate officers and
employees available to Purchaser to discuss by telephone the performance of the Current Mortgage Loans and Mortgage Loans and the performance of the parties under the Transaction Documents.
34
Section 8.10
Timely Payment of Owner Obligations
.
Seller shall pay all of its obligations to an Owner in a timely manner so as to avoid exercise of any right of set-off by any Owner
against Seller.
Section 8.11
Servicing Agreements
.
Seller will service the Mortgage Loans in accordance with Accepted Servicing Practices and will perform its obligations in all material
respects in accordance with the Servicing Agreements and Applicable Law. In particular, Seller shall comply with any advancing obligation under the Servicing Agreements. Without the express written consent of Purchaser (which consent may be withheld
in its absolute discretion), Seller shall not (a) cancel, terminate or amend any Mortgage Servicing Rights, (b) expressly provide any required consent to any termination, amendment or modification of any Servicing Agreements either
verbally or in writing, (c) expressly provide any required consent to any termination, amendment or modification of any other servicing agreements or enter into any other agreement or arrangement with the applicable Owner that may be reasonably
material to Purchaser either verbally or in writing, (d) expressly or verbally waive any material default under or breach of any Servicing Agreement by the applicable Owner that may be material to the Purchaser (in Purchaser’s reasonable
determination) or (e) take any other action in connection with any such Servicing Agreement that would impair in any material respect the value of the interests or rights of the Purchaser hereunder. Seller shall conduct its business and perform
its obligations under the Servicing Agreements in a manner such that the applicable Owner will not have cause to terminate any Servicing Agreement. Notwithstanding the foregoing, in no event will the prohibitions contained in this
Section 8.11
apply to any amendments or modifications of the Servicing Agreements applicable to Current Mortgage Loans or Mortgage Loans owned by Seller which do not affect the Future Excess Servicing Spread with respect to such Current
Mortgage Loans or Mortgage Loans and are not reasonably material to the Purchaser.
Section 8.12
Transfer of
Mortgage Servicing Rights
.
If Seller intends to assign, transfer or sell any of its Mortgage Servicing Rights
to a replacement servicer, to the extent permitted by applicable law, (a) Seller shall consult with Purchaser and Purchaser shall participate in the assignment, transfer and sale of such Mortgage Servicing Rights, and (b) Seller shall
obtain the written consent of Purchaser, granted by the Purchaser in its sole discretion, prior to any assignment, transfer or sale thereof.
Section 8.13
Consents to Transaction Documents
.
Seller
shall not terminate, amend, amend and restate, modify or waive any conditions or provisions of any Transaction Document without the express written consent of Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned.
35
Section 8.14
Accounts
.
Seller shall inform the Mortgagors of Mortgage Loans at its own expense to remit their mortgage payments to the Lockbox Account, and any
change in such instructions shall only be permitted with the express written consent of Purchaser.
Section 8.15
Notification of Certain Events
.
Seller shall promptly notify Purchaser of any event which, with the
passage of time, could reasonably be expected to result in a termination of any servicing agreement between Seller and any Owner. Seller shall provide Purchaser with copies of any notices from the applicable Owner of any breach, potential breach,
default or potential default by Seller under any servicing agreement between Seller and the applicable Owner, and with copies of any notices from any Owner of any termination, potential termination or threatened termination of any servicing
agreement entered into between Seller and that Owner. Seller shall promptly forward copies of any material notices received from any Owner or from any Governmental Authority with respect to the Mortgage Loans. Seller shall provide Purchaser with
(a) copies of all amendments to the Transaction Documents, the Servicing Agreements (other than with respect to Mortgage Loans owned by Seller) and the agreements relating to Seller’s acquisition of the Mortgage Servicing Rights,
(b) with respect to Mortgage Loans owned by Seller, copies of all material amendments to the Servicing Agreements, and (c) copies of any other agreements Seller enters into with any Owner that may be reasonably material to Purchaser, in
each case, promptly after execution thereof.
Section 8.16
Financing; Pledge of Future Excess Servicing
Spread
.
Seller shall not pledge, obtain financing for, or otherwise permit any Lien of any creditor of Seller
to exist on, any portion of the Servicing Spread Collections without the prior written consent of Purchaser. Seller’s financial statements shall contain footnotes indicating that the Future Excess Servicing Spread has been sold, and Seller does
not maintain any ownership interest therein.
Section 8.17
Existence, etc
.
Seller shall:
(a) preserve and maintain its legal existence, good standing and all of its material licenses required to service the Mortgage Loans;
(b) comply with the requirements of all Applicable Laws, rules, regulations and orders of Governmental Authorities
(including, without limitation, truth in lending and real estate settlement procedures) if failure to comply with such requirements could be reasonably likely (either individually or in the aggregate) to have a material adverse effect on its ability
to perform its obligations hereunder or under any other Transaction Document;
(c) keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP consistently applied, and maintain adequate accounts and reserves for all taxes (including income taxes), all depreciation, depletion, obsolescence and amortization of its
properties, all contingencies, and all other reserves;
36
(d) not move its chief executive office or chief operating office from the addresses
referred to in
Exhibit J
unless it shall have provided Purchaser not less than thirty (30) days prior written notice of such change;
(e) pay and discharge all material taxes, assessments and governmental charges or levies imposed on it or its income or profits or on any of its property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained. Seller and its subsidiaries shall file on a timely
basis all federal, and material state and local tax and information returns, reports and any other information statements or schedules required to be filed by or in respect of it;
(f) keep in full force and effect the provisions of its charter documents, by-laws, operating agreements or similar organizational
documents in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Documents;
(g) keep in full force and effect all agreements and instruments by which it or any of its properties may be bound and all applicable decrees, orders and judgments, in each case to the extent reasonably
necessary to perform its obligations hereunder or under any other Transaction Document; and
(h) comply with its obligations
under the Transaction Documents to which it is a party and each other agreement entered into with an Owner.
Section 8.18
Consent to Sub-Servicing
.
Subject to the rights of the Owners, Seller will not permit any Person other
than Seller to service or sub-service the Mortgage Loans without the prior written consent of Purchaser, in each case other than third-party vendors customarily employed by servicers in the ordinary course of business in accordance with prudent
mortgage servicing practices.
Section 8.19
Nonpetition Covenant
.
Seller shall not, prior to the date that is one year and one day after the payment in full of the Future Excess Servicing Spread,
petition or otherwise invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against Purchaser under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of Purchaser or any substantial part of its property, or ordering the winding up or liquidation of the affairs of Purchaser.
Section 8.20
Schedule of Mortgage Loans
.
Seller shall
maintain the Schedule of Mortgage Loans, which shall be updated as of each Assignment Date. The information in the Schedule of Mortgage Loans pertaining to the Mortgage Loans and the Mortgage Servicing Rights will be true and correct in all material
respects as of the date specified.
37
Section 8.21
True Sale Opinion
.
Seller shall cause a written opinion of counsel to be furnished, in form and substance satisfactory to Purchaser, dated the Sale Date
with respect to the characterization of the transfer of the Future Excess Servicing Spread by Seller to Purchaser as a true sale. Purchaser may request additional opinions regarding such characterization subsequent to the Sale Date as advised by
Purchaser’s counsel in light of changes in law and other circumstances. To the extent Seller is unable to provide such opinions with respect to any Mortgage Loans, Seller shall substitute such Mortgage Loans with residential mortgage loans have
substantially the same credit characteristics.
Section 8.22
Valuation
.
As of the Sale Date, Purchaser shall have received an opinion reasonably satisfactory to Purchaser that the Base Servicing Fee of the
Mortgage Loans and the Purchase Price of the Future Excess Servicing Spread is fair and reasonable.
Section 8.23
Material Documents
.
Seller shall provide Purchaser with executed copies of all material agreements and
documents, and any amendments thereto, as of each Assignment Date relating to Seller’s acquisition of the related Mortgage Servicing Rights and the servicing of the Mortgage Loans assigned.
Section 8.24
Insurance
.
The Seller shall maintain (a) general liability insurance, (b) errors and omission insurance or blanket bond coverage and (c) fidelity bond insurance, in each case, from reputable companies
with coverage in amounts customarily maintained by such similarly situated entities in the same jurisdiction and industry as the Seller.
Section 8.25
Defense of Title
.
The Seller warrants and
will defend the right, title and interest of the Purchaser in and to all Future Excess Servicing Spread against all adverse claims and demands subject to Permitted Liens.
Section 8.26
Refinancing of Mortgage Loans
.
Each agreement or
arrangement that Seller enters into to purchase Mortgage Servicing Rights shall be entered into on an arm’s length contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing
Rights to be acquired thereby. Seller shall not enter into any agreement or arrangement with a third party intended to encourage the refinancing of any Mortgage Loan by any Person other than Seller.
38
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations
of Purchaser under this Agreement are subject to the satisfaction of the following conditions as of the Sale Date:
Section 9.01
Correctness of Representations and Warranties
.
The representations and warranties made by Seller in this Agreement and each other Transaction Document to which Seller is a party to be
made on or prior to the Sale Date are true and correct in all material respects.
Section 9.02
Compliance with
Conditions
.
All of the terms, covenants, conditions and obligations of this Agreement and each other
Transaction Document required to be complied with and performed by Seller on or prior to the Sale Date shall have been duly complied with and performed in all material respects.
Section 9.03
Corporate Resolution
.
Purchaser shall have received from Seller a certified copy of the Seller’s corporate resolution approving the execution and delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, together with such other certificates of incumbency and other evidences of corporate authority as Purchaser or its counsel may reasonably request.
Section 9.04
No Material Adverse Change
.
From the Agreement Date, there shall not have been any change to Seller’s financial or operating condition or in the Mortgage
Servicing Rights, the Mortgage Loans, the Related Escrow Accounts or to Seller’s relationship with, or authority from, the Agency that in each case will likely materially and adversely affect the consummation of the transactions contemplated
hereby or the Future Excess Servicing Spread.
Section 9.05
Consents
.
The Seller shall have obtained all consents, approvals or other requirements of third parties required for the consummation of the
transactions contemplated by the Transaction Documents that are to be obtained on or prior to the Sale Date, and the Seller shall have commenced servicing the Mortgage Loans under the applicable Servicing Agreement. All actions of all Governmental
Authorities required to consummate the transactions contemplated by the Transaction Documents and the documents related thereto shall have been obtained or made.
39
Section 9.06
Delivery of Transaction Documents
.
Seller shall have delivered to Purchaser copies of each executed Transaction Document that is to be entered on or prior to the Sale Date
in the form and substance acceptable to the Purchaser and each of the items required to be delivered pursuant to Section 2.01 hereof.
Section 9.07
Certificate of Seller
.
Seller shall have
provided Purchaser a certificate, substantially in the form attached hereto as
Exhibit D
, signed by an authorized officer of Seller dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that:
(a) each of Seller’s representations and warranties made in this Agreement and each other Transaction Document to which Seller is a party is true and correct in all material respects as of such date; (b) all of the terms, covenants,
conditions and obligations of this Agreement and each other Transaction Document to which Seller is a party that are required to be complied with and performed by Seller at or prior to the Sale Date have been duly complied with and performed in all
material respects; (c) the conditions set forth in
Section 9.04
and
Section 9.05
have been satisfied; and (d) as of the Sale Date, Seller has a Consolidated Tangible Net Worth of at least the sum of
(x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries, and the Seller (considered together with
the Seller’s consolidated subsidiaries) is not in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
Section 9.08
Opinions of Counsel
.
Seller’s
counsel shall have delivered the Opinions of Counsel required pursuant to
Section 2.01(b)(v)
,
Section 2.01(b)(vi)
and
Section 2.01(b)(vii)
.
Section 9.09
Good Standing Certificate of Seller
.
Seller shall have provided Purchaser a certificate of good standing of Seller, dated as of a date within five (5) Business Days
prior to the Sale Date.
Section 9.10
No Actions or Proceedings.
No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit
the consummation of, or to invalidate, any of the transactions contemplated by this Agreement and the documents related hereto in any material respect.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the satisfaction of the following conditions as of the Sale
Date:
40
Section 10.01
Correctness of Representations and Warranties
.
The representations and warranties made by Purchaser in this Agreement to be made on or prior to the Sale Date are true and
correct in all material respects.
Section 10.02
Compliance with Conditions
.
All of the terms, conditions, covenants and obligations of this Agreement required to be complied with and performed by Purchaser on or
prior to the Sale Date shall have been duly complied with and performed in all material respects.
Section 10.03
Corporate Resolution
.
Seller shall have received from Purchaser a certified copy of its corporate
resolution approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, together with such other certificates of incumbency and other evidences of corporate authority as Seller or its counsel
may reasonably request.
Section 10.04
No Material Adverse Change
.
Since the Agreement Date, there shall not have been any change to Purchaser’s financial condition that will likely materially and
adversely affect the consummation of the transactions contemplated hereby.
Section 10.05
Certificate of
Purchaser
.
Purchaser shall have provided Seller a certificate, substantially in the form attached hereto as
Exhibit E
, signed by an authorized officer of Purchaser dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each of Purchaser’s representations and warranties made in this
Agreement is true and correct in all material respects as of such date; (b) all of the terms, covenants, conditions and obligations of this Agreement required to be complied with and performed by Purchaser at or prior to the Agreement Date have
been duly complied with and performed in all material respects; and (c) the condition set forth in
Section 10.04
has been satisfied.
Section 10.06
Good Standing Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate of good standing of Purchaser, dated as of a date within five (5) Business Days
prior to the Sale Date.
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ARTICLE XI
INDEMNIFICATION
Section 11.01
Indemnification by
Seller
.
(a) Seller shall indemnify, defend and hold Purchaser, its affiliates and its and their respective
directors, managers, officers, employees, agents, representatives and advisors (the “
Purchaser Indemnitees
”) harmless from and shall reimburse the applicable Purchaser Indemnitee for any Losses suffered or incurred by any Purchaser
Indemnitee after the Agreement Date which result from:
(i) Any material breach of a representation or
warranty by Seller, or non-fulfillment of any covenant or obligation of Seller, contained in this Agreement;
(ii) Any servicing act or omission of any prior servicer relating to any Mortgage Loan and any act or omission of any
party related to the origination of any Mortgage Loan;
(iii) Any act, error or omission of Seller in
servicing any of the Mortgage Loans, including improper action or failure to act when required to do so;
(iv)
Any exercise of any rights of setoff or other netting arrangements by any Owner against Seller that results in a decrease in Servicing Agreement termination payments due to Seller with respect to the Mortgage Loans from such Owner or in a shortfall
of funds to pay the Future Excess Servicing Spread; and
(v) Litigation, proceedings, governmental
investigations, orders, injunctions or decrees resulting from any of the items described in
Section 11.01(a)(i)-(iv)
above;
provided
,
however
, that the applicable Purchaser Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any
such losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Seller, which such failure of mitigation shall not relieve Seller of its indemnification obligations in this
Section 11.01(a)
but may
affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Purchaser Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be
reimbursed by Seller as part of its indemnification obligations in this
Section 11.01(a)
. Purchaser shall notify Seller promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations,
orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Seller shall have the right to assume the
defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Purchaser Indemnitee, but may not enter into any settlement without the prior written consent of the applicable Purchaser Indemnitee, which shall
not be unreasonably withheld. A Purchaser Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself at its own expense but shall not consent to the entry of a judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of Seller, which consent shall not be unreasonably withheld. Any exercise of such rights by a Purchaser Indemnitee shall not relieve Seller of its obligations and liabilities under
this
Section 11.01(a)
or any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Purchaser Indemnitee shall be required to cooperate in good faith with
Seller to ensure the proper and adequate defense of such Third-Party Claim. For the avoidance of doubt, Seller’s obligations for Purchaser Indemnitees shall not be limited to funds available in the Third Party Controlled Future Spread Custodial
Account or the Future Spread Reserve Account.
42
(b)
REIT Requirements
. Notwithstanding anything in
Section 11.01(a)
, in
the event that counsel or independent accountants for the Protected REIT determine that there exists a material risk that any amounts due to Purchaser under
Section 11.01(a)
hereof would be treated as Nonqualifying Income upon the
payment of such amounts to Purchaser, the amount paid to Purchaser pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to Purchaser in such year without causing the Protected REIT to fail to meet the REIT
Requirements for such year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the Protected REIT. If the amount payable for any tax year under the preceding sentence is
less than the amount which Seller would otherwise be obligated to pay to Purchaser pursuant to
Section 11.01
of this Agreement (the “
Expense Amount
”), then: (1) Seller shall place the Expense Amount into an escrow
account (the “
Expense Escrow Account
”) using an escrow agent and agreement reasonably acceptable to Purchaser and shall not release any portion thereof to Purchaser, and Purchaser shall not be entitled to any such amount, unless and
until Purchaser delivers to Seller, at the sole option of the Protected REIT, (i) an opinion (an “
Expense Amount Tax Opinion
”) of the Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid,
would not constitute Nonqualifying Income, (ii) a letter (an “
Expense Amount Accountant’s Letter
”) from the Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to
Purchaser without causing the Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to the Protected REIT indicating that the receipt of any Expense Amount
hereunder will not cause the Protected REIT to fail to satisfy the REIT Requirements (a “
REIT Qualification Ruling
” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a
“
Release Document
”); and (2) pending the delivery of a Release Document by Purchaser to Seller, Purchaser shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan
agreement (an “
Indemnity Loan Agreement
”) reasonably acceptable to Purchaser that (i) requires Seller to lend Purchaser immediately available cash proceeds in an amount equal to the Expense Amount (an “
Indemnity
Loan
”), and (ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the credit standing and profile of Purchaser or any guarantor of Purchaser, including the
Protected REIT, at the time of such Loan, and (B) a 15 year maturity with no periodic amortization.
Section 11.02
Indemnification by Purchaser
.
Purchaser shall indemnify, defend and hold Seller, its affiliates and its
and their respective directors, managers, officers, employees, agents, representatives and advisors (the “
Seller Indemnitees
”) harmless from and shall reimburse the applicable Seller Indemnitee for any Losses suffered or incurred by
any Seller Indemnitee which result from:
(a) Any material breach of a representation or warranty by Purchaser, or
non-fulfillment of any covenant or obligation of Purchaser contained in this Agreement; and
43
(b) Litigation, proceedings, governmental investigations, orders, injunctions or decrees,
the basis for which occurred after the Agreement Date, resulting from any of the items described in
Section 11.02(a)
above;
provided
,
however
, that the applicable Seller Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any such
losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Purchaser, which such failure of mitigation shall not relieve Purchaser of its indemnification obligations in this
Section 11.02
but may
affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Seller Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be
reimbursed by Purchaser as part of its indemnification obligations in this
Section 11.02
. Seller shall notify Purchaser promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations,
orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Purchaser shall have the right to assume the
defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Seller Indemnitee, but may not enter into any settlement without the prior written consent of Purchaser, which shall not be unreasonably
withheld. A Seller Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself but shall not consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the
prior written consent of Purchaser, which consent shall not be unreasonably withheld. Any exercise of such rights by a Seller Indemnitee shall not relieve Purchaser of its obligations and liabilities under this
Section 11.02
or any other
provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Seller Indemnitee shall be required to cooperate in good faith with Purchaser to ensure the proper and adequate
defense of such Third-Party Claim.
Section 11.03
Other Rights
.
The Seller hereby acknowledges that, in addition to its rights under this Agreement, the Purchaser is entitled to exercise its rights
under the related Owner Consent.
ARTICLE XII
MISCELLANEOUS
Section 12.01
Costs and
Expenses
.
Purchaser and Seller shall each pay the expenses incurred by it or its affiliates pursuant to the
Current Spread Agreement in connection with the transactions contemplated hereby.
Section 12.02
Confidentiality
.
Each Party understands that in connection with this transaction, it has been furnished
and will be furnished Non-Public Personal Information and/or Personally Identifiable Financial Information (as those terms are defined in Sections 573.3(n) and (o) of the Office of Thrift
44
Supervision Regulations on Privacy of Consumer Information published at 12 C.F.R. Chapter V implementing Title V of the Gramm-Leach-Bliley Act), and other information regarding the policies and
plans of the other Party and its affiliates that is and has been designated as confidential and proprietary, and each Party agrees that it will maintain the confidentiality of such information and will not disclose it to others (except for its
affiliates and its and their respective directors, managers, officers, employees, financing sources, agents, representatives and advisors), or use it except in connection with the proposed acquisition contemplated by this Agreement, without the
prior written consent of the Party furnishing such information. Information which is generally known in the industry concerning a Party or among such Party’s creditors generally or which has been disclosed to the other Party by third parties
who have a right to do so shall not be deemed confidential or proprietary information for these purposes. If Purchaser, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to
disclose any information supplied to it in connection with the transactions contemplated hereby, Purchaser agrees to provide Seller with prompt notice of such request(s) so that Seller may seek an appropriate protective order and/or waive
Purchaser’s compliance with the terms of this
Section 12.02
. If Seller, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information
supplied to it in connection with the transactions contemplated hereby, Seller agrees to provide Purchaser with prompt notice of such request(s) so that Purchaser may seek an appropriate protective order and/or waive Seller’s compliance with
the terms of this
Section 12.02
. Notwithstanding the terms of this
Section 12.02
, if, in the absence of a protective order or the receipt of a waiver hereunder, Purchaser or Seller is nonetheless, in the opinion of its
counsel, compelled to disclose information concerning the other Party to any tribunal or else stand liable for contempt or suffer other censure or penalty, Purchaser or Seller may disclose such information to such tribunal without liability
hereunder. If the proposed acquisition is not consummated, each Party agrees to promptly return to the other, promptly upon request, all confidential materials, and all copies thereof, which have been furnished to it in connection with the
transactions contemplated hereby. For the avoidance of doubt, either Party may provide its shareholders and creditors with a general description of this Agreement and any related transactions, and, subject to the provisions of this
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.03
Broker’s Fees
.
Each party hereto represents and warrants to the other that it has made no agreement to pay any finder’s, agent’s, broker’s or originator’s fee arising out of or in connection with the
subject matter of this Agreement. In the event Purchaser has entered or enters into an agreement to pay any finder’s, agent’s, broker’s, advisor’s or originator’s fee arising out of or in connection with the subject matter
of this Agreement, Purchaser shall be solely responsible for all such fees. The parties hereto shall indemnify and hold each other harmless from and against any such obligation or liability and any expense incurred in investigating or defending
(including reasonable attorneys’ fees) any claim based upon the other party’s actions in connection with such obligation.
45
Section 12.04
Relationship of Parties
.
The Parties intend that the transactions contemplated in the Transaction Documents constitute arms-length transactions among third
parties. Nothing contained in the Transaction Documents will establish any fiduciary, partnership, joint venture or similar relationship between or among the Parties except to the extent otherwise expressly stated therein.
Section 12.05
Survival of Representations and Warranties
.
Each party hereto covenants and agrees that the representations and warranties in this Agreement, and in any document delivered or to be
delivered pursuant hereto, shall survive the Agreement Date and each applicable Assignment Date.
Section 12.06
Notices
.
All notices, requests, demands and other communications which are required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been given if personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid or by prepaid overnight delivery service:
(a) If to Purchaser, to:
Fortress Investment Group LLC
1345 Avenue of the Americas
New York, NY 10105
Attn: Brian Sigman
Chief Financial Officer
(212) 479-5343
(b) If to Seller, to:
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attn: Amar Patel
or to such other address as Purchaser or Seller shall have specified in writing to the other.
Section 12.07
Waivers
.
Either Purchaser or Seller may, by written notice to the other:
(a) Extend the
time for the performance of any of the obligations or other transactions of the other; and
46
(b) Waive compliance with or performance of any of the terms, conditions, covenants or
obligations required to be complied with or performed by the other hereunder.
The waiver by Purchaser or Seller of a breach
of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.
Section 12.08
Entire Agreement; Amendment
.
This Agreement and the related Transaction Documents constitute the entire agreement between the parties with respect to the transactions
contemplated hereby and supersede all prior agreements with respect thereto. This Agreement may be amended only in a written instrument signed by both Seller and Purchaser.
Section 12.09
Binding Effect
.
This Agreement shall
inure to the benefit of and be binding upon the Parties and their successors and assigns. Nothing in this Agreement, express or implied, is intended to confer on any Person other than the Parties and their successors and assigns, any rights,
obligations, remedies or liabilities.
Section 12.10
Headings
.
Headings on the Articles and Sections in this Agreement are for reference purposes only and shall not be deemed to have any substantive
effect.
Section 12.11
Applicable Law
.
This Agreement shall be 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 the laws of the State of New York, except to the extent preempted by Federal law. This Agreement shall constitute a security agreement under the laws of the State of New York. In addition to
any other rights available under this Agreement or otherwise available at law or in equity but subject to the terms hereof, Purchaser shall have all rights and remedies of a secured party with respect to the Collateral under the laws of the State of
New York and under any other applicable law to enforce the assignments and security interests contained herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of applicable law and the terms of this
Agreement, to sell or apply any rights and other interests with respect to the Collateral assigned or pledged hereby in accordance with the terms hereof at public and private sale in accordance with the terms of this Agreement. The parties agree to
waive trial by jury in the event of any dispute under this Agreement.
Section 12.12
Incorporation of
Exhibits
.
The Exhibits attached hereto shall be incorporated herein and shall be understood to be a part
hereof as though included in the body of this Agreement.
47
Section 12.13
Counterparts
.
This Agreement may be executed in counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all
of which, taken together, shall constitute one and the same agreement.
Section 12.14
Severability of
Provisions
.
If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be
for any reason whatsoever held invalid, 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 or
enforceability of the other provisions of this Agreement or of the rights of the parties hereto.
Section 12.15
Assignment
.
(a) Seller may not assign, transfer, sell or subcontract all or any part of this Agreement,
any interest herein, or any of the Seller’s interest in the Servicing Spread Collections, other than the interest in the Total Servicing Spread sold hereby, without the prior written consent of Purchaser, provided that any successor to Seller
must assume Seller’s obligations under this Agreement. Purchaser shall have the unrestricted right to further assign, transfer, deliver, hypothecate, pledge, subdivide or otherwise deal with its rights under this Agreement on whatever terms
Purchaser shall determine without the consent of Seller; including the right to assign all or any portion of the Future Excess Servicing Spread and to assign the related rights under this Agreement. If Purchaser assigns any rights under this
Agreement to a third party (a “
Third Party Assignment
“), such third party (a “
Third Party Assignee
“) shall enter into a new agreement (a “
Third Party Future Spread Agreement
“) with Seller or
Seller’s assignee that provides such Third Party Assignee with the same rights with respect to the Future Excess Servicing Spread that Purchaser would have had under this Agreement if the Third Party Assignment had not occurred.
(b) Seller shall maintain a register on which it enters the name and address of each holder of the Future Excess Servicing Spread and
each holder’s interest in the Future Excess Servicing Spread (the “
Holder Register
”) for each transaction described in Section 12.15(a). The entries in the Holder Register shall be conclusive absent manifest error, and
Seller shall treat each Person whose name is recorded in the Holder Register as an owner of the Future Excess Servicing Spread for all purposes of this Agreement notwithstanding any notice to the contrary.
Section 12.16
Termination
.
If the Current Spread Agreement is terminated on or prior to the Sale Date, this Agreement shall terminate and neither Party shall have any further obligations to the other Party hereunder.
48
Section 12.17
Third Party Beneficiaries
.
This Agreement does not and is not intended to confer any rights or remedies upon any person or entity other than Purchaser and Seller,
except as provided in
Section 11.01
and in
Section 11.02
, provided that Purchaser and Seller reserve the right to modify any term of, or terminate, this Agreement, without the consent of any Purchaser Indemnitee or Seller
Indemnitee.
49
IN WITNESS WHEREOF, each of the undersigned parties to this Agreement has caused this
Agreement to be duly executed in its corporate name by one of its duly authorized officers, all as of the date first above written.
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MSR IX LLC
Purchaser
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By:
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/s/ Brian Sigman
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Name:
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Brian Sigman
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Title:
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Chief Financial Officer
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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/s/ Amar Patel
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Name:
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Amar Patel
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Title:
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Executive Vice President
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50
EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT FOR MORTGAGE LOANS
Subject to, and upon the terms and conditions of the Future Spread Agreement for FHLMC Mortgage Loans, dated as of January 6, 2013 (the “
Agreement
”), by and between Nationstar
Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) and MSR IX LLC, a Delaware limited liability company (together with its successors assigns, the
“
Purchaser
”), as may be amended, restated, or otherwise modified and in effect from time to time, Seller hereby assigns, transfers and delivers to Purchaser all of Seller’s right, title and interest in and to Future Excess
Servicing Spread for each of the Mortgage Loans set forth in Annex A attached hereto and all proceeds thereof, and agrees that as of the applicable Assignment Date, the applicable Mortgage Loan shall be deemed to be a “Mortgage Loan” for
all purposes of the Agreement. Capitalized terms used in this Assignment Agreement have the meanings given to such terms in, or incorporated by reference into, the Agreement.
In the event (but only in the event) that the conveyance of the Future Excess Servicing Spread is characterized by a court or governmental authority as security for a loan rather than a sale, Seller will
be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Future Excess Servicing Spread and all proceeds thereof as security for a loan in an
amount of the Purchase Price.
All of the terms, covenants, conditions and obligations of the Agreement required to be
complied with and performed by Seller on or prior to the date hereof have been duly complied with and performed in all material respects.
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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Name:
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Title:
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51
Annex A
[ATTACH ANNEX A, WHICH MAY BE ON COMPUTER TAPE, COMPACT DISK, OR MICROFICHE,
CONTAINING THE INFORMATION SET FORTH BELOW]
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(a)
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(b)
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(c)
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(d)
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(e)
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(g)
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(h)
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(i)
(column (g) –
column
(h))
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(j)
([ ]% of
column
(i))
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Refinancing
Date
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Loan #
of
Refinanced
Mortgage
Loan
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Principal
Balance
of
Refinanced
Mortgage
Loan
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Loan # of
Mortgage
Loan
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Principal
Balance of
Mortgage
Loan as of the
Assignment
Date
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Servicing
Spread
Rate
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Base Servicing
Fee Rate
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Net Servicing
Spread Rate
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Future Excess
Servicing Spread
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EXHIBIT B
Example of calculations of Maximum Retained Refinancing Loan Amounts
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Recaptured Loan Incentive
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Range of Loans Retained as a Percentage of
Total Recapture
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3 Month Avg
Recapture
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Retained
Percentage
(1)
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Nationstar
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Portfolio
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35% or Less
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0%
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0.00%
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100.00%
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> 35%, <= 40%
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25%
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0.00% to 1.25%
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100.00% to 98.75%
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> 40%, <= 45%
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30%
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1.50% to 3.00%
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98.50% to 97.00%
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> 45%, <= 50%
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35%
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3.50% to 5.25%
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96.50% to 94.75%
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> 50%, <= 55%
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40%
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6.00% to 8.00%
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94.00% to 92.00%
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> 55%, <= 60%
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45%
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9.00% to 11.25%
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91.00% to 88.75%
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> 60%, <= 65%
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50%
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12.50% to 15.00%
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87.50% to 85.00%
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> 65%, <= 70%
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50%
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15.00% to 17.50%
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85.00% to 82.50%
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> 70%, <= 75%
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50%
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17.50% to 20.00%
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82.50% to 80.00%
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Greater than 75%
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50%
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20.00% to 32.50%
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80.00% to 67.50%
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1
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Represents the percentage of loans Seller retains above 35% recapture.
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53
EXHIBIT C
SCHEDULE OF MORTGAGE LOANS
[SEPARATELY DELIVERED]
EXHIBIT D
SELLER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, a [Vice President] of Nationstar Mortgage LLC (the “
Company
”), pursuant to
Section 9.07
of the
Future Spread Agreement for FHLMC Mortgage Loans by and between MSR IX LLC and the Company, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material
respects as of the date hereof;
(ii) All of the terms, covenants, conditions and obligations of the Agreement
required to be complied with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects;
(iii) The conditions set forth in
Section 9.04
and
Section 9.05
of the Agreement have been satisfied; and
(iv) As of the date hereof, the Company has a Consolidated Tangible Net Worth (as defined in the Agreement) of at least
the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date of the Agreement by the Company, Nationstar Mortgage Holdings Inc. or any of Company’s consolidated subsidiaries, and the Company
(considered together with its consolidated subsidiaries)is not in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of [ ]
EXHIBIT E
PURCHASER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I, , [POSITION]
of [ ], the sole member of MSR IX LLC (the “
Company
”), pursuant to
Section 10.05
of the Future Spread Agreement for FHLMC Mortgage Loans by and
between the Company and Nationstar Mortgage LLC, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material respects as of the date hereof; and
(ii) All of the terms, covenants, conditions and obligations of the Agreement required to be complied with and performed by the Company at
or prior to the date hereof have been duly complied with and performed in all material respects; and
(iii) The condition set
forth in
Section 10.04
have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of [ ].
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MSR IX LLC
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By: [ ], as member
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By:
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EXHIBIT F
LOCATION OF CREDIT FILES
350 Highland Drive
Lewisville, Texas 75067
EXHIBIT G
FORM OF SUMMARY REMITTANCE REPORT
[SEPARATELY DELIVERED]
EXHIBIT H
FORM OF DELINQUENCY REPORT
[SEPARATELY DELIVERED]
EXHIBIT I
FORM OF DISBURSEMENT REPORT
[SEPARATELY DELIVERED]
EXHIBIT J
SELLER JURISDICTIONS AND RECORDING OFFICES
Chief Executive Office:
350 Highland Drive
Lewisville, Texas 75067
Recording Office:
Secretary
of State, State of Delaware
61
Exhibit 10.48
CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT
FOR FHLMC MORTGAGE
LOANS
by and between
NATIONSTAR MORTGAGE LLC
(Seller)
and
MSR IX LLC
(Purchaser)
Dated and effective as of January 6, 2013
Table of Contents
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ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
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2
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Section 1.01
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Definitions
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2
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Section 1.02
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General Interpretive Principles
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13
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ARTICLE II PROCEDURES; ITEMS TO BE DELIVERED
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14
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Section 2.01
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Sale of Current Excess Servicing Spread
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14
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Section 2.02
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Grant of Security Interest
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14
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Section 2.03
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Items to be Delivered on the Agreement Date
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14
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Section 2.04
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Items to be Delivered on the Sale Date
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15
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Section 2.05
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Sale Date Transactions
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17
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ARTICLE III PAYMENTS AND DISTRIBUTIONS
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17
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Section 3.01
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Purchase Price
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17
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Section 3.02
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Payments by Purchaser
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18
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Section 3.03
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Accounts
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18
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Section 3.04
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Priority of Payments
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21
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Section 3.05
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Withdrawals from the Current Spread Reserve Account
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22
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Section 3.06
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Payment to Seller of Base Servicing Fee
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22
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Section 3.07
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Intent and Characterization
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23
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ARTICLE IV [RESERVED]
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24
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER
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24
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Section 5.01
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Due Organization and Good Standing
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24
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Section 5.02
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Authority and Capacity
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24
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Section 5.03
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Agency Consents
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25
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Section 5.04
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Title to the Mortgage Servicing Rights
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25
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Section 5.05
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Effective Agreements
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25
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Section 5.06
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No Accrued Liabilities
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25
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Section 5.07
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|
Seller/Servicer Standing
|
|
|
25
|
|
|
Section 5.08
|
|
MERS Membership
|
|
|
26
|
|
|
Section 5.09
|
|
Agency Set-off Rights
|
|
|
26
|
|
|
Section 5.10
|
|
Ability to Perform; Solvency
|
|
|
26
|
|
|
Section 5.11
|
|
Material Documents
|
|
|
26
|
|
|
Section 5.12
|
|
Obligations with Respect to Origination
|
|
|
26
|
|
|
Section 5.13
|
|
No Actions
|
|
|
26
|
|
|
|
|
|
ARTICLE VI REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE LOANS AND SERVICING
|
|
|
27
|
|
|
Section 6.01
|
|
Servicing Agreements; Applicable Laws
|
|
|
27
|
|
i
|
|
|
|
|
|
|
|
|
Section 6.02
|
|
Related Escrow Accounts
|
|
|
27
|
|
|
Section 6.03
|
|
Accuracy of Servicing Information
|
|
|
27
|
|
|
Section 6.04
|
|
No Purchaser Responsibility
|
|
|
27
|
|
|
Section 6.05
|
|
Location of Credit Files
|
|
|
28
|
|
|
Section 6.06
|
|
Representations Concerning the Current Excess Servicing Spread
|
|
|
28
|
|
|
|
|
|
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER
|
|
|
29
|
|
|
Section 7.01
|
|
Due Organization and Good Standing
|
|
|
29
|
|
|
Section 7.02
|
|
Authority and Capacity
|
|
|
29
|
|
|
Section 7.03
|
|
Effective Agreements
|
|
|
29
|
|
|
Section 7.04
|
|
Sophisticated Investor
|
|
|
30
|
|
|
Section 7.05
|
|
No Actions
|
|
|
30
|
|
|
|
|
|
ARTICLE VIII SELLER COVENANTS
|
|
|
30
|
|
|
Section 8.01
|
|
Servicing Obligations
|
|
|
30
|
|
|
Section 8.02
|
|
Cooperation; Further Assurances
|
|
|
31
|
|
|
Section 8.03
|
|
Financing Statements
|
|
|
31
|
|
|
Section 8.04
|
|
Supplemental Information
|
|
|
31
|
|
|
Section 8.05
|
|
Access to Information
|
|
|
31
|
|
|
Section 8.06
|
|
Home Affordable Modification Program
|
|
|
32
|
|
|
Section 8.07
|
|
Distribution Date Data Tapes and Reports
|
|
|
32
|
|
|
Section 8.08
|
|
Financial Statements and Officer’s Certificates
|
|
|
34
|
|
|
Section 8.09
|
|
Monthly Management Calls
|
|
|
35
|
|
|
Section 8.10
|
|
Timely Payment of Agency Obligations
|
|
|
35
|
|
|
Section 8.11
|
|
Servicing Agreements
|
|
|
35
|
|
|
Section 8.12
|
|
Transfer of Mortgage Servicing Rights
|
|
|
36
|
|
|
Section 8.13
|
|
Consents to Transaction Documents
|
|
|
36
|
|
|
Section 8.14
|
|
Accounts
|
|
|
36
|
|
|
Section 8.15
|
|
Notification of Certain Events
|
|
|
36
|
|
|
Section 8.16
|
|
Financing; Pledge of Current Excess Servicing Spread
|
|
|
37
|
|
|
Section 8.17
|
|
Existence, etc
|
|
|
37
|
|
|
Section 8.18
|
|
Consent to Sub-Servicing
|
|
|
38
|
|
|
Section 8.19
|
|
Nonpetition Covenant
|
|
|
38
|
|
|
Section 8.20
|
|
Data Tape; Schedule of Mortgage Loans
|
|
|
38
|
|
|
Section 8.21
|
|
Insurance
|
|
|
38
|
|
|
Section 8.22
|
|
Defense of Title
|
|
|
39
|
|
|
Section 8.23
|
|
Refinancing of Mortgage Loans
|
|
|
39
|
|
|
|
|
|
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
|
|
|
39
|
|
|
Section 9.01
|
|
Correctness of Representations and Warranties
|
|
|
39
|
|
|
Section 9.02
|
|
Compliance with Conditions
|
|
|
39
|
|
ii
|
|
|
|
|
|
|
|
|
Section 9.03
|
|
Corporate Resolution
|
|
|
39
|
|
|
Section 9.04
|
|
No Material Adverse Change
|
|
|
40
|
|
|
Section 9.05
|
|
Consents
|
|
|
40
|
|
|
Section 9.06
|
|
Delivery of Transaction Documents
|
|
|
40
|
|
|
Section 9.07
|
|
Certificate of Seller
|
|
|
40
|
|
|
Section 9.08
|
|
Valuation
|
|
|
41
|
|
|
Section 9.09
|
|
Opinions of Counsel
|
|
|
41
|
|
|
Section 9.10
|
|
Acquisition of Mortgage Servicing Rights by Seller
|
|
|
41
|
|
|
Section 9.11
|
|
Good Standing Certificate of Seller
|
|
|
41
|
|
|
Section 9.12
|
|
No Actions or Proceedings
|
|
|
41
|
|
|
Section 9.13
|
|
Fees, Costs and Expenses
|
|
|
41
|
|
|
|
|
|
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
|
|
|
41
|
|
|
Section 10.01
|
|
Correctness of Representations and Warranties
|
|
|
42
|
|
|
Section 10.02
|
|
Compliance with Conditions
|
|
|
42
|
|
|
Section 10.03
|
|
Corporate Resolution
|
|
|
42
|
|
|
Section 10.04
|
|
No Material Adverse Change
|
|
|
42
|
|
|
Section 10.05
|
|
Certificate of Purchaser
|
|
|
42
|
|
|
Section 10.06
|
|
Good Standing Certificate of Purchaser
|
|
|
42
|
|
|
|
|
|
ARTICLE XI INDEMNIFICATION; CURE
|
|
|
43
|
|
|
Section 11.01
|
|
Indemnification by Seller
|
|
|
43
|
|
|
Section 11.02
|
|
Indemnification by Purchaser
|
|
|
45
|
|
|
Section 11.03
|
|
Award of Damages
|
|
|
46
|
|
|
Section 11.04
|
|
Other Rights
|
|
|
47
|
|
|
|
|
|
ARTICLE XII MISCELLANEOUS
|
|
|
47
|
|
|
Section 12.01
|
|
Costs and Expenses
|
|
|
47
|
|
|
Section 12.02
|
|
Confidentiality
|
|
|
47
|
|
|
Section 12.03
|
|
Broker’s Fees
|
|
|
48
|
|
|
Section 12.04
|
|
Relationship of Parties
|
|
|
48
|
|
|
Section 12.05
|
|
Survival of Representations and Warranties
|
|
|
48
|
|
|
Section 12.06
|
|
Notices
|
|
|
48
|
|
|
Section 12.07
|
|
Waivers
|
|
|
49
|
|
|
Section 12.08
|
|
Entire Agreement; Amendment
|
|
|
49
|
|
|
Section 12.09
|
|
Binding Effect
|
|
|
50
|
|
|
Section 12.10
|
|
Headings
|
|
|
50
|
|
|
Section 12.11
|
|
Applicable Law
|
|
|
50
|
|
|
Section 12.12
|
|
Incorporation of Exhibits
|
|
|
50
|
|
|
Section 12.13
|
|
Counterparts
|
|
|
50
|
|
|
Section 12.14
|
|
Severability of Provisions
|
|
|
50
|
|
|
Section 12.15
|
|
Public Announcement
|
|
|
51
|
|
iii
|
|
|
|
|
|
|
|
|
Section 12.16
|
|
Assignment
|
|
|
51
|
|
|
Section 12.17
|
|
Termination
|
|
|
51
|
|
|
Section 12.18
|
|
Third Party Beneficiaries
|
|
|
52
|
|
EXHIBITS
Exhibit A — Form of Assignment Agreement
Exhibit B — Schedule of Mortgage Loans
Exhibit C — Seller’s Officer’s Certificate
Exhibit D — Purchaser’s Officer’s Certificate
Exhibit E — Location of Credit
Files
Exhibit F — Form of Summary Remittance Report
Exhibit G — Form of Delinquency Report
Exhibit H — Form of Disbursement Report
Exhibit I — Seller Jurisdictions and Recording Offices
iv
CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT FOR
FHLMC MORTGAGE LOANS
This CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT FOR FHLMC MORTGAGE LOANS (as amended, restated, or otherwise modified and in effect from time to time, this “
Agreement
”), dated
as of January 6, 2013 (the “
Agreement Date
”), is by and between MSR IX LLC, a Delaware limited liability company (together with its successors and assigns, the “
Purchaser
”), and Nationstar Mortgage LLC, a
Delaware limited liability company (together with its successors and assigns, the “
Seller
”) (the Purchaser and the Seller will collectively be referred to as the “
Parties
” and each, a “
Party
”).
W I T N E S S E T H
:
WHEREAS
, Seller and Bank of America, National Association (“Bank of America”) have entered into the Purchase and Sale Agreement, pursuant to which, among other things, Seller will acquire
and assume all right, title and interest in mortgage servicing rights to a portfolio of residential mortgage loans owned or securitized by the Agency (as defined herein);
WHEREAS
, by acquiring such mortgage servicing rights, Seller is entitled to a servicing spread and other incidental fees with respect to the related residential mortgage loans;
WHEREAS
, the servicing spread, together with the Ancillary Income (as defined below), exceeds the compensation that Seller
requires to service the related residential mortgage loans;
WHEREAS
, Seller desires to sell, and Purchaser desires to
purchase, a portion of the servicing spread that exceeds such required compensation amount; and
WHEREAS
, Purchaser and
Seller desire to set forth the terms and conditions pursuant to which Seller will sell, transfer and assign to Purchaser, all of Seller’s right, title and interest in and to a portion of the servicing spread that exceeds the Seller’s
required compensation amount, and Purchaser will purchase all right, title and interest in and to such portion of the servicing spread;
NOW, THEREFORE
, in consideration of the mutual promises, covenants and conditions and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and
upon the terms and subject to the conditions set forth herein, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
Section 1.01
Definitions.
Whenever used herein, the following words and phrases, unless the context otherwise requires, shall have
the following meanings:
7 Year Swap Rate
: The yield reported by Bloomberg under USSWAP7 <Index> HP <GO> at
ten a.m. (10:00 a.m.), East Coast Time, on the applicable date. The 7 Year Swap Rate on December 7, 2012 was 1.1451%.
Accepted Servicing Practices
: With respect to any Mortgage Loan, those accepted and prudent mortgage servicing practices
(including collection procedures) which are in accordance with Agency servicing practices and procedures as set forth in the applicable Servicing Agreements, and in a manner at least equal in quality to the servicing that Seller provides to mortgage
loans which it owns in its own portfolio.
Agency
: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Agreement
: As defined in the preamble hereof.
Agreement Date
: As defined in the preamble hereof.
Ancillary Income
: All incidental servicing fees (such as late fees, assignment transfer fees, returned check fees, special services fees, amortization schedule fees, HAMP fees, modification and
incentive income and any interest or earnings on funds deposited in an account maintained by the Seller as servicer with respect to the Mortgage Loans, etc.) that are supplemental to the servicing spread payable to the servicer pursuant to the
Servicing Agreements.
Applicable Law
: With reference to any Person, all laws (including common law), statutes,
regulations, ordinances, treaties, judgments, decrees, injunctions, writs and orders of any court, governmental agency or authority and rules, regulations, orders, directives, licenses and permits of any Governmental Authority applicable to such
Person or its property or in respect of its operations.
Assignment Agreement
: An agreement substantially in the form
of
Exhibit A
to this Agreement or in such other form as mutually agreed upon by the Parties.
Bank of America
:
As defined in the recitals hereof.
Bank
: Wells Fargo Bank, National Association, or any successor thereto, or another
financial institution mutually agreed upon by the Parties or any successor thereto, each in its capacity as “Bank” under the Current Spread Custodial Account Control Agreement or the Current Spread Reserve Account Control Agreement, as
applicable, or any third party custodian or trustee in similar capacity under any replacement account control agreements.
2
Base Purchase Price
: The meaning given to such term in
Section 3.01
.
Base Servicing Fee
: With respect to a Collection Period, an amount equal to the product of (A) the aggregate
outstanding principal balance of the Mortgage Loans as of the related Measurement Date, (B) the Base Servicing Fee Rate and (C) (i) in the case of the initial Collection Period, a fraction, the numerator of which is the number of days
in the period from and including the Sale Date to and including the last day of the initial Collection Period, and the denominator of which is 360, and (ii) in the case of all other Collection Periods, 1/12;
provided
that the Base
Servicing Fee with respect to any Mortgage Loan whose Servicing Agreement is terminated during a Collection Period shall be pro-rated to the actual number of days within such Collection Period in which such Mortgage Loan was serviced by Seller.
Base Servicing Fee Rate
: 0.09% per annum, except that, for the period during which the Interim Servicer is
servicer of the Mortgage Loans, the Base Servicing Fee Rate shall be the lesser of (a) 0.09% per annum or (b) the interim servicing fee payable to the Interim Servicer.
Business Day
: Any day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the States of
Texas or New York are authorized or obligated by law or by executive order to be closed or (c) such other days as agreed upon by the Parties.
Code
: The Internal Revenue Code of 1986, as amended from time to time.
Collateral
: The meaning given to such term in
Section 2.02
.
Collection Period
: With respect to any Distribution Date, the calendar month preceding the month in which such Distribution Date
occurs.
Consolidated Tangible Net Worth
: (i) The net worth of Seller and its consolidated subsidiaries, on a
combined basis, determined in accordance with GAAP,
minus
(ii) all intangibles determined in accordance with GAAP (including goodwill, capitalized financing costs and capitalized administration costs but excluding originated and
purchased mortgage servicing rights or retained residual securities) and any and all advances to, investments in and receivables held from affiliates;
provided
,
however
, that the non-cash effect (gain or loss) of any mark-to-market
adjustments made directly to stockholders’ equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the
calculation of Consolidated Tangible Net Worth.
Control
: The meaning specified in Section 8-106 of the UCC.
Credit File
: Those documents, which may be originals, copies or electronically imaged, pertaining to each Mortgage
Loan, held by or on behalf of Seller in connection with the servicing of the Mortgage Loan, which may include Mortgage Loan Documents and the credit documentation relating to the origination of such Mortgage Loan, and any documents gathered during
the Servicing of a Mortgage Loan.
3
Current Excess Servicing Spread
: The rights of Seller, severable from each (and all)
of the other rights under the applicable Servicing Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to the Current Excess Servicing Spread Percentage.
Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans
: The current excess servicing spread acquisition
agreement for certain Fannie Mae mortgage loans, dated the date hereof, between the Seller and MSR IX LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans
: The current excess servicing spread acquisition
agreement for certain Ginnie Mae mortgage loans, dated the date hereof, between the Seller and MSR XI LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XII LLC
: The current excess servicing
spread acquisition agreement for certain non-agency mortgage loans, dated the date hereof, between the Seller and MSR XII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XIII LLC
: The current excess servicing
spread acquisition agreement for certain non-agency mortgage loans, dated the date hereof, between the Seller and MSR XIII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Percentage
: 66.67%.
Current Spread Custodial Account Agreement
: The applicable deposit account agreement and other related account documentation governing the Third Party Controlled Current Spread Custodial Account.
Current Spread Custodial Account Control Agreement
: The account control agreement among Seller, Purchaser and Wells
Fargo Bank, National Association, or any other institution agreed upon by the Parties, as Bank, dated as of the Sale Date, entered into with respect to the Third Party Controlled Current Spread Custodial Account, as amended, restated, supplemented
or otherwise modified from time to time.
Current Spread Reserve Account
: The account specified in the Current Spread
Reserve Account Control Agreement and maintained by Wells Fargo Bank, National Association or any successor thereto, or any other third party custodian or trustee selected by Purchaser.
Current Spread Reserve Account Agreement
: The applicable deposit account agreement and other related account documentation
governing the Current Spread Reserve Account.
Current Spread Reserve Account Control Agreement
: The account control
agreement among Seller, Purchaser and Wells Fargo Bank, National Association, or any other institution agreed upon by the Parties, as Bank, dated on or before the Sale Date, entered into with respect to the Current Spread Reserve Account, as
amended, restated, supplemented or otherwise modified from time to time.
4
Current Spread Reserve Account Deposit Event
: The meaning given to such term in
Section 3.03(c)
.
Current Spread Reserve Account Required Amount
: The meaning given to such term in
Section 3.03(c)
.
Custodian
: A custodian of Credit Files or any part thereof identified by the Seller to
the Purchaser in writing on or prior to the Sale Date as the same may be amended and supplemented from time to time by the Seller by providing a written notice of any such update to the Purchaser.
Cut-Off Date
: The opening of business on the Sale Date.
Data Tape
: The list of all mortgage loans, dated as of the date specified therein, whose Mortgage Servicing Rights will be sold, or that are anticipated to be sold, as applicable, to Seller
pursuant to the Purchase and Sale Agreement.
Deposit
: As defined in
Section 3.01
hereof.
Distribution Date
: The 10th day of each calendar month, or if such day is not a Business Day, the prior Business Day, beginning in
the month following the Sale Date, or such other day as mutually agreed upon by Seller and Purchaser.
Electronic Data
File
: A computer tape or other electronic medium generated by or on behalf of Seller and delivered or transmitted to or on behalf of Purchaser which provides information relating to the Mortgage Loans.
Eligible Servicing Agreement
: Unless otherwise agreed to by the Purchaser, a Servicing Agreement in respect of which the following
eligibility requirements have been satisfied:
(a) such Servicing Agreement is in full force and effect, and is in all respects
genuine as appearing on its face or as represented in the books and records of Seller, and no event of default, early amortization event, termination event, or other event giving any party thereto (including with notice or lapse of time or both) the
right to terminate Seller as servicer thereunder for cause has occurred and is continuing; provided, however, that with respect to any Servicing Agreement and the occurrence of any event set forth in this clause (a) which is based on a breach
of a collateral performance test, such Servicing Agreement shall remain an Eligible Servicing Agreement so long as no notice of termination based on such breach has been given or threatened in writing and subject to the restrictions set forth
herein; and
(b) Seller has not resigned or been terminated as servicer under such Servicing Agreement and has no actual
knowledge of any pending or threatened action to terminate Seller, as servicer (whether for cause or without cause).
Entitlement Holder
: The meaning specified in Section 8-102(a)(7) of the UCC.
Expense Amount
: As defined in
Section 11.01(b)
hereof.
Expense Amount Accountant’s Letter
: As defined in
Section 11.01(b)
hereof.
5
Expense Amount Tax Opinion
: As defined in
Section 11.01(b)
hereof.
Expense Escrow Account
: As defined in
Section 11.01(b)
hereof.
Fannie Mae
: Federal National Mortgage Association, or any successor thereto.
Federal Funds Rate
: For any date of determination, the federal funds rate as reported in the Federal Reserve H.15(519) Statistical
Release as of the first Business Day of the month in which such date of determination falls, or if such Statistical Release is no longer published, the average of the “high” and the “low” interest rate for reserves traded among
commercial banks for overnight use in amounts of one million dollars ($1,000,000.00) or more, as reported by The Wall Street Journal under “Federal Funds” rates as of the first Business Day of the month in which such date of determination
falls.
FHLMC Acknowledgment Agreement
: The acknowledgment agreement by and among the Agency, Seller and Purchaser, in
form and substance reasonably acceptable to such purchasers, dated on or before the Sale Date, pursuant to which, among other things, the Agency consents to (a) the sale of the Mortgage Servicing Rights (including the Total Servicing Spread) to
Seller and (b) the sale of the Current Excess Servicing Spread from Seller to the Purchaser and any other arrangements specified therein.
FHLMC Mortgage Loans
: Each of the Mortgage Loans on the Schedule of Mortgage Loans.
FNMA Mortgage Loans
: Each of those mortgage loans for which the current excess servicing spread has been sold and assigned to MSR X LLC pursuant to the Current Excess Servicing Spread Acquisition
Agreement for FNMA Mortgage Loans.
Freddie Mac
: Federal Home Loan Mortgage Corporation, or any successor thereto.
Future Spread Agreements
: The Future Spread Agreement for FHLMC Mortgage Loans, the Future Spread Agreement for FNMA
Mortgage Loans, the Future Spread Agreement for GNMA Mortgage Loans, the Future Spread Agreement for Non-Agency Mortgage Loans for MSR XII LLC and the Future Spread Agreement for Non-Agency Mortgage Loans for MSR XIII LLC.
Future Spread Agreement for FHLMC Mortgage Loans
: The Future Spread Agreement for FHLMC Mortgage Loans, dated January 6,
2013, by and between Seller and Purchaser, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for FNMA Mortgage Loans
: The Future Spread Agreement for FNMA Mortgage Loans, dated January 6, 2013,
by and between Seller and MSR X LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for GNMA Mortgage Loans
: The Future Spread Agreement for GNMA Mortgage Loans, dated January 6, 2013,
by and between Seller and MSR XI LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
6
Future Spread Agreement for Non-Agency Mortgage Loans for MSR XII LLC
: The Future
Spread Agreement for Non-Agency Mortgage Loans, dated January 6, 2013, by and between Seller and MSR XII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for Non-Agency Mortgage Loans for MSR XIII LLC
: The Future Spread Agreement for Non-Agency Mortgage Loans,
dated January 6, 2013, by and between Seller and MSR XIII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
GAAP
: Generally accepted accounting principles in the United States of America as in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in general use by significant segments of the accounting
profession, that are applicable to the circumstances as of the date of determination.
Ginnie Mae
: Government National
Mortgage Association, or any successor thereto.
GNMA Mortgage Loans
: Each of those mortgage loans for which the
current excess servicing spread has been sold and assigned to MSR XI LLC pursuant to the Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans.
Governmental Authority
: With respect to any Person, any nation or government, any state or other political subdivision, agency or instrumentality thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over such Person, any of its subsidiaries or any of its properties.
Grant
: To grant, bargain, sell, warrant, alienate, remise, demise, release, convey, assign, transfer, mortgage, pledge, create and
grant a security interest in and right of setoff against, deposit, set over or confirm.
HAMP
: The meaning given to
such term in
Section 8.06
.
HAMP Loans
: The meaning given to such term in
Section 8.06
.
Holder Register
: As defined in
Section 12.16(b)
hereof.
Indemnity Loan
: As defined in
Section 11.01(b)
hereof.
Indemnity Loan Agreement
: As defined in
Section 11.01(b)
hereof.
Interim Servicer
: Bank of America or its successors or assigns acting as interim servicer with respect to the Mortgage Loans
pursuant to the interim servicing addendum of the Purchase and Sale Agreement.
IRS
: The United States Internal Revenue
Service.
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Lien
: Any mortgage, deed of trust, pledge, hypothecation, collateral assignment,
charge, deposit, arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness
or the performance of any other obligation, including any conditional sale or other title retention agreement.
Lockbox
Account
: An account maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser for the purpose of receiving Servicing Spread Collections.
Loss
or
Losses
: Any and all direct, actual and out-of-pocket losses (including any loss in the value in the Current Excess
Servicing Spread), damages, deficiencies, claims, costs or expenses, including reasonable attorneys’ fees and disbursements, excluding (i) any amounts attributable to or arising from overhead allocations, general or administrative costs
and expenses, or any cost for the time of any Party’s employees, (ii) consequential losses or damages consisting of speculative lost profits, lost investment or business opportunity, damage to reputation or operating losses, or
(iii) punitive or treble damages;
provided
,
however
, that the exclusions set forth in clauses (ii) or (iii) above do not apply if and to the extent any such amounts are actually incurred in payment to a third party or
government entity.
Measurement Date
: With respect to any Collection Period, the first day of such Collection Period.
MERS
: Mortgage Electronic Registration Systems, Inc., or any successor thereto.
MI
: Insurance provided by private mortgage insurance companies to make payments on certain Mortgage Loans in the event that
the related Mortgagor defaults in its obligation in respect of the Mortgage.
Mortgage
: Each of those mortgages,
deeds of trust, security deeds or deeds to secure debt creating a first lien on or an interest in real property securing a Mortgage Note and related to a Mortgage Loan.
Mortgage Loan
: Each of those mortgage loans listed on the Schedule of Mortgage Loans.
Mortgage Loan Documents
: With respect to each Mortgage Loan, the documents and agreements related to such Mortgage Loan required to be held by the applicable Custodian, including, without
limitation, the original Mortgage Note, and any other documents or agreements evidencing and/or governing such Mortgage Loan.
Mortgage Note
: With respect to any Mortgage Loan, the note or other evidence of indebtedness of the Mortgagor, thereunder,
including, if applicable, an allonge and lost note affidavit.
Mortgage Servicing Rights
: The rights and
responsibilities of Seller with respect to servicing the Mortgage Loans under the Servicing Agreements, including any and all of the following if and to the extent provided therein: (a) all rights to service a Mortgage Loan; (b) all rights
to receive servicing fees, Ancillary Income, reimbursements or indemnification for
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servicing the Mortgage Loan, and any payments received in respect of the foregoing and proceeds thereof; (c) the right to collect, hold and disburse escrow payments or other payments with
respect to the Mortgage Loan and any amounts actually collected with respect thereto and to receive interest income on such amounts to the extent permitted by Applicable Law; (d) all accounts and other rights to payment related to any of the
property described in this paragraph; (e) possession and use of any and all Credit Files pertaining to the Mortgage Loan or pertaining to the past, present or prospective servicing of the Mortgage Loan; (f) to the extent applicable, all
rights and benefits relating to the direct solicitation of the related Mortgagors for refinance or modification of the Mortgage Loans and attendant right, title and interest in and to the list of such Mortgagors and data relating to their respective
Mortgage Loans; and (g) all rights, powers and privileges incident to any of the foregoing.
Mortgaged Property
:
The Mortgagor’s real property, securing repayment of a related Mortgage Note, consisting of an interest in a single parcel of real property, improved by a residential dwelling.
Mortgagor
: An obligor under a residential mortgage loan.
Net Servicing Fee
: As defined in the Purchase and Sale Agreement.
Non-Agency Mortgage Loans
: Each of the mortgage loans for which the current excess servicing spread has been sold and assigned to
MSR XII LLC or MSR XIII LLC pursuant to the applicable Sale Agreement.
Nonqualifying Income
: Any amount that is
treated as gross income for purposes of Section 856 of the Code and which is not Qualifying Income.
Objection
Notice
: The meaning given to such term in
Section 3.03(c)
.
Opinion of Counsel
: One or more written
opinions, in form and substance reasonably satisfactory to the recipient, of an attorney at law admitted to practice in any state of the United States or the District of Columbia, which attorney may be counsel for Seller or Purchaser, as the case
may be.
Owner Consent
: The FHLMC Acknowledgment Agreement.
Party
or
Parties
: As defined in the preamble hereof.
Permitted Liens
: Liens in favor of the Agency required pursuant to the applicable Servicing Agreements.
Person
: Any individual, partnership, corporation, limited liability company, limited liability partnership, business entity, joint
stock company, trust, business trust, unincorporated organization, association, enterprise, joint venture, government, any department or agency of any government or any other entity of whatever nature.
Power of Attorney
: A Power of Attorney delivered by the Seller to the Purchaser authorizing the Purchaser to enforce the right to
payment of the Current Excess Servicing Spread under the related Servicing Agreement solely in the event that the Seller fails to enforce such right within 30 days after receiving written notice of such failure from the Purchaser to the Seller.
9
Priority of Payments
: The meaning given to such term in
Section 3.04
.
Protected REIT
: Any entity that (i) has elected to be taxed as a real estate investment trust pursuant to
Section 856 et seq. of the Code, (ii) owns a direct or indirect equity interest in Purchaser, and (iii) is treated for purposes of Section 856 of the Code as owning all or a portion of the assets of the Purchaser or as receiving
all or a portion of the Purchaser’s income.
Purchase and Sale Agreement
: The Mortgage Servicing Rights Purchase
and Sale Agreement, dated as of January 6, 2013, by and between Nationstar Mortgage LLC, as purchaser, and Bank of America, National Association, as seller, together with all schedules and exhibits thereto, as the same may be amended,
supplemented or otherwise modified from time to time.
Purchase Price
: The meaning given to such term in
Section 3.01
.
Purchase Price Percentage
: 3.11 multiplied by the excess of (i) the Net Servicing Fee
(as such Net Servicing Fees are determined in accordance with Exhibit F to the Purchase and Sale Agreement), expressed as an annualized rate on the unpaid principal balances of the related Mortgage Loans as of the Sale Date over (ii) the Base
Servicing Fee Rate; provided however, that for every plus or minus 1 basis point (0.01%) movement in the 7 Year Swap Rate between December 7, 2012 and the Sale Date, the Purchase Price Percentage will be adjusted plus or minus by 0. 00065%. As
necessary, the percentage to be determined pursuant to this definition will be based on linear interpolation.
Purchased
Assets
: As defined in the Purchase and Sale Agreement.
Purchaser
: As defined in the preamble hereof.
Purchaser Enforcement Expenses
: An amount equal to the Current Excess Servicing Spread Percentage of the reasonable expenses,
including legal costs and expenses, incurred in the enforcement of any rights of Seller material to the value of the Total Servicing Spread under the Purchase and Sale Agreement and related documents, without duplication of any other such expenses
paid under any other Sale Agreement, which enforcement has been approved by Purchaser (such approval not to be unreasonably withheld).
Purchaser Indemnitees
: The meaning given to such term in
Section 11.01(a)
.
Qualifying Income
: Gross income that is described in Section 856(c)(2) or 856(c)(3) of the Code.
REIT Qualification Ruling
: As defined in
Section 11.01(b)
hereof.
REIT Requirements
: The requirements imposed on REITs pursuant to Sections 856 through and including 860 of the Code.
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Related Escrow Accounts
: Mortgage Loan escrow/impound accounts maintained by Seller
relating to the Mortgage Servicing Rights, including accounts for buydown funds, real estate taxes and MI, flood and hazard insurance premiums.
Release Document
: As defined in
Section 11.01(b)
hereof.
Remaining Expected Total Servicing Spread
: The meaning given to such term in
Section 3.03(c)
.
Repurchase Price
: As defined in the Purchase and Sale Agreement.
Requirement of Law
: As to any Person, the certificate of incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its
property is subject.
Retained Servicing Spread
: The rights of Seller, severable from each (and all) of the other
rights under the applicable Servicing Agreement, to the Retained Servicing Spread Percentage of the Total Servicing Spread.
Retained Servicing Spread Percentage
: 100%
minus
the Current Excess Servicing Spread Percentage.
Sale Agreements
: This Agreement, the Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, the Current
Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans, the Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XII LLC and the Current Excess Servicing Spread Acquisition Agreement for
Non-Agency Mortgage Loans for MSR XIII LLC.
Sale Date
: The “Sale Date” or the “Subsequent Sale
Date”, in each case, as defined in the Purchase and Sale Agreement with respect to the Mortgage Loans; provided that all conditions precedent to the execution and delivery of the related Assignment Agreement shall have been satisfied or waived
on such date.
Sales Proceeds
: The proceeds received upon a sale (approved by the Parties) of the Total Servicing
Spread (except without giving effect to clause (b) of the definition thereof), in whole or in part, including through a sale in accordance with
Section 8.12
.
Schedule of Mortgage Loans:
The list of Mortgage Loans whose Current Excess Servicing Spread has been assigned to Purchaser pursuant to this Agreement delivered initially accordance with
Section 2.04
, updated in accordance with
Section 3.01
and maintained as
Exhibit B
hereto.
Seller
: As defined in the preamble hereof.
Seller Enforcement Expenses
: An amount equal to the Retained Servicing Spread Percentage of the reasonable expenses, including legal costs and expenses, incurred in the
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enforcement of any rights of Seller material to the value of the Total Servicing Spread under the Purchase and Sale Agreement and related documents, without duplication of any other such expenses
paid under any other Sale Agreement, which enforcement has been approved by Purchaser (such approval not to be unreasonably withheld).
Seller Indemnitees
: The meaning given to such term in
Section 11.02
.
Servicing
: The responsibilities, with respect to servicing the Mortgage Loans, under the Servicing Agreements.
Servicing Agreements
: The servicing agreements, as amended from time to time, and any waivers, consent letters, acknowledgments and other agreements under which Seller or the Interim Servicer is
the servicer of the Mortgage Loans relating to the Mortgage Servicing Rights and governing the servicing of the Mortgage Loans.
Servicing Spread Collections
: For each Collection Period, the funds collected on the Mortgage Loans and allocated as the servicing
compensation payable to Seller as servicer of the Mortgage Loans with respect to such Collection Period pursuant to the applicable Servicing Agreements, other than Ancillary Income and, for the avoidance of doubt, other than reimbursements received
for advances and other out-of-pocket expenditures from the Agency by Seller in accordance with the Servicing Agreements.
Servicing Transfer Date
: As defined in the Purchase and Sale Agreement with respect to the Mortgage Loans.
Solvent
: With respect to any Person as of any date of determination, (a) the value of the assets of such Person is greater
than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person as determined in accordance with GAAP, (b) such Person is able to pay all liabilities of such Person as such liabilities mature and
(c) such Person does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the amount that, in light of all the facts and circumstances existing
at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
Third Party
Assignee
: The meaning given to such term in
Section 12.16
.
Third Party Assignment
: The meaning given
to such term in
Section 12.16
.
Third Party Current Spread Agreement
: The meaning given to such term in
Section 12.16
.
Third Party Claim
: The meaning given to such term in
Section 11.01
and
Section 11.02
, as applicable.
Third Party Controlled Current Spread Custodial Account
: The account
specified in the Current Spread Custodial Account Control Agreement and maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser, into which all Servicing Spread Collections and all
Servicing Agreement termination payments in respect of the Mortgage Loans shall be deposited.
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Total Servicing Spread
: For each Collection Period on and after the Sale Date, the
sum of the following: (a) the Servicing Spread Collections received during such Collection Period and remaining after payment of the Base Servicing Fee; (b) all Sales Proceeds received during such Collection Period; (c) all Repurchase
Prices received during such Collection Period; and (d) all other amounts payable by the Agency to Seller (or Purchaser under the Owner Consent) with respect to the Mortgage Servicing Rights for Mortgage Loans, including any termination fees
paid by the Agency to Seller for terminating Seller as the servicer of any of the Mortgage Loans, but for the avoidance of doubt, excluding all Ancillary Income and reimbursements received for advances and other out-of-pocket expenditures from the
Agency by Seller in accordance with the Servicing Agreements.
Transaction Documents
: The Purchase and Sale Agreement
(including any order, bill of sale, assignment agreement or other transfer agreement related to the sale of the Mortgage Servicing Rights thereunder), the Tri-Party Agreement, the Owner Consent, the Current Spread Custodial Account Agreement, the
Current Spread Custodial Account Control Agreement, the Current Spread Reserve Account Agreement, the Current Spread Reserve Account Control Agreement, the Sale Agreements and the Future Spread Agreements.
Tri-Party Agreement
: An agreement by, between and among Bank of America, the Agency and Seller (including any amendments
thereto) pursuant to which the Agency acknowledges that it will look solely to Bank of America or any of its affiliates, and not to Seller, for any claims relating to the selling representations and warranties on Mortgage Loans and the servicing of
such Mortgage Loans prior to the Sale Date.
UCC
: The Uniform Commercial Code as in effect from time to time in
the applicable jurisdiction.
Section 1.02
General Interpretive Principles
.
For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other gender;
(b) Accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with GAAP;
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(c) References herein to “Articles,” “Sections,”
“Subsections,” “Paragraphs,” and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Agreement;
(d) A reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section
in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions;
(e) The words
“herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; and
(f) The term “include” or “including” shall mean without limitation by reason of enumeration.
ARTICLE II
PROCEDURES; ITEMS TO BE DELIVERED
Section 2.01
Sale of Current Excess Servicing Spread
.
Subject to, and upon the terms and conditions of this Agreement, Seller will sell, transfer and assign to Purchaser, and Purchaser will
acquire from Seller, all of Seller’s right, title and interest in and to the Current Excess Servicing Spread and all proceeds thereof with respect to the Mortgage Loans.
Section 2.02
Grant of Security Interest
.
In order to secure
Seller’s obligations to deliver the Current Excess Servicing Spread and perform its obligations hereunder and under the Purchase and Sale Agreement, Seller hereby Grants to Purchaser a valid and continuing first priority and perfected Lien on
and security interest in all of Seller’s right, title and interest in, to and under, the Third Party Controlled Current Spread Custodial Account and the Current Spread Reserve Account, together with all amounts deposited therein from time to
time and all cash and non-cash proceeds thereof, in each case, whether now owned or existing, or hereafter acquired and arising (the “
Collateral
“).
Section 2.03
Items to be Delivered on the Agreement Date
.
On the
Agreement Date, each of Seller and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
(a) The Sale Agreements and all agreements, certificates, opinions and instruments required to be delivered under each Sale Agreement on
the Agreement Date;
14
(b) The Future Spread Agreements and all agreements, certificates, opinions and instruments
required to be delivered under each Future Spread Agreement on the Agreement Date; and
(c) The executed Purchase and Sale
Agreement.
Section 2.04
Items to be Delivered on the Sale Date
.
(a) On the Sale Date, subject to the satisfaction of the terms and conditions herein, each of Seller and Purchaser shall deliver or cause
to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible:
(i) The Owner Consent;
(ii) The Assignment Agreement;
(iii) All agreements, certificates, opinions and instruments required to be delivered under each Sale Agreement and Future
Spread Agreement on the Sale Date;
(iv) All agreements, certificates, opinions and instruments required to be
delivered under the executed Purchase and Sale Agreement reasonably related to the transactions contemplated hereunder that are required to be delivered on the Sale Date;
(v) The executed Current Spread Custodial Account Agreement;
(vi) The executed Current Spread Custodial Account Control Agreement;
(vii) The executed Current Spread Reserve Account Agreement;
(viii) The executed Current Spread Reserve Account Control Agreement;
(ix) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding due authorization, authority, and
enforceability of the applicable Transaction Documents to which Seller is a party, and regarding no conflicts with other material Seller agreements;
15
(x) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser,
regarding the characterization of the transfer of the Current Excess Servicing Spread from Seller to Purchaser as a true sale for bankruptcy purposes;
(xi) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the perfection of the assignment of Current Excess Servicing Spread to Purchaser and the security interests granted
hereunder;
(xii) A certificate of good standing of Seller dated as of a date within five (5) Business
Days prior to the Closing Date to be delivered by Seller;
(xiii) A secretary’s certificate of Seller
attaching its organizational documents, board resolutions and incumbency certificates;
(xiv) An officer’s
certificate of Seller that all conditions precedent to the purchase of the Mortgage Servicing Rights under the Purchase and Sale Agreement have been satisfied (or if waived, such waiver has been approved by Purchaser);
(xv) A duly executed corporate certificate of Seller required by
Section 9.07
dated as of the Sale Date;
(xvi) A duly executed corporate certificate of Purchaser required by
Section 10.05
dated as of the
Sale Date;
(xvii) A certificate of good standing of Purchaser, dated as of a date within five
(5) Business Days prior to the Sale Date to be delivered by Purchaser; and
(xviii) A UCC-1 financing
statement relating to the security interest of Purchaser in the Current Excess Servicing Spread, the Third Party Controlled Current Spread Custodial Account and the Current Spread Reserve Account, in form and substance reasonably acceptable to
Purchaser.
(b) On the Sale Date, subject to the satisfaction of the terms and conditions herein, Seller shall provide
Purchaser with copies of the following:
16
(i) Any amendments, modifications or restatements of the Purchase and Sale
Agreement;
(ii) The bill of sale, assignment agreement or other transfer agreement pursuant to which Bank of
America will transfer the Mortgage Servicing Rights to Seller;
(iii) The Tri-Party Agreement;
(iv) The executed Power of Attorney; and
(v) A preliminary Schedule of Mortgage Loans containing information with respect to the Mortgage Loans anticipated to be
included in this Agreement on the Sale Date as of November 30, 2012.
Section 2.05
Sale Date Transactions
.
On the Sale Date, subject to the satisfaction of the terms and conditions herein:
(a) The Parties shall execute and deliver the Assignment Agreement;
(b) Purchaser shall remit to Seller the Purchase Price; and
(c) Ownership of the Current Excess Servicing Spread shall be transferred to Purchaser.
ARTICLE III
PAYMENTS AND DISTRIBUTIONS
Section 3.01
Purchase Price
.
On the first Business Day following the Agreement Date, Purchaser shall pay Seller an amount (the “
Deposit
”) equal to the product of (i) $11,453,605 and (ii) Current Excess
Servicing Spread Percentage, without any of the adjustments provided in the Purchase and Sale Agreement for such calculation, as an earnest money deposit.
In full consideration for the purchase of the Current Excess Servicing Spread and the rights under the Future Spread Agreement for FHLMC Mortgage Loans, and upon the terms and conditions of this
Agreement, Purchaser shall pay to Seller an amount (the “
Base Purchase
17
Price
“) equal to the product of (x) the aggregate outstanding principal balance of the Mortgage Loans as of the Cut-Off Date, (y) the Purchase Price Percentage and
(z) the Current Excess Servicing Spread Percentage. The Base Purchase Price shall be allocated by the Parties on the Sale Date to reflect the consideration for the purchase of the Current Excess Servicing Spread hereunder (the “
Purchase
Price
”) and the consideration for the rights acquired by Purchaser under the Future Spread Agreement for FHLMC Mortgage Loans.
The Base Purchase Price shall be payable by the Purchaser to the Seller as follows: (a) the Deposit shall be payable on the first Business Day following the Agreement Date, (b) 50% of the
estimated Base Purchase Price net of the Deposit shall be payable on the Sale Date and (c) the portion of the Base Purchase Price that has not been paid to Seller by Purchaser as of such date, including with respect to Mortgage Loans that have
prepaid between the Sale Date and the Servicing Transfer Date, plus interest thereon at the Federal Funds Rate for the period from the Sale Date to the Servicing Transfer Date shall be payable on the Servicing Transfer Date.
The Seller shall deliver the Schedule of Mortgage Loans no later ten (10) Business Days after the Sale Date. In the event there is
an adjustment and reconciliation of the Seller’s purchase price pursuant to the terms of Section 3.01(d) of the Purchase and Sale Agreement, the Base Purchase Price shall be subject to a corresponding adjustment and any adjustment amounts
(including interest) shall be paid by the Purchaser or the Seller, as applicable, to the other party within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
Section 3.02
Payments by Purchaser
.
(a) Payments shall be made by Purchaser to Seller by wire transfer of immediately available funds to an account designated by Seller.
(b) If, subsequent to the payment of the Purchase Price or the payment of any amounts due hereunder to either party, the outstanding
principal balance of any Mortgage Loan is found to be in error, or if for any reason the Purchase Price or such other amounts is found to be in error, the party benefiting from the error shall pay an amount sufficient to correct and reconcile the
Purchase Price or such other amounts and shall provide a reconciliation statement and other such documentation to reasonably satisfy the other party concerning the accuracy of such reconciliation. Such amounts shall be paid by the proper party
within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
Section 3.03
Accounts
.
(a)
Lockbox Account
. Seller shall inform the Mortgagors of Mortgage Loans to remit their mortgage
payments due on or after the Servicing Transfer Date to the Lockbox Account. All amounts on deposit in the Lockbox Account will be maintained and applied in accordance with the Servicing Agreement. Payments of all Servicing Spread Collections
received on and after the Servicing Transfer Date shall be transferred from the
18
Lockbox Account to the Third Party Controlled Current Spread Custodial Account within one Business Day of receipt and identification thereof and in any event, within two Business Days of receipt
thereof. If Seller receives any Servicing Spread Collections not remitted to the Lockbox Account, it shall hold such funds in trust for the benefit of the Purchaser and deposit such amounts to the Third Party Controlled Current Spread Account within
two Business Days of receipt thereof.
(b)
Third Party Controlled Current Spread Custodial Account
.
(i) The Third Party Controlled Current Spread Custodial Account will be established with Wells Fargo Bank, National
Association or with such other third party custodian or trustee selected by Purchaser, for the sole purpose of receiving and disbursing all Servicing Spread Collections, Servicing Agreement termination payments with respect to the Mortgage Loans,
Sales Proceeds and Repurchase Prices. The Third Party Controlled Current Spread Custodial Account will be established pursuant to the Current Spread Custodial Account Control Agreement with respect to which Purchaser is an Entitlement Holder with
Control. So long as permitted by the Current Spread Custodial Account Control Agreement, Seller may direct the disposition of funds in the Third Party Controlled Current Spread Custodial Account strictly in accordance with the Priority of Payments.
Upon any material breach of a representation, warranty or covenant by Seller hereunder or during the occurrence and continuance of a Current Spread Reserve Account Deposit Event, Purchaser may elect to exercise Control over the Third Party
Controlled Current Spread Custodial Account. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Third Party Controlled Current Spread
Custodial Account.
(ii) Seller shall inform the Agency to remit the applicable portion of any Servicing
Agreement termination payments payable after the Sale Date directly to the Third Party Controlled Current Spread Custodial Account. Any termination payment to be directed to the Third Party Controlled Current Spread Custodial Account shall be equal
to the
pro
rata
amount by which the Mortgage Loans affected by such termination bear to all mortgage loans of Seller affected by such termination, based upon the method in which such termination payments are calculated in accordance
with the applicable Servicing Agreement.
(iii) Seller shall direct each payer of Sales Proceeds to remit such
payments directly to the Third Party Controlled Current Spread Custodial Account.
(iv) Seller shall direct
Bank of America to remit (i) Servicing Spread Collections received by it prior to the Servicing Transfer Date and (ii) any Repurchase Price under the Purchase and Sale Agreement, directly to the Third Party Controlled Current Spread Custodial
Account.
19
(v) If Seller receives any amounts required to be deposited into the Third Party Controlled
Current Spread Custodial Account in error, Seller shall promptly remit such funds to the Third Party Controlled Current Spread Custodial Account.
(c)
Current Spread Reserve Account
. The Current Spread Reserve Account will be established with Wells Fargo Bank, National Association or with such other third party custodian or trustee selected
by Purchaser. The Current Spread Reserve Account will be established pursuant to the Current Spread Reserve Account Control Agreement with respect to which Purchaser is an Entitlement Holder with Control. So long as permitted by the Current Spread
Reserve Account Control Agreement, Seller may direct the disposition of funds in the Current Spread Reserve Account strictly in accordance with
Section 3.05
. Seller agrees to take all actions reasonably necessary, including the filing of
appropriate financing statements, to protect Purchaser’s interest in the Current Spread Reserve Account.
If at any time
Seller’s Consolidated Tangible Net Worth falls below the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s
consolidated subsidiaries or if Seller (considered together with its consolidated subsidiaries) defaults in any indebtedness in excess of $10,000,000 (individually or in the aggregate) (each, a “
Current Spread Reserve Account Deposit
Event
”), Seller shall immediately notify Purchaser in writing that a Current Spread Reserve Account Deposit Event has occurred. On each Distribution Date upon which a Current Spread Reserve Account Deposit Event has occurred and is
continuing, Seller shall be required to transfer funds in the Third Party Controlled Current Spread Custodial Account to the Current Spread Reserve Account in accordance with the Priority of Payments until the amount of funds in the Current Spread
Reserve Account is equal to the Current Spread Reserve Account Required Amount. The “
Current Spread Reserve Account Required Amount
” is equal to 25% of the fair market value as of the date the Current Spread Reserve Account Deposit
Event that is then-continuing first occurred of the Total Servicing Spread expected to be paid over the expected remaining life of the Mortgage Loans (the “
Remaining Expected Total Servicing Spread
”) determined in accordance with
the following paragraph. Seller shall immediately notify Purchaser in writing if a Current Spread Reserve Account Deposit Event is no longer continuing. Any funds in the Current Spread Reserve Account in excess of the Current Spread Reserve Account
Required Amount shall be released to Seller.
For purposes of determining the fair market value of the Remaining Expected
Total Servicing Spread, Purchaser shall submit its claim for determination of the fair market value of the Remaining Expected Total Servicing Spread, together with such back-up information it deems appropriate to justify such fair market value
(which value shall be considered the fair market value of the Remaining Expected Total Servicing Spread for purposes of calculating the Current Spread Reserve Account Required Amount until the final determination of such fair market value in
accordance with this paragraph). Within five (5) Business Days of Seller’s
20
receipt of such determination, Seller shall notify Purchaser in writing of its acceptance or any objection to such determination of such fair market value, and if Seller objects to such
determination, such notice shall include its own determination of such fair market value and any back-up information as it deems appropriate to justify such fair market value (an “
Objection Notice
”). In the event an Objection Notice
is delivered, the parties shall negotiate in good faith a resolution to such objection. In the event that Seller and Purchaser are unable to resolve such objection within five (5) Business Days of the delivery of such Objection Notice, Seller
and Purchaser shall appoint a mutually acceptable nationally recognized valuation expert to determine such fair market value of the Remaining Expected Total Servicing Spread. The determination of such valuation expert shall be binding on Seller and
Purchaser and the fees of such valuation expert shall be borne by Seller.
Section 3.04
Priority of Payments
.
On each Business Day, subject to the terms and conditions of the Current Spread Custodial Account Control Agreement, Seller
(or, after the delivery of an access termination notice pursuant to the Current Spread Custodial Account Control Agreement, Purchaser) shall direct the Bank to apply the monies in the Third Party Controlled Current Spread Custodial Account in the
following order of priority (the “
Priority of Payments
”), in every case, after giving effect to each prior item in the Priority of Payments on such Distribution Date:
(A)
first
, from amounts in the Third Party Controlled Current Spread Custodial Account attributable to Servicing Agreement
termination payments made by the Agency with respect to any Mortgage Loans,
pro
rata
, (A) the Current Excess Servicing Spread Percentage of such termination payments to Purchaser, and (B) the Retained Servicing Spread
Percentage of such termination payments to Seller; provided, that (I) prior to the distribution to Purchaser of any termination payments pursuant to clause (A), such termination payments shall be applied first, to the payment to Seller of any
Purchaser Enforcement Expenses then due and payable and then, to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02
, and (II) prior to the distribution to Seller of any termination
payments pursuant to clause (B), such termination payments shall be applied first, to the payment of any Seller Enforcement Expenses then due and payable, second, to the payment of any indemnity payments then due and payable to a Purchaser
Indemnitee pursuant to
Section 11.01
and third, for deposit to the Current Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Current Spread Reserve Account to equal the Current Spread Reserve
Account Required Amount.
(b)
second
, on any Business Day from and including the first Business Day of a calendar month
to but excluding the Distribution Date in such calendar month, at the option of Seller, the Base Servicing Fee payable with respect to a prior Collection Period for the Mortgage Loans to Seller;
(c)
third
, on each Distribution Date, to the extent not previously paid to Seller in accordance with
Section 3.04(b)
,
any accrued and unpaid Base Servicing Fee to Seller;
21
(d)
fourth
, on each Distribution Date,
pro rata
, (A) to Purchaser, any
Current Excess Servicing Spread for the prior Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 3.04(a)
); and (B) to Seller, any Retained Servicing Spread for the prior
Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 3.04(a)
);
provided
, that (I) prior to the distribution to Purchaser of any Current Excess Servicing Spread pursuant
to
clause (A)
, the Current Excess Servicing Spread shall be applied
first
, to the payment to Seller of any Purchaser Enforcement Expenses then due and payable and
then
, to the payment of any indemnity payments then due and
payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to Seller of any Retained Servicing Spread pursuant to
clause (B)
, the Retained Servicing Spread shall be applied
first
, to
the payment of any Seller Enforcement Expenses then due and payable,
second
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
third
, for deposit
to the Current Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Current Spread Reserve Account to equal the Current Spread Reserve Account Required Amount; and
(e)
fifth
, on each Distribution Date, to Seller, any other amounts remaining on deposit in the Third Party Controlled Current
Spread Custodial Account.
All payments to Purchaser or Seller shall be made by wire transfer of immediately available federal
funds to an account designated by Purchaser or Seller, as applicable.
Section 3.05
Withdrawals from the Current
Spread Reserve Account
.
On any Business Day, at the instruction of Purchaser, Seller shall direct the Bank to apply funds
in the Current Spread Reserve Account, if any, to the payment of indemnity payments payable to a Purchaser Indemnitee pursuant to
Section 11.01
. If on any Business Day a Current Spread Reserve Account Deposit Event is not then continuing
and all outstanding indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller may direct the Bank to distribute any remaining funds in the Current Spread Reserve Account to, or as directed by, Seller. If there are any funds
remaining in the Current Spread Reserve Account after the Current Excess Servicing Spread and all indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller shall direct the Bank to distribute such remaining funds to, or as
directed by, Seller.
Section 3.06
Payment to Seller of Base Servicing Fee
.
Seller shall be entitled to payment of the Base Servicing Fee only to the extent funds are available therefor in the Third Party
Controlled Current Spread Custodial Account in accordance with the Priority of Payments. Under no circumstances shall Purchaser be liable to Seller for payment of the Base Servicing Fee. In the event servicing of the Mortgage Loans is transferred to
sub-servicers for any reason, the servicing fees and expenses of such sub-servicers shall be paid by Seller and in no event will the amount of Servicing Spread Collections or termination payments otherwise allocable to the Current Excess Servicing
Spread be reduced due to the payment of sub-servicing fees and expenses.
22
Section 3.07
Intent and Characterization
.
(a) Seller and Purchaser intend that the sale of the Current Excess Servicing Spread pursuant to this Agreement constitutes a valid sale
of such Current Excess Servicing Spread from Seller to Purchaser, conveying good title thereto free and clear of any Lien other than Permitted Liens, and that the beneficial interest in and title to the Current Excess Servicing Spread not be part of
Seller’s estate in the event of the bankruptcy of Seller. Seller and Purchaser intend and agree to treat the transfer and assignment of the Current Excess Servicing Spread as an absolute sale for tax purposes, and as an absolute and complete
conveyance of title for property law purposes. Except for financial accounting purposes, neither party intends the transactions contemplated hereby to be characterized as a loan from Purchaser to Seller.
(b) In the event (but only in the event) that the conveyance of the Current Excess Servicing Spread is characterized by a court or
governmental authority as security for a loan rather than a sale, Seller will be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Current
Excess Servicing Spread and all proceeds thereof as security for a loan in an amount equal to the Purchase Price.
23
ARTICLE IV
[RESERVED]
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as of the Agreement Date and the Sale Date (or as of the date specified below, as applicable):
Section 5.01
Due Organization and Good Standing
.
Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Seller is qualified to transact business in each jurisdiction in which such qualification is deemed necessary to service the Mortgage Loans. Seller has, in full force and effect (without notice of possible suspension, revocation or impairment), all
required permits, approvals, licenses, and registrations to conduct all activities in all states in which its activities with respect to the Mortgage Loans or the Mortgage Servicing Rights require it to be licensed, registered or approved in order
to service the Mortgage Loans and own the Mortgage Servicing Rights, unless the failure to obtain such permits, approvals, licenses and registrations would not reasonably be expected to have a material adverse effect on Seller’s ability to
perform its obligations under this Agreement or the other Transaction Documents to which it is a party.
Section 5.02
Authority and Capacity
.
Seller has all requisite limited liability company power, authority and capacity, subject to
the approvals required pursuant to
Section 5.03
, to enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery
of this Agreement and each other Transaction Document to which Seller is a party and the consummation of the transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company action.
This Agreement and each other Transaction Document to which it is a party has been duly executed and delivered by Seller. This Agreement constitutes, and each other applicable Transaction Document to which Seller is a party constitutes or will
constitute, a valid and legally binding agreement of Seller enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Seller of this Agreement or such other Transaction Document, except as the
same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
24
Section 5.03
Agency Consents
.
Seller will have obtained the FHLMC Acknowledgment Agreement and all other necessary approvals, agreements and consents, if any, of the
Agency with respect to the Transaction Documents on or prior to the Sale Date.
Section 5.04
Title to the Mortgage
Servicing Rights
.
As of the Sale Date, Seller will be the lawful owner of the Mortgage Servicing Rights, will be
responsible for the maintenance of the Related Escrow Accounts, and will have the sole right and authority to transfer the Current Excess Servicing Spread as contemplated hereby. The transfer, assignment and delivery of the Current Excess Servicing
Spread shall be free and clear of any and all claims, charges, defenses, offsets, Liens and encumbrances of any kind or nature whatsoever other than Permitted Liens.
Section 5.05
Effective Agreements
.
The execution, delivery and
performance of this Agreement and each other Transaction Document that has been executed by Seller, compliance with the terms hereof and thereof and the consummation of the transactions contemplated hereby and thereby did not, and will not, violate,
conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited liability company agreement, any instrument or agreement to which it is a party or by
which it is bound or which affects the Current Excess Servicing Spread, or any state or federal law, rule or regulation or any judicial or administrative decree, order, ruling or regulation applicable to it or to the Current Excess Servicing Spread.
Section 5.06
No Accrued Liabilities
.
There are no accrued liabilities of Seller with respect to the Mortgage Loans or the Mortgage Servicing Rights or circumstances under which such accrued liabilities will arise against Purchaser as
purchaser of the Current Excess Servicing Spread.
Section 5.07
Seller/Servicer Standing
.
Seller is approved by the Agency as a seller/servicer in good standing with the requisite financial criteria and adequate resources to
complete the transactions contemplated hereby on the conditions stated herein. No event has occurred, including but not limited to a change in insurance coverage, which would make Seller unable to comply with the Agency eligibility requirements or
which would require notification to the Agency. Furthermore, if at any time prior to the termination of this Agreement, the Seller is unable to comply with any of the Agency eligibility requirements, it shall immediately notify the Purchaser that it
is no longer an approved seller/servicer of mortgage loans for the Agency.
25
Section 5.08
MERS Membership
.
Seller is a member in good standing under the MERS system.
Section 5.09
Agency Set-off Rights
.
Seller has no actual notice,
including any notice received from the Agency, or any reason to believe, that, other than in the normal course of Seller’s business, any circumstances exist that would result in Seller being liable to the Agency for any amount due by reason of:
(i) any breach of servicing obligations or breach of mortgage selling warranty to the Agency under servicing agreements relating to Seller’s entire servicing portfolio for the Agency (including any unmet mortgage repurchase obligation),
(ii) any unperformed obligation with respect to mortgage loans that Seller is servicing for the Agency under the regular servicing option or other mortgages subject to recourse agreements, (iii) any loss or damage to the Agency by reason
of any inability to transfer to a purchaser of the servicing rights Seller’s selling and servicing representations, warranties and obligations, or (iv) any other unmet obligations to the Agency under a servicing contract relating to
Seller’s entire servicing portfolio with the Agency.
Section 5.10
Ability to Perform; Solvency
.
Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this
Agreement. Seller is Solvent and the sale of the Current Excess Servicing Spread will not cause Seller to become insolvent. The sale of the Current Excess Servicing Spread is not undertaken to hinder, delay or defraud any of the creditors of Seller.
The consideration received by Seller upon the sale of the Current Excess Servicing Spread constitutes fair consideration and reasonably equivalent value therefor.
Section 5.11
Material Documents
.
Seller has provided Purchaser with
executed copies of all material agreements and documents, and any amendments thereto, relating to Seller’s acquisition of the Mortgage Servicing Rights and the servicing of the Mortgage Loans.
Section 5.12
Obligations with Respect to Origination
.
Seller shall remain liable for all obligations with respect to the origination of each Mortgage Loan and, if applicable, for all
obligations with respect to the sale of such Mortgage Loan to the Agency.
Section 5.13
No Actions
.
There have not been commenced or, to the best of Seller’s knowledge, threatened, any action, suit or proceeding which will likely
materially and adversely affect the consummation of the transactions contemplated by any Transaction Document.
26
ARTICLE VI
REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE
LOANS AND
SERVICING
As further inducement to Purchaser to enter into this Agreement, Seller represents and warrants to
Purchaser, as of the Agreement Date and the Sale Date (or as of the date specified below, as applicable):
Section 6.01
Servicing Agreements; Applicable Laws
.
The originator of the Mortgage Loan and each prior owner of the Mortgage
Servicing Rights has each performed its obligations in all material respects in accordance with the terms of the related Mortgage Note, Mortgage, Servicing Agreements and Applicable Law.
Section 6.02 Related Escrow Accounts
.
All Related Escrow Accounts are being, and have been, maintained in accordance with Applicable Law and in accordance with the Servicing Agreements and the terms of the related Mortgages and other Mortgage
Loan Documents; and, except as to payments which are past due under Mortgage Notes, all balances required by the Mortgages or other Mortgage Loan Documents to be paid to Seller for the account of the Mortgagors are on deposit in the appropriate
Related Escrow Account.
Section 6.03
Accuracy of Servicing Information
.
The information in the Data Tape dated as of November 30, 2012 is true and correct in all material respects as of the date specified
therein; provided that if there is no date specified in the Data Tape, as of November 30, 2012.
Section 6.04
No
Purchaser Responsibility
.
Purchaser shall have no responsibility, liability or other obligation whatsoever under any
Servicing Agreement or with respect to any Mortgage Loan, or to make any advance thereunder, or to pay any servicing fees. Notwithstanding the sale of the Mortgage Servicing Rights for a Mortgage Loan by Bank of America to Seller, based on and
subject to the terms of the Tri-Party Agreement, Seller does not retain any obligations to the Agency under the Servicing Agreements with Agency for Mortgage Loans, including repurchase, indemnification and make-whole obligations, in respect of a
breach of the selling representations and warranties in connection with the sale of Mortgage Loans to Agency, or the failure of Bank of America or prior servicers to comply with the servicing obligations with respect to Mortgage Loans prior to the
date on which Seller assumes responsibility for servicing a Mortgage Loan.
27
Section 6.05
Location of Credit Files
.
All of the Mortgage Loan Documents are or upon delivery by Bank of America will be held by Custodians, or if held by the Seller, in the
locations specified in
Exhibit E
, unless temporarily removed for enforcement purposes in the normal course of servicing. Seller will notify Purchaser in writing of any changes in locations of the Mortgage Loan Documents held by the Seller in
Exhibit E
.
Section 6.06
Representations Concerning the Current Excess Servicing Spread
.
(a) Seller has not assigned, pledged, conveyed, or encumbered the Current Excess Servicing Spread to any other Person (other than
Permitted Liens) and immediately prior to the sale of the Current Excess Servicing Spread on the Sale Date, Seller was the sole owner of the Current Excess Servicing Spread and had good and marketable title thereto (subject to the rights of the
Agency under the Servicing Agreements and the Tri-Party Agreement, free and clear of all Liens (other than Permitted Liens), and no Person, other than Purchaser, has any Lien (other than Permitted Liens) on the Current Excess Servicing Spread. No
security agreement, financing statement, equivalent security or lien instrument or continuation statement covering all or any part of the Current Excess Servicing Spread which has been signed by Seller or which Seller has authorized any other Person
to sign or file or record, is on file or of record with any public office, except such as may have been terminated or filed by or on behalf of Purchaser.
(b) The sale and grant of a security interest by Seller to Purchaser of and on the Current Excess Servicing Spread does not and will not violate any Requirement of Law, the effect of which violation is to
render void or voidable such assignment.
(c) As contemplated under
Section 3.07(b)
, upon the filing of financing
statements on Form UCC-1 naming Purchaser as “Secured Party” and Seller as “Debtor”, and describing the Current Excess Servicing Spread, in the jurisdictions and recording offices listed on
Exhibit I
attached hereto, the
sale and security interests granted hereunder in the Current Excess Servicing Spread will constitute perfected first priority security interests under the UCC in all right, title and interest of Purchaser in, to and under the Current Excess
Servicing Spread.
(d) Purchaser has and will continue to have the full right, power and authority to pledge the Current
Excess Servicing Spread, and the Current Excess Servicing Spread may be further assigned without any requirement, in each case, subject only to the Agency’s consent.
(e) Each Servicing Agreement constitutes an Eligible Servicing Agreement.
28
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to
Seller to enter into this Agreement, Purchaser represents and warrants to Purchaser as of the Agreement Date and the Sale Date (or as of the date specified below, as applicable):
Section 7.01
Due Organization and Good Standing
.
Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Purchaser is qualified to transact business in each jurisdiction in
which such qualification is deemed necessary.
Section 7.02
Authority and Capacity
.
Purchaser has all requisite limited liability company power, authority and capacity to enter into this Agreement and each other
Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document to which it is a party and the consummation of the
transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company action. This Agreement constitutes, and each other applicable Transaction Document to which Purchaser is a party
constitutes or will constitute, a valid and legally binding agreement of Purchaser enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Purchaser of this Agreement or such other
Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
Section 7.03
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party by Purchaser, its compliance with the terms hereof and thereof and the consummation of
the transactions contemplated hereby and thereby will not violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited liability company
agreement, any instrument or agreement to which it is a party or by which it is bound, or any state or federal law, rule or regulation or any judicial or administrative decree, order, ruling or regulation applicable to it, in each case which
violation, conflict, breach or requirement would reasonably be expected to have a material adverse effect on Purchaser’s ability to perform its obligations under this Agreement and any other Transaction Document to which it is a party.
29
Section 7.04
Sophisticated Investor
.
Purchaser is a sophisticated investor and its decision to acquire the Current Excess Servicing Spread is based upon Purchaser’s own
independent experience, knowledge, due diligence and evaluation of this transaction. Purchaser has relied solely on such experience, knowledge, due diligence and evaluation and has not relied on any oral or written information provided by Seller
other than the representations and warranties made by Seller herein.
Section 7.05
No Actions
.
There shall not have been commenced or, to the best of Purchaser’s knowledge, threatened any action, suit or proceeding against the
Purchaser that will likely materially and adversely affect the consummation of the transactions contemplated hereby.
ARTICLE VIII
SELLER COVENANTS
Seller covenants and agrees as follows:
Section 8.01
Servicing Obligations
.
(a) Seller shall, or prior to the Servicing Transfer Date, shall cause the Interim Servicer to, pay, perform and discharge all liabilities and obligations relating to the Servicing, including all
liabilities and obligations under the Mortgage Loan Documents, Applicable Law and the Servicing Agreements; and shall pay, perform and discharge all the rights, obligations and duties with respect to the Related Escrow Accounts as required by the
Agency, the Servicing Agreements, the Mortgage Loan Documents, all Applicable Law and in accordance with the Purchase and Sale Agreement.
(b) Under no circumstances shall Purchaser be responsible for the Servicing acts and omissions of Seller or any other servicer or any originator of the Mortgage Loans, or for any servicing related
obligations or liabilities of any servicer in the Servicing Agreements or of any Person under the Mortgage Loan Documents, or for any other obligations or liabilities of Seller or Bank of America.
(c) Upon termination of any Servicing Agreement, Seller shall remain liable to Purchaser and the Agency for all liabilities and
obligations incurred by the servicer or its designee while Seller or its designee was acting as the servicer thereunder.
(d)
Seller shall conduct quality control reviews of its servicing operations in accordance with industry standards and the requirements of the Agency.
30
Section 8.02
Cooperation; Further Assurances
.
Seller shall cooperate with and assist Purchaser, as reasonably requested, in carrying out the purposes of this Agreement. Seller will
cooperate and assist Purchaser, as reasonably requested and at the reasonable expense of Purchaser (except as provided in
Section 12.01
), in obtaining consents from the Agency as may be required or advisable to assign, transfer, deliver,
hypothecate, pledge, subdivide, finance or otherwise deal with the Current Excess Servicing Spread. If Seller is terminated under any Servicing Agreement, Seller shall cooperate fully and at its own expense in transferring such Servicing. If
Purchaser assigns all or any portion of the Current Excess Servicing Spread or its other rights under this Agreement to a Third Party Assignee, Seller will cooperate and assist any Third Party Assignee in drafting and entering into a Third Party
Current Spread Agreement in accordance with
Section 12.16
.
Section 8.03
Financing Statements
.
Seller hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing
statements, in any jurisdictions and with any filing offices as Purchaser may determine, in its sole discretion, are necessary or advisable to perfect the sale of the Current Excess Servicing Spread and the security interests granted to Purchaser in
connection herewith. Seller agrees to execute financing statements in form reasonably acceptable to Purchaser and Seller at the request of Purchaser in order to reflect Purchaser’s interest in the Current Excess Servicing Spread, the Third
Party Controlled Current Spread Custodial Account and the Current Spread Reserve Account.
Section 8.04
Supplemental
Information
.
From time to time after the Sale Date, Seller promptly shall furnish Purchaser such incidental information,
which is reasonably available to Seller, supplemental to the information contained in the documents and schedules delivered pursuant to this Agreement, as may reasonably be requested to monitor performance of the Mortgage Loans and the payment of
the Current Excess Servicing Spread.
Section 8.05
Access to Information
.
From time to time, at such times as are reasonably convenient to Seller, Purchaser or its designees may conduct audits or visit and
inspect (a) any of the Mortgage Loans or places where the Credit Files are located, to examine the Credit Files, internal controls and procedures maintained by Seller and its agents, and take copies and extracts therefrom, and to discuss
Seller’s affairs with its officers, employees and, upon notice to Seller, independent accountants. Seller hereby authorizes such officers, employees and independent accountants to discuss with Purchaser the affairs of Seller and (b) the
Seller’s servicing facilities for the purpose of satisfying the Purchaser that Seller, has the ability to service the Mortgage Loans related to Mortgage Servicing Rights in accordance with the standards set forth in the applicable Servicing
Agreement. Any audit provided for herein will be conducted in accordance with Seller’s rules respecting safety and security on its premises, in accordance with applicable privacy and confidentiality laws and without materially disrupting
operations.
31
Section 8.06
Home Affordable Modification Program
.
With respect to any Mortgage Loans that have been modified or that are or will be in a modification trial period as part of the U.S. Department of the
Treasury’s Home Affordable Modification Program (“
HAMP
”) (such Mortgage Loans, the “
HAMP Loans
”), Seller represents and warrants that it will continue to service such HAMP Loan in accordance with the HAMP terms
and will ensure the timely compliance and filing of any appropriate HAMP documentation with the applicable regulator.
Section 8.07
Distribution Date Data Tapes and Reports
.
Seller shall deliver the following to Purchaser two Business Days prior to each Distribution Date:
(a) An Electronic Data File in form and substance acceptable to Purchaser containing, for each Mortgage Loan, principal, interest and
Servicing Spread Collections, and delinquency status (i.e. 30, 60, 90, FCL, REO) as of the last day of the prior Collection Period;
(b) A Summary Activity Report with respect to the Mortgage Loans with respect to the prior Collection Period containing:
(i) aggregate beginning principal balance as of the first and last date of the Collection Period,
(ii) aggregate regular principal collected,
(iii) aggregate noncash principal,
(iv) aggregate interest collected,
(v) aggregate liquidation principal,
(vi) aggregate curtailments,
(vii) liquidations,
32
(viii) short sales,
(ix)(1) for each Mortgage Loan, the principal balance, the applicable servicing spread, the final maturity date, the mortgage interest
rate, the loan-to-value ratio and the FICO score, and (2) for each Mortgage Loan that was refinanced by a lender other than Seller or an affiliate thereof, to the extent such information is known to Seller in the ordinary course of business and
the collection and delivery of such information does not impose any additional and undue burden on Seller, the name of such lender and the mortgage interest rate of the newly originated residential mortgage loan;
(c) A Delinquency Report with respect to the Mortgage Loans containing:
(i) The aggregate outstanding principal balance of the Mortgage Loans and percentages of the aggregate outstanding principal balance of
the Mortgage Loans in each of the following categories as of the last day of the prior Collection Period:
(1) Current
Mortgage Loans,
(2) 0-29 days delinquent,
(3) 30-59 days delinquent,
(4) 60-89 days delinquent,
(5) 90 days or more delinquent,
(6) Mortgage Loans in Foreclosure,
(7) Mortgage Loans with respect to which the
related Mortgaged Properties have become real estate owned properties, and
(8) Mortgage Loans in which the Mortgagor is in
bankruptcy;
33
(ii) For each of the above categories, a roll report showing the migration of Mortgage
Loans in such category from the last day of the second prior Collection Period;
(d) A Disbursement Report for such
Distribution Date containing:
(i) The Servicing Spread Collections for the prior Collection Period,
(ii) The Base Servicing Fee paid to Seller,
(iii) The amount of the Current Excess Servicing Spread paid to Purchaser,
(iv)
The amount of funds, if any, transferred to the Current Spread Reserve Account,
(v) The amount of Purchaser Indemnitees, if
any, paid from each of the Third Party Controlled Current Spread Custodial Account or the Current Spread Reserve Account, and
(vi) The amount of funds paid to Seller from the Current Spread Reserve Account.
Section 8.08
Financial Statements and Officer’s Certificates
.
(a) If Seller’s financial statements are not filed with the U.S. Securities and Exchange Commission and are not publicly available,
Seller shall deliver to Purchaser copies of Seller’s most recent audited quarterly financial statements within 45 days of the end of each of Seller’s fiscal quarters and its most recent audited annual financial statements within 90 days of
the end of each of Seller’s fiscal years.
(b) Within 45 days of the end of each of Seller’s fiscal quarters, Seller
shall deliver to Purchaser a certificate from a duly authorized officer of Seller certifying (i) whether or not Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any
issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries (and shall provide a calculation of its determination of its Consolidated Tangible Net Worth) and (ii)
whether or not Seller (considered together with its consolidated subsidiaries) is in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
34
Section 8.09
Monthly Management Calls
.
Within five Business Days after each Distribution Date, Seller shall make its management team and other appropriate officers and employees
available to Purchaser to discuss by telephone the performance of the Mortgage Loans and the performance of the parties under the Transaction Documents.
Section 8.10
Timely Payment of Agency Obligations
.
Seller shall pay
all of its obligations to the Agency in a timely manner so as to avoid exercise of any right of set-off by the Agency against Seller.
Section 8.11
Servicing Agreements
.
After the Servicing Transfer Date,
Seller will service the Mortgage Loans in accordance with Accepted Servicing Practices and will perform its obligations in all material respects in accordance with the Servicing Agreements and Applicable Law. In particular, without limitation, after
the Servicing Transfer Date, Seller shall comply with any advancing obligation under the Servicing Agreements. Without the express written consent of Purchaser (which consent may be withheld in its absolute discretion), Seller shall not
(a) cancel, terminate or amend any Mortgage Servicing Rights, (b) expressly provide any required consent to any termination, amendment or modification of any Servicing Agreements either verbally or in writing, (c) expressly provide
any required consent to any termination, amendment or modification of any other servicing agreements or enter into any other agreement or arrangement with the Agency that may be reasonably material to Purchaser either verbally or in writing,
(d) expressly or verbally waive any material default under or breach of any Servicing Agreement by the Agency that may be material to the Purchaser (in Purchaser’s reasonable determination) or (e) take any other action in connection
with any such Servicing Agreement that would impair in any material respect the value of the interests or rights of the Purchaser hereunder. Seller shall conduct its business and perform its obligations under the Servicing Agreements in a manner
such that the Agency will not have cause to terminate any Servicing Agreement. Notwithstanding the foregoing, in no event will the prohibitions contained in this
Section 8.11
apply to any amendments or modifications of the Servicing
Agreements applicable to Mortgage Loans owned by Seller which do not affect the Current Excess Servicing Spread with respect to such Mortgage Loans and are not reasonably material to the Purchaser.
The Seller shall monitor the obligations of the Interim Servicer to service and administer the Mortgage Loans in accordance with the
terms of the Servicing Agreement.
35
Section 8.12
Transfer of Mortgage Servicing Rights
.
If Seller intends to assign, transfer or sell any of its Mortgage Servicing Rights to a replacement servicer, to the extent permitted by
applicable law, (a) Seller shall consult with Purchaser and Purchaser shall participate in the assignment, transfer and sale of such Mortgage Servicing Rights, and (b) Seller shall obtain the written consent of Purchaser, granted by the
Purchaser in its sole discretion, prior to any assignment, transfer or sale thereof.
Section 8.13
Consents to
Transaction Documents
.
Seller shall not terminate, amend, amend and restate, modify or waive any conditions or provisions
of any Transaction Document without the express written consent of Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned.
Section 8.14
Accounts
.
Seller shall inform the Mortgagors of Mortgage
Loans at its own expense to remit their mortgage payments to the Lockbox Account, and any change in such instructions shall only be permitted with the express written consent of Purchaser.
Section 8.15
Notification of Certain Events
.
Seller shall promptly notify Purchaser of any event which, with the passage of time, could reasonably be expected to result in a termination of any servicing agreement between (i) Seller and the
Agency, (ii) Seller and Fannie Mae or (iii) Seller and Ginnie Mae. Seller shall provide Purchaser with copies of any notices from the Agency, Fannie Mae or Ginnie Mae of any breach, potential breach, default or potential default by Seller
under any servicing agreement between Seller and the Agency, Fannie Mae or Ginnie Mae and with copies of any notices from the Agency, Fannie Mae or Ginnie Mae of any termination, potential termination or threatened termination of any servicing
agreement entered into between (i) Seller and the Agency, (ii) Seller and Fannie Mae or (iii) Seller and Ginnie Mae. Seller shall promptly forward copies of any material notices received from the Agency or from any Governmental
Authority with respect to the Mortgage Loans. Seller shall provide Purchaser with (a) copies of all amendments to the Transaction Documents, the Servicing Agreements (other than with respect to Mortgage Loans owned by Seller) and the agreements
relating to Seller’s acquisition of the Mortgage Servicing Rights, (b) with respect to Mortgage Loans owned by Seller, copies of all material amendments to the Servicing Agreements, and (c) copies of any other agreements Seller enters
into with the Agency that may be reasonably material to Purchaser, in each case, promptly after execution thereof.
36
Section 8.16
Financing; Pledge of Current Excess Servicing Spread
.
Seller shall not pledge, obtain financing for, or otherwise permit any Lien of any creditor of Seller to exist on, any portion of the
Servicing Spread Collections without the prior written consent of Purchaser. Seller’s financial statements shall contain footnotes indicating that the Current Excess Servicing Spread has been sold, and Seller does not maintain any ownership
interest therein.
Section 8.17
Existence, etc
.
Seller shall:
(a) preserve and maintain its legal existence, good standing and all of its material licenses required to service the Mortgage Loans;
(b) comply with the requirements of all Applicable Laws, rules, regulations and orders of Governmental Authorities (including
truth in lending and real estate settlement procedures) if failure to comply with such requirements could be reasonably likely (either individually or in the aggregate) to have a material adverse effect on its ability to perform its obligations
hereunder or under any other Transaction Document;
(c) keep adequate records and books of account, in which complete entries
will be made in accordance with GAAP consistently applied, and maintain adequate accounts and reserves for all taxes (including income taxes), all depreciation, depletion, obsolescence and amortization of its properties, all contingencies, and all
other reserves;
(d) not move its chief executive office or chief operating office from the addresses referred to in
Exhibit I
unless it shall have provided Purchaser not less than thirty (30) days prior written notice of such change;
(e) pay and discharge all material taxes, assessments and governmental charges or levies imposed on it or its income or profits or on any of its property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained. Seller and its subsidiaries shall file on a timely
basis all federal, and material state and local tax and information returns, reports and any other information statements or schedules required to be filed by or in respect of it;
(f) keep in full force and effect the provisions of its charter documents, by-laws, operating agreements or similar organizational
documents in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Documents;
37
(g) keep in full force and effect all agreements and instruments by which it or any of its
properties may be bound and all applicable decrees, orders and judgments, in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Document; and
(h) comply with its obligations under the Transaction Documents to which it is a party, and each other agreement entered into with the
Agency.
Section 8.18
Consent to Sub-Servicing
.
Subject to the rights of the Agency and except as contemplated under the Purchase and Sale Agreement with respect to transition services
thereunder, Seller will not permit any Person other than Seller to service or sub-service the Mortgage Loans without the prior written consent of Purchaser, in each case other than (i) the Interim Servicer (prior to the Servicing Transfer Date)
and (ii) third-party vendors customarily employed by servicers in the ordinary course of business in accordance with prudent mortgage servicing practices.
Section 8.19
Nonpetition Covenant
.
Seller shall not, prior to the
date that is one year and one day after the payment in full of the Current Excess Servicing Spread, petition or otherwise invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against Purchaser
under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Purchaser or any substantial part of its property, or ordering the winding up or liquidation of the affairs of
Purchaser.
Section 8.20
Data Tape; Schedule of Mortgage Loans
.
The information in the Data Tape delivered to Purchaser on the Sale Date will be true and correct in all material respects as of the date
specified. Seller shall maintain the Schedule of Mortgage Loans, which shall be updated as of the Sale Date. The information in the Schedule of Mortgage Loans pertaining to the Mortgage Loans and the Mortgage Servicing Rights will be true and
correct in all material respects as of the date specified.
Section 8.21
Insurance
.
The Seller shall maintain (a) general liability insurance, (b) errors and omission insurance or blanket bond coverage and
(c) fidelity bond insurance, in each case, from reputable companies with coverage in amounts customarily maintained by such similarly situated entities in the same jurisdiction and industry as the Seller.
38
Section 8.22
Defense of Title
.
The Seller warrants and will defend the right, title and interest of the Purchaser in and to the Current Excess Servicing Spread against
all adverse claims and demands subject to Permitted Liens.
Section 8.23
Refinancing of Mortgage Loans
.
Each agreement or arrangement that Seller enters into to purchase Mortgage Servicing Rights shall be entered into on an
arm’s length contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing Rights to be acquired thereby. Seller shall not enter into any agreement or arrangement with a third
party intended to encourage the refinancing of any Mortgage Loan by any Person other than Seller.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser under this Agreement and under the Assignment Agreement are subject to the satisfaction of the following
conditions as of the Sale Date:
Section 9.01
Correctness of Representations and Warranties
.
The representations and warranties made by Seller in this Agreement and each other Transaction Document to which Seller is a party to be
made on or prior to the Sale Date are true and correct in all material respects.
Section 9.02
Compliance with
Conditions
.
All of the terms, covenants, conditions and obligations of this Agreement and each other Transaction Document
required to be complied with and performed by Seller and Bank of America on or prior to the Sale Date shall have been duly complied with and performed in all material respects.
Section 9.03
Corporate Resolution
.
Receipt by the Purchaser of a certified copy of the Seller’s corporate resolution approving the execution and delivery of this Agreement and the other Transaction Documents and the consummation of
the transactions contemplated hereby and thereby, together with such other certificates of incumbency and other evidences of corporate authority as Purchaser or its counsel may reasonably request.
39
Section 9.04
No Material Adverse Change
.
From the Agreement Date, there shall not have been any change to Seller’s financial or operating condition, or in the Mortgage
Servicing Rights, the Mortgage Loans, the Related Escrow Accounts or to Seller’s relationship with, or authority from, the Agency, that in each case will likely materially and adversely affect the consummation of the transactions contemplated
hereby or the Current Excess Servicing Spread.
Section 9.05
Consents
.
Seller shall have obtained all consents, approvals or other requirements of third parties required for the consummation of the
transactions contemplated by the Transaction Documents, including Agency approval as contemplated by
Section 5.03
and the Seller shall have commenced servicing the Mortgage Loans under the applicable Servicing Agreement. All actions of
all Governmental Authorities required to consummate the transactions contemplated by the Transaction Documents and the documents related thereto shall have been obtained or made.
Section 9.06
Delivery of Transaction Documents
.
Seller shall have delivered to the Purchaser copies of each executed Transaction Document that is to be entered into on or prior to such date and each of the items required to be delivered pursuant to
Section 2.04
hereof.
Section 9.07
Certificate of Seller
.
Seller shall have provided Purchaser a certificate, substantially in the form attached hereto as
Exhibit C
, signed by an authorized
officer of Seller dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each of Seller’s representations and warranties made in this Agreement and each other Transaction Document to
which Seller is a party is true and correct in all material respects as of such date; (b) all of the terms, covenants, conditions and obligations of this Agreement and each other Transaction Document to which Seller is a party that are required
to be complied with and performed by Seller at or prior to the Sale Date have been duly complied with and performed in all material respects; (c) the conditions set forth in
Section 9.04
and
Section 9.05
have been
satisfied; and (d) as of the Sale Date, Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar
Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries, and the Seller (considered together with the Seller’s consolidated subsidiaries) is not in default in any indebtedness in excess of $10,000,000 (individually or in the
aggregate).
40
Section 9.08
Valuation
.
Purchaser shall have received an opinion reasonably satisfactory to Purchaser that the Base Servicing Fee of the Mortgage Loans and the
Purchase Price of the Current Excess Servicing Spread is fair and reasonable.
Section 9.09
Opinions of Counsel
.
Seller’s counsel shall have delivered the Opinions of Counsel required pursuant to
Section 2.04(a)(ix)
,
Section 2.04(a)(x)
and
Section 2.04(a)(xi)
.
Section 9.10
Acquisition of Mortgage Servicing
Rights by Seller
.
Seller shall have acquired the Mortgage Servicing Rights and other Purchased Assets from Bank of America
pursuant to the Purchase and Sale Agreement as of the Sale Date.
Section 9.11
Good Standing Certificate of
Seller
.
Seller shall have provided Purchaser a certificate of good standing of Seller, dated as of a date within five
(5) Business Days prior to the Sale Date.
Section 9.12
No Actions or Proceedings
.
No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit
the consummation of, or to invalidate, any of the transactions contemplated by this Agreement and the documents related hereto in any material respect.
Section 9.13
Fees, Costs and Expenses
.
The fees, costs and expenses
payable by the Seller on or prior to the Sale Date pursuant to
Section 12.01
hereof and any other Transaction Document shall have been paid.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the satisfaction of the following conditions as of the
Sale Date, as applicable:
41
Section 10.01
Correctness of Representations and Warranties
.
The representations and warranties made by Purchaser in this Agreement to be made on or prior to the Agreement Date or Sale Date, as
applicable, are true and correct in all material respects as of the date thereof.
Section 10.02
Compliance with
Conditions
.
All of the terms, conditions, covenants and obligations of this Agreement required to be complied with and
performed by Purchaser on or prior to the Sale Date shall have been duly complied with and performed in all material respects as of the date thereof.
Section 10.03
Corporate Resolution
.
As of the date hereof, Seller
shall have received from Purchaser a certified copy of its corporate resolution approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, together with such other certificates of incumbency
and other evidences of corporate authority as Seller or its counsel may reasonably request.
Section 10.04
No
Material Adverse Change
.
Since the Agreement Date, there shall not have been any change to Purchaser’s financial
condition that will likely materially and adversely affect the consummation of the transactions contemplated hereby.
Section 10.05
Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate, substantially in the form attached hereto as
Exhibit D
, signed by an authorized officer of Purchaser dated as of such date, applicable to the
transactions contemplated by this Agreement, to the effect that: (a) each of Purchaser’s representations and warranties made in this Agreement is true and correct in all material respects as of such date; (b) all of the terms,
covenants, conditions and obligations of this Agreement required to be complied with and performed by Purchaser at or prior to the Sale Date have been duly complied with and performed in all material respects; and (c) the condition set forth in
Section 10.04
has been satisfied.
Section 10.06
Good Standing Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate of good standing of Purchaser, dated as of a date within five (5) Business Days
prior to the Sale Date.
42
ARTICLE XI
INDEMNIFICATION; CURE
Section 11.01
Indemnification by
Seller
.
(a) Seller shall indemnify, defend and hold Purchaser, its affiliates and its and their respective directors,
managers, officers, employees, agents, representatives and advisors (the “
Purchaser Indemnitees
”) harmless from and shall reimburse the applicable Purchaser Indemnitee for any Losses suffered or incurred by any Purchaser Indemnitee
after the Sale Date which result from:
(i) Any material breach of a representation or warranty by Seller, or
non-fulfillment of any covenant or obligation of Seller, contained in this Agreement or the Assignment Agreement;
(ii) Any servicing act or omission of any prior servicer relating to any Mortgage Loan and any act or omission of any party related to the origination of any Mortgage Loan;
(iii) Any act, error or omission of Seller in servicing any of the Mortgage Loans, including improper action or failure
to act when required to do so;
(iv) Any exercise of any rights of setoff or other netting arrangements by the
Agency against Seller that results in a decrease in Servicing Agreements termination payments due to Seller with respect to the Mortgage Loans from the Agency or in a shortfall of funds to pay the Current Excess Servicing Spread;
(v) Any breach by Seller of the Purchase and Sale Agreement; and
(vi) Litigation, proceedings, governmental investigations, orders, injunctions or decrees resulting from any of the items
described in Section 11.01(a)(i) – (v) above;
provided
,
however
, that the applicable Purchaser Indemnitee has
taken all commercially reasonable and appropriate actions to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Seller, which such failure of mitigation shall not relieve Seller of its
indemnification obligations in this
Section
11.01
but may affect the amount of such obligation; and
further
provided
, that any Losses
43
incurred by the Purchaser Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be reimbursed by Seller as part of its
indemnification obligations in this
Section 11.01
. Purchaser shall notify Seller promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations, orders, injunctions, decrees or any
third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Seller shall have the right to assume the defense of such Third Party Claim using
counsel of its choice reasonably satisfactory to the applicable Purchaser Indemnitee, but may not enter into any settlement without the prior written consent of the applicable Purchaser Indemnitee, which shall not be unreasonably withheld. A
Purchaser Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself at its own expense but shall not consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of Seller, which consent shall not be unreasonably withheld. Any exercise of such rights by a Purchaser Indemnitee shall not relieve Seller of its obligations and liabilities under this
Section 11.01
or
any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Purchaser Indemnitee shall be required to cooperate in good faith with Seller to ensure the proper and
adequate defense of such Third-Party Claim. For the avoidance of doubt, Seller’s obligations for Purchaser Indemnitees shall not be limited to funds available in the Third Party Controlled Current Spread Custodial Account or the Current Spread
Reserve Account.
(b)
REIT Requirements
. Notwithstanding anything in
Section 11.01(a)
above, in the event
that counsel or independent accountants for the Protected REIT determine that there exists a material risk that any amounts due to Purchaser under
ARTICLE XI
hereof would be treated as Nonqualifying Income upon the payment of such amounts to
Purchaser, the amount paid to Purchaser pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to Purchaser in such year without causing the Protected REIT to fail to meet the REIT Requirements for such year,
determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the Protected REIT. If the amount payable for any tax year under the preceding sentence is less than the amount which
Seller would otherwise be obligated to pay to Purchaser pursuant to
ARTICLE XI
of this Agreement (the “Expense Amount”), then: (1) Seller shall place the Expense Amount into an escrow account (the “Expense Escrow
Account”) using an escrow agent and agreement reasonably acceptable to Purchaser and shall not release any portion thereof to Purchaser, and Purchaser shall not be entitled to any such amount, unless and until Purchaser delivers to Seller, at
the sole option of the Protected REIT, (i) an opinion (an “Expense Amount Tax Opinion”) of the Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income,
(ii) a letter (an “Expense Amount Accountant’s Letter”) from the Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to Purchaser without causing the Protected REIT to fail to
meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to the Protected REIT indicating that the receipt of any Expense Amount hereunder will not cause the Protected REIT to fail to satisfy
the REIT Requirements (a “REIT
Qualification Ruling
” and, collectively with an Expense Amount Tax Opinion and an Expense
44
Amount Accountant’s Letter, a “
Release Document
”); and (2) pending the delivery of a Release Document by Purchaser to Seller, Purchaser shall have the right, but not
the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement (an “
Indemnity Loan Agreement
”) reasonably acceptable to Purchaser that (i) requires Seller to lend Purchaser immediately
available cash proceeds in an amount equal to the Expense Amount (an “
Indemnity Loan
”), and (ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the
credit standing and profile of Purchaser or any guarantor of Purchaser, including the Protected REIT, at the time of such Loan, and (B) a 15 year maturity with no periodic amortization.
Section 11.02
Indemnification by Purchaser
.
Purchaser shall indemnify, defend and hold Seller, its affiliates and its and their respective directors, managers, officers, employees, agents, representatives and advisors (the “
Seller
Indemnitees
”) harmless from and shall reimburse the applicable Seller Indemnitee for any Losses suffered or incurred by any Seller Indemnitee which result from:
(a) Any material breach of a representation or warranty by Purchaser, or non-fulfillment of any covenant or obligation of Purchaser contained in this Agreement; and
(b) Litigation, proceedings, governmental investigations, orders, injunctions or decrees, the basis for which occurred after the
Agreement Date, resulting from any of the items described in
Section 11.02(a)
above;
provided
,
however
, that the
applicable Seller Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Purchaser, which such failure of
mitigation shall not relieve Purchaser of its indemnification obligations in this
Section 11.02
but may affect the amount of such obligation; and
further provided
, that any Losses incurred by the Seller Indemnitee pursuant to any
attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be reimbursed by Purchaser as part of its indemnification obligations in this
Section 11.02
. Seller shall notify Purchaser promptly
after receiving written notice of the assertion of any litigation, proceedings, governmental investigations, orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party
Claim
”). Upon receipt of such notice of a Third Party Claim, Purchaser shall have the right to assume the defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Seller Indemnitee, but may not
enter into any settlement without the prior written consent of Purchaser, which shall not be unreasonably withheld. A Seller Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself but shall not consent
to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of Purchaser, which consent shall not be unreasonably withheld. Any exercise of such rights by a Seller Indemnitee shall
not relieve Purchaser of its obligations and liabilities under this
Section 11.02
or any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Seller
Indemnitee shall be required to cooperate in good faith with Purchaser to ensure the proper and adequate defense of such Third-Party Claim.
45
Section 11.03
Award of Damages
.
(a)
(i) In
the event that an award of damages or other payments is received by a Party or a designee of a Party as a result of a claim, judgment, settlement or arbitration (including payment pursuant to a guaranty of Bank of America by any other Person) of a
legal dispute that occurs either on or after the execution of the Purchase and Sale Agreement in connection with the enforcement of the Purchase and Sale Agreement in the event of a breach by Bank of America of any representations and warranties or
covenants where such breach had an adverse impact on the value of the Total Servicing Spread, the Current Excess Servicing Spread Percentage of that award shall be distributed to Purchaser or its designee and the remainder of that award shall be
distributed to Seller or its designee.
(ii) In the event that an award of damages or other payment is received by a Party or
a designee of a Party as a result of a claim, judgment, settlement or arbitration (including payment pursuant to a guaranty of Bank of America by any other Person) of a legal dispute that occurs either on or after the execution of the Purchase and
Sale Agreement in connection with the enforcement of the Purchase and Sale Agreement in the event of a breach by Bank of America of any representations and warranties or covenants where such breach did not have an adverse impact on the value of the
Total Servicing Spread, the entirety of the award shall be distributed to Seller or its designee.
(b) In the event that a
Party or designee of a Party receives an award pursuant to
Sections 11.03(a)(i) or (ii)
and some or all of that amount is to be distributed to the other Party or a designee of the other Party pursuant to
Sections 11.03(a)(i) or
(ii)
, the Party or the Party’s designee in possession of the applicable amount shall promptly notify the other Party or the other Party’s designee as to the award’s existence and request that the other Party or other Party’s
designee, as applicable, designate an account to which the amount shall be remitted. Once the necessary account information has been provided by the appropriate Party or designee of a Party, the applicable amount shall be remitted by wire transfer
of immediately available federal funds to the account so designated.
(c) Two Business Days prior to each Distribution Date,
the Seller shall, provide Purchaser with a monthly report of all claims and legal disputes made or pending with Bank of America during the prior month, including the amounts of any claims made or resolved during such month.
46
Section 11.04
Other Rights
.
The Seller hereby acknowledges that, in addition to its rights under this Agreement, the Purchaser is entitled to exercise its rights
under the related Owner Consent.
ARTICLE XII
MISCELLANEOUS
Section 12.01
Costs and Expenses
.
Except as otherwise provided herein, Purchaser and Seller shall share the expenses incurred by Seller and Purchaser or their
respective affiliates in connection with the transactions contemplated hereby, with the expense allocation percentage to be mutually agreed upon by the Parties.
Section 12.02
Confidentiality
.
Each Party understands that in
connection with this transaction, it has been furnished and will be furnished Non-Public Personal Information and/or Personally Identifiable Financial Information (as those terms are defined in Sections 573.3(n) and (o) of the Office of Thrift
Supervision Regulations on Privacy of Consumer Information published at 12 C.F.R. Chapter V implementing Title V of the Gramm-Leach-Bliley Act), and other information regarding the policies and plans of the other Party and its affiliates that is and
has been designated as confidential and proprietary, and each Party agrees that it will maintain the confidentiality of such information and will not disclose it to others (except for its affiliates and its and their respective directors, managers,
officers, employees, financing sources, agents, representatives and advisors), or use it except in connection with the proposed acquisition contemplated by this Agreement, without the prior written consent of the Party furnishing such information.
Information which is generally known in the industry concerning a Party or among such Party’s creditors generally or which has been disclosed to the other Party by third parties who have a right to do so shall not be deemed confidential or
proprietary information for these purposes. If Purchaser, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with
the transactions contemplated hereby, Purchaser agrees to provide Seller with prompt notice of such request(s) so that Seller may seek an appropriate protective order and/or waive Purchaser’s compliance with the terms of this
Section 12.02
. If Seller, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with the transactions
contemplated hereby, Seller agrees to provide Purchaser with prompt notice of such request(s) so that Purchaser may seek an appropriate protective order and/or waive Seller’s compliance with the terms of this
Section 12.02
.
Notwithstanding the terms of this
Section 12.02
, if, in the absence of a protective order or the receipt of a waiver hereunder, Purchaser or Seller is nonetheless, in the opinion of its counsel, compelled to disclose information
concerning the other Party to any
47
tribunal or else stand liable for contempt or suffer other censure or penalty, Purchaser or Seller may disclose such information to such tribunal without liability hereunder. If the proposed
acquisition is not consummated, each Party agrees to promptly return to the other, promptly upon request, all confidential materials, and all copies thereof, which have been furnished to it in connection with the transactions contemplated hereby.
For the avoidance of doubt, either Party may provide its shareholders and creditors with a general description of this Agreement and any related transactions, and, subject to the provisions of this
Section 12.02
, information obtained
from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.03
Broker’s Fees
.
Each party hereto represents and warrants to the other that it has made no agreement to pay any finder’s, agent’s,
broker’s or originator’s fee arising out of or in connection with the subject matter of this Agreement. In the event Purchaser has entered or enters into an agreement to pay any finder’s, agent’s, broker’s, advisor’s or
originator’s fee arising out of or in connection with the subject matter of this Agreement, Purchaser shall be solely responsible for all such fees. The parties hereto shall indemnify and hold each other harmless from and against any such
obligation or liability and any expense incurred in investigating or defending (including reasonable attorneys’ fees) any claim based upon the other party’s actions in connection with such obligation.
Section 12.04
Relationship of Parties
.
The Parties intend that the transactions contemplated in the Transaction Documents constitute arms-length transactions among third parties. Nothing contained in the Transaction Documents will establish
any fiduciary, partnership, joint venture or similar relationship between or among the Parties except to the extent otherwise expressly stated therein.
Section 12.05
Survival of Representations and Warranties
.
Each party
hereto covenants and agrees that the representations and warranties in this Agreement, and in any document delivered or to be delivered pursuant hereto, shall survive the Agreement Date.
Section 12.06
Notices
.
All notices, requests, demands and other communications which are required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given if personally delivered
or sent by registered or certified mail, return receipt requested, postage prepaid or by prepaid overnight delivery service:
(a) If to Purchaser, to:
48
Fortress Investment Group LLC
1345 Avenue of the Americas
New York, NY 10105
Attn: Brian Sigman
Chief Financial Officer
(212) 479-5343
(b) If to Seller, to:
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attn: Amar Patel
or to such other address as Purchaser or Seller shall have specified in writing to the other.
Section 12.07
Waivers
.
Either Purchaser or Seller may, by written
notice to the other:
(a) Extend the time for the performance of any of the obligations or other transactions of the other;
and
(b) Waive compliance with or performance of any of the terms, conditions, covenants or obligations required to be
complied with or performed by the other hereunder.
The waiver by Purchaser or Seller of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other subsequent breach.
Section 12.08
Entire
Agreement; Amendment
.
This Agreement and the related Transaction Documents constitute the entire agreement between the
parties with respect to the transactions contemplated hereby and supersede all prior agreements with respect thereto. This Agreement may be amended only in a written instrument signed by both Seller and Purchaser.
49
Section 12.09
Binding Effect
.
This Agreement shall inure to the benefit of and be binding upon the Parties and their successors and assigns. Nothing in this Agreement,
express or implied, is intended to confer on any Person other than the Parties and their successors and assigns, any rights, obligations, remedies or liabilities.
Section 12.10
Headings
.
Headings on the Articles and Sections in this
Agreement are for reference purposes only and shall not be deemed to have any substantive effect.
Section 12.11
Applicable Law
.
This Agreement shall be 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 the laws of the State of New York, except to the extent preempted by Federal law. This Agreement shall constitute a security agreement under the laws of
the State of New York. In addition to any other rights available under this Agreement or otherwise available at law or in equity but subject to the terms hereof, Purchaser shall have all rights and remedies of a secured party with respect to the
Collateral under the laws of the State of New York and under any other applicable law to enforce the assignments and security interests contained herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of
applicable law and the terms of this Agreement, to sell or apply any rights and other interests with respect to the Collateral assigned or pledged hereby in accordance with the terms hereof at public and private sale in accordance with the terms of
this Agreement. The parties agree to waive trial by jury in the event of any dispute under this Agreement.
Section 12.12
Incorporation of Exhibits
.
The Exhibits attached hereto shall be incorporated herein and shall be understood to be a part hereof as though included in the body of this Agreement.
Section 12.13
Counterparts
.
This Agreement may be executed in counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which, taken together, shall constitute one and the same
agreement.
Section 12.14
Severability of Provisions
.
If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid,
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 or enforceability of the other provisions of this
Agreement or of the rights of the parties hereto.
50
Section 12.15
Public Announcement
.
No public release or statement concerning the subject matter of this Agreement shall be made by either party without the express written
consent and approval of the other party, except as required by law or stock exchange rule, and provided that on and after the Agreement Date, either party may provide its shareholders and creditors with a general description of this Agreement and
any related transactions, and, subject to the provisions of
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.16
Assignment
.
(a) Seller may not assign, transfer, sell or subcontract all or any part of this Agreement, any interest herein, or any of the Seller’s interest in the Servicing Spread Collections, other than the
interest in the Total Servicing Spread sold hereby, without the prior written consent of Purchaser,
provided
that any successor to Seller must assume Seller’s obligations under this Agreement. Purchaser shall have the unrestricted right
to further assign, transfer, deliver, hypothecate, pledge, subdivide or otherwise deal with its rights under this Agreement on whatever terms Purchaser shall determine without the consent of Seller; including the right to assign all or any portion
of the Current Excess Servicing Spread and to assign the related rights under this Agreement. If Purchaser assigns any rights under this Agreement to a third party (a “
Third Party Assignment
“), such third party (a “
Third
Party Assignee
“) shall enter into a new agreement (a “
Third Party Current Spread Agreement
“) with Seller or Seller’s assignee that provides such Third Party Assignee with the same rights with respect to the Current
Excess Servicing Spread that Purchaser would have had under this Agreement if the Third Party Assignment had not occurred.
(b) Seller shall maintain a register on which it enters the name and address of each holder of the Current Excess Servicing Spread and
each holder’s interest in the Current Excess Servicing Spread (the “
Holder Register
”) for each transaction described in
Section 12.16(a)
. The entries in the Holder Register shall be conclusive absent manifest error,
and Seller shall treat each Person whose name is recorded in the Holder Register as an owner of the Current Excess Servicing Spread for all purposes of this Agreement notwithstanding any notice to the contrary.
Section 12.17
Termination
.
If all necessary Owner Consents are not received by the Sale Date, or if the Purchase and Sale Agreement is terminated, this Agreement shall be terminated concurrently therewith, without any further
action of either Party. In the event this agreement is terminated as set forth in the prior sentence or in
Section 8.13
, neither Party shall have any further obligations to the
51
other Party hereunder except as expressly set forth herein. If all conditions to Purchaser’s or Seller’s obligations to close set forth in Article IX and Article X, respectively, are
not satisfied on the Sale Date, Purchaser or Seller, as applicable based on the condition or conditions not satisfied, may terminate this agreement by written notice to the other party, and neither party shall have any further obligations to the
other party hereunder, except as expressly set forth herein.
Section 12.18
Third Party Beneficiaries
.
This Agreement does not and is not intended to confer any rights or remedies upon any person or entity other than Purchaser
and Seller, except as provided in
Section 11.01
and in
Section 11.02
, provided that Purchaser and Seller reserve the right to modify any term of, or terminate, this Agreement, without the consent of any Purchaser Indemnitee
or Seller Indemnitee.
52
IN WITNESS WHEREOF, each of the undersigned parties to this Agreement has caused this
Agreement to be duly executed in its corporate name by one of its duly authorized officers, all as of the date first above written.
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MSR IX LLC
Purchaser
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By:
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/s/ Brian Sigman
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Name:
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Brian Sigman
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Title:
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Chief Financial Officer
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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/s/Amar Patel
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Name:
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Amar Patel
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Title:
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Executive Vice President
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EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT FOR MORTGAGE LOANS
Subject to, and upon the terms and conditions of the Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, dated as of January 6, 2013 (the “
Agreement
”), by
and between Nationstar Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) and MSR IX LLC, a Delaware limited liability company (together with its successors assigns, the
“
Purchaser
”), as may be amended, restated, or otherwise modified and in effect from time to time, Seller hereby assigns, transfers and delivers to Purchaser all of Seller’s right, title and interest in and to Current Excess
Servicing Spread for each of the Mortgage Loans set forth in Annex A attached hereto and all proceeds thereof, and agrees that as of the Sale Date, the applicable Mortgage Loan shall be deemed to be a “Mortgage Loan” for all purposes of
the Agreement. Capitalized terms used in this Assignment Agreement have the meanings given to such terms in, or incorporated by reference into, the Agreement.
In the event (but only in the event) that the conveyance of the Current Excess Servicing Spread is characterized by a court or governmental authority as security for a loan rather than a sale, Seller will
be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Current Excess Servicing Spread and all proceeds thereof as security for a loan in an
amount of the Purchase Price.
All of the terms, covenants, conditions and obligations of the Agreement required to be
complied with and performed by Seller on or prior to the date hereof have been duly complied with and performed in all material respects.
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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Name:
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Title:
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Annex A
[ATTACH ANNEX A, WHICH MAY BE ON COMPUTER TAPE, COMPACT DISK, OR
MICROFICHE, CONTAINING THE INFORMATION SET FORTH BELOW]
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
(column (d) –
column
(e))
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(g)
([ ]% of column
(f))
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Sale Date
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Loan # of
Mortgage
Loan
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Principal
Balance of
Mortgage
Loan as of the
Sale Date
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Servicing
Spread
Rate
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Base Servicing
Fee Rate
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Net Servicing
Spread Rate
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Current Excess
Servicing Spread
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EXHIBIT B
SCHEDULE OF MORTGAGE LOANS
[SEPARATELY DELIVERED]
EXHIBIT C
SELLER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, a [Vice President] of Nationstar Mortgage LLC (the “
Company
”), pursuant to
Section 9.07
of the Current Excess Servicing Spread Acquisition
Agreement for FHLMC Mortgage Loans by and between MSR IX LLC and the Company, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material
respects as of the date hereof;
(ii) All of the terms, covenants, conditions and obligations of the Agreement
required to be complied with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects;
(iii) The conditions set forth in
Sections 9.04
and
9.05
of the Agreement have been satisfied; and
(iv) As of the date hereof, the Company has a Consolidated Tangible Net Worth (as defined in the Agreement) of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance
of equity on or after the date of the Agreement by the Company, Nationstar Mortgage Holdings Inc. or any of the Company’s consolidated subsidiaries, and the Company (considered together with its consolidated subsidiaries)is not in default in
any indebtedness in excess of $10,000,000 (individually or in the aggregate).
IN WITNESS WHEREOF, the undersigned has
executed this Certificate as of [ ]
EXHIBIT D
PURCHASER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, [POSITION] of [ ], the sole member of MSR IX LLC (the “
Company
”), pursuant to
Section 10.05
of the Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans by and between the Company and Nationstar Mortgage LLC, dated as of January 6, 2013 (the “
Agreement
”), hereby
certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is
true and correct in all material respects as of the date hereof; and
(ii) All of the terms, covenants, conditions and
obligations of the Agreement required to be complied with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects; and
(iii) All conditions set forth in
Section 10.04
have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
[ ].
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MSR IX LLC
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By:
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[ ], as member
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By:
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EXHIBIT E
LOCATION OF CREDIT FILES
350 Highland Drive
Lewisville, Texas 75067
EXHIBIT F
FORM OF SUMMARY REMITTANCE REPORT
[DELIVERED SEPARATELY]
EXHIBIT G
FORM OF DELINQUENCY REPORT
[DELIVERED SEPARATELY]
EXHIBIT H
FORM OF DISBURSEMENT REPORT
[DELIVERED SEPARATELY]
EXHIBIT I
SELLER JURISDICTIONS AND RECORDING OFFICES
Chief Executive Office:
350 Highland Drive
Lewisville, Texas 75067
Recording Office:
Secretary of
State, State of Delaware
Exhibit 10.49
FUTURE SPREAD AGREEMENT FOR FNMA MORTGAGE LOANS
by and between
NATIONSTAR MORTGAGE LLC
(Seller)
and
MSR X LLC
(Purchaser)
Dated and effective as of January 6, 2013
Table of Contents
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ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
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1
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Section 1.01
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Definitions
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1
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Section 1.02
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General Interpretive Principles
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12
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ARTICLE II ITEMS TO BE DELIVERED
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13
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Section 2.01
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Items to be Delivered
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13
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Section 2.02
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Grant of Security Interest
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14
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ARTICLE III REPLACEMENT OF MORTGAGE LOANS
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14
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Section 3.01
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Refinancing and Substitution of Mortgage Loans
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14
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Section 3.02
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Criteria for Mortgage Loans
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15
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Section 3.03
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Refinancing Incentives
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16
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Section 3.04
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Selection Procedures
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18
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Section 3.05
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Assignment of Future Excess Servicing Spread
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19
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ARTICLE IV PAYMENTS AND DISTRIBUTIONS
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19
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Section 4.01
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Purchase Price
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19
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Section 4.02
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Payments by Purchaser
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20
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Section 4.03
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Accounts
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20
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Section 4.04
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Priority of Payments
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22
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Section 4.05
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Withdrawals from the Future Spread Reserve Account
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23
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Section 4.06
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Payment to Seller of Base Servicing Fee
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24
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Section 4.07
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Correction of Principal Balance Error
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24
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Section 4.08
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Intent and Characterization
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24
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER
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25
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Section 5.01
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Due Organization and Good Standing
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25
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Section 5.02
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Authority and Capacity
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25
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Section 5.03
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Owner Consents
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25
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Section 5.04
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Title to the Mortgage Servicing Rights
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26
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Section 5.05
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Effective Agreements
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26
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Section 5.06
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No Accrued Liabilities
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26
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Section 5.07
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Seller/Servicer Standing
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26
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Section 5.08
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MERS Membership
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26
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Section 5.09
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Owner Set-off Rights
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26
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Section 5.10
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Ability to Perform; Solvency
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27
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Section 5.11
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Obligations with Respect to Origination
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27
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Section 5.12
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Purchase of Mortgage Servicing Rights
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27
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Section 5.13
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No Actions
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27
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i
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ARTICLE VI REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE LOANS AND SERVICING
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27
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Section 6.01
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Servicing Agreements; Applicable Laws
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28
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Section 6.02
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Related Escrow Accounts
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28
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Section 6.03
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No Purchaser Responsibility
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28
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Section 6.04
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Location of Credit Files
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28
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Section 6.05
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Representations Concerning the Future Excess Servicing Spread
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28
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ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER
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29
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Section 7.01
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Due Organization and Good Standing
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29
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Section 7.02
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Authority and Capacity
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29
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Section 7.03
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Effective Agreements
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30
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Section 7.04
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Sophisticated Investor
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30
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Section 7.05
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No Actions
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30
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ARTICLE VIII SELLER COVENANTS
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30
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Section 8.01
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Servicing Obligations
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30
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Section 8.02
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Cooperation; Further Assurances
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31
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Section 8.03
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Financing Statements
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31
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Section 8.04
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Supplemental Information
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31
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Section 8.05
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Access to Information
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32
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Section 8.06
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Home Affordable Modification Program
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32
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Section 8.07
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Distribution Date Data Tapes and Reports
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32
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Section 8.08
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Financial Statements and Officer’s Certificates
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34
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Section 8.09
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Monthly Management Calls
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34
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Section 8.10
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Timely Payment of Owner Obligations
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35
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Section 8.11
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Servicing Agreements
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35
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Section 8.12
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Transfer of Mortgage Servicing Rights
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35
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Section 8.13
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Consents to Transaction Documents
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35
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Section 8.14
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Accounts
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35
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Section 8.15
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Notification of Certain Events
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36
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Section 8.16
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Financing; Pledge of Future Excess Servicing Spread
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36
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Section 8.17
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Existence, etc
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36
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Section 8.18
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Consent to Sub-Servicing
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37
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Section 8.19
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Nonpetition Covenant
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37
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Section 8.20
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Schedule of Mortgage Loans
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37
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Section 8.21
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True Sale Opinion
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38
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Section 8.22
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Valuation
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38
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Section 8.23
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Material Documents
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38
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Section 8.24
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Insurance
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38
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Section 8.25
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Defense of Title
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38
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ii
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Section 8.26
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Refinancing of Mortgage Loans.
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38
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ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
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39
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Section 9.01
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Correctness of Representations and Warranties
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39
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Section 9.02
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Compliance with Conditions
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39
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Section 9.03
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Corporate Resolution
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39
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Section 9.04
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No Material Adverse Change
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39
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Section 9.05
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Consents
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39
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Section 9.06
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Delivery of Transaction Documents
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40
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Section 9.07
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Certificate of Seller
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40
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Section 9.08
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Opinions of Counsel
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40
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Section 9.09
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Good Standing Certificate of Seller
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40
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Section 9.10
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No Actions or Proceedings.
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40
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ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
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40
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Section 10.01
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|
Correctness of Representations and Warranties
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41
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Section 10.02
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Compliance with Conditions
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41
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Section 10.03
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Corporate Resolution
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41
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Section 10.04
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No Material Adverse Change
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41
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Section 10.05
|
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Certificate of Purchaser
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41
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Section 10.06
|
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Good Standing Certificate of Purchaser
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41
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ARTICLE XI INDEMNIFICATION
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42
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Section 11.01
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Indemnification by Seller
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42
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Section 11.02
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Indemnification by Purchaser
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43
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Section 11.03
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Other Rights
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44
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ARTICLE XII MISCELLANEOUS
|
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44
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Section 12.01
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Costs and Expenses
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44
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Section 12.02
|
|
Confidentiality
|
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44
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Section 12.03
|
|
Broker’s Fees
|
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45
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Section 12.04
|
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Relationship of Parties
|
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46
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Section 12.05
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Survival of Representations and Warranties
|
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46
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Section 12.06
|
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Notices
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46
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Section 12.07
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Waivers
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46
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Section 12.08
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Entire Agreement; Amendment
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47
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Section 12.09
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Binding Effect
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47
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Section 12.10
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Headings
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47
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Section 12.11
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Applicable Law
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47
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Section 12.12
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Incorporation of Exhibits
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47
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Section 12.13
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Counterparts
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48
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Section 12.14
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Severability of Provisions
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48
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Section 12.15
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Assignment
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48
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Section 12.16
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Termination
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48
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Section 12.17
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Third Party Beneficiaries
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49
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iii
EXHIBITS
Exhibit A – Form of Assignment Agreement
Annex A
Exhibit B – Example of Calculations of Maximum Retained Refinancing Loan Amounts
Exhibit C – Schedule of Mortgage Loans
Exhibit D – Seller’s Officer’s
Certificate
Exhibit E – Purchaser’s Officer’s Certificate
Exhibit F – Location of Credit Files
Exhibit G – Form of Summary Remittance Report
Exhibit H – Form of Delinquency Report
Exhibit I – Form of Disbursement Report
Exhibit J – Seller Jurisdictions and Recording
Offices
iv
FUTURE SPREAD AGREEMENT FOR FNMA MORTGAGE LOANS
This FUTURE SPREAD AGREEMENT FOR FNMA MORTGAGE LOANS (as amended, restated, or otherwise modified and in effect from time to time, this
“
Agreement
”), dated as of January 6, 2013 (the “
Agreement Date
”), is by and between MSR X LLC, a Delaware limited liability company (together with its successors and assigns, the “
Purchaser
”),
and Nationstar Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) (the Purchaser and the Seller will collectively be referred to as the “
Parties
” and each, a
“
Party
”).
W I T N E S S E T H
:
WHEREAS
, Seller and Purchaser have entered into the Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans,
dated as of the date hereof (as amended, restated, or otherwise modified and in effect, the “
Current Spread Agreement
”), pursuant to which Purchaser will purchase and assume all right, title and interest in the excess servicing
spread with respect to a pool of residential mortgage loans to be serviced by Seller;
WHEREAS
, Seller desires to
retain the right to refinance the residential mortgage loans in the pool, and Purchaser is willing to grant such right, as long as the excess servicing spread with respect to the newly-originated residential mortgage loans and replacement
residential mortgage loans is assigned to the Purchaser as described herein; and
WHEREAS
, Purchaser and Seller desire
to set forth the terms and conditions pursuant to which residential mortgage loans in the pool may be refinanced.
NOW,
THEREFORE
, in consideration of the mutual promises, covenants and conditions and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and upon the terms and subject to the conditions set forth
herein, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
Section 1.01
Definitions.
Whenever used herein, the following
words and phrases, unless the context otherwise requires, shall have the following meanings:
Accepted Servicing
Practices
: With respect to any Mortgage Loan, those accepted and prudent mortgage servicing practices (including collection procedures) which are in accordance with the servicing practices and procedures as set forth in the applicable Servicing
Agreements, and in a manner at least equal in quality to the servicing that Seller provides to mortgage loans which it owns in its own portfolio.
1
Agency
: The entity formerly known as the Federal Home Loan Mortgage Corporation, or
any successor thereto, the Federal National Mortgage Association, or any successor thereto, the Government National Mortgage Association, or any successor thereto, the Federal Housing Administration of the United States Department of Housing and
Urban Development, or any successor thereto, the Department of Veterans Affairs, or any successor thereto.
Agreement
:
As defined in the preamble hereof.
Agreement Date
: As defined in the preamble hereof.
Ancillary Income
: All incidental servicing fees (such as late fees, assignment transfer fees, returned check fees, special
services fees, amortization schedule fees, HAMP fees, modification and incentive income and any interest or earnings on funds deposited in an account maintained by the Seller as servicer with respect to the Mortgage Loans, etc.) that are
supplemental to the servicing spread payable to the servicer pursuant to the Servicing Agreements.
Applicable Law
:
With reference to any Person, all laws (including common law), statutes, regulations, ordinances, treaties, judgments, decrees, injunctions, writs and orders of any court, governmental agency or authority and rules, regulations, orders, directives,
licenses and permits of any Governmental Authority applicable to such Person or its property or in respect of its operations.
Assignment Agreement
: An assignment agreement substantially in the form of
Exhibit A
to this Agreement or in such other
form as mutually agreed upon by the Parties.
Assignment Date
: With respect to a Refinanced Mortgage Loan and its
related Mortgage Loan, the Distribution Date in the third calendar month following the Refinanced Mortgage Loan’s Refinancing Date.
Available Portfolio
: As defined in
Section 3.04(a)
hereof.
Bank
: Wells Fargo Bank, National Association, or another financial institution mutually agreed upon by the Parties or any
successor thereto, each in its capacity as “Bank” under the Future Spread Custodial Account Control Agreement or the Future Spread Reserve Account Control Agreement, as applicable, or any third party custodian or trustee in similar
capacity under any replacement account control agreements.
Base Servicing Fee
: With respect to a Collection Period, an
amount equal to the product of (A) the aggregate outstanding principal balance of the Mortgage Loans as of the related Measurement Date, (B) the Base Servicing Fee Rate and (C) (i) in the case of the initial Collection Period, a
fraction, the numerator of which is the number of days in the period from and including the Sale Date to and including the last day of the initial Collection Period, and the denominator of which is 360, and (ii) in the case of all other
Collection Periods, 1/12;
provided
that the Base Servicing Fee with respect to any Mortgage Loan whose Servicing Agreement is terminated during a Collection Period shall be pro-rated to the actual number of days within such Collection Period
in which such Mortgage Loan was serviced by Seller.
2
Base Servicing Fee Rate
: With respect to the Mortgage Loans (other than GNMA Mortgage
Loans), 0.06% per annum and with respect to GNMA Mortgage Loans, 0.12% per annum.
Business Day
: Any day
other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the States of Texas or New York are authorized or obligated by law or by executive order to be closed or (c) such other days as agreed upon by the
Parties.
Carryover Retained Amount
: As defined in
Section 3.03
hereof.
Code
: The Internal Revenue Code of 1986, as amended from time to time.
Collateral
: As defined in
Section 2.02
hereof.
Collection Period
: With respect to any Distribution Date, the calendar month preceding the month in which such Distribution Date
occurs.
Consolidated Tangible Net Worth
: (i) The net worth of Seller and its consolidated subsidiaries, on a
combined basis, determined in accordance with GAAP,
minus
(ii) all intangibles determined in accordance with GAAP (including goodwill, capitalized financing costs and capitalized administration costs but excluding originated and
purchased mortgage servicing rights or retained residual securities) and any and all advances to, investments in and receivables held from affiliates;
provided
,
however
, that the non-cash effect (gain or loss) of any mark-to-market
adjustments made directly to stockholders’ equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the
calculation of Consolidated Tangible Net Worth.
Control
: The meaning specified in Section 8-106 of the UCC.
Credit File
: Those documents, which may be originals, copies or electronically imaged, pertaining to each Mortgage
Loan, held by or on behalf of Seller in connection with the servicing of the Mortgage Loan, which may include Mortgage Loan Documents and the credit documentation relating to the origination of such Mortgage Loan, and any documents gathered during
the servicing of a Mortgage Loan.
Current Mortgage Loan
: A residential mortgage loan that is a “Mortgage
Loan” under the Current Spread Agreement.
Current Spread Agreement
: As defined in the recitals to this Agreement.
Custodian
: A custodian of Credit Files or any part thereof as identified by the Seller to the Purchaser in writing on
or prior to the first Assignment Date as the same may be amended and supplemented from time to time by the Seller by providing a written notice of any such update to the Purchaser.
3
Distribution Date
: The 10th day of each calendar month, or if such day is not a
Business Day, the prior Business Day, beginning in the month following the first Assignment Date, or such other day as mutually agreed upon by Seller and Purchaser.
Electronic Data File
: A computer tape or other electronic medium generated by or on behalf of Seller and delivered or transmitted to or on behalf of Purchaser which provides information relating to
the Mortgage Loans.
Eligible Servicing Agreement
: Unless otherwise agreed to by the Purchaser, a Servicing Agreement
in respect of which the following eligibility requirements have been satisfied:
(a) The Owner Consents relating to such
Servicing Agreement have been obtained;
(b) such Servicing Agreement is in full force and effect, and is in all respects
genuine as appearing on its face or as represented in the books and records of Seller, and no event of default, early amortization event, termination event, or other event giving any party thereto (including with notice or lapse of time or both) the
right to terminate Seller as servicer thereunder for cause has occurred and is continuing; provided, however, that with respect to any Servicing Agreement and the occurrence of any event set forth in this clause (b) which is based on a breach
of a collateral performance test, such Servicing Agreement shall remain an Eligible Servicing Agreement so long as no notice of termination based on such breach has been given or threatened in writing and subject to the restrictions set forth
herein;
(c) Seller has not resigned or been terminated as servicer under such Servicing Agreement and has no actual
knowledge of any pending or threatened action to terminate Seller, as servicer (whether for cause or without cause); and
(d)
with respect to any Servicing Agreement relating to Non-Agency Mortgage Loans, an agreement pursuant to which Seller as servicer may not be terminated without cause pursuant to such Servicing Agreement or if the Seller as servicer may be terminated
without cause, upon payment of a termination fee.
Entitlement Holder
: The meaning specified in
Section 8-102(a)(7) of the UCC.
Excess Refinancing Percentage
: As defined in
Section 3.03
hereof.
Expense Amount
: As defined in
Section 11.01(b)
hereof.
Expense Amount Accountant’s Letter
: As defined in
Section 11.01(b)
hereof.
Expense Amount Tax Opinion
: As defined in
Section 11.01(b)
hereof.
Expense Escrow Account
: As defined in
Section 11.01(b)
hereof.
Fannie Mae
: Federal National Mortgage Association, or any successor thereto.
4
Freddie Mac
: Federal Home Loan Mortgage Corporation, or any successor thereto.
FHLMC Acknowledgment Agreement
: The acknowledgment agreement by and among the entity formerly known as the Federal
Home Loan Mortgage Corporation, or any successor thereto, Seller and MSR IX LLC, in form and substance reasonably acceptable to MSR IX LLC, dated on or before the Sale Date, pursuant to which the entity formerly known as the Federal Home Loan
Mortgage Corporation, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
FNMA Acknowledgment Agreement
: The acknowledgment agreement by and among the Federal National Mortgage Association, or any successor thereto, Seller and Purchaser, in form and substance reasonably
acceptable to Purchaser, dated on or before the Sale Date, pursuant to which the Federal National Mortgage Association, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
Future Excess Servicing Spread
: The rights of Seller, severable from each (and all) of the other rights under the
applicable Servicing Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to the Future Excess Servicing Spread Percentage.
Future Excess Servicing Spread Assignment Obligation
: As defined in
Section 3.01
hereof.
Future Excess Servicing Spread Percentage
: A percentage equal to the Current Excess Servicing Spread Percentage in the Current Spread Agreement.
Future Excess Servicing Spread Rights
: As defined in
Section 3.01
hereof.
Future Spread Custodial Account Agreement
: The applicable deposit account agreement and other related account documentation
governing the Third Party Controlled Future Spread Custodial Account.
Future Spread Custodial Account Control
Agreement
: The account control agreement among Seller, Purchaser and Wells Fargo Bank, National Association, or any successor thereto, or any other institution agreed upon by the Parties, as Bank, dated as of the Sale Date, entered into with
respect to the Third Party Controlled Future Spread Custodial Account, as amended, restated, supplemented or otherwise modified from time to time.
Future Spread Reserve Account
: The account specified in the Future Spread Reserve Account Control Agreement and maintained by Wells Fargo Bank, National Association, or any successor thereto, or
another third party custodian or trustee selected by Purchaser.
Future Spread Reserve Account Agreement
: The
applicable deposit account agreement and other related account documentation governing the Future Spread Reserve Account.
Future Spread Reserve Account Control Agreement
: The account control agreement among Seller, Purchaser and Wells Fargo Bank,
National Association, or any successor thereto, or any other institution agreed upon by the Parties, as Bank, dated as of the Sale Date, entered into with respect to the Future Spread Reserve Account, as amended, restated, supplemented or otherwise
modified from time to time.
5
Future Spread Reserve Account Deposit Event
: As defined in
Section 4.03(c)
hereof.
Future Spread Reserve Account Required Amount
: As defined in
Section 4.03(c)
hereof.
GAAP
: Generally accepted accounting principles in the United States of America as
in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board,
or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, that are applicable to the circumstances as of the date of determination.
GNMA
: Government National Mortgage Association, or any successor thereto.
GNMA Acknowledgment Agreement
: The acknowledgment agreement by and among GNMA, or any successor thereto, Seller and MSR XI LLC, in
form and substance reasonably acceptable to MSR XI LLC, dated on or before the Sale Date, pursuant to which GNMA, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
GNMA Mortgage Loan
: A Mortgage Loan which is owned by GNMA, or any successor thereto.
Governmental Authority
: With respect to any Person, any nation or government, any state or other political subdivision, agency or
instrumentality thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over such Person, any of its subsidiaries or any
of its properties.
Grant
: To grant, bargain, sell, warrant, alienate, remise, demise, release, convey, assign,
transfer, mortgage, pledge, create and grant a security interest in and right of setoff against, deposit, set over or confirm.
HAMP
: As defined in
Section 8.06
hereof.
HAMP Loans
: As defined in
Section 8.06
hereof.
Holder
Register
: As defined in Section
12.15(b)
hereof.
Indemnity Loan
: As defined in
Section 11.01(b)
hereof.
Indemnity Loan Agreement
: As defined in
Section 11.01(b)
hereof.
IRS
: The United States Internal Revenue Service.
6
Lien
: Any mortgage, deed of trust, pledge, hypothecation, collateral assignment,
charge, deposit, arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness
or the performance of any other obligation, including any conditional sale or other title retention agreement.
Lockbox
Account
: An account maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser for the purpose of receiving Servicing Spread Collections.
Loss
or
Losses
: Any and all direct, actual and out-of-pocket losses (including any loss in the value in the Future Excess
Servicing Spread), damages, deficiencies, claims, costs or expenses, including reasonable attorneys’ fees and disbursements, excluding (i) any amounts attributable to or arising from overhead allocations, general or administrative costs
and expenses, or any cost for the time of any Party’s employees, (ii) consequential losses or damages consisting of speculative lost profits, lost investment or business opportunity, damage to reputation or operating losses, or
(iii) punitive or treble damages;
provided
,
however
, that the exclusions set forth in clauses (ii) and (iii) above do not apply if and to the extent any such amounts are actually incurred in payment to a third party or
government entity.
Maximum Retained Refinancing Loan Amount
: As defined in
Section 3.03
hereof.
Measurement Date
: With respect to any Collection Period, the first day of such Collection Period.
MERS
: Mortgage Electronic Registration Systems, Inc., or any successor thereto.
MI
: Insurance provided by private mortgage insurance companies to make payments on certain Mortgage Loans in the event that
the related Mortgagor defaults in its obligation in respect of the Mortgage.
Mortgage
: Each of those mortgages,
deeds of trust, security deeds or deeds to secure debt creating a first lien on or an interest in real property securing a Mortgage Note and related to a Mortgage Loan.
Mortgage Loan
: A residential mortgage loan that satisfies the conditions set forth in
Section 3.02
and whose Future Excess Servicing Spread is assigned to Purchaser hereunder in
satisfaction of Seller’s Future Excess Servicing Spread Assignment Obligation.
Mortgage Loan Documents
: With
respect to each Mortgage Loan, the documents and agreements related to such Mortgage Loan required to be held by the applicable Custodian, including, without limitation, the original Mortgage Note, and any other documents or agreements evidencing
and/or governing such Mortgage Loan.
Mortgage Loan Identification Date
: With respect to a Refinanced Mortgage Loan and
its related replacement Mortgage Loan, the 25th day of the second calendar month following the Refinanced Mortgage Loan’s Refinancing Date.
7
Mortgage Note
: With respect to any Mortgage Loan, the note or other evidence of
indebtedness of the Mortgagor, thereunder, including, if applicable, an allonge and lost note affidavit.
Mortgage
Servicing Rights
: The rights and responsibilities of Seller with respect to servicing the Mortgage Loans under the Servicing Agreements, including any and all of the following if and to the extent provided therein: (a) all rights to service
a Mortgage Loan; (b) all rights to receive servicing fees, Ancillary Income, reimbursements or indemnification for servicing the Mortgage Loan, and any payments received in respect of the foregoing and proceeds thereof; (c) the right to
collect, hold and disburse escrow payments or other payments with respect to the Mortgage Loan and any amounts actually collected with respect thereto and to receive interest income on such amounts to the extent permitted by Applicable Law;
(d) all accounts and other rights to payment related to any of the property described in this paragraph; (e) possession and use of any and all Credit Files pertaining to the Mortgage Loan or pertaining to the past, present or prospective
servicing of the Mortgage Loan; (f) to the extent applicable, all rights and benefits relating to the direct solicitation of the related Mortgagors for refinance or modification of the Mortgage Loans and attendant right, title and interest in
and to the list of such Mortgagors and data relating to their respective Mortgage Loans; and (g) all rights, powers and privileges incident to any of the foregoing.
Mortgaged Property
: The Mortgagor’s real property, securing repayment of a related Mortgage Note, consisting of an interest in a single parcel of real property, improved by a residential
dwelling.
Mortgagor
: An obligor under a residential mortgage loan.
New Mortgage Loan
: As defined in
Section 3.02(a)(i)(1)
hereof.
Non-Agency Mortgage Loan
: Any Mortgage Loan where the Owner is not an Agency.
Nonqualifying Income
: Any amount that is treated as gross income for purposes of Section 856 of the Code and which is not
Qualifying Income.
Objection Notice
: As defined in
Section 4.03(c)
hereof.
Opinion of Counsel
: One or more written opinions, in form and substance reasonably satisfactory to the recipient, of an attorney
at law admitted to practice in any state of the United States or the District of Columbia, which attorney may be counsel for Seller or Purchaser, as the case may be.
Owner
: With respect to a Mortgage Loan, the owner thereof.
Owner
Consent
: All agreements, including the FHLMC Acknowledgment Agreement, the FNMA Acknowledgment Agreement and GNMA Acknowledgment Agreement, if applicable, pursuant to which an Owner approves or consents to the sale of the Future Excess Servicing
Spread from Seller to Purchaser and any other consents, acknowledgements or similar instruments that may be required from an Owner in connection with the transactions contemplated herein.
8
Party
or
Parties
: As defined in the preamble hereof.
Permitted Liens
: Liens in favor of an Agency required pursuant to the applicable Servicing Agreements.
Person
: Any individual, partnership, corporation, limited liability company, limited liability partnership, business entity, joint
stock company, trust, business trust, unincorporated organization, association, enterprise, joint venture, government, any department or agency of any government or any other entity of whatever nature.
Power of Attorney
: A Power of Attorney delivered by the Seller to the Purchaser authorizing the Purchaser to enforce the right to
payment of the Future Excess Servicing Spread under the related Servicing Agreement solely in the event that the Seller fails to enforce such right within 30 days after receiving written notice of such failure from the Purchaser to the Seller.
Priority of Payments
: As defined in
Section 4.04
hereof.
Protected REIT
: Any entity that (i) has elected to be taxed as a real estate investment trust pursuant to Section 856 et
seq. of the Code, (ii) owns a direct or indirect equity interest in Purchaser, and (iii) is treated for purposes of Section 856 of the Code as owning all or a portion of the assets of the Purchaser or as receiving all or a portion of
the Purchaser’s income.
Purchase and Sale Agreement
: The Mortgage Servicing Rights Purchase and Sale Agreement,
dated as of January 6, 2013, by and between Nationstar Mortgage LLC, as purchaser, and Bank of America, National Association, as seller, together with all schedules and exhibits thereto, as the same may be amended, supplemented or otherwise
modified from time to time.
Purchase Price
: As defined in
Section 4.01
hereof.
Purchaser
: As defined in the preamble hereof.
Purchaser Indemnitees
: As defined in
Section 11.01(a)
hereof.
Qualifying Income
: Gross income that is described in Section 856(c)(2) or 856(c)(3) of the Code.
Quarterly Collection Period
: As defined in
Section 3.03
hereof.
Refinanced Mortgage Loan
: A Current Mortgage Loan or a Mortgage Loan that has been refinanced in whole or in part by Seller or an
affiliate thereof.
Refinancing Date
: The date on which a Current Mortgage Loan or Mortgage Loan is refinanced by
Seller or an affiliate thereof.
Refinancing Split Percentage
: As defined in
Section 3.03
hereof.
9
REIT Qualification Ruling
: As defined in
Section 11.01(b)
hereof.
REIT Requirements
: The requirements imposed on REITs pursuant to Sections 856 through and including 860 of the Code.
Related Collection Period
: With respect to an Assignment Date, the Collection Period in the third calendar month prior
to such Assignment Date, and with respect to a Mortgage Loan Identification Date, the second calendar month prior to such Mortgage Loan Identification Date.
Related Escrow Accounts
: Mortgage Loan escrow/impound accounts maintained by Seller relating to the Mortgage Servicing Rights, including accounts for buydown funds, real estate taxes and MI, flood
and hazard insurance premiums.
Release Document
: As defined in
Section 11.01(b)
hereof.
Remaining Expected Total Servicing Spread
: As defined in
Section 4.03(c)
hereof.
Replacement Portfolio
: As defined in
Section 3.04(a)
hereof.
Replacement Shortfall
: As defined in
Section 3.03
hereof.
Requirement of Law
: As to any Person, the certificate of incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its
property is subject.
Retained Portfolio
: As defined in
Section 3.04(a)
hereof.
Retained Servicing Spread
: The rights of Seller, severable from each (and all) of the other rights under the applicable Servicing
Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to 100%
minus
the Future Excess Servicing Spread Percentage.
Sale Date
: As defined in the Purchase and Sale Agreement; provided that all conditions precedent to the execution and delivery of the related assignment agreement under the Current Spread Agreement
shall have been satisfied or waived on such date.
Sales Proceeds
: The proceeds received upon a sale (approved by the
Parties) of the Total Servicing Spread (except without giving effect to clause (c) of the definition thereof), in whole or in part, including through a sale in accordance with
Section 8.12
.
Schedule of Mortgage Loans:
The list of Mortgage Loans whose Future Excess Servicing Spread has been assigned to Purchaser
pursuant to this Agreement as updated by the Seller and Purchaser on each Assignment Date and maintained as
Exhibit C
hereto.
Selection Period
: As defined in
Section 3.04(b)
hereof.
10
Seller
: As defined in the preamble hereof.
Seller Indemnitees
: As defined in
Section 11.02
hereof.
Servicing
: The responsibilities, with respect to servicing the Mortgage Loans, under the Servicing Agreements.
Servicing Agreements
: The servicing agreements, as amended from time to time, and any waivers, consent letters, acknowledgments
and other agreements under which Seller is the servicer of the Mortgage Loans relating to the Mortgage Servicing Rights and governing the servicing of the Mortgage Loans, or with respect to Mortgage Loans owned by the Seller, the credit and
collection standards, policies, procedures and practices of Seller relating to residential mortgage loans owned and serviced by Seller.
Servicing Spread Collections
: For each Collection Period, the funds collected on the Mortgage Loans and allocated as the servicing compensation payable to Seller as servicer of the Mortgage Loans
with respect to such Collection Period pursuant to the applicable Servicing Agreements, other than Ancillary Income and, for the avoidance of doubt, other than reimbursements received for advances and other out-of-pocket expenditures from an Owner
by Seller in accordance with the Servicing Agreements.
Solvent
: With respect to any Person as of any date of
determination, (a) the value of the assets of such Person is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person as determined in accordance with GAAP, (b) such Person is able to
pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the
amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
Third Party Assignee
: As defined in
Section 12.15
hereof.
Third Party Assignment
: As defined in
Section 12.15
hereof.
Third Party Future Spread Agreement
: As defined in
Section 12.15
hereof.
Third Party Claim
: As defined in
Section 11.01
and
Section 11.02
, as applicable.
Third Party Controlled Future Spread Custodial Account
: The account specified in the Future Spread Custodial Account Control
Agreement and maintained by Wells Fargo Bank, National Association, or any successor thereto, or another third party custodian or trustee selected by Purchaser, into which all Servicing Spread Collections, all Sales Proceeds and all Servicing
Agreement termination payments in respect of the Mortgage Loans shall be deposited.
Total Servicing Spread
: For each
Collection Period on and after the Sale Date, the sum of the following: (a) the Servicing Spread Collections received during such Collection Period and remaining after payment of the Base Servicing Fee; (b) all other amounts payable by an
11
Owner to Seller (or Purchaser under an Owner Consent) with respect to the Mortgage Servicing Rights for Mortgage Loans, including any termination fees paid by an Owner to Seller for terminating
Seller as the servicer of any of the Mortgage Loans, but for the avoidance of doubt, excluding all Ancillary Income and reimbursements received for advances and other out-of-pocket expenditures from an Owner by Seller in accordance with the
Servicing Agreements and (c) all Sales Proceeds received during such Collection Period.
Transaction
Documents
: The Future Spread Custodial Account Agreement, the Future Spread Custodial Account Control Agreement, the Future Spread Reserve Account Agreement, the Future Spread Reserve Account Control Agreement, the Current Spread Agreement and
this Agreement.
UCC
: The Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.
Section 1.02
General Interpretive Principles
.
For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other gender;
(b) Accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally accepted accounting principles;
(c)
References herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
(d) A reference to a Subsection without further reference to a Section is a reference to
such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions;
(e) The words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; and
(f) The term “include” or “including” shall mean without limitation by reason of enumeration.
12
ARTICLE II
ITEMS TO BE DELIVERED
Section 2.01
Items to be
Delivered
.
(a) On the Agreement Date, subject to the satisfaction of the terms and conditions herein, each of Seller
and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
(i) This Agreement;
(ii) The Current Spread Agreement and all agreements, certificates, opinions and instruments required to be delivered under the Current Spread Agreement on the Agreement Date, if any;
(b) On the Sale Date, subject to the satisfaction of the terms and conditions herein, each of Seller and Purchaser shall deliver or
cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
(i) The executed Future Spread Custodial Account Agreement;
(ii)
The executed Future Spread Custodial Account Control Agreement;
(iii) The executed Future Spread Reserve
Account Agreement;
(iv) The executed Future Spread Reserve Account Control Agreement;
(v) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser regarding due authorization, authority, and
enforceability of the applicable Transaction Documents to which Seller is a party, and regarding no conflicts with other material Seller agreements;
(vi) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the characterization of the transfer of the Future Excess Servicing Spread from Seller to Purchaser as a true sale for
bankruptcy purposes;
(vii) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the
perfection of the assignment of Future Excess Servicing Spread to Purchaser and the security interests granted hereunder;
(viii) The duly executed corporate certificate of Seller required by
Section 9.07
;
13
(ix) A certificate of good standing of Seller dated as of a date within
five (5) Business Days prior to the Sale Date to be delivered by Seller;
(x) A secretary’s
certificate of Seller attaching its organizational documents, board resolutions and incumbency certificates;
(xi) The duly executed corporate certificate of Purchaser required by
Section 10.05
;
(xii) A certificate of good standing of Purchaser dated as of a date within five (5) Business Days prior to the Sale
Date to be delivered by Purchaser;
(xiii) A UCC-1 financing statement relating to the sale of the Future
Excess Servicing Spread and relating to the security interest of Purchaser in the Third Party Controlled Future Spread Custodial Account and the Future Spread Reserve Account, in form and substance reasonably acceptable to Purchaser; and
(xiv) All agreements, certificates, opinions and instruments required to be delivered under the Current Spread Agreement
on the Sale Date.
(c) On or before the Assignment Date with respect to a Mortgage Loan, Seller shall provide Purchaser with
executed copies of the related Owner Consents, and any amendments thereto.
(d) On or before the first Assignment Date, the
executed Power of Attorney.
Section 2.02
Grant of Security Interest
.
In order to secure Seller’s obligations to deliver the Future Excess Servicing Spread and perform its obligations hereunder, Seller
hereby Grants to Purchaser a valid and continuing first priority and perfected Lien on and security interest in all of Seller’s right, title and interest in, to and under, the Third Party Controlled Future Spread Custodial Account and the
Future Spread Reserve Account, together with all amounts deposited therein from time to time and all cash and non-cash proceeds thereof, in each case, whether now owned or existing, or hereafter acquired and arising (the
“
Collateral
”).
ARTICLE III
REPLACEMENT OF MORTGAGE LOANS
Section 3.01
Refinancing
and Substitution of Mortgage Loans
.
Subject to, and upon the terms and conditions of this Agreement, and, more
particularly, the conditions of this
ARTICLE III
, if Seller or any of its affiliates refinances any Current Mortgage Loan or Mortgage Loan, it shall designate a residential mortgage loan as a replacement
14
Mortgage Loan pursuant to this
ARTICLE III
and assign the Future Excess Servicing Spread with respect
to such replacement Mortgage Loan on the applicable Assignment Date to Purchaser as provided in this Agreement (such obligations of Seller, the “
Future Excess Servicing Spread Assignment Obligation
“), and the rights of Purchaser to
such Future Excess Servicing Spread, the “
Future Excess Servicing Spread Rights
“).
Section 3.02
Criteria for Mortgage Loans
.
(a) As of the applicable Assignment Date, unless otherwise agreed upon by Seller
and Purchaser, either:
(i) The Mortgage Loan shall satisfy the following criteria:
(1) The proceeds of such Mortgage Loan (the “
New Mortgage Loan
“) were use to repay the Refinanced
Mortgage Loan in whole or in part;
(2) All consents, if any, required by the applicable Owner to assign the
related Future Excess Servicing Spread with respect to the New Mortgage Loan shall have been obtained;
(3)
The servicing fee rate for the New Mortgage Loan is not less than the lesser of (x) the servicing fee rate of the Refinanced Mortgage Loan and (y) (A) 0.25% per annum if such New Mortgage Loan is owned by Fannie Mae or Freddie
Mac, (B) 0.35% per annum if such New Mortgage Loan is a Non-Agency Mortgage Loan or (C) 0.375% per annum if such New Mortgage Loan is owned by GNMA; and
(4) The New Mortgage Loan is secured by the same property as the Refinanced Mortgage Loan; or
(ii) if Seller is unable to satisfy the conditions in
Section 3.02(a)(i)
after using commercially reasonable
efforts, Seller shall use its best efforts to substitute the New Mortgage Loan with a Mortgage Loan satisfying the following criteria:
(1) The servicing fee rate (which results in the Servicing Spread Collections) for the Mortgage Loan is equal to or greater than the servicing fee rate of the New Mortgage Loan; provided however if the
servicing fee rate of the New Mortgage Loan is less than the applicable rate set forth in
Section 3.02(a)(i)(3)
, the servicing fee rate on the Mortgage Loan is not less than the lesser of (x) the servicing fee rate of the Refinanced
Mortgage Loan and (y) (A) 0.25% per annum if such Mortgage Loan is owned by Fannie Mae or Freddie Mac, (B) 0.35% per annum if such Mortgage Loan is a Non-Agency Mortgage Loan or (C) 0.375% per annum if such
Mortgage Loan is owned by GNMA;
(2) The interest accrual rate per annum on the Mortgage Loan is within 12.5
basis points per annum of the interest accrual rate on the New Mortgage Loan;
15
(3) The final maturity date of the Mortgage Loan is within six months of
the final maturity date of the New Mortgage Loan;
(4) The principal balance of the Mortgage Loan is no less
than the principal balance of the Refinanced Mortgage Loan;
(5) The remaining credit characteristics of the
Mortgage Loan (other than as specified in
clauses (1)
,
(2)
,
(3)
and
(4)
above) are substantially the same as the credit characteristics of the New Mortgage Loan;
(6) The Mortgage Loan is current as of the applicable Assignment Date; and
(7) The Mortgage Loan is not subject to any foreclosure or similar proceeding as of the applicable Assignment Date; is
not in process of any modification, workout or other loss mitigation process; and is not involved in litigation.
(b) If a
New Mortgage Loan would otherwise meet the criteria set forth in
Section 3.02(a)(i)
and is still owned by Seller as of the Mortgage Loan Identification Date, in lieu of a substitution pursuant to
Section 3.02(a)(ii)
above,
the Seller may include such New Mortgage Loan as a Mortgage Loan in the Available Portfolio; provided (i) the servicing fee rate (which results in the Servicing Spread Collections) for such Mortgage Loan shall be deemed to be 0.30% per
annum and (ii) if at any time such Mortgage Loan fails to otherwise meet the criteria set forth in
Section 3.02(a)(i)
(e.g. the Mortgage Loan is sold to an Agency and the Seller is unable to obtain an Owner Consent), the Seller
shall be required to substitute a loan for such New Mortgage Loan pursuant to
Section 3.02(a)(ii)
above.
(c)
Notwithstanding the provisions of Section
3.02(a)(ii)(4)
, Seller shall not be in breach of
Section 3.01
on any Assignment Date if, after using best efforts to select residential mortgage loans to substitute New Mortgage Loans
pursuant to
Section 3.02(a)(ii)
, the aggregate outstanding principal balance of the residential mortgage loans in the Available Portfolio as of such Assignment Date is equal to or greater than 90% of the aggregate outstanding principal
balance of the New Mortgage Loans during the Related Collection Period as measured on the opening of business on their respective Refinancing Date.
Section 3.03
Refinancing Incentives
.
For any Assignment Date
beginning with the Assignment Date in the sixth calendar month after the Sale Date and subject to Section 4.04 hereof, Seller’s Future Excess Servicing Spread Assignment Obligation shall be reduced by the Maximum Retained
Refinancing Loan Amount for such Assignment Date. For purposes of this
Section 3.03
, the following definitions shall apply:
Replacement Shortfall:
With respect to any Assignment Date and the Related Collection Period, the aggregate outstanding principal balance of the New Mortgage Loans that were originated by Seller or
an affiliate thereof during the Related Collection Period as measured on the opening of business on their respective Refinancing Date,
minus
the aggregate outstanding principal balance of the residential mortgage loans in the Available
Portfolio as of such Assignment Date.
16
Excess Refinancing Percentage
: With respect to any Assignment Date, a percentage
equal to the excess, if any, of (a) a fraction, expressed as a percentage, the
numerator
of which is equal to the aggregate principal balance of New Mortgage Loans that were originated by Seller or an affiliate thereof over the Related
Collection Period and the two Collection Periods immediately prior to such Related Collection Period (the “
Quarterly Collection Period
”) as measured on their respective Refinancing Date,
minus
the aggregate Replacement
Shortfall over such Quarterly Collection Period, and the
denominator
of which is the aggregate principal balance of all Mortgage Loans that voluntarily prepaid in full over the Quarterly Collection Period (measured as of the date of such
prepayment),
over
(b) 35%.
Refinancing Split Percentage
: With respect to any Assignment Date, the
Refinancing Split Percentage shown in the column of the table below corresponding to the Excess Refinancing Percentage therein:
|
|
|
|
|
|
|
Three Month Average Recapture
Percentage
|
|
Excess Refinancing
Percentage
|
|
Refinancing Split
Percentage
|
|
35% or Less
|
|
0%
|
|
0%
|
|
> 35%, <= 40%
|
|
>0.00% and <=5.00%
|
|
25%
|
|
> 40%, <= 45%
|
|
>5.00% and <=10.00%
|
|
30%
|
|
> 45%, <= 50%
|
|
>10.00% and <=15.00%
|
|
35%
|
|
> 50%, <= 55%
|
|
>15.00% and <=20.00%
|
|
40%
|
|
> 55%, <= 60%
|
|
>20.00% and <=25.00%
|
|
45%
|
|
Greater than 60%
|
|
>25.00%
|
|
50%
|
Maximum Retained Refinancing Loan Amount
: With respect to any Assignment Date, an amount, not less
than zero, equal to the
sum
of (a) the
product
of (i) the Refinancing Split Percentage, if any, applicable to such Assignment Date, (ii) the Excess Refinancing Percentage applicable to such Assignment Date and
(iii) the aggregate principal balance of New Mortgage Loans that were refinanced with Seller or an affiliate thereof during the Related Collection Period,
plus
(b) the Carryover Retained Amount,
minus
(c) the applicable
Replacement Shortfall.
Carryover Retained Amount
: With respect to any Assignment Date beginning with the Assignment
Date in the seventh calendar month after the Sale Date, the
excess
, if any, of the Maximum Retained Refinancing Loan Amount for the prior Assignment Date
over
the aggregate outstanding principal balance of the Mortgage Loans that were
retained by Seller pursuant to this
Section 3.03
on the prior Assignment Date.
17
Section 3.04
Selection Procedures
.
(a) Not later than the Mortgage Loan Identification Date, Seller shall (i) notify Purchaser of the identity of each Current
Mortgage Loan and each Mortgage Loan that became a Refinanced Mortgage Loan during the Related Collection Period, (ii) calculate the Excess Refinancing Percentage, the Refinancing Split Percentage, the Maximum Retained Refinancing Loan Amount
and the Carryover Retained Amount for the following Assignment Date, and notify Purchaser of such amounts in writing, (iii) provide Purchaser with a list of potential Mortgage Loans (the “
Available Portfolio
”), selected on the
basis that the Excess Refinancing Percentage is equal to zero, and (iv) provide Purchaser with a list of residential mortgage loans selected from the Available Portfolio to be designated as Mortgage Loans (the “
Replacement
Portfolio
”) on the following Assignment Date and a list of residential mortgage loans selected from the Available Portfolio to be excluded from the pool of Mortgage Loans (the “
Retained Portfolio
”) on the following
Assignment Date in accordance with
Section 3.03
.
(b) Purchaser may submit an objection to the proposed Available
Portfolio, the proposed Replacement Portfolio or the proposed Retained Portfolio not later than five Business Days following receipt of the notice of the proposed portfolios pursuant to
Section 3.04(a)
. If Purchaser submits an objection,
Seller and Buyer shall work together in good faith over the next five Business Days (the “
Selection Period
”) to mutually agree on the Replacement Portfolio and the Retained Portfolio. During the Selection Period, Seller may suggest
alternative Mortgage Loans that meet the criteria of
Section 3.02
. If Seller and Purchaser are unable to agree on a Replacement Portfolio and a Retained Portfolio (if applicable) by close of business on the Business Day prior to the
Assignment Date, Seller and Purchaser may modify the percentages in the definitions of Future Excess Servicing Spread and Retained Servicing Spread and in the Priority of Payments, as applicable, to reflect the relative values that Seller and
Purchaser would have had in the Future Excess Servicing Spread and Retained Servicing Spread but for the inability of Seller and Purchaser to mutually agree on such portfolios.
(c) Unless mutually agreed upon by Seller and Purchaser, the Retained Portfolio and the Replacement Portfolio with respect to any
Assignment Date shall satisfy the following criteria:
(i) The aggregate outstanding principal balance of the
residential mortgage loans in the Retained Portfolio shall not exceed the Maximum Retained Refinancing Loan Amount;
(ii) The weighted average servicing fee rate for the residential mortgage loans in the Retained Portfolio shall be substantially equal to the weighted average servicing fee rate for the Mortgage Loans in
the Replacement Portfolio;
(iii) The weighted average interest accrual rate per annum of the residential
mortgage loans in the Retained Portfolio shall be within 12.5 basis points per annum of the weighted average interest rate of the Mortgage Loans in the Replacement Portfolio;
18
(iv) The weighted average final maturity date of the residential mortgage
loans in the Retained Portfolio shall be within six months of the weighted average final maturity date of the Mortgage Loans in the Replacement Portfolio; and
(v) The remaining credit characteristics of the pool of residential mortgage loans in the Retained Portfolio (other than as specified in
clauses (ii)
,
(iii)
and
(iv)
above)
shall be substantially the same as the credit characteristics of the pool of Mortgage Loans in the Replacement Portfolio.
(d)
Exhibit B
provides an example of the calculations to be made pursuant to Section 3.04(c)(i).
Section 3.05
Assignment of Future Excess Servicing Spread
.
Subject to the satisfaction of the terms and conditions in this Agreement, on each Assignment Date, Seller shall execute and deliver an
Assignment Agreement for the Future Excess Servicing Spread to be assigned on such Assignment Date with respect to the Mortgage Loans included in the applicable Replacement Portfolio;
provided
,
however
, that
(a) Purchaser shall be entitled to all Future Excess Servicing Spread and Seller shall be entitled to all Retained Servicing Spread
arising with respect to each such Mortgage Loan on and after the Refinancing Date with respect to the related Refinanced Mortgage Loan,
(b) Seller shall deposit all Servicing Spread Collections received with respect to such Mortgage Loans on and after the Refinancing Date with respect to the related Refinanced Mortgage Loans into the
Third Party Controlled Future Spread Custodial Account not later than the Assignment Date, and
(c) for each Mortgage Loan
that was originated on or after the Refinancing Date of the related Refinanced Mortgage Loan, Seller shall deposit all Servicing Spread Collections with respect to amounts prepaid at the time of closing of such Mortgage Loan, if applicable, into the
Third Party Controlled Future Spread Custodial Account not later than the Assignment Date.
ARTICLE IV
PAYMENTS AND DISTRIBUTIONS
Section 4.01
Purchase Price
.
In full consideration for
Purchaser’s right to receive any Future Excess Servicing Spread assigned to Purchaser, and upon the terms and conditions of this Agreement, Purchaser shall pay to Seller an amount (the “
Purchase Price
”) that shall be determined
by the Parties on the Sale Date in accordance with Section 3.01 of the Current Spread Agreement.
19
Section 4.02
Payments by Purchaser
.
Payment shall be made by Purchaser to Seller by wire transfer of immediately available federal funds, to an account designated by Seller.
Section 4.03
Accounts
.
(a)
Lockbox Account
. Seller shall inform the Mortgagors of Mortgage Loans to remit their mortgage payments to the Lockbox Account. Payments of all Servicing Spread Collections received on and after
the first Assignment Date shall be transferred from the Lockbox Account to the Third Party Controlled Future Spread Custodial Account within one Business Day of receipt and identification thereof and in any event, within two Business Days of receipt
thereof. If Seller receives any Servicing Spread Collections not remitted to the Lockbox Account, it shall hold such funds in trust for the benefit of the Purchaser and deposit such amounts to the Third Party Controlled Future Spread Account within
two Business Days of receipt thereof.
(b)
Third Party Controlled Future Spread Custodial Account
.
(i) The Third Party Controlled Future Spread Custodial Account will be established with Wells Fargo Bank, National
Association or with such other third party custodian or trustee selected by Purchaser, for the sole purpose of receiving and disbursing all Servicing Spread Collections, Sales Proceeds and Servicing Agreement termination payments with respect to the
Mortgage Loans. The Third Party Controlled Future Spread Custodial Account will be established pursuant to the Future Spread Custodial Account Control Agreement with respect to which Purchaser is an Entitlement Holder with Control. So long as
permitted by the Future Spread Custodial Account Control Agreement, Seller may direct the disposition of funds in the Third Party Controlled Future Spread Custodial Account strictly in accordance with the Priority of Payments. Upon any material
breach of a representation, warranty or covenant by Seller hereunder or during the occurrence and continuance of a Future Spread Reserve Account Deposit Event, Purchaser may elect to exercise Control over the Third Party Controlled Future Spread
Custodial Account. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Third Party Controlled Future Spread Custodial Account.
(ii) Seller shall inform each Owner to remit the applicable portion of any Servicing Agreement termination payments
payable with respect to the Mortgage Loans directly to the Third Party Controlled Future Spread Custodial Account. Any termination payment to be directed to the Third Party Controlled Future Spread Custodial Account shall be equal to the
pro
rata
amount by which the Mortgage Loans affected by such termination bear to all mortgage loans of Seller affected by such termination, based upon the method in which such termination payments are calculated in accordance with the applicable
Servicing Agreement.
20
(iii) If Seller is to receive any Sales Proceeds, Seller shall direct the
Person making such payments to deposit such payments into the Third Party Controlled Future Spread Custodial Account.
(iv) If Seller receives any amounts required to be deposited into the Third Party Controlled Future Spread Custodial Account in error, Seller shall promptly remit such funds to the Third Party Controlled
Future Spread Custodial Account.
(c)
Future Spread Reserve Account
. The Future Spread Reserve Account will be
established with Wells Fargo Bank, National Association or with such other third party custodian or trustee selected by Purchaser. The Future Spread Reserve Account will be established pursuant to the Future Spread Reserve Account Control Agreement
with respect to which Purchaser is an Entitlement Holder with Control. So long as permitted by the Future Spread Reserve Account Control Agreement, Seller may direct the disposition of funds in the Future Spread Reserve Account strictly in
accordance with
Section 4.05
. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Future Spread Reserve Account.
If at any time Seller’s Consolidated Tangible Net Worth falls below the sum of (x) $250,000,000 and (y) 50% of the
proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries or if Seller (considered together with its consolidated subsidiaries) defaults in any
indebtedness in excess of $10,000,000 (individually or in the aggregate) (each, a “
Future Spread Reserve Account Deposit Event
”), Seller shall immediately notify Purchaser in writing that a Future Spread Reserve Account Deposit
Event has occurred. On each Distribution Date upon which a Future Spread Reserve Account Deposit Event has occurred and is continuing, Seller shall be required to transfer funds in the Third Party Controlled Future Spread Custodial Account to the
Future Spread Reserve Account in accordance with the Priority of Payments until the amount of funds in the Future Spread Reserve Account is equal to the Future Spread Reserve Account Required Amount. The “
Future Spread Reserve Account
Required Amount
” is equal to 25% of the fair market value as of the date the Future Spread Reserve Account Deposit Event that is then-continuing first occurred of the Total Servicing Spread expected to be paid over the expected remaining
life of the Mortgage Loans (the “
Remaining Expected Total Servicing Spread
”) determined in accordance with the following paragraph. Seller shall immediately notify Purchaser in writing if a Future Spread Reserve Account Deposit
Event is no longer continuing. Any funds in the Future Spread Reserve Account in excess of the Future Spread Reserve Account Required Amount shall be released to Seller.
For purposes of determining the fair market value of the Remaining Expected Total Servicing Spread, Purchaser shall submit its claim for determination of the fair market value of the Remaining Expected
Total Servicing Spread, together with such back-up information it deems appropriate to justify such fair market value (which value shall be considered the fair market value of the Remaining Expected Total Servicing Spread for purposes of calculating
the Future Spread Reserve Account Required Amount until the final determination of such fair market value in accordance with this paragraph). Within five (5) Business Days of Seller’s
21
receipt of such determination, Seller shall notify Purchaser in writing of its acceptance or any objection
to such determination of such fair market value, and if Seller objects to such determination, such notice shall include its own determination of such fair market value and any back-up information as it deems appropriate to justify such fair market
value (an “
Objection Notice
”). In the event an Objection Notice is delivered, the parties shall negotiate in good faith a resolution to such objection. In the event that Seller and Purchaser are unable to resolve such objection
within five (5) Business Days of the delivery of such Objection Notice, Seller and Purchaser shall appoint a mutually acceptable nationally recognized valuation expert to determine such fair market value of the Remaining Expected Total
Servicing Spread. The determination of such valuation expert shall be binding on Seller and Purchaser and the fees of such valuation expert shall be borne by Seller.
Section 4.04
Priority of Payments
.
On each Business Day,
subject to the terms and conditions of the Future Spread Custodial Account Control Agreement, Seller (or, after the delivery of an access termination notice pursuant to the Future Spread Custodial Account Control Agreement, Purchaser) shall direct
the Bank to apply the monies in the Third Party Controlled Future Spread Custodial Account in the following order of priority (the “
Priority of Payments
”), in every case, after giving effect to each prior item in the Priority of
Payments on such Distribution Date:
(a)
first
, from amounts in the Third Party Controlled Future Spread Custodial
Account attributable to Servicing Agreement termination payments paid by an Owner with respect to any Mortgage Loans,
pro rata
, (A) the Future Excess Servicing Spread Percentage of such termination payments to Purchaser, and (B) the
Retained Excess Servicing Spread Percentage of such termination payments to Seller;
provided
, that (I) prior to the distribution to Purchaser of any termination payments pursuant to
clause (A)
, such termination payments shall be
applied to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to Seller of any termination payments pursuant to
clause (B)
, such
termination payments shall be applied
first
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
second
, for deposit to the Future Spread Reserve
Account to the extent necessary to cause the amount of funds on deposit in the Future Spread Reserve Account to equal the Future Spread Reserve Account Required Amount;
(b)
second
, on any Business Day from and including the first Business Day of a calendar month to but excluding the Distribution Date in such calendar month, at the option of Seller, the Base
Servicing Fee payable with respect to a prior Collection Period for the Mortgage Loans to Seller; provided however, that, to the extent that (i) the Seller is not permitted or is otherwise unable to advance servicing fees relating to the Total
Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing Agreement does not permit payment of servicing fees from general collections, and (iii) the related Servicing
Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Future Spread Custodial Account relating to the affected Mortgage Loans shall be made pursuant to clause (d) below
prior to this clause (b);
22
(c)
third
, on each Distribution Date, to the extent not previously paid to Seller in
accordance with
Section 4.04(b)
, any accrued and unpaid Base Servicing Fee to Seller; provided however, that, to the extent that (i) the Seller is not permitted or is otherwise unable to advance servicing fees relating to the Total
Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing Agreement does not permit payment of servicing fees from general collections, and (iii) the related Servicing
Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Future Spread Custodial Account relating to the affected Mortgage Loans shall be made pursuant to clause (d) below
prior to this clause (c);
(d)
fourth
, on each Distribution Date,
pro rata
, (A) to Purchaser, any Future
Excess Servicing Spread for the prior Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 4.04(a)
); and (B) to Seller, any Retained Servicing Spread for the prior Collection
Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 4.04(a)
);
provided
, that (I) prior to the distribution to Purchaser of any Future Excess Servicing Spread pursuant to
clause (A)
, the Future Excess Servicing Spread shall be applied to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to Seller of any
Retained Servicing Spread pursuant to
clause (B)
, the Retained Servicing Spread shall be applied
first
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
second
, for deposit to the Future Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Future Spread Reserve Account to equal the Future Spread Reserve Account Required Amount; and
(e)
fifth
, on each Distribution Date, to Seller, any other amounts remaining on deposit in the Third Party Controlled Future
Spread Custodial Account.
All payments to Purchaser or Seller shall be made by wire transfer of immediately available federal
funds to an account designated by Purchaser or Seller, as applicable.
Section 4.05
Withdrawals from the Future
Spread Reserve Account
.
On any Business Day, at the instruction of Purchaser, Seller shall direct the Bank to apply
funds in the Future Spread Reserve Account, if any, to the payment of indemnity payments payable to a Purchaser Indemnitee pursuant to
Section 11.01
. If on any Business Day a Future Spread Reserve Account Deposit Event is not then
continuing and all outstanding indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller may direct the Bank to distribute any remaining funds in the Future Spread Reserve Account to, or as directed by, Seller. If there are
any funds remaining in the Future Spread Reserve Account after the Future Excess Servicing Spread and all indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller shall direct the Bank to distribute such remaining funds to,
or as directed by, Seller.
23
Section 4.06
Payment to Seller of Base Servicing Fee
.
(a) Seller shall be entitled to payment of the Base Servicing Fee only to the extent funds are available therefor in the Third Party
Controlled Future Spread Custodial Account in accordance with the Priority of Payments. Under no circumstances shall Purchaser be liable to Seller for payment of the Base Servicing Fee. In the event servicing of the Mortgage Loans is transferred to
sub-servicers for any reason, the servicing fees and expenses of such sub-servicers shall be paid by Seller and in no event will the amount of Servicing Spread Collections or termination payments otherwise allocable to the Future Excess Servicing
Spread be reduced due to the payment of sub-servicing fees and expenses.
(b) The Base Servicing Fee with respect to a
Mortgage Loan shall begin to accrue as of the Collection Period prior to the applicable Assignment Date. In no event shall Base Servicing Fees accrue concurrently on any day for a Refinanced Mortgage Loan and for a Mortgage Loan.
Section 4.07
Correction of Principal Balance Error
.
If, subsequent to the payment of any amounts due hereunder to either party, the outstanding principal balance of any Mortgage Loan is
found to be in error, the party benefiting from the error shall pay an amount sufficient to correct and reconcile such amounts and shall provide a reconciliation statement and other such documentation to reasonably satisfy the other party concerning
the accuracy of such reconciliation. Such amounts shall be paid by the proper party within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
Section 4.08
Intent and Characterization
.
(a) Seller and Purchaser intend that the assignments of the Future Excess Servicing Spread pursuant to this Agreement and each Assignment Agreement constitute valid sales of such Future Excess Servicing
Spread from Seller to Purchaser, conveying good title thereto free and clear of any Lien other than Permitted Liens, and that the beneficial interest in and title to such Future Excess Servicing Spread not be part of Seller’s estate in the
event of the bankruptcy of Seller. Seller and Purchaser intend and agree to treat the transfer and assignment of the Future Excess Servicing Spread as an absolute sale for tax purposes, and as an absolute and complete conveyance of title for
property law purposes. Except for financial accounting purposes, neither party intends the transactions contemplated hereby to be characterized as a loan from Purchaser to Seller.
(b) In the event (but only in the event) that the conveyance of the Future Excess Servicing Spread is characterized by a court or
governmental authority as security for a loan rather than a sale, Seller will be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Future
Excess Servicing Spread and all proceeds thereof as security for a loan in an amount equal to the aggregate Purchase Price (as defined in the Current Spread Agreement).
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to
Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as of the Agreement Date, the Sale Date and as of each Assignment Date as follows (or as of the date specified below, as applicable):
Section 5.01
Due Organization and Good Standing
.
Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Seller is qualified to transact business in each jurisdiction in which such qualification is deemed necessary to service the Mortgage Loans. Seller has, in full force and effect (without notice of possible suspension, revocation or impairment), all
required permits, approvals, licenses, and registrations to conduct all activities in all states in which its activities with respect to the Mortgage Loans or the Mortgage Servicing Rights require it to be licensed, registered or approved in order
to service the Mortgage Loans and own the Mortgage Servicing Rights, unless the failure to obtain such permits, approvals, licenses and registrations would not reasonably be expected to have a material adverse effect on Seller’s ability to
perform its obligations under this Agreement or the other Transaction Documents to which it is a party.
Section 5.02
Authority and Capacity
.
Seller has all requisite limited liability company power, authority and capacity to
enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document and the
consummation of the transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company action. This Agreement and each other Transaction Document to which it is a party has been duly
executed and delivered by Seller. This Agreement constitutes, and each other applicable Transaction Document to which Seller is a party constitutes or will constitute, a valid and legally binding agreement of Seller enforceable in accordance with
its terms, and no offset, counterclaim or defense exists to the full performance by Seller of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting
the enforcement of creditors’ rights generally and by general equity principles.
Section 5.03
Owner
Consents
.
Prior to an Assignment Date, Seller has obtained all necessary and applicable Owner Consents.
25
Section 5.04
Title to the Mortgage Servicing Rights
.
As of an Assignment Date, Seller will be the lawful owner of the Mortgage Servicing Rights, will be responsible for the maintenance of
the Related Escrow Accounts, and will have the sole right and authority to transfer the Future Excess Servicing Spread as contemplated hereby. The transfer, assignment and delivery of the Future Excess Servicing Spread shall be free and clear of any
and all claims, charges, defenses, offsets, Liens and encumbrances of any kind or nature whatsoever other than Permitted Liens.
Section 5.05
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document by Seller, compliance with the terms hereof and thereof and the consummation of the transactions contemplated
hereby and thereby did not, and will not, violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited liability company agreement, any
instrument or agreement to which it is a party or by which it is bound or which affects the Future Excess Servicing Spread, or any state or federal law, rule or regulation or any judicial or administrative decree, order, ruling or regulation
applicable to it or to the Future Excess Servicing Spread.
Section 5.06
No Accrued Liabilities
.
There are no accrued liabilities of Seller with respect to the Mortgage Loans or the Mortgage Servicing Rights or
circumstances under which such accrued liabilities will arise against Purchaser as purchaser of the Future Excess Servicing Spread.
Section 5.07
Seller/Servicer Standing
.
As of the applicable
Assignment Date, Seller is approved by each applicable Agency as a seller/servicer in good standing with the requisite financial criteria and adequate resources to complete the transactions contemplated hereby on the conditions stated herein. No
event has occurred, including but not limited to a change in insurance coverage, which would make the Seller unable to comply with the applicable Agency eligibility requirements or which would require notification to the applicable Agency.
Furthermore, if at any time prior to the termination of this Agreement, the Seller is unable to comply with any of the Agency eligibility requirements, it shall immediately notify the Purchaser that it is no longer an approved seller/servicer of
mortgage loans for any Agency which is an Owner of a Mortgage Loan.
Section 5.08
MERS Membership
.
Seller is a member in good standing under the MERS system or another similar system reasonable acceptable to the Purchaser.
Section 5.09
Owner Set-off Rights
.
Seller has no actual notice, including any notice received from an Owner, or any reason to believe, that, other than in the normal course
of Seller’s business, any circumstances exist that would result in Seller being liable to an Owner for any amount due by reason of: (i) any breach of servicing obligations or breach of mortgage selling warranty to an Owner under servicing
agreements relating to Seller’s entire servicing portfolio for such Owner (including without limitation any unmet mortgage repurchase obligation), (ii) any unperformed obligation with
26
respect to mortgage loans that Seller is servicing for an Owner under the regular servicing option or other mortgages subject to recourse agreements, (iii) any loss or damage to an Owner by
reason of any inability to transfer to a purchaser of the servicing rights Seller’s selling and servicing representations, warranties and obligations, or (iv) any other unmet obligations to an Owner under a servicing contract relating to
Seller’s entire servicing portfolio with such Owner.
Section 5.10
Ability to Perform; Solvency
.
Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement. Seller is Solvent and the sale of the Future Excess Servicing Spread will not cause Seller to become insolvent. The sale of the Future Excess Servicing Spread is not undertaken to hinder, delay or defraud any of the
creditors of Seller. The consideration received by Seller upon the sale of the Future Excess Servicing Spread constitutes fair consideration and reasonably equivalent value therefor.
Section 5.11
Obligations with Respect to Origination
.
Seller shall remain liable for all obligations with respect to the origination of each Mortgage Loan and, if applicable, for all
obligations with respect to the sale of such Mortgage Loan to the applicable Owner.
Section 5.12
Purchase of
Mortgage Servicing Rights
.
Each agreement or arrangement that Seller enters into to purchase Mortgage Servicing
Rights shall be entered into on an arm’s length contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing Rights to be acquired thereby. Seller shall not enter into any
agreement or arrangement with a third party intended to encourage the refinancing of any Mortgage Loan by any Person other than Seller.
Section 5.13
No Actions
There have not been commenced or, to
the best of Seller’s knowledge, threatened any action, suit or proceeding which will likely materially and adversely affect the consummation of the transactions contemplated by any Transaction Document.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE
LOANS AND SERVICING
As further inducement to Purchaser to enter
into this Agreement, Seller represents and warrants to Purchaser, as of each Assignment Date (or as of the date specified below, as applicable), as follows:
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Section 6.01
Servicing Agreements; Applicable Laws
.
Seller, the originator of the Mortgage Loan and each prior owner of the Mortgage Servicing Rights has each performed its obligations in
all material respects in accordance with the terms of the related Mortgage Note, Mortgage, Servicing Agreements and Applicable Law.
Section 6.02
Related Escrow Accounts
.
All Related Escrow
Accounts are being, and have been, maintained in accordance with Applicable Law and in accordance with the Servicing Agreements and the terms of the related Mortgages and other Mortgage Loan Documents; and, except as to payments which are past due
under Mortgage Notes, all balances required by the Mortgages or other Mortgage Loan Documents to be paid to Seller for the account of the Mortgagors are on deposit in the appropriate Related Escrow Account.
Section 6.03
No Purchaser Responsibility
.
Purchaser shall have no responsibility, liability or other obligation whatsoever under any Servicing Agreement or with respect to any Mortgage Loan, or to make any advance thereunder, or to pay any
servicing fees.
Section 6.04
Location of Credit Files
.
All of the Mortgage Loan Documents are held by Custodians, or, if held by Seller, in the locations specified in
Exhibit F
, unless
temporarily removed for enforcement purposes in the normal course of servicing. Seller will notify Purchaser in writing of any changes in locations of the Mortgage Loan Documents held by Seller in
Exhibit F
.
Section 6.05
Representations Concerning the Future Excess Servicing Spread
.
(a) Seller has not assigned, pledged, conveyed, or encumbered the Future Excess Servicing Spread to any other Person (other than
Permitted Liens) and immediately prior to the sale of the Future Excess Servicing Spread, Seller was the sole owner of the Future Excess Servicing Spread and had good and marketable title thereto (subject to the rights of the applicable Owner under
the Servicing Agreements), free and clear of all Liens (other than Permitted Liens), and no Person, other than Purchaser, has any Lien (other than Permitted Liens) on the Future Excess Servicing Spread. No security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering all or any part of the Future Excess Servicing Spread which has been signed by Seller or which Seller has authorized any other Person to sign or file or record, is on file or
of record with any public office, except such as may have been terminated or filed by or on behalf of Purchaser.
(b) The
sale and grant of a security interest by Seller to Purchaser of and on the Future Excess Servicing Spread does not and will not violate any Requirement of Law, the effect of which violation is to render void or voidable such assignment.
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(c) As contemplated under
Section 4.08(b)
, upon the filing of financing
statements on Form UCC-1 naming Purchaser as “Secured Party” and Seller as “Debtor”, and describing the Future Excess Servicing Spread, in the jurisdictions and recording offices listed on Exhibit J attached hereto, the sale and
security interests granted hereunder in the Future Excess Servicing Spread will constitute perfected first priority security interests under the UCC in all right, title and interest of Purchaser in, to and under the Future Excess Servicing Spread.
(d) Purchaser has and will continue to have the full right, power and authority to pledge the Future Excess Servicing
Spread, and the Future Excess Servicing Spread may be further assigned without any requirement, in each case, subject only to applicable Owner Consents.
(e) Each Servicing Agreement constitutes an Eligible Servicing Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement, Purchaser represents and warrants to Seller as of the Agreement Date, the Sale Date and as of each Assignment Date as follows (or as of the date
specified below, as applicable):
Section 7.01
Due Organization and Good Standing
.
Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Purchaser is qualified to transact business in each jurisdiction in which such qualification is deemed necessary.
Section 7.02
Authority and Capacity
.
Purchaser has all requisite limited liability company power, authority and capacity to enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations
required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document to which it is a party and the consummation of the transactions contemplated hereby and thereby have each been duly and validly
authorized by all necessary limited liability company action. This Agreement constitutes, and each other applicable Transaction Document to which Purchaser is a party constitutes or will constitute, a valid and legally binding agreement of Purchaser
enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Purchaser of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency,
reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
29
Section 7.03
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party by Purchaser, its
compliance with the terms hereof and thereof and the consummation of the transactions contemplated hereby and thereby will not violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional
approval under its certificate of formation or limited liability company agreement, any instrument or agreement to which it is a party or by which it is bound, or any state or federal law, rule or regulation or any judicial or administrative decree,
order, ruling or regulation applicable to it, in each case which violation, conflict, breach or requirement would reasonably be expected to have a material adverse effect on Purchaser’s ability to perform its obligations under this Agreement
and any other Transaction Document to which it is a party.
Section 7.04
Sophisticated Investor
.
Purchaser is a sophisticated investor and its decision to acquire the Future Excess Servicing Spread is based upon
Purchaser’s own independent experience, knowledge, due diligence and evaluation of this transaction. Purchaser has relied solely on such experience, knowledge, due diligence and evaluation and has not relied on any oral or written information
provided by Seller other than the representations and warranties made by Seller herein.
Section 7.05
No
Actions
There shall not have been commenced or, to the best of Purchaser’s knowledge, threatened any action, suit
or proceeding against the Purchaser that will likely materially and adversely affect the consummation of the transactions contemplated hereby.
ARTICLE VIII
SELLER COVENANTS
Seller covenants and agrees as follows:
Section 8.01
Servicing Obligations
.
(a) Seller shall pay,
perform and discharge all liabilities and obligations relating to the Servicing, including all liabilities and obligations under the Mortgage Loan Documents, Applicable Law and the Servicing Agreements; and shall pay, perform and discharge all the
rights, obligations and duties with respect to the Related Escrow Accounts as required by the Servicing Agreements, the Mortgage Loan Documents, all Applicable Law and, with respect to any Mortgage Loans owned by an Agency, such Agency.
(b) Under no circumstances shall Purchaser be responsible for the Servicing acts and omissions of Seller or any other servicer or any
originator of the Mortgage Loans, or for any servicing related obligations or liabilities of any servicer in the Servicing Agreements or of any Person under the Mortgage Loan Documents, or for any other obligations or liabilities of Seller.
30
(c) With respect to any Servicing Agreement relating to a Non-Agency Mortgage Loan, subject
to a nonrecoverability determination made in accordance with the related Servicing Agreement and to the extent the Seller as servicer has an obligation to advance principal and interest on delinquent Mortgage Loans, the Seller shall advance the full
amount of principal and interest on delinquent Mortgage Loans for each Collection Period, including the related servicing fee.
(d) Upon termination of any Servicing Agreement, Seller shall remain liable to Purchaser and the applicable Owner for all liabilities
and obligations incurred by the servicer or its designee while Seller or its designee was acting as the servicer thereunder.
(e) Seller shall conduct quality control reviews of its servicing operations in accordance with industry standards and the requirements
of each Agency relating to the Mortgage Loans.
Section 8.02
Cooperation; Further Assurances
Seller shall cooperate with and assist Purchaser, as reasonably requested, in carrying out the purposes of this Agreement. Seller will
cooperate and assist Purchaser, as reasonably requested and at the reasonable expense of Purchaser, in obtaining consents from any Owner as may be required or advisable to assign, transfer, deliver, hypothecate, pledge, subdivide, finance or
otherwise deal with the Future Excess Servicing Spread. If Seller is terminated under any Servicing Agreement, Seller shall cooperate fully and at its own expense in transferring such Servicing. If Purchaser assigns all or any portion of its Future
Excess Servicing Spread or its other rights under this Agreement to a Third Party Assignee, Seller will cooperate and assist any Third Party Assignee in drafting and entering into a Third Party Future Spread Agreement in accordance with
Section 12.15
.
Section 8.03
Financing Statements
.
Seller hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements, in
any jurisdictions and with any filing offices as Purchaser may determine, in its sole discretion, are necessary or advisable to perfect the sale of the Future Excess Servicing Spread and the security interests granted to Purchaser in connection
herewith. Seller agrees to execute financing statements in form reasonably acceptable to Purchaser and Seller at the request of Purchaser in order to reflect Purchaser’s interest in the Future Excess Servicing Spread, the Third Party Controlled
Future Spread Custodial Account and the Future Spread Reserve Account.
Section 8.04
Supplemental
Information
.
From time to time after the applicable Assignment Date with respect to each Mortgage Loan, Seller
promptly shall furnish Purchaser such incidental information, which is reasonably available to Seller, supplemental to the information contained in the documents and schedules delivered pursuant to this Agreement, as may reasonably be requested to
monitor performance of the Mortgage Loans and the payment of the Future Excess Servicing Spread.
31
Section 8.05
Access to Information
.
From time to time, at such times as are reasonably convenient to Seller, Purchaser or its designees may conduct audits or visit and
inspect (a) any of the Mortgage Loans or places where the Credit Files are located, to examine the Credit Files, internal controls and procedures maintained by Seller and its agents, and take copies and extracts therefrom, and to discuss
Seller’s affairs with its officers, employees and, upon notice to Seller, independent accountants. Seller hereby authorizes such officers, employees and independent accountants to discuss with Purchaser the affairs of Seller and (b) the
Seller’s servicing facilities for the purpose of satisfying the Purchaser that Seller, has the ability to service the Mortgage Loans related to Mortgage Servicing Rights in accordance with the standards set forth in the applicable Servicing
Agreement. Any audit provided for herein will be conducted in accordance with Seller’s rules respecting safety and security on its premises, in accordance with applicable.
Section 8.06
Home Affordable Modification Program
.
With respect to any Mortgage Loans that have been modified or that are or will be in a modification trial period as part of the U.S.
Department of the Treasury’s Home Affordable Modification Program (“
HAMP
”) (such Mortgage Loans, the “
HAMP Loans
”), Seller represents and warrants that it will continue to service such HAMP Loan in accordance
with the HAMP terms and will ensure the timely compliance and filing of any appropriate HAMP documentation with the applicable regulator.
Section 8.07
Distribution Date Data Tapes and Reports
.
Seller
shall deliver the following to Purchaser two Business Days prior to each Distribution Date:
(a) An Electronic Data File in
form and substance acceptable to Purchaser containing, for each Current Mortgage Loan and each Mortgage Loan, principal, interest and Servicing Spread Collections, and delinquency status (i.e. 30, 60, 90, FCL, REO) as of the last day of the prior
Collection Period;
(b) A Summary Activity Report with respect to each of the pool of Current Mortgage Loans and the pool of
Mortgage Loans with respect to the prior Collection Period containing:
(i) aggregate beginning principal
balance as of the first and last date of the Collection Period,
(ii) aggregate regular principal collected,
(iii) aggregate noncash principal,
(iv) aggregate interest collected,
(v) aggregate liquidation principal,
(vi) aggregate curtailments,
32
(vii) liquidations,
(viii) short sales,
(ix) aggregate principal balance of Refinanced Mortgage Loans, and (1) for each Refinanced Mortgage Loan, the principal balance, the applicable servicing spread, the final maturity date, the mortgage
interest rate, the loan-to-value ratio and the FICO score, and (2) for each Current Mortgage Loan and each Mortgage Loan that was refinanced by a lender other than Seller or an affiliate thereof, to the extent such information is known to
Seller in the ordinary course of business and the collection and delivery of such information does not impose any additional and undue burden on Seller, the name of such lender and the mortgage interest rate of the newly originated residential
mortgage loan;
(c) A Delinquency Report with respect to the Current Mortgage Loans and Mortgage Loans containing:
(i) The aggregate outstanding principal balance of the pool of Current Mortgage Loans and the pool of
Mortgage Loans and percentages of the aggregate outstanding principal balance of the pool of Current Mortgage Loans and the pool of Mortgage Loans in each of the following categories as of the last day of the prior Collection Period:
(1) Non-delinquent Mortgage Loans,
(2) 0-29 days delinquent,
(3) 30-59 days delinquent,
(4) 60-89 days delinquent,
(5) 90 days or more delinquent,
(6) Current Mortgage Loans and Mortgage Loans in Foreclosure,
(7) Current Mortgage Loans and Mortgage Loans with respect to which the related Mortgaged Properties have become real
estate owned properties, and
(8) Current Mortgage Loans and Mortgage Loans in which the Mortgagor is in
bankruptcy;
(ii) For each of the above categories, a roll report showing the migration of Current Mortgage
Loans and Mortgage Loans in such category from the last day of the second prior Collection Period;
33
(d) A Disbursement Report for such Distribution Date containing:
(i) The Servicing Spread Collections for the prior Collection Period,
(ii) The Base Servicing Fee paid to Seller,
(iii) The amount of the Future Excess Servicing Spread paid to Purchaser,
(iv) The amount of funds, if any, transferred to the Future Spread Reserve Account,
(v) The amount of Purchaser Indemnitees, if any, paid from each of the Third Party Controlled Future Spread Custodial
Account or the Future Spread Reserve Account, and
(vi) The amount of funds paid to Seller from the Future
Spread Reserve Account.
Section 8.08
Financial Statements and Officer’s Certificates
.
(a) If Seller’s financial statements are not filed with the U.S. Securities and Exchange Commission and are not publicly available,
Seller shall deliver to Purchaser copies of Seller’s most recent audited quarterly financial statements within 45 days of the end of each of Seller’s fiscal quarters and its most recent audited annual financial statements within 90 days of
the end of each of Seller’s fiscal years.
(b) Within 45 days of the end of each of Seller’s fiscal quarters,
Seller shall deliver to Purchaser a certificate from a duly authorized officer of Seller certifying (i) whether or not Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds
from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries (and shall provide a calculation of its determination of its Consolidated Tangible Net Worth) and
(ii) whether or not Seller (considered together with its consolidated subsidiaries) is in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
Section 8.09
Monthly Management Calls
.
Within five Business Days after each Distribution Date, Seller shall make its management team and other appropriate officers and employees available to Purchaser to discuss by telephone the performance of
the Current Mortgage Loans and Mortgage Loans and the performance of the parties under the Transaction Documents.
34
Section 8.10
Timely Payment of Owner Obligations
.
Seller shall pay all of its obligations to an Owner in a timely manner so as to avoid exercise of any right of set-off by any Owner
against Seller.
Section 8.11
Servicing Agreements
.
Seller will service the Mortgage Loans in accordance with Accepted Servicing Practices and will perform its obligations in all material
respects in accordance with the Servicing Agreements and Applicable Law. In particular, Seller shall comply with any advancing obligation under the Servicing Agreements. Without the express written consent of Purchaser (which consent may be withheld
in its absolute discretion), Seller shall not (a) cancel, terminate or amend any Mortgage Servicing Rights, (b) expressly provide any required consent to any termination, amendment or modification of any Servicing Agreements either
verbally or in writing, (c) expressly provide any required consent to any termination, amendment or modification of any other servicing agreements or enter into any other agreement or arrangement with the applicable Owner that may be reasonably
material to Purchaser either verbally or in writing, (d) expressly or verbally waive any material default under or breach of any Servicing Agreement by the applicable Owner that may be material to the Purchaser (in Purchaser’s reasonable
determination) or (e) take any other action in connection with any such Servicing Agreement that would impair in any material respect the value of the interests or rights of the Purchaser hereunder. Seller shall conduct its business and perform
its obligations under the Servicing Agreements in a manner such that the applicable Owner will not have cause to terminate any Servicing Agreement. Notwithstanding the foregoing, in no event will the prohibitions contained in this Section 8.11
apply to any amendments or modifications of the Servicing Agreements applicable to Current Mortgage Loans or Mortgage Loans owned by Seller which do not affect the Future Excess Servicing Spread with respect to such Current Mortgage Loans or
Mortgage Loans and are not reasonably material to the Purchaser.
Section 8.12
Transfer of Mortgage Servicing
Rights
.
If Seller intends to assign, transfer or sell any of its Mortgage Servicing Rights to a replacement servicer,
to the extent permitted by applicable law, (a) Seller shall consult with Purchaser and Purchaser shall participate in the assignment, transfer and sale of such Mortgage Servicing Rights, and (b) Seller shall obtain the written consent of
Purchaser, granted by the Purchaser in its sole discretion, prior to any assignment, transfer or sale thereof.
Section 8.13
Consents to Transaction Documents.
Seller shall not terminate, amend, amend and restate, modify or waive any conditions or provisions of any Transaction Document without
the express written consent of Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned.
Section 8.14
Accounts.
Seller shall inform the Mortgagors of Mortgage Loans at its own expense to remit their mortgage payments to the Lockbox Account, and any change in such instructions shall only be permitted with the
express written consent of Purchaser.
35
Section 8.15
Notification of Certain Events
.
Seller shall promptly notify Purchaser of any event which, with the passage of time, could reasonably be expected to result in a
termination of any servicing agreement between Seller and any Owner. Seller shall provide Purchaser with copies of any notices from the applicable Owner of any breach, potential breach, default or potential default by Seller under any servicing
agreement between Seller and the applicable Owner, and with copies of any notices from any Owner of any termination, potential termination or threatened termination of any servicing agreement entered into between Seller and that Owner. Seller shall
promptly forward copies of any material notices received from any Owner or from any Governmental Authority with respect to the Mortgage Loans. Seller shall provide Purchaser with (a) copies of all amendments to the Transaction Documents, the
Servicing Agreements (other than with respect to Mortgage Loans owned by Seller) and the agreements relating to Seller’s acquisition of the Mortgage Servicing Rights, (b) with respect to Mortgage Loans owned by Seller, copies of all
material amendments to the Servicing Agreements, and (c) copies of any other agreements Seller enters into with any Owner that may be reasonably material to Purchaser, in each case, promptly after execution thereof.
Section 8.16
Financing; Pledge of Future Excess Servicing Spread
.
Seller shall not pledge, obtain financing for, or otherwise permit any Lien of any creditor of Seller to exist on, any portion of the
Servicing Spread Collections without the prior written consent of Purchaser. Seller’s financial statements shall contain footnotes indicating that the Future Excess Servicing Spread has been sold, and Seller does not maintain any ownership
interest therein.
Section 8.17
Existence, etc
.
Seller shall:
(a) preserve and maintain its legal existence, good standing and all of its material licenses required to service the Mortgage Loans;
(b) comply with the requirements of all Applicable Laws, rules, regulations and orders of Governmental Authorities
(including, without limitation, truth in lending and real estate settlement procedures) if failure to comply with such requirements could be reasonably likely (either individually or in the aggregate) to have a material adverse effect on its ability
to perform its obligations hereunder or under any other Transaction Document;
(c) keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP consistently applied, and maintain adequate accounts and reserves for all taxes (including income taxes), all depreciation, depletion, obsolescence and amortization of its
properties, all contingencies, and all other reserves;
(d) not move its chief executive office or chief operating office
from the addresses referred to in
Exhibit J
unless it shall have provided Purchaser not less than thirty (30) days prior written notice of such change;
36
(e) pay and discharge all material taxes, assessments and governmental charges or levies
imposed on it or its income or profits or on any of its property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained. Seller and its subsidiaries shall file on a timely basis all federal, and material state and local tax and information returns, reports and any other information statements or schedules
required to be filed by or in respect of it;
(f) keep in full force and effect the provisions of its charter documents,
by-laws, operating agreements or similar organizational documents in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Documents;
(g) keep in full force and effect all agreements and instruments by which it or any of its properties may be bound and all applicable
decrees, orders and judgments, in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Document; and
(h) comply with its obligations under the Transaction Documents to which it is a party and each other agreement entered into with an Owner.
Section 8.18
Consent to Sub-Servicing
.
Subject to the rights of the Owners, Seller will not permit any Person other than Seller to service or sub-service the Mortgage Loans without the prior written consent of Purchaser, in each case other
than third-party vendors customarily employed by servicers in the ordinary course of business in accordance with prudent mortgage servicing practices.
Section 8.19
Nonpetition Covenant
.
Seller shall not, prior to
the date that is one year and one day after the payment in full of the Future Excess Servicing Spread, petition or otherwise invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against
Purchaser under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Purchaser or any substantial part of its property, or ordering the winding up or liquidation of the
affairs of Purchaser.
Section 8.20
Schedule of Mortgage Loans
.
Seller shall maintain the Schedule of Mortgage Loans, which shall be updated as of each Assignment Date. The information in the Schedule
of Mortgage Loans pertaining to the Mortgage Loans and the Mortgage Servicing Rights will be true and correct in all material respects as of the date specified.
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Section 8.21
True Sale Opinion
.
Seller shall cause a written opinion of counsel to be furnished, in form and substance satisfactory to Purchaser, dated the Sale Date
with respect to the characterization of the transfer of the Future Excess Servicing Spread by Seller to Purchaser as a true sale. Purchaser may request additional opinions regarding such characterization subsequent to the Sale Date as advised by
Purchaser’s counsel in light of changes in law and other circumstances. To the extent Seller is unable to provide such opinions with respect to any Mortgage Loans, Seller shall substitute such Mortgage Loans with residential mortgage loans have
substantially the same credit characteristics.
Section 8.22
Valuation
.
As of the Sale Date, Purchaser shall have received an opinion reasonably satisfactory to Purchaser that the Base Servicing Fee of the
Mortgage Loans and the Purchase Price of the Future Excess Servicing Spread is fair and reasonable.
Section 8.23
Material Documents
.
Seller shall provide Purchaser with executed copies of all material agreements and
documents, and any amendments thereto, as of each Assignment Date relating to Seller’s acquisition of the related Mortgage Servicing Rights and the servicing of the Mortgage Loans assigned.
Section 8.24
Insurance
.
The Seller shall maintain (a) general liability insurance, (b) errors and omission insurance or blanket bond coverage and (c) fidelity bond insurance, in each case, from reputable companies
with coverage in amounts customarily maintained by such similarly situated entities in the same jurisdiction and industry as the Seller.
Section 8.25
Defense of Title
.
The Seller warrants and will
defend the right, title and interest of the Purchaser in and to all Future Excess Servicing Spread against all adverse claims and demands subject to Permitted Liens.
Section 8.26
Refinancing of Mortgage Loans
.
Each agreement or
arrangement that Seller enters into to purchase Mortgage Servicing Rights shall be entered into on an arm’s length contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing
Rights to be acquired thereby. Seller shall not enter into any agreement or arrangement with a third party intended to encourage the refinancing of any Mortgage Loan by any Person other than Seller.
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ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations
of Purchaser under this Agreement are subject to the satisfaction of the following conditions as of the Sale Date:
Section 9.01
Correctness of Representations and Warranties
.
The representations and warranties made by Seller in this Agreement and each other Transaction Document to which Seller is a party to be
made on or prior to the Sale Date are true and correct in all material respects.
Section 9.02
Compliance with
Conditions
.
All of the terms, covenants, conditions and obligations of this Agreement and each other Transaction
Document required to be complied with and performed by Seller on or prior to the Sale Date shall have been duly complied with and performed in all material respects.
Section 9.03
Corporate Resolution
.
Purchaser shall have
received from Seller a certified copy of the Seller’s corporate resolution approving the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby,
together with such other certificates of incumbency and other evidences of corporate authority as Purchaser or its counsel may reasonably request.
Section 9.04
No Material Adverse Change
.
From the Agreement
Date, there shall not have been any change to Seller’s financial or operating condition or in the Mortgage Servicing Rights, the Mortgage Loans, the Related Escrow Accounts or to Seller’s relationship with, or authority from, the Agency
that in each case will likely materially and adversely affect the consummation of the transactions contemplated hereby or the Future Excess Servicing Spread.
Section 9.05
Consents
.
The Seller shall have obtained all
consents, approvals or other requirements of third parties required for the consummation of the transactions contemplated by the Transaction Documents that are to be obtained on or prior to the Sale Date, and the Seller shall have commenced
servicing the Mortgage Loans under the applicable Servicing Agreement. All actions of all Governmental Authorities required to consummate the transactions contemplated by the Transaction Documents and the documents related thereto shall have been
obtained or made.
39
Section 9.06
Delivery of Transaction Documents
.
Seller shall have delivered to Purchaser copies of each executed Transaction Document that is to be entered on or prior to the Sale Date
in the form and substance acceptable to the Purchaser and each of the items required to be delivered pursuant to Section 2.01 hereof.
Section 9.07
Certificate of Seller
.
Seller shall have
provided Purchaser a certificate, substantially in the form attached hereto as
Exhibit D
, signed by an authorized officer of Seller dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that:
(a) each of Seller’s representations and warranties made in this Agreement and each other Transaction Document to which Seller is a party is true and correct in all material respects as of such date; (b) all of the terms, covenants,
conditions and obligations of this Agreement and each other Transaction Document to which Seller is a party that are required to be complied with and performed by Seller at or prior to the Sale Date have been duly complied with and performed in all
material respects; (c) the conditions set forth in
Section 9.04
and
Section 9.05
have been satisfied; and (d) as of the Sale Date, Seller has a Consolidated Tangible Net Worth of at least the sum of
(x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries, and the Seller (considered together with
the Seller’s consolidated subsidiaries) is not in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
Section 9.08
Opinions of Counsel
.
Seller’s counsel shall
have delivered the Opinions of Counsel required pursuant to
Section 2.01(b)(v)
,
Section 2.01(b)(vi)
and
Section 2.01(b)(vii)
.
Section 9.09
Good Standing Certificate of Seller
.
Seller
shall have provided Purchaser a certificate of good standing of Seller, dated as of a date within five (5) Business Days prior to the Sale Date.
Section 9.10
No Actions or Proceedings
.
No action, suit,
proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit the consummation of, or to invalidate, any of the transactions contemplated by this Agreement and the documents related hereto in
any material respect.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of
Seller under this Agreement are subject to the satisfaction of the following conditions as of the Sale Date:
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Section 10.01
Correctness of Representations and Warranties
.
The representations and warranties made by Purchaser in this Agreement to be made on or prior to the Sale Date are true and correct in
all material respects.
Section 10.02
Compliance with Conditions
.
All of the terms, conditions, covenants and obligations of this Agreement required to be complied with and performed by Purchaser on or
prior to the Sale Date shall have been duly complied with and performed in all material respects.
Section 10.03
Corporate Resolution
.
Seller shall have received from Purchaser a certified copy of its corporate resolution
approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, together with such other certificates of incumbency and other evidences of corporate authority as Seller or its counsel may
reasonably request.
Section 10.04
No Material Adverse Change
.
Since the Agreement Date, there shall not have been any change to Purchaser’s financial condition that will likely materially and
adversely affect the consummation of the transactions contemplated hereby.
Section 10.05
Certificate of
Purchaser
.
Purchaser shall have provided Seller a certificate, substantially in the form attached hereto as
Exhibit E
, signed by an authorized officer of Purchaser dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each of Purchaser’s representations and warranties made in this
Agreement is true and correct in all material respects as of such date; (b) all of the terms, covenants, conditions and obligations of this Agreement required to be complied with and performed by Purchaser at or prior to the Agreement Date have
been duly complied with and performed in all material respects; and (c) the condition set forth in
Section 10.04
has been satisfied.
Section 10.06
Good Standing Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate of good standing of Purchaser, dated as of a date within five (5) Business Days
prior to the Sale Date.
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ARTICLE XI
INDEMNIFICATION
Section 11.01
Indemnification by
Seller
.
(a) Seller shall indemnify, defend and hold Purchaser, its affiliates and its and their respective
directors, managers, officers, employees, agents, representatives and advisors (the “
Purchaser Indemnitees
”) harmless from and shall reimburse the applicable Purchaser Indemnitee for any Losses suffered or incurred by any Purchaser
Indemnitee after the Agreement Date which result from:
(i) Any material breach of a representation or
warranty by Seller, or non-fulfillment of any covenant or obligation of Seller, contained in this Agreement;
(ii) Any servicing act or omission of any prior servicer relating to any Mortgage Loan and any act or omission of any
party related to the origination of any Mortgage Loan;
(iii) Any act, error or omission of Seller in
servicing any of the Mortgage Loans, including improper action or failure to act when required to do so;
(iv)
Any exercise of any rights of setoff or other netting arrangements by any Owner against Seller that results in a decrease in Servicing Agreement termination payments due to Seller with respect to the Mortgage Loans from such Owner or in a shortfall
of funds to pay the Future Excess Servicing Spread; and
(v) Litigation, proceedings, governmental
investigations, orders, injunctions or decrees resulting from any of the items described in
Section 11.01(a)(i)-(iv)
above;
provided
,
however
, that the applicable Purchaser Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any
such losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Seller, which such failure of mitigation shall not relieve Seller of its indemnification obligations in this
Section 11.01(a)
but may
affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Purchaser Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be
reimbursed by Seller as part of its indemnification obligations in this
Section 11.01(a)
. Purchaser shall notify Seller promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations,
orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Seller shall have the right to assume the
defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Purchaser Indemnitee, but may not enter into any settlement without the prior written consent of the applicable Purchaser Indemnitee, which shall
not be unreasonably withheld. A Purchaser Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself at its own expense but shall not consent to the entry of a judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of Seller, which consent shall not be unreasonably withheld. Any exercise of such rights by a Purchaser Indemnitee shall not relieve Seller of its obligations and liabilities under
this
Section 11.01(a)
or any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Purchaser Indemnitee shall be required to cooperate in good faith with
Seller to ensure the proper and adequate defense of such Third-Party Claim. For the avoidance of doubt, Seller’s obligations for Purchaser Indemnitees shall not be limited to funds available in the Third Party Controlled Future Spread Custodial
Account or the Future Spread Reserve Account.
42
(b)
REIT Requirements
. Notwithstanding anything in
Section 11.01(a)
, in
the event that counsel or independent accountants for the Protected REIT determine that there exists a material risk that any amounts due to Purchaser under
Section 11.01(a)
hereof would be treated as Nonqualifying Income upon the
payment of such amounts to Purchaser, the amount paid to Purchaser pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to Purchaser in such year without causing the Protected REIT to fail to meet the REIT
Requirements for such year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the Protected REIT. If the amount payable for any tax year under the preceding sentence is
less than the amount which Seller would otherwise be obligated to pay to Purchaser pursuant to
Section 11.01
of this Agreement (the “
Expense Amount
”), then: (1) Seller shall place the Expense Amount into an escrow
account (the “
Expense Escrow Account
”) using an escrow agent and agreement reasonably acceptable to Purchaser and shall not release any portion thereof to Purchaser, and Purchaser shall not be entitled to any such amount, unless and
until Purchaser delivers to Seller, at the sole option of the Protected REIT, (i) an opinion (an “
Expense Amount Tax Opinion
”) of the Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid,
would not constitute Nonqualifying Income, (ii) a letter (an “
Expense Amount Accountant’s Letter
”) from the Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to
Purchaser without causing the Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to the Protected REIT indicating that the receipt of any Expense Amount
hereunder will not cause the Protected REIT to fail to satisfy the REIT Requirements (a “
REIT Qualification Ruling
” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a
“
Release Document
”); and (2) pending the delivery of a Release Document by Purchaser to Seller, Purchaser shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan
agreement (an “
Indemnity Loan Agreement
”) reasonably acceptable to Purchaser that (i) requires Seller to lend Purchaser immediately available cash proceeds in an amount equal to the Expense Amount (an “
Indemnity
Loan
”), and (ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the credit standing and profile of Purchaser or any guarantor of Purchaser, including the
Protected REIT, at the time of such Loan, and (B) a 15 year maturity with no periodic amortization.
Section 11.02
Indemnification by Purchaser
.
Purchaser shall indemnify, defend and hold Seller, its affiliates and its and
their respective directors, managers, officers, employees, agents, representatives and advisors (the “
Seller Indemnitees
”) harmless from and shall reimburse the applicable Seller Indemnitee for any Losses suffered or incurred by any
Seller Indemnitee which result from:
(a) Any material breach of a representation or warranty by Purchaser, or
non-fulfillment of any covenant or obligation of Purchaser contained in this Agreement; and
43
(b) Litigation, proceedings, governmental investigations, orders, injunctions or decrees,
the basis for which occurred after the Agreement Date, resulting from any of the items described in
Section 11.02(a)
above;
provided
,
however
, that the applicable Seller Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any such
losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Purchaser, which such failure of mitigation shall not relieve Purchaser of its indemnification obligations in this
Section 11.02
but may
affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Seller Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be
reimbursed by Purchaser as part of its indemnification obligations in this
Section 11.02
. Seller shall notify Purchaser promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations,
orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Purchaser shall have the right to assume the
defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Seller Indemnitee, but may not enter into any settlement without the prior written consent of Purchaser, which shall not be unreasonably
withheld. A Seller Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself but shall not consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the
prior written consent of Purchaser, which consent shall not be unreasonably withheld. Any exercise of such rights by a Seller Indemnitee shall not relieve Purchaser of its obligations and liabilities under this
Section 11.02
or any other
provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Seller Indemnitee shall be required to cooperate in good faith with Purchaser to ensure the proper and adequate
defense of such Third-Party Claim.
Section 11.03
Other Rights
.
The Seller hereby acknowledges that, in addition to its rights under this Agreement, the Purchaser is entitled to exercise its rights
under the related Owner Consent.
ARTICLE XII
MISCELLANEOUS
Section 12.01
Costs and Expenses
.
Purchaser and Seller shall each pay the expenses incurred by it or its affiliates pursuant to the Current Spread Agreement in
connection with the transactions contemplated hereby.
Section 12.02
Confidentiality
.
Each Party understands that in connection with this transaction, it has been furnished and will be furnished Non-Public Personal
Information and/or Personally Identifiable Financial Information (as those terms are defined in Sections 573.3(n) and (o) of the Office of Thrift
44
Supervision Regulations on Privacy of Consumer Information published at 12 C.F.R. Chapter V implementing Title V of the Gramm-Leach-Bliley Act), and other information regarding the policies and
plans of the other Party and its affiliates that is and has been designated as confidential and proprietary, and each Party agrees that it will maintain the confidentiality of such information and will not disclose it to others (except for its
affiliates and its and their respective directors, managers, officers, employees, financing sources, agents, representatives and advisors), or use it except in connection with the proposed acquisition contemplated by this Agreement, without the
prior written consent of the Party furnishing such information. Information which is generally known in the industry concerning a Party or among such Party’s creditors generally or which has been disclosed to the other Party by third parties
who have a right to do so shall not be deemed confidential or proprietary information for these purposes. If Purchaser, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to
disclose any information supplied to it in connection with the transactions contemplated hereby, Purchaser agrees to provide Seller with prompt notice of such request(s) so that Seller may seek an appropriate protective order and/or waive
Purchaser’s compliance with the terms of this
Section 12.02
. If Seller, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information
supplied to it in connection with the transactions contemplated hereby, Seller agrees to provide Purchaser with prompt notice of such request(s) so that Purchaser may seek an appropriate protective order and/or waive Seller’s compliance with
the terms of this
Section 12.02
. Notwithstanding the terms of this
Section 12.02
, if, in the absence of a protective order or the receipt of a waiver hereunder, Purchaser or Seller is nonetheless, in the opinion of its
counsel, compelled to disclose information concerning the other Party to any tribunal or else stand liable for contempt or suffer other censure or penalty, Purchaser or Seller may disclose such information to such tribunal without liability
hereunder. If the proposed acquisition is not consummated, each Party agrees to promptly return to the other, promptly upon request, all confidential materials, and all copies thereof, which have been furnished to it in connection with the
transactions contemplated hereby. For the avoidance of doubt, either Party may provide its shareholders and creditors with a general description of this Agreement and any related transactions, and, subject to the provisions of this
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.03
Broker’s Fees
.
Each party hereto represents and warrants to the other that it has made no agreement to pay any finder’s, agent’s, broker’s or originator’s fee arising out of or in connection with the
subject matter of this Agreement. In the event Purchaser has entered or enters into an agreement to pay any finder’s, agent’s, broker’s, advisor’s or originator’s fee arising out of or in connection with the subject matter
of this Agreement, Purchaser shall be solely responsible for all such fees. The parties hereto shall indemnify and hold each other harmless from and against any such obligation or liability and any expense incurred in investigating or defending
(including reasonable attorneys’ fees) any claim based upon the other party’s actions in connection with such obligation.
45
Section 12.04
Relationship of Parties
.
The Parties intend that the transactions contemplated in the Transaction Documents constitute arms-length transactions among third
parties. Nothing contained in the Transaction Documents will establish any fiduciary, partnership, joint venture or similar relationship between or among the Parties except to the extent otherwise expressly stated therein.
Section 12.05
Survival of Representations and Warranties
.
Each party hereto covenants and agrees that the representations and warranties in this Agreement, and in any document delivered or to be
delivered pursuant hereto, shall survive the Agreement Date and each applicable Assignment Date.
Section 12.06
Notices
.
All notices, requests, demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been given if personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid or by prepaid overnight delivery service:
Fortress Investment Group LLC
1345 Avenue of the Americas
New York, NY 10105
Attn: Brian Sigman
Chief Financial Officer
(212) 479-5343
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attn: Amar Patel
or to such other address as Purchaser or Seller shall have
specified in writing to the other.
Section 12.07
Waivers
.
Either Purchaser or Seller may, by written notice to the other:
(a) Extend the time for the performance of any of the obligations or other transactions of the other; and
46
(b) Waive compliance with or performance of any of the terms, conditions, covenants or
obligations required to be complied with or performed by the other hereunder.
The waiver by Purchaser or Seller of a breach
of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.
Section 12.08
Entire Agreement; Amendment
.
This Agreement and the related Transaction Documents constitute the entire agreement between the parties with respect to the transactions contemplated hereby and supersede all prior agreements with
respect thereto. This Agreement may be amended only in a written instrument signed by both Seller and Purchaser.
Section 12.09
Binding Effect
.
This Agreement shall inure to the benefit of and be binding upon the Parties and their successors and assigns. Nothing in this Agreement, express or implied, is intended to confer on any Person other than
the Parties and their successors and assigns, any rights, obligations, remedies or liabilities.
Section 12.10
Headings
.
Headings on the Articles and Sections in this Agreement are for reference purposes only and shall not
be deemed to have any substantive effect.
Section 12.11
Applicable Law
.
This Agreement shall be 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 the laws of the State of New York, except to the extent preempted by Federal law. This Agreement shall constitute a security agreement under the laws of the State of New York. In addition to
any other rights available under this Agreement or otherwise available at law or in equity but subject to the terms hereof, Purchaser shall have all rights and remedies of a secured party with respect to the Collateral under the laws of the State of
New York and under any other applicable law to enforce the assignments and security interests contained herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of applicable law and the terms of this
Agreement, to sell or apply any rights and other interests with respect to the Collateral assigned or pledged hereby in accordance with the terms hereof at public and private sale in accordance with the terms of this Agreement. The parties agree to
waive trial by jury in the event of any dispute under this Agreement.
Section 12.12
Incorporation of
Exhibits
.
The Exhibits attached hereto shall be incorporated herein and shall be understood to be a part hereof as
though included in the body of this Agreement.
47
Section 12.13
Counterparts
.
This Agreement may be executed in counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all
of which, taken together, shall constitute one and the same agreement.
Section 12.14
Severability of
Provisions
.
If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, 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 or enforceability
of the other provisions of this Agreement or of the rights of the parties hereto.
Section 12.15
Assignment
.
(a) Seller may not assign, transfer, sell or subcontract all or any part of this Agreement, any
interest herein, or any of the Seller’s interest in the Servicing Spread Collections, other than the interest in the Total Servicing Spread sold hereby, without the prior written consent of Purchaser, provided that any successor to Seller must
assume Seller’s obligations under this Agreement. Purchaser shall have the unrestricted right to further assign, transfer, deliver, hypothecate, pledge, subdivide or otherwise deal with its rights under this Agreement on whatever terms
Purchaser shall determine without the consent of Seller; including the right to assign all or any portion of the Future Excess Servicing Spread and to assign the related rights under this Agreement. If Purchaser assigns any rights under this
Agreement to a third party (a “
Third Party Assignment
“), such third party (a “
Third Party Assignee
“) shall enter into a new agreement (a “
Third Party Future Spread Agreement
“) with Seller or
Seller’s assignee that provides such Third Party Assignee with the same rights with respect to the Future Excess Servicing Spread that Purchaser would have had under this Agreement if the Third Party Assignment had not occurred.
(b) Seller shall maintain a register on which it enters the name and address of each holder of the Future Excess Servicing Spread and
each holder’s interest in the Future Excess Servicing Spread (the “
Holder Register
”) for each transaction described in Section 12.15(a). The entries in the Holder Register shall be conclusive absent manifest error, and
Seller shall treat each Person whose name is recorded in the Holder Register as an owner of the Future Excess Servicing Spread for all purposes of this Agreement notwithstanding any notice to the contrary.
Section 12.16
Termination
.
If the Current Spread Agreement is terminated on or prior to the Sale Date, this Agreement shall terminate and neither Party shall have any further obligations to the other Party hereunder.
48
Section 12.17
Third Party Beneficiaries
.
This Agreement does not and is not intended to confer any rights or remedies upon any person or entity other than Purchaser and Seller,
except as provided in
Section 11.01
and in
Section 11.02
, provided that Purchaser and Seller reserve the right to modify any term of, or terminate, this Agreement, without the consent of any Purchaser Indemnitee or Seller
Indemnitee.
49
IN WITNESS WHEREOF, each of the undersigned parties to this Agreement has caused this
Agreement to be duly executed in its corporate name by one of its duly authorized officers, all as of the date first above written.
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MSR X LLC
Purchaser
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By:
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/s/ Brian Sigman
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Name:
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Brian Sigman
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Title:
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Chief Financial Officer
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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/s/ Amar Patel
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Name:
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Amar Patel
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Title:
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Executive Vice President
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50
EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT FOR MORTGAGE LOANS
Subject to, and upon the terms and conditions of the Future Spread Agreement for FNMA Mortgage Loans, dated as of January 6, 2013 (the “
Agreement
”), by and between Nationstar
Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) and MSR X LLC, a Delaware limited liability company (together with its successors assigns, the
“
Purchaser
”), as may be amended, restated, or otherwise modified and in effect from time to time, Seller hereby assigns, transfers and delivers to Purchaser all of Seller’s right, title and interest in and to Future Excess
Servicing Spread for each of the Mortgage Loans set forth in Annex A attached hereto and all proceeds thereof, and agrees that as of the applicable Assignment Date, the applicable Mortgage Loan shall be deemed to be a “Mortgage Loan” for
all purposes of the Agreement. Capitalized terms used in this Assignment Agreement have the meanings given to such terms in, or incorporated by reference into, the Agreement.
In the event (but only in the event) that the conveyance of the Future Excess Servicing Spread is characterized by a court or governmental authority as security for a loan rather than a sale, Seller will
be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Future Excess Servicing Spread and all proceeds thereof as security for a loan in an
amount of the Purchase Price.
All of the terms, covenants, conditions and obligations of the Agreement required to be
complied with and performed by Seller on or prior to the date hereof have been duly complied with and performed in all material respects.
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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Name:
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Title:
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51
Annex A
[
ATTACH ANNEX A, WHICH MAY BE ON COMPUTER TAPE, COMPACT DISK, OR MICROFICHE,
CONTAINING THE INFORMATION SET FORTH BELOW
]
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(a)
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(b)
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(c)
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(d)
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(e)
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(g)
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(h)
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(i)
(column (g) –
column
(h))
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(j)
([ ]% of
column
(i))
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Refinancing
Date
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|
Loan #
of
Refinanced
Mortgage
Loan
|
|
Principal
Balance
of
Refinanced
Mortgage
Loan
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|
Loan # of
Mortgage
Loan
|
|
Principal
Balance of
Mortgage
Loan as of the
Assignment
Date
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|
Servicing
Spread
Rate
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Base
Servicing
Fee Rate
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Net Servicing
Spread
Rate
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Future Excess
Servicing Spread
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52
EXHIBIT B
Example of calculations of Maximum Retained Refinancing Loan Amounts
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Recaptured Loan Incentive
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Range of Loans Retained as a Percentage of
Total Recapture
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3 Month Avg
Recapture
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Retained
Percentage
(1)
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Nationstar
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Portfolio
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35% or Less
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0%
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0.00%
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100.00%
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> 35%, <= 40%
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25%
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0.00% to 1.25%
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100.00% to 98.75%
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> 40%, <= 45%
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30%
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1.50% to 3.00%
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98.50% to 97.00%
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> 45%, <= 50%
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35%
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3.50% to 5.25%
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96.50% to 94.75%
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> 50%, <= 55%
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40%
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6.00% to 8.00%
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94.00% to 92.00%
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> 55%, <= 60%
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45%
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9.00% to 11.25%
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91.00% to 88.75%
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> 60%, <= 65%
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50%
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12.50% to 15.00%
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87.50% to 85.00%
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> 65%, <= 70%
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50%
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15.00% to 17.50%
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85.00% to 82.50%
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> 70%, <= 75%
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50%
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17.50% to 20.00%
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82.50% to 80.00%
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Greater than 75%
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50%
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20.00% to 32.50%
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80.00% to 67.50%
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1
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Represents the percentage of loans Seller retains above 35% recapture.
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53
EXHIBIT C
SCHEDULE OF MORTGAGE LOANS
[SEPARATELY DELIVERED]
EXHIBIT D
SELLER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, a [Vice President] of Nationstar Mortgage LLC (the “
Company
”), pursuant to
Section 9.07
of the Future Spread Agreement for FNMA Mortgage Loans by
and between MSR X LLC and the Company, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material respects as of the date hereof;
(ii) All of the terms, covenants, conditions and obligations of the Agreement required to be complied with and performed
by the Company at or prior to the date hereof have been duly complied with and performed in all material respects;
(iii) The conditions set forth in
Section 9.04
and
Section 9.05
of the Agreement have been satisfied; and
(iv) As of the date hereof, the Company has a Consolidated Tangible Net Worth (as defined in the Agreement) of at least
the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date of the Agreement by the Company, Nationstar Mortgage Holdings Inc. or any of Company’s consolidated subsidiaries, and the Company
(considered together with its consolidated subsidiaries)is not in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of [ ]
EXHIBIT E
PURCHASER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale
Date)
I, , [POSITION] of
[ ], the sole member of MSR X LLC (the “
Company
”), pursuant to
Section 10.05
of the Future Spread Agreement for FNMA Mortgage Loans by and between
the Company and Nationstar Mortgage LLC, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material respects as of the date hereof; and
(ii) All of the terms, covenants, conditions and obligations of the Agreement required to be complied with and performed
by the Company at or prior to the date hereof have been duly complied with and performed in all material respects; and
(iii) The condition set forth in
Section 10.04
have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
[ ].
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MSR X LLC
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By:
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[ ], as member
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By:
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EXHIBIT F
LOCATION OF CREDIT FILES
350 Highland Drive
Lewisville, Texas 75067
EXHIBIT G
FORM OF SUMMARY REMITTANCE REPORT
[SEPARATELY DELIVERED]
EXHIBIT H
FORM OF DELINQUENCY REPORT
[SEPARATELY DELIVERED]
EXHIBIT I
FORM OF DISBURSEMENT REPORT
[SEPARATELY DELIVERED]
EXHIBIT J
SELLER JURISDICTIONS AND RECORDING OFFICES
Chief Executive Office:
350 Highland Drive
Lewisville, Texas 75067
Recording Office:
Secretary
of State, State of Delaware
61
Exhibit 10.50
CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT
FOR FNMA MORTGAGE
LOANS
by and between
NATIONSTAR MORTGAGE LLC
(Seller)
and
MSR X LLC
(Purchaser)
Dated and effective as of January 6, 2013
Table of Contents
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ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
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2
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Section 1.01
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Definitions
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2
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Section 1.02
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|
General Interpretive Principles
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13
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ARTICLE II PROCEDURES; ITEMS TO BE DELIVERED
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14
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Section 2.01
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Sale of Current Excess Servicing Spread
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14
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Section 2.02
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|
Grant of Security Interest
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14
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Section 2.03
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|
Items to be Delivered on the Agreement Date
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14
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Section 2.04
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|
Items to be Delivered on the Sale Date
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15
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Section 2.05
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Sale Date Transactions
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17
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ARTICLE III PAYMENTS AND DISTRIBUTIONS
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17
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Section 3.01
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Purchase Price
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17
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Section 3.02
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Payments by Purchaser
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18
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Section 3.03
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Accounts
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19
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Section 3.04
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Priority of Payments
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21
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Section 3.05
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Withdrawals from the Current Spread Reserve Account
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23
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Section 3.06
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|
Payment to Seller of Base Servicing Fee
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23
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Section 3.07
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Intent and Characterization
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23
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ARTICLE IV [Reserved]
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24
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER
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24
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Section 5.01
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Due Organization and Good Standing
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24
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Section 5.02
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Authority and Capacity
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24
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Section 5.03
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Agency Consents
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25
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Section 5.04
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Title to the Mortgage Servicing Rights
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25
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Section 5.05
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Effective Agreements
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25
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Section 5.06
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No Accrued Liabilities
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25
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Section 5.07
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Seller/Servicer Standing
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25
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Section 5.08
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MERS Membership
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26
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Section 5.09
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|
Agency Set-off Rights
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26
|
|
Section 5.10
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|
Ability to Perform; Solvency
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|
26
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|
Section 5.11
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|
Material Documents
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26
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Section 5.12
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|
Obligations with Respect to Origination
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26
|
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Section 5.13
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|
No Actions
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26
|
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ARTICLE VI REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE
LOANS AND SERVICING
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27
|
|
Section 6.01
|
|
Servicing Agreements; Applicable Laws
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27
|
i
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Section 6.02
|
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Related Escrow Accounts
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27
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|
Section 6.03
|
|
Accuracy of Servicing Information
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27
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|
Section 6.04
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|
No Purchaser Responsibility
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27
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Section 6.05
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|
Location of Credit Files
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28
|
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Section 6.06
|
|
Representations Concerning the Current Excess Servicing Spread
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28
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ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER
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29
|
|
Section 7.01
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|
Due Organization and Good Standing
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29
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|
Section 7.02
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|
Authority and Capacity
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29
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|
Section 7.03
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|
Effective Agreements
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|
29
|
|
Section 7.04
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|
Sophisticated Investor
|
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30
|
|
Section 7.05
|
|
No Actions
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30
|
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|
ARTICLE VIII SELLER COVENANTS
|
|
30
|
|
Section 8.01
|
|
Servicing Obligations
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30
|
|
Section 8.02
|
|
Cooperation; Further Assurances
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31
|
|
Section 8.03
|
|
Financing Statements
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31
|
|
Section 8.04
|
|
Supplemental Information
|
|
31
|
|
Section 8.05
|
|
Access to Information
|
|
31
|
|
Section 8.06
|
|
Home Affordable Modification Program
|
|
32
|
|
Section 8.07
|
|
Distribution Date Data Tapes and Reports
|
|
32
|
|
Section 8.08
|
|
Financial Statements and Officer’s Certificates
|
|
34
|
|
Section 8.09
|
|
Monthly Management Calls
|
|
35
|
|
Section 8.10
|
|
Timely Payment of Agency Obligations
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35
|
|
Section 8.11
|
|
Servicing Agreements
|
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35
|
|
Section 8.12
|
|
Transfer of Mortgage Servicing Rights
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36
|
|
Section 8.13
|
|
Consents to Transaction Documents
|
|
36
|
|
Section 8.14
|
|
Accounts
|
|
36
|
|
Section 8.15
|
|
Notification of Certain Events
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|
36
|
|
Section 8.16
|
|
Financing; Pledge of Current Excess Servicing Spread
|
|
36
|
|
Section 8.17
|
|
Existence, etc
|
|
37
|
|
Section 8.18
|
|
Consent to Sub-Servicing
|
|
38
|
|
Section 8.19
|
|
Nonpetition Covenant
|
|
38
|
|
Section 8.20
|
|
Data Tape; Schedule of Mortgage Loans
|
|
38
|
|
Section 8.21
|
|
Insurance.
|
|
38
|
|
Section 8.22
|
|
Defense of Title
|
|
39
|
|
Section 8.23
|
|
Refinancing of Mortgage Loans
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|
39
|
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|
|
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
|
|
39
|
|
Section 9.01
|
|
Correctness of Representations and Warranties
|
|
39
|
|
Section 9.02
|
|
Compliance with Conditions
|
|
39
|
ii
|
|
|
|
|
|
|
Section 9.03
|
|
Corporate Resolution
|
|
39
|
|
Section 9.04
|
|
No Material Adverse Change
|
|
40
|
|
Section 9.05
|
|
Consents
|
|
40
|
|
Section 9.06
|
|
Delivery of Transaction Documents
|
|
40
|
|
Section 9.07
|
|
Certificate of Seller
|
|
40
|
|
Section 9.08
|
|
Valuation
|
|
41
|
|
Section 9.09
|
|
Opinions of Counsel
|
|
41
|
|
Section 9.10
|
|
Acquisition of Mortgage Servicing Rights by Seller
|
|
41
|
|
Section 9.11
|
|
Good Standing Certificate of Seller
|
|
41
|
|
Section 9.12
|
|
No Actions or Proceedings
|
|
41
|
|
Section 9.13
|
|
Fees, Costs and Expenses
|
|
41
|
|
|
|
|
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
|
|
41
|
|
Section 10.01
|
|
Correctness of Representations and Warranties
|
|
42
|
|
Section 10.02
|
|
Compliance with Conditions
|
|
42
|
|
Section 10.03
|
|
Corporate Resolution
|
|
42
|
|
Section 10.04
|
|
No Material Adverse Change
|
|
42
|
|
Section 10.05
|
|
Certificate of Purchaser
|
|
42
|
|
Section 10.06
|
|
Good Standing Certificate of Purchaser
|
|
42
|
|
|
|
|
ARTICLE XI INDEMNIFICATION; CURE
|
|
43
|
|
Section 11.01
|
|
Indemnification by Seller
|
|
43
|
|
Section 11.02
|
|
Indemnification by Purchaser
|
|
45
|
|
Section 11.03
|
|
Award of Damages
|
|
46
|
|
Section 11.04
|
|
Other Rights
|
|
47
|
|
|
|
|
ARTICLE XII MISCELLANEOUS
|
|
47
|
|
Section 12.01
|
|
Costs and Expenses
|
|
47
|
|
Section 12.02
|
|
Confidentiality
|
|
47
|
|
Section 12.03
|
|
Broker’s Fees
|
|
48
|
|
Section 12.04
|
|
Relationship of Parties
|
|
48
|
|
Section 12.05
|
|
Survival of Representations and Warranties
|
|
48
|
|
Section 12.06
|
|
Notices
|
|
48
|
|
Section 12.07
|
|
Waivers
|
|
49
|
|
Section 12.08
|
|
Entire Agreement; Amendment
|
|
49
|
|
Section 12.09
|
|
Binding Effect
|
|
50
|
|
Section 12.10
|
|
Headings
|
|
50
|
|
Section 12.11
|
|
Applicable Law
|
|
50
|
|
Section 12.12
|
|
Incorporation of Exhibits
|
|
50
|
|
Section 12.13
|
|
Counterparts
|
|
50
|
|
Section 12.14
|
|
Severability of Provisions
|
|
51
|
|
Section 12.15
|
|
Public Announcement
|
|
51
|
iii
|
|
|
|
|
|
|
Section 12.16
|
|
Assignment
|
|
51
|
|
Section 12.17
|
|
Termination
|
|
52
|
|
Section 12.18
|
|
Third Party Beneficiaries
|
|
52
|
EXHIBITS
Exhibit A – Form of Assignment Agreement
Exhibit B – Schedule of Mortgage Loans
Exhibit C – Seller’s Officer’s Certificate
Exhibit D – Purchaser’s Officer’s Certificate
Exhibit E – Location of Credit
Files
Exhibit F – Form of Summary Remittance Report
Exhibit G – Form of Delinquency Report
Exhibit H – Form of Disbursement Report
Exhibit I – Seller Jurisdictions and Recording Offices
iv
CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT FOR FNMA MORTGAGE LOANS
This CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT FOR FNMA MORTGAGE LOANS (as amended, restated, or otherwise
modified and in effect from time to time, this “
Agreement
”), dated as of January 6, 2013 (the “
Agreement Date
”), is by and between MSR X LLC, a Delaware limited liability company (together with its successors
and assigns, the “
Purchaser
”), and Nationstar Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) (the Purchaser and the Seller will collectively be referred
to as the “
Parties
” and each, a “
Party
”).
W I T N E S S E T H:
WHEREAS
, Seller and Bank of America, National Association (“
Bank of America
”) have entered into the Purchase and
Sale Agreement, pursuant to which, among other things, Seller will acquire and assume all right, title and interest in mortgage servicing rights to a portfolio of residential mortgage loans owned or securitized by the Agency (as defined herein);
WHEREAS
, by acquiring such mortgage servicing rights, Seller is entitled to a servicing spread and other incidental
fees with respect to the related residential mortgage loans;
WHEREAS
, the servicing spread, together with the
Ancillary Income (as defined below), exceeds the compensation that Seller requires to service the related residential mortgage loans;
WHEREAS
, Seller desires to sell, and Purchaser desires to purchase, a portion of the servicing spread that exceeds such required compensation amount; and
WHEREAS
, Purchaser and Seller desire to set forth the terms and conditions pursuant to which Seller will sell, transfer and assign
to Purchaser, all of Seller’s right, title and interest in and to a portion of the servicing spread that exceeds the Seller’s required compensation amount, and Purchaser will purchase all right, title and interest in and to such portion of
the servicing spread;
NOW, THEREFORE
, in consideration of the mutual promises, covenants and conditions and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and upon the terms and subject to the conditions set forth herein, the Parties hereto agree as follows:
1
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
Section 1.01
Definitions.
Whenever used herein, the following words and phrases, unless the context otherwise requires, shall have
the following meanings:
7 Year Swap Rate
: The yield reported by Bloomberg under USSWAP7 <Index> HP <GO> at
ten a.m. (10:00 a.m.), East Coast Time, on the applicable date. The 7 Year Swap Rate on December 7, 2012 was 1.1451%.
Accepted Servicing Practices
: With respect to any Mortgage Loan, those accepted and prudent mortgage servicing practices
(including collection procedures) which are in accordance with Agency servicing practices and procedures as set forth in the applicable Servicing Agreements, and in a manner at least equal in quality to the servicing that Seller provides to mortgage
loans which it owns in its own portfolio.
Agency
: The Federal National Mortgage Association, or any successor thereto.
Agreement
: As defined in the preamble hereof.
Agreement Date
: As defined in the preamble hereof.
Ancillary Income
: All incidental servicing fees (such as late fees, assignment transfer fees, returned check fees, special services fees, amortization schedule fees, HAMP fees, modification and
incentive income and any interest or earnings on funds deposited in an account maintained by the Seller as servicer with respect to the Mortgage Loans, etc.) that are supplemental to the servicing spread payable to the servicer pursuant to the
Servicing Agreements.
Applicable Law
: With reference to any Person, all laws (including common law), statutes,
regulations, ordinances, treaties, judgments, decrees, injunctions, writs and orders of any court, governmental agency or authority and rules, regulations, orders, directives, licenses and permits of any Governmental Authority applicable to such
Person or its property or in respect of its operations.
Assignment Agreement
: An agreement substantially in the form
of
Exhibit A
to this Agreement or in such other form as mutually agreed upon by the Parties.
Bank
: Wells Fargo
Bank, National Association, or any successor thereto, or another financial institution mutually agreed upon by the Parties or any successor thereto, each in its capacity as “Bank” under the Current Spread Custodial Account Control
Agreement or the Current Spread Reserve Account Control Agreement, as applicable, or any third party custodian or trustee in similar capacity under any replacement account control agreements.
2
Bank of America
: As defined in the recitals hereof.
Base Purchase Price
: The meaning given to such term in
Section 3.01
.
Base Servicing Fee
: With respect to a Collection Period, an amount equal to the product of (A) the aggregate outstanding
principal balance of the Mortgage Loans as of the related Measurement Date, (B) the Base Servicing Fee Rate and (C) (i) in the case of the initial Collection Period, a fraction, the numerator of which is the number of days in the
period from and including the Sale Date to and including the last day of the initial Collection Period, and the denominator of which is 360, and (ii) in the case of all other Collection Periods, 1/12;
provided
that the Base Servicing Fee
with respect to any Mortgage Loan whose Servicing Agreement is terminated during a Collection Period shall be pro-rated to the actual number of days within such Collection Period in which such Mortgage Loan was serviced by Seller.
Base Servicing Fee Rate
: 0.11% per annum, except that, for the period during which the Interim Servicer is servicer of the
Mortgage Loans, the Base Servicing Fee Rate shall be the lesser of (a) 0.11% per annum or (b) the interim servicing fee payable to the Interim Servicer.
Business Day
: Any day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the States of Texas or New York are authorized or obligated by law or by executive
order to be closed or (c) such other days as agreed upon by the Parties.
Code
: The Internal Revenue Code of 1986,
as amended from time to time.
Collateral
: The meaning given to such term in
Section 2.02
.
Collection Period
: With respect to any Distribution Date, the calendar month preceding the month in which such Distribution Date
occurs.
Consolidated Tangible Net Worth
: (i) The net worth of Seller and its consolidated subsidiaries, on a
combined basis, determined in accordance with GAAP,
minus
(ii) all intangibles determined in accordance with GAAP (including goodwill, capitalized financing costs and capitalized administration costs but excluding originated and
purchased mortgage servicing rights or retained residual securities) and any and all advances to, investments in and receivables held from affiliates;
provided
,
however
, that the non-cash effect (gain or loss) of any mark-to-market
adjustments made directly to stockholders’ equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the
calculation of Consolidated Tangible Net Worth.
Control
: The meaning specified in Section 8-106 of the UCC.
Credit File
: Those documents, which may be originals, copies or electronically imaged, pertaining to each Mortgage
Loan, held by or on behalf of Seller in connection with the servicing of the Mortgage Loan, which may include Mortgage Loan Documents and the credit documentation relating to the origination of such Mortgage Loan, and any documents gathered during
the Servicing of a Mortgage Loan.
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Current Excess Servicing Spread
: The rights of Seller, severable from each (and all)
of the other rights under the applicable Servicing Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to the Current Excess Servicing Spread Percentage.
Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans
: The current excess servicing spread acquisition
agreement for certain Freddie Mac mortgage loans, dated the date hereof, between the Seller and MSR IX LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans
: The current excess servicing spread acquisition
agreement for certain Ginnie Mae mortgage loans, dated the date hereof, between the Seller and MSR XI LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XII LLC
: The current excess servicing
spread acquisition agreement for certain non-agency mortgage loans, dated the date hereof, between the Seller and MSR XII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XIII LLC
: The current excess servicing
spread acquisition agreement for certain non-agency mortgage loans, dated the date hereof, between the Seller and MSR XIII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Percentage
: 66.67%.
Current Spread Custodial Account Agreement
: The applicable deposit account agreement and other related account documentation governing the Third Party Controlled Current Spread Custodial Account.
Current Spread Custodial Account Control Agreement
: The account control agreement among Seller, Purchaser and Wells
Fargo Bank, National Association, or any other institution agreed upon by the Parties, as Bank, dated as of the Sale Date, entered into with respect to the Third Party Controlled Current Spread Custodial Account, as amended, restated, supplemented
or otherwise modified from time to time.
Current Spread Reserve Account
: The account specified in the Current Spread
Reserve Account Control Agreement and maintained by Wells Fargo Bank, National Association or any successor thereto, or any other third party custodian or trustee selected by Purchaser.
Current Spread Reserve Account Agreement
: The applicable deposit account agreement and other related account documentation
governing the Current Spread Reserve Account.
Current Spread Reserve Account Control Agreement
: The account control
agreement among Seller, Purchaser and Wells Fargo Bank, National Association, or any other institution agreed upon by the Parties, as Bank, dated on or before the Sale Date, entered into with respect to the Current Spread Reserve Account, as
amended, restated, supplemented or otherwise modified from time to time.
4
Current Spread Reserve Account Deposit Event
: The meaning given to such term in
Section 3.03(c)
.
Current Spread Reserve Account Required Amount
: The meaning given to such term in
Section 3.03(c)
.
Custodian
: A custodian of Credit Files or any part thereof identified by the Seller to
the Purchaser in writing on or prior to the Sale Date as the same may be amended and supplemented from time to time by the Seller by providing a written notice of any such update to the Purchaser.
Cut-Off Date
: The opening of business on the Sale Date.
Data Tape
: The list of all mortgage loans, dated as of the date specified therein, whose Mortgage Servicing Rights will be sold, or that are anticipated to be sold, as applicable, to Seller
pursuant to the Purchase and Sale Agreement.
Deposit
: As defined in
Section 3.01
hereof.
Distribution Date
: The 10th day of each calendar month, or if such day is not a Business Day, the prior Business Day, beginning in
the month following the Sale Date, or such other day as mutually agreed upon by Seller and Purchaser.
Electronic Data
File
: A computer tape or other electronic medium generated by or on behalf of Seller and delivered or transmitted to or on behalf of Purchaser which provides information relating to the Mortgage Loans.
Eligible Servicing Agreement
: Unless otherwise agreed to by the Purchaser, a Servicing Agreement in respect of which the following
eligibility requirements have been satisfied:
(a) such Servicing Agreement is in full force and effect, and is in all
respects genuine as appearing on its face or as represented in the books and records of Seller, and no event of default, early amortization event, termination event, or other event giving any party thereto (including with notice or lapse of time or
both) the right to terminate Seller as servicer thereunder for cause has occurred and is continuing; provided, however, that with respect to any Servicing Agreement and the occurrence of any event set forth in this clause (a) which is based on
a breach of a collateral performance test, such Servicing Agreement shall remain an Eligible Servicing Agreement so long as no notice of termination based on such breach has been given or threatened in writing and subject to the restrictions set
forth herein; and
(b) Seller has not resigned or been terminated as servicer under such Servicing Agreement and has no actual
knowledge of any pending or threatened action to terminate Seller, as servicer (whether for cause or without cause).
Entitlement Holder
: The meaning specified in Section 8-102(a)(7) of the UCC.
Expense Amount
: As defined in
Section 11.01(b)
hereof.
Expense Amount Accountant’s Letter
: As defined in
Section 11.01(b)
hereof.
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Expense Amount Tax Opinion
: As defined in
Section 11.01(b)
hereof.
Expense Escrow Account
: As defined in
Section 11.01(b)
hereof.
Fannie Mae
: Federal National Mortgage Association, or any successor thereto.
Federal Funds Rate
: For any date of determination, the federal funds rate as reported in the Federal Reserve H.15(519) Statistical
Release as of the first Business Day of the month in which such date of determination falls, or if such Statistical Release is no longer published, the average of the “high” and the “low” interest rate for reserves traded among
commercial banks for overnight use in amounts of one million dollars ($1,000,000.00) or more, as reported by The Wall Street Journal under “Federal Funds” rates as of the first Business Day of the month in which such date of determination
falls.
FHLMC Mortgage Loans
: Each of those mortgage loans for which the current excess servicing spread has been sold
and assigned to MSR IX LLC pursuant to the Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans.
FNMA Acknowledgment Agreement
: The acknowledgment agreement by and among the Agency, Seller and Purchaser, in form and substance
reasonably acceptable to such purchasers, dated on or before the Sale Date, pursuant to which, among other things, the Agency consents to (a) the sale of the Mortgage Servicing Rights (including the Total Servicing Spread) to Seller and
(b) the sale of the Current Excess Servicing Spread from Seller to the Purchaser and any other arrangements specified therein.
FNMA Mortgage Loans
: Each of the Mortgage Loans on the Schedule of Mortgage Loans.
Freddie Mac
: Federal Home Loan Mortgage Corporation, or any successor thereto.
Future Spread Agreements
: The Future Spread Agreement for FHLMC Mortgage Loans, the Future Spread Agreement for FNMA Mortgage Loans, the Future Spread Agreement for GNMA Mortgage Loans, the Future
Spread Agreement for Non-Agency Mortgage Loans for MSR XII LLC and the Future Spread Agreement for Non-Agency Mortgage Loans for MSR XIII LLC.
Future Spread Agreement for FHLMC Mortgage Loans
: The Future Spread Agreement for FHLMC Mortgage Loans, dated January 6, 2013, by and between Seller and MSR IX LLC, as may be amended,
restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for FNMA Mortgage Loans
: The
Future Spread Agreement for FNMA Mortgage Loans, dated January 6, 2013, by and between Seller and Purchaser, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for GNMA Mortgage Loans
: The Future Spread Agreement for GNMA Mortgage Loans, dated January 6, 2013,
by and between Seller and MSR XI LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
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Future Spread Agreement for Non-Agency Mortgage Loans for MSR XII LLC
: The Future
Spread Agreement for Non-Agency Mortgage Loans, dated January 6, 2013, by and between Seller and MSR XII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for Non-Agency Mortgage Loans for MSR XIII LLC
: The Future Spread Agreement for Non-Agency Mortgage Loans,
dated January 6, 2013, by and between Seller and Purchaser, as may be amended, restated, or otherwise modified and in effect from time to time.
GAAP
: Generally accepted accounting principles in the United States of America as in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in general use by significant segments of the accounting
profession, that are applicable to the circumstances as of the date of determination.
Ginnie Mae
: Government National
Mortgage Association, or any successor thereto.
GNMA Mortgage Loans
: Each of those mortgage loans for which the
current excess servicing spread has been sold and assigned to MSR XI LLC pursuant to the Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans.
Governmental Authority
: With respect to any Person, any nation or government, any state or other political subdivision, agency or instrumentality thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over such Person, any of its subsidiaries or any of its properties.
Grant
: To grant, bargain, sell, warrant, alienate, remise, demise, release, convey, assign, transfer, mortgage, pledge, create and
grant a security interest in and right of setoff against, deposit, set over or confirm.
HAMP
: The meaning given to
such term in
Section 8.06
.
HAMP Loans
: The meaning given to such term in
Section 8.06
.
Holder Register
: As defined in Section 12.16(b) hereof.
Indemnity Loan
: As defined in
Section 11.01(b)
hereof.
Indemnity Loan Agreement
: As defined in
Section 11.01(b)
hereof.
Interim Servicer
: Bank of America or its successors or assigns acting as interim servicer with respect to the Mortgage Loans
pursuant to the interim servicing addendum of the Purchase and Sale Agreement.
IRS
: The United States Internal Revenue
Service.
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Lien
: Any mortgage, deed of trust, pledge, hypothecation, collateral assignment,
charge, deposit, arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness
or the performance of any other obligation, including any conditional sale or other title retention agreement.
Lockbox
Account
: An account maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser for the purpose of receiving Servicing Spread Collections.
Loss
or
Losses
: Any and all direct, actual and out-of-pocket losses (including any loss in the value in the Current Excess
Servicing Spread), damages, deficiencies, claims, costs or expenses, including reasonable attorneys’ fees and disbursements, excluding (i) any amounts attributable to or arising from overhead allocations, general or administrative costs
and expenses, or any cost for the time of any Party’s employees, (ii) consequential losses or damages consisting of speculative lost profits, lost investment or business opportunity, damage to reputation or operating losses, or
(iii) punitive or treble damages;
provided
,
however
, that the exclusions set forth in clauses (ii) or (iii) above do not apply if and to the extent any such amounts are actually incurred in payment to a third party or
government entity.
Measurement Date
: With respect to any Collection Period, the first day of such Collection Period.
MERS
: Mortgage Electronic Registration Systems, Inc., or any successor thereto.
MI
: Insurance provided by private mortgage insurance companies to make payments on certain Mortgage Loans in the event that the
related Mortgagor defaults in its obligation in respect of the Mortgage.
Mortgage
: Each of those mortgages, deeds of
trust, security deeds or deeds to secure debt creating a first lien on or an interest in real property securing a Mortgage Note and related to a Mortgage Loan.
Mortgage Loan
: Each of those mortgage loans listed on the Schedule of Mortgage Loans.
Mortgage Loan Documents
: With respect to each Mortgage Loan, the documents and agreements related to such Mortgage Loan required to be held by the applicable Custodian, including, without
limitation, the original Mortgage Note, and any other documents or agreements evidencing and/or governing such Mortgage Loan.
Mortgage Note
: With respect to any Mortgage Loan, the note or other evidence of indebtedness of the Mortgagor, thereunder,
including, if applicable, an allonge and lost note affidavit.
Mortgage Servicing Rights
: The rights and
responsibilities of Seller with respect to servicing the Mortgage Loans under the Servicing Agreements, including any and all of the following if and to the extent provided therein: (a) all rights to service a Mortgage Loan; (b) all rights
to receive servicing fees, Ancillary Income, reimbursements or indemnification for
8
servicing the Mortgage Loan, and any payments received in respect of the foregoing and proceeds thereof; (c) the right to collect, hold and disburse escrow payments or other payments with
respect to the Mortgage Loan and any amounts actually collected with respect thereto and to receive interest income on such amounts to the extent permitted by Applicable Law; (d) all accounts and other rights to payment related to any of the
property described in this paragraph; (e) possession and use of any and all Credit Files pertaining to the Mortgage Loan or pertaining to the past, present or prospective servicing of the Mortgage Loan; (f) to the extent applicable, all
rights and benefits relating to the direct solicitation of the related Mortgagors for refinance or modification of the Mortgage Loans and attendant right, title and interest in and to the list of such Mortgagors and data relating to their respective
Mortgage Loans; and (g) all rights, powers and privileges incident to any of the foregoing.
Mortgaged Property
:
The Mortgagor’s real property, securing repayment of a related Mortgage Note, consisting of an interest in a single parcel of real property, improved by a residential dwelling.
Mortgagor
: An obligor under a residential mortgage loan.
Net Servicing Fee
: As defined in the Purchase and Sale Agreement.
Non-Agency Mortgage Loans
: Each of the mortgage loans for which the current excess servicing spread has been sold and assigned to
MSR XII LLC or MSR XIII LLC pursuant to the applicable Sale Agreement.
Nonqualifying Income
: Any amount that is
treated as gross income for purposes of Section 856 of the Code and which is not Qualifying Income.
Objection
Notice
: The meaning given to such term in
Section 3.03(c)
.
Opinion of Counsel
: One or more written
opinions, in form and substance reasonably satisfactory to the recipient, of an attorney at law admitted to practice in any state of the United States or the District of Columbia, which attorney may be counsel for Seller or Purchaser, as the case
may be.
Owner Consent
: The FNMA Acknowledgment Agreement.
Party
or
Parties
: As defined in the preamble hereof.
Permitted Liens
: Liens in favor of the Agency required pursuant to the applicable Servicing Agreements.
Person
: Any individual, partnership, corporation, limited liability company, limited liability partnership, business entity, joint
stock company, trust, business trust, unincorporated organization, association, enterprise, joint venture, government, any department or agency of any government or any other entity of whatever nature.
Power of Attorney
: A Power of Attorney delivered by the Seller to the Purchaser authorizing the Purchaser to enforce the right to
payment of the Current Excess Servicing Spread under the related Servicing Agreement solely in the event that the Seller fails to enforce such right within 30 days after receiving written notice of such failure from the Purchaser to the Seller.
9
Priority of Payments
: The meaning given to such term in
Section 3.04
.
Protected REIT
: Any entity that (i) has elected to be taxed as a real estate investment trust pursuant to
Section 856 et seq. of the Code, (ii) owns a direct or indirect equity interest in Purchaser, and (iii) is treated for purposes of Section 856 of the Code as owning all or a portion of the assets of the Purchaser or as receiving
all or a portion of the Purchaser’s income.
Purchase and Sale Agreement
: The Mortgage Servicing Rights Purchase
and Sale Agreement, dated as of January 6, 2013, by and between Nationstar Mortgage LLC, as purchaser, and Bank of America, National Association, as seller, together with all schedules and exhibits thereto, as the same may be amended,
supplemented or otherwise modified from time to time.
Purchase Price
: The meaning given to such term in
Section 3.01
.
Purchase Price Percentage
: 3.15 multiplied by the excess of (i) the Net Servicing Fee
(as such Net Servicing Fees are determined in accordance with Exhibit F to the Purchase and Sale Agreement), expressed as an annualized rate on the unpaid principal balances of the related Mortgage Loans as of the Sale Date over (ii) the Base
Servicing Fee Rate; provided however, that for every plus or minus 1 basis point (0.01%) movement in the 7 Year Swap Rate between December 7, 2012 and the Sale Date, the Purchase Price Percentage will be adjusted plus or minus by 0.0005%. As
necessary, the percentage to be determined pursuant to this definition will be based on linear interpolation.
Purchased
Assets
: As defined in the Purchase and Sale Agreement.
Purchaser
: As defined in the preamble hereof.
Purchaser Enforcement Expenses
: An amount equal to the Current Excess Servicing Spread Percentage of the reasonable expenses,
including legal costs and expenses, incurred in the enforcement of any rights of Seller material to the value of the Total Servicing Spread under the Purchase and Sale Agreement and related documents, without duplication of any other such expenses
paid under any other Sale Agreement, which enforcement has been approved by Purchaser (such approval not to be unreasonably withheld).
Purchaser Indemnitees
: The meaning given to such term in
Section 11.01(a)
.
Qualifying Income
: Gross income that is described in Section 856(c)(2) or 856(c)(3) of the Code.
REIT Qualification Ruling
: As defined in
Section 11.01(b)
hereof.
REIT Requirements
: The requirements imposed on REITs pursuant to Sections 856 through and including 860 of the Code.
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Related Escrow Accounts
: Mortgage Loan escrow/impound accounts maintained by Seller
relating to the Mortgage Servicing Rights, including accounts for buydown funds, real estate taxes and MI, flood and hazard insurance premiums.
Release Document
: As defined in Section 11.01(b) hereof.
Remaining
Expected Total Servicing Spread
: The meaning given to such term in
Section 3.03(c)
.
Repurchase Price
:
As defined in the Purchase and Sale Agreement.
Requirement of Law
: As to any Person, the certificate of incorporation
and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject.
Retained Servicing Spread
: The
rights of Seller, severable from each (and all) of the other rights under the applicable Servicing Agreement, to the Retained Servicing Spread Percentage of the Total Servicing Spread.
Retained Servicing Spread Percentage
: 100%
minus
the Current Excess Servicing Spread Percentage.
Sale Agreements
: This Agreement, the Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, the Current
Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans, the Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XII LLC and the Current Excess Servicing Spread Acquisition Agreement for
Non-Agency Mortgage Loans for MSR XII LLC.
Sale Date
: The “Sale Date” or the “Subsequent Sale
Date”, in each case, as defined in the Purchase and Sale Agreement with respect to the Mortgage Loans; provided that all conditions precedent to the execution and delivery of the related Assignment Agreement shall have been satisfied or waived
on such date.
Sales Proceeds
: The proceeds received upon a sale (approved by the Parties) of the Total Servicing
Spread (except without giving effect to clause (b) of the definition thereof), in whole or in part, including through a sale in accordance with
Section 8.12
.
Schedule of Mortgage Loans:
The list of Mortgage Loans whose Current Excess Servicing Spread has been assigned to Purchaser pursuant to this Agreement delivered initially accordance with
Section 2.04
, updated in accordance with
Section 3.01
and maintained as
Exhibit B
hereto.
Seller
: As defined in the preamble hereof.
Seller Enforcement Expenses
: An amount equal to the Retained Servicing Spread Percentage of the reasonable expenses, including legal costs and expenses, incurred in the
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enforcement of any rights of Seller material to the value of the Total Servicing Spread under the Purchase and Sale Agreement and related documents, without duplication of any other such expenses
paid under any other Sale Agreement, which enforcement has been approved by Purchaser (such approval not to be unreasonably withheld).
Seller Indemnitees
: The meaning given to such term in
Section 11.02
.
Servicing
: The responsibilities, with respect to servicing the Mortgage Loans, under the Servicing Agreements.
Servicing Agreements
: The servicing agreements, as amended from time to time, and any waivers, consent letters, acknowledgments and other agreements under which Seller or the Interim Servicer is
the servicer of the Mortgage Loans relating to the Mortgage Servicing Rights and governing the servicing of the Mortgage Loans.
Servicing Spread Collections
: For each Collection Period, the funds collected on the Mortgage Loans and allocated as the servicing
compensation payable to Seller as servicer of the Mortgage Loans with respect to such Collection Period pursuant to the applicable Servicing Agreements, other than Ancillary Income and, for the avoidance of doubt, other than reimbursements received
for advances and other out-of-pocket expenditures from the Agency by Seller in accordance with the Servicing Agreements.
Servicing Transfer Agreement
: The servicing transfer agreement by, between and among Bank of America, the Agency and Seller
(including any amendments thereto) relating to the Mortgage Loans.
Servicing Transfer Date
: As defined in the Purchase
and Sale Agreement with respect to the Mortgage Loans.
Solvent
: With respect to any Person as of any date of
determination, (a) the value of the assets of such Person is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person as determined in accordance with GAAP, (b) such Person is able to
pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the
amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
Third Party Assignee
: The meaning given to such term in
Section 12.16
.
Third Party Assignment
: The meaning given to such term in
Section 12.16
.
Third Party Current Spread Agreement
: The meaning given to such term in
Section 12.16
.
Third Party Claim
: The meaning given to such term in
Section 11.01
and
Section 11.02
, as applicable.
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Third Party Controlled Current Spread Custodial Account
: The account specified in the
Current Spread Custodial Account Control Agreement and maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser, into which all Servicing Spread Collections and all Servicing Agreement
termination payments in respect of the Mortgage Loans shall be deposited.
Total Servicing Spread
: For each Collection
Period on and after the Sale Date, the sum of the following: (a) the Servicing Spread Collections received during such Collection Period and remaining after payment of the Base Servicing Fee, (b) all Sales Proceeds received during such
Collection Period; (c) all Repurchase Prices received during such Collection Period; and (d) all other amounts payable by the Agency to Seller (or Purchaser under the Owner Consent) with respect to the Mortgage Servicing Rights for
Mortgage Loans, including any termination fees paid by the Agency to Seller for terminating Seller as the servicer of any of the Mortgage Loans, but for the avoidance of doubt, excluding all Ancillary Income and reimbursements received for advances
and other out-of-pocket expenditures from the Agency by Seller in accordance with the Servicing Agreements.
Transaction
Documents
: The Purchase and Sale Agreement (including any order, bill of sale, assignment agreement or other transfer agreement related to the sale of the Mortgage Servicing Rights thereunder), the Tri-Party Agreement, the Owner Consent, the
Current Spread Custodial Account Agreement, the Current Spread Custodial Account Control Agreement, the Current Spread Reserve Account Agreement, the Current Spread Reserve Account Control Agreement, the Sale Agreements and the Future Spread
Agreements.
Tri-Party Agreement
: An agreement by, between and among Bank of America, the Agency and Seller (including
any amendments thereto) pursuant to which the Agency acknowledges that it will look solely to Bank of America or any of its affiliates, and not to Seller, for any claims relating to the selling representations and warranties on Mortgage Loans and
the servicing of such Mortgage Loans prior to the Sale Date.
UCC
: The Uniform Commercial Code as in effect from time
to time in the applicable jurisdiction.
Section 1.02 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other gender;
(b) Accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with GAAP;
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(c) References herein to “Articles,” “Sections,”
“Subsections,” “Paragraphs,” and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Agreement;
(d) A reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section
in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions;
(e) The words
“herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; and
(f) The term “include” or “including” shall mean without limitation by reason of enumeration.
ARTICLE II
PROCEDURES; ITEMS TO BE DELIVERED
Section 2.01
Sale of Current Excess Servicing Spread
.
Subject to, and upon the terms and conditions of this Agreement, Seller will sell, transfer and assign to Purchaser, and Purchaser will
acquire from Seller, all of Seller’s right, title and interest in and to the Current Excess Servicing Spread and all proceeds thereof with respect to the Mortgage Loans.
Section 2.02
Grant of Security Interest
.
In order to secure
Seller’s obligations to deliver the Current Excess Servicing Spread and perform its obligations hereunder and under the Purchase and Sale Agreement, Seller hereby Grants to Purchaser a valid and continuing first priority and perfected Lien on
and security interest in all of Seller’s right, title and interest in, to and under, the Third Party Controlled Current Spread Custodial Account and the Current Spread Reserve Account, together with all amounts deposited therein from time to
time and all cash and non-cash proceeds thereof, in each case, whether now owned or existing, or hereafter acquired and arising (the “
Collateral
“).
Section 2.03
Items to be Delivered on the Agreement Date
.
On the
Agreement Date, each of Seller and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
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(a) The Sale Agreements and all agreements, certificates, opinions and instruments required
to be delivered under each Sale Agreement on the Agreement Date;
(b) The Future Spread Agreements and all agreements,
certificates, opinions and instruments required to be delivered under each Future Spread Agreement on the Agreement Date; and
(c) The executed Purchase and Sale Agreement.
Section 2.04
Items to be Delivered on the Sale Date
.
(a) On the Sale
Date, subject to the satisfaction of the terms and conditions herein, each of Seller and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise
responsible:
(i) The Owner Consent;
(ii) The Assignment Agreement;
(iii) All agreements, certificates, opinions and instruments required to be delivered under each Sale Agreement and Future Spread Agreement on the Sale Date;
(iv) All agreements, certificates, opinions and instruments required to be delivered under the executed Purchase and Sale
Agreement reasonably related to the transactions contemplated hereunder that are required to be delivered on the Sale Date;
(v) The executed Current Spread Custodial Account Agreement;
(vi) The executed Current Spread Custodial Account Control Agreement;
(vii) The executed Current Spread Reserve Account Agreement;
(viii) The executed Current Spread Reserve Account Control Agreement;
15
(ix) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser,
regarding due authorization, authority, and enforceability of the applicable Transaction Documents to which Seller is a party, and regarding no conflicts with other material Seller agreements;
(x) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the characterization of the transfer
of the Current Excess Servicing Spread from Seller to Purchaser as a true sale for bankruptcy purposes;
(xi)
An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the perfection of the assignment of Current Excess Servicing Spread to Purchaser and the security interests granted hereunder;
(xii) A certificate of good standing of Seller dated as of a date within five (5) Business Days prior to the Closing
Date to be delivered by Seller;
(xiii) A secretary’s certificate of Seller attaching its organizational
documents, board resolutions and incumbency certificates;
(xiv) An officer’s certificate of Seller that
all conditions precedent to the purchase of the Mortgage Servicing Rights under the Purchase and Sale Agreement have been satisfied (or if waived, such waiver has been approved by Purchaser);
(xv) A duly executed corporate certificate of Seller required by
Section 9.07
dated as of the Sale Date;
(xvi) A duly executed corporate certificate of Purchaser required by
Section 10.05
dated as of
the Sale Date;
(xvii) A certificate of good standing of Purchaser, dated as of a date within five
(5) Business Days prior to the Sale Date to be delivered by Purchaser; and
(xviii) A UCC-1 financing
statement relating to the security interest of Purchaser in the Current Excess Servicing Spread, the Third Party Controlled Current Spread Custodial Account and the Current Spread Reserve Account, in form and substance reasonably acceptable to
Purchaser.
16
(b) On the Sale Date, subject to the satisfaction of the terms and conditions herein,
Seller shall provide Purchaser with copies of the following:
(i) Any amendments, modifications or
restatements of the Purchase and Sale Agreement;
(ii) The bill of sale, assignment agreement or other
transfer agreement pursuant to which Bank of America will transfer the Mortgage Servicing Rights to Seller;
(iii) The Tri-Party Agreement;
(iv) The executed Power of Attorney; and
(v) A preliminary
Schedule of Mortgage Loans containing information with respect to the Mortgage Loans anticipated to be included in this Agreement on the Sale Date as of November 30, 2012.
Section 2.05
Sale Date Transactions
.
On the Sale Date, subject to the satisfaction of the terms and conditions herein:
(a) The Parties shall execute and deliver the Assignment Agreement;
(b) Purchaser shall remit to Seller the Purchase Price; and
(c) Ownership of the Current Excess Servicing Spread shall be transferred to Purchaser.
ARTICLE III
PAYMENTS AND DISTRIBUTIONS
Section 3.01
Purchase Price
.
On the first Business Day following the Agreement Date, Purchaser shall pay Seller an amount (the “
Deposit
”) equal to the product of (i) $21,358,151 and (ii) Current Excess
Servicing Spread Percentage, without any of the adjustments provided in the Purchase and Sale Agreement for such calculation, as an earnest money deposit.
17
In full consideration for the purchase of the Current Excess Servicing Spread and the rights
under the Future Spread Agreement for FNMA Mortgage Loans, and upon the terms and conditions of this Agreement, Purchaser shall pay to Seller on the Sale Date an amount (the “
Base Purchase Price
”) equal to the product of
(x) the aggregate outstanding principal balance of the Mortgage Loans as of the Cut-Off Date, (y) the Purchase Price Percentage and (z) the Current Excess Servicing Spread Percentage. The Base Purchase Price shall be allocated by the
Parties on the Sale Date to reflect the consideration for the purchase of the Current Excess Servicing Spread hereunder (the “
Purchase Price
”) and the consideration for the rights acquired by Purchaser under the Future Spread
Agreement for FNMA Mortgage Loans.
The Base Purchase Price shall be payable by the Purchaser to the Seller as follows:
(a) the Deposit shall be payable on the first Business Day following the Agreement Date, (b) 50% of the estimated Base Purchase Price net of the Deposit shall be payable on the Sale Date and (c) the portion of the Base Purchase Price
with respect to the Mortgage Servicing Rights transferred on such Servicing Transfer Date that has not been paid to Seller by Purchaser as of such date, including with respect to Mortgage Loans that have prepaid between either (x) the Sale Date
and the initial applicable Servicing Transfer Date or (y) two Servicing Transfer Dates pertaining to the same Mortgage Servicing Rights, plus interest thereon at the Federal Funds Rate for the period from the Sale Date to such Servicing
Transfer Date or between such Servicing Transfer Dates, shall be payable on the Servicing Transfer Date.
The Seller shall
deliver the Schedule of Mortgage Loans no later ten (10) Business Days after the Sale Date. In the event there is an adjustment and reconciliation of the Seller’s purchase price pursuant to the terms of Section 3.01(d) of the Purchase
and Sale Agreement, the Base Purchase Price shall be subject to a corresponding adjustment and any adjustment amounts (including interest) shall be paid by the Purchaser or the Seller, as applicable, to the other party within ten (10) Business
Days from receipt of satisfactory written verification of amounts due.
Section 3.02
Payments by Purchaser
.
(a) Payments shall be made by Purchaser to Seller by wire transfer of immediately available funds to an account designated by
Seller.
(b) If, subsequent to the payment of the Purchase Price or the payment of any amounts due hereunder to either party,
the outstanding principal balance of any Mortgage Loan is found to be in error, or if for any reason the Purchase Price or such other amounts is found to be in error, the party benefiting from the error shall pay an amount sufficient to correct and
reconcile the Purchase Price or such other amounts and shall provide a reconciliation statement and other such documentation to reasonably satisfy the other party concerning the accuracy of such reconciliation. Such amounts shall be paid by the
proper party within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
18
Section 3.03
Accounts
.
(a)
Lockbox Account
. Seller shall inform the Mortgagors of Mortgage Loans to remit their mortgage payments due on or after the
Servicing Transfer Date to the Lockbox Account. All amounts on deposit in the Lockbox Account will be maintained and applied in accordance with the Servicing Agreement. Payments of all Servicing Spread Collections received on and after the Servicing
Transfer Date shall be transferred from the Lockbox Account to the Third Party Controlled Current Spread Custodial Account within one Business Day of receipt and identification thereof and in any event, within two Business Days of receipt thereof.
If Seller receives any Servicing Spread Collections not remitted to the Lockbox Account, it shall hold such funds in trust for the benefit of the Purchaser and deposit such amounts to the Third Party Controlled Current Spread Account within two
Business Days of receipt thereof.
(b)
Third Party Controlled Current Spread Custodial Account
.
(i) The Third Party Controlled Current Spread Custodial Account will be established with Wells Fargo Bank, National
Association or with such other third party custodian or trustee selected by Purchaser, for the sole purpose of receiving and disbursing all Servicing Spread Collections, Servicing Agreement termination payments with respect to the Mortgage Loans,
Sales Proceeds and Repurchase Prices. The Third Party Controlled Current Spread Custodial Account will be established pursuant to the Current Spread Custodial Account Control Agreement with respect to which Purchaser is an Entitlement Holder with
Control. So long as permitted by the Current Spread Custodial Account Control Agreement, Seller may direct the disposition of funds in the Third Party Controlled Current Spread Custodial Account strictly in accordance with the Priority of Payments.
Upon any material breach of a representation, warranty or covenant by Seller hereunder or during the occurrence and continuance of a Current Spread Reserve Account Deposit Event, Purchaser may elect to exercise Control over the Third Party
Controlled Current Spread Custodial Account. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Third Party Controlled Current Spread
Custodial Account.
(ii) Seller shall inform the Agency to remit the applicable portion of any Servicing
Agreement termination payments payable after the Sale Date directly to the Third Party Controlled Current Spread Custodial Account. Any termination payment to be directed to the Third Party Controlled Current Spread Custodial Account shall be equal
to the
pro
rata
amount by which the Mortgage Loans affected by such termination bear to all mortgage loans of Seller affected by such termination, based upon the method in which such termination payments are calculated in accordance
with the applicable Servicing Agreement.
19
(iii) Seller shall direct each payer of Sales Proceeds to remit such
payments directly to the Third Party Controlled Current Spread Custodial Account.
(iv) Seller shall direct
Bank of America to remit (i) Servicing Spread Collections received by it prior to the Servicing Transfer Date and (ii) any Repurchase Price under the Purchase and Sale Agreement, directly to the Third Party Controlled Current Spread
Custodial Account.
(v) If Seller receives any amounts required to be deposited into the Third Party
Controlled Current Spread Custodial Account in error, Seller shall promptly remit such funds to the Third Party Controlled Current Spread Custodial Account.
(c)
Current Spread Reserve Account
. The Current Spread Reserve Account will be established with Wells Fargo Bank, National Association or with such other third party custodian or trustee selected
by Purchaser. The Current Spread Reserve Account will be established pursuant to the Current Spread Reserve Account Control Agreement with respect to which Purchaser is an Entitlement Holder with Control. So long as permitted by the Current Spread
Reserve Account Control Agreement, Seller may direct the disposition of funds in the Current Spread Reserve Account strictly in accordance with
Section 3.05
. Seller agrees to take all actions reasonably necessary, including the filing of
appropriate financing statements, to protect Purchaser’s interest in the Current Spread Reserve Account.
If at any time
Seller’s Consolidated Tangible Net Worth falls below the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s
consolidated subsidiaries or if Seller (considered together with its consolidated subsidiaries) defaults in any indebtedness in excess of $10,000,000 (individually or in the aggregate) (each, a “
Current Spread Reserve Account Deposit
Event
”), Seller shall immediately notify Purchaser in writing that a Current Spread Reserve Account Deposit Event has occurred. On each Distribution Date upon which a Current Spread Reserve Account Deposit Event has occurred and is
continuing, Seller shall be required to transfer funds in the Third Party Controlled Current Spread Custodial Account to the Current Spread Reserve Account in accordance with the Priority of Payments until the amount of funds in the Current Spread
Reserve Account is equal to the Current Spread Reserve Account Required Amount. The “
Current Spread Reserve Account Required Amount
” is equal to 25% of the fair market value as of the date the Current Spread Reserve Account Deposit
Event that is then-continuing first occurred of the Total Servicing Spread expected to be paid over the expected remaining life of the Mortgage Loans (the “
Remaining Expected Total Servicing Spread
”) determined in accordance with
the following paragraph. Seller shall immediately notify Purchaser in writing if a Current Spread Reserve Account Deposit Event is no longer continuing. Any funds in the Current Spread Reserve Account in excess of the Current Spread Reserve Account
Required Amount shall be released to Seller.
20
For purposes of determining the fair market value of the Remaining Expected Total Servicing
Spread, Purchaser shall submit its claim for determination of the fair market value of the Remaining Expected Total Servicing Spread, together with such back-up information it deems appropriate to justify such fair market value (which value shall be
considered the fair market value of the Remaining Expected Total Servicing Spread for purposes of calculating the Current Spread Reserve Account Required Amount until the final determination of such fair market value in accordance with this
paragraph). Within five (5) Business Days of Seller’s receipt of such determination, Seller shall notify Purchaser in writing of its acceptance or any objection to such determination of such fair market value, and if Seller objects to such
determination, such notice shall include its own determination of such fair market value and any back-up information as it deems appropriate to justify such fair market value (an “
Objection Notice
”). In the event an Objection Notice
is delivered, the parties shall negotiate in good faith a resolution to such objection. In the event that Seller and Purchaser are unable to resolve such objection within five (5) Business Days of the delivery of such Objection Notice, Seller
and Purchaser shall appoint a mutually acceptable nationally recognized valuation expert to determine such fair market value of the Remaining Expected Total Servicing Spread. The determination of such valuation expert shall be binding on Seller and
Purchaser and the fees of such valuation expert shall be borne by Seller.
Section 3.04
Priority of Payments
.
On each Business Day, subject to the terms and conditions of the Current Spread Custodial Account Control Agreement, Seller
(or, after the delivery of an access termination notice pursuant to the Current Spread Custodial Account Control Agreement, Purchaser) shall direct the Bank to apply the monies in the Third Party Controlled Current Spread Custodial Account in the
following order of priority (the “
Priority of Payments
”), in every case, after giving effect to each prior item in the Priority of Payments on such Distribution Date:
(a)
first
, from amounts in the Third Party Controlled Current Spread Custodial Account attributable to Servicing Agreement
termination payments made by the Agency with respect to any Mortgage Loans,
pro
rata
, (A) the Current Excess Servicing Spread Percentage of such termination payments to Purchaser, and (B) the Retained Servicing Spread
Percentage of such termination payments to Seller; provided, that (I) prior to the distribution to Purchaser of any termination payments pursuant to clause (A), such termination payments shall be applied first, to the payment to Seller of any
Purchaser Enforcement Expenses then due and payable and then, to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to Section 11.02, and (II) prior to the distribution to Seller of any termination
payments pursuant to clause (B), such termination payments shall be applied first, to the payment of any Seller Enforcement Expenses then due and payable, second, to the payment of any indemnity payments then due and payable to a Purchaser
Indemnitee pursuant to Section 11.01 and third, for deposit to the Current Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Current Spread Reserve Account to equal the Current Spread Reserve Account
Required Amount.
21
(b)
second
, on any Business Day from and including the first Business Day of a
calendar month to but excluding the Distribution Date in such calendar month, at the option of Seller, the Base Servicing Fee payable with respect to a prior Collection Period for the Mortgage Loans to Seller;
(c)
third
, on each Distribution Date, to the extent not previously paid to Seller in accordance with
Section 3.04(b)
,
any accrued and unpaid Base Servicing Fee to Seller;
(d)
fourth
, on each Distribution Date,
pro
rata
,
(A) to Purchaser, any Current Excess Servicing Spread for the prior Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 3.04(a)
); and (B) to Seller, any Retained
Servicing Spread for the prior Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 3.04(a)
);
provided
, that (I) prior to the distribution to Purchaser of any Current
Excess Servicing Spread pursuant to
clause (A)
, the Current Excess Servicing Spread shall be applied
first
, to the payment to Seller of any Purchaser Enforcement Expenses then due and payable and
then
, to the payment of any
indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to Seller of any Retained Servicing Spread pursuant to
clause (B)
, the Retained Servicing Spread shall be
applied
first
, to the payment of any Seller Enforcement Expenses then due and payable,
second
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
third
, for deposit to the Current Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Current Spread Reserve Account to equal the Current Spread Reserve Account Required Amount; and
(e)
fifth
, on each Distribution Date, to Seller, any other amounts remaining on deposit in the Third Party Controlled Current
Spread Custodial Account.
All payments to Purchaser or Seller shall be made by wire transfer of immediately available federal
funds to an account designated by Purchaser or Seller, as applicable.
22
Section 3.05
Withdrawals from the Current Spread Reserve Account
.
On any Business Day, at the instruction of Purchaser, Seller shall direct the Bank to apply funds in the Current Spread Reserve Account,
if any, to the payment of indemnity payments payable to a Purchaser Indemnitee pursuant to
Section 11.01
. If on any Business Day a Current Spread Reserve Account Deposit Event is not then continuing and all outstanding indemnity payments
payable to Purchaser Indemnitees have been paid in full, Seller may direct the Bank to distribute any remaining funds in the Current Spread Reserve Account to, or as directed by, Seller. If there are any funds remaining in the Current Spread Reserve
Account after the Current Excess Servicing Spread and all indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller shall direct the Bank to distribute such remaining funds to, or as directed by, Seller.
Section 3.06
Payment to Seller of Base Servicing Fee
.
Seller shall be entitled to payment of the Base Servicing Fee only to the extent funds are available therefor in the Third Party
Controlled Current Spread Custodial Account in accordance with the Priority of Payments. Under no circumstances shall Purchaser be liable to Seller for payment of the Base Servicing Fee. In the event servicing of the Mortgage Loans is transferred to
sub-servicers for any reason, the servicing fees and expenses of such sub-servicers shall be paid by Seller and in no event will the amount of Servicing Spread Collections or termination payments otherwise allocable to the Current Excess Servicing
Spread be reduced due to the payment of sub-servicing fees and expenses.
Section 3.07
Intent and
Characterization
.
(a) Seller and Purchaser intend that the sale of the Current Excess Servicing Spread pursuant to this
Agreement constitutes a valid sale of such Current Excess Servicing Spread from Seller to Purchaser, conveying good title thereto free and clear of any Lien other than Permitted Liens, and that the beneficial interest in and title to the Current
Excess Servicing Spread not be part of Seller’s estate in the event of the bankruptcy of Seller. Seller and Purchaser intend and agree to treat the transfer and assignment of the Current Excess Servicing Spread as an absolute sale for tax
purposes, and as an absolute and complete conveyance of title for property law purposes. Except for financial accounting purposes, neither party intends the transactions contemplated hereby to be characterized as a loan from Purchaser to Seller.
(b) In the event (but only in the event) that the conveyance of the Current Excess Servicing Spread is characterized by a
court or governmental authority as security for a loan rather than a sale, Seller will be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the
Current Excess Servicing Spread and all proceeds thereof as security for a loan in an amount equal to the Purchase Price.
23
ARTICLE IV
[RESERVED]
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as of the Agreement Date and the Sale Date (or as of the date specified below, as applicable):
Section 5.01
Due Organization and Good Standing
.
Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Seller is qualified to transact business in each jurisdiction in which such qualification is deemed necessary to service the Mortgage Loans. Seller has, in full force and effect (without notice of possible suspension, revocation or impairment), all
required permits, approvals, licenses, and registrations to conduct all activities in all states in which its activities with respect to the Mortgage Loans or the Mortgage Servicing Rights require it to be licensed, registered or approved in order
to service the Mortgage Loans and own the Mortgage Servicing Rights, unless the failure to obtain such permits, approvals, licenses and registrations would not reasonably be expected to have a material adverse effect on Seller’s ability to
perform its obligations under this Agreement or the other Transaction Documents to which it is a party.
Section 5.02
Authority and Capacity
.
Seller has all requisite limited liability company power, authority and capacity, subject to
the approvals required pursuant to
Section 5.03
, to enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery
of this Agreement and each other Transaction Document to which Seller is a party and the consummation of the transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company action.
This Agreement and each other Transaction Document to which it is a party has been duly executed and delivered by Seller. This Agreement constitutes, and each other applicable Transaction Document to which Seller is a party constitutes or will
constitute, a valid and legally binding agreement of Seller enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Seller of this Agreement or such other Transaction Document, except as the
same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
24
Section 5.03
Agency Consents
.
Seller will have obtained the FHLMC Acknowledgment Agreement and all other necessary approvals, agreements and consents, if any, of the
Agency with respect to the Transaction Documents on or prior to the Sale Date.
Section 5.04
Title to the Mortgage
Servicing Rights
.
As of the Sale Date, Seller will be the lawful owner of the Mortgage Servicing Rights, will be
responsible for the maintenance of the Related Escrow Accounts, and will have the sole right and authority to transfer the Current Excess Servicing Spread as contemplated hereby. The transfer, assignment and delivery of the Current Excess Servicing
Spread shall be free and clear of any and all claims, charges, defenses, offsets, Liens and encumbrances of any kind or nature whatsoever other than Permitted Liens.
Section 5.05
Effective Agreements
.
The execution, delivery and
performance of this Agreement and each other Transaction Document that has been executed by Seller, compliance with the terms hereof and thereof and the consummation of the transactions contemplated hereby and thereby did not, and will not, violate,
conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited liability company agreement, any instrument or agreement to which it is a party or by
which it is bound or which affects the Current Excess Servicing Spread, or any state or federal law, rule or regulation or any judicial or administrative decree, order, ruling or regulation applicable to it or to the Current Excess Servicing Spread.
Section 5.06
No Accrued Liabilities
.
There are no accrued liabilities of Seller with respect to the Mortgage Loans or the Mortgage Servicing Rights or circumstances under which such accrued liabilities will arise against Purchaser as
purchaser of the Current Excess Servicing Spread.
Section 5.07
Seller/Servicer Standing
.
Seller is approved by the Agency as a seller/servicer in good standing with the requisite financial criteria and adequate resources to
complete the transactions contemplated hereby on the conditions stated herein. No event has occurred, including but not limited to a change in insurance coverage, which would make Seller unable to comply with the Agency eligibility requirements or
which would require notification to the Agency. Furthermore, if at any time prior to the termination of this Agreement, the Seller is unable to comply with any of the Agency eligibility requirements, it shall immediately notify the Purchaser that it
is no longer an approved seller/servicer of mortgage loans for the Agency.
25
Section 5.08
MERS Membership
.
Seller is a member in good standing under the MERS system.
Section 5.09
Agency Set-off Rights
.
Seller has no actual notice,
including any notice received from the Agency, or any reason to believe, that, other than in the normal course of Seller’s business, any circumstances exist that would result in Seller being liable to the Agency for any amount due by reason of:
(i) any breach of servicing obligations or breach of mortgage selling warranty to the Agency under servicing agreements relating to Seller’s entire servicing portfolio for the Agency (including any unmet mortgage repurchase obligation),
(ii) any unperformed obligation with respect to mortgage loans that Seller is servicing for the Agency under the regular servicing option or other mortgages subject to recourse agreements, (iii) any loss or damage to the Agency by reason
of any inability to transfer to a purchaser of the servicing rights Seller’s selling and servicing representations, warranties and obligations, or (iv) any other unmet obligations to the Agency under a servicing contract relating to
Seller’s entire servicing portfolio with the Agency.
Section 5.10
Ability to Perform; Solvency
.
Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in
this Agreement. Seller is Solvent and the sale of the Current Excess Servicing Spread will not cause Seller to become insolvent. The sale of the Current Excess Servicing Spread is not undertaken to hinder, delay or defraud any of the creditors of
Seller. The consideration received by Seller upon the sale of the Current Excess Servicing Spread constitutes fair consideration and reasonably equivalent value therefor.
Section 5.11
Material Documents
.
Seller has provided Purchaser with
executed copies of all material agreements and documents, and any amendments thereto, relating to Seller’s acquisition of the Mortgage Servicing Rights and the servicing of the Mortgage Loans.
Section 5.12
Obligations with Respect to Origination
.
Seller shall remain liable for all obligations with respect to the origination of each Mortgage Loan and, if applicable, for all
obligations with respect to the sale of such Mortgage Loan to the Agency.
Section 5.13
No Actions
There have not been commenced or, to the best of Seller’s knowledge, threatened, any action, suit or proceeding which will likely
materially and adversely affect the consummation of the transactions contemplated by any Transaction Document.
26
ARTICLE VI
REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE
LOANS AND
SERVICING
As further inducement to Purchaser to enter into this Agreement, Seller represents and warrants to
Purchaser, as of the Agreement Date and the Sale Date (or as of the date specified below, as applicable):
Section 6.01
Servicing Agreements; Applicable Laws.
The originator of the Mortgage Loan and each prior owner of the Mortgage Servicing
Rights has each performed its obligations in all material respects in accordance with the terms of the related Mortgage Note, Mortgage, Servicing Agreements and Applicable Law.
Section 6.02
Related Escrow Accounts
.
All Related Escrow Accounts are being, and have been, maintained in accordance with Applicable Law and in accordance with the Servicing Agreements and the terms of the related Mortgages and other Mortgage
Loan Documents; and, except as to payments which are past due under Mortgage Notes, all balances required by the Mortgages or other Mortgage Loan Documents to be paid to Seller for the account of the Mortgagors are on deposit in the appropriate
Related Escrow Account.
Section 6.03
Accuracy of Servicing Information
.
The information in the Data Tape dated as of November 30, 2012 is true and correct in all material respects as of the date
specified; therein; provided that if there is no date specified in the Data Tape, as of November 30, 2012.
Section 6.04
No Purchaser Responsibility
.
Purchaser shall have no responsibility, liability or other obligation whatsoever under any Servicing Agreement or with respect to any Mortgage Loan, or to make any advance thereunder, or to pay any
servicing fees. Notwithstanding the sale of the Mortgage Servicing Rights for a Mortgage Loan by Bank of America to Seller, based on and subject to the terms of the Tri-Party Agreement, Seller does not retain any obligations to the Agency under the
Servicing Agreements with Agency for Mortgage Loans, including repurchase, indemnification and make-whole obligations, in respect of a breach of the selling representations and warranties in connection with the sale of Mortgage Loans to Agency, or
the failure of Bank of America or prior servicers to comply with the servicing obligations with respect to Mortgage Loans prior to the date on which Seller assumes responsibility for servicing a Mortgage Loan.
27
Section 6.05
Location of Credit Files
.
All of the Mortgage Loan Documents are or upon delivery by Bank of America will be held by Custodians, or if held by the Seller, in the
locations specified in
Exhibit E
, unless temporarily removed for enforcement purposes in the normal course of servicing. Seller will notify Purchaser in writing of any changes in locations of the Mortgage Loan Documents held by the Seller in
Exhibit E
.
Section 6.06
Representations Concerning the Current Excess Servicing Spread
.
(a) Seller has not assigned, pledged, conveyed, or encumbered the Current Excess Servicing Spread to any other Person (other than
Permitted Liens) and immediately prior to the sale of the Current Excess Servicing Spread on the Sale Date, Seller was the sole owner of the Current Excess Servicing Spread and had good and marketable title thereto (subject to the rights of the
Agency under the Servicing Agreements and the Tri-Party Agreement, free and clear of all Liens (other than Permitted Liens), and no Person, other than Purchaser, has any Lien (other than Permitted Liens) on the Current Excess Servicing Spread. No
security agreement, financing statement, equivalent security or lien instrument or continuation statement covering all or any part of the Current Excess Servicing Spread which has been signed by Seller or which Seller has authorized any other Person
to sign or file or record, is on file or of record with any public office, except such as may have been terminated or filed by or on behalf of Purchaser.
(b) The sale and grant of a security interest by Seller to Purchaser of and on the Current Excess Servicing Spread does not and will not violate any Requirement of Law, the effect of which violation is to
render void or voidable such assignment.
(c) As contemplated under
Section 3.07(b)
, upon the filing of financing
statements on Form UCC-1 naming Purchaser as “Secured Party” and Seller as “Debtor”, and describing the Current Excess Servicing Spread, in the jurisdictions and recording offices listed on
Exhibit I
attached hereto, the
sale and security interests granted hereunder in the Current Excess Servicing Spread will constitute perfected first priority security interests under the UCC in all right, title and interest of Purchaser in, to and under the Current Excess
Servicing Spread.
(d) Purchaser has and will continue to have the full right, power and authority to pledge the Current
Excess Servicing Spread, and the Current Excess Servicing Spread may be further assigned without any requirement, in each case, subject only to the Agency’s consent.
(e) Each Servicing Agreement constitutes an Eligible Servicing Agreement.
28
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to
Seller to enter into this Agreement, Purchaser represents and warrants to Purchaser as of the Agreement Date and the Sale Date (or as of the date specified below, as applicable):
Section 7.01
Due Organization and Good Standing
.
Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Purchaser is qualified to transact business in each jurisdiction in
which such qualification is deemed necessary.
Section 7.02
Authority and Capacity
.
Purchaser has all requisite limited liability company power, authority and capacity to enter into this Agreement and each other
Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document to which it is a party and the consummation of the
transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company action. This Agreement constitutes, and each other applicable Transaction Document to which Purchaser is a party
constitutes or will constitute, a valid and legally binding agreement of Purchaser enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Purchaser of this Agreement or such other
Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
Section 7.03
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party by Purchaser, its compliance with the terms hereof and thereof and the consummation of
the transactions contemplated hereby and thereby will not violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited liability company
agreement, any instrument or agreement to which it is a party or by which it is bound, or any state or federal law, rule or regulation or any judicial or administrative decree, order, ruling or regulation applicable to it, in each case which
violation, conflict, breach or requirement would reasonably be expected to have a material adverse effect on Purchaser’s ability to perform its obligations under this Agreement and any other Transaction Document to which it is a party.
29
Section 7.04
Sophisticated Investor
.
Purchaser is a sophisticated investor and its decision to acquire the Current Excess Servicing Spread is based upon Purchaser’s own
independent experience, knowledge, due diligence and evaluation of this transaction. Purchaser has relied solely on such experience, knowledge, due diligence and evaluation and has not relied on any oral or written information provided by Seller
other than the representations and warranties made by Seller herein.
Section 7.05
No Actions
There shall not have been commenced or, to the best of Purchaser’s knowledge, threatened any action, suit or proceeding against the
Purchaser that will likely materially and adversely affect the consummation of the transactions contemplated hereby.
ARTICLE VIII
SELLER COVENANTS
Seller covenants and agrees as follows:
Section 8.01
Servicing Obligations
.
(a) Seller shall (or, prior to the Servicing Transfer Date, shall cause the Interim Servicer to,) pay, perform and discharge all liabilities and obligations relating to the Servicing, including all
liabilities and obligations under the Mortgage Loan Documents, Applicable Law and the Servicing Agreements; and shall pay, perform and discharge all the rights, obligations and duties with respect to the Related Escrow Accounts as required by the
Agency, the Servicing Agreements, the Mortgage Loan Documents, all Applicable Law and in accordance with the Purchase and Sale Agreement.
(b) Under no circumstances shall Purchaser be responsible for the Servicing acts and omissions of Seller or any other servicer or any originator of the Mortgage Loans, or for any servicing related
obligations or liabilities of any servicer in the Servicing Agreements or of any Person under the Mortgage Loan Documents, or for any other obligations or liabilities of Seller or Bank of America.
(c) Upon termination of any Servicing Agreement, Seller shall remain liable to Purchaser and the Agency for all liabilities and
obligations incurred by the servicer or its designee while Seller or its designee was acting as the servicer thereunder.
(d)
Seller shall conduct quality control reviews of its servicing operations in accordance with industry standards and the requirements of the Agency.
30
Section 8.02
Cooperation; Further Assurances
.
Seller shall cooperate with and assist Purchaser, as reasonably requested, in carrying out the purposes of this Agreement. Seller will
cooperate and assist Purchaser, as reasonably requested and at the reasonable expense of Purchaser (except as provided in
Section 12.01
), in obtaining consents from the Agency as may be required or advisable to assign, transfer, deliver,
hypothecate, pledge, subdivide, finance or otherwise deal with the Current Excess Servicing Spread. If Seller is terminated under any Servicing Agreement, Seller shall cooperate fully and at its own expense in transferring such Servicing. If
Purchaser assigns all or any portion of the Current Excess Servicing Spread or its other rights under this Agreement to a Third Party Assignee, Seller will cooperate and assist any Third Party Assignee in drafting and entering into a Third Party
Current Spread Agreement in accordance with
Section 12.16
.
Section 8.03
Financing Statements
.
Seller hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing
statements, in any jurisdictions and with any filing offices as Purchaser may determine, in its sole discretion, are necessary or advisable to perfect the sale of the Current Excess Servicing Spread and the security interests granted to Purchaser in
connection herewith. Seller agrees to execute financing statements in form reasonably acceptable to Purchaser and Seller at the request of Purchaser in order to reflect Purchaser’s interest in the Current Excess Servicing Spread, the Third
Party Controlled Current Spread Custodial Account and the Current Spread Reserve Account.
Section 8.04
Supplemental
Information
.
From time to time after the Sale Date, Seller promptly shall furnish Purchaser such incidental information,
which is reasonably available to Seller, supplemental to the information contained in the documents and schedules delivered pursuant to this Agreement, as may reasonably be requested to monitor performance of the Mortgage Loans and the payment of
the Current Excess Servicing Spread.
Section 8.05
Access to Information
.
From time to time, at such times as are reasonably convenient to Seller, Purchaser or its designees may conduct audits or visit and
inspect (a) any of the Mortgage Loans or places where the Credit Files are located, to examine the Credit Files, internal controls and procedures maintained by Seller and its agents, and take copies and extracts therefrom, and to discuss
Seller’s affairs with its officers, employees and, upon notice to Seller, independent accountants. Seller hereby authorizes such officers, employees and independent accountants to discuss with Purchaser the affairs of Seller and (b) the
Seller’s servicing facilities for the purpose of satisfying the Purchaser that Seller, has the ability to service the Mortgage Loans related to Mortgage Servicing Rights in accordance with the standards set forth in the applicable Servicing
Agreement. Any audit provided for herein will be conducted in accordance with Seller’s rules respecting safety and security on its premises, in accordance with applicable privacy and confidentiality laws and without materially disrupting
operations.
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Section 8.06
Home Affordable Modification Program
.
With respect to any Mortgage Loans that have been modified or that are or will be in a modification trial period as part of the U.S. Department of the
Treasury’s Home Affordable Modification Program (“
HAMP
”) (such Mortgage Loans, the “
HAMP Loans
”), Seller represents and warrants that it will continue to service such HAMP Loan in accordance with the HAMP terms
and will ensure the timely compliance and filing of any appropriate HAMP documentation with the applicable regulator.
Section 8.07
Distribution Date Data Tapes and Reports
.
Seller shall deliver the following to Purchaser two Business Days prior to each Distribution Date:
(a) An Electronic Data File in form and substance acceptable to Purchaser containing, for each Mortgage Loan, principal, interest and
Servicing Spread Collections, and delinquency status (i.e. 30, 60, 90, FCL, REO) as of the last day of the prior Collection Period;
(b) A Summary Activity Report with respect to the Mortgage Loans with respect to the prior Collection Period containing:
(i) aggregate beginning principal balance as of the first and last date of the Collection Period,
(ii) aggregate regular principal collected,
(iii) aggregate noncash principal,
(iv) aggregate interest collected,
(v) aggregate liquidation principal,
(vi) aggregate curtailments,
(vii) liquidations,
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(viii) short sales,
(ix)(1) for each Mortgage Loan, the principal balance, the applicable servicing spread, the final maturity date, the
mortgage interest rate, the loan-to-value ratio and the FICO score, and (2) for each Mortgage Loan that was refinanced by a lender other than Seller or an affiliate thereof, to the extent such information is known to Seller in the ordinary
course of business and the collection and delivery of such information does not impose any additional and undue burden on Seller, the name of such lender and the mortgage interest rate of the newly originated residential mortgage loan;
(c) A Delinquency Report with respect to the Mortgage Loans containing:
(i) The aggregate outstanding principal balance of the Mortgage Loans and percentages of the aggregate outstanding
principal balance of the Mortgage Loans in each of the following categories as of the last day of the prior Collection Period:
(1) Current Mortgage Loans,
(2) 0-29 days delinquent,
(3) 30-59 days delinquent,
(4) 60-89 days delinquent,
(5) 90 days or more delinquent,
(6) Mortgage Loans in
Foreclosure,
(7) Mortgage Loans with respect to which the related Mortgaged Properties have become real
estate owned properties, and
(8) Mortgage Loans in which the Mortgagor is in bankruptcy;
33
(ii) For each of the above categories, a roll report showing the migration
of Mortgage Loans in such category from the last day of the second prior Collection Period;
(d) A Disbursement Report for
such Distribution Date containing:
(i) The Servicing Spread Collections for the prior Collection Period,
(ii) The Base Servicing Fee paid to Seller,
(iii) The amount of the Current Excess Servicing Spread paid to Purchaser,
(iv) The amount of funds, if any, transferred to the Current Spread Reserve Account,
(v) The amount of Purchaser Indemnitees, if any, paid from each of the Third Party Controlled Current Spread Custodial
Account or the Current Spread Reserve Account, and
(vi) The amount of funds paid to Seller from the Current
Spread Reserve Account.
Section 8.08
Financial Statements and Officer’s Certificates
.
(a) If Seller’s financial statements are not filed with the U.S. Securities and Exchange Commission and are not publicly available,
Seller shall deliver to Purchaser copies of Seller’s most recent audited quarterly financial statements within 45 days of the end of each of Seller’s fiscal quarters and its most recent audited annual financial statements within 90 days of
the end of each of Seller’s fiscal years.
(b) Within 45 days of the end of each of Seller’s fiscal quarters, Seller
shall deliver to Purchaser a certificate from a duly authorized officer of Seller certifying (i) whether or not Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any
issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries (and shall provide a calculation of its determination of its Consolidated Tangible Net Worth) and
(ii) whether or not Seller (considered together with its consolidated subsidiaries) is in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
34
Section 8.09
Monthly Management Calls
.
Within five Business Days after each Distribution Date, Seller shall make its management team and other appropriate officers and
employees available to Purchaser to discuss by telephone the performance of the Mortgage Loans and the performance of the parties under the Transaction Documents.
Section 8.10
Timely Payment of Agency Obligations
.
Seller shall pay
all of its obligations to the Agency in a timely manner so as to avoid exercise of any right of set-off by the Agency against Seller.
Section 8.11
Servicing Agreements
.
After the Servicing Transfer
Date, Seller will service the Mortgage Loans in accordance with Accepted Servicing Practices and will perform its obligations in all material respects in accordance with the Servicing Agreements and Applicable Law. In particular, without limitation,
after the Servicing Transfer Date, Seller shall comply with any advancing obligation under the Servicing Agreements. Without the express written consent of Purchaser (which consent may be withheld in its absolute discretion), Seller shall not
(a) cancel, terminate or amend any Mortgage Servicing Rights, (b) expressly provide any required consent to any termination, amendment or modification of any Servicing Agreements either verbally or in writing, (c) expressly provide
any required consent to any termination, amendment or modification of any other servicing agreements or enter into any other agreement or arrangement with the Agency that may be reasonably material to Purchaser either verbally or in writing,
(d) expressly or verbally waive any material default under or breach of any Servicing Agreement by the Agency that may be material to the Purchaser (in Purchaser’s reasonable determination) or (e) take any other action in connection
with any such Servicing Agreement that would impair in any material respect the value of the interests or rights of the Purchaser hereunder. Seller shall conduct its business and perform its obligations under the Servicing Agreements in a manner
such that the Agency will not have cause to terminate any Servicing Agreement. Notwithstanding the foregoing, in no event will the prohibitions contained in this
Section 8.11
apply to any amendments or modifications of the Servicing
Agreements applicable to Mortgage Loans owned by Seller which do not affect the Current Excess Servicing Spread with respect to such Mortgage Loans and are not reasonably material to the Purchaser.
The Seller shall monitor the obligations of the Interim Servicer to service and administer the Mortgage Loans in accordance with the
terms of the Servicing Agreement.
35
Section 8.12
Transfer of Mortgage Servicing Rights
.
If Seller intends to assign, transfer or sell any of its Mortgage Servicing Rights to a replacement servicer, to the extent permitted by
applicable law, (a) Seller shall consult with Purchaser and Purchaser shall participate in the assignment, transfer and sale of such Mortgage Servicing Rights, and (b) Seller shall obtain the written consent of Purchaser, granted by the
Purchaser in its sole discretion, prior to any assignment, transfer or sale thereof.
Section 8.13
Consents to
Transaction Documents
.
Seller shall not terminate, amend, amend and restate, modify or waive any conditions or provisions
of any Transaction Document without the express written consent of Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned.
Section 8.14
Accounts
.
Seller shall inform the Mortgagors of
Mortgage Loans at its own expense to remit their mortgage payments to the Lockbox Account, and any change in such instructions shall only be permitted with the express written consent of Purchaser.
Section 8.15
Notification of Certain Events
.
Seller shall promptly notify Purchaser of any event which, with the passage of time, could reasonably be expected to result in a termination of any servicing agreement between (i) Seller and the
Agency, (ii) Seller and Freddie Mac or (iii) Seller and Ginnie Mae. Seller shall provide Purchaser with copies of any notices from the Agency, Ginnie Mae or Freddie Mac of any breach, potential breach, default or potential default by
Seller under any servicing agreement between Seller and the Agency, Ginnie Mae or Freddie Mac and with copies of any notices from the Agency, Ginnie Mae or Freddie Mac of any termination, potential termination or threatened termination of any
servicing agreement entered into between (i) Seller and the Agency (ii) Seller and Freddie Mac or (iii) Seller and Ginnie Mae. Seller shall promptly forward copies of any material notices received from the Agency or from any
Governmental Authority with respect to the Mortgage Loans. Seller shall provide Purchaser with (a) copies of all amendments to the Transaction Documents, the Servicing Agreements (other than with respect to Mortgage Loans owned by Seller) and
the agreements relating to Seller’s acquisition of the Mortgage Servicing Rights, (b) with respect to Mortgage Loans owned by Seller, copies of all material amendments to the Servicing Agreements, and (c) copies of any other
agreements Seller enters into with the Agency that may be reasonably material to Purchaser, in each case, promptly after execution thereof.
Section 8.16
Financing; Pledge of Current Excess Servicing Spread
.
Seller shall not pledge, obtain financing for, or otherwise permit any Lien of any creditor of Seller to exist on, any portion of the
Servicing Spread Collections without the prior written consent of Purchaser. Seller’s financial statements shall contain footnotes indicating that the Current Excess Servicing Spread has been sold, and Seller does not maintain any ownership
interest therein.
36
Section 8.17
Existence, etc
.
Seller shall:
(a) preserve and maintain its legal existence, good standing and all of its material licenses required to service the Mortgage Loans;
(b) comply with the requirements of all Applicable Laws, rules, regulations and orders of Governmental Authorities (including
truth in lending and real estate settlement procedures) if failure to comply with such requirements could be reasonably likely (either individually or in the aggregate) to have a material adverse effect on its ability to perform its obligations
hereunder or under any other Transaction Document;
(c) keep adequate records and books of account, in which complete entries
will be made in accordance with GAAP consistently applied, and maintain adequate accounts and reserves for all taxes (including income taxes), all depreciation, depletion, obsolescence and amortization of its properties, all contingencies, and all
other reserves;
(d) not move its chief executive office or chief operating office from the addresses referred to in
Exhibit I
unless it shall have provided Purchaser not less than thirty (30) days prior written notice of such change;
(e) pay and discharge all material taxes, assessments and governmental charges or levies imposed on it or its income or profits or on any of its property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained. Seller and its subsidiaries shall file on a timely
basis all federal, and material state and local tax and information returns, reports and any other information statements or schedules required to be filed by or in respect of it;
(f) keep in full force and effect the provisions of its charter documents, by-laws, operating agreements or similar organizational
documents in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Documents;
(g) keep in full force and effect all agreements and instruments by which it or any of its properties may be bound and all applicable decrees, orders and judgments, in each case to the extent reasonably
necessary to perform its obligations hereunder or under any other Transaction Document; and
37
(h) comply with its obligations under the Transaction Documents to which it is a party, and
each other agreement entered into with the Agency.
Section 8.18
Consent to Sub-Servicing
.
Subject to the rights of the Agency and except as contemplated under the Purchase and Sale Agreement with respect to transition services
thereunder, Seller will not permit any Person other than Seller to service or sub-service the Mortgage Loans without the prior written consent of Purchaser, in each case other than (i) the Interim Servicer (prior to the Servicing Transfer Date)
and (ii) third-party vendors customarily employed by servicers in the ordinary course of business in accordance with prudent mortgage servicing practices.
Section 8.19
Nonpetition Covenant
.
Seller shall not, prior to the
date that is one year and one day after the payment in full of the Current Excess Servicing Spread, petition or otherwise invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against Purchaser
under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Purchaser or any substantial part of its property, or ordering the winding up or liquidation of the affairs of
Purchaser.
Section 8.20
Data Tape; Schedule of Mortgage Loans
.
The information in the Data Tape delivered to Purchaser on the Sale Date will be true and correct in all material respects as of the date
specified. Seller shall maintain the Schedule of Mortgage Loans, which shall be updated as of the Sale Date. The information in the Schedule of Mortgage Loans pertaining to the Mortgage Loans and the Mortgage Servicing Rights will be true and
correct in all material respects as of the date specified.
Section 8.21
Insurance
.
The Seller shall maintain (a) general liability insurance, (b) errors and omission insurance or blanket bond coverage and
(c) fidelity bond insurance, in each case, from reputable companies with coverage in amounts customarily maintained by such similarly situated entities in the same jurisdiction and industry as the Seller.
38
Section 8.22
Defense of Title
.
The Seller warrants and will defend the right, title and interest of the Purchaser in and to the Current Excess Servicing Spread against
all adverse claims and demands subject to Permitted Liens.
Section 8.23
Refinancing of Mortgage
Loans
.
Each agreement or arrangement that Seller enters into to purchase Mortgage Servicing Rights shall be entered into
on an arm’s length contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing Rights to be acquired thereby. Seller shall not enter into any agreement or arrangement with a
third party intended to encourage the refinancing of any Mortgage Loan by any Person other than Seller.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser under this Agreement and under the Assignment Agreement are subject to the satisfaction of the following
conditions as of the Sale Date:
Section 9.01
Correctness of Representations and Warranties
.
The representations and warranties made by Seller in this Agreement and each other Transaction Document to which Seller is a party to be
made on or prior to the Sale Date are true and correct in all material respects.
Section 9.02
Compliance with
Conditions
.
All of the terms, covenants, conditions and obligations of this Agreement and each other Transaction Document
required to be complied with and performed by Seller and Bank of America on or prior to the Sale Date shall have been duly complied with and performed in all material respects.
Section 9.03
Corporate Resolution
.
Receipt by the Purchaser of a certified copy of the Seller’s corporate resolution approving the execution and delivery of this Agreement and the other Transaction Documents and the consummation of
the transactions contemplated hereby and thereby, together with such other certificates of incumbency and other evidences of corporate authority as Purchaser or its counsel may reasonably request.
39
Section 9.04
No Material Adverse Change
.
From the Agreement Date, there shall not have been any change to Seller’s financial or operating condition, or in the Mortgage
Servicing Rights, the Mortgage Loans, the Related Escrow Accounts or to Seller’s relationship with, or authority from, the Agency, that in each case will likely materially and adversely affect the consummation of the transactions contemplated
hereby or the Current Excess Servicing Spread.
Section 9.05
Consents
.
Seller shall have obtained all consents, approvals or other requirements of third parties required for the consummation of the
transactions contemplated by the Transaction Documents, including Agency approval as contemplated by
Section 5.03
and the Seller shall have commenced servicing the Mortgage Loans under the applicable Servicing Agreement. All actions of
all Governmental Authorities required to consummate the transactions contemplated by the Transaction Documents and the documents related thereto shall have been obtained or made.
Section 9.06
Delivery of Transaction Documents
.
Seller shall have delivered to the Purchaser copies of each executed Transaction Document that is to be entered into on or prior to such date and each of the items required to be delivered pursuant to
Section 2.04 hereof.
Section 9.07
Certificate of Seller
.
Seller shall have provided Purchaser a certificate, substantially in the form attached hereto as
Exhibit C
, signed by an
authorized officer of Seller dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each of Seller’s representations and warranties made in this Agreement and each other Transaction
Document to which Seller is a party is true and correct in all material respects as of such date; (b) all of the terms, covenants, conditions and obligations of this Agreement and each other Transaction Document to which Seller is a party that
are required to be complied with and performed by Seller at or prior to the Sale Date have been duly complied with and performed in all material respects; (c) the conditions set forth in
Section 9.04
and
Section 9.05
have been satisfied; and (d) as of the Sale Date, Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller,
Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries and, the Seller (considered together with the Seller’s consolidated subsidiaries) is not in default in any indebtedness in excess of $10,000,000 (individually
or in the aggregate).
40
Section 9.08
Valuation
.
Purchaser shall have received an opinion reasonably satisfactory to Purchaser that the Base Servicing Fee of the Mortgage Loans and the
Purchase Price of the Current Excess Servicing Spread is fair and reasonable.
Section 9.09
Opinions of Counsel
.
Seller’s counsel shall have delivered the Opinions of Counsel required pursuant to
Section 2.04(a)(ix)
,
Section 2.04(a)(x)
and
Section 2.04(a)(xi)
.
Section 9.10
Acquisition of Mortgage Servicing
Rights by Seller
.
Seller shall have acquired the Mortgage Servicing Rights and other Purchased Assets from Bank of
America pursuant to the Purchase and Sale Agreement as of the Sale Date.
Section 9.11
Good Standing Certificate of
Seller
.
Seller shall have provided Purchaser a certificate of good standing of Seller, dated as of a date within five
(5) Business Days prior to the Sale Date.
Section 9.12
No Actions or Proceedings
.
No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit
the consummation of, or to invalidate, any of the transactions contemplated by this Agreement and the documents related hereto in any material respect.
Section 9.13
Fees, Costs and Expenses
.
The fees, costs and expenses
payable by the Seller on or prior to the Sale Date pursuant to Section 12.01 hereof and any other Transaction Document shall have been paid.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the satisfaction of the following conditions as of the Sale
Date, as applicable:
41
Section 10.01
Correctness of Representations and Warranties
.
The representations and warranties made by Purchaser in this Agreement to be made on or prior to the Agreement Date or Sale Date, as
applicable, are true and correct in all material respects as of the date thereof.
Section 10.02
Compliance with
Conditions
.
All of the terms, conditions, covenants and obligations of this Agreement required to be complied with and
performed by Purchaser on or prior to the Sale Date shall have been duly complied with and performed in all material respects as of the date thereof.
Section 10.03
Corporate Resolution
.
As of the date hereof, Seller
shall have received from Purchaser a certified copy of its corporate resolution approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, together with such other certificates of incumbency
and other evidences of corporate authority as Seller or its counsel may reasonably request.
Section 10.04
No
Material Adverse Change
.
Since the Agreement Date, there shall not have been any change to Purchaser’s financial
condition that will likely materially and adversely affect the consummation of the transactions contemplated hereby.
Section 10.05
Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate, substantially in the form attached hereto as
Exhibit D
, signed by an authorized officer of Purchaser dated as of such date, applicable to the
transactions contemplated by this Agreement, to the effect that: (a) each of Purchaser’s representations and warranties made in this Agreement is true and correct in all material respects as of such date; (b) all of the terms,
covenants, conditions and obligations of this Agreement required to be complied with and performed by Purchaser at or prior to the Sale Date have been duly complied with and performed in all material respects; and (c) the condition set forth in
Section 10.04
has been satisfied.
Section 10.06
Good Standing Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate of good standing of Purchaser, dated as of a date within five (5) Business Days
prior to the Sale Date.
42
ARTICLE XI
INDEMNIFICATION; CURE
Section 11.01
Indemnification by
Seller
.
(a) Seller shall indemnify, defend and hold Purchaser, its affiliates and its and their respective directors,
managers, officers, employees, agents, representatives and advisors (the “
Purchaser Indemnitees
”) harmless from and shall reimburse the applicable Purchaser Indemnitee for any Losses suffered or incurred by any Purchaser Indemnitee
after the Sale Date which result from:
(i) Any material breach of a representation or warranty by Seller, or
non-fulfillment of any covenant or obligation of Seller, contained in this Agreement or the Assignment Agreement;
(ii) Any servicing act or omission of any prior servicer relating to any Mortgage Loan and any act or omission of any party related to the origination of any Mortgage Loan;
(iii) Any act, error or omission of Seller in servicing any of the Mortgage Loans, including improper action or failure
to act when required to do so;
(iv) Any exercise of any rights of setoff or other netting arrangements by the
Agency against Seller that results in a decrease in Servicing Agreements termination payments due to Seller with respect to the Mortgage Loans from the Agency or in a shortfall of funds to pay the Current Excess Servicing Spread;
(v) Any breach by Seller of the Purchase and Sale Agreement;
(vi) Any termination of Seller by the Agency pursuant to Section 10 of the Servicing Transfer Agreement; and
(vii) Litigation, proceedings, governmental investigations, orders, injunctions or decrees resulting from any
of the items described in Section 11.01(a)(i)-(vi) above;
43
provided
,
however
, that the applicable Purchaser Indemnitee has taken all commercially
reasonable and appropriate actions to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Seller, which such failure of mitigation shall not relieve Seller of its indemnification
obligations in this
Section 11.01
but may affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Purchaser Indemnitee pursuant to any attempt to mitigate any such losses, damages,
deficiencies, claims, causes of action or expenses shall be reimbursed by Seller as part of its indemnification obligations in this
Section 11.01
. Purchaser shall notify Seller promptly after receiving written notice of the assertion of
any litigation, proceedings, governmental investigations, orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third
Party Claim, Seller shall have the right to assume the defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Purchaser Indemnitee, but may not enter into any settlement without the prior written
consent of the applicable Purchaser Indemnitee, which shall not be unreasonably withheld. A Purchaser Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself at its own expense but shall not consent to
the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of Seller, which consent shall not be unreasonably withheld. Any exercise of such rights by a Purchaser Indemnitee shall not
relieve Seller of its obligations and liabilities under this
Section 11.01
or any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Purchaser
Indemnitee shall be required to cooperate in good faith with Seller to ensure the proper and adequate defense of such Third-Party Claim. For the avoidance of doubt, Seller’s obligations for Purchaser Indemnitees shall not be limited to funds
available in the Third Party Controlled Current Spread Custodial Account or the Current Spread Reserve Account.
(b)
REIT
Requirements
. Notwithstanding anything in
Section 11.01(a)
above, in the event that counsel or independent accountants for the Protected REIT determine that there exists a material risk that any amounts due to Purchaser under
ARTICLE XI
hereof would be treated as Nonqualifying Income upon the payment of such amounts to Purchaser, the amount paid to Purchaser pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to
Purchaser in such year without causing the Protected REIT to fail to meet the REIT Requirements for such year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the
Protected REIT. If the amount payable for any tax year under the preceding sentence is less than the amount which Seller would otherwise be obligated to pay to Purchaser pursuant to
ARTICLE XI
of this Agreement (the “
Expense
Amount
”), then: (1) Seller shall place the Expense Amount into an escrow account (the “
Expense Escrow Account
”) using an escrow agent and agreement reasonably acceptable to Purchaser and shall not release any portion
thereof to Purchaser, and Purchaser shall not be entitled to any such amount, unless and until Purchaser delivers to Seller, at the sole option of the Protected REIT, (i) an opinion (an “
Expense Amount Tax Opinion
”) of the
Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a letter (an “
Expense Amount Accountant’s Letter
”) from the Protected REIT’s
independent accountants indicating the maximum amount that can be paid at that time to Purchaser without causing the Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling
44
issued by the IRS to the Protected REIT indicating that the receipt of any Expense Amount hereunder will not cause the Protected REIT to fail to satisfy the REIT Requirements (a “
REIT
Qualification Ruling
” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a “
Release Document
”); and (2) pending the delivery of a Release Document by Purchaser to
Seller, Purchaser shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement (an “
Indemnity Loan Agreement
”) reasonably acceptable to Purchaser that
(i) requires Seller to lend Purchaser immediately available cash proceeds in an amount equal to the Expense Amount (an “
Indemnity Loan
”), and (ii) provides for (A) a commercially reasonable interest rate and
commercially reasonable covenants, taking into account the credit standing and profile of Purchaser or any guarantor of Purchaser, including the Protected REIT, at the time of such Loan, and (B) a 15 year maturity with no periodic amortization.
Section 11.02
Indemnification by Purchaser
.
Purchaser shall indemnify, defend and hold Seller, its affiliates and its and their respective directors, managers, officers, employees,
agents, representatives and advisors (the “
Seller Indemnitees
”) harmless from and shall reimburse the applicable Seller Indemnitee for any Losses suffered or incurred by any Seller Indemnitee which result from:
(a) Any material breach of a representation or warranty by Purchaser, or non-fulfillment of any covenant or obligation of Purchaser
contained in this Agreement; and
(b) Litigation, proceedings, governmental investigations, orders, injunctions or decrees,
the basis for which occurred after the Agreement Date, resulting from any of the items described in
Section 11.02(a)
above;
provided
,
however
, that the applicable Seller Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any such
losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Purchaser, which such failure of mitigation shall not relieve Purchaser of its indemnification obligations in this
Section 11.02
but may
affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Seller Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be
reimbursed by Purchaser as part of its indemnification obligations in this
Section 11.02
. Seller shall notify Purchaser promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations,
orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Purchaser shall have the right to assume the
defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Seller Indemnitee, but may not enter into any settlement without the prior written consent of Purchaser, which shall not be unreasonably
withheld. A Seller Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself but shall not consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the
prior written consent of Purchaser, which consent shall not be unreasonably withheld. Any exercise of such rights by a Seller Indemnitee shall not
45
relieve Purchaser of its obligations and liabilities under this
Section 11.02
or any other provision of this Agreement. With respect to any Third Party Claim subject to
indemnification under this Agreement, the applicable Seller Indemnitee shall be required to cooperate in good faith with Purchaser to ensure the proper and adequate defense of such Third-Party Claim.
Section 11.03
Award of Damages
.
(a)
(i) In the event that an award of damages or other payments
is received by a Party or a designee of a Party as a result of a claim, judgment, settlement or arbitration (including payment pursuant to a guaranty of Bank of America by any other Person) of a legal dispute that occurs either on or after the
execution of the Purchase and Sale Agreement in connection with the enforcement of the Purchase and Sale Agreement in the event of a breach by Bank of America of any representations and warranties or covenants where such breach had an adverse impact
on the value of the Total Servicing Spread, the Current Excess Servicing Spread Percentage of that award shall be distributed to Purchaser or its designee and the remainder of that award shall be distributed to Seller or its designee.
(ii) In the event that an award of damages or other payment is received by a Party or a designee of a Party as a result
of a claim, judgment, settlement or arbitration (including payment pursuant to a guaranty of Bank of America by any other Person) of a legal dispute that occurs either on or after the execution of the Purchase and Sale Agreement in connection with
the enforcement of the Purchase and Sale Agreement in the event of a breach by Bank of America of any representations and warranties or covenants where such breach did not have an adverse impact on the value of the Total Servicing Spread, the
entirety of the award shall be distributed to Seller or its designee.
(b) In the event that a Party or designee of a Party
receives an award pursuant to
Sections 11.03(a)(i) or (ii)
and some or all of that amount is to be distributed to the other Party or a designee of the other Party pursuant to
Sections 11.03(a)(i) or (ii)
, the Party or the
Party’s designee in possession of the applicable amount shall promptly notify the other Party or the other Party’s designee as to the award’s existence and request that the other Party or other Party’s designee, as applicable,
designate an account to which the amount shall be remitted. Once the necessary account information has been provided by the appropriate Party or designee of a Party, the applicable amount shall be remitted by wire transfer of immediately available
federal funds to the account so designated.
(c) Two Business Days prior to each Distribution Date, the Seller shall, provide
Purchaser with a monthly report of all claims and legal disputes made or pending with Bank of America during the prior month, including the amounts of any claims made or resolved during such month.
46
Section 11.04
Other Rights
.
The Seller hereby acknowledges that, in addition to its rights under this Agreement, the Purchaser is entitled to exercise its rights
under the related Owner Consent.
ARTICLE XII
MISCELLANEOUS
Section 12.01
Costs and Expenses
.
Except as otherwise provided herein, Purchaser and Seller shall share the expenses incurred by Seller and Purchaser or their
respective affiliates in connection with the transactions contemplated hereby, with the expense allocation percentage to be mutually agreed upon by the Parties.
Section 12.02
Confidentiality
.
Each Party understands that in
connection with this transaction, it has been furnished and will be furnished Non-Public Personal Information and/or Personally Identifiable Financial Information (as those terms are defined in Sections 573.3(n) and (o) of the Office of Thrift
Supervision Regulations on Privacy of Consumer Information published at 12 C.F.R. Chapter V implementing Title V of the Gramm-Leach-Bliley Act), and other information regarding the policies and plans of the other Party and its affiliates that is and
has been designated as confidential and proprietary, and each Party agrees that it will maintain the confidentiality of such information and will not disclose it to others (except for its affiliates and its and their respective directors, managers,
officers, employees, financing sources, agents, representatives and advisors), or use it except in connection with the proposed acquisition contemplated by this Agreement, without the prior written consent of the Party furnishing such information.
Information which is generally known in the industry concerning a Party or among such Party’s creditors generally or which has been disclosed to the other Party by third parties who have a right to do so shall not be deemed confidential or
proprietary information for these purposes. If Purchaser, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with
the transactions contemplated hereby, Purchaser agrees to provide Seller with prompt notice of such request(s) so that Seller may seek an appropriate protective order and/or waive Purchaser’s compliance with the terms of this
Section 12.02
. If Seller, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with the transactions
contemplated hereby, Seller agrees to provide Purchaser with prompt notice of such request(s) so that Purchaser may
47
seek an appropriate protective order and/or waive Seller’s compliance with the terms of this
Section 12.02
. Notwithstanding the terms of this
Section 12.02
, if, in
the absence of a protective order or the receipt of a waiver hereunder, Purchaser or Seller is nonetheless, in the opinion of its counsel, compelled to disclose information concerning the other Party to any tribunal or else stand liable for contempt
or suffer other censure or penalty, Purchaser or Seller may disclose such information to such tribunal without liability hereunder. If the proposed acquisition is not consummated, each Party agrees to promptly return to the other, promptly upon
request, all confidential materials, and all copies thereof, which have been furnished to it in connection with the transactions contemplated hereby. For the avoidance of doubt, either Party may provide its shareholders and creditors with a general
description of this Agreement and any related transactions, and, subject to the provisions of this
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.03
Broker’s Fees
.
Each party hereto represents and warrants to the other that it has made no agreement to pay any finder’s, agent’s, broker’s or originator’s fee arising out of or in connection with the
subject matter of this Agreement. In the event Purchaser has entered or enters into an agreement to pay any finder’s, agent’s, broker’s, advisor’s or originator’s fee arising out of or in connection with the subject matter
of this Agreement, Purchaser shall be solely responsible for all such fees. The parties hereto shall indemnify and hold each other harmless from and against any such obligation or liability and any expense incurred in investigating or defending
(including reasonable attorneys’ fees) any claim based upon the other party’s actions in connection with such obligation.
Section 12.04
Relationship of Parties
.
The Parties intend that the
transactions contemplated in the Transaction Documents constitute arms-length transactions among third parties. Nothing contained in the Transaction Documents will establish any fiduciary, partnership, joint venture or similar relationship between
or among the Parties except to the extent otherwise expressly stated therein.
Section 12.05
Survival of
Representations and Warranties
.
Each party hereto covenants and agrees that the representations and warranties in this
Agreement, and in any document delivered or to be delivered pursuant hereto, shall survive the Agreement Date.
Section 12.06
Notices
.
All notices, requests, demands and other communications which are required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given if personally delivered
or sent by registered or certified mail, return receipt requested, postage prepaid or by prepaid overnight delivery service:
48
(a) If to Purchaser, to:
Fortress Investment Group LLC
1345 Avenue of the Americas
New York, NY 10105
Attn: Brian Sigman
Chief Financial Officer
(212) 479-5343
(b) If to Seller, to:
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attn: Amar Patel
or to such other address as Purchaser or Seller shall have
specified in writing to the other.
Section 12.07
Waivers
.
Either Purchaser or Seller may, by written notice to the other:
(a) Extend the time for the performance of any of the obligations or other transactions of the other; and
(b) Waive compliance with or performance of any of the terms, conditions, covenants or obligations required to be complied with or performed by the other hereunder.
The waiver by Purchaser or Seller of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any
other subsequent breach.
Section 12.08
Entire Agreement; Amendment
.
This Agreement and the related Transaction Documents constitute the entire agreement between the parties with respect to the transactions
contemplated hereby and supersede all prior agreements with respect thereto. This Agreement may be amended only in a written instrument signed by both Seller and Purchaser.
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Section 12.09
Binding Effect
.
This Agreement shall inure to the benefit of and be binding upon the Parties and their successors and assigns. Nothing in this Agreement,
express or implied, is intended to confer on any Person other than the Parties and their successors and assigns, any rights, obligations, remedies or liabilities.
Section 12.10
Headings
.
Headings on the Articles and Sections in
this Agreement are for reference purposes only and shall not be deemed to have any substantive effect.
Section 12.11
Applicable Law
.
This Agreement shall be 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 the laws of the State of New York, except to the extent preempted by Federal law. This Agreement shall constitute a security agreement under the laws of
the State of New York. In addition to any other rights available under this Agreement or otherwise available at law or in equity but subject to the terms hereof, Purchaser shall have all rights and remedies of a secured party with respect to the
Collateral under the laws of the State of New York and under any other applicable law to enforce the assignments and security interests contained herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of
applicable law and the terms of this Agreement, to sell or apply any rights and other interests with respect to the Collateral assigned or pledged hereby in accordance with the terms hereof at public and private sale in accordance with the terms of
this Agreement. The parties agree to waive trial by jury in the event of any dispute under this Agreement.
Section 12.12
Incorporation of Exhibits
.
The Exhibits attached hereto shall be incorporated herein and shall be understood to be a part hereof as though included in the body of this Agreement.
Section 12.13
Counterparts
.
This Agreement may be executed in counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which, taken together, shall constitute one and the same
agreement.
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Section 12.14
Severability of Provisions
.
If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid,
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 or enforceability of the other provisions of this
Agreement or of the rights of the parties hereto.
Section 12.15
Public Announcement
.
No public release or statement concerning the subject matter of this Agreement shall be made by either party without the express written
consent and approval of the other party, except as required by law or stock exchange rule, and provided that on and after the Agreement Date, either party may provide its shareholders and creditors with a general description of this Agreement and
any related transactions, and, subject to the provisions of
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.16
Assignment
.
(a) Seller may not assign, transfer, sell or subcontract all or any part of this Agreement, any interest herein, or any of the Seller’s interest in the Servicing Spread Collections, other than the
interest in the Total Servicing Spread sold hereby, without the prior written consent of Purchaser,
provided
that any successor to Seller must assume Seller’s obligations under this Agreement. Purchaser shall have the unrestricted right
to further assign, transfer, deliver, hypothecate, pledge, subdivide or otherwise deal with its rights under this Agreement on whatever terms Purchaser shall determine without the consent of Seller; including the right to assign all or any portion
of the Current Excess Servicing Spread and to assign the related rights under this Agreement. If Purchaser assigns any rights under this Agreement to a third party (a “
Third Party Assignment
”), such third party (a “
Third
Party Assignee
”) shall enter into a new agreement (a “
Third Party Current Spread Agreement
”) with Seller or Seller’s assignee that provides such Third Party Assignee with the same rights with respect to the Current
Excess Servicing Spread that Purchaser would have had under this Agreement if the Third Party Assignment had not occurred.
(b) Seller shall maintain a register on which it enters the name and address of each holder of the Current Excess Servicing Spread and
each holder’s interest in the Current Excess Servicing Spread (the “
Holder Register
”) for each transaction described in Section 12.16(a). The entries in the Holder Register shall be conclusive absent manifest error, and
Seller shall treat each Person whose name is recorded in the Holder Register as an owner of the Current Excess Servicing Spread for all purposes of this Agreement notwithstanding any notice to the contrary.
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Section 12.17
Termination
.
If all necessary Owner Consents are not received by the Sale Date, or if the Purchase and Sale Agreement is terminated, this Agreement
shall be terminated concurrently therewith, without any further action of either Party. In the event this agreement is terminated as set forth in the prior sentence or in Section 8.13, neither Party shall have any further obligations to the
other Party hereunder except as expressly set forth herein. If all conditions to Purchaser’s or Seller’s obligations to close set forth in Article IX and Article X, respectively, are not satisfied on the Sale Date, Purchaser or Seller, as
applicable based on the condition or conditions not satisfied, may terminate this agreement by written notice to the other party, and neither party shall have any further obligations to the other party hereunder, except as expressly set forth
herein.
Section 12.18
Third Party Beneficiaries
.
This Agreement does not and is not intended to confer any rights or remedies upon any person or entity other than Purchaser and Seller,
except as provided in
Section 11.01
and in
Section 11.02
, provided that Purchaser and Seller reserve the right to modify any term of, or terminate, this Agreement, without the consent of any Purchaser Indemnitee or Seller
Indemnitee.
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IN WITNESS WHEREOF, each of the undersigned parties to this Agreement has caused this
Agreement to be duly executed in its corporate name by one of its duly authorized officers, all as of the date first above written.
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MSR X LLC
Purchaser
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By:
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/s/ Brian Sigman
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Name:
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Brian Sigman
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Title:
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Chief Financial Officer
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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/s/ Amar Patel
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Name:
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Amar Patel
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Title:
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Executive Vice President
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EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT FOR MORTGAGE LOANS
Subject to, and upon the terms and conditions of the Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, dated as of January 6, 2013 (the “
Agreement
”), by
and between Nationstar Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) and MSR X LLC, a Delaware limited liability company (together with its successors assigns, the
“
Purchaser
”), as may be amended, restated, or otherwise modified and in effect from time to time, Seller hereby assigns, transfers and delivers to Purchaser all of Seller’s right, title and interest in and to Current Excess
Servicing Spread for each of the Mortgage Loans set forth in Annex A attached hereto and all proceeds thereof, and agrees that as of the Sale Date, the applicable Mortgage Loan shall be deemed to be a “Mortgage Loan” for all purposes of
the Agreement. Capitalized terms used in this Assignment Agreement have the meanings given to such terms in, or incorporated by reference into, the Agreement.
In the event (but only in the event) that the conveyance of the Current Excess Servicing Spread is characterized by a court or governmental authority as security for a loan rather than a sale, Seller will
be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Current Excess Servicing Spread and all proceeds thereof as security for a loan in an
amount of the Purchase Price..
All of the terms, covenants, conditions and obligations of the Agreement required to be
complied with and performed by Seller on or prior to the date hereof have been duly complied with and performed in all material respects.
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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Name:
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Title:
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54
Annex A
[ATTACH ANNEX A, WHICH MAY BE ON COMPUTER TAPE, COMPACT DISK, OR
MICROFICHE, CONTAINING THE INFORMATION SET FORTH BELOW]
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
(column (d) –
column
(e))
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(g)
([ ]% of column
(f))
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Sale Date
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Loan # of
Mortgage
Loan
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Principal
Balance of
Mortgage
Loan
as of the
Sale Date
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Servicing
Spread
Rate
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Base Servicing
Fee Rate
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Net Servicing
Spread Rate
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Current Excess
Servicing Spread
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EXHIBIT B
SCHEDULE OF MORTGAGE LOANS
[SEPARATELY DELIVERED]
1vi
EXHIBIT C
SELLER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, a [Vice President] of Nationstar Mortgage LLC (the “
Company
”), pursuant to
Section 9.07
of the
Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans by and between MSR X LLC and the Company, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material respects as of
the date hereof;
(ii) All of the terms, covenants, conditions and obligations of the Agreement required to be complied with
and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects;
(iii) The conditions set forth in
Sections 9.04
and
9.05
of the Agreement have been satisfied; and
(iv) As of the date hereof, the Company has a Consolidated Tangible Net Worth (as defined in the Agreement) of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance
of equity on or after the date of the Agreement by the Company, Nationstar Mortgage Holdings Inc. or any of the Company’s consolidated subsidiaries, and the Company (considered together with its consolidated subsidiaries) is not in default in
any indebtedness in excess of $10,000,000 (individually or in the aggregate).
IN WITNESS WHEREOF, the undersigned has
executed this Certificate as of [ ]
1vii
EXHIBIT D
PURCHASER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, [POSITION] of
[ ], the sole member of MSR X LLC (the “
Company
”), pursuant to
Section 10.05
of the Current Excess
Servicing Spread Acquisition Agreement for FNMA Mortgage Loans by and between the Company and Nationstar Mortgage LLC, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material respects as of
the date hereof; and
(ii) All of the terms, covenants, conditions and obligations of the Agreement required to be complied
with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects; and
(iii) All conditions set forth in
Section 10.04
have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
[ ].
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MSR X LLC
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By: [ ], as member
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By:
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EXHIBIT E
LOCATION OF CREDIT FILES
350 Highland Drive
Lewisville, Texas 75067
EXHIBIT F
FORM OF SUMMARY REMITTANCE REPORT
[DELIVERED SEPARATELY]
EXHIBIT G
FORM OF DELINQUENCY REPORT
[DELIVERED SEPARATELY]
EXHIBIT H
FORM OF DISBURSEMENT REPORT
[DELIVERED SEPARATELY]
EXHIBIT I
SELLER JURISDICTIONS AND RECORDING OFFICES
Chief Executive Office:
350 Highland Drive
Lewisville, Texas 75067
Recording Office:
Secretary of
State, State of Delaware
Exhibit 10.51
FUTURE SPREAD AGREEMENT FOR GNMA MORTGAGE LOANS
by and between
NATIONSTAR MORTGAGE LLC
(Seller)
and
MSR XI LLC
(Purchaser)
Dated and effective as of January 6, 2013
Table of Contents
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ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
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1
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Section 1.01
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Definitions
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1
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Section 1.02
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General Interpretive Principles
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12
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ARTICLE II ITEMS TO BE DELIVERED
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12
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Section 2.01
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Items to be Delivered
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12
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Section 2.02
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Grant of Security Interest
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14
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ARTICLE III REPLACEMENT OF MORTGAGE LOANS
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14
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Section 3.01
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Refinancing and Substitution of Mortgage Loans
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14
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Section 3.02
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Criteria for Mortgage Loans
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14
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Section 3.03
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[Reserved]
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16
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Section 3.04
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Selection Procedures
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16
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Section 3.05
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Assignment of Future Excess Servicing Spread
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17
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ARTICLE IV PAYMENTS AND DISTRIBUTIONS
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17
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Section 4.01
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Purchase Price
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17
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Section 4.02
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Payments by Purchaser
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17
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Section 4.03
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Accounts
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18
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Section 4.04
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Priority of Payments
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20
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Section 4.05
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Withdrawals from the Future Spread Reserve Account
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21
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Section 4.06
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Payment to Seller of Base Servicing Fee
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21
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Section 4.07
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Correction of Principal Balance Error
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22
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Section 4.08
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Intent and Characterization
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22
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER
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22
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Section 5.01
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Due Organization and Good Standing
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23
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Section 5.02
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Authority and Capacity
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23
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|
Section 5.03
|
|
Owner Consents
|
|
|
23
|
|
|
Section 5.04
|
|
Title to the Mortgage Servicing Rights
|
|
|
23
|
|
|
Section 5.05
|
|
Effective Agreements
|
|
|
24
|
|
|
Section 5.06
|
|
No Accrued Liabilities
|
|
|
24
|
|
|
Section 5.07
|
|
Seller/Servicer Standing
|
|
|
24
|
|
|
Section 5.08
|
|
MERS Membership
|
|
|
24
|
|
|
Section 5.09
|
|
Owner Set-off Rights
|
|
|
24
|
|
|
Section 5.10
|
|
Ability to Perform; Solvency
|
|
|
25
|
|
|
Section 5.11
|
|
Obligations with Respect to Origination
|
|
|
25
|
|
|
Section 5.12
|
|
Purchase of Mortgage Servicing Rights
|
|
|
25
|
|
|
Section 5.13
|
|
No Actions
|
|
|
25
|
|
i
|
|
|
|
|
|
|
|
|
ARTICLE VI REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE LOANS AND SERVICING
|
|
|
25
|
|
|
Section 6.01
|
|
Servicing Agreements; Applicable Laws
|
|
|
25
|
|
|
Section 6.02
|
|
Related Escrow Accounts
|
|
|
26
|
|
|
Section 6.03
|
|
No Purchaser Responsibility
|
|
|
26
|
|
|
Section 6.04
|
|
Location of Credit Files
|
|
|
26
|
|
|
Section 6.05
|
|
Representations Concerning the Future Excess Servicing Spread
|
|
|
26
|
|
|
|
|
|
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER
|
|
|
27
|
|
|
Section 7.01
|
|
Due Organization and Good Standing
|
|
|
27
|
|
|
Section 7.02
|
|
Authority and Capacity
|
|
|
27
|
|
|
Section 7.03
|
|
Effective Agreements
|
|
|
27
|
|
|
Section 7.04
|
|
Sophisticated Investor
|
|
|
28
|
|
|
Section 7.05
|
|
No Actions
|
|
|
28
|
|
|
|
|
|
ARTICLE VIII SELLER COVENANTS
|
|
|
28
|
|
|
Section 8.01
|
|
Servicing Obligations
|
|
|
28
|
|
|
Section 8.02
|
|
Cooperation; Further Assurances
|
|
|
29
|
|
|
Section 8.03
|
|
Financing Statements
|
|
|
29
|
|
|
Section 8.04
|
|
Supplemental Information
|
|
|
29
|
|
|
Section 8.05
|
|
Access to Information
|
|
|
29
|
|
|
Section 8.06
|
|
Home Affordable Modification Program
|
|
|
30
|
|
|
Section 8.07
|
|
Distribution Date Data Tapes and Reports
|
|
|
30
|
|
|
Section 8.08
|
|
Financial Statements and Officer’s Certificates
|
|
|
32
|
|
|
Section 8.09
|
|
Monthly Management Calls
|
|
|
32
|
|
|
Section 8.10
|
|
Timely Payment of Owner Obligations
|
|
|
32
|
|
|
Section 8.11
|
|
Servicing Agreements
|
|
|
33
|
|
|
Section 8.12
|
|
Transfer of Mortgage Servicing Rights
|
|
|
33
|
|
|
Section 8.13
|
|
Consents to Transaction Documents
|
|
|
33
|
|
|
Section 8.14
|
|
Accounts
|
|
|
33
|
|
|
Section 8.15
|
|
Notification of Certain Events
|
|
|
34
|
|
|
Section 8.16
|
|
Financing; Pledge of Future Excess Servicing Spread
|
|
|
34
|
|
|
Section 8.17
|
|
Existence, etc
|
|
|
34
|
|
|
Section 8.18
|
|
Consent to Sub-Servicing
|
|
|
35
|
|
|
Section 8.19
|
|
Nonpetition Covenant
|
|
|
35
|
|
|
Section 8.20
|
|
Schedule of Mortgage Loans
|
|
|
35
|
|
|
Section 8.21
|
|
True Sale Opinion
|
|
|
36
|
|
|
Section 8.22
|
|
Valuation
|
|
|
36
|
|
|
Section 8.23
|
|
Material Documents
|
|
|
36
|
|
|
Section 8.24
|
|
Insurance
|
|
|
36
|
|
|
Section 8.25
|
|
Defense of Title
|
|
|
36
|
|
|
Section 8.26
|
|
Refinancing of Mortgage Loans
|
|
|
36
|
|
ii
|
|
|
|
|
|
|
|
|
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
|
|
|
37
|
|
|
Section 9.01
|
|
Correctness of Representations and Warranties
|
|
|
37
|
|
|
Section 9.02
|
|
Compliance with Conditions
|
|
|
37
|
|
|
Section 9.03
|
|
Corporate Resolution
|
|
|
37
|
|
|
Section 9.04
|
|
No Material Adverse Change
|
|
|
37
|
|
|
Section 9.05
|
|
Consents
|
|
|
37
|
|
|
Section 9.06
|
|
Delivery of Transaction Documents
|
|
|
38
|
|
|
Section 9.07
|
|
Certificate of Seller
|
|
|
38
|
|
|
Section 9.08
|
|
Opinions of Counsel
|
|
|
38
|
|
|
Section 9.09
|
|
Good Standing Certificate of Seller
|
|
|
38
|
|
|
Section 9.10
|
|
No Actions or Proceedings
|
|
|
38
|
|
|
|
|
|
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
|
|
|
38
|
|
|
Section 10.01
|
|
Correctness of Representations and Warranties
|
|
|
39
|
|
|
Section 10.02
|
|
Compliance with Conditions
|
|
|
39
|
|
|
Section 10.03
|
|
Corporate Resolution
|
|
|
39
|
|
|
Section 10.04
|
|
No Material Adverse Change
|
|
|
39
|
|
|
Section 10.05
|
|
Certificate of Purchaser
|
|
|
39
|
|
|
Section 10.06
|
|
Good Standing Certificate of Purchaser
|
|
|
39
|
|
|
|
|
|
ARTICLE XI INDEMNIFICATION
|
|
|
39
|
|
|
Section 11.01
|
|
Indemnification by Seller
|
|
|
39
|
|
|
Section 11.02
|
|
Indemnification by Purchaser
|
|
|
42
|
|
|
Section 11.03
|
|
Other Rights
|
|
|
42
|
|
|
|
|
|
ARTICLE XII MISCELLANEOUS
|
|
|
42
|
|
|
Section 12.01
|
|
Costs and Expenses
|
|
|
42
|
|
|
Section 12.02
|
|
Confidentiality
|
|
|
42
|
|
|
Section 12.03
|
|
Broker’s Fees
|
|
|
43
|
|
|
Section 12.04
|
|
Relationship of Parties
|
|
|
44
|
|
|
Section 12.05
|
|
Survival of Representations and Warranties
|
|
|
44
|
|
|
Section 12.06
|
|
Notices
|
|
|
44
|
|
|
Section 12.07
|
|
Waivers
|
|
|
44
|
|
|
Section 12.08
|
|
Entire Agreement; Amendment
|
|
|
45
|
|
|
Section 12.09
|
|
Binding Effect
|
|
|
45
|
|
|
Section 12.10
|
|
Headings
|
|
|
45
|
|
|
Section 12.11
|
|
Applicable Law
|
|
|
45
|
|
|
Section 12.12
|
|
Incorporation of Exhibits
|
|
|
45
|
|
|
Section 12.13
|
|
Counterparts
|
|
|
46
|
|
|
Section 12.14
|
|
Severability of Provisions
|
|
|
46
|
|
|
Section 12.15
|
|
Assignment
|
|
|
46
|
|
|
Section 12.16
|
|
Termination
|
|
|
46
|
|
|
Section 12.17
|
|
Third Party Beneficiaries
|
|
|
47
|
|
iii
EXHIBITS
Exhibit A – Form of Assignment Agreement Annex A
Exhibit B – [RESERVED]
Exhibit C – Schedule of Mortgage Loans
Exhibit D – Seller’s Officer’s Certificate
Exhibit E – Purchaser’s Officer’s Certificate
Exhibit F – Location of Credit
Files
Exhibit G – Form of Summary Remittance Report
Exhibit H – Form of Delinquency Report
Exhibit I – Form of Disbursement Report
Exhibit J – Seller Jurisdictions and Recording Offices
iv
FUTURE SPREAD AGREEMENT FOR GNMA MORTGAGE LOANS
This FUTURE SPREAD AGREEMENT FOR GNMA MORTGAGE LOANS (as amended, restated, or otherwise modified and in effect from time to time, this
“
Agreement
”), dated as of January 6, 2013 (the “
Agreement Date
”), is by and between MSR XI LLC, a Delaware limited liability company (together with its successors and assigns, the “
Purchaser
”),
and Nationstar Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) (the Purchaser and the Seller will collectively be referred to as the “
Parties
” and each, a
“
Party
”).
W I T N E S S E T H:
WHEREAS
, Seller and Purchaser have entered into the Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans,
dated as of the date hereof (as amended, restated, or otherwise modified and in effect, the “
Current Spread Agreement
”), pursuant to which Purchaser will purchase and assume all right, title and interest in the excess servicing
spread with respect to a pool of residential mortgage loans to be serviced by Seller;
WHEREAS
, Seller desires to
retain the right to refinance the residential mortgage loans in the pool, and Purchaser is willing to grant such right, as long as the excess servicing spread with respect to the newly-originated residential mortgage loans and replacement
residential mortgage loans is assigned to the Purchaser as described herein; and
WHEREAS
, Purchaser and Seller desire
to set forth the terms and conditions pursuant to which residential mortgage loans in the pool may be refinanced.
NOW,
THEREFORE
, in consideration of the mutual promises, covenants and conditions and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and upon the terms and subject to the conditions set forth
herein, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
Section 1.01
Definitions
.
Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have the following meanings:
Accepted Servicing
Practices
: With respect to any Mortgage Loan, those accepted and prudent mortgage servicing practices (including collection procedures) which are in accordance with the servicing practices and procedures as set forth in the applicable Servicing
Agreements, and in a manner at least equal in quality to the servicing that Seller provides to mortgage loans which it owns in its own portfolio.
1
Agency
: The entity formerly known as the Federal Home Loan Mortgage Corporation, or
any successor thereto, the Federal National Mortgage Association, or any successor thereto, the Government National Mortgage Association, or any successor thereto, the Federal Housing Administration of the United States Department of Housing and
Urban Development, or any successor thereto, the Department of Veterans Affairs, or any successor thereto.
Agreement
:
As defined in the preamble hereof.
Agreement Date
: As defined in the preamble hereof.
Ancillary Income
: All incidental servicing fees (such as late fees, assignment transfer fees, returned check fees, special
services fees, amortization schedule fees, HAMP fees, modification and incentive income and any interest or earnings on funds deposited in an account maintained by the Seller as servicer with respect to the Mortgage Loans, etc.) that are
supplemental to the servicing spread payable to the servicer pursuant to the Servicing Agreements.
Applicable Law
:
With reference to any Person, all laws (including common law), statutes, regulations, ordinances, treaties, judgments, decrees, injunctions, writs and orders of any court, governmental agency or authority and rules, regulations, orders, directives,
licenses and permits of any Governmental Authority applicable to such Person or its property or in respect of its operations.
Assignment Agreement
: An assignment agreement substantially in the form of
Exhibit A
to this Agreement or in such other
form as mutually agreed upon by the Parties.
Assignment Date
: With respect to a Refinanced Mortgage Loan and its
related Mortgage Loan, the Distribution Date in the third calendar month following the Refinanced Mortgage Loan’s Refinancing Date.
Bank
: Wells Fargo Bank, National Association, or another financial institution mutually agreed upon by the Parties or any successor thereto, each in its capacity as “Bank” under the
Future Spread Custodial Account Control Agreement or the Future Spread Reserve Account Control Agreement, as applicable, or any third party custodian or trustee in similar capacity under any replacement account control agreements.
Base Servicing Fee
: With respect to a Collection Period, an amount equal to the product of (A) the aggregate outstanding
principal balance of the Mortgage Loans as of the related Measurement Date, (B) the Base Servicing Fee Rate and (C) (i) in the case of the initial Collection Period, a fraction, the numerator of which is the number of days in the
period from and including the Sale Date to and including the last day of the initial Collection Period, and the denominator of which is 360, and (ii) in the case of all other Collection Periods, 1/12;
provided
that the Base Servicing Fee
with respect to any Mortgage Loan whose Servicing Agreement is terminated during a Collection Period shall be pro-rated to the actual number of days within such Collection Period in which such Mortgage Loan was serviced by Seller.
2
Base Servicing Fee Rate
: With respect to the Mortgage Loans (other than GNMA Mortgage
Loans), 0.06% per annum and with respect to GNMA Mortgage Loans, 0.12% per annum.
Business Day
: Any day
other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the States of Texas or New York are authorized or obligated by law or by executive order to be closed or (c) such other days as agreed upon by the
Parties.
Code
: The Internal Revenue Code of 1986, as amended from time to time.
Collateral
: As defined in
Section 2.02
hereof.
Collection Period
: With respect to any Distribution Date, the calendar month preceding the month in which such Distribution Date
occurs.
Consolidated Tangible Net Worth
: (i) The net worth of Seller and its consolidated subsidiaries, on a
combined basis, determined in accordance with GAAP,
minus
(ii) all intangibles determined in accordance with GAAP (including goodwill, capitalized financing costs and capitalized administration costs but excluding originated and
purchased mortgage servicing rights or retained residual securities) and any and all advances to, investments in and receivables held from affiliates;
provided
,
however
, that the non-cash effect (gain or loss) of any mark-to-market
adjustments made directly to stockholders’ equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the
calculation of Consolidated Tangible Net Worth.
Control
: The meaning specified in Section 8-106 of the UCC.
Credit File
: Those documents, which may be originals, copies or electronically imaged, pertaining to each Mortgage
Loan, held by or on behalf of Seller in connection with the servicing of the Mortgage Loan, which may include Mortgage Loan Documents and the credit documentation relating to the origination of such Mortgage Loan, and any documents gathered during
the servicing of a Mortgage Loan.
Current Mortgage Loan
: A residential mortgage loan that is a “Mortgage
Loan” under the Current Spread Agreement.
Current Spread Agreement
: As defined in the recitals to this Agreement.
Custodian
: A custodian of Credit Files or any part thereof as identified by the Seller to the Purchaser in writing on
or prior to the first Assignment Date as the same may be amended and supplemented from time to time by the Seller by providing a written notice of any such update to the Purchaser.
Distribution Date
: The 10th day of each calendar month, or if such day is not a Business Day, the prior Business Day, beginning in
the month following the first Assignment Date, or such other day as mutually agreed upon by Seller and Purchaser.
3
Electronic Data File
: A computer tape or other electronic medium generated by or on
behalf of Seller and delivered or transmitted to or on behalf of Purchaser which provides information relating to the Mortgage Loans.
Eligible Servicing Agreement
: Unless otherwise agreed to by the Purchaser, a Servicing Agreement in respect of which the following eligibility requirements have been satisfied:
(a) The Owner Consents relating to such Servicing Agreement have been obtained;
(b) such Servicing Agreement is in full force and effect, and is in all respects genuine as appearing on its face or as represented in the
books and records of Seller, and no event of default, early amortization event, termination event, or other event giving any party thereto (including with notice or lapse of time or both) the right to terminate Seller as servicer thereunder for
cause has occurred and is continuing; provided, however, that with respect to any Servicing Agreement and the occurrence of any event set forth in this clause (b) which is based on a breach of a collateral performance test, such Servicing
Agreement shall remain an Eligible Servicing Agreement so long as no notice of termination based on such breach has been given or threatened in writing and subject to the restrictions set forth herein;
(c) Seller has not resigned or been terminated as servicer under such Servicing Agreement and has no actual knowledge of any pending or
threatened action to terminate Seller, as servicer (whether for cause or without cause); and
(d) with respect to any Servicing
Agreement relating to Non-Agency Mortgage Loans, an agreement pursuant to which Seller as servicer may not be terminated without cause pursuant to such Servicing Agreement or if the Seller as servicer may be terminated without cause, upon payment of
a termination fee.
Entitlement Holder
: The meaning specified in Section 8-102(a)(7) of the UCC.
Expense Amount
: As defined in
Section 11.01(b)
hereof.
Expense Amount Accountant’s Letter: As defined in Section 11.01(b) hereof.
Expense Amount Tax Opinion
: As defined in
Section 11.01(b)
hereof.
Expense Escrow Account
: As defined in
Section 11.01(b)
hereof.
Fannie Mae
: Federal National Mortgage Association, or any successor thereto.
Freddie Mac
: Federal Home Loan Mortgage Corporation, or any successor thereto.
FHLMC Acknowledgment Agreement
: The acknowledgment agreement by and among the entity formerly known as the Federal Home Loan
Mortgage Corporation, or any successor thereto, Seller and MSR IX LLC, in form and substance reasonably acceptable to MSR IX LLC, dated on or before the Sale Date, pursuant to which the entity formerly known as the Federal Home Loan Mortgage
Corporation, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
4
FNMA Acknowledgment Agreement
: The acknowledgment agreement by and among the Federal
National Mortgage Association, or any successor thereto, Seller and MSR X LLC, in form and substance reasonably acceptable to MSR X LLC, dated on or before the Sale Date, pursuant to which the Federal National Mortgage Association, or any successor
thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
Future Excess
Servicing Spread
: The rights of Seller, severable from each (and all) of the other rights under the applicable Servicing Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to the Future Excess Servicing Spread
Percentage.
Future Excess Servicing Spread Assignment Obligation
: As defined in
Section 3.01
hereof.
Future Excess Servicing Spread Percentage
: A percentage equal to the Current Excess Servicing Spread Percentage in the
Current Spread Agreement.
Future Excess Servicing Spread Rights
: As defined in
Section 3.01
hereof.
Future Spread Custodial Account Agreement
: The applicable deposit account agreement and other related account
documentation governing the Third Party Controlled Future Spread Custodial Account.
Future Spread Custodial Account
Control Agreement
: The account control agreement among Seller, Purchaser and Wells Fargo Bank, National Association, or any successor thereto, or any other institution agreed upon by the Parties, as Bank, dated as of the Sale Date, entered into
with respect to the Third Party Controlled Future Spread Custodial Account, as amended, restated, supplemented or otherwise modified from time to time.
Future Spread Reserve Account
: The account specified in the Future Spread Reserve Account Control Agreement and maintained by Wells Fargo Bank, National Association, or any successor thereto, or
another third party custodian or trustee selected by Purchaser.
Future Spread Reserve Account Agreement
: The
applicable deposit account agreement and other related account documentation governing the Future Spread Reserve Account.
Future Spread Reserve Account Control Agreement
: The account control agreement among Seller, Purchaser and Wells Fargo Bank,
National Association, or any successor thereto, or any other institution agreed upon by the Parties, as Bank, dated as of the Sale Date, entered into with respect to the Future Spread Reserve Account, as amended, restated, supplemented or otherwise
modified from time to time.
Future Spread Reserve Account Deposit Event
: As defined in
Section 4.03(c)
hereof.
Future Spread Reserve Account Required Amount
: As defined in
Section 4.03(c)
hereof.
5
GAAP
: Generally accepted accounting principles in the United States of America as in
effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board, or
in such other statements by such other entity as may be in general use by significant segments of the accounting profession, that are applicable to the circumstances as of the date of determination.
GNMA
: Government National Mortgage Association, or any successor thereto.
GNMA Acknowledgment Agreement
: The acknowledgment agreement by and among GNMA, or any successor thereto, Seller and Purchaser, in
form and substance reasonably acceptable to Purchaser, dated on or before the Sale Date, pursuant to which GNMA, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
GNMA Mortgage Loan
: A Mortgage Loan which is owned by GNMA, or any successor thereto.
Governmental Authority
: With respect to any Person, any nation or government, any state or other political subdivision, agency or
instrumentality thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over such Person, any of its subsidiaries or any
of its properties.
Grant
: To grant, bargain, sell, warrant, alienate, remise, demise, release, convey, assign,
transfer, mortgage, pledge, create and grant a security interest in and right of setoff against, deposit, set over or confirm.
HAMP
: As defined in
Section 8.06
hereof.
HAMP Loans
: As defined in
Section 8.06
hereof.
Holder
Register
: As defined in
Section 12.15(b)
hereof.
Indemnity Loan
: As defined in
Section 11.01(b)
hereof.
Indemnity Loan Agreement
: As defined in
Section 11.01(b)
hereof.
IRS
: The United States Internal Revenue Service.
Lien
: Any mortgage, deed of trust, pledge, hypothecation, collateral assignment, charge, deposit, arrangement, encumbrance, lien
(statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness or the performance of any other obligation,
including any conditional sale or other title retention agreement.
6
Lockbox Account
: An account maintained by Wells Fargo Bank, National Association or
another third party custodian or trustee selected by Purchaser for the purpose of receiving Servicing Spread Collections.
Loss
or
Losses
: Any and all direct, actual and out-of-pocket losses (including any loss in the value in the Future Excess
Servicing Spread), damages, deficiencies, claims, costs or expenses, including reasonable attorneys’ fees and disbursements, excluding (i) any amounts attributable to or arising from overhead allocations, general or administrative costs
and expenses, or any cost for the time of any Party’s employees, (ii) consequential losses or damages consisting of speculative lost profits, lost investment or business opportunity, damage to reputation or operating losses, or
(iii) punitive or treble damages;
provided
,
however
, that the exclusions set forth in clauses (ii) and (iii) above do not apply if and to the extent any such amounts are actually incurred in payment to a third party or
government entity.
Measurement Date
: With respect to any Collection Period, the first day of such Collection Period.
MERS
: Mortgage Electronic Registration Systems, Inc., or any successor thereto.
MI
: Insurance provided by private mortgage insurance companies to make payments on certain Mortgage Loans in the event that
the related Mortgagor defaults in its obligation in respect of the Mortgage.
Mortgage
: Each of those mortgages,
deeds of trust, security deeds or deeds to secure debt creating a first lien on or an interest in real property securing a Mortgage Note and related to a Mortgage Loan.
Mortgage Loan
: A residential mortgage loan that satisfies the conditions set forth in
Section 3.02
and whose Future Excess Servicing Spread is assigned to Purchaser hereunder in
satisfaction of Seller’s Future Excess Servicing Spread Assignment Obligation.
Mortgage Loan Documents
: With
respect to each Mortgage Loan, the documents and agreements related to such Mortgage Loan required to be held by the applicable Custodian, including, without limitation, the original Mortgage Note, and any other documents or agreements evidencing
and/or governing such Mortgage Loan.
Mortgage Loan Identification Date
: With respect to a Refinanced Mortgage Loan and
its related replacement Mortgage Loan, the 25th day of the second calendar month following the Refinanced Mortgage Loan’s Refinancing Date.
Mortgage Note
: With respect to any Mortgage Loan, the note or other evidence of indebtedness of the Mortgagor, thereunder, including, if applicable, an allonge and lost note affidavit.
Mortgage Servicing Rights
: The rights and responsibilities of Seller with respect to servicing the Mortgage Loans under the
Servicing Agreements, including any and all of the following if and to the extent provided therein: (a) all rights to service a Mortgage Loan; (b) all
7
rights to receive servicing fees, Ancillary Income, reimbursements or indemnification for servicing the Mortgage Loan, and any payments received in respect of the foregoing and proceeds thereof;
(c) the right to collect, hold and disburse escrow payments or other payments with respect to the Mortgage Loan and any amounts actually collected with respect thereto and to receive interest income on such amounts to the extent permitted by
Applicable Law; (d) all accounts and other rights to payment related to any of the property described in this paragraph; (e) possession and use of any and all Credit Files pertaining to the Mortgage Loan or pertaining to the past, present
or prospective servicing of the Mortgage Loan; (f) to the extent applicable, all rights and benefits relating to the direct solicitation of the related Mortgagors for refinance or modification of the Mortgage Loans and attendant right, title
and interest in and to the list of such Mortgagors and data relating to their respective Mortgage Loans; and (g) all rights, powers and privileges incident to any of the foregoing.
Mortgaged Property
: The Mortgagor’s real property, securing repayment of a related Mortgage Note, consisting of an interest
in a single parcel of real property, improved by a residential dwelling.
Mortgagor
: An obligor under a residential
mortgage loan.
New Mortgage Loan
: As defined in
Section 3.02(a)(i)(1)
hereof.
Non-Agency Mortgage Loan
: Any Mortgage Loan where the Owner is not an Agency.
Nonqualifying Income
: Any amount that is treated as gross income for purposes of Section 856 of the Code and which is not
Qualifying Income.
Objection Notice
: As defined in
Section 4.03(c)
hereof.
Opinion of Counsel
: One or more written opinions, in form and substance reasonably satisfactory to the recipient, of an attorney
at law admitted to practice in any state of the United States or the District of Columbia, which attorney may be counsel for Seller or Purchaser, as the case may be.
Owner
: With respect to a Mortgage Loan, the owner thereof.
Owner
Consent
: All agreements, including the FHLMC Acknowledgment Agreement, the FNMA Acknowledgment Agreement and GNMA Acknowledgment Agreement, if applicable, pursuant to which an Owner approves or consents to the sale of the Future Excess Servicing
Spread from Seller to Purchaser and any other consents, acknowledgements or similar instruments that may be required from an Owner in connection with the transactions contemplated herein.
Party
or
Parties
: As defined in the preamble hereof.
Permitted Liens
: Liens in favor of an Agency required pursuant to the applicable Servicing Agreements.
8
Person
: Any individual, partnership, corporation, limited liability company, limited
liability partnership, business entity, joint stock company, trust, business trust, unincorporated organization, association, enterprise, joint venture, government, any department or agency of any government or any other entity of whatever nature.
Potential Replacement Portfolio
: As defined in
Section 3.04(a)
hereof.
Power of Attorney
: A Power of Attorney delivered by the Seller to the Purchaser authorizing the Purchaser to enforce the
right to payment of the Future Excess Servicing Spread under the related Servicing Agreement solely in the event that the Seller fails to enforce such right within 30 days after receiving written notice of such failure from the Purchaser to the
Seller.
Priority of Payments
: As defined in
Section 4.04
hereof.
Protected REIT
: Any entity that (i) has elected to be taxed as a real estate investment trust pursuant to Section 856 et
seq. of the Code, (ii) owns a direct or indirect equity interest in Purchaser, and (iii) is treated for purposes of Section 856 of the Code as owning all or a portion of the assets of the Purchaser or as receiving all or a portion of
the Purchaser’s income.
Purchase and Sale Agreement
: The Mortgage Servicing Rights Purchase and Sale Agreement,
dated as of January 6, 2013, by and between Nationstar Mortgage LLC, as purchaser, and Bank of America, National Association, as seller, together with all schedules and exhibits thereto, as the same may be amended, supplemented or otherwise
modified from time to time.
Purchase Price
: As defined in
Section 4.01
hereof.
Purchaser
: As defined in the preamble hereof.
Purchaser Indemnitees
: As defined in
Section 11.01(a)
hereof.
Qualifying Income
: Gross income that is described in Section 856(c)(2) or 856(c)(3) of the Code.
Refinanced Mortgage Loan
: A Current Mortgage Loan or a Mortgage Loan that has been refinanced in whole or in part by Seller or an
affiliate thereof.
Refinancing Date
: The date on which a Current Mortgage Loan or Mortgage Loan is refinanced by
Seller or an affiliate thereof.
REIT Qualification Ruling
: As defined in
Section 11.01(b)
hereof.
REIT Requirements
: The requirements imposed on REITs pursuant to Sections 856 through and including 860 of the Code.
Related Collection Period
: With respect to an Assignment Date, the Collection Period in the third calendar month prior
to such Assignment Date, and with respect to a Mortgage Loan Identification Date, the second calendar month prior to such Mortgage Loan Identification Date.
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Related Escrow Accounts
: Mortgage Loan escrow/impound accounts maintained by Seller
relating to the Mortgage Servicing Rights, including accounts for buydown funds, real estate taxes and MI, flood and hazard insurance premiums.
Release Document
: As defined in
Section 11.01(b)
hereof.
Remaining Expected Total Servicing Spread
: As defined in
Section 4.03(c)
hereof.
Replacement Portfolio
: As defined in
Section 3.04(a)
hereof.
Requirement of Law
: As to any Person, the certificate of incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its
property is subject.
Retained Servicing Spread
: The rights of Seller, severable from each (and all) of the other
rights under the applicable Servicing Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to 100%
minus
the Future Excess Servicing Spread Percentage.
Sale Date
: As defined in the Purchase and Sale Agreement; provided that all conditions precedent to the execution and delivery of
the related assignment agreement under the Current Spread Agreement shall have been satisfied or waived on such date.
Sales Proceeds
: The proceeds received upon a sale (approved by the Parties) of the Total Servicing Spread (except without giving
effect to clause (c) of the definition thereof), in whole or in part, including through a sale in accordance with
Section 8.12
.
Schedule of Mortgage Loans:
The list of Mortgage Loans whose Future Excess Servicing Spread has been assigned to Purchaser pursuant to this Agreement as updated by the Seller and Purchaser on each
Assignment Date and maintained as
Exhibit C
hereto.
Selection Period
: As defined in
Section 3.04(b)
hereof.
Seller
: As defined in the preamble hereof.
Seller Indemnitees
: As defined in
Section 11.02
hereof.
Servicing
: The responsibilities, with respect to servicing the Mortgage Loans, under the Servicing Agreements.
Servicing Agreements
: The servicing agreements, as amended from time to time, and any waivers, consent letters, acknowledgments
and other agreements under which Seller is the servicer of the Mortgage Loans relating to the Mortgage Servicing Rights and governing the servicing of the Mortgage Loans, or with respect to Mortgage Loans owned by the Seller, the credit and
collection standards, policies, procedures and practices of Seller relating to residential mortgage loans owned and serviced by Seller.
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Servicing Spread Collections
: For each Collection Period, the funds collected on the
Mortgage Loans and allocated as the servicing compensation payable to Seller as servicer of the Mortgage Loans with respect to such Collection Period pursuant to the applicable Servicing Agreements, other than Ancillary Income and, for the avoidance
of doubt, other than reimbursements received for advances and other out-of-pocket expenditures from an Owner by Seller in accordance with the Servicing Agreements.
Solvent
: With respect to any Person as of any date of determination, (a) the value of the assets of such Person is greater than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person as determined in accordance with GAAP, (b) such Person is able to pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In
computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability.
Third Party Assignee
: As defined in
Section 12.15
hereof.
Third Party Assignment
: As defined in
Section 12.15
hereof.
Third Party Future Spread Agreement
: As defined in
Section 12.15
hereof.
Third Party Claim
: As defined in
Section 11.01
and
Section 11.02
, as applicable.
Third Party Controlled Future Spread Custodial Account
: The account specified in the Future Spread Custodial Account Control
Agreement and maintained by Wells Fargo Bank, National Association, or any successor thereto, or another third party custodian or trustee selected by Purchaser, into which all Servicing Spread Collections, all Sales Proceeds and all Servicing
Agreement termination payments in respect of the Mortgage Loans shall be deposited.
Total Servicing Spread
: For each
Collection Period on and after the Sale Date, the sum of the following: (a) the Servicing Spread Collections received during such Collection Period and remaining after payment of the Base Servicing Fee; (b) all other amounts payable by an
Owner to Seller (or Purchaser under an Owner Consent) with respect to the Mortgage Servicing Rights for Mortgage Loans, including any termination fees paid by an Owner to Seller for terminating Seller as the servicer of any of the Mortgage Loans,
but for the avoidance of doubt, excluding all Ancillary Income and reimbursements received for advances and other out-of-pocket expenditures from an Owner by Seller in accordance with the Servicing Agreements and (c) all Sales Proceeds received
during such Collection Period.
Transaction Documents
: The Future Spread Custodial Account Agreement, the Future
Spread Custodial Account Control Agreement, the Future Spread Reserve Account Agreement, the Future Spread Reserve Account Control Agreement, the Current Spread Agreement and this Agreement.
11
UCC
: The Uniform Commercial Code as in effect from time to time in the applicable
jurisdiction.
Section 1.02
General Interpretive Principles
.
For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other gender;
(b) Accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally accepted accounting principles;
(c) References
herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) A reference to a Subsection without further reference to a Section is a reference to such Subsection as
contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions;
(e) The words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; and
(f) The term “include” or “including” shall mean without limitation by reason of enumeration.
ARTICLE II
ITEMS TO BE DELIVERED
Section 2.01
Items to be Delivered
.
(a) On the Agreement
Date, subject to the satisfaction of the terms and conditions herein, each of Seller and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise
responsible as set forth below:
(i) This Agreement;
(ii) The Current Spread Agreement and all agreements, certificates, opinions and instruments required to be delivered
under the Current Spread Agreement on the Agreement Date, if any;
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(b) On the Sale Date, subject to the satisfaction of the terms and conditions herein, each
of Seller and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
(i) The executed Future Spread Custodial Account Agreement;
(ii) The executed Future Spread Custodial Account Control Agreement;
(iii) The executed Future Spread Reserve Account Agreement;
(iv) The executed Future Spread Reserve Account Control Agreement;
(v) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser regarding due authorization, authority, and
enforceability of the applicable Transaction Documents to which Seller is a party, and regarding no conflicts with other material Seller agreements;
(vi) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the characterization of the transfer of the Future Excess Servicing Spread from Seller to Purchaser as a true sale for
bankruptcy purposes;
(vii) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the
perfection of the assignment of Future Excess Servicing Spread to Purchaser and the security interests granted hereunder;
(viii) The duly executed corporate certificate of Seller required by
Section 9.07
;
(ix) A certificate of good standing of Seller dated as of a date within five (5) Business Days prior to the Sale Date to be delivered by Seller;
(x) A secretary’s certificate of Seller attaching its organizational documents, board resolutions and incumbency
certificates;
(xi) The duly executed corporate certificate of Purchaser required by
Section 10.05
;
(xii) A certificate of good standing of Purchaser dated as of a date within five
(5) Business Days prior to the Sale Date to be delivered by Purchaser;
(xiii) A UCC-1 financing
statement relating to the sale of the Future Excess Servicing Spread and relating to the security interest of Purchaser in the Third Party Controlled Future Spread Custodial Account and the Future Spread Reserve Account, in form and substance
reasonably acceptable to Purchaser; and
13
(xiv) All agreements, certificates, opinions and instruments required to be
delivered under the Current Spread Agreement on the Sale Date.
(c) On or before the Assignment Date with respect to a
Mortgage Loan, Seller shall provide Purchaser with executed copies of the related Owner Consents, and any amendments thereto.
(d) On or before the first Assignment Date, the executed Power of Attorney.
Section 2.02
Grant of Security Interest
.
In order to secure Seller’s obligations to deliver the Future Excess Servicing Spread and perform its obligations hereunder, Seller hereby Grants to Purchaser a valid and continuing first priority
and perfected Lien on and security interest in all of Seller’s right, title and interest in, to and under, the Third Party Controlled Future Spread Custodial Account and the Future Spread Reserve Account, together with all amounts deposited
therein from time to time and all cash and non-cash proceeds thereof, in each case, whether now owned or existing, or hereafter acquired and arising (the “
Collateral
”).
ARTICLE III
REPLACEMENT OF MORTGAGE LOANS
Section 3.01
Refinancing and Substitution of Mortgage Loans
.
Subject to, and upon the terms and conditions of this Agreement, and, more particularly, the conditions of this
ARTICLE III
, if
Seller or any of its affiliates refinances any Current Mortgage Loan or Mortgage Loan, it shall designate a residential mortgage loan as a replacement Mortgage Loan pursuant to this
ARTICLE III
and assign the Future Excess Servicing Spread
with respect to such replacement Mortgage Loan on the applicable Assignment Date to Purchaser as provided in this Agreement (such obligations of Seller, the “
Future Excess Servicing Spread Assignment Obligation
“), and the rights of
Purchaser to such Future Excess Servicing Spread, the “
Future Excess Servicing Spread Rights
“).
Section 3.02
Criteria for Mortgage Loans
.
(a) As of the applicable Assignment Date, unless otherwise agreed upon by Seller and Purchaser, either:
(i) The Mortgage Loan shall satisfy the following criteria:
(1)
The proceeds of such Mortgage Loan (the “
New Mortgage Loan
“) were use to repay the Refinanced Mortgage Loan in whole or in part;
14
(2) All consents, if any, required by the applicable Owner to assign the
related Future Excess Servicing Spread with respect to the New Mortgage Loan shall have been obtained;
(3)
The servicing fee rate for the New Mortgage Loan is not less than the lesser of (x) the servicing fee rate of the Refinanced Mortgage Loan and (y) (A) 0.25% per annum if such New Mortgage Loan is owned by Fannie Mae or Freddie
Mac, (B) 0.35% per annum if such New Mortgage Loan is a Non-Agency Mortgage Loan or (C) 0.375% per annum if such New Mortgage Loan is owned by GNMA; and
(4) The New Mortgage Loan is secured by the same property as the Refinanced Mortgage Loan; or
(ii) if Seller is unable to satisfy the conditions in
Section 3.02(a)(i)
after using commercially reasonable
efforts, Seller shall use its best efforts to substitute the New Mortgage Loan with a Mortgage Loan satisfying the following criteria:
(1) The servicing fee rate (which results in the Servicing Spread Collections) for the Mortgage Loan is equal to or greater than the servicing fee rate of the New Mortgage Loan; provided however if the
servicing fee rate of the New Mortgage Loan is less than the applicable rate set forth in
Section 3.02(a)(i)(3)
, the servicing fee rate on the Mortgage Loan is not less than the lesser of (x) the servicing fee rate of the Refinanced
Mortgage Loan and (y) (A) 0.25% per annum if such Mortgage Loan is owned by Fannie Mae or Freddie Mac, (B) 0.35% per annum if such Mortgage Loan is a Non-Agency Mortgage Loan or (C) 0.375% per annum if such
Mortgage Loan is owned by GNMA;
(2) The interest accrual rate per annum on the Mortgage Loan is within 12.5
basis points per annum of the interest accrual rate on the New Mortgage Loan;
(3) The final maturity date of
the Mortgage Loan is within six months of the final maturity date of the New Mortgage Loan;
(4) The principal
balance of the Mortgage Loan is no less than the principal balance of the Refinanced Mortgage Loan;
(5) The
remaining credit characteristics of the Mortgage Loan (other than as specified in
clauses (1)
,
(2)
,
(3)
and
(4)
above) are substantially the same as the credit characteristics of the New Mortgage Loan;
(6) The Mortgage Loan is current as of the applicable Assignment Date; and
15
(7) The Mortgage Loan is not subject to any foreclosure or similar
proceeding as of the applicable Assignment Date; is not in process of any modification, workout or other loss mitigation process; and is not involved in litigation.
(b) If a New Mortgage Loan would otherwise meet the criteria set forth in
Section 3.02(a)(i)
and is still owned by Seller as of the Mortgage Loan Identification Date, in lieu of a substitution
pursuant to
Section 3.02(a)(ii)
above, the Seller may include such New Mortgage Loan as a Mortgage Loan; provided (i) the servicing fee rate (which results in the Servicing Spread Collections) for such Mortgage Loan shall be deemed
to be 0.30% per annum and (ii) if at any time such Mortgage Loan fails to otherwise meet the criteria set forth in
Section 3.02(a)(i)
(e.g. the Mortgage Loan is sold to an Agency and the Seller is unable to obtain an Owner
Consent), the Seller shall be required to substitute a loan for such New Mortgage Loan pursuant to
Section 3.02(a)(ii)
above.
(c) Notwithstanding the provisions of Section
3.02(a)(ii)(4)
, Seller shall not be in breach of
Section 3.01
on any Assignment Date if, after using best efforts to select
residential mortgage loans to substitute New Mortgage Loans pursuant to
Section 3.02(a)(ii)
, the aggregate outstanding principal balance of the residential mortgage loans in the Potential Replacement Portfolio as of such Assignment Date
is equal to or greater than 90% of the aggregate outstanding principal balance of the Refinanced Mortgage Loans during the Related Collection Period as measured on the opening of business on their respective Refinancing Date.
Section 3.03
[Reserved]
.
Section 3.04
Selection Procedures
.
(a) Not later than the
Mortgage Loan Identification Date, Seller shall (i) notify Purchaser of the identity of each Current Mortgage Loan and each Mortgage Loan that became a Refinanced Mortgage Loan during the Related Collection Period, (ii) provide purchaser a
list of New Mortgage Loans which meet the criteria set forth in
Section 3.02(a)(i)
, (iii) with respect to any New Mortgage Loans which do not meet the criteria set forth in
Section 3.02(a)(i)
, provide Purchaser with a
list of potential residential mortgage loans in the Seller’s portfolio that meet the criteria of
Section 3.02(a)(ii)
(the “
Potential Replacement Portfolio
”), and (iv) provide Purchaser with a list of
residential mortgage loans selected from the Potential Replacement Portfolio to be designated as Mortgage Loans (the “
Replacement Portfolio
”) on the following Assignment Date.
(b) Purchaser may submit an objection to the proposed Replacement Portfolio not later than five Business Days following receipt of the
notice of the proposed portfolios pursuant to
Section 3.04(a)
. If Purchaser submits an objection, Seller and Buyer shall work together in good faith over the next five Business Days (the “
Selection Period
”) to mutually
agree on the Replacement Portfolio. During the Selection Period, Seller may suggest alternative Mortgage Loans that meet the criteria of
Section 3.02
. If Seller and Purchaser are unable to agree on a Replacement Portfolio by close of
business on the Business Day prior to the Assignment Date, Seller and Purchaser may modify the percentages in the definitions of Future
16
Excess Servicing Spread and Retained Servicing Spread and in the Priority of Payments, as applicable, to reflect the relative values that Seller and Purchaser would have had in the Future Excess
Servicing Spread and Retained Servicing Spread but for the inability of Seller and Purchaser to mutually agree on the Replacement Portfolio.
Section 3.05
Assignment of Future Excess Servicing Spread
.
Subject to the satisfaction of the terms and conditions in this Agreement, on each Assignment Date, Seller shall execute and deliver an
Assignment Agreement for the Future Excess Servicing Spread to be assigned on such Assignment Date with respect to the Mortgage Loans included in the applicable Replacement Portfolio;
provided
,
however
, that
(a) Purchaser shall be entitled to all Future Excess Servicing Spread and Seller shall be entitled to all Retained Servicing Spread
arising with respect to each such Mortgage Loan on and after the Refinancing Date with respect to the related Refinanced Mortgage Loan,
(b) Seller shall deposit all Servicing Spread Collections received with respect to such Mortgage Loans on and after the Refinancing Date with respect to the related Refinanced Mortgage Loans into the
Third Party Controlled Future Spread Custodial Account not later than the Assignment Date, and
(c) for each Mortgage Loan
that was originated on or after the Refinancing Date of the related Refinanced Mortgage Loan, Seller shall deposit all Servicing Spread Collections with respect to amounts prepaid at the time of closing of such Mortgage Loan, if applicable, into the
Third Party Controlled Future Spread Custodial Account not later than the Assignment Date.
ARTICLE IV
PAYMENTS AND DISTRIBUTIONS
Section 4.01
Purchase Price
.
In full consideration for
Purchaser’s right to receive any Future Excess Servicing Spread assigned to Purchaser, and upon the terms and conditions of this Agreement, Purchaser shall pay to Seller an amount (the “
Purchase Price
”) that shall be determined
by the Parties on the Sale Date in accordance with Section 3.01 of the Current Spread Agreement.
Section 4.02
Payments by Purchaser
.
Payment shall be made by Purchaser to Seller by wire transfer of immediately available
federal funds, to an account designated by Seller.
17
Section 4.03
Accounts
.
(a)
Lockbox Account
. Seller shall inform the Mortgagors of Mortgage Loans to remit their mortgage payments to the Lockbox Account.
Payments of all Servicing Spread Collections received on and after the first Assignment Date shall be transferred from the Lockbox Account to the Third Party Controlled Future Spread Custodial Account within one Business Day of receipt and
identification thereof and in any event, within two Business Days of receipt thereof. If Seller receives any Servicing Spread Collections not remitted to the Lockbox Account, it shall hold such funds in trust for the benefit of the Purchaser and
deposit such amounts to the Third Party Controlled Future Spread Account within two Business Days of receipt thereof.
(b)
Third Party Controlled Future Spread Custodial Account
.
(i) The Third Party Controlled Future Spread
Custodial Account will be established with Wells Fargo Bank, National Association or with such other third party custodian or trustee selected by Purchaser, for the sole purpose of receiving and disbursing all Servicing Spread Collections, Sales
Proceeds and Servicing Agreement termination payments with respect to the Mortgage Loans. The Third Party Controlled Future Spread Custodial Account will be established pursuant to the Future Spread Custodial Account Control Agreement with respect
to which Purchaser is an Entitlement Holder with Control. So long as permitted by the Future Spread Custodial Account Control Agreement, Seller may direct the disposition of funds in the Third Party Controlled Future Spread Custodial Account
strictly in accordance with the Priority of Payments. Upon any material breach of a representation, warranty or covenant by Seller hereunder or during the occurrence and continuance of a Future Spread Reserve Account Deposit Event, Purchaser may
elect to exercise Control over the Third Party Controlled Future Spread Custodial Account. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the
Third Party Controlled Future Spread Custodial Account.
(ii) Seller shall inform each Owner to remit the
applicable portion of any Servicing Agreement termination payments payable with respect to the Mortgage Loans directly to the Third Party Controlled Future Spread Custodial Account. Any termination payment to be directed to the Third Party
Controlled Future Spread Custodial Account shall be equal to the
pro rata
amount by which the Mortgage Loans affected by such termination bear to all mortgage loans of Seller affected by such termination, based upon the method in which such
termination payments are calculated in accordance with the applicable Servicing Agreement.
(iii) If Seller is
to receive any Sales Proceeds, Seller shall direct the Person making such payments to deposit such payments into the Third Party Controlled Future Spread Custodial Account.
(iv) If Seller receives any amounts required to be deposited into the Third Party Controlled Future Spread Custodial
Account in error, Seller shall promptly remit such funds to the Third Party Controlled Future Spread Custodial Account.
18
(c)
Future Spread Reserve Account
. The Future Spread Reserve Account will be
established with Wells Fargo Bank, National Association or with such other third party custodian or trustee selected by Purchaser. The Future Spread Reserve Account will be established pursuant to the Future Spread Reserve Account Control Agreement
with respect to which Purchaser is an Entitlement Holder with Control. So long as permitted by the Future Spread Reserve Account Control Agreement, Seller may direct the disposition of funds in the Future Spread Reserve Account strictly in
accordance with
Section 4.05
. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Future Spread Reserve Account.
If at any time Seller’s Consolidated Tangible Net Worth falls below the sum of (x) $250,000,000 and (y) 50% of the
proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries or if Seller (considered together with its consolidated subsidiaries) defaults in any
indebtedness in excess of $10,000,000 (individually or in the aggregate) (each, a “
Future Spread Reserve Account Deposit Event
”), Seller shall immediately notify Purchaser in writing that a Future Spread Reserve Account Deposit
Event has occurred. On each Distribution Date upon which a Future Spread Reserve Account Deposit Event has occurred and is continuing, Seller shall be required to transfer funds in the Third Party Controlled Future Spread Custodial Account to the
Future Spread Reserve Account in accordance with the Priority of Payments until the amount of funds in the Future Spread Reserve Account is equal to the Future Spread Reserve Account Required Amount. The “
Future Spread Reserve Account
Required Amount
” is equal to 25% of the fair market value as of the date the Future Spread Reserve Account Deposit Event that is then-continuing first occurred of the Total Servicing Spread expected to be paid over the expected remaining
life of the Mortgage Loans (the “
Remaining Expected Total Servicing Spread
”) determined in accordance with the following paragraph. Seller shall immediately notify Purchaser in writing if a Future Spread Reserve Account Deposit
Event is no longer continuing. Any funds in the Future Spread Reserve Account in excess of the Future Spread Reserve Account Required Amount shall be released to Seller.
For purposes of determining the fair market value of the Remaining Expected Total Servicing Spread, Purchaser shall submit its claim for determination of the fair market value of the Remaining Expected
Total Servicing Spread, together with such back-up information it deems appropriate to justify such fair market value (which value shall be considered the fair market value of the Remaining Expected Total Servicing Spread for purposes of calculating
the Future Spread Reserve Account Required Amount until the final determination of such fair market value in accordance with this paragraph). Within five (5) Business Days of Seller’s receipt of such determination, Seller shall notify
Purchaser in writing of its acceptance or any objection to such determination of such fair market value, and if Seller objects to such determination, such notice shall include its own determination of such fair market value and any back-up
information as it deems appropriate to justify such fair market value (an “
Objection Notice
”). In the event an Objection Notice is delivered, the parties shall negotiate in good faith a resolution to such objection. In the event
that Seller and Purchaser are unable to resolve such
19
objection within five (5) Business Days of the delivery of such Objection Notice, Seller and Purchaser shall appoint a mutually acceptable nationally recognized valuation expert to determine
such fair market value of the Remaining Expected Total Servicing Spread. The determination of such valuation expert shall be binding on Seller and Purchaser and the fees of such valuation expert shall be borne by Seller.
Section 4.04
Priority of Payments
.
On each Business Day, subject to the terms and conditions of the Future Spread Custodial Account Control Agreement, Seller (or, after the delivery of an access termination notice pursuant to the Future
Spread Custodial Account Control Agreement, Purchaser) shall direct the Bank to apply the monies in the Third Party Controlled Future Spread Custodial Account in the following order of priority (the “
Priority of Payments
”), in every
case, after giving effect to each prior item in the Priority of Payments on such Distribution Date:
(a)
first
, from
amounts in the Third Party Controlled Future Spread Custodial Account attributable to Servicing Agreement termination payments paid by an Owner with respect to any Mortgage Loans,
pro rata
, (A) the Future Excess Servicing Spread
Percentage of such termination payments to Purchaser, and (B) the Retained Excess Servicing Spread Percentage of such termination payments to Seller;
provided
, that (I) prior to the distribution to Purchaser of any termination
payments pursuant to
clause (A)
, such termination payments shall be applied to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to
Seller of any termination payments pursuant to
clause (B)
, such termination payments shall be applied
first
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
second
, for deposit to the Future Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Future Spread Reserve Account to equal the Future Spread Reserve Account
Required Amount;
(b)
second
, on any Business Day from and including the first Business Day of a calendar month to but
excluding the Distribution Date in such calendar month, at the option of Seller, the Base Servicing Fee payable with respect to a prior Collection Period for the Mortgage Loans to Seller; provided however, that, to the extent that (i) the
Seller is not permitted or is otherwise unable to advance servicing fees relating to the Total Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing Agreement does not
permit payment of servicing fees from general collections, and (iii) the related Servicing Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Future Spread Custodial
Account relating to the affected Mortgage Loans shall be made pursuant to clause (d) below prior to this clause (b);
(c)
third
, on each Distribution Date, to the extent not previously paid to Seller in accordance with
Section 4.04(b)
, any accrued and unpaid Base Servicing Fee to Seller; provided however, that, to the extent that (i) the Seller
is not permitted or is otherwise unable to advance servicing fees relating to the Total Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing Agreement does not permit
payment of servicing fees from general collections, and (iii) the related Servicing
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Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Future Spread Custodial Account relating to the affected Mortgage
Loans shall be made pursuant to clause (d) below prior to this clause (c);
(d)
fourth
, on each Distribution Date,
pro rata
, (A) to Purchaser, any Future Excess Servicing Spread for the prior Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 4.04(a)
); and (B) to Seller, any
Retained Servicing Spread for the prior Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 4.04(a)
);
provided
, that (I) prior to the distribution to Purchaser of any
Future Excess Servicing Spread pursuant to
clause (A)
, the Future Excess Servicing Spread shall be applied to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II)
prior to the distribution to Seller of any Retained Servicing Spread pursuant to
clause (B)
, the Retained Servicing Spread shall be applied
first
, to the payment of any indemnity payments then due and payable to a Purchaser
Indemnitee pursuant to
Section 11.01
and
second
, for deposit to the Future Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Future Spread Reserve Account to equal the Future Spread
Reserve Account Required Amount; and
(e)
fifth
, on each Distribution Date, to Seller, any other amounts remaining on
deposit in the Third Party Controlled Future Spread Custodial Account.
All payments to Purchaser or Seller shall be made by
wire transfer of immediately available federal funds to an account designated by Purchaser or Seller, as applicable.
Section 4.05
Withdrawals from the Future Spread Reserve Account
.
On any Business Day, at the instruction of Purchaser, Seller shall direct the Bank to apply funds in the Future Spread Reserve Account, if
any, to the payment of indemnity payments payable to a Purchaser Indemnitee pursuant to
Section 11.01
. If on any Business Day a Future Spread Reserve Account Deposit Event is not then continuing and all outstanding indemnity payments
payable to Purchaser Indemnitees have been paid in full, Seller may direct the Bank to distribute any remaining funds in the Future Spread Reserve Account to, or as directed by, Seller. If there are any funds remaining in the Future Spread Reserve
Account after the Future Excess Servicing Spread and all indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller shall direct the Bank to distribute such remaining funds to, or as directed by, Seller.
Section 4.06
Payment to Seller of Base Servicing Fee
.
(a) Seller shall be entitled to payment of the Base Servicing Fee only to the extent funds are available therefor in the Third Party
Controlled Future Spread Custodial Account in accordance with the Priority of Payments. Under no circumstances shall Purchaser be liable to Seller for payment of the Base Servicing Fee. In the event servicing of the Mortgage Loans is transferred to
sub-servicers for any reason, the servicing fees and expenses of such sub-servicers shall be paid by Seller and in no event will the amount of Servicing Spread Collections or termination payments otherwise allocable to the Future Excess Servicing
Spread be reduced due to the payment of sub-servicing fees and expenses.
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(b) The Base Servicing Fee with respect to a Mortgage Loan shall begin to accrue as of the
Collection Period prior to the applicable Assignment Date. In no event shall Base Servicing Fees accrue concurrently on any day for a Refinanced Mortgage Loan and for a Mortgage Loan.
Section 4.07
Correction of Principal Balance Error
.
If, subsequent to the payment of any amounts due hereunder to either party, the outstanding principal balance of any Mortgage Loan is
found to be in error, the party benefiting from the error shall pay an amount sufficient to correct and reconcile such amounts and shall provide a reconciliation statement and other such documentation to reasonably satisfy the other party concerning
the accuracy of such reconciliation. Such amounts shall be paid by the proper party within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
Section 4.08
Intent and Characterization
.
(a) Seller and Purchaser intend that the assignments of the Future Excess Servicing Spread pursuant to this Agreement and each Assignment Agreement constitute valid sales of such Future Excess Servicing
Spread from Seller to Purchaser, conveying good title thereto free and clear of any Lien other than Permitted Liens, and that the beneficial interest in and title to such Future Excess Servicing Spread not be part of Seller’s estate in the
event of the bankruptcy of Seller. Seller and Purchaser intend and agree to treat the transfer and assignment of the Future Excess Servicing Spread as an absolute sale for tax purposes, and as an absolute and complete conveyance of title for
property law purposes. Except for financial accounting purposes, neither party intends the transactions contemplated hereby to be characterized as a loan from Purchaser to Seller.
(b) In the event (but only in the event) that the conveyance of the Future Excess Servicing Spread is characterized by a court or
governmental authority as security for a loan rather than a sale, Seller will be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Future
Excess Servicing Spread and all proceeds thereof as security for a loan in an amount equal to the aggregate Purchase Price (as defined in the Current Spread Agreement).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as of the
Agreement Date, the Sale Date and as of each Assignment Date as follows (or as of the date specified below, as applicable):
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Section 5.01
Due Organization and Good Standing
.
Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Seller is qualified to transact business in each jurisdiction in which such qualification is deemed necessary to service the Mortgage Loans. Seller has, in full force and effect (without notice of possible suspension, revocation or impairment), all
required permits, approvals, licenses, and registrations to conduct all activities in all states in which its activities with respect to the Mortgage Loans or the Mortgage Servicing Rights require it to be licensed, registered or approved in order
to service the Mortgage Loans and own the Mortgage Servicing Rights, unless the failure to obtain such permits, approvals, licenses and registrations would not reasonably be expected to have a material adverse effect on Seller’s ability to
perform its obligations under this Agreement or the other Transaction Documents to which it is a party.
Section 5.02
Authority and Capacity
.
Seller has all requisite limited liability company power, authority and capacity to
enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document and the
consummation of the transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company action. This Agreement and each other Transaction Document to which it is a party has been duly
executed and delivered by Seller. This Agreement constitutes, and each other applicable Transaction Document to which Seller is a party constitutes or will constitute, a valid and legally binding agreement of Seller enforceable in accordance with
its terms, and no offset, counterclaim or defense exists to the full performance by Seller of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting
the enforcement of creditors’ rights generally and by general equity principles.
Section 5.03
Owner
Consents
.
Prior to an Assignment Date, Seller has obtained all necessary and applicable Owner Consents.
Section 5.04
Title to the Mortgage Servicing Rights
.
As of an Assignment Date, Seller will be the lawful owner of the Mortgage Servicing Rights, will be responsible for the maintenance of the
Related Escrow Accounts, and will have the sole right and authority to transfer the Future Excess Servicing Spread as contemplated hereby. The transfer, assignment and delivery of the Future Excess Servicing Spread shall be free and clear of any and
all claims, charges, defenses, offsets, Liens and encumbrances of any kind or nature whatsoever other than Permitted Liens.
23
Section 5.05
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document by Seller, compliance with the terms hereof
and thereof and the consummation of the transactions contemplated hereby and thereby did not, and will not, violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its
certificate of formation or limited liability company agreement, any instrument or agreement to which it is a party or by which it is bound or which affects the Future Excess Servicing Spread, or any state or federal law, rule or regulation or any
judicial or administrative decree, order, ruling or regulation applicable to it or to the Future Excess Servicing Spread.
Section 5.06
No Accrued Liabilities
.
There are no accrued liabilities of Seller with respect to the Mortgage Loans or the Mortgage Servicing Rights or circumstances under which such accrued liabilities will arise against Purchaser as
purchaser of the Future Excess Servicing Spread.
Section 5.07
Seller/Servicer Standing
.
As of the applicable Assignment Date, Seller is approved by each applicable Agency as a seller/servicer in good standing with the
requisite financial criteria and adequate resources to complete the transactions contemplated hereby on the conditions stated herein. No event has occurred, including but not limited to a change in insurance coverage, which would make the Seller
unable to comply with the applicable Agency eligibility requirements or which would require notification to the applicable Agency. Furthermore, if at any time prior to the termination of this Agreement, the Seller is unable to comply with any of the
Agency eligibility requirements, it shall immediately notify the Purchaser that it is no longer an approved seller/servicer of mortgage loans for any Agency which is an Owner of a Mortgage Loan.
Section 5.08
MERS Membership
.
Seller is a member in good standing under the MERS system or another similar system reasonable acceptable to the Purchaser.
Section 5.09
Owner Set-off Rights
.
Seller has no actual
notice, including any notice received from an Owner, or any reason to believe, that, other than in the normal course of Seller’s business, any circumstances exist that would result in Seller being liable to an Owner for any amount due by reason
of: (i) any breach of servicing obligations or breach of mortgage selling warranty to an Owner under servicing agreements relating to Seller’s entire servicing portfolio for such Owner (including without limitation any unmet mortgage
repurchase obligation), (ii) any unperformed obligation with respect to mortgage loans that Seller is servicing for an Owner under the regular servicing option or other mortgages subject to recourse agreements, (iii) any loss or damage to
an Owner by reason of any inability to transfer to a purchaser of the servicing rights Seller’s selling and servicing representations, warranties and obligations, or (iv) any other unmet obligations to an Owner under a servicing contract
relating to Seller’s entire servicing portfolio with such Owner.
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Section 5.10
Ability to Perform; Solvency
.
Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this
Agreement. Seller is Solvent and the sale of the Future Excess Servicing Spread will not cause Seller to become insolvent. The sale of the Future Excess Servicing Spread is not undertaken to hinder, delay or defraud any of the creditors of Seller.
The consideration received by Seller upon the sale of the Future Excess Servicing Spread constitutes fair consideration and reasonably equivalent value therefor.
Section 5.11
Obligations with Respect to Origination
.
Seller
shall remain liable for all obligations with respect to the origination of each Mortgage Loan and, if applicable, for all obligations with respect to the sale of such Mortgage Loan to the applicable Owner.
Section 5.12
Purchase of Mortgage Servicing Rights
.
Each agreement or arrangement that Seller enters into to purchase Mortgage Servicing Rights shall be entered into on an arm’s length
contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing Rights to be acquired thereby. Seller shall not enter into any agreement or arrangement with a third party intended to
encourage the refinancing of any Mortgage Loan by any Person other than Seller.
Section 5.13
No Actions
.
There have not been commenced or, to the best of Seller’s knowledge, threatened, any action, suit or proceeding which
will likely materially and adversely affect the consummation of the transactions contemplated by any Transaction Document.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE LOANS AND SERVICING
As further inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser, as of each Assignment Date
(or as of the date specified below, as applicable), as follows:
Section 6.01
Servicing Agreements; Applicable
Laws
.
Seller, the originator of the Mortgage Loan and each prior owner of the Mortgage Servicing Rights has each
performed its obligations in all material respects in accordance with the terms of the related Mortgage Note, Mortgage, Servicing Agreements and Applicable Law.
25
Section 6.02
Related Escrow Accounts
.
All Related Escrow Accounts are being, and have been, maintained in accordance with Applicable Law and in accordance with the Servicing
Agreements and the terms of the related Mortgages and other Mortgage Loan Documents; and, except as to payments which are past due under Mortgage Notes, all balances required by the Mortgages or other Mortgage Loan Documents to be paid to Seller for
the account of the Mortgagors are on deposit in the appropriate Related Escrow Account.
Section 6.03
No Purchaser
Responsibility
.
Purchaser shall have no responsibility, liability or other obligation whatsoever under any Servicing
Agreement or with respect to any Mortgage Loan, or to make any advance thereunder, or to pay any servicing fees.
Section 6.04
Location of Credit Files
.
All of the Mortgage Loan Documents are held by Custodians or, if held by Seller, in the locations specified in
Exhibit F
, unless temporarily removed for enforcement purposes in the normal course of
servicing. Seller will notify Purchaser in writing of any changes in locations of the Mortgage Loan Documents held by Seller in
Exhibit F
.
Section 6.05
Representations Concerning the Future Excess Servicing Spread
.
(a) Seller has not assigned, pledged, conveyed, or encumbered the Future Excess Servicing Spread to any other Person (other than Permitted Liens) and immediately prior to the sale of the Future Excess
Servicing Spread, Seller was the sole owner of the Future Excess Servicing Spread and had good and marketable title thereto (subject to the rights of the applicable Owner under the Servicing Agreements), free and clear of all Liens (other than
Permitted Liens), and no Person, other than Purchaser, has any Lien (other than Permitted Liens) on the Future Excess Servicing Spread. No security agreement, financing statement, equivalent security or lien instrument or continuation statement
covering all or any part of the Future Excess Servicing Spread which has been signed by Seller or which Seller has authorized any other Person to sign or file or record, is on file or of record with any public office, except such as may have been
terminated or filed by or on behalf of Purchaser.
(b) The sale and grant of a security interest by Seller to Purchaser of and
on the Future Excess Servicing Spread does not and will not violate any Requirement of Law, the effect of which violation is to render void or voidable such assignment.
(c) As contemplated under
Section 4.08(b)
, upon the filing of financing statements on Form UCC-1 naming Purchaser as “Secured Party” and Seller as “Debtor”, and describing
the Future Excess Servicing Spread, in the jurisdictions and recording offices listed on Exhibit J attached hereto, the sale and security interests granted hereunder in the Future Excess Servicing Spread will constitute perfected first priority
security interests under the UCC in all right, title and interest of Purchaser in, to and under the Future Excess Servicing Spread.
26
(d) Purchaser has and will continue to have the full right, power and authority to pledge
the Future Excess Servicing Spread, and the Future Excess Servicing Spread may be further assigned without any requirement, in each case, subject only to applicable Owner Consents.
(e) Each Servicing Agreement constitutes an Eligible Servicing Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement, Purchaser represents and warrants to Seller as of the Agreement Date, the Sale Date and as of each Assignment Date as follows (or as of the date
specified below, as applicable):
Section 7.01
Due Organization and Good Standing
.
Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Purchaser is qualified to transact business in each jurisdiction in which such qualification is deemed necessary.
Section 7.02
Authority and Capacity
.
Purchaser has all requisite limited liability company power, authority and capacity to enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations
required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document to which it is a party and the consummation of the transactions contemplated hereby and thereby have each been duly and validly
authorized by all necessary limited liability company action. This Agreement constitutes, and each other applicable Transaction Document to which Purchaser is a party constitutes or will constitute, a valid and legally binding agreement of Purchaser
enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Purchaser of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency,
reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
Section 7.03
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party by Purchaser, its compliance with the terms hereof and thereof and the consummation of
the transactions contemplated hereby and thereby will not violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited liability company
agreement, any instrument or agreement to which it is a party or by which it is bound, or any state or federal law, rule or regulation or any judicial or administrative decree, order, ruling or regulation
27
applicable to it, in each case which violation, conflict, breach or requirement would reasonably be expected to have a material adverse effect on Purchaser’s ability to perform its
obligations under this Agreement and any other Transaction Document to which it is a party.
Section 7.04
Sophisticated Investor
.
Purchaser is a sophisticated investor and its decision to acquire the Future Excess
Servicing Spread is based upon Purchaser’s own independent experience, knowledge, due diligence and evaluation of this transaction. Purchaser has relied solely on such experience, knowledge, due diligence and evaluation and has not relied on
any oral or written information provided by Seller other than the representations and warranties made by Seller herein.
Section 7.05
No Actions
There shall not have been commenced or, to the best of Purchaser’s knowledge, threatened any action, suit or proceeding against the Purchaser that will likely materially and adversely affect the
consummation of the transactions contemplated hereby.
ARTICLE VIII
SELLER COVENANTS
Seller covenants and agrees as follows:
Section 8.01
Servicing
Obligations
.
(a) Seller shall pay, perform and discharge all liabilities and obligations relating to the Servicing,
including all liabilities and obligations under the Mortgage Loan Documents, Applicable Law and the Servicing Agreements; and shall pay, perform and discharge all the rights, obligations and duties with respect to the Related Escrow Accounts as
required by the Servicing Agreements, the Mortgage Loan Documents, all Applicable Law and, with respect to any Mortgage Loans owned by an Agency, such Agency.
(b) Under no circumstances shall Purchaser be responsible for the Servicing acts and omissions of Seller or any other servicer or any originator of the Mortgage Loans, or for any servicing related
obligations or liabilities of any servicer in the Servicing Agreements or of any Person under the Mortgage Loan Documents, or for any other obligations or liabilities of Seller.
(c) With respect to any Servicing Agreement relating to a Non-Agency Mortgage Loan, subject to a nonrecoverability determination made in
accordance with the related Servicing Agreement and to the extent the Seller as servicer has an obligation to advance principal and interest on delinquent Mortgage Loans, the Seller shall advance the full amount of principal and interest on
delinquent Mortgage Loans for each Collection Period, including the related servicing fee.
28
(d) Upon termination of any Servicing Agreement, Seller shall remain liable to Purchaser
and the applicable Owner for all liabilities and obligations incurred by the servicer or its designee while Seller or its designee was acting as the servicer thereunder.
(e) Seller shall conduct quality control reviews of its servicing operations in accordance with industry standards and the requirements of each Agency relating to the Mortgage Loans.
Section 8.02
Cooperation; Further Assurances
Seller shall cooperate with and assist Purchaser, as reasonably requested, in carrying out the purposes of this Agreement. Seller will cooperate and assist Purchaser, as reasonably requested and at the
reasonable expense of Purchaser, in obtaining consents from any Owner as may be required or advisable to assign, transfer, deliver, hypothecate, pledge, subdivide, finance or otherwise deal with the Future Excess Servicing Spread. If Seller is
terminated under any Servicing Agreement, Seller shall cooperate fully and at its own expense in transferring such Servicing. If Purchaser assigns all or any portion of its Future Excess Servicing Spread or its other rights under this Agreement to a
Third Party Assignee, Seller will cooperate and assist any Third Party Assignee in drafting and entering into a Third Party Future Spread Agreement in accordance with
Section 12.15
.
Section 8.03
Financing Statements
.
Seller hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements, in any jurisdictions and with any filing offices as Purchaser may
determine, in its sole discretion, are necessary or advisable to perfect the sale of the Future Excess Servicing Spread and the security interests granted to Purchaser in connection herewith. Seller agrees to execute financing statements in form
reasonably acceptable to Purchaser and Seller at the request of Purchaser in order to reflect Purchaser’s interest in the Future Excess Servicing Spread, the Third Party Controlled Future Spread Custodial Account and the Future Spread Reserve
Account.
Section 8.04
Supplemental Information
.
From time to time after the applicable Assignment Date with respect to each Mortgage Loan, Seller promptly shall furnish Purchaser such
incidental information, which is reasonably available to Seller, supplemental to the information contained in the documents and schedules delivered pursuant to this Agreement, as may reasonably be requested to monitor performance of the Mortgage
Loans and the payment of the Future Excess Servicing Spread.
Section 8.05
Access to Information
.
From time to time, at such times as are reasonably convenient to Seller, Purchaser or its designees may conduct audits or
visit and inspect (a) any of the Mortgage Loans or places where the Credit Files are located, to examine the Credit Files, internal controls and procedures maintained by Seller and its agents, and take copies and extracts therefrom, and to
discuss Seller’s affairs with its officers, employees and, upon notice to Seller, independent accountants.
29
Seller hereby authorizes such officers, employees and independent accountants to discuss with Purchaser the affairs of Seller and (b) the Seller’s servicing facilities for the purpose
of satisfying the Purchaser that Seller, has the ability to service the Mortgage Loans related to Mortgage Servicing Rights in accordance with the standards set forth in the applicable Servicing Agreement. Any audit provided for herein will be
conducted in accordance with Seller’s rules respecting safety and security on its premises, in accordance with applicable privacy and confidentiality laws and without materially disrupting operations.
Section 8.06
Home Affordable Modification Program
.
With respect to any Mortgage Loans that have been modified or that are or will be in a modification trial period as part of the U.S.
Department of the Treasury’s Home Affordable Modification Program (“
HAMP
”) (such Mortgage Loans, the “
HAMP Loans
”), Seller represents and warrants that it will continue to service such HAMP Loan in accordance
with the HAMP terms and will ensure the timely compliance and filing of any appropriate HAMP documentation with the applicable regulator.
Section 8.07
Distribution Date Data Tapes and Reports
.
Seller
shall deliver the following to Purchaser two Business Days prior to each Distribution Date:
(a) An Electronic Data File in
form and substance acceptable to Purchaser containing, for each Current Mortgage Loan and each Mortgage Loan, principal, interest and Servicing Spread Collections, and delinquency status (i.e. 30, 60, 90, FCL, REO) as of the last day of the prior
Collection Period;
(b) A Summary Activity Report with respect to each of the pool of Current Mortgage Loans and the pool of
Mortgage Loans with respect to the prior Collection Period containing:
(i) aggregate beginning principal
balance as of the first and last date of the Collection Period,
(ii) aggregate regular principal collected,
(iii) aggregate noncash principal,
(iv) aggregate interest collected,
(v) aggregate liquidation principal,
(vi) aggregate curtailments,
(vii) liquidations,
(viii) short sales,
30
(ix) aggregate principal balance of Refinanced Mortgage Loans, and
(1) for each Refinanced Mortgage Loan, the principal balance, the applicable servicing spread, the final maturity date, the mortgage interest rate, the loan-to-value ratio and the FICO score, and (2) for each Current Mortgage Loan and each
Mortgage Loan that was refinanced by a lender other than Seller or an affiliate thereof, to the extent such information is known to Seller in the ordinary course of business and the collection and delivery of such information does not impose any
additional and undue burden on Seller, the name of such lender and the mortgage interest rate of the newly originated residential mortgage loan;
(c) A Delinquency Report with respect to the Current Mortgage Loans and Mortgage Loans containing:
(i) The aggregate outstanding principal balance of the pool of Current Mortgage Loans and the pool of Mortgage Loans and percentages of the aggregate outstanding principal balance of the pool of Current
Mortgage Loans and the pool of Mortgage Loans in each of the following categories as of the last day of the prior Collection Period:
(1) Non-delinquent Mortgage Loans,
(2) 0-29 days delinquent,
(3) 30-59 days delinquent,
(4) 60-89 days delinquent,
(5) 90 days or more delinquent,
(6) Current Mortgage Loans and
Mortgage Loans in Foreclosure,
(7) Current Mortgage Loans and Mortgage Loans with respect to which the
related Mortgaged Properties have become real estate owned properties, and
(8) Current Mortgage Loans and
Mortgage Loans in which the Mortgagor is in bankruptcy;
(ii) For each of the above categories, a roll report
showing the migration of Current Mortgage Loans and Mortgage Loans in such category from the last day of the second prior Collection Period;
(d) A Disbursement Report for such Distribution Date containing:
(i) The Servicing Spread Collections for the prior Collection Period,
31
(ii) The Base Servicing Fee paid to Seller,
(iii) The amount of the Future Excess Servicing Spread paid to Purchaser,
(iv) The amount of funds, if any, transferred to the Future Spread Reserve Account,
(v) The amount of Purchaser Indemnitees, if any, paid from each of the Third Party Controlled Future Spread Custodial
Account or the Future Spread Reserve Account, and
(vi) The amount of funds paid to Seller from the Future
Spread Reserve Account.
Section 8.08
Financial Statements and Officer’s Certificates
.
(a) If Seller’s financial statements are not filed with the U.S. Securities and Exchange Commission and are not publicly available,
Seller shall deliver to Purchaser copies of Seller’s most recent audited quarterly financial statements within 45 days of the end of each of Seller’s fiscal quarters and its most recent audited annual financial statements within 90 days of
the end of each of Seller’s fiscal years.
(b) Within 45 days of the end of each of Seller’s fiscal quarters, Seller
shall deliver to Purchaser a certificate from a duly authorized officer of Seller certifying (i) whether or not Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any
issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries (and shall provide a calculation of its determination of its Consolidated Tangible Net Worth) and
(ii) whether or not Seller (considered together with its consolidated subsidiaries) is in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
Section 8.09
Monthly Management Calls
.
Within five Business Days after each Distribution Date, Seller shall make its management team and other appropriate officers and employees available to Purchaser to discuss by telephone the performance of
the Current Mortgage Loans and Mortgage Loans and the performance of the parties under the Transaction Documents.
Section 8.10
Timely Payment of Owner Obligations
.
Seller shall pay all of its obligations to an Owner in a timely manner so as to avoid exercise of any right of set-off by any Owner
against Seller.
32
Section 8.11
Servicing Agreements
.
Seller will service the Mortgage Loans in accordance with Accepted Servicing Practices and will perform its obligations in all material
respects in accordance with the Servicing Agreements and Applicable Law. In particular, Seller shall comply with any advancing obligation under the Servicing Agreements. Without the express written consent of Purchaser (which consent may be withheld
in its absolute discretion), Seller shall not (a) cancel, terminate or amend any Mortgage Servicing Rights, (b) expressly provide any required consent to any termination, amendment or modification of any Servicing Agreements either
verbally or in writing, (c) expressly provide any required consent to any termination, amendment or modification of any other servicing agreements or enter into any other agreement or arrangement with the applicable Owner that may be reasonably
material to Purchaser either verbally or in writing, (d) expressly or verbally waive any material default under or breach of any Servicing Agreement by the applicable Owner that may be material to the Purchaser (in Purchaser’s reasonable
determination) or (e) take any other action in connection with any such Servicing Agreement that would impair in any material respect the value of the interests or rights of the Purchaser hereunder. Seller shall conduct its business and perform
its obligations under the Servicing Agreements in a manner such that the applicable Owner will not have cause to terminate any Servicing Agreement. Notwithstanding the foregoing, in no event will the prohibitions contained in this
Section 8.11
apply to any amendments or modifications of the Servicing Agreements applicable to Current Mortgage Loans or Mortgage Loans owned by Seller which do not affect the Future Excess Servicing Spread with respect to such Current
Mortgage Loans or Mortgage Loans and are not reasonably material to the Purchaser.
Section 8.12
Transfer of
Mortgage Servicing Rights
.
If Seller intends to assign, transfer or sell any of its Mortgage Servicing Rights to a
replacement servicer, to the extent permitted by applicable law, (a) Seller shall consult with Purchaser and Purchaser shall participate in the assignment, transfer and sale of such Mortgage Servicing Rights, and (b) Seller shall obtain
the written consent of Purchaser, granted by the Purchaser in its sole discretion, prior to any assignment, transfer or sale thereof.
Section 8.13
Consents to Transaction Documents
.
Seller shall
not terminate, amend, amend and restate, modify or waive any conditions or provisions of any Transaction Document without the express written consent of Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned.
Section 8.14
Accounts
.
Seller shall inform the Mortgagors of Mortgage Loans at its own expense to remit their mortgage payments to the Lockbox Account, and any change in such instructions shall only be permitted with the
express written consent of Purchaser.
33
Section 8.15
Notification of Certain Events
.
Seller shall promptly notify Purchaser of any event which, with the passage of time, could reasonably be expected to result in a
termination of any servicing agreement between Seller and any Owner. Seller shall provide Purchaser with copies of any notices from the applicable Owner of any breach, potential breach, default or potential default by Seller under any servicing
agreement between Seller and the applicable Owner, and with copies of any notices from any Owner of any termination, potential termination or threatened termination of any servicing agreement entered into between Seller and that Owner. Seller shall
promptly forward copies of any material notices received from any Owner or from any Governmental Authority with respect to the Mortgage Loans. Seller shall provide Purchaser with (a) copies of all amendments to the Transaction Documents, the
Servicing Agreements (other than with respect to Mortgage Loans owned by Seller) and the agreements relating to Seller’s acquisition of the Mortgage Servicing Rights, (b) with respect to Mortgage Loans owned by Seller, copies of all
material amendments to the Servicing Agreements, and (c) copies of any other agreements Seller enters into with any Owner that may be reasonably material to Purchaser, in each case, promptly after execution thereof.
Section 8.16
Financing; Pledge of Future Excess Servicing Spread
.
Seller shall not pledge, obtain financing for, or otherwise permit any Lien of any creditor of Seller to exist on, any portion of the
Servicing Spread Collections without the prior written consent of Purchaser. Seller’s financial statements shall contain footnotes indicating that the Future Excess Servicing Spread has been sold, and Seller does not maintain any ownership
interest therein.
Section 8.17
Existence, etc
.
Seller shall:
(a) preserve and maintain its legal existence, good standing and
all of its material licenses required to service the Mortgage Loans;
(b) comply with the requirements of all Applicable Laws,
rules, regulations and orders of Governmental Authorities (including, without limitation, truth in lending and real estate settlement procedures) if failure to comply with such requirements could be reasonably likely (either individually or in the
aggregate) to have a material adverse effect on its ability to perform its obligations hereunder or under any other Transaction Document;
(c) keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied, and maintain adequate accounts and reserves for all taxes (including
income taxes), all depreciation, depletion, obsolescence and amortization of its properties, all contingencies, and all other reserves;
(d) not move its chief executive office or chief operating office from the addresses referred to in
Exhibit J
unless it shall have provided Purchaser not less than thirty (30) days prior
written notice of such change;
34
(e) pay and discharge all material taxes, assessments and governmental charges or levies
imposed on it or its income or profits or on any of its property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained. Seller and its subsidiaries shall file on a timely basis all federal, and material state and local tax and information returns, reports and any other information statements or schedules
required to be filed by or in respect of it;
(f) keep in full force and effect the provisions of its charter documents,
by-laws, operating agreements or similar organizational documents in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Documents;
(g) keep in full force and effect all agreements and instruments by which it or any of its properties may be bound and all applicable
decrees, orders and judgments, in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Document; and
(h) comply with its obligations under the Transaction Documents to which it is a party and each other agreement entered into with an Owner.
Section 8.18
Consent to Sub-Servicing
.
Subject to the rights of the Owners, Seller will not permit any Person other than Seller to service or sub-service the Mortgage Loans without the prior written consent of Purchaser, in each case other
than third-party vendors customarily employed by servicers in the ordinary course of business in accordance with prudent mortgage servicing practices.
Section 8.19
Nonpetition Covenant
.
Seller shall not, prior to
the date that is one year and one day after the payment in full of the Future Excess Servicing Spread, petition or otherwise invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against
Purchaser under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Purchaser or any substantial part of its property, or ordering the winding up or liquidation of the
affairs of Purchaser.
Section 8.20
Schedule of Mortgage Loans
.
Seller shall maintain the Schedule of Mortgage Loans, which shall be updated as of each Assignment Date. The information in the Schedule
of Mortgage Loans pertaining to the Mortgage Loans and the Mortgage Servicing Rights will be true and correct in all material respects as of the date specified.
35
Section 8.21
True Sale Opinion
.
Seller shall cause a written opinion of counsel to be furnished, in form and substance satisfactory to Purchaser, dated the Sale Date with
respect to the characterization of the transfer of the Future Excess Servicing Spread by Seller to Purchaser as a true sale. Purchaser may request additional opinions regarding such characterization subsequent to the Sale Date as advised by
Purchaser’s counsel in light of changes in law and other circumstances. To the extent Seller is unable to provide such opinions with respect to any Mortgage Loans, Seller shall substitute such Mortgage Loans with residential mortgage loans have
substantially the same credit characteristics.
Section 8.22
Valuation
.
As of the Sale Date, Purchaser shall have received an opinion reasonably satisfactory to Purchaser that the Base Servicing Fee of the
Mortgage Loans and the Purchase Price of the Future Excess Servicing Spread is fair and reasonable.
Section 8.23
Material Documents
.
Seller shall provide Purchaser with executed copies of all material agreements and
documents, and any amendments thereto, as of each Assignment Date relating to Seller’s acquisition of the related Mortgage Servicing Rights and the servicing of the Mortgage Loans assigned.
Section 8.24
Insurance
.
The Seller shall maintain (a) general liability insurance, (b) errors and omission insurance or blanket bond coverage and (c) fidelity bond insurance, in each case, from reputable companies
with coverage in amounts customarily maintained by such similarly situated entities in the same jurisdiction and industry as the Seller.
Section 8.25
Defense of Title
.
The Seller warrants and will
defend the right, title and interest of the Purchaser in and to all Future Excess Servicing Spread against all adverse claims and demands subject to Permitted Liens.
Section 8.26
Refinancing of Mortgage Loans
.
Each agreement or
arrangement that Seller enters into to purchase Mortgage Servicing Rights shall be entered into on an arm’s length contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing
Rights to be acquired thereby. Seller shall not enter into any agreement or arrangement with a third party intended to encourage the refinancing of any Mortgage Loan by any Person other than Seller.
36
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations
of Purchaser under this Agreement are subject to the satisfaction of the following conditions as of the Sale Date:
Section 9.01
Correctness of Representations and Warranties
.
The representations and warranties made by Seller in this Agreement and each other Transaction Document to which Seller is a party to be
made on or prior to the Sale Date are true and correct in all material respects.
Section 9.02
Compliance with
Conditions
.
All of the terms, covenants, conditions and obligations of this Agreement and each other Transaction
Document required to be complied with and performed by Seller on or prior to the Sale Date shall have been duly complied with and performed in all material respects.
Section 9.03
Corporate Resolution
.
Purchaser shall have
received from Seller a certified copy of the Seller’s corporate resolution approving the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby,
together with such other certificates of incumbency and other evidences of corporate authority as Purchaser or its counsel may reasonably request.
Section 9.04
No Material Adverse Change
.
From the Agreement
Date, there shall not have been any change to Seller’s financial or operating condition or in the Mortgage Servicing Rights, the Mortgage Loans, the Related Escrow Accounts or to Seller’s relationship with, or authority from, the Agency
that in each case will likely materially and adversely affect the consummation of the transactions contemplated hereby or the Future Excess Servicing Spread.
Section 9.05
Consents
.
The Seller shall have obtained all
consents, approvals or other requirements of third parties required for the consummation of the transactions contemplated by the Transaction Documents that are to be obtained on or prior to the Sale Date, and the Seller shall have commenced
servicing the Mortgage Loans under the applicable Servicing Agreement. All actions of all Governmental Authorities required to consummate the transactions contemplated by the Transaction Documents and the documents related thereto shall have been
obtained or made.
37
Section 9.06
Delivery of Transaction Documents
.
Seller shall have delivered to Purchaser copies of each executed Transaction Document that is to be entered on or prior to the Sale Date
in the form and substance acceptable to the Purchaser and each of the items required to be delivered pursuant to Section 2.01 hereof.
Section 9.07
Certificate of Seller
.
Seller shall have provided
Purchaser a certificate, substantially in the form attached hereto as
Exhibit D
, signed by an authorized officer of Seller dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each
of Seller’s representations and warranties made in this Agreement and each other Transaction Document to which Seller is a party is true and correct in all material respects as of such date; (b) all of the terms, covenants, conditions and
obligations of this Agreement and each other Transaction Document to which Seller is a party that are required to be complied with and performed by Seller at or prior to the Sale Date have been duly complied with and performed in all material
respects; (c) the conditions set forth in
Section 9.04
and
Section 9.05
have been satisfied; and (d) as of the Sale Date, Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and
(y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries, and the Seller (considered together with the Seller’s
consolidated subsidiaries) is not in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
Section 9.08
Opinions of Counsel
.
Seller’s counsel shall have delivered the Opinions of Counsel required pursuant to
Section 2.01(b)(v)
,
Section 2.01(b)(vi)
and
Section 2.01(b)(vii)
.
Section 9.09
Good Standing Certificate of Seller
.
Seller shall have provided Purchaser a certificate of good standing of Seller, dated as of a date within five (5) Business Days prior
to the Sale Date.
Section 9.10
No Actions or Proceedings
.
No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit
the consummation of, or to invalidate, any of the transactions contemplated by this Agreement and the documents related hereto in any material respect.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the satisfaction of the following conditions as of the
Sale Date:
38
Section 10.01
Correctness of Representations and Warranties
.
The representations and warranties made by Purchaser in this Agreement to be made on or prior to the Sale Date are true and correct in all
material respects.
Section 10.02
Compliance with Conditions
.
All of the terms, conditions, covenants and obligations of this Agreement required to be complied with and performed by Purchaser on or
prior to the Sale Date shall have been duly complied with and performed in all material respects.
Section 10.03
Corporate Resolution
.
Seller shall have received from Purchaser a certified copy of its corporate resolution
approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, together with such other certificates of incumbency and other evidences of corporate authority as Seller or its counsel may
reasonably request.
Section 10.04
No Material Adverse Change
.
Since the Agreement Date, there shall not have been any change to Purchaser’s financial condition that will likely materially and
adversely affect the consummation of the transactions contemplated hereby.
Section 10.05
Certificate of
Purchaser
.
Purchaser shall have provided Seller a certificate, substantially in the form attached hereto as
Exhibit
E
, signed by an authorized officer of Purchaser dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each of Purchaser’s representations and warranties made in this Agreement is
true and correct in all material respects as of such date; (b) all of the terms, covenants, conditions and obligations of this Agreement required to be complied with and performed by Purchaser at or prior to the Agreement Date have been duly
complied with and performed in all material respects; and (c) the condition set forth in
Section 10.04
has been satisfied.
Section 10.06
Good Standing Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate of good standing of Purchaser, dated as of a date within five (5) Business Days
prior to the Sale Date.
ARTICLE XI
INDEMNIFICATION
Section 11.01
Indemnification by
Seller
.
(a) Seller shall indemnify, defend and hold Purchaser, its affiliates and its and their respective directors,
managers, officers, employees, agents, representatives and
39
advisors (the “
Purchaser Indemnitees
”) harmless from and shall reimburse the applicable Purchaser Indemnitee for any Losses suffered or incurred by any Purchaser Indemnitee after
the Agreement Date which result from:
(i) Any material breach of a representation or warranty by Seller, or
non-fulfillment of any covenant or obligation of Seller, contained in this Agreement;
(ii) Any servicing act
or omission of any prior servicer relating to any Mortgage Loan and any act or omission of any party related to the origination of any Mortgage Loan;
(iii) Any act, error or omission of Seller in servicing any of the Mortgage Loans, including improper action or failure to act when required to do so;
(iv) Any exercise of any rights of setoff or other netting arrangements by any Owner against Seller that results in a
decrease in Servicing Agreement termination payments due to Seller with respect to the Mortgage Loans from such Owner or in a shortfall of funds to pay the Future Excess Servicing Spread; and
(v) Litigation, proceedings, governmental investigations, orders, injunctions or decrees resulting from any of the items
described in
Section 11.01(a)(i)-(iv)
above;
provided
,
however
, that the applicable Purchaser Indemnitee has
taken all commercially reasonable and appropriate actions to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Seller, which such failure of mitigation shall not relieve Seller of its
indemnification obligations in this
Section 11.01(a)
but may affect the amount of such obligation; and
further provided
, that any Losses incurred by the Purchaser Indemnitee pursuant to any attempt to mitigate any such losses,
damages, deficiencies, claims, causes of action or expenses shall be reimbursed by Seller as part of its indemnification obligations in this
Section 11.01(a)
. Purchaser shall notify Seller promptly after receiving written notice of the
assertion of any litigation, proceedings, governmental investigations, orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice
of a Third Party Claim, Seller shall have the right to assume the defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Purchaser Indemnitee, but may not enter into any settlement without the prior
written consent of the applicable Purchaser Indemnitee, which shall not be unreasonably withheld. A Purchaser Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself at its own expense but shall not
consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of Seller, which consent shall not be unreasonably withheld. Any exercise of such rights by a Purchaser
Indemnitee shall not relieve Seller of its obligations and liabilities under this
Section 11.01(a)
or any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the
applicable Purchaser Indemnitee shall be required to cooperate in good faith with Seller to ensure the proper and adequate defense of such Third-Party Claim. For the avoidance of doubt, Seller’s obligations for Purchaser Indemnitees shall not
be limited to funds available in the Third Party Controlled Future Spread Custodial Account or the Future Spread Reserve Account.
40
(b)
REIT Requirements
. Notwithstanding anything in
Section 11.01(a)
, in
the event that counsel or independent accountants for the Protected REIT determine that there exists a material risk that any amounts due to Purchaser under
Section 11.01(a)
hereof would be treated as Nonqualifying Income upon the
payment of such amounts to Purchaser, the amount paid to Purchaser pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to Purchaser in such year without causing the Protected REIT to fail to meet the REIT
Requirements for such year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the Protected REIT. If the amount payable for any tax year under the preceding sentence is
less than the amount which Seller would otherwise be obligated to pay to Purchaser pursuant to
Section 11.01
of this Agreement (the “
Expense Amount
”), then: (1) Seller shall place the Expense Amount into an escrow
account (the “
Expense Escrow Account
”) using an escrow agent and agreement reasonably acceptable to Purchaser and shall not release any portion thereof to Purchaser, and Purchaser shall not be entitled to any such amount, unless and
until Purchaser delivers to Seller, at the sole option of the Protected REIT, (i) an opinion (an “
Expense Amount Tax Opinion
”) of the Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid,
would not constitute Nonqualifying Income, (ii) a letter (an “
Expense Amount Accountant’s Letter
”) from the Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to
Purchaser without causing the Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to the Protected REIT indicating that the receipt of any Expense Amount
hereunder will not cause the Protected REIT to fail to satisfy the REIT Requirements (a “
REIT Qualification Ruling
” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a
“
Release Document
”); and (2) pending the delivery of a Release Document by Purchaser to Seller, Purchaser shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan
agreement (an “
Indemnity Loan Agreement
”) reasonably acceptable to Purchaser that (i) requires Seller to lend Purchaser immediately available cash proceeds in an amount equal to the Expense Amount (an “
Indemnity
Loan
”), and (ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the credit standing and profile of Purchaser or any guarantor of Purchaser, including the
Protected REIT, at the time of such Loan, and (B) a 15 year maturity with no periodic amortization.
Section 11.02
Indemnification by Purchaser
.
Purchaser shall indemnify, defend and hold Seller, its affiliates and its and
their respective directors, managers, officers, employees, agents, representatives and advisors (the “
Seller Indemnitees
”) harmless from and shall reimburse the applicable Seller Indemnitee for any Losses suffered or incurred by any
Seller Indemnitee which result from:
(a) Any material breach of a representation or warranty by Purchaser, or non-fulfillment
of any covenant or obligation of Purchaser contained in this Agreement; and
41
(b) Litigation, proceedings, governmental investigations, orders, injunctions or decrees,
the basis for which occurred after the Agreement Date, resulting from any of the items described in
Section 11.02(a)
above;
provided
,
however
, that the applicable Seller Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any such
losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Purchaser, which such failure of mitigation shall not relieve Purchaser of its indemnification obligations in this
Section 11.02
but may
affect the amount of such obligation; and
further provided
, that any Losses incurred by the Seller Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be reimbursed
by Purchaser as part of its indemnification obligations in this
Section 11.02
. Seller shall notify Purchaser promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations, orders,
injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Purchaser shall have the right to assume the defense
of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Seller Indemnitee, but may not enter into any settlement without the prior written consent of Purchaser, which shall not be unreasonably withheld. A
Seller Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself but shall not consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the prior written
consent of Purchaser, which consent shall not be unreasonably withheld. Any exercise of such rights by a Seller Indemnitee shall not relieve Purchaser of its obligations and liabilities under this
Section 11.02
or any other provision of
this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Seller Indemnitee shall be required to cooperate in good faith with Purchaser to ensure the proper and adequate defense of such
Third-Party Claim.
Section 11.03
Other Rights
.
The Seller hereby acknowledges that, in addition to its rights under this Agreement, the Purchaser is entitled to exercise its rights
under the related Owner Consent.
ARTICLE XII
MISCELLANEOUS
Section 12.01
Costs and Expenses
.
Purchaser and Seller shall each pay the expenses incurred by it or its affiliates pursuant to the Current Spread Agreement in
connection with the transactions contemplated hereby.
Section 12.02
Confidentiality
.
Each Party understands that in connection with this transaction, it has been furnished and will be furnished Non-Public Personal
Information and/or Personally Identifiable Financial Information (as those terms are defined in Sections 573.3(n) and (o) of the Office of Thrift
42
Supervision Regulations on Privacy of Consumer Information published at 12 C.F.R. Chapter V implementing Title V of the Gramm-Leach-Bliley Act), and other information regarding the policies and
plans of the other Party and its affiliates that is and has been designated as confidential and proprietary, and each Party agrees that it will maintain the confidentiality of such information and will not disclose it to others (except for its
affiliates and its and their respective directors, managers, officers, employees, financing sources, agents, representatives and advisors), or use it except in connection with the proposed acquisition contemplated by this Agreement, without the
prior written consent of the Party furnishing such information. Information which is generally known in the industry concerning a Party or among such Party’s creditors generally or which has been disclosed to the other Party by third parties
who have a right to do so shall not be deemed confidential or proprietary information for these purposes. If Purchaser, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to
disclose any information supplied to it in connection with the transactions contemplated hereby, Purchaser agrees to provide Seller with prompt notice of such request(s) so that Seller may seek an appropriate protective order and/or waive
Purchaser’s compliance with the terms of this
Section 12.02
. If Seller, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information
supplied to it in connection with the transactions contemplated hereby, Seller agrees to provide Purchaser with prompt notice of such request(s) so that Purchaser may seek an appropriate protective order and/or waive Seller’s compliance with
the terms of this
Section 12.02
. Notwithstanding the terms of this
Section 12.02
, if, in the absence of a protective order or the receipt of a waiver hereunder, Purchaser or Seller is nonetheless, in the opinion of its
counsel, compelled to disclose information concerning the other Party to any tribunal or else stand liable for contempt or suffer other censure or penalty, Purchaser or Seller may disclose such information to such tribunal without liability
hereunder. If the proposed acquisition is not consummated, each Party agrees to promptly return to the other, promptly upon request, all confidential materials, and all copies thereof, which have been furnished to it in connection with the
transactions contemplated hereby. For the avoidance of doubt, either Party may provide its shareholders and creditors with a general description of this Agreement and any related transactions, and, subject to the provisions of this
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.03
Broker’s Fees
.
Each party hereto represents and warrants to the other that it has made no agreement to pay any finder’s, agent’s, broker’s or originator’s fee arising out of or in connection with the
subject matter of this Agreement. In the event Purchaser has entered or enters into an agreement to pay any finder’s, agent’s, broker’s, advisor’s or originator’s fee arising out of or in connection with the subject matter
of this Agreement, Purchaser shall be solely responsible for all such fees. The parties hereto shall indemnify and hold each other harmless from and against any such obligation or liability and any expense incurred in investigating or defending
(including reasonable attorneys’ fees) any claim based upon the other party’s actions in connection with such obligation.
43
Section 12.04
Relationship of Parties
.
The Parties intend that the transactions contemplated in the Transaction Documents constitute arms-length transactions among third
parties. Nothing contained in the Transaction Documents will establish any fiduciary, partnership, joint venture or similar relationship between or among the Parties except to the extent otherwise expressly stated therein.
Section 12.05
Survival of Representations and Warranties
.
Each party hereto covenants and agrees that the representations and warranties in this Agreement, and in any document delivered or to be
delivered pursuant hereto, shall survive the Agreement Date and each applicable Assignment Date.
Section 12.06
Notices
.
All notices, requests, demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been given if personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid or by prepaid overnight delivery service:
(a) If to Purchaser, to:
Fortress Investment Group LLC
1345 Avenue of the Americas
New York, NY 10105
Attn: Brian Sigman
Chief Financial Officer
(212) 479-5343
(b) If to Seller, to:
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attn: Amar Patel
or to such other address as Purchaser or Seller shall have specified in writing to the other.
Section 12.07
Waivers
.
Either Purchaser or Seller may, by written notice to the other:
(a) Extend the
time for the performance of any of the obligations or other transactions of the other; and
44
(b) Waive compliance with or performance of any of the terms, conditions, covenants or
obligations required to be complied with or performed by the other hereunder.
The waiver by Purchaser or Seller of a breach
of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.
Section 12.08
Entire Agreement; Amendment
.
This Agreement and the related Transaction Documents constitute the entire agreement between the parties with respect to the transactions contemplated hereby and supersede all prior agreements with
respect thereto. This Agreement may be amended only in a written instrument signed by both Seller and Purchaser.
Section 12.09
Binding Effect
.
This Agreement shall inure to the benefit of and be binding upon the Parties and their successors and assigns. Nothing in this Agreement, express or implied, is intended to confer on any Person other than
the Parties and their successors and assigns, any rights, obligations, remedies or liabilities.
Section 12.10
Headings
.
Headings on the Articles and Sections in this Agreement are for reference purposes only and shall not
be deemed to have any substantive effect.
Section 12.11
Applicable Law
.
This Agreement shall be 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 the laws of the State of New York, except to the extent preempted by Federal law. This Agreement shall constitute a security agreement under the laws of the State of New York. In addition to
any other rights available under this Agreement or otherwise available at law or in equity but subject to the terms hereof, Purchaser shall have all rights and remedies of a secured party with respect to the Collateral under the laws of the State of
New York and under any other applicable law to enforce the assignments and security interests contained herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of applicable law and the terms of this
Agreement, to sell or apply any rights and other interests with respect to the Collateral assigned or pledged hereby in accordance with the terms hereof at public and private sale in accordance with the terms of this Agreement. The parties agree to
waive trial by jury in the event of any dispute under this Agreement.
Section 12.12
Incorporation of
Exhibits
.
The Exhibits attached hereto shall be incorporated herein and shall be understood to be a part hereof as
though included in the body of this Agreement.
45
Section 12.13
Counterparts
.
This Agreement may be executed in counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all
of which, taken together, shall constitute one and the same agreement.
Section 12.14
Severability of
Provisions
.
If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, 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 or enforceability
of the other provisions of this Agreement or of the rights of the parties hereto.
Section 12.15
Assignment
.
(a) Seller may not assign, transfer, sell or subcontract all or any part of this Agreement, any
interest herein, or any of the Seller’s interest in the Servicing Spread Collections, other than the interest in the Total Servicing Spread sold hereby, without the prior written consent of Purchaser, provided that any successor to Seller must
assume Seller’s obligations under this Agreement. Purchaser shall have the unrestricted right to further assign, transfer, deliver, hypothecate, pledge, subdivide or otherwise deal with its rights under this Agreement on whatever terms
Purchaser shall determine without the consent of Seller; including the right to assign all or any portion of the Future Excess Servicing Spread and to assign the related rights under this Agreement. If Purchaser assigns any rights under this
Agreement to a third party (a “
Third Party Assignment
“), such third party (a “
Third Party Assignee
“) shall enter into a new agreement (a “
Third Party Future Spread Agreement
“) with Seller or
Seller’s assignee that provides such Third Party Assignee with the same rights with respect to the Future Excess Servicing Spread that Purchaser would have had under this Agreement if the Third Party Assignment had not occurred.
(b) Seller shall maintain a register on which it enters the name and address of each holder of the Future Excess Servicing Spread and
each holder’s interest in the Future Excess Servicing Spread (the “
Holder Register
”) for each transaction described in Section 12.15(a). The entries in the Holder Register shall be conclusive absent manifest error, and
Seller shall treat each Person whose name is recorded in the Holder Register as an owner of the Future Excess Servicing Spread for all purposes of this Agreement notwithstanding any notice to the contrary.
Section 12.16
Termination
.
If the Current Spread Agreement is terminated on or prior to the Sale Date, this Agreement shall terminate and neither Party shall have any further obligations to the other Party hereunder.
46
Section 12.17
Third Party Beneficiaries
.
This Agreement does not and is not intended to confer any rights or remedies upon any person or entity other than Purchaser and Seller,
except as provided in
Section 11.01
and in
Section 11.02
, provided that Purchaser and Seller reserve the right to modify any term of, or terminate, this Agreement, without the consent of any Purchaser Indemnitee or Seller
Indemnitee.
47
IN WITNESS WHEREOF, each of the undersigned parties to this Agreement has caused this
Agreement to be duly executed in its corporate name by one of its duly authorized officers, all as of the date first above written.
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MSR XI LLC
Purchaser
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By:
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/s/ Brian Sigman
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Name: Brian Sigman
Title: Chief Financial Officer
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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/s/ Amar Patel
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Name: Amar Patel
Title: Executive Vice President
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48
EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT FOR MORTGAGE LOANS
Subject to, and upon the terms and conditions of the Future Spread Agreement for GNMA Mortgage Loans, dated as of January 6, 2013 (the “
Agreement
”), by and between Nationstar
Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) and MSR XI LLC, a Delaware limited liability company (together with its successors assigns, the
“
Purchaser
”), as may be amended, restated, or otherwise modified and in effect from time to time, Seller hereby assigns, transfers and delivers to Purchaser all of Seller’s right, title and interest in and to Future Excess
Servicing Spread for each of the Mortgage Loans set forth in Annex A attached hereto and all proceeds thereof, and agrees that as of the applicable Assignment Date, the applicable Mortgage Loan shall be deemed to be a “Mortgage Loan” for
all purposes of the Agreement. Capitalized terms used in this Assignment Agreement have the meanings given to such terms in, or incorporated by reference into, the Agreement.
In the event (but only in the event) that the conveyance of the Future Excess Servicing Spread is characterized by a court or governmental authority as security for a loan rather than a sale, Seller will
be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Future Excess Servicing Spread and all proceeds thereof as security for a loan in an
amount of the Purchase Price.
All of the terms, covenants, conditions and obligations of the Agreement required to be
complied with and performed by Seller on or prior to the date hereof have been duly complied with and performed in all material respects.
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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Name:
Title:
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49
Annex A
[ATTACH ANNEX A, WHICH MAY BE ON COMPUTER TAPE, COMPACT DISK, OR MICROFICHE,
CONTAINING THE INFORMATION SET FORTH BELOW]
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(a)
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(b)
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(c)
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(d)
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(e)
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(g)
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(h)
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(i)
(column (g)
–
column (h))
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(j)
([ ]% of
column
(i))
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Refinancing
Date
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Loan # of
Refinanced
Mortgage
Loan
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Principal
Balance of
Refinanced
Mortgage
Loan
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Loan # of
Mortgage
Loan
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Principal
Balance of
Mortgage
Loan as of the
Assignment
Date
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Servicing
Spread
Rate
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Base
Servicing
Fee Rate
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Net Servicing
Spread
Rate
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Future Excess
Servicing
Spread
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50
EXHIBIT C
SCHEDULE OF MORTGAGE LOANS
[SEPARATELY DELIVERED]
EXHIBIT D
SELLER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, a [Vice President] of Nationstar Mortgage LLC (the “
Company
”), pursuant to
Section 9.07
of the Future
Spread Agreement for GNMA Mortgage Loans by and between MSR XI LLC and the Company, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material
respects as of the date hereof;
(ii) All of the terms, covenants, conditions and obligations of the Agreement
required to be complied with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects;
(iii) The conditions set forth in
Section 9.04
and
Section 9.05
of the Agreement have been satisfied; and
(iv) As of the date hereof, the Company has a Consolidated Tangible Net Worth (as defined in the Agreement) of at least
the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date of the Agreement by the Company, Nationstar Mortgage Holdings Inc. or any of Company’s consolidated subsidiaries, and the Company
(considered together with its consolidated subsidiaries)is not in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of [ ]
EXHIBIT E
PURCHASER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, [POSITION] of [ ], the sole member of MSR XI LLC (the “
Company
”), pursuant to
Section 10.05
of the Future Spread Agreement for GNMA Mortgage Loans by and between the Company and Nationstar Mortgage LLC, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company
that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material
respects as of the date hereof; and
(ii) All of the terms, covenants, conditions and obligations of the Agreement required to
be complied with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects; and
(iii) The condition set forth in
Section 10.04
have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
[ ].
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MSR XI LLC
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By: [ ], as member
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By:
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EXHIBIT F
LOCATION OF CREDIT FILES
350 Highland Drive
Lewisville, Texas 75067
EXHIBIT G
FORM OF SUMMARY REMITTANCE REPORT
[SEPARATELY DELIVERED]
EXHIBIT H
FORM OF DELINQUENCY REPORT
[SEPARATELY DELIVERED]
EXHIBIT I
FORM OF DISBURSEMENT REPORT
[SEPARATELY DELIVERED]
EXHIBIT J
SELLER JURISDICTIONS AND RECORDING OFFICES
Chief Executive Office:
350 Highland Drive
Lewisville, Texas 75067
Recording Office:
Secretary of
State, State of Delaware
58
Exhibit 10.52
CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT
FOR GNMA MORTGAGE
LOANS
by and between
NATIONSTAR MORTGAGE LLC
(Seller)
and
MSR XI LLC
(Purchaser)
Dated and effective as of January 6, 2013
Table of Contents
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ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
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2
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Section 1.01
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Definitions
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2
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Section 1.02
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General Interpretive Principles
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14
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ARTICLE II PROCEDURES; ITEMS TO BE DELIVERED
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15
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Section 2.01
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Sale of Current Excess Servicing Spread
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15
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Section 2.02
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[Reserved]
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15
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Section 2.03
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Items to be Delivered on the Agreement Date
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15
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Section 2.04
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Items to be Delivered on the Sale Date
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15
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Section 2.05
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Sale Date Transactions
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17
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ARTICLE III PAYMENTS AND DISTRIBUTIONS
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18
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Section 3.01
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Purchase Price
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18
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Section 3.02
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Payments by Purchaser
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19
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Section 3.03
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Accounts
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19
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Section 3.04
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Priority of Payments
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22
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Section 3.05
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Withdrawals from the Current Spread Reserve Account
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23
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Section 3.06
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Payment to Seller of Base Servicing Fee
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23
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Section 3.07
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Intent and Characterization
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24
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ARTICLE IV [RESERVED]
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24
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER
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24
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Section 5.01
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Due Organization and Good Standing
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24
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Section 5.02
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Authority and Capacity
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25
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Section 5.03
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Agency Agreements
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25
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Section 5.04
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Title to the Mortgage Servicing Rights
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25
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Section 5.05
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Effective Agreements
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26
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Section 5.06
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No Accrued Liabilities
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26
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Section 5.07
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Seller/Servicer Standing
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26
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Section 5.08
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MERS Membership
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26
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Section 5.09
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Agency Set-off Rights
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26
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Section 5.10
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Ability to Perform; Solvency
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27
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Section 5.11
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Material Documents
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27
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Section 5.12
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Obligations with Respect to Origination
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27
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Section 5.13
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No Actions.
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27
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ARTICLE VI REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE
LOANS AND SERVICING
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27
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Section 6.01
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Servicing Agreements; Applicable Laws
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28
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i
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Section 6.02
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Related Escrow Accounts
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28
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Section 6.03
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Accuracy of Servicing Information
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28
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Section 6.04
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No Purchaser Responsibility
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28
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Section 6.05
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Location of Credit Files
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28
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Section 6.06
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Representations Concerning the Current Excess Servicing Spread
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28
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ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER
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29
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Section 7.01
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Due Organization and Good Standing
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29
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Section 7.02
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Authority and Capacity
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30
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Section 7.03
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Effective Agreements
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30
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Section 7.04
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Sophisticated Investor
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30
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Section 7.05
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No Actions
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30
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ARTICLE VIII SELLER COVENANTS
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31
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Section 8.01
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Servicing Obligations
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31
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Section 8.02
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Cooperation; Further Assurances
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31
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Section 8.03
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Financing Statements
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32
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Section 8.04
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Supplemental Information
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32
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Section 8.05
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Access to Information
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32
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Section 8.06
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Home Affordable Modification Program
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32
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Section 8.07
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Distribution Date Data Tapes and Reports
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33
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Section 8.08
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Financial Statements and Officer’s Certificates
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35
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Section 8.09
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Monthly Management Calls
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35
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Section 8.10
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Timely Payment of Agency Obligations
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36
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Section 8.11
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Servicing Agreements
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36
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Section 8.12
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Transfer of Mortgage Servicing Rights
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36
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Section 8.13
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Consents to Transaction Documents
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37
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Section 8.14
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Accounts
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37
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Section 8.15
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Notification of Certain Events
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37
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Section 8.16
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Financing; Pledge of Current Excess Servicing Spread
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37
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Section 8.17
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Existence, etc
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38
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Section 8.18
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Consent to Sub-Servicing
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39
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Section 8.19
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Nonpetition Covenant
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39
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Section 8.20
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Data Tape; Schedule of Mortgage Loans
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39
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Section 8.21
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Insurance
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39
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Section 8.22
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Defense of Title
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40
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Section 8.23
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Refinancing of Mortgage Loans
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40
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ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
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40
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Section 9.01
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Correctness of Representations and Warranties
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40
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Section 9.02
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Compliance with Conditions
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40
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ii
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Section 9.03
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Corporate Resolution
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40
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Section 9.04
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No Material Adverse Change
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41
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Section 9.05
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Consents
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41
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Section 9.06
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Delivery of Transaction Documents
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41
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Section 9.07
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Certificate of Seller
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41
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Section 9.08
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Valuation
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42
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Section 9.09
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Opinions of Counsel
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42
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Section 9.10
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Acquisition of Mortgage Servicing Rights by Seller
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42
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Section 9.11
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Good Standing Certificate of Seller
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42
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Section 9.12
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No Actions or Proceedings
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42
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Section 9.13
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Fees, Costs and Expenses
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42
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ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
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43
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Section 10.01
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Correctness of Representations and Warranties
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43
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Section 10.02
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Compliance with Conditions
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43
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Section 10.03
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Corporate Resolution
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43
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Section 10.04
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No Material Adverse Change
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43
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Section 10.05
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Certificate of Purchaser
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43
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Section 10.06
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Good Standing Certificate of Purchaser
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43
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ARTICLE XI INDEMNIFICATION; CURE
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44
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Section 11.01
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Indemnification by Seller
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44
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Section 11.02
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Indemnification by Purchaser
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46
|
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Section 11.03
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Award of Damages
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47
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Section 11.04
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Other Rights
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48
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ARTICLE XII MISCELLANEOUS
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48
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Section 12.01
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Costs and Expenses
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48
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Section 12.02
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|
Confidentiality
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48
|
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Section 12.03
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Broker’s Fees
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49
|
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Section 12.04
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Relationship of Parties
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49
|
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Section 12.05
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Survival of Representations and Warranties
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50
|
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Section 12.06
|
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Notices
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50
|
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Section 12.07
|
|
Waivers
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50
|
|
Section 12.08
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|
Entire Agreement; Amendment
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51
|
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Section 12.09
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Binding Effect
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51
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Section 12.10
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Headings
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51
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Section 12.11
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Applicable Law
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51
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Section 12.12
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Incorporation of Exhibits
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51
|
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Section 12.13
|
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Counterparts
|
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52
|
|
Section 12.14
|
|
Severability of Provisions
|
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52
|
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Section 12.15
|
|
Public Announcement
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52
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Section 12.16
|
|
Assignment
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52
|
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Section 12.17
|
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Termination
|
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53
|
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Section 12.18
|
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Third Party Beneficiaries
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53
|
iii
EXHIBITS
Exhibit A – Form of Assignment Agreement
Exhibit B – Schedule of Mortgage Loans
Exhibit C – Seller’s Officer’s Certificate
Exhibit D – Purchaser’s Officer’s Certificate
Exhibit E – Location of Credit
Files
Exhibit F – Form of Summary Remittance Report
Exhibit G – Form of Delinquency Report
Exhibit H – Form of Disbursement Report
Exhibit I – Seller Jurisdictions and Recording Offices
iv
CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT FOR GNMA
MORTGAGE LOANS
This CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT FOR GNMA MORTGAGE LOANS (as amended, restated, or otherwise modified and in effect from time to time, this “
Agreement
”), dated
as of January 6, 2013 (the “
Agreement Date
”), is by and between MSR XI LLC, a Delaware limited liability company (together with its successors and assigns, the “
Purchaser
”), and Nationstar Mortgage LLC, a
Delaware limited liability company (together with its successors and assigns, the “
Seller
”) (the Purchaser and the Seller will collectively be referred to as the “
Parties
” and each, a “
Party
”).
W I T N E S S E T H
:
WHEREAS
, Seller and Bank of America, National Association (“
Bank of America
”) have entered into the Purchase and Sale Agreement, pursuant to which, among other things, Seller will
acquire and assume all right, title and interest in mortgage servicing rights to a portfolio of residential mortgage loans owned or securitized by the Agency (as defined herein);
WHEREAS
, by acquiring such mortgage servicing rights, Seller is entitled to a servicing spread and other incidental fees with
respect to the related residential mortgage loans;
WHEREAS
, the servicing spread, together with the Ancillary Income
(as defined below), exceeds the compensation that Seller requires to service the related residential mortgage loans;
WHEREAS
, Seller desires to sell, and Purchaser desires to purchase, a portion of the servicing spread that exceeds such required
compensation amount; and
WHEREAS
, Purchaser and Seller desire to set forth the terms and conditions pursuant to which
Seller will sell, transfer and assign to Purchaser, all of Seller’s right, title and interest in and to a portion of the servicing spread that exceeds the Seller’s required compensation amount, and Purchaser will purchase all right, title
and interest in and to such portion of the servicing spread;
NOW, THEREFORE
, in consideration of the mutual promises,
covenants and conditions and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and upon the terms and subject to the conditions set forth herein, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
Section 1.01
Definitions
.
Whenever used herein, the following words and phrases, unless the context otherwise requires, shall have
the following meanings:
7 Year Swap Rate
: The yield reported by Bloomberg under USSWAP7 <Index> HP <GO> at
ten a.m. (10:00 a.m.), East Coast Time, on the applicable date. The 7 Year Swap Rate on December 7, 2012 was 1.1451%.
Accepted Servicing Practices
: With respect to any Mortgage Loan, those accepted and prudent mortgage servicing practices
(including collection procedures) which are in accordance with servicing practices required to be followed by the Agency as set forth in the applicable Servicing Agreements, and in a manner at least equal in quality to the servicing that Seller
provides to mortgage loans which it owns in its own portfolio.
Agency
: Ginnie Mae, or any successor thereto.
Agency Reserve Account
: The account created pursuant to Section 3.03(d) hereof and maintained by Wells Fargo
Bank, National Association or any successor thereto, or any other third party custodian or trustee selected by Purchaser. Such account has been pledged by the Purchaser to Agency pursuant to the requirements of the GNMA Acknowledgement Agreement.
Agreement
: As defined in the preamble hereof.
Agreement Date
: As defined in the preamble hereof.
Ancillary Income
: All incidental servicing fees (such as late fees, assignment transfer fees, returned check fees, special services fees, amortization schedule fees, HAMP fees, modification and
incentive income and any interest or earnings on funds deposited in an account maintained by the Seller as servicer with respect to the Mortgage Loans, etc.) that are supplemental to the servicing spread payable to the servicer pursuant to the
Servicing Agreements.
Applicable Law
: With reference to any Person, all laws (including common law), statutes,
regulations, ordinances, treaties, judgments, decrees, injunctions, writs and orders of any court, governmental agency or authority and rules, regulations, orders, directives, licenses and permits of any Governmental Authority applicable to such
Person or its property or in respect of its operations.
Assignment Agreement
: An agreement substantially in the form
of
Exhibit A
to this Agreement or in such other form as mutually agreed upon by the Parties.
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Bank
: Wells Fargo Bank, National Association, or any successor thereto, or another
financial institution mutually agreed upon by the Parties or any successor thereto, each in its capacity as “Bank” under the Current Spread Distribution Account Control Agreement or the Current Spread Reserve Account Control Agreement, as
applicable, or any third party custodian or trustee in similar capacity under any replacement account control agreements.
Bank of America
: As defined in the recitals hereof.
Base Purchase Price
: The meaning given to such term in
Section 3.01
.
Base Servicing Fee
: With respect to a Collection Period, an amount equal to the product of (A) the aggregate outstanding principal balance of the Mortgage Loans as of the related Measurement
Date, (B) the Base Servicing Fee Rate and (C) (i) in the case of the initial Collection Period, a fraction, the numerator of which is the number of days in the period from and including the Sale Date to and including the last day of
the initial Collection Period, and the denominator of which is 360, and (ii) in the case of all other Collection Periods, 1/12;
provided
that the Base Servicing Fee with respect to any Mortgage Loan whose Servicing Agreement is
terminated during a Collection Period shall be pro-rated to the actual number of days within such Collection Period in which such Mortgage Loan was serviced by Seller.
Base Servicing Fee Rate
: 0.18% per annum, except that, for the period during which the Interim Servicer is servicer of the Mortgage Loans, the Base Servicing Fee Rate shall be the lesser of
(a) 0.18% per annum or (b) the interim servicing fee payable to the Interim Servicer.
Business Day
: Any
day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the States of Texas or New York are authorized or obligated by law or by executive order to be closed or (c) such other days as agreed upon by the
Parties.
Claims and Losses
: As defined in the GNMA Acknowledgment Agreement.
Code
: The Internal Revenue Code of 1986, as amended from time to time.
Collection Period
: With respect to any Distribution Date, the calendar month preceding the month in which such Distribution Date
occurs.
Consolidated Tangible Net Worth
: (i) The net worth of Seller and its consolidated subsidiaries, on a
combined basis, determined in accordance with GAAP,
minus
(ii) all intangibles determined in accordance with GAAP (including goodwill, capitalized financing costs and capitalized administration costs but excluding originated and
purchased mortgage servicing rights or retained residual securities) and any and all advances to, investments in and receivables held from affiliates;
provided
,
however
, that the non-cash effect (gain or loss) of any mark-to-market
adjustments made directly to stockholders’ equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the
calculation of Consolidated Tangible Net Worth.
Control
: The meaning specified in Section 8-106 of the UCC.
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Credit File
: Those documents, which may be originals, copies or electronically
imaged, pertaining to each Mortgage Loan, held by or on behalf of Seller in connection with the servicing of the Mortgage Loan, which may include Mortgage Loan Documents and the credit documentation relating to the origination of such Mortgage Loan,
and any documents gathered during the Servicing of a Mortgage Loan.
Current Excess Servicing Spread
: The rights of
Seller, severable from each (and all) of the other rights under the applicable Servicing Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to the Current Excess Servicing Spread Percentage.
Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans
: The current excess servicing spread acquisition
agreement for certain Freddie Mac mortgage loans, dated the date hereof, between the Seller and MSR IX LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans
: The current excess servicing spread acquisition
agreement for certain Fannie Mae mortgage loans, dated the date hereof, between the Seller and MSR X LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XII LLC
: The current excess servicing
spread acquisition agreement for certain non-agency mortgage loans, dated the date hereof, between the Seller and MSR XII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XIII LLC
: The current excess servicing
spread acquisition agreement for certain non-agency mortgage loans, dated the date hereof, between the Seller and MSR XIII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Percentage
: 66.67% .
Current Spread Distribution Account Agreement
: The applicable deposit account agreement and other related account documentation governing the Third Party Controlled Current Spread Distribution
Account.
Current Spread Distribution Account Control Agreement
: The account control agreement among Seller, Purchaser
and Wells Fargo Bank, National Association, or any other institution agreed upon by the Parties, as Bank, dated as of the Sale Date, entered into with respect to the Third Party Controlled Current Spread Distribution Account, as amended, restated,
supplemented or otherwise modified from time to time.
Current Spread Reserve Account
: The account specified in the
Current Spread Reserve Account Control Agreement and maintained by Wells Fargo Bank, National Association or any successor thereto, or any other third party custodian or trustee selected by Purchaser. Such account has been pledged by the Seller to
Agency pursuant to the requirements of the GNMA Acknowledgement Agreement.
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Current Spread Reserve Account Agreement
: The applicable deposit account agreement
and other related account documentation governing the Current Spread Reserve Account.
Current Spread Reserve Account
Control Agreement
: The account control agreement among Seller, Purchaser and Wells Fargo Bank, National Association, or any other institution agreed upon by the Parties, as Bank, dated on or before the Sale Date, entered into with respect to the
Current Spread Reserve Account, as amended, restated, supplemented or otherwise modified from time to time.
Current Spread
Reserve Account Deposit Event
: The meaning given to such term in
Section 3.03(c)
.
Current Spread Reserve
Account Required Amount
: The meaning given to such term in
Section 3.03(c)
.
Custodian
: A custodian of
Credit Files or any part thereof as identified by the Seller to the Purchaser in writing on or prior to the Sale Date as the same may be amended and supplemented from time to time by the Seller by providing a written notice of any such update to the
Purchaser.
Cut-Off Date
: The opening of business on the Sale Date.
Data Tape
: The list of all mortgage loans, dated as of the date specified therein, whose Mortgage Servicing Rights will be sold,
or that are anticipated to be sold, as applicable, to Seller under the Purchase and Sale Agreement.
Deposit
: As
defined in
Section 3.01
hereof.
Distribution Date
: The 10th day of each calendar month, or if such day is
not a Business Day, the prior Business Day, beginning in the month following the Sale Date, or such other day as mutually agreed upon by Seller and Purchaser.
Electronic Data File
: A computer tape or other electronic medium generated by or on behalf of Seller and delivered or transmitted to or on behalf of Purchaser which provides information relating to
the Mortgage Loans.
Eligible Servicing Agreement
: Unless otherwise agreed to by the Purchaser, a Servicing Agreement
in respect of which the following eligibility requirements have been satisfied:
(a) such Servicing Agreement is in full force
and effect, and is in all respects genuine as appearing on its face or as represented in the books and records of Seller, and no event of default, early amortization event, termination event, or other event giving any party thereto (including with
notice or lapse of time or both) the right to terminate Seller as servicer thereunder for cause has occurred and is continuing; provided, however, that with respect to any Servicing Agreement and the occurrence of any event set forth in this clause
(a) which is based on a breach of a collateral performance test, such Servicing Agreement shall remain an Eligible Servicing Agreement so long as no notice of termination based on such breach has been given or threatened in writing and subject
to the restrictions set forth herein; and
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(b) Seller has not resigned or been terminated as servicer under such Servicing Agreement
and has no actual knowledge of any pending or threatened action to terminate Seller, as servicer (whether for cause or without cause).
Entitlement Holder
: The meaning specified in Section 8-102(a)(7) of the UCC.
Expense Amount
: As defined in
Section 11.01(b)
hereof.
Expense Amount Accountant’s Letter
: As defined in
Section 11.01(b)
hereof.
Expense Amount Tax Opinion
: As defined in
Section 11.01(b)
hereof.
Expense Escrow Account
: As defined in
Section 11.01(b)
hereof.
Fannie Mae
: Federal National Mortgage Association, or any successor thereto.
Federal Funds Rate
: For any date of determination, the federal funds rate as reported in the Federal Reserve H.15(519) Statistical
Release as of the first Business Day of the month in which such date of determination falls, or if such Statistical Release is no longer published, the average of the “high” and the “low” interest rate for reserves traded among
commercial banks for overnight use in amounts of one million dollars ($1,000,000.00) or more, as reported by The Wall Street Journal under “Federal Funds” rates as of the first Business Day of the month in which such date of determination
falls.
FHLMC Mortgage Loans
: Each of those mortgage loans for which the current excess servicing spread has been sold
and assigned to MSR IX LLC pursuant to the Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans.
FNMA Mortgage Loans
: Each of those mortgage loans for which the current excess servicing spread has been sold and assigned to MSR
X LLC pursuant to the Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans.
Freddie Mac
:
Federal Home Loan Mortgage Corporation, or any successor thereto.
Future Spread Agreements
: The Future Spread
Agreement for FHLMC Mortgage Loans, the Future Spread Agreement for FNMA Mortgage Loans, the Future Spread Agreement for GNMA Mortgage Loans, the Future Spread Agreement for Non-Agency Mortgage Loans for MSR XII LLC and the Future Spread Agreement
for Non-Agency Mortgage Loans for MSR XIII LLC.
Future Spread Agreement for FHLMC Mortgage Loans
: The Future Spread
Agreement for FHLMC Mortgage Loans, dated January 6, 2013, by and between Seller and MSR IX LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
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Future Spread Agreement for FNMA Mortgage Loans
: The Future Spread Agreement for FNMA
Mortgage Loans, dated January 6, 2013, by and between Seller and Purchaser, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for GNMA Mortgage Loans
: The Future Spread Agreement for GNMA Mortgage Loans, dated January 6, 2013, by and between Seller and MSR XI LLC, as may be amended, restated,
or otherwise modified and in effect from time to time.
Future Spread Agreement for Non-Agency Mortgage Loans for MSR XII
LLC
: The Future Spread Agreement for Non-Agency Mortgage Loans, dated January 6, 2013, by and between Seller and MSR XII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for Non-Agency Mortgage Loans for MSR XIII LLC
: The Future Spread Agreement for Non-Agency Mortgage Loans,
dated January 6, 2013, by and between Seller and MSR XIII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
GAAP
: Generally accepted accounting principles in the United States of America as in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in general use by significant segments of the accounting
profession, that are applicable to the circumstances as of the date of determination.
Ginnie Mae
: Government National
Mortgage Association, or any successor thereto.
Ginnie Mae Contract
: The meaning given to that term in the GNMA
Acknowledgment Agreement.
GNMA Acknowledgment Agreement
: The acknowledgment agreement relating to the excess servicing
spread by and among the Agency, Seller and Purchaser relating to the Mortgage Loans.
GNMA Mortgage Loans
: Each of the
Mortgage Loans on the Schedule of Mortgage Loans.
Governmental Authority
: With respect to any Person, any nation or
government, any state or other political subdivision, agency or instrumentality thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having
jurisdiction over such Person, any of its subsidiaries or any of its properties.
HAMP
: The meaning given to such term
in
Section 8.06
.
HAMP Loans
: The meaning given to such term in
Section 8.06
.
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Holder Register
: As defined in Section 12.16(b) hereof.
HUD
: The Federal Housing Administration of the United States Department of Housing and Urban Development or any successor thereto.
Indemnity Loan
: As defined in
Section 11.01(b)
hereof.
Indemnity Loan Agreement
: As defined in
Section 11.01(b)
hereof.
Interim Servicer
: Bank of America or its successors or assigns acting as interim servicer with respect to the Mortgage Loans
pursuant to the interim servicing addendum of the Purchase and Sale Agreement.
IRS
: The United States Internal Revenue
Service.
Lien
: Any mortgage, deed of trust, pledge, hypothecation, collateral assignment, charge, deposit,
arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness or the performance
of any other obligation, including any conditional sale or other title retention agreement.
Lockbox Account
: An
account maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser for the purpose of receiving payments from Mortgagors, which account is the relevant “P&I custodial account”
maintained by Seller in accordance with the Ginnie Mae guide.
Loss
or
Losses
: Any and all direct, actual and
out-of-pocket losses (including any loss in the value in the Current Excess Servicing Spread), damages, deficiencies, claims, costs or expenses, including reasonable attorneys’ fees and disbursements, excluding (i) any amounts attributable
to or arising from overhead allocations, general or administrative costs and expenses, or any cost for the time of any Party’s employees, (ii) consequential losses or damages consisting of speculative lost profits, lost investment or
business opportunity, damage to reputation or operating losses, or (iii) punitive or treble damages;
provided
,
however
, that the exclusions set forth in clauses (ii) or (iii) above do not apply if and to the extent any
such amounts are actually incurred in payment to a third party or government entity.
Measurement Date
: With respect to
any Collection Period, the first day of such Collection Period.
MERS
: Mortgage Electronic Registration Systems, Inc.,
or any successor thereto.
MI
: Insurance provided by private mortgage insurance companies to make payments on
certain Mortgage Loans in the event that the related Mortgagor defaults in its obligation in respect of the Mortgage.
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Mortgage
: Each of those mortgages, deeds of trust, security deeds or deeds to secure
debt creating a first lien on or an interest in real property securing a Mortgage Note and related to a Mortgage Loan.
Mortgage Loan
: Each of those mortgage loans listed on the Schedule of Mortgage Loans.
Mortgage Loan Documents
: With respect to each Mortgage Loan, the documents and agreements related to such Mortgage Loan required
to be held by the applicable Custodian, including, without limitation, the original Mortgage Note, and any other documents or agreements evidencing and/or governing such Mortgage Loan.
Mortgage Note
: With respect to any Mortgage Loan, the note or other evidence of indebtedness of the Mortgagor, thereunder,
including, if applicable, an allonge and lost note affidavit.
Mortgage Servicing Rights
: The rights and
responsibilities of Seller with respect to servicing the Mortgage Loans under the Servicing Agreements, including any and all of the following if and to the extent provided therein: (a) all rights to service a Mortgage Loan; (b) all rights
to receive servicing fees, Ancillary Income, indemnification for servicing the Mortgage Loan, and any payments received in respect of the foregoing and proceeds thereof; (c) the right to collect, hold and disburse escrow payments or other
payments with respect to the Mortgage Loan and any amounts actually collected with respect thereto and to receive interest income on such amounts to the extent permitted by Applicable Law; (d) all accounts and other rights to payment related to
any of the property described in this paragraph; (e) possession and use of any and all Credit Files pertaining to the Mortgage Loan or pertaining to the past, present or prospective servicing of the Mortgage Loan; (f) to the extent
applicable, all rights and benefits relating to the direct solicitation of the related Mortgagors for refinance or modification of the Mortgage Loans and attendant right, title and interest in and to the list of such Mortgagors and data relating to
their respective Mortgage Loans; and (g) all rights, powers and privileges incident to any of the foregoing.
Mortgaged Property
: The Mortgagor’s real property, securing repayment of a related Mortgage Note, consisting of an interest
in a single parcel of real property, improved by a residential dwelling.
Mortgagor
: An obligor under a residential
mortgage loan.
MSR Successor Proceeds
: Any proceeds received by the Seller or the Purchaser in connection with the
sale of the Mortgage Servicing Rights and appointment of a successor servicer, as servicer of the Mortgage Loans, in accordance with the GNMA Acknowledgment Agreement. In the event that consideration for any such sale and appointment relates to
mortgage loans in addition to the Mortgage Loans, “MSR Successor Proceeds” shall be equal to the
pro rata
amount of such consideration, based upon the proportionate amount of affected Mortgage Loans in relation to all affected
mortgage loans of Seller (calculated in accordance with the method in which such MSR Successor Proceeds are calculated).
Net Servicing Fee
: As defined in the Purchase and Sale Agreement.
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Non-Agency Mortgage Loans
: Each of the mortgage loans for which the current excess
servicing spread has been sold and assigned to MSR XII LLC or MSR XIII LLC pursuant to the applicable Sale Agreement.
Nonqualifying Income
: Any amount that is treated as gross income for purposes of Section 856 of the Code and which is not
Qualifying Income.
Objection Notice
: The meaning given to such term in
Section 3.03(c)
.
Opinion of Counsel
: One or more written opinions, in form and substance reasonably satisfactory to the recipient, of an attorney
at law admitted to practice in any state of the United States or the District of Columbia, which attorney may be counsel for Seller or Purchaser, as the case may be.
Party
or
Parties
: As defined in the preamble hereof.
Permitted
Liens
: Liens in favor of the Agency required pursuant to the applicable Servicing Agreements.
Person
: Any
individual, partnership, corporation, limited liability company, limited liability partnership, business entity, joint stock company, trust, business trust, unincorporated organization, association, enterprise, joint venture, government, any
department or agency of any government or any other entity of whatever nature.
Power of Attorney
: A Power of Attorney
delivered by the Seller to the Purchaser authorizing the Purchaser to enforce the right to payment of the Current Excess Servicing Spread under the related Servicing Agreement solely in the event that the Seller fails to enforce such right within 30
days after receiving written notice of such failure from the Purchaser to the Seller.
Priority of Payments
: The
meaning given to such term in
Section 3.04
.
Protected REIT
: Any entity that (i) has elected to be
taxed as a real estate investment trust pursuant to Section 856 et seq. of the Code, (ii) owns a direct or indirect equity interest in Purchaser, and (iii) is treated for purposes of Section 856 of the Code as owning all or a
portion of the assets of the Purchaser or as receiving all or a portion of the Purchaser’s income.
Purchase and Sale
Agreement
: The Mortgage Servicing Rights Purchase and Sale Agreement, dated as of January 6, 2013, by and between Nationstar Mortgage LLC, as purchaser, and Bank of America, National Association, as seller, together with all schedules and
exhibits thereto, as the same may be amended, supplemented or otherwise modified from time to time.
Purchase Price
:
The meaning given to such term in
Section 3.01
.
Purchase Price Percentage
: 2.79 multiplied by the excess
of (i) Net Servicing Fee (as such Net Servicing Fees are determined in accordance with Exhibit F to the Purchase and Sale Agreement), expressed as an annualized rate on the unpaid principal balances of the related Mortgage Loans as of the Sale
Date over (ii) the Base Servicing Fee Rate; provided however,
10
that for every plus or minus 1 basis point (0.01%) movement in the 7 Year Swap Rate between December 7, 2012 and the Sale Date, the Purchase Price Percentage will be adjusted plus or minus
by 0. 0015%. As necessary, the percentage to be determined pursuant to this definition will be based on linear interpolation.
Purchased Assets
: As defined in the Purchase and Sale Agreement.
Purchaser
: As defined in the preamble hereof.
Purchaser Enforcement Expenses
: An amount equal to the Current Excess Servicing Spread Percentage of the reasonable expenses, including legal costs and expenses, incurred in the enforcement of any
rights of Seller material to the value of the Total Servicing Spread under the Purchase and Sale Agreement and related documents, without duplication of any other such expenses paid under any other Sale Agreement, which enforcement has been approved
by Purchaser (such approval not to be unreasonably withheld).
Purchaser Indemnitees
: The meaning given to such term in
Section 11.01(a)
.
Qualifying Income
: Gross income that is described in Section 856(c)(2) or 856(c)(3)
of the Code.
REIT Qualification Ruling
: As defined in
Section 11.01(b)
hereof.
REIT Requirements
: The requirements imposed on REITs pursuant to Sections 856 through and including 860 of the Code.
Related Escrow Accounts
: Mortgage Loan escrow/impound accounts maintained by Seller relating to the Mortgage Servicing Rights,
including accounts for buydown funds, real estate taxes and MI, flood and hazard insurance premiums.
Release Document
:
As defined in Section 11.01(b) hereof.
Remaining Expected Total Servicing Spread
: The meaning given to such term
in
Section 3.03(c)
.
Repurchase Price
: As defined in the Purchase and Sale Agreement.
Requirement of Law
: As to any Person, the certificate of incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its
property is subject.
Reserve Account Deposit Amount
: An amount to be deposited in the Reserve Account on each
Distribution Date as provided under the Ginnie Acknowledgment Agreement.
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Retained Servicing Spread
: The rights of Seller, severable from each (and all) of the
other rights under the applicable Servicing Agreement, to the Retained Servicing Spread Percentage of the Total Servicing Spread.
Retained Servicing Spread Percentage
: 100%
minus
the Current Excess Servicing Spread Percentage.
Sale Agreements
: This Agreement, the Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, the Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage
Loans, the Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XII LLC and the Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XIII LLC.
Sale Date
: The “Sale Date” or the “Subsequent Sale Date”, in each case, as defined in the Purchase and Sale
Agreement with respect to the Mortgage Loans; provided that all conditions precedent to the execution and delivery of the related Assignment Agreement shall have been satisfied or waived on such date.
Sales Proceeds
: The proceeds received upon a sale (approved by the Parties) of the Total Servicing Spread (except without giving
effect to clause (b) of the definition thereof), in whole or in part, including through a sale in accordance with
Section 8.12
.
Schedule of Mortgage Loans:
The list of Mortgage Loans whose Current Excess Servicing Spread has been assigned to Purchaser pursuant to this Agreement delivered initially accordance with
Section 2.04
, updated in accordance with
Section 3.01
and maintained as
Exhibit B
hereto.
Seller
: As defined in the preamble hereof.
Seller Enforcement Expenses
: An amount equal to the Retained Servicing Spread Percentage of the reasonable expenses, including legal costs and expenses, incurred in the enforcement of any rights of
Seller material to the value of the Total Servicing Spread under the Purchase and Sale Agreement and related documents, without duplication of any other such expenses paid under any other Sale Agreement, which enforcement has been approved by
Purchaser (such approval not to be unreasonably withheld).
Seller Indemnitees
: The meaning given to such term in
Section 11.02
.
Seller Purchase Price
: The “Purchase Price” as defined in the Purchase and Sale
Agreement.
Servicing
: The responsibilities, with respect to servicing the Mortgage Loans, under the Servicing
Agreements.
Servicing Agreement
: The servicing agreements, as amended from time to time, and any waivers, consent
letters, acknowledgments and other agreements under which Seller or the Interim Servicer is the servicer of the Mortgage Loans relating to the Mortgage Servicing Rights and governing the servicing of the Mortgage Loans.
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Servicing Transfer Date
: As defined in the Purchase and Sale Agreement with respect
to the Mortgage Loans.
Servicing Spread Collections
: For each Collection Period, the funds collected on the Mortgage
Loans and allocated as the servicing compensation payable to Seller as servicer of the Mortgage Loans with respect to such Collection Period pursuant to the applicable Servicing Agreements, other than Ancillary Income and, for the avoidance of
doubt, other than reimbursement for out-of-pocket expenditures by Seller in accordance with the Servicing Agreements.
Solvent
: With respect to any Person as of any date of determination, (a) the value of the assets of such Person is greater
than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person as determined in accordance with GAAP, (b) such Person is able to pay all liabilities of such Person as such liabilities mature and
(c) such Person does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the amount that, in light of all the facts and circumstances existing
at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
Target
Reserve Amount
: As defined in the Ginnie Acknowledgment Agreement.
Third Party Assignee
: The meaning given to such
term in
Section 12.16
.
Third Party Assignment
: The meaning given to such term in
Section 12.16
.
Third Party Current Spread Agreement
: The meaning given to such term in
Section 12.16
.
Third Party Claim
: The meaning given to such term in
Section 11.01
and
Section 11.02
, as applicable.
Third Party Controlled Current Spread Distribution Account
: The account
specified in the Current Spread Distribution Account Control Agreement and maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser, into which all Servicing Spread Collections in respect
of the Mortgage Loans and all MSR Successor Proceeds shall be deposited. Such account has been pledged by Seller to Agency pursuant to the requirements of the GNMA Acknowledgment Agreement.
Total Servicing Spread
: For each Collection Period on and after the Sale Date, the sum of the following: (a) the Servicing
Spread Collections received during such Collection Period and remaining after payment of the Base Servicing Fee; (b) all Sales Proceeds received during such Collection Period; (c) all Repurchase Prices received during such Collection
Period; (d) all MSR Successor Proceeds received during such Collection Period and (e) all other amounts payable by the Agency to Seller (or Purchaser under the GNMA Acknowledgement Agreement) with respect to the Mortgage Servicing Rights
for Mortgage Loans, but for the avoidance of doubt, excluding all Ancillary Income and reimbursements received for advances and other out-of-pocket expenditures in accordance with the Servicing Agreements.
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Transaction Documents
: The Purchase and Sale Agreement (including any order, bill of
sale, assignment agreement or other transfer agreement related to the sale of the Mortgage Servicing Rights thereunder), the GNMA Acknowledgment Agreement, the Current Spread Distribution Account Agreement, the Current Spread Distribution Account
Control Agreement, the Current Spread Reserve Account Agreement, the Current Spread Reserve Account Control Agreement, this Agreement and the Future Spread Agreement.
UCC
: The Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.
Section 1.02
General Interpretive Principles
.
For purposes of this
Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this
Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender;
(b) Accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;
(c) References herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and other
subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Agreement;
(d) A reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions;
(e) The words “herein,” “hereof,” “hereunder” and other words
of similar import refer to this Agreement as a whole and not to any particular provision; and
(f) The term “include”
or “including” shall mean without limitation by reason of enumeration.
14
ARTICLE II
PROCEDURES; ITEMS TO BE DELIVERED
Section 2.01
Sale of
Current Excess Servicing Spread
.
Subject to, and upon the terms and conditions of this Agreement, Seller will sell,
transfer and assign to Purchaser, and Purchaser will acquire from Seller, all of Seller’s right, title and interest in and to the Current Excess Servicing Spread and all proceeds thereof with respect to the Mortgage Loans.
Section 2.02
[Reserved]
.
Section 2.03
Items to be Delivered on the Agreement Date
.
On the
Agreement Date, each of Seller and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
(a) The Sale Agreements and all agreements, certificates, opinions and instruments required to be delivered under each Sale Agreement on
the Agreement Date;
(b) The Future Spread Agreements and all agreements, certificates, opinions and instruments required to
be delivered under each Future Spread Agreement on the Agreement Date; and
(c) The executed Purchase and Sale Agreement.
Section 2.04
Items to be Delivered on the Sale Date
.
(a) On the Sale Date, subject to the satisfaction of the terms and conditions herein, each of Seller and Purchaser shall deliver or cause
to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible:
(i) The GNMA Acknowledgment Agreement;
(ii) The Assignment
Agreement;
15
(iii) All agreements, certificates, opinions and instruments required to be
delivered under each Sale Agreement and Future Spread Agreement on the Sale Date;
(iv) All agreements,
certificates, opinions and instruments required to be delivered under the executed Purchase and Sale Agreement reasonably related to the transactions contemplated hereunder that are required to be delivered on the Sale Date;
(v) The executed Current Spread Distribution Account Agreement;
(vi) The executed Current Spread Distribution Account Control Agreement;
(vii) The executed Current Spread Reserve Account Agreement;
(viii) The executed Current Spread Reserve Account Control Agreement;
(ix) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding due authorization, authority, and
enforceability of the applicable Transaction Documents to which Seller is a party, and regarding no conflicts with other material Seller agreements;
(x) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the characterization of the transfer of the Current Excess Servicing Spread from Seller to Purchaser as a true sale for
bankruptcy purposes;
(xi) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the
perfection of the assignment of Current Excess Servicing Spread to Purchaser;
(xii) A certificate of good
standing of Seller dated as of a date within five (5) Business Days prior to the Closing Date to be delivered by Seller;
(xiii) A secretary’s certificate of Seller attaching its organizational documents, board resolutions and incumbency certificates;
16
(xiv) An officer’s certificate of Seller that all conditions precedent
to the purchase of the Mortgage Servicing Rights under the Purchase and Sale Agreement have been satisfied (or if waived, such waiver has been approved by Purchaser);
(xv) A duly executed corporate certificate of Seller required by
Section 9.07
dated as of the Sale Date;
(xvi) A duly executed corporate certificate of Purchaser required by
Section 10.05
dated as of
the Sale Date;
(xvii) A certificate of good standing of Purchaser, dated as of a date within five
(5) Business Days prior to the Sale Date to be delivered by Purchaser; and
(xviii) A UCC-1 financing
statement relating to the security interest of Purchaser in the Current Excess Servicing Spread, in form and substance reasonably acceptable to Purchaser.
(b) On the Sale Date, subject to the satisfaction of the terms and conditions herein, Seller shall provide Purchaser with copies of the following:
(i) Any amendments, modifications or restatements of the Purchase and Sale Agreement;
(ii) The bill of sale, assignment agreement or other transfer agreement pursuant to which Bank of America will transfer
the Mortgage Servicing Rights to Seller;
(iii) The executed Power of Attorney; and
(iv) A preliminary Schedule of Mortgage Loans containing information with respect to the Mortgage Loans anticipated to be
included in this Agreement on the Sale Date as of November 30, 2012.
Section 2.05
Sale Date Transactions
.
On the Sale Date, subject to the satisfaction of the terms and conditions herein:
17
(a) The Parties shall execute and deliver the Assignment Agreement;
(b) Purchaser shall remit to Seller the Purchase Price; and
(c) Ownership of the Current Excess Servicing Spread shall be transferred to Purchaser.
ARTICLE III
PAYMENTS AND DISTRIBUTIONS
Section 3.01
Purchase Price
.
On the first Business Day following the Agreement Date, Purchaser shall pay Seller an amount (the “
Deposit
”) equal to the product of (i) $24,241,315 and (ii) Current Excess
Servicing Spread Percentage, without any of the adjustments provided in the Purchase and Sale Agreement for such calculation, as an earnest money deposit.
In full consideration for the purchase of the Current Excess Servicing Spread and the rights under the Future Spread Agreement for GNMA Mortgage Loans, and upon the terms and conditions of this Agreement,
Purchaser shall pay to Seller an amount (the “
Base Purchase Price
”) equal to the product of (x) the aggregate outstanding principal balance of the Mortgage Loans as of the Cut-Off Date, (y) the Purchase Price Percentage
and (z) the Current Excess Servicing Spread Percentage. The Base Purchase Price shall be allocated by the Parties on the Sale Date to reflect the consideration for the purchase of the Current Excess Servicing Spread hereunder (the
“
Purchase Price
”) and the consideration for the rights acquired by Purchaser under the Future Spread Agreement for GNMA Mortgage Loans.
The Base Purchase Price shall be payable by the Purchaser to the Seller as follows: (a) the Deposit shall be payable on the first Business Day following the Agreement Date, (b) 50% of the
estimated Base Purchase Price net of the Deposit shall be payable on the Sale Date and (c) the portion of the Base Purchase Price that has not been paid to Seller by Purchaser as of such date, including with respect to Mortgage Loans that have
prepaid between the Sale Date and the Servicing Transfer Date, plus interest thereon at the Federal Funds Rate for the period from the Sale Date to the Servicing Transfer Date shall be payable on the Servicing Transfer Date.
The Seller shall deliver the Schedule of Mortgage Loans no later ten (10) Business Days after the Sale Date. In the event there is
an adjustment and reconciliation of the Seller’s purchase price pursuant to the terms of Section 3.01(d) of the Purchase and Sale Agreement, the Base Purchase Price shall be subject to a corresponding adjustment and any adjustment amounts
(including interest) shall be paid by the Purchaser or the Seller, as applicable, to the other party within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
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Section 3.02
Payments by Purchaser
(a) Payments shall be made by Purchaser to Seller by wire transfer of immediately available funds to an account designated by Seller.
(b) If, subsequent to the payment of the Purchase Price or the payment of any amounts due hereunder to either party, the
outstanding principal balance of any Mortgage Loan is found to be in error, or if for any reason the Purchase Price or such other amounts is found to be in error, the party benefiting from the error shall pay an amount sufficient to correct and
reconcile the Purchase Price or such other amounts and shall provide a reconciliation statement and other such documentation to reasonably satisfy the other party concerning the accuracy of such reconciliation. Such amounts shall be paid by the
proper party within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
Section 3.03
Accounts
.
(a)
Lockbox Account
. Seller shall inform the Mortgagors of Mortgage Loans to remit their mortgage payments due on or after the Servicing Transfer Date to the Lockbox Account. All amounts on deposit
in the Lockbox Account will be maintained and applied in accordance with the Servicing Agreement. Payments of all Servicing Spread Collections received on and after the Servicing Transfer Date shall be transferred from the Lockbox Account to the
Third Party Controlled Current Spread Distribution Account within one Business Day of receipt and identification thereof and in any event, within two Business Days of receipt thereof, subject, however, to the rights and remedies of Agency pursuant
to the lien granted in its favor pursuant to the requirements of the GNMA Acknowledgment Agreement. If Seller receives any Servicing Spread Collections not remitted to the Lockbox Account or the Third Party Controlled Current Spread Distribution
Account, it shall hold such funds in trust for the benefit of the Purchaser and deposit such amounts to the Third Party Controlled Current Spread Distribution Account within two Business Days of receipt thereof.
(b)
Third Party Controlled Current Spread Distribution Account
.
(i) The Third Party Controlled Current Spread Distribution Account will be established with Wells Fargo Bank, National
Association or with such other third party custodian or trustee selected by Purchaser, for the sole purpose of receiving and disbursing all Servicing Spread Collections with respect to the Mortgage Loans, MSR Successor Proceeds, Sales Proceeds and
Repurchase Prices. The Third Party Controlled Current Spread Distribution Account will be established pursuant to the Current Spread Distribution Account Control Agreement with respect to which Purchaser is an Entitlement Holder with Control. So
long as permitted by the Current Spread Distribution Account Control Agreement,
19
Seller may direct the disposition of funds in the Third Party Controlled Current Spread Distribution Account strictly in accordance with the Priority of Payments. Upon any material breach of a
representation, warranty or covenant by Seller hereunder or during the occurrence and continuance of a Current Spread Reserve Account Deposit Event, Purchaser may elect to exercise Control over the Third Party Controlled Current Spread Distribution
Account. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Third Party Controlled Current Spread Distribution Account.
(ii) Each of the Seller and the Purchaser shall remit any MSR Successor Proceeds received by such party after the Sale
Date directly to the Third Party Controlled Current Spread Distribution Account. The Purchaser shall remit any proceeds received by the Purchaser in connection with the sale of the Mortgage Servicing Rights and appointment of a successor servicer
following the termination of the Seller, as servicer of the Mortgage Loans, by the Agency in excess of MSR Successor Proceeds to the Seller, as directed by the Seller.
(iii) Seller shall direct each payer of Sales Proceeds to remit such payments directly to the Third Party Controlled
Current Spread Distribution Account.
(iv) Seller shall direct Bank of America to remit (i) Servicing
Spread Collections received by it prior to the Servicing Transfer Date and (ii) any Repurchase Price under the Purchase and Sale Agreement, directly to the Third Party Controlled Current Spread Distribution Account.
(v) If Seller receives any amounts required to be deposited into the Third Party Controlled Current Spread Distribution
Account in error, Seller shall promptly remit such funds to the Third Party Controlled Current Spread Distribution Account.
(c)
Current Spread Reserve Account
. The Current Spread Reserve Account will be established with Wells Fargo Bank, National
Association or with such other third party custodian or trustee selected by Purchaser. The Current Spread Reserve Account will be established pursuant to the Current Spread Reserve Account Control Agreement with respect to which Purchaser is an
Entitlement Holder with Control. So long as permitted by the Current Spread Reserve Account Control Agreement, Seller may direct the disposition of funds in the Current Spread Reserve Account strictly in accordance with
Section 3.05
.
Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Current Spread Reserve Account.
20
If at any time Seller’s Consolidated Tangible Net Worth falls below the sum of
(x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries or if Seller (considered together with its
consolidated subsidiaries) defaults in any indebtedness in excess of $10,000,000 (individually or in the aggregate) (each, a “
Current Spread Reserve Account Deposit Event
”), Seller shall immediately notify Purchaser in writing that
a Current Spread Reserve Account Deposit Event has occurred. On each Distribution Date upon which a Current Spread Reserve Account Deposit Event has occurred and is continuing, Seller shall be required to transfer funds in the Third Party Controlled
Current Spread Distribution Account to the Current Spread Reserve Account in accordance with the Priority of Payments until the amount of funds in the Current Spread Reserve Account is equal to the Current Spread Reserve Account Required Amount. The
“
Current Spread Reserve Account Required Amount
” is equal to 25% of the fair market value as of the date the Current Spread Reserve Account Deposit Event that is then-continuing first occurred of the Total Servicing Spread expected
to be paid over the expected remaining life of the Mortgage Loans (the “
Remaining Expected Total Servicing Spread
”) determined in accordance with the following paragraph. Seller shall immediately notify Purchaser in writing if a
Current Spread Reserve Account Deposit Event is no longer continuing. Any funds in the Current Spread Reserve Account in excess of the Current Spread Reserve Account Required Amount shall be released to Seller.
For purposes of determining the fair market value of the Remaining Expected Total Servicing Spread, Purchaser shall submit its claim for
determination of the fair market value of the Remaining Expected Total Servicing Spread, together with such back-up information it deems appropriate to justify such fair market value (which value shall be considered the fair market value of the
Remaining Expected Total Servicing Spread for purposes of calculating the Current Spread Reserve Account Required Amount until the final determination of such fair market value in accordance with this paragraph). Within five (5) Business Days
of Seller’s receipt of such determination, Seller shall notify Purchaser in writing of its acceptance or any objection to such determination of such fair market value, and if Seller objects to such determination, such notice shall include its
own determination of such fair market value and any back-up information as it deems appropriate to justify such fair market value (an “
Objection Notice
”). In the event an Objection Notice is delivered, the parties shall negotiate in
good faith a resolution to such objection. In the event that Seller and Purchaser are unable to resolve such objection within five (5) Business Days of the delivery of such Objection Notice, Seller and Purchaser shall appoint a mutually
acceptable nationally recognized valuation expert to determine such fair market value of the Remaining Expected Total Servicing Spread. The determination of such valuation expert shall be binding on Seller and Purchaser and the fees of such
valuation expert shall be borne by Seller.
(d)
Agency Reserve Account
. On the Closing Date, the Purchaser shall
establish the Agency Reserve Account, which shall be pledged to Ginnie Mae pursuant to the GNMA Acknowledgment Agreement. The Agency Reserve Account shall be available for Claims and Losses payable to Ginnie Mae pursuant to Section 8(d) of the
GNMA Acknowledgement Agreement. The Reserve Account Deposit Amount shall be deposited in the Agency Reserve Account pursuant to the Priority of Payments until the amounts on deposit in the Agency Reserve Account are equal to the Target Reserve
Account. On any Distribution Date, if the amount on deposit in the Agency Reserve Account exceeds the Target Reserve Amount, such excess shall be released to Purchaser.
21
Section 3.04
Priority of Payments
.
On each Business Day, subject to the terms and conditions of the Current Spread Distribution Account Control Agreement, Seller (or, after
the delivery of an access termination notice pursuant to the Current Spread Distribution Account Control Agreement, Purchaser) shall direct the Bank to apply the monies in the Third Party Controlled Current Spread Distribution Account in the
following order of priority (the “
Priority of Payments
”), in every case, after giving effect to each prior item in the Priority of Payments on such Distribution Date:
(a)
first
, on each Distribution Date, to pay to the parties necessary to cure the failure of the issuer to make a required
remittance to security holders then-outstanding under the Ginnie Mae Contract;
(b)
second,
from amounts in the Third
Party Controlled Current Spread Distribution Account attributable to MSR Successor Proceeds,
pro
rata
, (A) the Current Excess Servicing Spread Percentage of such MSR Successor Proceeds to Purchaser, and (B) the Retained
Servicing Spread Percentage of such MSR Successor Proceeds to Seller; provided, that (I) prior to the distribution to Purchaser of any MSR Successor Proceeds pursuant to clause (A), such MSR Successor Proceeds shall be applied
first
, to
the payment to Seller of any Purchaser Enforcement Expenses then due and payable and
second
, to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to Section 11.02, and (II) prior to the
distribution to Seller of any MSR Successor Proceeds pursuant to clause (B), such MSR Successor Proceeds shall be applied first, to the payment of any Seller Enforcement Expenses then due and payable, second, to the payment of any indemnity payments
then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and third, for deposit to the Current Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Current Spread Reserve Account
to equal the Current Spread Reserve Account Required Amount.
(c)
third
, on any Business Day from and including the
first Business Day of a calendar month to but excluding the Distribution Date in such calendar month, at the option of Seller, the Base Servicing Fee payable with respect to a prior Collection Period for the Mortgage Loans to Seller;
(d)
fourth
, on each Distribution Date, to the extent not previously paid to Seller in accordance with
Section 3.04(c)
,
any accrued and unpaid Base Servicing Fee to Seller;
22
(e)
fifth
, on each Distribution Date,
pro
rata
, (A) to Purchaser,
any Current Excess Servicing Spread for the prior Collection Period (other than the portion thereof consisting of MSR Successor Proceeds paid pursuant to
Section 3.04(a)
); and (B) to Seller, any Retained Servicing Spread for the
prior Collection Period (other than the portion thereof consisting of MSR Successor Proceeds paid pursuant to
Section 3.04(a)
);
provided
, that (I) prior to the distribution to Purchaser of any Current Excess Servicing Spread
pursuant to
clause (A)
, the Current Excess Servicing Spread shall be applied
first
, to the Agency Reserve Account for the payment of the Reserve Account Deposit Amount,
second
, to the payment to Seller of any Purchaser
Enforcement Expenses then due and payable and
third
, to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to Seller of any Retained
Servicing Spread pursuant to
clause (B)
, the Retained Servicing Spread shall be applied
first
, to the payment of any Seller Enforcement Expenses then due and payable,
second
, to the payment of any indemnity payments then
due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
third
, for deposit to the Current Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Current Spread Reserve
Account to equal the Current Spread Reserve Account Required Amount; and
(f)
sixth
, on each Distribution Date, to
Seller, any other amounts remaining on deposit in the Third Party Controlled Current Spread Distribution Account.
All
payments to Purchaser or Seller shall be made by wire transfer of immediately available federal funds to an account designated by Purchaser or Seller, as applicable.
Section 3.05
Withdrawals from the Current Spread Reserve Account
.
On
any Business Day, at the instruction of Purchaser, Seller shall direct the Bank to apply funds in the Current Spread Reserve Account, if any, to the payment of indemnity payments payable to a Purchaser Indemnitee pursuant to
Section 11.01
. If on any Business Day a Current Spread Reserve Account Deposit Event is not then continuing and all outstanding indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller may direct the Bank to
distribute any remaining funds in the Current Spread Reserve Account to, or as directed by, Seller. If there are any funds remaining in the Current Spread Reserve Account after the Current Excess Servicing Spread and all indemnity payments payable
to Purchaser Indemnitees have been paid in full, Seller shall direct the Bank to distribute such remaining funds to, or as directed by, Seller.
Section 3.06
Payment to Seller of Base Servicing Fee
.
Seller shall
be entitled to payment of the Base Servicing Fee only to the extent funds are available therefor in the Third Party Controlled Current Spread Distribution Account in accordance with the Priority of Payments. Under no circumstances shall Purchaser be
liable to Seller for payment of the Base Servicing Fee. In the event servicing of the Mortgage Loans is
23
transferred to sub-servicers for any reason, the servicing fees and expenses of such sub-servicers shall be paid by Seller and in no event will the amount of Servicing Spread Collections or MSR
Successor Proceeds otherwise allocable to the Current Excess Servicing Spread be reduced due to the payment of sub-servicing fees and expenses.
Section 3.07
Intent and Characterization
.
(a) Seller and Purchaser
intend that the sale of the Current Excess Servicing Spread pursuant to this Agreement constitutes a valid sale of such Current Excess Servicing Spread from Seller to Purchaser, conveying good title thereto free and clear of any Lien other than
Permitted Liens, and that the beneficial interest in and title to the Current Excess Servicing Spread not be part of Seller’s estate in the event of the bankruptcy of Seller. Seller and Purchaser intend and agree to treat the transfer and
assignment of the Current Excess Servicing Spread as an absolute sale for tax purposes, and as an absolute and complete conveyance of title for property law purposes. Except for financial accounting purposes, neither party intends the transactions
contemplated hereby to be characterized as a loan from Purchaser to Seller.
(b) In the event (but only in the event) that the
conveyance of the Current Excess Servicing Spread is characterized by a court or governmental authority as security for a loan rather than a sale, Seller will be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security
interest in all of its right, title and interest in, to and under the Current Excess Servicing Spread and all proceeds thereof as security for a loan in an amount equal to the Purchase Price.
ARTICLE IV
[RESERVED]
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as of the Agreement Date and the Sale Date (or as of the date specified below, as applicable):
Section 5.01
Due Organization and Good Standing
.
Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Seller is qualified to transact business in each jurisdiction in which such qualification is deemed necessary to service the Mortgage Loans.
24
Seller has, in full force and effect (without notice of possible suspension, revocation or impairment), all required permits, approvals, licenses, and registrations to conduct all activities in
all states in which its activities with respect to the Mortgage Loans or the Mortgage Servicing Rights require it to be licensed, registered or approved in order to service the Mortgage Loans and own the Mortgage Servicing Rights, unless the failure
to obtain such permits, approvals, licenses and registrations would not reasonably be expected to have a material adverse effect on Seller’s ability to perform its obligations under this Agreement or the other Transaction Documents to which it
is a party.
Section 5.02
Authority and Capacity
.
Seller has all requisite limited liability company power, authority and capacity, subject to the approvals required pursuant to
Section 5.03
, to enter into this Agreement and each other Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other
Transaction Document to which Seller is a party and the consummation of the transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company action. This Agreement and each other
Transaction Document to which it is a party has been duly executed and delivered by Seller. This Agreement constitutes, and each other applicable Transaction Document to which Seller is a party constitutes or will constitute, a valid and legally
binding agreement of Seller enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Seller of this Agreement or such other Transaction Document, except as the same may be limited by
bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
Section 5.03
Agency Agreements
.
Seller will have obtained the GNMA
Acknowledgement Agreement and all other necessary approvals, agreements and consents, if any, of the Agency with respect to the Transaction Documents on or prior to the Sale Date.
Section 5.04
Title to the Mortgage Servicing Rights
.
As of the Closing Date, Seller will be the lawful owner of the Mortgage Servicing Rights, will be responsible for the maintenance of the
Related Escrow Accounts, and will have the sole right and authority to transfer the Current Excess Servicing Spread as contemplated hereby. The transfer, assignment and delivery of the Current Excess Servicing Spread shall be subject to the
Agency’s rights under the Ginnie Mae Contract and shall be free and clear of any and all claims, charges, defenses, offsets, Liens and encumbrances of any kind or nature whatsoever, other than such Agency rights and Permitted Liens.
25
Section 5.05
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document that has been executed by Seller,
compliance with the terms hereof and thereof and the consummation of the transactions contemplated hereby and thereby did not, and will not, violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any
additional approval under its certificate of formation or limited liability company agreement, any instrument or agreement to which it is a party or by which it is bound or which affects the Current Excess Servicing Spread, or any state or federal
law, rule or regulation or any judicial or administrative decree, order, ruling or regulation applicable to it or to the Current Excess Servicing Spread.
Section 5.06
No Accrued Liabilities
.
There are no accrued
liabilities of Seller with respect to the Mortgage Loans or the Mortgage Servicing Rights or circumstances under which such accrued liabilities will arise against Purchaser as purchaser of the Current Excess Servicing Spread.
Section 5.07
Seller/Servicer Standing
.
Seller is a Ginnie Mae issuer and a HUD approved mortgagee/servicer in good standing with the requisite financial criteria and adequate resources to complete the transactions contemplated hereby on the
conditions stated herein. No event has occurred, including but not limited to a change in insurance coverage, which would make Seller unable to comply with Ginnie Mae and HUD eligibility requirements or which would require notification to the Agency
or HUD. Furthermore, if at any time prior to the termination of this Agreement, the Seller is unable to comply with any of Ginnie Mae or HUD eligibility requirements, it shall immediately notify the Purchaser that it is no longer a Ginnie Mae
approved issuer or a HUD approved mortgagee/servicer of mortgage loans.
Section 5.08
MERS Membership
.
Seller is a member in good standing under the MERS system.
Section 5.09
Agency Set-off Rights
.
Seller has no actual notice, including any notice received from the Agency, or any reason to believe, that, other than in the normal course of Seller’s business, any circumstances exist that would
result in Seller being liable to the Agency for any amount due by reason of: (i) any breach of servicing obligations or breach of mortgage selling warranty to the Agency under servicing agreements relating to Seller’s entire servicing
portfolio for the Agency (including any unmet mortgage repurchase obligation), (ii) any unperformed obligation with respect to mortgage loans that Seller is servicing for the Agency under the regular servicing option or other mortgages
26
subject to recourse agreements, (iii) any loss or damage to the Agency by reason of any inability to transfer to a purchaser of the servicing rights Seller’s selling and servicing
representations, warranties and obligations, or (iv) any other unmet obligations to the Agency under a servicing contract relating to Seller’s entire servicing portfolio with the Agency.
Section 5.10
Ability to Perform; Solvency
.
Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement. Seller is Solvent and the sale of the Current Excess
Servicing Spread will not cause Seller to become insolvent. The sale of the Current Excess Servicing Spread is not undertaken to hinder, delay or defraud any of the creditors of Seller. The consideration received by Seller upon the sale of the
Current Excess Servicing Spread constitutes fair consideration and reasonably equivalent value therefor.
Section 5.11
Material Documents
.
Seller has provided Purchaser with executed copies of all material agreements and documents, and
any amendments thereto, relating to Seller’s acquisition of the Mortgage Servicing Rights and the servicing of the Mortgage Loans.
Section 5.12
Obligations with Respect to Origination
.
Seller shall
remain liable for all obligations with respect to the origination of each Mortgage Loan and, if applicable, for all obligations with respect to the sale of such Mortgage Loan to the Agency.
Section 5.13
No Actions
.
There have not been commenced or, to the best of Seller’s knowledge, threatened, any action, suit or proceeding which will likely materially and adversely affect the consummation of the transactions
contemplated by any Transaction Document.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE
LOANS AND SERVICING
As further inducement to Purchaser to enter
into this Agreement, Seller represents and warrants to Purchaser, as of the Agreement Date and the Sale Date (or as of the date specified below, as applicable):
27
Section 6.01
Servicing Agreements; Applicable Laws
.
The originator of the Mortgage Loan and each prior owner of the Mortgage Servicing Rights has each performed its obligations in all
material respects in accordance with the terms of the related Mortgage Note, Mortgage, Servicing Agreements and Applicable Law.
Section 6.02
Related Escrow Accounts
.
All Related Escrow Accounts
are being, and have been, maintained in accordance with Applicable Law and in accordance with the Servicing Agreements and the terms of the related Mortgages and other Mortgage Loan Documents; and, except as to payments which are past due under
Mortgage Notes, all balances required by the Mortgages or other Mortgage Loan Documents to be paid to Seller for the account of the Mortgagors are on deposit in the appropriate Related Escrow Account.
Section 6.03
Accuracy of Servicing Information
.
The information in the Data Tape dated as of November 30, 2012 is true and correct in all material respects as of the date specified therein; provided that if there is no date specified in the Data
Tape, as of November 30, 2012.
Section 6.04
No Purchaser Responsibility
.
Purchaser shall have no responsibility, liability or other obligation whatsoever under any Servicing Agreement or with respect to any
Mortgage Loan, or to make any advance thereunder, to pay any servicing fees thereunder or for repurchase or origination claims thereunder.
Section 6.05
Location of Credit Files
.
All of the Mortgage Loan
Documents are or upon delivery by Bank of America will be held by Custodians, or if held by the Seller, in the locations specified in
Exhibit E
, unless temporarily removed for enforcement purposes in the normal course of servicing. Seller
will notify Purchaser in writing of any changes in locations of the Mortgage Loan Documents held by the Seller in
Exhibit E
.
Section 6.06
Representations Concerning the Current Excess Servicing Spread
.
(a) Seller has not assigned, pledged, conveyed, or encumbered the Current Excess Servicing Spread to any other Person (other than Permitted Liens) and immediately prior to the sale of the Current Excess
Servicing Spread on the Sale Date, Seller was the sole owner of the Current Excess Servicing Spread and had good and marketable title thereto (subject to the rights of the Agency under the Servicing Agreements, free and clear of all Liens
28
(other than Permitted Liens), and no Person, other than Purchaser, has any Lien (other than Permitted Liens) on the Current Excess Servicing Spread. No security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering all or any part of the Current Excess Servicing Spread which has been signed by Seller or which Seller has authorized any other Person to sign or file or record, is on file or
of record with any public office, except such as may have been terminated or filed by or on behalf of Purchaser.
(b) The sale
by Seller to Purchaser of the Current Excess Servicing Spread does not and will not violate any Requirement of Law, the effect of which violation is to render void or voidable such sale.
(c) As contemplated under
Section 3.07(b)
, upon the filing of financing statements on Form UCC-1 naming Purchaser as
“Secured Party” and Seller as “Debtor”, and describing the Current Excess Servicing Spread, in the jurisdictions and recording offices listed on
Exhibit I
attached hereto, the Seller has taken all steps necessary under the
UCC to perfect the sale of the Current Excess Servicing Spread to Purchaser and all right, title and interest of Purchaser in, to and under the Current Excess Servicing Spread.
(d) Purchaser has and will continue to have the full right, power and authority to pledge the Current Excess Servicing Spread, and the
Current Excess Servicing Spread may be further assigned without any requirement, in each case, subject only to the Agency’s consent.
(e) Each Servicing Agreement constitutes an Eligible Servicing Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to
Seller to enter into this Agreement, Purchaser represents and warrants to Purchaser as of the Agreement Date and the Sale Date (or as of the date specified below, as applicable):
Section 7.01
Due Organization and Good Standing
.
Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Purchaser is qualified to transact business in each jurisdiction in
which such qualification is deemed necessary.
29
Section 7.02
Authority and Capacity
.
Purchaser has all requisite limited liability company power, authority and capacity to enter into this Agreement and each other
Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document to which it is a party and the consummation of the
transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company action. This Agreement constitutes, and each other applicable Transaction Document to which Purchaser is a party
constitutes or will constitute, a valid and legally binding agreement of Purchaser enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Purchaser of this Agreement or such other
Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
Section 7.03
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party by Purchaser, its compliance with the terms hereof and thereof and the consummation of
the transactions contemplated hereby and thereby will not violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited liability company
agreement, any instrument or agreement to which it is a party or by which it is bound, or any state or federal law, rule or regulation or any judicial or administrative decree, order, ruling or regulation applicable to it, in each case which
violation, conflict, breach or requirement would reasonably be expected to have a material adverse effect on Purchaser’s ability to perform its obligations under this Agreement and any other Transaction Document to which it is a party.
Section 7.04
Sophisticated Investor
.
Purchaser is a sophisticated investor and its decision to acquire the Current Excess Servicing Spread is based upon Purchaser’s own independent experience, knowledge, due diligence and evaluation of
this transaction. Purchaser has relied solely on such experience, knowledge, due diligence and evaluation and has not relied on any oral or written information provided by Seller other than the representations and warranties made by Seller herein.
Section 7.05
No Actions
There shall not have been commenced or, to the best of Purchaser’s knowledge, threatened any action, suit or proceeding against the Purchaser that will likely materially and adversely affect the
consummation of the transactions contemplated hereby.
30
ARTICLE VIII
SELLER COVENANTS
Seller covenants and agrees as follows:
Section 8.01
Servicing Obligations
.
(a) Seller shall (or, prior to the Servicing Transfer Date, shall cause the Interim Servicer to,) pay, perform and discharge all liabilities and obligations relating to the Servicing, including all
liabilities and obligations under the Mortgage Loan Documents, Applicable Law and the Servicing Agreements; and shall pay, perform and discharge all the rights, obligations and duties with respect to the Related Escrow Accounts as required by the
Agency, the Servicing Agreements, the Mortgage Loan Documents, all Applicable Law and in accordance with the Purchase and Sale Agreement.
(b) Under no circumstances shall Purchaser be responsible for the Servicing acts and omissions of Seller or any other servicer or any originator of the Mortgage Loans, or for any servicing related
obligations or liabilities of any servicer in the Servicing Agreements or of any Person under the Mortgage Loan Documents, or for any other obligations or liabilities of Seller or Bank of America.
(c) Upon termination of any Servicing Agreement, Seller shall remain liable to Purchaser and the Agency for all liabilities and
obligations incurred by the servicer or its designee while Seller or its designee was acting as the servicer thereunder.
(d)
Seller shall conduct quality control reviews of its servicing operations in accordance with industry standards and the requirements of the Agency.
Section 8.02
Cooperation; Further Assurances
.
Seller shall cooperate
with and assist Purchaser, as reasonably requested, in carrying out the purposes of this Agreement. Seller will cooperate and assist Purchaser, as reasonably requested and at the reasonable expense of Purchaser (except as provided in
Section 12.01
), in obtaining consents from the Agency as may be required or advisable to assign, transfer, deliver, hypothecate, pledge, subdivide, finance or otherwise deal with the Current Excess Servicing Spread. If Seller is
terminated under any Servicing Agreement, Seller shall cooperate fully and at its own expense in transferring such Servicing. If Purchaser assigns all or any portion of the Current Excess Servicing Spread or its other rights under this Agreement to
a Third Party Assignee, Seller will cooperate and assist any Third Party Assignee in drafting and entering into a Third Party Current Spread Agreement in accordance with
Section 12.16
.
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Section 8.03
Financing Statements
.
Seller hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements, in
any jurisdictions and with any filing offices as Purchaser may determine, in its sole discretion, are necessary or advisable to perfect the sale of the Current Excess Servicing Spread granted to Purchaser in connection herewith. Seller agrees to
execute financing statements in form reasonably acceptable to Purchaser and Seller at the request of Purchaser in order to reflect Purchaser’s interest in the Current Excess Servicing Spread.
Section 8.04
Supplemental Information
.
From time to time after the Sale Date, Seller promptly shall furnish Purchaser such incidental information, which is reasonably available to Seller, supplemental to the information contained in the
documents and schedules delivered pursuant to this Agreement, as may reasonably be requested to monitor performance of the Mortgage Loans and the payment of the Current Excess Servicing Spread.
Section 8.05
Access to Information
.
From time to time, at such times as are reasonably convenient to Seller, Purchaser or its designees may conduct audits or visit and inspect (a) any of the Mortgage Loans or places where the Credit
Files are located, to examine the Credit Files, internal controls and procedures maintained by Seller and its agents, and take copies and extracts therefrom, and to discuss Seller’s affairs with its officers, employees and, upon notice to
Seller, independent accountants. Seller hereby authorizes such officers, employees and independent accountants to discuss with Purchaser the affairs of Seller and (b) the Seller’s servicing facilities for the purpose of satisfying the
Purchaser that Seller, has the ability to service the Mortgage Loans related to Mortgage Servicing Rights in accordance with the standards set forth in the applicable Servicing Agreement. Any audit provided for herein will be conducted in accordance
with Seller’s rules respecting safety and security on its premises, in accordance with applicable privacy and confidentiality laws and without materially disrupting operations.
Section 8.06
Home Affordable Modification Program
.
With respect to any Mortgage Loans that have been modified or that are or will be in a modification trial period as part of the U.S. Department of the Treasury’s Home Affordable Modification Program
(“
HAMP
”) (such Mortgage Loans, the “
HAMP Loans
”), Seller represents and warrants that it will continue to service such HAMP Loan in accordance with the HAMP terms and will ensure the timely compliance and filing of
any appropriate HAMP documentation with the applicable regulator.
32
Section 8.07
Distribution Date Data Tapes and Reports
.
Seller shall deliver the following to Purchaser two Business Days prior to each Distribution Date:
(a) An Electronic Data File in form and substance acceptable to Purchaser containing, for each Mortgage Loan, principal, interest and
Servicing Spread Collections, and delinquency status (i.e. 30, 60, 90, FCL, REO) as of the last day of the prior Collection Period;
(b) A Summary Activity Report with respect to the Mortgage Loans with respect to the prior Collection Period containing:
(i) aggregate beginning principal balance as of the first and last date of the Collection Period,
(ii) aggregate regular principal collected,
(iii) aggregate noncash principal,
(iv) aggregate interest collected,
(v) aggregate liquidation principal,
(vi) aggregate curtailments,
(vii) liquidations,
(viii) short sales,
(ix) (1) for each Mortgage Loan, the principal balance, the applicable servicing spread, the final maturity date, the
mortgage, interest rate, the loan-to-value ratio and the FICO score, and (2) for each Mortgage Loan that was refinanced by a lender other than Seller or an affiliate thereof, to the extent such information is known to Seller in the ordinary
course of business and the collection and delivery of such information does not impose any additional and undue burden on Seller, the name of such lender and the mortgage interest rate of the newly originated residential mortgage loan;
33
(c) A Delinquency Report with respect to the Mortgage Loans containing:
(i) The aggregate outstanding principal balance of the Mortgage Loans and percentages of the aggregate outstanding
principal balance of the Mortgage Loans in each of the following categories as of the last day of the prior Collection Period:
(1) Current Mortgage Loans,
(2) 0-29 days delinquent,
(3) 30-59 days delinquent,
(4) 60-89 days delinquent,
(5) 90 days or more delinquent,
(6) Mortgage Loans in
Foreclosure,
(7) Mortgage Loans with respect to which the related Mortgaged Properties have become real
estate owned properties, and
(8) Mortgage Loans in which the Mortgagor is in bankruptcy;
(ii) For each of the above categories, a roll report showing the migration of Mortgage Loans in such category from the
last day of the second prior Collection Period;
(d) A Disbursement Report for such Distribution Date containing:
(i) The Servicing Spread Collections for the prior Collection Period,
(ii) The Base Servicing Fee paid to Seller,
34
(iii) The amount of the Current Excess Servicing Spread paid to Purchaser,
(iv) The amount of funds, if any, transferred to the Current Spread Reserve Account,
(v) The amount of Purchaser Indemnitees, if any, paid from each of the Third Party Controlled Current Spread Distribution
Account or the Current Spread Reserve Account, and
(vi) The amount of funds paid to Seller from the Current
Spread Reserve Account.
Section 8.08
Financial Statements and Officer’s Certificates
.
(a) If Seller’s financial statements are not filed with the U.S. Securities and Exchange Commission and are not publicly available,
Seller shall deliver to Purchaser copies of Seller’s most recent audited quarterly financial statements within 45 days of the end of each of Seller’s fiscal quarters and its most recent audited annual financial statements within 90 days of
the end of each of Seller’s fiscal years.
(b) Within 45 days of the end of each of Seller’s fiscal quarters, Seller
shall deliver to Purchaser a certificate from a duly authorized officer of Seller certifying (i) whether or not Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any
issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries (and shall provide a calculation of its determination of its Consolidated Tangible Net Worth) and
(ii) whether or not Seller (considered together with its consolidated subsidiaries) is in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
Section 8.09
Monthly Management Calls
.
Within five Business Days after each Distribution Date, Seller shall make its management team and other appropriate officers and employees available to Purchaser to discuss by telephone the performance of
the Mortgage Loans and the performance of the parties under the Transaction Documents.
35
Section 8.10
Timely Payment of Agency Obligations
.
Seller shall pay all of its obligations to the Agency in a timely manner so as to avoid exercise of any right of set-off by the Agency
against Seller.
Section 8.11
Servicing Agreements
.
After the Servicing Transfer Date, Seller will service the Mortgage Loans in accordance with Accepted Servicing Practices and will
perform its obligations in all material respects in accordance with the Servicing Agreements and Applicable Law. In particular, without limitation, after the Servicing Transfer Date, Seller shall comply with any advancing obligation under the
Servicing Agreements. Without the express written consent of Purchaser (which consent may be withheld in its absolute discretion), Seller shall not (a) cancel, terminate or amend any Mortgage Servicing Rights, (b) expressly provide any
required consent to any termination, amendment or modification of any Servicing Agreements either verbally or in writing, (c) expressly provide any required consent to any termination, amendment or modification of any other servicing agreements
or enter into any other agreement or arrangement with the Agency that may be reasonably material to Purchaser either verbally or in writing, (d) expressly or verbally waive any material default under or breach of any Servicing Agreement by the
Agency that may be material to the Purchaser (in the Purchaser’s reasonable determination) or (e) take any other action in connection with any such Servicing Agreement that would impair in any material respect the value of the interests or
rights of the Purchaser hereunder. Seller shall conduct its business and perform its obligations under the Servicing Agreements in a manner such that the Agency will not have cause to terminate any Servicing Agreement. Notwithstanding the foregoing,
in no event will the prohibitions contained in this Section 8.11 apply to any amendments or modifications of the Servicing Agreements applicable to Mortgage Loans owned by Seller which do not affect the Current Excess Servicing Spread with
respect to such Mortgage Loans and are not reasonably material to the Purchaser.
The Seller shall monitor the obligations of
the Interim Servicer to service and administer the Mortgage Loans in accordance with the terms of the Servicing Agreement.
Section 8.12
Transfer of Mortgage Servicing Rights
.
If Seller intends to assign, transfer or sell any of its Mortgage Servicing Rights to a replacement servicer, to the extent permitted by
applicable law, (a) Seller shall consult with Purchaser and Purchaser shall participate in the assignment, transfer and sale of such Mortgage Servicing Rights, and (b) Seller shall obtain the written consent of Purchaser, granted by the
Purchaser in its sole discretion, prior to any assignment, transfer or sale thereof.
36
Section 8.13
Consents to Transaction Documents
.
Seller shall not terminate, amend, amend and restate, modify or waive any conditions or provisions of any Transaction Document without
the express written consent of Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned.
Section 8.14
Accounts
.
Seller shall inform the Mortgagors of Mortgage Loans at its own expense to remit their mortgage payments to the Lockbox Account, and any change in such instructions shall only be permitted with the
express written consent of Purchaser.
Section 8.15
Notification of Certain Events
.
Seller shall promptly notify Purchaser of any event which, with the passage of time, could reasonably be expected to result in a
termination of any servicing agreement between (i) Seller and the Agency, (ii) Seller and Fannie Mae or (iii) Seller and Freddie Mac. Seller shall provide Purchaser with copies of any notices from the Agency, Fannie Mae or Freddie Mac
of any breach, potential breach, default or potential default by Seller under any servicing agreement between Seller and the Agency, Fannie Mae or Freddie Mac and with copies of any notices from the Agency, Fannie Mae or Freddie Mac of any
termination, potential termination or threatened termination of any servicing agreement entered into between (i) Seller and the Agency, (ii) Seller and Fannie Mae or (iii) Seller and Freddie Mac. Seller shall promptly forward copies
of any material notices received from the Agency or from any Governmental Authority with respect to the Mortgage Loans. Seller shall provide Purchaser with (a) copies of all amendments to the Transaction Documents, the Servicing Agreements
(other than with respect to Mortgage Loans owned by Seller) and the agreements relating to Seller’s acquisition of the Mortgage Servicing Rights, (b) with respect to Mortgage Loans owned by Seller, copies of all material amendments to the
Servicing Agreements, and (c) copies of any other agreements Seller enters into with the Agency that may be reasonably material to Purchaser, in each case, promptly after execution thereof.
Section 8.16
Financing; Pledge of Current Excess Servicing Spread
.
Seller shall not pledge, obtain financing for, or otherwise permit any Lien of any creditor of Seller to exist on, any portion of the
Servicing Spread Collections without the prior written consent of Purchaser. Seller’s financial statements shall contain footnotes indicating that the Current Excess Servicing Spread has been sold, and Seller does not maintain any ownership
interest therein.
37
Section 8.17
Existence, etc
.
Seller shall:
(a) preserve and maintain its legal existence, good standing and all of its material licenses required to service the Mortgage Loans;
(b) comply with the requirements of all Applicable Laws, rules, regulations and orders of Governmental Authorities (including
truth in lending and real estate settlement procedures) if failure to comply with such requirements could be reasonably likely (either individually or in the aggregate) to have a material adverse effect on its ability to perform its obligations
hereunder or under any other Transaction Document;
(c) keep adequate records and books of account, in which complete entries
will be made in accordance with GAAP consistently applied, and maintain adequate accounts and reserves for all taxes (including income taxes), all depreciation, depletion, obsolescence and amortization of its properties, all contingencies, and all
other reserves;
(d) not move its chief executive office or chief operating office from the addresses referred to in
Exhibit I
unless it shall have provided Purchaser not less than thirty (30) days prior written notice of such change;
(e) pay and discharge all material taxes, assessments and governmental charges or levies imposed on it or its income or profits or on any of its property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained. Seller and its subsidiaries shall file on a timely
basis all federal, and material state and local tax and information returns, reports and any other information statements or schedules required to be filed by or in respect of it;
(f) keep in full force and effect the provisions of its charter documents, by-laws, operating agreements or similar organizational
documents in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Documents;
(g) keep in full force and effect all agreements and instruments by which it or any of its properties may be bound and all applicable decrees, orders and judgments, in each case to the extent reasonably
necessary to perform its obligations hereunder or under any other Transaction Document;
38
(h) maintain its status as a Ginnie Mae issuer and as a HUD approved mortgagee/servicer;
and
(i) comply with its obligations under the Transaction Documents to which it is a party, and each other agreement entered
into with the Agency.
Section 8.18
Consent to Sub-Servicing
.
Subject to the rights of the Agency and except as contemplated under the Purchase and Sale Agreement with respect to transition services
thereunder, Seller will not permit any Person other than Seller to service or sub-service the Mortgage Loans without the prior written consent of Purchaser, in each case other than (i) the Interim Servicer (prior to the Servicing Transfer Date)
and (ii) third-party vendors customarily employed by servicers in the ordinary course of business in accordance with prudent mortgage servicing practices.
Section 8.19
Nonpetition Covenant
.
Seller shall not, prior to the
date that is one year and one day after the payment in full of the Current Excess Servicing Spread, petition or otherwise invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against Purchaser
under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Purchaser or any substantial part of its property, or ordering the winding up or liquidation of the affairs of
Purchaser.
Section 8.20
Data Tape; Schedule of Mortgage Loans
.
The information in the Data Tape delivered to Purchaser on the Sale Date will be true and correct in all material respects as of the date
specified. Seller shall maintain the Schedule of Mortgage Loans, which shall be updated as of the Sale Date. The information in the Schedule of Mortgage Loans pertaining to the Mortgage Loans and the Mortgage Servicing Rights will be true and
correct in all material respects as of the date specified.
Section 8.21
Insurance
.
The Seller shall maintain (a) general liability insurance, (b) errors and omission insurance or blanket bond coverage and
(c) fidelity bond insurance, in each case, from reputable companies with coverage in amounts customarily maintained by such similarly situated entities in the same jurisdiction and industry as the Seller.
39
Section 8.22
Defense of Title
.
The Seller warrants and will defend the right, title and interest of the Purchaser in and to the Current Excess Servicing Spread against
all adverse claims and demands subject to Permitted Liens.
Section 8.23
Refinancing of Mortgage Loans
.
Each agreement or arrangement that Seller enters into to purchase Mortgage Servicing Rights shall be entered into on an
arm’s length contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing Rights to be acquired thereby. Seller shall not enter into any agreement or arrangement with a third
party intended to encourage the refinancing of any Mortgage Loan by any Person other than Seller.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser under this Agreement and under the Assignment Agreement are subject to the satisfaction of the following
conditions as of the Sale Date:
Section 9.01
Correctness of Representations and Warranties
.
The representations and warranties made by Seller in this Agreement and each other Transaction Document to which Seller is a party to be
made on or prior to the Sale Date are true and correct in all material respects.
Section 9.02
Compliance with
Conditions
.
All of the terms, covenants, conditions and obligations of this Agreement and each other Transaction Document
required to be complied with and performed by Seller and Bank of America on or prior to the Sale Date shall have been duly complied with and performed in all material respects.
Section 9.03
Corporate Resolution
.
Receipt by the Purchaser of a certified copy of the Seller’s corporate resolution approving the execution and delivery of this Agreement and the other Transaction Documents and the consummation of
the transactions contemplated hereby and thereby, together with such other certificates of incumbency and other evidences of corporate authority as Purchaser or its counsel may reasonably request.
40
Section 9.04
No Material Adverse Change
.
From the Agreement Date, there shall not have been any change to Seller’s financial or operating condition, or in the Mortgage
Servicing Rights, the Mortgage Loans, the Related Escrow Accounts or to Seller’s relationship with, or authority from, the Agency, that in each case will likely materially and adversely affect the consummation of the transactions contemplated
hereby or the Current Excess Servicing Spread.
Section 9.05
Consents
.
Seller shall have obtained all consents, approvals or other requirements of third parties required for the consummation of the
transactions contemplated by the Transaction Documents, including Agency approval as contemplated by
Section 5.03
and the Seller shall have commenced servicing the Mortgage Loans under the applicable Servicing Agreement. All actions of
all Governmental Authorities required to consummate the transactions contemplated by the Transaction Documents and the documents related thereto shall have been obtained or made.
Section 9.06
Delivery of Transaction Documents
.
Seller shall have delivered to the Purchaser copies of each executed Transaction Document that is to be entered into on or prior to such date and each of the items required to be delivered pursuant to
Section 2.04 hereof.
Section 9.07
Certificate of Seller
.
Seller shall have provided Purchaser a certificate, substantially in the form attached hereto as
Exhibit C
, signed by an
authorized officer of Seller dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each of Seller’s representations and warranties made in this Agreement and each other Transaction
Document to which Seller is a party is true and correct in all material respects as of such date; (b) all of the terms, covenants, conditions and obligations of this Agreement and each other Transaction Document to which Seller is a party that
are required to be complied with and performed by Seller at or prior to the Sale Date have been duly complied with and performed in all material respects; (c) the conditions set forth in
Section 9.04
and
Section 9.05
have been satisfied; and (d) as of the Sale Date, Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller,
Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries, and the Seller (considered together with the Seller’s consolidated subsidiaries) is not in default in any indebtedness in excess of $10,000,000 (individually
or in the aggregate).
41
Section 9.08
Valuation
.
Purchaser shall have received an opinion reasonably satisfactory to Purchaser that the Base Servicing Fee of the Mortgage Loans and the
Purchase Price of the Current Excess Servicing Spread is fair and reasonable.
Section 9.09
Opinions of Counsel
.
Seller’s counsel shall have delivered the Opinions of Counsel required pursuant to
Section 2.04(a)(ix)
,
Section 2.04(a)(x)
and
Section 2.04(a)(xi)
.
Section 9.10
Acquisition of Mortgage Servicing
Rights by Seller
.
Seller shall have acquired the Mortgage Servicing Rights and the other Purchased Assets from Bank of
America pursuant to the Purchase and Sale Agreement as of the Sale Date.
Section 9.11
Good Standing Certificate of
Seller
.
Seller shall have provided Purchaser a certificate of good standing of Seller, dated as of a date within five
(5) Business Days prior to the Sale Date.
Section 9.12
No Actions or Proceedings
.
No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit
the consummation of, or to invalidate, any of the transactions contemplated by this Agreement and the documents related hereto in any material respect.
Section 9.13
Fees, Costs and Expenses
.
The fees, costs and expenses
payable by the Seller on or prior to the Sale Date pursuant to Section 12.01 hereof and any other Transaction Document shall have been paid.
42
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of
Seller under this Agreement are subject to the satisfaction of the following conditions as of the Sale Date, as applicable:
Section 10.01
Correctness of Representations and Warranties
.
The representations and warranties made by Purchaser in this Agreement to be made on or prior to the Agreement Date or Sale Date, as
applicable, are true and correct in all material respects as of the date thereof.
Section 10.02
Compliance with
Conditions
.
All of the terms, conditions, covenants and obligations of this Agreement required to be complied with and
performed by Purchaser on or prior to the Sale Date shall have been duly complied with and performed in all material respects as of the date thereof.
Section 10.03
Corporate Resolution
.
As of the date hereof, Seller
shall have received from Purchaser a certified copy of its corporate resolution approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, together with such other certificates of incumbency
and other evidences of corporate authority as Seller or its counsel may reasonably request.
Section 10.04
No
Material Adverse Change
.
Since the Agreement Date, there shall not have been any change to Purchaser’s financial
condition that will likely materially and adversely affect the consummation of the transactions contemplated hereby.
Section 10.05
Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate, substantially in the form attached hereto as
Exhibit D
, signed by an authorized officer of Purchaser dated as of such date, applicable to the
transactions contemplated by this Agreement, to the effect that: (a) each of Purchaser’s representations and warranties made in this Agreement is true and correct in all material respects as of such date; (b) all of the terms,
covenants, conditions and obligations of this Agreement required to be complied with and performed by Purchaser at or prior to the Sale Date have been duly complied with and performed in all material respects; and (c) the condition set forth in
Section 10.04
has been satisfied.
Section 10.06
Good Standing Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate of good standing of Purchaser, dated as of a date within five (5) Business Days
prior to the Sale Date.
43
ARTICLE XI
INDEMNIFICATION; CURE
Section 11.01
Indemnification by
Seller
.
(a) Seller shall indemnify, defend and hold Purchaser, its affiliates and its and their respective directors,
managers, officers, employees, agents, representatives and advisors (the “
Purchaser Indemnitees
”) harmless from and shall reimburse the applicable Purchaser Indemnitee for any Losses suffered or incurred by any Purchaser Indemnitee
after the Sale Date which result from:
(i) Any material breach of a representation or warranty by Seller, or
non-fulfillment of any covenant or obligation of Seller, contained in this Agreement or the Assignment Agreement;
(ii) Any servicing act or omission of any prior servicer relating to any Mortgage Loan and any act or omission of any party related to the origination of any Mortgage Loan;
(iii) Any act, error or omission of Seller in servicing any of the Mortgage Loans, including improper action or failure
to act when required to do so;
(iv) Any exercise of any rights of setoff or other netting arrangements by the
Agency against Seller that results in a decrease in MSR Successor Proceeds or in a shortfall of funds to pay the Current Excess Servicing Spread;
(v) Any breach by Seller of the Purchase and Sale Agreement;
(vi) Any payments made pursuant to clause
first
of Section 3.04(a) hereof;
(vii) Any amounts paid to Ginnie Mae from the Agency Reserve Account;
44
(viii) Seller not maintaining a “Secured Party” under the GNMA
Acknowledgment Agreement or any breach of the GNMA Acknowledgment Agreement by the “Secured Party” thereunder; and
(ix) Litigation, proceedings, governmental investigations, orders, injunctions or decrees resulting from any of the items described in Section 11.01(a)(i) – (viii) above;
provided
,
however
, that the applicable Purchaser Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any
such losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Seller, which such failure of mitigation shall not relieve Seller of its indemnification obligations in this
Section 11.01
but may affect
the amount of such obligation; and
further provided
, that any Losses incurred by the Purchaser Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be reimbursed by
Seller as part of its indemnification obligations in this
Section 11.01
. Purchaser shall notify Seller promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations, orders,
injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Seller shall have the right to assume the defense of
such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Purchaser Indemnitee, but may not enter into any settlement without the prior written consent of the applicable Purchaser Indemnitee, which shall not be
unreasonably withheld. A Purchaser Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself at its own expense but shall not consent to the entry of a judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent of Seller, which consent shall not be unreasonably withheld. Any exercise of such rights by a Purchaser Indemnitee shall not relieve Seller of its obligations and liabilities under this
Section 11.01
or any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Purchaser Indemnitee shall be required to cooperate in good faith with Seller
to ensure the proper and adequate defense of such Third-Party Claim. For the avoidance of doubt, Seller’s obligations for Purchaser Indemnitees shall not be limited to funds available in the Third Party Controlled Current Spread Distribution
Account or the Current Spread Reserve Account.
(b)
REIT Requirements
. Notwithstanding anything in
Section 11.01(a)
above, in the event that counsel or independent accountants for the Protected REIT determine that there exists a material risk that any amounts due to Purchaser under
ARTICLE XI
hereof would be treated as
Nonqualifying Income upon the payment of such amounts to Purchaser, the amount paid to Purchaser pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to Purchaser in such year without causing the Protected
REIT to fail to meet the REIT Requirements for such year, determined as if the payment of such
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amount were Nonqualifying Income as determined by such counsel or independent accountants to the Protected REIT. If the amount payable for any tax year under the preceding sentence is less than
the amount which Seller would otherwise be obligated to pay to Purchaser pursuant to
ARTICLE XI
of this Agreement (the “
Expense Amount
”), then: (1) Seller shall place the Expense Amount into an escrow account (the
“
Expense Escrow Account
”) using an escrow agent and agreement reasonably acceptable to Purchaser and shall not release any portion thereof to Purchaser, and Purchaser shall not be entitled to any such amount, unless and until
Purchaser delivers to Seller, at the sole option of the Protected REIT, (i) an opinion (an “
Expense Amount Tax Opinion
”) of the Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid, would
not constitute Nonqualifying Income, (ii) a letter (an “
Expense Amount Accountant’s Letter
”) from the Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to Purchaser
without causing the Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to the Protected REIT indicating that the receipt of any Expense Amount hereunder will
not cause the Protected REIT to fail to satisfy the REIT Requirements (a “
REIT Qualification Ruling
” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a “
Release
Document
”); and (2) pending the delivery of a Release Document by Purchaser to Seller, Purchaser shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement (an
“
Indemnity Loan Agreement
”) reasonably acceptable to Purchaser that (i) requires Seller to lend Purchaser immediately available cash proceeds in an amount equal to the Expense Amount (an “
Indemnity Loan
”), and
(ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the credit standing and profile of Purchaser or any guarantor of Purchaser, including the Protected REIT, at the time
of such Loan, and (B) a 15 year maturity with no periodic amortization.
Section 11.02
Indemnification by
Purchaser
.
Purchaser shall indemnify, defend and hold Seller, its affiliates and its and their respective directors,
managers, officers, employees, agents, representatives and advisors (the “
Seller Indemnitees
”) harmless from and shall reimburse the applicable Seller Indemnitee for any Losses suffered or incurred by any Seller Indemnitee which
result from:
(a) Any material breach of a representation or warranty by Purchaser, or non-fulfillment of any covenant or
obligation of Purchaser contained in this Agreement; and
(b) Litigation, proceedings, governmental investigations, orders,
injunctions or decrees, the basis for which occurred after the Agreement Date, resulting from any of the items described in
Section 11.02(a)
above;
provided
,
however
, that the applicable Seller Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any such losses, damages, deficiencies, claims, causes of
action or expenses as reasonably requested by Purchaser, which such failure of mitigation shall not relieve Purchaser of its indemnification obligations in this
Section 11.02
but may affect the
46
amount of such obligation; and
further provided
, that any Losses incurred by the Seller Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims,
causes of action or expenses shall be reimbursed by Purchaser as part of its indemnification obligations in this
Section 11.02
. Seller shall notify Purchaser promptly after receiving written notice of the assertion of any litigation,
proceedings, governmental investigations, orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim,
Purchaser shall have the right to assume the defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Seller Indemnitee, but may not enter into any settlement without the prior written consent of
Purchaser, which shall not be unreasonably withheld. A Seller Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself but shall not consent to the entry of a judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of Purchaser, which consent shall not be unreasonably withheld. Any exercise of such rights by a Seller Indemnitee shall not relieve Purchaser of its obligations and liabilities
under this
Section 11.02
or any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Seller Indemnitee shall be required to cooperate in good faith with
Purchaser to ensure the proper and adequate defense of such Third-Party Claim.
Section 11.03
Award of Damages
.
(a)
(i) In the event that an award of damages or other payments is received by a Party or a designee of a Party as a result of a claim, judgment, settlement or arbitration (including payment pursuant to a
guaranty of Bank of America by any other Person) of a legal dispute that occurs either on or after the execution of the Purchase and Sale Agreement in connection with the enforcement of the Purchase and Sale Agreement in the event of a breach by
Bank of America of any representations and warranties or covenants where such breach had an adverse impact on the value of the Total Servicing Spread, the Current Excess Servicing Spread Percentage of that award shall be distributed to Purchaser or
its designee and the remainder of that award shall be distributed to Seller or its designee.
(ii) In the
event that an award of damages or other payment is received by a Party or a designee of a Party as a result of a claim, judgment, settlement or arbitration (including payment pursuant to a guaranty of Bank of America by any other Person) of a legal
dispute that occurs either on or after the execution of the Purchase and Sale Agreement in connection with the enforcement of the Purchase and Sale Agreement in the event of a breach by Bank of America of any representations and warranties or
covenants where such breach did not have an adverse impact on the value of the Total Servicing Spread, the entirety of the award shall be distributed to Seller or its designee.
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(b) In the event that a Party or designee of a Party receives an award pursuant to
Sections 11.03(a)(i) or (ii)
and some or all of that amount is to be distributed to the other Party or a designee of the other Party pursuant to
Sections 11.03(a)(i) or (ii)
, the Party or the Party’s designee in possession of
the applicable amount shall promptly notify the other Party or the other Party’s designee as to the award’s existence and request that the other Party or other Party’s designee, as applicable, designate an account to which the amount
shall be remitted. Once the necessary account information has been provided by the appropriate Party or designee of a Party, the applicable amount shall be remitted by wire transfer of immediately available federal funds to the account so
designated.
(c) Two Business Days prior to each Distribution Date, the Seller shall, provide Purchaser with a monthly report
of all claims and legal disputes made or pending with Bank of America during the prior month, including the amounts of any claims made or resolved during such month.
Section 11.04
Other Rights
.
The Seller hereby acknowledges that, in
addition to its rights under this Agreement, the Purchaser is entitled to exercise its rights under the GNMA Acknowledgment Agreement.
ARTICLE XII
MISCELLANEOUS
Section 12.01
Costs and Expenses
.
Except as otherwise provided herein, Purchaser and Seller shall share the expenses incurred by Seller and Purchaser or their respective affiliates in connection with the transactions contemplated hereby,
with the expense allocation percentage to be mutually agreed upon by the Parties.
Section 12.02
Confidentiality
.
Each Party understands that in connection with this transaction, it has been furnished and will be furnished Non-Public
Personal Information and/or Personally Identifiable Financial Information (as those terms are defined in Sections 573.3(n) and (o) of the Office of Thrift Supervision Regulations on Privacy of Consumer Information published at 12 C.F.R. Chapter
V implementing Title V of the Gramm-Leach-Bliley Act), and other information regarding the policies and plans of the other Party and its affiliates that is and has been designated as confidential and proprietary, and each Party agrees that it will
maintain the confidentiality of such information and will not disclose it to others (except for its affiliates and its and their respective directors, managers, officers, employees, financing sources, agents, representatives
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and advisors), or use it except in connection with the proposed acquisition contemplated by this Agreement, without the prior written consent of the Party furnishing such information. Information
which is generally known in the industry concerning a Party or among such Party’s creditors generally or which has been disclosed to the other Party by third parties who have a right to do so shall not be deemed confidential or proprietary
information for these purposes. If Purchaser, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with the
transactions contemplated hereby, Purchaser agrees to provide Seller with prompt notice of such request(s) so that Seller may seek an appropriate protective order and/or waive Purchaser’s compliance with the terms of this
Section 12.02
. If Seller, any of its affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with the transactions
contemplated hereby, Seller agrees to provide Purchaser with prompt notice of such request(s) so that Purchaser may seek an appropriate protective order and/or waive Seller’s compliance with the terms of this Section 12.02. Notwithstanding
the terms of this
Section 12.02
, if, in the absence of a protective order or the receipt of a waiver hereunder, Purchaser or Seller is nonetheless, in the opinion of its counsel, compelled to disclose information concerning the other
Party to any tribunal or else stand liable for contempt or suffer other censure or penalty, Purchaser or Seller may disclose such information to such tribunal without liability hereunder. If the proposed acquisition is not consummated, each Party
agrees to promptly return to the other, promptly upon request, all confidential materials, and all copies thereof, which have been furnished to it in connection with the transactions contemplated hereby. For the avoidance of doubt, either Party may
provide its shareholders and creditors with a general description of this Agreement and any related transactions, and, subject to the provisions of this
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.03
Broker’s Fees
.
Each party hereto represents and warrants to the other that it has made no agreement to pay any finder’s, agent’s,
broker’s or originator’s fee arising out of or in connection with the subject matter of this Agreement. In the event Purchaser has entered or enters into an agreement to pay any finder’s, agent’s, broker’s, advisor’s or
originator’s fee arising out of or in connection with the subject matter of this Agreement, Purchaser shall be solely responsible for all such fees. The parties hereto shall indemnify and hold each other harmless from and against any such
obligation or liability and any expense incurred in investigating or defending (including reasonable attorneys’ fees) any claim based upon the other party’s actions in connection with such obligation.
Section 12.04
Relationship of Parties
.
The Parties intend that the transactions contemplated in the Transaction Documents constitute arms-length transactions among third parties. Nothing contained in the Transaction Documents will establish
any fiduciary, partnership, joint venture or similar relationship between or among the Parties except to the extent otherwise expressly stated therein.
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Section 12.05
Survival of Representations and Warranties
.
Each party hereto covenants and agrees that the representations and warranties in this Agreement, and in any document delivered or to be
delivered pursuant hereto, shall survive the Agreement Date.
Section 12.06
Notices
.
All notices, requests, demands and other communications which are required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been given if personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid or by prepaid overnight delivery service:
(a) If to Purchaser, to:
Fortress Investment Group LLC
1345 Avenue of the Americas
New York, NY 10105
Attn: Brian Sigman
Chief Financial Officer
(212) 479-5343
(b) If to Seller, to:
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attn: Amar Patel
or to such other address as Purchaser or Seller shall have specified in writing to the other.
Section 12.07
Waivers
.
Either Purchaser or Seller may, by written notice to the other:
(a) Extend the
time for the performance of any of the obligations or other transactions of the other; and
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(b) Waive compliance with or performance of any of the terms, conditions, covenants or
obligations required to be complied with or performed by the other hereunder.
The waiver by Purchaser or Seller of a breach
of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.
Section 12.08
Entire Agreement; Amendment
.
This Agreement and the related Transaction Documents constitute the entire agreement between the parties with respect to the transactions contemplated hereby and supersede all prior agreements with
respect thereto. This Agreement may be amended only in a written instrument signed by both Seller and Purchaser.
Section 12.09
Binding Effect
.
This Agreement shall inure to the benefit of and be binding upon the Parties and their successors and assigns. Nothing in this Agreement, express or implied, is intended to confer on any Person other than
the Parties and their successors and assigns, any rights, obligations, remedies or liabilities.
Section 12.10
Headings
.
Headings on the Articles and Sections in this Agreement are for reference purposes only and shall not be
deemed to have any substantive effect.
Section 12.11
Applicable Law
.
This Agreement shall be 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 the laws of the State of New York, except to the extent preempted by Federal law. The parties agree to waive trial by jury in the event of any dispute under this Agreement.
Section 12.12
Incorporation of Exhibits
.
The Exhibits attached hereto shall be incorporated herein and shall be understood to be a part hereof as though included in the body of this Agreement.
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Section 12.13
Counterparts
.
This Agreement may be executed in counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all
of which, taken together, shall constitute one and the same agreement.
Section 12.14
Severability of Provisions
.
If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever
held invalid, 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 or enforceability of the other
provisions of this Agreement or of the rights of the parties hereto.
Section 12.15
Public Announcement
.
No public release or statement concerning the subject matter of this Agreement shall be made by either party without the
express written consent and approval of the other party, except as required by law or stock exchange rule, and provided that on and after the Agreement Date, either party may provide its shareholders and creditors with a general description of this
Agreement and any related transactions, and, subject to the provisions of
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.16
Assignment
.
(a) Seller may not assign, transfer, sell or subcontract all or any part of this Agreement, any interest herein, or any of the Seller’s interest in the Servicing Spread Collections, other than the
interest in the Total Servicing Spread sold hereby, without the prior written consent of Purchaser,
provided
that any successor to Seller must assume Seller’s obligations under this Agreement. Purchaser shall have the unrestricted right
to further assign, transfer, deliver, hypothecate, pledge, subdivide or otherwise deal with its rights under this Agreement on whatever terms Purchaser shall determine without the consent of Seller; including the right to assign all or any portion
of the Current Excess Servicing Spread and to assign the related rights under this Agreement. If Purchaser assigns any rights under this Agreement to a third party (a “
Third Party Assignment
”), such third party (a “
Third
Party Assignee
”) shall enter into a new agreement (a “
Third Party Current Spread Agreement
”) with Seller or Seller’s assignee that provides such Third Party Assignee with the same rights with respect to the Current
Excess Servicing Spread that Purchaser would have had under this Agreement if the Third Party Assignment had not occurred.
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(b) Seller shall maintain a register on which it enters the name and address of each holder
of the Current Excess Servicing Spread and each holder’s interest in the Current Excess Servicing Spread (the “
Holder Register
”) for each transaction described in Section 12.16(a). The entries in the Holder Register shall
be conclusive absent manifest error, and Seller shall treat each Person whose name is recorded in the Holder Register as an owner of the Current Excess Servicing Spread for all purposes of this Agreement notwithstanding any notice to the contrary.
Section 12.17
Termination
.
If the GNMA Acknowledgment Agreement is not received by the Sale Date, or if the Purchase and Sale Agreement is terminated, this Agreement shall be terminated concurrently therewith, without any further
action of either Party. In the event this agreement is terminated as set forth in the prior sentence, neither Party shall have any further obligations to the other Party hereunder except as expressly set forth herein. If all conditions to
Purchaser’s or Seller’s obligations to close set forth in Article IX and Article X, respectively, are not satisfied on the Sale Date, Purchaser or Seller, as applicable based on the condition or conditions not satisfied, may terminate this
agreement by written notice to the other party, and neither party shall have any further obligations to the other party hereunder, except as expressly set forth herein.
Section 12.18
Third Party Beneficiaries
.
This Agreement does not and
is not intended to confer any rights or remedies upon any person or entity other than Purchaser and Seller, except as provided in
Section 11.01
and in
Section 11.02
, provided that Purchaser and Seller reserve the right to
modify any term of, or terminate, this Agreement, without the consent of any Purchaser Indemnitee or Seller Indemnitee.
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IN WITNESS WHEREOF, each of the undersigned parties to this Agreement has caused this
Agreement to be duly executed in its corporate name by one of its duly authorized officers, all as of the date first above written.
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MSR XI LLC
Purchaser
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By:
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/s/ Brian Sigman
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Name:
Title:
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Brian Sigman
Chief
Financial Officer
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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/s/ Amar Patel
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Name:
Title:
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Amar Patel
Executive Vice
President
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EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT FOR MORTGAGE LOANS
Subject to, and upon the terms and conditions of the Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans, dated as of January 6, 2013 (the “
Agreement
”), by
and between Nationstar Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) and MSR XI LLC, a Delaware limited liability company (together with its successors assigns, the
“
Purchaser
”), as may be amended, restated, or otherwise modified and in effect from time to time, Seller hereby assigns, transfers and delivers to Purchaser all of Seller’s right, title and interest in and to Current Excess
Servicing Spread for each of the Mortgage Loans set forth in Annex A attached hereto and all proceeds thereof, and agrees that as of the Sale Date, the applicable Mortgage Loan shall be deemed to be a “Mortgage Loan” for all purposes of
the Agreement. Capitalized terms used in this Assignment Agreement have the meanings given to such terms in, or incorporated by reference into, the Agreement.
In the event (but only in the event) that the conveyance of the Current Excess Servicing Spread is characterized by a court or governmental authority as security for a loan rather than a sale, Seller will
be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Current Excess Servicing Spread and all proceeds thereof as security for a loan in an
amount of the Purchase Price.
All of the terms, covenants, conditions and obligations of the Agreement required to be
complied with and performed by Seller on or prior to the date hereof have been duly complied with and performed in all material respects.
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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Name:
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Title:
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Annex A
[ATTACH ANNEX A, WHICH MAY BE ON COMPUTER TAPE, COMPACT DISK, OR
MICROFICHE, CONTAINING THE INFORMATION SET FORTH BELOW]
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
(column (d) –
column (e))
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(g)
([ ]% of column
(f))
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Sale Date
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Loan # of
Mortgage
Loan
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Principal
Balance of
Mortgage
Loan as of the Sale
Date
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Servicing
Spread Rate
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Base Servicing
Fee Rate
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Net Servicing
Spread Rate
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Current Excess
Servicing Spread
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EXHIBIT B
SCHEDULE OF MORTGAGE LOANS
[SEPARATELY DELIVERED]
EXHIBIT C
SELLER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, a [Vice President] of Nationstar Mortgage LLC (the “
Company
”), pursuant to
Section 9.07
of the
Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans by and between MSR XI LLC and the Company, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material respects as of
the date hereof;
(ii) All of the terms, covenants, conditions and obligations of the Agreement required to be complied with
and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects;
(iii) The conditions set forth in
Sections 9.04
and
9.05
of the Agreement have been satisfied; and
(iv) As of the date hereof, the Company has a Consolidated Tangible Net Worth (as defined in the Agreement) of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance
of equity on or after the date of the Agreement by the Company, Nationstar Mortgage Holdings Inc. or any of Company’s consolidated subsidiaries, and the Company (considered together with its consolidated subsidiaries)is not in default in any
indebtedness in excess of $10,000,000 (individually or in the aggregate).
IN WITNESS WHEREOF, the undersigned has executed
this Certificate as of [ ]
EXHIBIT D
PURCHASER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, [POSITION] of
[ ], the sole member of MSR XI LLC (the “
Company
”), pursuant to
Section 10.05
of the Current Excess
Servicing Spread Acquisition Agreement for GNMA Mortgage Loans by and between the Company and Nationstar Mortgage LLC, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material respects as of
the date hereof; and
(ii) All of the terms, covenants, conditions and obligations of the Agreement required to be complied
with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects; and
(iii) All conditions set forth in
Section 10.04
have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
[ ].
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MSR XI LLC
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By: [ ], as member
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By:
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EXHIBIT E
LOCATION OF CREDIT FILES
350 Highland Drive
Lewisville, Texas 75067
EXHIBIT F
FORM OF SUMMARY REMITTANCE REPORT
[DELIVERED SEPARATELY]
EXHIBIT G
FORM OF DELINQUENCY REPORT
[DELIVERED SEPARATELY]
EXHIBIT H
FORM OF DISBURSEMENT REPORT
[DELIVERED SEPARATELY]
EXHIBIT I
SELLER JURISDICTIONS AND RECORDING OFFICES
Chief Executive Office:
350 Highland Drive
Lewisville, Texas 75067
Recording Office:
Secretary of
State, State of Delaware
Exhibit 10.53
FUTURE SPREAD AGREEMENT FOR NON-AGENCY MORTGAGE LOANS
by and between
NATIONSTAR MORTGAGE LLC
(Seller)
and
MSR XII LLC
(Purchaser)
Dated and effective as of January 6, 2013
Table of Contents
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ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
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1
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Section 1.01
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Definitions
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1
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Section 1.02
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General Interpretive Principles
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12
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ARTICLE II ITEMS TO BE DELIVERED
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12
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Section 2.01
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Items to be Delivered
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12
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Section 2.02
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Grant of Security Interest
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14
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ARTICLE III REPLACEMENT OF MORTGAGE LOANS
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14
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Section 3.01
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Refinancing and Substitution of Mortgage Loans
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14
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Section 3.02
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Criteria for Mortgage Loans
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14
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Section 3.03
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Refinancing Incentives
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16
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Section 3.04
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Selection Procedures
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Section 3.05
|
|
Assignment of Future Excess Servicing Spread
|
|
|
19
|
|
|
|
|
|
ARTICLE IV PAYMENTS AND DISTRIBUTIONS
|
|
|
19
|
|
|
Section 4.01
|
|
Purchase Price
|
|
|
19
|
|
|
Section 4.02
|
|
Payments by Purchaser
|
|
|
19
|
|
|
Section 4.03
|
|
Accounts
|
|
|
19
|
|
|
Section 4.04
|
|
Priority of Payments
|
|
|
21
|
|
|
Section 4.05
|
|
Withdrawals from the Future Spread Reserve Account
|
|
|
23
|
|
|
Section 4.06
|
|
Payment to Seller of Base Servicing Fee
|
|
|
23
|
|
|
Section 4.07
|
|
Correction of Principal Balance Error
|
|
|
23
|
|
|
Section 4.08
|
|
Intent and Characterization
|
|
|
24
|
|
|
|
|
|
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER
|
|
|
24
|
|
|
Section 5.01
|
|
Due Organization and Good Standing
|
|
|
24
|
|
|
Section 5.02
|
|
Authority and Capacity
|
|
|
25
|
|
|
Section 5.03
|
|
Owner Consents
|
|
|
25
|
|
|
Section 5.04
|
|
Title to the Mortgage Servicing Rights
|
|
|
25
|
|
|
Section 5.05
|
|
Effective Agreements
|
|
|
25
|
|
|
Section 5.06
|
|
No Accrued Liabilities
|
|
|
25
|
|
|
Section 5.07
|
|
Seller/Servicer Standing
|
|
|
26
|
|
|
Section 5.08
|
|
MERS Membership
|
|
|
26
|
|
|
Section 5.09
|
|
Owner Set-off Rights
|
|
|
26
|
|
|
Section 5.10
|
|
Ability to Perform; Solvency
|
|
|
26
|
|
|
Section 5.11
|
|
Obligations with Respect to Origination
|
|
|
26
|
|
|
Section 5.12
|
|
Purchase of Mortgage Servicing Rights
|
|
|
26
|
|
|
Section 5.13
|
|
No Actions
|
|
|
27
|
|
i
|
|
|
|
|
|
|
|
|
ARTICLE VI REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE
|
|
|
|
|
|
LOANS AND SERVICING
|
|
|
27
|
|
|
Section 6.01
|
|
Servicing Agreements; Applicable Laws
|
|
|
27
|
|
|
Section 6.02
|
|
Related Escrow Accounts
|
|
|
27
|
|
|
Section 6.03
|
|
No Purchaser Responsibility
|
|
|
27
|
|
|
Section 6.04
|
|
Location of Credit Files
|
|
|
27
|
|
|
Section 6.05
|
|
Representations Concerning the Future Excess Servicing Spread
|
|
|
28
|
|
|
|
|
|
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER
|
|
|
28
|
|
|
Section 7.01
|
|
Due Organization and Good Standing
|
|
|
28
|
|
|
Section 7.02
|
|
Authority and Capacity
|
|
|
29
|
|
|
Section 7.03
|
|
Effective Agreements
|
|
|
29
|
|
|
Section 7.04
|
|
Sophisticated Investor
|
|
|
29
|
|
|
Section 7.05
|
|
No Actions
|
|
|
29
|
|
|
|
|
|
ARTICLE VIII SELLER COVENANTS
|
|
|
30
|
|
|
Section 8.01
|
|
Servicing Obligations
|
|
|
30
|
|
|
Section 8.02
|
|
Cooperation; Further Assurances
|
|
|
30
|
|
|
Section 8.03
|
|
Financing Statements
|
|
|
30
|
|
|
Section 8.04
|
|
Supplemental Information
|
|
|
31
|
|
|
Section 8.05
|
|
Access to Information
|
|
|
31
|
|
|
Section 8.06
|
|
Home Affordable Modification Program
|
|
|
31
|
|
|
Section 8.07
|
|
Distribution Date Data Tapes and Reports
|
|
|
31
|
|
|
Section 8.08
|
|
Financial Statements and Officer’s Certificates
|
|
|
33
|
|
|
Section 8.09
|
|
Monthly Management Calls
|
|
|
34
|
|
|
Section 8.10
|
|
Timely Payment of Owner Obligations
|
|
|
34
|
|
|
Section 8.11
|
|
Servicing Agreements
|
|
|
34
|
|
|
Section 8.12
|
|
Transfer of Mortgage Servicing Rights
|
|
|
34
|
|
|
Section 8.13
|
|
Consents to Transaction Documents
|
|
|
35
|
|
|
Section 8.14
|
|
Accounts
|
|
|
35
|
|
|
Section 8.15
|
|
Notification of Certain Events
|
|
|
35
|
|
|
Section 8.16
|
|
Financing; Pledge of Future Excess Servicing Spread
|
|
|
35
|
|
|
Section 8.17
|
|
Existence, etc
|
|
|
35
|
|
|
Section 8.18
|
|
Consent to Sub-Servicing
|
|
|
36
|
|
|
Section 8.19
|
|
Nonpetition Covenant
|
|
|
36
|
|
|
Section 8.20
|
|
Schedule of Mortgage Loans
|
|
|
37
|
|
|
Section 8.21
|
|
True Sale Opinion
|
|
|
37
|
|
|
Section 8.22
|
|
Valuation
|
|
|
37
|
|
|
Section 8.23
|
|
Material Documents
|
|
|
37
|
|
|
Section 8.24
|
|
Insurance
|
|
|
37
|
|
|
Section 8.25
|
|
Defense of Title
|
|
|
37
|
|
ii
|
|
|
|
|
|
|
|
|
Section 8.26
|
|
Refinancing of Mortgage Loans
|
|
|
37
|
|
|
|
|
|
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
|
|
|
38
|
|
|
Section 9.01
|
|
Correctness of Representations and Warranties
|
|
|
38
|
|
|
Section 9.02
|
|
Compliance with Conditions
|
|
|
38
|
|
|
Section 9.03
|
|
Corporate Resolution
|
|
|
38
|
|
|
Section 9.04
|
|
No Material Adverse Change
|
|
|
38
|
|
|
Section 9.05
|
|
Consents
|
|
|
38
|
|
|
Section 9.06
|
|
Delivery of Transaction Documents
|
|
|
39
|
|
|
Section 9.07
|
|
Certificate of Seller
|
|
|
39
|
|
|
Section 9.08
|
|
Opinions of Counsel
|
|
|
39
|
|
|
Section 9.09
|
|
Good Standing Certificate of Seller
|
|
|
39
|
|
|
Section 9.10
|
|
No Actions or Proceedings
|
|
|
39
|
|
|
|
|
|
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
|
|
|
40
|
|
|
Section 10.01
|
|
Correctness of Representations and Warranties
|
|
|
40
|
|
|
Section 10.02
|
|
Compliance with Conditions
|
|
|
40
|
|
|
Section 10.03
|
|
Corporate Resolution
|
|
|
40
|
|
|
Section 10.04
|
|
No Material Adverse Change
|
|
|
40
|
|
|
Section 10.05
|
|
Certificate of Purchaser
|
|
|
40
|
|
|
Section 10.06
|
|
Good Standing Certificate of Purchaser
|
|
|
40
|
|
|
|
|
|
ARTICLE XI INDEMNIFICATION
|
|
|
41
|
|
|
Section 11.01
|
|
Indemnification by Seller
|
|
|
41
|
|
|
Section 11.02
|
|
Indemnification by Purchaser
|
|
|
42
|
|
|
Section 11.03
|
|
Other Rights
|
|
|
43
|
|
|
|
|
|
ARTICLE XII MISCELLANEOUS
|
|
|
44
|
|
|
Section 12.01
|
|
Costs and Expenses
|
|
|
44
|
|
|
Section 12.02
|
|
Confidentiality
|
|
|
44
|
|
|
Section 12.03
|
|
Broker’s Fees
|
|
|
44
|
|
|
Section 12.04
|
|
Relationship of Parties
|
|
|
45
|
|
|
Section 12.05
|
|
Survival of Representations and Warranties
|
|
|
45
|
|
|
Section 12.06
|
|
Notices
|
|
|
45
|
|
|
Section 12.07
|
|
Waivers
|
|
|
45
|
|
|
Section 12.08
|
|
Entire Agreement; Amendment
|
|
|
46
|
|
|
Section 12.09
|
|
Binding Effect
|
|
|
46
|
|
|
Section 12.10
|
|
Headings
|
|
|
46
|
|
|
Section 12.11
|
|
Applicable Law
|
|
|
46
|
|
|
Section 12.12
|
|
Incorporation of Exhibits
|
|
|
47
|
|
|
Section 12.13
|
|
Counterparts
|
|
|
47
|
|
|
Section 12.14
|
|
Severability of Provisions
|
|
|
47
|
|
|
Section 12.15
|
|
Assignment
|
|
|
47
|
|
|
Section 12.16
|
|
Termination
|
|
|
47
|
|
|
Section 12.17
|
|
Third Party Beneficiaries
|
|
|
48
|
|
iii
EXHIBITS
Exhibit A – Form of Assignment Agreement Annex A
Exhibit B – Example of Calculations of
Maximum Retained Refinancing Loan Amounts
Exhibit C – Schedule of Mortgage Loans
Exhibit D – Seller’s Officer’s Certificate
Exhibit E – Purchaser’s
Officer’s Certificate
Exhibit F – Location of Credit Files
Exhibit G – Form of Summary Remittance Report
Exhibit H – Form of Delinquency Report
Exhibit I – Form of Disbursement Report
Exhibit J – Seller Jurisdictions and Recording Offices
iv
FUTURE SPREAD AGREEMENT FOR NON-AGENCY MORTGAGE LOANS
This FUTURE SPREAD AGREEMENT FOR NON-AGENCY MORTGAGE LOANS (as amended, restated, or otherwise modified and in effect from time to time,
this “
Agreement
”), dated as of January 6, 2013 (the “
Agreement Date
”), is by and between MSR XII LLC, a Delaware limited liability company (together with its successors and assigns, the
“
Purchaser
”), and Nationstar Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) (the Purchaser and the Seller will collectively be referred to as the
“
Parties
” and each, a “
Party
”).
W I T N E S S E T H
:
WHEREAS
, Seller and Purchaser have entered into the Current Excess Servicing Spread Acquisition Agreement For Non-Agency Mortgage
Loans, dated as of the date hereof (as amended, restated, or otherwise modified and in effect, the “
Current Spread Agreement
”), pursuant to which Purchaser will purchase and assume all right, title and interest in the excess
servicing spread with respect to a pool of residential mortgage loans to be serviced by Seller;
WHEREAS
, Seller
desires to retain the right to refinance the residential mortgage loans in the pool, and Purchaser is willing to grant such right, as long as the excess servicing spread with respect to the newly-originated residential mortgage loans and replacement
residential mortgage loans is assigned to the Purchaser as described herein; and
WHEREAS
, Purchaser and Seller desire
to set forth the terms and conditions pursuant to which residential mortgage loans in the pool may be refinanced.
NOW,
THEREFORE
, in consideration of the mutual promises, covenants and conditions and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and upon the terms and subject to the conditions set forth
herein, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
Section 1.01
Definitions
.
Whenever used herein, the following
words and phrases, unless the context otherwise requires, shall have the following meanings:
Accepted Servicing
Practices
: With respect to any Mortgage Loan, those accepted and prudent mortgage servicing practices (including collection procedures) which are in accordance with the servicing practices and procedures as set forth in the applicable Servicing
Agreements, and in a manner at least equal in quality to the servicing that Seller provides to mortgage loans which it owns in its own portfolio.
1
Agency
: The entity formerly known as the Federal Home Loan Mortgage Corporation, or
any successor thereto, the Federal National Mortgage Association, or any successor thereto, the Government National Mortgage Association, or any successor thereto, the Federal Housing Administration of the United States Department of Housing and
Urban Development, or any successor thereto, the Department of Veterans Affairs, or any successor thereto.
Agreement
:
As defined in the preamble hereof.
Agreement Date
: As defined in the preamble hereof.
Ancillary Income
: All incidental servicing fees (such as late fees, assignment transfer fees, returned check fees, special
services fees, amortization schedule fees, HAMP fees, modification and incentive income and any interest or earnings on funds deposited in an account maintained by the Seller as servicer with respect to the Mortgage Loans, etc.) that are
supplemental to the servicing spread payable to the servicer pursuant to the Servicing Agreements.
Applicable Law
:
With reference to any Person, all laws (including common law), statutes, regulations, ordinances, treaties, judgments, decrees, injunctions, writs and orders of any court, governmental agency or authority and rules, regulations, orders, directives,
licenses and permits of any Governmental Authority applicable to such Person or its property or in respect of its operations.
Assignment Agreement
: An assignment agreement substantially in the form of
Exhibit A
to this Agreement or in such other
form as mutually agreed upon by the Parties.
Assignment Date
: With respect to a Refinanced Mortgage Loan and its
related Mortgage Loan, the Distribution Date in the third calendar month following the Refinanced Mortgage Loan’s Refinancing Date.
Available Portfolio
: As defined in
Section 3.04(a)
hereof.
Bank
: Wells Fargo Bank, National Association, or another financial institution mutually agreed upon by the Parties or any
successor thereto, each in its capacity as “Bank” under the Future Spread Custodial Account Control Agreement or the Future Spread Reserve Account Control Agreement, as applicable, or any third party custodian or trustee in similar
capacity under any replacement account control agreements.
Base Servicing Fee
: With respect to a Collection Period, an
amount equal to the product of (A) the aggregate outstanding principal balance of the Mortgage Loans as of the related Measurement Date, (B) the Base Servicing Fee Rate and (C) (i) in the case of the initial Collection Period, a
fraction, the numerator of which is the number of days in the period from and including the Sale Date to and including the last day of the initial Collection Period, and the denominator of which is 360, and (ii) in the case of all other
Collection Periods, 1/12;
provided
that the Base Servicing Fee with respect to any Mortgage Loan whose Servicing Agreement is terminated during a Collection Period shall be pro-rated to the actual number of days within such Collection Period
in which such Mortgage Loan was serviced by Seller.
2
Base Servicing Fee Rate
: With respect to the Mortgage Loans (other than GNMA Mortgage
Loans), 0.06% per annum and with respect to GNMA Mortgage Loans, 0.12% per annum.
Business Day
: Any day
other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the States of Texas or New York are authorized or obligated by law or by executive order to be closed or (c) such other days as agreed upon by the
Parties.
Carryover Retained Amount
: As defined in
Section 3.03
hereof.
Code
: The Internal Revenue Code of 1986, as amended from time to time.
Collateral
: As defined in
Section 2.02
hereof.
Collection Period
: With respect to any Distribution Date, the calendar month preceding the month in which such Distribution Date
occurs.
Consolidated Tangible Net Worth
: (i) The net worth of Seller and its consolidated subsidiaries, on a
combined basis, determined in accordance with GAAP,
minus
(ii) all intangibles determined in accordance with GAAP (including goodwill, capitalized financing costs and capitalized administration costs but excluding originated and
purchased mortgage servicing rights or retained residual securities) and any and all advances to, investments in and receivables held from affiliates;
provided
,
however
, that the non-cash effect (gain or loss) of any mark-to-market
adjustments made directly to stockholders’ equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the
calculation of Consolidated Tangible Net Worth.
Control
: The meaning specified in Section 8-106 of the UCC.
Credit File
: Those documents, which may be originals, copies or electronically imaged, pertaining to each Mortgage
Loan, held by or on behalf of Seller in connection with the servicing of the Mortgage Loan, which may include Mortgage Loan Documents and the credit documentation relating to the origination of such Mortgage Loan, and any documents gathered during
the servicing of a Mortgage Loan.
Current Mortgage Loan
: A residential mortgage loan that is a “Mortgage
Loan” under the Current Spread Agreement.
Current Spread Agreement
: As defined in the recitals to this Agreement.
Custodian
: A custodian of Credit Files or any part thereof as identified by the Seller to the Purchaser in writing on
or prior to the first Assignment Date as the same may be amended and supplemented from time to time by the Seller by providing a written notice of any such update to the Purchaser.
3
Distribution Date
: The 10th day of each calendar month, or if such day is not a
Business Day, the prior Business Day, beginning in the month following the first Assignment Date, or such other day as mutually agreed upon by Seller and Purchaser.
Electronic Data File
: A computer tape or other electronic medium generated by or on behalf of Seller and delivered or transmitted to or on behalf of Purchaser which provides information relating to
the Mortgage Loans.
Eligible Servicing Agreement
: Unless otherwise agreed to by the Purchaser, a Servicing Agreement
in respect of which the following eligibility requirements have been satisfied:
(a) the Owner Consents relating to such
Servicing Agreement have been obtained;
(b) such Servicing Agreement is in full force and effect, and is in all respects
genuine as appearing on its face or as represented in the books and records of Seller, and no event of default, early amortization event, termination event, or other event giving any party thereto (including with notice or lapse of time or both) the
right to terminate Seller as servicer thereunder for cause has occurred and is continuing; provided, however, that with respect to any Servicing Agreement and the occurrence of any event set forth in this clause (b) which is based on a breach
of a collateral performance test, such Servicing Agreement shall remain an Eligible Servicing Agreement so long as no notice of termination based on such breach has been given or threatened in writing and subject to the restrictions set forth
herein;
(c) Seller has not resigned or been terminated as servicer under such Servicing Agreement and has no actual knowledge
of any pending or threatened action to terminate Seller, as servicer (whether for cause or without cause); and
(d) with
respect to any Servicing Agreement relating to Non-Agency Mortgage Loans, an agreement pursuant to which the Seller as servicer may not be terminated without cause pursuant to such Servicing Agreement or if the Seller as servicer may be terminated
without cause, upon payment of a termination fee.
Entitlement Holder
: The meaning specified in
Section 8-102(a)(7) of the UCC.
Excess Refinancing Percentage
: As defined in
Section 3.03
hereof.
Expense Amount
: As defined in
Section 11.01(b)
hereof.
Expense Amount Accountant’s Letter
: As defined in
Section 11.01(b)
hereof.
Expense Amount Tax Opinion
: As defined in
Section 11.01(b)
hereof.
Expense Escrow Account
: As defined in
Section 11.01(b)
hereof.
Fannie Mae
: Federal National Mortgage Association, or any successor thereto.
Freddie Mac
: Federal Home Loan Mortgage Corporation, or any successor thereto.
4
FHLMC Acknowledgment Agreement
: The acknowledgment agreement by and among the entity
formerly known as the Federal Home Loan Mortgage Corporation, or any successor thereto, Seller and MSR IX LLC, in form and substance reasonably acceptable to MSR IX LLC, dated on or before the Sale Date, pursuant to which the entity formerly known
as the Federal Home Loan Mortgage Corporation, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
FNMA Acknowledgment Agreement
: The acknowledgment agreement by and among the Federal National Mortgage Association, or any successor thereto, Seller and MSR X LLC, in form and substance reasonably
acceptable to MSR X LLC, dated on or before the Sale Date, pursuant to which the Federal National Mortgage Association, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
Future Excess Servicing Spread
: The rights of Seller, severable from each (and all) of the other rights under the
applicable Servicing Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to the Future Excess Servicing Spread Percentage.
Future Excess Servicing Spread Assignment Obligation
: As defined in
Section 3.01
hereof.
Future Excess Servicing Spread Percentage
: A percentage equal to the Current Excess Servicing Spread Percentage in the Current Spread Agreement.
Future Excess Servicing Spread Rights
: As defined in
Section 3.01
hereof.
Future Spread Custodial Account Agreement
: The applicable deposit account agreement and other related account documentation
governing the Third Party Controlled Future Spread Custodial Account.
Future Spread Custodial Account Control
Agreement
: The account control agreement among Seller, Purchaser and Wells Fargo Bank, National Association, or any successor thereto, or any other institution agreed upon by the Parties, as Bank, dated as of the Sale Date, entered into with
respect to the Third Party Controlled Future Spread Custodial Account, as amended, restated, supplemented or otherwise modified from time to time.
Future Spread Reserve Account
: The account specified in the Future Spread Reserve Account Control Agreement and maintained by Wells Fargo Bank, National Association, or any successor thereto, or
another third party custodian or trustee selected by Purchaser.
Future Spread Reserve Account Agreement
: The
applicable deposit account agreement and other related account documentation governing the Future Spread Reserve Account.
Future Spread Reserve Account Control Agreement
: The account control agreement among Seller, Purchaser and Wells Fargo Bank,
National Association, or any successor thereto, or any other institution agreed upon by the Parties, as Bank, dated as of the Sale Date, entered into with respect to the Future Spread Reserve Account, as amended, restated, supplemented or otherwise
modified from time to time.
5
Future Spread Reserve Account Deposit Event
: As defined in
Section 4.03(c)
hereof.
Future Spread Reserve Account Required Amount
: As defined in
Section 4.03(c)
hereof.
GAAP
: Generally accepted accounting principles in the United States of America as
in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board,
or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, that are applicable to the circumstances as of the date of determination.
GNMA
: Government National Mortgage Association, or any successor thereto.
GNMA Acknowledgment Agreement
: The acknowledgment agreement by and among GNMA, or any successor thereto, Seller and MSR XI LLC, in
form and substance reasonably acceptable to MSR XI LLC, dated on or before the Sale Date, pursuant to which GNMA, or any successor thereto, consents to the sale of the excess servicing spread and other arrangements specified therein.
GNMA Mortgage Loan
: A Mortgage Loan which is owned by GNMA, or any successor thereto.
Governmental Authority
: With respect to any Person, any nation or government, any state or other political subdivision, agency or
instrumentality thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over such Person, any of its subsidiaries or any
of its properties.
Grant
: To grant, bargain, sell, warrant, alienate, remise, demise, release, convey, assign,
transfer, mortgage, pledge, create and grant a security interest in and right of setoff against, deposit, set over or confirm.
HAMP
: As defined in
Section 8.06
hereof.
HAMP Loans
: As defined in
Section 8.06
hereof.
Holder
Register
: As defined in
Section 12.15(b)
hereof.
Indemnity Loan
: As defined in
Section 11.01(b)
hereof.
Indemnity Loan Agreement
: As defined in
Section 11.01(b)
hereof.
IRS
: The United States Internal Revenue Service.
6
Lien
: Any mortgage, deed of trust, pledge, hypothecation, collateral assignment,
charge, deposit, arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness
or the performance of any other obligation, including any conditional sale or other title retention agreement.
Lockbox
Account
: An account maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser for the purpose of receiving Servicing Spread Collections.
Loss
or
Losses
: Any and all direct, actual and out-of-pocket losses (including any loss in the value in the Future Excess
Servicing Spread), damages, deficiencies, claims, costs or expenses, including reasonable attorneys’ fees and disbursements, excluding (i) any amounts attributable to or arising from overhead allocations, general or administrative costs
and expenses, or any cost for the time of any Party’s employees, (ii) consequential losses or damages consisting of speculative lost profits, lost investment or business opportunity, damage to reputation or operating losses, or
(iii) punitive or treble damages;
provided
,
however
, that the exclusions set forth in clauses (ii) and (iii) above do not apply if and to the extent any such amounts are actually incurred in payment to a third party or
government entity.
Maximum Retained Refinancing Loan Amount
: As defined in
Section 3.03
hereof.
Measurement Date
: With respect to any Collection Period, the first day of such Collection Period.
MERS
: Mortgage Electronic Registration Systems, Inc., or any successor thereto.
MI
: Insurance provided by private mortgage insurance companies to make payments on certain Mortgage Loans in the event that
the related Mortgagor defaults in its obligation in respect of the Mortgage.
Mortgage
: Each of those mortgages,
deeds of trust, security deeds or deeds to secure debt creating a first lien on or an interest in real property securing a Mortgage Note and related to a Mortgage Loan.
Mortgage Loan
: A residential mortgage loan that satisfies the conditions set forth in
Section 3.02
and whose Future Excess Servicing Spread is assigned to Purchaser hereunder in
satisfaction of Seller’s Future Excess Servicing Spread Assignment Obligation.
Mortgage Loan Documents
: With
respect to each Mortgage Loan, the documents and agreements related to such Mortgage Loan required to be held by the applicable Custodian, including, without limitation, the original Mortgage Note, and any other documents or agreements evidencing
and/or governing such Mortgage Loan.
Mortgage Loan Identification Date
: With respect to a Refinanced Mortgage Loan and
its related replacement Mortgage Loan, the 25th day of the second calendar month following the Refinanced Mortgage Loan’s Refinancing Date.
7
Mortgage Note
: With respect to any Mortgage Loan, the note or other evidence of
indebtedness of the Mortgagor, thereunder, including, if applicable, an allonge and lost note affidavit.
Mortgage
Servicing Rights
: The rights and responsibilities of Seller with respect to servicing the Mortgage Loans under the Servicing Agreements, including any and all of the following if and to the extent provided therein: (a) all rights to service
a Mortgage Loan; (b) all rights to receive servicing fees, Ancillary Income, reimbursements or indemnification for servicing the Mortgage Loan, and any payments received in respect of the foregoing and proceeds thereof; (c) the right to
collect, hold and disburse escrow payments or other payments with respect to the Mortgage Loan and any amounts actually collected with respect thereto and to receive interest income on such amounts to the extent permitted by Applicable Law;
(d) all accounts and other rights to payment related to any of the property described in this paragraph; (e) possession and use of any and all Credit Files pertaining to the Mortgage Loan or pertaining to the past, present or prospective
servicing of the Mortgage Loan; (f) to the extent applicable, all rights and benefits relating to the direct solicitation of the related Mortgagors for refinance or modification of the Mortgage Loans and attendant right, title and interest in
and to the list of such Mortgagors and data relating to their respective Mortgage Loans; and (g) all rights, powers and privileges incident to any of the foregoing.
Mortgaged Property
: The Mortgagor’s real property, securing repayment of a related Mortgage Note, consisting of an interest in a single parcel of real property, improved by a residential
dwelling.
Mortgagor
: An obligor under a residential mortgage loan.
New Mortgage Loan
: As defined in
Section 3.02(a)(i)(1)
hereof.
Non-Agency Mortgage Loan
: Any Mortgage Loan where the Owner is not an Agency.
Nonqualifying Income
: Any amount that is treated as gross income for purposes of Section 856 of the Code and which is not
Qualifying Income.
Objection Notice
: As defined in
Section 4.03(c)
hereof.
Opinion of Counsel
: One or more written opinions, in form and substance reasonably satisfactory to the recipient, of an attorney
at law admitted to practice in any state of the United States or the District of Columbia, which attorney may be counsel for Seller or Purchaser, as the case may be.
Owner
: With respect to a Mortgage Loan, the owner thereof.
Owner
Consent
: All agreements, including the FHLMC Acknowledgment Agreement, the FNMA Acknowledgment Agreement and GNMA Acknowledgment Agreement, if applicable, pursuant to which an Owner approves or consents to the sale of the Future Excess Servicing
Spread from Seller to Purchaser and any other consents, acknowledgements or similar instruments that may be required from an Owner in connection with the transactions contemplated herein.
8
Party
or
Parties
: As defined in the preamble hereof.
Permitted Liens
: Liens in favor of an Agency required pursuant to the applicable Servicing Agreements.
Person
: Any individual, partnership, corporation, limited liability company, limited liability partnership, business entity, joint
stock company, trust, business trust, unincorporated organization, association, enterprise, joint venture, government, any department or agency of any government or any other entity of whatever nature.
Power of Attorney
: A Power of Attorney delivered by the Seller to the Purchaser authorizing the Purchaser to enforce the
right to payment of the Future Excess Servicing Spread under the related Servicing Agreement solely in the event that the Seller fails to enforce such right within 30 days after receiving written notice of such failure from the Purchaser to the
Seller.
Priority of Payments
: As defined in
Section 4.04
hereof.
Protected REIT
: Any entity that (i) has elected to be taxed as a real estate investment trust pursuant to Section 856 et
seq. of the Code, (ii) owns a direct or indirect equity interest in Purchaser, and (iii) is treated for purposes of Section 856 of the Code as owning all or a portion of the assets of the Purchaser or as receiving all or a portion of
the Purchaser’s income.
Purchase and Sale Agreement
: The Mortgage Servicing Rights Purchase and Sale Agreement,
dated as of January 6, 2013, by and between Nationstar Mortgage LLC, as purchaser, and Bank of America, National Association, as seller, together with all schedules and exhibits thereto, as the same may be amended, supplemented or otherwise
modified from time to time.
Purchase Price
: As defined in
Section 4.01
hereof.
Purchaser
: As defined in the preamble hereof.
Purchaser Indemnitees
: As defined in
Section 11.01(a)
hereof.
Qualifying Income
: Gross income that is described in Section 856(c)(2) or 856(c)(3) of the Code.
Quarterly Collection Period
: As defined in
Section 3.03
hereof.
Refinanced Mortgage Loan
: A Current Mortgage Loan or a Mortgage Loan that has been refinanced in whole or in part by Seller or an
affiliate thereof.
Refinancing Date
: The date on which a Current Mortgage Loan or Mortgage Loan is refinanced by
Seller or an affiliate thereof.
Refinancing Split Percentage
: As defined in
Section 3.03
hereof.
REIT Qualification Ruling
: As defined in
Section 11.01(b)
hereof.
9
REIT Requirements
: The requirements imposed on REITs pursuant to Sections 856 through
and including 860 of the Code.
Related Collection Period
: With respect to an Assignment Date, the Collection Period in
the third calendar month prior to such Assignment Date, and with respect to a Mortgage Loan Identification Date, the second calendar month prior to such Mortgage Loan Identification Date.
Related Escrow Accounts
: Mortgage Loan escrow/impound accounts maintained by Seller relating to the Mortgage Servicing Rights,
including accounts for buydown funds, real estate taxes and MI, flood and hazard insurance premiums.
Release Document
:
As defined in
Section 11.01(b)
hereof.
Remaining Expected Total Servicing Spread
: As defined in
Section 4.03(c)
hereof.
Replacement Portfolio
: As defined in
Section 3.04(a)
hereof.
Replacement Shortfall
: As defined in
Section 3.03
hereof.
Requirement of Law
: As to any Person, the certificate of incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its
property is subject.
Retained Portfolio
: As defined in
Section 3.04(a)
hereof.
Retained Servicing Spread
: The rights of Seller, severable from each (and all) of the other rights under the applicable Servicing
Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to 100%
minus
the Future Excess Servicing Spread Percentage.
Sale Date
: As defined in the Purchase and Sale Agreement; provided that all conditions precedent to the execution and delivery of the related assignment agreement under the Current Spread Agreement
shall have been satisfied or waived on such date.
Sales Proceeds
: The proceeds received upon a sale (approved by the
Parties) of the Total Servicing Spread (except without giving effect to clause (c) of the definition thereof), in whole or in part, including through a sale in accordance with
Section 8.12
.
Schedule of Mortgage Loans:
The list of Mortgage Loans whose Future Excess Servicing Spread has been assigned to Purchaser
pursuant to this Agreement as updated by the Seller and Purchaser on each Assignment Date and maintained as
Exhibit C
hereto.
Selection Period
: As defined in
Section 3.04(b)
hereof.
Seller
: As defined in the preamble hereof.
10
Seller Indemnitees
: As defined in
Section 11.02
hereof.
Servicing
: The responsibilities, with respect to servicing the Mortgage Loans, under the Servicing Agreements.
Servicing Agreements
: The servicing agreements, as amended from time to time, and any waivers, consent letters, acknowledgments
and other agreements under which Seller is the servicer of the Mortgage Loans relating to the Mortgage Servicing Rights and governing the servicing of the Mortgage Loans, or with respect to Mortgage Loans owned by the Seller, the credit and
collection standards, policies, procedures and practices of Seller relating to residential mortgage loans owned and serviced by Seller.
Servicing Spread Collections
: For each Collection Period, the funds collected on the Mortgage Loans and allocated as the servicing compensation payable to Seller as servicer of the Mortgage Loans
with respect to such Collection Period pursuant to the applicable Servicing Agreements, other than Ancillary Income and, for the avoidance of doubt, other than reimbursements received for advances and other out-of-pocket expenditures from an Owner
by Seller in accordance with the Servicing Agreements.
Solvent
: With respect to any Person as of any date of
determination, (a) the value of the assets of such Person is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person as determined in accordance with GAAP, (b) such Person is able to
pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the
amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
Third Party Assignee
: As defined in
Section 12.15
hereof.
Third Party Assignment
: As defined in
Section 12.15
hereof.
Third Party Future Spread Agreement
: As defined in
Section 12.15
hereof.
Third Party Claim
: As defined in
Section 11.01
and
Section 11.02
, as applicable.
Third Party Controlled Future Spread Custodial Account
: The account specified in the Future Spread Custodial Account Control
Agreement and maintained by Wells Fargo Bank, National Association, or any successor thereto, or another third party custodian or trustee selected by Purchaser, into which all Servicing Spread Collections, all Sales Proceeds and all Servicing
Agreement termination payments in respect of the Mortgage Loans shall be deposited.
Total Servicing Spread
: For each
Collection Period on and after the Sale Date, the sum of the following: (a) the Servicing Spread Collections received during such Collection Period and remaining after payment of the Base Servicing Fee; (b) all other amounts payable by an
Owner to Seller (or Purchaser under an Owner Consent) with respect to the Mortgage Servicing Rights for Mortgage Loans, including any termination fees paid by an Owner to Seller for terminating Seller as the servicer of any of the Mortgage Loans,
but for the avoidance of doubt, excluding all Ancillary Income and reimbursements received for advances and other out-of-pocket expenditures from an Owner by Seller in accordance with the Servicing Agreements and (c) all Sales Proceeds received
during such Collection Period.
11
Transaction Documents
: The Future Spread Custodial Account Agreement, the
Future Spread Custodial Account Control Agreement, the Future Spread Reserve Account Agreement, the Future Spread Reserve Account Control Agreement, the Current Spread Agreement and this Agreement.
UCC
: The Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.
Section 1.02
General Interpretive Principles
.
For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other gender;
(b) Accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally accepted accounting principles;
(c) References
herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) A reference to a Subsection without further reference to a Section is a reference to such Subsection as
contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions;
(e) The words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; and
(f) The term “include” or “including” shall mean without limitation by reason of enumeration.
ARTICLE II
ITEMS TO BE DELIVERED
Section 2.01
Items to be Delivered
.
(a) On the Agreement
Date, subject to the satisfaction of the terms and conditions herein, each of Seller and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise
responsible as set forth below:
12
(i) This Agreement;
(ii) The Current Spread Agreement and all agreements, certificates, opinions and instruments required to be delivered under the Current
Spread Agreement on the Agreement Date, if any;
(b) On the Sale Date, subject to the satisfaction of the terms and
conditions herein, each of Seller and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
(i) The executed Future Spread Custodial Account Agreement;
(ii) The executed Future Spread Custodial Account Control Agreement;
(iii) The
executed Future Spread Reserve Account Agreement;
(iv) The executed Future Spread Reserve Account Control Agreement;
(v) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser regarding due authorization, authority, and
enforceability of the applicable Transaction Documents to which Seller is a party, and regarding no conflicts with other material Seller agreements;
(vi) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the characterization of the transfer of the Future Excess Servicing Spread from Seller to Purchaser as a true sale for
bankruptcy purposes;
(vii) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the perfection of
the assignment of Future Excess Servicing Spread to Purchaser and the security interests granted hereunder;
(viii) The duly
executed corporate certificate of Seller required by
Section 9.07
;
(ix) A certificate of good standing of Seller
dated as of a date within five (5) Business Days prior to the Sale Date to be delivered by Seller;
(x) A
secretary’s certificate of Seller attaching its organizational documents, board resolutions and incumbency certificates;
(xi) The duly executed corporate certificate of Purchaser required by
Section 10.05
;
13
(xii) A certificate of good standing of Purchaser dated as of a date within five
(5) Business Days prior to the Sale Date to be delivered by Purchaser;
(xiii) A UCC-1 financing statement relating to
the sale of the Future Excess Servicing Spread and relating to the security interest of Purchaser in the Third Party Controlled Future Spread Custodial Account and the Future Spread Reserve Account, in form and substance reasonably acceptable to
Purchaser; and
(xiv) All agreements, certificates, opinions and instruments required to be delivered under the Current Spread
Agreement on the Sale Date.
(c) On or before the Assignment Date with respect to a Mortgage Loan, Seller shall provide
Purchaser with executed copies of the related Owner Consents, and any amendments thereto.
(d) On or before the first
Assignment Date, the executed Power of Attorney.
Section 2.02
Grant of Security Interest
.
In order to secure Seller’s obligations to deliver the Future Excess Servicing Spread and perform its obligations hereunder, Seller
hereby Grants to Purchaser a valid and continuing first priority and perfected Lien on and security interest in all of Seller’s right, title and interest in, to and under the Third Party Controlled Future Spread Custodial Account and the Future
Spread Reserve Account, together with all amounts deposited therein from time to time and all cash and non-cash proceeds thereof, in each case, whether now owned or existing, or hereafter acquired and arising (the “
Collateral
”).
ARTICLE III
REPLACEMENT OF MORTGAGE LOANS
Section 3.01
Refinancing
and Substitution of Mortgage Loans
.
Subject to, and upon the terms and conditions of this Agreement, and, more
particularly, the conditions of this
ARTICLE III
, if Seller or any of its affiliates refinances any Current Mortgage Loan or Mortgage Loan, it shall designate a residential mortgage loan as a replacement Mortgage Loan pursuant to this
ARTICLE III
and assign the Future Excess Servicing Spread with respect to such replacement Mortgage Loan on the applicable Assignment Date to Purchaser as provided in this Agreement (such obligations of Seller, the “
Future Excess
Servicing Spread Assignment Obligation
”), and the rights of Purchaser to such Future Excess Servicing Spread, the “
Future Excess Servicing Spread Rights
”).
Section 3.02
Criteria for Mortgage Loans
.
(a) As of the applicable Assignment Date, unless otherwise agreed upon by Seller and Purchaser, either:
14
(i) The Mortgage Loan shall satisfy the following criteria:
(1) The proceeds of such Mortgage Loan (the “
New Mortgage Loan
”) were use to repay the Refinanced Mortgage Loan in whole
or in part;
(2) All consents, if any, required by the applicable Owner to assign the related Future Excess Servicing Spread
with respect to the New Mortgage Loan shall have been obtained;
(3) The servicing fee rate for the New Mortgage Loan is not
less than the lesser of (x) the servicing fee rate of the Refinanced Mortgage Loan and (y) (A) 0.25% per annum if such New Mortgage Loan is owned by Fannie Mae or Freddie Mac, (B) 0.35% per annum if such New Mortgage
Loan is a Non-Agency Mortgage Loan or (C) 0.375% per annum if such New Mortgage Loan is owned by GNMA; and
(4) The
New Mortgage Loan is secured by the same property as the Refinanced Mortgage Loan; or
(ii) if Seller is unable to satisfy the
conditions in
Section 3.02(a)(i)
after using commercially reasonable efforts, Seller shall use its best efforts to substitute the New Mortgage Loan with a Mortgage Loan satisfying the following criteria:
(1) The servicing fee rate (which results in the Servicing Spread Collections) for the Mortgage Loan is equal to or greater than the
servicing fee rate of the New Mortgage Loan; provided however if the servicing fee rate of the New Mortgage Loan is less than the applicable rate set forth in
Section 3.02(a)(i)(3)
, the servicing fee rate on the Mortgage Loan is not less
than the lesser of (x) the servicing fee rate of the Refinanced Mortgage Loan and (y) (A) 0.25% per annum if such Mortgage Loan is owned by Fannie Mae or Freddie Mac, (B) 0.35% per annum if such Mortgage Loan is a
Non-Agency Mortgage Loan or (C) 0.375% per annum if such Mortgage Loan is owned by GNMA;
(2) The interest accrual
rate per annum on the Mortgage Loan is within 12.5 basis points per annum of the interest accrual rate on the New Mortgage Loan;
(3) The final maturity date of the Mortgage Loan is within six months of the final maturity date of the New Mortgage Loan;
(4) The principal balance of the Mortgage Loan is no less than the principal balance of the Refinanced Mortgage Loan;
(5) The remaining credit characteristics of the Mortgage Loan (other than as specified in
clauses (1)
,
(2)
,
(3)
and
(4)
above) are substantially the same as the
credit characteristics of the New Mortgage Loan;
15
(6) The Mortgage Loan is current as of the applicable Assignment Date; and
(7) The Mortgage Loan is not subject to any foreclosure or similar proceeding as of the applicable Assignment Date; is not in process of
any modification, workout or other loss mitigation process; and is not involved in litigation.
(b) If a New Mortgage Loan
would otherwise meet the criteria set forth in
Section 3.02(a)(i)
and is still owned by Seller as of the Mortgage Loan Identification Date, in lieu of a substitution pursuant to
Section 3.02(a)(ii)
above, the Seller may
include such New Mortgage Loan as a Mortgage Loan in the Available Portfolio; provided (i) the servicing fee rate (which results in the Servicing Spread Collections) for such Mortgage Loan shall be deemed to be 0.30% per annum and
(ii) if at any time such Mortgage Loan fails to otherwise meet the criteria set forth in
Section 3.02(a)(i)
(e.g. the Mortgage Loan is sold to an Agency and the Seller is unable to obtain an Owner Consent), the Seller shall be
required to substitute a loan for such New Mortgage Loan pursuant to
Section 3.02(a)(ii)
above.
(c)
Notwithstanding the provisions of Section
3.02(a)(ii)(4)
, Seller shall not be in breach of
Section 3.01
on any Assignment Date if, after using best efforts to select residential mortgage loans to substitute New Mortgage Loans
pursuant to
Section 3.02(a)(ii)
, the aggregate outstanding principal balance of the residential mortgage loans in the Available Portfolio as of such Assignment Date is equal to or greater than 90% of the aggregate outstanding principal
balance of the New Mortgage Loans during the Related Collection Period as measured on the opening of business on their respective Refinancing Date.
Section 3.03
Refinancing Incentives
.
For any Assignment Date
beginning with the Assignment Date in the sixth calendar month after the Sale Date and subject to Section 4.04 hereof, Seller’s Future Excess Servicing Spread Assignment Obligation shall be reduced by the Maximum Retained
Refinancing Loan Amount for such Assignment Date. For purposes of this
Section 3.03
, the following definitions shall apply:
Replacement Shortfall:
With respect to any Assignment Date and the Related Collection Period, the aggregate outstanding principal balance of the New Mortgage Loans that were originated by Seller or
an affiliate thereof during the Related Collection Period as measured on the opening of business on their respective Refinancing Date,
minus
the aggregate outstanding principal balance of the residential mortgage loans in the Available
Portfolio as of such Assignment Date.
Excess Refinancing Percentage
: With respect to any Assignment Date, a percentage
equal to the excess, if any, of (a) a fraction, expressed as a percentage, the
numerator
of which is equal to the aggregate principal balance of New Mortgage Loans that were originated by Seller or an affiliate thereof over the Related
Collection Period and the two Collection Periods immediately prior to such Related Collection Period (the “
Quarterly Collection Period
”) as measured
16
on their respective Refinancing Date,
minus
the aggregate Replacement Shortfall over such Quarterly Collection Period, and the
denominator
of which is the aggregate principal
balance of all Mortgage Loans that voluntarily prepaid in full over the Quarterly Collection Period (measured as of the date of such prepayment),
over
(b) 35%.
Refinancing Split Percentage
: With respect to any Assignment Date, the Refinancing Split Percentage shown in the column of the table below corresponding to the Excess Refinancing Percentage
therein:
|
|
|
|
|
|
|
Three Month Average Recapture
Percentage
|
|
Excess Refinancing
Percentage
|
|
Refinancing Split
Percentage
|
|
35% or Less
|
|
0%
|
|
0%
|
|
> 35%, <= 40%
|
|
>0.00% and <=5.00%
|
|
25%
|
|
> 40%, <= 45%
|
|
>5.00% and <=10.00%
|
|
30%
|
|
> 45%, <= 50%
|
|
>10.00% and <=15.00%
|
|
35%
|
|
> 50%, <= 55%
|
|
>15.00% and <=20.00%
|
|
40%
|
|
> 55%, <= 60%
|
|
>20.00% and <=25.00%
|
|
45%
|
|
Greater than 60%
|
|
>25.00%
|
|
50%
|
Maximum Retained Refinancing Loan Amount
: With respect to any Assignment Date, an amount, not less
than zero, equal to the
sum
of (a) the
product
of (i) the Refinancing Split Percentage, if any, applicable to such Assignment Date, (ii) the Excess Refinancing Percentage applicable to such Assignment Date and
(iii) the aggregate principal balance of New Mortgage Loans that were refinanced with Seller or an affiliate thereof during the Related Collection Period,
plus
(b) the Carryover Retained Amount,
minus
(c) the applicable
Replacement Shortfall.
Carryover Retained Amount
: With respect to any Assignment Date beginning with the Assignment
Date in the seventh calendar month after the Sale Date, the
excess
, if any, of the Maximum Retained Refinancing Loan Amount for the prior Assignment Date
over
the aggregate outstanding principal balance of the Mortgage Loans that were
retained by Seller pursuant to this
Section 3.03
on the prior Assignment Date.
Section 3.04
Selection
Procedures
.
(a) Not later than the Mortgage Loan Identification Date, Seller shall (i) notify Purchaser of the
identity of each Current Mortgage Loan and each Mortgage Loan that became a Refinanced Mortgage Loan during the Related Collection Period, (ii) calculate the Excess Refinancing Percentage, the Refinancing Split Percentage, the Maximum Retained
Refinancing Loan Amount and the Carryover Retained Amount for the following Assignment Date, and notify Purchaser of such amounts in writing, (iii) provide Purchaser with a list of potential Mortgage Loans (the “
Available
Portfolio
”), selected on the basis that the Excess Refinancing Percentage is equal to zero, and (iv) provide Purchaser with a list of residential mortgage loans selected from the Available Portfolio to be designated as Mortgage Loans
(the “
Replacement Portfolio
”) on the following Assignment Date and a list of residential mortgage loans selected from the Available Portfolio to be excluded from the pool of Mortgage Loans (the “
Retained Portfolio
”)
on the following Assignment Date in accordance with
Section 3.03
.
17
(b) Purchaser may submit an objection to the proposed Available Portfolio, the proposed
Replacement Portfolio or the proposed Retained Portfolio not later than five Business Days following receipt of the notice of the proposed portfolios pursuant to
Section 3.04(a)
. If Purchaser submits an objection, Seller and Buyer shall
work together in good faith over the next five Business Days (the “
Selection Period
”) to mutually agree on the Replacement Portfolio and the Retained Portfolio. During the Selection Period, Seller may suggest alternative Mortgage
Loans that meet the criteria of
Section 3.02
. If Seller and Purchaser are unable to agree on a Replacement Portfolio and a Retained Portfolio (if applicable) by close of business on the Business Day prior to the Assignment Date, Seller
and Purchaser may modify the percentages in the definitions of Future Excess Servicing Spread and Retained Servicing Spread and in the Priority of Payments, as applicable, to reflect the relative values that Seller and Purchaser would have had in
the Future Excess Servicing Spread and Retained Servicing Spread but for the inability of Seller and Purchaser to mutually agree on such portfolios.
(c) Unless mutually agreed upon by Seller and Purchaser, the Retained Portfolio and the Replacement Portfolio with respect to any Assignment Date shall satisfy the following criteria:
(i) The aggregate outstanding principal balance of the residential mortgage loans in the Retained Portfolio shall not
exceed the Maximum Retained Refinancing Loan Amount;
(ii) The weighted average servicing fee rate for the
residential mortgage loans in the Retained Portfolio shall be substantially equal to the weighted average servicing fee rate for the Mortgage Loans in the Replacement Portfolio;
(iii) The weighted average interest accrual rate per annum of the residential mortgage loans in the Retained Portfolio
shall be within 12.5 basis points per annum of the weighted average interest rate of the Mortgage Loans in the Replacement Portfolio;
(iv) The weighted average final maturity date of the residential mortgage loans in the Retained Portfolio shall be within six months of the weighted average final maturity date of the Mortgage Loans in
the Replacement Portfolio; and
(v) The remaining credit characteristics of the pool of residential mortgage
loans in the Retained Portfolio (other than as specified in
clauses (ii)
,
(iii)
and
(iv)
above) shall be substantially the same as the credit characteristics of the pool of Mortgage Loans in the Replacement Portfolio.
(d)
Exhibit B
provides an example of the calculations to be made pursuant to Section 3.04(c)(i).
18
Section 3.05
Assignment of Future Excess Servicing Spread
.
Subject to the satisfaction of the terms and conditions in this Agreement, on each Assignment Date, Seller shall execute and deliver an
Assignment Agreement for the Future Excess Servicing Spread to be assigned on such Assignment Date with respect to the Mortgage Loans included in the applicable Replacement Portfolio;
provided
,
however
, that
(a) Purchaser shall be entitled to all Future Excess Servicing Spread and Seller shall be entitled to all Retained Servicing Spread
arising with respect to each such Mortgage Loan on and after the Refinancing Date with respect to the related Refinanced Mortgage Loan,
(b) Seller shall deposit all Servicing Spread Collections received with respect to such Mortgage Loans on and after the Refinancing Date with respect to the related Refinanced Mortgage Loans into the
Third Party Controlled Future Spread Custodial Account not later than the Assignment Date, and
(c) for each Mortgage Loan
that was originated on or after the Refinancing Date of the related Refinanced Mortgage Loan, Seller shall deposit all Servicing Spread Collections with respect to amounts prepaid at the time of closing of such Mortgage Loan, if applicable, into the
Third Party Controlled Future Spread Custodial Account not later than the Assignment Date.
ARTICLE IV
PAYMENTS AND DISTRIBUTIONS
Section 4.01
Purchase Price
.
In full consideration for
Purchaser’s right to receive any Future Excess Servicing Spread assigned to Purchaser, and upon the terms and conditions of this Agreement, Purchaser shall pay to Seller an amount (the “
Purchase Price
”) that shall be determined
by the Parties on the Sale Date in accordance with Section 3.01 of the Current Spread Agreement.
Section 4.02
Payments by Purchaser
.
Payment shall be made by Purchaser to Seller by wire transfer of immediately available
federal funds, to an account designated by Seller.
Section 4.03
Accounts
.
(a)
Lockbox Account
. Seller shall inform the Mortgagors of Mortgage Loans to remit their mortgage payments to the Lockbox Account.
Payments of all Servicing Spread Collections received on and after the first Assignment Date shall be transferred from the Lockbox Account to the Third Party Controlled Future Spread Custodial Account within one Business Day of receipt and
identification thereof and in any event, within two Business Days of receipt thereof. If Seller receives any Servicing Spread Collections not remitted to the Lockbox Account, it shall hold such funds in trust for the benefit of the Purchaser and
deposit such amounts to the Third Party Controlled Future Spread Account within two Business Days of receipt thereof.
19
(b)
Third Party Controlled Future Spread Custodial Account
.
(i) The Third Party Controlled Future Spread Custodial Account will be established with Wells Fargo Bank, National
Association or with such other third party custodian or trustee selected by Purchaser, for the sole purpose of receiving and disbursing all Servicing Spread Collections, Sales Proceeds and Servicing Agreement termination payments with respect to the
Mortgage Loans. The Third Party Controlled Future Spread Custodial Account will be established pursuant to the Future Spread Custodial Account Control Agreement with respect to which Purchaser is an Entitlement Holder with Control. So long as
permitted by the Future Spread Custodial Account Control Agreement, Seller may direct the disposition of funds in the Third Party Controlled Future Spread Custodial Account strictly in accordance with the Priority of Payments. Upon any material
breach of a representation, warranty or covenant by Seller hereunder or during the occurrence and continuance of a Future Spread Reserve Account Deposit Event, Purchaser may elect to exercise Control over the Third Party Controlled Future Spread
Custodial Account. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Third Party Controlled Future Spread Custodial Account.
(ii) Seller shall inform each Owner to remit the applicable portion of any Servicing Agreement termination payments
payable with respect to the Mortgage Loans directly to the Third Party Controlled Future Spread Custodial Account. Any termination payment to be directed to the Third Party Controlled Future Spread Custodial Account shall be equal to the
pro
rata
amount by which the Mortgage Loans affected by such termination bear to all mortgage loans of Seller affected by such termination, based upon the method in which such termination payments are calculated in accordance with the applicable
Servicing Agreement.
(iii) If Seller is to receive any Sales Proceeds, Seller shall direct the Person making
such payments to deposit such payments into the Third Party Controlled Future Spread Custodial Account.
(iv)
If Seller receives any amounts required to be deposited into the Third Party Controlled Future Spread Custodial Account in error, Seller shall promptly remit such funds to the Third Party Controlled Future Spread Custodial Account.
(c)
Future Spread Reserve Account
. The Future Spread Reserve Account will be established with Wells Fargo Bank, National
Association or with such other third party custodian or trustee selected by Purchaser. The Future Spread Reserve Account will be established pursuant to the Future Spread Reserve Account Control Agreement with respect to which Purchaser is an
Entitlement Holder with Control. So long as permitted by the Future Spread Reserve Account Control Agreement, Seller may direct the disposition of funds in the Future Spread Reserve Account strictly in accordance with
Section 4.05
.
Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Future Spread Reserve Account.
20
If at any time Seller’s Consolidated Tangible Net Worth falls below the sum of
(x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries or if Seller (considered together with its
consolidated subsidiaries) defaults in any indebtedness in excess of $10,000,000 (individually or in the aggregate) (each, a “
Future Spread Reserve Account Deposit Event
”), Seller shall immediately notify Purchaser in writing that a
Future Spread Reserve Account Deposit Event has occurred. On each Distribution Date upon which a Future Spread Reserve Account Deposit Event has occurred and is continuing, Seller shall be required to transfer funds in the Third Party Controlled
Future Spread Custodial Account to the Future Spread Reserve Account in accordance with the Priority of Payments until the amount of funds in the Future Spread Reserve Account is equal to the Future Spread Reserve Account Required Amount. The
“
Future Spread Reserve Account Required Amount
” is equal to 25% of the fair market value as of the date the Future Spread Reserve Account Deposit Event that is then-continuing first occurred of the Total Servicing Spread expected to
be paid over the expected remaining life of the Mortgage Loans (the “
Remaining Expected Total Servicing Spread
”) determined in accordance with the following paragraph. Seller shall immediately notify Purchaser in writing if a Future
Spread Reserve Account Deposit Event is no longer continuing. Any funds in the Future Spread Reserve Account in excess of the Future Spread Reserve Account Required Amount shall be released to Seller.
For purposes of determining the fair market value of the Remaining Expected Total Servicing Spread, Purchaser shall submit its claim for
determination of the fair market value of the Remaining Expected Total Servicing Spread, together with such back-up information it deems appropriate to justify such fair market value (which value shall be considered the fair market value of the
Remaining Expected Total Servicing Spread for purposes of calculating the Future Spread Reserve Account Required Amount until the final determination of such fair market value in accordance with this paragraph). Within five (5) Business Days of
Seller’s receipt of such determination, Seller shall notify Purchaser in writing of its acceptance or any objection to such determination of such fair market value, and if Seller objects to such determination, such notice shall include its own
determination of such fair market value and any back-up information as it deems appropriate to justify such fair market value (an “
Objection Notice
”). In the event an Objection Notice is delivered, the parties shall negotiate in
good faith a resolution to such objection. In the event that Seller and Purchaser are unable to resolve such objection within five (5) Business Days of the delivery of such Objection Notice, Seller and Purchaser shall appoint a mutually
acceptable nationally recognized valuation expert to determine such fair market value of the Remaining Expected Total Servicing Spread. The determination of such valuation expert shall be binding on Seller and Purchaser and the fees of such
valuation expert shall be borne by Seller.
Section 4.04
Priority of Payments
.
On each Business Day, subject to the terms and conditions of the Future Spread Custodial Account Control Agreement, Seller (or, after the
delivery of an access termination notice pursuant to the Future Spread Custodial Account Control Agreement, Purchaser) shall direct the Bank to apply the monies in the Third Party Controlled Future Spread Custodial Account in the following order of
priority (the “
Priority of Payments
”), in every case, after giving effect to each prior item in the Priority of Payments on such Distribution Date:
21
(a)
first
, from amounts in the Third Party Controlled Future Spread Custodial
Account attributable to Servicing Agreement termination payments paid by an Owner with respect to any Mortgage Loans,
pro
rata
, (A) the Future Excess Servicing Spread Percentage of such termination payments to Purchaser, and
(B) the Retained Excess Servicing Spread Percentage of such termination payments to Seller;
provided
, that (I) prior to the distribution to Purchaser of any termination payments pursuant to
clause (A)
, such termination
payments shall be applied to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to Seller of any termination payments pursuant to
clause
(B)
, such termination payments shall be applied
first
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
second
, for deposit to the Future
Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Future Spread Reserve Account to equal the Future Spread Reserve Account Required Amount;
(b)
second
, on any Business Day from and including the first Business Day of a calendar month to but excluding the Distribution
Date in such calendar month, at the option of Seller, the Base Servicing Fee payable with respect to a prior Collection Period for the Mortgage Loans to Seller; provided however, that, to the extent that (i) the Seller is not permitted or is
otherwise unable to advance servicing fees relating to the Total Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing Agreement does not permit payment of servicing fees
from general collections, and (iii) the related Servicing Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Future Spread Custodial Account relating to the affected
Mortgage Loans shall be made pursuant to clause (d) below prior to this clause (b);
(c)
third
, on each
Distribution Date, to the extent not previously paid to Seller in accordance with
Section 4.04(b)
, any accrued and unpaid Base Servicing Fee to Seller; provided however, that, to the extent that (i) the Seller is not permitted or is
otherwise unable to advance servicing fees relating to the Total Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing Agreement does not permit payment of servicing fees
from general collections, and (iii) the related Servicing Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Future Spread Custodial Account relating to the affected
Mortgage Loans shall be made pursuant to clause (d) below prior to this clause (c);
(d)
fourth
, on each
Distribution Date,
pro rata
, (A) to Purchaser, any Future Excess Servicing Spread for the prior Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 4.04(a)
); and
(B) to Seller, any Retained Servicing Spread for the prior Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 4.04(a)
);
provided
, that (I) prior to the
distribution to Purchaser of any Future Excess Servicing Spread pursuant to
clause (A)
, the Future Excess Servicing Spread shall be applied to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the
22
distribution to Seller of any Retained Servicing Spread pursuant to
clause (B)
, the Retained Servicing Spread shall be applied
first
, to the payment of any indemnity payments
then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
second
, for deposit to the Future Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Future Spread
Reserve Account to equal the Future Spread Reserve Account Required Amount; and
(e)
fifth
, on each Distribution Date,
to Seller, any other amounts remaining on deposit in the Third Party Controlled Future Spread Custodial Account.
All payments
to Purchaser or Seller shall be made by wire transfer of immediately available federal funds to an account designated by Purchaser or Seller, as applicable.
Section 4.05
Withdrawals from the Future Spread Reserve Account
.
On any Business Day, at the instruction of Purchaser, Seller shall direct the Bank to apply funds in the Future Spread Reserve Account, if
any, to the payment of indemnity payments payable to a Purchaser Indemnitee pursuant to
Section 11.01
. If on any Business Day a Future Spread Reserve Account Deposit Event is not then continuing and all outstanding indemnity payments
payable to Purchaser Indemnitees have been paid in full, Seller may direct the Bank to distribute any remaining funds in the Future Spread Reserve Account to, or as directed by, Seller. If there are any funds remaining in the Future Spread Reserve
Account after the Future Excess Servicing Spread and all indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller shall direct the Bank to distribute such remaining funds to, or as directed by, Seller.
Section 4.06
Payment to Seller of Base Servicing Fee
.
(a) Seller shall be entitled to payment of the Base Servicing Fee only to the extent funds are available therefor in the Third Party
Controlled Future Spread Custodial Account in accordance with the Priority of Payments. Under no circumstances shall Purchaser be liable to Seller for payment of the Base Servicing Fee. In the event servicing of the Mortgage Loans is transferred to
sub-servicers for any reason, the servicing fees and expenses of such sub-servicers shall be paid by Seller and in no event will the amount of Servicing Spread Collections or termination payments otherwise allocable to the Future Excess Servicing
Spread be reduced due to the payment of sub-servicing fees and expenses.
(b) The Base Servicing Fee with respect to a
Mortgage Loan shall begin to accrue as of the Collection Period prior to the applicable Assignment Date. In no event shall Base Servicing Fees accrue concurrently on any day for a Refinanced Mortgage Loan and for a Mortgage Loan.
Section 4.07
Correction of Principal Balance Error
.
If, subsequent to the payment of any amounts due hereunder to either party, the outstanding principal balance of any Mortgage Loan is
found to be in error, the party benefiting from the error shall pay an amount sufficient to correct and reconcile such amounts and shall provide a reconciliation statement and other such documentation to reasonably satisfy the other party concerning
the accuracy of such reconciliation. Such amounts shall be paid by the proper party within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
23
Section 4.08
Intent and Characterization
.
(a) Seller and Purchaser intend that the assignments of the Future Excess Servicing Spread pursuant to this Agreement and each Assignment
Agreement constitute valid sales of such Future Excess Servicing Spread from Seller to Purchaser, conveying good title thereto free and clear of any Lien other than Permitted Liens, and that the beneficial interest in and title to such Future Excess
Servicing Spread not be part of Seller’s estate in the event of the bankruptcy of Seller. Seller and Purchaser intend and agree to treat the transfer and assignment of the Future Excess Servicing Spread as an absolute sale for tax purposes, and
as an absolute and complete conveyance of title for property law purposes. Except for financial accounting purposes, neither party intends the transactions contemplated hereby to be characterized as a loan from Purchaser to Seller.
(b) In the event (but only in the event) that the conveyance of the Future Excess Servicing Spread is characterized by a court or
governmental authority as security for a loan rather than a sale, Seller will be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Future
Excess Servicing Spread and all proceeds thereof as security for a loan in an amount equal to the aggregate Purchase Price (as defined in the Current Spread Agreement).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as of the
Agreement Date, the Sale Date and as of each Assignment Date as follows (or as of the date specified below, as applicable):
Section 5.01
Due Organization and Good Standing
.
Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Seller is qualified to transact business in each jurisdiction in which such qualification is deemed necessary to service the Mortgage Loans. Seller has, in full force and effect (without notice of possible suspension, revocation or impairment), all
required permits, approvals, licenses, and registrations to conduct all activities in all states in which its activities with respect to the Mortgage Loans or the Mortgage Servicing Rights require it to be licensed, registered or approved in order
to service the Mortgage Loans and own the Mortgage Servicing Rights, unless the failure to obtain such permits, approvals, licenses and registrations would not reasonably be expected to have a material adverse effect on Seller’s ability to
perform its obligations under this Agreement or the other Transaction Documents to which it is a party.
24
Section 5.02
Authority and Capacity
.
Seller has all requisite limited liability company power, authority and capacity to enter into this Agreement and each other Transaction
Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document and the consummation of the transactions contemplated hereby and
thereby have each been duly and validly authorized by all necessary limited liability company action. This Agreement and each other Transaction Document to which it is a party has been duly executed and delivered by Seller. This Agreement
constitutes, and each other applicable Transaction Document to which Seller is a party constitutes or will constitute, a valid and legally binding agreement of Seller enforceable in accordance with its terms, and no offset, counterclaim or defense
exists to the full performance by Seller of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally
and by general equity principles.
Section 5.03
Owner Consents
.
Prior to an Assignment Date, Seller has obtained all necessary and applicable Owner Consents.
Section 5.04
Title to the Mortgage Servicing Rights
.
As of an Assignment Date, Seller will be the lawful owner of the Mortgage Servicing Rights, will be responsible for the maintenance of the
Related Escrow Accounts, and will have the sole right and authority to transfer the Future Excess Servicing Spread as contemplated hereby. The transfer, assignment and delivery of the Future Excess Servicing Spread shall be free and clear of any and
all claims, charges, defenses, offsets, Liens and encumbrances of any kind or nature whatsoever other than Permitted Liens.
Section 5.05
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document by Seller, compliance with the terms hereof and thereof and the consummation of the transactions contemplated
hereby and thereby did not, and will not, violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited liability company agreement, any
instrument or agreement to which it is a party or by which it is bound or which affects the Future Excess Servicing Spread, or any state or federal law, rule or regulation or any judicial or administrative decree, order, ruling or regulation
applicable to it or to the Future Excess Servicing Spread.
Section 5.06
No Accrued Liabilities
.
There are no accrued liabilities of Seller with respect to the Mortgage Loans or the Mortgage Servicing Rights or
circumstances under which such accrued liabilities will arise against Purchaser as purchaser of the Future Excess Servicing Spread.
25
Section 5.07
Seller/Servicer Standing
.
As of the applicable Assignment Date, Seller is approved by each applicable Agency as a seller/servicer in good standing with the
requisite financial criteria and adequate resources to complete the transactions contemplated hereby on the conditions stated herein. No event has occurred, including but not limited to a change in insurance coverage, which would make the Seller
unable to comply with the applicable Agency eligibility requirements or which would require notification to the applicable Agency. Furthermore, if at any time prior to the termination of this Agreement, the Seller is unable to comply with any of the
Agency eligibility requirements, it shall immediately notify the Purchaser that it is no longer an approved seller/servicer of mortgage loans for any Agency which is an Owner of a Mortgage Loan.
Section 5.08
MERS Membership
.
Seller is a member in good standing under the MERS system or another similar system reasonable acceptable to the Purchaser.
Section 5.09
Owner Set-off Rights
.
Seller has no actual
notice, including any notice received from an Owner, or any reason to believe, that, other than in the normal course of Seller’s business, any circumstances exist that would result in Seller being liable to an Owner for any amount due by reason
of: (i) any breach of servicing obligations or breach of mortgage selling warranty to an Owner under servicing agreements relating to Seller’s entire servicing portfolio for such Owner (including without limitation any unmet mortgage
repurchase obligation), (ii) any unperformed obligation with respect to mortgage loans that Seller is servicing for an Owner under the regular servicing option or other mortgages subject to recourse agreements, (iii) any loss or damage to
an Owner by reason of any inability to transfer to a purchaser of the servicing rights Seller’s selling and servicing representations, warranties and obligations, or (iv) any other unmet obligations to an Owner under a servicing contract
relating to Seller’s entire servicing portfolio with such Owner.
Section 5.10
Ability to Perform;
Solvency
.
Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and
every covenant contained in this Agreement. Seller is Solvent and the sale of the Future Excess Servicing Spread will not cause Seller to become insolvent. The sale of the Future Excess Servicing Spread is not undertaken to hinder, delay or defraud
any of the creditors of Seller. The consideration received by Seller upon the sale of the Future Excess Servicing Spread constitutes fair consideration and reasonably equivalent value therefor.
Section 5.11
Obligations with Respect to Origination
.
Seller shall remain liable for all obligations with respect to the origination of each Mortgage Loan and, if applicable, for all
obligations with respect to the sale of such Mortgage Loan to the applicable Owner.
Section 5.12
Purchase of
Mortgage Servicing Rights
.
Each agreement or arrangement that Seller enters into to purchase Mortgage Servicing Rights
shall be entered into on an arm’s length contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing Rights to be acquired thereby. Seller shall not enter into any agreement or
arrangement with a third party intended to encourage the refinancing of any Mortgage Loan by any Person other than Seller.
26
Section 5.13
No Actions
.
There have not been commenced or, to the best of Seller’s knowledge, threatened any action, suit or proceeding which will likely
materially and adversely affect the consummation of the transactions contemplated by any Transaction Document.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE
LOANS AND SERVICING
As further inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser, as of each Assignment Date (or as of the date specified below, as applicable), as follows:
Section 6.01
Servicing Agreements; Applicable Laws
.
Seller, the originator of the Mortgage Loan and each prior owner of the Mortgage Servicing Rights has each performed its obligations in
all material respects in accordance with the terms of the related Mortgage Note, Mortgage, Servicing Agreements and Applicable Law.
Section 6.02
Related Escrow Accounts
.
All Related Escrow
Accounts are being, and have been, maintained in accordance with Applicable Law and in accordance with the Servicing Agreements and the terms of the related Mortgages and other Mortgage Loan Documents; and, except as to payments which are past due
under Mortgage Notes, all balances required by the Mortgages or other Mortgage Loan Documents to be paid to Seller for the account of the Mortgagors are on deposit in the appropriate Related Escrow Account.
Section 6.03
No Purchaser Responsibility
.
Purchaser shall have no responsibility, liability or other obligation whatsoever under any Servicing Agreement or with respect to any Mortgage Loan, or to make any advance thereunder, or to pay any
servicing fees.
Section 6.04
Location of Credit Files
.
All of the Mortgage Loan Documents are held by Custodians or, if held by Seller, in the locations specified in
Exhibit F
, unless
temporarily removed for enforcement purposes in the normal course of servicing. Seller will notify Purchaser in writing of any changes in locations of the Mortgage Loan Documents held by Seller in
Exhibit F
.
27
Section 6.05
Representations Concerning the Future Excess Servicing
Spread
.
(a) Seller has not assigned, pledged, conveyed, or encumbered the Future Excess Servicing Spread to any other
Person (other than Permitted Liens) and immediately prior to the sale of the Future Excess Servicing Spread, Seller was the sole owner of the Future Excess Servicing Spread and had good and marketable title thereto (subject to the rights of the
applicable Owner under the Servicing Agreements), free and clear of all Liens (other than Permitted Liens), and no Person, other than Purchaser, has any Lien (other than Permitted Liens) on the Future Excess Servicing Spread. No security agreement,
financing statement, equivalent security or lien instrument or continuation statement covering all or any part of the Future Excess Servicing Spread which has been signed by Seller or which Seller has authorized any other Person to sign or file or
record, is on file or of record with any public office, except such as may have been terminated or filed by or on behalf of Purchaser.
(b) The sale and grant of a security interest by Seller to Purchaser of and on the Future Excess Servicing Spread does not and will not violate any Requirement of Law, the effect of which violation is to
render void or voidable such assignment.
(c) As contemplated under
Section 4.08(b)
, upon the filing of financing
statements on Form UCC-1 naming Purchaser as “Secured Party” and Seller as “Debtor”, and describing the Future Excess Servicing Spread, in the jurisdictions and recording offices listed on Exhibit J attached hereto, the sale and
security interests granted hereunder in the Future Excess Servicing Spread will constitute perfected first priority security interests under the UCC in all right, title and interest of Purchaser in, to and under the Future Excess Servicing Spread.
(d) Purchaser has and will continue to have the full right, power and authority to pledge the Future Excess Servicing
Spread, and the Future Excess Servicing Spread may be further assigned without any requirement, in each case, subject only to applicable Owner Consents.
(e) Each Servicing Agreement constitutes an Eligible Servicing Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to
Seller to enter into this Agreement, Purchaser represents and warrants to Seller as of the Agreement Date, the Sale Date and as of each Assignment Date as follows (or as of the date specified below, as applicable):
Section 7.01
Due Organization and Good Standing
.
Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Purchaser is qualified to transact business in each jurisdiction in which such qualification is deemed necessary.
28
Section 7.02
Authority and Capacity
.
Purchaser has all requisite limited liability company power, authority and capacity to enter into this Agreement and each other
Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document to which it is a party and the consummation of the
transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company action. This Agreement constitutes, and each other applicable Transaction Document to which Purchaser is a party
constitutes or will constitute, a valid and legally binding agreement of Purchaser enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Purchaser of this Agreement or such other
Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
Section 7.03
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party by Purchaser, its compliance with the terms hereof and thereof and the consummation of
the transactions contemplated hereby and thereby will not violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited liability company
agreement, any instrument or agreement to which it is a party or by which it is bound, or any state or federal law, rule or regulation or any judicial or administrative decree, order, ruling or regulation applicable to it, in each case which
violation, conflict, breach or requirement would reasonably be expected to have a material adverse effect on Purchaser’s ability to perform its obligations under this Agreement and any other Transaction Document to which it is a party.
Section 7.04
Sophisticated Investor
.
Purchaser is a sophisticated investor and its decision to acquire the Future Excess Servicing Spread is based upon Purchaser’s own
independent experience, knowledge, due diligence and evaluation of this transaction. Purchaser has relied solely on such experience, knowledge, due diligence and evaluation and has not relied on any oral or written information provided by Seller
other than the representations and warranties made by Seller herein.
Section 7.05
No Actions
There shall not have been commenced or, to the best of Purchaser’s knowledge, threatened any action, suit or proceeding against the
Purchaser that will likely materially and adversely affect the consummation of the transactions contemplated hereby.
29
ARTICLE VIII
SELLER COVENANTS
Seller covenants and agrees as follows:
Section 8.01
Servicing Obligations
.
(a) Seller shall pay, perform and discharge all liabilities and obligations relating to the Servicing, including all liabilities and obligations under the Mortgage Loan Documents, Applicable Law and the
Servicing Agreements; and shall pay, perform and discharge all the rights, obligations and duties with respect to the Related Escrow Accounts as required by the Servicing Agreements, the Mortgage Loan Documents, all Applicable Law and, with respect
to any Mortgage Loans owned by an Agency, such Agency.
(b) Under no circumstances shall Purchaser be responsible for the
Servicing acts and omissions of Seller or any other servicer or any originator of the Mortgage Loans, or for any servicing related obligations or liabilities of any servicer in the Servicing Agreements or of any Person under the Mortgage Loan
Documents, or for any other obligations or liabilities of Seller.
(c) With respect to any Servicing Agreement relating to a
Non-Agency Mortgage Loan, subject to a nonrecoverability determination made in accordance with the related Servicing Agreement and to the extent the Seller as servicer has an obligation to advance principal and interest on delinquent Mortgage Loans,
the Seller shall advance the full amount of principal and interest on delinquent Mortgage Loans for each Collection Period, including the related servicing fee.
(d) Upon termination of any Servicing Agreement, Seller shall remain liable to Purchaser and the applicable Owner for all liabilities and obligations incurred by the servicer or its designee while Seller
or its designee was acting as the servicer thereunder.
(e) Seller shall conduct quality control reviews of its servicing
operations in accordance with industry standards and the requirements of each Agency relating to the Mortgage Loans.
Section 8.02
Cooperation; Further Assurances
.
Seller shall cooperate with and assist Purchaser, as reasonably requested, in carrying out the purposes of this Agreement. Seller will
cooperate and assist Purchaser, as reasonably requested and at the reasonable expense of Purchaser, in obtaining consents from any Owner as may be required or advisable to assign, transfer, deliver, hypothecate, pledge, subdivide, finance or
otherwise deal with the Future Excess Servicing Spread. If Seller is terminated under any Servicing Agreement, Seller shall cooperate fully and at its own expense in transferring such Servicing. If Purchaser assigns all or any portion of its Future
Excess Servicing Spread or its other rights under this Agreement to a Third Party Assignee, Seller will cooperate and assist any Third Party Assignee in drafting and entering into a Third Party Future Spread Agreement in accordance with
Section 12.15
.
Section 8.03
Financing Statements
.
Seller hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements, in any
jurisdictions and with any filing offices as Purchaser may determine, in its sole discretion, are necessary or advisable to perfect the sale of
30
the Future Excess Servicing Spread and the security interests granted to Purchaser in connection herewith. Seller agrees to execute financing statements in form reasonably acceptable to Purchaser
and Seller at the request of Purchaser in order to reflect Purchaser’s interest in the Future Excess Servicing Spread, the Third Party Controlled Future Spread Custodial Account and the Future Spread Reserve Account.
Section 8.04
Supplemental Information
.
From time to time after the applicable Assignment Date with respect to each Mortgage Loan, Seller promptly shall furnish Purchaser such incidental information, which is reasonably available to Seller,
supplemental to the information contained in the documents and schedules delivered pursuant to this Agreement, as may reasonably be requested to monitor performance of the Mortgage Loans and the payment of the Future Excess Servicing Spread.
Section 8.05
Access to Information
.
From time to time, at such times as are reasonably convenient to Seller, Purchaser or its designees may conduct audits or visit and
inspect (a) any of the Mortgage Loans or places where the Credit Files are located, to examine the Credit Files, internal controls and procedures maintained by Seller and its agents, and take copies and extracts therefrom, and to discuss
Seller’s affairs with its officers, employees and, upon notice to Seller, independent accountants. Seller hereby authorizes such officers, employees and independent accountants to discuss with Purchaser the affairs of Seller and (b) the
Seller’s servicing facilities for the purpose of satisfying the Purchaser that Seller, has the ability to service the Mortgage Loans related to Mortgage Servicing Rights in accordance with the standards set forth in the applicable Servicing
Agreement. Any audit provided for herein will be conducted in accordance with Seller’s rules respecting safety and security on its premises, in accordance with applicable privacy and confidentiality laws and without materially disrupting
operations.
Section 8.06
Home Affordable Modification Program
.
With respect to any Mortgage Loans that have been modified or that are or will be in a modification trial period as part of the U.S.
Department of the Treasury’s Home Affordable Modification Program (“
HAMP
”) (such Mortgage Loans, the “
HAMP Loans
”), Seller represents and warrants that it will continue to service such HAMP Loan in accordance
with the HAMP terms and will ensure the timely compliance and filing of any appropriate HAMP documentation with the applicable regulator.
Section 8.07
Distribution Date Data Tapes and Reports
.
Seller
shall deliver the following to Purchaser two Business Days prior to each Distribution Date:
(a) An Electronic Data File in
form and substance acceptable to Purchaser containing, for each Current Mortgage Loan and each Mortgage Loan, principal, interest and Servicing Spread Collections, and delinquency status (i.e. 30, 60, 90, FCL, REO) as of the last day of the prior
Collection Period;
31
(b) A Summary Activity Report with respect to each of the pool of Current Mortgage Loans
and the pool of Mortgage Loans with respect to the prior Collection Period containing:
(i) aggregate
beginning principal balance as of the first and last date of the Collection Period,
(ii) aggregate regular
principal collected,
(iii) aggregate noncash principal,
(iv) aggregate interest collected,
(v) aggregate liquidation principal,
(vi) aggregate curtailments,
(vii) liquidations,
(viii) short sales,
(ix) aggregate principal balance of Refinanced Mortgage Loans, and (1) for each Refinanced Mortgage Loan, the
principal balance, the applicable servicing spread, the final maturity date, the mortgage interest rate, the loan-to-value ratio and the FICO score, and (2) for each Current Mortgage Loan and each Mortgage Loan that was refinanced by a lender
other than Seller or an affiliate thereof, to the extent such information is known to Seller in the ordinary course of business and the collection and delivery of such information does not impose any additional and undue burden on Seller, the name
of such lender and the mortgage interest rate of the newly originated residential mortgage loan;
(c) A Delinquency Report
with respect to the Current Mortgage Loans and Mortgage Loans containing:
(i) The aggregate outstanding
principal balance of the pool of Current Mortgage Loans and the pool of Mortgage Loans and percentages of the aggregate outstanding principal balance of the pool of Current Mortgage Loans and the pool of Mortgage Loans in each of the following
categories as of the last day of the prior Collection Period:
(1) Non-delinquent Mortgage Loans,
(2) 0-29 days delinquent,
(3) 30-59 days delinquent,
(4) 60-89 days delinquent,
(5) 90 days or more delinquent,
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(6) Current Mortgage Loans and Mortgage Loans in Foreclosure,
(7) Current Mortgage Loans and Mortgage Loans with respect to which the related Mortgaged Properties have become real
estate owned properties, and
(8) Current Mortgage Loans and Mortgage Loans in which the Mortgagor is in bankruptcy;
(ii) For each of the above categories, a roll report showing the migration of Current Mortgage Loans and
Mortgage Loans in such category from the last day of the second prior Collection Period;
(d) A Disbursement Report for such
Distribution Date containing:
(i) The Servicing Spread Collections for the prior Collection Period,
(ii) The Base Servicing Fee paid to Seller,
(iii) The amount of the Future Excess Servicing Spread paid to Purchaser,
(iv) The amount of funds, if any, transferred to the Future Spread Reserve Account,
(v) The amount of Purchaser Indemnitees, if any, paid from each of the Third Party Controlled Future Spread Custodial
Account or the Future Spread Reserve Account, and
(vi) The amount of funds paid to Seller from the Future
Spread Reserve Account.
Section 8.08
Financial Statements and Officer’s Certificates
.
(a) If Seller’s financial statements are not filed with the U.S. Securities and Exchange Commission and are not publicly available,
Seller shall deliver to Purchaser copies of Seller’s most recent audited quarterly financial statements within 45 days of the end of each of Seller’s fiscal quarters and its most recent audited annual financial statements within 90 days of
the end of each of Seller’s fiscal years.
(b) Within 45 days of the end of each of Seller’s fiscal quarters,
Seller shall deliver to Purchaser a certificate from a duly authorized officer of Seller certifying (i) whether or not Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds
from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries (and shall provide a calculation of its determination of its Consolidated Tangible Net Worth) and
(ii) whether or not Seller (considered together with its consolidated subsidiaries) is in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
33
Section 8.09
Monthly Management Calls
.
Within five Business Days after each Distribution Date, Seller shall make its management team and other appropriate officers and employees
available to Purchaser to discuss by telephone the performance of the Current Mortgage Loans and Mortgage Loans and the performance of the parties under the Transaction Documents.
Section 8.10
Timely Payment of Owner Obligations
.
Seller shall pay all of its obligations to an Owner in a timely manner so as to avoid exercise of any right of set-off by any Owner
against Seller.
Section 8.11
Servicing Agreements
.
Seller will service the Mortgage Loans in accordance with Accepted Servicing Practices and will perform its obligations in all material
respects in accordance with the Servicing Agreements and Applicable Law. In particular, Seller shall comply with any advancing obligation under the Servicing Agreements. Without the express written consent of Purchaser (which consent may be withheld
in its absolute discretion), Seller shall not (a) cancel, terminate or amend any Mortgage Servicing Rights, (b) expressly provide any required consent to any termination, amendment or modification of any Servicing Agreements either
verbally or in writing, (c) expressly provide any required consent to any termination, amendment or modification of any other servicing agreements or enter into any other agreement or arrangement with the applicable Owner that may be reasonably
material to Purchaser either verbally or in writing, (d) expressly or verbally waive any material default under or breach of any Servicing Agreement by the applicable Owner that may be material to the Purchaser (in Purchaser’s reasonable
determination) or (e) take any other action in connection with any such Servicing Agreement that would impair in any material respect the value of the interests or rights of the Purchaser hereunder. Seller shall conduct its business and perform
its obligations under the Servicing Agreements in a manner such that the applicable Owner will not have cause to terminate any Servicing Agreement. Notwithstanding the foregoing, in no event will the prohibitions contained in this
Section 8.11
apply to any amendments or modifications of the Servicing Agreements applicable to Current Mortgage Loans or Mortgage Loans owned by Seller which do not affect the Future Excess Servicing Spread with respect to such Current
Mortgage Loans or Mortgage Loans and are not reasonably material to the Purchaser.
Section 8.12
Transfer of
Mortgage Servicing Rights
.
If Seller intends to assign, transfer or sell any of its Mortgage Servicing Rights to a
replacement servicer, to the extent permitted by applicable law, (a) Seller shall consult with Purchaser and Purchaser shall participate in the assignment, transfer and sale of such Mortgage Servicing Rights, and (b) Seller shall obtain
the written consent of Purchaser, granted by the Purchaser in its sole discretion, prior to any assignment, transfer or sale thereof.
34
Section 8.13
Consents to Transaction Documents
.
Seller shall not terminate, amend, amend and restate, modify or waive any conditions or provisions of any Transaction Document without the
express written consent of Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned.
Section 8.14
Accounts
.
Seller shall inform the Mortgagors of Mortgage Loans at its own expense to remit their mortgage payments to the Lockbox Account, and any change in such instructions shall only be permitted with the
express written consent of Purchaser.
Section 8.15
Notification of Certain Events
.
Seller shall promptly notify Purchaser of any event which, with the passage of time, could reasonably be expected to result in a
termination of any servicing agreement between Seller and any Owner. Seller shall provide Purchaser with copies of any notices from the applicable Owner of any breach, potential breach, default or potential default by Seller under any servicing
agreement between Seller and the applicable Owner, and with copies of any notices from any Owner of any termination, potential termination or threatened termination of any servicing agreement entered into between Seller and that Owner. Seller shall
promptly forward copies of any material notices received from any Owner or from any Governmental Authority with respect to the Mortgage Loans. Seller shall provide Purchaser with (a) copies of all amendments to the Transaction Documents, the
Servicing Agreements (other than with respect to Mortgage Loans owned by Seller) and the agreements relating to Seller’s acquisition of the Mortgage Servicing Rights, (b) with respect to Mortgage Loans owned by Seller, copies of all
material amendments to the Servicing Agreements, and (c) copies of any other agreements Seller enters into with any Owner that may be reasonably material to Purchaser, in each case, promptly after execution thereof.
Section 8.16
Financing; Pledge of Future Excess Servicing Spread
.
Seller shall not pledge, obtain financing for, or otherwise permit any Lien of any creditor of Seller to exist on, any portion of the
Servicing Spread Collections without the prior written consent of Purchaser. Seller’s financial statements shall contain footnotes indicating that the Future Excess Servicing Spread has been sold, and Seller does not maintain any ownership
interest therein.
Section 8.17
Existence, etc
.
Seller shall:
(a) preserve and maintain its legal existence, good standing and all of its material licenses required to service the Mortgage Loans;
(b) comply with the requirements of all Applicable Laws, rules, regulations and orders of Governmental Authorities
(including, without limitation, truth in lending and real estate settlement procedures) if failure to comply with such requirements could be reasonably likely (either individually or in the aggregate) to have a material adverse effect on its ability
to perform its obligations hereunder or under any other Transaction Document;
35
(c) keep adequate records and books of account, in which complete entries will be made in
accordance with GAAP consistently applied, and maintain adequate accounts and reserves for all taxes (including income taxes), all depreciation, depletion, obsolescence and amortization of its properties, all contingencies, and all other reserves;
(d) not move its chief executive office or chief operating office from the addresses referred to in
Exhibit J
unless
it shall have provided Purchaser not less than thirty (30) days prior written notice of such change;
(e) pay and
discharge all material taxes, assessments and governmental charges or levies imposed on it or its income or profits or on any of its property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy
the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained. Seller and its subsidiaries shall file on a timely basis all federal, and material state and local tax and
information returns, reports and any other information statements or schedules required to be filed by or in respect of it;
(f) keep in full force and effect the provisions of its charter documents, by-laws, operating agreements or similar organizational
documents in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Documents;
(g) keep in full force and effect all agreements and instruments by which it or any of its properties may be bound and all applicable decrees, orders and judgments, in each case to the extent reasonably
necessary to perform its obligations hereunder or under any other Transaction Document; and
(h) comply with its obligations
under the Transaction Documents to which it is a party and each other agreement entered into with an Owner.
Section 8.18
Consent to Sub-Servicing
.
Subject to the rights of the Owners, Seller will not permit any Person other than Seller to service or sub-service the Mortgage Loans without the prior written consent of Purchaser, in each case other
than third-party vendors customarily employed by servicers in the ordinary course of business in accordance with prudent mortgage servicing practices.
Section 8.19
Nonpetition Covenant
.
Seller shall not, prior to
the date that is one year and one day after the payment in full of the Future Excess Servicing Spread, petition or otherwise invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against
Purchaser under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Purchaser or any substantial part of its property, or ordering the winding up or liquidation of the
affairs of Purchaser.
36
Section 8.20
Schedule of Mortgage Loans
.
Seller shall maintain the Schedule of Mortgage Loans, which shall be updated as of each Assignment Date. The information in the Schedule
of Mortgage Loans pertaining to the Mortgage Loans and the Mortgage Servicing Rights will be true and correct in all material respects as of the date specified.
Section 8.21
True Sale Opinion
.
Seller shall cause a written
opinion of counsel to be furnished, in form and substance satisfactory to Purchaser, dated the Sale Date with respect to the characterization of the transfer of the Future Excess Servicing Spread by Seller to Purchaser as a true sale. Purchaser may
request additional opinions regarding such characterization subsequent to the Sale Date as advised by Purchaser’s counsel in light of changes in law and other circumstances. To the extent Seller is unable to provide such opinions with respect
to any Mortgage Loans, Seller shall substitute such Mortgage Loans with residential mortgage loans have substantially the same credit characteristics.
Section 8.22
Valuation
.
As of the Sale Date, Purchaser shall
have received an opinion reasonably satisfactory to Purchaser that the Base Servicing Fee of the Mortgage Loans and the Purchase Price of the Future Excess Servicing Spread is fair and reasonable.
Section 8.23
Material Documents
.
Seller shall provide Purchaser with executed copies of all material agreements and documents, and any amendments thereto, as of each Assignment Date relating to Seller’s acquisition of the related
Mortgage Servicing Rights and the servicing of the Mortgage Loans assigned.
Section 8.24
Insurance
.
The Seller shall maintain (a) general liability insurance, (b) errors and omission insurance or blanket bond
coverage and (c) fidelity bond insurance, in each case, from reputable companies with coverage in amounts customarily maintained by such similarly situated entities in the same jurisdiction and industry as the Seller.
Section 8.25
Defense of Title
The Seller warrants and will defend the right, title and interest of the Purchaser in and to all Future Excess Servicing Spread against all adverse claims and demands subject to Permitted Liens.
Section 8.26
Refinancing of Mortgage Loans
.
Each agreement or arrangement that Seller enters into to purchase Mortgage Servicing Rights shall be entered into on an arm’s length
contractual basis in the ordinary course of business and shall have market terms applicable for the type of Mortgage Servicing Rights to be acquired thereby. Seller shall not enter into any agreement or arrangement with a third party intended to
encourage the refinancing of any Mortgage Loan by any Person other than Seller.
37
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations
of Purchaser under this Agreement are subject to the satisfaction of the following conditions as of the Sale Date:
Section 9.01
Correctness of Representations and Warranties
.
The representations and warranties made by Seller in this Agreement and each other Transaction Document to which Seller is a party to be
made on or prior to the Sale Date are true and correct in all material respects.
Section 9.02
Compliance with
Conditions
.
All of the terms, covenants, conditions and obligations of this Agreement and each other Transaction
Document required to be complied with and performed by Seller on or prior to the Sale Date shall have been duly complied with and performed in all material respects.
Section 9.03
Corporate Resolution
.
Purchaser shall have
received from Seller a certified copy of the Seller’s corporate resolution approving the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby,
together with such other certificates of incumbency and other evidences of corporate authority as Purchaser or its counsel may reasonably request.
Section 9.04
No Material Adverse Change
.
From the Agreement
Date, there shall not have been any change to Seller’s financial or operating condition or in the Mortgage Servicing Rights, the Mortgage Loans, the Related Escrow Accounts or to Seller’s relationship with, or authority from, the Agency
that in each case will likely materially and adversely affect the consummation of the transactions contemplated hereby or the Future Excess Servicing Spread.
Section 9.05
Consents
.
The Seller shall have obtained all
consents, approvals or other requirements of third parties required for the consummation of the transactions contemplated by the Transaction Documents that are to be obtained on or prior to the Sale Date, and the Seller shall have commenced
servicing the Mortgage Loans under the applicable Servicing Agreement. All actions of all Governmental Authorities required to consummate the transactions contemplated by the Transaction Documents and the documents related thereto shall have been
obtained or made.
38
Section 9.06
Delivery of Transaction Documents
.
Seller shall have delivered to Purchaser copies of each executed Transaction Document that is to be entered on or prior to the Sale Date
in the form and substance acceptable to the Purchaser and each of the items required to be delivered pursuant to Section 2.01 hereof.
Section 9.07
Certificate of Seller
.
Seller shall have provided
Purchaser a certificate, substantially in the form attached hereto as
Exhibit D
, signed by an authorized officer of Seller dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each
of Seller’s representations and warranties made in this Agreement and each other Transaction Document to which Seller is a party is true and correct in all material respects as of such date; (b) all of the terms, covenants, conditions and
obligations of this Agreement and each other Transaction Document to which Seller is a party that are required to be complied with and performed by Seller at or prior to the Sale Date have been duly complied with and performed in all material
respects; (c) the conditions set forth in
Section 9.04
and
Section 9.05
have been satisfied; and (d) as of the Sale Date, Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and
(y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries, and the Seller (considered together with the Seller’s
consolidated subsidiaries) is not in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
Section 9.08
Opinions of Counsel
.
Seller’s counsel shall have delivered the Opinions of Counsel required pursuant to
Section 2.01(b)(v)
,
Section 2.01(b)(vi)
and
Section 2.01(b)(vii)
.
Section 9.09
Good Standing Certificate of Seller
.
Seller shall have provided Purchaser a certificate of good standing of Seller, dated as of a date within five (5) Business Days prior
to the Sale Date.
Section 9.10
No Actions or Proceedings
.
No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit
the consummation of, or to invalidate, any of the transactions contemplated by this Agreement and the documents related hereto in any material respect.
39
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of
Seller under this Agreement are subject to the satisfaction of the following conditions as of the Sale Date:
Section 10.01
Correctness of Representations and Warranties
.
The representations and warranties made by Purchaser in this Agreement to be made on or prior to the Sale Date are true and correct in all
material respects.
Section 10.02
Compliance with Conditions
.
All of the terms, conditions, covenants and obligations of this Agreement required to be complied with and performed by Purchaser on or
prior to the Sale Date shall have been duly complied with and performed in all material respects.
Section 10.03
Corporate Resolution
.
Seller shall have received from Purchaser a certified copy of its corporate resolution
approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, together with such other certificates of incumbency and other evidences of corporate authority as Seller or its counsel may
reasonably request.
Section 10.04
No Material Adverse Change
.
Since the Agreement Date, there shall not have been any change to Purchaser’s financial condition that will likely materially and
adversely affect the consummation of the transactions contemplated hereby.
Section 10.05
Certificate of
Purchaser
.
Purchaser shall have provided Seller a certificate, substantially in the form attached hereto as
Exhibit
E
, signed by an authorized officer of Purchaser dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each of Purchaser’s representations and warranties made in this Agreement is
true and correct in all material respects as of such date; (b) all of the terms, covenants, conditions and obligations of this Agreement required to be complied with and performed by Purchaser at or prior to the Agreement Date have been duly
complied with and performed in all material respects; and (c) the condition set forth in
Section 10.04
has been satisfied.
Section 10.06
Good Standing Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate of good standing of Purchaser, dated as of a date within five (5) Business Days
prior to the Sale Date.
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ARTICLE XI
INDEMNIFICATION
Section 11.01
Indemnification by
Seller
.
(a) Seller shall indemnify, defend and hold Purchaser, its affiliates and its and their respective directors,
managers, officers, employees, agents, representatives and advisors (the “
Purchaser Indemnitees
”) harmless from and shall reimburse the applicable Purchaser Indemnitee for any Losses suffered or incurred by any Purchaser Indemnitee
after the Agreement Date which result from:
(i) Any material breach of a representation or warranty by
Seller, or non-fulfillment of any covenant or obligation of Seller, contained in this Agreement;
(ii) Any
servicing act or omission of any prior servicer relating to any Mortgage Loan and any act or omission of any party related to the origination of any Mortgage Loan;
(iii) Any act, error or omission of Seller in servicing any of the Mortgage Loans, including improper action or failure
to act when required to do so;
(iv) Any exercise of any rights of setoff or other netting arrangements by any
Owner against Seller that results in a decrease in Servicing Agreement termination payments due to Seller with respect to the Mortgage Loans from such Owner or in a shortfall of funds to pay the Future Excess Servicing Spread; and
(v) Litigation, proceedings, governmental investigations, orders, injunctions or decrees resulting from any of the items
described in
Section 11.01(a)(i)-(iv)
above;
provided
,
however
, that the applicable Purchaser Indemnitee has
taken all commercially reasonable and appropriate actions to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses as reasonably requested by Seller, which such failure of mitigation shall not relieve Seller of its
indemnification obligations in this
Section 11.01(a)
but may affect the amount of such obligation; and
further provided
, that any Losses incurred by the Purchaser Indemnitee pursuant to any attempt to mitigate any such losses,
damages, deficiencies, claims, causes of action or expenses shall be reimbursed by Seller as part of its indemnification obligations in this
Section 11.01(a)
. Purchaser shall notify Seller promptly after receiving written notice of the
assertion of any litigation, proceedings, governmental investigations, orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice
of a Third Party Claim, Seller shall have the right to assume the defense of such Third Party Claim using counsel of its choice reasonably satisfactory to the applicable Purchaser Indemnitee, but may not enter into any settlement without the prior
written consent of the applicable Purchaser Indemnitee, which shall not be unreasonably withheld. A Purchaser Indemnitee shall have the right to select separate counsel and to otherwise separately defend itself at its own expense but shall not
consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the
41
prior written consent of Seller, which consent shall not be unreasonably withheld. Any exercise of such rights by a Purchaser Indemnitee shall not relieve Seller of its obligations and
liabilities under this
Section 11.01(a)
or any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, the applicable Purchaser Indemnitee shall be required to cooperate
in good faith with Seller to ensure the proper and adequate defense of such Third-Party Claim. For the avoidance of doubt, Seller’s obligations for Purchaser Indemnitees shall not be limited to funds available in the Third Party Controlled
Future Spread Custodial Account or the Future Spread Reserve Account.
(b)
REIT Requirements
. Notwithstanding anything
in
Section 11.01(a)
, in the event that counsel or independent accountants for the Protected REIT determine that there exists a material risk that any amounts due to Purchaser under
Section 11.01(a)
hereof would be treated as
Nonqualifying Income upon the payment of such amounts to Purchaser, the amount paid to Purchaser pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to Purchaser in such year without causing the Protected
REIT to fail to meet the REIT Requirements for such year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the Protected REIT. If the amount payable for any tax year
under the preceding sentence is less than the amount which Seller would otherwise be obligated to pay to Purchaser pursuant to
Section 11.01
of this Agreement (the “
Expense Amount
”), then: (1) Seller shall place the
Expense Amount into an escrow account (the “
Expense Escrow Account
”) using an escrow agent and agreement reasonably acceptable to Purchaser and shall not release any portion thereof to Purchaser, and Purchaser shall not be entitled
to any such amount, unless and until Purchaser delivers to Seller, at the sole option of the Protected REIT, (i) an opinion (an “
Expense Amount Tax Opinion
”) of the Protected REIT’s tax counsel to the effect that such
amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a letter (an “
Expense Amount Accountant’s Letter
”) from the Protected REIT’s independent accountants indicating the maximum amount
that can be paid at that time to Purchaser without causing the Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to the Protected REIT indicating that the
receipt of any Expense Amount hereunder will not cause the Protected REIT to fail to satisfy the REIT Requirements (a “
REIT Qualification Ruling
” and, collectively with an Expense Amount Tax Opinion and an Expense Amount
Accountant’s Letter, a “
Release Document
”); and (2) pending the delivery of a Release Document by Purchaser to Seller, Purchaser shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow
Account pursuant to a loan agreement (an “
Indemnity Loan Agreement
”) reasonably acceptable to Purchaser that (i) requires Seller to lend Purchaser immediately available cash proceeds in an amount equal to the Expense Amount (an
“
Indemnity Loan
”), and (ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the credit standing and profile of Purchaser or any guarantor of Purchaser,
including the Protected REIT, at the time of such Loan, and (B) a 15 year maturity with no periodic amortization.
Section 11.02
Indemnification by Purchaser
.
Purchaser shall indemnify, defend and hold Seller, its affiliates and its and their respective directors, managers, officers, employees, agents, representatives and advisors (the “
Seller
Indemnitees
”) harmless from and shall reimburse the applicable Seller Indemnitee for any Losses suffered or incurred by any Seller Indemnitee which result from:
42
(a) Any material breach of a representation or warranty by Purchaser, or non-fulfillment of
any covenant or obligation of Purchaser contained in this Agreement; and
(b) Litigation, proceedings, governmental
investigations, orders, injunctions or decrees, the basis for which occurred after the Agreement Date, resulting from any of the items described in
Section 11.02(a)
above;
provided
,
however
, that the applicable Seller Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any such losses, damages, deficiencies, claims, causes of
action or expenses as reasonably requested by Purchaser, which such failure of mitigation shall not relieve Purchaser of its indemnification obligations in this
Section 11.02
but may affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Seller Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be reimbursed by Purchaser as part of its indemnification
obligations in this
Section 11.02
. Seller shall notify Purchaser promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations, orders, injunctions, decrees or any third party claims
subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Purchaser shall have the right to assume the defense of such Third Party Claim using counsel of its
choice reasonably satisfactory to the applicable Seller Indemnitee, but may not enter into any settlement without the prior written consent of Purchaser, which shall not be unreasonably withheld. A Seller Indemnitee shall have the right to select
separate counsel and to otherwise separately defend itself but shall not consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of Purchaser, which consent shall not be
unreasonably withheld. Any exercise of such rights by a Seller Indemnitee shall not relieve Purchaser of its obligations and liabilities under this
Section 11.02
or any other provision of this Agreement. With respect to any Third Party
Claim subject to indemnification under this Agreement, the applicable Seller Indemnitee shall be required to cooperate in good faith with Purchaser to ensure the proper and adequate defense of such Third-Party Claim.
Section 11.03
Other Rights
.
The Seller hereby acknowledges that, in addition to its rights under this Agreement, the Purchaser is entitled to exercise its rights under the related Owner Consent.
43
ARTICLE XII
MISCELLANEOUS
Section 12.01
Costs and Expenses
.
Purchaser and Seller shall each pay the expenses incurred by it or its affiliates pursuant to the Current Spread Agreement in
connection with the transactions contemplated hereby.
Section 12.02
Confidentiality
.
Each Party understands that in connection with this transaction, it has been furnished and will be furnished Non-Public Personal
Information and/or Personally Identifiable Financial Information (as those terms are defined in Sections 573.3(n) and (o) of the Office of Thrift Supervision Regulations on Privacy of Consumer Information published at 12 C.F.R. Chapter V
implementing Title V of the Gramm-Leach-Bliley Act), and other information regarding the policies and plans of the other Party and its affiliates that is and has been designated as confidential and proprietary, and each Party agrees that it will
maintain the confidentiality of such information and will not disclose it to others (except for its affiliates and its and their respective directors, managers, officers, employees, financing sources, agents, representatives and advisors), or use it
except in connection with the proposed acquisition contemplated by this Agreement, without the prior written consent of the Party furnishing such information. Information which is generally known in the industry concerning a Party or among such
Party’s creditors generally or which has been disclosed to the other Party by third parties who have a right to do so shall not be deemed confidential or proprietary information for these purposes. If Purchaser, any of its affiliates or any
officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with the transactions contemplated hereby, Purchaser agrees to provide Seller with prompt
notice of such request(s) so that Seller may seek an appropriate protective order and/or waive Purchaser’s compliance with the terms of this
Section 12.02
. If Seller, any of its affiliates or any officer, director, employee or agent
of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with the transactions contemplated hereby, Seller agrees to provide Purchaser with prompt notice of such request(s) so that
Purchaser may seek an appropriate protective order and/or waive Seller’s compliance with the terms of this
Section 12.02
. Notwithstanding the terms of this
Section 12.02
, if, in the absence of a protective order or the
receipt of a waiver hereunder, Purchaser or Seller is nonetheless, in the opinion of its counsel, compelled to disclose information concerning the other Party to any tribunal or else stand liable for contempt or suffer other censure or penalty,
Purchaser or Seller may disclose such information to such tribunal without liability hereunder. If the proposed acquisition is not consummated, each Party agrees to promptly return to the other, promptly upon request, all confidential materials, and
all copies thereof, which have been furnished to it in connection with the transactions contemplated hereby. For the avoidance of doubt, either Party may provide its shareholders and creditors with a general description of this Agreement and any
related transactions, and, subject to the provisions of this
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.03
Broker’s Fees
.
Each party hereto represents and warrants to the other that it has made no agreement to pay any finder’s, agent’s, broker’s or originator’s fee arising out of or in connection with the
subject matter of this Agreement. In the event Purchaser has entered or enters into an agreement to pay any finder’s, agent’s, broker’s, advisor’s or originator’s fee arising out of or in connection with the subject matter
of this Agreement, Purchaser shall be solely responsible for all such fees.
44
The parties hereto shall indemnify and hold each other harmless from and against any such obligation or liability and any expense incurred in investigating or defending (including reasonable
attorneys’ fees) any claim based upon the other party’s actions in connection with such obligation.
Section 12.04
Relationship of Parties
.
The Parties intend that the transactions contemplated in the Transaction Documents constitute arms-length transactions among third parties. Nothing contained in the Transaction Documents will establish
any fiduciary, partnership, joint venture or similar relationship between or among the Parties except to the extent otherwise expressly stated therein.
Section 12.05
Survival of Representations and Warranties
.
Each
party hereto covenants and agrees that the representations and warranties in this Agreement, and in any document delivered or to be delivered pursuant hereto, shall survive the Agreement Date and each applicable Assignment Date.
Section 12.06
Notices
.
All notices, requests, demands and other communications which are required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given if personally delivered
or sent by registered or certified mail, return receipt requested, postage prepaid or by prepaid overnight delivery service:
(a) If to Purchaser, to:
Fortress Investment Group LLC
1345 Avenue of the Americas
New York, NY 10105
Attn: Brian Sigman
Chief Financial Officer
(212) 479-5343
(b) If to Seller, to:
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attn: Amar Patel
or to such other address as Purchaser or Seller shall have specified in writing to the other.
Section 12.07
Waivers
.
Either Purchaser or Seller may, by written notice to the other:
45
(a) Extend the time for the performance of any of the obligations or other transactions of
the other; and
(b) Waive compliance with or performance of any of the terms, conditions, covenants or obligations required
to be complied with or performed by the other hereunder.
The waiver by Purchaser or Seller of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any other subsequent breach.
Section 12.08
Entire
Agreement; Amendment
.
This Agreement and the related Transaction Documents constitute the entire agreement between the
parties with respect to the transactions contemplated hereby and supersede all prior agreements with respect thereto. This Agreement may be amended only in a written instrument signed by both Seller and Purchaser.
Section 12.09
Binding Effect
.
This Agreement shall inure to the benefit of and be binding upon the Parties and their successors and assigns. Nothing in this Agreement, express or implied, is intended to confer on any Person other than
the Parties and their successors and assigns, any rights, obligations, remedies or liabilities.
Section 12.10
Headings
.
Headings on the Articles and Sections in this Agreement are for reference purposes only and shall not
be deemed to have any substantive effect.
Section 12.11
Applicable Law
.
This Agreement shall be 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 the laws of the State of New York, except to the extent preempted by Federal law. This Agreement shall constitute a security agreement under the laws of the State of New York. In addition to
any other rights available under this Agreement or otherwise available at law or in equity but subject to the terms hereof, Purchaser shall have all rights and remedies of a secured party with respect to the Collateral under the laws of the State of
New York and under any other applicable law to enforce the assignments and security interests contained herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of applicable law and the terms of this
Agreement, to sell or apply any rights and other interests with respect to the Collateral assigned or pledged hereby in accordance with the terms hereof at public and private sale in accordance with the terms of this Agreement. The parties agree to
waive trial by jury in the event of any dispute under this Agreement.
46
Section 12.12
Incorporation of Exhibits
.
The Exhibits attached hereto shall be incorporated herein and shall be understood to be a part hereof as though included in the body of
this Agreement.
Section 12.13
Counterparts
.
This Agreement may be executed in counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all
of which, taken together, shall constitute one and the same agreement.
Section 12.14
Severability of
Provisions
.
If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, 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 or enforceability
of the other provisions of this Agreement or of the rights of the parties hereto.
Section 12.15
Assignment
.
(a) Seller may not assign, transfer, sell or subcontract all or any part of this Agreement, any
interest herein, or any of the Seller’s interest in the Servicing Spread Collections, other than the interest in the Total Servicing Spread sold hereby, without the prior written consent of Purchaser,
provided
that any successor to
Seller must assume Seller’s obligations under this Agreement. Purchaser shall have the unrestricted right to further assign, transfer, deliver, hypothecate, pledge, subdivide or otherwise deal with its rights under this Agreement on whatever
terms Purchaser shall determine without the consent of Seller; including the right to assign all or any portion of the Future Excess Servicing Spread and to assign the related rights under this Agreement. If Purchaser assigns any rights under this
Agreement to a third party (a “
Third Party Assignment
”), such third party (a “
Third Party Assignee
”) shall enter into a new agreement (a “
Third Party Future Spread Agreement
”) with Seller or
Seller’s assignee that provides such Third Party Assignee with the same rights with respect to the Future Excess Servicing Spread that Purchaser would have had under this Agreement if the Third Party Assignment had not occurred.
(b) Seller shall maintain a register on which it enters the name and address of each holder of the Future Excess Servicing Spread and
each holder’s interest in the Future Excess Servicing Spread (the “
Holder Register
”) for each transaction described in Section 12.15(a). The entries in the Holder Register shall be conclusive absent manifest error, and
Seller shall treat each Person whose name is recorded in the Holder Register as an owner of the Future Excess Servicing Spread for all purposes of this Agreement notwithstanding any notice to the contrary.
Section 12.16
Termination
.
If the Current Spread Agreement is terminated on or prior to the Sale Date, this Agreement shall terminate and neither Party shall have any further obligations to the other Party hereunder.
47
Section 12.17
Third Party Beneficiaries
.
This Agreement does not and is not intended to confer any rights or remedies upon any person or entity other than Purchaser and Seller,
except as provided in
Section 11.01
and in
Section 11.02
, provided that Purchaser and Seller reserve the right to modify any term of, or terminate, this Agreement, without the consent of any Purchaser Indemnitee or Seller
Indemnitee.
48
IN WITNESS WHEREOF, each of the undersigned parties to this Agreement has caused this
Agreement to be duly executed in its corporate name by one of its duly authorized officers, all as of the date first above written.
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MSR XII LLC
Purchaser
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By:
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/s/ Brian Sigman
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Name:
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Brian Sigman
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Title:
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Chief Financial Officer
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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/s/ Amar Patel
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Name:
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Amar Patel
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Title:
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Executive Vice President
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49
EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT FOR MORTGAGE LOANS
Subject to, and upon the terms and conditions of the Future Spread Agreement for Non-Agency Mortgage Loans, dated as of January 6, 2013 (the “
Agreement
”), by and between Nationstar
Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) and MSR XII LLC, a Delaware limited liability company (together with its successors assigns, the
“
Purchaser
”), as may be amended, restated, or otherwise modified and in effect from time to time, Seller hereby assigns, transfers and delivers to Purchaser all of Seller’s right, title and interest in and to Future Excess
Servicing Spread for each of the Mortgage Loans set forth in Annex A attached hereto and all proceeds thereof, and agrees that as of the applicable Assignment Date, the applicable Mortgage Loan shall be deemed to be a “Mortgage Loan” for
all purposes of the Agreement. Capitalized terms used in this Assignment Agreement have the meanings given to such terms in, or incorporated by reference into, the Agreement.
In the event (but only in the event) that the conveyance of the Future Excess Servicing Spread is characterized by a court or governmental authority as security for a loan rather than a sale, Seller will
be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Future Excess Servicing Spread and all proceeds thereof as security for a loan in an
amount of the Purchase Price.
All of the terms, covenants, conditions and obligations of the Agreement required to be
complied with and performed by Seller on or prior to the date hereof have been duly complied with and performed in all material respects.
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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Name:
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Title:
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50
Annex A
[ATTACH ANNEX A, WHICH MAY BE ON COMPUTER TAPE, COMPACT DISK, OR MICROFICHE,
CONTAINING THE INFORMATION SET FORTH BELOW]
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(a)
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(b)
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(c)
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(d)
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(e)
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(g)
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(h)
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(i)
(column (g) –
column (h))
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(j)
([ ]% of column
(i))
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Refinancing
Date
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Loan #
of
Refinanced
Mortgage
Loan
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Principal
Balance
of
Refinanced
Mortgage
Loan
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Loan # of
Mortgage
Loan
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Principal
Balance of
Mortgage
Loan as of the
Assignment
Date
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Servicing
Spread
Rate
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Base Servicing
Fee Rate
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Net Servicing
Spread Rate
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Future Excess
Servicing Spread
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EXHIBIT B
Example of calculations of Maximum Retained Refinancing Loan Amounts
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Recaptured Loan Incentive
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Range of Loans Retained as a Percentage of Total Recapture
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3 Month Avg
Recapture
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Retained
Percentage
(1)
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Nationstar
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Portfolio
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35% or Less
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0%
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0.00%
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100.00%
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> 35%, <= 40%
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25%
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0.00% to 1.25%
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100.00% to 98.75%
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> 40%, <= 45%
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30%
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1.50% to 3.00%
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98.50% to 97.00%
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> 45%, <= 50%
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35%
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3.50% to 5.25%
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96.50% to 94.75%
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> 50%, <= 55%
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40%
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6.00% to 8.00%
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94.00% to 92.00%
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> 55%, <= 60%
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45%
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9.00% to 11.25%
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91.00% to 88.75%
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> 60%, <= 65%
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50%
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12.50% to 15.00%
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87.50% to 85.00%
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> 65%, <= 70%
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50%
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15.00% to 17.50%
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85.00% to 82.50%
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> 70%, <= 75%
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50%
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17.50% to 20.00%
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82.50% to 80.00%
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Greater than 75%
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50%
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20.00% to 32.50%
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80.00% to 67.50%
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1
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Represents the percentage of loans Seller retains above 35% recapture.
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52
EXHIBIT C
SCHEDULE OF MORTGAGE LOANS
[SEPARATELY DELIVERED]
EXHIBIT D
SELLER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, a [Vice President] of Nationstar Mortgage LLC (the “
Company
”), pursuant to
Section 9.07
of the
Future Spread Agreement for Non-Agency Mortgage Loans by and between MSR XII LLC and the Company, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material
respects as of the date hereof;
(ii) All of the terms, covenants, conditions and obligations of the Agreement
required to be complied with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects;
(iii) The conditions set forth in
Section 9.04
and
Section 9.05
have been satisfied; and
(iv) (iv) As of the date hereof, the Company has a Consolidated Tangible Net Worth
(as defined in the Agreement) of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date of the Agreement by the Company, Nationstar Mortgage Holdings Inc. or any of the
Company’s consolidated subsidiaries, and the Company (considered together with its consolidated subsidiaries)is not in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
[ ]
By:
EXHIBIT E
PURCHASER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, [POSITION] of [ ], the sole member of MSR XII LLC (the “
Company
”), pursuant to
Section 10.05
of the Future Spread Agreement for Non-Agency Mortgage Loans by and between the Company and Nationstar Mortgage LLC, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the
Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all
material respects as of the date hereof; and
(ii) All of the terms, covenants, conditions and obligations of the Agreement
required to be complied with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects; and
(iii) The condition set forth in
Section 10.04
have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
[ ].
[
]
By: [ ], as member
By:
EXHIBIT F
LOCATION OF CREDIT FILES
350 Highland Drive
Lewisville, Texas 75067
EXHIBIT G
FORM OF SUMMARY REMITTANCE REPORT
[SEPARATELY DELIVERED]
EXHIBIT H
FORM OF DELINQUENCY REPORT
[SEPARATELY DELIVERED]
EXHIBIT I
FORM OF DISBURSEMENT REPORT
[SEPARATELY DELIVERED]
EXHIBIT J
SELLER JURISDICTIONS AND RECORDING OFFICES
Chief Executive Office:
350 Highland Drive
Lewisville, Texas 75067
Recording Office:
Secretary of
State, State of Delaware
Exhibit 10.54
CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT
FOR NON-AGENCY
MORTGAGE LOANS
by and between
NATIONSTAR MORTGAGE LLC
(Seller)
and
MSR XII LLC
(Purchaser)
Dated and effective as of January 6, 2013
Table of Contents
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ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
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1
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Section 1.01
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Definitions
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1
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Section 1.02
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General Interpretive Principles
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13
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ARTICLE II PROCEDURES; ITEMS TO BE DELIVERED
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14
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Section 2.01
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Sale of Current Excess Servicing Spread
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14
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Section 2.02
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Grant of Security Interest
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14
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Section 2.03
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Items to be Delivered on the Agreement Date
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14
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Section 2.04
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Items to be Delivered on the Sale Date
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15
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Section 2.05
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Sale Date Transactions
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18
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ARTICLE III PAYMENTS AND DISTRIBUTIONS
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18
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Section 3.01
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Purchase Price
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18
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Section 3.02
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Payments by Purchaser
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19
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Section 3.03
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Accounts
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20
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Section 3.04
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Priority of Payments
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22
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Section 3.05
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Withdrawals from the Current Spread Reserve Account
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24
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Section 3.06
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Payment to Seller of Base Servicing Fee
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24
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Section 3.07
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Intent and Characterization
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24
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ARTICLE IV [RESERVED]
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25
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER
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25
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Section 5.01
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Due Organization and Good Standing
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25
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Section 5.02
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Authority and Capacity
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25
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Section 5.03
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Title to the Mortgage Servicing Rights; Owner Consents
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26
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Section 5.04
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Effective Agreements
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26
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Section 5.05
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No Accrued Liabilities
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26
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Section 5.06
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Seller/Servicer Standing
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26
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Section 5.07
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MERS Membership
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27
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Section 5.08
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Owner Set-off Rights
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27
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Section 5.09
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Ability to Perform; Solvency
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27
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Section 5.10
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Material Documents
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27
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Section 5.11
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Obligations with Respect to Origination
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27
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Section 5.12
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No Actions
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27
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ARTICLE VI REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE LOANS AND SERVICING
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28
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Section 6.01
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Servicing Agreements; Applicable Laws
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28
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Section 6.02
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Related Escrow Accounts
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28
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i
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Section 6.03
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Accuracy of Servicing Information
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28
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Section 6.04
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No Purchaser Responsibility
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28
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Section 6.05
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Location of Credit Files
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28
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Section 6.06
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Representations Concerning the Current Excess Servicing Spread
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29
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ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER
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30
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Section 7.01
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Due Organization and Good Standing
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30
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Section 7.02
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Authority and Capacity
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30
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Section 7.03
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Effective Agreements
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30
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Section 7.04
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Sophisticated Investor
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31
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Section 7.05
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No Actions
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31
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ARTICLE VIII SELLER COVENANTS
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31
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Section 8.01
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Servicing Obligations
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31
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Section 8.02
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Cooperation
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32
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Section 8.03
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Financing Statements
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32
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Section 8.04
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Supplemental Information
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32
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Section 8.05
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Access to Information
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33
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Section 8.06
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Home Affordable Modification Program
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33
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|
Section 8.07
|
|
Distribution Date Data Tapes and Reports
|
|
|
33
|
|
|
Section 8.08
|
|
Financial Statements and Officer’s Certificates
|
|
|
36
|
|
|
Section 8.09
|
|
Monthly Management Calls
|
|
|
36
|
|
|
Section 8.10
|
|
Timely Payment of Owner Obligations
|
|
|
36
|
|
|
Section 8.11
|
|
Servicing Agreements
|
|
|
36
|
|
|
Section 8.12
|
|
Transfer of Mortgage Servicing Rights
|
|
|
37
|
|
|
Section 8.13
|
|
Consents to Transaction Documents
|
|
|
37
|
|
|
Section 8.14
|
|
Accounts
|
|
|
37
|
|
|
Section 8.15
|
|
Notification of Certain Events
|
|
|
37
|
|
|
Section 8.16
|
|
Financing; Pledge of Current Excess Servicing Spread
|
|
|
38
|
|
|
Section 8.17
|
|
Existence, etc
|
|
|
38
|
|
|
Section 8.18
|
|
Consent to Sub-Servicing
|
|
|
39
|
|
|
Section 8.19
|
|
Nonpetition Covenant
|
|
|
39
|
|
|
Section 8.20
|
|
Data Tape; Schedule of Mortgage Loans
|
|
|
39
|
|
|
Section 8.21
|
|
Insurance
|
|
|
40
|
|
|
Section 8.22
|
|
Defense of Title
|
|
|
40
|
|
|
Section 8.23
|
|
Refinancing of Mortgage Loans
|
|
|
40
|
|
|
|
|
|
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
|
|
|
40
|
|
|
Section 9.01
|
|
Correctness of Representations and Warranties
|
|
|
40
|
|
|
Section 9.02
|
|
Compliance with Conditions
|
|
|
41
|
|
|
Section 9.03
|
|
Corporate Resolution
|
|
|
41
|
|
ii
|
|
|
|
|
|
|
|
|
Section 9.04
|
|
No Material Adverse Change
|
|
|
41
|
|
|
Section 9.05
|
|
Consents
|
|
|
41
|
|
|
Section 9.06
|
|
Delivery of Transaction Documents
|
|
|
42
|
|
|
Section 9.07
|
|
Certificate of Seller
|
|
|
42
|
|
|
Section 9.08
|
|
Valuation
|
|
|
42
|
|
|
Section 9.09
|
|
Opinions of Counsel
|
|
|
42
|
|
|
Section 9.10
|
|
Acquisition of Mortgage Servicing Rights by Seller
|
|
|
42
|
|
|
Section 9.11
|
|
Good Standing Certificate of Seller
|
|
|
43
|
|
|
Section 9.12
|
|
No Actions or Proceedings
|
|
|
43
|
|
|
Section 9.13
|
|
Fees, Costs and Expenses
|
|
|
43
|
|
|
|
|
|
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
|
|
|
43
|
|
|
Section 10.01
|
|
Correctness of Representations and Warranties
|
|
|
43
|
|
|
Section 10.02
|
|
Compliance with Conditions
|
|
|
43
|
|
|
Section 10.03
|
|
Corporate Resolution
|
|
|
44
|
|
|
Section 10.04
|
|
No Material Adverse Change
|
|
|
44
|
|
|
Section 10.05
|
|
Certificate of Purchaser
|
|
|
44
|
|
|
Section 10.06
|
|
Good Standing Certificate of Purchaser
|
|
|
44
|
|
|
|
|
|
ARTICLE XI INDEMNIFICATION; CURE
|
|
|
44
|
|
|
Section 11.01
|
|
Indemnification by Seller
|
|
|
44
|
|
|
Section 11.02
|
|
Indemnification by Purchaser
|
|
|
46
|
|
|
Section 11.03
|
|
Award of Damages
|
|
|
47
|
|
|
Section 11.04
|
|
Other Rights
|
|
|
48
|
|
|
|
|
|
ARTICLE XII MISCELLANEOUS
|
|
|
48
|
|
|
Section 12.01
|
|
Costs and Expenses
|
|
|
48
|
|
|
Section 12.02
|
|
Confidentiality
|
|
|
49
|
|
|
Section 12.03
|
|
Broker’s Fees
|
|
|
49
|
|
|
Section 12.04
|
|
Relationship of Parties
|
|
|
50
|
|
|
Section 12.05
|
|
Survival of Representations and Warranties
|
|
|
50
|
|
|
Section 12.06
|
|
Notices
|
|
|
50
|
|
|
Section 12.07
|
|
Waivers
|
|
|
51
|
|
|
Section 12.08
|
|
Entire Agreement; Amendment
|
|
|
51
|
|
|
Section 12.09
|
|
Binding Effect
|
|
|
51
|
|
|
Section 12.10
|
|
Headings
|
|
|
51
|
|
|
Section 12.11
|
|
Applicable Law
|
|
|
51
|
|
|
Section 12.12
|
|
Incorporation of Exhibits
|
|
|
52
|
|
|
Section 12.13
|
|
Counterparts
|
|
|
52
|
|
|
Section 12.14
|
|
Severability of Provisions
|
|
|
52
|
|
|
Section 12.15
|
|
Public Announcement
|
|
|
52
|
|
|
Section 12.16
|
|
Assignment
|
|
|
52
|
|
|
Section 12.17
|
|
Termination
|
|
|
53
|
|
|
Section 12.18
|
|
Third Party Beneficiaries
|
|
|
53
|
|
iii
EXHIBITS
|
|
|
Exhibit A — Form of Assignment Agreement
|
|
Exhibit B — Schedule of Mortgage Loans
|
|
Exhibit C — Seller’s Officer’s Certificate
|
|
Exhibit D — Purchaser’s Officer’s Certificate
|
|
Exhibit E — Location of Credit Files
|
|
Exhibit F — Form of Summary Remittance Report
|
|
Exhibit G — Form of Delinquency Report
|
|
Exhibit H — Form of Disbursement Report
|
|
Exhibit I — Seller Jurisdictions and Recording Offices
|
|
Exhibit J — Servicing Agreements
|
iv
CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT FOR NON-
AGENCY MORTGAGE LOANS
This CURRENT EXCESS SERVICING SPREAD ACQUISITION AGREEMENT FOR NON-AGENCY MORTGAGE LOANS (as amended, restated, or otherwise modified and in effect from time to time, this “
Agreement
”),
dated as of January 6, 2013 (the “
Agreement Date
”), is by and between MSR XII LLC, a Delaware limited liability company (together with its successors and assigns, the “
Purchaser
”), and Nationstar Mortgage LLC,
a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) (the Purchaser and the Seller will collectively be referred to as the “
Parties
” and each, a “
Party
”).
W I T N E S S E T H
:
WHEREAS
, Seller and Bank of America, National Association (“Bank of America”) have entered into the Purchase and Sale Agreement, pursuant to which, among other things, Seller will acquire
and assume all right, title and interest in mortgage servicing rights to a portfolio of residential mortgage loans owned or securitized by the Owners (as defined herein);
WHEREAS
, by acquiring such mortgage servicing rights, Seller is entitled to a servicing spread and other incidental fees with respect to the related residential mortgage loans;
WHEREAS
, the servicing spread, together with the Ancillary Income (as defined below), exceeds the compensation that Seller
requires to service the related residential mortgage loans;
WHEREAS
, Seller desires to sell, and Purchaser desires to
purchase, a portion of the servicing spread that exceeds such required compensation amount; and
WHEREAS
, Purchaser and
Seller desire to set forth the terms and conditions pursuant to which Seller will sell, transfer and assign to Purchaser, all of Seller’s right, title and interest in and to a portion of the servicing spread, that exceeds the Seller’s
required compensation amount, and Purchaser will purchase all right, title and interest in and to such portion of the servicing spread;
NOW, THEREFORE
, in consideration of the mutual promises, covenants and conditions and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and
upon the terms and subject to the conditions set forth herein, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
Section 1.01
Definitions
.
Whenever used herein, the following words and phrases, unless the context otherwise requires, shall have the following meanings:
1
Accepted Servicing Practices
: With respect to any Mortgage Loan, those accepted and
prudent mortgage servicing practices (including collection procedures) which are in accordance with the servicing practices and procedures as set forth in the applicable Servicing Agreements, and in a manner at least equal in quality to the
servicing that Seller provides to mortgage loans which it owns in its own portfolio.
Agency
: Any of Fannie Mae,
Freddie Mac or Ginnie Mae, or any successor thereto.
Agreement
: As defined in the preamble hereof.
Agreement Date
: As defined in the preamble hereof.
Ancillary Income
: All incidental servicing fees (such as late fees, assignment transfer fees, returned check fees, special services fees, amortization schedule fees, HAMP fees, modification and
incentive income and any interest or earnings on funds deposited in an account maintained by the Seller as servicer with respect to the Mortgage Loans, etc.) that are supplemental to the servicing spread payable to the servicer pursuant to the
Servicing Agreements.
Applicable Law
: With reference to any Person, all laws (including common law), statutes,
regulations, ordinances, treaties, judgments, decrees, injunctions, writs and orders of any court, governmental agency or authority and rules, regulations, orders, directives, licenses and permits of any Governmental Authority applicable to such
Person or its property or in respect of its operations.
Assignment Agreement
: An agreement substantially in the form
of
Exhibit A
to this Agreement or in such other form as mutually agreed upon by the Parties.
Bank
: Wells Fargo
Bank, National Association, or any successor thereto, or another financial institution mutually agreed upon by the Parties or any successor thereto, each in its capacity as “Bank” under the Current Spread Custodial Account Control
Agreement or the Current Spread Reserve Account Control Agreement, as applicable, or any third party custodian or trustee in similar capacity under any replacement account control agreements.
Bank of America
: As defined in the recitals hereof.
Base Purchase Price
: The meaning given to such term in
Section 3.01
.
Base Servicing Fee
: With respect to a Collection Period, an amount equal to the sum for each Mortgage Loan of the product of (A) the outstanding principal balance of such Mortgage Loan with
respect to the related Measurement Date, (B) the Base Servicing Fee Rate and (C) (i) in the case of the initial Collection Period following the Sale Date or Subsequent Sale Date for such Mortgage Loan, as applicable, a fraction, the
numerator of which is the number of days in the period from and including the Sale Date or Subsequent Sale Date, as applicable, to and including the last day of the such Collection Period, and the denominator of which is 360, and (ii) in the
case of all other Collection Periods for a Mortgage Loan, 1/12;
provided
that the Base Servicing Fee with respect to any Mortgage Loan whose Servicing Agreement is terminated during a Collection Period shall be pro-rated to the actual number
of days within such Collection Period in which such Mortgage Loan was serviced by Seller.
2
Base Servicing Fee Rate
: 0.235% per annum, except that, for the period during
which the Interim Servicer is servicer of the Mortgage Loans, the Base Servicing Fee Rate shall be the lesser of (a) 0.235% per annum or (b) the interim servicing fee payable to the Interim Servicer.
Business Day
: Any day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the States of
Texas or New York are authorized or obligated by law or by executive order to be closed or (c) such other days as agreed upon by the Parties.
Code
: The Internal Revenue Code of 1986, as amended from time to time.
Collateral
: The meaning given to such term in
Section 2.02
.
Collection Period
: With respect to any Distribution Date, the calendar month preceding the month in which such Distribution Date
occurs.
Consolidated Tangible Net Worth
: (i) The net worth of Seller and its consolidated subsidiaries, on a
combined basis, determined in accordance with GAAP,
minus
(ii) all intangibles determined in accordance with GAAP (including goodwill, capitalized financing costs and capitalized administration costs but excluding originated and
purchased mortgage servicing rights or retained residual securities) and any and all advances to, investments in and receivables held from affiliates;
provided
,
however
, that the non-cash effect (gain or loss) of any mark-to-market
adjustments made directly to stockholders’ equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the
calculation of Consolidated Tangible Net Worth.
Control
: The meaning specified in Section 8-106 of the UCC.
Credit File
: Those documents, which may be originals, copies or electronically imaged, pertaining to each Mortgage
Loan, held by or on behalf of Seller in connection with the servicing of the Mortgage Loan, which may include Mortgage Loan Documents and the credit documentation relating to the origination of such Mortgage Loan, and any documents gathered during
the Servicing of a Mortgage Loan.
Current Excess Servicing Spread
: The rights of Seller, severable from each (and all)
of the other rights under the applicable Servicing Agreements, to a percentage of the Total Servicing Spread, which percentage is equal to the Current Excess Servicing Spread Percentage.
Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans
: The current excess servicing spread acquisition
agreement for certain Freddie Mac mortgage loans, dated the date hereof, between the Seller and MSR IX LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans
: The current excess servicing spread acquisition
agreement for certain Fannie Mae mortgage loans, dated the date hereof, between the Seller and MSR X LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
3
Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans
: The
current excess servicing spread acquisition agreement for certain Ginnie Mae mortgage loans, dated the date hereof, between the Seller and MSR XI LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XIII LLC
: The current excess servicing
spread acquisition agreement for certain Non-Agency Mortgage Loans, dated the date hereof, between the Seller and MSR XIII LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Current Excess Servicing Spread Percentage
: 66.67%.
Current Spread Custodial Account Agreement
: The applicable deposit account agreement and other related account documentation governing the Third Party Controlled Current Spread Custodial Account.
Current Spread Custodial Account Control Agreement
: The account control agreement among Seller, Purchaser and Wells
Fargo Bank, National Association, or any other institution agreed upon by the Parties, as Bank, dated as of the Sale Date, entered into with respect to the Third Party Controlled Current Spread Custodial Account, as amended, restated, supplemented
or otherwise modified from time to time.
Current Spread Reserve Account
: The account specified in the Current Spread
Reserve Account Control Agreement and maintained by Wells Fargo Bank, National Association, or any successor thereto, or any other third party custodian or trustee selected by Purchaser.
Current Spread Reserve Account Agreement
: The applicable deposit account agreement and other related account documentation
governing the Current Spread Reserve Account.
Current Spread Reserve Account Control Agreement
: The account control
agreement among Seller, Purchaser and Wells Fargo Bank, National Association, or any other institution agreed upon by the Parties, as Bank, dated on or before the Sale Date, entered into with respect to the Current Spread Reserve Account, as
amended, restated, supplemented or otherwise modified from time to time.
Current Spread Reserve Account Deposit Event
:
The meaning given to such term in
Section 3.03(c)
.
Current Spread Reserve Account Required Amount
: The
meaning given to such term in
Section 3.03(c)
.
Custodian
: A custodian of Credit Files or any part thereof
as identified by the Seller to the Purchaser in writing on or prior to the Sale Date or the related Subsequent Sale Date, as applicable, as the same may be amended and supplemented from time to time by the Seller by providing a written notice of any
such update to the Purchaser.
4
Cut-Off Date
: With respect to the Mortgage Loans sold on the Sale Date, the opening
of business on the Sale Date. With respect to the Mortgage Loans sold on a Subsequent Sale Date, the opening of business on such Subsequent Sale Date.
Deposit
: As defined in Section 3.01 hereof.
Data Tape
: The
list of all mortgage loans, dated as of the date specified therein, whose Mortgage Servicing Rights will be sold, or that are anticipated to be sold, as applicable, to Seller under the Purchase and Sale Agreement.
Distribution Date
: The 10th day of each calendar month, or if such day is not a Business Day, the prior Business Day, beginning in
the month following the Sale Date, or such other day as mutually agreed upon by Seller and Purchaser.
Electronic Data
File
: A computer tape or other electronic medium generated by or on behalf of Seller and delivered or transmitted to or on behalf of Purchaser which provides information relating to the Mortgage Loans.
Eligible Servicing Agreement
: Unless otherwise agreed to by the Purchaser, a Servicing Agreement in respect of which the following
eligibility requirements have been satisfied:
(a) either (i) the Owner Consents relating to such Servicing Agreement
have been obtained or (ii) a final order entered by the bankruptcy court providing that an Owner Consent with respect to such Servicing Agreement is not required has been obtained;
(b) such Servicing Agreement is an Eligible Servicing Agreement (as such term is defined in the Purchase and Sale Agreement);
(c) such Servicing Agreement is in full force and effect, and is in all respects genuine as appearing on its face or as represented in
the books and records of Seller, and no event of default, early amortization event, termination event, or other event giving any party thereto (including with notice or lapse of time or both) the right to terminate Seller as servicer thereunder for
cause has occurred and is continuing; provided, however, that with respect to any Servicing Agreement and the occurrence of any event set forth in this clause (c) which is based on a breach of a collateral performance test, such Servicing
Agreement shall remain an Eligible Servicing Agreement so long as no notice of termination based on such breach has been given or threatened in writing and subject to the restrictions set forth herein;
(d) Seller has not resigned or been terminated as servicer under such Servicing Agreement and has no actual knowledge of any pending or
threatened action to terminate Seller, as servicer (whether for cause or without cause); and
(e) the Seller as servicer may
not be terminated without cause pursuant to such Servicing Agreement or if the Seller as servicer may be terminated without cause, upon payment of a termination fee.
Entitlement Holder
: The meaning specified in Section 8-102(a)(7) of the UCC.
5
Expense Amount
: As defined in
Section 11.01(b)
hereof.
Expense Amount Accountant’s Letter
: As defined in
Section 11.01(b)
hereof.
Expense Amount Tax Opinion
: As defined in
Section 11.01(b)
hereof.
Expense Escrow Account
: As defined in
Section 11.01(b)
hereof.
Fannie Mae: Federal National Mortgage Association, or any successor thereto.
FHLMC Mortgage Loans
: Each of those mortgage loans for which the current excess servicing spread has been sold and assigned to MSR
XI LLC pursuant to the Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans.
FNMA Mortgage
Loans
: Each of those mortgage loans for which the current excess servicing spread has been sold and assigned to MSR X LLC pursuant to the Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans.
Freddie Mac
: Federal Home Loan Mortgage Corporation, or any successor thereto.
Future Spread Agreements
: The Future Spread Agreement for FHLMC Mortgage Loans, the Future Spread Agreement for FNMA Mortgage
Loans, the Future Spread Agreement for GNMA Mortgage Loans, the Future Spread Agreement for Non-Agency Mortgage Loans for MSR XII LLC and the Future Spread Agreement for Non-Agency Mortgage Loans for MSR XIII LLC.
Future Spread Agreement for FHLMC Mortgage Loans
: The Future Spread Agreement for FHLMC Mortgage Loans, dated January 6,
2013, by and between Seller and MSR IX LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for FNMA Mortgage Loans
: The Future Spread Agreement for FNMA Mortgage Loans, dated January 6, 2013,
by and between Seller and MSR X LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for GNMA Mortgage Loans
: The Future Spread Agreement for GNMA Mortgage Loans, dated January 6, 2013,
by and between Seller and MSR XI LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for Non-Agency Mortgage Loans for MSR XII LLC
: The Future Spread Agreement for Non-Agency Mortgage Loans,
dated January 6, 2013, by and between Seller and Purchaser, as may be amended, restated, or otherwise modified and in effect from time to time.
Future Spread Agreement for Non-Agency Mortgage Loans for MSR XIII LLC
: The Future Spread Agreement for Non-Agency Mortgage Loans, dated January 6, 2013, by and between Seller and MSR XIII
LLC, as may be amended, restated, or otherwise modified and in effect from time to time.
6
GAAP
: Generally accepted accounting principles in the United States of America as in
effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board, or
in such other statements by such other entity as may be in general use by significant segments of the accounting profession, that are applicable to the circumstances as of the date of determination.
Ginnie Mae
: Government National Mortgage Association, or any successor thereto.
GNMA Mortgage Loans
: Each of those mortgage loans for which the current excess servicing spread has been sold and assigned to MSR
XI LLC pursuant to the Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans.
Governmental
Authority
: With respect to any Person, any nation or government, any state or other political subdivision, agency or instrumentality thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction over such Person, any of its subsidiaries or any of its properties.
Grant
: To grant, bargain, sell, warrant, alienate, remise, demise, release, convey, assign, transfer, mortgage, pledge, create and grant a security interest in and right of setoff against, deposit,
set over or confirm.
HAMP
: The meaning given to such term in
Section 8.06
.
HAMP Loans
: The meaning given to such term in
Section 8.06
.
Holder Register
: As defined in
Section 12.16(b)
hereof.
Indemnity Loan
: As defined in
Section 11.01(b)
hereof.
Indemnity Loan Agreement
: As defined in
Section 11.01(b)
hereof.
Interim Servicer
: Bank of America or its successors or assigns acting as interim servicer with respect to the Mortgage Loans
pursuant to the interim servicing addendum of the Purchase and Sale Agreement.
IRS
: The United States Internal Revenue
Service.
Lien
: Any mortgage, deed of trust, pledge, hypothecation, collateral assignment, charge, deposit,
arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness or the performance
of any other obligation, including any conditional sale or other title retention agreement.
Lockbox Account
: An
account maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser for the purpose of receiving Servicing Spread Collections.
7
Loss
or
Losses
: Any and all direct, actual and out-of-pocket losses (including
any loss in the value in the Current Excess Servicing Spread), damages, deficiencies, claims, costs or expenses, including reasonable attorneys’ fees and disbursements, excluding (i) any amounts attributable to or arising from overhead
allocations, general or administrative costs and expenses, or any cost for the time of any Party’s employees, (ii) consequential losses or damages consisting of speculative lost profits, lost investment or business opportunity, damage to
reputation or operating losses, or (iii) punitive or treble damages;
provided
,
however
, that the exclusions set forth in clauses (ii) or (iii) above do not apply if and to the extent any such amounts are actually
incurred in payment to a third party or government entity.
Measurement Date
: With respect to any Collection Period,
the first day of such Collection Period.
MERS
: Mortgage Electronic Registration Systems, Inc., or any successor
thereto.
MI
: Insurance provided by private mortgage insurance companies to make payments on certain Mortgage Loans in
the event that the related Mortgagor defaults in its obligation in respect of the Mortgage.
Mortgage
: Each of those
mortgages, deeds of trust, security deeds or deeds to secure debt creating a first lien on or an interest in real property securing a Mortgage Note and related to a Mortgage Loan.
Mortgage Loan
: Each of those mortgage loans listed on the Schedule of Mortgage Loans.
Mortgage Loan Documents
: With respect to each Mortgage Loan, the documents and agreements related to such Mortgage Loan required
to be held by the applicable Custodian, including, without limitation, the original Mortgage Note, and any other documents or agreements evidencing and/or governing such Mortgage Loan.
Mortgage Note
: With respect to any Mortgage Loan, the note or other evidence of indebtedness of the Mortgagor, thereunder,
including, if applicable, an allonge and lost note affidavit.
Mortgage Servicing Rights
: The rights and
responsibilities of Seller with respect to servicing the Mortgage Loans under the Servicing Agreements, including any and all of the following if and to the extent provided therein: (a) all rights to service a Mortgage Loan; (b) all rights
to receive servicing fees, Ancillary Income, reimbursements or indemnification for servicing the Mortgage Loan, and any payments received in respect of the foregoing and proceeds thereof; (c) the right to collect, hold and disburse escrow
payments or other payments with respect to the Mortgage Loan and any amounts actually collected with respect thereto and to receive interest income on such amounts to the extent permitted by Applicable Law; (d) all accounts and other rights to
payment related to any of the property described in this paragraph; (e) possession and use of any and all Credit Files pertaining to the Mortgage Loan or pertaining to the past, present or prospective servicing of the Mortgage Loan; (f) to
the extent applicable, all rights and benefits relating to the direct solicitation of the related Mortgagors for refinance or modification of the Mortgage Loans and attendant right, title and interest in and to the list of such Mortgagors and data
relating to their respective Mortgage Loans; and (g) all rights, powers and privileges incident to any of the foregoing.
8
Mortgaged Property
: The Mortgagor’s real property, securing repayment of a
related Mortgage Note, consisting of an interest in a single parcel of real property, improved by a residential dwelling.
Mortgagor
: An obligor under a residential mortgage loan.
Net Servicing Fee
: As defined in the Purchase and Sale Agreement.
Non-Agency Mortgage Loans
: Each of the mortgage loans for which the current excess servicing spread has been sold and assigned to
MSR XII LLC or MSR XIII LLC pursuant to the applicable Sale Agreement.
Nonqualifying Income
: Any amount that is
treated as gross income for purposes of Section 856 of the Code and which is not Qualifying Income.
Objection
Notice
: The meaning given to such term in
Section 3.03(c)
.
Opinion of Counsel
: One or more written
opinions, in form and substance reasonably satisfactory to the recipient, of an attorney at law admitted to practice in any state of the United States or the District of Columbia, which attorney may be counsel for Seller or Purchaser, as the case
may be.
Owner
: With respect to a Mortgage Loan, the owner thereof.
Owner Consent
: All agreements, consents, approvals, confirmations and other items required pursuant to a Servicing Agreement to
complete the sale of the Mortgage Servicing Rights (including the Total Excess Spread) to Seller.
Party
or
Parties
: As defined in the preamble hereof.
Person
: Any individual, partnership, corporation, limited liability
company, limited liability partnership, business entity, joint stock company, trust, business trust, unincorporated organization, association, enterprise, joint venture, government, any department or agency of any government or any other entity of
whatever nature.
Power of Attorney
: A Power of Attorney delivered by the Seller to the Purchaser authorizing the
Purchaser to enforce the right to payment of the Current Excess Servicing Spread under the related Servicing Agreement solely in the event that the Seller fails to enforce such right within 30 days after receiving written notice of such failure from
the Purchaser to the Seller.
Priority of Payments
: The meaning given to such term in
Section 3.04
.
Protected REIT
: Any entity that (i) has elected to be taxed as a real estate investment trust pursuant to
Section 856 et seq. of the Code, (ii) owns a direct or indirect equity interest in Purchaser, and (iii) is treated for purposes of Section 856 of the Code as owning all or a portion of the assets of the Purchaser or as receiving
all or a portion of the Purchaser’s income.
9
Purchase and Sale Agreement
: The Mortgage Servicing Rights Purchase and Sale
Agreement, dated as of January 6, 2013, by and between Nationstar Mortgage LLC, as purchaser, and Bank of America, National Association, as seller, together with all schedules and exhibits thereto, as the same may be amended, supplemented or
otherwise modified from time to time.
Purchase Price
: The meaning given to such term in
Section 3.01
.
Purchase Price Percentage
: 3.78 multiplied by the excess of (i) the Net Servicing Fee (as such Net Servicing Fees
are determined in accordance with Exhibit F to the Purchase and Sale Agreement), expressed as an annualized rate on the unpaid principal balances of the related Mortgage Loans as of the Sale Date or Subsequent Sale Date, as applicable over
(ii) the Base Servicing Fee Rate.
Purchased Assets
: As defined in the Purchase and Sale Agreement.
Purchaser
: As defined in the preamble hereof.
Purchaser Enforcement Expenses
: An amount equal to the Current Excess Servicing Spread Percentage of the reasonable expenses, including legal costs and expenses, incurred in the enforcement of any
rights of Seller material to the value of the Total Servicing Spread under the Purchase and Sale Agreement and related documents, without duplication of any other such expenses paid under any other Sale Agreement, which enforcement has been approved
by Purchaser (such approval not to be unreasonably withheld).
Purchaser Indemnitees
: The meaning given to such term in
Section 11.01(a)
.
Qualifying Income
: Gross income that is described in Section 856(c)(2) or 856(c)(3)
of the Code.
REIT Qualification Ruling
: As defined in Section 11.01(b) hereof.
REIT Requirements
: The requirements imposed on REITs pursuant to Sections 856 through and including 860 of the Code.
Related Escrow Accounts
: Mortgage Loan escrow/impound accounts maintained by Seller relating to the Mortgage Servicing Rights,
including accounts for buydown funds, real estate taxes and MI, flood and hazard insurance premiums.
Release Document
:
As defined in Section 11.01(b) hereof.
Remaining Expected Total Servicing Spread
: The meaning given to such term
in
Section 3.03(c)
.
Repurchase Price
: As defined in the Purchase and Sale Agreement.
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Requirement of Law
: As to any Person, the certificate of incorporation and by-laws or
other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
Retained Servicing Spread
: The rights of Seller,
severable from each (and all) of the other rights under the applicable Servicing Agreements, to the Retained Servicing Spread Percentage of the Total Servicing Spread.
Retained Servicing Spread Percentage
: 100%
minus
the Current Excess Servicing Spread Percentage.
Sale Agreements
: This Agreement, the Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, the Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage
Loans, the Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans and the Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans for MSR XIII LLC.
Sale Date
: As defined in the Purchase and Sale Agreement; provided that all conditions precedent to the execution and delivery of
the related Assignment Agreement shall have been satisfied or waived on such date.
Sales Proceeds
: The proceeds
received upon a sale (approved by the Parties) of the Total Servicing Spread (except without giving effect to clause (b) of the definition thereof), in whole or in part, including through a sale in accordance with
Section 8.12
.
Schedule of Mortgage Loans:
The list of Mortgage Loans whose Current Excess Servicing Spread has been assigned to
Purchaser pursuant to this Agreement delivered initially accordance with
Section 2.04
, updated in accordance with
Section 3.01
and maintained as
Exhibit B
hereto.
Seller
: As defined in the preamble hereof.
Seller Enforcement Expenses
: An amount equal to the Retained Servicing Spread Percentage of the reasonable expenses, including legal costs and expenses, incurred in the enforcement of any rights of
Seller material to the value of the Total Servicing Spread under the Purchase and Sale Agreement and related documents, without duplication of any other such expenses paid under any other Sale Agreement, which enforcement has been approved by
Purchaser (such approval not to be unreasonably withheld).
Seller Indemnitees
: The meaning given to such term in
Section 11.02
.
Servicing
: The responsibilities, with respect to servicing the Mortgage Loans, under the
Servicing Agreements.
Servicing Agreements
: The servicing agreements, as amended from time to time, and any waivers,
consent letters, acknowledgments and other agreements under which Seller or the Interim Servicer is the servicer of the Mortgage Loans relating to the Mortgage Servicing Rights and governing the servicing of the Mortgage Loans.
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Servicing Spread Collections
: For each Collection Period, the funds collected on the
Mortgage Loans and allocated as the servicing compensation payable to Seller as servicer of the Mortgage Loans with respect to such Collection Period pursuant to the applicable Servicing Agreements, other than Ancillary Income and, for the avoidance
of doubt, other than reimbursements received for advances and other out-of-pocket expenditures from an Owner by Seller in accordance with the Servicing Agreements.
Servicing Transfer Date
: As defined in the Purchase and Sale Agreement with respect to the Mortgage Loans.
Solvent
: With respect to any Person as of any date of determination, (a) the value of the assets of such Person is greater than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person as determined in accordance with GAAP, (b) such Person is able to pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In
computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability.
Subsequent Sale Date
: As defined in the Purchase and Sale
Agreement; provided that all conditions precedent to the execution and delivery of the related Assignment Agreement shall have been satisfied or waived on such date.
Third Party Assignee
: The meaning given to such term in
Section 12.16
.
Third Party Assignment
: The meaning given to such term in
Section 12.16
.
Third Party Current Spread Agreement
: The meaning given to such term in
Section 12.16
.
Third Party Claim
: The meaning given to such term in
Section 11.01
and
Section 11.02
, as applicable.
Third Party Controlled Current Spread Custodial Account
: The account specified in the Current Spread Custodial Account Control
Agreement and maintained by Wells Fargo Bank, National Association or another third party custodian or trustee selected by Purchaser, into which all Servicing Spread Collections and all Servicing Agreement termination payments in respect of the
Mortgage Loans shall be deposited.
Total Servicing Spread
: For each Collection Period on and after the Sale Date, the
sum of the following: (a) the Servicing Spread Collections received during such Collection Period and remaining after payment of the Base Servicing Fee; (b) all Sales Proceeds received during such Collection Period; (c) all Repurchase
Prices received during such Collection Period; and (d) all other amounts payable by an Owner to Seller with respect to the Mortgage Servicing Rights for Mortgage Loans, including any termination fees paid by the applicable Owner to Seller for
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terminating Seller as the servicer of any of the Mortgage Loans, but for the avoidance of doubt, excluding all Ancillary Income and reimbursements received for advances and other out-of-pocket
expenditures, if any, from the applicable Owner by Seller in accordance with the Servicing Agreements.
Transaction
Documents
: The Purchase and Sale Agreement (including any order, bill of sale, assignment agreement or other transfer agreement related to the sale of the Mortgage Servicing Rights thereunder), the Owner Consents, the Current Spread Custodial
Account Agreement, the Current Spread Custodial Account Control Agreement, the Current Spread Reserve Account Agreement, the Current Spread Reserve Account Control Agreement, the Sale Agreements and the Future Spread Agreements.
UCC
: The Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.
Section 1.02
General Interpretive Principles
.
For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the
other gender;
(b) Accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;
(c) References herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and
other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Agreement;
(d) A reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions;
(e) The words “herein,” “hereof,” “hereunder” and other
words of similar import refer to this Agreement as a whole and not to any particular provision; and
(f) The term
“include” or “including” shall mean without limitation by reason of enumeration.
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ARTICLE II
PROCEDURES; ITEMS TO BE DELIVERED
Section 2.01
Sale of
Current Excess Servicing Spread
.
Subject to, and upon the terms and conditions of this Agreement, on the Sale Date and on
each Subsequent Sale Date occurring within 90 days of the Sale Date, Seller will sell, transfer and assign to Purchaser, and Purchaser will acquire from Seller, all of Seller’s right, title and interest in and to the Current Excess Servicing
Spread and all proceeds thereof with respect to the related Mortgage Loans.
Section 2.02
Grant of Security
Interest
.
In order to secure Seller’s obligations to deliver the Current Excess Servicing Spread and perform its
obligations hereunder and under the Purchase and Sale Agreement, Seller hereby Grants to Purchaser a valid and continuing first priority and perfected Lien on and security interest in all of Seller’s right, title and interest in, to and under,
the Third Party Controlled Current Spread Custodial Account and the Current Spread Reserve Account, together with all amounts deposited therein from time to time and all cash and non-cash proceeds thereof, in each case, whether now owned or
existing, or hereafter acquired and arising (the “
Collateral
”).
Section 2.03
Items to be Delivered
on the Agreement Date
.
On the Agreement Date, each of Seller and Purchaser shall deliver or cause to be delivered duly
executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:
(a) The Sale Agreements and all agreements, certificates, opinions and instruments required to be delivered under each Sale Agreement on the Agreement Date;
(b) The Future Spread Agreements and all agreements, certificates, opinions and instruments required to be delivered under each Future
Spread Agreement on the Agreement Date; and
(c) The executed Purchase and Sale Agreement.
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Section 2.04
Items to be Delivered on the Sale Date or Subsequent Sale Date
.
(a) On the Sale Date, subject to the satisfaction of the terms and conditions herein, each of Seller and Purchaser shall
deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible:
(i) With respect to each related Mortgage Loan, either (i) an Owner Consent relating to the Servicing Agreement for such Mortgage Loan or (ii) a final order entered by the bankruptcy court
providing that such Owner Consent is not required;
(ii) An Assignment Agreement with respect to the Sale
Date;
(iii) All agreements, certificates, opinions and instruments required to be delivered under each Sale
Agreement and Future Spread Agreement on the Sale Date;
(iv) All agreements, certificates, opinions and
instruments required to be delivered under the executed Purchase and Sale Agreement reasonably related to the transactions contemplated hereunder that are required to be delivered on the Sale Date;
(v) The executed Current Spread Custodial Account Agreement;
(vi) The executed Current Spread Custodial Account Control Agreement;
(vii) The executed Current Spread Reserve Account Agreement;
(viii) The executed Current Spread Reserve Account Control Agreement;
(ix) An Opinion of Counsel of Seller reasonably acceptable to Purchaser regarding due authorization, authority, and
enforceability
15
of the applicable Transaction Documents to which Seller is a party, and regarding no conflicts with other material Seller agreements;
(x) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the characterization of the transfer
of the Current Excess Servicing Spread from Seller to Purchaser as a true sale for bankruptcy or receivership purposes, as applicable;
(xi) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser, regarding the perfection of the assignment of Current Excess Servicing Spread to Purchaser and the security interests granted
hereunder;
(xii) A certificate of good standing of Seller dated as of a date within five (5) Business
Days prior to the Sale Date to be delivered by Seller;
(xiii) A secretary’s certificate of Seller
attaching its organizational documents, board resolutions and incumbency certificates;
(xiv) An
officer’s certificate of Seller that all conditions precedent to the purchase of the Mortgage Servicing Rights under the Purchase and Sale Agreement have been satisfied (or if waived, such waiver has been approved by Purchaser);
(xv) A duly executed corporate certificate of Seller required by
Section 9.07
dated as of the Sale Date;
(xvi) A duly executed corporate certificate of Purchaser required by
Section 10.05
dated as of
the Sale Date;
(xvii) A certificate of good standing of Purchaser, dated as of a date within five
(5) Business Days prior to the Sale Date to be delivered by Purchaser; and
(xviii) A UCC-1 financing
statement relating to the security interest of Purchaser in the Current Excess Servicing Spread, the Third Party Controlled Current Spread Custodial Account and the Current Spread Reserve Account, in form and substance reasonably acceptable to
Purchaser.
16
(b) On the Sale Date, subject to the satisfaction of the terms and conditions herein,
Seller shall provide Purchaser with copies of the following:
(i) Any amendments, modifications or
restatements of the Purchase and Sale Agreement;
(ii) Each bill of sale, assignment agreement or other
transfer agreement pursuant to which Bank of America will transfer the Mortgage Servicing Rights to Seller;
(iii) The executed Power of Attorney; and
(iv) A preliminary Schedule of Mortgage Loans containing information with respect to the Mortgage Loans anticipated to be
included in this Agreement on the Sale Date as of November 30, 2012.
(c) On each Subsequent Sale Date, subject to the
satisfaction of the terms and conditions herein, each of Seller and Purchaser shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible:
(i) With respect to each related Mortgage Loan, either (i) an Owner Consent relating to the Servicing Agreement for
such Mortgage Loan or (ii) a final order entered by the bankruptcy court providing that such Owner Consent is not required;
(ii) Each bill of sale, assignment agreement or other transfer agreement pursuant to which Bank of America will transfer the Mortgage Servicing Rights to Seller pursuant to the Purchase and Sale
Agreement; and
(iii) An Assignment Agreement with respect to such Subsequent Sale Date;
(iv) A preliminary Schedule of Mortgage Loans containing information with respect to the Mortgage Loans anticipated to be
included in this Agreement on the Subsequent Sale Date.
17
Section 2.05
Sale Date and Subsequent Sale Date Transactions
.
On the Sale Date and each Subsequent Sale Date, subject to the satisfaction of the terms and conditions herein:
(a) The Parties shall execute and deliver the Assignment Agreement;
(b) Purchaser shall remit to Seller the Purchase Price; and
(c) Ownership of the Current Excess Servicing Spread shall be transferred to Purchaser.
ARTICLE III
PAYMENTS AND DISTRIBUTIONS
Section 3.01
Purchase Price
.
On the first Business Day following the Agreement Date, Purchaser shall pay Seller an amount (the “
Deposit
”) equal to the product of (i) $6,943,463 and (ii) Current Excess
Servicing Spread Percentage, without any of the adjustments provided in the Purchase and Sale Agreement for such calculation, as an earnest money deposit. MSR XII LLC shall act as Purchaser for the Sale Date and for any Subsequent Sale Dates
occurring within 90 days following the Sale Date with respect to purchases of current excess servicing spread relating to any Non-Agency Mortgage Loan pursuant to the Purchase and Sale Agreement. For avoidance of doubt, the purchaser for any
Subsequent Sale Date occurring after 90 days following the Sale Date will be MSR XIII LLC and not MSR XII LLC, and any related current excess servicing spread shall be sold pursuant to the Current Excess Servicing Spread Acquisition Agreement for
Non-Agency Mortgage Loans for MSR XIII LLC and not this Agreement, and MSR XII LLC shall not acquire any interest in such current excess servicing spread.
In full consideration for the purchase of the Current Excess Servicing Spread and the rights under the Future Spread Agreement for Non-Agency Mortgage Loans, and upon the terms and conditions of this
Agreement, Purchaser shall pay to Seller an amount (the “
Base Purchase Price
”) equal to the product of (x) the aggregate outstanding principal balance of the Mortgage Loans as of the Cut-Off Date, (y) the Purchase Price
Percentage and (z) the Current Excess Servicing Spread Percentage. The Base Purchase Price shall be allocated by the Parties on the Sale Date to reflect the consideration for the purchase of the Current Excess Servicing Spread hereunder (the
“
Purchase Price
”) and the consideration for the rights acquired by Purchaser under the Future Spread Agreement for Non-Agency Mortgage Loans.
18
The Base Purchase Price shall be payable by the Purchaser to the Seller as follows:
(a) the Deposit shall be payable on the first Business Day following the Agreement Date, (b) 50% of the estimated Base Purchase Price net of the portion of the Deposit with respect to the applicable Servicing Agreements shall be payable on
the Sale Date or the Subsequent Sale Date, as applicable and (c) the portion of the Base Purchase Price with respect to the Mortgage Servicing Rights transferred on such Servicing Transfer Date that has not been paid to Seller by Purchaser as
of such date, including with respect to Mortgage Loans that have prepaid between either (x) the Sale Date or Subsequent Sale Date, as applicable, and the initial applicable Servicing Transfer Date or (y) two Servicing Transfer Dates
pertaining to the same Mortgage Servicing Rights, plus interest thereon at the Federal Funds Rate for the period from the Sale Date or Subsequent Sale Date, as applicable, to such Servicing Transfer Date or between such Servicing Transfer Dates,
shall be payable on the Servicing Transfer Date.
The Seller shall deliver the Schedule of Mortgage Loans no later ten
(10) Business Days after the Sale Date and any Subsequent Sale Date, as applicable. In the event there is an adjustment and reconciliation of the Seller’s purchase price pursuant to the terms of Section 3.01(d) of the Purchase and
Sale Agreement, the Base Purchase Price shall be subject to a corresponding adjustment and any adjustment amounts (including interest) shall be paid by Purchaser or the Seller, as applicable, to the other party within ten (10) Business Days
from receipt of satisfactory written verification of amounts due.
In the event the sale of the Current Excess Servicing
Spreads related to any Servicing Agreement is delayed to a Subsequent Sale Date with respect to which MSR XII LLC is the Purchaser in accordance with the terms of the Purchase and Sale Agreement and this Agreement, the Base Purchase Price and
Purchase Price to be paid hereunder related to the Current Excess Servicing Spreads to be sold on such Subsequent Sale Date shall be paid on such Subsequent Sale Date, in accordance with the preceding provisions of this Section 3.01 as if such
Subsequent Sale Date were the Sale Date thereunder, net of the portion of the earnest money deposit set forth in the first paragraph of Section 3.01 with respect to the applicable Servicing Agreements.
Section 3.02
Payments by Purchaser
.
(a) Payments shall be made by Purchaser to Seller by wire transfer of immediately available funds to an account designated by Seller.
(b) If, subsequent to the payment of the Purchase Price or the payment of any amounts due hereunder to either party, the outstanding
principal balance of any Mortgage Loan is found to be in error, or if for any reason the Purchase Price or such other amounts is found to be in error, the party benefiting from the error shall pay an amount sufficient to correct and reconcile the
Purchase Price or such other amounts and shall provide a reconciliation statement and other such documentation to reasonably satisfy the other party concerning the accuracy of such reconciliation. Such amounts shall be paid by the proper party
within ten (10) Business Days from receipt of satisfactory written verification of amounts due.
19
Section 3.03
Accounts
.
(a)
Lockbox Account
. Seller shall inform the Mortgagors of Mortgage Loans to remit their mortgage payments due on or after the
Servicing Transfer Date to the Lockbox Account. All amounts on deposit in the Lockbox Account will be maintained and applied in accordance with the Servicing Agreement. Payments of all Servicing Spread Collections received on and after the Servicing
Transfer Date shall be transferred from the Lockbox Account to the Third Party Controlled Current Spread Custodial Account within one Business Day of receipt and identification thereof and in any event, within two Business Days of receipt thereof.
If Seller receives any Servicing Spread Collections not remitted to the Lockbox Account, it shall hold such funds in trust for the benefit of the Purchaser and deposit such amounts to the Third Party Controlled Current Spread Account within two
Business Days of receipt thereof. Any deferred servicing fees purchased by the Seller with respect to the Mortgage Loans under the Purchase and Sale Agreement shall only be retained by Seller after all Servicing Spread Collections with respect to
the applicable Mortgage Loan for the related Collection Period (and any unpaid Servicing Spread Collections from prior Collection Periods) have been remitted to the Third Party Controlled Current Spread Custodial Account.
(b)
Third Party Controlled Current Spread Custodial Account
.
(i) The Third Party Controlled Current Spread Custodial Account will be established with Wells Fargo Bank, National
Association or with such other third party custodian or trustee selected by Purchaser, for the sole purpose of receiving and disbursing all Servicing Spread Collections, Servicing Agreement termination payments with respect to the Mortgage Loans,
Sales Proceeds and Repurchase Prices. The Third Party Controlled Current Spread Custodial Account will be established pursuant to the Current Spread Custodial Account Control Agreement with respect to which Purchaser is an Entitlement Holder with
Control. So long as permitted by the Current Spread Custodial Account Control Agreement, Seller may direct the disposition of funds in the Third Party Controlled Current Spread Custodial Account strictly in accordance with the Priority of Payments.
Upon any material breach of a representation, warranty or covenant by Seller hereunder or during the occurrence and continuance of a Current Spread Reserve Account Deposit Event, Purchaser may elect to exercise Control over the Third Party
Controlled Current Spread Custodial Account. Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Third Party Controlled Current Spread
Custodial Account.
(ii) Seller shall inform each Owner to remit the applicable portion of any Servicing
Agreement termination payments payable after the Sale Date or Subsequent Sale Date, as applicable, directly to the Third Party Controlled Current Spread Custodial Account. Any termination payment to be directed to the Third Party Controlled Current
Spread Custodial Account shall
20
be equal to the pro rata amount by which the Mortgage Loans affected by such termination bear to all mortgage loans of Seller affected by such termination, based upon the method in which such
termination payments are calculated in accordance with the applicable Servicing Agreement.
(iii) Seller shall
direct each payer of Sales Proceeds to remit such payments directly to the Third Party Controlled Current Spread Custodial Account.
(iv) Seller shall direct Bank of America to remit (i) Servicing Spread Collections received by it prior to the Servicing Transfer Date and (ii) any Repurchase Price under the Purchase and Sale
Agreement, directly to the Third Party Controlled Current Spread Custodial Account.
(v) If Seller receives
any amounts required to be deposited into the Third Party Controlled Current Spread Custodial Account in error, Seller shall promptly remit such funds to the Third Party Controlled Current Spread Custodial Account.
(c)
Current Spread Reserve Account
. The Current Spread Reserve Account will be established with Wells Fargo Bank, National
Association or with such other third party custodian or trustee selected by Purchaser. The Current Spread Reserve Account will be established pursuant to the Current Spread Reserve Account Control Agreement with respect to which Purchaser is an
Entitlement Holder with Control. So long as permitted by the Current Spread Reserve Account Control Agreement, Seller may direct the disposition of funds in the Current Spread Reserve Account strictly in accordance with
Section 3.05
.
Seller agrees to take all actions reasonably necessary, including the filing of appropriate financing statements, to protect Purchaser’s interest in the Current Spread Reserve Account.
If at any time Seller’s Consolidated Tangible Net Worth falls below the sum of (x) $250,000,000 and (y) 50% of the
proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries or if Seller (considered together with its consolidated subsidiaries) defaults in any
indebtedness in excess of $10,000,000 (individually or in the aggregate) (each, a
“Current Spread Reserve Account Deposit Event”
), Seller shall immediately notify Purchaser in writing that a Current Spread Reserve Account Deposit
Event has occurred. On each Distribution Date upon which a Current Spread Reserve Account Deposit Event has occurred and is continuing, Seller shall be required to transfer funds in the Third Party Controlled Current Spread Custodial Account to the
Current Spread Reserve Account in accordance with the Priority of Payments until the amount of funds in the Current Spread Reserve Account is equal to the Current Spread Reserve Account Required Amount. The
“Current Spread Reserve Account
Required Amount”
is equal to 25% of the fair market value as of the date the Current Spread Reserve Account Deposit Event that is then-continuing first occurred of the Total Servicing Spread expected to be paid over the expected remaining
life of the Mortgage Loans (the
“Remaining Expected Total Servicing
21
Spread
”) determined in accordance with the following paragraph. Seller shall immediately notify Purchaser in writing if a Current Spread Reserve Account Deposit Event is no longer
continuing. Any funds in the Current Spread Reserve Account in excess of the Current Spread Reserve Account Required Amount shall be released to Seller.
For purposes of determining the fair market value of the Remaining Expected Total Servicing Spread, Purchaser shall submit its claim for determination of the fair market value of the Remaining Expected
Total Servicing Spread, together with such back-up information it deems appropriate to justify such fair market value (which value shall be considered the fair market value of the Remaining Expected Total Servicing Spread for purposes of calculating
the Current Spread Reserve Account Required Amount until the final determination of such fair market value in accordance with this paragraph). Within five (5) Business Days of Seller’s receipt of such determination, Seller shall notify
Purchaser in writing of its acceptance or any objection to such determination of such fair market value, and if Seller objects to such determination, such notice shall include its own determination of such fair market value and any back-up
information as it deems appropriate to justify such fair market value (an “
Objection Notice
”). In the event an Objection Notice is delivered, the parties shall negotiate in good faith a resolution to such objection. In the event
that Seller and Purchaser are unable to resolve such objection within five (5) Business Days of the delivery of such Objection Notice, Seller and Purchaser shall appoint a mutually acceptable nationally recognized valuation expert to determine
such fair market value of the Remaining Expected Total Servicing Spread. The determination of such valuation expert shall be binding on Seller and Purchaser and the fees of such valuation expert shall be borne by Seller.
Section 3.04
Priority of Payments
.
On each Business Day, subject to the terms and conditions of the Current Spread Custodial Account Control Agreement, Seller (or, after the delivery of an access termination notice pursuant to the Current
Spread Custodial Account Control Agreement, Purchaser) shall direct the Bank to apply the monies in the Third Party Controlled Current Spread Custodial Account in the following order of priority (the “
Priority of Payments
”), in
every case, after giving effect to each prior item in the Priority of Payments on such Distribution Date:
(a)
first
,
from amounts in the Third Party Controlled Current Spread Custodial Account attributable to Servicing Agreement termination payments made by an Owner with respect to any Mortgage Loans,
pro rata
, (A) the Current Excess Servicing Spread
Percentage of such termination payments to Purchaser, and (B) the Retained Servicing Spread Percentage of such termination payments to Seller;
provided
, that (I) prior to the distribution to Purchaser of any termination payments
pursuant to
clause (A)
, such termination payments shall be applied
first
, to the payment to Seller of any Purchaser Enforcement Expenses then due and payable and
then
, to the payment of any indemnity payments then due and
payable, to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the distribution to Seller of any termination payments pursuant to
clause (B)
, such termination payments shall be applied
first
, to the payment of
any Seller Enforcement Expenses then due and payable,
second
, to the payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
third
, for deposit to the Current
Spread Reserve Account to the extent necessary to cause the amount of funds on deposit in the Current Spread Reserve Account to equal the Current Spread Reserve Account Required Amount;
22
(b)
second
, on any Business Day from and including the first Business Day of a
calendar month to but excluding the Distribution Date in such calendar month, at the option of Seller, the Base Servicing Fee payable with respect to a prior Collection Period for the Mortgage Loans to Seller; provided however, that, to the extent
that (i) the Seller is not permitted or is otherwise unable to advance servicing fees relating to the Total Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement, (ii) the related Servicing
Agreement does not permit payment of servicing fees from general collections, and (iii) the related Servicing Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the Third Party Controlled Current
Spread Custodial Account relating to the affected Mortgage Loans shall be made pursuant to clause (d) below prior to this clause (b);
(c)
third
, on each Distribution Date, to the extent not previously paid to Seller in accordance with
Section 3.04(b)
, any accrued and unpaid Base Servicing Fee to Seller; provided
however, that, to the extent that (i) the Seller is not permitted or is otherwise unable to advance servicing fees relating to the Total Servicing Spread with respect to the Mortgage Loans serviced under the related Servicing Agreement,
(ii) the related Servicing Agreement does not permit payment of servicing fees from general collections, and (iii) the related Servicing Agreement does not allocate liquidation proceeds to servicing fees first, payments from monies in the
Third Party Controlled Current Spread Custodial Account relating to the affected Mortgage Loans shall be made pursuant to clause (d) below prior to this clause (c);
(d)
fourth,
on each Distribution Date,
pro rata
, (A) to Purchaser, any Current Excess Servicing Spread for the prior Collection Period (other than the portion thereof consisting of
termination payments paid pursuant to
Section 3.04(a)
); and (B) to Seller, any Retained Servicing Spread for the prior Collection Period (other than the portion thereof consisting of termination payments paid pursuant to
Section 3.04(a)
);
provided
, that (I) prior to the distribution to Purchaser of any Current Excess Servicing Spread pursuant to
clause (A)
, the Current Excess Servicing Spread shall be applied
first
, to the
payment to Seller of any Purchaser Enforcement Expenses then due and payable and
then
, to the payment of any indemnity payments then due and payable to a Seller Indemnitee pursuant to
Section 11.02,
and (II) prior to the
distribution to Seller of any Retained Servicing Spread pursuant to
clause (B)
, the Retained Servicing Spread shall be applied
first
, to the payment of any Seller Enforcement Expenses then due and payable,
second
, to the
payment of any indemnity payments then due and payable to a Purchaser Indemnitee pursuant to
Section 11.01
and
third
, for deposit to the Current Spread Reserve Account to the extent necessary to cause the amount of funds on
deposit in the Current Spread Reserve Account to equal the Current Spread Reserve Account Required Amount; and
(e)
fifth
, on each Distribution Date, to Seller, any other amounts remaining on deposit in the Third Party Controlled Current Spread Custodial Account.
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All payments to Purchaser or Seller shall be made by wire transfer of immediately available
federal funds to an account designated by Purchaser or Seller, as applicable.
Section 3.05
Withdrawals from the
Current Spread Reserve Account
.
On any Business Day, at the instruction of Purchaser, Seller shall direct the Bank to
apply funds in the Current Spread Reserve Account, if any, to the payment of indemnity payments payable to a Purchaser Indemnitee pursuant to
Section 11.01
. If on any Business Day a Current Spread Reserve Account Deposit Event is not
then continuing and all outstanding indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller may direct the Bank to distribute any remaining funds in the Current Spread Reserve Account to, or as directed by, Seller. If
there are any funds remaining in the Current Spread Reserve Account after the Current Excess Servicing Spread and all indemnity payments payable to Purchaser Indemnitees have been paid in full, Seller shall direct the Bank to distribute such
remaining funds to, or as directed by, Seller.
Section 3.06
Payment to Seller of Base Servicing Fee
.
Seller shall be entitled to payment of the Base Servicing Fee only to the extent funds are available therefor in the Third Party
Controlled Current Spread Custodial Account in accordance with the Priority of Payments. Under no circumstances shall Purchaser be liable to Seller for payment of the Base Servicing Fee. In the event servicing of the Mortgage Loans is transferred to
sub-servicers for any reason, the servicing fees and expenses of such sub-servicers shall be paid by Seller and in no event will the amount of Servicing Spread Collections or termination payments otherwise allocable to the Current Excess Servicing
Spread be reduced due to the payment of sub-servicing fees and expenses.
Section 3.07
Intent and
Characterization
.
(a) Seller and Purchaser intend that the sale of the Current Excess Servicing Spread pursuant to this
Agreement constitutes a valid sale of such Current Excess Servicing Spread from Seller to Purchaser, conveying good title thereto free and clear of any Lien, and that the beneficial interest in and title to the Current Excess Servicing Spread not be
part of Seller’s estate in the event of the bankruptcy of Seller. Seller and Purchaser intend and agree to treat the transfer and assignment of the Current Excess Servicing Spread as an absolute sale for tax purposes, and as an absolute and
complete conveyance of title for property law purposes. Except for financial accounting purposes, neither party intends the transactions contemplated hereby to be characterized as a loan from Purchaser to Seller.
(b) In the event (but only in the event) that the conveyance of the Current Excess Servicing Spread is characterized by a court or
governmental authority as security for a loan rather than a sale, Seller will be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Current
Excess Servicing Spread and all proceeds thereof as security for a loan in an amount equal to the Purchase Price.
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ARTICLE IV
[RESERVED]
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as of the Agreement Date, the Sale Date and as of each Subsequent Sale Date (or as of the date
specified below, as applicable):
Section 5.01
Due Organization and Good Standing
.
Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
Seller is qualified to transact business in each jurisdiction in which such qualification is deemed necessary to service the Mortgage Loans. Seller has, in full force and effect (without notice of possible suspension, revocation or impairment), all
required permits, approvals, licenses, and registrations to conduct all activities in all states in which its activities with respect to the Mortgage Loans or the Mortgage Servicing Rights require it to be licensed, registered or approved in order
to service the Mortgage Loans and own the Mortgage Servicing Rights, unless the failure to obtain such permits, approvals, licenses and registrations would not reasonably be expected to have a material adverse effect on Seller’s ability to
perform its obligations under this Agreement or the other Transaction Documents to which it is a party.
Section 5.02
Authority and Capacity
.
Seller has all requisite limited liability company power, authority and capacity to enter into
this Agreement and each other Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document to which Seller is a
party and the consummation of the transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary corporate action. This Agreement constitutes, and each other applicable Transaction Document to which Seller
is a party constitutes or will constitute, a valid and legally binding agreement of Seller enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Seller of this Agreement or such other
Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
25
Section 5.03
Title to the Mortgage Servicing Rights; Owner Consents
(a) As of the Sale Date or Subsequent Sale Date, as applicable, Seller will be the lawful owner of the Mortgage Servicing Rights, will be
responsible for the maintenance of the Related Escrow Accounts, and will have the sole right and authority to transfer the Current Excess Servicing Spread as contemplated hereby. The transfer, assignment and delivery of the Current Excess Servicing
Spread shall be free and clear of any and all claims, charges, defenses, offsets, Liens and encumbrances of any kind or nature whatsoever.
(b) As of the Sale Date or Subsequent Sale Date, as applicable, Seller has obtained all Owner Consents or, with respect to any Servicing Agreement relating to the Mortgage Loans for which an Owner Consent
has not been obtained, a final order entered by the bankruptcy court providing that such Owner Consent is not required.
Section 5.04
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document that has been executed by Seller, compliance with the terms hereof and thereof and the consummation of the
transactions contemplated hereby and thereby did not, and will not, violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited
liability company agreement, any instrument or agreement to which it is a party or by which it is bound or which affects the Current Excess Servicing Spread, or any state or federal law, rule or regulation or any judicial or administrative decree,
order, ruling or regulation applicable to it or to the Current Excess Servicing Spread.
Section 5.05
No Accrued
Liabilities
.
There are no accrued liabilities of Seller with respect to the Mortgage Loans or the Mortgage Servicing
Rights or circumstances under which such accrued liabilities will arise against Purchaser as purchaser of the Current Excess Servicing Spread.
Section 5.06
Seller/Servicer Standing.
Seller is qualified to
act as servicer under, and meets all eligibility criteria required by, each applicable Servicing Agreement, and has adequate resources to complete the transactions contemplated hereby on the conditions stated herein. No event has occurred,
including but not limited to a change in insurance coverage, which would make the Seller unable to comply with any such requirements or which would require notification to the applicable Owner. Furthermore, if at any time prior to the
termination of this Agreement, the Seller is unable to comply with any eligibility requirements under any Servicing Agreement, it shall immediately notify the Purchaser.
26
Section 5.07
MERS Membership
.
Seller is a member in good standing under the MERS system.
Section 5.08
Owner Set-off Rights
.
Seller has no actual notice,
including any notice received from an Owner, or any reason to believe, that, other than in the normal course of Seller’s business, any circumstances exist that would result in Seller being liable to an Owner for any amount due by reason of:
(i) any breach of servicing obligations or breach of mortgage selling warranty to such Owner under servicing agreements relating to Seller’s entire servicing portfolio for such Owner (including any unmet mortgage repurchase obligation),
(ii) any unperformed obligation with respect to mortgage loans that Seller is servicing for such Owner under the regular servicing option or other mortgages subject to recourse agreements, (iii) any loss or damage to such Owner by reason
of any inability to transfer to a purchaser of the servicing rights Seller’s selling and servicing representations, warranties and obligations, or (iv) any other unmet obligations to such Owner under a servicing contract relating to
Seller’s entire servicing portfolio with such Owner.
Section 5.09
Ability to Perform; Solvency
.
Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this
Agreement. Seller is Solvent and the sale of the Current Excess Servicing Spread will not cause Seller to become insolvent. The sale of the Current Excess Servicing Spread is not undertaken to hinder, delay or defraud any of the creditors of Seller.
The consideration received by Seller upon the sale of the Current Excess Servicing Spread constitutes fair consideration and reasonably equivalent value therefor.
Section 5.10
Material Documents
.
Seller has provided Purchaser with
executed copies of all material agreements and documents, and any amendments thereto, relating to Seller’s acquisition of the Mortgage Servicing Rights and the servicing of the Mortgage Loans.
Section 5.11
Obligations with Respect to Origination
.
Seller shall remain liable for all obligations with respect to the origination of each Mortgage Loan and, if applicable, for all
obligations with respect to the sale of such Mortgage Loan to the applicable Owner.
Section 5.12
No Actions
.
There have not been commenced or, to the best of Seller’s knowledge, threatened any action, suit or proceeding which will
likely materially and adversely affect the consummation of the transactions contemplated by any Transaction Document.
27
ARTICLE VI
REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE
LOANS AND
SERVICING
As further inducement to Purchaser to enter into this Agreement, Seller represents and warrants to
Purchaser, as of the Agreement Date, the Sale Date and each Subsequent Sale Date (or as of the date specified below, as applicable):
Section 6.01
Servicing Agreements; Applicable Laws
.
The originator of
the Mortgage Loan and each prior owner of the Mortgage Servicing Rights has each performed its obligations in all material respects in accordance with the terms of the related Mortgage Note, Mortgage, Servicing Agreements and Applicable Law.
Section 6.02
Related Escrow Accounts
.
All Related Escrow Accounts are being, and have been, maintained in accordance with Applicable Law and in accordance with the Servicing Agreements and the terms of the related Mortgages and other Mortgage
Loan documents; and, except as to payments which are past due under Mortgage Notes, all balances required by the Mortgages or other Mortgage Loan Documents to be paid to Seller for the account of the Mortgagors are on deposit in the appropriate
Related Escrow Account.
Section 6.03
Accuracy of Servicing Information
.
The information in the Data Tape dated as of November 30, 2012 is true and correct in all material respects as of the date specified
therein; provided that if there is no date specified in the Data Tape, as of November 30, 2012.
Section 6.04
No
Purchaser Responsibility
.
Purchaser shall have no responsibility, liability or other obligation whatsoever under any
Servicing Agreement or with respect to any Mortgage Loan, or to make any advance thereunder, or to pay any servicing fees.
Section 6.05
Location of Credit Files
.
All of the Mortgage Loan Documents are or upon delivery by Bank of America will be held by Custodians, or if held by the Seller, in the locations specified in
Exhibit E
, unless temporarily removed
for enforcement purposes in the normal course of servicing. Seller will notify Purchaser in writing of any changes in locations of the Mortgage Loan Documents held by the Seller in
Exhibit E
.
28
Section 6.06
Representations Concerning the Current Excess Servicing Spread
.
(a) Seller has not assigned, pledged, conveyed, or encumbered the Current Excess Servicing Spread to any other Person and
immediately prior to the sale of the Current Excess Servicing Spread on the Sale Date or Subsequent Sale Date, as applicable, Seller was the sole owner of the Current Excess Servicing Spread and had good and marketable title thereto, free and clear
of all Liens, and no Person, other than Purchaser, has any Lien on the Current Excess Servicing Spread. No security agreement, financing statement, equivalent security or lien instrument or continuation statement covering all or any part of the
Current Excess Servicing Spread which has been signed by Seller or which Seller has authorized any other Person to sign or file or record, is on file or of record with any public office, except such as may have been terminated or filed by or on
behalf of Purchaser.
(b) The sale and grant of a security interest by Seller to Purchaser of and on the Current Excess
Servicing Spread does not and will not violate any Requirement of Law, the effect of which violation is to render void or voidable such assignment.
(c) As contemplated under
Section 3.07(b)
, upon the filing of financing statements on Form UCC-1 naming Purchaser as “Secured Party” and Seller as “Debtor”, and describing
the Current Excess Servicing Spread, in the jurisdictions and recording offices listed on
Exhibit I
attached hereto, the sale and security interests granted hereunder in the Current Excess Servicing Spread will constitute perfected first
priority security interests under the UCC in all right, title and interest of Purchaser in, to and under the Current Excess Servicing Spread.
(d) Purchaser has and will continue to have the full right, power and authority to pledge the Current Excess Servicing Spread, and the Current Excess Servicing Spread may be further assigned without any
requirement.
(e) Each Servicing Agreement constitutes an Eligible Servicing Agreement.
29
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to
Seller to enter into this Agreement, Purchaser represents and warrants to Purchaser as of the Agreement Date, the Sale Date and each Subsequent Sale Date (or as of the date specified below, as applicable):
Section 7.01
Due Organization and Good Standing
.
Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Purchaser is qualified to transact business in each jurisdiction in
which such qualification is deemed necessary.
Section 7.02
Authority and Capacity
.
Purchaser has all requisite limited liability company power, authority and capacity to enter into this Agreement and each other
Transaction Document to which it is a party and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other Transaction Document to which it is a party and the consummation of the
transactions contemplated hereby and thereby have each been duly and validly authorized by all necessary limited liability company action. This Agreement constitutes, and each other applicable Transaction Document to which Purchaser is a party
constitutes or will constitute, a valid and legally binding agreement of Purchaser enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Purchaser of this Agreement or such other
Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.
Section 7.03
Effective Agreements
.
The execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party by Purchaser, its compliance with the terms hereof and thereof and the consummation of
the transactions contemplated hereby and thereby will not violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation or limited liability company
agreement, any instrument or agreement to which it is a party or by which it is bound, or any state or federal law, rule or regulation or any judicial or administrative decree, order, ruling or regulation applicable to it, in each case which
violation, conflict, breach or requirement would reasonably be expected to have a material adverse effect on Purchaser’s ability to perform its obligations under this Agreement and any other Transaction Document to which it is a party.
30
Section 7.04
Sophisticated Investor
.
Purchaser is a sophisticated investor and its decision to acquire the Current Excess Servicing Spread is based upon Purchaser’s own
independent experience, knowledge, due diligence and evaluation of this transaction. Purchaser has relied solely on such experience, knowledge, due diligence and evaluation and has not relied on any oral or written information provided by Seller
other than the representations and warranties made by Seller herein.
Section 7.05
No Actions
There shall not have been commenced or, to the best of Purchaser’s knowledge, threatened any action, suit or proceeding against the
Purchaser that will likely materially and adversely affect the consummation of the transactions contemplated hereby.
ARTICLE VIII
SELLER COVENANTS
Seller covenants and agrees as follows:
Section 8.01
Servicing Obligations
.
(a) Seller shall (or, prior to the Servicing Transfer Date, shall cause the Interim Servicer to,) pay, perform and discharge all liabilities and obligations relating to the Servicing, including all
liabilities and obligations under the Mortgage Loan Documents, Applicable Law and the Servicing Agreements; and shall pay, perform and discharge all the rights, obligations and duties with respect to the Related Escrow Accounts as required by the
Servicing Agreements, the Mortgage Loan Documents, all Applicable Law and in accordance with the Purchase and Sale Agreement.
(b) Under no circumstances shall Purchaser be responsible for the Servicing acts and omissions of Seller or any other servicer or any
originator of the Mortgage Loans, or for any servicing related obligations or liabilities of any servicer in the Servicing Agreements or of any Person under the Mortgage Loan Documents, or for any other obligations or liabilities of Seller or Bank
of America.
(c) Any deferred servicing fees purchased by the Seller with respect to the Mortgage Loans under the Purchase and
Sale Agreement shall only be retained by Seller after all Servicing Spread Collections with respect to the applicable Mortgage Loan for the related Collection Period (and any unpaid Servicing Spread Collections from prior Collection Periods) have
been remitted to the Third Party Controlled Current Spread Custodial Account.
31
(d) Subject to a nonrecoverability determination made pursuant to the related Servicing
Agreement, the Seller shall advance the full amount of principal and interest on delinquent Mortgage Loans for each Collection Period, including the related servicing fee.
(e) Upon termination of any Servicing Agreement, Seller shall remain liable to Purchaser and the applicable Owner for all liabilities and obligations incurred by the servicer or its designee while Seller
or its designee was acting as the servicer thereunder.
(f) Seller shall conduct quality control reviews of its servicing
operations in accordance with industry standards.
Section 8.02
Cooperation; Further Assurances
.
Seller shall cooperate with and assist Purchaser, as reasonably requested, in carrying out the purposes of this Agreement. Seller will
cooperate and assist Purchaser, as reasonably requested and at the reasonable expense of Purchaser (except as otherwise provided in Section 12.01), in obtaining consents from any Owner as may be required or advisable to assign, transfer,
deliver, hypothecate, pledge, subdivide, finance or otherwise deal with the Current Excess Servicing Spread. If Seller is terminated under any Servicing Agreement, Seller shall cooperate fully and at its own expense in transferring such Servicing.
If Purchaser assigns all or any portion of the Current Excess Servicing Spread or its other rights under this Agreement to a Third Party Assignee, Seller will cooperate and assist any Third Party Assignee in drafting and entering into a Third Party
Current Spread Agreement in accordance with
Section 12.16
.
Section 8.03
Financing Statements
.
Seller hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing
statements, in any jurisdictions and with any filing offices as Purchaser may determine, in its sole discretion, are necessary or advisable to perfect the sale of the Current Excess Servicing Spread and the security interests granted to Purchaser in
connection herewith. Seller agrees to execute financing statements in form reasonably acceptable to Purchaser and Seller at the request of Purchaser in order to reflect Purchaser’s interest in the Current Excess Servicing Spread, the Third
Party Controlled Current Spread Custodial Account and the Current Spread Reserve Account.
Section 8.04
Supplemental
Information
.
From time to time after the Sale Date or the Subsequent Sale Date, as applicable, Seller promptly shall
furnish Purchaser such incidental information, which is reasonably available to Seller, supplemental to the information contained in the documents and schedules delivered pursuant to this Agreement, as may reasonably be requested to monitor
performance of the Mortgage Loans and the payment of the Current Excess Servicing Spread.
32
Section 8.05
Access to Information
.
From time to time, at such times as are reasonably convenient to Seller, Purchaser or its designees may conduct audits or visit and
inspect (a) any of the Mortgage Loans or places where the Credit Files are located, to examine the Credit Files, internal controls and procedures maintained by Seller and its agents, and take copies and extracts therefrom, and to discuss
Seller’s affairs with its officers, employees and, upon notice to Seller, independent accountants. Seller hereby authorizes such officers, employees and independent accountants to discuss with Purchaser the affairs of Seller and (b) the
Seller’s servicing facilities for the purpose of satisfying the Purchaser that Seller, has the ability to service the Mortgage Loans related to Mortgage Servicing Rights in accordance with the standards set forth in the applicable Servicing
Agreement. Any audit provided for herein will be conducted in accordance with Seller’s rules respecting safety and security on its premises, in accordance with applicable privacy and confidentiality laws and without materially disrupting
operations.
Section 8.06
Home Affordable Modification Program
.
With respect to any Mortgage Loans that have been modified or that are or will be in a modification trial period as part of the U.S.
Department of the Treasury’s Home Affordable Modification Program (“
HAMP
”) (such Mortgage Loans, the “
HAMP Loans
”), Seller represents and warrants that it will continue to service such HAMP Loan in accordance
with the HAMP terms and will ensure the timely compliance and filing of any appropriate HAMP documentation with the applicable regulator.
Section 8.07
Distribution Date Data Tapes and Reports
.
Seller shall
deliver the following to Purchaser two Business Days prior to each Distribution Date:
(a) An Electronic Data File in form and
substance acceptable to Purchaser containing, for each Mortgage Loan, principal, interest and Servicing Spread Collections, and delinquency status (i.e. 30, 60, 90, FCL, REO) as of the last day of the prior Collection Period;
(b) A Summary Activity Report with respect to the Mortgage Loans with respect to the prior Collection Period containing:
(i) aggregate beginning principal balance as of the first and last date of the Collection Period,
(ii) aggregate regular principal collected,
33
(iii) aggregate noncash principal,
(iv) aggregate interest collected,
(v) aggregate liquidation principal,
(vi) aggregate curtailments,
(vii) liquidations,
(viii) short sales,
(ix) (1) for each Mortgage Loan, the principal balance, the applicable servicing spread, the final maturity date, the
mortgage interest rate, the loan-to-value ratio and the FICO score, and (2) for each Mortgage Loan that was refinanced by a lender other than Seller or an affiliate thereof, to the extent such information is known to Seller in the ordinary
course of business and the collection and delivery of such information does not impose any additional and undue burden on Seller, the name of such lender and the mortgage interest rate of the newly originated residential mortgage loan;
(c) A Delinquency Report with respect to the Mortgage Loans containing:
(i) The aggregate outstanding principal balance of the Mortgage Loans and percentages of the aggregate outstanding
principal balance of the Mortgage Loans in each of the following categories as of the last day of the prior Collection Period:
(1) Current Mortgage Loans,
(2) 0-29 days delinquent,
(3) 30-59 days delinquent,
(4) 60-89 days delinquent,
34
(5) 90 days or more delinquent,
(6) Mortgage Loans in Foreclosure,
(7) Mortgage Loans with respect to which the related Mortgaged Properties have become real estate owned properties, and
(8) Mortgage Loans in which the Mortgagor is in bankruptcy;
(ii) For each of the above categories, a roll report showing the migration of Mortgage Loans in such category from the
last day of the second prior Collection Period;
(d) A Disbursement Report for such Distribution Date containing:
(i) The Servicing Spread Collections for the prior Collection Period,
(ii) The Base Servicing Fee paid to Seller,
(iii) The amount of the Current Excess Servicing Spread paid to Purchaser,
(iv) The amount of funds, if any, transferred to the Current Spread Reserve Account,
(v) The amount of Purchaser Indemnitees, if any, paid from each of the Third Party Controlled Current Spread Custodial
Account or the Current Spread Reserve Account, and
(vi) The amount of funds paid to Seller from the Current
Spread Reserve Account.
35
Section 8.08
Financial Statements and Officer’s Certificates
.
(a) If Seller’s financial statements are not filed with the U.S. Securities and Exchange Commission and are not publicly available,
Seller shall deliver to Purchaser copies of Seller’s most recent audited quarterly financial statements within 45 days of the end of each of Seller’s fiscal quarters and its most recent audited annual financial statements within 90 days of
the end of each of Seller’s fiscal years.
(b) Within 45 days of the end of each of Seller’s fiscal quarters, Seller
shall deliver to Purchaser a certificate from a duly authorized officer of Seller certifying (i) whether or not Seller has a Consolidated Tangible Net Worth of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any
issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries (and shall provide a calculation of its determination of its Consolidated Tangible Net Worth) and
(ii) whether or not Seller (considered together with its consolidated subsidiaries) is in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
Section 8.09
Monthly Management Calls
.
Within five Business Days after each Distribution Date, Seller shall make its management team and other appropriate officers and employees available to Purchaser to discuss by telephone the performance of
the Mortgage Loans and the performance of the parties under the Transaction Documents.
Section 8.10
Timely Payment
of Owner Obligations
.
Seller shall pay all of its obligations to the Owners in a timely manner so as to avoid exercise of
any right of set-off by any Owner against Seller.
Section 8.11
Servicing Agreements
.
After the Serving Transfer Date, Seller will service the Mortgage Loans in accordance with Accepted Servicing Practices and will perform
its obligations in all material respects in accordance with the Servicing Agreements and Applicable Law. In particular, after the Servicing Transfer Date, Seller shall comply with any advancing obligation under the Servicing Agreements. Without the
express written consent of Purchaser (which consent may be withheld in its absolute discretion), Seller shall not (a) cancel, terminate or amend any Mortgage Servicing Rights, (b) expressly provide any required consent to any termination,
amendment or modification of any Servicing Agreements either verbally or in writing, (c) expressly provide any required consent to any termination, amendment or modification of any other servicing agreements or enter into any other agreement or
arrangement with any Owner that may be reasonably material to Purchaser either verbally or in writing or (d) take any other action in connection with any such Servicing Agreement that would impair in any material respect the
36
value of the interests or rights of the Purchaser hereunder. Seller shall conduct its business and perform its obligations under the Servicing Agreements in a manner such that no Owner will have
cause to terminate any Servicing Agreement. Notwithstanding the foregoing, in no event will the prohibitions contained in this
Section 8.11
apply to any amendments or modifications of the Servicing Agreements applicable to Mortgage Loans
owned by Seller which do not affect the Current Excess Servicing Spread with respect to such Mortgage Loans and are not reasonably material to the Purchaser.
The Seller shall monitor the obligations of the Interim Servicer to service and administer the Mortgage Loans in accordance with the terms of the Servicing Agreement.
Section 8.12
Transfer of Mortgage Servicing Rights
.
If Seller intends to assign, transfer or sell any of its Mortgage Servicing Rights to a replacement servicer, to the extent permitted by applicable law, (a) Seller shall consult with Purchaser and
Purchaser shall participate in the assignment, transfer and sale of such Mortgage Servicing Rights, and (b) Seller shall obtain the written consent of Purchaser, granted by the Purchaser in its sole discretion, prior to any assignment, transfer
or sale thereof.
Section 8.13
Consents to Transaction Documents
.
Seller shall not terminate, amend, amend and restate, modify or waive any conditions or provisions of any Transaction Document without the
express written consent of Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned.
Section 8.14
Accounts
.
Seller shall inform the Mortgagors of Mortgage Loans at its own expense to remit their mortgage payments to the Lockbox Account, and any change in such instructions shall only be permitted with the
express written consent of Purchaser.
Section 8.15
Notification of Certain Events
.
Seller shall promptly notify Purchaser of any event which, with the passage of time, could reasonably be expected to result in a
termination of any servicing agreement between Seller and any Owner. Seller shall provide Purchaser with copies of any notices from any Owner of any breach, potential breach, default or potential default by Seller under any servicing agreement
between Seller and such Owner, and with copies of any notices from any Owner of any termination, potential termination or threatened termination of any servicing agreement entered into between Seller and such Owner. Seller shall promptly forward
copies of any material notices received from any Owner or from any Governmental Authority with respect to the Mortgage Loans. Seller shall provide Purchaser with (a) copies of all amendments to the Transaction Documents, the Servicing
Agreements and the agreements relating to Seller’s acquisition of the Mortgage Servicing Rights, and (b) copies of any other agreements Seller enters into with any Owner that may be reasonably material to Purchaser, in each case, promptly
after execution thereof.
37
Section 8.16
Financing; Pledge of Current Excess Servicing Spread
.
Seller shall not pledge, obtain Seller financing for, or otherwise permit any Lien of any creditor of Seller to exist on, any portion of
the Servicing Spread Collections without the prior written consent of Purchaser. Seller’s financial statements shall contain footnotes indicating that the Current Excess Servicing Spread has been sold, and Seller does not maintain any ownership
interest therein.
Section 8.17
Existence, etc
.
Seller shall:
(a) preserve and maintain its legal existence, good standing and all of its material licenses required to service the Mortgage Loans;
(b) comply with the requirements of all Applicable Laws, rules, regulations and orders of Governmental Authorities
(including, truth in lending and real estate settlement procedures) if failure to comply with such requirements could be reasonably likely (either individually or in the aggregate) to have a material adverse effect on its ability to perform its
obligations hereunder or under any other Transaction Document;
(c) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied, and maintain adequate accounts and reserves for all taxes (including income taxes), all depreciation, depletion, obsolescence and amortization of its properties, all
contingencies, and all other reserves;
(d) not move its chief executive office or chief operating office from the addresses
referred to in
Exhibit I
unless it shall have provided Purchaser not less than thirty (30) days prior written notice of such change;
(e) pay and discharge all material taxes, assessments and governmental charges or levies imposed on it or its income or profits or on any of its property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained. Seller and its subsidiaries shall file on a timely
basis all federal, and material state and local tax and information returns, reports and any other information statements or schedules required to be filed by or in respect of it;
38
(f) keep in full force and effect the provisions of its charter documents, by-laws,
operating agreements or similar organizational documents in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Documents;
(g) keep in full force and effect all agreements and instruments by which it or any of its properties may be bound and all applicable
decrees, orders and judgments, in each case to the extent reasonably necessary to perform its obligations hereunder or under any other Transaction Document; and
(h) comply with its obligations under the Transaction Documents to which it is a party.
Section 8.18
Consent to Sub-Servicing
.
Subject to the rights of the
Owners, and except as contemplated under the Purchase and Sale Agreement with respect to transition services hereunder, Seller will not permit any Person other than Seller to service or sub-service the Mortgage Loans without the prior written
consent of Purchaser, in each case other than (i) the Interim Servicer (prior to the Servicing Transfer Date) and (ii) third-party vendors customarily employed by servicers in the ordinary course of business in accordance with prudent
mortgage servicing practices.
Section 8.19
Nonpetition Covenant
.
Seller shall not, prior to the date that is one year and one day after the payment in full of the Current Excess Servicing Spread,
petition or otherwise invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against Purchaser under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of Purchaser or any substantial part of its property, or ordering the winding up or liquidation of the affairs of Purchaser.
Section 8.20
Data Tape; Schedule of Mortgage Loans
.
The information
in the Data Tape delivered to Purchaser on the Sale Date or the Subsequent Sale Date, as applicable, will be true and correct in all material respects as of the date specified. Seller shall maintain the Schedule of Mortgage Loans, which shall be
updated as of the Sale Date or the Subsequent Sale Date, as applicable. The information in the Schedule of Mortgage Loans pertaining to the Mortgage Loans and the Mortgage Servicing Rights will be true and correct in all material respects as of the
date specified.
39
Section 8.21
Insurance
.
The Seller shall maintain (a) general liability insurance, (b) errors and omission insurance or blanket bond coverage and
(c) fidelity bond insurance, in each case, from reputable companies with coverage in amounts customarily maintained by such similarly situated entities in the same jurisdiction and industry as the Seller.
Section 8.22
Defense of Title
.
The Seller warrants and will defend the right, title and interest of the Purchaser in and to the Current Excess Servicing Spread against all adverse claims and demands.
Section 8.23
Refinancing of Mortgage Loans
.
Each agreement or arrangement that Seller enters into to purchase Mortgage Servicing Rights shall be entered into on an arm’s length contractual basis in the ordinary course of business and shall
have market terms applicable for the type of Mortgage Servicing Rights to be acquired thereby. Seller shall not enter into any agreement or arrangement with a third party intended to encourage the refinancing of any Mortgage Loan by any Person other
than Seller.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations
of Purchaser under this Agreement and under the Assignment Agreement are subject to the satisfaction of the following conditions as of the Sale Date or as of each Subsequent Sale Date, as applicable:
Section 9.01
Correctness of Representations and Warranties
.
The representations and warranties made by Seller in this Agreement and each other Transaction Document to which Seller is a party to be
made on or prior to the Sale Date or the Subsequent Sale Date, as applicable, are true and correct in all material respects; provided however, that, if the representations and warranties made in Sections 5.03(b) and 6.06(e) hereof with respect to
any Servicing Agreement are not true and correct in all material respects on the Sale Date or the Subsequent Sale Date, as applicable, unless otherwise agreed in writing by Purchaser, (a) the Current Excess Servicing Spread for the Mortgage
Loans relating to the affected Servicing Agreements shall not be sold to Purchaser and (b) such Servicing Agreements shall be removed from the definition of Servicing Agreements. In the event that the representations and warranties made in
Sections 5.03(b) and 6.03(e) hereof are not true and correct in all material respects on the Sale Date or the Subsequent Sale Date, as applicable, with
40
respect to a Servicing Agreement (a) unless the Purchaser elects to waive the failure of such representations and warranties with respect to any such Servicing Agreement and purchase the
related Current Excess Servicing Spread, Seller shall have no further obligations to Purchaser with respect to such Servicing Agreement or the related Mortgage Loans and (b) the failure of such representations and warranties to be true and
correct in all material respects on the Sale Date or the Subsequent Sale Date, as applicable, with respect to a Servicing Agreement or any number of Servicing Agreements shall not be considered a failure of the condition precedent contained in this
Section 9.01 for the consummation of the transactions contemplated hereby with respect to those Servicing Agreements that do satisfy this condition.
Section 9.02
Compliance with Conditions
.
All of the terms, covenants,
conditions and obligations of this Agreement and each other Transaction Document required to be complied with and performed by Seller and Bank of America on or prior to the Sale Date or the Subsequent Sale Date, as applicable, shall have been duly
complied with and performed in all material respects.
Section 9.03
Corporate Resolution
.
Receipt by the Purchaser of a certified copy of the Seller’s corporate resolution approving the execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, together with such other certificates of incumbency and other evidences of corporate authority as Purchaser or its counsel may
reasonably request.
Section 9.04
No Material Adverse Change
.
From the Agreement Date, there shall not have been any change to Seller’s financial or operating condition, or in the Mortgage
Servicing Rights, the Mortgage Loans or the Related Escrow Accounts that in each case will likely have a material adverse effect the consummation of the transactions contemplated hereby or the Current Excess Servicing Spread.
Section 9.05
Consents
.
Seller shall have obtained all consents, approvals or other requirements of third parties required for the consummation of the transactions contemplated by the Transaction Documents that are to be
obtained on or prior to the Sale Date or the Subsequent Sale Date, as applicable. No consents are required for the sale of the Current Excess Servicing Spread from Seller to Purchaser. All actions of all Governmental Authorities required to
consummate the transactions contemplated by the Transaction Documents and the documents related thereto shall have been obtained or made.
41
Section 9.06
Delivery of Transaction Documents
.
Seller shall have delivered to the Purchaser copies of each executed Transaction Document that is to be entered into on or prior to such
date and each of the items required to be delivered pursuant to Section 2.04 hereof.
Section 9.07
Certificate
of Seller
.
Seller shall have provided Purchaser a certificate, substantially in the form attached hereto as
Exhibit
C
, signed by an authorized officer of Seller dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each of Seller’s representations and warranties made in this Agreement and each
other Transaction Document to which Seller is a party is true and correct in all material respects as of such date; (b) all of the terms, covenants, conditions and obligations of this Agreement and each other Transaction Document to which
Seller is a party that are required to be complied with and performed by Seller at or prior to the Sale Date or the Subsequent Sale Date, as applicable, have been duly complied with and performed in all material respects; (c) the conditions set
forth in
Section 9.04
and
Section 9.05
have been satisfied; and (d) as of the Sale Date or the Subsequent Sale Date, as applicable, Seller has a Consolidated Tangible Net Worth of at least the sum of
(x) $250,000,000 and (y) 50% of the proceeds from any issuance of equity on or after the date hereof by Seller, Nationstar Mortgage Holdings Inc. or any of Seller’s consolidated subsidiaries, and the Seller (considered together with
the Seller’s consolidated subsidiaries) is not in default in any indebtedness in excess of $10,000,000 (individually or in the aggregate).
Section 9.08
Valuation
.
Purchaser shall have received an opinion
reasonably satisfactory to Purchaser that the Base Servicing Fee of the Mortgage Loans and the Purchase Price of the Current Excess Servicing Spread is fair and reasonable.
Section 9.09
Opinions of Counsel
.
Seller’s counsel shall have
delivered the Opinions of Counsel required pursuant to
Section 2.04(a)(ix)
,
Section 2.04(a)(x)
and
Section 2.04(a)(xi)
.
Section 9.10
Acquisition of Mortgage Servicing Rights by Seller
.
Seller shall have acquired the Mortgage Servicing Rights and the other Purchased Assets from Bank of America pursuant to the Purchase and
Sale Agreement as of the Sale Date or the Subsequent Sale Date, as applicable.
42
Section 9.11
Good Standing Certificate of Seller
.
Seller shall have provided Purchaser a certificate of good standing of Seller, dated as of a date within five (5) Business Days prior
to the Sale Date or the Subsequent Sale Date, as applicable.
Section 9.12
No Actions or Proceedings
.
No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit
the consummation of, or to invalidate, any of the transactions contemplated by this Agreement and the documents related hereto in any material respect.
Section 9.13
Fees, Costs and Expenses
.
The fees, costs and expenses
payable by the Seller on or prior to the Sale Date or the Subsequent Sale Date, as applicable pursuant to Section 12.01 hereof and any other Transaction Document shall have been paid.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the satisfaction of the following conditions as of the Sale Date or the Subsequent Sale Date, as applicable:
Section 10.01
Correctness of Representations and Warranties
.
The representations and warranties made by Purchaser in this Agreement to be made on or prior to the Agreement Date, Sale Date or the
Subsequent Sale Date, as applicable, are true and correct in all material respects as of the date thereof.
Section 10.02
Compliance with Conditions
.
All of the terms, conditions, covenants and obligations of this Agreement required to be complied with and performed by Purchaser on or prior to the Sale Date or the Subsequent Sale Date, as applicable,
shall have been duly complied with and performed in all material respects as of the date thereof.
43
Section 10.03
Corporate Resolution
.
As of the date hereof, Seller shall have received from Purchaser a certified copy of its corporate resolution approving the execution and
delivery of this Agreement and the consummation of the transactions contemplated hereby, together with such other certificates of incumbency and other evidences of corporate authority as Seller or its counsel may reasonably request.
Section 10.04
No Material Adverse Change
.
Since the Agreement Date, there shall not have been any change to Purchaser’s financial condition that will likely materially and adversely affect the consummation of the transactions contemplated
hereby.
Section 10.05
Certificate of Purchaser
.
Purchaser shall have provided Seller a certificate, substantially in the form attached hereto as
Exhibit D
, signed by an authorized
officer of Purchaser dated as of such date, applicable to the transactions contemplated by this Agreement, to the effect that: (a) each of Purchaser’s representations and warranties made in this Agreement is true and correct in all
material respects as of such date; (b) all of the terms, covenants, conditions and obligations of this Agreement required to be complied with and performed by Purchaser at or prior to the Sale Date or the Subsequent Sale Date, as applicable,
have been duly complied with and performed in all material respects; and (c) the condition set forth in
Section 10.04
has been satisfied.
Section 10.06
Good Standing Certificate of Purchaser
.
Purchaser
shall have provided Seller a certificate of good standing of Purchaser, dated as of a date within five (5) Business Days prior to the Sale Date or the Subsequent Sale Date, as applicable.
ARTICLE XI
INDEMNIFICATION; CURE
Section 11.01
Indemnification by Seller
.
(a) Seller shall indemnify,
defend and hold Purchaser, its affiliates and its and their respective directors, managers, officers, employees, agents, representatives and advisors (the “
Purchaser Indemnitees
”) harmless from and shall reimburse the applicable
Purchaser Indemnitee for any Losses suffered or incurred by any Purchaser Indemnitee after the Sale Date or the Subsequent Sale Date, as applicable, which result from:
(i) Any material breach of a representation or warranty by Seller, or non-fulfillment of any covenant or obligation of
Seller, contained in this Agreement or the Assignment Agreement;
44
(ii) Any servicing act or omission of any prior servicer relating to any
Mortgage Loan and any act or omission of any party related to the origination of any Mortgage Loan;
(iii) Any
act, error or omission of Seller in servicing any of the Mortgage Loans, including improper action or failure to act when required to do so;
(iv) Any exercise of any rights of setoff or other netting arrangements by any Owner against Seller that results in a decrease in Servicing Agreements termination payments due to Seller with respect to
the Mortgage Loans from such Owner or in a shortfall of funds to pay the Current Excess Servicing Spread;
(v)
Any breach by Seller of the Purchase and Sale Agreement; and
(vi) Litigation, proceedings, governmental
investigations, orders, injunctions or decrees resulting from any of the items described in
Section 11.01(a)(i) – (v)
above;
provided
,
however
, that the applicable Purchaser Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any such losses, damages, deficiencies, claims, causes
of action or expenses as reasonably requested by Seller, which such failure of mitigation shall not relieve Seller of its indemnification obligations in this
Section 11.01
but may affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Purchaser Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be reimbursed by Seller as part of its indemnification
obligations in this
Section 11.01
. Purchaser shall notify Seller promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations, orders, injunctions, decrees or any third party claims
subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Seller shall have the right to assume the defense of such Third Party Claim using counsel of its
choice reasonably satisfactory to the applicable Purchaser Indemnitee, but may not enter into any settlement without the prior written consent of the applicable Purchaser Indemnitee, which shall not be unreasonably withheld. A Purchaser Indemnitee
shall have the right to select separate counsel and to otherwise separately defend itself at its own expense but shall not consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the prior
written consent of Seller, which consent shall not be unreasonably withheld. Any exercise of such rights by a Purchaser Indemnitee shall not relieve Seller of its obligations and liabilities under this
Section 11.01
or any other
provision of this Agreement. With respect to any Third Party Claim subject to
45
indemnification under this Agreement, the applicable Purchaser Indemnitee shall be required to cooperate in good faith with Seller to ensure the proper and adequate defense of such Third-Party
Claim. For the avoidance of doubt, Seller’s obligations for Purchaser Indemnitees shall not be limited to funds available in the Third Party Controlled Current Spread Custodial Account or the Current Spread Reserve Account.
(b)
REIT Requirements
. Notwithstanding anything in
Section 11.01(a)
above, in the event that counsel or independent
accountants for the Protected REIT determine that there exists a material risk that any amounts due to Purchaser under
ARTICLE XI
hereof would be treated as Nonqualifying Income upon the payment of such amounts to Purchaser, the amount paid
to Purchaser pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to Purchaser in such year without causing the Protected REIT to fail to meet the REIT Requirements for such year, determined as if the
payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the Protected REIT. If the amount payable for any tax year under the preceding sentence is less than the amount which Seller would otherwise
be obligated to pay to Purchaser pursuant to
ARTICLE XI
of this Agreement (the “
Expense Amount
”), then: (1) Seller shall place the Expense Amount into an escrow account (the “
Expense Escrow Account
”)
using an escrow agent and agreement reasonably acceptable to Purchaser and shall not release any portion thereof to Purchaser, and Purchaser shall not be entitled to any such amount, unless and until Purchaser delivers to Seller, at the sole option
of the Protected REIT, (i) an opinion (an “
Expense Amount Tax Opinion
”) of the Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a
letter (an “
Expense Amount Accountant’s Letter
”) from the Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to Purchaser without causing the Protected REIT to fail to meet
the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to the Protected REIT indicating that the receipt of any Expense Amount hereunder will not cause the Protected REIT to fail to satisfy the
REIT Requirements (a “
REIT Qualification Ruling
” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a “
Release Document
”); and (2) pending the delivery of a
Release Document by Purchaser to Seller, Purchaser shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement (an “
Indemnity Loan Agreement
”) reasonably acceptable
to Purchaser that (i) requires Seller to lend Purchaser immediately available cash proceeds in an amount equal to the Expense Amount (an “
Indemnity Loan
”), and (ii) provides for (A) a commercially reasonable interest
rate and commercially reasonable covenants, taking into account the credit standing and profile of Purchaser or any guarantor of Purchaser, including the Protected REIT, at the time of such Loan, and (B) a 15 year maturity with no periodic
amortization.
Section 11.02
Indemnification by Purchaser.
Purchaser shall indemnify, defend and hold Seller, its affiliates and its and their respective directors, managers, officers, employees,
agents, representatives and advisors (the “
Seller Indemnitees
”) harmless from and shall reimburse the applicable Seller Indemnitee for any Losses suffered or incurred by any Seller Indemnitee which result from:
46
(a) Any material breach of a representation or warranty by Purchaser, or non-fulfillment of
any covenant or obligation of Purchaser contained in this Agreement; and
(b) Litigation, proceedings, governmental
investigations, orders, injunctions or decrees, the basis for which occurred after the Agreement Date, resulting from any of the items described in
Section 11.02(a)
above;
provided
,
however
, that the applicable Seller Indemnitee has taken all commercially reasonable and appropriate actions to mitigate any such losses, damages, deficiencies, claims, causes of
action or expenses as reasonably requested by Purchaser, which such failure of mitigation shall not relieve Purchaser of its indemnification obligations in this
Section 11.02
but may affect the amount of such obligation; and
further
provided
, that any Losses incurred by the Seller Indemnitee pursuant to any attempt to mitigate any such losses, damages, deficiencies, claims, causes of action or expenses shall be reimbursed by Purchaser as part of its indemnification
obligations in this
Section 11.02
. Seller shall notify Purchaser promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations, orders, injunctions, decrees or any third party claims
subject to indemnification under this Agreement (each, a “
Third Party Claim
”). Upon receipt of such notice of a Third Party Claim, Purchaser shall have the right to assume the defense of such Third Party Claim using counsel of its
choice reasonably satisfactory to the applicable Seller Indemnitee, but may not enter into any settlement without the prior written consent of Purchaser, which shall not be unreasonably withheld. A Seller Indemnitee shall have the right to select
separate counsel and to otherwise separately defend itself but shall not consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of Purchaser, which consent shall not be
unreasonably withheld. Any exercise of such rights by a Seller Indemnitee shall not relieve Purchaser of its obligations and liabilities under this
Section 11.02
or any other provision of this Agreement. With respect to any Third Party
Claim subject to indemnification under this Agreement, the applicable Seller Indemnitee shall be required to cooperate in good faith with Purchaser to ensure the proper and adequate defense of such Third-Party Claim.
Section 11.03
Award of Damages
.
(a)
(i) In the event that an award of damages or other payment
is received by a Party or a designee of a Party as a result of a claim, judgment, settlement or arbitration (including payment pursuant to a guaranty of Bank of America by any other Person) of a legal dispute that occurs either on or after the
execution of the Purchase and Sale Agreement in connection with the enforcement of the Purchase and Sale Agreement in the event of a breach by Bank of America of any representations and warranties or covenants where such breach had an adverse impact
on the value of the Total Servicing Spread, the Current Excess Servicing Spread Percentage of that award shall be distributed to
47
Purchaser or its designee and the remainder of that award shall be distributed to Seller or its designee
(ii) In the event that an award of damages or other payment is received by a Party or a designee of a Party as a result of a claim, judgment, settlement or arbitration (including payment pursuant to a
guaranty of Bank of America by any other Person) of a legal dispute that occurs either on or after the execution of the Purchase and Sale Agreement in connection with the enforcement of the Purchase and Sale Agreement in the event of a breach by
Bank of America of any representations and warranties or covenants where such breach did not have an adverse impact on the value of the Total Servicing Spread, the entirety of the award shall be distributed to Seller or its designee.
(b) In the event that a Party or designee of a Party receives an award pursuant to
Sections 11.03(a)(i) or (ii)
and some or
all of that amount is to be distributed to the other Party or a designee of the other Party pursuant to
Sections 11.03(a)(i) or (ii)
, the Party or the Party’s designee in possession of the applicable amount shall promptly notify the
other Party or the other Party’s designee as to the award’s existence and request that the other Party or other Party’s designee, as applicable, designate an account to which the amount shall be remitted. Once the necessary account
information has been provided by the appropriate Party or designee of a Party, the applicable amount shall be remitted by wire transfer of immediately available federal funds to the account so designated.
(c) Two Business Days prior to each Distribution Date, the Seller shall, provide Purchaser with a monthly report of all claims and legal
disputes made or pending with Bank of America during the prior month, including the amounts of any claims made or resolved during such month.
Section 11.04 Other Rights
The Seller hereby acknowledges that, in addition
to its rights under this Agreement, the Purchaser is entitled to exercise its rights under the related Owner Consent.
ARTICLE XII
MISCELLANEOUS
Section 12.01
Costs and Expenses.
Except as otherwise provided herein, Purchaser and Seller shall share the expenses incurred by Seller and Purchaser or their
respective affiliates in connection with the transactions contemplated hereby, with the expense allocation percentage to be mutually agreed upon by the Parties.
48
Section 12.02
Confidentiality.
Each Party understands that in connection with this transaction, it has been furnished and will be furnished Non-Public Personal
Information and/or Personally Identifiable Financial Information (as those terms are defined in Sections 573.3(n) and (o) of the Office of Thrift Supervision Regulations on Privacy of Consumer Information published at 12 C.F.R. Chapter V
implementing Title V of the Gramm-Leach-Bliley Act), and other information regarding the policies and plans of the other Party and its affiliates that is and has been designated as confidential and proprietary, and each Party agrees that it will
maintain the confidentiality of such information and will not disclose it to others (except for its affiliates and its and their respective directors, managers, officers, employees, financing sources, agents, representatives and advisors), or use it
except in connection with the proposed acquisition contemplated by this Agreement, without the prior written consent of the Party furnishing such information. Information which is generally known in the industry concerning a Party or among such
Party’s creditors generally or which has been disclosed to the other Party by third parties who have a right to do so shall not be deemed confidential or proprietary information for these purposes. If Purchaser, any of its affiliates or any
officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with the transactions contemplated hereby, Purchaser agrees to provide Seller with prompt
notice of such request(s) so that Seller may seek an appropriate protective order and/or waive Purchaser’s compliance with the terms of this
Section 12.02
. If Seller, any of its affiliates or any officer, director, employee or agent
of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with the transactions contemplated hereby, Seller agrees to provide Purchaser with prompt notice of such request(s) so that
Purchaser may seek an appropriate protective order and/or waive Seller’s compliance with the terms of this Section 12.02. Notwithstanding the terms of this
Section 12.02
, if, in the absence of a protective order or the receipt
of a waiver hereunder, Purchaser or Seller is nonetheless, in the opinion of its counsel, compelled to disclose information concerning the other Party to any tribunal or else stand liable for contempt or suffer other censure or penalty, Purchaser or
Seller may disclose such information to such tribunal without liability hereunder. If the proposed acquisition is not consummated, each Party agrees to promptly return to the other, promptly upon request, all confidential materials, and all copies
thereof, which have been furnished to it in connection with the transactions contemplated hereby. For the avoidance of doubt, either Party may provide its shareholders and creditors with a general description of this Agreement and any related
transactions, and, subject to the provisions of this
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.03
Broker’s Fees.
Each party hereto represents and
warrants to the other that it has made no agreement to pay any finder’s, agent’s, broker’s or originator’s fee arising out of or in connection with the subject matter of this Agreement. In the event Purchaser has entered or
enters into an agreement
49
to pay any finder’s, agent’s, broker’s, advisor’s or originator’s fee arising out of or in connection with the subject matter of this Agreement, Purchaser shall be solely
responsible for all such fees. The parties hereto shall indemnify and hold each other harmless from and against any such obligation or liability and any expense incurred in investigating or defending (including reasonable attorneys’ fees) any
claim based upon the other party’s actions in connection with such obligation.
Section 12.04
Relationship of
Parties
.
The Parties intend that the transactions contemplated in the Transaction Documents constitute arms-length
transactions among third parties. Nothing contained in the Transaction Documents will establish any fiduciary, partnership, joint venture or similar relationship between or among the Parties except to the extent otherwise expressly stated therein.
Section 12.05
Survival of Representations and Warranties
.
Each party hereto covenants and agrees that the representations and warranties in this Agreement, and in any document delivered or to be
delivered pursuant hereto, shall survive the Agreement Date.
Section 12.06
Notices
.
All notices, requests, demands and other communications which are required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been given if personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid or by prepaid overnight delivery service:
(a) If to Purchaser, to:
Fortress Investment Group LLC
1345 Avenue of the Americas
New York, NY 10105
Attn: Brian Sigman
Chief Financial Officer
(212) 479-5343
(b) If to Seller, to:
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attn: Amar Patel
50
or to such other address as Purchaser or Seller shall have specified in writing to the
other.
Section 12.07
Waivers
.
Either Purchaser or Seller may, by written notice to the other:
(a) Extend the
time for the performance of any of the obligations or other transactions of the other; and
(b) Waive compliance with or
performance of any of the terms, conditions, covenants or obligations required to be complied with or performed by the other hereunder.
The waiver by Purchaser or Seller of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.
Section 12.08
Entire Agreement; Amendment
.
This Agreement and the related Transaction Documents constitute the entire agreement between the parties with respect to the transactions contemplated hereby and supersede all prior agreements with
respect thereto. This Agreement may be amended only in a written instrument signed by both Seller and Purchaser.
Section 12.09
Binding Effect
.
This Agreement shall inure to the benefit of and be binding upon the Parties and their successors and assigns. Nothing in this Agreement, express or implied, is intended to confer on any Person other than
the Parties and their successors and assigns, any rights, obligations, remedies or liabilities.
Section 12.10
Headings
.
Headings on the Articles and Sections in this Agreement are for reference purposes only and shall not be
deemed to have any substantive effect.
Section 12.11
Applicable Law
.
This Agreement shall be 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 the laws of the State of New York, except to the extent preempted by Federal law. This Agreement shall constitute a security agreement under the laws of the State of New
51
York. In addition to any other rights available under this Agreement or otherwise available at law or in equity but subject to the terms hereof, Purchaser shall have all rights and remedies of a
secured party with respect to the Collateral under the laws of the State of New York and under any other applicable law to enforce the assignments and security interests contained herein and, in addition, shall have the right, subject to compliance
with any mandatory requirements of applicable law and the terms of this Agreement, to sell or apply any rights and other interests with respect to the Collateral assigned or pledged hereby in accordance with the terms hereof at public and private
sale in accordance with the terms of this Agreement. The parties agree to waive trial by jury in the event of any dispute under this Agreement.
Section 12.12
Incorporation of Exhibits
.
The Exhibits attached hereto
shall be incorporated herein and shall be understood to be a part hereof as though included in the body of this Agreement.
Section 12.13
Counterparts
.
This Agreement may be executed in counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which, taken together, shall constitute one and the same
agreement.
Section 12.14
Severability of Provisions
.
If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid,
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 or enforceability of the other provisions of this
Agreement or of the rights of the parties hereto.
Section 12.15
Public Announcement
.
No public release or statement concerning the subject matter of this Agreement shall be made by either party without the express written
consent and approval of the other party, except as required by law or stock exchange rule, and provided that on and after the Agreement Date, either party may provide its shareholders and creditors with a general description of this Agreement and
any related transactions, and, subject to the provisions of
Section 12.02
, information obtained from the reports provided by Seller pursuant to
Section 8.07
.
Section 12.16
Assignment
.
(a) Seller may not assign, transfer, sell or subcontract all or any part of this Agreement, any interest herein, or any of the Seller’s interest in the Servicing Spread Collections, other than the
interest in the Total Servicing Spread sold hereby, without the prior
52
written consent of Purchaser,
provided
that any successor to Seller must assume Seller’s obligations under this Agreement. Purchaser shall have the unrestricted right to further
assign, transfer, deliver, hypothecate, pledge, subdivide or otherwise deal with its rights under this Agreement on whatever terms Purchaser shall determine without the consent of Seller; including the right to assign all or any portion of the
Current Excess Servicing Spread and to assign the related rights under this Agreement. If Purchaser assigns any rights under this Agreement to a third party (a “
Third Party Assignment
“), such third party (a “
Third Party
Assignee
“) shall enter into a new agreement (a “
Third Party Current Spread Agreement
“) with Seller or Seller’s assignee that provides such Third Party Assignee with the same rights with respect to the Current Excess
Servicing Spread that Purchaser would have had under this Agreement if the Third Party Assignment had not occurred.
(b)
Seller shall maintain a register on which it enters the name and address of each holder of the Current Excess Servicing Spread and each holder’s interest in the Current Excess Servicing Spread (the “
Holder Register
”) for each
transaction described in Section 12.16(a). The entries in the Holder Register shall be conclusive absent manifest error, and Seller shall treat each Person whose name is recorded in the Holder Register as an owner of the Current Excess
Servicing Spread for all purposes of this Agreement notwithstanding any notice to the contrary.
Section 12.17
Termination
.
If the Purchase and Sale Agreement is terminated, this Agreement shall be terminated concurrently
therewith, without any further action of either Party. In the event this agreement is terminated as set forth in the prior sentence or in Section 8.13, neither Party shall have any further obligations to the other Party hereunder except as
expressly set forth herein. If all conditions to Purchaser’s or Seller’s obligations to close set forth in Article IX and Article X, respectively, are not satisfied on the Sale Date or the Subsequent Sale Date, as applicable, Purchaser or
Seller, as applicable based on the condition or conditions not satisfied, may terminate this agreement by written notice to the other party, and neither party shall have any further obligations to the other party hereunder, except as expressly set
forth herein.
Section 12.18
Third Party Beneficiaries
.
This Agreement does not and is not intended to confer any rights or remedies upon any person or entity other than Purchaser and Seller,
except as provided in
Section 11.01
and in
Section 11.02
, provided that Purchaser and Seller reserve the right to modify any term of, or terminate, this Agreement, without the consent of any Purchaser Indemnitee or Seller
Indemnitee.
53
IN WITNESS WHEREOF, each of the undersigned parties to this Agreement has caused this
Agreement to be duly executed in its corporate name by one of its duly authorized officers, all as of the date first above written.
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MSR XII LLC
Purchaser
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By:
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/s/ Brian Sigman
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Name:
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Brian Sigman
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Title:
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Chief Financial Officer
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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/s/ Amar Patel
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Name:
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Amar Patel
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Title:
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Executive Vice President
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54
EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT FOR MORTGAGE LOANS
Subject to, and upon the terms and conditions of the Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, dated as of January 6, 2013 (the
“
Agreement
”), by and between Nationstar Mortgage LLC, a Delaware limited liability company (together with its successors and assigns, the “
Seller
”) and MSR XII LLC, a Delaware limited liability company (together
with its successors assigns, the “
Purchaser
”), as may be amended, restated, or otherwise modified and in effect from time to time, Seller hereby assigns, transfers and delivers to Purchaser all of Seller’s right, title and
interest in and to Current Excess Servicing Spread for each of the Mortgage Loans set forth in Annex A attached hereto and all proceeds thereof, and agrees that as of the Sale Date, the applicable Mortgage Loan shall be deemed to be a “Mortgage
Loan” for all purposes of the Agreement. Capitalized terms used in this Assignment Agreement have the meanings given to such terms in, or incorporated by reference into, the Agreement.
In the event (but only in the event) that the conveyance of the Current Excess Servicing Spread is characterized by a court or
governmental authority as security for a loan rather than a sale, Seller will be deemed to have granted to Purchaser, and Seller hereby grants to Purchaser, a security interest in all of its right, title and interest in, to and under the Current
Excess Servicing Spread and all proceeds thereof as security for a loan in an amount of the Purchase Price..
All of the
terms, covenants, conditions and obligations of the Agreement required to be complied with and performed by Seller on or prior to the date hereof have been duly complied with and performed in all material respects.
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NATIONSTAR MORTGAGE LLC
Seller
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By:
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Name:
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Title:
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55
Annex A
[ATTACH ANNEX A, WHICH MAY BE ON COMPUTER TAPE, COMPACT DISK, OR
MICROFICHE, CONTAINING THE INFORMATION SET FORTH BELOW]
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
(column (d) –
column
(e))
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(g)
([ ]% of
column
(f))
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Sale Date
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Loan # of
Mortgage
Loan
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Principal
Balance of
Mortgage
Loan as of the
Sale Date
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Servicing
Spread
Rate
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Base Servicing
Fee Rate
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Net Servicing
Spread Rate
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Current Excess
Servicing Spread
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EXHIBIT B
SCHEDULE OF MORTGAGE LOANS
[SEPARATELY DELIVERED]
EXHIBIT C
SELLER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, a [Vice President] of Nationstar Mortgage LLC (the “
Company
”), pursuant to
Section 9.07
of the Current Excess Servicing Spread
Acquisition Agreement for Non-Agency Mortgage Loans by and between MSR XII LLC and the Company, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material
respects as of the date hereof;
(ii) All of the terms, covenants, conditions and obligations of the Agreement
required to be complied with and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects;
(iii) The conditions set forth in
Sections 9.04
and
9.05
of the Agreement have been satisfied; and
(iv) As of the date hereof, the Company has a Consolidated Tangible Net Worth (as defined in the Agreement) of at least the sum of (x) $250,000,000 and (y) 50% of the proceeds from any issuance
of equity on or after the date of the Agreement by the Company, Nationstar Mortgage Holdings Inc. or any of Company’s consolidated subsidiaries, and the Company (considered together with its consolidated subsidiaries) is not in default in any
indebtedness in excess of $10,000,000 (individually or in the aggregate).
IN WITNESS WHEREOF, the undersigned has executed
this Certificate as of [ ]
1viii
EXHIBIT D
PURCHASER’S OFFICER’S CERTIFICATE
(To be supplied on the Sale Date)
I,
, [POSITION] of
[ ], the sole member of MSR XII LLC (the “
Company
”), pursuant to
Section 10.05
of the Current Excess Servicing Spread Acquisition Agreement for
Non-Agency Mortgage Loans by and between the Company and Nationstar Mortgage LLC, dated as of January 6, 2013 (the “
Agreement
”), hereby certify on behalf of the Company that:
(i) Each of the Company’s representations and warranties made in the Agreement is true and correct in all material respects as of the
date hereof; and
(ii) All of the terms, covenants, conditions and obligations of the Agreement required to be complied with
and performed by the Company at or prior to the date hereof have been duly complied with and performed in all material respects; and
(iii) All conditions set forth in
Section 10.04
have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
[ ].
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MSR XII LLC
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By: [ ], as member
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By:
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EXHIBIT E
LOCATION OF CREDIT FILES
350 Highland Drive
Lewisville, Texas 75067
EXHIBIT F
FORM OF SUMMARY REMITTANCE REPORT
[DELIVERED SEPARATELY]
EXHIBIT G
FORM OF DELINQUENCY REPORT
[DELIVERED SEPARATELY]
EXHIBIT H
FORM OF DISBURSEMENT REPORT
[DELIVERED SEPARATELY]
EXHIBIT I
SELLER JURISDICTIONS AND RECORDING OFFICES
Chief Executive Office:
350 Highland Drive
Lewisville, Texas 75067
Recording Office:
Secretary
of State, State of Delaware
EXHIBIT J
SERVICING AGREEMENTS
[DELIVERED SEPARATELY]
AMENDMENT NUMBER FIVE
to the
Amended and Restated Master Repurchase Agreement
Dated as of October 21, 2010
between
BANK OF AMERICA, N.A.
and
NATIONSTAR MORTGAGE LLC
This AMENDMENT NUMBER FIVE (this “
Amendment
”) is made as of this 30th day of January, 2013, by and between Bank of America, N.A. (“
Buyer
”) and Nationstar Mortgage LLC (“
Seller
”) to that certain Amended and Restated Master Repurchase Agreement, dated as of October 21, 2010 (as amended by Amendment Number One to the Amended and Restated Master Repurchase Agreement, dated as of November 24, 2010, Amendment Number Two to the Amended and Restated Master Repurchase Agreement, dated as of October 20, 2011, Amendment Number Three to the Amended and Restated Master Repurchase Agreement, dated as of January 17, 2012, that certain Amendment and Waiver, dated as of February 21, 2012, Amendment Number Four to the Amended and Restated Master Repurchase Agreement, dated as of June 1, 2012, in each case between Seller and Buyer, and as further amended, supplemented or otherwise modified from time to time, the “
Agreement
”), between Seller and Buyer.
WHEREAS, Seller has requested and Buyer agrees to amend the Agreement as more specifically set forth herein; and
WHEREAS, as of the date of this Amendment, Seller represents to Buyer that it is in compliance with all of the representations and warranties and all of the affirmative and negative covenants set forth in the Agreement and is not in default under the Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1.
Amendments
. Effective as of January 30, 2013 (the “
Effective Date
”) the Agreement is hereby amended as follows:
(a)
Section 5.1
of the Agreement is hereby amended by deleting the third sentence thereof in its entirety.
(b)
Section 14.11
of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following (modified text underlined for review purposes):
14.11
Notices
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(a)
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All notices, demands, consents, requests and other communications required or permitted to be given or made hereunder in writing shall be mailed (first class, return receipt requested and postage prepaid) or delivered in person or by overnight delivery service or by facsimile, addressed to the respective parties hereto at their respective addresses set forth below or, as to any such party, at such other address as may be designated by it in a notice to the other:
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If to Seller:
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Th
e
address set forth in the Transactions Terms Letter
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If to Buyer:
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Bank of America, N.A.
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4500 Park Granada
Mail Code: CA7-910-02-38
Calabasas, California 91302
Attention: Adam Gadsby
Telephone: (818) 225-6541
Fax: (213) 457-8707
E-mail: Adam.Gadsby@baml.com
and
Bank of America, N.A.
225 West Hillcrest Drive
Mail Code: CA6-918-01-03
Thousand Oaks, California 91360
Attention: Rayanthi De Mel, Assistant Vice President
Telephone: (805) 917-0716
Fax: (805) 917-0741
E-mail: Rayanthi.De.Mel@baml.com
With copies to:
Bank of America, N.A.
One Bryant Park, 11th Floor
Mail Code:
NY1-100-11-01
New York, New York 10036
Attention: Eileen Albus, Vice President, Mortgage Finance
Telephone: (646) 855-0946
Fax: (646) 855-5050
E-mail: Eileen.Albus@baml.com
and
Bank of America, N.A.
50 Rockefeller Plaza
Mail Code: NY1-050-12-03
New York, NY 10020
Attention: Mr. Michael McGovern Esq.
Telephone: (646) 855-0183
E-mail: Michael.McGovern@bankofamerica.com
All written notices shall be conclusively deemed to have been properly given or made when duly delivered, if delivered in person or by overnight delivery service, or on the third (3
rd
) Business Day after being deposited in the mail, if mailed in accordance herewith, or upon transmission by the receiving party of a facsimile confirming receipt, if delivered by facsimile. Notwithstanding the foregoing, any notice of termination shall be deemed effective upon mailing, transmission, or delivery, as the case may be.
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(b)
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All notices, demands, consents, requests and other communications required or permitted to be given or made hereunder which are not required to be in writing may also be provided electronically either (i) as an electronic mail sent and addressed to the respective parties hereto at their respective electronic mail addresses set forth below, or as to any such party, at such
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other electronic mail address as may be designated by it in a notice to the other or (ii) with respect to Buyer, via a posting of such notice on Buyer's customer website(s).
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If to Seller:
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Th
e
email address(es) specified in the Transactions Terms Letter, if any.
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If to Buyer:
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Eileen.Albus@baml.com
and
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Michael.McGovern@bankofamerica.com
Adam.Gadsby@baml.com
Rayanthi.De.Mel@baml.com
(c)
Section 14.24
of the Agreement is hereby amended by deleting each of “Office of Thrift Supervision (“OTS”)” and “OTS” in its entirety, and replacing them with “Office of the Comptroller of the Currency (“OCC”)” and “OCC”, respectively.
(d)
Exhibit A
to the Agreement is hereby amended by deleting the definition of “
Business Day
” in its entirety and replacing it with the following (modified text underlined for review purposes):
Business Day
:
Any day, excluding Saturday, Sunday and any day that is a legal holiday under the laws of
the State of New York and
the State of California
or as may otherwise be published on Buyer's website(s).
(e)
Exhibit A
to the Agreement is hereby amended by deleting the definition of “
Calculation Period
” in its entirety and replacing it with the following (modified text underlined for review purposes):
Calculation Period:
With respect to: (a) the initial Payment Date on which an Unused Facility Fee is due, the period beginning on the Effective Date and ending on the last day of the
calendar quarter
in which such Effective Date occurs, (b) for each subsequent Payment Date on which an Unused Facility Fee is due, the prior
calendar quarter
and (c) with respect to the
date this
Agreement is terminated pursuant to the terms herein, the period beginning on the first day of
the calendar quarter in which such termination is to occur
and ending on the Expiration Date.
(f)
Exhibit A
to the Agreement is hereby amended by deleting the definition of “
Liquidity
” in its entirety and replacing it with the following:
Liquidity
:
As of any date of determination, the sum of (i) Seller's cash, (ii) Seller's Cash Equivalents and (iii) the aggregate amount of unused committed capacity available to Seller (taking into account applicable haircuts) under mortgage loan warehouse and servicer advance facilities (other than the repurchase facility provided under the Agreement) for which Seller has unencumbered eligible collateral to pledge thereunder.
(g)
Exhibit A
to the Agreement is hereby amended by deleting the definition of “
Tangible Net Worth
” in its entirety and replacing it with the following:
Tangible Net Worth
:
As of any date of determination, (i) the net worth of Seller and its consolidated Subsidiaries, on a combined basis, determined in accordance with GAAP, minus (ii) all intangibles determined in accordance with GAAP (including, without limitation, goodwill, capitalized financing costs and capitalized administration costs but excluding originated and purchased mortgage servicing rights or retained residual securities) and any and all advances to, investments in and receivables held from Affiliates; provided, however, that the non-cash effect (gain or loss) of any mark-to-market adjustments made directly to stockholders' equity for fluctuation of the value of financial instruments as mandated under the Statement of Financial Accounting Standards No. 133 (or any successor statement) shall be excluded from the calculation of Tangible Net Worth.
(h)
Exhibit A
to the Agreement is hereby amended by deleting the definition of “
Total Liabilities
” in its entirety and replacing it with the following:
Total Liabilities
:
As of any date of determination, the result of (i) the total liabilities of Seller on any given date of determination, to be determined in accordance with GAAP consistent with those applied in the preparation of Seller's financial statements, plus (ii) to the extent not already included under GAAP, the total aggregate outstanding amount owed by Seller under any repurchase, refinance or other similar credit arrangements, plus (iii) to the extent not already included under GAAP, any “off balance sheet” repurchase, refinance or other similar credit arrangements, minus (iv) the amount of any nonspecific consolidated balance sheet reserves maintained in accordance with GAAP, and minus (v) the amount of any non-recourse debt, including any securitization debt.
(i)
Exhibit A
to the Agreement is hereby amended by deleting the definition of “
Unused Facility Fee
” in its entirety and replacing it with the following:
Unused Facility Fee
:
The fee set forth in the Transactions Terms Letter payable by Seller quarterly in arrears on each Payment Date, based upon the unused portion of the Aggregate Transaction Limit; provided, however, that no fee shall be due on a Payment Date if the Used Amount is less than the specified percentage of the Aggregate Transaction Limit that is set forth in the Transactions Terms Letter.
(j)
Exhibit A
to the Agreement is hereby amended by inserting the following new defined term in the appropriate alphabetical order
:
Operating Income
:
For any period, the operating income of Seller for such period as determined in accordance with GAAP; provided, that charges of up to a maximum aggregate amount of $15,000,000 which directly relate to Seller's stock-based management equity plan shall be excluded from this calculation.
SECTION 2.
Fees and Expenses
. Seller agrees to pay to Buyer all fees and out of pocket expenses incurred by Buyer in connection with this Amendment, including all reasonable fees and out of pocket costs and expenses of the legal counsel Buyer incurred in connection with this Amendment, in accordance with
Section 12.2
of the Agreement.
SECTION 3.
Defined Terms
. Any terms capitalized but not otherwise defined herein should have the respective meanings set forth in the Agreement.
SECTION 4.
Limited Effect
. Except as amended hereby, the Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment need not be made in the Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Agreement, any reference in any of such items to the Agreement being sufficient to refer to the Agreement as amended hereby.
SECTION 5.
Representations
. In order to induce Buyer to execute and deliver this Amendment, Seller hereby represents to Buyer that as of the date hereof, (i) Seller is in full compliance with all of the terms and conditions of the Principal Agreements and remains bound by the terms thereof, and (ii) no Potential Default or Event of Default has occurred and is continuing under the Principal Agreements.
SECTION 6.
Governing Law
. This Amendment shall be construed in accordance with the laws of the State of New York without regard to any conflicts of law provisions (except for Section 5-1401 of the New York General Obligations Law, which shall govern) and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with the laws of the State of New York, except to the extent preempted by federal law.
SECTION 7.
Counterparts
. For the purpose of facilitating the execution of this Amendment, and for other purposes, this Amendment may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Buyer and Seller have caused this Amendment to be executed and delivered by their duly authorized officers as of the Effective Date.
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BANK OF AMERICA, N.A.
,
as Buyer
By:
/s/ Rayanthi De Mel_________________
Name: Rayanthi De Mel
Title: Assistant Vice President
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NATIONSTAR MORTGAGE LLC
,
as Seller
By:
/s/ Larry Brown_____________________
Name: Larry Brown
Title: Vice President
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January 30, 2013
Nationstar Mortgage LLC
350 Highland Drive
Lewisville, Texas 75067
Attn: Mr. Greg Oniu
Email:
Greg.Oniu@nationstarmail.com
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Re:
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Transactions Terms Letter for Amended and Restated Master Repurchase Agreement
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Ladies and Gentlemen:
This Transactions Terms Letter (this “
Transactions Terms Letter
”) is made and entered into, as of the date set forth above, by and between Bank of America, N.A. (“
Buyer
”) and Nationstar Mortgage LLC (“
Seller
”). This Transactions Terms Letter supplements the Amended and Restated Master Repurchase Agreement, dated as of October 21, 2010 (as amended by Amendment Number One to the Amended and Restated Master Repurchase Agreement, dated as of November 24, 2010, Amendment Number Two to the Amended and Restated Master Repurchase Agreement, dated as of October 20, 2011, Amendment Number Three to the Amended and Restated Master Repurchase Agreement, dated as of January 17, 2012, that certain Amendment and Waiver, dated as of February 21, 2012, Amendment Number Four to the Amended and Restated Master Repurchase Agreement, dated as of June 1, 2012, Amendment Number Five to the Amended and Restated Master Repurchase Agreement, dated as of January 15, 2013, in each case between Seller and Buyer, and as further amended, supplemented or otherwise modified from time to time, the “
Agreement
”). In the event there exists any inconsistency between the Agreement and this Transactions Terms Letter, the latter shall be controlling notwithstanding anything contained in the Agreement to the contrary. This Transactions Terms Letter supersedes all previous Transactions Terms Letters and amendments as of the Effective Date. All capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.
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Effective Date:
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January 30, 2013.
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Expiration Date:
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Expiring on January 14, 2014.
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Aggregate Transaction Limit:
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$750,000,000, consisting of the sum of the Committed Amount and the Uncommitted Amount; which amount may be increased from time to time at Buyer's sole discretion as provided in the definition of Uncommitted Amount. In the event Buyer agrees to a Temporary Increase pursuant to
Section 2.10
, the Aggregate Transaction Limit shall equal the Temporary Aggregate Transaction Limit until such time as the Temporary Increase terminates.
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Committed Amount:
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$750,000,000
.
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Uncommitted Amount:
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$0 or such greater amount agreed to by Buyer in its sole discretion from time to time.
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Financial Covenants:
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Seller shall satisfy and maintain the following financial covenants at all times during the term of the Agreement (unless expressly stated otherwise below):
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(a)
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Minimum Tangible Net Worth
: The sum of (i) $350,000,000 plus (ii) (A) the product of (x) two (2) and (y) the aggregate amount of proceeds received by Seller in connection with an issuance of equity interests in Seller from and after January 1, 2013
divided
by (B) three (3).
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Nationstar Mortgage LLC
January 30, 2013
Page
2
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(b)
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Minimum Liquidity:
Liquidity of at least $45,000,000.
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(c)
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Maximum ratio of Total Liabilities to Tangible Net Worth:
9:1.
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(d)
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Operating Income:
Seller shall show positive pre-tax Operating Income, on a rolling six-month basis.
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Other Covenants:
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Seller shall maintain the following other covenants:
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(a)
|
Commitment Basis
. Seller shall lock all loans on a best effort commitment basis or a loan level mandatory commitment basis prior to entering into a Transaction for such mortgage loan. In the event that Seller shall have entered into a Purchase Commitment on or prior to the Purchase Date in respect of Eligible Mortgage Loans, Seller shall deliver a true and complete copy of such Purchase Commitment to Buyer on the related Purchase Date for such Eligible Mortgage Loans. For any Transaction in which the underlying Purchased Mortgage Loans are not subject to a Purchase Commitment on the related Purchase Date, Seller shall promptly deliver to Buyer a true and complete copy of any Purchase Commitment executed after such Purchase Date.
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(b)
|
Additional Mortgage Financing Facilities
. Notwithstanding anything to the contrary in
Section 10.1
of the Agreement, Seller shall not, without prior written notification to Buyer, enter into any mortgage financing facility (including, without limitation, any warehouse, repurchase, purchase or off-balance sheet facility).
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(c)
|
Cross-collateralization
. Seller's payment and performance of its obligations under the Agreement shall be cross-collateralized with any and all deposits of money or property or any other indebtedness at any time held or owing to Buyer or any of its Affiliates to or for the credit of the account of Seller and its Affiliates under any agreement(s) between Seller and/or its Affiliates, on the one hand, and Buyer and/or its Affiliates, on the other hand, irrespective of whether or not Buyer and/or its Affiliates shall have made any demand thereunder and whether or not said obligations shall have matured.
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(d)
|
Payment of Dividends
. If a Potential Default or an Event of Default has occurred and is occurring or will occur as a result of such payments, Seller shall not pay any dividends or distributions with respect to any capital stock or other equity interests in Seller, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Seller.
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Facility Fee:
|
[***], which is equal to the result of (i) the product of (a) [***], (b) the Committed Amount and (c) 350, divided by (ii) 360. The Facility Fee shall be deemed due, earned and payable in full on the Effective Date, in accordance with
Section 5.1
of the Agreement; provided, that such Facility Fee is hereby reduced by an amount equal to [***], which amount was remitted by Seller to Buyer prior to the Effective Date. Upon early termination of the Agreement
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Nationstar Mortgage LLC
January 30, 2013
Page
3
by Seller, no portion of the Facility Fee shall be refunded. The fee is payable based on Committed Amount only and shall be prorated in the event of increases in the Committed Amount.
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Unused Facility Fees:
|
For any given calendar quarter and on the Expiration Date, Seller shall pay in arrears to Buyer an amount equal to the product of (i) [***] and (ii) the unused portion of the Aggregate Transaction Limit, annualized), in accordance with
Section 5.1
of the Agreement; provided, that Sellers shall only be required to pay an Unused Facility Fee for such period if, the Average Quarterly Utilization during such quarter is less than 50%.
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Average Quarterly Utilization:
|
Following the end of each calendar quarter and on the Expiration Date, Buyer shall determine the Used Amount during the preceding Calculation Period. The Average Quarterly Utilization shall be calculated by dividing (i) the Used Amount, by (ii) the Aggregate Transaction Limit.
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|
Used Amount:
|
The average Aggregate Outstanding Purchase Price of all Transactions, calculated on a daily basis during the preceding Calculation Period.
|
Transaction Request Deadline:
4:00 p.m. (New York City time).
Deadline for Daily Receipt
Of Purchase Advices by Buyer:
4:00 p.m. (New York City time).
Minimum Over/Under
|
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Eligible Mortgage Loans:
|
A Mortgage Loan shall be an Eligible Mortgage Loan only if (i) it is a first lien, fixed or adjustable rate Mortgage Loan on a single family residential property that is either (x) an Agency Eligible Mortgage Loan that is also (1) a Conventional Conforming Mortgage Loan or (2) a Jumbo Mortgage Loan, (y) a Government Mortgage Loan, or (z) a Jumbo Mortgage Loan that is not an Agency Eligible Mortgage Loan, or as otherwise permitted on
Schedule 1
, (ii) it was originated in compliance with and remains in compliance with, or was otherwise acquired in compliance with the Agency Guides (unless it is a Jumbo Mortgage Loan that is not an Agency Eligible Mortgage Loan), Buyer's Correspondent Guidelines (if applicable) and Seller's underwriting guidelines approved by Buyer in its sole reasonable discretion and (iii) it meets each of the following criteria:
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|
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|
(a)
|
each of the applicable representations and warranties in
Section 8.1(r)
and
8.1(v)
and
Exhibit L
of the Agreement are true and correct;
|
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|
(b)
|
the Purchase Date for such Mortgage Loan is not more than thirty (30) days past the origination date for such Mortgage Loan;
|
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(c)
|
such Mortgage Loan is not thirty (30) or more days contractually delinquent (as determined by using the MBA method of delinquency) nor has it been thirty (30) or more days contractually delinquent since the origination date for such Mortgage Loan;
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Nationstar Mortgage LLC
January 30, 2013
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(d)
|
such Mortgage Loan is not subject to a Transaction for longer than the Maximum Dwell Time;
|
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|
(e)
|
no rescission notice and/or notice of right to cancel shall have been improperly delivered to the Mortgagor, and the related rescission period related shall have expired;
|
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(f)
|
such Mortgage Loan was originated with full documentation;
|
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(g)
|
such Mortgage Loan must have an unpaid principal balance of at least $50,000;
|
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|
(h)
|
such Mortgage Loan is not secured by Mortgaged Property located in the Commonwealth of Puerto Rico;
|
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|
(i)
|
such Mortgage Loan shall neither be a HELOC Mortgage Loan nor a reverse mortgage loan;
|
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|
(j)
|
such Mortgage Loan's FICO Score is not less than 620 (except as otherwise permitted in
Schedule 1
);
|
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(k)
|
such Mortgage Loan has not been previously rejected for purchase by any investor at any time, except as permitted on
Schedule 1
;
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|
(l)
|
such Mortgage Loan has not been repurchased by Seller from any Person to whom such Mortgage Loan was previously sold (including transfers in connection with securitizations);
|
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(m)
|
the Mortgagor in respect of such Mortgage Loan is not a partnership, corporation or other non-natural person (other than an inter-vivos trust which conforms to the Agency Guides);
|
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(n)
|
if such Mortgage Loan is a Jumbo Mortgage Loan, the original principal balance of such Mortgage Loan was not greater than $1,500,000; and
|
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|
|
|
(o)
|
if such Mortgage Loan is a Jumbo Mortgage Loan that is not an Agency Eligible Mortgage Loan, the related Mortgagor's FICO Score at the time of origination is 700 or above, with maximum loan-to-value ratio of 80% and maximum debt-to-income ratio of 45 %.
|
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Securitization:
|
Unless otherwise agreed to by Buyer, all Mortgage Loans must be settled with cash directly from an Approved Investor.
|
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|
|
Eligible Certified Mortgage Loan:
|
A Certified Mortgage Loan shall be an Eligible Certified Mortgage Loan only if it meets each of the following criteria:
|
|
|
|
|
(a)
|
such Mortgage Loan is an Eligible Mortgage Loan;
|
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|
|
|
(b)
|
Custodian has delivered to Buyer a Certified Mortgage Loan Trust Receipt with respect to such Mortgage Loan;
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Nationstar Mortgage LLC
January 30, 2013
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(c)
|
if such Mortgage Loan is a Pooled Mortgage Loan, within two (2) Business Days of the related Pooling Date, Seller shall have delivered to Buyer a duly executed Trade Assignment together with a true and complete copy of the Purchase Commitment with respect to the related Mortgage-Backed Security; and
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(d)
|
the Takeout Price set forth in the related Purchase Commitment for the related Mortgage-Backed Security or the Portfolio Mortgage Loans, as applicable, is for an amount that is not less than the outstanding Repurchase Price for the Pool or such Portfolio Mortgage Loans, respectively.
|
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|
Eligible Security:
|
A Mortgage-Backed Security shall be an Eligible Security only if it meets each of the following criteria:
|
|
|
|
|
(a)
|
each of the applicable representations and warranties set forth on
Exhibit L
of the Agreement are true and correct;
|
|
|
|
|
(b)
|
it is issued on the Settlement Date in Strict Compliance with the applicable Agency Guides;
|
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|
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|
(c)
|
a CUSIP has been issued and provided to Buyer in compliance with
Section 7.2(c)
of the Agreement;
|
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|
|
|
(d)
|
it is backed solely by Eligible Certified Mortgage Loans that (x) are (i) Agency Eligible Mortgage Loans that are also Conventional Conforming Mortgage Loans or (ii) Government Mortgage Loans, and (y) were subject to Transactions immediately prior to the issuance of such Mortgage-Backed Security;
|
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|
(e)
|
it is delivered in a manner sufficient to cause Buyer to have a perfected, first priority security interest in, and to be the “entitlement holder” (as defined in Section 8-102(a)(7) of the Uniform Commercial Code of, such Mortgage-Backed Security; and
|
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(f)
|
the related Trade Assignment is enforceable and in effect.
|
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Type:
|
With respect to each Eligible Asset, the descriptions set forth on
Schedule 1
under the heading “Type.”
|
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|
Type Purchase Price Percentage:
|
With respect to each Eligible Asset, the percentages set forth on
Schedule 1
under the heading “Type Purchase Price Percentage.”
|
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Type Sublimit:
|
With respect to each Eligible Asset, the percentages set forth on
Schedule 1
under the heading “Type Sublimit.”
|
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|
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|
Type Margin:
|
With respect to each Eligible Asset, the percentages set forth on
Schedule 1
under the heading “Type Margin.”
|
|
|
|
|
Maximum Dwell Time:
|
With respect to each Eligible Asset, the number of days set forth on
Schedule 1
under the heading “Maximum Dwell Time.”
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Reporting Requirements:
|
Financial Reports & Officer's Certificate
: Seller shall deliver to Buyer, as soon as possible but in no event more than forty-five (45) days after the end of each calendar month, financial statements of Seller, including statements of income and changes in shareholders' equity (or its equivalent) for such month and the related balance sheet as at the end of such period, all in reasonable detail acceptable to Buyer and certified by the chief financial officer of Seller, subject, however, to year-end audit adjustments. Together with such financial statements, Seller shall deliver an officer's certificate substantially in a form to be provided by Buyer, which shall include funding and production volume reports for the previous month and evidence of compliance with all financial covenants.
|
Annual Reports
: Seller shall deliver to Buyer, as soon as possible but in no event more than ninety (90) days after the end of each fiscal year of Seller, audited financial statements of Seller, including statements of income and changes in shareholders' equity for such fiscal year and the related balance sheet as at the end of such fiscal year, all in reasonable detail acceptable to Buyer and certified by the chief financial officer of Seller stating, at a minimum, that the financial statements fairly present the financial condition and results of operations of Seller as of the end of, and for, such year.
Government Insuring Reports
: Seller shall provide Buyer, as soon as possible but in no event more than thirty (30) days after the end of each quarter, or as requested by Buyer, the following government insuring reports (including 15 month history):
|
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|
(a)
|
Loans Originated - Current Defaults and Claims Reported - United States (from FHA Connection):
|
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|
|
▪
|
Output option: all loans
|
|
|
|
|
▪
|
Performance period: current period
|
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|
|
|
▪
|
All insured single family loans with a beginning amortization within the last two years
|
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|
|
(b)
|
HUD Pipeline/Uninsured Query:
|
|
|
|
|
▪
|
Date range: use default
|
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|
|
▪
|
Sort by: originating ID in ascending order
|
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|
(c)
|
Late Endorsement Query:
|
|
|
|
|
▪
|
Loan status: Active, claimed
|
|
|
|
|
▪
|
Date range: last two year period
|
Sort by: # days closing to Endr pkg Rcvd in descending order
Hedging Report
: Seller shall deliver to Buyer each Monday a loan and rate lock position report and hedge report containing product level pricing and interest rate sensitivity analysis (shocks) or as requested by Buyer (data elements to be agreed upon).
Monthly Collateral Tape
: Seller shall deliver within five (5) days after the end of each month, a collateral tape including the data fields (to
Nationstar Mortgage LLC
January 30, 2013
Page
7
be determined) representing the Eligible Mortgage Loans subject to Transactions under the Agreement as of the end of such month, acceptable to the Buyer in its sole discretion.
If requested by Buyer, Seller shall promptly provide to Buyer (i) in a form reasonably acceptable to Buyer, a detailed aging report of all outstanding mortgage loans that are subject to warehouse/ purchase/ repurchase facilities entered into by Seller, and detail of all uninsured government loans, and (ii) any additional information as reasonably requested.
|
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Key Personnel:
|
Individuals that directly report to Executive Management.
|
Buyer's Guidelines,
|
|
|
|
Policies and Procedures:
|
The terms and conditions of this Transactions Terms Letter and the Agreement shall be subject to Buyer's guidelines, policies and procedures, as may be changed from time to time. Buyer may communicate changes to its guidelines, policies and procedures to Seller via Buyer's website, email or in writing.
|
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Governing Law:
|
This Transactions Terms Letter and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of New York, without regard to principles of conflicts of laws (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law).
|
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Severability:
|
This Transactions Terms Letter, together with the other Principal Agreements, and all other documents executed pursuant to the terms hereof and thereof, constitute the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all prior or contemporaneous oral or written communications with respect to the subject matter hereof, all of which such communications are merged herein. All Transactions hereunder constitute a single business and contractual relationship and each Transaction has been entered into in consideration of the other Transactions.
|
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Counterparts:
|
This Transactions Terms Letter may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. The parties agree that this Transactions Terms Letter and any notices hereunder may be transmitted between them by email and/or by facsimile. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested.
|
[signature page follows]
Please acknowledge your agreement to the terms and conditions of this Transactions Terms Letter by signing in the appropriate space below and returning a copy of the same to the undersigned. Facsimile signatures shall be deemed valid and binding to the same extent as the original. Buyer shall have no obligation to honor the terms and conditions of this Transactions Terms Letter if Seller fails to fully execute and return this document to Buyer on or prior to the Effective Date.
Sincerely,
Agreed to and Accepted by:
Bank of America, N.A.
Nationstar Mortgage LLC
By:
/s/ Rayanthi De Mel__________
By:
/s/ Larry Brown_______________
Name:
Rayanthi De Mel
Name:
Larry Brown
Title:
Assistant Vice President
Title:
Vice President
SCHEDULE 1
ELIGIBLE ASSETS
|
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|
|
|
|
|
|
|
|
Type
|
Type
Sublimit*
|
Type Margin
|
Type Purchase Price Percentage
|
Maximum
Dwell Time**
|
Transaction Requirements
|
|
Type A:
Agency Eligible Mortgage Loans that are also Conventional Conforming Mortgage Loans (1
st
mortgages only), including Jumbo Mortgage Loans that are Agency Eligible Mortgage Loans
|
[***]
|
[***]
|
[***]
|
45 calendar days
|
None
|
|
Type B:
Government Mortgage Loans
(1st mortgages only)
|
[***]
|
[***]
|
[***]
|
45 calendar days
|
None
|
|
Type C:
Jumbo Mortgage Loans that are not Agency Eligible Mortgage Loans
(1st mortgages only, maximum original loan amounts up to $1,500,000)
|
[***]
|
[***]
|
[***]
|
45 calendar days
|
Rate lock and prior approval
|
|
Type D:
Government Mortgage Loans (1st mortgages only) that are: (i) secured by manufactured homes and originated in compliance with Title II under FHA 203(b); or (ii) have FICO scores between 550 and 619
These loans will be identified in the Asset Data Record as “
Conf Balance Expanded
”
|
[***]
|
[***]
|
[***]
|
45 calendar days
|
None
|
|
Type E:
Texas Cash-Out Refinance Mortgage Loans - Type A and Type B Mortgage Loans
These loans will be identified in the Asset Data Record as “
Expanded/Alt-A
”
|
[***]
|
[***]
|
[***]
|
45 calendar days
|
None
|
|
Type F:
HARP Mortgage Loans (1st mortgages only)
These loans will be identified in the Asset Data Record as “
Specialty ARM
”
|
[***]
|
[***]
|
[***]
|
45 calendar days
|
None
|
|
|
|
|
|
|
|
|
Noncompliant Asset - Type A, B, C, D, E and F Mortgage Loans that have been (i) subject to one or more Transactions hereunder for a period greater than 45 days but not greater than 60 days, or (ii) rejected by the applicable Approved Investor
|
[***]
|
The initial Type Margin
|
[***]
cumulative reduction in Type Purchase Price Percentage for Mortgage Loans rejected by an Approved Investor; subject to further review and reduction in Type Purchase Price Percentage at Buyer's discretion
|
|
[***]
reduction in Type Purchase Price Percentage for an additional dwell time of 1-15 days
|
*** Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.
|
|
|
|
|
|
|
|
|
|
Wet Mortgage Loans - Type A, B, C, D, E and F Mortgage Loans, excluding loans originated under a correspondent program
|
[***]
, increasing to
[***]
for the first and last five (5) Business Days of each month
|
The initial Type Margin
|
The initial Type
Purchase Price
Percentage
|
7 Business Days from origination
|
|
|
Eligible Certified Mortgage Loans that are Portfolio Mortgage Loans - Type A and Type B Mortgage Loans
|
[***]
|
[***]
|
[***]
|
60 calendar days from the date on which the Mortgage Loan first became subject to a Transaction whether or not it was an Eligible Certified Mortgage Loan at the time
|
None
|
|
Eligible Certified Mortgage Loans that are Pooled Mortgage Loans - Type A, Type B and Type D Mortgage Loans
|
[***]
|
[***]
|
[***]
|
60 calendar days from the date on which the Mortgage Loan first became subject to a Transaction whether or not it was an Eligible Certified Mortgage Loan at the time
|
None
|
* Unless otherwise specified, all Type Sublimits are calculated as a percentage of the Aggregate Transaction Limit (as the same may be increased or decreased pursuant to the terms of the Agreement).
** All Maximum Dwell Times are calculated without regard to whether the time that such Purchased Asset is subject to the facility is consecutive.
NATIONSTAR MORTGAGE HOLDINGS INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT
(“Agreement”) is made and entered into as of the 27
th
day of February 2012 by and between NATIONSTAR MORTGAGE HOLDINGS INC., a Delaware corporation (the “Company”) and HAROLD LEWIS, an individual presently residing at 2220 King Fisher Drive, Westlake, TX 76262 (“Executive”).
W I T N E S S E T H:
NOW, THEREFORE
, in consideration of the mutual promises, covenants and agreements herein contained, together with other good and valuable consideration the receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1.
SERVICES AND DUTIES
. The Company hereby employs Executive, and Executive hereby accepts employment by the Company in the capacity of its President & Chief Operating Officer. Executive will report directly to the Company's Chief Executive Officer (the “Manager”). The principal location of Executive's employment shall be at the Company's executive office located in Lewisville, Texas, or such other location determined by the entity identified in the organizational documents of the Company, in its sole discretion, that is within a fifty (50) mile radius of the Company's current location at 350 Highland Drive, Lewisville Texas 75067, although Executive understands and agrees that Executive may be required to travel from time to time for business reasons. Executive shall be a full-time employee of the Company and shall dedicate all of Executive's working time to the Company and shall have no other employment and no other business ventures which are undisclosed to the Company or which conflict with Executive's duties under this Agreement. Executive will have such duties, responsibilities and authority as are prescribed by the Manager from time to time, together with such additional duties as may be assigned to Executive from time to time by the Manager. Notwithstanding the foregoing, nothing herein shall prohibit Executive from (i) engaging in personal investment activities for himself and his family that do not give rise to any conflict of interests with the Company or its affiliates, (ii) subject to prior approval of the Company, acting as a director or in a similar role for an entity unrelated to the Company if such role does not give rise to any conflict of interests with the Company or its affiliates and (iii) engaging in charitable and civic activities, in each case provided that such activities do not interfere with the performance of his duties hereunder.
2.
TERM
. Executive's employment under the terms and conditions of this Agreement will commence on the first day of Executive's employment with the Company (the “Effective Date”) and end on February 28, 2014 (“Term”), or, if earlier, the date of a termination of his employment for any reason (“Termination Date”). Effective after February 28, 2014, to the extent of Executive's continued employment with the Company, such employment shall be “at will”, meaning that either Executive or the Company may terminate Executive's employment at any time and for any reason without the payment of any severance and, if Executive's employment is terminated without cause by the Company after the Term, Executive shall receive such severance as may be consistent with the then current practices of the Company.
Notwithstanding anything to the contrary herein, in the event of any termination of this Agreement, Executive shall nevertheless continue to be bound by the terms and conditions set forth in Sections 6 and 7 hereof, which provisions, along with Sections 8 and 9 hereof, shall survive any such termination of this Agreement and any termination of Executive's employment with the Company.
For a period of one year following any termination of Executive's employment with the Company, Executive agrees to reasonably assist and cooperate with the Company and its affiliates and their respective agents, officers, directors and employees with respect to the operations of the Company (and its successors and assigns) (i) on matters relating to the tasks for which Executive was responsible, or about which Executive had knowledge, before cessation of employment or which may otherwise be within the knowledge of Executive and (ii) exclusively in connection with any existing or future disputes, litigation or investigations of any nature brought by, against, or
otherwise involving the Company or its affiliates in which the Company deems Executive's cooperation necessary, not to exceed 24 hours per month (or such other amount of time as agreed to by the parties). The Company will pay Executive a consulting fee of $216.35 per hour and will also reimburse Executive for reasonable out of pocket expenses incurred in connection therewith, in accordance with Company policy.
(a)
Base Salary
. In consideration of Executive's full and faithful satisfaction of Executive's duties under this Agreement, the Company agrees to pay to Executive a base salary at the amount of $450,000 per annum (the “Base Salary”), payable in accordance with the Company's payroll practices and in such installments as the Company pays its similarly situated employees (but not less frequently than each calendar month), subject to usual and customary deductions for withholding taxes and similar charges, and customary employee contributions to health, welfare and retirement programs in which Executive is enrolled. The Base Salary shall be reviewed periodically in accordance with Executive's annual performance evaluation and adjusted at the Company's sole discretion
;
provided
,
however
, that in no event shall the Base Salary be reduced without Executive's approval.
(b)
Sign-On Bonus.
Executive will be paid a Sign On Bonus in the amount of $650,000 to be paid as soon as administratively possible following the Executive's date of hire. Should Executive voluntarily terminate employment with the Company without good reason within 24 months of the Executive's date of hire, the Executive will be obligated to repay 100% of the sign-on Bonus.
(c)
Executive will be granted a number of shares of Restricted Stock of Nationstar Mortgage Holdings Inc. with an aggregate fair market value of $1,000,000 which will vest at 33.3% on each of the first and second anniversaries and 33.4% on the third anniversary of the grant date.
(d)
Bonus Compensation
. In addition to the Base Salary payable pursuant to Section 3(a) above, Executive will also be eligible to receive in respect of each fiscal year of the Company a cash bonus as follows:
(i)
For the fiscal year ending on December 31, 2012, Executive will be entitled to a minimum bonus in an amount not less than $1,150,000 for the period from the Effective Date through December 31, 2012. This minimum bonus for 2012 is exclusive of any sign-on bonus. Executive will be eligible to participate in the Nationstar Mortgage LLC Annual Incentive Compensation Plan (“AIP”), as approved by the Compensation Committee of the Board of Directors. Subject to the approval of the Compensation Committee of the Board, the AIP for 2012 is funded via a bonus pool of 5% of operating cash flow; Executive's participation for the calendar year 2012 is expected to be 20% of the bonus pool. The specific terms of the AIP are described in more detail in the plan document.
(ii)
For the fiscal year ending after December 31, 2012, Executive will be entitled to an amount determined by the senior management of the Company in their sole discretion and based upon individual and Company performance and targets determined by the senior management of the Company at the beginning of each such fiscal year. Executive will participate in the AIP which is based upon operating cash flow. Typically a bonus pool of 5% of operating cash flow is created at year end. Executives' annual cash bonus is expected to be 20% of the bonus pool.
(iii)
Executive will be eligible to participate in the Company's 2012 Incentive Compensation Plan. Grants of Restricted Stock in Nationstar Mortgage Holdings Inc. will vest at 33.3% on the first and second anniversaries and 33.4% on the third anniversary of the grant date. Executive's initial opportunity in 2012 will be 35% of his annual bonus.
(iv)
Executive will receive a deferred cash award of $100,000 which will vest in 12 months from your date of hire and paid within 30 days of such date.
Notwithstanding any provision of this Agreement, bonuses and awards hereunder are subject to the approval of the Compensation Committee of the Board. Such amounts will be paid as soon as practicable after the Company's financial results for such fiscal year have been determined, but in no event later than two (2) months after the end of such fiscal year, and shall be payable only if Executive is employed by the Company on the last day of the fiscal year in respect of which such bonus is awarded and has not notified the Company of his intent to resign.
(e)
To assist with expenses associated with relocating your home from Atlanta to Dallas, you will receive a relocation assistance payment of $550,000 within 30 days of your start date. Should you voluntarily terminate your employment within two (2) years of your date of hire, you will be required to repay the full amount.
(f)
Withholding
. All taxable compensation payable to Executive by the Company shall be subject to customary withholding taxes and such other employment taxes as are required under Federal law or the law of any state or by any governmental body to be collected with respect to compensation paid to an employee.
(g)
Compliance with Section 409A of the Code.
This Agreement is intended to comply with Section 409A of the Code, if and to the extent applicable, and will be interpreted and applied in a manner consistent with that intention. Toward that end, unless permitted sooner by Section 409A of the Code, severance amounts otherwise payable within six-months after termination of employment will be deferred until and become payable on the first day of the seventh month following the Termination Date. Further, to the extent Section 409A of the Code is applicable, the phrase “termination of employment” shall have the same meaning as a “separation from service” as defined in Code Section 409A.
4.
BENEFITS AND PERQUISITES.
(a)
Retirement and Welfare Benefits
. During the Term, Executive shall be entitled to all the usual benefits offered to the Company's senior management, including vacation, sick time, and the ability to participate in the Company's medical, dental, life insurance, disability and other welfare programs, and 401(k) retirement savings plan, subject to and in accordance with the applicable limitations and requirements imposed by the terms of the documents governing such benefits, as from time to time in effect. Nothing, however, shall require the Company to maintain any benefit, plan or arrangement or provide any type or level of benefits to the Company's employees, including Executive. During the Term, Executive shall be entitled to not less than three (3) weeks paid vacation.
(b)
Reimbursement of Expenses
. The Company shall reimburse Executive for any expenses reasonably incurred by Executive for business purposes in furtherance of Executive's duties hereunder, including travel, meals and accommodations, upon submission by Executive of vouchers or receipts and in compliance with such rules and policies relating thereto as the Company may from time to time adopt.
5.
TERMINATION
. Executive's employment pursuant to this Agreement shall be terminated on the earliest of (i) the date on which the Manager or the Company delivers written notice that Executive is being terminated for Disability, and (ii) the date of Executive's death. In addition, Executive's employment with the Company may be terminated (w) by the Company for Cause, effective on the date on which a written notice to such effect is delivered to Executive; (x) by the Company at any time without Cause, effective on the date on which a written notice to such effect is delivered to Executive; (y) by Executive for “Good Reason”, effective on the date on which a written notice to such effect is delivered to
the Company as provided for in 5(h)(v) of this Agreement; or (z) by Executive at any time, effective on the date on which a written notice to such effect is delivered to the Company.
(a)
For Cause Termination
. If Executive's employment with the Company is terminated by the Company for Cause, Executive shall not be entitled to any further compensation or benefits other than Accrued Benefits. If the definition of “Cause” set forth below conflicts with such definition in any incentive plan or equity plan or agreement of the Company or any of its affiliates, the definition set forth herein shall control.
(b)
Termination by Company without Cause or by Executive for Good Reason
. If Executive's employment is terminated by the Company other than for Cause or is terminated by Executive for Good Reason prior to the end of the Term hereof, then Executive shall be entitled to, subject to Executive providing the Company with a signed release of claims in a form adopted by the Company from time to time, which shall contain customary terms and conditions, and subject to Executive's continued compliance with the provisions of Sections 6 and 7 hereof: (i) the Accrued Benefits, (ii) twelve (12) months base salary (“Salary Continuation Payments”) plus 100% of the Executive's prior year's bonus, if said termination occurs during the 2012 calendar year, the Executive will receive twelve (12) months base salary plus the minimum bonus of $1,150,000 described in Section 3 (c) (i) and (iii) continuation of Executive's coverage under the Company's medical plan until the earlier of (A) the period of time it takes Executive to become eligible for the medical benefits program of a new employer (subject to Section 6(a) hereof) or (B) twelve (12) months from the date of such termination. Notwithstanding the foregoing, Executive's entitlement to the Accrued Benefits shall not be subject to Executive's provision of the release hereunder.
(c)
Resignation, Death or Disability
. If Executive's employment with the Company terminates due to Executive's voluntary termination without Good Reason, then Executive shall be entitled to the Accrued Benefits. If Executive's employment is terminated by reason of Executive's death or Disability prior to the end of the Term, Executive shall be entitled to receive the Accrued Benefits plus a pro-rata bonus for that portion of the calendar year the Executive was employed by the Company. During any period that Executive fails to perform his duties hereunder as a result of Disability, Executive shall continue to receive his Base Salary and all other benefits and all other compensation pursuant to this Agreement unless and until his employment is terminated pursuant to this Section 5.
(d)
Payments in Lieu of Other Severance Rights
. The payments provided in subsections (a), (b) and (c) of this Section 5 shall be made in lieu of any other severance payments under any severance agreement, plan, program or arrangement of the Company.
(e)
Manner of Payment
. Unless Executive breaches one of the restrictive covenants contained in Sections 6 and 7 of this Agreement, the payments described in clause (b) of this Section 5 shall be paid as follows: the Salary Continuation Payments shall commence within 30 days of the Date of Termination (or, if the 30-day period spans two taxable years, in the later taxable year) and be paid in installments over a period of twelve (12) months. The payment of 100% of the prior year's bonus shall be paid in a lump sum on the later to occur of the first day of the 7th month following the Termination Date, or March 15 of the year following the year in which the Termination Date occurs. Notwithstanding anything herein to the contrary, the payment of any amounts hereunder (including benefits continuation) shall cease on the date on which Executive breaches any of the restrictive covenants contained in Sections 6 and 7 of this Agreement and shall not be paid unless Executive executes the release described in clause (b) of Section 5.
(f)
No Mitigation
. Upon termination of his employment, Executive will be under no obligation to seek other employment or earn other income in order to remain eligible for the payments and benefits set forth in this Section 5. Not including the repayment of loans made to Executive by the Company or any affiliates thereof, amounts due to Executive under this Agreement will not be subject to offset by the Company for any claims the Company may have against Executive, unless otherwise specifically agreed to in writing by Executive.
(g)
Internal Revenue Code Section 280G
. The Company shall take all reasonable action, including taking reasonable steps to obtain applicable approval if necessary, to cause any payments under this Agreement, to qualify for the exemption from the definition of “parachute payment” described in Section 280G(b)(5), to the extent applicable. If, however, Executive is entitled to receive payments and benefits under this Agreement and if, when combined with the payments and benefits Executive is entitled to receive under any other plan, program or arrangement of Company or an Affiliate, Executive would be subject to excise tax under Section 4999 of the Code or Company would be denied a deduction under Section 280G of the Code, then the severance amounts otherwise payable to Executive under this Agreement will be reduced by the minimum amount necessary to ensure that Executive will not be subject to such excise tax and Company will not be denied any such deduction.
(h)
Definitions
. For purposes of this Agreement:
(i)
“Accrued Benefits” means collectively the following: (i) any earned but unpaid salary through the last day of employment, (ii) any accrued but unpaid paid time off, (iii) any reimbursable business expenses through the last day of employment, (iv) any vested benefits in accordance with the terms of the Company's employee benefit plans or programs and (v) any benefit continuation and/or conversion rights in accordance with the terms of the Company's employee benefit plans or programs.
(ii)
“Cause” means (i) conviction of, guilty plea concerning or confession of any felony, (ii) any act of misappropriation or fraud committed by Executive in connection with the Company's or its subsidiaries' business, (iii) any material breach by Executive of this Agreement (iv) any material breach of any reasonable and lawful rule or directive of the Company or the Manager, (v) the gross or willful neglect of duties or gross misconduct by Executive, or (vi) the habitual use of drugs or habitual, excessive use of alcohol to the extent that any of such uses in the Company's or the Manager's good faith determination materially interferes with the performance of Executive's duties under this Agreement.
(iii)
“Code” means the Internal Revenue Code of 1986 as amended.
(iv)
“Good Reason” means the occurrence of any of the following without the written consent of Executive:
(A) A material diminution in the Executive's base compensation;
(B) A material diminution in the Executive's authority, duties, or responsibilities;
(C) A material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report; or
(D) A material change in the geographic location at which the Executive must perform the services under this Agreement.
(v) No “Good Reason” shall be deemed to have occurred unless the Executive provides notice to the Company of the existence of Good Reason within a period not to exceed 90
days of the initial existence of the condition, and the Company has a period of at least 30 days to remedy the condition.
(vi) “Disability” means, the inability of Executive to substantially perform the customary duties and responsibilities of Executive's Employment with Company or an Affiliate for a period of at least 120 consecutive days or 120 days in any 12-month period by reason of a physical or mental incapacity which is expected to result in death or last indefinitely, as determined by a duly licensed physician appointed by the Company.
(vii) Resignation as Officer or Director
. Upon the termination of employment for any reason, Executive shall resign each position (if any) that he then holds as an officer or director of the Company and any of its subsidiaries.
6.
RESTRICTIVE COVENANTS
. The parties agree that Executive's employment with Company involves of position of special trust and confidence wherein, in reliance upon Executive's promises in this Agreement (including but not limited to the covenants in this Section 6 (the “Restrictive Covenants”)) Executive will be entrusted with access to the Company's Confidential Information (as defined below) and will be given the opportunity to meet and develop relationships with the Company's potential and existing suppliers, financing sources, clients, customers and employees.
(a)
Noncompetition
. Executive agrees that during the period of his employment with the Company and for the twelve (12) month period immediately following Executive's resignation with Good Reason, or for any other reason, Executive shall not directly or indirectly, either as a principal, agent, employee, employer, consultant, partner, shareholder of a closely held corporation or shareholder in excess of five (5%) percent of a publicly traded corporation, corporate officer or director, or in any other individual or representative capacity, engage or otherwise participate in any manner or fashion in any business that is in competition in any manner whatsoever with the mortgage lending business of the Company or its subsidiaries or of any other business in which the Company or its subsidiaries is engaged at the time of Executive's termination of employment, or which is part of the Company's Developing Business, within states in which the Company is engaged in such business or Developing Business. For purposes of the foregoing, “Developing Business” shall mean the new business concepts and services the Company has developed and is in the process of developing during Executive's employment with the Company. Executive further covenants and agrees that this restrictive covenant is reasonable as to duration, terms and geographical area and that the same protects the legitimate interests of the Company and its respective affiliates, imposes no undue hardship on Executive, is not injurious to the public, and that any violation of this restrictive covenant shall be specifically enforceable in any court with jurisdiction upon short notice.
(b)
Solicitation of Employees, Etc
. Executive agrees that during the period of his employment with the Company and for the twelve (12) month period immediately following the date of termination of Executive's employment with the Company for any reason, Executive shall not, directly or indirectly, solicit or induce any officer, director, employee, agent or consultant of the Company or any of its successors, assigns, subsidiaries or affiliates to terminate his, her or its employment or other relationship with the Company or its successors, assigns, subsidiaries or affiliates, or otherwise encourage any such person or entity to leave or sever his, her or its employment or other relationship with the Company or its successors, assigns, subsidiaries or affiliates, for any other reason.
(c)
Disparaging Comments
. Executive agrees that during the period of his employment with the Company and for three years thereafter, Executive shall not make any disparaging or defamatory comments regarding the Company or, after termination of his employment relationship with the Company, make any comments concerning any aspect of the termination of their relationship. The obligations of Executive under this subparagraph shall not apply to disclosures required by applicable law, regulation or order of any court or governmental agency.
Nothing contained in this Section 6 shall limit any common law or statutory obligation that Executive may have to the Company or any of its affiliates. For purposes of this Section 6 and Section 7, the “Company” refers to the Company and any incorporated or unincorporated affiliates of the Company, including any entity which becomes Executive's employer as a result of any reorganization or restructuring of the Company for any reason. The Company shall be entitled, in connection with its tax planning or other reasons, to terminate Executive's employment (which termination shall not be considered a termination without Cause for purposes of this Agreement or otherwise) in connection with an invitation from another affiliate of the Company to accept employment with such affiliate in which case the terms and conditions hereof shall apply to Executive's employment relationship with such entity mutatis mutandis. For purposes of the time-limited, post-employment restrictions contained in Section 6 and Section 7, a reference to a period that begins at the termination of Executive's employment: (a) refers to the end of Executives employment with the Company irrespective of which party ended the relationship or why, and refers to end of Executive's continuous employment with the Company inclusive of any successor to which his employment may be transferred or assigned as a result of any reorganization, restructuring, merger or assignment; and (b) shall be extended by one day for each day Executive is found to be in violation of such Restrictive Covenant until such time as the Restrictive Covenant is complied with by Executive for a length of time equal to the length of time originally provided for.
7.
CONFIDENTIALITY
. All books of account, records, systems, correspondence, documents, and any and all other data, in whatever form, concerning or containing any reference to the works and business of the Company or its affiliated companies shall belong to the Company and shall be given up to the Company whenever the Company requires Executive to do so. Executive agrees that Executive shall not at any time during the term of Executive's employment or thereafter, without the Company's prior written consent, disclose to any person (individual or entity) any information or any trade secrets, plans or other information or data, in whatever form, (including, without limitation, (i) any financing strategies and practices, pricing information and methods, training and operational procedures, advertising, marketing, and sales information or methodologies or financial information and (ii) any Proprietary Information (as defined below)), concerning the Company's or any of its affiliated companies' or customers' practices, businesses, procedures, systems, plans or policies (collectively, “Confidential Information”), nor shall Executive utilize any such Confidential Information in any way or communicate with or contact any such customer other than in connection with Executive's employment by the Company. Executive hereby confirms that all Confidential Information constitutes the Company's exclusive property, and that all of the restrictions on Executive's activities contained in this Agreement and such other nondisclosure policies of the Company are required for the Company's reasonable protection. Confidential Information shall not include any information that has otherwise been disclosed to the public through proper means. This confidentiality provisions shall survive the termination of this Agreement and shall not be limited by any other confidentiality agreements entered into with the Company or any of its affiliates.
Executive agrees that he shall promptly disclose to the Company in writing all information and inventions generated, conceived or first reduced to practice by him alone or in conjunction with others, during or after working hours, while in the employ of the Company (all of which is collectively referred to in this Agreement as “
Proprietary Information
”);
provided
,
however
, that such Proprietary Information shall not include (i) any information that has otherwise been disclosed to the public not in violation of this Agreement and (ii) general business knowledge and work skills of Executive, even if developed or improved by Executive while in the employ of the Company. All such Proprietary Information shall be the exclusive property of the Company and is hereby assigned by Executive to the Company. Executive's obligation relative to the disclosure to the Company of such Proprietary Information anticipated in this Section 7 shall continue beyond Executive's termination of employment and Executive shall, at the Company's expense, give the Company all assistance it reasonably requires to perfect, protect and use its right to the Proprietary Information.
8.
ASSIGNMENT
. This Agreement and all of the terms and conditions hereof, shall bind the Company and its successors and assigns and shall bind Executive and Executive's heirs, executors and administrators. This Agreement shall automatically inure to the benefit of, and be fully enforceable by, any parent, subsidiary, affiliate, successor, or assign of the Company that Executive provides services to or is
provided Confidential Information about without the need for any further action by any party. No transfer or assignment of this Agreement shall release the Company from any obligation to Executive hereunder. Neither this Agreement, nor any of the Company's rights or obligations hereunder, may be assigned or otherwise subject to hypothecation by Executive. The Company may assign the rights and obligations of the Company hereunder, in whole or in part, to any of the Company's subsidiaries, affiliates or parent corporations, or to any other successor or assign in connection with the sale of all or substantially all of the Company's assets or stock or in connection with any merger, acquisition and/or reorganization, provided the assignee assumes the obligations of the Company hereunder.
9.
GENERAL
.
(a)
Notices
. Any notices provided hereunder must be in writing and shall be deemed effective upon the earlier of one business day following personal delivery (including personal delivery by telecopy or telex), or the third business day after mailing by first class mail to the recipient at the address indicated below:
To the Company:
Nationstar Mortgage Holdings Inc.
350 Highland Drive
Lewisville, Texas 75067
Attention: General Counsel
To Executive:
Harold Lewis
2220 King Fisher Drive
Westlake, TX 76262
or to such other address or to the attention of such other person as the recipient party will have specified by prior written notice to the sending party.
(b)
Severability
. Any provision of this Agreement which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this paragraph be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable.
(c)
Entire Agreement
. This document constitutes the final, complete, and exclusive embodiment of the entire agreement and understanding between the parties related to the subject matter hereof and supersedes and preempts any prior or contemporaneous understandings, agreements, or representations by or between the parties, written or oral.
(d)
Counterparts
. This Agreement may be executed on separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same agreement.
(e)
Amendments
. No amendments or other modifications to this Agreement may be made except by a writing signed by all parties. No amendment or waiver of this Agreement requires the consent of any individual, partnership, corporation or other entity not a party to this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any third person any rights or remedies under or by reason of this Agreement.
(f)
Choice of Law
. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the State of Texas without giving effect to principles of conflicts of law of such state.
(g)
Survivorship
. The provisions of this Agreement necessary to carry out the intention of the parties as expressed herein shall survive the termination or expiration of this Agreement.
(h)
Waiver
. The waiver by either party of the other party's prompt and complete performance, or breach or violation, of any provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation, and the failure by any party hereto to exercise any right or remedy which it may possess hereunder shall not operate nor be construed as a bar to the exercise of such right or remedy by such party upon the occurrence of any subsequent breach or violation. No waiver shall be deemed to have occurred unless set forth in a writing executed by or on behalf of the waiving party. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
(i)
Captions
. The captions of this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision hereof.
(j)
Construction
. The parties acknowledge that this Agreement is the result of arm's-length negotiations between sophisticated parties each afforded representation by legal counsel. Each and every provision of this Agreement shall be construed as though both parties participated equally in the drafting of the same, and any rule of construction that a document shall be construed against the drafting party shall not be applicable to this Agreement.
(k)
Arbitration
. Except as necessary for the Company and its subsidiaries, affiliates, successors or assigns or Executive to specifically enforce or enjoin a breach of this Agreement (to the extent such remedies are otherwise available), the parties agree that any and all disputes that may arise in connection with, arising out of or relating to this Agreement, or any dispute that relates in any way, in whole or in part, to Executive's services on behalf of the Company or any subsidiary, the termination of such services or any other dispute by and between the parties or their subsidiaries, affiliates, successors or assigns, shall be submitted to binding arbitration in Dallas, Texas according to the National Employment Dispute Resolution Rules and procedures of the American Arbitration Association. The parties agree that the prevailing party in any such dispute shall be entitled to reasonable attorneys' fees, costs, and necessary disbursements in addition to any other relief to which he or it may be entitled. For purposes of enforcement of the Restrictive Covenants, the Company shall be considered a “prevailing party” if it secures injunctive relief to enforce any of the Restrictive Covenants, with or without reformation of the covenant under Paragraph 9(b) or otherwise. This arbitration obligation extends to any and all claims that may arise by and between the parties or their subsidiaries, affiliates, successors or assigns, and expressly extends to, without limitation, claims or causes of action for wrongful termination, impairment of ability to compete in the open labor market, breach of an express or implied contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, fraud, misrepresentation, defamation, slander, infliction of emotional distress, disability, loss of future earnings, and claims under the United States Constitution, and applicable state and federal fair employment laws, federal and state equal employment opportunity laws, and federal and state labor statutes and regulations, including, but not limited to, the Civil Rights Act of 1964, as amended, the Fair Labor Standards Act, as amended, the Americans With Disabilities Act of 1990, as amended, the Rehabilitation Act of 1973, as amended, the Employee Retirement Income Security Act of 1974, as amended, the Age Discrimination in Employment Act of 1967, as amended, and any other state or federal law.
10.
EXECUTIVE REPRESENTATION AND ACCEPTANCE
.
By signing this Agreement, Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which Executive is bound and, (b) Executive is not a party to or bound by any employment agreement, noncompetition agreement or confidentiality agreement with any other person or entity that would interfere with the execution, delivery or performance of this Agreement by Executive, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. Executive agrees that he will not disclose to or use on behalf of the Company any proprietary information of a third party without that party's consent.
11.
COMPANY REPRESENTATION AND ACCEPTANCE
. By signing this Agreement, Company hereby represents and warrants to Executive that (a) the Company has all required power and authority to enter into, deliver, and perform its obligations under this Agreement and, (b) the execution, delivery and performance of this Agreement by the Company have been duly authorized by all necessary action on the part of the Company and does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Company is a party or by which the Company is bound, this Agreement will be the valid and binding obligation of Company, enforceable in accordance with its terms.
12.
EFFECTIVENESS
. This agreement shall become effective as of the Effective Date, it being understood that the Executive shall have no rights hereunder and the Company shall have no duties or obligations hereunder until this Agreement shall become effective; provided, however, that this Agreement is a binding obligation which cannot be revoked or terminated by either party except as provided herein.
IN WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND THEREOF, the parties hereto have executed and delivered this Agreement as of the year and date first above written.
COMPANY
By:
/s/ Jay Bray
Jay Bray, Chief Executive Officer
Dated: February 14, 2013
EXECUTIVE
/s/ Harold Lewis
Harold Lewis, President & Chief Operating Officer
Dated: February 14, 2013
NATIONSTAR MORTGAGE HOLDINGS INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT
(“Agreement”) is made and entered into as of the 2nd day of July 2012 by and between NATIONSTAR MORTGAGE HOLDINGS INC., a Delaware corporation (the “Company”) and RAMESH LAKSHMINARAYANAN, an individual presently residing at 92 Myrtle Ave., Milburn, NJ 07041 (“Executive”).
W I T N E S S E T H:
NOW, THEREFORE
, in consideration of the mutual promises, covenants and agreements herein contained, together with other good and valuable consideration the receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1.
SERVICES AND DUTIES
. The Company hereby employs Executive, and Executive hereby accepts employment by the Company in the capacity of its Executive Vice President & Chief Risk Officer. Executive will report directly to the Company's Chief Executive Officer (the “Manager”). The principal location of Executive's employment shall be at the Company's executive office located in Lewisville, Texas, or such other location determined by the Company, in its sole discretion, that is within a fifty (50) mile radius of the Company's current location at 350 Highland Drive, Lewisville Texas 75067, although Executive understands and agrees that Executive may be required to travel from time to time for business reasons. Executive shall be a full-time employee of the Company and shall dedicate all of Executive's working time to the Company and shall have no other employment and no other business ventures which are undisclosed to the Company or which conflict with Executive's duties under this Agreement. Executive will have such duties, responsibilities and authority as are prescribed by the Manager from time to time, together with such additional duties as may be assigned to Executive from time to time by the Manager. Notwithstanding the foregoing, nothing herein shall prohibit Executive from (i) engaging in personal investment activities for himself and his family that do not give rise to any conflict of interests with the Company or its affiliates, (ii) subject to prior approval of the Company, acting as a director or in a similar role for an entity unrelated to the Company if such role does not give rise to any conflict of interests with the Company or its affiliates and (iii) engaging in charitable and civic activities, in each case provided that such activities do not interfere with the performance of his duties hereunder.
2.
TERM
. Executive's employment under the terms and conditions of this Agreement will commence on the first day of Executive's employment with the Company (the “Effective Date”). The term of this Agreement shall be for a period of one (1) year (the “Initial Term”) beginning on the Effective Date, subject to earlier termination pursuant to Section 5 herein. The Term of this Agreement will be automatically renewed and extended up to one (1) time, for a period of one year (the “Renewal Terms”) unless either party gives the other notice that this Agreement will not be renewed at least thirty (30) days prior to the end of the Initial Term or of the first Renewal Term. The Renewal Terms will continue to be subject to the provisions for termination set forth herein. The Initial Term and Renewal term are hereinafter collectively referred to as the “Term”. Effective as of the expiration date, your continued employment with the Company will be “
at will
”, meaning that either your or the Company may terminate your employment at any time and for any reason, without the payment of any severance. Provided however, that if Executive is terminated without Cause by the Company after the expiration of this Agreement but through and including July 2, 2015; then Executive shall be compensated pursuant to the terms of section 5(b) of this Agreement as hereinafter set forth.
Notwithstanding anything to the contrary herein, in the event of any termination of this Agreement, Executive shall nevertheless continue to be bound by the terms and conditions set forth in Sections 6 and 7 hereof, which provisions, along with Sections 8 and 9 hereof, shall survive any such termination of this Agreement and any termination of Executive's employment with the Company.
For a period of one year following any termination of Executive's employment with the Company, Executive agrees to reasonably assist and cooperate with the Company and its affiliates and their respective agents,
officers, directors and employees with respect to the operations of the Company (and its successors and assigns) (i) on matters relating to the tasks for which Executive was responsible, or about which Executive had knowledge, before cessation of employment or which may otherwise be within the knowledge of Executive and (ii) exclusively in connection with any existing or future disputes, litigation or investigations of any nature brought by, against, or otherwise involving the Company or its affiliates in which the Company deems Executive's cooperation necessary, not to exceed 24 hours per month (or such other amount of time as agreed to by the parties). The Company will pay Executive a consulting fee of $182.69 per hour and will also reimburse Executive for reasonable out of pocket expenses incurred in connection therewith, in accordance with Company policy.
3.
COMPENSATION
.
(a)
Base Salary
. In consideration of Executive's full and faithful satisfaction of Executive's duties under this Agreement, the Company agrees to pay to Executive a base salary at the amount of $380,000 per annum (the “Base Salary”), payable in accordance with the Company's payroll practices and in such installments as the Company pays its similarly situated employees (but not less frequently than each calendar month), subject to usual and customary deductions for withholding taxes and similar charges, and customary employee contributions to health, welfare and retirement programs in which Executive is enrolled. The Base Salary shall be reviewed periodically in accordance with Executive's annual performance evaluation and adjusted at the Company's sole discretion;
provided
,
however
, that in no event shall the Base Salary be reduced without Executive's approval.
(b)
Sign-On Bonus.
Executive will be paid a Sign-On Bonus in two components as follows:
(i)
First component will be a cash award totaling $500,000
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$350,000 cash award payable within 30 days of date of hire
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$75,000 to be paid within 30 days of the anniversary of your date of hire in 2013 and 2014. Should the Executive be terminated without Cause or by the Executive for Good Reason, any unpaid components of the sign-on bonus will be paid to the Executive within 30 days of the effective date of the Separation Agreement.
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(ii)
The second component will be a number of shares of Restricted Stock of Nationstar Mortgage Holdings Inc. with an aggregate fair market value of $1,000,000 as of the date of the Effective Date. The shares of Restricted Stock will vest at 33.3% on each of the first and second anniversaries and 33.4% on the third anniversary of the Effective Date. The shares of Restricted Stock granted pursuant to this Section (3)(b)(ii), shall be subject to the terms and conditions set forth in agreement evidencing the award of the Restricted Stock (the “Award Agreement”); provided that, notwithstanding the Award Agreement, in the event that Executive is terminated by the Company without Cause, all unvested shares of Restricted Stock granted pursuant to this Section (3)(b)(ii) not previously forfeited shall immediately vest on the effective date of the termination. All equity awards are subject to approval of executive management and the Compensation Committee of the Board of Directors.
Should Executive voluntarily terminate employment with the Company without Good Reason within 24 months of the Executive's date of hire, the Executive will be obligated to repay a pro rata portion of the sign-on Bonus, paid through Date of Termination.
(iii)
For each of the years 2012, 2013, and 2014, Executive will receive a number of shares of Restricted Stock of Nationstar Mortgage Holdings Inc. with a Fair Market Value (FMV) of $300,000. The shares will be granted in 2013, 2014 and 2015 during the annual equity award period which is in March or April of each year. The FMV will be calculated based on the 2012 Incentive Compensation Plan. All
equity awards are subject to approval of executive management and the Compensation Committee of the Board of Directors
.
(c)
Bonus Compensation
. In addition to the Base Salary payable pursuant to Section 3(a) above, Executive will also be eligible to receive in respect of each fiscal year of the Company a cash bonus as follows:
(i)
For the fiscal year ending on December 31, 2012, Executive will be entitled to a minimum bonus in an amount not less than $650,000 from the Effective Date through December 31, 2012.
This minimum bonus for 2012 is exclusive of your sign-on bonus.
(ii)
Executive's maximum annual cash bonus opportunity will be 275% of his annual base salary, or $1,045,000, pursuant to the Company's incentive bonus plan.
Bonuses will be paid as soon as practicable after the Company's financial results for such fiscal year have been determined, but in no event later than two (2) months after the end of such fiscal year, and shall be payable only if Executive is employed by the Company on the last day of the fiscal year in respect of which such bonus is awarded and has not notified the Company of his intent to resign.
(d)
To assist with expenses associated with relocating your home to Dallas, you will receive a relocation assistance payment of $350,000, payable within 30 days of your relocation which must occur on or before July 2, 2013. Should Executive voluntarily terminate employment within two (2) years of Executive's date of hire, Executive will be required to repay a pro rata portion of the relocation benefits paid on behalf of the Executive or reimbursed directly to the Executive.
(e)
Compliance with Section 409A of the Code.
This Agreement is intended to comply with Section 409A of the Code, if and to the extent applicable, and will be interpreted and applied in a manner consistent with that intention. Toward that end, unless permitted sooner by Section 409A of the Code, severance amounts otherwise payable within six-months after termination of employment will be deferred until and become payable on the first day of the seventh month following the Termination Date. Further, to the extent Section 409A of the Code is applicable; the phrase “termination of employment” shall have the same meaning as a “separation from service” as defined in Code Section 409A.
(f)
Withholding
. All taxable compensation payable to Executive by the Company shall be subject to customary withholding taxes and such other employment taxes as are required under Federal law or the law of any state or by any governmental body to be collected with respect to compensation paid to an employee.
4.
BENEFITS AND PERQUISITES.
(a)
Retirement and Welfare Benefits
. During the Term, Executive shall be entitled to all the usual benefits offered to the Company's senior management, including vacation, sick time, and the ability to participate in the Company's medical, dental, life insurance, disability and other welfare programs, and 401(k) retirement savings plan, subject to and in accordance with the applicable limitations and requirements imposed by the terms of the documents governing such benefits, as from time to time in effect. Nothing, however, shall require the Company to maintain any benefit, plan or arrangement or provide any type or level of benefits to the Company's employees, including Executive. During the Term, Executive shall be entitled to not less than three (3) weeks paid vacation.
(b)
Reimbursement of Expenses
. The Company shall reimburse Executive for any expenses reasonably incurred by Executive for business purposes in furtherance of Executive's duties hereunder, including travel, meals and accommodations, upon submission by Executive of vouchers or receipts and in compliance with such rules and policies relating thereto as the Company may from time to time adopt.
5.
TERMINATION
. Executive's employment pursuant to this Agreement shall be terminated on the earliest of (i) the date on which the Manager or the Company delivers written notice that Executive is being terminated for Disability, and (ii) the date of Executive's death. In addition, Executive's employment with the Company may be terminated (w) by the Company for Cause, effective on the date on which a written notice to such effect is delivered to Executive; (x) by the Company at any time without Cause, effective on the date on which a written notice to such effect is delivered to Executive; (y) by Executive for “Good Reason”, effective on the date on which a written notice to such effect is delivered to the Company as provided for in 5(h)(iv)(E) in this Agreement ; or (z) by Executive at any time, effective on the date on which a written notice to such effect is delivered to the Company.
(a)
For Cause Termination
. If Executive's employment with the Company is terminated by the Company for Cause, Executive shall not be entitled to any further compensation or benefits other than Accrued Benefits. If the definition of “Cause” set forth below conflicts with such definition in any incentive plan or equity plan or agreement of the Company or any of its affiliates, the definition set forth herein shall control.
(b)
Termination by Company without Cause or by Executive for Good Reason
. If Executive's employment is terminated by the Company other than for Cause or is terminated by Executive for Good Reason prior to July 3, 2015, then Executive shall be entitled ,subject to Executive's providing the Company with a signed release of claims in a form adopted by the Company from time to time, which shall contain customary terms and conditions, and subject to Executive's continued compliance with the provisions of Sections 6 and 7 hereof: (i) the Accrued Benefits (ii) twelve (12) months base salary (“Salary Continuation Payments”) plus 100% of the Executive's prior year's bonus, and (iii) continuation of Executive's coverage under the Company's medical plan until the earlier of (A) the period of time it takes Executive to become eligible for the medical benefits program of a new employer (subject to Section 6(a) hereof) or (B) twelve (12) months from the date of such termination. Notwithstanding the foregoing, Executive's entitlement to the Accrued Benefits shall not be subject to Executive's provision of the release hereunder.
(c)
Resignation, Death or Disability
. If Executive's employment with the Company terminates due to Executive's voluntary termination without Good Reason, then Executive shall be entitled to the Accrued Benefits and vested Restricted Stock. If Executive's employment is terminated by reason of Executive's death or Disability prior to the end of the Term, Executive shall be entitled to receive the Accrued Benefits plus a pro-rata bonus for that portion of the calendar year the Executive was employed by the Company. During any period that Executive fails to perform his duties hereunder as a
result of Disability. Executive shall continue to receive his Base Salary and all other benefits and all other compensation pursuant to this Agreement unless and until his employment is terminated pursuant to this Section 5.
(d)
Payments in Lieu of Other Severance Rights
. The payments provided in subsections (a), (b) and (c) of this Section 5 shall be made in lieu of any other severance payments under any severance agreement, plan, program or arrangement of the Company.
(e)
Manner of Payment
. Unless Executive breaches one of the restrictive covenants contained in Sections 6 and 7 of this Agreement, the payments described in clause (b) of this Section 5 shall be paid as follows: the Salary Continuation Payment shall commence within 30 days of the Date of Termination (or, if the 30-day period spans two taxable years, in the later taxable year) and be paid over a period of twelve (12) months, and 100% of the prior year's bonus shall be paid in a lump sum within 30 days of the final Salary Continuation Payment. Notwithstanding anything herein to the contrary, the payment of any amounts hereunder (1) shall cease on the date on which Executive breaches any of the restrictive covenants contained in Sections 6 and 7 of this Agreement, and (2) shall not be paid unless Executive executes the release described in clause (b) of Section 5.
(f)
No Mitigation
. Upon termination of his employment, Executive will be under no obligation to seek other employment or earn other income in order to remain eligible for the payments and benefits set forth in this Section 5. Not including the repayment of loans made to Executive by the Company or any affiliates thereof, amounts due to Executive under this Agreement will not be subject to offset by the Company for any claims the Company may have against Executive, unless otherwise specifically agreed to in writing by Executive.
(g)
Internal Revenue Code Section 280G
. The Company shall take all reasonable action, including taking reasonable steps to obtain applicable approval if necessary, to cause any payments under this Agreement, to qualify for the exemption from the definition of “parachute payment” described in Section 280G(b)(5), to the extent applicable. If, however, Executive is entitled to receive payments and benefits under this Agreement and if, when combined with the payments and benefits Executive is entitled to receive under any other plan, program or arrangement of Company or an Affiliate, Executive would be subject to excise tax under Section 4999 of the Code or Company would be denied a deduction under Section 280G of the Code, then the severance amounts otherwise payable to Executive under this Agreement will be reduced by the minimum amount necessary to ensure that Executive will not be subject to such excise tax Further, to the extent Section 409A of the Code is applicable, the phrase “termination of employment” shall have the same meaning as a “separation of service” as defined in Code Section 409A.
(h)
and Company will not be denied any such deduction.
(i)
Definitions
. For purposes of this Agreement:
(i)
“Accrued Benefits” means collectively the following: (i) any earned but unpaid salary through the last day of employment, (ii) any accrued but unpaid paid time off, (iii) any reimbursable business expenses through the last day of employment, (iv) any vested benefits in accordance with the terms of the Company's employee benefit plans or programs and (v) any benefit continuation and/or conversion rights in accordance with the terms of the Company's employee benefit plans or programs.
(ii)
“Cause” means (i) conviction of, guilty plea concerning or confession of any felony, (ii) any act of misappropriation or fraud committed by Executive in connection with the Company's or its subsidiaries' business, (iii) any material breach by Executive of this Agreement (iv) any material breach of any reasonable and lawful rule or directive of the Company or the
Manager, (v) the gross or willful neglect of duties or gross misconduct by Executive, or (vi) the habitual use of drugs or habitual, excessive use of alcohol to the extent that any of such uses in the Company's or the Manager's good faith determination materially interferes with the performance of Executive's duties under this Agreement. In circumstances contemplated in (ii), (iii), (iv) and (v), the Executive will have a period of up to 30 days to remedy the situation.
(iii) “Code” means the Internal Revenue Code of 1986 as amended.
(iv)
"Good Reason" means the occurrence of any of the following without the written consent of Executive:
(A) A material diminution in the Executive's base compensation.
(B) A material diminution in the Executive's authority, duties, or responsibilities.
(C) A material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report.
(D) A material change in the geographic location at which the Executive must perform the services under this Agreement.
(E) No “Good Reason” shall be deemed to have occurred unless the Executive provides notice to the Company of the existence of Good Reason within a period not to exceed 90 days of the initial existence of the condition, and the Company has a period of at least 30 days to remedy the condition.
(v)
"Disability" means the inability of Executive to substantially perform the customary duties and responsibilities of Executive's Employment with Company or an Affiliate for a period of at least 120 consecutive days or 120 days in any 12-month period by reason of a physical or mental incapacity which is expected to result in death or last indefinitely, as determined by a duly licensed physician appointed by the Company.
(vi)
Resignation as Officer or Director
. Upon the termination of employment for any reason, Executive shall resign each position (if any) that he then holds as an officer or director of the Company and any of its subsidiaries.
6.
RESTRICTIVE COVENANTS
. The parties agree that Executive's employment with the Company involves a position of special trust and confidence wherein, in reliance upon Executive's promises in this Agreement (including but not limited to the covenants in this Section 6 (the “Restrictive Covenants”)) Executive will be entrusted with access to the Company's Confidential Information (as defined below) and will be given the opportunity to meet and develop relationships with the Company's potential and existing suppliers, financing sources, clients, customers and employees.
(a)
Solicitation of Employees, Etc
. Executive agrees that during the period of his employment with the Company and for the twelve (12) month period immediately following the date of termination of Executive's employment with the Company for any reason, Executive shall not, directly or indirectly, solicit or induce any officer, director, employee, agent or consultant of the Company or any of its successors, assigns, subsidiaries or affiliates to terminate his, her or its employment or other relationship with the Company or its successors, assigns, subsidiaries or affiliates, or otherwise encourage any such person or entity to leave or sever his, her or its employment or other relationship with the Company or its successors, assigns, subsidiaries or affiliates, for any other reason.
(b)
Disparaging Comments
. Executive agrees that during the period of his employment with the Company and for three years thereafter, Executive shall not make any disparaging or defamatory comments regarding the Company or, after termination of his employment relationship with the Company, make any comments concerning any aspect of the termination of their relationship. The obligations of Executive under this subparagraph shall not apply to disclosures required by applicable law, regulation or order of any court or governmental agency.
(c)
Garden Leave
. Notwithstanding any provision hereof, Executive agrees that, for a period of not longer than 90 days after notice of his voluntary termination of employment without Good Reason and prior to the date that the Company has scheduled for the effective date of his termination of employment, the Company may require Executive not to carry out his duties or to carry out limited duties for the Company (“Garden Leave”). During the period of Garden Leave:
(i) The Company shall be under no obligation to provide any work to, or vest any powers in, Executive, who shall have no right to perform any services for the Company.
(ii) The Company shall be entitled at its absolute discretion to require Executive not to attend his place of work or any other premises of the Company; and to require the Executive to work from his home.
(iii) Executive shall: continue to receive his salary and all contractual benefits in the usual way; and remain an employee of the Company and remain bound by the terms of this Agreement with the Company.
Nothing contained in this Section 6 shall limit any common law or statutory obligation that Executive may have to the Company or any of its affiliates. For purposes of this Section 6 and Section 7, the “Company” refers to the Company and any incorporated or unincorporated affiliates of the Company, including any entity which becomes Executive's employer as a result of any reorganization or restructuring of the Company for any reason. The Company shall be entitled, in connection with its tax planning or other reasons, to terminate Executive's employment (which termination shall not be considered a termination without Cause for purposes of this Agreement or otherwise) in connection with an invitation from another affiliate of the Company to accept employment with such affiliate in which case the terms and conditions hereof shall apply to Executive's employment relationship with such entity mutatis mutandis. For purposes of the time-limited, post-employment restrictions contained in Section 6 and Section 7, a reference to a period that begins at the termination of Executive's employment: (a) refers to the end of Executives employment with the Company irrespective of which party ended the relationship or why, and refers to end of Executive's continuous employment with the Company inclusive of any successor to which his employment may be transferred or assigned as a result of any reorganization, restructuring, merger or assignment; and (b) shall be extended by one day for each day Executive is found to be in violation of such Restrictive Covenant until such time as the Restrictive Covenant is complied with by Executive for a length of time equal to the length of time originally provided for.
7.
CONFIDENTIALITY
. All books of account, records, systems, correspondence, documents, and any and all other data, in whatever form, concerning or containing any reference to the works and business of the Company or its affiliated companies shall belong to the Company and shall be given up to the Company whenever the Company requires Executive to do so. Executive agrees that Executive shall not at any time during the term of Executive's employment or thereafter, without the Company's prior written consent, disclose to any person (individual or entity) any information or any trade secrets, plans or other information or data, in whatever form, (including, without limitation, (i) any financing strategies and practices, pricing information and methods, training and operational procedures, advertising, marketing, and sales information or methodologies or financial information and (ii) any Proprietary Information (as defined below)), concerning the Company's or any of its affiliated companies' or customers' practices, businesses, procedures, systems, plans or policies (collectively, “Confidential Information”), nor shall Executive utilize any such Confidential Information in any way or communicate with or
contact any such customer other than in connection with Executive's employment by the Company. Executive hereby confirms that all Confidential Information constitutes the Company's exclusive property, and that all of the restrictions on Executive's activities contained in this Agreement and such other nondisclosure policies of the Company are required for the Company's reasonable protection. Confidential Information shall not include any information that has otherwise been disclosed to the public through proper means. This confidentiality provisions shall survive the termination of this Agreement and shall not be limited by any other confidentiality agreements entered into with the Company or any of its affiliates.
Executive agrees that he shall promptly disclose to the Company in writing all information and inventions generated, conceived or first reduced to practice by him alone or in conjunction with others, during or after working hours, while in the employ of the Company (all of which is collectively referred to in this Agreement as “
Proprietary Information
”);
provided
,
however
, that such Proprietary Information shall not include (i) any information that has otherwise been disclosed to the public not in violation of this Agreement and (ii) general business knowledge and work skills of Executive, even if developed or improved by Executive while in the employ of the Company. All such Proprietary Information shall be the exclusive property of the Company and is hereby assigned by Executive to the Company. Executive's obligation relative to the disclosure to the Company of such Proprietary Information anticipated in this Section 7 shall continue beyond Executive's termination of employment and Executive shall, at the Company's expense, give the Company all assistance it reasonably requires to perfect, protect and use its right to the Proprietary Information.
8.
ASSIGNMENT
. This Agreement and all of the terms and conditions hereof, shall bind the Company and its successors and assigns and shall bind Executive and Executive's heirs, executors and administrators. This Agreement shall automatically inure to the benefit of, and be fully enforceable by, any parent, subsidiary, affiliate, successor, or assign of the Company that Executive provides services to or is provided Confidential Information about without the need for any further action by any party. No transfer or assignment of this Agreement shall release the Company from any obligation to Executive hereunder. Neither this Agreement, nor any of the Company's rights or obligations hereunder, may be assigned or otherwise subject to hypothecation by Executive. The Company may assign the rights and obligations of the Company hereunder, in whole or in part, to any of the Company's subsidiaries, affiliates or parent corporations, or to any other successor or assign in connection with the sale of all or substantially all of the Company's assets or stock or in connection with any merger, acquisition and/or reorganization, provided the assignee assumes the obligations of the Company hereunder.
9.
GENERAL
.
(a)
Notices
. Any notices provided hereunder must be in writing and shall be deemed effective upon the earlier of one business day following personal delivery (including personal delivery by telecopy or telex), or the third business day after mailing by first class mail to the recipient at the address indicated below:
To the Company:
Nationstar Mortgage Holdings Inc.
350 Highland Drive
Lewisville, Texas 75067
Attention: General Counsel
To Executive:
Ramesh Lakshminarayanan
92 Myrtle Ave.
Milburn, New Jersey 07041
or to such other address or to the attention of such other person as the recipient party will have specified by prior written notice to the sending party.
(b)
Severability
. Any provision of this Agreement which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this paragraph be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable.
(c)
Entire Agreement
. This document constitutes the final, complete, and exclusive embodiment of the entire agreement and understanding between the parties related to the subject matter hereof and supersedes and preempts any prior or contemporaneous understandings, agreements, or representations by or between the parties, written or oral.
(d)
Counterparts
. This Agreement may be executed on separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same agreement.
(e)
Amendments
. No amendments or other modifications to this Agreement may be made except by a writing signed by all parties. No amendment or waiver of this Agreement requires the consent of any individual, partnership, corporation or other entity not a party to this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any third person any rights or remedies under or by reason of this Agreement.
(f)
Choice of Law
. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the State of Texas without giving effect to principles of conflicts of law of such state.
(g)
Survivorship
. The provisions of this Agreement necessary to carry out the intention of the parties as expressed herein shall survive the termination or expiration of this Agreement.
(h)
Waiver
. The waiver by either party of the other party's prompt and complete performance, or breach or violation, of any provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation, and the failure by any party hereto to exercise any right or remedy which it may possess hereunder shall not operate nor be construed as a bar to the exercise of such right or remedy by such party upon the occurrence of any subsequent breach or violation. No waiver shall be deemed to have occurred unless set forth in a writing executed by or on behalf of the waiving party. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
(i)
Captions
. The captions of this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision hereof.
(j)
Construction
. The parties acknowledge that this Agreement is the result of arm's-length negotiations between sophisticated parties each afforded representation by legal counsel. Each and every provision of this Agreement shall be construed as though both parties participated equally in the drafting of the same, and any rule of construction that a document shall be construed against the drafting party shall not be applicable to this Agreement.
(k)
Arbitration
. Except as necessary for the Company and its subsidiaries, affiliates, successors or assigns or Executive to specifically enforce or enjoin a breach of this Agreement (to the extent such remedies are otherwise available), the parties agree that any and all disputes that may arise in connection with, arising out of or relating to this Agreement, or any dispute that relates in any way, in whole or in part, to Executive's services on behalf of the Company or any subsidiary, the termination of such services or any other
dispute by and between the parties or their subsidiaries, affiliates, successors or assigns, shall be submitted to binding arbitration in Dallas, Texas according to the National Employment Dispute Resolution Rules and procedures of the American Arbitration Association. The parties agree that the prevailing party in any such dispute shall be entitled to reasonable attorneys' fees, costs, and necessary disbursements in addition to any other relief to which he or it may be entitled. For purposes of enforcement of the Restrictive Covenants, the Company shall be considered a “prevailing party” if it secures injunctive relief to enforce any of the Restrictive Covenants, with or without reformation of the covenant under Paragraph 9(b) or otherwise. This arbitration obligation extends to any and all claims that may arise by and between the parties or their subsidiaries, affiliates, successors or assigns, and expressly extends to, without limitation, claims or causes of action for wrongful termination, impairment of ability to compete in the open labor market, breach of an express or implied contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, fraud, misrepresentation, defamation, slander, infliction of emotional distress, disability, loss of future earnings, and claims under the United States Constitution, and applicable state and federal fair employment laws, federal and state equal employment opportunity laws, and federal and state labor statutes and regulations, including, but not limited to, the Civil Rights Act of 1964, as amended, the Fair Labor Standards Act, as amended, the Americans With Disabilities Act of 1990, as amended, the Rehabilitation Act of 1973, as amended, the Employee Retirement Income Security Act of 1974, as amended, the Age Discrimination in Employment Act of 1967, as amended, and any other state or federal law.
10.
EXECUTIVE REPRESENTATION AND ACCEPTANCE
.
By signing this Agreement, Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which Executive is bound, (b) Executive is not a party to or bound by any employment agreement, noncompetition agreement or confidentiality agreement with any other person or entity that would interfere with the execution, delivery or performance of this Agreement by Executive, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. Executive agrees that he will not disclose to or use on behalf of the Company any proprietary information of a third party without that party's consent.
11.
COMPANY REPRESENTATION AND ACCEPTANCE
. By signing this Agreement, Company hereby represents and warrants to Executive that (a) the Company has all required power and authority to enter into, deliver, and perform its obligations under this Agreement and, (b) the execution, delivery and performance of this Agreement by the Company have been duly authorized by all necessary action on the part of the Company and does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Company is a party or by which the Company is bound, this Agreement will be the valid and binding obligation of Company, enforceable in accordance with its terms.
12.
EFFECTIVENESS
. This agreement shall become effective as of the Effective Date, it being understood that the Executive shall have no rights hereunder and the Company shall have no duties or obligations hereunder until this Agreement shall become effective; provided, however, that this Agreement is a binding obligation which cannot be revoked or terminated by either party except as provided herein.
IN WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND THEREOF, the parties hereto have executed and delivered this Agreement as of the year and date first above written.
COMPANY
By:
/s/ Jay Bray
Jay Bray, Chief Executive Officer
Dated: March 5, 2013
EXECUTIVE
/s/ Ramesh Lakshminarayanan
Ramesh Lakshminarayanan, EVP & Chief Risk Officer
Dated: March 5, 2013
NATIONSTAR MORTGAGE HOLDINGS INC.
GRANT OF CASH-BASED AWARD
Grantee: __________________________
Grant Date: _________________________
Cash-Based Award Amount: ___________________
General Vesting Schedule:
[graded vesting at 33.3% over a three-year period] [100% at the end of three years] [100% at on the first anniversary of the Grant]
Performance Period: [3] years commencing on the anniversary date of the Grant Date
1.
Grant of Cash-Based Award
. Pursuant to, and subject to, the terms and conditions set forth herein and in the 2012 Incentive Compensation Plan (the “
Plan
”), Nationstar Mortgage Holdings Inc. (the “
Company
”) hereby grants to Grantee a Cash-Based Award, as defined in the Plan, in the amount set forth above.
2.
Vesting Date
. The Cash-Based Award shall become vested as follows:
[33.3% of the Cash-Based Award shall vest on the first anniversary of the Grant Date; 33.3% of the Cash-Based Award shall vest on the second anniversary of the Grant Date; and 33.4% of Cash-Based Award shall vest on the third anniversary of the Grant Date (each a “Vesting Date”)];
[100% of the Cash-Based Award shall vest on the third anniversary of the Grant Date (“Vesting Date”)]; or
[100% of the Cash-Based Award shall vest on the first anniversary of the Grant Date (“Vesting Date”)].
provided
that, (i) in the event that the Grantee's employment with the Company ends on account of the Grantee's death or Disability at any time, the unvested portion of the Cash-Based Award shall immediately vest on such date as service ends, and (ii) in the event of a Change in Control, the unvested portion of the Cash-Based Award shall vest on such Change in Control (each, a “Vesting Date”); and
further provided
that the Grantee remains continuously employed through such Vesting Date.
For purposes of this Agreement, “Disability” shall mean (i) “Disability” as defined in such Grantee's written contract of Employment or engagement, if any, as may be in effect at the time of the occurrence of any acts or omissions that may constitute “Disability”; or (ii), in the case of any Grantee who is not party to any such written contract or whose written contract does not contain a definition of “Disability,” a mental or physical condition which, with or without reasonable accommodations, renders a Grantee permanently unable or incompetent to carry out the responsibilities he or she held or tasks and duties to which he or she was assigned at the time the condition was incurred, with such determination to be made by the Committee on the basis of such medical and other competent evidence as the Committee in its sole discretion shall deem relevant.
3.
Time and Form of Payment
. Within 60 days after a Vesting Date, an amount equal to a Grantee's vested Award, to the extent not yet already paid, shall be payable to the Grantee. Payment of a vested Award shall be made in cash.
4.
Forfeiture
. Subject to the provisions of the Plan and Section 2 of this Agreement, the portion of the Cash-Based Award which has not become vested on the date the Grantee's employment with the Company ends for any reason, shall immediately be forfeited on such date.
5.
Incorporation of the Plan
. All terms, conditions and restrictions of the Plan are incorporated herein and made part hereof as if stated herein. If there is any conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of this Agreement, as interpreted by the Board of Directors or the Committee shall govern. Unless otherwise indicated herein, all capitalized terms used herein shall have the meanings given to such terms in the Plan.
6.
Integration
. This Agreement and the Plan contain the entire understanding of the parties with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein and in the Plan. This Agreement and the Plan supersede all prior agreements and understandings between the parties with respect to its subject matter.
7.
Grantee Acknowledgment
. The Grantee hereby acknowledges receipt of a copy of the Plan. The Grantee hereby acknowledges that all decisions, determinations and interpretations of the Board, or a Committee thereof, or a delegatee in respect of the Plan, this Agreement and this Cash-Based Award shall be final and conclusive.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly authorized officer and said Grantee has hereunto signed this Agreement on the Grantee's own behalf, thereby representing that the Grantee has carefully read and understands this Agreement and the Plan as of the day and year first written above.
Acknowledged and Accepted:
___________________________
[Grantee]
NATIONSTAR MORTGAGE LLC
ANNUAL INCENTIVE COMPENSATION PLAN
The purpose of the Nationstar Mortgage LLC Annual Incentive Compensation Plan (the “
Plan
”) is to provide certain senior executive officers of Nationstar Mortgage LLC (the “
Company
”) with annual cash incentive bonus opportunities that are tied to both the achievement of financial performance goals by the Company and the attainment of individual performance objectives by a Participant.
2.
Administration.
The Plan shall be administered by the Compensation Committee of the Board of Directors of Nationstar Mortgage Holdings Inc. (the “
Committee
”). The Committee shall have discretionary and final authority to interpret the terms and provisions of the Plan and may adopt, alter or repeal any administrative rules, guidelines and/or practices governing the operation of the Plan as it shall from time to time deem advisable; provided, however, that the Committee may not decrease the amount of the Bonus Pool (as described below) and provided, further, that no action taken under this Section 2 shall intentionally cause a Bonus payment to become subject to Sections 409A or 457A of the Internal Revenue Code of 1986, as amended.
3.
Eligibility.
Any senior executive officer of the Company who is either listed on Exhibit A attached hereto or is otherwise notified in writing by the Company and the Committee of his or her eligibility to participate shall be eligible to participate in the Plan (each such officer, a “
Participant
”).
4.
Determination and Payment of Annual Bonus Awards.
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(a)
|
Amount of Bonus Pool
. The annual bonus pool from which a bonus (a “
Bonus
”) may be paid to a Participant pursuant to the terms of the Plan shall be equal to five percent (5%) of the Company's “Operating Cash Flow,” as defined in and determined in accordance with the terms set forth in Exhibit B attached hereto, which Exhibit B may be amended from time to time (the “
Bonus Pool
”).
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(b)
|
Allocation of Bonus Pool Among Participants
. For each fiscal year during which the Plan is in effect, the Committee shall (i) determine, in its sole discretion, but following consultation with the Chief Executive Officer of the Company, the percentage of the Bonus Pool to be allocated to each Participant (the “
Annual Allocation
”), provided that, in no event may the Annual Allocation for a Participant be less than seventy-five percent (75%) of the Annual Allocation for that Participant in the immediately preceding fiscal year, and (ii) provide written notice to the Chief Executive Officer of the Company of such Annual Allocation. Upon receipt of such written notice from the Committee, the Chief Executive Officer of the Company shall (1) provide written notice to each Participant of that Participant's Annual Allocation and (2) provide a copy of such written notices to the Committee.
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(c)
|
Eligibility to Receive Bonus Payment
. Except to the extent otherwise provided in a Participant's employment agreement with the Company, a Participant shall only be eligible to receive the payment of a Bonus pursuant to the terms of the Plan if, as of the last day of the fiscal year to which such Bonus relates, the Participant (i) is employed by the Company or its subsidiaries and (ii) has not notified the Company of his or her intent to resign employment with the Company and its subsidiaries.
|
|
|
|
|
(d)
|
Bonus Payment
. A Bonus, if any, shall be paid to a Participant, in cash, as soon as practicable after the Company's financial results for the fiscal year have been determined;
provided
,
however
, that in no event shall such payment be made earlier than January 1
st
or later than March 15
th
of the year following the year to which it relates.
|
|
|
|
|
(e)
|
Termination of Employment of a Participant
. Subject to Section 4(c) hereof, in the event that a Participant terminates employment with the Company for any reason, the Participant shall no longer be entitled to participate in the Plan and the Committee shall, in its sole discretion, (i) apportion all (or a portion) of the terminated Participant's Annual Allocation among the remaining Participants, (ii) add a new Participant (or Participants) to the Plan and apportion all (or a portion) of the terminated Participant's Annual Allocation to the new Participant (or Participants) or (iii) implement any combination of the foregoing.
|
|
|
|
|
5.
|
Amendment and Termination.
|
The Company, with the express consent of the Committee, shall have the right to amend, modify, suspend or terminate the Plan at any time. Notwithstanding the foregoing, no such amendment, modification, suspension or termination may, without the consent of any Participant affected thereby, impair the rights of such Participant with respect to a Bonus which became vested prior to the date thereof.
6.
Miscellaneous
|
|
|
|
(a)
|
No Right to Continued Employment or Payment of a Bonus
. The right of a Participant to receive a Bonus under the Plan shall not be deemed a right to continued employment by the Company or its subsidiaries and does not otherwise restrict the Participant's right or the right of the Company to terminate the Participant's employment at any time, with or without notice and with or without cause. No Participant has any claim to be awarded a Bonus, and there is no obligation for uniformity of treatment of Participants. The terms and conditions of each Bonus and the Committee's determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not the Participants are similarly situated).
|
|
|
|
|
(b)
|
Unfunded Status of Awards
. Bonus payments shall be made from the general funds of the Company and no special or separate fund shall be established or other segregation of assets made to assure the payment of such bonuses.
|
|
|
|
|
(c)
|
Nontransferability
. No Participant shall have the power or right to transfer (other than by will or the laws of descent and distribution), alienate or otherwise encumber his or her interest under the Plan.
|
|
|
|
|
(d)
|
Beneficiary
. A Participant may file with the Company a written designation of a beneficiary on a form as may be prescribed by the Company and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Participant, the executor or administrator of the Participant's estate will be deemed to be the Participant's beneficiary.
|
|
|
|
|
(e)
|
Withholding Taxes
. The Company shall withhold all applicable federal, state and local taxes from the payment of any Bonus made pursuant to the Plan, in accordance with applicable laws and regulations.
|
|
|
|
|
(f)
|
Governing Law
. The Plan shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its principles of conflict of laws.
|
|
|
|
|
(g)
|
Effective Date
. The effective date of the Plan is January 1, 2012.
|
EXHIBIT A
PARTICIPANTS
1. Jesse K. Bray (Chief Executive Officer)
2. David Hisey (Chief Financial Officer)
3. Harold Lewis (Chief Operating Officer)
4. Amar Patel (Executive Vice President of Portfolio Investments)
EXHIBIT B
OPERATING CASH FLOW
Operating Cash Flow
= Adjusted EBITDA from Operating Segments
Adjusted EBITDA is EBITDA adjusted in a manner consistent with the Company's financial reporting less Capitalized Servicing and a fair value adjustment for NCT interest expense difference plus impairments of equity method investments.
Operating Segments means the servicing and originations segments.
Capitalized Servicing is recorded with Nationstar Mortgage sells loans on a servicing-retained basis.
2012 MANAGEMENT INCENTIVE PLAN (MIP)
NATIONSTAR MORTGAGE LLC
|
|
|
|
|
|
PARTICIPANT
|
POSITION
|
|
(Participant's Full Name)
|
(Job Title)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Bonus Opportunity is ___% of your December 31, 2012 annual base salary.
Target Bonus reflects performance at the “Meets Expectations” level
and
is generally expressed as 60% of the Maximum Bonus Opportunity.
|
Plan Approval
___________________________________ ____________________________________
Business or Function Head Date Finance Date
___________________________________ ___________________________________
Human Resources Date President / COO or CFO Date
_____________________________________
CEO Date
___________________________________________
Participant Date
BASIS FOR DETERMINING INCENTIVE AWARDS
Plan Purpose
It is the company's objective to design and administer incentive opportunities that when combined with base salary will deliver above average total cash to successful performers as compared to their peers in firms competing in the same product, service, and talent marketplaces.
Eligibility for Participation
Only those Participants actively employed with Nationstar Mortgage LLC (the “Company”), identified on the cover page, and designated by the CEO are eligible for participation in this incentive plan.
Life of the Plan
This incentive plan is effective beginning January 1, 2012 and continues until revised or revoked by the CEO.
Plan Approvals
The CEO, and such other Nationstar executives whom the CEO authorizes to so act, will determine the individual awards for all Participants in this Plan.
Program Measures
Participants in this Plan are eligible for incentive compensation based on achievement of objectives/goals as identified in the attached
Appendix A
.
Incentive Opportunity
Key performance objectives, measures and targets have been established for this Participant/position. The incentive awards will be calculated in accordance with the applicable criteria documented in
Appendix A
. These should be communicated to the eligible Participant prior to the performance period. This incentive plan expresses the incentive opportunity as a percentage of base salary. The base salary used will be the Participant's base salary as of December 31 of the applicable plan year.
New / Reactivated / Transferred Employees
With respect to any payment, Participants who become eligible for participation during the plan performance period will be prorated from the Eligibility Date. The Eligibility Date shall be defined as the effective date that the new/reactivated/transferred Participant assumes his/her responsibilities as reflected on the Payroll Action Notice/in the HRIS system.
Responsibility for Calculations and Plan Payments
The Participant must complete the requirements as specified by management to qualify for incentive consideration. The appropriate Nationstar SVP Finance or his/her designee is charged in each case with the responsibility for incentive payment calculations made in accordance with the terms of this Plan. He/she must also certify full and partial year payments for all qualified Participants. The Business/Function EVP or his/her designee will be responsible for resolving discrepancies and clarifying interpretations of this Plan on an ongoing basis.
Adjustments
From time to time adjustments to the awards may need to be made. The CEO may modify awards based on various business factors during the Plan year and/or input from executive management.
Performance Rating Requirement
In order to be eligible to receive any payment under this program, the Participant must, at all times, maintain an acceptable level of performance. Participants are also expected to follow all guidelines with respect to the code of conduct as specified by the Company.
Review and Modification of the Plan
It is important that performance objectives/goals established in the Company's incentive plans support a competitive position as it relates to the market and the overall business plan. Clearly, expectations of market potential can change during the year. Such reviews may result in changes in incentive rates or goals upward or downward depending on specific circumstances at the Company's discretion without the need for prior notice. Any changes will require approval of the CEO.
Timing of Incentive Payments
Awards will be paid as soon as practical after the Company's financial results for the year have been determined, but in no event later than March 15 following the end of the fiscal year. Awards shall be payable only if the Participant is employed by the Company when payment is made. If a Participant resigns, gives notice of his/her intent to resign or otherwise terminates his/her employment before the award is paid, the Participant forfeits all rights to any incentive award. Any incentive award that is paid is at the sole discretion of the Company.
Terminated Employees
A Participant whose employment is terminated (either by the Company or the Participant), prior to the awards being paid, shall not be eligible to receive any payment under this Plan, except where payment is required by federal or state law. Otherwise stated, the Participant must be actively employed when awards are paid to be eligible to receive any payment. This provision shall not apply in cases of the employee's death, Retirement or Disability. Management reserves the right to withhold payments from any Participant where there is an ongoing investigation with respect to appropriate business practices until such time as the investigation is complete and the employee has been exonerated.
Plan Amendments and Termination
The CEO will have the complete authority to interpret Plan provisions, to revise the Plan and to make determinations deemed appropriate for administration of the Plan. The CEO reserves the right to amend or terminate this Plan or to revise any aspect of the Plan at any time, including individual payouts, without prior notification to the Participant(s).
Other General Rules
Participation in this Plan cannot be construed to constitute a contract between the Company and any of its employees. All employees are employee's at-will. Plan participation does not limit the Company from terminating an employee's employment at any time. Participation in the Plan during the fiscal year does not imply participation in any subsequent fiscal year.
Non-Solicitation
As a condition of participation in this Plan, the Participant specifically agrees that during the course of the Participant's employment with the Company and for the period of twelve (12) months following his/her termination of employment for any reason: (i) he/she will not directly or indirectly (whether personally or through another business, entity or person) recruit, solicit, induce or encourage others to recruit, solicit, or induce, any employee of the company to terminate his/her employment with or otherwise cease his/her relationship with the company or (ii) hire any individual who left the employ of the company or any of its affiliates during the preceding one-year period. Subject to the limitations noted in this Plan and the terms and conditions, the Participant is not restricted from being employed by or engaged in any type of business following the termination of the Participant's employment relationship with the Company.
Plan Acknowledgement
I acknowledge that without my signature to demonstrate the acceptance of all the terms and conditions of this Plan and the terms and conditions, unless prohibited by the state law, I will be ineligible to participate in this Plan and I will not be entitled to receive any payment provided for in such Plan. Notwithstanding the foregoing, in the event I for any reason fail to sign or acknowledge my acceptance of all the terms and conditions of this Plan and the terms and conditions, any incentive payment made to me by the Company will be governed exclusively by this Plan.
By signing or acknowledging the Plan, I authorize the Company to deduct any incentive payment or advanced payment from any future incentive payment or my final paycheck upon termination if the conditions for earning such incentive payments do not occur. I understand and agree to the use of an electric method of signature to demonstrate my acceptance of the terms and conditions of this Plan, and the terms and conditions, including any applicable amendment, and all related business practices and policies, all of which are incorporated into and made a part of this Plan and which may be revised from time to time at the Company's sole discretion.
Appendix A
2012 SCORECARD
EMPLOYEE:
POSITION:
|
|
|
|
|
|
|
Score
|
Overall Rating
|
Percent of Opportunity
|
|
5
|
4.50 - 5.00 = Outstanding
|
100%
|
|
4
|
4.00 - 4.49 = Exceeds Expectations
|
80%
|
|
3
|
3.50 - 3.99 = Meets Expectations
|
60%
|
|
2
|
3.00 - 3.49 = Acceptable
|
40%
|
|
1
|
2.75 - 2.99 = Marginal
|
20%
|
|
—
|
< 2.75 = Needs Improvement
|
—%
|
|
|
|
|
|
|
|
EVALUATION OF KEY PERFORMANCE OBJECTIVES
|
|
|
Rate each Key Performance Objective in the “Rating” column.
|
|
|
Provide specific examples of performance in the “Results” column
|
|
|
Maximum Bonus Opportunity: ____% of Base Salary Target Bonus is generally expressed as 60% of the Max Bonus Opportunity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance Objectives
|
Measurements
List your metric(s) for each objective. Describe how / when you will measure your results.
|
Results
|
Weight (enter as decimal)
|
Rating
|
Weighted Rating
|
|
A.
|
5 =
4 =
3 =
2 =
|
|
|
|
—
|
|
B.
|
5 =
4 =
3 =
2 =
|
|
|
|
—
|
|
C.
|
5 =
4 =
3 =
2 =
|
|
|
|
—
|
|
D.
|
5 =
4 =
3 =
2 =
|
|
|
|
—
|
|
E.
|
5 =
4 =
3 =
2 =
|
|
|
|
—
|
|
|
|
Overall Weight
(must total 1.00)
|
—
|
Weighted Score
|
—
|
AMENDMENT NO. TWO TO
NATIONSTAR MORTGAGE LLC
LONG-TERM INCENTIVE PLAN
WHEREAS, Nationstar Mortgage, LLC (the “
Company
”), a corporation duly organized and existing under the laws of the State of Texas, previously established the Nationstar Mortgage LLC Long-Term Incentive Plan (the “
Plan
”) for the benefit of certain employees, effective January 1, 2007;
WHEREAS, pursuant to Article VIII of the Plan, the Company is authorized to amend the Plan at its discretion by resolution of the President and CEO of the Company;
NOW THEREFORE, BE IT RESOLVED that Article II is hereby amended, effective June 1, 2011, to renumber the existing Section 2.2 as Section 2.3, and to add the following Section 2.2, to read as follows:
“2.2
Discretionary Awards
. The President and CEO may, from time to time, grant discretionary Awards. The determination of the individuals, if any, to whom a discretionary Award is to be granted and the amount of such Award shall be in the sole and absolute discretion of the President and CEO. In such case, and notwithstanding Section 11.3 hereof, the Award Date of the discretionary Award shall be the date determined by the President and CEO and set forth in the notice of Award provided to the Participant.”
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing instrument comprising Amendment No. Two to the Nationstar Mortgage LLC Long-Term Incentive Plan, the Company has caused these presents to be duly executed in its name and on its behalf this 1st day of June, 2011.
NATIONSTAR MORTGAGE LLC
By:
/s/ Anthony H. Barone
Title: President and CEO
ATTEST:
/s/ Mark O'Brien
Executive Vice President
(Title)
2012 MANAGEMENT INCENTIVE PLAN (MIP)
NATIONSTAR MORTGAGE LLC
|
|
|
|
|
|
PARTICIPANT
|
POSITION
|
|
(Participant's Full Name)
|
(Job Title)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Bonus Opportunity is ___% of your December 31, 2012 annual base salary.
Target Bonus reflects performance at the “Meets Expectations” level
and
is generally expressed as 60% of the Maximum Bonus Opportunity.
|
Plan Approval
__________________________________
Business or Function Head Date
___________________________________
Finance Date
___________________________________
Human Resources Date
_________________________________
President / COO or CFO Date
_____________________________________
CEO Date
___________________________________________
Participant Date
BASIS FOR DETERMINING INCENTIVE AWARDS
Plan Purpose
It is the company's objective to design and administer incentive opportunities that when combined with base salary will deliver above average total cash to successful performers as compared to their peers in firms competing in the same product, service, and talent marketplaces.
Eligibility for Participation
Only those Participants actively employed with Nationstar Mortgage LLC (the “Company”), identified on the cover page, and designated by the CEO are eligible for participation in this incentive plan.
Life of the Plan
This incentive plan is effective beginning January 1, 2012 and continues until revised or revoked by the CEO.
Plan Approvals
The CEO, and such other Nationstar executives whom the CEO authorizes to so act, will determine the individual awards for all Participants in this Plan.
Program Measures
Participants in this Plan are eligible for incentive compensation based on achievement of objectives/goals as identified in the attached
Appendix A
.
Incentive Opportunity
Key performance objectives, measures and targets have been established for this Participant/position. The incentive awards will be calculated in accordance with the applicable criteria documented in
Appendix A
. These should be communicated to the eligible Participant prior to the performance period. This incentive plan expresses the incentive opportunity as a percentage of base salary. The base salary used will be the Participant's base salary as of December 31 of the applicable plan year.
New / Reactivated / Transferred Employees
With respect to any payment, Participants who become eligible for participation during the plan performance period will be prorated from the Eligibility Date. The Eligibility Date shall be defined as the effective date that the new/reactivated/transferred Participant assumes his/her responsibilities as reflected on the Payroll Action Notice/in the HRIS system.
Responsibility for Calculations and Plan Payments
The Participant must complete the requirements as specified by management to qualify for incentive consideration. The appropriate Nationstar SVP Finance or his/her designee is charged in each case with the responsibility for incentive payment calculations made in accordance with the terms of this Plan. He/she must also certify full and partial year payments for all qualified Participants. The Business/Function EVP or his/her designee will be responsible for resolving discrepancies and clarifying interpretations of this Plan on an ongoing basis.
Adjustments
From time to time adjustments to the awards may need to be made. The CEO may modify awards based on various business factors during the Plan year and/or input from executive management.
Performance Rating Requirement
In order to be eligible to receive any payment under this program, the Participant must, at all times, maintain an acceptable level of performance. Participants are also expected to follow all guidelines with respect to the code of conduct as specified by the Company.
Review and Modification of the Plan
It is important that performance objectives/goals established in the Company's incentive plans support a competitive position as it relates to the market and the overall business plan. Clearly, expectations of market potential can change during the year. Such reviews may result in changes in incentive rates or goals upward or downward depending on specific circumstances at the Company's discretion without the need for prior notice. Any changes will require approval of the CEO.
Timing of Incentive Payments
Awards will be paid as soon as practical after the Company's financial results for the year have been determined, but in no event later than March 15 following the end of the fiscal year. Awards shall be payable only if the Participant is employed by the Company when payment is made. If a Participant resigns, gives notice of his/her intent to resign or otherwise terminates his/her employment before the award is paid, the Participant forfeits all rights to any incentive award. Any incentive award that is paid is at the sole discretion of the Company.
Terminated Employees
A Participant whose employment is terminated (either by the Company or the Participant), prior to the awards being paid, shall not be eligible to receive any payment under this Plan, except where payment is required by federal or state law. Otherwise stated, the Participant must be actively employed when awards are paid to be eligible to receive any payment. This provision shall not apply in cases of the employee's death, Retirement or Disability. Management reserves the right to withhold payments from any Participant where there is an ongoing investigation with respect to appropriate business practices until such time as the investigation is complete and the employee has been exonerated.
Plan Amendments and Termination
The CEO will have the complete authority to interpret Plan provisions, to revise the Plan and to make determinations deemed appropriate for administration of the Plan. The CEO reserves the right to amend or terminate this Plan or to revise any aspect of the Plan at any time, including individual payouts, without prior notification to the Participant(s).
Other General Rules
Participation in this Plan cannot be construed to constitute a contract between the Company and any of its employees. All employees are employee's at-will. Plan participation does not limit the Company from terminating an employee's employment at any time. Participation in the Plan during the fiscal year does not imply participation in any subsequent fiscal year.
Non-Solicitation
As a condition of participation in this Plan, the Participant specifically agrees that during the course of the Participant's employment with the Company and for the period of twelve (12) months following his/her termination of employment for any reason: (i) he/she will not directly or indirectly (whether personally or through another business, entity or person) recruit, solicit, induce or encourage others to recruit, solicit, or induce, any employee of the company to terminate his/her employment with or otherwise cease his/her relationship with the company or (ii) hire any individual who left the employ of the company or any of its affiliates during the preceding one-year period. Subject to the limitations noted in this Plan and the terms and conditions, the Participant is not restricted from being employed by or engaged in any type of business following the termination of the Participant's employment relationship with the Company.
Plan Acknowledgement
I acknowledge that without my signature to demonstrate the acceptance of all the terms and conditions of this Plan and the terms and conditions, unless prohibited by the state law, I will be ineligible to participate in this Plan and I will not be entitled to receive any payment provided for in such Plan. Notwithstanding the foregoing, in the event I for any reason fail to sign or acknowledge my acceptance of all the terms and conditions of this Plan and the terms and conditions, any incentive payment made to me by the Company will be governed exclusively by this Plan.
By signing or acknowledging the Plan, I authorize the Company to deduct any incentive payment or advanced payment from any future incentive payment or my final paycheck upon termination if the conditions for earning such incentive payments do not occur. I understand and agree to the use of an electric method of signature to demonstrate my acceptance of the terms and conditions of this Plan, and the terms and conditions, including any applicable amendment, and all related business practices and policies, all of which are incorporated into and made a part of this Plan and which may be revised from time to time at the Company's sole discretion.
Appendix A
2012 SCORECARD
EMPLOYEE:
POSITION:
EVALUATION OF KEY PERFORMANCE OBJECTIVES
Rate each Key Performance Objective in the “Rating” column.
Provide specific examples of performance in the “Results” column
|
|
|
|
|
|
|
Score
|
Overall Rating
|
Percent of Opportunity
|
|
5
|
4.50 - 5.00 = Outstanding
|
100%
|
|
4
|
4.00 - 4.49 = Exceeds Expectations
|
80%
|
|
3
|
3.50 - 3.99 = Meets Expectations
|
60%
|
|
2
|
3.00 - 3.49 = Acceptable
|
40%
|
|
1
|
2.75 - 2.99 = Marginal
|
20%
|
|
—
|
< 2.75 = Needs Improvement
|
—%
|
Maximum Bonus Opportunity:
____
% of Base Salary
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance Objectives
|
Measurements
List your metric(s) for each objective. Describe how / when you will measure your results.
|
Results
|
Weight (enter as decimal)
|
Rating
|
Weighted Rating
|
|
A.
|
5 =
4 =
3 =
2 =
|
|
|
|
—
|
|
B.
|
5 =
4 =
3 =
2 =
|
|
|
|
—
|
|
C.
|
5 =
4 =
3 =
2 =
|
|
|
|
—
|
|
D.
|
5 =
4 =
3 =
2 =
|
|
|
|
—
|
|
E.
|
5 =
4 =
3 =
2 =
|
|
|
|
—
|
|
|
|
Overall Weight
(must total 1.00)
|
—
|
Weighted Score
|
—
|
Subsidiaries of Registrant
|
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
Jurisdiction of Organization
|
|
|
|
|
Nationstar Sub1 LLC
|
|
Delaware
|
|
|
|
|
Nationstar Mortgage LLC
|
|
Delaware
|
|
|
|
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-183332) pertaining to the 2012 Incentive Compensation Plan of Nationstar Mortgage Holdings Inc. of our report dated March 15, 2013, with respect to the consolidated financial statements of Nationstar Mortgage Holdings Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2012.
/s/ Ernst & Young LLP
Dallas, Texas
March 15, 2013
Exhibit 31.1
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
I, Jay Bray, certify that:
|
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2012 of Nationstar Mortgage Holdings Inc.;
|
|
|
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:
|
|
|
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
|
b.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
|
c.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
|
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
|
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
|
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
|
|
|
|
|
|
Date:
|
March 15, 2013
|
|
/s/ Jay Bray
|
|
|
|
|
Jay Bray
|
|
|
|
|
Title:
|
Chief Executive Officer
|
Exhibit 31.2
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
I, David C. Hisey, certify that:
|
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2012 of Nationstar Mortgage Holdings Inc.;
|
|
|
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
|
|
4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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c.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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March 15, 2013
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/s/ David C. Hisey
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David C. Hisey
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Title
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Chief Financial Officer
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Exhibit 32.1
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
In connection with the Annual Report of Nationstar Mortgage Holdings Inc. (the “Company”) on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jay Bray, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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March 15, 2013
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By:
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/s/ Jay Bray
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Jay Bray
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Title:
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Chief Executive Officer
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Exhibit 32.2
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
In connection with the Annual Report of Nationstar Mortgage Holdings Inc. (the “Company”) on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David C. Hisey, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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March 15, 2013
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By:
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/s/ David C. Hisey
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David C. Hisey
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Title:
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Chief Financial Officer
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