Altisource Residential Corp (Form: 10-K, Received: 03/02/2015 17:30:14)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K



x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 001-35657

Altisource Residential Corporation

(Exact name of registrant as specified in its charter)



MARYLAND	46-0633510
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

c/o Altisource Asset Management Corporation

402 Strand Street

Frederiksted, United States Virgin Islands 00840-3531

(Address of principal executive office)

(340) 692-1055

(Registrant’s telephone number, including area code)

(340) 692-1055

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



(Title of Each Class)	(Name of exchange on which registered)
Common stock, par value $0.01 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None.

Indicate by check if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨

Indicate by check if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

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 x No ¨

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer	x		Accelerated Filer	¨
Non-Accelerated Filer	¨	(Do not check if a smaller reporting company)	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The aggregate market value of common stock held by non-affiliates of the registrant was $836.2 million , based on the closing share price as reported on the New York Stock Exchange on June 30, 2014 and the assumption that all directors and executive officers of the registrant and their families are affiliates. This determination of affiliate status is not necessarily a conclusive determination for any other purpose.

As of February 19, 2015 , 57,203,211 shares of our common stock were outstanding.

Altisource Residential Corporation

December 31, 2014

Table of Contents



Part I	1
Item 1. Business.	1
Item 1A. Risk Factors.	35
Item 1B. Unresolved Staff Comments.	35
Item 2. Properties.	35
Item 3. Legal Proceedings.	37
Item 4. Mine Safety Disclosures.	37
Part II	38
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	38
Item 6. Selected Financial Data.	40
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	40
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.	54
Item 8. Consolidated Financial Statements and Supplementary Data.	55
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	55
Item 9A. Controls and Procedures.	55
Item 9B. Other Information.	57
Part III	58
Item 10. Directors, Executive Officers and Corporate Governance.	58
Item 11. Executive Compensation.	58
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	58
Item 13. Certain Relationships and Related Transactions, and Director Independence.	58
Item 14. Principal Accountant Fees and Services.	58
Part IV	59
Item 15. Exhibits.	59
Signatures	61

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References in this report to "we," "our," "us," or the "Company" refer to Altisource Residential Corporation and its consolidated subsidiaries, unless otherwise indicated. References in this report to “AAMC” refer to Altisource Asset Management Corporation, unless otherwise indicated. References in this report to “Altisource” refer to Altisource Portfolio Solutions S.A. and its consolidated subsidiaries, unless otherwise indicated. References in this report to “Ocwen” refer to Ocwen Financial Corporation and its consolidated subsidiaries, unless otherwise indicated.

Special note on forward-looking statements

Our disclosure and analysis in this Annual Report on Form 10-K contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to as the “Securities Act,” and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act.” In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

The forward-looking statements contained in this report reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. Factors that may materially affect such forward-looking statements include, but are not limited to:


•	our ability to implement our business strategy;


•	our ability to make distributions to our stockholders;


•	our ability to acquire assets for our portfolio;


•	the impact of changes to the supply of, value of and the returns on sub-performing and non-performing loans;


•	our ability to convert loans to rental properties generating attractive returns;


•	our ability to predict our costs;


•	our ability to effectively compete with our competitors;


•	our ability to apply the proceeds from financing activities to target assets in a timely manner;


•	changes in interest rates and the market value of the collateral underlying our sub-performing and non- performing loan portfolios or acquired properties;


•	our ability to obtain and access financing arrangements on favorable terms, or at all;


•	our ability to maintain adequate liquidity;


•	our ability to retain our engagement of AAMC;


•	the failure of Altisource to effectively perform its obligations under various agreements with us;


•	the failure of our servicers to effectively perform their servicing obligations;


•	our failure to maintain qualification as a REIT;


•	our failure to maintain our exemption from registration under the Investment Company Act;


•	the impact of adverse real estate, mortgage or housing markets;


•	the impact of adverse legislative or regulatory tax changes; and


•	general economic and market conditions.

While forward-looking statements reflect our good faith beliefs, assumptions and expectations, they are not guarantees of future performance. Such forward-looking statements speak only as of their respective dates, and we assume no obligation to update them to reflect changes in underlying assumptions or factors, new information or otherwise. For a further discussion of these and other factors that could cause our future results to differ materially from any forward-looking statements contained herein, please refer to the section "Item 1A. Risk factors.”

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Part I

Item 1. Business

Overview

Altisource Residential Corporation is a Maryland REIT focused on acquiring, owning and managing single-family rental properties throughout the United States. We acquire our single-family rental properties primarily through the acquisition of sub-performing and non-performing loan portfolios, which is a differentiated approach that we believe strategically positions us to take advantage of market opportunities better than market participants that are solely focused on real estate-owned, or “REO,” acquisitions. We conduct substantially all of our activities through our operating partnership, Altisource Residential, L.P., and its subsidiaries.

On December 21, 2012 we became a stand-alone publicly traded company with an initial capital contribution of $100.0 million. We have a long-term service agreement with Altisource, a leading provider of real estate and mortgage portfolio management, asset recovery and customer relationship management services. We also have servicing agreements with three separate servicers. We believe that our relationship with Altisource and access to its nationwide renovation and property management vendor network enables us to competitively bid on large sub-performing or non-performing residential mortgage loan portfolios with assets dispersed throughout the United States.

We are managed by AAMC. We rely on AAMC for administering our business and performing certain of our corporate governance functions. AAMC also provides portfolio management services in connection with our acquisition of sub-performing and non-performing loans and single-family residential properties. AAMC was formed on March 15, 2012 as a wholly owned subsidiary of Altisource and was spun off from Altisource into a stand-alone publicly traded company concurrently with our separation from Altisource.

Our Business Strategy

Overview

We believe our business model provides us with operating capabilities that are difficult to replicate and positions us to capitalize on substantial single-family rental and non-performing loan market opportunities. Specifically, we believe our differentiated acquisition strategy focused on purchasing non-performing mortgage loans, our multifaceted loan resolution methodologies through our mortgage loan servicers and our access to an established, nationwide renovation and property management infrastructure provide us with multiple avenues of value creation that will help us to achieve our business objective of generating attractive risk-adjusted returns for our stockholders.

Acquisition Strategy

We expect to continue to acquire single-family rental properties primarily through our acquisition of sub-performing and non-performing mortgage loan portfolios. Based on the experience of AAMC’s management team, we believe that the distressed loan channel gives us a cost advantage over other acquisition channels such as foreclosure auctions and REO acquisitions because:

•

we believe there are fewer participants in the sub-performing and non-performing loan marketplace than in the foreclosure auction and other REO acquisition channels due to the large size of portfolios offered for sale on an “all or none” basis and the required operational infrastructure involved in servicing loans and managing single-family rental properties throughout the United States. We believe the relatively lower level of competition for sub-performing and non-performing loans provides buyers with the opportunity for a relatively lower cost to ultimately acquire single-family rental properties relative to foreclosure auctions or other REO acquisition channels; and

•

we believe that we will be able to purchase residential mortgage loans at a lower price than REO properties because sellers of such loans will be able to avoid paying costs typically associated with home sales, such as broker commissions and closing costs of up to 10% of gross proceeds of the sale. We believe this will motivate the sellers to accept a lower price for the sub-performing and non-performing loans than they would if selling REO.

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Multifaceted Loan Resolution Methodologies

Through our mortgage servicers, including Ocwen, we seek to employ various loan resolution methodologies with respect to our residential mortgage loans, including loan modification, collateral resolution and collateral disposition. To help us achieve our business objective, we intend to focus on (1) converting a portion of our sub-performing and non-performing loans to performing status and (2) managing the foreclosure process and timelines with respect to the remainder of those loans.

Our preferred resolution methodology is to modify the sub-performing and non-performing loans. Once successfully modified, we expect that certain borrowers will refinance their loans with other lenders or we will sell the modified loans after establishing a payment history at or near the estimated value of the underlying property, potentially generating attractive returns for us. We believe modification followed by refinancing or sale generates near-term cash flows, provides the highest possible economic outcome for us and is a socially responsible business strategy because it keeps more families in their homes. We expect a significant portion of our residential mortgage loans will enter into foreclosure or result in our acquisition of the property via alternative resolution such as deed-in-lieu of foreclosure, ultimately becoming REO that we can convert into single-family rental properties which we believe will generate long-term returns for our stockholders. If an REO property does not meet our rental investment criteria, we expect to engage in REO liquidation to dispose of the property and generate cash for reinvestment in other acquisitions and dividend distributions. We believe that the optionality provided by our multifaceted resolution approach enables us to bid on large portfolios in an effective manner as all loans may not be amenable to a single resolution strategy.

Access to Established Nationwide Property Management Infrastructure

We believe that our 15-year master services agreement with Altisource allows us to operate and manage single-family rental properties with efficiency and predictability. This efficiency and predictability is driven by Altisource’s technology and global workforce. Altisource has developed a nationwide operating infrastructure enabled by technology and standardized and centrally managed processes. It also has a global back office organization that qualifies vendors, solicits the appropriate vendors to perform requested work, assigns the work to the vendor with the best possible combination of cost and delivery capabilities, verifies that the vendor’s work is complete and pays the vendor. This technology and organizational infrastructure allows Altisource to provide services which we believe provide us with the following competitive advantages:


•	our management of single-family rental properties using Altisource’s nationwide vendor network is not dependent upon scale; accordingly, unlike many of our competitors, we do not require a critical size of single-family rental properties in a geographic area to attain operating efficiencies;


•	sub-performing and non-performing loan portfolios typically contain properties that are geographically dispersed, requiring a cost-effective nationwide property management system; we believe we are positioned to bid effectively on portfolios with large geographic dispersion;


•	Altisource’s rental marketing strategy is specifically designed to advertise listings across popular industry-focused websites, utilizing their high organic and paid search rankings to generate large volumes of prospective tenants;


•	our contracted relationships with nationwide manufacturers and material suppliers, who are also used by Altisource, enable us to manage the ordering and delivery of flooring, appliances, paint, fixtures and lighting for all renovation and unit turn work (i.e. work associated with turnover from one tenant to the next);

•

We have direct access to Altisource’s inspection and estimating application which is utilized by the third-party general contracting vendors to identify required renovation work and prepare detailed scopes of work to provide a consistent end product. In addition, this application catalogs major HVAC systems, appliances and construction materials, which can enable more accurate forecasting of long term maintenance requirements; and


•	Ongoing tenant management services are coordinated through an internal “24x7” customer service center.

AAMC works directly with Altisource’s vendor management team on our behalf, and AAMC’s construction management team often interfaces with the general contractors and vendors to maintain relationships with the vendor network. Through AAMC’s team, we coordinate with Altisource and its personnel as well as the vendor network to establish a collective approach to the renovation management, maintenance, repair and materials supply chain to create a unified look and feel for the REO properties that we rent, own or acquire upon resolution of our mortgage loans. We believe AAMC’s experience and these coordinated efforts with Altisource provide it with the capabilities to replicate Altisource’s vendor network, if necessary, which our competitors may not be able to do without substantial efforts and expense.

Although our master services agreement and other support agreements with Altisource are not exclusive arrangements, we believe that these relationships and our direct access to a large vendor network through Altisource provide us with significant competitive advantages over third parties with respect to acquiring and maintaining sub-performing and non-performing loans

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and single-family rental properties. We expect to hold single-family rental property assets over the long-term with a focus on developing brand and franchise value.

We also believe that the forecasted growth for the single-family rental marketplace, in combination with our projected asset management and acquisition costs and our ability to acquire assets nationwide, provides us with a significant opportunity to establish ourselves as a leading, externally-managed residential REIT.

Existing Portfolio

In 2014 we completed the acquisition of an aggregate of 7,326 residential mortgage loans, substantially all of which were non-performing, and 237 REO properties having an aggregate unpaid principal balance (“UPB”) of approximately $1.9 billion and an aggregate market value of underlying properties of $1.8 billion . The aggregate purchase price for these acquisitions was $1.2 billion . In 2013 we completed the acquisition of an aggregate of 8,491 residential mortgage loans, substantially all of which were non-performing, and 40 REO properties having an aggregate UPB of approximately $2.2 billion and an aggregate market value of underlying properties of $1.8 billion . The aggregate purchase price for these acquisitions was $1.2 billion .

During the years ended December 31, 2014 and 2013, we completed the acquisition of the following portfolios of non-performing residential mortgage loans.



	Portfolios Acquired
Date acquired	Number of loans acquired		Fair value of underlying property (in millions)		UPB (in millions)
Year ended December 31, 2013	8,531		$	1,795.2	$	2,219.3
January 2, 2014	650		93.6		120.8
January 28, 2014	66		7.0		7.3
January 31, 2014	3,421		791.7		987.8
February 28, 2014	70		8.2		8.0
May 1, 2014	664		126.6		153.0
June 27, 2014	1,116		375.3		328.2
July 10, 2014	46		5.0		6.9
July 31, 2014	1,243		315.7		260.3
October 24, 2014	159		31.6		42.9
December 23, 2014	127		15.1		16.0
Totals	16,093	⁽¹⁾	$	3,565.0	$	4,150.5

_____________


(1)	Includes 40 REOs purchased in 2013, 190 REOs purchased in May 2014, and 46 REOs purchased in October 2014. Excludes the portfolio of 879 re-performing loans acquired in June 2014, the majority of which were subsequently sold in October 2014.

Throughout this report, all unpaid principal balance and market value amounts for the portfolios we have acquired are provided as of the applicable “cut-off” date for each transaction unless otherwise indicated. We refer to the assets underlying our completed acquisitions as our “Existing Portfolio.” The Existing Portfolio does not include assets acquired as REO. As defined in this report, our “Existing Portfolio” does not include the 102 re-performing mortgage loans having an aggregate UPB of approximately $18.4 million and an aggregate market value of underlying properties of approximately $22.5 million as of December 31, 2014 , which are considered “Mortgage loans held for sale.”

Our sub-performing and non-performing mortgage loans become REO properties when we obtain legal title to the property upon completion of foreclosure. Additionally, some of the portfolios we purchase may, from time to time, contain a small number of residential mortgage loans that have already been converted to REO.

As of December 31, 2014 , we had 3,960 REO properties, consisting of 3,349 REO properties held for use and 611 held for sale. Of the 3,349 REO properties held for use, 336 properties had been rented, 197 were being listed for rent and 254 were in varying stages of renovation in preparation for rent. With respect to the remaining 2,562 REO properties held for use, we will make a final determination whether each property meets its rental profile after (a) applicable state redemption periods have expired, (b) the foreclosure sale has been ratified, (c) we have recorded the deed for the property, (d) utilities have been activated and (e) we have secured access for interior inspection. A majority of the REO properties are subject to state

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regulations which require us to await the expiration of a redemption period before a foreclosure can be finalized. We include these redemption periods in our pricing which generally reduces the price we pay for the mortgage loans. Once the redemption period expires, we immediately proceed to record the new deed, take possession of the property, activate utilities, and start the inspection process in order to make a final determination on whether to rent or liquidate the property. If an REO property meets our rental investment criteria, we determine the extent of renovations that are needed to generate an optimal rent and maintain consistency of renovation specifications for future branding. If it is determined that the REO property will not meet our rental investment criteria, the property is listed for sale, in some instances after renovations are made to optimize the sale proceeds. As of December 31, 2013 , we had 246 REO properties held for use. Of these properties, 14 had been rented, 11 were being listed for rent and 18 were in various stages of renovation. With respect to the remaining 203 REO properties at December 31, 2013 , we were in the process of determining whether these properties would meet our rental profile. Additionally, 16 REO properties owned as of December 31, 2013 were held for sale.

The remainder of our Existing Portfolio consists of a diversified pool of sub-performing and non-performing residential mortgage loans with the underlying properties located across the United States. The aggregate purchase price of our Existing Portfolio for acquisitions completed through December 31, 2014 was 67% of the aggregate market value, as determined by the most recent BPO provided by the applicable seller for each property in the respective portfolio as of its cut-off date. We cannot assure you that the BPOs accurately reflected the actual market value of the related property at the purported time or accurately reflect such market value today.

As of December 31, 2014 the aggregate carrying value of our Existing Portfolio was $2.0 billion (which does not include the carrying value of our REO properties of an additional $624.6 million ). The carrying value of mortgage loans is based on our asset manager's proprietary pricing model. The significant unobservable inputs used in the fair value measurement of our mortgage loans are discount rates, forecasts of future home prices, alternate resolution probabilities and foreclosure timelines. Significant changes in any of these inputs in isolation could result in a significant change to the fair value measurement. For a more complete description of the fair value measurements and the factors that may significantly affect the carrying value of our assets, please see Note 4 to our consolidated financial statements.

The table below provides a summary of the sub-performing and non-performing residential mortgage loans in our Existing Portfolio based on the respective UPB and respective market values of underlying properties as of December 31, 2014 ($ in thousands):



Location	Loan count	UPB		Market value of underlying properties (1)		Weighted average market LTV (2)
Alabama	58	$	8,479	$	7,404	174.4	%
Alaska	3	672		1,011		68.8	%
Arizona	152	41,668		37,939		121.8	%
Arkansas	54	4,409		5,088		108.3	%
California	1302	615,067		643,059		108.5	%
Colorado	58	17,051		16,834		109.0	%
Connecticut	139	41,462		37,664		139.8	%
Delaware	59	11,254		10,030		128.9	%
Dist. of Columbia	67	17,735		20,726		109.2	%
Florida	2160	524,716		424,259		145.3	%
Georgia	262	48,882		43,594		136.6	%
Hawaii	53	27,840		28,230		106.1	%
Idaho	33	7,829		7,177		132.2	%
Illinois	384	96,036		74,762		189.8	%
Indiana	260	32,532		29,420		123.5	%
Iowa	26	2,252		2,340		108.1	%
Kansas	26	2,801		3,120		114.5	%
Kentucky	53	6,212		5,713		118.0	%
Louisiana	38	6,503		7,101		103.2	%
Maine	38	7,097		6,763		118.8	%
Maryland	633	169,408		137,391		145.8	%

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Massachusetts	278	75,893		75,426		118.1	%
Michigan	98	15,324		14,290		165.2	%
Minnesota	42	9,486		8,756		127.3	%
Mississippi	27	3,150		3,029		124.7	%
Missouri	80	8,162		6,864		166.2	%
Montana	4	1,121		1,266		89.3	%
Nebraska	7	730		682		111.1	%
Nevada	233	73,771		56,805		146.3	%
New Hampshire	13	3,319		3,403		103.4	%
New Jersey	1071	319,960		250,254		158.6	%
New Mexico	125	17,614		17,709		110.6	%
New York	732	251,483		255,943		116.0	%
North Carolina	238	32,958		29,870		128.8	%
North Dakota	1	123		140		87.9	%
Ohio	128	19,036		16,362		148.5	%
Oklahoma	34	4,377		4,466		134.8	%
Oregon	106	31,002		28,906		116.2	%
Pennsylvania	288	51,698		43,952		139.6	%
Puerto Rico	2	219		293		76.3	%
Rhode Island	58	13,716		7,447		229.3	%
South Carolina	216	39,907		34,301		128.7	%
South Dakota	3	396		325		132.0	%
Tennessee	83	12,257		12,695		117.7	%
Texas	459	53,508		71,055		88.2	%
Utah	66	15,399		15,804		103.3	%
Vermont	9	1,452		1,336		133.4	%
Virginia	149	47,771		46,745		113.4	%
Washington	482	131,475		127,470		115.8	%
West Virginia	8	1,009		827		135.2	%
Wisconsin	65	9,740		7,479		160.0	%
Total mortgage loans	10,963	$	2,935,961	$	2,693,525	131.6	%

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(1)

Market value is based on the most recent BPO provided to us by the applicable seller for each property in the respective portfolio as of its cut-off date or an updated BPO received since the acquisition was completed. Although we performed diligence on a representative sample of the properties to confirm the accuracy of the BPOs provided by the sellers, we cannot assure you that the BPOs set forth in this table accurately reflected the actual market value of the related property at the purported time or accurately reflect such market value today.


(2)	Weighted average loan to value (LTV) is based on the loan to value weighted by unpaid principal balance for each state.

As of December 31, 2014, the 15 states with the highest concentration of loans accounted for 8,724 loans (80% of our Existing Portfolio), with an aggregate UPB of $2.5 billion (87% of our Existing Portfolio) as of the respective cut-off dates, with the remainder dispersed among 34 other states, one territory and the District of Columbia.

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As set forth in the chart below, approximately 93% of the residential mortgage loans in our Existing Portfolio were 60 days or more delinquent as of December 31, 2014 .

Our Strengths

Depth of Management Experience in Mortgage Servicing

We believe the experience of our management team allows us to capitalize on the servicing capabilities of our third party servicers and ensure cost effective servicing of our acquired residential mortgage loan portfolios. We have directed and will continue to direct our mortgage servicers to employ various loan resolution methodologies with respect to our residential mortgage loans, including loan modification, collateral resolution and collateral disposition. To help us achieve our business objective, we instruct our mortgage servicers to focus on (1) converting a portion of our sub-performing and non-performing loans to performing status and (2) managing the foreclosure process and timelines with respect to the remainder of those loans.

Importantly, by modifying as many loans as possible, we seek to keep more families in their homes because of our efforts.

Through 2014, we had exclusively engaged Ocwen to service the residential mortgage loans in our portfolio. Given the recent challenges and regulatory scrutiny faced by Ocwen, we have engaged additional alternate servicers to service our loans. We have begun to move certain loans to these new servicers to diversify our servicing options. However, a substantial number of the loans we own continue to be serviced by Ocwen. It is possible, even as we transfer all or a portion of our mortgage loan portfolio to such other servicers, the alternate servicers may not be able to service our loans or resolve our non-performing loans as well as Ocwen has serviced our portfolio. In any event, if for any reason, our mortgage servicers, including Ocwen, are unable to service these loans at the level and/or the cost that we anticipate, or if we fail to pay or otherwise default under the servicing agreements, causing one or more mortgage servicers cease to act as its servicer, alternate qualified servicers may not be readily available on favorable terms, or at all, which could have a material adverse effect on us.

Relationship with Altisource and its Nationwide Property Management Infrastructure

We believe that we are strategically positioned to operate single-family rental properties across the United States at an attractive cost structure, with the support of Altisource’s nationwide vendor network, which provides services in 208 major markets across the United States.

In 2014, Altisource’s vendor network completed an average of approximately 400,000 inspection, maintenance and repair orders per month. This vendor network infrastructure has been developed over many years, and we believe this infrastructure would be difficult and expensive for our competitors and/or new market participants to replicate. We believe, therefore, that our existing relationships with Altisource and its vendor network, as described above in “-Access to Established Nationwide Property Management Infrastructure,” gives us a distinct advantage as it allows us to bid on large attractive portfolios regardless of geography at an attractive cost structure. We also believe that AAMC’s established relationships with the Altisource network management team and our ongoing experience with the service providers in Altisource’s vendor network who know our renovation, maintenance and repair standards would likely provide us with an advantage over others in replicating and/or acquiring this nationwide property management infrastructure, if necessary.

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Other Services Provided by Altisource

In addition to the Altisource master services agreement, we also have a trademark license agreement with Altisource that provides us with a non-exclusive, non-transferable, non-sublicensable, royalty free license to use the name “Altisource.” We also have a support services agreement with Altisource to provide services to us in such areas as human resources, vendor management operations, corporate services, risk management, quality assurance, consumer psychology, treasury, finance and accounting, legal, tax and compliance. Although the support services agreement has enabled us to grow our business, AAMC is in the process of internalizing the support services that had been provided to us by Altisource through its direct employment of the 26 employees that currently are providing these services to us through the support services agreement.

Expertise of Our Manager

The senior management team of our Manager includes individuals with significant experience in the real estate, mortgage, housing and asset management markets. Throughout their careers, these executives have managed various real estate-related businesses and executed structured real estate and financing transactions through multiple market cycles. AAMC has also internally developed a valuation model that uses proprietary historical data to evaluate and project the performance of residential mortgage loans. We believe that AAMC’s asset evaluation process and the experience and judgment of its executive management team in identifying, assessing, valuing and acquiring new residential mortgage loans will help us to appropriately value the portfolios at the time of purchase.

Our Investment Process

Our underwriting analysis for acquiring sub-performing and non-performing loan portfolios on a national basis relies on extensive analysis of the target portfolio’s characteristics, and the use of our proprietary model in determining future cash flows and returns from various resolution methodologies. We estimate our resolution timelines using advanced modeling techniques. We use regression-based models to determine the expected probabilities of different loan resolutions, including modification, rental and liquidation. We also use an extensive due diligence process to validate data accuracy, compliance with laws, and enforceability of liens among other factors.

The following graphic outlines our process for assessing sub-performing and non-performing portfolio investment opportunities:

Our Financing Strategy

We intend to continue to finance our investments with leverage, the level of which may vary based upon the particular characteristics of our portfolio and on market conditions. To the extent available at the relevant time, our financing sources may include bank credit facilities, warehouse lines of credit, structured financing arrangements and repurchase agreements, among

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others. We may also seek to raise additional capital through public or private offerings of debt or equity securities, depending upon market conditions. For additional information on our financing arrangements, see “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources.”

Investment Committee and Investment Policy

Substantially all of our investment activities are conducted by AAMC on our behalf pursuant to the asset management agreement. Our principal objective is to generate attractive risk-adjusted returns for our stockholders over the long-term through dividends and capital appreciation.

Our Board of Directors has adopted a broad investment policy designed to facilitate the management of our capital and assets and the maintenance of an investment portfolio profile that meets our objectives. Our manager has established an investment committee, whose role is to act in accordance with the investment policy and guidelines approved by our Board of Directors for the investment of our capital. As part of an overall investment portfolio strategy, the investment policy provides that we can purchase or sell non-performing or sub-performing residential mortgage loans, residential mortgage backed securities and real estate owned assets. We are also authorized to offer leases on acquired single-family residential real estate. The investment policy may be modified by our Board of Directors without the approval of our stockholders.

The objective of the investment policy is to oversee our efforts to achieve a return on assets consistent with our business objective and to maintain adequate liquidity to meet financial covenants and regular cash requirements.

The investment committee is authorized to finance our investment positions through repurchase agreements, warehouse lines of credit, securitized debt and other financing arrangements provided such agreements are negotiated with counterparties approved by the investment committee. We are also permitted to hedge our interest rate exposure on our financing activities through the use of interest rate swaps, forwards, futures and options, subject to prior approval from the investment committee.

Investment Committee Approval of Counterparties

The investment committee is authorized to consider and approve:


•	the financial soundness of institutions with which we plan to transact business and make recommendations with respect thereto;


•	our risk exposure limits with respect to the dollar amounts of total exposure with a given institution; and


•	investment accounts and trading accounts to be opened with banks, broker-dealers and financial institutions.

Investment Committee Guidelines

The activities of our investment committee are subject to the following guidelines:


•	no investment will be made that would cause us or any of our subsidiaries to fail to qualify as a REIT for U.S. federal income tax purposes;


•	no investment will be made that would cause us to be required to register as an investment company under the Investment Company Act of 1940; and


•	until appropriate investments can be identified, we may invest available cash in interest-bearing and short-term investments that are consistent with (a) our intention to qualify as a REIT and (b) our exemption from registration as an investment company under the Investment Company Act of 1940.

Broad Investment Policy Risks

Our investment policy is very broad and, therefore, our investment committee and AAMC have great latitude in determining the types of assets that are proper investments for us, as well as the individual investment decisions. In the future, AAMC may make investments with lower rates of return than those anticipated under current market conditions and/or may make investments with greater risks to achieve those anticipated returns. Our Board of Directors will periodically review our investment policy and our investment portfolio but will not review or approve each proposed investment by AAMC unless it falls outside our previously approved investment policy or constitutes a related party transaction.

In addition, in conducting periodic reviews, our Board of Directors will rely primarily on information provided to it by AAMC. Furthermore, AAMC may use complex strategies. Transactions entered into by AAMC may be costly, difficult or impossible to unwind by the time they are reviewed by our Board of Directors. In addition, we may change our investment policy and

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targeted asset classes at any time without the consent of our stockholders, and this could result in our making investments that are different in type from, and possibly riskier, than our current investments or the investments currently contemplated. Changes in our investment strategy, investment policy and targeted asset classes may increase our exposure to interest rate risk, counterparty risk, default risk and real estate market fluctuations, which could materially and adversely affect us.

Our Manager and the Asset Management Agreement

Under our asset management agreement with AAMC, which we refer to as the “asset management agreement,” AAMC is responsible for, among other duties: (1) performing and administering all our day-to-day operations, (2) defining investment criteria in our Investment Policy in cooperation with our Board of Directors, (3) sourcing, analyzing and executing asset acquisitions, including our acquisition of sub-performing and non-performing residential mortgage loan portfolios and related financing activities, (4) analyzing sales of properties, (5) overseeing Altisource’s renovation, leasing and property management of our single-family rental properties, (6) overseeing servicing of our residential mortgage loan portfolios, (7) performing asset management duties and (8) performing corporate governance and other management functions, including financial, accounting and tax management services. AAMC provides us with a management team and appropriate support personnel who have substantial sub-performing and non-performing loan portfolio experience. AAMC’s management also has significant corporate governance experience that enables us to manage our business and organizational structure efficiently. AAMC has agreed not to provide the same or substantially similar services to any other party so long as the company and the operating partnership have on hand an average of $50,000,000 in capital available for investment over the previous two fiscal quarters.

Incentive Management Fee

Under the asset management agreement, we pay AAMC quarterly incentive management fees as follows:

2% of all cash available for distribution by us to our stockholders and to AAMC as incentive management fees, which we refer to as “available cash,” until the aggregate amount per share of available cash for the quarter (based on the average number of shares of our common stock outstanding during the quarter), which we refer to as the “quarterly per share distribution amount,” exceeds $0.161, then


ii.	15% of all additional available cash for the quarter until the quarterly per share distribution amount exceeds $0.193, then


iii.	25% of all additional available cash for the quarter until the quarterly per share distribution amount exceeds $0.257, and thereafter


iv.	50% of all additional available cash for the quarter;

in each case set forth in clauses (i) through (iv), as such amounts may be appropriately adjusted from time to time to take into account the effect of any stock split, reverse stock split or stock dividend.

We will distribute any quarterly distribution to our stockholders after the application of the incentive management fee payable to AAMC.

In the event of the payment of any dividend of cash from capital transactions by us, each of the thresholds described above shall be reduced by an amount equal to the applicable threshold multiplied by a fraction (i) the numerator of which shall be the amount of distributions of available cash that are deemed to be cash from capital transactions that a hypothetical holder of one share of common stock has received with respect to such share of common stock, during the period since December 21, 2012 through the date of such payment, and (ii) denominator of which shall be $12.74 (as such amount may be appropriately adjusted from time to time to take into account the effect of any stock split, reverse stock split or stock dividend); provided that in no event shall such fraction be greater than 1.

Notwithstanding the foregoing, in the case of cash dividends from capital transactions, no incentive management fee will be paid to AAMC in respect of such dividends unless and until a hypothetical holder of one share of common stock has received with respect to such share of common stock, during the period from December 21, 2012 through the date of payment, cash dividends from capital transactions in an aggregate amount equal to $12.74 (as such amount may be appropriately adjusted from time to time to take into account the effect of any stock split, reverse stock split or stock dividend).

The asset management agreement defines “capital transactions” to include various financing transactions and sales and other dispositions of assets, but not sales and other dispositions in the ordinary course of business. A sale or disposition is treated for this purpose as being in the ordinary course of business unless it involves, in a single transaction or series of related transactions, assets that have an aggregate value in excess of 50% of the aggregate value of all assets held by us and our

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subsidiaries on a consolidated basis immediately prior to the consummation of such transaction or, in the case of a series of related transactions, the first such transaction.

Expense Reimbursement

We are required to reimburse AAMC for the (i) direct and indirect expenses AAMC incurs or payments it makes on our behalf, including, but not limited to, the allocable compensation and routine overhead expenses of all employees and staff of AAMC and (ii) all other reasonable operating and overhead expenses AAMC incurs related to the asset management services it provides to us. We do not reimburse AAMC for any compensation paid to its Directors.

Termination

We may terminate the asset management agreement without cause upon the determination of at least two-thirds of our independent directors that (i) there has been unsatisfactory performance by AAMC that is materially detrimental to us, or (ii) the compensation payable to AAMC under the asset management agreement is unreasonable, unless AAMC agrees to compensation that at least two-thirds of our independent directors determine is reasonable.

AAMC may terminate the asset management agreement without cause by providing written notice to us no later than 180 days prior to December 21 of any year during the initial term or a renewal term, and the asset management agreement will terminate on the December 21 following the delivery of such notice.

We will be required to pay AAMC a termination fee in the event that the asset management agreement is terminated as a result of (i) a termination of AAMC by us without cause, (ii) a termination by AAMC as a result of our becoming regulated as an “investment company” under the Investment Company Act, or (iii) a termination by AAMC if we default in the performance of any material term of the asset management agreement (subject to a notice and cure period).

The termination fee will be equal to three times the average annual incentive management fee earned by AAMC during the prior 24-month period immediately preceding the date of termination, calculated as of the end of the fiscal quarter completed prior to the date of termination. In the event the asset management agreement is terminated: (1) the Ocwen servicing agreement, the support services agreement and the trademark license agreement will terminate within 30 days; and (2) if the asset management agreement is terminated without cause by us, the Altisource master services agreement may be terminated at Altisource’s sole discretion.

If the asset management agreement were terminated by AAMC our financial position and future prospects for revenues and growth could be materially adversely affected.

Manager’s Management of the Operating Partnership

General

Substantially all of our assets are and will be held by, and substantially all of our operations will be conducted through, the operating partnership, either directly or through its subsidiaries or trusts for its benefit. Altisource Residential GP, LLC, which we refer to as the “general partner,” is the sole general partner of the operating partnership. We own 100% of the membership interests in the general partner. We also own 100% of the limited partnership interests of the operating partnership. We do not intend to list any operating partnership interests on any exchange or any national market system. The provisions of the limited partnership agreement are described below.

The general partner is managed by AAMC through our asset management agreement with AAMC. Except as otherwise expressly provided in the limited partnership agreement and subject to the rights of holders of any class or series of operating partnership interests, all management powers over the business and affairs of the operating partnership are exclusively vested in AAMC through its management of us and the general partner, subject to the oversight of our Board of Directors. No limited partner, in its capacity as a limited partner, has any right to participate in or exercise control or management power over the operating partnership’s business and affairs other than through our Board of Directors’ oversight of AAMC’s executive officers who manage our business and that of the general partner. With limited exceptions, the general partner, through its management by AAMC, may execute, deliver and perform agreements and transactions on behalf of the operating partnership without the approval or consent of any limited partner.

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Terms of the Limited Partnership Agreement

Capital Contributions, Profits and Losses and Distributions

Neither the general partner nor the limited partner is required to make any additional capital contribution to the operating partnership, although we intend to contribute funds generally from equity offerings, repurchase facilities or securitization financings into the operating partnership in order to (a) make additional acquisitions of portfolios of sub-performing and non-performing residential mortgage loans and other single-family rental properties, (b) pay servicing fees and other related expenses for the residential mortgage loans we acquire;(c) conduct the renovation, leasing and property management services for assets that become single-family rental properties and (d) general corporate purposes.

The profits and losses of the operating partnership shall be allocated in proportion to the capital contributions of the partners of the operating partnership.

At the time or times determined by the general partner, the general partner may cause the operating partnership to distribute any cash held by it which is not reasonably necessary for the operation of the operating partnership. If the general partner determines that cash will be distributed, the cash available for distribution will be distributed to us, as the limited partner of the operating partnership since we are the contributor of all the funds in the operating partnership’s capital account.

Restrictions on Transfer of Partnership Interests; Withdrawals

Any partner of the operating partnership may transfer all or any part of its interest in the operating partnership only with the consent of the general partner. Because we are the only limited partner and control the general partner, we do not expect to transfer our limited partnership interests for the foreseeable future.

No partner may withdraw from the operating partnership except pursuant to an amendment to the limited partnership agreement signed by all of the partners. The withdrawal of the limited partner, and admission of a new or substitute limited partner, as applicable, will be effective as of the date of any such amendment. Upon the withdrawal of any partner, the withdrawing partner shall, to the extent permitted by Delaware Revised Uniform Limited Partnership Act, or “DRULPA,” be entitled to payment of the balance of its capital account, and shall have no further right, interest or obligation of any kind whatsoever as a partner in the operating partnership. We do not intend to withdraw as a partner of the operating partnership for the foreseeable future.

Amendments; Admission of Additional Partners

Without our approval as the limited partner, the general partner may amend, and may amend and restate, the limited partnership agreement. The general partner may admit additional limited partners to the operating partnership. The admission of additional limited partners to the operating partnership may be accomplished by the amendment, or the amendment and restatement, of the limited partnership agreement without our consent, and, if required by DRULPA, the filing of an appropriate amendment of the operating partnership’s certificate of formation.

NewSource Investment

On December 21, 2012, we entered into a subscription agreement to invest $18.0 million in the non-voting preferred stock of NewSource Reinsurance Company Ltd., which we refer to as “NewSource,” an insurance and reinsurance company focused on real estate related insurance products in Bermuda. AAMC simultaneously entered into a subscription agreement to invest $2.0 million to acquire 100% of the common stock and voting rights of NewSource. On October 17, 2013, we and AAMC invested the full amount of our respective subscriptions in NewSource, and on December 2, 2013, NewSource became registered as a licensed reinsurer with the Bermuda Monetary Authority (“BMA”).

Additionally, on November 18, 2013, NewSource entered into a management agreement with AAMC to provide asset management and corporate governance services and in November 2013 entered into a management agreement with Marsh IAS Management Services (Bermuda) Ltd. to administer its day-to-day business activities and operations.

NewSource commenced reinsurance activities during the second quarter of 2014, and generated approximately $5.0 million of title reinsurance premiums during 2014. However, in December 2014, NewSource determined that the economics of the initial business activities did not warrant the continuation of its initial reinsurance quota share agreement with an unrelated third party.

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NewSource therefore transferred all of the risk of claims and future losses underwritten to an unrelated third party for a price of $3.2 million.

Policies with Respect to Certain Other Activities

We intend to raise additional funds through equity offerings, repurchase facilities, securitization financings or other debt arrangements, the retention of cash flow (subject to REIT distribution requirements), or a combination of these methods. In the event that our Board of Directors determines to raise additional equity capital, it has the authority, without stockholder approval, to issue additional common stock or preferred stock in any manner and on such terms and for such consideration as it deems appropriate, at any time, subject to compliance with NYSE listing requirements.

In addition, we have borrowed and intend to continue to borrow money to finance or refinance the acquisition of sub-performing and non-performing residential mortgage loans and single-family properties and for general corporate purposes. Our investment policy, the assets in our portfolio, the decision to use leverage and the appropriate level of leverage will be based on AAMC’s assessment of a variety of factors, including our historical and projected financial condition, liquidity and results of operations, financing covenants, the cash flow generation capability of assets, the availability of credit on favorable terms, our outlook for borrowing costs relative to the unlevered yields on our assets, maintenance of our REIT qualification, applicable law and other factors, as AAMC and/or our Board of Directors may deem relevant from time to time. Our decision to use leverage will be at AAMC’s discretion and will not be subject to the approval of our stockholders. We are not restricted by our governing documents in the amount of leverage that we may use.

As of the date of this report, we do not intend to invest in the securities of other REITs, other entities engaged in real estate activities or securities of other issuers for the purpose of exercising control over such entities. We do not intend that our investments in securities will require us to register as an investment company under the Investment Company Act, and we would intend to divest such securities before any such registration would be required. We do not intend to underwrite securities of other issuers.

Our Board of Directors may change any of these policies without prior notice to, or the consent of our stockholders.

REIT Qualification

We elected and qualified to be taxed as a REIT under Sections 856 through 859 of the Internal Revenue Code of 1986, or the “Code,” beginning with our taxable year ended December 31, 2013, and we currently expect to maintain this status for the foreseeable future. Our qualification as a REIT depends upon our ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Code relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our common shares. We believe that we are organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and that our manner of operation enables us to meet the requirements for qualification and taxation as a REIT. As a REIT, we generally are not subject to U.S. federal income tax on our REIT taxable income we distribute to our stockholders.

Even though we elected to be taxed as a REIT, we are subject to some U.S. federal, state and local taxes on our income or property. A portion of our business is expected to be conducted through, and a portion of our income is expected to be earned in, one or more taxable REIT subsidiaries, each of which we refer to as a “TRS.” In general, a TRS may hold assets and engage in activities that the REIT cannot hold, may choose not to hold to maintain REIT compliance and cannot engage in directly. Additionally, a TRS may engage in any real estate or non-real estate related business. A TRS is subject to U.S. federal, state and local corporate income taxes. To maintain our REIT election, at the end of each quarter no more than 25% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. If our TRS generates net income, our TRS can declare dividends to us which will be included in our taxable income and necessitate a distribution to our stockholders. Conversely, if we retain earnings at the TRS level, no distribution is required, and we can increase stockholders’ equity of the consolidated entity. As discussed under “Item 1A. Risk Factors—Risks Related to Our Qualification as a REIT”, the combination of the requirement to maintain no more than 25% of our assets in the TRS coupled with the effect of TRS dividends on our income tests creates compliance complexities for us in the maintenance of our qualified REIT status.

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Exemption from Investment Company Act

We rely on the exception from the Investment Company Act of 1940, as amended, or the “Investment Company Act,” set forth in Section 3(c)(5)(C) of the Investment Company Act which excludes from the definition of investment company “any person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in one or more of the following businesses… (C) purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” The SEC Staff generally requires that, for the exception provided by Section 3(c)(5)(C) to be available, at least 55% of an entity’s assets be comprised of mortgages and other liens on and interests in real estate, also known as “qualifying interests,” and at least another 25% of the entity’s assets must be comprised of additional qualifying interests or real estate-type interests (with no more than 20% of the entity’s assets comprised of miscellaneous assets). We believe that our $18.0 million investment in NewSource does not meet the definition of “qualifying interest.” Any significant acquisition by us of non-real estate assets without the acquisition of substantial real estate assets could cause us to meet the definitions of an “investment company.” If we are deemed to be an investment company, we could be required to dispose of our NewSource investment or a portion thereof, potentially at a loss, in order to qualify for the 3(c)(5)(C) exception. We may also be required to register as an investment company if we are unable to dispose of the disqualifying assets, which could have a material adverse effect on us. See “Item 1A. Risk Factors—Risks Related to Our Structure—We could be materially and adversely affected if we are deemed to be an investment company under the Investment Company Act.”

Employees

We do not currently have any employees and do not expect to have any employees in the foreseeable future. Currently, services necessary for our business are provided by individuals who are employees of AAMC and our service providers. Each of our executive officers is an employee or officer or both, of AAMC, and they are paid by AAMC. As of December 31, 2014 , AAMC had nine full-time employees and had an additional 26 dedicated support personnel provided to us by Altisource through its support services agreement with us.

Competition

We face competition from various sources for the acquisition of sub-performing and non-performing residential mortgage loans. Our competition includes other REITs, hedge funds, private equity funds and partnerships. To effectively compete, we will rely upon AAMC's management team and their substantial industry expertise which we believe provides us with a competitive advantage and helps us assess the investment risks and determine appropriate pricing. We expect our integrated approach of acquiring sub-performing and non-performing residential mortgage loans and converting them to rental properties will enable us to compete more effectively for attractive investment opportunities. However, we cannot assure you that we will be able to achieve our business goals or expectations due to the competitive pricing and other risks that we face. Our competitors may have greater resources and access to capital and higher risk tolerances than we have, may be able to pay higher prices for sub-performing and non-performing residential mortgage loans than we can or may be willing to accept lower returns on investment. As the inventory of available sub-performing and non-performing residential mortgage loans and REO will fluctuate, the competition for assets and financing may increase.

We also face significant competition in the single-family rental market from other real-estate companies, including REITs, investment companies, partnerships and developers. To effectively manage rental yield and occupancy levels, we will rely upon the ability of AAMC's management team to supervise the renovation, yield management and property management services on our acquired properties. Despite these efforts, some of our competitors' single-family rental properties may be of better quality, or in more desirable locations than our properties or have leasing terms more favorable than we offer. In addition, our ability to compete and meet our return objectives depends upon, among other factors, trends of the national and local economies, the financial condition and liquidity of current and prospective tenants, availability and cost of capital, taxes and governmental regulations. Given the significant competition, complexity of the market, changing financial and economic conditions and evolving single-family tenant demographics and demands, we cannot assure you that we will be successful in acquiring or managing single-family rental properties that satisfy our return objectives.

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Environmental Matters

As an owner of real estate, we are subject to various federal, state and local environmental laws, regulations and ordinances and also could be liable to third parties resulting from environmental contamination or noncompliance with environmental laws at our properties. Environmental laws can impose liability on an owner or operator of real property for the investigation and remediation of contamination at or migrating from such real property without regard to whether the owner or operator knew of or was responsible for the presence of the contaminants. The costs of any required investigation or cleanup of these substances could be substantial. The liability is generally not limited under such laws and could exceed the property's value and the aggregate assets of the liable party. The presence of contamination or the failure to remediate contamination at our properties also may expose us to third-party liability for personal injury or property damage or adversely affect our ability to sell, lease or renovate the real estate or to borrow using the real estate as collateral. These and other risks related to environmental matters are described in more detail in “Item 1A. Risk Factors.”

Government Approval

Outside of routine business filings, we do not believe it is necessary to obtain any government approval to operate our business.

Governmental Regulations

We do not believe there are any governmental regulations that will materially affect the conduct of our business.

Available Information

We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other information with the Securities and Exchange Commission which we refer to as the “SEC.” These filings are available to the public over the Internet at the SEC's website at http://www.sec.gov. You may also read and copy any document we file at the SEC's public reference room located at 100 F Street, N.E., Washington, DC 20549. Please call the SEC at 1 800-SEC-0330 for further information on the public reference room.

Our principal Internet address is http://www.altisourceresi.com , and we encourage investors to use it as a way of easily finding information about us. We promptly make available on this website, free of charge, the reports that we file with or furnish to the SEC along with corporate governance information including our Corporate Governance Guidelines, our Code of Business Conduct and Ethics and select press releases. The contents of our website are available for informational purposes only and shall not be deemed incorporated by reference in this report.

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Item 1A. Risk factors

The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. If any of the following risks actually occur, our business, operating results and financial condition could be materially adversely affected.

Risks Related to Our Business

We have a limited operating history. If we are unable to implement our business strategy as planned, we will be materially and adversely affected.

We commenced operations approximately two years ago, and our business model is relatively untested and evolving. Businesses like ours that have a limited operating history present substantial business and financial risks and may suffer significant losses. As a result we cannot predict our results of operations, financial condition and cash flows. We only began to generate residential rental revenue during 2013. In addition, our financial results have been largely attributable to purchasing non-performing loan and other rental-related assets at a discount, and the rates of such acquisitions may be uneven over periods of time and unpredictable due to market conditions, limited financial resources or other constraints.

Our results for prior periods are not necessarily indicative of our results for any future period, and we may not have sufficient additional capital to implement our business model. Moreover, we expect that it will take time to determine success from loan resolution efforts and it could take as long as 24 months, and in some cases longer, for a significant portion of loans in any given portfolio to be converted into single-family rental properties or an underlying property to be liquidated or sold. Accordingly, if we are not able to generate sufficient cash flows from our loan modification and refinancing or other activities, we may not have cash available for distribution to our stockholders for an extended period of time. There can be no assurance that our business will remain profitable or that our profitability will be sustainable. The earnings potential of our business is unproven, and our limited operating history makes it difficult to evaluate our prospects. We may not be able to implement our business strategy as planned, which could materially and adversely affect us.

We are an early entrant in an emerging industry, and the long-term viability of our investment strategy on an institutional scale is unproven.

Large-scale institutional investment in single-family residential homes for rent is a relatively recent phenomenon that has emerged out of the mortgage and housing crisis that began in late 2007. Prior to that time, single-family rental homes were generally not viewed as viable assets for investment on a large scale by institutional investors. Consequently, the long-term viability of the single-family rental property investment strategy on an institutional scale has not yet been proven. As an early entrant in this emerging industry, we are subject to the risk that single-family rental properties may not prove to be a viable long-term investment strategy on an institutional scale for a permanent capital vehicle. If it turns out that this investment strategy is not a viable one, we would be materially and adversely affected and we may not be able to sustain the growth of our assets and our operations that we seek.

Our failure to raise equity capital and/or obtain adequate debt financing could adversely affect our ability to increase our portfolio, manage our existing assets and generate shareholder returns.

Our success has been, and will be, largely dependent on our ability to raise equity capital and obtain debt financing to increase our portfolio, manage our existing assets and generate attractive shareholder returns. We require significant financial resources to maintain our obligations under our debt facilities and to continue to acquire portfolios of mortgage loans and REO properties. If we are unable to continue to raise equity capital, or leverage our portfolio through repurchase facilities and/or securitizations, our current portfolio and cash from operations may become inadequate to meet our financial obligations.

We use leverage as a component of our financing strategy in an effort to enhance our returns. We can provide no assurance that we will be able to timely access all funds available under our financing arrangements or obtain other debt or equity financing on favorable terms or at all. To qualify as a REIT, we will be required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year to our stockholders. As a result, our ability to retain earnings to fund acquisitions, property renovations or other capital expenditures will be limited.

Limited availability of credit may have an adverse effect on our ability to obtain financing on favorable terms, thereby increasing financing costs and/or requiring us to accept financing with increasing restrictions. Our long-term ability to grow through additional investments will be limited if we cannot obtain additional debt or equity financing.

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We may not be able to successfully operate our business or generate sufficient operating cash flows to make or sustain distributions to our stockholders.

There can be no assurance that we will be able to successfully operate our business or generate sufficient cash to make distributions to our stockholders. Our ability to make or sustain distributions to our stockholders depends on many factors, including the availability of attractive risk-adjusted investment opportunities that satisfy our investment strategy and our success in identifying and consummating such opportunities on favorable terms, the success of our loan resolution efforts, the ability of borrowers to refinance our loans with other lenders, our ability to sell modified loans on favorable terms, the availability of short-term and long-term financing on favorable terms, length of time required to convert a distressed loan into a single-family rental property, the level and expected movement of home prices, the occupancy rates and rent levels of properties, the restoration, maintenance, marketing and other operating costs, the level and volatility of interest rates, conditions in the financial, real estate, housing and mortgage markets and the economy, as to which no assurance can be given. We cannot assure you that we will be able to make investments with attractive risk-adjusted returns or will not seek investments with greater risk to obtain the same level of returns or that the value of our investments in the future will not decline substantially. Existing and future government regulations may result in additional costs or delays, which could adversely affect the implementation of our investment strategy.

We have leveraged our investments and expect to continue to do so, which may materially and adversely affect our return on our investments and may reduce cash available for distribution to our stockholders.

To the extent available, we intend to continue to leverage our investments through borrowings, the level of which may vary based on the particular characteristics of our investment portfolio and on market conditions. We have leveraged certain of our investments to date through our repurchase agreements. When we enter into any repurchase agreement, we sell securities or residential mortgage loans to lenders ( i.e ., repurchase agreement counterparties) and receive cash from the lenders. The lenders are obligated to resell the same assets back to us at the end of the term of the transaction. Because the cash we receive from the lender when we initially sell the assets to the lender is less than the value of those assets, if the lender defaults on its obligation to resell the same assets back to us we could incur a loss on the transaction. In addition, repurchase agreements generally allow the counterparties, to varying degrees, to determine a new market value of the collateral to reflect current market conditions or for other reasons. If such counterparty determines that the value of the collateral has decreased, it may initiate a margin call and require us to either post additional collateral to cover such decrease or repay a portion of the outstanding borrowing. Should this occur, in order to obtain cash to satisfy a margin call, we may be required to liquidate assets at a disadvantageous time, which could cause us to incur further losses. In the event we are unable to satisfy a margin call, our counterparty may sell the collateral, which may result in significant losses to us. Our repurchase agreements generally require us to comply with various financial covenants, including those relating to tangible net worth, profitability and our ratio of total liabilities to tangible net worth, and to maintain minimum amounts of cash or cash equivalents sufficient to maintain a specified liquidity position. We expect any future repurchase agreements or other financing arrangements will have similar provisions. In the event that we are unable to satisfy these requirements, we could be forced to sell additional investments at a loss which could materially and adversely affect us.

Our repurchase agreements to finance sub-performing and non-performing loans are complex and difficult to manage. In part, this is due to the fact that our residential mortgage loan portfolios and single-family rental properties that will collateralize these repurchase agreements do not produce consistent cash flows and require specific activities to be performed at specific points in time in order to preserve value. Our inability to comply with the terms and conditions of these agreements could materially and adversely impact us. In addition, our outstanding repurchase agreements contain, and we expect any future repurchase agreements will contain, events of default, including payment defaults, breaches of financial and other covenants and/or certain representations and warranties, cross-defaults, servicer termination events, guarantor defaults, bankruptcy or insolvency proceedings and other events of default customary for these types of agreements. The remedies for such events of default are also customary for these types of agreements and include the acceleration of the outstanding principal amount, requirements that we repurchase loans collateralizing the financing, the liquidation by the lender of the assets then subject to the agreements and the avoidance of other repurchase transactions with us. Because our financing agreements will typically contain cross-default provisions, a default that occurs under any one agreement could allow the lenders under our other agreements to also declare a default. Any losses we incur on our repurchase agreements could materially and adversely affect us.

We have utilized repurchase facilities and securitization transactions to finance our portfolio and may in the future utilize other sources of borrowings, including bank credit facilities, warehouse lines of credit and structured financing arrangements, among others, each of which has similar risks to repurchase agreement financing and securitizations, including, but not limited to, covenant compliance, events of default, acceleration and margin calls. The percentage of leverage we employ, which could increase substantially in the future, varies depending on assets in our portfolios, our available capital, our ability to obtain and

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access financing arrangements with lenders and the lenders’ and rating agencies’ estimate of the stability of our investment portfolio’s cash flow. There can be no assurance that new sources of financing will be available to us in the future or that existing sources of financing will continue to be available to us. Our governing documents contain no limitation on the amount of debt we may incur. Our return on our investments and cash available for distribution to our stockholders may be reduced to the extent that changes in market conditions increase the cost of our financing relative to the income that can be derived from the investments acquired. Our debt service payments will reduce cash flow available for distribution to stockholders. We may not be able to meet our debt service obligations and, to the extent that we cannot, we risk the loss of some or all of our assets to foreclosure or sale to satisfy the obligations.

If and when non-recourse long-term financing structures become available to us and are utilized, such structures expose us to risks which could result in losses to us.

We may use securitization and other non-recourse long-term financing for our investments if, and to the extent, available. In such structures, our lenders typically have only a claim against the assets included in the securitizations rather than a general claim against us as an entity. Prior to any such financing, we seek to finance our investments with relatively short-term facilities until a sufficient portfolio is accumulated. Conditions in the capital markets may make the issuance of any such securitization less attractive to us. While we intend to retain the unrated equity component of securitizations and, therefore, still have exposure to any investments included in such securitizations, our inability to enter into such securitizations may increase our overall exposure to risks associated with direct ownership of such investments, including the risk of default.

Our inability to refinance any short-term facilities would also increase our risk because borrowings thereunder would likely be recourse to us as an entity. If we are unable to obtain and renew short-term facilities or to consummate securitizations to finance our investments on a long-term basis, we may be required to seek other forms of potentially less attractive financing or to liquidate assets at an inopportune time or price.

Failure of Altisource to effectively perform its obligations under various agreements with us including the master services agreement, could materially and adversely affect us.

Both AAMC and we have engaged Altisource to provide services. If for any reason Altisource is unable to perform the services described under these agreements at the level and/or the cost that we anticipate, qualified alternate service providers may not be readily available on favorable terms, or at all, which could adversely affect AAMC’s performance under the asset management agreement with us. Altisource’s failure to perform the services under these agreements with AAMC or us or our inability to retain qualified alternate service providers to replace and/or supplement Altisource could have a material adverse effect on us.

Failure of our third party mortgage servicers to effectively perform its servicing obligations under our servicing agreements could have a material adverse effect on us.

We are contractually obligated to service the residential mortgage loans that we acquire. We do not have any employees, servicing platform, licenses or technical resources necessary to service our acquired loans. Consequently, we have engaged mortgage servicers to service the non-performing and sub-performing loans we acquire. Through 2014, we had exclusively engaged Ocwen to service the residential mortgage loans in our portfolio.

Ocwen has been and is subject to a number of pending regulatory investigations, inquiries, requests for information and legal proceedings that could result in adverse regulatory or other actions against Ocwen. As a result of these various difficulties faced by Ocwen, its debt and servicer ratings have been downgraded. Given the recent challenges and regulatory scrutiny faced by Ocwen, we have engaged additional alternate servicers to service our loans. We have begun to move certain loans to these new servicers to diversify its servicing service providers. However, a substantial number of the loans we own continue to be serviced by Ocwen. It is possible, even as we transfers all or a portion of our mortgage loan portfolio to such other servicers, the alternate servicers may not be able to service our loans or resolve our non-performing loans. If for any reason, our mortgage servicers are unable to service these loans at the level and/or the cost that we anticipate, or if we fail to pay or otherwise default under the servicing agreements, and our mortgage servicers cease to act as our servicers, alternate servicers may not be readily available on favorable terms, or at all, which could have a material adverse effect on us

We may incur significant costs in renovating our properties, and we may underestimate the costs or amount of time necessary to complete restorations.

Before renting a property, we perform a detailed assessment, with an on-site review of the property, to identify the scope of renovation to be completed. Beyond customary repairs, we may undertake improvements designed to optimize overall property appeal and increase the value of the property. We expect that nearly all of our rental properties will require some level of

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renovation immediately upon their acquisition or in the future following expiration of a lease or otherwise. We may acquire properties that we plan to extensively renovate and restore. In addition, in order to reposition properties in the rental market, we will be required to make ongoing capital improvements and may need to perform significant renovations and repairs from time to time. Consequently, we are exposed to the risks inherent in property renovation, including potential cost overruns, increases in labor and materials costs, delays by contractors in completing work, delays in the timing of receiving necessary work permits and certificates of occupancy and poor workmanship. If our assumptions regarding the cost or timing of renovations across our properties prove to be materially inaccurate, it may be more difficult or take significantly more time than anticipated to develop and grow our single-family rental portfolio, which could materially and adversely affect us.

Difficulties in selling REO properties and/or single-family rental properties could limit our flexibility and/or harm our liquidity.

Federal tax laws may limit our ability to earn a gain on the sale of our properties if we are found to have held or acquired the properties with the intent to resell, and this limitation may adversely affect our willingness to sell single-family rental properties under favorable conditions or if necessary for funding purposes. We typically contribute properties that will not meet our rental profile to our taxable REIT subsidiary in order to sell and generate gains or losses at the taxable REIT subsidiary upon such sales. In addition, our REO properties that we intend to sell can at times be difficult to dispose of quickly or at favorable prices. These potential difficulties in selling real estate in our markets may limit our ability to either sell properties that we deem unsuitable for rental or change or reduce the single-family rental properties in our portfolio promptly in response to changes in economic or other conditions. Our failure to sell or delays in selling our REO properties could potentially cause a strain on our liquidity, and we may be forced to reduce prices and/or continue to hold such REO properties, without leverage which could materially and adversely affect our financial condition.

A significant portion of the residential mortgage loans that we acquire are, or may become, sub-performing or non-performing loans, which increases our risk of loss.

We acquire distressed residential mortgage loans where the borrower has failed to make timely payments of principal and/or interest. As part of the residential mortgage loan portfolios we purchase, we also may acquire performing loans that are or subsequently become sub-performing or non-performing. Under current market conditions, it is likely that many of these loans will have current loan-to-value ratios in excess of 100%, meaning the amount owed on the loan exceeds the value of the underlying real estate. Further, the borrowers on such loans may be in economic distress and/or may have become unemployed, bankrupt or otherwise unable or unwilling to make payments when due. Even though we typically pay less than the amount owed on these loans to acquire them, if actual results are different from our assumptions in determining the price for such loans, we may incur significant losses. There are no limits on the percentage of sub-performing or non-performing loans we may hold. Any loss we incur may be significant and could materially and adversely affect us.

Many of our assets may be illiquid, and this lack of liquidity could significantly impede our ability to vary our portfolio in response to changes in economic and other conditions or to realize the value at which such assets are carried if we are required to dispose of them.

The distressed residential mortgage loans we acquire are generally illiquid. Illiquidity may result from the absence of an established market for the distressed residential mortgage loans, as well as legal or contractual restrictions on their resale, refinancing or other disposition. Such restrictions would interfere with subsequent sales of such loans or adversely affect the terms that could be obtained upon any disposition thereof.

Residential mortgage loan modification and refinance programs, future legislative action, and other actions and changes may materially and adversely affect the supply of, value of and the returns on sub-performing and non-performing loans.

Our business model is dependent on the acquisition of a steady supply of sub-performing and nonperforming loans, the success of our loan modification and other resolution efforts and the conversion of a significant portion of those loans to REO. The number of sub-performing and non-performing loans available for purchase may be reduced by uncertainty in the lending industry and the governmental sector and/or as a result of general economic improvement. Lenders may choose to delay foreclosure proceedings, renegotiate interest rates or refinance loans for borrowers who face foreclosure. In recent years, the federal government has instituted a number of programs aimed at assisting at-risk homeowners and reducing the number of properties going into foreclosure or going into non-performing status.

For example, the U.S. Government, through the Federal Reserve, the Federal Housing Administration or “FHA” and the Federal Deposit Insurance Corporation or “FDIC” has implemented a number of federal programs designed to assist homeowners, including (i) the Home Affordable Modification Program or “HAMP”, which provides homeowners with

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assistance in avoiding defaults on residential mortgage loans, (ii) the Hope for Homeowners Program or “H4H Program”, which allows certain distressed borrowers to refinance their residential mortgage loans into FHA-insured loans in order to avoid residential mortgage loan foreclosures and (iii) the Home Affordable Refinance Program which allows borrowers who are current on their mortgage payments to refinance and reduce their monthly mortgage payments without new mortgage insurance, up to an unlimited loan-to-value ratio for fixed-rate mortgages. HAMP, the H4H Program and other loss mitigation programs may involve, among other things, the modification of residential mortgage loans to reduce the principal amount of the loans (through forbearance and/or forgiveness) and/or the rate of interest payable on the loans and/or to extend the payment terms of the loans. These loan modification programs, future legislative or regulatory actions including possible amendments to the bankruptcy laws which result in the modification of outstanding residential mortgage loans as well as changes in the requirements necessary to qualify for refinancing residential mortgage loans, may materially and adversely affect the value of, and the returns on, our portfolio of sub-performing and non-performing loans.

Other governmental actions may affect our business by hindering the pace of foreclosures. In recent periods, there has been a backlog of foreclosures, due to a combination of volume constraints and legal actions, including those brought by the U.S. Department of Justice, or the “DOJ,” HUD, State Attorneys General, the office of the Comptroller of the Currency, or the “OCC,” and the Federal Reserve Board against mortgage servicers alleging wrongful foreclosure practices. Financial institutions have also been subjected to regulatory restrictions and limitations on foreclosure activity by the FDIC. Legal claims brought or threatened by the DOJ, HUD and 49 State Attorneys General against residential mortgage servicers and an enforcement action threatened by the OCC against residential mortgage servicers have both produced large settlements. A portion of the funds from each settlement will be directed to homeowners seeking to avoid foreclosure through mortgage modifications, and servicers are required to adopt specified measures to reduce mortgage obligations in certain situations. It is expected that the settlements will help many homeowners avoid foreclosures that would otherwise have occurred in the near-term. It is also possible that other residential mortgage servicers will agree to similar settlements. These developments will reduce the number of homes in the process of foreclosure and decrease the supply of properties that meet our investment criteria.

In addition, the U.S. Congress and numerous state legislatures have considered, proposed or adopted legislation to constrain foreclosures, or may do so in the future. The Dodd-Frank Act also created the Consumer Financial Protection Bureau, or “CFPB,” which supervises and enforces federal consumer protection laws as they apply to banks, credit unions and other financial companies, including mortgage servicers. It remains uncertain as to whether any of these CFPB or other related measures will have a significant impact on foreclosure volumes or what the timing or extent of that impact would be. If foreclosure volumes were to decline significantly, we may experience difficulty in finding target assets at attractive prices, which would materially and adversely affect us. Also, the number of families seeking rental housing might be reduced by such legislation, reducing rental housing demand for properties in our markets.

We may be, or may become, subject to the regulation of various states, including licensing requirements and consumer protection statutes. Our failure to comply with any such laws, if applicable to us, would adversely affect our ability to implement our business strategy, which could materially and adversely affect us.

Certain jurisdictions require licenses to purchase, hold, enforce or sell residential mortgage loans. In the event that any such licensing requirement is applicable to us and we are not able to obtain such licenses in a timely manner or at all, our ability to implement our its business strategy could be adversely affected, which could materially and adversely affect us.

Certain jurisdictions require a license to purchase, hold, enforce or sell residential mortgage loans. We currently own our loans in Delaware statutory trusts with a nationally-chartered bank as the trustee. Therefore, we do not hold any such licenses. Because we have contributed our acquired sub-performing and non-performing residential mortgage loans to wholly-owned trusts whose trustee is a nationally-chartered bank, we may be exempt from state licensing requirements. However, there is no assurance that we will ever seek or be required to obtain such licenses or, if obtained, that we will be able to maintain them. Our failure to obtain or maintain such licenses could restrict our ability to invest in loans in these jurisdictions if such licensing requirements become applicable. If our subsidiaries obtain the required licenses, any trust holding loans in the applicable jurisdictions may transfer such loans to such subsidiaries, resulting in these loans being held by a state-licensed entity. There can be no assurance that we will be able to obtain the requisite licenses in a timely manner or at all or in all necessary jurisdictions, or that the use of the trusts will reduce the requirement for licensing, any of which could limit our ability to invest in residential mortgage loans in the future and have a material adverse effect on us.

The supply of sub-performing and non-performing loans may decline over time as a result of higher credit standards for new loans and/or general economic improvement and the prices for sub-performing and non-performing loans may increase, which could materially and adversely affect us.

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Over the last several years, there has been an increase in supply of sub-performing and non-performing loans available for sale. However, in response to the economic crisis, the origination of jumbo, subprime, Alt-A and second lien residential mortgage loans has dramatically declined as lenders have increased their standards of credit-worthiness in originating new loans and fewer homeowners may go into sub-performing or non-performing status on their residential mortgage loans. In addition, the prices at which sub-performing and non-performing loans can be acquired may increase from time to time, or permanently,

due to the entry of new participants into the distressed loan marketplace or a lower supply of sub-performing and non-performing loans in the marketplace. For these reasons, along with the general improvement in the economy, the supply of sub-performing and non-performing residential mortgage loans that we may acquire may decline over time and could materially and adversely affect us.

Competition in identifying and acquiring non-performing loans could adversely affect our ability to implement our business strategy, which could materially and adversely affect us.

We face competition from various sources for investment opportunities in sub-performing and non-performing loans including REITs, hedge funds, private equity funds, partnerships and developers. Some third-party competitors have substantially greater financial resources and access to capital than we do and may be able to accept more risk than it can. Competition from these companies may reduce the number of attractive sub-performing and non-performing loan investment opportunities available to us or increase the bargaining power of asset owners seeking to sell, which would increase the prices for sub-performing and non-performing loans. If such events occur, our ability to implement our business strategy could be adversely affected, which could materially and adversely affect us. Given the existing competition, complexity of the market and requisite time needed to make such investments, no assurance can be given that we will be successful in acquiring investments that generate attractive risk-adjusted returns. Furthermore, there is no assurance that such investments, once acquired, will perform as expected.

Our inability to promptly foreclose upon defaulted residential mortgage loans could increase our costs and/or diminish our expected return on investments.

Our ability to seek alternative resolutions for the underlying properties and, in certain cases, where appropriate, promptly foreclose upon defaulted residential mortgage loans plays a critical role in our valuation of the assets in which we invest and our expected return on those investments. We expect the timeline to convert acquired loans into single-family rental properties will vary significantly by loan. Certain of our acquired loans may already be in foreclosure proceedings, in which case conversion could be as soon as three to six months following acquisition, but in other cases conversion could take up to 24 months or longer. There are a variety of factors that may inhibit our ability, through our mortgage servicers, to foreclose upon a residential mortgage loan and get access to the real property within the timelines modeled as part of our valuation process. These factors include, without limitation: state foreclosure timelines and deferrals associated therewith (including with respect to litigation, bankruptcy and statute of limitations); unauthorized occupants living in the property; federal, state or local legislative action or initiatives designed to provide homeowners with assistance in avoiding residential mortgage loan foreclosures and that serve to delay the foreclosure process; HAMP and similar programs that require specific procedures to be followed to explore the refinancing of a residential mortgage loan prior to the commencement of a foreclosure proceeding; and continued declines in real estate values and sustained high levels of unemployment that increase the number of foreclosures and place additional pressure on the already overburdened judicial and administrative systems.

In addition, certain issues, including “robo-signing,” have been identified throughout the mortgage industry that relate to affidavits used in connection with the residential mortgage loan foreclosure process. A substantial portion of our investments are, and in the future may be, sub-performing and non-performing residential mortgage loans, many of which are already subject to foreclosure proceedings at the time of purchase. There can be no assurance that similar practices have not been followed in connection with residential mortgage loans that are already subject to foreclosure proceedings at the time of purchase. To the extent we determine that any of the loans we acquire are impacted by these issues, we may be required to re-commence the foreclosure proceedings relating to such loans, thereby resulting in additional delay that could have the effect of increasing our costs and/or diminishing our expected return on our investments. The uncertainty surrounding these issues could also result in legal, regulatory or industry changes to the foreclosure process as a whole, any or all of which could lengthen the foreclosure process and negatively impact our business.

We may be materially and adversely affected by risks affecting borrowers or the single-family rental properties in which our investments may be concentrated at any given time, as well as from unfavorable changes in the related geographic regions.

Our assets are not subject to any geographic diversification or concentration limitations. Entities that sell distressed mortgage loan portfolios may group the portfolios by location or other metrics that could result in a concentration of our portfolio by geography, single-family rental property characteristics and/or borrower demographics. Such concentration could increase the risk of loss to us if the particular concentration in our portfolio is subject to greater risks or undergoing adverse developments.

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In addition, adverse conditions in the areas where the properties securing our investments are located (including business layoffs or downsizing, industry slowdowns, changing demographics, oversupply, reduced demand and other factors) may have an adverse effect on the value of our investments. As of December 31, 2014 , approximately 21% of our portfolio by UPB was concentrated in California and approximately 18% of our portfolio by UPB was concentrated in Florida. A material decline in the demand for single-family housing or rentals in these or other areas where we own assets may materially and adversely affect us. Lack of diversification can increase the correlation of non-performance and foreclosure risks among our investments.

Short-term leases of residential property expose us more quickly to the effects of declining market rents.

We anticipate that a majority of our leases to tenants of single-family rental properties will be for a term of two years or less. As these leases permit the residents to leave at the end of the lease term without penalty, we anticipate our rental revenues will be affected by declines in market rents more quickly than if our leases were for longer terms. Short-term leases may result in high turnover, resulting in additional cost to renovate and maintain the property and lower occupancy levels. Because we have a limited operating history, our tenant turnover rate and related cost estimates may be less accurate than if we had more operating data upon which to base these estimates.

We may be unable to secure funds for future tenant or other capital improvements, which could limit our ability to attract or replace tenants.

When we acquire or otherwise take title to single-family properties or when tenants fail to renew their leases or otherwise vacate their space, we will be required to expend funds for property restoration and leasing commissions in order to lease the property. If we have not established reserves or set aside sufficient funds for such expenditures, we may have to obtain financing from other sources, as to which no assurance can be given. We may also have future financing needs for other capital improvements to restore our properties. If we need to secure financing for capital improvements in the future but are unable to secure such financing on favorable terms or at all, we may be unable or unwilling to make capital improvements or may choose to defer such improvements. If this happens, our properties may suffer from a greater risk of obsolescence or a decline in value, or a greater risk of decreased cash flow as a result of fewer potential tenants being attracted to the property or existing tenants not renewing their leases. If we do not have access to sufficient funding in the future, we may not be able to make necessary capital improvements to our properties, and our properties’ ability to generate revenue may be significantly impaired.

Our revenue and expenses are not directly correlated, and, because a large percentage of our costs and expenses are fixed and some variable expenses may not decrease over time, we may not be able to adapt our cost structure to offset any declines in our revenue.

Many of the expenses associated with our business, such as acquisition costs, restoration and maintenance costs, home owners’ association, or “HOA,” fees, personal and real property taxes, insurance, compensation and other general expenses are fixed and would not necessarily decrease proportionally with any decrease in revenue. Our assets also will likely require a significant amount of ongoing capital expenditure. Our expenses, including capital expenditures, will be affected by, among other things, any inflationary increases, and cost increases may exceed the rate of inflation in any given period. Certain expenses, such as HOA fees, taxes, insurance and maintenance costs are recurring in nature and may not decrease on a per-unit basis as our portfolio grows through additional property acquisitions. By contrast, our revenue is affected by many factors beyond our control, such as the availability and price of alternative rental housing and economic conditions in our markets. As a result, we may not be able to fully, or even partially, offset any increase in our expenses with a corresponding increase in our revenues. In addition, state and local regulations may require us to maintain our properties, even if the cost of maintenance is greater than the potential benefit.

Fair values of our mortgage loans are imprecise and may materially and adversely affect our operating results and credit availability, which, in turn, would materially and adversely affect us.

The values of our mortgage loans may not be readily determinable. We measure the fair value of our mortgage loans monthly, but the fair value at which our mortgage loans are recorded may not be an indication of their realizable value. Ultimate realization of the value of a mortgage loan depends to a great extent on economic and other conditions that are beyond our control. Further, fair value is only an estimate based on good faith judgment of the price at which a mortgage loan can be sold since market prices of mortgage loans can only be determined by negotiation between a willing buyer and seller. In certain cases, our estimation of the fair value of our mortgage loans includes inputs provided by third-party dealers and pricing services, and valuations of certain securities or other assets in which we invest are often difficult to obtain and are subject to judgments that may vary among market participants. Changes in the estimated fair values of our mortgage loans are directly charged or credited to earnings for the period. If we were to liquidate a particular mortgage loan, the realized value may be more than or less than the amount at which such mortgage loan was recorded. We could be materially and adversely affected by

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negative determinations that reduce the fair value of our mortgage loans, and such valuations may fluctuate over short periods of time.

We value the properties underlying our mortgage loans and recognize unrealized gains in each period when our mortgage loans are transferred to real estate owned. The fair value of our residential properties is estimated using broker price opinions, or “BPOs,” provided by third-party brokers. BPOs are subject to the judgments of the particular broker formed by visiting the property, assessing general home values in the area, reviewing comparable listings and reviewing comparable completed sales. These judgments may vary among brokers and may fluctuate over time based on housing market activities and the influx of additional comparable listings and sales. Our results could be materially and adversely affected if the judgments used by the brokers prove to be incorrect or inaccurate.

Challenges to the MERS ® System could materially and adversely affect us.

MERSCORP, Inc. is a privately held company that maintains an electronic registry, referred to as the MERS System, which tracks servicing rights and ownership of loans in the United States. Mortgage Electronic Registration Systems, Inc. or “MERS,” a wholly owned subsidiary of MERSCORP, Inc., can serve as a nominee for the owner of a residential mortgage loan and in that role initiate foreclosures and/or become the mortgagee of record for the loan in local land records. We may choose to use MERS as a nominee. The MERS System is widely used by participants in the mortgage finance industry. Several legal challenges have been made disputing MERS’s legal standing to initiate foreclosures and/or act as nominee in local land records. These challenges could negatively affect MERS’s ability to serve as the mortgagee of record in some jurisdictions. In addition, where MERS is the mortgagee of record, it must execute assignments of mortgages, affidavits and other legal documents in connection with foreclosure proceedings. As a result, investigations by governmental authorities and others into the servicer foreclosure process deficiencies described under “—Our inability to promptly foreclose upon defaulted residential mortgage loans could increase our cost of doing business and/or diminish our expected return on investments” may impact

MERS. Failures by MERS to apply prudent and effective process controls and to comply with legal and other requirements in the foreclosure process could pose operational, reputational and legal risks that may materially and adversely affect us.

AAMC utilizes analytical models and data in connection with the valuation of our investments, and any incorrect, misleading or incomplete information used in connection therewith would subject us to potential risks.

Given the complexity of our investments and strategies, AAMC must rely heavily on models and data, including analytical models (both proprietary models developed by AAMC and those supplied by third parties) and information and data supplied by third parties. Models and data are used to value investments or potential investments and also in connection with performing due diligence on our investments. In the event models and data prove to be incorrect, misleading or incomplete, any decisions made in reliance thereon expose us to potential risks. For example, by relying on incorrect models and data, especially valuation models, we may be induced to buy certain investments at prices that are too high, to sell certain other investments at prices that are too low or to miss favorable opportunities altogether.

Our accounting and other management systems and resources may not be adequately prepared to meet the financial reporting and other requirements we are subject to as a stand-alone reporting public company.

We are subject to reporting and other obligations under the Exchange Act, as amended. Under the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act,” we are required to maintain effective disclosure controls and procedures. To comply with these requirements, we may need to implement additional financial and management controls, reporting systems and procedures. We have incurred, and expect to incur, additional annual expenses for the purpose of addressing these requirements, and these expenses may be significant. If we are unable to implement additional controls, reporting systems, information technology systems and procedures in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to reporting companies under the Exchange Act could be impaired. Any failure to achieve and maintain effective internal controls could have a material adverse effect on us. We are also required to comply with Section 404 of the Sarbanes-Oxley Act which requires annual management assessments of the effectiveness of our internal control over financial reporting and a report thereon by our independent registered public accounting firm. These reporting and other obligations may place significant demands on our management, administrative and operational resources, including accounting systems and resources.

Changes in global economic and capital market conditions, including periods of generally deteriorating occupancy and real estate industry fundamentals, may materially and adversely affect us.

There are risks to the ownership of real estate and real estate related assets, including decreases in residential property values, changes in global, national, regional or local economic, demographic and real estate market conditions as well as other factors

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particular to the locations of our investments. A prolonged recession and a slow recovery could materially and adversely affect us as a result of, among other items, the following:


•	joblessness or unemployment rates that adversely affect the local economy;


•	an oversupply of or a reduced demand for single-family rental properties for rent;


•	a decline in employment, or lack of employment growth;


•	the inability or unwillingness of residents to pay rent increases or fulfill their lease obligations;


•	a decline in rental rate which may be accentuated since we expect to have rent terms of two years or less;


•	rent control or rent stabilization laws or other laws regulating housing that could prevent us from raising rents to offset increases in operating costs;


•	changes in interest rates, availability and terms of debt financing; and


•	economic conditions that could cause an increase in our operating expenses such as increases in property taxes, utilities and routine maintenance.

These conditions could also adversely impact the financial condition and liquidity of the renters that will occupy our real estate properties and, as a result, their ability to pay rent to us.

Suboptimal economics of real estate related insurance activities, or a failure to commence and/or grow the business of NewSource could adversely impact our investment in NewSource.

We have invested $18.0 million in the non-voting preferred stock of NewSource. Despite the commencement in 2014 of NewSource’s title reinsurance business operations, NewSource determined that the economics of the initial business activities did not warrant the continuation of its initial reinsurance quota share agreement with an unrelated third party. NewSource therefore transferred all of the risk of claims and future losses underwritten to an unrelated third party for a price of $3.2 million.

NewSource is continuing to evaluate its real estate related insurance and reinsurance strategy and considering related opportunities. There is no assurance that NewSource will be able to develop or grow its business strategy or operations, or engage in insurance and reinsurance activities at all. In any such event, the business model for NewSource would become challenged or the growth of NewSource would become hampered, which would adversely affect the economics of our investment in NewSource and/or NewSource’s ability to pay its preferred dividend to us and/or generate shareholder returns.

Inflation or deflation may adversely affect our results of operations and cash flows.

Increased inflation could have an adverse impact on interest rates, property management expenses and general and administrative expenses, as these costs could increase at a rate higher than our rental and other revenue. Conversely, deflation could lead to downward pressure on rents and other sources of income without an accompanying reduction in our expenses. Accordingly, inflation or deflation may adversely affect our results of operations and cash flows.

Changes in applicable laws or noncompliance with applicable law could materially and adversely affect us.

As an owner of real estate, we are required to comply with numerous federal, state and local laws and regulations, some of which may conflict with one another or be subject to limited judicial or regulatory interpretations. These laws and regulations may include zoning laws, building codes, landlord-tenant laws and other laws generally applicable to business operations. Noncompliance with laws or regulations could expose us to liability.

Lower revenue growth or significant unanticipated expenditures may result from our need to comply with changes in (i) laws imposing remediation requirements and potential liability for environmental conditions existing on properties or the restrictions on discharges or other conditions, (ii) rent control or rent stabilization laws or other residential landlord-tenant laws or (iii) other governmental rules and regulations or enforcement policies affecting the rehabilitation, use and operation of our single-family rental properties including changes to building codes and fire and life-safety codes.

In addition, NewSource has registered as a Class 3A Bermuda insurance company and is subject to regulation and supervision in Bermuda by the BMA. Changes in Bermuda insurance statutes, regulations and policies could result in restrictions on NewSource’s ability to pursue its business plans, issue reinsurance policies, distribute funds and execute its investment strategy. In addition, NewSource may become subject to regulation and supervision by insurance authorities in any other jurisdictions in which it operates. Failure to comply with or to obtain appropriate authorizations and/or exemptions under any applicable laws could result in restrictions on NewSource’s ability to do business or certain activities that are regulated in one or more of the jurisdictions in which it operates and could subject NewSource to fines and other sanctions, which could have a material

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adverse effect on NewSource’s business and its ability to pay the dividend on our preferred stock. As a result, the value of our investment in NewSource could decline.

Competition could limit our ability to lease single-family rental properties or increase or maintain rents.

Our single-family rental properties, when acquired, will compete with other housing alternatives to attract residents, including rental apartments, condominiums and other single-family homes available for rent as well as new and existing condominiums and single-family homes for sale. Our competitors’ single-family rental properties may be of better quality, in a more desirable location or have leasing terms more favorable than we can provide. In addition, our ability to compete and generate favorable returns depends upon, among other factors, trends of the national and local economies, the financial condition and liquidity of current and prospective renters, availability and cost of capital, taxes and governmental regulations. Given significant competition, we cannot assure you that we will be successful in acquiring or managing single-family rental properties that generate favorable returns.

If rents in our markets do not increase sufficiently to keep pace with rising costs of operations, our operating results and cash available for distribution will decline.

The success of our business model will substantially depend on conditions in the single-family rental property market in our geographic markets. Our asset acquisitions are premised on assumptions about, among other things, occupancy and rent levels. If those assumptions prove to be inaccurate, our operating results and cash available for distribution will be lower than expected, potentially materially. Rental rates and occupancy levels have benefited in recent periods from macroeconomic trends affecting the U.S. economy and residential real estate and mortgage markets in particular, including:


•	a tightening of credit that has made it more difficult to finance a home purchase, combined with efforts by consumers generally to reduce their exposure to credit;


•	economic and employment conditions that have increased foreclosure rates; and


•	reduced real estate values that challenged the traditional notion that homeownership is a stable investment.

If the current trend favoring renting rather than homeownership reverses, the single-family rental market could decline.

The single-family rental market is currently significantly larger than in historical periods. We do not expect the favorable trends in the single-family rental market to continue indefinitely. Eventually, a strengthening of the U.S. economy and job growth, together with the large supply of foreclosed single-family rental properties, the current availability of low residential mortgage rates and government sponsored programs promoting home ownership, may contribute to a stabilization or reversal of the current trend that favors renting rather than homeownership. In addition, we expect that as investors increasingly seek to capitalize on opportunities to purchase undervalued housing properties and convert them to productive uses, the supply of single-family rental properties will decrease and the competition for tenants will intensify. A softening of the rental property market in our markets would adversely affect our operating results and cash available for distribution, potentially materially.

Single-family rental properties that are subject to foreclosure or short-sales are subject to risks of theft, vandalism or other damage that could impair their value.

When a single-family rental property is subject to foreclosure, it is possible that the homeowner may cease to maintain the property adequately, or that the property may be abandoned by the homeowner and become susceptible to theft or vandalism. Lack of maintenance, theft and vandalism can substantially impair the value of the property. To the extent we initiate foreclosure proceedings, some of our properties could be impaired.

Contingent or unknown liabilities could materially and adversely affect us.

Our acquisition activities are subject to many risks. We may acquire properties that are subject to unknown or contingent liabilities, including liabilities for or with respect to liens attached to properties, unpaid real estate taxes, utilities or HOA charges for which a prior owner remains liable, clean-up or remediation of environmental conditions or code violations, claims of vendors or other persons dealing with the acquired properties and tax liabilities, among other things. In each case, our acquisition may be without any, or with only limited, recourse with respect to unknown or contingent liabilities or conditions. As a result, if any such liability were to arise relating to our properties, or if any adverse condition exists with respect to our properties that is in excess of our insurance coverage, we might have to pay substantial sums to settle or cure it, which could materially and adversely affect us. The properties we acquire may also be subject to covenants, conditions or restrictions that restrict the use or ownership of such properties, including prohibitions on leasing or requirements to obtain the approval of

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HOAs prior to leasing. We may not discover such restrictions during the acquisition process and such restrictions may adversely affect our ability to operate such properties as we intend.

The costs and amount of time necessary to secure possession and control of a newly acquired property may exceed our assumptions, which would delay our receipt of revenue from, and return on, the property.

Upon acquiring a property, we may have to evict occupants who are in unlawful possession before we can secure possession and control of the property. The holdover occupants may be the former owners or tenants of a property, or they may be squatters or others who are illegally in possession. Securing control and possession from these occupants can be both costly and time-consuming. If these costs and delays exceed our expectations, our financial performance may suffer because of the increased expenses incurred or the unexpected delays in turning the properties into revenue-producing rental properties.

Poor tenant selection and defaults by our tenants may materially and adversely affect us.

Our success will depend, in large part, upon our ability to attract and retain qualified tenants for our properties. This will depend, in turn, upon our ability to screen applicants, identify good tenants and avoid tenants who may default. We will inevitably make mistakes in our selection of tenants, and we may rent to tenants whose default on our leases or failure to comply with the terms of the lease or HOA regulations could materially and adversely affect us. For example, tenants may default on payment of rent, make unreasonable and repeated demands for service or improvements, make unsupported or unjustified complaints to regulatory or political authorities, make use of our properties for illegal purposes, damage or make unauthorized structural changes to our properties which may not be fully covered by security deposits, refuse to leave the property when the lease is terminated, engage in domestic violence or similar disturbances, disturb nearby residents with noise, trash, odors or eyesores, fail to comply with HOA regulations, sub-let to less desirable individuals in violation of our leases or permit unauthorized persons to live with them. The process of evicting a defaulting tenant from a family residence can be adversarial, protracted and costly. Furthermore, some tenants facing eviction may damage or destroy the property. Damage to our properties may significantly delay re-leasing after eviction, necessitate expensive repairs or impair the rental revenue or value of the property. In addition, we will incur turnover costs associated with re-leasing the properties, such as marketing expense and brokerage commissions, and will not collect revenue while the property is vacant. Although we will attempt to work with tenants to prevent such damage or destruction, there can be no assurance that we will be successful in all or most cases. Such tenants will not only cause us not to achieve our financial objectives for the properties in which they live, but may subject us to liability, and may damage our reputation with our other tenants and in the communities where we do business.

Eminent domain could lead to material losses on our investments.

It is possible that governmental authorities may exercise eminent domain to acquire land on which our properties are built in order to build roads or other infrastructure. Any such exercise of eminent domain would allow us to recover only the fair value of the affected properties, which we believe may be interpreted to be substantially less than the actual value of the property. Several cities are also exploring proposals to use eminent domain to acquire residential loans to assist borrowers to remain in their homes, potentially reducing the supply of single-family properties for sale in our markets. Any of these events can cause a material loss to us.

A significant uninsured property or liability loss could have a material adverse effect on us.

We will carry commercial general liability insurance and property insurance with respect to our single-family rental properties on terms we consider commercially reasonable. There are, however, certain types of losses (such as losses arising from acts of war or earthquake) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it economically impractical. If an uninsured property loss or a property loss in excess of insured limits were to occur, we could lose our capital invested in a single-family rental property or group of rental properties as well as the anticipated future revenues from such single-family rental property or group of properties. If an uninsured liability to a third party were to occur, we would incur the cost of defense and settlement with or court ordered damages to that third party. A significant uninsured property or liability loss could materially and adversely affect us.

A significant number of our single-family rental properties may be part of home owners’ associations. We and our renters will be subject to the rules and regulations of such home owners’ associations which may be arbitrary or restrictive and violations of such rules may subject us to additional fees and penalties and litigation which may be costly.

A significant number of our single-family rental properties, when acquired, may be subject to HOAs which are private entities that regulate the activities of and levy assessments on properties in a residential subdivision. Some of the HOAs that will govern our single-family rental properties may enact onerous or arbitrary rules that restrict our ability to renovate, market or

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lease our single-family rental properties or require us to renovate or maintain such properties at standards or costs that are in excess of our planned operating budgets. Such rules may include requirements for landscaping, limitations on signage promoting a property for lease or sale or the use of specific construction materials to be used in renovations. Some HOAs also impose limits on the number of property owners who may rent their homes which, if met or exceeded, may cause us to incur additional costs to sell the affected single-family rental property and opportunity costs of lost rental income. Furthermore, many HOAs impose restrictions on the conduct of occupants of homes and the use of common areas, and we may have renters who violate these HOA rules for which we may be liable as the property owner. Additionally, the boards of directors of the HOAs that will govern our single-family rental properties may not make important disclosures or may block our access to HOA records, initiate litigation, restrict our ability to sell, impose assessments or arbitrarily change the HOA rules. We may be unaware of or unable to review or comply with certain HOA rules before acquiring a single-family rental property, and any such excessively restrictive or arbitrary regulations may cause us to sell such property, if possible, prevent us from renting such property or otherwise reduce our cash flow from such property. Any of the above-described occurrences may materially and adversely affect us.

We rely on information supplied by prospective tenants in managing our business.

We rely on information supplied to us by prospective tenants in their rental applications as part of our due diligence process to make leasing decisions, and we cannot be certain that this information is accurate. In particular, we rely on information submitted by prospective tenants regarding household income, tenure at current job, number of children and size of household. Moreover, these applications are submitted to us at the time we evaluate a prospective tenant, and we do not require tenants to provide us with updated information during the terms of their leases, notwithstanding the fact that this information can, and frequently does, change over time. Even though this information is not updated, we will use it to evaluate the overall average credit characteristics of our portfolio over time. If tenant-supplied information is inaccurate or our tenants’ creditworthiness declines over time, we may make poor leasing decisions and our portfolio may contain more credit risk than we believe.

We are subject to the risks of securities laws liability and related civil litigation.

We may be subject to risk of securities litigation and derivative actions from time to time as a result of being publicly traded. For example, in January 2015, a purported shareholder filed a derivative action against the members of our Board of Directors, us and AAMC in connection with our asset management agreement with AAMC. For more information concerning this matter, please see “Item 3. Legal Proceedings.” While we and our Board of Directors deny the allegations of wrongdoing against us in the actions initiated against us, there can be no assurance as to the ultimate outcome or timing of their resolution. The range of possible resolutions could include determinations and judgments against us or settlements that could require substantial payments by us, including the costs of defending such investigations and suits, which could have a material adverse effect on our financial condition, results of operations and cash flows. An adverse resolution of any future lawsuits or claims against us could have an adverse effect on our business, financial condition and/or operating results.

We likely will incur costs due to litigation, including but not limited to, class actions, tenant rights claims and consumer demands.

There are numerous tenants’ rights and consumer rights organizations throughout the country. As we grow in scale, we may attract attention from some of these organizations and become a target of legal demands or litigation. Many such consumer organizations have become more active and better funded in connection with mortgage foreclosure-related issues and displaced home ownership. Some of these organizations may shift their litigation, lobbying, fundraising and grass roots organizing activities to focus on landlord-tenant issues as more entities engage in the single-family rental property market. Additional actions that may be targeted at us include eviction proceedings and other landlord-tenant disputes, challenges to title and ownership rights (including actions brought by prior owners alleging wrongful foreclosure by their lender or servicer) and issues with local housing officials arising from the condition or maintenance of a single-family rental property. While we intend to conduct our rental business lawfully and in compliance with applicable landlord-tenant and consumer laws, such organizations might work in conjunction with trial and pro bono lawyers in one state or multiple states to attempt to bring claims against us on a class action basis for damages or injunctive relief. We cannot anticipate what form such legal actions might take or what remedies they may seek. Any of such claims may result in a finding of liability that may materially and adversely affect us.

Additionally, these organizations may lobby local county and municipal attorneys or state attorneys general to pursue enforcement or litigation against us or may lobby state and local legislatures to pass new laws and regulations to constrain our business operations. If they are successful in any such endeavors, they could directly limit and constrain our business operations and impose on us significant litigation expenses, including settlements to avoid continued litigation or judgments for damages or injunctions. Any of the above-described occurrences may materially and adversely affect us.

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Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

In the ordinary course of our business, we, through AAMC, Altisource or our mortgage servicers, may acquire and store sensitive data on our network, such as our proprietary business information and personally identifiable information of our prospective and current tenants. The secure processing and maintenance of this information is critical to our business strategy. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruption to our operations and the services we provide to customers or damage our reputation, which could materially and adversely affect us.

We may incur substantial costs due to environmental contamination or non-compliance.

Under various federal, state and local environmental and public health laws, regulations and ordinances, we may be required, regardless of knowledge or responsibility, to investigate and remediate the effects of hazardous or toxic substances or petroleum product releases at our single-family rental properties (including in some cases, asbestos-containing construction materials, lead-based paints, contaminants migrating from offsite sources and natural substances such as methane, mold and radon gas) and may be held liable under these laws or common law to a governmental entity or to third parties for property, personal injury or natural resources damages and for investigation and remediation costs incurred as a result of the contamination. These damages and costs may be substantial and may exceed any insurance coverage we may have for such events, which could materially and adversely affect us. The presence of such substances or the failure to properly remediate the contamination may adversely affect our ability to borrow against, sell or rent the affected single-family rental property. In addition, some environmental laws create or allow a government agency to impose a lien on the contaminated site in favor of the government for damages and costs it incurs as a result of the contamination, which may also adversely affect our ability to borrow against, sell or rent the affected single-family rental property.

Our properties will be subject to property and other taxes that may increase over time.

We will be responsible for property taxes for our single-family rental properties, when acquired which may increase as tax rates change and properties are reassessed by taxing authorities. If we fail to pay any such taxes, the applicable taxing authorities may place a lien on the property and the property may be subject to a tax sale. Increases in property taxes would also adversely affect our yield from rental properties. Any such occurrence may materially and adversely affect us.

Risks Related to Our Management and Our Relationships

We could have conflicts with AAMC and our Directors or management could have conflicts of interest due to their relationship with AAMC, which may be resolved in a manner adverse to us.

We have engaged, and expect to continue to engage, in a substantial amount of business with AAMC. Conflicts may arise between AAMC and us because of our ongoing agreement with AAMC and because of the nature of our respective businesses.

Prior to his stepping down from the Board of Directors in January 2015, our former Chairman was also the Chairman of AAMC, Altisource and Ocwen. As a result, he had obligations to us as well as to these other entities, which could have resulted in conflicts of interest with respect to matters potentially or actually involving or affecting us and AAMC, Altisource or Ocwen, as the case may be. Our former Chairman also currently has substantial investments in AAMC, Altisource and Ocwen, and certain of our other officers own stock or options in one or more of AAMC, Altisource and Ocwen. Such ownership interests may have created or appeared to create conflicts of interest with respect to matters potentially or actually involving or affecting us and AAMC, Altisource and Ocwen, as the case may be.

Each of our executive officers is also an executive officer of AAMC and has interests in our relationship with AAMC that may be different than the interests of our stockholders. As a result, they may have obligations to us and AAMC and could have conflicts of interest with respect to matters potentially or actually involving or affecting us and AAMC. In particular, these individuals have a direct interest in the financial success of AAMC which may encourage these individuals to support strategies in furtherance of the financial success of AAMC that could potentially adversely impact us.

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We follow policies, procedures and practices to avoid potential conflicts with respect to our dealings with AAMC, including, where necessary, certain of our officers recusing themselves from discussions on, and approvals of transactions with AAMC). We also manage potential conflicts of interest through oversight by independent members of our Board of Directors (independent directors constitute a majority of our Board of Directors), and we will seek to manage these potential conflicts through dispute resolution and other provisions of our agreements with AAMC. Although we continue to seek ways to lessen many of these conflicts of interest, there can be no assurance that such measures will be effective, that we will be able to resolve all conflicts with AAMC, or that the resolution of any such conflicts will be no less favorable to us than if we were dealing with a third party that had none of the connections we have with AAMC.

Our Board of Directors has approved a very broad investment policy and guidelines for AAMC and will not review or approve each investment decision. We may change our investment policy and guidelines without stockholder consent, which may materially and adversely affect the market price of our common stock and our ability to make distributions to our stockholders.

AAMC is authorized to follow a very broad investment policy and, therefore, has great latitude in determining the types of assets that are proper investments for us, as well as the individual investment decisions. In the future, AAMC may make investments with lower rates of return than those anticipated under current market conditions and/or may make investments with greater risks to achieve those anticipated returns. Our Board of Directors will periodically review our investment policy and our investment portfolio but will not review or approve each proposed investment by AAMC unless it falls outside the scope of our previously approved investment policy or constitutes a related party transaction. In addition, in conducting periodic reviews, our Board of Directors will rely primarily on information provided to it by AAMC. Furthermore, AAMC may use complex strategies. Transactions entered into by AAMC may be costly, difficult or impossible to unwind by the time they are reviewed by our Board of Directors. In addition, we may change our investment policy and targeted asset classes at any time without the consent of our stockholders, and this could result in our making investments that are different in type from, and possibly riskier than, our current investments or the investments currently contemplated. Changes in our investment policy and targeted asset classes may increase our exposure to interest rate risk, counterparty risk, default risk and real estate market fluctuations, which could materially and adversely affect us.

We depend on AAMC as our Manager. We may not be able to retain our exclusive engagement of AAMC under certain circumstances, which could materially and adversely affect us. Termination of AAMC by us without cause is difficult and costly and our agreements with Ocwen and Altisource may simultaneously terminate or be terminated, as applicable.

Our success is dependent upon our relationships with and the performance of AAMC and its key personnel. Key personnel may leave AAMC, may become distracted by adverse financial or operational issues in connection with AAMC’s business and other activities or may fail to perform for any reason. AAMC has agreed not to provide the same or substantially similar services to any other party so long as we have on hand an average of $50 million in capital available for investment over the previous two fiscal quarters. Notwithstanding the foregoing, AAMC may engage in any other business or render similar or different services to others, including, without limitation, the direct or indirect sponsorship or management of other investment based accounts or commingled pools of capital, however structured, having an investment strategy similar to ours, so long as its services to us are not impaired thereby. In the event AAMC provides its services to a competitor, it may be difficult for us to secure a suitable replacement to AAMC on favorable terms or at all or maintain our engagement of AAMC. In the event that the asset management agreement is terminated for any reason or AAMC is unable to retain its key personnel, it may also be difficult for us to secure a suitable replacement to AAMC on favorable terms, or at all. We are unable to terminate the asset management agreement during the first two years of its term except “for cause” as defined therein. In the event we terminate the asset management agreement without cause or AAMC terminates the asset management agreement due to our default in the performance of any material term of the asset management agreement, we will be required to pay a significant termination fee equal to three times the average annual incentive management fee earned by AAMC during the prior 24-month period immediately preceding the date of termination. Furthermore, if the asset management agreement expires or is earlier terminated, the Ocwen services agreement and the Altisource support agreement and trademark license agreement automatically terminate; and if the asset management agreement is terminated without cause, then Altisource has the right to terminate its master services agreement with us. The occurrence of any of the above described events could materially and adversely affect us.

Our directors have the right to engage or invest in the same or similar businesses as ours.

Our directors may have other investments and business activities in addition to their interest in, and responsibilities to, us. Under the provisions of our Charter and our bylaws (the “Bylaws”), our directors have no duty to abstain from exercising the right to engage or invest in the same or similar businesses as ours or employ or otherwise engage any of the other directors. If any of our directors who are also directors, officers or employees of any or any other company acquires knowledge of a

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corporate opportunity or is offered a corporate opportunity outside of his capacity as one of our directors, then our Bylaws provide that such director will be permitted to pursue that corporate opportunity independently of us, so long as the director has acted in good faith. Our Bylaws provide that, to the fullest extent permitted by law, such a director will be deemed to have satisfied his fiduciary duties to us and will not be liable to us for pursuing such a corporate opportunity independently of us. This may create conflicts of interest between us and certain of our directors and result in less than favorable treatment of us and our stockholders. As of this date, none of our Directors is directly involved as a director, officer or employee of a business that competes with us, but there can be no assurance that will remain unchanged in the future.

Risks Related to Our Qualification as a REIT

Failure to qualify as a REIT could materially and adversely affect us.

We made an election to be treated as a REIT for U.S. federal income tax purposes beginning with the year ended December 31, 2013. However, we cannot assure you that we will remain qualified as a REIT. Moreover, our qualification and taxation as a REIT will depend upon our ability to meet on a continuing basis, through actual operating results, certain qualification tests set forth in the federal income tax laws. Accordingly, no assurance can be given that our actual results of operations for any particular taxable year will satisfy such requirements. If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds available for distribution to our stockholders because:


•	we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income;


•	we could be subject to the federal alternative minimum tax to a greater extent and possibly increased state and local taxes; and


•	unless we are entitled to relief under certain federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT. In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions.

As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it could materially and adversely affect us and the market price of our common stock.

Our tax position with respect to the accrual of interest and market discount income with respect to distressed mortgage loans involves risk.

We do not accrue interest income or market discount on defaulted or delinquent loans when certain criteria are satisfied. The criteria generally relate to whether those amounts are uncollectible or of doubtful collectability. If the Internal Revenue Service were to challenge this position successfully, we could be subject to entity level excise tax as a result of “deficiency dividends” that we may be required to pay to our stockholders at the time of such an adjustment to our income in order to maintain our qualification as a REIT.

Compliance with REIT requirements may cause us to forego otherwise attractive opportunities which may hinder or delay our ability to meet our investment objectives and reduce your overall return.

To qualify as a REIT, we are required at all times to satisfy certain tests relating to, among other things, the sources of our income, the nature and diversification of our assets, our financing, hedging and investment strategies, the ownership of our stock and amounts we distribute to our stockholders. Compliance with the REIT requirements may preclude us from certain financing or hedging strategies or cause us to forego otherwise attractive opportunities which may hinder or delay our ability to meet our investment objectives and reduce your overall return. For example, we may be required to pay distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution.

Compliance with REIT requirements may force us to liquidate otherwise attractive investments, which could materially adversely affect us.

To qualify as a REIT, at the end of each calendar quarter, at least 75% of our assets must consist of qualified real estate assets, cash, cash items and government securities. In addition, no more than 25% of the value of our assets may be represented by securities of one or more taxable REIT subsidiaries. Except for securities that qualify for purposes of the 75% asset test above and investments in our qualified REIT subsidiaries and our taxable REIT subsidiaries, our investment in the value of any one issuer’s securities may not exceed 5% of the value of our total assets, and we may not own more than 10% of the total vote or value of the outstanding securities of any one issuer, except, in the case of the 10% value test, certain “straight debt” securities. In order to satisfy these requirements, we may be forced to liquidate otherwise attractive investments, potentially at a loss, which could materially and adversely affect us.

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Failure to make required distributions would subject us to federal corporate income tax.

We intend to continue to operate in a manner so as to qualify as a REIT for federal income tax purposes. In order to qualify as a REIT, we generally are required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year to our stockholders. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under the Code.

The IRS may deem the gains from sales of our properties to be subject to a 100% prohibited transaction tax.

From time to time, we may be forced to sell properties that do not meet our investment objectives or we may need to sell properties or other assets to satisfy our REIT distribution requirements, to satisfy other REIT requirements or for other purposes. The IRS may deem one or more sales of our properties to be “prohibited transactions.” If the IRS takes the position that we have engaged in a “prohibited transaction” (i.e., if we sell a property held by us primarily for sale in the ordinary course of our trade or business), the gain we recognize from such sale would be subject to a 100% tax. The Code sets forth a safe harbor for REITs that wish to sell property without risking the imposition of the 100% tax; however, there is no assurance that we will be able to qualify for the safe harbor. We do not intend to hold property for sale in the ordinary course of business; however, there is no assurance that our position will not be challenged by the IRS especially if we make frequent sales or sales of property in which we have short holding periods.

The “taxable mortgage pool” rules may increase the taxes that we or our stockholders may incur, and may limit the manner in which we effect future securitizations.

Securitizations by us or our subsidiaries could result in the creation of taxable mortgage pools for U.S. federal income tax purposes, resulting in “excess inclusion income.” As a REIT, so long as we own 100% of the equity interests in a taxable mortgage pool, we generally would not be adversely affected by the characterization of the securitization as a taxable mortgage pool. Certain categories of stockholders, however, such as non-U.S. stockholders eligible for treaty or other benefits, stockholders with net operating losses, and certain tax-exempt U.S. stockholders that are subject to unrelated business income tax, could be subject to increased taxes on a portion of their dividend income from us that is attributable to the excess inclusion income. In the case of a stockholder that is a REIT, a regulated investment company, or RIC, common trust fund or other pass-through entity, our allocable share of our excess inclusion income could be considered excess inclusion income of such entity. In addition, to the extent that our stock is owned by tax-exempt “disqualified organizations,” such as certain government-related entities and charitable remainder trusts that are not subject to tax on unrelated business income, we may incur a corporate level tax on a portion of any excess inclusion income. Because this tax generally would be imposed on us, all of our stockholders, including stockholders that are not disqualified organizations, generally would bear a portion of the tax cost associated with the classification of us or a portion of our assets as a taxable mortgage pool. A RIC, or other pass-through entity owning our stock in record name will be subject to tax at the highest U.S. federal corporate tax rate on any excess inclusion income allocated to their owners that are disqualified organizations. Moreover, we could face limitations in selling equity interests in these securitizations to outside investors, or selling any debt securities issued in connection with these securitizations that might be considered to be equity interests for tax purposes. Finally, if we were to fail to maintain our REIT qualification, any taxable mortgage pool securitizations would be treated as separate taxable corporations for U.S. federal income tax purposes that could not be included in any consolidated U.S. federal income tax return. These limitations may prevent us from using certain techniques to maximize our returns from securitization transactions.

In the future, we could be required to sell assets, borrow funds or raise equity capital to fund our distributions or to make a portion of our distributions in the form of a taxable stock distribution.

Our Board of Directors has the sole discretion to determine the timing, form and amount of any distributions to our stockholders, and the amount of such distributions may be limited. In the future, we could be required to sell assets, borrow funds or raise equity capital to fund our distributions or to make a portion of our distributions in the form of a taxable stock distribution. Our Board of Directors will make determinations regarding distributions based upon various factors, including our historical and projected financial condition, liquidity and results of operations, financing covenants, maintenance of our REIT qualification, applicable law and other factors, as our Board of Directors may deem relevant from time to time. To the extent that we are required to sell assets in adverse market conditions or borrow funds at unfavorable rates, we could be materially and adversely affected. To the extent we may have to raise equity capital, we may be unable to do so at attractive prices, on a timely basis or at all, which could adversely affect our ability to make distributions to our stockholders.

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Even if we qualify as a REIT, we may be subject to tax liabilities that could materially and adversely affect us.

Even if we qualify for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. In addition, we could, in certain circumstances, be required to pay an excise tax or penalty tax (which could be significant in amount) in order to utilize one or more of the relief provisions under the Code to maintain our qualification as a REIT. In order to meet the REIT qualification requirements or to avert the imposition of a 100% tax that applies to certain gains derived by a REIT from sales of “dealer property,” we may also move or hold some of our assets or conduct activities through a TRS. In addition, if we lend money to a TRS, the TRS may be unable to deduct all or a portion of the interest paid to us, which could result in an even higher corporate level tax liability. Any of these taxes would decrease cash available for distribution to our stockholders.

Furthermore, the Code imposes a 100% tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s length basis. We will structure our transaction with any TRS on terms that we believe are arm’s length to avoid incurring the 100% excise tax described above. There can be no assurances, however, that we will be able to avoid application of the 100% tax. Any such additional tax liabilities would have an adverse effect on us.

Generally, ordinary dividends payable by REITs do not qualify for reduced U.S. federal income tax rates.

The maximum U.S. federal income tax rate for “qualifying dividends” payable by U.S. corporations to individual U.S. stockholders is 23.8%, including the 3.8% Medicare tax. However, ordinary dividends payable by REITs are generally not eligible for the reduced rates and generally are taxed at ordinary income rates (the maximum individual rate being 39.6%).

We may be subject to legislative or regulatory tax changes that could materially and adversely affect us.

At any time, the federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be amended. We cannot predict when or if any new federal income tax law, regulation or administrative interpretation or any amendment to any existing federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation or interpretation may take effect retroactively. We and our stockholders could be materially and adversely affected by any such change in or any new, federal income tax law, regulation or administrative interpretation.

Risks Related to Our Organization and Structure

Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit your recourse in the event of actions not in your best interests.

Under Maryland law, generally, a director will not be liable if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in the best interests of the corporation and with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, our Charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from:


•	actual receipt of an improper benefit or profit in money, property or services; or


•	active and deliberate dishonesty that is established by a final judgment and is material to the cause of action.

Our Charter and Bylaws provide for indemnification of our directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law. Our Bylaws require us to indemnify each director and officer, to the maximum extent permitted by Maryland law, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service to us. In addition, we may be obligated to advance the defense costs incurred by our directors and officers. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist absent the current provisions in our Charter and Bylaws or that might exist with other companies.

Our Charter may limit or otherwise discourage a takeover or business combination that could otherwise benefit our stockholders.

Our Charter, with certain exceptions, authorizes our Board of Directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exempted by our Board of Directors, no person may own more than 9.8% in value or number of shares, whichever is more restrictive, of our outstanding shares of common or capital stock. A person that did not acquire more than 9.8% of our outstanding shares of common or capital stock may become subject to our Charter restrictions if

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repurchases by us cause such person’s holdings to exceed 9.8% of our outstanding shares of common or capital stock. Any attempt to own or transfer shares of our common stock in excess of the ownership limit without the consent of our Board of Directors will be void or will result in those shares being transferred to a charitable trust, and the person who acquired such excess shares will not be entitled to any distributions thereon or to vote those excess shares. Our 9.8% ownership limitation may have the effect of delaying, deferring or preventing a change in control of us including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for our stockholders. Our Board of Directors may also, without stockholder approval, amend our Charter to increase or decrease the aggregate number of our shares or the number of shares of any class or series that we have the authority to issue and to classify or reclassify any unissued shares of our common or preferred stock, and set the preferences, rights and other terms of the classified or reclassified shares. As a result, our Board of Directors may authorize the issuance of additional shares or establish a series of common or preferred stock that may have the effect of delaying or preventing a change in control, including transactions at a premium over the market price of our shares, even if stockholders believe that a change in control is in their interest. These provisions, along with the restrictions on ownership and transfer contained in our Charter and certain provisions of Maryland law described below, could discourage unsolicited acquisition proposals or make it more difficult for a third party to gain control of us, which could adversely affect the market price of our common stock.

Certain provisions of Maryland law could inhibit changes in control, preventing our stockholders from realizing a potential premium over the market price of our stock in a proposed acquisition.

Certain provisions of the Maryland General Corporate Law, or "MGCL," may have the effect of deterring a third party from making a proposal to acquire us or impeding a change in control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock. Subject to limitations, the “business combination” provisions of the MGCL that prohibit certain business combinations (including a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities) between us and an “interested stockholder” or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder. An “interested stockholder” is defined generally as any person who beneficially owns 10% or more of our outstanding voting stock or an affiliate or associate of ours who was the beneficial owner of 10% or more of our then outstanding voting stock within the last two years. After the five-year prohibition, any business combination between us and an interested stockholder generally must be recommended by our Board of Directors and approved by the affirmative vote of at least (1) 80% of the votes entitled to be cast by holders of outstanding shares of our voting stock; and (2) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation (excluding the shares held by the interested stockholder or its affiliate the business combination is to be effected) . These super-majority vote requirements do not apply if our common stockholders receive a minimum price, as described under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares. These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by a Board of Directors prior to the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, our Board of Directors has by resolution exempted business combinations between us and any other person. There is no assurance that our Board of Directors will not supersede this resolution in the future.

The “control share” provisions of the MGCL provide that “control shares” (generally defined as shares which, when aggregated with other shares controlled by the stockholder entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) of a Maryland corporation acquired in a “control share acquisition” (defined as the acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter (excluding the control shares in question).

Our Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock. There can be no assurance that this provision will not be amended or eliminated at any time in the future. The “unsolicited takeover” provisions of the MGCL permit our Board of Directors, without stockholder approval to implement certain provisions if we have a class of equity securities registered under the Exchange Act and at least three independent directors (which we have). These provisions may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change in control of us under the circumstances that otherwise could provide the holders of shares of common stock with the opportunity to realize a premium over the then current market price. Our Charter contains a provision whereby we have elected to be subject to the provisions of Title 3, Subtitle 8 of the MGCL allowing vacancies on our Board of Directors to be filled only by the affirmative vote of the remaining directors in office.

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We could be materially and adversely affected if we are deemed to be an investment company under the Investment Company Act.

We rely on the exception from the Investment Company Act set forth in Section 3(c)(5)(C) of the Investment Company Act, which excludes from the definition of investment company “any person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in one or more of the following businesses… (C) purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” The SEC Staff generally requires that, for the exception provided by Section 3(c)(5)(C) to be available, at least 55% of an entity’s assets be comprised of mortgages and other liens on and interests in real estate, also known as “qualifying interests,” and at least another 25% of the entity’s assets must be comprised of additional qualifying interests or real estate-type interests (with no more than 20% of the entity’s assets comprised of miscellaneous assets). We believe that our $18.0 million investment in NewSource does not meet the definition of “qualifying interest.” Any significant acquisition by us of non-real estate assets without the acquisition of substantial real estate assets could cause us to meet the definitions of an “investment company.” If we are deemed to be an investment company, we could be required to dispose of our NewSource investment or a portion thereof, potentially at a loss, in order to qualify for the 3(c)(5)(C) exception. We may also be required to register as an investment company if we are unable to dispose of the disqualifying assets, which could have a material adverse effect on us.

In August 2011, the SEC issued a concept release which indicated that the SEC is reviewing whether issuers who own certain mortgage related investments which rely on the exception from registration under Section 3(c)(5)(C), should continue to be allowed to rely on such exception from registration. We cannot provide you with any assurance that the outcome of the SEC’s review will not require us to register under the Investment Company Act. If we are determined to be an investment company, and we fail to qualify for this exception from registration as an investment company or the SEC determines that companies that engage in businesses similar to ours are no longer able to rely on this exception, we may be required to register as an investment company under the Investment Company Act.

Registration under the Investment Company Act would require us to comply with a variety of substantive requirements that impose, among other things:


•	limitations on capital structure;


•	restrictions on specified investments;


•	restrictions on leverage or senior securities;


•	restrictions on unsecured borrowings;


•	prohibitions on transactions with affiliates;


•	compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

If we were required to register as an investment company but failed to do so, we could be prohibited from engaging in our business, and criminal and civil actions could be brought against us. Registration with the SEC as an investment company would be costly, would subject us to a host of complex regulations and would divert attention from the conduct of our business, which could materially and adversely affect us. In addition, if we purchase or sell any real estate assets to avoid becoming an investment company under the Investment Company Act, our net asset value, the amount of funds available for investment and our ability to pay distributions to our stockholders could be materially adversely affected.

Risks Related to Our Common Stock

The market price and trading volume of our common stock may be volatile and may be affected by market conditions beyond our control.

The price at which our common stock trades has fluctuated, and may continue to fluctuate, significantly. The market price of our common stock may fluctuate in response to many things, including but not limited to:


•	variations in our actual or anticipated results of operations, liquidity or financial condition;


•	changes in, or the failure to meet, our financial estimates or those of securities analysts;


•	the amount and timing of any cash distributions;


•	actions or announcements by our competitors;


•	potential conflicts of interest, or the discontinuance of our strategic relationships, with AAMC, Altisource and Ocwen;


•	actual or anticipated accounting problems;


•	adverse market reaction to any increased indebtedness we incur in the future;

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•	regulatory actions;


•	changes in the market outlook for the real estate, mortgage or housing markets;


•	technology changes in our business;


•	changes in interest rates that lead purchasers of our common stock to demand a higher yield;


•	future equity issuances by us, or share resales by our stockholders, or the perception that such issuances or resales may occur;


•	actions by our stockholders;


•	speculation in the press or investment community;


•	general market, economic and political conditions, including an economic slowdown or dislocation in the global credit markets;


•	failure to maintain the listing of our common stock on the New York Stock Exchange;


•	failure to qualify or maintain our qualification as a REIT;


•	failure to maintain our exemption from registration under the Investment Company Act;


•	changes in accounting principles;


•	passage of legislation or other regulatory developments that adversely affect us or our industry; and


•	departure of AAMC’s, and therefore our, key personnel.

The market prices of securities of public REITs have experienced fluctuations that often have been unrelated or disproportionate to the operating results of these companies. These market fluctuations could result in extreme volatility in the market price of our common stock.

Furthermore, our small size and different investment characteristics may not continue to appeal to our investor base, and they may seek to dispose of large amounts of our common stock. There is no assurance that there will be sufficient buying interest to offset those sales, and, accordingly, the market price of our common stock could be depressed and/or experience periods of high volatility.

The availability and timing of cash distributions is uncertain.

We are generally required to distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year in order for us to qualify as a REIT under the Code, which requirement we currently intend to satisfy through quarterly cash distributions of all or substantially all of our REIT taxable income in such year, subject to certain adjustments. We have not established a minimum distribution payment level, and our ability to make distributions may be adversely affected by a number of factors, including the risk factors described in this Annual Report.

Our Board of Directors, in its sole discretion, will determine the amount and timing of any distributions. In making such determinations, our Board of Directors will consider all relevant factors, including, without limitation, the amount of cash available for distribution, capital expenditures and general operational requirements. Our Board of Directors will also consider our ability to successfully modify and refinance or sell distressed loans or convert them into performing single-family rental properties, and the timing thereof, and our historical and projected financial condition, liquidity and results of operations, any financing covenants, maintenance of our REIT qualification, applicable law and such other factors as our Board of Directors may deem relevant from time to time. We intend over time to make regular quarterly distributions to holders of our common stock. However, we bear all expenses incurred by our operations, and the funds generated by our operations, after deducting these expenses, may not be sufficient to cover desired levels of distributions to our stockholders. In addition, our Board of Directors, in its discretion, may retain any portion of such cash in excess of our REIT taxable income for working capital. We cannot assure you how long it may take to generate sufficient available cash flow to fund distributions, nor can we assure you that sufficient cash will be available to make distributions to you. With a limited operating history, we cannot predict the amount of distributions you may receive, and we may be unable to make, maintain or increase distributions over time. There are many factors that can affect the availability and timing of cash distributions to stockholders. Because we may receive rents and income from our properties at various times during our fiscal year, distributions paid may not reflect our income earned in that particular distribution period. The amount of cash available for distribution will be affected by many factors, including, without limitation, the amount of time it takes for us to deploy the net proceeds from this offering into our target assets, the amount of income we will earn from those investments, the amount of our operating expenses and many other variables. Actual cash available for distribution may vary substantially from our expectations.

While we intend to fund the payment of quarterly distributions to our stockholders entirely from distributable cash flows, in the future we could be required to sell assets, borrow funds or raise equity to make distributions to our stockholders, which, if not available on favorable terms, or at all, may require us to eliminate or otherwise reduce such distributions or to make a portion of such distributions in the form of a taxable stock distribution. In the event we are unable to consistently fund future quarterly

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distributions to our stockholders entirely from distributable cash flows, the market price of our common stock may be negatively impacted.

The incurrence or issuance of debt, which ranks senior to our common stock upon our liquidation, and future issuances of equity or equity-related securities, which would dilute the holdings of our existing common stockholders and may be senior to our common stock for the purposes of making distributions, periodically or upon liquidation, may negatively affect the market price of our common stock.

We have incurred debt and may in the future incur or issue additional debt or issue equity or equity-related securities. Upon our liquidation, lenders and holders of our debt and holders of our preferred stock will receive a distribution of our available assets before common stockholders. Any future incurrence or issuance of debt will increase our interest cost and could adversely affect our results of operations and cash flows. We are not required to offer any additional equity securities to existing common stockholders on a preemptive basis. Therefore, additional issuances of common stock, directly or through convertible or exchangeable securities (including limited partnership interests in our operating partnership), warrants or options, will dilute the holdings of our existing common stockholders and such issuances, or the perception of such issuances, may reduce the market price of our common stock. Our preferred stock, if issued, would likely have a preference on distribution payments, periodically or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to common stockholders. Because our decision to incur or issue debt or issue equity or equity-related securities in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. Thus, common stockholders bear the risk that our future incurrence or issuance of debt or issuance of equity or equity-related securities will adversely affect the market price of our common stock.

An increase in market interest rates may have an adverse effect on the market price of our common stock and our ability to make distributions to our stockholders.

One of the factors that investors may consider in deciding whether to buy or sell shares of our common stock is our distribution rate as a percentage of our share price, relative to market interest rates. If market interest rates increase, prospective investors may demand a higher distribution rate on shares of our common stock or seek alternative investments paying higher distributions or interest. As a result, interest rate fluctuations and capital market conditions can adversely affect the market price of our common stock. For instance, if interest rates rise without an increase in our distribution rate, the market price of shares of our common stock could decrease because potential investors may require a higher distribution yield on shares of our common stock as market rates on our interest-bearing instruments such as bonds rise. In addition, to the extent we have variable rate debt, rising interest rates would result in increased interest expense on our variable rate debt, thereby adversely affecting our results of operations and cash flows and our ability to make distributions to our stockholders.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties

Our principal executive offices are c/o Altisource Asset Management Corporation, 402 Strand Street, Frederiksted, St. Croix, United States Virgin Islands 00840-3531 where AAMC subleases approximately 2,000 square feet from Ocwen under a sublease expiring June 30, 2017. The annual rent under the sublease was $40,000 per year until June 30, 2014 and continues at $45,000 per year until the termination date of the lease, plus one-half of the lease-related operating expenses and leasehold improvements. We do not currently own any real property that we use as office space. AAMC currently is seeking new, larger space in St. Croix to further increase its staff to manage our business.

For information concerning our Existing Portfolio of residential mortgage loans and REO properties (including our single-family rental properties), see “Item 1. Business–Existing Portfolio.” The following table sets forth a summary of our single-family properties as of December 31, 2014 ($ in thousands):

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State / District	Number of properties	Carrying value (1)		Weighted average age (2)
Alabama	28	$	4,410	21
Alaska	1	185		28
Arizona	97	16,722		22
Arkansas	46	4,119		31
California	512	151,844		33
Colorado	25	4,871		28
Connecticut	25	4,639		45
Delaware	10	1,883		35
District of Columbia	1	244		103
Florida	696	104,922		23
Georgia	165	19,080		22
Hawaii	2	339		20
Idaho	9	1,095		32
Illinois	359	51,260		44
Indiana	155	16,726		33
Iowa	6	401		61
Kansas	27	2,255		45
Kentucky	54	6,033		30
Louisiana	22	2,329		27
Maine	14	1,669		116
Maryland	84	16,249		35
Massachusetts	36	6,977		81
Michigan	80	9,473		46
Minnesota	71	11,400		39
Mississippi	9	912		28
Missouri	75	6,859		44
Montana	3	295		39
Nebraska	5	997		37
Nevada	17	2,284		20
New Hampshire	13	2,079		49
New Jersey	47	7,782		64
New Mexico	30	3,864		21
New York	45	8,611		68
North Carolina	259	29,979		19
Ohio	124	13,127		45
Oklahoma	23	2,372		29
Oregon	8	1,336		30
Pennsylvania	188	24,361		54
Rhode Island	46	5,707		72
South Carolina	84	9,641		22
South Dakota	2	295		52
Tennessee	76	9,366		23
Texas	118	14,447		23
Utah	63	9,864		30
Vermont	3	561		140
Virginia	42	10,931		26
Washington	19	4,161		38
West Virginia	3	648		25
Wisconsin	132	14,728		49
Wyoming	1	275		21
Total	3,960	$	624,607	34

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(1)	The carrying value of an asset is based on historical cost which generally consists of the market value at the time of foreclosure sale plus renovation costs, net of any accumulated depreciation.


(2)	Weighted average age is based on the age weighted by carrying value for each state.

Item 3. Legal Proceedings

From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of December 31, 2014 , we were not a party to, and our properties were not subject to, any pending or threatened legal proceedings that individually or in the aggregate, are expected to have a material impact on our financial condition, results of operations or cash flows. Subsequent to December 31, 2014, the following legal proceedings were commenced with respect to us:

On January 15, 2015, a shareholder derivative action was filed in the Circuit Court of Maryland for Baltimore City by a purported shareholder under the caption The Police Retirement System of Saint Louis v. Erbey, et al. , 24-C-15-000223. The action names as defendants William C. Erbey and each of the members of our Board of Directors and alleges that Mr. Erbey and our directors breached fiduciary duties in connection with the asset management agreement among us, Altisource Residential, L.P. and AAMC. The action also names Altisource Residential, L.P. and AAMC as defendants and alleges that AAMC aided and abetted the purported breaches of fiduciary duty and has been unjustly enriched by the asset management agreement. The complaint also names us as a nominal defendant. The plaintiff seeks, among other things, an order declaring that Mr. Erbey and the director defendants have breached their fiduciary duties, an order declaring that Mr. Erbey and AAMC have been unjustly enriched, an order declaring that the asset management agreement is unenforceable and directing our Board of Directors to terminate the asset management agreement, damages, disgorgement by Mr. Erbey and AAMC of allegedly wrongful profits, changes to our corporate governance and an award of attorney’s and other fees and expenses. We believe the complaint is without merit. At this time, we are not able to predict the ultimate outcome of this matter, nor can we estimate the range of possible loss, if any.

On December 24, 2014, a shareholder derivative action was filed in the United States District Court for the Southern District of Florida by a purported shareholder of Ocwen under the caption Sokolowski v. Erbey, et al., 14-cv-8160-1. The action named the directors of Ocwen as defendants and alleged, among other things, various breaches of fiduciary duties by the directors of Ocwen. On February 11, 2015, plaintiff filed an amended complaint naming the directors of Ocwen as defendants and also naming Altisource, Home Loan Servicing Solutions, AAMC and us as alleged aiders and abettors of the purported breaches of fiduciary duties. The amended complaint alleges that the directors of Ocwen breached their fiduciary duties by, among other things, allegedly failing to exercise oversight over Ocwen's compliance with applicable laws, rules and regulations; failing to exercise oversight responsibilities with respect to the accounting and financial reporting processes of Ocwen; failing to prevent conflicts of interest and allegedly improper related party transactions; failing to adhere to Ocwen's code of conduct and corporate governance guidelines; selling personal holdings of Ocwen stock on the basis of material adverse inside information; and disseminating allegedly false and misleading statements regarding Ocwen's compliance with regulatory obligations and allegedly self-dealing transactions with related companies. Plaintiff claims that as a result of the alleged breaches of fiduciary duties, Ocwen has suffered damages including settlements with regulatory agencies in excess of $2 billion, injury to its reputation and corporate goodwill, and exposure to governmental investigations and securities and consumer class action lawsuits. In addition to the derivative claims, the plaintiff also alleges an individual claim that Ocwen's 2014 proxy statement allegedly contained untrue statements of material fact and failed to disclose material information in violation of federal securities laws. The plaintiff seeks, among other things, an order requiring the defendants to repay to Ocwen unspecified amounts by which Ocwen has been damaged or will be damaged, an award of an unspecified amount of exemplary damages, changes to Ocwen's corporate governance, and an award of attorney's and other fees and expenses. We believe the claims against us in the matter are without merit. At this time, we are not able to predict the ultimate outcome of this matter, nor can we estimate the range of possible loss, if any.

Management does not believe that we have incurred an estimable, probable or material loss by reason of any of the above actions.

Item 4. Mine safety disclosures

Not applicable.

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Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock has been listed on the New York Stock Exchange under the symbol “RESI” since December 13, 2012. The following table sets forth the high and low close of day sales prices for our common stock as reported by the New York Stock Exchange and dividend declared per share for the periods indicated:



	2014						2013
Quarter ended	High		Low		Dividend		High		Low		Dividend
March 31	$	34.81	$	26.72	$	0.48	$	20.51	$	15.35	$	—
June 30	31.57		25.16		0.45		20.00		16.03		—
September 30	26.49		23.19		0.55		22.98		16.88		0.10
December 31	25.13		18.54		0.55		31.90		22.50		0.25

The number of holders of record of our common stock as of February 19, 2015 was 64. The number of beneficial stockholders is substantially greater than the number of holders as a large portion of our stock is held through brokerage firms. Information regarding s ecurities authorized for issuance under equity compensation plans is set forth in Note 10 to the consolidated financial statements.

Dividends

We will pay dividends at the sole and absolute discretion of our Board of Directors in light of conditions then existing including our earnings, taxable income, financial condition, liquidity, capital requirements, the availability of capital, applicable REIT and legal restrictions, general overall economic conditions and other factors. We are restricted by the terms of our repurchase agreements from paying dividends greater than our REIT taxable income in a calendar year.

In order to qualify as a REIT, we are required to distribute dividends, other than capital gain dividends, to our shareholders in an amount at least equal to the sum of 90% of our REIT taxable income (computed without regard to our deduction for dividends paid and our net capital gains) and 90% of the net income after tax, if any, from foreclosure property, less the sum of specified items of non-cash income that exceeds a percentage of our income.

During 2014, cash dividends on common stock totaled $2.03 per share, or an aggregate of $116.0 million . When we realize gains on sales of assets, a portion of our dividends may be characterized as long term capital gains. The dividends paid in 2014 represented $1.08 of ordinary income and $0.95 of long-term capital gain for income tax purposes. The aggregate minimum distribution to shareholders required to maintain our REIT status was $104.2 million in 2014. The 2014 distributions included a cash dividend of $0.08 per share of common stock intended to satisfy the distribution requirement for 2013 and was treated as a 2013 distribution for REIT qualification purposes. During 2013, cash dividends on common stock totaled $0.35 per share, all of which represented ordinary income for income tax purposes. In 2013 the aggregate minimum distribution to shareholders required to maintain our REIT status was $16.0 million.

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Performance Graph

The following stock price performance graph compares the performance of our common stock to the S&P 500 and the Russell 2000. The stock price performance graph assumes an investment of $100 in our common stock and the two indices on December 13, 2012 and further assumes the reinvestment of all dividends. Stock price performance is not necessarily indicative of future results.



	For the period from December 13, 2012 to December 31,
Index	2012		2013		2014
Altisource Residential Corporation	$	105.60	$	203.07	$	145.20
S&P 500	100.47		130.22		145.05
Russell 2000	103.05		141.18		146.17
NAREIT FTSE All Equity REITs (1)	102.63		101.81		125.68

_______

(1) NAREIT FTSE All Equity REITs performance is reported historically on a monthly basis and therefore the total return has been calculated from November 30, 2012.

The performance graph above is being furnished as part of this Annual Report solely in accordance with the requirement under Rule 14a-3(b)(9) to furnish the Company’s stockholders with such information and, therefore, is not deemed to be filed, or incorporated by reference in any filing, by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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Item 6. Selected Financial Data

The following table sets forth selected financial data which is derived from our audited consolidated financial statements ($ in thousands, except per share data). The historical results presented below may not be indicative of our future performance and do not necessarily reflect what our financial position would have been had we operated as a separate, stand-alone entity since inception. The data should be read in conjunction with our consolidated financial statements and notes thereto, included elsewhere in this report, and “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.”



	Year ended December 31, 2014		Year ended December 31, 2013		June 7, 2012 (Inception) to December 31, 2012
Total revenue	$	423,298	$	72,297	$	—
Net income (loss)	188,853		39,596		(89		)
Earnings (loss) per basic share	3.36		1.67		(0.01		)
Earnings (loss) per diluted share	3.34		1.61		(0.01		)
Dividend per share	2.03		0.35		—



	December 31, 2014		December 31, 2013		December 31, 2012
Total assets	$	2,726,062	$	1,398,640	$	100,011
Repurchase agreements	1,015,000		602,382		—
Other secured borrowings	339,082		—		—

Item 7. Management's discussion and analysis of financial condition and results of operations

Overview

We are a Maryland REIT focused on acquiring and managing single-family rental properties primarily by acquiring portfolios of sub-performing and non-performing residential mortgage loans throughout the United States. We believe that the events affecting the housing and mortgage market in recent years have created a significant rental demand for single-family properties and have created a large supply of distressed mortgage loans for sale in the market. We therefore believe we have an opportunity to acquire single-family properties through the acquisition of sub-performing and non-performing loan portfolios at attractive valuations. We expect our integrated approach of acquiring sub-performing and non-performing residential mortgage loans and converting them to rental properties will enable us to compete more effectively for attractive investment opportunities. While we focus on acquiring our rental properties through the acquisition of distressed mortgage loans, we also may consider purchasing rental properties through other avenues, including, without limitation, though the purchase of REO, residential mortgage-backed securities, clean-up calls and other distressed assets.

During the year ended December 31, 2014 , we completed the acquisition of an aggregate of 7,326 residential mortgage loans, substantially all of which were non-performing, and 237 REO properties having an aggregate unpaid principal balance (“UPB”) of approximately $1.9 billion and an aggregate market value of underlying properties of approximately $1.8 billion . The aggregate purchase price for these acquisitions was approximately $1.2 billion .

In 2013, we acquired portfolios consisting of an aggregate of 8,491 residential mortgage loans and 40 REO properties, substantially all of which were non-performing, having an aggregate UPB of approximately $2.2 billion and an aggregate market value of underlying properties of $1.8 billion . The aggregate purchase price for these portfolios was $1.2 billion .

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During 2014 and 2013, we modified an aggregate of 619 mortgage loans, converted an aggregate of 3,908 mortgage loans into REO properties and disposed of an aggregate of 946 mortgage loans through short sale, refinancing or other liquidation events.

Following the above-referenced transactions, as of December 31, 2014 , our portfolio consisted of 10,963 residential mortgage loans, substantially all of which were non-performing, having an aggregate UPB of approximately $2.9 billion and an aggregate market value of underlying properties of $2.7 billion . We also owned 3,960 REO properties with an aggregate carrying value of $624.6 million , of which 3,349 were held for use and 611 were held for sale. Of the 3,349 REO properties held for use, 336 properties had been rented and were occupied by tenants, 197 were being listed for rent and 254 were in varying stages of renovation. With respect to the remaining 2,562 REO properties held for use, we will make a final determination whether each property meets our rental profile after (a) applicable state redemption periods have expired, (b) the foreclosure sale has been ratified, (c) we have recorded the deed for the property, (d) utilities have been activated and (e) we have secured access for interior inspection. We also owned 102 re-performing mortgage loans held for sale having an aggregate UPB of approximately $18.4 million and an aggregate market value of underlying properties of approximately $22.5 million as of December 31, 2014 .

To date, we have acquired our non-performing and re-performing mortgage loans through direct acquisitions from institutions such as banks, HUD and private equity funds.

We are externally managed by AAMC, an asset management company that provides portfolio management and corporate governance services to investment vehicles. We conduct substantially all of our operations, and make substantially all of our investments, through our operating partnership and its subsidiaries. One of our subsidiaries is the sole general partner of the operating partnership, and we are the sole limited partner.

Observations on Current Market Opportunities

We believe there is currently a significant market opportunity to acquire single-family rental properties through the distressed loan channel and expect the supply of non-performing loans, sub-performing loans, properties in foreclosure and REO to remain steady over the next two years as GSEs, HUD, banks and other mortgage lenders seek to dispose of their distressed inventories. We continue to see substantial volumes of distressed residential mortgage loan portfolios offered for sale by banks, HUD, GSEs and private equity funds, among others. We believe that the distressed loan channel gives us a cost advantage over other acquisition channels such as foreclosure auctions and REO acquisitions, involves less competition and positions us to be selected as the buyer of diverse portfolios of such loans since we are not geographically constrained. Our preferred resolution methodology is to modify the sub-performing and non-performing loans. We believe modification followed by refinancing generates near-term cash flows, provides the highest possible economic outcome for us and is a socially responsible business strategy because it keeps more families in their homes.

Metrics Affecting Our Consolidated Results

Revenues

Our revenues primarily consist of the following:

Net realized gain on mortgage loans. We record net realized gains, including the reclassification of previously accumulated net unrealized gains, upon the liquidation of a loan which may consist of short sale, third party sale of the underlying property, refinancing or full debt pay-off of the loan. We expect the timeline to liquidate loans will vary significantly by loan, which could result in fluctuations in revenue recognition and operating performance from period to period. Additionally, the proceeds from loan liquidations may vary significantly depending on the resolution methodology. We generally expect to collect proceeds of loan liquidations in cash and, thereafter, have no continuing involvement with the asset.

ii.

Net unrealized gains from the conversion of loans to REO. Upon conversion of loans to REO, we mark the properties to the most recent market value. The difference between the carrying value of the asset at the time of conversion and the most recent market value, based on BPOs, is recorded in our statement of operations as net unrealized gain on mortgage loans. We expect the timeline to convert acquired loans into REO will vary significantly by loan, which could result in fluctuations in our revenue recognition and our operating performance from period to period. The factors that may affect the timelines to foreclose upon a residential mortgage loan include, without limitation, state foreclosure timelines and deferrals associated therewith; unauthorized parties occupying the property; federal, state or local legislative action or initiatives designed to provide homeowners with assistance in avoiding residential mortgage

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loan foreclosures and continued declines in real estate values and/or sustained high levels of unemployment that increase the number of foreclosures and which place additional pressure and/or delays on the already overburdened judicial and administrative proceedings.

iii.

Net unrealized gains from the change in fair value of loans. After our sub-performing and non-performing mortgage loans are acquired, the fair value of each loan is adjusted in each subsequent reporting period as the loan proceeds to a particular resolution (i.e., modification, or conversion to real estate owned). As a loan approaches resolution, the resolution timeline for that loan decreases and costs embedded in the discounted cash flow model for loan servicing, foreclosure costs and property insurance are incurred and removed from future expenses. The shorter resolution timelines and reduced future expenses each increase the fair value of the loan. The increase in the value of the loan is recognized in net unrealized gain on mortgage loans in our consolidated statements of operations. The exact nature of resolution will be dependent on a number of factors that are beyond our control, including borrower willingness to pay, property value, availability of refinancing, interest rates, conditions in the financial markets, the regulatory environment and other factors.


iv.	Net realized gain on real estate. REO properties that do not meet our investment criteria are sold out of our taxable REIT subsidiary. The realized gain or loss recognized in financial statements reflects the net amount of realized and unrealized gains on sold REOs from the time of acquisition to sale completion.

As a greater number of our REO properties are renovated and deemed suitable for rental, we expect a greater portion of our revenues will be rental revenues. We believe the key variables that will affect our rental revenues over the long term will be average occupancy and rental rates. We anticipate that a majority of our leases of single-family rental properties to tenants will be for a term of two years or less. As these leases permit the residents to leave at the end of the lease term without penalty, we anticipate our rental revenues will be affected by declines in market rents more quickly than if our leases were for longer terms. Short-term leases may result in high turnover, which involves expenses such as renovation costs and leasing expenses, or reduced rental revenues.

Although we seek to lease the majority of REO properties we acquire on foreclosure, we also sell the properties that do not meet our rental investment criteria. The real estate market and home prices will determine proceeds from any sale of real estate. In addition, while we seek to track real estate price trends and estimate the effects of those trends on the valuations of our portfolios of residential mortgage loans, future real estate values are subject to influences beyond our control.

Expenses

Our expenses primarily consist of rental property operating expenses, depreciation and amortization, real estate selling cost and impairment, mortgage loan servicing, interest expense, general and administrative expenses, expense reimbursement, incentive management fees. Rental property operating expenses are expenses associated with our ownership and operation of rental properties including expenses such as Altisource's property management fees, expenses towards repairs, utility expenses on vacant properties, turnover costs, property taxes, insurance and HOA dues. Depreciation and amortization is a non-cash expense associated with the ownership of real estate and generally remains relatively consistent each year in relation to our asset levels since we depreciate our properties on a straight-line basis over a fixed life. Real estate selling cost and impairment represents our estimate for the costs to be incurred to sell a property and an amount that represents the carrying amount over the estimated fair value less costs to sell. Mortgage loan servicing costs are primarily for servicing fees, foreclosure fees and advances of residential property insurance. Interest expense consists of the costs to borrow money in connection with our debt financing of our portfolios. General and administrative expenses consist of the costs related to the general operation and overall administration of our business. Expense reimbursement consists primarily of employee salaries of AAMC in direct correlation to the services they provide on our behalf and other personnel costs and corporate overhead. The incentive management fees consist of compensation due to AAMC, based on the amount of cash available for distribution to our stockholders for each period.

Other factors affecting our consolidated results

We expect our results of operations to be affected by various factors, many of which are beyond our control, including the following:

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Acquisitions

Our operating results will depend on our ability to source sub-performing and non-performing loans, as well as other residential mortgage loans and REO property assets. We believe that there is currently a large supply of sub-performing and non-performing mortgage loans available to us for acquisition. We believe the available supply provides for a steady acquisition pipeline of assets since we plan on targeting just a small percentage of the population.

Generally, we expect that our residential mortgage loan portfolio may grow at an uneven pace, as opportunities to acquire distressed residential mortgage loans may be irregularly timed and may at times involve large portfolios of loans, and the timing and extent of our success in acquiring such loans cannot be predicted. In addition, for any given portfolio of loans that we agree to acquire, we typically acquire fewer loans than originally expected, as certain loans may be resolved prior to the closing date or may fail to meet our diligence standards. Although the number of unacquired loans typically constitutes a relatively small portion of a particular portfolio, in certain cases, the number of loans we do not acquire could be a significant portion of a particular portfolio. In any case where we do not acquire the full portfolio, appropriate adjustments are made to the applicable purchase price.

Financing

Our ability to grow our business is dependent on the availability of adequate financing including additional equity financing, debt financing or both in order to meet our objectives. We intend to leverage our investments with debt, the level of which may vary based upon the particular characteristics of our portfolio and on market conditions. To the extent available at the relevant time, our financing sources may include bank credit facilities, warehouse lines of credit, structured financing arrangements and repurchase agreements, among others. We may also seek to raise additional capital through public or private offerings of debt or equity securities, depending upon market conditions. To qualify as a REIT under the Code, we will need to distribute at least 90% of our taxable income each year to our stockholders. This distribution requirement limits our ability to retain earnings and thereby replenish or increase capital to support our activities.

Our taxable income is triggered primarily by material changes in the economic status of loans, such as a sale of the loan, modification of the loan from a non-performing status to a performing status or conversion of the loan to REO. We expect to convert our taxable gains on REO dispositions and loan modifications to cash gains, which can be used to fund the distribution requirements from the corresponding taxable gains. Distribution requirements from our taxable gains on the remaining loans that we expect to convert to rental properties can be funded through a higher advance rate on the increased value when a property becomes rented.

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Resolution Activities



	First quarter 2013		Second quarter 2013		Third quarter 2013		Fourth quarter 2013		Year ended December 31, 2013		First quarter 2014		Second quarter 2014		Third quarter 2014		Fourth quarter 2014		Year ended December 31, 2014
Mortgage Loans ⁽¹⁾
Beginning balance	—		673		1,332		5,020		—		8,054		11,509		12,070		12,090		8,054
Acquisitions	684		720		3,783		3,304		8,491		4,207		1,590		1,289		240		7,326
Dispositions	(10	)	(28	)	(54	)	(119	)	(211	)	(116	)	(135	)	(165	)	(319	)	(735	)
Mortgage loan conversions to REO	(1	)	(33	)	(43	)	(151	)	(228	)	(637	)	(907	)	(1,113	)	(1,061	)	(3,718	)
Reversions to mortgage loans ⁽²⁾	—		—		2		—		2		1		13		9		13		36
Ending balance	673		1,332		5,020		8,054		8,054		11,509		12,070		12,090		10,963		10,963

Modifications	—		18		29		54		101		81		90		179		168		518
Loan reinstatements	4		10		6		8		28		19		30		64		55		168

Real Estate Owned
Beginning balance	—		7		40		114		—		262		896		1,958		2,984		262
Acquisitions	6		—		34		—		40		—		190		—		47		237
Dispositions	—		—		(1	)	(3	)	(4	)	(2	)	(22	)	(78	)	(119	)	(221	)
Mortgage loan conversions to REO	1		33		43		151		228		637		907		1,113		1,061		3,718
Reversions to mortgage loans	—		—		(2	)	—		(2	)	(1	)	(13	)	(9	)	(13	)	(36	)
Ending balance	7		40		114		262		262		896		1,958		2,984		3,960		3,960

Leased	—		1		5		14		14		35		102		216		336		336
Renovations complete	—		—		6		11		11		17		40		90		197		197
Renovations in process	—		5		3		18		18		48		140		270		254		254
Evaluating strategy/held for sale	7		34		100		219		219		796		1,676		2,408		3,173		3,173
	7		40		114		262		262		896		1,958		2,984		3,960		3,960

_____________


(1)	Excludes mortgage loans held for sale.


(2)	Subsequent to the foreclosure sale, we may be notified that the foreclosure sale was invalidated for certain reasons.

In addition, as of December 31, 2014 , 207 of our mortgage loans were on trial modification plans, compared to 197 mortgage loans on trial modification plans as of September 30, 2014.

Portfolio size

The size of our investment portfolio will also be a key revenue driver. Generally, as the size of our investment portfolio grows, the amount of revenue we expect to generate will increase. A growing investment portfolio, however, will drive increased expenses including possibly higher servicing fees, property management fees to Altisource and fees payable to AAMC. We may also incur additional interest expense if we incur additional debt to finance the purchase of our assets.

Results of operations

The following sets forth discussion of our results of operations for the years ended December 31, 2014 and 2013 . We had no substantial revenues or expenses for the period from June 7, 2012 (Inception) through December 31, 2012. Accordingly, we have not presented comparative results for the period from Inception to December 31, 2012. We purchased our first portfolio of sub-performing and non-performing residential mortgage loans in February 2013. Our results of operations for the periods presented are not indicative of our expected results in future periods.

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Fiscal year ended December 31, 2014 compared to fiscal year ended December 31, 2013

Rental revenues

Rental revenues increased to $1.6 million for the year ended December 31, 2014 from $36,000 for the year ended December 31, 2013 . The number of leased properties increased to 336 leased properties at December 31, 2014 from 14 at December 31, 2013 . We expect to generate increasing rental revenues as we continue to renovate, list and rent additional residential rental properties. Our rental revenues will depend primarily on occupancy levels and rental rates for our residential rental properties. Because our lease terms generally are expected to be two or fewer years, our occupancy levels and rental rates will be highly dependent on localized residential rental markets, our ability to manage maintenance and upkeep costs and our renters’ desire to remain in our properties.

Net unrealized gain on mortgage loans

Our net unrealized gains on mortgage loans increased to $350.8 million for the year ended December 31, 2014 from $61.1 million for the year ended December 31, 2013 . These increases were primarily related to an increase in the number of loans for which unrealized gains were estimated and the continued discounts at which we have been able to acquire non-performing loans into our portfolio. The net unrealized gains for the year ended December 31, 2014 and 2013 can be broken down into the following two components:

•

First, we recognized unrealized gains driven by a material change in loan status of $124.9 million for the year ended December 31, 2014 compared to $8.3 million for the year ended December 31, 2013 . During the year ended December 31, 2014 and 2013 , we converted 3,682 and 226 mortgage loans to REO status, respectively. Upon conversion of these mortgage loans to REO, we marked these properties to the most recent market value, less estimated selling costs in the case of REO properties held for sale; and

•

Second, we recognized $225.9 million in unrealized gains for the year ended December 31, 2014 from the net increase in the fair value of loans during the period compared to $52.8 million for the year ended December 31, 2013 . Adjustments to the fair value of loans after acquisition represent, among other factors, a reduction in the time remaining to complete the foreclosure process due to the passage of time since acquisition and a reduction in future foreclosure expenses to the extent we have already incurred them. The reduction in time remaining to complete the foreclosure is driven by the completion of activities in the foreclosure process after we acquired the loans. This reduction in timeline results in reduced carrying costs and reduced future expenses for the loans, each of which increases the fair value of the loans. The increase in the value of the loans is recognized in net unrealized gain on mortgage loans in our consolidated statements of operations.

Through our acquisitions, the number of sub-performing and non-performing loans in our Existing Portfolio has grown from 8,054 loans at December 31, 2013 to 10,963 loans at December 31, 2014 . The fair value of mortgage loans is based on a number of factors which are difficult to predict and may be subject to positive or adverse changes in value depending on the financial condition of borrowers, as well as geographic, economic, market and other conditions. Therefore, we may experience unrealized losses or additional unrealized gains on our mortgage loans in the future.

Net realized gain on mortgage loans

Net realized gain on mortgage loans increased to $55.8 million for the year ended December 31, 2014 from $10.5 million for the year ended December 31, 2013 , primarily due to our disposition of mortgage loans through loan sales, refinancings, short sales and foreclosure sales. We disposed of 735 mortgage loans in the year ended December 31, 2014 and 211 mortgage loans in the year ended December 31, 2013 , primarily from short sales and foreclosure sales.

Net realized gain on re-performing mortgage loans

Net realized gain on re-performing mortgage loans were $2.8 million for the year ended December 31, 2014 , during which we disposed of 770 re-performing loans. We did not dispose of any re-performing loans in 2013.

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Net realized gain on real estate

Net realized gain on real estate was $9.5 million for the year ended December 31, 2014 , during which we disposed of 221 residential properties. We disposed of four residential properties during the year ended December 31, 2013 , resulting in no meaningful gains or losses on such dispositions.

Interest income

Interest income increased to $2.9 million for the year ended December 31, 2014 from $0.7 million for the year ended December 31, 2013 , primarily related to the accretion of $2.6 million into interest income with respect to our re-performing loans that were acquired during 2014.

Residential property operating expenses

We incurred $26.0 million of residential property operating expenses for the year ended December 31, 2014 compared to $0.8 million for the year ended December 31, 2013 . We expect to incur increasing residential property operating expenses as we convert more mortgage loans to, and own more residential properties. Our residential property operating expenses will be dependent primarily on residential property taxes and insurance, property management fees and repair and maintenance expenditures.

Real estate depreciation and amortization

We incurred $1.1 million of real estate depreciation and amortization for the year ended December 31, 2014 compared to a nominal amount of real estate depreciation and amortization for the year ended December 31, 2013 . We expect to incur increasing real estate depreciation and amortization as we convert more mortgage loans to, and own more residential rental properties. Real estate depreciation and amortization are non-cash expenditures which generally are not expected to be indicative of the market value or condition of our residential rental properties.

Real estate selling costs and impairment

Real estate selling costs of REO held for sale were $13.9 million for the year ended December 31, 2014 compared to $0.2 million for the year ended December 31, 2013 . We also recognized $7.9 million impairment of our REO for the year ended December 31, 2014 compared to $0 impairment for the year ended December 31, 2013 . We record residential properties held for sale at the lower of either the carrying amount of REO or its estimated fair value less estimated selling costs. If the carrying amount exceeds the estimated fair value, as adjusted, we record impairment equal to the amount of such excess.

Mortgage loan servicing costs

We incurred $68.2 million of mortgage loan servicing costs, primarily for servicing fees, foreclosure fees and advances of residential property insurance, for the year ended December 31, 2014 compared to $10.4 million for the year ended December 31, 2013 . We incur mortgage loan servicing and foreclosure costs as our mortgage servicers provide servicing for our loans and pay for advances relating to property insurance that are made to protect our investment in mortgage loans. Our loan servicing costs could be higher in a given period if the number of mortgage loans in our portfolio increases.

Interest expense

We incurred $35.8 million of interest expense for the year ended December 31, 2014 related to borrowings under our repurchase agreements (including amortization of deferred financing costs) compared to $4.6 million for the year ended December 31, 2013 . The interest rate under our repurchase agreements is subject to change, based on changes in the relevant index. Market interest rates are currently at historically low levels, and any increase in market interest rates will cause our contractual interest expense to increase. We also expect our interest expense to increase as our debt increases to fund and/or leverage our ownership of existing and additional portfolios.

General and administrative expenses

General and administrative expenses increased to $7.0 million for the year ended December 31, 2014 from $4.2 million for the year ended December 31, 2013 , primarily due to an increase in professional fees and acquisition costs related to our acquisitions of mortgage loan portfolios and due to an increase of litigation-based expenses.

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Related party general and administrative

We incurred $77.0 million of related party general and administrative expenses for the year ended December 31, 2014 compared to $12.5 million for the year ended December 31, 2013 . The increase in 2014 included $67.9 million in management incentive fees for the year ended December 31, 2014 , which were due to AAMC under the asset management agreement compared to $4.9 million for the year ended December 31, 2013 . The remaining increase in related party general and administrative expenses related to increased expense reimbursements to AAMC for salaries and benefits attributable to AAMC’s hiring of additional personnel to provide services on behalf of our business.

Other income

Other income was $2.5 million for the year ended December 31, 2014 , primarily reflecting $2.2 million of dividends we received from NewSource pursuant to the terms of our preferred stock investment.

Liquidity and capital resources

As of December 31, 2014 , we had cash and cash equivalents of $66.2 million compared to $116.0 million as of December 31, 2013 . Our liquidity reflects our ability to meet our current obligations (including our operating expenses and, when applicable, retirement of, and margin calls relating to, our financing arrangements) and make distributions to our stockholders. We are required to distribute at least 90% of our taxable income each year to our stockholders to qualify as a REIT under the Internal Revenue Code. This distribution requirement limits our ability to retain earnings and thereby replenish or increase capital to support our activities.

We were initially funded with $100.0 million on December 21, 2012. Since our separation, our primary sources of liquidity have been proceeds from equity offerings, borrowings under our repurchase agreements and securitization financings, interest payments we receive from our portfolio of assets, cash generated from loan liquidations and cash generated from our rental portfolio. We expect our existing business strategy will require additional debt and/or equity financing. Our manager continues to explore a variety of financing sources to support our growth, including, but not limited to, debt financing through bank warehouse lines of credit, additional and/or amended repurchase agreements, term financing, securitization transactions and additional debt or equity offerings. Based on our current borrowing capacity, leverage ratio, and anticipated additional debt financing transactions, we believe that these sources of liquidity will be sufficient to enable us to meet anticipated short-term (one year) liquidity requirements, including paying expenses on our existing loan portfolio, funding distributions to our stockholders, paying fees to AAMC under the asset management agreement and general corporate expenses. However, there can be no assurance as to how much additional financing capacity such efforts will produce, what form the financing will take or that such efforts will be successful. If we are unable to renew, replace or expand our sources of financing, our business, financial condition, liquidity and results of operations may be materially and adversely affected.

To date, we have conducted the following equity offerings, repurchase facilities and securitization transactions:

Equity Offerings

We have completed three public equity offerings with aggregate net proceeds of approximately $1.1 billion. On May 1, 2013, we completed a public offering of 17,250,000 shares of common stock at $18.75 per share and received net proceeds of approximately $309.5 million. On October 1, 2013, we completed our second public offering of 17,187,000 shares of common stock at $21.00 per share and received net proceeds of $349.4 million. On January 22, 2014, we completed our third public offering of 14,200,000 shares of common stock at $34.00 per share and received net proceeds of approximately $467.6 million.

Repurchase Facilities

On March 22, 2013, September 12, 2013 and September 23, 2013, we entered into three separate repurchase agreements to finance the acquisition and ownership of residential mortgage loans and REO properties. The maximum aggregate funding available under these repurchase agreements initially was $425.0 million . We subsequently increased the aggregate funding capacity under each repurchase agreement as follows:


•	Credit Suisse (“CS”) is the lender on the repurchase agreement entered into on March 22, 2013 (the “CS repurchase agreement”). The CS Repurchase Agreement was amended on April 21, 2014 to initially increase the aggregate maximum borrowing capacity from $100.0 million to $200.0 million . The maturity date of the CS repurchase

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agreement was also extended to April 20, 2015, subject to an additional one-year extension with the approval of the lender. On June 11, 2014, we further amended the CS repurchase agreement to increase the aggregate maximum borrowing capacity from $200.0 million to $375.0 million , subject to certain sublimits, for the period from June 11, 2014 through October 11, 2014. In October 2014, we further extended the temporary increase with CS in order to enable us to complete a securitization of the non-performing mortgage loans comprising the increased capacity. Following the securitization of these loans, on December 23, 2014, we further amended the CS repurchase agreement and entered into a securities repurchase agreement with Credit Suisse to obtain additional financing on the bonds issued by us in our securitizations. This December 2014 amendment increased our aggregate maximum borrowing capacity under the CS repurchase agreement to $225.0 million . We are in discussions with CS to renew the repurchase agreement. No assurance can be provided that we will be able to renew this facility on reasonable terms, on a timely basis or at all.

•

Deutsche Bank (“DB”) is the lender on the repurchase agreement dated September 12, 2013 (the “DB repurchase agreement”). The DB repurchase agreement was amended on December 18, 2013, has an aggregate funding capacity of $250.0 million and matures on March 11, 2016. The DB repurchase agreement includes a provision that, beginning in the nineteenth month, we will not be able to finance mortgage loans in excess of amounts outstanding under the facility at the end of the eighteenth month.

•

Wells Fargo (“Wells”) is the lender under the repurchase agreement dated September 23, 2013 (the “Wells repurchase agreement”). The Wells repurchase agreement was amended on December 23, 2013 to initially increase the aggregate maximum borrowing capacity from $200.0 million to $400.0 million . On June 25, 2014, we further amended the Wells repurchase agreement to increase the aggregate maximum borrowing capacity from $400.0 million to $1.0 billion , subject to certain sublimits. On December 31, 2014, we further amended the Wells repurchase agreement to reduce the aggregate maximum borrowing capacity from $1.0 billion to $750 million to reflect the securitization of a significant portion of our non-performing loans that previously had been financed under the Wells repurchase agreement. The maturity date of the Wells repurchase agreement was March 23, 2015. However, on February 20, 2015, we exercised our option to extend the termination date of this facility to March 23, 2016. We are in discussions with Wells to renew the repurchase agreement. No assurance can be provided that we will be able to renew this facility on reasonable terms, on a timely basis or at all. In the event we cannot renew the agreement, the advance rate will be reduced by 10% after the first 90 days of the extension term and we will not be entitled to draw additional funds under the facility.

Following all of the amendments described above, the maximum aggregate funding available to us under these repurchase agreements as of December 31, 2014 was $1.2 billion , subject to certain sublimits, eligibility requirements and conditions precedent to each funding. As of December 31, 2014 , an aggregate of $1.0 billion was outstanding under our repurchase agreements. All obligations under each of these repurchase agreements are fully guaranteed by us.

Under the terms of each repurchase agreement, as collateral for the funds we draw thereunder, subject to certain conditions, the operating partnership will sell to the applicable lender equity interests in the Delaware statutory trust subsidiary that owns the applicable underlying mortgage assets on our behalf, or the trust will directly sell such underlying mortgage assets. In the event the lender determines the value of the collateral has decreased, the lender has the right to initiate a margin call and require us to post additional collateral or to repay a portion of the outstanding borrowings. The price paid by the lender for each underlying mortgage asset we finance under the applicable repurchase agreement is subject to agreement between the lender and us and is based on a percentage of the market value of the underlying mortgage asset and depends on its delinquency status. Our cost of borrowing under the repurchase agreements generally corresponds to LIBOR, or the lender interest at the lender’s cost of funds plus a margin. We are also required to pay certain other customary fees, administrative costs and expenses to maintain and administer the repurchase agreements.

The repurchase agreements require us to maintain various financial and other covenants, including maintaining a minimum adjusted tangible net worth, a maximum ratio of indebtedness to adjusted tangible net worth and specified levels of unrestricted cash. In addition, the repurchase agreements contain customary events of default.

We are currently in compliance with the covenants and other requirements with respect to our repurchase agreements. We monitor our banking partners’ ability to perform under the repurchase agreements and have concluded there is currently no reason to doubt that they will continue to perform under the repurchase agreements as contractually obligated.

The following table sets forth data with respect to our repurchase agreements as of and for the three months ended December 31, 2014 and December 31, 2013 ($ in thousands):

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	Three months ended December 31, 2014		Three months ended December 31, 2013
Balance at end of period	$	1,015,000	$	602,382
Maximum month-end balance outstanding during the period	1,112,883		602,382
Weighted average quarterly balance	1,055,776		364,665

As amended, the three repurchase agreements provide for the lenders to finance our portfolio at advance rates (or purchase prices) ranging from 40% to 80% of the “asset value” of the mortgage loans and REO properties. Under these repurchase agreements, the “asset value” generally is an amount that is based on the market value of the mortgage loan or REO property. We believe these are typical market terms which are designed to provide protection for the lender to collateralize its advances to us in the event the collateral declines in value. Under each of the repurchase agreements, if the carrying value of the collateral declines beyond certain limits, we would have to either (a) provide additional collateral or (b) repurchase certain assets under the agreement to maintain the applicable advance rate.

The increase in amounts outstanding under our repurchase agreements from December 31, 2013 to December 31, 2014 relate primarily to funds we drew down under a repurchase facility in January 2014, April 2014, June 2014, and July 2014 to complete our acquisitions of portfolios of mortgage loans and REO properties, net of amounts paid down with the proceeds from the issuance of the bonds issued in the securitizations we completed in the third and fourth quarters of 2014 as describe below in “-Securitizations”. Our overall advance rate under the repurchase agreements declined slightly from 59.9% at December 31, 2013 to 55.8% at December 31, 2014 , although the aggregate dollar amount of funding increased. We do not collateralize any of our repurchase facilities with cash.

Securitizations

On November 25, 2014, we completed a securitization transaction in which ARLP Securitization Trust, Series 2014-2 ("ARLP 2014-2") issued $270.8 million in Class A Notes (the “Class A Notes”) and $234.0 million in Class M Notes (the “Class M Notes”). We retained $95.8 million of the Class A Notes and all of the Class M Notes in our taxable REIT subsidiary (“TRS”). The Class A Notes and the Class M Notes are secured solely by the non-performing mortgage loans and REO properties of ARLP 2014-2 and not by any of our other assets. The assets of ARLP 2014-2 are the only source of repayment and interest on the Class A Notes and the Class M Notes. The Class A Notes and the Class M Notes mature on January 26, 2054, and we do not guaranty any of the obligations of ARLP 2014-2 under the terms of the Indenture governing the notes or otherwise. As of December 31, 2014 , the book value of the underlying securitized assets held by ARLP 2014-2 was $333.0 million . In February 2015, we sold $50.7 million of the retained Class A Notes to an unrelated third party.

On September 25, 2014, we completed a securitization transaction in which ARLP Securitization Trust, Series 2014-1 ("ARLP 2014-1") issued $150.0 million in Class A Notes (the “Class A Notes”) and $32.0 million in Class M Notes (the “Class M Notes”). The Class A Notes and the Class M Notes are secured solely by the non-performing mortgage loans and REO properties of ARLP 2014-1 and not by any of our other assets. The assets of ARLP 2014-1 are the only source of repayment and interest on the Class A Notes and the Class M Notes. The Class A Notes and the Class M Notes mature on September 25, 2044, and we do not guaranty any of the obligations of ARLP 2014-1 under the terms of the Indenture governing the notes or otherwise. As of December 31, 2014 , the book value of the underlying securitized assets held by ARLP 2014-1 was $212.7 million .

As described above in “-Repurchase Agreements”, we used a portion of the proceeds of the securitizations to repurchase the non-performing loans from the repurchase facilities, as such non-performing loans were used to collateralize the securitization trusts.

We retained all of the Class M Notes issued by ARLP 2014-1 in our TRS. On September 30, 2014, pursuant to a master repurchase agreement, the TRS sold $15.0 million of the Class M Notes to NewSource, an entity in which we own 100% of the outstanding preferred stock and in which AAMC owns 100% of the outstanding common stock, for a purchase price of $15.0 million . The master repurchase agreement required the TRS to repurchase the Class M Notes from NewSource at a 5.0% yield on December 28, 2014, with the parties having the option to extend the master repurchase agreement for an additional 89 day period. On December 26, 2014, the parties agreed to extend the agreement to March 27, 2015. In no event can the master repurchase agreement be extended beyond September 29, 2015.

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Cash flows

We report and analyze our cash flows based on operating activities, investing activities and financing activities. The following table sets forth the changes in our cash flows ($ in thousands):



	Year ended December 31, 2014			Year ended December 31, 2013			Change
Net cash used in operating activities	$	(173,621	)	(22,563		)	$	(151,058	)
Net cash used in investing activities	(974,920		)	(1,206,230		)	231,310
Net cash provided by financing activities	1,098,719			1,244,776			(146,057		)
Total cash flows	$	(49,822	)	$	15,983		$	(65,805	)

The decrease in net cash used in operating activities for the year ended December 31, 2014 and 2013 consisted primarily of related party mortgage loan servicing costs including servicing fees, foreclosure fees and advances of residential property insurance on delinquent loans, interest expense, professional fees, acquisition costs and expense reimbursements to our manager for salaries and benefits.

The change in net cash used in investing activities for the year ended December 31, 2014 consisted primarily of investments in non-performing and re-performing loan portfolios, partly offset by proceeds from the disposition of loans. The change in net cash used in investing activities for the year ended December 31, 2013 consisted primarily of investments in non-performing loan portfolios. During periods in which we purchase a significant number of mortgage loans and conduct substantial renovations of residential real estate, our cash used in investing activities is generally expected to exceed cash provided by investing activities.

The change in net cash provided by financing activities for the year ended December 31, 2014 consisted primarily of the net proceeds from the issuance of common stock, payment of dividends and net borrowings under repurchase agreements and other secured borrowings. The change in net cash provided by financing activities for the year ended December 31, 2013 consisted primarily of the net proceeds from the issuance of common stock and net borrowings under repurchase agreements. Net cash related to financing activities will generally consist of the incurrence by us of debt, repayment of debt previously incurred by us, payment of dividends and issuance of common stock.

Off-balance sheet arrangements

We have no off-balance sheet arrangements as of December 31, 2014 .

Off-balance sheet arrangements

We had no off-balance sheet arrangements as of December 31, 2013 or 2012.

Contractual obligations

The following table sets forth a summary regarding our known contractual obligations based on the current principal outstanding and contractual terms of the debt obligations, including current interest rates, at December 31, 2014 ($ in thousands):



			Amount due during the years ending December 31,
	Total		2015		2016 - 2017		2018 - 2019		Thereafter
Borrowings (1)	$	1,354,656	$	237,044	$	792,956	$	—	$	324,656
Interest (2)	433,663		37,707		28,226		23,087		344,643
	$	1,788,319	$	274,751	$	821,182	$	23,087	$	669,299

________

(1) Does not consider the expected redemption dates for secured notes. The securitized assets are the only source of repayment for the secured notes and are expected to provide funding for these liabilities (see Note 7).

(2) Assumes interest rates as of December 31, 2014 remain in effect for the remaining term of the borrowings. Actual payments could vary.

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The table above does not include amounts due under the asset management agreement as those obligations do not have fixed and determinable payments.

We enter into certain contracts that contain a variety of indemnification obligations. The maximum potential future payment amount we could be required to pay under these indemnification obligations is unlimited. We have not incurred any costs to defend lawsuits or settle claims related to these indemnification obligations. As a result, the estimated fair value of these agreements is minimal. Accordingly, we recorded no liabilities for these agreements as of December 31, 2014 or 2013.

Recent accounting pronouncements

See Item 8 - Consolidated Financial Statements and Supplementary Data - Note 1, “Organization and basis of presentation - Recently issued accounting standards.”

Critical accounting judgments

Accounting standards require information in financial statements about the risks and uncertainties inherent in significant estimates, and the application of generally accepted accounting principles involves the exercise of varying degrees of judgment. Certain amounts included in or affecting our financial statements and related disclosures must be estimated requiring us to make certain assumptions with respect to values or conditions that cannot be known with certainty at the time our consolidated financial statements are prepared. These estimates and assumptions affect the amounts we report for our assets and liabilities and our revenues and expenses during the reporting period and our disclosure of contingent assets and liabilities at the date of our consolidated financial statements. Actual results may differ significantly from our estimates and any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.

We consider our critical accounting judgments to be those used in the determination of the reported amounts and disclosure related to the following:

Income taxes

We believe that we have complied and will continue to comply with the provisions of the federal income tax code applicable to REITs beginning for the year ended December 31, 2013 and have elected REIT status with the filing of our 2013 income tax return. Accordingly, we believe that we will not be subject to federal income tax beginning in the year ended December 31, 2013 on the portion of our REIT taxable income that is distributed to our stockholders as long as certain asset, income and share ownership tests are met. If after electing to be taxed as a REIT, we subsequently fail to qualify as a REIT in any taxable year, we generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost.

Our TRSs will be subject to federal and state income taxes. Income taxes are provided for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which management expects those temporary differences to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period in which the change occurs. Subject to our judgment, we reduce a deferred tax asset by a valuation allowance if it is “more likely than not” that the entire deferred tax asset will not be realized. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in evaluating tax positions, and we recognize tax benefits only if it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authority.

Mortgage loans

Upon the acquisition of sub-performing and non-performing mortgage loans, we record the assets at fair value which is the purchase price we paid for the loans on the acquisition date. The sub-performing and non-performing mortgage loans are subsequently accounted for at fair value under the fair value option election with unrealized gains and losses recorded in current period earnings. We have concluded that accounting for these sub-performing and non-performing mortgage loans at fair value timely reflect the results of our investment performance.

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We determine the purchase price for our sub-performing and non-performing mortgage loans at the time of acquisition by using a discounted cash flow valuation model and considering alternate loan resolution probabilities including modification, liquidation or conversion to rental property. Observable inputs to the model include current interest rates, loan amounts, status of payments and property types. Unobservable inputs to the model include discount rates, forecast of future home prices, alternate loan resolution probabilities, resolution timelines and the value of underlying properties.

After our sub-performing and non-performing mortgage loans are acquired, the fair value of each loan is adjusted in each subsequent reporting period as the loan proceeds to a particular resolution (i.e., modification, or conversion to real estate owned). As a loan approaches resolution, the resolution timeline for that loan decreases and costs embedded in the discounted cash flow model for loan servicing, foreclosure costs and property insurance are incurred and removed from future expenses. The shorter resolution timelines and reduced future expenses each increase the fair value of the loan. The increase in the value of the loan is recognized in net unrealized gain on mortgage loans in our consolidated statements of operations.

We also recognize unrealized gains and losses in the fair value of the sub-performing and non-performing loans in each reporting period when our mortgage loans are transferred to real estate owned. The transfer to real estate owned occurs when we have obtained legal title to the property upon completion of the foreclosure. The fair value of these assets at the time of transfer to real estate owned is estimated using BPOs. BPOs are subject to judgments of a particular broker formed by visiting a property, assessing general home values in an area, reviewing comparable listings and reviewing comparable completed sales. These judgments may vary among brokers and may fluctuate over time based on housing market activities and the influx of additional comparable listings and sales. Our results could be materially and adversely affected if the judgments used by a broker prove to be incorrect or inaccurate.

AAMC’s capital markets group determines the fair value of sub-performing and non-performing mortgage loans monthly and has developed procedures and controls governing the valuation process relating to these assets. The capital markets group reports to our Investment Committee, a committee of our Chief Executive Officer and our Chairman that oversees and approves the valuations. The capital markets group also monitors the valuation model for performance against actual results which is reported to the Investment Committee and used to continuously improve the model.

Loans held for sale

Loans held for sale, which consist of re-performing residential mortgage loans acquired from others, are recorded at the lower of cost or fair value. We do not originate loans. During 2014, Residential decided to sell certain re-performing loans and as such they were reclassified as loans held for sale from loans held for investment.

Acquired distressed re-performing residential mortgage loans that have evidence of deteriorated credit quality at the time of acquisition are accounted for in accordance with the provisions of ASC Topic 310-30, Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality. Under ASC 310-30, acquired loans may be aggregated and accounted for as a pool of loans if the loans being aggregated have common risk characteristics. A pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Under ASC Topic 310-30, we estimate cash flows expected to be collected, adjusted for expected prepayments and defaults. At each balance sheet date, we evaluate the pool of loans to determine whether the present value derived using the effective interest rate has decreased and, if so, recognize a provision for loan loss. For any significant increases in cash flows expected to be collected, we adjust the amount of accretable yield recognized on a prospective basis over the pool’s remaining life.

Real estate impairment

With respect to residential rental properties classified as held for use, we perform an impairment analysis using estimated cash flows if events or changes in circumstances indicate that the carrying value may be impaired, such as prolonged vacancy, identification of materially adverse legal or environmental factors, changes in expected ownership period or a decline in market value to an amount less than cost. This analysis is performed at the property level. These cash flows are estimated based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for rental properties, competition for customers, changes in market rental rates, costs to operate each property and expected ownership periods.

If the carrying amount of a held for use asset exceeds the sum of its undiscounted future operating and residual cash flows, an impairment loss is recorded for the difference between estimated fair value of the asset and the carrying amount. We generally estimate the fair value of assets held for use by using BPOs. In some instances, appraisal information may be available and is used in addition to BPOs.

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Residential properties, net

Upon the acquisition of real estate, generally through completion of foreclosure, we record the residential property at fair value as of the acquisition date as a component of real estate owned based on information obtained from a BPO, a full appraisal or the price given in a current contract of sale of the property. After a short evaluation period, we perform property renovations to maximize the value of the property for our rental strategy. Such expenditures are part of our initial investment in a property and, therefore, are classified as investing activities in our consolidated statement of cash flows. Subsequently, the residential property, including any renovations that improve or extend the life of the asset, is accounted for at cost. The cost basis is depreciated using the straight-line method over an estimated useful life of three to 27.5 years based on the nature of the components. Interest and other carrying costs incurred during the renovation period are capitalized until the property is ready for its intended use. Expenditures for ordinary maintenance and repairs are charged to expense as incurred.

Expenditures directly related to successful leasing efforts such as lease commissions are included in deferred leasing and financing costs, net and are stated at amortized cost. Such expenditures are part of our operations and, therefore, are classified as operating activities in our consolidated statement of cash flows. Capitalized leasing costs are amortized on a straight-line basis over the lease term of the respective leases which generally are from one to two years.

Residential properties are classified either as held for use or held for sale. Residential properties are classified as real estate and related assets held for sale when sale of the assets has been formally approved and is expected to occur in the next twelve months. We record residential properties held for sale at the lower of the carrying amount or estimated fair value less costs to sell. The impairment loss is the amount by which the carrying amount exceeds the estimated fair value less costs to sell.

Rental revenues

Minimum contractual rents from leases are recognized on a straight-line basis over the terms of the leases in rental revenues. Therefore, actual amounts billed in accordance with the lease during any given period may be higher or lower than the amount of rental revenue recognized for the period. Straight-line rental revenue commences when the customer takes control of the leased premises. Deferred rents receivable, net represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements. Contingent rental revenue is accrued when the contingency is removed. Termination fee income is recognized when the customer has vacated the rental property, the amount of the fee is determinable and collectability is reasonably assured.

Rents receivable, net and deferred rents receivable, net are reduced by an allowance for amounts that become uncollectible. We regularly evaluate the adequacy of our allowance for doubtful accounts. The evaluation takes into consideration the aging of accounts receivable, our analysis of customer personal profile and review of past due account balances. Rents receivable, net and deferred rents receivable, net are written-off when we have deemed that the amounts are uncollectible.

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Non-GAAP measures - Estimated REIT taxable income

Estimated REIT taxable income is a measure that we use in connection with monitoring our compliance with certain REIT requirements. Estimated REIT taxable income should not be considered as an alternative to net income or net income per share as indicators of our operating performance.

The following table is a reconciliation of U.S. GAAP net income to estimated REIT taxable income ($ in thousands):



	U.S. GAAP		Adjustments ⁽¹⁾			Tax
	Year ended December 31, 2014		Year ended December 31, 2014			Year ended December 31, 2014
Revenues:
Rental revenues	$	1,564	$	—		$	1,564
Net unrealized gain on mortgage loans	350,822		(135,576		)	215,246
Net realized gains	68,019		(25,473		)	42,546
Interest income, advance recoveries and other	2,893		12,858			15,751
Total revenues	423,298		(148,191		)	275,107
Expenses:
Residential property operating expenses including depreciation	27,085		(4,762		)	22,323
Mortgage loan servicing costs	68,181		(49,384		)	18,797
General, administrative and other	139,134		(20,910		)	118,224
Total expenses	234,400		(75,056		)	159,344
Estimated income before income taxes	$	188,898	$	(73,135	)	$	115,763

_____________

(1) Adjustments between GAAP earnings and estimated taxable REIT income primarily represent temporary timing differences in the recognition of revenue and expense items, as provided above.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. The primary market risks that we are currently exposed to are real estate risk and interest rate risk. A substantial portion of our investments are, and we expect will continue to be, comprised of non-performing loans and rental properties. The primary driver of the value of both these asset classes is the fair value of the underlying real estate.

Real Estate Risk

Residential property values are subject to volatility and may be affected adversely by a number of factors, including, but not limited to: national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions (such as an oversupply of housing); construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. Decreases in property values could cause us to suffer losses.

Interest Rate Risk

We will be exposed to interest rate risk from our (a) acquisition and ownership of residential mortgage loans and (b) debt financing activities. Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control. Changes in interest rates may affect the fair value of the residential mortgage loans and real estate underlying our portfolios as well as our financing interest rate expense.

We currently do not intend to hedge the risk associated with the residential mortgage loans and real estate underlying our portfolios. However, although we have not yet done so, we may undertake risk mitigation activities with respect to our debt financing interest rate obligations. We expect that our debt financing will at times be based on a floating rate of interest calculated on a fixed spread over the relevant index, as determined by the particular financing arrangement. A significantly rising interest rate environment could have an adverse effect on the cost of our financing. To mitigate this risk, we may use

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derivative financial instruments such as interest rate swaps and interest rate options in an effort to reduce the variability of earnings caused by changes in the interest rates we pay on our debt.

These derivative transactions will be entered into solely for risk management purposes, not for investment purposes. When undertaken, these derivative instruments likely will expose us to certain risks such as price and interest rate fluctuations, timing risk, volatility risk, credit risk, counterparty risk and changes in the liquidity of markets. Therefore, although we expect to transact in these derivative instruments purely for risk management, they may not adequately protect us from fluctuations in our financing interest rate obligations.

We currently borrow funds on our repurchase facilities at variable rates using secured financings. At December 31, 2014 , we had $1.0 billion of variable rate debt outstanding not protected by interest rate hedge contracts. The estimated aggregate fair market value of this debt was $1.0 billion . If the weighted average interest rate on this variable rate debt had been 100 basis points higher or lower, the annual interest expense would increase or decrease by $10.2 million , respectively.

Item 8. Consolidated Financial Statements and Supplementary Data

See index to consolidated financial statements.

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

We carried out an evaluation required by the 1934 Act, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the 1934 Act, as of December 31, 2014 . Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2014 , our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the 1934 Act. Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2014 based on criteria established in Internal Control-Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of December 31, 2014 , our internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that 1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer; 2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and 3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer's assets that could have a material effect on the financial statements.

The effectiveness of our internal control over financial reporting as of December 31, 2014 has been audited by Deloitte & Touche LLP, an independent registered certified public accounting firm, as stated in their report that appears herein.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Altisource Residential Corporation:

We have audited the internal control over financial reporting of Altisource Residential Corporation and subsidiaries (the "Company") as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2014 of the Company and our report dated March 2, 2015 expressed an unqualified opinion on those consolidated financial statements and financial statement schedules and included an explanatory paragraph related to the significant related party transactions with Altisource Asset Management Corporation, Altisource Portfolio Solutions S.A., and Ocwen Financial Corporation and the potential implications to the Company should the related parties be unable to perform under their respective agreements or in the event that these arrangements are terminated.

/s/DELOITTE & TOUCHE LLP

Atlanta, Georgia

March 2, 2015

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Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2014 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Controls

Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

Item 9B. Other Information

None.

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Part III

We will file a definitive Proxy Statement for our 2015 Annual Meeting of Stockholders, which we refer to as the “2015 Proxy Statement,” with the Securities and Exchange Commission, pursuant to Regulation 14A, not later than 120 days after December 31, 2014. Accordingly, certain information required by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections of the 2015 Proxy Statement that specifically address the items set forth herein are incorporated by reference.

Item 10. Directors, Executive Officers and Corporate Governance

The information required by Item 10 is hereby incorporated by reference from our 2015 Proxy Statement under the captions “Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Code of Ethics.”

Item 11. Executive Compensation

The information required by Item 11 is hereby incorporated by reference from our 2015 Proxy Statement under the captions “Executive Compensation” and “Director Compensation.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 is hereby incorporated by reference from our 2015 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management.”

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 is hereby incorporated by reference from our 2015 Proxy Statement under the captions “Transactions with Related Persons” and “Information Regarding the Board of Directors and Corporate Governance.”

Item 14. Principal Accountant Fees and Services

The information required by Item 14 is hereby incorporated by reference from our 2015 Proxy Statement under the captions “Independent Registered Public Accounting Firm Fees” and “Pre-Approval Policy and Procedures.”

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Part IV

Item 15. Exhibits

Exhibits



Exhibit Number		Description
2.1		Separation Agreement, dated as of December 21, 2012, between Altisource Residential Corporation and Altisource Portfolio Solutions S.A. (incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed with the Commission on December 28, 2012).
3.1		Articles of Restatement of Altisource Residential Corporation (incorporated by reference to Exhibit 3.3 of the registrant's Current Report on Form 8-K filed on April 8, 2013).
3.2		By-laws of Altisource Residential Corporation (incorporated by reference to Exhibit 3.2 of the Registrant's Registration Statement on Form 10 filed with the Commission on December 5, 2012).
10.1		Support Services Agreement, dated as of December 21, 2012, between Altisource Residential Corporation and Altisource Solutions S.à r.l. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
10.2		Tax Matters Agreement, dated as of December 21, 2012, between Altisource Residential Corporation and Altisource Solutions S.à r.l. (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
10.3		Asset Management Agreement, dated as of December 21, 2012, between Altisource Residential Corporation, Altisource Residential, L.P. and Altisource Asset Management Corporation (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
10.4		Master Services Agreement, dated as of December 21, 2012, between Altisource Residential Corporation and Altisource Solutions S.à r.l. (incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
10.5		Servicing Agreement, dated as of December 21, 2012, between Altisource Residential, L.P. and Ocwen Mortgage Servicing, Inc. (incorporated by reference to Exhibit 10.5 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
10.6		Trademark License Agreement, dated as of December 21, 2012, between Altisource Residential Corporation and Altisource Solutions S.à r.l. (incorporated by reference to Exhibit 10.6 the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
10.7		Subscription Agreement, dated as of December 21, 2012, between ARNS, Inc.) and NewSource Reinsurance Company Ltd. (incorporated by reference to Exhibit 10.7 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
10.8 †		Altisource Residential Corporation Conversion Option Plan (incorporated by reference to Exhibit 10.8 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
10.9		Altisource Residential Corporation Special Conversion Option Plan (incorporated by reference to Exhibit 10.9 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
10.10†		Altisource Residential Corporation 2013 Director Equity Plan (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on May 31, 2013.
10.11		Master Mortgage Loan Sale Agreement, dated as of February 14, 2013, between Ocwen Loan Servicing LLC and Altisource Residential, L.P. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on February 21, 2013).
10.12		Confirmation, dated as of February 14, 2013, between Ocwen Loan Servicing, LLC and Altisource Residential, L.P. (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Commission on February 21, 2013).
10.13		Pricing Letter, dated as of February 14, 2013, between Ocwen Loan Servicing, LLC and Altisource Residential, L.P. (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the Commission on February 21, 2013).
10.14		Master Repurchase Agreement, dated March 22, 2013, between Altisource Residential Corporation and Credit Suisse First Boston Mortgage Capital LLC (incorporated by reference to Exhibit 10.10 of Amendment No. 1 to the Registrant’s Registration Statement on Form S-11 filed with the Commission on April 8, 2013).
10.15		Guaranty Agreement, dated March 22, 2013, by Altisource Residential Corporation in favor of Credit Suisse First Boston Mortgage Capital, LLC (incorporated by reference to Exhibit 10.10 of Amendment No. 1 to the Registrant’s Registration Statement on Form S-11 filed with the Commission on April 8, 2013).
10.16		Master Repurchase Agreement, dated September 12, 2013, among Deutsche Bank AG, Cayman Islands Branch, Altisource Residential L.P. and Altisource Residential Corporation (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on September 18, 2013).
10.17		Guaranty Agreement, dated September 12, 2013, by Altisource Residential Corporation in favor of Deutsche Bank AG, Cayman Islands Branch (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Commission on September 18, 2013).

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10.18		Master Repurchase Agreement and Securities Contract, dated September 23, 2013, between ARLP Trust 3 and Wells Fargo, National Association (incorporated by reference to Exhibit 10.18 of Amendment No. 2 to the Registrant’s Registration Statement on Form S-11 filed with the Commission on September 24, 2013).
10.19		Guaranty, dated September 23, 2013, by Altisource Residential Corporation in favor of Wells Fargo, National Association (incorporated by reference to Exhibit 10.18 of Amendment No. 2 to the Registrant’s Registration Statement on Form S-11 filed with the Commission on September 24, 2013).
10.2		Aircraft Time Sharing Agreement, dated October 8, 2013, by and between Ocwen Mortgage Servicing, Inc. and Altisource Residential Corporation (incorporated by reference to Exhibit 10.20 of the Registrant’s Registration Statement on Form S-11 filed with the Commission on November 20, 2013.
10.21		Amended and Restated Guaranty Agreement, dated as of June 25, 2014, by Altisource Residential Corporation in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 4, 2014).
10.22 *		Master Repurchase Agreement and related Annexes, dated as of December 22, 2014, between Credit Suisse Securities (USA) LLC and ARNS, Inc.
10.23 *		Guaranty, dated as of December 22, 2014, by Altisource Residential Corporation in favor of Credit Suisse Securities (USA) LLC.
10.24 *		Amended and Restated Master Repurchase Agreement and Securities Contract, dated December 31, 2014, between Altisource Residential, L.P. and Wells Fargo, National Association.
10.25 *		Flow Servicing Agreement, dated as of January 24, 2015, between Fay Servicing, LLC and Altisource Residential, L.P.
10.26 *		Servicing Agreement, dated as of January 29, 2015, between Altisource Residential, L.P. and Servis One, Inc. d/b/a BSI Financial Services.
21 *		Schedule of Subsidiaries
23 *		Consent of Deloitte & Touche LLP
24 *		Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K).
31.1*		Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act
31.2*		Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act
32.1*		Certification of CEO Pursuant to Section 906 of the Sarbanes-Oxley Act
32.2*		Certification of CFO Pursuant to Section 906 of the Sarbanes-Oxley Act
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Extension Labels Linkbase
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

__________

* Filed herewith.

† Denotes management contract or compensatory arrangement.

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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		Altisource Residential Corporation
March 2, 2015	By:	/s/ Ashish Pandey
		Ashish Pandey Chief Executive Officer
March 2, 2015	By:	/s/ Robin N. Lowe
		Robin N. Lowe Chief Financial Officer

Power of Attorney

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ashish Pandey and Robin N. Lowe and each of them severally, his or her true and lawful attorney-in-fact with power of substitution and resubstitution to sign in his or her name, place and stead, in any and all capacities, to do any and all things and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission in connection with the Annual Report on Form 10-K and any and all amendments hereto, as fully for all intents and purposes as he or she might or could do in person, and hereby ratifies and confirms all said attorneys-in-fact and agents, each acting alone, and his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated:



Signature	Title	Date

/s/ David B. Reiner	Chairman of the Board of Directors	March 2, 2015
David B. Reiner
/s/ Michael A Eruzione	Director	March 2, 2015
Michael A Eruzione
/s/ Robert J. Fitzpatrick	Director	March 2, 2015
Robert J. Fitzpatrick
/s/ James H. Mullen, Jr.	Director	March 2, 2015
James H. Mullen, Jr.
/s/ Ashish Pandey	Chief Executive Officer (Principal Executive Officer)	March 2, 2015
Ashish Pandey
/s/ Robin N. Lowe	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	March 2, 2015
Robin N. Lowe

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Index to Consolidated Financial Statements

Certain information contained herein is presented as of February 19, 2015 , which we have concluded is the latest practicable date for financial information prior to the filing of this report.



Report of Independent Registered Public Accounting Firm	1
Consolidated Balance Sheets	2
Consolidated Statements of Operations	3
Consolidated Statements of Stockholders’ Equity	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	8
Financial Statement Schedules	28

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Altisource Residential Corporation:

We have audited the accompanying consolidated balance sheets of Altisource Residential Corporation and subsidiaries (the "Company") as of December 31, 2014 and 2013, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years ended December 31, 2014 and December 31, 2013 and for the period from June 7, 2012 (date of inception) to December 31, 2012. Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Altisource Residential Corporation and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the years ended December 31, 2014 and December 31, 2013 and for the period from June 7, 2012 (date of inception) to December 31, 2012, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects the information set forth therein.

As discussed in Notes 1 and 9 of the consolidated financial statements, the Company has significant related party transactions with Altisource Asset Management Corporation, Altisource Portfolio Solutions, and Ocwen Financial Corporation. Note 9 also discusses the potential implications to the Company should the related parties be unable to perform under their respective agreements or in the event that these arrangements are terminated.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2014 expressed an unqualified opinion on the Company's internal control over financial reporting .

/s/DELOITTE & TOUCHE LLP

Atlanta, Georgia

March 2, 2015

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Altisource Residential Corporation

Consolidated Balance Sheets

(In thousands, except share and per share amounts)



	December 31, 2014		December 31, 2013
Assets:
Real estate held for use:
Land	$	14,424	$	478
Rental residential properties (net of accumulated depreciation of $1,062 and $24, respectively)	60,908		3,092
Real estate owned	457,045		32,332
Total real estate held for use, net	532,377		35,902
Real estate assets held for sale	92,230		1,186
Mortgage loans at fair value	1,959,044		1,207,163
Mortgage loans held for sale	12,535		—
Cash and cash equivalents	66,166		115,988
Restricted cash	13,282		5,878
Accounts receivable	10,313		1,428
Related party receivables	17,491		9,260
Investment in affiliate	18,000		18,000
Deferred leasing and financing costs, net	4,251		2,293
Prepaid expenses and other assets	373		1,542
Total assets	$	2,726,062	$	1,398,640
Liabilities:
Repurchase agreements	$	1,015,000	$	602,382
Other secured borrowings (including $14,991 repurchase agreement with NewSource)	339,082		—
Accounts payable and accrued liabilities	11,678		4,952
Related party payables	33,391		5,879
Total liabilities	1,399,151		613,213
Commitments and contingencies (Note 8)
Equity:
Common stock, $.01 par value, 200,000,000 authorized shares; 57,192,212 and 42,286,669 shares issued and outstanding, at December 31, 2014 and December 31, 2013, respectively	572		423
Additional paid-in capital	1,227,091		758,584
Retained earnings	99,248		26,420
Total equity	1,326,911		785,427
Total liabilities and equity	$	2,726,062	$	1,398,640

See accompanying notes to consolidated financial statements.

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Altisource Residential Corporation

Consolidated Statements of Operations

(In thousands, except share and per share amounts)



	Year ended December 31, 2014		Year ended December 31, 2013		June 7, 2012 (inception) to December 31, 2012

Revenues:
Rental revenues	$	1,564	$	36	$	—
Net unrealized gain on mortgage loans	350,822		61,092		—
Net realized gain on mortgage loans	55,766		10,482		—
Net realized gain on re-performing mortgage loans	2,771		—		—
Net realized gain on real estate	9,482		—		—
Interest income	2,893		687		—
Total revenues	423,298		72,297		—
Expenses:
Residential property operating expenses	26,018		767		—
Real estate depreciation and amortization	1,067		25		—
Real estate selling costs and impairment	21,788		184		—
Mortgage loan servicing costs	68,181		10,418		—
Interest expense	35,812		4,568		—
General and administrative	7,047		4,208		47
Related party general and administrative	77,030		12,531		42
Total expenses	236,943		32,701		89
Other income	2,543		—		—
Income (loss) before income taxes	188,898		39,596		(89		)
Income tax expense	45		—		—
Net income (loss)	$	188,853	$	39,596	$	(89	)

Earnings (loss) per share of common stock – basic:
Earnings (loss) per basic share	$	3.36	$	1.67	$	(0.01	)
Weighted average common stock outstanding – basic	56,247,376		23,734,869		7,810,708			(1	)
Earnings (loss) per share of common stock – diluted:
Earnings (loss) per diluted share	$	3.34	$	1.61	$	(0.01	)
Weighted average common stock outstanding – diluted	56,588,137		24,620,996		7,810,708			(1	)

Dividends declared per common share	$	2.03	$	0.35	$	—

_________

(1) Shares weighted by period outstanding since the separation on December 21, 2012.

See accompanying notes to consolidated financial statements.

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Altisource Residential Corporation

Consolidated Statements of Stockholders' Equity

(In thousands, except share amounts)



	Common stock
	Number of shares	Amount		Additional paid-in capital			Retained earnings			Total equity
June 7, 2012 (inception)	—	$	—	$	—		$	—		$	—
Issuance of common stock	7,810,708	78		99,922			—			100,000
Net loss	—	—		—			(89		)	(89		)
December 31, 2012	7,810,708	78		99,922			(89		)	99,911
Issuance of common stock, including stock option exercises	34,475,961	345		684,147			—			684,492
Cost of issuance of common stock	—	—		(25,729		)	—			(25,729		)
Dividends on common stock ($0.35 per share)	—	—		—			(13,087		)	(13,087		)
Share-based compensation	—	—		244			—			244
Net income	—	—		—			39,596			39,596
December 31, 2013	42,286,669	423		758,584			26,420			785,427
Issuance of common stock, including stock option exercises	14,905,543	149		483,570			—			483,719
Cost of issuance of common stock	—	—		(15,290		)	—			(15,290		)
Dividends on common stock ($2.03 per share)	—	—		—			(116,025		)	(116,025		)
Share-based compensation	—	—		227			—			227
Net income	—	—		—			188,853			188,853
December 31, 2014	57,192,212	$	572	$	1,227,091		$	99,248		$	1,326,911

See accompanying notes to consolidated financial statements.

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Altisource Residential Corporation

Consolidated Statements of Cash Flows

(In thousands)



	Year ended December 31, 2014			Year ended December 31, 2013			June 7, 2012 (inception) to December 31, 2012
Operating activities:
Net income (loss)	$	188,853		$	39,596		$	(89	)
Adjustments to reconcile net income to net cash used in operating activities:
Net unrealized gain on mortgage loans	(350,822		)	(61,092		)	—
Net realized gain on mortgage loans	(55,766		)	(10,482		)	—
Net realized gain on sale of re-performing mortgage loans	(2,771		)	—			—
Net realized gain on sale of real estate	(9,482		)	—			—
Real estate depreciation and amortization	1,067			25			—
Real estate selling costs and impairment	21,788			—			—
Accretion of interest on re-performing mortgage loans	(2,610		)	—			—
Share-based compensation	227			244			—
Amortization of deferred financing costs	3,427			1,102			—
Changes in operating assets and liabilities:
Accounts receivable	(3,472		)	—			—
Related party receivables	8,199			(876		)	—
Prepaid expenses and other assets	(293		)	(106		)	—
Accounts payable and accrued liabilities	522			3,201			47
Related party payables	27,512			5,825			42
Net cash used in operating activities	(173,621		)	(22,563		)	—
Investing activities:
Investment in mortgage loans	(1,265,890		)	(1,212,620		)	—
Investment in real estate	(34,104		)	(6,198		)	—
Investment in renovations	(12,721		)	(465		)	—
Investment in affiliate	—			(18,000		)	—
Real estate tax advances	(33,719		)	(6,472		)	—
Mortgage loan dispositions	334,366			38,967			—
Mortgage loan payments	20,900			4,901			—
Disposition of real estate	23,652			685			—
Acquisition-related deposits	—			(1,150		)	—
Change in restricted cash	(7,404		)	(5,878		)	—
Net cash used in investing activities	(974,920		)	(1,206,230		)	—
Financing activities:
Issuance of common stock, including stock option exercises	491,388			684,615			100,000
Payment of tax withholdings on exercise of stock options	(7,669		)	(123		)	—
Cost of issuance of common stock	(15,290		)	(25,729		)	—
Dividends on common stock	(116,025		)	(13,087		)	—
Proceeds from issuance of other secured debt	339,426			—			—
Repayments of secured notes	(344		)	—			—
Proceeds from repurchase agreement	1,094,042			689,490			—
Repayments of repurchase agreement	(681,424		)	(87,108		)	—
Payment of deferred financing costs	(5,385		)	(3,282		)	—
Related party payables	—			—			5
Net cash provided by financing activities	1,098,719			1,244,776			100,005
Net increase (decrease) in cash and cash equivalents	(49,822		)	15,983			100,005
Cash and cash equivalents as of beginning of the period	115,988			100,005			—
Cash and cash equivalents as of end of the period	$	66,166		$	115,988		$	100,005

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Altisource Residential Corporation Consolidated Statements of Cash Flows (continued) (In thousands)
	Year ended December 31, 2014		Year ended December 31, 2013		June 7, 2012 (inception) to December 31, 2012
Supplemental disclosure of cash flow information:
Cash paid for interest	$	31,218	$	2,445	$	—
Income taxes paid	11		—		—
Transfer of mortgage loans to real estate owned	595,668		31,014		—
Transfer of real estate owned to mortgage loans	8,400		—		—
Change in accrued capital expenditures	4,151		—		—
Changes in receivables from mortgage loan dispositions, payments and real estate tax advances to borrowers, net	10,024		9,812		—
Changes in receivables from real estate owned dispositions	4,640		—		—
Acquisition-related payable	—		1,191		—

See accompanying notes to consolidated financial statements.

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Altisource Residential Corporation

Notes to Consolidated Financial Statements

December 31, 2014

1. Organization and basis of presentation

Altisource Residential Corporation is a Maryland REIT focused on acquiring, owning and managing single-family rental properties throughout the United States. We acquire our rental properties primarily through the acquisition of sub-performing and non-performing mortgage loan portfolios, which is a differentiated approach that we believe strategically positions us to take advantage of market opportunities better than market participants that are solely focused on real estate-owned (“REO”) acquisitions. We conduct substantially all of our activities through our wholly owned subsidiary Altisource Residential, L.P.

On December 21, 2012 we became a stand-alone publicly traded company with an initial capital contribution of $100 million . We have a long-term service agreement with Altisource, a leading provider of real estate and mortgage portfolio management, asset recovery and customer relationship management services. We also have servicing agreements with three separate servicers.

We are managed by Altisource Asset Management Corporation ("AAMC"). We rely on AAMC for administering our business and performing certain of our corporate governance functions. AAMC also provides portfolio management services in connection with our acquisition and management of sub-performing and non-performing loans and REO properties. AAMC was formed on March 15, 2012 as a wholly owned subsidiary of Altisource and was spun off from Altisource into a stand-alone publicly traded company concurrently with our separation from Altisource.

Since we commenced operations, we have completed three public equity offerings with aggregate net proceeds of approximately $1.1 billion . On March 22, 2013, September 12, 2013 and September 23, 2013, we entered into three separate repurchase agreements to finance the acquisition and ownership of residential mortgage loans and REO properties. The maximum aggregate funding available under these repurchase agreements initially was $425.0 million . We subsequently increased the aggregate funding capacity under each repurchase agreement as follows:

•

Credit Suisse (“CS”) is the lender on the repurchase agreement entered into on March 22, 2013, (the “CS repurchase agreement”). The CS Repurchase Agreement was amended on April 21, 2014 to initially increase the aggregate maximum borrowing capacity from $100.0 million to $200.0 million . The maturity date of the CS repurchase agreement was also extended to April 20, 2015, subject to an additional one -year extension with the approval of the lender. On June 11, 2014, we further amended the CS repurchase agreement to increase the aggregate maximum borrowing capacity from $200.0 million to $375.0 million , subject to certain sublimits, for the period from June 11, 2014 through October 11, 2014. In October 2014, we further extended the temporary increase with CS in order to enable us to complete a securitization of the non-performing mortgage loans comprising the increased capacity. . Following the securitization of these loans, on December 23, 2014, we further amended the CS repurchase agreement and entered into a securities repurchase agreement with Credit Suisse to obtain additional financing on the bonds issued by us in our securitizations. This December 2014 amendment increased our aggregate maximum borrowing capacity under the CS repurchase agreement to $225.0 million . We are in discussions with CS to renew the repurchase agreement. No assurance can be provided that we will be able to renew this facility on reasonable terms, on a timely basis or at all.

•

Wells Fargo (“Wells”) is the lender under the repurchase agreement dated September 23, 2013 (the “Wells repurchase agreement”). The Wells repurchase agreement was amended it on December 23, 2013 to initially increase the aggregate maximum borrowing capacity from $200.0 million to $400.0 million . On June 25, 2014, we further amended the Wells repurchase agreement to increase the aggregate maximum borrowing capacity from $400.0 million to $1.0 billion , subject to certain sublimits. On December 31, 2014, we further amended the Wells repurchase agreement to reduce the aggregate maximum borrowing capacity from $1.0 billion to $750.0 million to reflect the securitization of a significant portion of our non-performing loans that previously had been financed under the Wells repurchase agreement. The maturity date of the Wells repurchase agreement was March 23, 2015. However, on

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February 20, 2015, we exercised our option to extend the termination date of this facility to March 23, 2016. We are in discussions with Wells to further extend the repurchase agreement with an ability to obtain additional funding. No assurance can be provided that we will be able to renew this facility on reasonable terms, on a timely basis or at all. In the event we cannot renew the agreement, the advance rate will be reduced by 10% after the first 90 days of the extension term and we will not be entitled to draw additional funds under the facility.

On November 25, 2014, we completed a securitization transaction in which ARLP Securitization Trust, Series 2014-2 ("ARLP 2014-2") issued $270.8 million in Class A Notes (the “Class A Notes”) with a weighted yield of approximately 3.85% and $234.0 million in Class M Notes (the “Class M Notes”). No interest will be paid on any Class M Notes while any Class A Notes remain outstanding. We retained $95.8 million of the Class A Notes and all of the Class M Notes in our taxable REIT subsidiary (“TRS”). The Class A Notes and Class M Notes are secured solely by the non-performing mortgage loans and REO properties of ARLP 2014-2 and not by any of our other assets. The assets of ARLP 2014-2 are the only source of repayment and interest on the Class A Notes and the Class M Notes. The Class A Notes and the Class M Notes mature on January 26, 2054, and we do not guaranty any of the obligations of ARLP 2014-2 under the terms of the Indenture governing the notes or otherwise. As of December 31, 2014 , the book value of the underlying securitized assets held by ARLP 2014-2 was $333.0 million .

On September 25, 2014, we completed a securitization transaction in which ARLP Securitization Trust, Series 2014-1 (“ARLP 2014-1”) issued $150.0 million in Class A Notes (the “Class A Notes”) with a weighted yield of approximately 3.47% and $32.0 million in Class M Notes (the “Class M Notes”) with a weighted yield of 4.25% . The Class A Notes and the Class M Notes are secured solely by the non-performing mortgage loans and REO properties of ARLP 2014-1 and not by any of our other assets. The assets of ARLP 2014-1 are the only source of repayment and interest on the Class A Notes and the Class M Notes. The Class A Notes and the Class M Notes mature on September 25, 2044, and we do not guaranty any of the obligations of ARLP 2014-1 under the terms of the Indenture governing the notes or otherwise. As of December 31, 2014 , the book value of the underlying securitized assets held by ARLP 2014-1 was $212.7 million .

We retained all of the Class M Notes issued by ARLP 2014-1 in our TRS. On September 30, 2014, pursuant to a master repurchase agreement, the TRS sold $15.0 million of the Class M Notes to NewSource Reinsurance Company Ltd, ("NewSource"), an entity in which we own 100% of the outstanding preferred stock and in which AAMC owns 100% of the outstanding common stock, for a purchase price of $15.0 million . The master repurchase agreement required the TRS to repurchase the Class M Notes from NewSource at a 5.0% yield on December 28, 2014, subject to the parties’ option to extend the master repurchase agreement for an additional 89 day period. On December 26, 2014, the parties agreed to extend the agreement to March 27, 2015. In no event can the master repurchase agreement be extended beyond September 29, 2015.

We ceased to be a development stage enterprise in the second quarter of 2013.

Basis of presentation and use of estimates

The accompanying audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States which we refer to as "U.S. GAAP." All wholly owned subsidiaries are included and all intercompany accounts and transactions have been eliminated. The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates.

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Recently issued accounting standards

In January 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-04, Troubled Debt Restructurings by Creditors. It provides that a repossession or foreclosure has occurred, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendment requires disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in mortgage loans collateralized by residential real estate property that are in the process of foreclosure. The amended guidance may be applied using either a prospective transition method or a modified retrospective transition method and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. We do not expect this amendment to have a significant effect on our financial position or results of operations.

In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 may be applied using either a full retrospective or a modified retrospective approach and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is not permitted. We do not expect this amendment to have a significant effect on our financial position or results of operations.

2. Summary of significant accounting policies

Cash equivalents

We consider highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Comprehensive income

Because comprehensive income (loss) equals net income (loss), separate statements of comprehensive income (loss) are not presented as part of our consolidated financial statements.

Concentration of credit risk

We maintain our cash and cash equivalents at banking institutions. Certain account balances exceed FDIC insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage.

Earnings per share

Basic earnings per share is computed by dividing net income (loss) by the weighted average common stock outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) by the weighted average common stock outstanding for the period plus the dilutive effect of stock options and restricted stock outstanding using the treasury stock method and if converted method, respectively.

Expense reimbursement and incentive management fee

Our asset manager's primary business is asset management. In its role as our asset manager, AAMC incurs indirect costs (e.g. payroll and overhead) related to managing our business which are contractually reimbursable by us. AAMC allocates indirect costs to us as incurred by estimating the percentage of time spent for our benefit.

The incentive management fee we pay to our Manager is based on the quarterly cash available for distribution to our stockholders. Pursuant to our asset management agreement, our Manager's incentive management fee structure entitles it to receive a share of our cash flow available for distribution to our stockholders. If we do not generate taxable income that is distributable to our stockholders, then we will not be required to pay incentive management fees.

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Fair value of financial instruments

We designate fair value measurements into three levels based on the lowest level of substantive input used to make the fair value measurement. Those levels are as follows:


•	Level 1 - Quoted prices in active markets for identical assets or liabilities.


•	Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.


•	Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Income taxes

We believe that we have complied and will continue to comply with the provisions of the federal income tax code applicable to REITs beginning for the year ended December 31, 2013 and elected REIT status upon filing of our 2013 income tax return. Accordingly, we believe that we will not be subject to federal income tax beginning in the year ended December 31, 2013 and going forward on the portion of our REIT taxable income that is distributed to our shareholders as long as certain asset, income and share ownership tests are met. If after electing to be taxed as a REIT, we subsequently fail to qualify as a REIT in any taxable year, we generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost.

Our TRSs will be subject to federal and state income taxes. Income taxes are provided for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which management expects those temporary differences to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period in which the change occurs. Subject to our judgment, we reduce a deferred tax asset by a valuation allowance if it is “more likely than not” that some or all of the deferred tax asset will not be realized. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in evaluating tax positions, and we recognize tax benefits only if it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authority.

Mortgage loans

Upon the acquisition of mortgage loans, we record the assets at fair value which is the purchase price we paid for the loans on the acquisition date. Mortgage loans are subsequently accounted for at fair value under the fair value option election with unrealized gains and losses recorded in current period earnings. We have concluded that mortgage loans accounted for at fair value timely reflect the results of our investment performance.

We determine the purchase price for mortgage loans at the time of acquisition by using a discounted cash flow valuation model and considering alternate loan resolution probabilities including modification, liquidation or conversion to rental property. Observable inputs to the model include current interest rates, loan amounts, status of payments and property types. Unobservable inputs to the model include discount rates, forecast of future home prices, alternate loan resolution probabilities, resolution timelines and the value of underlying properties.

After mortgage loans are acquired, the fair value of each loan is adjusted in each subsequent reporting period as the loan proceeds to a particular resolution (i.e., modification, or conversion to real estate owned). As a loan approaches resolution, the resolution timeline for that loan decreases and costs embedded in the discounted cash flow model for loan servicing, foreclosure costs and property insurance are incurred and removed from future expenses. The shorter resolution timelines and reduced future expenses each increase the fair value of the loan. The increase in the value of the loan is recognized in net unrealized gain on mortgage loans in our consolidated statements of operations.

We also recognize unrealized gains and losses in the fair value of the loans in each reporting period when our mortgage loans are transferred to real estate owned. The transfer to real estate owned occurs when we have obtained title to the property through completion of the foreclosure process. The fair value of these assets at the time of transfer to real estate owned is estimated using BPOs.

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AAMC’s capital markets group determines the fair value of mortgage loans monthly and has developed procedures and controls governing the valuation process relating to these assets. The capital markets group reports to our Investment Committee, a committee of our Chief Executive Officer and our Chairman that oversees and approves the valuations. The capital markets group also monitors the valuation model for performance against actual results which is reported to the Investment Committee and used to continuously improve the model.

Loans held for sale

Loans held for sale, which consist of re-performing residential mortgage loans acquired from others, are recorded at the lower of cost or fair value. We do not originate loans. During 2014, management decided to sell certain re-performing loans and as such they were reclassified as loans held for sale from loans held for investment.

Real estate impairment

Residential properties

Upon the acquisition of real estate, generally through the completion of foreclosure, we record the residential property at fair value as of the acquisition date as a component of real estate owned based on information obtained from a broker's price opinion, a full appraisal or the price given in a current contract of sale of the property. After a short evaluation period, we perform property renovations to maximize the value of the property for our rental strategy. Such expenditures are part of our initial investment in a property and, therefore, are classified as investing activities in our consolidated statement of cash flows. Subsequently, the residential property, including any renovations that improve or extend the life of the asset, are accounted for at cost. The cost basis is depreciated using the straight-line method over an estimated useful life of three to 27.5 years based on the nature of the components. Interest and other carrying costs incurred during the renovation period are capitalized until the property is ready for its intended use. Expenditures for ordinary maintenance and repairs are charged to expense as incurred.

Residential rental revenues

Minimum contractual rents from leases are recognized on a straight-line basis over the terms of the leases in residential rental revenues. Therefore, actual amounts billed in accordance with the lease during any given period may be higher or lower than the amount of rental revenue recognized for the period. Straight-line rental revenue commences when the customer takes control of the leased premises. Deferred rents receivable, net represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements. Contingent rental revenue is accrued when the contingency is removed. Termination fee income is recognized when the customer has vacated the rental property, the amount of the fee is determinable and collectability is reasonably assured.

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Rents receivable, net and deferred rents receivable, net are reduced by an allowance for amounts that become uncollectible. We regularly evaluate the adequacy of our allowance for doubtful accounts. The evaluation takes into consideration the aging of accounts receivable and our analysis of customer personal profile and review past due account balances. Rents receivable, net and deferred rents receivable, net are written-off when we have deemed that the amounts are uncollectible.

Restricted cash

Restricted cash represents cash deposits that are legally restricted or held by third parties on our behalf, such as escrows and reserves for debt service established pursuant to certain of our repurchase agreements.

Unconsolidated affiliates

We account for our investment in NewSource using the cost method because we do not exercise significant influence over NewSource. As a result, we recognize preferred dividend income from this investment when received.

3. Mortgage loans

During the year ended December 31, 2014 , Residential acquired an aggregate of 8,441 mortgage loans and REO properties, consisting of the following:

Acquisitions of non-performing residential mortgage loans

During the year ended December 31, 2014 , we acquired an aggregate of 7,326 residential mortgage loans, substantially all of which were non-performing, and 237 REO properties having an aggregate UPB of approximately $1.9 billion and an aggregate market value of underlying properties of $1.8 billion . The aggregate purchase price for these acquisitions was $1.2 billion .

Acquisition of re-performing residential mortgage loans

On June 27, 2014, we acquired 879 re-performing mortgage loans with an aggregate market value of underlying properties of $271.1 million for an aggregate purchase price of $144.6 million . Under ASC 310-30, acquired loans may be aggregated and accounted for as a pool of loans if the loans being aggregated have common risk characteristics. A pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. These 879 re-performing residential mortgage loans were determined to have common risk characteristics and have been accounted for as a single loan pool. Under ASC 310-30, we estimate cash flows expected to be collected, adjusted for expected prepayments and defaults expected to be incurred over the life of the loan pool. We determine the excess of the loan pool's contractually required principal and interest payments over the expected cash flows as an amount that should not be accreted, the nonaccretable yield. The difference between expected cash flows and the present value of the expected cash flows is referred to as the accretable yield, which represents the amount that is expected to be recorded as interest income over the remaining life of the loan pool. For the year ended December 31, 2014 , we recognized no provision for loan loss and no adjustments to the amount of the accretable yield. For the year ended December 31, 2014 , we accreted $2.6 million into interest income with respect to our re-performing loans. As of December 31, 2014 , these re-performing loans, having a UPB of $18.4 million and a carrying value of $12.5 million , were held for sale. During October 2014, we sold an aggregate of 934 re-performing loans to an unrelated third party for an aggregate purchase price of $164 million .

The following tables present information regarding the estimates of the contractually required payments and the cash flows expected to be collected as of the date of the acquisition and changes in the balance of the accretable yield ($ in thousands):



Contractually required principal and interest	$	325,000
Non-accretable yield	(96,263		)
Expected cash flows to be collected	228,737
Accretable yield	(84,728		)
Fair value at the date of acquisition	$	144,009

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Accretable Yield	Year ended December 31, 2014
Balance at the beginning of the period	$	84,728
Loans sold	(74,478		)
Accretion	(2,610		)
Balance at the end of the period	$	7,640

Since the commencement of our operations, we have engaged in the acquisition of the following portfolios of non-performing and re-performing residential mortgage loans:



Portfolios We Agreed to Acquire					Acquisitions Completed in 2014			Acquisitions Completed in 2013
Date of agreement in principle	Number of loans	Fair value of underlying property (in millions)		Date acquisition closed	Number of loans acquired	Fair value of underlying property (in millions)		Number of loans acquired	Fair value of underlying property (in millions)
January 23, 2013	460	$	94.2	February 14, 2013 ⁽¹⁾				460	$	94.2
February 12, 2013	244	40.1		March 21, 2013 ⁽²⁾				230	38.7
February 14, 2013	762	128.9		April 5, 2013				720	122.1
June 25, 2013	321	73.9		August 26, 2013 ⁽³⁾				292	67.3
June 27, 2013	2,377	296.1		August 6, 2013				1,562	185.2
				September 19, 2013				416	56.0
August 12, 2013	2,966	790.2		September 30, 2013				1,547	403.6
				October 21, 2013				1,100	298.0
November 12, 2013	993	137.3		January 2, 2014	650	$	93.6
November 22, 2013	6,540	1,542.1		December 24, 2013				2,204	530.1
				January 31, 2014	3,421	791.7
December 19, 2013	164	18.3		January 28, 2014	66	7.0
				February 28, 2014	70	8.2
March 11, 2014	915	180.0		May 1, 2014 ⁽⁴⁾	664	126.6
				October 24, 2014 ⁽⁵⁾	159	31.6
May 2, 2014	78	8.7		July 10, 2014	46	5.0
June 4, 2014	3,191	891.6		June 27, 2014	1,116	375.3
				July 31, 2014	1,243	315.7
June 4, 2014 ⁽⁶⁾	1,105	331.6		June 27, 2014 ⁽⁶⁾	879	271.1
September 15, 2014	246	29.7		December 23, 2014	127	15.1
Totals	20,362	$	4,562.7	Totals	8,441	$	2,040.9	8,531	$	1,795.2

_____________


(1)	Includes one REO.


(2)	Includes five REOs.


(3)	Includes 34 REOs.


(4)	Includes 190 REOs.


(5)	Includes 46 REOs.


(6)	This acquisition consisted of a portfolio of re-performing loans.

During the year ended December 31, 2014 , we recognized $3.1 million for due diligence costs related to these and other transactions in both general and administrative expense and related party general and administrative expense. During the year ended December 31, 2013 , we expensed $3.5 million for due diligence costs.

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particular portfolio. In some cases, the number of loans we do not acquire could be significant. In any case where we do not acquire the full portfolio, appropriate adjustments are made to the applicable purchase price.

Throughout this report, all unpaid principal balance and market value amounts for the portfolios we have acquired are provided as of “cut-off date” for each transaction unless otherwise indicated. The “cut-off date” for each acquisition is a date shortly before the closing used to identify the final loans being purchased and the related unpaid principal balance, market value of underlying properties and other characteristics of the loans.

Transfer of mortgage loans to real estate owned

During the year ended December 31, 2014 and 2013 , we transferred an aggregate of 3,682 and 226 mortgage loans, respectively, to REO at an aggregate fair value based on broker price opinions ("BPOs"), of $587.3 million and $31.0 million , respectively. Such transfers occur when the foreclosure sale is complete. In connection with these transfers to REO, we recorded $124.9 million and $8.3 million , respectively, in net unrealized gains on mortgage loans.

Dispositions

During the year ended December 31, 2014 and 2013 , we disposed of 735 and 211 mortgage loans, respectively, primarily through short sales, refinancing and foreclosure sales. In connection with these dispositions, we recorded $55.8 million and $10.5 million , respectively, of net realized gains on mortgage loans. During October 2014, we sold 934 re-performing loans to an unrelated third party and recognized a gain of $2.8 million . The sale included 770 loans from the re-performing mortgage loans held for sale, purchased in the second quarter of 2014, and 164 loans that have transitioned to re-performing status from prior non-performing loan acquisitions that have a clean pay history of at least six months .

4. Real estate assets, net

Acquisitions

During the year ended December 31, 2014 , we acquired 237 REO properties as part of our portfolio acquisitions. During the year ended December 31, 2013 , we acquired 40 REO properties. The aggregate purchase price attributable to these acquired REO properties was $34.1 million for the year ended December 31, 2014 and was $6.2 million for the year ended December 31, 2013 .

Real estate held for use

As of December 31, 2014 , we had 3,349 REO properties held for use. Of these properties, 336 had been rented, 197 were being listed for rent and 254 were in varying stages of renovation. We generally rent our REO properties under non-cancelable leases with a term of one year. Future minimum rental revenues under leases existing for the 336 properties that were rented as of December 31, 2014 are approximately $3.6 million for 2015 and approximately $0.6 million for 2016. With respect to the remaining 2,562 REO properties, we will make a final determination whether each property meets our rental profile after (a) applicable state redemption periods have expired, (b) the foreclosure sale has been ratified, (c) we have recorded the deed for the property, (d) utilities have been activated and (e) we have secured access for interior inspection. A majority of the REO properties are subject to state regulations which require us to await the expiration of a redemption period before a foreclosure can be finalized. We include these redemption periods in our portfolio pricing which generally reduces the price we pay for the mortgage loans. Once the redemption period expires, we immediately proceed to record the new deed, take possession of the property, activate utilities, and start the inspection process in order to make our final determination. As of December 31, 2013 , we had 246 REO properties held for use. Of these properties, 14 had been rented, 11 were being listed for rent and 18 were in various stages of renovation. With respect to the remaining 203 REO properties, we were in the process of determining whether these properties would meet our rental profile. If a REO property meets our rental profile, we determine the extent of renovations that are needed to generate an optimal rent and maintain consistency of renovation specifications for future branding. If we determine that the REO property will not meet our rental profile, we list the property for sale, in certain instances after renovations are made to optimize the sale proceeds.

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Real estate held for sale

As of December 31, 2014 , we classified 611 REO properties having an aggregate carrying value of $92.2 million as real estate held for sale as they do not meet our residential rental property investment criteria. As of December 31, 2013 , we had 16 REO properties having an aggregate carrying value of $1.2 million held for sale. None of these REO properties have any operations; therefore, we are not presenting discontinued operations related to these properties.

Dispositions

During the year ended December 31, 2014 , we disposed of 221 residential properties and recorded $9.5 million of net realized gains on real estate. We disposed of four residential properties during the year ended December 31, 2013 . There were no significant gains or losses on the dispositions in 2013 .

5. Unconsolidated affiliates

On October 17, 2013, we invested $18.0 million in the non-voting preferred stock of NewSource, a title insurance and reinsurance company in Bermuda. We are eligible to receive a 12% annual non-cumulative preferred dividend on our investment. We account for our investment in NewSource using the cost method because we do not exercise significant influence over NewSource. As a result, we recognize preferred dividend income from this investment when received. We received preferred dividends of $2.2 million in 2014.

6. Fair value of financial instruments

The following table sets forth the fair value of financial assets and liabilities by level within the fair value hierarchy as of December 31, 2014 and December 31, 2013 ($ in thousands):



	Level 1		Level 2		Level 3
	Quoted prices in active markets		Observable inputs other than Level 1 prices		Unobservable inputs
December 31, 2014
Recurring basis (assets)
Mortgage loans	$	—	$	—	$	1,959,044
Nonrecurring basis (assets)
Real estate assets held for sale	$	—	$	—	$	96,041
Transfer of real estate owned to mortgage loans	$	—	$	—	$	8,400
Transfer of mortgage loans to real estate owned	$	—	$	—	$	595,668
Not recognized on consolidated balance sheets at fair value (assets)
Mortgage loans held for sale	$	—	$	—	$	12,535
Not recognized on consolidated balance sheets at fair value (liabilities)
Repurchase agreements at fair value	$	—	$	1,015,000	$	—
Other secured borrowings	$	—	$	336,409	$	—

December 31, 2013
Recurring basis (assets)
Mortgage loans	$	—	$	—	$	1,207,163
Nonrecurring basis (assets)
Real estate assets held for sale	$	—	$	—	$	1,520
Transfer of mortgage loans to real estate owned	$	—	$	—	$	31,014
Not recognized on consolidated balance sheets at fair value (liabilities)
Repurchase agreements at fair value	$	—	$	602,382	$	—

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We have not transferred any assets from one level to another level during the year ended December 31, 2014 or 2013 .

The carrying values of our cash and cash equivalents, restricted cash, related party receivables, accounts payable and accrued liabilities, related party payables and investment in NewSource are equal to or approximate fair value. The fair value of mortgage loans is estimated using our asset manager's proprietary pricing model. The fair value of transfers of mortgage loans to real estate owned is estimated using BPOs. The fair value of re-performing mortgage loans held for sale is estimated using the present value of the future estimated principal and interest payments of the loan, with the discount rate used in the present value calculation representing the estimated effective yield of the loan. The fair value of the repurchase agreements is estimated using the income approach based on credit spreads available to us currently in the market for similar floating rate debt. The fair value of other secured borrowings is estimated using observable market data.

The following table sets forth the changes in our level 3 assets that are measured at fair value on a recurring basis ($ in thousands):



	Year ended December 31, 2014			Year ended December 31, 2013
Mortgage loans
Beginning balance	$	1,207,163		$	—
Investment in mortgage loans	1,122,408			1,213,811
Net unrealized gain on mortgage loans	350,822			61,092
Net realized gain on mortgage loans	55,766			10,482
Mortgage loan dispositions and payments	(235,743		)	(53,680		)
Real estate tax advances to borrowers	36,842			6,472
Reclassification of realized gains on real estate sold from unrealized gains	9,054			—
Transfer of real estate owned to mortgage loans	8,400			—
Transfer of mortgage loans to real estate owned	(595,668		)	(31,014		)
Ending balance at December 31	$	1,959,044		$	1,207,163

Net unrealized gain on mortgage loans held at the end of the period	$	222,034		$	61,092

There was no corresponding activity for level 3 assets for the year ended December 31, 2012 because we did not own any such assets at that time.

The following table sets forth the fair value of our non-performing mortgage loans, the related unpaid principal balance and market value of underlying properties by delinquency status as of December 31, 2014 and December 31, 2013 ($ in thousands):



	Number of loans	Carrying value		Unpaid principal balance		Market value of underlying properties
December 31, 2014
Current	670	$	107,467	$	159,731	$	160,654
30	109	15,424		22,629		24,046
60	57	7,921		11,624		12,510
90	2,286	361,434		569,930		544,709
Foreclosure	7,841	1,466,798		2,172,047		1,951,606
Mortgage loans	10,963	$	1,959,044	$	2,935,961	$	2,693,525
December 31, 2013
Current	238	$	31,649	$	60,051	$	52,506
30	26	2,087		4,492		3,763
60	23	3,376		5,683		4,738
90	1,555	245,024		419,836		355,451
Foreclosure	6,212	925,027		1,609,546		1,310,439
Mortgage loans	8,054	$	1,207,163	$	2,099,608	$	1,726,897

The following table sets forth the carrying value of our re-performing mortgage loans held for sale, the related unpaid principal balance and market value of underlying properties by delinquency status as of December 31, 2014 .

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	Number of loans	Carrying value		Unpaid principal balance		Market value of underlying properties
December 31, 2014
Current	68	$	8,317	$	11,938	$	15,154
30	6	1,118		1,667		2,004
60	4	359		644		670
90	24	2,741		4,149		4,624
Mortgage loans held for sale	102	$	12,535	$	18,398	$	22,452

The significant unobservable inputs used in the fair value measurement of our mortgage loans are discount rates, forecasts of future home prices, alternate loan resolution probabilities, resolution timelines and the value of underlying properties. Significant changes in any of these inputs in isolation could result in a significant change to the fair value measurement. A decline in the discount rate in isolation would increase the fair value. A decrease in the housing pricing index in isolation would decrease the fair value. Individual loan characteristics such as location and value of underlying collateral affect the loan resolution probabilities and timelines. An increase in the loan resolution timeline in isolation would decrease the fair value. A decrease in the value of underlying properties in isolation would decrease the fair value. The following table sets forth quantitative information about the significant unobservable inputs used to measure the fair value of our mortgage loans as of December 31, 2014 and December 31, 2013 :



Input	December 31, 2014	December 31, 2013
Equity discount rate	15.0%	15.0%
Debt to asset ratio	65.0%	55.0%
Cost of funds	3.5% over 1 month LIBOR	3.5% over 1 month LIBOR
Annual change in home pricing index	-0.1% to 7.6%	-0.3% to 7.6%
Loan resolution probabilities — modification	0% to 44.7%	0% to 22.3%
Loan resolution probabilities — rental	0% to 100.0%	0% to 100.0%
Loan resolution probabilities — liquidation	0% to 100.0%	0% to 100.0%
Loan resolution timelines (in years)	0.1 to 5.3	0.1 - 5.8
Value of underlying properties	$3,000 - $5,300,000	$3,000 - $3,550,000

7. Borrowings

Repurchase Agreements

Our operating partnership and certain of its Delaware Statutory Trust subsidiaries, as applicable, have entered into master repurchase agreements with major financial institutions. The purpose of these repurchase agreements is to finance the acquisition and ownership of mortgage loans and REO properties in our portfolio. We have effective control of the assets associated with these agreements and therefore have concluded these are financing arrangements. As of December 31, 2014 , the weighted average annualized interest rate on borrowings under our repurchase agreements was 3.05% , excluding amortization of deferred financing costs. The following table sets forth data with respect to our repurchase agreements as of December 31, 2014 and December 31, 2013 ($ in thousands):

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	Maximum borrowing capacity		Book value of collateral		Amount outstanding
December 31, 2014
CS repurchase agreement due April 20, 2015	$	225,000	$	332,618	$	222,044
Wells repurchase agreement due March 23, 2015	750,000		1,036,409		569,509
DB repurchase agreement due March 11, 2016	250,000		450,532		223,447
	$	1,225,000	$	1,819,559	$	1,015,000
December 31, 2013
CS repurchase agreement due April 21, 2014	$	100,000	$	166,350	$	85,364
Wells repurchase agreement due March 23, 2015	$	400,000	$	634,234	$	398,602
DB repurchase agreement due March 11, 2016	$	250,000	$	205,328	$	118,416
	$	750,000	$	1,005,912	$	602,382

Under the terms of each repurchase agreement, as collateral for the funds drawn thereunder, subject to certain conditions, our operating partnership will sell to the applicable lender equity interests in the Delaware statutory trust subsidiary that owns the applicable underlying mortgage assets on our behalf, or the trust will directly sell such underlying mortgage assets. In the event the lender determines the value of the collateral has decreased, the lender has the right to initiate a margin call and require us, or the applicable trust subsidiary, to post additional collateral or to repay a portion of the outstanding borrowings. The price paid by the lender for each mortgage asset we finance under the repurchase agreements is based on a percentage of the market value of the mortgage asset and may depend on its delinquency status. With respect to funds drawn under the repurchase agreements, our applicable subsidiary is required to pay the lender interest based on LIBOR or at the lender’s cost of funds plus a spread calculated based on the type of applicable mortgage assets collateralizing the funding, as well as certain other customary fees, administrative costs and expenses to maintain and administer the repurchase agreements. We do not collateralize any of our repurchase facilities with cash.

We are currently in compliance with the covenants and other requirements with respect to the repurchase agreements. We monitor our banking partners’ ability to perform under the repurchase agreements and have concluded there is currently no reason to doubt that they will continue to perform under the repurchase agreements as contractually obligated. For additional information on the repurchase agreements, please see Note 1, "Organization and basis of presentation."

Other Secured Debt

On November 25, 2014, we completed a securitization transaction in which ARLP 2014-2 issued $270.8 million in Class A Notes with a weighted yield of approximately 3.85% and $234.0 million in Class M Notes. No interest will be paid on any Class M Notes while any Class A Notes remain outstanding. We retained $95.8 million of the Class A Notes and all of the Class M Notes in our TRS. The Class A Notes and Class M Notes are secured solely by the non-performing mortgage loans and REO properties of ARLP 2014-2 and not by any of our other assets. The assets of ARLP 2014-2 are the only source of repayment and interest on the Class A Notes and the Class M Notes. The Class A Notes and the Class M Notes mature on January 26, 2054, and we do not guaranty any of the obligations of ARLP 2014-2 under the terms of the Indenture governing the notes or otherwise. As of December 31, 2014 , the book value of the underlying securitized assets held by ARLP 2014-2 was $333.0 million .

On September 25, 2014, we completed a securitization transaction in which ARLP 2014-1 issued $150.0 million in Class A Notes with a weighted yield of approximately 3.47% and $32.0 million in Class M Notes with a weighted yield of 4.25% . The Class A Notes and Class M Notes are secured solely by the non-performing mortgage loans and REO properties of ARLP 2014-1 and not by any of our other assets. The assets of ARLP 2014-1 are the only source of repayment and interest on the Class A Notes and the Class M Notes. The Class A Notes and the Class M Notes mature on September 25, 2044, and we do not guaranty any of the obligations of ARLP 2014-1 under the terms of the Indenture governing the notes or otherwise. As of December 31, 2014 , the book value of the underlying securitized assets held by ARLP 2014-1 was $212.7 million .

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We retained all of the Class M Notes issued by ARLP 2014-1 in our TRS. On September 30, 2014, pursuant to a master repurchase agreement, the TRS sold $15.0 million of the Class M Notes to NewSource for a purchase price of $15.0 million . The master repurchase agreement required the TRS to repurchase the Class M Notes from NewSource at a 5.0% yield on December 28, 2014, with the parties having the option to extend the master repurchase agreement for an additional 89 day period. On December 26, 2014, the parties agreed to extend the agreement to March 27, 2015. In no event can the master repurchase agreement be extended beyond September 29, 2015.

The following table sets forth data with respect to these notes as of December 31, 2014 ($ in thousands):



	Interest Rate		December 31, 2014
ARLP Securitization Trust, Series 2014-1
ARLP 2014-1 Class A Notes due September 25, 2044 ⁽¹⁾	3.47	%	$	150,000
ARLP 2014-1 Class M Notes due September 25, 2044 ⁽²⁾	4.25	%	32,000
ARLP Securitization Trust, Series 2014-2
ARLP 2014-2 Class A Notes due January 26, 2054 ⁽³⁾	3.85	%	269,820
ARLP 2014-2 Class M Notes due January 26, 2054	—	%	234,010
ARNS, Inc.
Securities sold under agreement to repurchase due March 27, 2015	5.00	%	14,991
Elimination of ARLP 2014-1 Class M Notes due to ARNS, Inc.			(32,000		)
Elimination of ARLP 2014-2 Class A Notes due to ARNS, Inc.			(95,729		)
Elimination of ARLP 2014-2 Class M Notes due to ARNS, Inc.			(234,010		)
Total			$	339,082

_____________


(1)	The expected redemption date for the Class A Notes is September 25, 2017.


(2)	The expected redemption date for the Class M Notes is September 25, 2018.


(3)	The expected redemption date for the Class A Notes is November 27, 2017.

8. Commitments and contingencies

Litigation, claims and assessments

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On December 24, 2014, a shareholder derivative action was filed in the United States District Court for the Southern District of Florida by a purported shareholder of Ocwen under the caption Sokolowski v. Erbey, et al., 14-cv-8160-1. The action named the directors of Ocwen as defendants and alleged, among other things, various breaches of fiduciary duties by the directors of Ocwen. On February 11, 2015, plaintiff filed an amended complaint naming the directors of Ocwen as defendants and also naming Altisource, Home Loan Servicing Solutions, AAMC and us as alleged aiders and abettors of the purported breaches of fiduciary duties. The amended complaint alleges that the directors of Ocwen breached their fiduciary duties by, among other things, allegedly failing to exercise oversight over Ocwen's compliance with applicable laws, rules and regulations; failing to exercise oversight responsibilities with respect to the accounting and financial reporting processes of Ocwen; failing to prevent conflicts of interest and allegedly improper related party transactions; failing to adhere to Ocwen's code of conduct and corporate governance guidelines; selling personal holdings of Ocwen stock on the basis of material adverse inside information; and disseminating allegedly false and misleading statements regarding Ocwen's compliance with regulatory obligations and allegedly self-dealing transactions with related companies. Plaintiff claims that as a result of the alleged breaches of fiduciary duties, Ocwen has suffered damages including settlements with regulatory agencies in excess of $2 billion , injury to its reputation and corporate goodwill, and exposure to governmental investigations and securities and consumer class action lawsuits. In addition to the derivative claims, the plaintiff also alleges an individual claim that Ocwen's 2014 proxy statement allegedly contained untrue statements of material fact and failed to disclose material information in violation of federal securities laws. The plaintiff seeks, among other things, an order requiring the defendants to repay to Ocwen unspecified amounts by which Ocwen has been damaged or will be damaged, an award of an unspecified amount of exemplary damages, changes to Ocwen's corporate governance, and an award of attorney's and other fees and expenses. We believe the claims against us in the matter are without merit. At this time, we are not able to predict the ultimate outcome of this matter, nor can we estimate the range of possible loss, if any.

Management does not believe that we have incurred an estimable, probable or material loss by reason of any of the above actions.

9. Related-party transactions

Asset Management Agreement with AAMC

Upon completion of our separation and AAMC’s separation from Altisource on December 21, 2012, we entered into a 15 -year asset management agreement with AAMC. Pursuant to the asset management agreement, AAMC designs and implements our business strategy, administers our business activities and day-to-day operations and provides corporate governance services, subject to oversight by our Board of Directors. AAMC is responsible for, among other duties: (1) performing and administering all of our day-to-day operations, (2) determining investment criteria through our Investment Policy in cooperation with our Board of Directors, (3) sourcing, analyzing and executing asset acquisitions, including our acquisition of sub-performing and non-performing residential mortgage loan portfolios and related financing activities, (4) analyzing and performing sales of properties, (5) overseeing Altisource’s renovation, leasing and property management of our single-family rentals, (6) overseeing Ocwen’s servicing of our residential mortgage loan portfolios, (7) performing asset management duties and (8) performing corporate governance and other management functions, including financial, accounting and tax management services.

AAMC provides us with a management team and appropriate support personnel who have substantial sub-performing and non-performing loan portfolio experience. AAMC’s management also has significant corporate governance experience that enables us to manage our business and organizational structure efficiently. AAMC has agreed not to provide the same or substantially similar services to any other party so long as we and our operating partnership have on hand an average of $50.0 million in capital available for investment over the previous two fiscal quarters. Notwithstanding the foregoing, AAMC may engage in any other business or render similar or different services to others including, without limitation, the direct or indirect sponsorship or management of other investment based accounts or commingled pools of capital, however structured, having investment objectives similar to those of us or our operating partnership, so long as its services to us and our operating partnership are not impaired thereby.

Incentive Management Fee

Under the asset management agreement, we pay AAMC a quarterly incentive management fee as follows:

(i)

2% of all cash available for distribution by us to our stockholders and to AAMC as incentive management fee, which we refer to as “available cash,” until the aggregate amount per share of available cash for the quarter (based on the average number of shares of our common stock outstanding during the quarter), which we refer to as the “quarterly per share distribution amount,” exceeds $0.161 , then

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(ii)	15% of all additional available cash for the quarter until the quarterly per share distribution amount exceeds $0.193 , then


(iii)	25% of all additional available cash for the quarter until the quarterly per share distribution amount exceeds $0.257 , and thereafter


(iv)	50% of all additional available cash for the quarter.

We distribute any quarterly distribution to our stockholders after the application of the incentive management fee payable to AAMC.

Expense Reimbursement

We are required to reimburse AAMC on a monthly basis for the (i) direct and indirect expenses AAMC incurs or payments it makes on our behalf, including, but not limited to, the allocable compensation and routine overhead expenses of all employees and staff of AAMC and (ii) all other reasonable operating and overhead expenses AAMC incurs related to the asset management services it provides to us.

Termination

AAMC may terminate the asset management agreement without cause by providing written notice to us no later than 180 days prior to December 21 of any year during the initial term or a renewal term, and the asset management agreement will terminate effective on the December 21 next following the delivery of such notice.

We will be required to pay AAMC a termination fee in the event that the asset management agreement is terminated as a result of (i) a termination by us without cause, (ii) a termination by AAMC as a result of our becoming regulated as an “investment company” under the Investment Company Act, or (iii) a termination by AAMC if we default in the performance of any material term of the asset management agreement (subject to a notice and cure period).

If the asset management agreement were terminated by AAMC, our financial position and future prospects for revenues and growth could be materially adversely affected.

Agreements with Altisource

We have engaged Altisource to provide services for us as detailed below. If for any reason Altisource is unable to perform the services described under these agreements at the level and/or the cost that we anticipate, alternate service providers may not be readily available on favorable terms, or at all which could adversely affect our performance. Altisource’s failure to perform the services under these agreements with AAMC or us could have a material adverse effect on us.

Master Services Agreement

Under the master services agreement, Altisource provides property management, leasing and renovation management services associated with the single-family rental properties we acquire upon conversion of residential mortgage loans that continue to be sub-performing or non-performing. The agreement provides for an initial term of 15 years, which term will automatically renew for successive two -year terms unless either party sends a notice of non-renewal to the other party at least nine months before the completion of the initial or renewal term, as applicable. AAMC works directly with Altisource’s vendor management team on our behalf, and AAMC’s construction management team often interfaces with the general contractors and vendors to maintain relationships with the vendor network. Through AAMC’s team, we coordinate with Altisource and its personnel as well as the vendor network to establish a collective approach to the renovation management, maintenance, repair and materials supply

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chain. We believe AAMC’s experience and these coordinated efforts with Altisource provide it with the capabilities to replicate Altisource’s vendor network, if necessary.

The total fees incurred by us under this agreement will be dependent upon the property management, leasing and renovation management services required on an asset-specific basis and will vary significantly based upon the location and condition of the asset as well as current market conditions and tenant turnover.

In the event our asset management agreement with AAMC is terminated without cause by us, the master services agreement with Altisource may be terminated at its sole discretion.

Support Services Agreement

Under the support services agreement, Altisource may provide services to us in such areas as human resources, vendor management operations, corporate services, risk management, quality assurance, consumer psychology, treasury, finance and accounting, legal, tax, compliance and other support services where we may need assistance and support. The support services agreement provides generally that Altisource will undertake to provide the support services in a manner generally consistent with the manner and level of care with which such service, if any, was performed or provided prior to our separation from Altisource. The support services agreement extended for two years after the separation and automatically renews every year thereafter, but may be terminated earlier under certain circumstances including a default. The fees for all support services provided pursuant to the support services agreement are based on the fully-allocated cost of providing the service. “Fully-allocated cost” means the all-in cost of providing such service, including direct charges and allocable amounts reflecting compensation and benefits, technology expenses, occupancy and equipment expense and third-party payments (but not taxes incurred in connection therewith).

Although the support services agreement has enabled us to grow our business, AAMC is in the process of internalizing the support services that had been provided to us by Altisource through its direct employment of the 26 employees that currently are providing these services to us through the support services agreement.

The total fees incurred by us under this agreement are dependent upon our business activity and the level of services required in connection therewith. In the event our asset management agreement with AAMC expires or is terminated, the support services agreement will terminate within 30 days.

Tax Matters Agreement

The tax matters agreement with Altisource sets out each party’s rights and obligations with respect to deficiencies and refunds, if any, of Luxembourg, U.S. federal, state, local or other foreign taxes for periods before and after our separation from Altisource and related matters such as the filing of tax returns and the conduct of IRS and other audits. In general, under this agreement, we are responsible for taxes attributable to our business incurred after the separation, and Altisource is responsible for taxes attributable to our business incurred prior to the separation.

Trademark License Agreement

Under the trademark license agreement, Altisource granted us a non-exclusive, non-transferable, non-sublicensable, royalty free license to use the name “Altisource.” The agreement has no specified term and may be terminated by either party upon 30 days’ written notice, with or without cause. In the event that this agreement is terminated, all rights and licenses granted thereunder, including, but not limited to, the right to use “Altisource” in our name will terminate.

In the event our asset management agreement with AAMC expires or is terminated, the trademark license agreement will terminate within 30 days.

Agreements with Ocwen

Servicing Agreement

Under the servicing agreement, Ocwen services our acquired residential mortgage loans and provides loan modification, assisted deed-in-lieu, assisted deed-for-lease and other loss mitigation programs. The agreement provides for an initial term of 15 years. In the event our asset management agreement with AAMC expires or is terminated, the servicing agreement will terminate within 30 days. Through 2014, we had exclusively engaged Ocwen to service the residential mortgage loans in our portfolio.

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Ocwen has been and is subject to a number of pending regulatory investigations, inquiries, requests for information and legal proceedings that could result in adverse regulatory or other actions against Ocwen. As a result of these various difficulties faced by Ocwen, its debt and servicer ratings have been downgraded. Given the recent challenges and regulatory scrutiny faced by Ocwen, we have engaged additional alternate servicers to service our loans. We have begun to move certain loans to these new servicers to diversify our servicing options. However, a substantial number of the loans we own continue to be serviced by Ocwen. It is possible, even as we transfer all or a portion of our mortgage loan portfolio to such other servicers, the alternate servicers may not be able to service our loans or resolve our non-performing loans. If for any reason, our mortgage servicers are unable to service these loans at the level and/or the cost that we anticipate, or if we fail to pay or otherwise default under the servicing agreements, and our mortgage servicers cease to act as our servicers, alternate servicers may not be readily available on favorable terms, or at all, which could have a material adverse effect on us..

The total fees incurred by us under this agreement are dependent upon the number and type of acquired residential mortgage loans that Ocwen services pursuant to the terms of the agreement.

Aircraft Time Sharing Agreement with Ocwen

On October 8, 2013, we entered into an Aircraft Time Sharing Agreement, or the “Timeshare Agreement,” with Ocwen pursuant to which Ocwen will make its corporate plane available to us for business-related travel from time to time. Under the Time Sharing Agreement, Ocwen agreed to provide us, on a time sharing basis, access to its plane in consideration of our reimbursement to Ocwen of the sum of its direct expenses of operating the plane plus an additional charge equal to 100% of such expenses. The amounts actually charged to us in any period will directly correlate to our use of the aircraft in each period, which will vary depending on our needs and business use.

Our Consolidated Statements of Operations included the following significant related party transactions ($ in thousands):



	Year ended December 31, 2014		Counter-party	Consolidated Statements of Operations location
Residential property operating expenses	$	21,612	Ocwen/Altisource	Residential property operating expenses
Mortgage loan servicing costs	65,363		Ocwen	Mortgage loan servicing costs
Due diligence and unsuccessful deal costs	1,815		Altisource	Related party general and administrative expenses
Other general and administrative expenses	1,196		Altisource	Related party general and administrative expenses
Expense reimbursements	6,070		AAMC	Related party general and administrative expenses
Management incentive fee	67,949		AAMC	Related party general and administrative expenses
Dividend income	2,160		NewSource	Other income
Interest expense	156		NewSource	Interest expense
	Year ended December 31, 2013		Counter-party	Consolidated Statements of Operations location
Residential property operating expenses	$	767	Ocwen/Altisource	Residential property operating expenses
Mortgage loan servicing costs	9,335		Ocwen	Mortgage loan servicing costs
Due diligence and unsuccessful deal costs	2,059		Altisource	Related party general and administrative expenses
Other general and administrative expenses	181		Altisource	Related party general and administrative expenses
Expense reimbursements	5,411		AAMC	Related party general and administrative expenses
Management incentive fee	4,880		AAMC	Related party general and administrative expenses
	June 7, 2012 (inception) to December 31, 2012		Counter-party	Consolidated Statements of Operations location
Expense reimbursements	42		AAMC	Related party general and administrative expenses

On September 30, 2014, pursuant to a master repurchase agreement, our TRS sold $15.0 million of the Class M Notes to NewSource for a purchase price of $15.0 million . The master repurchase agreement requires the TRS to repurchase the Class M Notes from NewSource at a 5.0% yield on December 28, 2014, with the parties having the option to extend the master repurchase agreement for an additional 89 day period. In no event can the master repurchase agreement be extended beyond September 29, 2015.

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During the year ended December 31, 2013 , we acquired a portfolio from Ocwen of non-performing first lien residential mortgage loans having aggregate market value of underlying properties of $94 million . The aggregate purchase price for this portfolio was $64 million .

10. Share-based payments

Stock options

On December 21, 2012, as part of our separation transaction from Altisource, we issued stock options under the 2012 Conversion Option Plan and 2012 Special Conversion Option Plan to holders of Altisource stock options to purchase shares of our common stock in a ratio of one share of our common stock to every three shares of Altisource common stock. The options were granted as part of our separation to employees of Altisource and/or Ocwen solely to give effect to the exchange ratio in the separation, and we do not include share-based compensation expense related to these options in our consolidated statements of operations because they are not related to our incentive compensation.

The following table sets forth the activity of our outstanding options:



	Number of options		Weighted average exercise price per share
June 7, 2012 (Inception)	—		$	—
Granted	1,019,424		2.09
December 31, 2012	1,019,424		2.09
Exercised	(61,736	)	1.97
Forfeited or canceled	(47,929	)	9.08
December 31, 2013	909,759		1.73
Exercised	(666,409	)	1.39
Canceled	(1,584	)	2.32
December 31, 2014 ^{(1), (2)}	241,766		$	2.69

__________

(1) The outstanding options as of December 31, 2014 had a weighted average remaining life of 5.0 years with total intrinsic value of $4.0 million .

(2) We have 204,805 options exercisable as of December 31, 2014 with a weighted average exercise price of $2.28 , weighted average remaining life of 4.8 years and intrinsic value of $3.5 million . Of these exercisable options, none had exercise prices higher than the market price of our common stock as of December 31, 2014.

Restricted stock

Our directors each receive annual grants of restricted stock equal to $45,000 based on the market value of our common stock at the time of the annual stockholders meeting. This restricted stock vests and is issued after a one -year service period subject to each director attending at least 75% of the Board and committee meetings. No dividends are paid on the shares until the award is issued. During the year ended December 31, 2014 and 2013 , we granted 8,245 and 16,355 shares of stock, respectively, pursuant to our 2013 Director Equity Plan with weighted average grant date fair value per share of $27.28 and $18.47 , respectively.

We recorded $0.2 million and $0.2 million of compensation expense related to these grants for the year ended December 31, 2014 and 2013 , respectively. As of December 31, 2014 and 2013 , we had $0.1 million and $0.1 million , respectively, of unrecognized share-based compensation cost remaining with respect to the director grants to be recognized over a weighted average remaining estimated term of 0.4 years and 0.4 years .

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The following table sets forth the activity of our restricted stock:



	Number of shares		Weighted average grant date fair value
December 31, 2012	—		$	—
Granted	16,355		18.47
Vested ⁽¹⁾	(4,265	)	18.71
December 31, 2013	12,090		18.50
Granted	8,245		27.28
Vested ⁽¹⁾	(12,090	)	18.50
December 31, 2014	8,245		$	27.28

__________

(1) The vesting date fair value of restricted stock that vested during the year ended December 31, 2014 and 2013 was $0.3 million and $0.1 million , respectively.

The following table sets forth the number of shares of common stock reserved for future issuance:



	December 31, 2014
Stock options outstanding	241,766
Possible future issuances under director compensation plan	75,400
	317,166

As of December 31, 2014 , we had 142,807,788 remaining shares of common stock authorized to be issued under our charter.

11. Income taxes

As a REIT, we must meet certain organizational and operational requirements including the requirement to distribute at least 90% of our annual REIT taxable income excluding capital gains to our stockholders. As a REIT, we generally will not be subject to federal income tax to the extent we distribute our REIT taxable income to our stockholders and provided we satisfy the REIT requirements including certain asset, income, distribution and stock ownership tests. If we fail to qualify as a REIT, and do not qualify for certain statutory relief provisions, we will be subject to U.S. federal, state and local income taxes and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year in which we lost our REIT qualification.

Based on our 2014 taxable income of $115.8 million , which includes net capital gains of $54.4 million , the aggregate minimum distribution to stockholders required to maintain our REIT status was $55.3 million in 2014. Dividends declared and paid per share of common stock aggregated $2.03 for the year ended December 31, 2014 , or $116.0 million . These distributions included a cash dividend paid on March 10, 2014 of $0.08 per share of common stock, or $4.5 million , which was intended to satisfy the requirement that a REIT must distribute at least 90% of its annual REIT taxable income to its stockholders and was treated as a 2013 distribution for REIT qualification purposes.

Our consolidated financial statements include the operations of our taxable REIT subsidiary ("TRS"), which is subject to federal, state and local income taxes on its taxable income. From inception through December 31, 2014 , the TRS operated at a cumulative taxable loss, which resulted in our recording a deferred tax asset with a corresponding valuation allowance.

We recorded state income tax expense on our consolidated operations for the year ended December 31, 2014 . As a REIT, we may also be subject to federal taxes if we engage in certain types of transactions.

As of December 31, 2014 and 2013 , we did not accrue interest or penalties associated with any unrecognized tax benefits, nor was any interest expense or penalty recognized during the year ended December 31, 2014 and 2013 . We recorded nominal state and local tax expense on income and property for the year ended December 31, 2014 . Our subsidiaries and we remain subject to tax examination for the period from inception to December 31, 2014 .

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12. Earnings per share

The following table sets forth the components of diluted earnings per share (in thousands, except share and per share amounts):



	Year ended December 31, 2014		Year ended December 31, 2013		June 7, 2012 (inception) to December 31, 2012
Numerator
Net income (loss)	$	188,853	$	39,596	$	(89	)

Denominator
Weighted average common stock outstanding – basic	56,247,376		23,734,869		7,810,708			(1	)
Stock options using the treasury method	335,275		879,005		—
Restricted stock	5,486		7,122		—
Weighted average common stock outstanding – diluted	56,588,137		24,620,996		7,810,708			(1	)

Earnings (loss) per basic share	$	3.36	$	1.67	$	(0.01	)
Earnings (loss) per diluted share	$	3.34	$	1.61	$	(0.01	)

_________

(1) Shares weighted by period outstanding since the separation on December 21, 2012.

Because we incurred a net loss for the period from March 15, 2012 (inception) to December 31, 2012 , basic and diluted earnings per share are equivalent. For the period from March 15, 2012 (inception) to December 31, 2012 there were 276,100 stock options excluded from the calculation of diluted earnings per share because inclusion would have been anti-dilutive, which shares are weighted by period outstanding since the separation on December 21, 2012.

13. Segment information

Our primary business is the acquisition and ownership of single-family rental assets. Our primary sourcing strategy is to acquire these assets by purchasing sub-performing and non-performing mortgage loans. As a result, we operate in a single segment focused on the resolution of sub-performing and non-performing mortgages and ownership of rental residential properties.

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14. Quarterly financial information (unaudited)

The following tables set forth our quarterly financial information (unaudited, $ in thousands):



	2014
	First quarter			Second quarter		Third quarter		Fourth quarter		Full Year
Total revenues	$	74,628		$	117,357	$	109,102	$	122,211	$	423,298

Net income	41,913			67,782		37,676		41,482		188,853
Earnings per share of common stock – basic:
Earnings per share basic	0.78			1.19		0.66		0.73		3.36
Earnings per share of common stock – diluted:
Earnings per share diluted	0.77			1.18		0.66		0.72		3.34
	2013
	First quarter			Second quarter		Third quarter		Fourth quarter		Full Year
Total revenues	$	1,515		$	9,096	$	19,741	$	41,945	$	72,297

Net income (loss)	(984		)	5,227		13,709		21,644		39,596
Earnings per share of common stock – basic:
Earnings (loss) per share basic	(0.13		)	0.27		0.55		0.51		1.67
Earnings per share of common stock – diluted:
Earnings (loss) per share diluted	(0.13		)	0.26		0.53		0.50		1.61

Altisource Residential Corporation

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2014

($ in thousands)



State	No. of Props	Type	Encum-brances		Initial Cost to Company		Capitalized Costs after Acquisition		Gross Amount at which Carried at Close of Period (2)		Accum Depr and Reserves		WA Age (1)	Date Acquired	Life on which Depr is Calc
Alabama	28	SFR	$	1,414	$	4,538	$	43	$	4,581	$	171	21	2013 - 2014	3-27.5 years
Alaska	1	SFR	84		185		—		185		—		28	2014
Arizona	97	SFR	4,877		17,004		354		17,358		636		22	2013 - 2014	3-27.5 years
Arkansas	46	SFR	893		4,176		82		4,258		139		31	2013 - 2014	3-27.5 years
California	512	SFR	45,006		154,291		1,129		155,420		3,575		33	2013 - 2014	3-27.5 years
Colorado	25	SFR	1,610		4,838		92		4,930		59		28	2013 - 2014	3-27.5 years
Connecticut	25	SFR	1,909		4,618		37		4,655		16		45	2013 - 2014	3-27.5 years
Delaware	10	SFR	416		1,996		25		2,021		138		34	2014	3-27.5 years
Dist. of Columbia	1	SFR	109		240		4		244		—		103	2014
Florida	696	SFR	28,554		102,888		4,906		107,794		2,871		23	2013 - 2014	3-27.5 years
Georgia	165	SFR	4,455		18,192		1,250		19,442		363		21	2013 - 2014	3-27.5 years
Hawaii	2	SFR	144		321		18		339		—		20	2013 - 2014
Idaho	9	SFR	235		1,198		7		1,205		110		32	2014
Illinois	359	SFR	14,161		52,441		1,370		53,811		2,549		44	2013 - 2014	3-27.5 years
Indiana	155	SFR	4,026		16,314		1,318		17,632		906		32	2013 - 2014	3-27.5 years
Iowa	6	SFR	98		401		—		401		—		61	2014
Kansas	27	SFR	428		2,199		129		2,328		73		45	2013 - 2014	3-27.5 years

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Kentucky	54	SFR	2,192	6,099	59	6,158	125	30	2013 - 2014	3-27.5 years
Louisiana	22	SFR	415	2,357	114	2,471	142	27	2013 - 2014	3-27.5 years
Maine	14	SFR	348	1,777	—	1,777	109	116	2013 - 2014
Maryland	84	SFR	5,395	15,877	415	16,292	42	35	2013 - 2014	3-27.5 years
Massachusetts	36	SFR	2,279	6,922	132	7,054	76	81	2013 - 2014	3-27.5 years
Michigan	80	SFR	2,676	9,859	236	10,095	622	46	2013 - 2014	3-27.5 years
Minnesota	71	SFR	4,237	11,440	177	11,617	217	39	2014	3-27.5 years
Mississippi	9	SFR	314	896	16	912	—	28	2014	3-27.5 years
Missouri	75	SFR	1,517	6,988	208	7,196	338	44	2013 - 2014	3-27.5 years
Montana	3	SFR	13	320	—	320	26	39	2014
Nebraska	5	SFR	352	1,021	—	1,021	25	37	2014
Nevada	17	SFR	432	2,268	96	2,364	80	20	2013 - 2014	3-27.5 years
New Hampshire	13	SFR	737	2,084	22	2,106	27	49	2014
New Jersey	47	SFR	2,675	7,838	111	7,949	168	64	2013 - 2014	3-27.5 years
New Mexico	30	SFR	1,188	3,828	154	3,982	118	21	2013 - 2014	3-27.5 years
New York	45	SFR	3,459	8,568	152	8,720	108	68	2013 - 2014	3-27.5 years
North Carolina	259	SFR	6,101	30,102	1,578	31,680	1,701	19	2013 - 2014	3-27.5 years
Ohio	124	SFR	3,334	13,416	322	13,738	610	45	2013 - 2014	3-27.5 years
Oklahoma	23	SFR	574	2,432	72	2,504	132	29	2013 - 2014	3-27.5 years
Oregon	8	SFR	294	1,381	2	1,383	47	30	2014
Pennsylvania	188	SFR	9,222	24,565	241	24,806	444	54	2013 - 2014	3-27.5 years
Rhode Island	46	SFR	1,398	5,523	317	5,840	133	72	2014	3-27.5 years
South Carolina	84	SFR	2,935	9,551	341	9,892	252	22	2013 - 2014	3-27.5 years
South Dakota	2	SFR	166	295	—	295	—	52	2014
Tennessee	76	SFR	1,991	9,343	509	9,852	487	23	2013 - 2014	3-27.5 years
Texas	118	SFR	3,046	14,068	764	14,832	385	23	2013 - 2014	3-27.5 years
Utah	63	SFR	3,582	9,869	109	9,978	114	30	2013 - 2014	3-27.5 years
Vermont	3	SFR	202	561	—	561	—	140	2014
Virginia	42	SFR	2,562	10,910	170	11,080	150	26	2013 - 2014	3-27.5 years
Washington	19	SFR	1,166	4,089	96	4,185	24	38	2013 - 2014	3-27.5 years
West Virginia	3	SFR	125	701	—	701	53	25	2013 - 2014
Wisconsin	132	SFR	3,920	15,453	281	15,734	1,006	49	2013 - 2014	3-27.5 years
Wyoming	1	SRF	128	275	—	275	—	21	2014
Total (2)	3,960		177,394	626,516	17,458	643,974	19,367	34

__________


(1)	Weighted average age is based on the age of the property weighted by gross amount at which carried at close of period.


(2)	The following table sets forth the activity of real estate assets and accumulated depreciation ($ in thousands):

F- 29

(table of contents)



	Year ended December 31, 2014			Year ended December 31, 2013
Real estate assets:
Beginning balance	$	37,113		$	—
Acquisitions through foreclosure	587,268			31,014
Other acquisitions	34,104			6,198
Improvements	16,872			586
Cost of real estate sold	(31,383		)	(685		)
Ending balance (1)	$	643,974		$	37,113

Accumulated depreciation and reserves for selling costs and impairment:
Beginning balance	$	25		$	—
Depreciation expense	1,067			25
Selling cost and impairment	21,788			—
Real estate sold	(3,513		)	—
Ending balance	$	19,367		$	25

___________

(1) The aggregate cost for federal income tax purposes is $625.7 million as of December 31, 2014 .

Altisource Residential Corporation

Schedule IV - Mortgage Loans on Real Estate

December 31, 2013

($ in thousands)



Description (face value of loan)	Loan count	Interest rate	Maturity	Carrying amount of mortgages (1)		Principal amount of loans subject to delinquent principal or interest
$0-49,999	299	2.000% - 15.875%	01/01/2009 - 04/01/2053	$	6,059	$	7,802
$50,000-99,999	1,289	0.000% - 16.125%	07/01/2001 - 01/01/2054	59,773		82,009
$100,000-149,999	1,971	1.000% - 13.600%	03/28/2008 - 04/01/2057	152,536		216,612
$150,000-199,999	1,665	1.375% - 13.950%	05/01/2010 - 11/01/2053	176,448		260,658
$200,000-249,999	1,458	1.500% - 11.960%	06/01/2009 - 01/01/2057	193,891		296,390
$250,000+	4,281	1.000% - 12.950%	08/01/2010 - 01/01/2054	1,370,337		1,878,506
Total ⁽²⁾⁽³⁾	10,963			$	1,959,044	$	2,741,977

_____________

(1)

The carrying value of an asset is based on our fair value model. The significant unobservable inputs used in the fair value measurement of our mortgage loans are discount rates, forecasts of future home prices, alternate loan resolution probabilities, resolution timelines and the value of underlying properties. Significant changes in any of these inputs in isolation could result in a significant change to the fair value measurement. The substantial majority of the mortgage loans are significantly delinquent and have varying monthly payment requirements. For a more complete description of the fair value measurements and the factors that may significantly affect the carrying value of our assets, please see Note 4 to our consolidated financial statements.


(2)	The aggregate cost for federal income tax purposes is $1,823.3 million as of December 31, 2014 .

F- 30

(table of contents)


(3)	The following table sets forth the activity of mortgage loans ($ in thousands):



	Year ended December 31, 2014			Year ended December 31, 2013
Mortgage loans
Beginning balance	$	1,207,163		$	—
Investment in mortgage loans	1,122,408			1,213,811
Net unrealized gain on mortgage loans	350,822			61,092
Cost of mortgages sold	(151,624		)	(38,297		)
Mortgage loan payments	(19,299		)	(4,901		)
Real estate tax advances to borrowers	36,842			6,472
Transfer of real estate owned to mortgage loans	8,400			—
Transfer of mortgage loans to real estate owned	(595,668		)	(31,014		)
Ending balance	$	1,959,044		$	1,207,163

F- 31

Exhibit 10.22

Master Repurchase Agreement

September 1996 Version

Dated as of December 22, 2014

Between: Credit Suisse Securities (USA) LLC

and ARNS, Inc.


1.	Applicability

From time to time the parties hereto may enter into transactions in which one party ("Seller") agrees to transfer to the other ("Buyer") securities or other assets ("Securities") against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Securities at a date certain or on demand, against the transfer of funds by Seller. Each such transaction shall be referred to herein as a "Transaction" and, unless otherwise agreed in writing, shall be governed by this Agreement, including any supplemental terms or conditions contained in Annex I hereto and in any other annexes identified herein or therein as applicable hereunder.


2.	Definitions

(a)

"Act of Insolvency", with respect to any party, (i) the commencement by such party as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, moratorium, dissolution, delinquency or similar law, or such party seeking the appointment or election of a receiver, conservator, trustee, custodian or similar official for such party or any substantial part of its property, or the convening of any meeting of creditors for purposes of commencing any such case or proceeding or seeking such an appointment or election, (ii) the commencement of any such case or proceeding against such party, or another seeking such an appointment or election, or the filing against a party of an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970, which (A) is consented to or not timely contested by such party, (B) results in the entry of an order for relief, such an appointment or election, the issuance of such a protective decree or the entry of an order having a similar effect, or (C) is not dismissed within 15 days, (Iii) the making by such party of a general assignment for the benefit of creditors, or (iv) the admission in writing by such party of such party's inability to pay such party's debts as they become due;


(b)	"Additional Purchased Securities", Securities provided by Seller to Buyer pursuant to Paragraph 4(a) hereof;

1 ▪ September 1996 ▪ Master Repurchase Agreement


(c)	"Buyer's Margin Amount", with respect to any Transaction as of any date, the amount obtained by application of the Buyer's Margin Percentage to the Repurchase Price for such Transaction as of such dale;


(d)	"Buyer's Margin Percentage", with respect to any Transaction as of any date, a percentage (which may be equal to the Seller's Margin Percentage) agreed to by Buyer and Seller or, in the absence of any such agreement, the percentage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction;


(e)	"Confirmation", the meaning specified in Paragraph 3(b) hereof;


(f)	"Income", with respect to any Security at any time, any principal thereof and all interest, dividends or other distributions thereon;


(g)	"Margin Deficit", the meaning specified in Paragraph 4(a) hereof;


(h)	"Margin Excess", the meaning specified in Paragraph 4(b) hereof:


(i)	"Margin Notice Deadline", the time agreed to by the parties in the relevant Confirmation, Annex 1 hereto or otherwise as the deadline for giving notice requiring same-day satisfaction of margin maintenance obligations as provided in Paragraph 4 hereof (or, In the absence of any such agreement, the deadline for such purposes established in accordance with market practice);

(j)

"Market Value", with respect to any Securities as of any date. the price for such Securities on such date obtained from a generally recognized source agreed to by the parties or the most recent closing bid quotation from such a source, plus accrued Income to the extent not Included therein (other than any Income credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary to market practice for such Securities);

(k)

"Price Differential", with respect to any Transaction as of any date, the aggregate amount obtained by dally application of the Pricing Rate for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of determination (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Transaction);


(1)	"Pricing Rate", the per annum percentage rate for determination of the Price Differential;


(m)	"Prime Rate", the prime rate of U.S. commercial banks as published in The Wall Street Journal (or, if more than one such rate is published, the average of such rates);


(n)	"Purchase Date", the date on which Purchased Securities are Lo be transferred by Seller to Buyer;

2 ▪ September 1996 ▪ Master Repurchase Agreement

(o)

"Purchase Price", (1) on the Purchase Date, the price at which Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter, except where Buyer and Seller agree otherwise, such price increased by the amount of any cash transferred by Buyer to Seller pursuant to Paragraph 4 (b) hereof and decreased by the amount of any cash transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller's obligations under clause (ii) of Paragraph 5 hereof;

(p)

"Purchased Securities", the Securities transferred by Seller to Buyer in a Transaction hereunder, and any Securities substituted therefor in accordance with Paragraph 9 hereof. The term "Purchased Securities" with respect to any Transaction at any time also shall include Additional Purchased Securities delivered pursuant to Paragraph 4(a) hereof and shall exclude Securities returned pursuant to Paragraph 4(b) hereof;


(q)	"Repurchase Date", the date on which Seller is to repurchase the Purchased Securities from Buyer, including any date determined by application of the provisions of Paragraph 3(c) or 11 hereof;


(r)	"Repurchase Price", the price at which Purchased Securities are to be transferred from Buyer to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as of the date of such determination;


(s)	"Seller's Margin Amount", with respect to any Transaction as of any date, the amount obtained by application of the Seller's Margin Percentage to the Repurchase Price for such Transaction as of such date;


(t)	"Seller's Margin Percentage", with respect to any Transaction as of any date, a percentage (which may be equal to the Buyer's Margin Percentage) agreed to by Buyer and Seller or, in the absence of any such agreement, the percentage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction.


3.	Initiation; Confirmation; Termination


(a)	An agreement to enter into a Transaction may be made orally or in writing at the initiation of either Buyer or Seller. On the Purchase Date for the Transaction, the Purchased Securities shall be transferred to Buyer or its agent against the transfer of the Purchase Price to an account of Seller.

(b)

Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or both), as shall be agreed, shall promptly deliver to the other party a written confirmation of each Transaction (a “Confirmation"). The Confirmation shall describe the Purchased Securities (including CUSIP number, if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on demand, (Iv) the Pricing Rate or Repurchase Price applicable to the Transaction, and (v) any additional terms or conditions of the Transaction not inconsistent with this Agreement. The Confirmation, together with this Agreement, shall constitute conclusive evidence of the terms agreed between Buyer and Seller with respect to the Transaction to which the Confirmation relates, unless with respect to the Confirmation specific objection is made promptly after receipt

3 ▪ September 1996 ▪ Master Repurchase Agreement

thereof. In the event of any conflict between the terms of such Confirmation and this Agreement, this Agreement shall prevail.

(c)

In the case of Transactions terminable upon demand, such demand shall be made by Buyer or Seller, no later than such time as is customary in accordance with market practice, by telephone or otherwise on or prior to the business day on which such termination will be effective. On the date specified in such demand, or on the date fixed for termination in the case of Transactions having a fixed term, termination of the Transaction will be effected by transfer to Seller or its agent of the Purchased Securities and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof) against the transfer of the Repurchase Price to an account of Buyer.

4. Margin Maintenance

(a)

If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto is acting as Buyer is less than the aggregate Buyer's Margin Amount for all such Transactions (a "Margin Deficit"), then Buyer may by notice to Seller require Seller in such Transactions, at Seller's option, to transfer to Buyer cash or additional Securities reasonably acceptable to Buyer ("Additional Purchased Securities"), so that the cash and aggregate Market Value of the Purchased Securities, including any such Additional Purchased Securities, will thereupon equal or exceed such aggregate Buyer's Margin Amount (decreased by the amount of any Margin Deficit as of such date arising from any Transactions In which such Buyer Is acting as Seller) .

(b)

If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto Is acting as Seller exceeds the aggregate Seller's Margin Amount for all such Transactions at such time (a "Margin Excess"), then Seller may by notice to Buyer require Buyer In such Transactions, at Buyer's option, to transfer cash or Purchased Securities to Seller, so that the aggregate Market Value of the Purchased Securities, after deduction of any such cash or any Purchased Securities so transferred, will thereupon not exceed such aggregate Seller's Margin Amount (increased by the amount of any Margin Excess as of such date arising from any Transactions in which such Seller is acting as Buyer).

(c)

If any notice is given by Buyer or Seller under subparagraph (a) or (b) of this Paragraph at or before the Margin Notice Deadline on any business day, the party receiving such notice shall transfer cash or Additional Purchased Securities as provided in such subparagraph no later than the close of business in the relevant market on such day. If any such notice is given after the Margin Notice Deadline, the party receiving such notice shall transfer such cash or Securities no later than the close of business in the relevant market on the next business day following such notice.


(d)	Any cash transferred pursuant to this Paragraph shall be attributed to such Transactions as shall be agreed upon by Buyer and Seller.


(e)	Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective rights of Buyer or Seller (or both) under subparagraphs (a) and (b) of this Paragraph may be exercised only where a Margin Deficit or Margin Excess, as the

4 ▪ September 1996 ▪ Master Repurchase Agreement

case may be, exceeds a specified dollar amount or a specified percentage of the Repurchase Prices for such Transactions (which amount or percentage shall be agreed to by Buyer and Seller prior to entering into any such Transactions).

(f)

Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph to require the elimination of a Margin Deficit or a Margin Excess, as the case may be, may be exercised whenever such a Margin Deficit or Margin Excess exists with respect to any single Transaction hereunder (calculated without regard to any other Transaction outstanding under this Agreement).


5.	Income Payments

Seller shall be entitled to receive an amount equal to all Income paid or distributed on or in respect of the Securities that is not otherwise received by Seller, to the full extent it would be so entitled if the Securities had not been sold to Buyer. Buyer shall, as the parties may agree with respect to any Transaction (or, in the absence of any such agreement, as Buyer shall reasonably determine in its discretion). on the date such Income is paid or distributed either (i) transfer to or credit to the account of Seller such Income with respect to any Purchased Securities subject to such Transaction or (ii) with respect to Income paid in cash, apply the Income payment or payments to reduce the amount, if any, to be transferred to Buyer by Seller upon termination of such Transaction. Buyer shall not be obligated to take any action pursuant to the preceding sentence (A) to the extent that such action would result in the creation of a Margin Deficit, unless prior thereto or simultaneously therewith Seller transfers to Buyer cash or Additional Purchased Securities sufficient to eliminate such Margin Deficit, or (B) if an Event of Default with respect to Seller has occurred and is then continuing at the time such Income is paid or distributed.


6.	Security Interest

Although the parties intend that all Transactions hereunder be sales and purchases and not loans. in the event any such Transactions are deemed to be loans, Seller shall be deemed to have pledged to Buyer as security for the performance by Seller of its obligations under each such Transaction, and shall be deemed to have granted to Buyer a security interest in, all of the Purchased Securities with respect to all Transactions hereunder and all Income thereon and other proceeds thereof.


7.	Payment and Transfer

Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately available funds. All Securities transferred by one party hereto to the other party (i) shall be in suitable form for transfer or shall be accompanied by duly executed instruments of transfer or assignment in blank and such other documentation as the party receiving possession may reasonably request, (ii) shall be transferred on the book-entry system of a Federal Reserve Bank or (iii) shall be transferred by any other method mutually acceptable to Seller and Buyer.


8.	Segregation of Purchased Securities

To the extent required by applicable law, all Purchased Securities in the possession of Seller shall be segregated from other securities in its possession and shall be identified as subject to this Agreement. Segregation may be accomplished by appropriate identification

5 ▪ September 1996 ▪ Master Repurchase Agreement

on the books and records of the holder, including a financial or securities Intermediary or a clearing corporation. All of Seller's interest in the Purchased Securities shall pass to Buyer on the Purchase Date and, unless otherwise agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Securities or otherwise selling, transferring, pledging or hypothecating the Purchased Securities, but no such transaction shall relieve Buyer of its obligations to transfer Purchased Securities to Seller pursuant to Paragraph 3, 4 or 11 hereof, or of Buyer's obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to Paragraph 5 hereof.

Required Disclosure for Transactions in Which the Seller Retains Custody of the Purchased Securities

Seller is not permitted to substitute other securities for those subject to this Agreement and therefore must keep Buyer's securities segregated at all times, unless in this Agreement Buyer grants Seller the right to substitute other securities. If Buyer grants the right to substitute, this means that Buyer's securities will likely be commingled with Seller's own securities during the trading day. Buyer is advised that, during any trading day that Buyer's securities are commingled with Seller's securities, they [will]* be subject to liens granted by Seller to [its clearing bank]* and may be used by Seller for deliveries on other securities transactions. Whenever the securities are commingled, Seller's ability to resegregate substitute securities for Buyer will be subject to Seller's ability to satisfy [the clearing]* lien or to obtain substitute securities.

* Language to be used under 17 C.F.R. B403.4 (e) if Seller is a government securities broker or dealer other than a financial institution.

** Language to be used under 17 C.F.R. B403.5(d) if Seller is a financial institution.


9.	Substitution


(a)	Seller may, subject to agreement with and acceptance by Buyer, substitute other Securities for any Purchased Securities. Such substitution shall be made by transfer to Buyer of such other Securities and transfer to Seller of such Purchased Securities. After substitution, the substituted Securities shall be deemed to be Purchased Securities.

(b)

In Transactions in which Seller retains custody of Purchased Securities, the parties expressly agree that Buyer shall be deemed, for purposes of subparagraph (a) of this Paragraph, to have agreed to and accepted in this Agreement substitution by Seller of other Securities for Purchased Securities; provided, however, that such other Securities shall have a Market Value at least equal to the Market Value of the Purchased Securities for which they are subs ti tuted.


10.	Representations

Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to execute and deliver this Agreement, to enter into Transactions contemplated hereunder and to perform its obligations hereunder and has taken all necessary action to authorize such execution, delivery and performance, (ii) it will engage in such Transactions as principal (or, if agreed in writing, in the form of an annex hereto or otherwise, in advance of any Transaction by the other party hereto, as agent for a disclosed principal), (iii) the person signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed principal), (iv) it has obtained all authorizations of any governmental body required in connection with this Agreement and the Transactions hereunder and such

6 ▪ September 1996 ▪ Master Repurchase Agreement

authorizations are in full force and effect and (v) the execution, delivery and performance of this Agreement and the Transactions hereunder will not violate any law, ordinance, charter, bylaw or rule applicable to it or any agreement by which it is bound or by which any of its assets are affected. On the Purchase Date for any Transaction Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it.


11.	Events of Default

In the event that (i) Seller fails to transfer or Buyer fails to purchase Purchased Securities upon the applicable Purchase Date, (ii) Seller fails to repurchase or Buyer fails to transfer Purchased Securities upon the applicable Repurchase Date, (iii) Seller or Buyer fails to comply with Paragraph 4 hereof, (iv) Buyer fails, after one business day's notice, to comply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect to Seller or Buyer, (vi) any representation made by Seller or Buyer shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated, or (vii) Seller or Buyer shall admit to the other its inability to, or its intention not to, perform any of its obligations hereunder (each an “Event of Default"):

(a)

The nondefaulting party may, at its option (which option shall be deemed to have been exercised immediately upon the occurrence of an Act of Insolvency), declare an Event of Default to have occurred hereunder and. upon the exercise or deemed exercise of such option. 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). The nondefaulting party shall (except upon the occurrence of an Act of Insolvency) give notice to the defaulting party of the exercise of such option as promptly as practicable.

(b)

In all Transactions in which the defaulting party is acting as Seller, jf the nondefaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph, (i) the defaulting party's obligations in such Transactions to repurchase all Purchased Securities, at the Repurchase Price therefor on the Repurchase Date determined in accordance with subparagraph (a) of this Paragraph, shall thereupon become immediately due and payable. (ii) all Income paid after such exercise or deemed exercise shall be retained by the nondefaulting party and applied to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder, and (iii) the defaulting party shall immediately deliver to the nondefaulting party any Purchased Securities subject to such Transactions then in the defaulting party's possession or control.

(c)

In all Transactions in which the defaulting party is acting as Buyer, upon tender by the nondefaulting party of payment of the aggregate Repurchase Prices for all such Transactions, all right, title and interest in and entitlement to all Purchased Securities subject to such Transactions shall be deemed transferred to the nondefaulting party, and the defaulting party shall deliver all such Purchased Securities to the nondefaulting party.


(d)	If the nondefaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph, the nondefaulting party, without prior notice to the defaulting party, may:

7 ▪ September 1996 ▪ Master Repurchase Agreement

(i)

as to Transactions in which the defaulting party is acting as Seller, (A) immediately sell, in a recognized market (or otherwise in a commercially reasonable manner) at such price or prices as the nondefaulting party may reasonably deem satisfactory, any or all Purchased Securities subject to such Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Securities, to give the defaulting party credit for such Purchased Securities in an amount equal to the price therefor on such date, obtained from a generally recognized source or the most recent closing bid quotation from such a source, against the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder; and

(ii)

as to Transactions in which the defaulting party is acting as Buyer, (A) immediately purchase, in a recognized market (or otherwise in a commercially reasonable manner) at such price or prices as the nondefaulting party may reasonably deem satisfactory. securities ("Replacement Securities") of the same class and amount as any Purchased Securities that are not delivered by the defaulting party to the nondefaulting party as required hereunder or (B) in its sole discretion elect, in lieu of purchasing Replacement Securities, to be deemed to have purchased Replacement Securities at the price therefor on such date, obtained from a generally recognized source or the most recent closing offer quotation from such a source.

Unless otherwise provided in Annex I. the parties acknowledge and agree that (1) the Securities subject to any Transaction hereunder are instruments traded in a recognized market, (2) in the absence of a generally recognized source for prices or bid or offer quotations for any Security, the nondefaultlng party may establish the source therefor in its sole discretion and (3) all prices, bids and offers shall be determined together with accrued Income (except to the extent contrary to market practice with respect to the relevant Securities).

(e)

As to Transactions in which the defaulting party is acting as Buyer, the defaulting party shall be liable to the nondefaulting party for any excess of the price paid (or deemed paid) by the nondefaulting party for Replacement Securities over the Repurchase Price for the Purchased Securities replaced thereby and for any amounts payable by the defaulting party under Paragraph 5 hereof or otherwise hereunder.


(f)	For purposes of this Paragraph 11, the Repurchase Price for each Transaction hereunder in respect of which the defaulting party is acting as Buyer shall not increase above the amount of such Repurchase Price for such Transaction determined as of the date of the exercise or deemed exercise by the nondefaulting party of the option referred to in subparagraph (a) of this Paragraph.

(g)

The defaulting party shall be liable to the nondefaulting party for (i) the amount of all reasonable legal or other expenses Incurred by the nondefaulting party in connection with or as a result of an Event of Default, (ii) damages in an amount equal to the cost (including all fees, expenses and commissions) of entering into replacement transactions and entering into or terminating hedge transactions In connection with or as a result of an Event of Default , and (iii) any other loss,

8 ▪ September 1996 ▪ Master Repurchase Agreement

damage, cost or expense directly arising or resulting from the occurrence of an Event of Default in respect of a Transaction.

(h)

To the extent permitted by applicable law, the defaulting party shall be liable to the nondefaulting party for interest on any amounts owing by the defaulting party hereunder, from the date the defaulting party becomes liable for such amounts hereunder until such amounts are (i) paid in full by the defaulting party or (ii) satisfied in full by the exercise of the nondefaulting party's rights hereunder . Interest on any sum payable by the defaulting party to the nondefaulting party under this Paragraph 11(h) shall be at a rate equal to the greater of the Pricing Rate for the relevant Transaction or the Prime Rate .


(i)	The nondefaulting party shall have , in addition to its rights hereunder, any rights otherwise available to it under any other agreement or applicable law.


12.	Single Agreement

Agreement Buyer and Seller acknowledge that, and have entered herein to 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 , each of Buyer and Seller agrees (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, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that payments, deliveries and other transfers made by either 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 Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.


13.	Notices and Other Communications

Any and all notices, statements, demands or other communications hereunder may be given by a party to the other by mail, facsimile, telegraph, messenger or otherwise to the address specified in Annex II hereto, or so sent to such party at any other place specified in a notice of change of address hereafter received by the other. All notices, demands and requests hereunder may be made orally, to be confirmed promptly in writing , or by other communication as specified in the preceding sentence.


14.	Entire Agreement; Severability

This Agreement shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions. Each provision and agreement herein shall be treated as separate and independent from any other prov i sion or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.


15.	Non-assignability; Termination


(a)	The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by either party without the prior written consent of the other party, and any such assignment without the prior written consent of the other

9 ▪ September 1996 ▪ Master Repurchase Agreement

party shall be null and void. Subject to the foregoing, this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. This Agreement may be terminated by either party upon giving written notice to the other, except that this Agreement shall, notwithstanding such notice, remain applicable to any Transactions then outstanding.


(b)	Subparagraph (a) of this Paragraph 15 shall not preclude a party from assigning, charging or otherwise dealing with all or any part of its interest in any sum payable to it under Paragraph 11 hereof.


16.	Governing Law

This Agreement shall be governed by the laws of the State of New York without giving effect to the conflict of law principles thereof .


17.	No Waivers, Etc.

No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any party to a departure herefrom shall be effective unless and until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing, the failure to give a notice pursuant to Paragraph 4 (a) or 4(b) hereof will not constitute a waiver of any right to do so at a later date.


18.	Use of Employee Plan Assets

(a)

If assets of an employee benefit plan subject to any provision of the Employee Retirement Income Security Act of 1974 ("ERISA") are intended to be used by either party hereto (the "Plan Party") in a Transaction, the Plan Party shall so notify the other party prior to the Transaction. The Plan Party shall represent i n writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to proceed.


(b)	Subject to the last sentence of subparagraph (a) of this Paragraph, any such Transaction shall proceed only If Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial condition.

(c)

By entering into a Transaction pursuant to this Paragraph, Seller shall be deemed (i) to represent to Buyer that since the date of Seller's latest such financial statements, there has been no material adverse change In Seller's financial condition which Seller has not disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is a Seller in any outstanding Transaction involving a Plan Party.


19.	Intent


(a)	The parties recognize that each Transaction is a "repurchase agreement" as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except Insofar as the type of Securities subject to such Transaction or the term of such

10 ▪ September 1996 ▪ Master Repurchase Agreement

Transaction would render such definition inapplicable), and a "securities contract" as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).


(b)	It is understood that either party's right to liquidate Securities delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Paragraph 11 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the United States Code, as amended.

(c)

The parties agree and acknowledge that if a party hereto Is an "insured depository institution," as such term is defined in the Federal Deposit Insurance Act, as amended ("FDIA"), then each Transaction hereunder is a "qualified financial contract," as that term is defined in 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 under any Transaction hereunder shall constitute a "covered contractual payment entitlement" or "covered contractual payment obligation", respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a "financial institution" as that term is defined in FDICIA).


20.	Disclosure Relating to Certain Federal Protections

The parties acknowledge that they have been advised that:

(a)

in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission ("SEC") under Section 15 of the Securities Exchange Act of 1934 (“1934 Act"), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 ("SIPA") do not protect the other party with respect to any Transaction hereunder;


(b)	in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and


(c)	in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable.

11 ▪ September 1996 ▪ Master Repurchase Agreement



Credit Suisse Securities (USA) LLC		ARNS, Inc.
By: /s/ Louis J. Impellizeri		By: /s/ Stephen H. Gray
Title: Director		Title: Director
Date: 12/22/14		Date: 12/22/14

12 ▪ September 1996 ▪ Master Repurchase Agreement

ANNEX I

Supplemental Terms and Conditions

This Annex I forms a part of the Master Repurchase Agreement dated as of December 22, 2014 (the "Agreement") between Credit Suisse Securities (USA) LLC (“Party A”) and ARNS, Inc. a corporation organized under the laws of Delaware (“Party B”), the obligations of which are to be guaranteed by Altisource Residential Corporation ( “Guarantor”). Capitalized terms used but not defined in this Annex I shall have the meaning ascribed to them in the Agreement.

1. Other Applicable Annexes . In addition to this Annex I and Annex II, the following Annexes and any Schedules thereto shall form part of the Agreement and shall be applicable thereunder:

None

2. Additional Definition. In addition to the definitions set forth in Paragraph 2, the following definition shall apply to the Agreement.

“"business day" shall mean any day on which the Federal Reserve System is open to transact business and in no event shall include a Saturday or a Sunday.”

3. Paragraph 2(j) of the Agreement is hereby amended by adding the following at the end thereof:

“provided that, where there is no generally recognized pricing source acceptable to Party A, Party A shall determine the Market Value for the Securities acting in a commercially reasonable manner and in good faith, and such valuation shall be binding on Party B;"

4. Paragraph 11 of the agreement is hereby amended by deleting the word “or” before “(vii)” in the first paragraph thereof and by adding the following additional Events of Default before the words “(each an “Event of Default”)”:

“(viii) Guarantor shall breach any of the financial covenants set forth in Section 2 of the Pricing Side Letter, (ix) a Change in Control occurs (as defined in the Master Repurchase Agreement) without the prior written consent of Credit Suisse First Boston Mortgage Capital LLC (“CSMC”), or (x) Party A or Party B, as the case may be, fails to comply with or perform any agreement or obligation (other than those agreements or obligations under Paragraphs 11(i) to 11(ix) above) to be complied with or performed by such party in accordance with this Agreement if such failure is not remedied on or before the thirtieth (30th) day after notice of such failure is given to such party.

“Master Repurchase Agreement” means the Master Repurchase Agreement dated March 22, 2013 among CSMC, as Buyer, Altisource Residential, L.P. as Seller, ARLP Trust and ARLP Trust 4, each as a Trust Subsidiary, and Guarantor, as such Master Repurchase Agreement may be amended, supplemented and otherwise modified from time to time.

“Pricing Side Letter” means the Pricing Side Letter dated March 22, 2013 CSMC, as Buyer, Altisource Residential, L.P. as Seller, ARLP Trust and ARLP Trust 4, each as a Trust Subsidiary, and Guarantor, as such Pricing Side Letter may be amended, supplemented and otherwise modified from time to time.

Capitalized terms used in this Paragraph 4 but not defined in the Agreement or this Annex I shall have the meaning ascribed to them in the Master Repurchase Agreement or Pricing Side Letter.

5. (b) For the purposes of Paragraph 11 of the Agreement, the following provisions shall be added at the end of Paragraph 11:

“(j) For the avoidance of doubt, the parties hereto agree that if Party B and/or Guarantor and CSMC agree to amend the Master Repurchase Agreement and/or Pricing Side Letter to amend an event of default or any other financial test or trigger which corresponds to any of the Events of Default

referenced in this Paragraph 11, then such corresponding Event of Default in this Agreement will be automatically amended to reflect such amendment in the Master Repurchase Agreement and/or Pricing Side Letter, as applicable.

(k) The parties hereto agree that to the extent the Master Repurchase Agreement and/or the Pricing Side Letter is terminated, (i) the Events of Default referenced in this Paragraph 11 (as such Events of Default may have been amended pursuant to Paragraph 4 of Annex I) at the time of termination shall survive the termination of the Master Repurchase Agreement and/or the Pricing Side Letter, as applicable, for the purposes of this Agreement and (ii) any financial reporting obligations of Party B set forth in the Master Repurchase Agreement and/or the Pricing Side Letter, as applicable, shall no longer apply; provided; however, that Party B agrees in such circumstances to thereafter provide Party A, to the extent not publicly available, with Party B’s quarterly financial statements (which may be on a consolidated basis) for the most recently ended financial quarter within 45 days after the end of the relevant quarter.”

6. Paragraph 4 of the Agreement is hereby amended to include the following:

"(g) Unless the parties otherwise agree, the parties shall with respect to any or all Transactions hereunder, exercise the respective rights of the parties under Paragraphs 4(a) and 4(b), only where the Margin Deficit or Margin Excess, respectively, exceeds $250,000 for such Transactions."

7. Paragraph 12 of the Agreement shall be deleted in its entirety and the following paragraph shall be inserted in lieu thereof:

“12. Single Agreement

Buyer and Seller hereby acknowledge that they consider all transactions and agreements between Credit Suisse Securities (USA) LLC and ARNS, Inc. (each an “Applicable Party” and collectively, the “Applicable Parties”) to constitute a single business and contractual relationship and to have been made in consideration of each other and this Agreement. Therefore, (a) each party hereby agrees (i) to perform all of its obligations to the other party with respect to all transactions or agreements between the Applicable Parties, (ii) that a default in the performance of any such obligations ("Obligations") shall constitute an Event of Default hereunder and (iii) that any Event of Default hereunder shall constitute a default in respect of all such other transactions and agreements between the Applicable Parties, (b) each Applicable Party shall have a right of setoff against the other Applicable Party for amounts owing hereunder and any other Obligations owing in respect of any other agreement or transaction whatsoever between the Applicable Parties, and (c) payments, deliveries, and other transfers made by either Applicable Party hereunder shall be considered to have been made in consideration of payments, deliveries, and other transfers made by the other Applicable Party with respect to all other agreements or transactions between them, and the Obligations to make any such payments, deliveries, and other transfers may be applied against each other and netted. As security for the performance by each Applicable Party of all of its Obligations, each Applicable Party hereby grants to the other a security interest in all securities, instruments, money, and other property (and all proceeds thereof) transferred by such Applicable Party to the other pursuant to this Agreement or otherwise. With respect to defaulted Obligations which did not arise under this Agreement, such security interest may be enforced in accordance with the provisions of applicable law or Paragraph 11(d)(i) hereof (applying such Paragraph as if such defaulted Obligations were owed hereunder in respect of a Transaction in which the defaulting party is acting as Seller). Buyer and Seller further agree that a default by Party B or Guarantor in the performance of any obligation, which, after giving effect to the defenses or cure periods contained in any transaction or agreement between Party B and/or Guarantor and CSMC, results in an event of default occurring and continuing under any master agreement under which multiple transactions may be entered into by Party B and/or Guarantor and CSMC, including, but not limited, to the Master Repurchase Agreement and Pricing Side Letter (or in the case of any transaction with respect to which no master agreement is in place, such transaction or agreement) shall constitute an Event of Default hereunder.”

8. Relationship Between Parties. Each party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction):

(a) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction; it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that Transaction.

(b) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction.

(c) Status of Parties. The other party is not acting as a fiduciary for, or an adviser to, it in respect of that Transaction.

(d) No Agency. It is entering into this Agreement, including each Transaction, as principal and not as agent of any person or entity."

9. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY SUCH COURT, SOLELY FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING BROUGHT TO ENFORCE ITS OBLIGATIONS HEREUNDER OR RELATING IN ANY WAY TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREUNDER AND (B) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF ITS PLACE OF RESIDENCE OR DOMICILE.

EACH PARTY HERETO IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Service of Process . Party B irrevocably appoints the Process Agent specified below to receive, for it and on its behalf, service of process in any Proceedings.

ARNS, Inc.

c/o Corporation Service Company

2711 Centerville Road, Suite 400

Wilmington, DE 19808

Party B agrees that service upon itself or its Process Agent by certified mail or air courier constitutes effective service as if personally served pursuant to Section 311 of the New York Civil Practice Law and Rules or Rule 4 of the U.S. Federal Rules of Civil Procedure, or any successor section or rule thereof. Party B waives any right to contest the effectiveness of the service if done in accordance with the previous sentence.

10. UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE FOR PUNITIVE DAMAGES IN ANY WAY RELATED TO THIS AGREEMENT AND EXCEPT AS PROVIDED IN PARAGRAPH 11(g) OF THE AGREEMENT, UNDER NO CIRCUMSTANCES WILL EITHER PARTY, BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL LOSS OR DAMAGES SUFFERED OR INCURRED BY THE OTHER, OR ANY OTHER PARTY, IN EACH CASE ARISING UNDER THIS

AGREEMENT, REGARDLESS OF WHETHER SUCH DAMAGES COULD HAVE BEEN FORESEEN OR PREVENTED.

11. This Agreement and all Transactions hereunder shall be governed by the laws of the State of New York.



CREDIT SUISSE SECURITIES (USA) LLC	ARNS, INC.

By _/s/ Louis J. Impellizari __________________ Name: Louis J. Impellizari Title: Director	By_ /s/ Stephen H. Gray _____________________ Name: Stephen Gray Title: Director

ANNEX II

Names and Addresses for Communications Between Parties

FOR ALL NOTICES (OTHER THAN LEGAL NOTICES) :

CREDIT SUISSE SECURITIES (USA) LLC

Eleven Madison Avenue

New York, NY 10010-3629

Attn: Head of Credit Risk Management

Fax: (212) 325-8170

FOR LEGAL NOTICES ONLY :

CREDIT SUISSE SECURITIES (USA) LLC

Eleven Madison Avenue, 26 ^th Floor

New York, NY 10010-3629

Attn: Head of Documentation Group

Fax: (917) 326-7930

COUNTERPARTY :

ARNS, Inc.

c/o Altisource Asset Management Corporation

402 Strand Street

Frederiksted, VI 00840

Attn: General Counsel

Fax: (340) 692-1046

Exhibit 10.23

GUARANTY

This GUARANTY (the “Guaranty”), dated as of December 22, 2014, made by Altisource Residential Corporation , a corporation organized under the laws of Maryland with principal offices at 402 Strand Street, Frederiksted, VI 00840 (the “Guarantor”) is made in favor of Credit Suisse Securities (USA) LLC (the “Beneficiary”).

RECITALS

Guarantor is a beneficial owner of ARNS, Inc., a corporation organized under the laws of Delaware (“Counterparty”). Counterparty and Beneficiary have entered into a Master Repurchase Agrement, dated as of December 22, 2014 (as amended, supplemented or modified from time to time, the “Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Agreement.

Pursuant to the Agreement, the Counterparty is required to provide the Beneficiary with a guaranty duly executed by the Guarantor and this Guaranty is being delivered in satisfaction of such requirement.

Pursuant to the Agreement and as an inducement to the Beneficiary to enter into the Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor agrees as follows:

1. Guaranty . The Guarantor hereby irrevocably and unconditionally guarantees (as primary obligor and not merely as surety) to the Beneficiary, its successors and permitted assigns: (i) that all amounts payable (now or hereafter) by the Counterparty arising out of or in connection with the Agreement will be duly and punctually paid, in accordance with its terms, whether due on a scheduled payment date or earlier by reason of early termination thereof or otherwise (as to which this Guaranty shall be of payment and not of collection) and (ii) that all delivery obligations due (now or hereafter) of the Counterparty arising out of or in connection with the Agreement, or under any and all Transactions and Confirmations will be duly and punctually performed in accordance with their terms, whether due on a scheduled payment date or earlier by reason of early termination thereof or otherwise (all of the foregoing payment and delivery obligations (whether actual or contingent) of the Counterparty being the “Guaranteed Obligations”).

2. Guaranty Absolute and Unconditional . The Guarantor hereby agrees that its obligations hereunder shall be absolute, irrevocable and unconditional and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by:

(a) any failure to enforce the provisions of the Agreement, including without limitation any lack of action to demand or obtain any amount in respect of the Guaranteed Obligations from the Counterparty, the obtaining of, or the failure to obtain, any judgment against the Counterparty, or any attempt, or failure to attempt, to enforce any such judgment (and the Beneficiary shall be under no obligation whatsoever to proceed against the Counterparty before proceeding against the Guarantor hereunder);

(b) any failure to realize on any collateral or margin or any other action or inaction with respect to any collateral provided by any party (including any other guaranty);

(d) the invalidity, illegality or unenforceability of the Agreement or any Transaction (whether wholly or in part) on any ground whatsoever, including without limitation any defect in or want of powers of the Counterparty or irregular exercise thereof, any lack of authority by any person purporting to act on behalf of the Counterparty, any imposition of foreign exchange controls which may prevent or hinder the Counterparty from paying its obligations hereunder, any order of any governmental entity purporting to reduce, amend or restructure any of the obligations or any legal or other limitation, disability or incapacity, or any change in the constituting documents of or the bankruptcy, liquidation or insolvency of the Counterparty;

(e) any change in the corporate existence, structure or ownership of the Counterparty or the Guarantor;

(f) any stay, injunction or other prohibition (whether as a result of the insolvency, bankruptcy or reorganization of the Counterparty or otherwise) which may delay or prevent any payment (or any declaration that payment is due) by the Counterparty; or

(g) any other circumstances which may otherwise constitute a defense available to the Counterparty or a legal or equitable discharge of a surety or guarantor.

3. Waiver by Guarantor . The Guarantor hereby waives notice of acceptance of this Guaranty, diligence, promptness, acceleration, presentment, demand of payment, filing of claims with a court in the event of merger or bankruptcy of the Counterparty, any right to proceed first against the Counterparty, any protest or notice with respect to any Transaction or the Agreement or the obligations created or evidenced thereby and all demands whatsoever, any exchange, sale or surrender of, or realization on, any other guaranty or any collateral, and any and all other notices and demands whatsoever. Subject to the immediately following paragraph, this Guaranty shall remain in full force and effect until such time as when there are no Transactions and no Agreement outstanding and all Guaranteed Obligations shall have been satisfied in full.

4. Waiver of Immunities. Guarantor irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings (as defined in Paragragh 12 below) in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings.

5. Reinstatement in Certain Instances . The Guarantor further agrees that if any payment or delivery of any of the Guaranteed Obligations is subsequently rescinded or is subsequently recovered from or repaid by the recipient thereof, in whole or in part, in any bankruptcy, reorganization, insolvency or similar proceedings instituted by or against the Counterparty, or otherwise, the Guarantor’s obligations hereunder with respect to such Guaranteed Obligation shall be reinstated at such time to the same extent as though the payment or delivery so recovered or repaid had not been originally made.

6. Consents and Renewals . The Guarantor agrees that the Beneficiary, may at any time and from time to time, either before or after the maturity thereof, without notice to or further consent of the Guarantor, extend the time of payment of, exchange or surrender any collateral for, or renew any of the Guaranteed Obligations, and may also make any agreement with the Counterparty or with any other party to or person liable on any of the Guaranteed Obligations, or interested therein, for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between the Beneficiary and Counterparty or any such other party or person, without in any way impairing or affecting this Guaranty. The Guarantor agrees that the Beneficiary may resort to the Guarantor for payment of any of the Guaranteed Obligations, whether or not the Beneficiary shall have resorted to any collateral security, or shall have proceeded against any other obligor principally or secondarily obligated with respect to any of the Guaranteed Obligations.

7. Representations and Warranties . The Guarantor hereby represents and warrants to the Beneficiary (which representations and warranties shall survive the delivery of this Guaranty and for as long as any Guaranteed Obligations are outstanding) that:

(a)

Guarantor (i) is a corporation duly organized, validly existing and in good standing under the laws of Maryland, (ii) has full power and authority to own its properties and assets and to carry on its business as now being conducted and as presently contemplated, and (iii) has full power and authority to execute, deliver and perform its obligations under this Guaranty to which it is a party or signatory;

(b) the execution, delivery and performance by the Guarantor of its obligations under this Guaranty will not (i) violate or conflict with (x) any provision of law, order, judgment or decree of any court or other agency or government, (y) any provision of its constitutional documents, or (z) any indenture, agreement or other instrument to which the Guarantor is a party or is bound; (ii) result in a breach of, or constitute (with due notice or lapse of time or both) a default under any contractual provision to which it is bound; or (iii) result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of Guarantor pursuant to any indenture, agreement or instrument;

(c) the Guarantor is not required to obtain any consent, approval or authorization from or to file any declaration or statement with, any governmental instrumentality or other agency, or any other person or entity, in connection with or as a condition to the execution, delivery or performance of this Guaranty other than such as have already been obtained and are in full force and effect;

(d) there are no actions, suits or proceedings at law or in equity or by or before any governmental instrumentality or other agency, including any arbitration board or tribunal, now pending, or to the knowledge of the Guarantor, threatened (i) which is likely to affect the validity or enforceability of this Guaranty or the Guarantor’s ability to perform its obligations hereunder, or (ii) against or affecting the Guarantor which, if adversely determined, individually or in the aggregate, would have a materially adverse effect on the condition (financial or otherwise), business, results of operations, prospects or properties of the Guarantor or the Counterparty; and

(e) the Guarantor is currently solvent and the Guarantor’s obligations hereunder will not render the Guarantor insolvent; the Guarantor is not contemplating either a filing of a petition under any state or federal bankruptcy law, or, the liquidating of all or a major portion of its property; and the Guarantor has no knowledge of any person contemplating the filing of such petition against it.

8. Subrogation . The Guarantor will not exercise any rights that it may acquire by way of subrogation until all of the Guaranteed Obligations shall have been paid in full. If any amount shall be paid to the Guarantor in violation of the preceding sentence, such amount shall be held for the benefit of the Beneficiary and shall forthwith be paid to the Beneficiary to be credited and applied to the Guaranteed Obligations, whether matured or unmatured. Subject to the foregoing, upon payment of all the Guaranteed Obligations, the Guarantor shall be subrogated to the rights of the Beneficiary against Counterparty and the Beneficiary agrees to take at the Guarantor’s expense such steps as the Guarantor may reasonably request to implement such subrogation.

9. No Set-off or Counterclaim by Guarantor; Taxes . All payments and deliveries hereunder shall be made by the Guarantor without set-off, counterclaim or deduction or withholding for any tax. If the Guarantor is required by law to deduct or withhold any taxes, Guarantor shall pay to Beneficiary such additional amounts as necessary to ensure that the amount received by Beneficiary equals the full amount Beneficiary would have received had no such deduction or withholding been required. The Guarantor agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Guaranty or the Guaranteed Obligations. Without prejudice to the survival of any other agreement contained herein, the Guarantor’s agreements and obligations contained in this paragraph shall survive the payment in full of the Guaranteed Obligations and any termination of this Guaranty.

10. Expenses of Enforcement . The Guarantor shall pay on demand all costs and expenses, including reasonable attorneys' fees, which may be incurred by the Beneficiary in any effort to collect or enforce any provision of this Guaranty.

11. Cumulative Rights . No failure on the part of the Beneficiary to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power. Each and every right, remedy and power hereby granted to the Beneficiary or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Beneficiary from time to time.

12. Governing Law; Submission to Jurisdiction . THIS GUARANTY AND, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL MATTERS ARISING OUT OF OR RELATING IN ANY WAY TO THIS GUARANTY, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. With respect to any suit, action or proceedings relating to this Guaranty (“Proceedings”), the Guarantor irrevocably: (a) submits to the exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City and irrevocably agrees to designate any Proceedings brought in the courts of the State of New York as “commercial” on the Request for Judicial Intervention seeking assignment to the Commercial Division of the Supreme Court; and (b) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings that such court does not have any jurisdiction over the Guarantor. Nothing in this Guaranty precludes the Beneficiary from bringing Proceedings in any other jurisdiction in order to enforce any judgment obtained in any Proceedings referred to in the preceding sentence.

13. Service of Process . The Guarantor irrevocably appoints the Process Agent specified below to receive, for it and on its behalf, service of process in any Proceedings.

Altisource Residential Corporation

c/o CSC-Lawyers Incorporating Service Company

7 St. Paul Street, Suite 1660

Baltimore, MD 21202

The Guarantor agrees that service upon itself or this Process Agent by certified mail or air courier constitutes effective service as if personally served pursuant to Section 311 of the New York Civil Practice Law and Rules or Rule 4 of the U.S. Federal Rules of Civil Procedure, or any successor section thereof. The Guarantor waives any right to contest the effectiveness of the service if done in accordance with the previous sentence.

15. Waiver of Jury Trial . The Guarantor waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Guaranty.

16. Successor and Assigns . This Guaranty shall continue in full force and effect and be binding upon the Guarantor and the successors and permitted assigns of the Guarantor until all of the Guaranteed Obligations have been satisfied in full; provided, however, that the Guarantor may not assign or otherwise transfer this Guaranty or any obligations hereunder without the prior written consent of the Beneficiary and any such assignment or transfer without such consent shall be void. The Beneficiary may assign this Guaranty or any rights or powers hereunder, with any or all of the underlying liabilities or obligations, the payment of which is guaranteed hereunder.

17. Entire Agreement ; Amendments and Waivers. This Guaranty supercedes any prior negotiations, discussions, or communications between the Beneficiary and the Guarantor and constitutes the entire agreement between the Beneficiary and the Guarantor with respect to this Guaranty. No provision of this Guaranty may be amended, modified or waived without the prior written consent of the Beneficiary.

IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed by one of its duly authorized representatives or officers as of December 22, 2014.

Altisource Residential Corporation

By: /s/ Kenneth D. Najour _______________

Name: Kenneth D. Najour

Title: Chief Accounting Officer

Exhibit 10.24

AMENDED AND RESTATED

MASTER REPURCHASE AGREEMENT AND SECURITIES CONTRACT

Dated as of December 31, 2014

between

ALTISOURCE RESIDENTIAL, L.P.

as Seller

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Buyer

TABLE OF CONTENTS


ARTICLE 1	APPLICABILITY 1


Section 1.01	Applicability 1


ARTICLE 2	DEFINITIONS AND INTERPRETATION 1


Section 2.01	Definitions 1


Section 2.02	Rules of Interpretation 26


ARTICLE 3	THE TRANSACTIONS 28


Section 3.01	Procedures 28


Section 3.02	Transfer of Purchased Assets; Servicing Rights 31


Section 3.03	[Reserved] 31


Section 3.04	Maximum Aggregate Purchase Price 31


Section 3.05	Early Repurchase Date; Mandatory Repurchases 31


Section 3.06	Repurchase 32


Section 3.07	Extension Option 32


Section 3.08	Payment of Price Differential and Fees 32


Section 3.09	Payment, Transfer and Custody 33


Section 3.10	Repurchase Obligations Absolute 33


ARTICLE 4	MARGIN MAINTENANCE 34


Section 4.01	Margin Deficit 34


ARTICLE 5	APPLICATION OF INCOME 35


Section 5.01	Waterfall Account 35


Section 5.03	Before an Event of Default 35


Section 5.04	After Event of Default 36


Section 5.05	Seller to Remain Liable 37


Section 5.06	Update of the Purchase Price 37


ARTICLE 6	CONDITIONS PRECEDENT 37


Section 6.01	Conditions Precedent to Initial Transaction 37


Section 6.02	Conditions Precedent to All Transactions 38


Section 6.03	Conditions Precedent to Amendment and Restatement 39


ARTICLE 7	REPRESENTATIONS AND WARRANTIES OF SELLER 40


Section 7.01	Seller 40


Section 7.02	Repurchase Documents 40


Section 7.03	Solvency 40


Section 7.04	Taxes 41


Section 7.05	Financial Condition 41


Section 7.06	True and Complete Disclosure 41


Section 7.07	Compliance with Laws 42


Section 7.08	Compliance with ERISA 42


Section 7.09	No Default or Material Adverse Effect 42


Section 7.10	[Reserved]. 43


Section 7.11	[Reserved]. 43


Section 7.12	Transfer and Security Interest 43


Section 7.13	No Broker 43

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Section 7.14	[Reserved] 43


Section 7.15	Separateness 43


Section 7.16	Other Indebtedness 43


Section 7.17	[Reserved] 43


Section 7.18	Chief Executive Office; Jurisdiction of Organization 43


Section 7.19	[Reserved] 44


Section 7.20	REIT Status 44


Section 7.21	[Reserved] 44


Section 7.22	No Adverse Selection 44


Section 7.23	Servicing Rights 44


ARTICLE 8	COVENANTS OF SELLER AND GUARANTOR 44


Section 8.01	Existence; Governing Documents; Conduct of Business 44


Section 8.02	Compliance with Laws, Contractual Obligations and Repurchase Documents 45


Section 8.03	Structural Changes 45


Section 8.04	Protection of Buyer’s Interest in Purchased Assets 45


Section 8.05	Actions of Seller Relating to Distributions, Indebtedness, Guarantee Obligations, Contractual Obligations, Investments and Liens 46


Section 8.06	Maintenance of Property and Insurance 46


Section 8.07	Financial Covenants 46


Section 8.08	Delivery of Income 46


Section 8.09	Delivery of Financial Statements and Other Information 47


Section 8.10	Delivery of Notices 48


Section 8.11	[Reserved] 49


Section 8.12	[Reserved] 49


Section 8.13	Records 49


Section 8.14	No Pledge 50


Section 8.15	[Reserved] 50


Section 8.16	Maximum Aggregate Purchase Price 50


Section 8.17	[Reserved] 50


Section 8.18	Distributions 50


Section 8.19	Maintenance of Price Differential Maintenance Account 50


ARTICLE 9	SINGLE-PURPOSE ENTITY 50


Section 9.01	Covenants Applicable to each Trust 50


ARTICLE 10	EVENTS OF DEFAULT AND REMEDIES 51


Section 10.01	Events of Default 51


Section 10.02	Remedies of Buyer as Owner of the Purchased Assets 54


ARTICLE 11	SECURITY INTEREST 56


Section 11.01	Grant 56


Section 11.02	Effect of Grant 57


Section 11.03	Seller to Remain Liable 57


Section 11.04	Rights with Respect to Trust Certificates 57


Section 11.05	Waiver of Certain Laws 57


ARTICLE 12	INCREASED COSTS; CAPITAL ADEQUACY 58


Section 12.01	Market Disruption 58

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Section 12.02	Illegality 58


Section 12.03	Breakfunding 58


Section 12.04	Increased Costs 58


Section 12.05	Capital Adequacy 58


Section 12.06	Withholding Taxes 59


Section 12.07	Payment and Survival of Obligations 61


ARTICLE 13	INDEMNITY AND EXPENSES 61


Section 13.01	Indemnity 61


Section 13.02	Expenses 62


ARTICLE 14	INTENT 63


Section 14.01	Intent 63


ARTICLE 15	DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS 64


Section 15.01	Disclosure 64


ARTICLE 16	NO RELIANCE 64


Section 16.01	No Reliance 64


ARTICLE 17	SERVICING 65


Section 17.01	Servicing of Underlying Assets 65


Section 17.02	Fees and Expenses of Servicer 67


ARTICLE 18	MISCELLANEOUS 67


Section 18.01	Governing Law 67


Section 18.02	Submission to Jurisdiction; Service of Process 67


Section 18.03	IMPORTANT WAIVERS 68


Section 18.04	Integration 69


Section 18.05	Single Agreement 69


Section 18.06	Use of Employee Plan Assets 69


Section 18.07	Survival and Benefit of Seller’s Agreements 69


Section 18.08	Assignments and Participations 69


Section 18.09	Ownership and Hypothecation of Purchased Assets 70


Section 18.10	Confidentiality 71


Section 18.11	No Implied Waivers 71


Section 18.12	Notices and Other Communications 71


Section 18.13	Counterparts; Electronic Transmission 71


Section 18.14	No Personal Liability 72


Section 18.15	Protection of Buyer’s Interests in the Purchased Assets; Further Assurances 72


Section 18.16	Default Rate 73


Section 18.17	Termination 73


Section 18.18	Set-off 73


Section 18.19	Power of Attorney 74


Section 18.20	Seller’s Waiver of Setoff 75


Section 18.21	Periodic Due Diligence Review 75


Section 18.22	Time of the Essence 75


Section 18.23	Amendment and Restatement 75


Section 18.24	Patriot Act Notice 75

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Section 18.25	Acknowledgement Of Anti-Predatory Lending Policies 75


Section 18.26	Successors and Assigns 76

- iv -

SCHEDULES


Schedule 1-A	Representations and Warranties with Respect to Mortgage Loans


Schedule 1-B	Representations and Warranties with Respect to REO Property


Schedule 1-C	Representations and Warranties with Respect to Trust Certificates


Schedule 2	Notice Addresses and Wire Instructions


Schedule 3	Schedule of Exceptions to any Representations and Warranties


Schedule 4	Schedule of Indebtedness

EXHIBITS


EXHIBIT A	Form of Interim Servicer Letter Agreement


EXHIBIT B	Form of Servicer Letter Agreement


EXHIBIT C	Form of Closing Certificate


EXHIBIT D	Form of Compliance Certificate


EXHIBIT E	Form of Confirmation


EXHIBIT F	Form of Mortgage Loan Schedule


EXHIBIT G	Form of REO Property Schedule


EXHIBIT H	Form of Transaction Request


EXHIBIT I	Form of Seller’s Power of Attorney


EXHIBIT J	[Reserved]


EXHIBIT K	Form of Assignment and Acceptance


EXHIBIT L	Form of “Good-Bye Letter”


EXHIBIT M	Form of Monthly Servicing Report

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THIS AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT AND SECURITIES CONTRACT , dated as of December 31, 2014 (this “ Agreement ”), is made by and between ALTISOURCE RESIDENTIAL, L.P. , a Delaware limited partnership (“ Seller ”), and WELLS FARGO BANK, NATIONAL ASSOCIATION , a national banking association (as more specifically defined below, “ Buyer ”). This Agreement amends and restates in its entirety that certain Master Repurchase Agreement and Securities Contract, dated as of September 23, 2013, between ARLP Trust 3, a Delaware statutory trust (“ ARLP Trust 3 ”) and Buyer, as amended and supplemented by that certain Joinder Agreement to Master Repurchase Agreement and Securities Contract, dated as of June 25, 2014, among ARLP Trust 3, ARLP Trust 5, a Delaware statutory trust, and ARLP Trust 6, a Delaware statutory trust (together with ARLP Trust 3, the “ Trusts ”), and Buyer (as so amended and supplemented, the “ Original Agreement ”). Seller and Buyer (each a “ Party ”) hereby agree as follows:

ARTICLE 1

APPLICABILITY

Section 1.01 Applicability . Subject to the terms and conditions of the Repurchase Documents, from time to time during the Funding Period and at the request of Seller, the Parties may enter into transactions in which Seller agrees to sell, transfer and assign to Buyer certain Trust Certificates on the Restatement Date and any Underlying Assets acquired by a Trust on a future date, and all related rights in and interests related to such Trust Certificates (with respect to which the Underlying Assets shall be sold to a Trustee on a servicing released basis), against the transfer of funds by Buyer representing the Purchase Price for such Trust Certificates, with a simultaneous agreement by Buyer to transfer to Seller and Seller to repurchase such Trust Certificates in a repurchase transaction at a date not later than the Facility Termination Date, against the transfer of funds by Seller representing the Repurchase Price for such Trust Certificates.

Pursuant to the Original Agreement, each Trust, as a seller thereunder, sold certain Mortgage Loans to Buyer. In connection with the execution of this Agreement, the Guarantor has caused the contribution of each Trust’s Trust Certificate to Seller; Seller will subsequently sell, transfer and assign such Trust Certificates to Buyer as described more fully herein, and the Mortgage Loans subject to Transactions under the Original Agreement will constitute Underlying Assets with respect to the related Trust Certificate.

ARTICLE 2

DEFINITIONS AND INTERPRETATION

Section 2.01 Definitions .

“ Accelerated Repurchase Date ”: Defined in Section 10.02 .

“ Accepted Servicing Practices ”: With respect to any Underlying Asset, those mortgage servicing practices of prudent financial or mortgage lending institutions which service assets of the same type as such Underlying Assets in the jurisdiction where the related Mortgaged Property is located.

“ Account Bank ”: Wells Fargo Bank, National Association or any other bank approved by Buyer.

“ Actual Knowledge ”: With respect to any Person, the actual knowledge of such Person without further inquiry or investigation; provided , that for the avoidance of doubt, such actual knowledge shall include the knowledge of such Person and each of its employees, officers, directors and agents.

“ Adjusted Tangible Net Worth ”: For any Person, Tangible Net Worth minus (a) restricted cash (other than any portion of restricted cash that has a corresponding offsetting current liability); (b) 25% of investment securities that are rated below BBB by S&P or the equivalent thereof (other than ownership interests in any Affiliate) and (c) all intangible assets, including goodwill, patents, tradenames, trademarks, copyrights, franchises, any organizational expenses, deferred taxes and expenses, prepaid expenses, prepaid assets, receivables from shareholders, Affiliates or employees, mortgage servicing rights, mortgage servicing advances and any other asset as shown as an intangible asset on the balance sheet of such Person on a consolidated basis as determined at a particular date in accordance with GAAP (other than any portion of such assets that has a corresponding offsetting current liability).

“ Affiliate ”: With respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such Person.

“ Alternative Rate ”: A per annum rate based on an index approximating the behavior of LIBOR, as determined by Buyer in substantially the same manner that Buyer determines such rate in transactions with similarly situated counterparties and similar assets.

“ Agency ”: Fannie Mae or Freddie Mac, as applicable.

“ Aggregate Purchase Price ”: As of any date of determination, the aggregate outstanding Purchase Price of all Purchased Assets subject to a Transaction.

“ Agreement ”: This Amended and Restated Master Repurchase Agreement and Securities Contract, dated as of the Restatement Date, by and between Seller and Buyer, as the same may be amended, supplemented, or modified thereto from time to time, and which shall include all Schedules and Exhibits thereto.

“ Allocated Purchase Price ”: With respect to an Underlying Asset and the related Purchase Date for such Underlying Asset, the product of the Market Value of such Underlying Asset on the Purchase Date times the Applicable Percentage, and thereafter, such Allocated Purchase Price as decreased by the amount, without duplication, of any cash or Income received by Buyer and applied to reduce the Allocated Purchase Price attributable to such Underlying Asset under Section 5.03(b) , and if not solely attributable to any specific Underlying Asset, to be applied by Buyer in its discretion to all Underlying Assets.

“ ALTA ”: The American Land Title Association.

“ Anti-Terrorism Laws ”: Any Requirements of Law relating to money laundering or terrorism, including Executive Order 13224 signed into law on September 23, 2001, the regulations promulgated by the Office of Foreign Assets Control of the Treasury Department, and the Patriot Act.

“ Applicable Percentage ”: The meaning set forth in the Fee Letter, which definition is incorporated by reference herein.

“ Asset Documents ”: With respect to any (i) Mortgage Loan, as applicable, those documents identified in the definition of “Mortgage File” in the Custodial Agreement executed in connection with, evidencing or governing such Mortgage Loan and the related Mortgaged Property and which are required to be delivered to Custodian under the Custodial Agreement, and (ii) REO Property, those documents which are required to be delivered to the Custodian under the Custodial Agreement.

“ Asset Manager ”: Altisource Asset Management Corporation, a U.S. Virgin Islands corporation, or any successor manager of Seller appointed in accordance with Section 10.01(q) .

“ Asset Management Agreement ”: The Asset Management Agreement, dated as of December 21, 2012, among Guarantor, Seller and Asset Manager, or any agreement, pursuant to which Asset Manager is appointed as responsible for the administration and/or management of Seller and each Trust; together with all amendments and assignments thereto.

“ Asset Tape ”: A computer tape or other electronic medium generated by Seller, and delivered to Buyer and Custodian, which provides information (including the information set forth on Exhibit F attached hereto) for the Underlying Assets, in a format acceptable to Buyer.

“ Assignment Documents ”: Defined in Schedule 1-A .

“ Bankruptcy Code ”: Title 11 of the United States Code, as amended.

“ BPO ”: An opinion of the BPO Value of a Mortgaged Property or REO Property.

“ BPO Value ”: The stated dollar value, based on “as-is” condition, contained in a BPO regarding the fair market value of a Mortgaged Property, REO Property or parcel of real property and given by a licensed real estate agent or broker (such agent or broker being independent from Seller, Guarantor, Servicer or Interim Servicer and acceptable to Buyer) which generally shall include three (3) comparable sales and three (3) comparable listings and assuming a marketing period for the related property of ninety (90) days.

“ Business Day ”: Any day other than (a) a Saturday or a Sunday, (b) a day on which banks in the States of New York, California, North Carolina or the U.S. Virgin Islands are authorized or obligated by law or executive order to be closed, (c) any day on which the New York Stock Exchange, the Federal Reserve Bank of New York or the Custodian is authorized or obligated by law or executive order to be closed, or (d) if the term “Business Day” is used in connection with the determination of LIBOR, a day dealings in Dollar deposits are not carried on in the London interbank market.

“ Buyer ”: Wells Fargo Bank, National Association, in its capacity as Buyer under this Agreement and the other Repurchase Documents.

“ Buyer’s Margin Percentage ”: For any Purchased Asset as of any date, with respect to each related Underlying Asset, the percentage equivalent of the quotient obtained by dividing one (1) by the Applicable Percentage for such Underlying Asset as of such date.

“ Capital Lease Obligations ”: With respect to any Person, the amount of all obligations of such Person to pay rent or other amounts under a lease of property to the extent and in the amount that such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person.

“ Capital Stock ”: Any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent equity ownership interests in a Person which is not a corporation, including any and all member or other equivalent interests (certificated or un-certificated) in any limited liability company, and any and all partnership or other equivalent interests in any partnership or limited partnership, and any and all warrants or options to purchase any of the foregoing.

“ Cash Equivalents ”: (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 Buyer or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of Buyer or 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 S&P or P-1 or the equivalent thereof by 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 Buyer or 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.

“ Cash-Trap Trigger Event ”: If at any time any of the following shall occur:

(a) the Aggregate Purchase Price falls below $50,000,000, if the Aggregate Purchase Price at any time was greater than or equal to $50,000,000;

(b) a Servicer Termination Event;

(d) the occurrence and continuation of an Event of Default under any Repurchase Document.

“ Change of Control ”: The occurrence of either of the following events: (a) with respect to Seller, Guarantor shall cease to own and control, of record and beneficially, directly or indirectly 100% of the Equity Interests of Seller, or (b) any “person” or “group” (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the beneficial owner, directly or indirectly, of 50% or more of the total voting power of all classes of Equity Interests of Guarantor entitled to vote generally in the election of the directors.

“ Closing Certificate ”: A true and correct certificate in the form of Exhibit C , executed by a Responsible Officer of Seller.

“ Closing Date ”: September 23, 2013.

“ Code ”: The Internal Revenue Code of 1986, and the regulations promulgated and rulings issued thereunder, in each case as amended, modified or replaced from time to time.

“ Compliance Certificate ”: A true and correct certificate in the form of Exhibit D , executed by a Responsible Officer of Seller.

“ Confirmation ”: A purchase confirmation in the form of Exhibit E , duly completed, executed and delivered by Seller and Buyer in accordance with Section 3.01 .

“ Contractual Obligation ”: With respect to any Person, any provision of any securities issued by such Person or any indenture, mortgage, deed of trust, deed to secure debt, contract, undertaking, agreement, instrument or other document to which such Person is a party or by which it or any of its property or assets are bound or are subject.

“ Control ”: With respect to any Person, the direct or indirect possession of the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling,” “Controlled” and “under common Control” have correlative meanings.

“ Custodial Agreement ”: The Amended and Restated Custodial Agreement, dated as of the date hereof, among Buyer, Seller, each Trust and Custodian, as the same may be amended, modified or supplemented from time to time.

“ Custodian ”: Wells Fargo Bank, National Association, or any successor permitted by the Custodial Agreement.

“ Default ”: Any event that, with the giving of notice or the lapse of time, or both, would become an Event of Default.

“ Default Rate ”: As of any date, the Pricing Rate in effect on such date plus 400 basis points (4.00%).

“ Derivatives Contract ”: Any rate swap transaction, basis swap, credit derivative transaction, forward rate transaction, commodity swap, commodity option, forward commodity contract, equity or equity index swap or option, bond or bond price or bond index swap or option or forward bond or forward bond price or forward bond index transaction, interest rate option, forward foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, spot contract, or any other similar transaction or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, including any obligations or liabilities thereunder.

“ Derivatives Termination Value ”: With respect to any one or more Derivatives Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Derivatives Contracts, (a) for any date on or after the date such Derivatives Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in the preceding clause (a), the amount(s) determined as the mark-to-market value(s) for such Derivatives Contracts, as determined based on one or more mid-market or other readily available quotations provided by any recognized dealer in such Derivatives Contracts (which may include Buyer).

“ Dollars ” and “ $ ”: Lawful money of the United States of America.

“ Due Date ”: The day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.

“ Early Repurchase Date ”: Defined in Section 3.05 .

“ Electronic Tracking Agreement ”: The Electronic Tracking Agreement among Buyer, each Trust, MERS and MERSCORP, Inc., to the extent applicable, as the same may be amended, modified or supplemented from time to time.

“ Eligible Asset ”: An Eligible Trust Certificate.

“ Eligible Assignee ”: Any of the following Persons designated by Buyer for purposes of Section 18.08(c) : (a) an Affiliate of Buyer (that is not an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA, a “plan” as defined by and subject to Section 4975 of the Code, or an entity deemed to hold “plan assets” of either of the foregoing, that would cause Seller to incur any prohibited transaction excise tax penalties under Section 4975 of the Code), and (b) any other Person to which Seller has consented; provided , that such consent of Seller shall not be unreasonably withheld, delayed or conditioned, and shall not be required at any time when a Default or Event of Default exists. Such Person shall provide to Seller such duly executed IRS forms as Seller reasonably requests.

“ Eligible Mortgage Loan ”: Any Mortgage Loan owned by a Trust and (a) as to which each of the representations and warranties in Schedule 1-A are true and correct in all material respects, (b) that contains all required Asset Documents without exceptions unless otherwise waived by Buyer or permitted below and (c) that satisfies each of the following eligibility requirements:

(i) At the time it was made, such Mortgage Loan complied in all material respects with all applicable local, state and federal laws, including but not limited to all predatory lending laws;

(ii) Such Mortgage Loan is secured by a first priority mortgage or deed of trust on real property;

(iii) The Mortgaged Property is neither a cooperative nor a condotel unit except as provided in a Sub-Limit;

(iv) The Mortgaged Property related to such Mortgage Loan is secured by a one- to four-family residential property. The Mortgaged Property is located in the jurisdiction identified in the related Mortgage Loan Schedule and consists of a single parcel of real property with a detached single family residence erected thereon, or a two- to four-family dwelling, or an individual condominium unit in a low-rise or high-rise condominium project, or an individual unit in a planned unit development or a de minimis planned unit development, a manufactured home, or shares in a co-operative;

(v) The BPO Value for such Mortgage Loan exceeds $50,000 except as provided in a Sub-Limit;

(vi) The unpaid principal balance of such Mortgage Loan is equal to or exceeds $50,000;

(vii) Such Mortgage Loan is not a “Section 32” loan;

(viii) Such Mortgage Loan is not a High Cost Mortgage Loan;

(ix) The information set forth in the related Mortgage Loan Schedule is true and correct in all material respects as of the date or dates respecting which the information is furnished;

(x) Such Mortgage Loan has been approved as an Eligible Mortgage Loan by Buyer on the related Purchase Date;

(xi) There are no future funding obligations on the part of Seller or Buyer or any other Person with respect to such Mortgage Loan;

(xii) The Mortgaged Property with respect to such Mortgage Loan located in the United States, and the Underlying Obligors are domiciled in the United States and are not Sanctioned Entities, and all obligations thereunder and under the Asset Documents are denominated and payable in Dollars;

(xiii) A BPO Value has been provided to Buyer for the related Mortgaged Property dated no earlier than ninety (90) days prior to the related Purchase Date with respect to such Mortgage Loan; and

(xiv) A BPO valuation has been conducted and delivered to Buyer with respect to the related Mortgaged Property every one hundred eighty (180) days that such Mortgage Loan is subject to a Transaction;

provided , that notwithstanding the failure of a Mortgage Loan to conform to the requirements of this definition, Buyer may, subject to such terms, conditions and requirements and Applicable Percentage adjustments as Buyer may require, designate in writing any such non-conforming Mortgage Loan as an Eligible Mortgage Loan, which designation (1) may include a temporary or permanent waiver of one or more Eligible Mortgage Loan requirements, and (2) shall not be deemed a waiver of the requirement that all other Mortgage Loans must be Eligible Mortgage Loans (including any Mortgage Loans that are similar or identical to the Mortgage Loan subject to the waiver).

“ Eligible REO Property ”: Any REO Property wholly owned by a Trust and (a) as to which each of the representations and warranties in Schedule 1-B are true and correct in all material respects, (b) as to which the related deed or other title document is titled in the name of such Trust or such deed is in the process of being recorded, and the recordation status of such REO Property is included in the related REO Property Summary, and (c) which satisfies the following eligibility requirements:

(i) The information set forth in the related REO Property Schedule is true and correct in all material respects as of the date or dates respecting which the information is furnished;

(ii) Such REO Property has either (i) been approved as an Eligible REO Property by Buyer on the related Purchase Date, or (ii) was acquired with regard to an Eligible Mortgage Loan that is converted to an REO Property;

(iii) The BPO Value for such Mortgage Loan exceeds $50,000 except as provided in a Sub-Limit;

(iv) No lease agreements with any tenant with respect to the REO Property have been entered into or renewed after the related foreclosure date;

(v) Such REO Property is located in the United States and all obligations thereunder and under the related REO Property File are denominated and payable in Dollars;

(vi) A BPO Value has been provided to Buyer for the related REO Property dated no earlier than ninety (90) days prior to the related Purchase Date with respect to such REO Property;

(vii) A BPO valuation has been conducted and delivered to Buyer with respect to the REO Property every one hundred eighty (180) days that such REO Property is subject to a Transaction; and

(viii) The REO Aging of such REO Property does not exceed one hundred eighty (180) days, except as provided in a Sub-Limit;

provided , that notwithstanding the failure of an REO Property to conform to the requirements of this definition, Buyer may, subject to such terms, conditions and requirements and Applicable Percentage adjustments as Buyer may require, designate in writing any such non-conforming REO Property as an Eligible REO Property, which designation (1) may include a temporary or permanent waiver of one or more Eligible REO Property requirements, and (2) shall not be deemed a waiver of the requirement that all other REO Property must be Eligible REO Property (including any REO Property that is similar or identical to the REO Property subject to the waiver).

“ Eligible Trust Certificate ”: A Trust Certificate as to which each of the representations and warranties in Schedule 1-C is true and correct in all material respects.

“ Environmental Laws ”: Any federal, state, foreign or local statute, law, rule, regulation, ordinance, code, guideline, written policy and rule of common law now or hereafter in effect, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, employee health and safety or hazardous materials, including CERCLA, RCRA, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Clean Air Act, the Safe Drinking Water Act, the Oil Pollution Act of 1990, the Emergency Planning and the Community Right-to-Know Act of 1986, the Hazardous Material Transportation Act, the Occupational Safety and Health Act, and any state and local or foreign counterparts or equivalents.

“ Equity Interests ”: With respect to any Person, (a) any share, interest, participation and other equivalent (however denominated) of Capital Stock of (or other ownership, equity or profit interests in) such Person, (b) any warrant, option or other right for the purchase or other acquisition from such Person of any of the foregoing, (c) any security convertible into or exchangeable for any of the foregoing, and (d) any other ownership or profit interest in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date.

“ ERISA ”: The Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” shall mean any entity, whether or not incorporated, that is a member of any group of organizations described in Section 414(b), (c), (m) or (o) of the Code of which Seller or Guarantor is a member.

“ Escrow Payments ”: With respect to any Mortgage Loan, the amounts constituting ground rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage insurance premiums, fire and hazard insurance premiums, condominium charges, and any other payments required to be escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.

“ Event of Default ”: Defined in Section 10.01 .

“ Excluded Taxes ”: Any of the following Taxes imposed on or with respect to Buyer or any other Indemnified Person or required to be withheld or deducted from a payment to Buyer or such other Indemnified Person: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profit Taxes, in each case, (i) imposed as a result of Buyer or any other recipient of the payment being organized under the laws of, or having its principal office or its applicable lending office located in the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) imposed as a result of a present or former connection between Buyer or any other recipient of the payment and the jurisdiction imposing such Tax; (b) any Tax imposed on Buyer or other recipient of a payment hereunder that is attributable to such Buyer’s or other recipient’s failure to comply with relevant requirements set forth in Section 12.06(d); (c) any withholding Tax that is imposed on amounts payable to Buyer or other recipient of a payment hereunder pursuant to a law in effect on the date such person becomes a party to or under this Agreement or such person changes its lending office, except (i) if such person becomes such party or changes such office after the occurrence and during the continuation of an Event of Default, (ii) to the extent Additional Amounts are payable to such person’s assignor immediately before such person becomes a party to or under this Agreement or payable to such person before such person changed its lending office, or (iii) such assignment or change of lending office occurs at the request of Seller; and (d) any U.S. federal withholding Taxes imposed under FATCA.

“ Extended Facility Termination Date ”: Defined in Section 3.07 .

“ Extension Fee ”: The meaning set forth in the Fee Letter, which definition is incorporated by reference herein.

“ Extension Margin Amount ”: The meaning set forth in the Fee Letter, which definition is incorporated by reference herein.

“ Extension Period ”: Defined in Section 3.07 .

“ Facility Fee ”: The meaning set forth in the Fee Letter, which definition is incorporated by reference herein.

“ Facility Termination Date ”: The earliest of (i) March 23, 2015, as such date may be extended pursuant to Section 3.07 , (b) any Accelerated Repurchase Date, and (c) any date on which the Facility Termination Date shall otherwise occur in accordance with the Repurchase Documents or Requirements of Law.

“ FATCA ”: Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

“ Fannie Mae ”: Fannie Mae, or any successor thereto.

“ Fee Letter ”: The second amended and restated fee and pricing letter, dated as of the date hereof, between Buyer and Seller.

“ FHA ”: 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.

“ FHA Loan ”: A Mortgage Loan that is the subject of an FHA Mortgage Insurance Contract.

“ FHA Mortgage Insurance ”: Mortgage insurance authorized under Sections 203(b), 213, 221(d)(2), 222, and 235 of the National Housing Act, as amended, codified in 24 Code of Federal Regulations, and provided by the FHA.

“ FHA Mortgage Insurance Contract ”: The contractual obligation of the FHA respecting the insurance of a Mortgage Loan.

“ FHA Regulations ”: Regulations promulgated by HUD under the Federal Housing Administration Act, codified in 24 Code of Federal Regulations, and other HUD issuances relating to FHA Loans, including the related handbooks, circulars, notices and mortgagee letters.

“ Freddie Mac ”: Freddie Mac, or any successor thereto.

“ Funding Period ”: The period beginning on the Closing Date and ending on the Facility Termination Date; provided , that the Funding Period shall not continue during the Extension Period.

“ GAAP ”: Generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

“ Governing Documents ”: With respect to any Person, its articles or certificate of incorporation or formation, by-laws, partnership, limited liability company, memorandum and articles of association, operating or trust agreement and/or other organizational, charter or governing documents.

“ Governmental Authority ”: Any (a) nation or government, (b) state or local or other political subdivision thereof, (c) central bank or similar monetary or regulatory authority, (d) Person, agency, authority, instrumentality, court, regulatory body, central bank or other body or entity exercising executive, legislative, judicial, taxing, quasi-judicial, quasi-legislative, regulatory or administrative functions or powers of or pertaining to government, (e) court or arbitrator having jurisdiction over such Person, its Affiliates or its assets or properties, (f) stock exchange on which shares of stock of such Person are listed or admitted for trading, (g) accounting board or authority that is responsible for the establishment or interpretation of national or international accounting principles, and (h) supra-national body such as the European Union or the European Central Bank.

“ Guarantee Agreement ”: The Second Amended and Restated Guarantee Agreement, dated as of the date hereof, made by Guarantor in favor of Buyer, as amended, supplemented or otherwise modified from time to time.

“ Guarantee Default ”: Has the meaning assigned thereto in the Guarantee Agreement.

“ Guarantee Obligation ”: With respect to any Person (the “ guaranteeing person ”), any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any letter of credit) to induce the creation of the obligations for which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends, Contractual Obligation, Derivatives Contract or other obligations or indebtedness (the “ primary obligations ”) of any other third Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation, or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided , that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the maximum stated amount of the primary obligation relating to such Guarantee Obligation (or, if less, the maximum stated liability set forth in the instrument embodying such Guarantee Obligation); provided , that in the absence of any such stated amount or stated liability, the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum anticipated liability in respect thereof as reasonably determined by such Person.

“ Guarantor ”: Altisource Residential Corporation, together with its permitted successors and assigns.

“ High Cost Mortgage Loan ”: A Mortgage Loan classified as (a) a “high cost” loan under the Home Ownership and Equity Protection Act of 1994, (b) a “high cost,” “threshold,” “covered,” or “predatory” loan under any other applicable state, federal or local law (or a similarly classified loan using different terminology under a law, regulation or ordinance imposing heightened regulatory scrutiny or additional legal liability for residential Mortgage Loans having high interest rates, points and/or fees) or (c) a High Cost Loan or Covered Loan, as applicable (as such terms are defined in the current Standard & Poor’s LEVELS® Glossary Revised, Appendix E).

“ HUD ”: The U.S. Department of Housing and Urban Development.

“ Income ”: With respect to any Purchased Asset, all of the following (in each case with respect to the entire par amount of the Underlying Assets and not just with respect to the portion of the par amount represented by the Purchase Price advanced against such Purchased Asset): (a) all Principal Payments, (b) all Interest Payments, (c) all Net Liquidation Proceeds and all other income, dividends, distributions, receipts, payments, collections, prepayments, recoveries, proceeds (including insurance and condemnation proceeds) and other payments or amounts of any kind paid, received, collected, recovered or distributed on, in connection with or in respect of such Underlying Asset, including extension fees, exit fees, any rental payments, if any, and all proceeds of any Underlying Asset received upon securitization, liquidation, foreclosure, short sale and third-party sales or other disposition, transfer fees, make whole fees, late charges, late fees and all other fees or charges of any kind or nature, premiums, yield maintenance charges, penalties, default interest, gains, receipts, allocations, rents, interests, profits, payments in kind, returns or repayment of contributions, insurance payments, judgments, settlements and proceeds; and (d) all other “proceeds” as defined in Section 9-102(64) of the UCC, including all collections or distributions thereon or other income or receipts therefrom or in respect thereof; provided , that any amounts that under the applicable Asset Documents are required to be deposited into and held in escrow or reserve to be used for a specific purpose, such as taxes and insurance, shall not be included in the term “Income” unless and until (i) an event of default exists under such Asset Documents, (ii) the holder of the related Underlying Asset has exercised or is entitled to exercise rights and remedies with respect to such amounts, (iii) such amounts are no longer required to be held for such purpose under such Asset Documents, or (iv) such amounts may be applied to all or a portion of the outstanding indebtedness under such Asset Documents; provided , further that amounts permitted to be retained by Servicer pursuant to the Servicing Agreement shall not be included in the term “Income”.

“ Indebtedness ”: For any Person: at any time, and only to the extent outstanding at such time: (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 after 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 the account of such Person; (e) Capital Lease Obligations of such Person; (f) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements, including any Indebtedness arising hereunder; (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) with respect to clauses (a)-(i) above both on and off balance sheet; in each case excluding Non-Recourse Indebtedness.

“ Indemnified Amount ”: Defined in Section 13.01 .

“ Indemnified Person ”: Defined in Section 13.01 .

“ Indemnified Taxes ” means Taxes other than Excluded Taxes and Other Taxes imposed on or with respect to any payment made by or on account of any obligation of Seller under the Repurchase Documents.

“ Initial Purchase Date ”: September 30, 2013.

“ Insolvency Action ”: With respect to any Person, the taking by such Person of any action resulting in an Insolvency Event with respect to such Person, other than solely under clause (g) of the definition thereof.

“ Insolvency Event ”: With respect to any Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises with respect to such Person or any substantial part of its assets or property in an involuntary case under any applicable Insolvency Law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its assets or property, or ordering the winding-up or liquidation of such Person’s affairs, and such decree or order shall remain unstayed and in effect for a period of thirty (30) days, (b) the commencement by such Person of a voluntary case under any applicable Insolvency Law now or hereafter in effect, (c) the consent by such Person to the entry of an order for relief in an involuntary case under any Insolvency Law, (d) the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its assets or property, (e) the making by such Person of any general assignment for the benefit of creditors, (f) the admission in a legal proceeding of the inability of such Person to pay its debts generally as they become due, (g) the failure by such Person generally to pay its debts as they become due, or (h) the taking of action by such Person in furtherance of any of the foregoing.

“ Insolvency Laws ”: The Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments and similar debtor relief laws from time to time in effect affecting the rights of creditors generally.

“ Insolvency Proceeding ”: Any case, action or proceeding before any court or other Governmental Authority relating to any Insolvency Event.

“ Interest Payments ”: With respect to any Underlying Asset, all payments of interest, including default interest, received from time to time.

“ Interim Servicer ”: With respect to any Underlying Asset, any interim servicer servicing such Underlying Asset for an interim period together with its permitted successors and assigns; provided , that such Interim Servicer shall service such Purchase Asset for an interim period no greater than (i) thirty (30) days following such Underlying Asset becoming subject to a Transaction if Servicer is interim servicing or sub-servicing the related Underlying Asset, and (ii) sixty (60) days following such Underlying Asset becoming subject to a Transaction if a servicer other than Servicer is interim servicing or sub-servicing such Underlying Asset.

“ Interim Servicer Letter Agreement ” Each side letter agreement to be entered into among, or notice to, Buyer, Seller, the related Trust and an Interim Servicer of Underlying Assets, in the form attached hereto as Exhibit A hereof or such other form that is reasonably acceptable to Buyer.

“ Internal Control Event ”: Fraud that involves management or other employees who have a significant role in, the internal controls of Seller, any Trust, Guarantor, Asset Manager or any Affiliate of Seller or Guarantor over financial reporting.

“ Investment ”: With respect to any Person, any acquisition or investment (whether or not of a controlling interest) by such Person, whether by means of (a) the purchase or other acquisition of any Equity Interest in another Person, (b) a loan, advance or extension of credit to, capital contribution to, guaranty or credit enhancement of Indebtedness of, or purchase or other acquisition of any Indebtedness of, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute the business or a division or operating unit of another Person. Any binding commitment or option to make an Investment in any other Person shall constitute an Investment. Except as expressly provided otherwise, for purposes of determining compliance with any covenant contained in this Agreement, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“ Investment Company Act ”: The Investment Company Act of 1940, as amended, restated or modified from time to time, including all rules and regulations promulgated thereunder.

“ Knowledge ”: With respect to any Person, means collectively (i) the Actual Knowledge of such Person, (ii) notice of any fact, event, condition or circumstance that would cause a reasonably prudent Person to conduct an inquiry that would give such Person Actual Knowledge, whether or not such Person actually undertook such an inquiry, and (iii) all knowledge that is imputed to a Person under any statute, rule, regulation, ordinance, or official decree or order.

“ LIBO Rate ”: For any Pricing Period, the rate (expressed as a percentage per annum and rounded upward, if necessary, to the next nearest 1/100 of 1%) determined for such Pricing Period in accordance with the following formula:

LIBOR for such Pricing

Period

1 - Reserve Requirement

“ LIBOR ”: For any Pricing Period, the rate (expressed as a percentage per annum and rounded upward, if necessary, to the next nearest 1/100 of 1%) for deposits in Dollars, for a one-month period, that appears on Reuters Screen LIBOR01 (or the successor thereto) as the London interbank offered rate for deposits in Dollars as of 11:00 a.m., London time, on the Pricing Rate Reset Date for such Pricing Period. If such rate does not appear on Reuters Screen LIBOR01 as of 11:00 a.m., London time, on such Pricing Rate Reset Date, Buyer shall request the principal London office of the Reference Banks selected by Buyer to provide such banks’ offered quotation (expressed as a percentage per annum) to leading banks in the international Eurocurrency market for deposits in Dollars for a one-month period as of 11:00 a.m., London time, on such Pricing Rate Reset Date for amounts of not less than the Aggregate Purchase Price. If at least two such offered quotations are so provided, LIBOR shall be the arithmetic mean of such quotations. If fewer than two such quotations are so provided, Buyer shall request any three major banks in New York City selected by Buyer to provide such banks’ rate (expressed as a percentage per annum) for loans in Dollars to leading banks in the international Eurocurrency market for a one-month period as of approximately 11:00 a.m., New York City time on the applicable Pricing Rate Reset Date for amounts of not less than the Aggregate Purchase Price of all Purchased Assets. If at least two such rates are so provided, LIBOR shall be the arithmetic mean of such rates.

“ Lien ”: Any mortgage, statutory or other lien, pledge, charge, right, claim, adverse claim, attachment, levy, hypothecation, assignment, deposit arrangement, security interest, UCC financing statement or encumbrance of any kind on or otherwise relating to any Person’s assets or properties in favor of any other Person or any preference, priority or other security agreement or preferential arrangement of any kind.

“ Liquidity ”: With respect to any Person, the sum of (i) its unrestricted cash, plus (ii) its unrestricted Cash Equivalents, plus (iii) the aggregate amount of unused capacity immediately available to such Person (taking into account applicable haircuts) under financing facilities for which such Person has pledged eligible collateral to over-collateralize such financing facility.

“ Margin Call ”: Defined in Section 4.01 .

“ Margin Deficit ”: Defined in Section 4.01 .

“ Market Disruption Event ”: Any event or events that, in the determination of Buyer, results in (a) a significant deterioration of a “repo market” or related “lending market” for purchasing (subject to repurchase) or financing debt obligations secured by Mortgage Loans or REO Property from the status of such markets on the Closing Date, (b) Buyer’s not being able to finance Mortgage Loans or REO Property through the “repo market” or “lending market” with traditional counterparties at rates that would have been reasonable prior to the occurrence of such event or events, (c) Buyer not being able to sell securities backed by Purchased Assets at prices that would have been reasonable prior to the occurrence of such event or events, or (d) the imposition of a foreclosure moratorium or regulatory changes, the effect of which would be to materially impair Buyer’s ability to realize on the Purchased Assets.

“ Market Value ”: As of any date, (x) for any Purchased Asset, the aggregate value of the related Underlying Assets, and (y) for any Underlying Asset, the value of such Underlying Asset, in each case including the related Servicing Rights, at which such Underlying Asset could be sold in its entirety to a single third-party purchaser, as determined by Buyer, taking into account the fact that the Purchased Asset or Underlying Asset may be sold under circumstances in which Seller is in default under this Agreement. Buyer’s determination of Market Value shall be conclusive upon the parties, absent manifest error on the part of Buyer; provided , that Buyer agrees to determine the Market Value of any Purchased Asset or Underlying Asset in a manner similar to other similarly situated sellers. Subject to the foregoing proviso, Buyer shall have the right to mark to market the Purchased Assets and Underlying Assets on a daily basis in connection with which the Market Value with respect to one or more of the Purchased Assets or Underlying Assets may be determined to be zero in accordance with the terms herein. Seller acknowledges that Buyer’s determination of Market Value is for the limited purpose of determining the value of Purchased Assets and Underlying Assets that are subject to Transactions hereunder without the ability to perform customary purchaser’s due diligence and is not necessarily equivalent to a determination of the fair market value of the Purchased Assets or Underlying Assets achieved by obtaining competing bids in an orderly market in which the originator or servicer is not in default under a revolving debt facility and the bidders have adequate opportunity to perform customary asset and servicing due diligence. For the purpose of determining the related Market Value, Buyer may reasonably request at any time from Seller an updated valuation for each Purchased Asset and Underlying Asset, in a form mutually acceptable to Buyer and Seller. Notwithstanding anything else in this definition, the Market Value shall be deemed to be zero with respect to each Purchased Asset and Underlying Asset with respect to which:

(a) the requirements of the definition of Eligible Mortgage Loan or Eligible REO Property are not satisfied, as determined by Buyer;

(b) Seller fails to repurchase such Purchased Asset by the Repurchase Date;

(d) all Asset Documents have not been delivered to Custodian within the time periods required by this Agreement and the Custodial Agreement;

(e) any material Asset Document has been released from the possession of Custodian under the Custodial Agreement to Seller or Servicer for more than twenty (20) days (unless Custodian has received an attorney bailee letter with respect thereto);

(f) the Underlying Asset exceeds the applicable Sub-Limit;

(g) Seller or Servicer fails to deliver any reports required hereunder where such failure materially adversely affects Buyer’s ability to determine Market Value of such Purchased Asset or Underlying Asset; or

(h) (i) there is a material exception in the trust receipt or bailee letter that has not been expressly waived by Buyer, or (ii) Buyer has not received a trust receipt or bailee letter.

“ Material Adverse Effect ”: A material adverse effect on or material adverse change in or to (a) the property, assets, business, operations, financial condition, credit quality or prospects of Seller, each Trust, Guarantor and Asset Manager as a whole, (b) the ability of Seller and Guarantor to pay and perform the Repurchase Obligations, (c) the validity, legality, binding effect or enforceability of any Repurchase Document with respect to Seller, any Trust or Guarantor or security interest granted hereunder or thereunder or (d) the rights and remedies of Buyer or any Indemnified Person under any Repurchase Document, Asset Document or Purchased Asset.

“ Materials of Environmental Concern ”: Any hazardous, toxic or harmful substances, materials, wastes, pollutants or contaminants defined as such in or regulated under any Environmental Law.

“ Maximum Aggregate Purchase Price ”: The meaning set forth in the Fee Letter, which definition is incorporated by reference herein.

“ MERS Loan ”: 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 Loan on the related Mortgage Loan Schedule.

“ Monthly Payment ”: The scheduled monthly payment of principal and/or interest on a Mortgage Loan.

“ Moody’s ”: Moody’s Investors Service, Inc. or, if Moody’s Investors Service, Inc. is no longer issuing ratings, another nationally recognized rating agency reasonably acceptable to Buyer.

“ Mortgage ”: Any mortgage, deed of trust, assignment of rents, security agreement and fixture filing, or other instruments creating and evidencing a lien on real property and other property and rights incidental thereto.

“ Mortgage Interest Rate ”: The rate of interest borne on a Mortgage Loan from time to time in accordance with the terms of the related Mortgage Note.

“ Mortgage Loan ”: Any fixed rate or adjustable rate and closed-end home equity one-to-four-family residential mortgage loan or closed end line of credit that is current (including modified loans), delinquent, and/or in the process of foreclosure and secured by a first Lien Mortgage, which the Custodian has been instructed to hold for Buyer pursuant to the Custodial Agreement, and which Mortgage Loan includes, without limitation, (i) a Mortgage Note, the related Mortgage and all other Asset Documents and (ii) all right, title and interest of the related Trust in and to the Mortgaged Property covered by such Mortgage.

“ Mortgage Loan Schedule ”: With respect to any Transaction as of any date, a mortgage loan schedule in the form of either (a) Exhibit F attached hereto or (b) the Asset Tape (including the information set forth on Exhibit F attached hereto) relating to the Mortgage Loans.

“ Mortgage Note ”: The original executed promissory note or other evidence of the indebtedness of a Mortgagor with respect to a Mortgage Loan.

“ Mortgaged Property ”: The real property (including all improvements, buildings, fixtures, building equipment and personal property thereon and all additions, alterations and replacements made at any time with respect to the foregoing) and all other collateral securing repayment of, or converted into REO Property in satisfaction of, the indebtedness evidenced by a Mortgage Note.

“ Mortgagee ”: The record holder of a Mortgage Note secured by a Mortgage.

“ Mortgagor ”: The obligor on a Mortgage Note, including any Person who has assumed or guaranteed the obligations of the obligor thereunder.

“ Multiemployer Plan ”: A multiemployer plan as defined in Section 4001(a)(3) of ERISA as to which Seller, Guarantor or any ERISA Affiliate has made during the preceding five years, or is required to make contributions or has any actual or potential liability.

“ Net Liquidation Proceeds ”: Amounts received in respect of any disposition of an Underlying Asset other than amounts retained by or paid to Servicer under the Master Repurchase Agreement or the Servicing Agreement.

“ Non-Recourse Indebtedness ”: With respect to any Person and any date, indebtedness of such Person as of such date for borrowed money in respect of which recourse for payment (except for customary exceptions for fraud, misapplication of funds, environmental indemnities, Insolvency Events, non-approved transfers or other events) is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness.

“ Off-Balance Sheet Obligations ”: With respect to any Person and any date, to the extent not included as a liability on the balance sheet of such Person, all of the following with respect to such Person as of such date: (a) monetary obligations under any financing lease or so-called “synthetic,” tax retention or off-balance sheet lease transaction that, upon the application of any Insolvency Laws, would be characterized as indebtedness, (b) monetary obligations under any sale and leaseback transaction that does not create a liability on the balance sheet of such Person, or (c) any other monetary obligation arising with respect to any other transaction that (i) is characterized as indebtedness for tax purposes but not for accounting purposes, or (ii) is the functional equivalent of or takes the place of borrowing but that does not constitute a liability on the balance sheet of such Person (for purposes of this clause (c), any transaction structured to provide tax deductibility as interest expense of any dividend, coupon or other periodic payment will be deemed to be the functional equivalent of a borrowing).

“ Original Agreement ”: Defined in the preamble of this Agreement.

“ Other Taxes ”: Any and all present or future stamp or documentary taxes or any other excise, sales, goods and services or transfer taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, any Repurchase Document.

“ Participant ”: Defined in Section 18.08(b) .

“ Patriot Act ”: The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended, modified or replaced from time to time.

“ PBGC ”: The Pension Benefit Guaranty Corporation.

“ Permitted Liens ”: Any of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding has been commenced: (a) Liens for state, municipal, local or other local Taxes not yet due and payable, (b) Liens imposed by Requirements of Law, such as materialmen’s, mechanics’, carriers’, workmen’s, repairmen’s and similar Liens, arising in the ordinary course of business securing obligations that are not overdue for more than thirty (30) days, and (c) Liens granted pursuant to or by the Repurchase Documents.

“ Person ”: An individual, corporation, limited liability company, business trust, partnership, trust, unincorporated organization, joint stock company, sole proprietorship, joint venture, Governmental Authority or any other form of entity.

“ Plan ”: An employee benefit plan as defined in Section 3(3) of ERISA, subject to Title IV of ERISA (other than a Multiemployer Plan) in respect of which Seller, Servicer, Guarantor or any ERISA Affiliate thereof has any actual or potential liability or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be, an “employer” as defined in Section 3(5) of ERISA.

“ PMI Policy ” or “ Primary Insurance Policy ”: A policy of primary mortgage guaranty insurance issued by a Qualified Insurer.

“ Price Differential ”: For any Pricing Period or portion thereof and (a) for any Transaction outstanding, the sum of the products, for each day during such Pricing Period or portion thereof, of (i) 1/360th of the Pricing Rate in effect for each Purchased Asset subject to such Transaction during such Pricing Period, times (ii) the Purchase Price for such Purchased Asset, or (b) for all Transactions outstanding, the sum of the amounts calculated in accordance with the preceding clause (a) for all Transactions.

“ Price Differential Maintenance Account ”: The separate trust account established by Buyer and maintained pursuant to this Agreement for the benefit of Buyer, which shall at all times contain funds in an amount equal to the Price Differential Required Amount, to be held for the benefit of Buyer. The Price Differential Maintenance Account shall be an interest bearing account established with the Account Bank with the account number to be provided by Buyer after the Closing Date.

“ Price Differential Required Amount ”: The meaning set forth in the Fee Letter, which definition is incorporated by reference herein.

“ Pricing Margin ”: The meaning set forth in the Fee Letter, which definition is incorporated by reference herein.

“ Pricing Period ”: For any Purchased Asset, (a) in the case of the first Remittance Date, the period from the Initial Purchase Date for such Purchased Asset to but excluding the related Pricing Period End Date, and (b) in the case of any subsequent Remittance Date, the one-month period commencing on and including the prior Pricing Period End Date and ending on but excluding such Pricing Period End Date; provided , that no Pricing Period for a Purchased Asset shall end after the Repurchase Date for such Purchased Asset.

“ Pricing Period End Date ”: The first day of each calendar month.

“ Pricing Rate ”: For any Pricing Period, the LIBO Rate for such Pricing Period plus the applicable Pricing Margin, which shall be subject to adjustment and/or conversion as provided in Sections 12.01 and 12.02 ; provided , that while an Event of Default exists, the Pricing Rate shall be the Default Rate.

“ Pricing Rate Reset Date ”: (a) In the case of the first Pricing Period for any Purchased Asset, the Purchase Date for such Purchased Asset, and (b) in the case of any subsequent Pricing Period, the related Pricing Period End Date on which such Pricing Period begins or on any other date as mutually determined by Buyer and Seller. The failure to communicate shall not impair Buyer’s decision to reset the Pricing Rate on any date.

“ Principal Payments ”: For any Underlying Asset, all payments and prepayments of principal received from time to time, including insurance and condemnation proceeds and recoveries from liquidation or foreclosure.

“ Purchase Agreement ”: Any purchase agreement between a Trust and any Transferor pursuant to which such Trust purchased or acquired a Mortgage Loan or REO Property which is subsequently included as an Underlying Asset hereunder. If a Transferor under a Purchase Agreement is an Affiliate of Seller or the related Trust, such Purchase Agreement shall contain a grant of a security interest in favor of Seller or the related Trust and authorize the filing of UCC financing statements against the Transferor with respect to such Mortgage Loan or REO Property.

“ Purchase Date ”: For any Purchased Asset, the date on which such Purchased Asset is transferred by Seller to Buyer or, as applicable, the date on which Buyer funds a Purchase Price Increase with respect to additional Underlying Assets in accordance with this Agreement.

“ Purchase Price ”: For any Purchased Asset, (a) as of the Purchase Date for such Purchased Asset, an amount equal to the sum of the products of the Market Value of each related Underlying Asset, times the Applicable Percentage for each such Underlying Asset and (b) as of any other date, the amount described in the preceding clause (a), (i) reduced by (A) any amount of Margin Deficit transferred by Seller to Buyer pursuant to Section 4.01 and applied to the Purchase Price of such Purchased Asset, (B) any Principal Payments or Income remitted to the Waterfall Account and which were applied to the Purchase Price of such Purchased Asset by Buyer pursuant to clause eighth of Section 5.03(a) , and (C) any payments made by Seller in reduction of the outstanding Purchase Price, in each case before or as of such determination date with respect to such Purchased Asset, and (ii) increased by the amount of any Purchase Price Increase transferred by Buyer to Seller with respect to additional Underlying Assets related to such Purchased Asset in accordance with Section 3.01 .

“ Purchase Price Decrease ”: A decrease in the Purchase Price for any Purchased Asset equal to the amount of the Allocated Purchase Price of any Underlying Assets in connection with the release of such Underlying Assets from Transactions hereunder as a result of the sale or conveyance of such Underlying Assets by the related Trust to a party other than Buyer or another Trust.

“ Purchase Price Decrease Date ” shall mean the date upon which Buyer and Seller effectuate a Purchase Price Decrease.

“ Purchase Price Increase ”: An increase in the Purchase Price for any Purchased Asset equal to the amount of the Allocated Purchase Price of Underlying Assets transferred by Buyer to Seller in connection with the acquisition of additional Underlying Assets by the related Trust, as requested by Seller pursuant to Section 3.01 hereof.

“ Purchased Assets ”: (a) For any Transaction, each Trust Certificate sold by Seller to Buyer in such Transaction and not subsequently repurchased by Seller, and (b) for the Transactions in general, all Trust Certificates sold by Seller to Buyer and not subsequently repurchased by Seller and the Underlying Assets, including all of Seller’s right, title and interest in and to (i) all Records, (ii) mortgage guaranties and insurance (issued by Governmental Authorities or otherwise) and claims, payments and proceeds thereunder, including but not limited to, any payments or proceeds under any related PMI Policy, hazard insurance, FHA Mortgage Insurance Contracts and VA Loan Guaranty Agreements (if any) (iii) insurance policies, certificates of insurance and claims, payments and proceeds thereunder, (iv) the principal balance of any such Mortgage Loans, not just the amount advanced, (v) amounts and property from time to time on deposit in the Waterfall Account and the Waterfall Account itself, (vi) collection, escrow, reserve, collateral or lock-box accounts and all amounts and property from time to time on deposit therein, to the extent of Seller’s or the holder’s interest therein, (vii) all Income and rights to receive Income and all Escrow Payments and rights to receive Escrow Payments, (viii) security interests of Seller in Derivatives Contracts entered into by Underlying Obligors, (ix) rights of Seller under any letter of credit, guarantee, warranty, indemnity or other credit support or enhancement, (x) all rights to receive from any third party or to take delivery of any Records or other documents which constitute a part of the Asset Documents or Servicing File, (xi) Servicing Rights (xii) the Price Differential Maintenance Account and (xiii) all related contracts, collateral and supporting obligations of any kind; provided , that (A) Purchased Assets shall not include any obligations of Seller or any Retained Interests, and (B) for purposes of the grant of security interest by Seller to Buyer and the other provisions of Article 11 , Purchased Assets shall include all of the following: general intangibles, accounts, chattel paper, deposit accounts, securities accounts, instruments, securities, financial assets, uncertificated securities, security entitlements and investment property (as such terms are defined in the UCC) and replacements, substitutions, conversions, distributions or proceeds relating to or constituting any of the items described in the preceding clauses (i) through (xiii).

“ Qualified Insurer ”: A mortgage guaranty or hazard insurance company reasonably acceptable to Buyer and duly authorized and licensed where required by law to transact mortgage guaranty insurance business and approved as an insurer by Fannie Mae or Freddie Mac.

“ Rating Agencies ”: Each of Fitch, Inc., Moody’s and S&P.

“ Records ” 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 or related Underlying Assets. Records shall include the Mortgage Notes, Mortgages and other Asset Documents, the Servicing Files, the Servicing Records, the credit files related to each Underlying Asset and any other instruments necessary to document, service or manage such Underlying Asset.

“ Reference Banks ”: Banks each of which shall (a) be a leading bank in the international Eurocurrency market, and (b) have an established place of business in London. Initially, the Reference Banks shall be JPMorgan Chase Bank, Barclays Bank, PLC and Deutsche Bank AG. If any such Reference Bank should be unwilling or unable to act as such or if Buyer shall terminate the appointment of any such Reference Bank or if any of the Reference Banks should be removed from the Reuters Monitor Money Rates Service or in any other way fail to meet the qualifications of a Reference Bank, Buyer may designate alternative banks meeting the criteria specified in the preceding clauses (a) and (b).

“ REIT ”: A Person satisfying the conditions and limitations set forth in Section 756(b) and 856(c) of the Code which are necessary to qualify such Person as a “real estate investment trust,” as defined in Section 756(a) of the Code.

“ Release ”: Any generation, treatment, use, storage, transportation, manufacture, refinement, handling, production, removal, remediation, disposal, presence or migration of Materials of Environmental Concern on, about, under or within all or any portion of any property or Mortgaged Property.

“ Remedial Work ”: Any investigation, inspection, site monitoring, containment, clean-up, removal, response, corrective action, mitigation, restoration or other remedial work of any kind or nature because of, or in connection with, the current or future presence, suspected presence, Release or threatened Release in or about the air, soil, ground water, surface water or soil vapor at, on, about, under or within all or any portion of any property or Mortgaged Property of any Materials of Environmental Concern, including any action to comply with any applicable Environmental Laws or directives of any Governmental Authority with regard to any Environmental Laws.

“ Remittance Date ”: The twelfth (12th) Business Day of each calendar month, or such other day as is mutually agreed to by Seller and Buyer.

“ REO Aging ”: With respect to any REO Property, the number of days elapsed following the date of the related foreclosure sale, acquisition or other comparable conversion.

“ REO Property ”: Any Mortgaged Property for which a foreclosure sale, acquisition by deed in lieu of foreclosure or other comparable conversion has occurred.

“ REO Property Schedule ”: With respect to any Transaction as of any date, a hard copy or electronic schedule in the form of either (a) Exhibit G attached hereto or (b) the Asset Tape (including the information set forth on Exhibit G attached hereto) relating to the Underlying REO Property.

“ REO Property Summary ”: A written summary with respect to each Underlying REO Property, which shall include: (i) the jurisdiction in which such REO Property is located, (ii) the instrument or document used to convey fee title, (iii) the length of the applicable redemption period (including the start date of such period), and (iv) solely with respect to any REO Property for which the deed or other title document is not yet titled in the name of the related Trust, the status of the title recording process with respect to such REO Property.

“ Reportable Event ”: Any event set forth in Section 4043(c) of ERISA, other than an event as to which the notice period is waived.

“ Reporting Date ”: The fifteenth (15th) Business Day of each month.

“ Representation Breach ”: Any representation, warranty, certification, statement or affirmation made or deemed made by Seller or Guarantor in any Repurchase Document (including those contained in Schedule 1-A , 1-B and 1-C ) or in any certificate, notice, report or other document delivered pursuant to any Repurchase Document proves to be incorrect, false or misleading in any material respect when made or deemed made, without regard to any Knowledge or lack of Knowledge thereof by such Person and without regard to any qualification, representation or warranty relating to such Knowledge or lack of Knowledge.

“ Representation Exceptions ”: A written list prepared by Seller specifying, in reasonable detail, the representations and warranties (or portions thereof) set forth in this Agreement (including in Schedule 1-A , 1-B and 1-C ) which are not satisfied with respect to an Underlying Asset or Purchased Asset.

“ Repurchase Date ”: For any (i) Purchased Asset and all related Underlying Assets, the earliest of (a) the Facility Termination Date, (b) any Early Repurchase Date therefor, and (c) the Business Day on which Seller is to repurchase such Purchased Asset as specified by Seller and agreed to by Buyer in the related Confirmation; and (ii) any Underlying Asset pursuant to a Purchase Price Decrease, such related Purchase Price Decrease Date, including without limitation any Purchase Price Decrease Date as may be specified by Seller and agreed to by Buyer in the related Confirmation.

“ Repurchase Documents ”: Collectively, this Agreement, the Custodial Agreement, the Fee Letter, the Guarantee Agreement, all Confirmations, all Custodial Letter Agreements, each Servicing Agreement and Servicer Letter Agreement in respect of any Underlying Asset, each Trust Agreement in respect of any Purchased Asset, each Interim Servicer Letter Agreement, the Seller’s Power of Attorney, the Electronic Tracking Agreement, all UCC financing statements, amendments and continuation statements filed pursuant to any other Repurchase Document, and all additional documents, certificates, agreements or instruments, the execution of which is required, necessary or incidental to or desirable for performing or carrying out any other Repurchase Document.

“ Repurchase Obligations ”: All obligations of Seller to pay the Repurchase Price on the Repurchase Date and all other obligations and liabilities of Seller to Buyer arising under or in connection with the Repurchase Documents, whether now existing or hereafter arising, and all interest and fees that accrue after the commencement by or against Seller, Guarantor or any Affiliate of Seller or Guarantor of any Insolvency Proceeding naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding (in each case, whether due or accrued).

“ Repurchase Price ”: For any Purchased Asset as of any date, an amount equal to the sum of (a) the outstanding Purchase Price as of such date, (b) the accrued and unpaid Price Differential for such Purchased Asset as of such date, and (c) any accrued and unpaid fees and expenses and indemnity amounts and any other amounts owed by Seller, Guarantor or Affiliates thereof to Buyer under this Agreement, any Repurchase Document or otherwise with respect to such Purchased Asset.

“ Requirements of Law ”: With respect to any Person or property or assets of such Person and as of any date, all of the following applicable thereto as of such date: all Governing Documents and existing and future laws, statutes, rules, regulations, treaties, codes, ordinances, permits, certificates, orders and licenses of and interpretations by any Governmental Authority (including Environmental Laws, ERISA, regulations of the Board of Governors of the Federal Reserve System, and laws, rules and regulations relating to usury, licensing, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), judgments, decrees, injunctions, writs, awards or orders of any court, arbitrator or other Governmental Authority.

“ Reserve Requirement ”: For any Pricing Period, the aggregate of the rates (expressed as a decimal fraction) of reserve requirements in effect during such Pricing Period (including basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for Eurocurrency funding (currently referred to as “ Eurocurrency Liabilities ” in Regulation D of such Board of Governors) maintained by Buyer.

“ Responsible Officer ”: With respect to any Person, the chief executive officer, the chief financial officer, the chief accounting officer, the treasurer or the chief operating officer of such Person or such other officer designated as an authorized signatory in such Person’s Governing Documents.

“ Restatement Date ”: December 31, 2014.

“ Retained Interest ”: (a) With respect to any Purchased Asset and the related Underlying Assets, (i) all duties, obligations and liabilities of Seller thereunder, including payment and indemnity obligations, (ii) all obligations of agents, trustees, servicers, administrators or other Persons under the documentation evidencing such Purchased Asset and Underlying Assets, and (iii) if any portion of the Indebtedness related to such Purchased Asset or related Underlying Assets is owned by another lender or is being retained by Seller, the interests, rights and obligations under such documentation to the extent they relate to such portion, and (b) with respect to any Purchased Asset or Underlying Asset with an unfunded commitment on the part of Seller, all obligations to provide additional funding, contributions, payments or credits.

“ S&P ”: Standard and Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or, if Standard & Poor’s Ratings Services is no longer issuing ratings, another nationally recognized rating agency reasonably acceptable to Buyer.

“ Sanctioned Entity ”: (a) A country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, (d) a Person resident in or determined to be resident in a country, that (in the case of the preceding clauses (a), (b), (c) and this clause (d)) is subject to a country sanctions program administered and enforced by the Office of Foreign Assets Control, or (e) a Person named on the list of Specially Designated Nationals maintained by the Office of Foreign Assets Control.

“ Securities Laws ”: The Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the Securities and Exchange Commission or the Public Company Accounting Oversight Board.

“ Seller ”: The Seller named in the preamble of this Agreement.

“ Seller’s Power of Attorney ” Defined in Section 18.19 .

“ Servicer ”: Ocwen Mortgage Servicing, Inc., acting through its Affiliate Ocwen Loan Servicing, LLC, or acting through any other Affiliate approved in writing by Buyer, together with its permitted successors and assigns.

“ Servicer Change of Control ”: The occurrence, at any time, of the acquisition by Seller or any Affiliate of Seller of the beneficial ownership or rights (whether by means of warrants, options or otherwise) to become, the beneficial owner, whether directly or indirectly, of 50% or more of the total voting power of all classes of Equity Interests of Servicer.

“ Servicer Termination Event ”: The occurrence of (i) any material default or any event of default (howsoever defined) by Servicer under the Servicing Agreement, (ii) any material failure of Servicer to service the Underlying Assets in accordance with the Servicing Standard, which failure continues unremedied for fifteen (15) days after notice of such failure to Servicer by Seller or Buyer or Servicer’s Knowledge of such failure, (iii) any Servicer Change of Control or (iv) any breach by Servicer of the Servicer Letter Agreement.

“ Servicer Letter Agreement ”: Each side letter agreement to be entered into among, or notice to, Buyer, Seller, each Trust and Servicer, in the form attached hereto as Exhibit B hereof or such other form that is acceptable to Buyer.

“ Servicing Agreement ”: The Servicing Agreement, dated as of December 21, 2012, between Seller and Servicer, as the same may be amended, supplemented, or otherwise modified from time to time, which amendments, supplements or modifications shall be approved by Buyer.

“ Servicing File ”: With respect to any Underlying Asset, the file retained and maintained by Seller, Asset Manager or Servicer including the originals or copies of all Asset Documents and other documents and agreements relating to such Underlying Asset, including to the extent applicable all servicing agreements, files, documents, records, data bases, Asset Tapes, insurance policies and certificates, appraisals, other closing documentation, payment history and other records relating to or evidencing the servicing of such Underlying Asset, which file shall be held by Seller, Asset Manager and/or Servicer for and on behalf of Buyer.

“ Servicing Rights ”: All right, title and interest of Seller or Guarantor or any Affiliate thereof in and to any and all of the following: (a) rights to service and collect and make all decisions with respect to the Underlying Assets, (b) amounts received by Seller or any other Person for servicing the Underlying Assets, (c) late fees, penalties or similar payments with respect to the Underlying Assets, (d) agreements and documents creating or evidencing any such rights to service, documents, files and records relating to the servicing of the Underlying Assets, and rights of Seller or any other Person thereunder, (e) escrow, reserve and similar amounts with respect to the Underlying Assets, (f) rights to appoint, designate and retain any other servicers, sub-servicers, special servicers, agents, custodians, trustees and liquidators with respect to the Underlying Assets, and (g) accounts and other rights to payment related to the Underlying Assets.

“ Servicing Standard ”: All of Servicer’s duties hereunder to service the related Underlying Assets in accordance with Accepted Servicing Practices and comply with all of its other obligations and duties herein and pursuant to the Servicing Agreement and the Servicer Letter Agreement, including but not limited to its obligations to:

(a) continue to make servicing advances in accordance with the terms of the Servicing Agreement and related Servicer Letter Agreement;

(b) maintain systems and operating procedures necessary to comply with all the terms of the Servicing Agreement and the related Servicer Letter Agreement;

(d) cooperate with all Transaction parties on its duties as set forth in this Agreement; and

(e) with respect to all Underlying Assets, deposit all Income directly in the Waterfall Account on a monthly basis not later than the second (2 ^nd ) Business Day prior to the Remittance Date related to the Pricing Period in which such Income was received.

“ Solvent ”: With respect to any Person at any time, having a state of affairs such that all of the following conditions are met at such time: (a) the fair value of the assets and property of such Person is greater than the amount of such Person’s liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy Code, (b) the present fair salable value of the assets and property of such Person in an orderly liquidation of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its assets and property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, and (e) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s assets and property would constitute unreasonably small capital.

“ Special Purpose Entity ”: A corporation, limited partnership or limited liability company or trust that, since the date of its formation (unless otherwise indicated in this Agreement) and at all times on and after the date hereof, has complied with and shall at all times comply with the provisions of Article 9 .

“ Sub-Limit ”: The composition of all Underlying Assets subject to Transactions hereunder shall at all times be subject to the following sublimit caps, as may be adjusted on a pool-by-pool basis as set forth in the related Confirmation as mutually agreed by Buyer and Seller, and a Market Value of zero shall be ascribed to any Underlying Assets that exceed such caps:

(a) With respect to clause (c)(iii) of the definition of “Eligible Mortgage Loan,” up to three percent (3%) of the Underlying Assets subject to Transactions (based upon aggregate Purchase Price) may consist of cooperative or condotel units;

(b) With respect to clause (c)(v) of the definition of “Eligible Mortgage Loan” and clause (c)(iii) of the definition of “Eligible REO Property,” up to five percent (5%) of the Underlying Assets subject to Transactions (based upon aggregate Purchase Price) may have BPO Values less than $50,000 but greater than $35,000;

(c) With respect to clause (c)(viii) of the definition of “Eligible REO Property,” the REO Aging of up to five percent (5%) of the Underlying Assets subject to Transactions (based upon aggregate Purchase Price) may exceed one hundred eighty (180) days but not two hundred seventy (270) days; and

(d) With respect to all Underlying Assets, up to ten percent (10%) of Underlying Assets subject to Transactions (based upon aggregate Purchase Price) may be Eligible REO Property.

“ Subsidiary ”: With respect to any Person, any corporation, partnership, limited liability company or other entity (heretofore, now or hereafter established) 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, limited liability company or other entity (without regard to the occurrence 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, and shall include all Persons the accounts of which are with those of such Person pursuant to GAAP.

“ Tangible Net Worth ”: With respect to any Person, the excess of total assets of such Person, over total liabilities of such Person, determined in accordance with GAAP.

“ Taxes ”: Any present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges, imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“ Termination Date ”: The later to occur of (i) the Facility Termination Date, or (ii) the date on which all Repurchase Obligations have been irrevocably satisfied in full.

“ Transaction ”: With respect to any Purchased Asset, (i) the sale and transfer of such Purchased Asset from Seller to Buyer pursuant to the Repurchase Documents against the transfer of funds from Buyer to Seller representing the Purchase Price or any additional Purchase Price for such Purchased Asset, or (ii) the funding by Buyer to Seller of any Purchase Price Increase in connection with the acquisition of Eligible Mortgage Loans and/or Eligible REO Property by the related Trust.

“ Transaction Report ”: The monthly report generated by Servicer setting forth cash inflows and expenses with respect to each Underlying Asset and delivered by Seller to Buyer in a form acceptable to Buyer.

“ Transaction Request ”: Defined in Section 3.01(a) .

“ Transferor ”: The seller of a Mortgage Loan or REO Property under a Purchase Agreement.

“ Trust ”: Each of ARLP Trust 3, a Delaware statutory trust, ARLP Trust 5, a Delaware statutory trust, and ARLP Trust 6, a Delaware statutory trust, and any other trust established pursuant to a Trust Agreement and added, with the consent of Buyer, as a Trust under this Agreement.

“ Trust Agreement ”: With respect to any Purchased Asset, the trust agreement that governs the Trust of which Seller owns the Trust Certificate thereof.

“ Trust Certificate ”: Each certificate evidencing a beneficial ownership interest in a Trust and representing an undivided beneficial interest in one or more Underlying Assets.

“ Trustee ”: Each trustee under a Trust Agreement and which is (a) a national bank and (b) not an Affiliate of Seller, Servicer, Asset Manager or Guarantor.

“ UCC ”: The Uniform Commercial Code as in effect in the State of New York; provided , that, if, by reason of Requirements of Law, the perfection or priority of the security interest in any Purchased Asset is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority.

“ Underlying Assets ”: The Mortgage Loans and REO Property underlying a Purchased Asset.

“ Underlying Obligor ”: Individually and collectively, as the context may require, the Mortgagor and other obligor or obligors under a Mortgage Loan, including (i) any Person that has not signed the related Mortgage Note but owns an interest in the related Mortgaged Property, which interest has been encumbered to secure such Mortgage Loan, and (ii) any other Person who has assumed or guaranteed the obligations of such Mortgagor under the Asset Documents relating to a Mortgage Loan.

“ Underwriting Package ”: All of the following with respect to each Purchased Asset, to the extent applicable and available (redacted to protect confidential information, as applicable):

(a) All Asset Documents required to be delivered to Custodian under Section 3.1 of the Custodial Agreement,

(b) all Mortgage Loan Schedules and REO Property Schedules, and

(c) all documents, instruments and agreements received in respect of the closing of the acquisition transaction under the Purchase Agreement, including, to the extent received (i) an appraisal, (ii) third-party reports and agreed-upon procedures, letters and reports (whether drafts or final forms), site inspection reports, and other due diligence materials prepared by or on behalf of or delivered to Seller, (iii) such further documents or information as Buyer may request, (iv) any and all agreements, documents, reports, or other information received or obtained in connection with the origination or acquisition of each Underlying Asset, and (v) any other material documents or reports concerning each Underlying Asset prepared or executed by Seller or Guarantor.

“ VA ”: The U.S. Department of Veterans Affairs, an agency of the United States of America, or any successor thereto including the Secretary of Veterans Affairs.

“ VA Loan ”: A Mortgage Loan which is subject of a VA Loan Guaranty Agreement as evidenced by a VA Loan Guaranty Agreement, or a Mortgage Loan which is a vender loan sold by the VA.

“ VA Loan Guaranty Agreement ”: The obligation of the United States to pay a specific percentage of a Mortgage Loan (subject to a maximum amount) upon default of the Mortgagor pursuant to the Servicemen’s Readjustment Act, as amended, codified in 38 Code of Federal Regulations.

“ Variable Interest Entity ”: As defined in accordance with GAAP.

“ Waterfall Account ”: The separate trust account established by Buyer and maintained pursuant to this Agreement for the benefit of Buyer, into which all Income on or in respect of the Purchased Assets and Underlying assets shall be deposited by an Interim Servicer or Servicer, as applicable. The Waterfall Account shall be established at the Account Bank with the account number with the account number to be provided by Buyer after the Closing Date.

Section 2.02 Rules of Interpretation . Headings are for convenience only and do not affect interpretation. The following rules of this Section 2.01 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 an Article, Section, Subsection, Paragraph, Subparagraph, Clause, Annex, Schedule, Appendix, Attachment, Rider or Exhibit is, unless otherwise specified, a reference to an Article, Section, Subsection, Paragraph, Subparagraph or Clause of, or Annex, Schedule, Appendix, Attachment, Rider or Exhibit to, this Agreement, all of which are hereby incorporated herein by this reference and made a part hereof. A reference to a party to this Agreement or another agreement or document includes the party’s permitted successors, 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 Repurchase Document. A reference to legislation or to a provision of legislation includes a modification, codification, replacement, amendment or reenactment of it, a legislative provision substituted for it and a rule, regulation or statutory instrument issued under it. A reference to writing includes a facsimile or electronic transmission and any means of reproducing words in a tangible and permanently visible form. A reference to conduct includes an omission, statement or undertaking, whether or not in writing. A Default or Event of Default exists until it has been cured or waived in writing by Buyer. The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement, unless the context clearly requires or the language provides otherwise. The word “including” is not limiting and means “including without limitation.” The word “any” is not limiting and means “any and all” unless the context clearly requires or the language provides otherwise. 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.” The words “will” and “shall” have the same meaning and effect. A reference to day or days without further qualification means calendar days. A reference to any time means New York time. 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 respective terms. Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed in accordance with GAAP, and all accounting determinations, financial computations and financial statements required hereunder shall be made in accordance with GAAP, without duplication of amounts, and on a consolidated basis with all Subsidiaries. All terms used in Articles 8 and 9 of the UCC, and used but not specifically defined herein, are used herein as defined in such Articles 8 and 9. A reference to “fiscal year” and “fiscal quarter” means the fiscal periods of the applicable Person referenced therein. A reference to an agreement includes a security interest, guarantee, agreement or legally enforceable arrangement whether or not in writing. A reference to a document includes an agreement (as so defined) in writing or a certificate, notice, instrument or document, or any information recorded in computer disk form. Whenever a Person is required to provide any document to Buyer under the Repurchase Documents, the relevant document shall be provided in writing, in printed or electronic form, unless Buyer requests otherwise. At the request of Buyer, the document shall be provided in computer disk form or both printed and computer disk form. The Repurchase Documents are the result of negotiations between the Parties, have been reviewed by counsel to Buyer and counsel to Seller, and are the product of both Parties. 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 the Repurchase Documents or the Repurchase Documents themselves. Except where otherwise expressly stated, Buyer may give or withhold, or give conditionally, approvals and consents, and may form opinions and make determinations, in its sole and absolute discretion subject in all cases to the implied covenant of good faith and fair dealing. Reference in any Repurchase Document to Buyer’s discretion, shall mean, unless otherwise expressly stated herein or therein, Buyer’s sole and absolute discretion, and the exercise of such discretion shall be final and conclusive. In addition, whenever Buyer has a decision or right of determination, opinion or request, exercises any right given to it to agree, disagree, accept, consent, grant waivers, take action or no action or to approve or disapprove (or any similar language or terms), or any arrangement or term is to be satisfactory or acceptable to or approved by Buyer (or any similar language or terms), the decision of Buyer with respect thereto shall be in the sole and absolute discretion of Buyer, and such decision shall be final and conclusive.

ARTICLE 3

THE TRANSACTIONS

Section 3.01 Procedures .

(a) From time to time during the Funding Period, but not more frequently than once per week, Seller may request Buyer to enter into a proposed Transaction to purchase Eligible Assets or fund a Purchase Price Increase in respect of one or more Purchased Assets by sending Buyer a notice substantially in the form of Exhibit H (“ Transaction Request ”), at least five (5) Business Days prior to the proposed Purchase Date, (i) describing the Transaction and each proposed Eligible Asset and related Underlying Assets to be purchased by Buyer, or in connection with a Purchase Price Increase, the related Underlying Assets proposed to conveyed to the related Trustee, and other security therefor in reasonable detail, (ii) transmitting a complete Underwriting Package for each proposed Eligible Asset and related Underlying Assets, and (iii) specifying which (if any) of the representations and warranties of Seller set forth in this Agreement (including those contained in Schedule 1-A , 1-B and 1-C ) Seller will be unable to make with respect to such Underlying Assets. Seller shall promptly deliver to Buyer any supplemental materials requested at any time by Buyer. Buyer shall conduct such review of the Underwriting Package and each such Eligible Asset and Underlying Asset as Buyer determines appropriate. Buyer shall determine whether or not it is willing to purchase any or all of the proposed Eligible Assets or fund a Purchase Price Increase in respect of additional Underlying Assets, and if so, on what terms and conditions. It is expressly agreed and acknowledged that Buyer is entering into the Transactions on the basis of all such representations and warranties and on the completeness and accuracy of the information contained in the applicable Underwriting Package, and any incompleteness or inaccuracies in the related Underwriting Package will only be acceptable to Buyer if disclosed in writing to Buyer by Seller in advance of the related Purchase Date, and then only if Buyer opts to purchase the related Eligible Asset or fund a Purchase Price Increase in respect of additional Underlying Assets notwithstanding such incompleteness and inaccuracies. In the event of a Representation Breach regarding any representations and warranties set forth in Schedule 1-A , 1-B or 1-C related to any Underlying Asset, or any Underlying Asset is no longer an Eligible Mortgage Loan or Eligible REO Property, as applicable, Seller shall immediately repurchase such Underlying Asset in accordance with Section 3.05 .

(b) Buyer shall give Seller notice of the date when Buyer has received a complete Underwriting Package and supplemental materials. Buyer shall endeavor to communicate in writing to Seller a preliminary non-binding determination of whether or not it is willing to purchase any or all of such Eligible Assets or fund any Purchase Price Increase, and if so, on what terms and conditions, within four (4) Business Days after such date, and if its preliminary determination is favorable, by what date Buyer expects to communicate to Seller a final non-binding indication of its determination. If Buyer has not communicated in writing, its final non-binding indication to Seller by such date, Buyer shall automatically and without further action be deemed to have determined not to purchase any such Eligible Asset or fund such Purchase Price Increase.

(c) If Buyer communicates to Seller a final non-binding determination that it is willing to purchase any or all of such Eligible Assets or fund any Purchase Price Increase, Seller shall deliver to Buyer an executed preliminary Confirmation for such Transaction, describing each such Eligible Asset and Underlying Asset and the proposed Purchase Date, Market Value (as provided by Buyer), Applicable Percentage, Purchase Price and such other terms and conditions as Buyer may require and agreed to by Seller. If Buyer requires changes to the preliminary Confirmation, Seller shall make such changes and re-execute the preliminary Confirmation. If Buyer determines to enter into the Transaction on the terms described in the preliminary Confirmation, Buyer shall promptly execute and return the same to Seller, which shall thereupon become effective as the Confirmation of the Transaction. Buyer’s approval of the purchase of an Eligible Assets or funding of a Purchase Price Increase on such terms and conditions as Buyer may require shall be evidenced only by its execution and delivery of the related Confirmation. For the avoidance of doubt, Buyer shall not (i) be bound by any preliminary or final non-binding determination referred to above, or (ii) be obligated to purchase an Eligible Assets or fund any Purchase Price Increase notwithstanding a Confirmation executed by the Parties unless and until all applicable conditions precedent in Article 6 have been satisfied or waived by Buyer. For the avoidance of doubt, once (A) Buyer has executed a Confirmation and delivered the Confirmation to Seller, (B) Buyer has funded the Transaction, (C) Seller has fully funded its portion of the Purchase Price, to the extent applicable, and (D) the Purchased Asset, Underlying Assets and related Asset Documents have been delivered in accordance with the provisions of this Agreement and the Custodial Agreement, then such Confirmation shall evidence (i) Buyer’s approval of the Purchased Assets and related Underlying Assets on the related Purchase Date and each Underlying Asset shall remain an Eligible Mortgage Loan or Eligible REO Property unless and until Buyer determines that such Underlying Asset does not satisfy the requirements of an Eligible Mortgage Loan (other than clause (c)(x) of the definition of Eligible Mortgage Loan) or an Eligible REO Property (other than clause (c)(ii) of the definition of Eligible REO Property and (ii) Buyer’s written agreement to be bound by the provisions of such Confirmation.

(d) Each Confirmation, together with this Agreement, shall be conclusive evidence of the terms of the Transaction covered thereby, and shall be construed to be cumulative to the extent possible. If terms in a Confirmation are inconsistent with terms in this Agreement with respect to a particular Transaction, the Confirmation shall prevail. Whenever the Applicable Percentage or any other term of a Transaction (other than the Pricing Rate, Market Value and outstanding Purchase Price) with respect to a Purchased Asset or an Underlying Asset is revised or adjusted in accordance with this Agreement, an amended and restated Confirmation reflecting such revision or adjustment and that is otherwise acceptable to the Parties shall be prepared by Seller and executed by the Parties.

(e) The fact that Buyer has conducted or has failed to conduct any partial or complete examination or any other due diligence review of any Purchased Asset or Underlying Asset shall in no way affect any rights Buyer may have under the Repurchase Documents or otherwise with respect to any representations or warranties or other rights or remedies thereunder or otherwise, including the right to determine at any time that such Purchased Asset is not an Eligible Asset or such Underlying Asset is not an Eligible Mortgage Loan or Eligible REO Property, as applicable.

(f) No Transaction shall be entered into if (i) any Margin Deficit, Default or Event of Default exists or would exist as a result of such Transaction, (ii) the Repurchase Date for the Purchased Assets subject to such Transaction would be later than the Facility Termination Date, or (iii) after giving effect to such Transaction, the Aggregate Purchase Price then outstanding would exceed the Maximum Aggregate Purchase Price.

(g) Seller may, at any time by sending a Transaction Request (which shall designate the Underlying Asset to be released from a Transaction hereunder) to Buyer at least one (1) Business Day prior to the requested Purchase Price Decrease Date, request a Purchase Price Decrease and obtain the release of the related Underlying Asset. Seller shall remit or cause to be remitted to Buyer the Allocated Purchase Price in connection with such Purchase Price Decrease in accordance with Buyer’s wire instructions not later than 3:00 p.m. on the Purchase Price Decrease Date. Buyer shall apply such Allocated Purchase Price to reduce the aggregate outstanding Purchase Price. In addition, Buyer shall be deemed to have simultaneously released its security interest in such Underlying Asset, shall permit Seller to remove such Underlying Asset from the related Trust, and shall authorize the Custodian to release to Seller the Asset Documents for such Underlying Asset and, to the extent any UCC financing statement filed against Seller specifically identifies such Underlying Asset, Buyer shall promptly deliver an amendment thereto or termination thereof evidencing the release of such Underlying Asset Loan from Buyer’s security interest therein. Notwithstanding any provision to the contrary contained elsewhere in any Repurchase Document, at any time during the existence of an uncured Default or Event of Default, Seller may not effect a Purchase Price Decrease with respect to any Underlying Asset without Buyer’s written consent.

(h) On each Purchase Date, (i) Seller shall, with respect to Eligible Assets that will be delivered or held in definitive, certificated form, deliver to Buyer the original of the relevant certificate with respect to the related Eligible Assets registered in the name of Buyer, and (ii) with respect to Eligible Assets that will be delivered or held in uncertificated form and the ownership of which is registered on books maintained by the issuer thereof or its transfer agent, Seller shall cause the registration of such security or other item of investment property in the name of Buyer and, at the request of Buyer, shall take such other and further steps, and shall execute and deliver such documents or instruments necessary in the opinion of Buyer, to effect and perfect a legally valid delivery of the relevant interest granted therein to Buyer hereunder. Unless otherwise instructed by Buyer, any delivery of a security or other item of investment property in definitive, certificated form shall be made to Buyer in accordance with Buyer’s instructions. Any delivery of a Purchased Asset in accordance with this subsection, or any other method acceptable to Buyer, shall be effected in a manner sufficient to cause Buyer to be the “entitlement holder” (as defined in Section 8-102(a)(7) of the UCC) with respect to the Purchased Assets and, if the Transaction is recharacterized as a secured financing, to have a perfected first priority security interest therein. No Purchased Assets, whether certificated or uncertificated, shall (i) remain in the possession of Seller, or (ii) remain in the name of Seller or any of its respective agents, or in any account in the name of Seller or any of its respective agents.

(i) Buyer shall be entitled to exercise any and all voting and corporate rights with respect to the Purchased Assets, including without limitation the right to direct any Trustee relating to any Purchased Asset. Notwithstanding the foregoing clause, Buyer hereby grants Seller a revocable license to (i) direct any Trustee relating to any Purchased Asset, and (ii) vote on any matter, subject however to the terms and conditions of this Agreement; provided , however , that no vote shall be cast or right exercised or other action taken that would, as determined by Buyer, impair, reduce the value of or otherwise adversely affect the Purchased Assets or that would be inconsistent with or result in any violation of any provision of this Agreement or any other Repurchase Document or the Guarantee Agreement; provided , further , that such license shall be automatically revoked upon the occurrence and continuance of any Default or Event of Default hereunder. Without the prior consent of Buyer, Seller shall not (i) vote to enable, or take any other action to permit any related Trust to issue any equity interests of any nature or to issue any other equity interests convertible into or granting the right to purchase or exchange for any equity interests of such Trust, or (ii) sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, a Trust Certificate, or (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, Trust Certificates or any interest therein, except for the Lien provided for by this Agreement, or (iv) enter into any agreement (other than this Agreement) or undertaking restricting the right or ability of Seller to sell, pledge, assign or transfer any Trust Certificate.

(j) Seller hereby agrees to pay all reasonable costs and expenses incurred by any party (including reasonable attorney’s fees and expenses) in connection with any registration of a Purchased Asset in the name of Buyer and any ultimate re-registration of a Purchased Asset in the name of Seller, if applicable.

(k) Buyer and Seller and each Trust hereby agree that, upon the sale of each Trust’s Trust Certificate by Seller to Buyer pursuant to a Transaction hereunder, (i) each Trust irrevocably assigns all of its rights and obligations under the Original Agreement to Seller, Seller accepts such assignment and assumes all of the Trusts’ obligations under the Original Agreement and Buyer consents to such assignment, (ii) the related Trust shall no longer be a Seller under this Agreement, (iii) all Purchased Assets sold by such Trust to Buyer under the Original Agreement and subject to a Transaction at the time such Trust’s Trust Certificate is sold to Buyer shall become Underlying Assets with respect to the related Trust Certificate and remain subject to such Transaction (provided, that upon Buyer’s request, Seller and Buyer shall execute a new Confirmation with respect to such Underlying Assets), subject to the terms of this Agreement, and (iv) such Trust shall have no obligation under this Agreement except with respect to Article 9 hereof.

Section 3.02 Transfer of Purchased Assets; Servicing Rights . (a) On the Purchase Date for each Purchased Asset or Underlying Asset, and subject to the satisfaction of all applicable conditions precedent in Article 6 , (a) ownership of and title to such Purchased Asset shall be transferred to and vest in Buyer or its designee against the simultaneous transfer of the Purchase Price to the account of Seller specified in Schedule 2 (or if not specified therein, in the related Confirmation or as directed by Seller), and (b) Seller hereby sells, transfers, conveys and assigns to Buyer on a servicing-released basis all of Seller’s right, title and interest (but no Retained Interests) in and to the related Purchased Assets, together with all Servicing Rights in respect of related Underlying Assets. Subject to this Agreement, during the Funding Period, Seller may sell to Buyer, repurchase from Buyer and re-sell Eligible Assets to Buyer, but may not substitute other Eligible Assets for Purchased Assets. Subject to the Servicing Agreement, Buyer has the right to designate the servicer and sub-servicer of the Underlying Assets; the Servicing Rights and other servicing provisions under this Agreement are not severable from or to be separated from the Underlying Assets under this Agreement and, such Servicing Rights and other servicing provisions of this Agreement constitute (a) “related terms” under this Agreement within the meaning of Section 101(47)(A)(i) of the Bankruptcy Code and/or (b) a security agreement or other arrangement or other credit enhancement related to the Repurchase Documents.

Section 3.03 [ Reserved ].

Section 3.04 Maximum Aggregate Purchase Price . The Aggregate Purchase Price for all Purchased Assets as of any date shall not exceed the Maximum Aggregate Purchase Price. If the Aggregate Purchase Price exceeds the Maximum Aggregate Purchase Price, Seller shall immediately pay to Buyer an amount necessary to reduce the Aggregate Purchase Price to an amount equal to or less than the Maximum Aggregate Purchase Price.

Section 3.05 Early Repurchase Date; Mandatory Repurchases . Seller may terminate any Transaction with respect to any or all Purchased Assets or Underlying Assets and repurchase such Purchased Assets or Underlying Assets on any date prior to the Repurchase Date (an “ Early Repurchase Date ”); provided, that (a) Seller irrevocably notifies Buyer at least five (5) Business Days before the proposed Early Repurchase Date identifying the Purchased Asset(s) or Underlying Asset(s) to be repurchased and the Repurchase Price thereof, (b) Seller delivers a certificate from a Responsible Officer of Seller in form and substance satisfactory to Buyer certifying that no Margin Deficit, Default or Event of Default exists or would exist as a result of such repurchase and there are no other Liens on the Purchased Assets or Underlying Assets other than Buyer’s Lien, (c) if the Early Repurchase Date is not a Remittance Date, Seller pays to Buyer any amount due under Section 12.03 , (d) Seller thereafter complies with Section 3.06 .

In addition to other rights and remedies of Buyer under any Repurchase Document, Seller shall immediately repurchase (i) any Purchased Asset that no longer qualifies as an Eligible Asset and any Underlying Asset that no longer qualifies as an Eligible Mortgage Loan or Eligible REO Property, in each case as determined by Buyer, and (ii) any Purchased Asset or Underlying Asset the Market Value of which is determined by Buyer to be zero.

Section 3.06 Repurchase . On the Repurchase Date for each Purchased Asset, Seller shall transfer to Buyer the Repurchase Price for such Purchased Asset as of the Repurchase Date, and, so long as no Default or Event of Default has occurred and is continuing, Buyer shall transfer to Seller such Purchased Asset, whereupon the Transaction with respect to such Purchased Asset or Underlying Asset shall terminate. So long as no Default or Event of Default has occurred and is continuing, Buyer shall be deemed to have simultaneously released its security interest in such Purchased Asset and the related Underlying Assets, shall authorize Custodian to release to Seller the related Asset Documents and, to the extent any UCC financing statement filed against Seller specifically identifies such Purchased Asset or Underlying Assets, upon Seller’s request Buyer shall deliver an amendment thereto or termination thereof evidencing the release of such Purchased Asset and Underlying Assets from Buyer’s security interest therein. Any such transfer or release shall be without recourse to Buyer and without representation or warranty by Buyer, except that Buyer shall represent to Seller, to the extent that good title was transferred and assigned by Seller to Buyer hereunder on the related Purchase Date, that Buyer is the sole owner of such Purchased Asset, free and clear of any other interests or Liens caused by Buyer’s actions or inactions. Any Income with respect to such Purchased Asset received by Buyer or Account Bank after payment of the Repurchase Price therefor shall be remitted to Seller. Notwithstanding the foregoing, on or before the Facility Termination Date, Seller shall repurchase all Purchased Assets by paying to Buyer the outstanding Repurchase Price therefor and all other outstanding Repurchase Obligations.

Section 3.07 Extension Option . Upon written notice by Seller delivered to Buyer no earlier than ninety (90) days or later than thirty (30) days before the Facility Termination Date, the Facility Termination Date shall be automatically extended for a period (the “ Extension Period ”) not to exceed twelve (12) months (the “ Extended Facility Termination Date ”). The extension of the Facility Termination Date shall be subject to the following: (i) no Default or Event of Default exists on the date of the request to extend or the current Facility Termination Date, (ii) no Margin Deficit shall be outstanding, (iii) all Purchased Assets must qualify as Eligible Assets and all Underlying Assets must qualify as Eligible Mortgage Loans or Eligible REO Property, and (iv) the payment by Seller to Buyer of the Extension Fee on or before the current Facility Termination Date. For the avoidance of doubt, (i) it is understood and acknowledged by the parties that the Funding Period shall not continue during the Extension Period, and (ii) the Facility Termination Date may only be extended automatically once under this Section 3.07 , and Buyer shall be under no obligation to extend the Facility Termination Date after the end of the Extended Facility Termination Date.

Section 3.08 Payment of Price Differential and Fees .

(a) Notwithstanding that Buyer and Seller intend that the Transactions hereunder be sales to Buyer of the Purchased Assets for all but U.S. federal and relevant state and local income and franchise tax purposes, Seller shall pay to Buyer the accrued value of the Price Differential for each Purchased Asset on each Remittance Date. Buyer shall give Seller notice of the Price Differential and any fees and other amounts due under the Repurchase Documents on or prior to the second (2 ^nd ) Business Day preceding each Remittance Date; provided , that Buyer’s failure to deliver such notice shall not affect Seller’s obligation to pay such amounts. If the Price Differential includes any estimated Price Differential, Buyer shall recalculate such Price Differential after the Remittance Date and, if necessary, make adjustments to the Price Differential amount due on the following Remittance Date.

(b) If Seller fails to pay all or part of the Price Differential by 3:00 p.m. (New York City time) on the related Remittance Date, with respect to any Purchased Asset, Seller shall be obligated to pay to Buyer (in addition to, and together with, the amount of such Price Differential) interest on the unpaid Repurchase Price at a rate per annum equal to the Pricing Rate until the Price Differential is received in full by Buyer.

(c) Seller shall pay to Buyer all fees and other amounts as and when due as set forth in this Agreement and the Fee Letter including, without limitation:

(i) the Facility Fee, which shall be due, earned and payable in full (without reduction, set-off or refund in the event of any early termination of this Agreement) by Seller on the Closing Date or, as applicable, the Restatement Date; and

(ii) the Extension Fee, which shall be due and payable by Seller on the date of the exercise by Seller of each extension of the Facility Termination Date.

Section 3.09 Payment, Transfer and Custody .

(a) Unless otherwise expressly provided herein, all amounts required to be paid or deposited by Seller, Guarantor or any other Person under the Repurchase Documents shall be paid or deposited in accordance with the terms hereof no later than 3:00 p.m. (New York City time) on the day when due, in immediately available Dollars and without deduction, setoff or counterclaim, and if not received before such time shall be deemed to be received on the next Business Day. Whenever any payment under the Repurchase Documents shall be stated to be due on a day other than a Business Day, such payment shall be made on the next following Business Day, and such extension of time shall in such case be included in the computation of such payment. Seller shall, to the extent permitted by Requirements of Law, pay to Buyer interest in connection with any amounts not paid when due under the Repurchase Documents, which interest shall be calculated at a rate equal to the Default Rate, until all such amounts are received in full by Buyer. Amounts payable to Buyer and not otherwise required to be deposited into the Waterfall Account shall be deposited into an account of Buyer. Seller shall have no rights in, rights of withdrawal from, or rights to give notices or instructions regarding Buyer’s account or the Waterfall Account.

(b) Any Asset Documents not delivered to Buyer or Custodian are and shall be held in trust by Seller or its agent for the benefit of Buyer as the beneficial owner thereof. Seller or its agent shall maintain a copy of the Asset Documents and the originals of the Asset Documents not delivered to Buyer or Custodian. The possession of Asset Documents by Seller or its agent is in a custodial capacity only at the will of Buyer for the sole purpose of assisting the Servicer with its duties under the Servicing Agreement. Each Asset Document retained or held by Seller or its agent shall be segregated on Seller’s books and records from the other assets of Seller or its agent, and the books and records of Seller or its agent shall be marked to reflect clearly the sale of the related Purchased Asset, including the Underlying Assets, to Buyer on a servicing-released basis. Seller or its related agent shall release its custody of the Asset Documents only in accordance with written instructions from Buyer, unless such release required as incidental to the servicing of the Underlying Assets by Servicer is in connection with a repurchase of any Purchased Asset or the release of an Underlying Asset from a Transaction hereunder by Seller in accordance with this Agreement and the Custodial Agreement.

Section 3.10 Repurchase Obligations Absolute . All amounts payable by Seller under the Repurchase Documents shall be paid without notice, demand, counterclaim, setoff, deduction or defense (as to any Person and for any reason whatsoever) and without abatement, suspension, deferment, diminution or reduction (as to any Person and for any reason whatsoever), and the Repurchase Obligations shall not be released, discharged or otherwise affected, except as expressly provided herein, by reason of: (a) any damage to, destruction of, taking of, restriction or prevention of the use of, interference with the use of, title defect in, encumbrance on or eviction from, any Underlying Asset or related Mortgaged Property, (b) any Insolvency Proceeding relating to Seller or any Underlying Obligor, or any action taken with respect to any Repurchase Document or Asset Document by any trustee or receiver of Seller or any Underlying Obligor or by any court in any such proceeding, (c) any claim that Seller has or might have against Buyer under any Repurchase Document or otherwise, (d) any default or failure on the part of Buyer to perform or comply with any Repurchase Document or other agreement with Seller, (e) the invalidity or unenforceability of any Purchased Asset or Underlying Asset, Repurchase Document or Asset Document, or (f) any other occurrence whatsoever, whether or not similar to any of the foregoing, and whether or not Seller has notice or Knowledge of any of the foregoing. The Repurchase Obligations shall be full recourse to Seller. This Section 3.10 shall survive the termination of the Repurchase Documents and the payment in full of the Repurchase Obligations.

ARTICLE 4

MARGIN MAINTENANCE

Section 4.01 Margin Deficit .

(b) If on any date (i) prior to the Extension Period, and during the first ninety (90) days of the Extension Period, the aggregate Market Value of all Underlying Assets is less than the product of (A) Buyer’s Margin Percentage times (B) the aggregate outstanding Purchase Price for all Purchased Assets as of such date, (ii) after the ninetieth (90 ^th ) day following the start of the Extension Period, the Extension Margin Amount as of such date is less than the aggregate Purchase Price of all Purchased Assets (either (i) or (ii), a “ Margin Deficit ”), and such Margin Deficit is greater than the Minimum Transfer Amount, Buyer may provide notice to Seller (as such notice is more particularly set forth below and in Section 4.01(b) (a “ Margin Call ”)) of such Margin Deficit. Such notice shall require Seller to transfer cash to Buyer to reduce the Aggregate Purchase Price, so that, after giving effect to such payments, the Aggregate Purchase Price for all Purchased Assets does not exceed the aggregate Market Value of all Underlying Assets multiplied by the Applicable Percentage or, after the (90th) day following the start of the Extension Period, the Extension Margin Amount as of such date. Buyer shall apply the funds received in satisfaction of a Margin Deficit to the Repurchase Obligations to reduce the Aggregate Purchase Price in such manner as Buyer determines. For the avoidance of doubt, a Margin Call may be made with respect to a single Purchased Asset, multiple Purchased Assets or any number of Underlying Assets, so long as, subject to the following sentence, a Margin Deficit that is greater than the Minimum Transfer Amount exists. Notwithstanding the foregoing, at any time an Underlying Asset becomes (x) a Non-Performing Mortgage Loan or (y) an REO Property, if the Market Value of such Underlying Asset is less than the product, as of such date, of (A) Buyer’s Margin Percentage times (B) the Allocated Purchase Price for such Underlying Asset, Buyer may provide a notice to Seller in accordance with this Section 4.01 requiring Seller to transfer cash to Buyer to eliminate such deficit.

(c) Notice delivered pursuant to Section 4.01(a) may be given by any written means. Any notice given before 11:00 a.m. (New York City time) on a Business Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m. (New York City time) on the next Business Day; notice given after 11:00 a.m. (New York City time) on a Business Day shall be met, and the related Margin Call satisfied, no later than 11:00 a.m. (New York City time) on the second Business Day following such notice delivery (the foregoing time requirements for satisfaction of a Margin Call are referred to as the “ Margin Deadlines ”). The failure of Buyer, on any one or more occasions, to exercise its rights hereunder, shall not change or alter the terms and conditions to which this Agreement is subject or limit the right of Buyer to do so at a later date.

(d) Buyer’s election not to deliver a Margin Call at any time there is a Margin Deficit shall not waive the Margin Deficit or in any way limit or impair Buyer’s right to deliver a Margin Call at any time when the same or any other Margin Deficit exists. Buyer’s rights under this Section 4.01 are in addition to and not in lieu of any other rights of Buyer under the Repurchase Documents or Requirements of Law.

(e) All cash transferred to Buyer pursuant to this Section 4.01 with respect to a Purchased Asset shall be deposited into the Waterfall Account, except as directed by Buyer, and notwithstanding any provision in Section 5.03 to the contrary, shall be applied to reduce the Purchase Price of such Purchased Asset.

ARTICLE 5

APPLICATION OF INCOME

Section 5.01 Waterfall Account . The Waterfall Account shall be established at the Account Bank. Buyer shall have sole dominion and control (including “control” within the meaning of Section 9-104(a) of the UCC) over the Waterfall Account. Neither Seller nor any Person claiming through or under Seller shall have any claim to or interest in the Waterfall Account. All Income received by Seller, Servicer, any Trustee, Buyer or Account Bank in respect of the Purchased Assets and Underlying Assets shall be deposited by such Person into the Waterfall Account in accordance with the Servicing Agreement and, if applicable, the Servicing Side Letter, and shall be property of Buyer and applied to and remitted by Account Bank in accordance with this Article 5 .

Section 5.02 Price Differential Maintenance Account . Seller shall establish a Price Differential Maintenance Account at Account Bank. Buyer shall have sole dominion and control (including “control” within the meaning of Section 9-104(a) of the UCC) over the Price Differential Maintenance Account. Neither Seller nor any Person claiming through or under Seller shall have any claim to or interest in the Price Differential Maintenance Account. All amounts on deposit, as well as any amounts remitted by Seller in accordance with this Agreement, shall be deposited directly into the Price Differential Maintenance Account and shall be for the benefit of Seller. Any amounts remaining in the Price Differential Maintenance Account upon the satisfaction of all Repurchase Obligations due to Buyer under this Agreement shall be remitted to Seller.

Section 5.03 Before an Event of Default .

(a) If no Event of Default exists, Buyer shall direct Account Bank to apply all Income described in Section 5.01 and received during each Pricing Period and deposited into the Waterfall Account by no later than the next following Remittance Date in the following order of priority:

first , to pay to Servicer an amount sufficient to reimburse Servicer for any outstanding servicing advances advanced from Servicer’s own funds pursuant to the Servicing Agreement;

second , to pay to Servicer and Custodian, on a pro rata basis, amounts equal to their respective fees due and payable with respect to the Repurchase Documents;

third , to pay to Buyer amounts equal to the Price Differential accrued with respect to all Purchased Assets as of such Remittance Date;

fourth , to pay to Buyer amounts equal to any Repurchase Price payable to Buyer;

fifth , to pay to Buyer amounts sufficient to eliminate any outstanding Margin Deficit (without limiting Seller’s obligation to satisfy a Margin Deficit in a timely manner as required by Section 4.01 );

sixth , to pay to Buyer amounts equal to all default interest, late fees, fees, expenses and Indemnified Amounts then due and payable from Seller to Buyer under the Repurchase Documents;

seventh , to deposit any amounts necessary to maintain the Price Differential Required Amount;

eighth , (i) for any Remittance Date during the Extension Period, and provided no Cash-Trap Trigger Event has occurred, to remit amounts to Buyer to be applied to decrease the aggregate Purchase Price of the Purchased Assets, until the aggregate Purchase Price equals or is less than the Extension Margin Amount or (ii) during the existence of a Cash-Trap Trigger Event, one hundred percent (100%) of any remaining amounts to Buyer to reduce the Aggregate Purchase Price to zero;

ninth , to pay to Servicer and Custodian any Indemnified Amounts then due and payable from Seller to such parties under the Repurchase Documents; and

tenth , any remaining amounts to Seller.

(b) Notwithstanding anything in this Section 5.03 to the contrary, Buyer shall apply all amounts allocable to any outstanding Margin Deficit under clause fifth of Section 5.03(a) above and any amounts paid by Seller to cure any outstanding Margin Deficit in its discretion and shall apply all other amounts allocable to Buyer under Section 5.03(a) above first to the Purchased Asset and Underlying Assets with respect to which such amounts relate, and then, pro rata to all other Purchased Assets and Underlying Assets in accordance with the outstanding Purchase Price for such Purchased Assets and Underlying Assets.

(c) On the Facility Termination Date, all Income net of those proceeds used to pay the Price Differential, shall be paid to Buyer to reduce the Aggregate Purchase Price to zero and any remainder shall be remitted to Seller.

(d) If on any Remittance Date, the amounts then on deposit in the Waterfall Account are insufficient to satisfy clause third of Section 5.03(a) above, Buyer may withdraw from the Price Differential Maintenance Account an amount of funds necessary to cure such deficiency.

Section 5.04 After Event of Default . If an Event of Default exists, all Income with respect to the Purchased Assets in respect of Underlying Assets shall be deposited into the Waterfall Account. All Income deposited into the Waterfall Account in respect of the Purchased Assets and Underlying Assets shall be applied by Account Bank, on the Business Day next following the Business Day on which each amount of Income is so deposited, in the following order of priority:

first , to pay to Buyer an amount equal to the Price Differential accrued with respect to all Purchased Assets as of such date;

second , to pay to Buyer, Custodian and Servicer an amount equal to all default interest, late fees, fees, expenses and Indemnified Amounts then due and payable from Seller and other applicable Persons to Buyer, each Trustee and Servicer, as applicable, under the Repurchase Documents;

third , to pay to Buyer an amount equal to the Aggregate Purchase Price (to be applied in such order and in such amounts as determined by Buyer, until such Aggregate Purchase Price has been reduced to zero);

fourth , to pay to Buyer all other Repurchase Obligations due to Buyer; and

fifth , to pay any remaining amounts to Seller.

Section 5.05 Seller to Remain Liable . If the amounts remitted to Buyer as provided in Sections 5.03 and 5.04 are insufficient to pay all amounts due and payable from Seller to Buyer under this Agreement or any Repurchase Document on a Remittance Date, a Repurchase Date, upon the occurrence of an Event of Default or otherwise, Seller shall nevertheless remain liable for and shall pay to Buyer when due all such amounts.

Section 5.06 Update of the Purchase Price . Buyer shall provide an update of the outstanding Allocated Purchase Price for each Underlying Asset upon request by Seller, which request may be made no more frequently than once each calendar month.

ARTICLE 6

CONDITIONS PRECEDENT

Section 6.01 Conditions Precedent to Initial Transaction . Buyer shall not be obligated to enter into any Transaction for the purchase of any Eligible Asset or funding of any Purchase Price Increase until the following conditions have been satisfied, or waived by Buyer, on and as of the Initial Purchase Date:

(a) Buyer has received the following documents, each dated the Closing Date or as of the Closing Date unless otherwise specified: (i) each Repurchase Document duly executed and delivered by the parties thereto, (ii) an official good standing certificate dated a recent date with respect to Seller and Guarantor, (iii) certificates of the secretary or an assistant secretary of Seller, Servicer and Guarantor together with copies of the Governing Documents and applicable resolutions and the incumbencies and signatures of officers of Seller, Servicer and Guarantor executing the Repurchase Documents to which it is a party, evidencing the respective authority of Seller, Servicer and Guarantor with respect to the execution, delivery and performance thereof, (iv) a Closing Certificate, (v) an executed Seller’s Power of Attorney in the form of Exhibit I , (vi) [reserved], (vii) such opinions from counsel to Seller, Servicer and Guarantor as Buyer may require, including with respect to corporate matters, enforceability, non-contravention, no consents or approvals required other than those that have been obtained, first priority perfected security interests in the Purchased Assets and any other collateral pledged pursuant to the Repurchase Documents, Investment Company Act matters, and the applicability of Bankruptcy Code and “securities contract” safe harbor, and (viii) all other documents, certificates, information, financial statements, reports, approvals and opinions of counsel as it may reasonably require;

(b) (i) UCC financing statements have been filed against Seller in all filing offices required by Buyer, (ii) Buyer has received such searches of UCC filings, tax liens, judgments, pending litigation, bankruptcy and other matters relating to Seller, Servicer and Guarantor and the Purchased Assets as Buyer may require, and (iii) the results of such searches are reasonably satisfactory to Buyer;

(c) Buyer has received payment from Seller of all fees and expenses then payable under the Fee Letter and the other Repurchase Documents, as contemplated by Section 13.02 , including without limitation the Facility Fee;

(d) Buyer has completed to its satisfaction such due diligence (including, Buyer’s “Know Your Customer” and Anti-Terrorism Laws diligence) and modeling as it may require in its discretion; and

(e) Buyer has received approval from its internal credit committee and all other necessary approvals required for Buyer, to enter into this Agreement and consummate Transactions hereunder.

Section 6.02 Conditions Precedent to All Transactions . Buyer shall not be obligated to enter into any Transaction for the purchase of any Eligible Asset or funding of any Purchase Price Increase, or be obligated to take, fulfill or perform any other action hereunder, until the following additional conditions have been satisfied or waived by Buyer, with respect to each Eligible Asset and Underlying Asset on and as of the Purchase Date therefor:

(e) Buyer has received the following documents: (i) a Transaction Request, (ii) an Underwriting Package, (iii) a Confirmation, (iv) copies of the Servicing Agreement, to the extent not already provided, (v) all related Servicer Letter Agreement to the extent not already provided, and shall have received and consented to all amendments, supplements and modifications thereto, (vi) each trust receipt and any other items required to be delivered under the Custodial Agreement, and (vii) all other documents, certificates, information, financial statements, reports and approvals as Buyer may reasonably require;

(f) immediately before such Transaction and after giving effect thereto and to the intended use thereof, no Representation Breach with respect to the Eligible Assets or related Underlying Assets proposed to be sold, Default, Event of Default, Margin Deficit, Material Adverse Effect or Market Disruption Event exists;

(g) Buyer has completed its due diligence review of the Underwriting Package, Asset Documents and such other documents, records and information as Buyer deems appropriate with respect to each Underlying Asset, and the results of such reviews are satisfactory to Buyer, which determination may include, without limitation, ordering BPOs on a representative sample of Underlying Assets as determined by Buyer and its credit review of the data. Seller shall pay all reasonable out-of-pocket costs and expenses incurred by Buyer in connection with Buyer’s activities pursuant to this Section 6.02(c) ; provided , that Seller shall not be responsible for paying Buyer’s costs and expenses in excess of, in the aggregate, $20.00 per Underlying Asset in such pool of Underlying Assets. Seller shall deliver BPOs in addition to the representative sample upon the request of Buyer, provided that these additional BPOs shall be at Buyer’s sole expense. Seller shall provide Buyer with a BPO Schedule for all Underlying Assets;

(h) Buyer has (i) determined that such Trust Certificate is an Eligible Asset and each Underlying Asset is an Eligible Mortgage Loan or Eligible REO Property, and (ii) has executed the Confirmation;

(i) the Aggregate Purchase Price of all Transactions does not exceed the Maximum Aggregate Purchase Price after giving effect to such Transaction;

(j) such Purchase Date occurs on or after the Closing Date but prior to the expiration of the Funding Period and the Repurchase Date specified in the Confirmation is not later than the Facility Termination Date;

(k) Seller and Custodian have satisfied all requirements and conditions and have performed all covenants, duties, obligations and agreements contained in the Repurchase Documents to be performed by such Person on or before such Purchase Date;

(l) to the extent the related Asset Documents contain notice, cure and other provisions in favor of a pledgee under a repurchase or warehouse facility, Buyer has received evidence that Seller has given notice to the applicable Persons of Buyer’s interest in such Underlying Asset and otherwise satisfied any other applicable requirements under such pledgee provisions so that Buyer is entitled to the rights and benefits of a pledgee under such pledgee provisions;

(m) [reserved]; and

(n) the Price Differential Maintenance Account contains funds in an amount equal to the Price Differential Required Amount.

Section 6.03 Conditions Precedent to Amendment and Restatement . The amendment and restatement of the Original Agreement shall be conditioned on the satisfaction or waiver of the following conditions:

(a) Buyer has received the following documents, each dated the Restatement Date or as of the Restatement Date unless otherwise specified: (i) this Agreement, the Custodial Agreement, the Fee Letter, the Guarantee Agreement, the Servicer Letter Agreement, each related Trust Agreement and the Seller’s Power of Attorney, each duly executed and delivered by the parties thereto, (ii) an official good standing certificate dated a recent date with respect to Seller, each Trust and Guarantor, (iii) certificates of the secretary or an assistant secretary of Seller, each Trust, Servicer and Guarantor together with copies of the Governing Documents and applicable resolutions and the incumbencies and signatures of officers of Seller, each Trust, Servicer and Guarantor executing the Repurchase Documents to which it is a party, evidencing the respective authority of Seller, each Trust, Servicer and Guarantor with respect to the execution, delivery and performance thereof, (iv) a Closing Certificate, (v) an executed Seller’s Power of Attorney in the form of Exhibit I with respect to Seller, (vi) [reserved], and (vii) such opinions from counsel to Seller, each Trust, Servicer and Guarantor as Buyer may require, including with respect to corporate matters, enforceability, non-contravention, no consents or approvals required other than those that have been obtained, first priority perfected security interests in the Purchased Assets and any other collateral pledged pursuant to the Repurchase Documents, Investment Company Act matters, non-consolidation and the applicability of Bankruptcy Code and “securities contract” safe harbor;

(b) UCC financing statements have been filed against Seller in all filing offices required by Buyer, (ii) Buyer has received such searches of UCC filings, tax liens, judgments, pending litigation, bankruptcy and other matters relating to Seller, each Trust and Guarantor and the Purchased Assets as Buyer may reasonably require, and (iii) the results of such searches are reasonably satisfactory to Buyer; and

Each Confirmation delivered by Seller shall constitute a certification by Seller that all of the conditions precedent in this Article 6 (other than the conditions set forth in Sections 6.02(e) or 6.01(d) , 6.01(e) or 6.02(g) (solely with respect to Custodian) have been satisfied.

ARTICLE 7

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller (unless otherwise specified herein) represents and warrants, on and as of the date of this Agreement, each Purchase Date, and at all times when any Repurchase Document or Transaction is in full force and effect, except as set forth in Schedule 3 , as follows:

Section 7.01 Seller . Seller has been duly organized and validly exists in good standing as a limited liability company under the laws of the State of Delaware. Seller (a) has all requisite power, authority, legal right, licenses and franchises, (b) is duly qualified to do business in all jurisdictions necessary, and (c) has been duly authorized by all necessary action, to (w) own, lease and operate its properties and assets, (x) conduct its business as presently conducted, (y) execute, deliver and perform its obligations under the Repurchase Documents to which it is a party, and (z) acquire, own, sell, assign, pledge and repurchase the Purchased Assets. Seller’s exact legal name is set forth in the preamble and signature pages of this Agreement. Seller is located (within the meaning of Article 9 of the UCC), in the state of Delaware. Seller has not changed its name or location within the past twelve (12) months. Seller’s organizational identification number is 5166450 and its tax identification number is 33-1227030. Seller is an indirect wholly-owned Subsidiary of Guarantor. The fiscal year of Seller is the calendar year. Seller has no Indebtedness, Contractual Obligations or investments other than (a) ordinary trade payables, (b) in connection with Underlying Assets acquired or originated for the Transactions, and (c) the Repurchase Documents. Seller has no Guarantee Obligations.

Section 7.02 Repurchase Documents . Each Repurchase Document to which Seller is a party has been duly executed and delivered by Seller and constitutes the legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except as such enforceability may be limited by Insolvency Laws and general principles of equity. The execution, delivery and performance by Seller of each Repurchase Document to which it is a party do not and will not (a) conflict with, result in a breach of, or constitute (with or without notice or lapse of time or both) a default under, any (i) Governing Document, Indebtedness, Guarantee Obligation or Contractual Obligation applicable to Seller or any of its properties or assets, (ii) Requirements of Law, or (iii) approval, consent, judgment, decree, order or demand of any Governmental Authority, or (b) result in the creation of any Lien (other than Permitted Liens) on any of the properties or assets of Seller. All approvals, authorizations, consents, orders, filings, notices or other actions of any Person or Governmental Authority required for the execution, delivery and performance by Seller of the Repurchase Documents to which it is a party and the sale of and grant of a security interest in each Purchased Asset to Buyer, have been obtained, effected, waived or given and are in full force and effect. The execution, delivery and performance of the Repurchase Documents do not require compliance by Seller with any “bulk sales” or similar law. There is no litigation, proceeding or investigation pending or, to the Knowledge of Seller threatened, against Seller, Guarantor or any Affiliate of Seller or Guarantor before any Governmental Authority (a) asserting the invalidity of any Repurchase Document, (b) seeking to prevent the consummation of any Transaction, or (c) seeking any determination or ruling that could reasonably be expected to have a Material Adverse Effect.

Section 7.03 Solvency . Neither Seller nor any Affiliate of Seller (excluding any Affiliate that is a Variable Interest Entity) is or has ever been the subject of an Insolvency Proceeding. Seller, Guarantor and each Affiliate of Seller (excluding any Affiliate that is a Variable Interest Entity) or Guarantor is Solvent and the Transactions do not and will not render Seller, Guarantor or any Affiliate of Seller (excluding any Affiliate that is a Variable Interest Entity) or Guarantor not Solvent. Neither Seller nor Guarantor is entering into the Repurchase Documents or any Transaction with the intent to hinder, delay or defraud any creditor of Seller, Guarantor or any Affiliate of Seller or Guarantor. Seller has received or will receive reasonably equivalent value for the Repurchase Documents and each Transaction. Seller has adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations. Seller is generally able to pay, and as of the date hereof is paying, its debts as they come due.

Section 7.04 Taxes . Seller and each Affiliate of Seller have filed all required federal income tax returns and all other material tax returns, domestic and foreign, required to be filed by them, or with respect to any of their properties or assets (taking into account extensions) and have paid all material Taxes (including mortgage recording Taxes and all income or franchise Taxes) due and payable by them pursuant to such returns or pursuant to any assessment received by them, except for any such Taxes that are being contested in good faith by appropriate proceedings diligently conducted and for which appropriate reserves have been established in accordance with GAAP. Seller and each Affiliate of Seller have paid, or have provided adequate reserves for the payment of, all such Taxes for all prior fiscal years and for the current fiscal year to date. There is no material action, suit, proceeding, investigation, audit or claim relating to any such Taxes now pending or threatened in writing by any Governmental Authority which is not being contested in good faith as provided above. Neither Seller nor any Affiliate of Seller has entered into any agreement or waiver or been requested to enter into any agreement or waiver extending any statute of limitations relating to the payment or collection of Taxes, or is aware of any circumstances that would cause the taxable years or other taxable periods of Seller, Guarantor or any Affiliate of Seller or Guarantor not to be subject to the normally applicable statute of limitations. No tax liens have been filed against any assets of Seller or Guarantor. Seller does not intend to treat any Transaction as being a “reportable transaction” as defined in Treasury Regulation Section 1.6011-4. If Seller determines to take any action inconsistent with such intention, it will promptly notify Buyer, in which case Buyer may treat each Transaction as subject to Treasury Regulation Section 301.6112-1 and will maintain the lists and other records required thereunder.

Section 7.05 Financial Condition . The audited balance sheet of Seller or Guarantor as at the fiscal year most recently ended for which such audited balance sheet is available, and the related audited statements of income and retained earnings and of cash flows for the fiscal year then ended, setting forth in each case in comparative form the figures for the previous year, reported on without a “going concern” or like qualification arising out of the audit conducted by Guarantor’s independent certified public accountants, copies of which have been delivered to Buyer, are complete and correct and present fairly the financial condition of Guarantor as of such date and the results of its operations and cash flows for the fiscal year then ended. All such financial statements, including related schedules and notes, were prepared in accordance with GAAP except as disclosed therein. Guarantor does not have any material contingent liability or liability for Taxes or any long term lease or unusual forward or long term commitment, including any Derivative Contract, which is not reflected in the foregoing statements or notes. Since the date of the financial statements and other information delivered to Buyer prior to the Closing Date, Guarantor has not sold, transferred or otherwise disposed of any material part of its property or assets (except pursuant to the Repurchase Documents) that are material in relation to the financial condition of Seller.

Section 7.06 True and Complete Disclosure . The information, reports, certificates, documents, financial statements, operating statements, forecasts, books, records, files, exhibits and schedules furnished by or on behalf of Seller, any Trust or Guarantor to Buyer in connection with the Repurchase Documents and the Transactions (excluding any representation and warranty set forth on Schedule 1-A , 1-B and 1-C and any information set forth in the Mortgage Loan Schedule or REO Property Schedule), when taken as a whole, do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. All written information furnished after the date hereof by or on behalf of Seller, any Trust or Guarantor to Buyer in connection with the Repurchase Documents and the Transactions will be true, correct and complete in all material respects, or in the case of projections will be based on reasonable estimates prepared and presented in good faith, on the date as of which such information is stated or certified.

Section 7.07 Compliance with Laws . Seller and each Trust has complied in all respects with all Requirements of Laws, and no Purchased Asset or Underlying Asset contravenes any Requirements of Laws. Neither Seller nor any Affiliate of Seller (a) is an “enemy” or an “ally of the enemy” as defined in the Trading with the Enemy Act of 1917, (b) is in violation of any Anti-Terrorism Laws, (c) is a blocked person described in Section 1 of Executive Order 13224 or to its knowledge engages in any dealings or transactions or is otherwise associated with any such blocked person, (d) is in violation of any country or list based economic and trade sanction administered and enforced by the Office of Foreign Assets Control, (e) is a Sanctioned Entity, (f) has more than 10% of its assets located in Sanctioned Entities, or (g) derives more than 10% of its operating income from investments in or transactions with Sanctioned Entities. The proceeds of any Transaction have not been and will not be used to fund any operations in, finance any investments or activities in or make any payments to a Sanctioned Entity. Neither Seller nor any Affiliate of Seller (a) is or is controlled by an “investment company” as defined in such Act or is exempt from the provisions of the Investment Company Act, (b) is a “broker” or “dealer” as defined in, or could be subject to a liquidation proceeding under, the Securities Investor Protection Act of 1970, or (c) is subject to regulation by any Governmental Authority limiting its ability to incur the Repurchase Obligations. No properties presently or previously owned or leased by Seller, any Affiliate of Seller or their respective predecessors contain or previously contained any Materials of Environmental Concern that constitute or constituted a violation of Environmental Laws or reasonably could be expected to give rise to liability of Seller or Guarantor thereunder. Seller has no Knowledge of any violation, alleged violation, non-compliance, liability or potential liability of Seller under any Environmental Law. Materials of Environmental Concern have not been released, transported, generated, treated, stored or disposed of in violation of Environmental Laws or in a manner that reasonably could be expected to give rise to liability of Seller or Guarantor thereunder. Seller and all Affiliates of Seller are in compliance with the Foreign Corrupt Practices Act of 1977 and any foreign counterpart thereto. Neither Seller nor any Affiliate of Seller has made, offered, promised or authorized a payment of money or anything else of value (a) in order to assist in obtaining or retaining business for or with, or directing business to, any foreign official, foreign political party, party official or candidate for foreign political office, (b) to any foreign official, foreign political party, party official or candidate for foreign political office, or (c) with the intent to induce the recipient to misuse his or her official position to direct business wrongfully to Seller, any Affiliate of Seller or any other Person, in violation of the Foreign Corrupt Practices Act.

Section 7.08 Compliance with ERISA . With respect to any Plan, during the immediately preceding five (5) year period, (a) neither a Reportable Event nor any failure to meet the minimum funding standards of section 302 of ERISA or section 412 of the Code has occurred, (b) each Plan has complied in all material respects with the applicable provisions of the Code and ERISA, (c) no termination of a Plan has occurred resulting in any liability that has remained underfunded, and (d) no Lien in favor of the PBGC or a Plan has arisen. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for the purposes of Statement of Financial Accounting) did not, as of the last annual valuation date prior to the date hereof, exceed the value of the assets of such Plan by an amount greater than $1,000,000. Neither Seller nor any Affiliate of Seller is currently subject to any liability for a complete or partial withdrawal from a Multiemployer Plan. None of the assets of Seller or any Guarantor are deemed to be plan assets within the meaning of 29 C.F.R. 2510.3-101, as modified by Section 3(42) of ERISA.

Section 7.09 No Default or Material Adverse Effect . No Event of Default exists. No default or event of default (however defined) exists under any Indebtedness, Guarantee Obligations or Contractual Obligations of Seller (excluding the Repurchase Documents). Seller believes that it is and will be able to pay and perform each agreement, duty, obligation and covenant contained in the Repurchase Documents and Asset Documents to which it is a party, and that it is not subject to any agreement, obligation, restriction or Requirements of Law which would unduly burden its ability to do so or could reasonably be expected to have a Material Adverse Effect. Seller has no Knowledge of any actual or prospective development, event or other fact that could reasonably be expected to have a Material Adverse Effect. No Internal Control Event has occurred. Seller has delivered to Buyer all underlying servicing agreements (or provided Buyer with access to a service, internet website or other system where Buyer can successfully access such agreements) with respect to the Underlying Assets, and to Seller’s Knowledge no material default or event of default (however defined) exists thereunder. Seller has delivered to Buyer copies of all credit facilities, repurchase facilities and substantially similar facilities of Seller that are presently in effect, and no default or event of default (however defined) on the part of Seller exists thereunder.

Section 7.10 [ Reserved ].

Section 7.11 [ Reserved ].

Section 7.12 Transfer and Security Interest . The Repurchase Documents constitute a valid and effective transfer to Buyer of all right, title and interest of Seller in, to and under all Purchased Assets (together with all Servicing Rights related to the Underlying Assets), free and clear of any Liens (other than Permitted Liens). With respect to the protective security interest granted by Seller in Section 11.01 , upon the delivery of the Confirmations, delivery to Buyer of the Trust Certificates, the execution and delivery of the Custodial Agreement and the filing of the UCC financing statements as provided herein, such security interest shall be a valid first priority perfected security interest to the extent such security interest can be perfected by possession, filing or control under the UCC, subject only to Permitted Liens. The Purchased Assets constitute the following, as defined in the UCC: a general intangible, instrument, investment property, security, deposit account, financial asset, uncertificated security, securities account, or security entitlement, and Seller intends that they be governed by Article 8 of the UCC. Seller has not sold, assigned, pledged, granted a security interest in, encumbered or otherwise conveyed any of the Purchased Assets to any Person other than pursuant to the Repurchase Documents. Seller has not authorized the filing of and is not aware of any UCC financing statements filed against Seller as debtor that include the Purchased Assets, other than any financing statement that has been terminated or filed pursuant to this Agreement.

Section 7.13 No Broker . Neither Seller nor any Affiliate of Seller has dealt with any broker, investment banker, agent or other Person, except for Buyer or an Affiliate of Buyer, who may be entitled to any commission or compensation in connection with any Transaction.

Section 7.14 [ Reserved ].

Section 7.15 Separateness . Seller is in compliance with the requirements of Article 9 .

Section 7.16 Other Indebtedness . All Indebtedness (other than Indebtedness as evidenced by this Agreement or Indebtedness to Seller’s sole stockholder or member included in the calculation of Adjusted Tangible Net Worth) of Seller existing on the date hereof are listed on Schedule 4 hereto.

Section 7.17 [ Reserved ].

Section 7.18 Chief Executive Office; Jurisdiction of Organization . Seller’s jurisdiction of organization is Delaware. Seller shall provide Buyer with thirty (30) days advance notice of any change in Seller’s jurisdiction. Seller does not have a trade name. During the preceding five (5) years, Seller has not been known by or done business under any other name, corporate or fictitious, and has not filed or had filed against it any bankruptcy receivership or similar petitions nor has it made any assignments for the benefit of creditors.

Section 7.19 [ Reserved ].

Section 7.20 REIT Status . Guarantor has not engaged in any material “prohibited transactions” as defined in Section 857(b)(6)(B)(iii) and (C) of the Code. Guarantor for its current “tax year” (as defined in the Code) is entitled to a dividends paid deduction under the requirements of Section 857 of the Code with respect to any dividends paid by it with respect to each such year for which it claims a deduction in its Form 1120-REIT filed with the United States Internal Revenue Service for such year.

Section 7.21 [ Reserved ].

Section 7.22 No Adverse Selection . No procedures believed by Seller to be adverse to Buyer were utilized by Seller or Servicer in identifying or selecting the proposed Purchased Assets or Underlying Assets for sale to Buyer.

Section 7.23 Servicing Rights . All Servicing Rights with respect to the Underlying Assets have been sold and transferred to the applicable Trust for the benefit of Buyer, and neither Seller or any Affiliate of Seller has any Retained Interest therein except as may be provided in the Repurchase Documents.

ARTICLE 8

COVENANTS OF SELLER AND GUARANTOR

From the date hereof until the Repurchase Obligations are paid in full and the Repurchase Documents are terminated, Seller (unless otherwise specified herein) shall perform and observe the following covenants, which shall (a) be given independent effect (so that if a particular action or condition is prohibited by any covenant, the fact that it would be permitted by an exception to or be otherwise within the limitations of another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists), and (b) shall also apply to all Subsidiaries of Seller:

Section 8.01 Existence; Governing Documents; Conduct of Business . Seller shall (a) preserve and maintain its legal existence, (b) qualify and remain qualified in good standing in each jurisdiction where the failure to be so qualified would have a Material Adverse Effect, (c) comply with its Governing Documents, including all special purpose entity provisions, and (d) not modify, amend or terminate its Governing Documents. Seller’s operating agreement may not be amended without Buyer’s prior written consent. Seller shall (a) not engage in any activities other than those expressly permitted under its trust agreement and (b) maintain and preserve all of its material rights, privileges, licenses and franchises necessary for the operation of its business. Seller shall not (a) change its name, organizational number, tax identification number, fiscal year, method of accounting, identity, structure or jurisdiction of organization (or have more than one such jurisdiction), or (b) move (except to the extent permitted pursuant to the Custodial Agreement), or consent to Custodian moving, the Asset Documents from the location thereof on the Restatement Date, unless in each case Seller has given at least thirty (30) days prior notice to Buyer and has taken all actions required under the UCC to continue the first priority perfected security interest of Buyer in the Purchased Assets. Seller shall enter into each Transaction as principal, unless Buyer agrees before a Transaction that Seller may enter into such Transaction as agent for a principal and under terms and conditions disclosed to Buyer.

Section 8.02 Compliance with Laws, Contractual Obligations and Repurchase Documents . Seller shall comply in all material respects with all Requirements of Laws, including those relating to any Purchased Asset and Underlying Asset and to the reporting and payment of Taxes. No part of the proceeds of any Transaction shall be used for any purpose that violates Regulation T, U or X of the Board of Governors of the Federal Reserve System. Seller shall maintain the Custodial Agreement in full force and effect.

Section 8.03 Structural Changes . Neither Seller nor Guarantor shall (a) enter into a merger or consolidation (except that Guarantor may enter into a merger or consolidation if Guarantor is the surviving entity after such merger or consolidation), (b) sell all or substantially all of its assets or properties or (c) liquidate, wind up or dissolve, without the consent of Buyer. Seller shall ensure that all Equity Interests of Seller shall continue to be owned by the owner or owners thereof as of the date hereof. Seller shall ensure that neither the Equity Interests of Seller nor any property or assets of Seller shall be pledged to any Person other than Buyer (other than a transfer of any unpledged property or assets to another Affiliate of Seller). Except as contemplated by this Agreement or the other Repurchase Documents, Seller shall not enter into any transaction with an Affiliate of Seller (other than a transfer of Mortgage Loans and/or REO Property in the ordinary course of business) unless (a) Seller notifies Buyer of such transaction at least ten (10) days before entering into it, and (b) such transaction is on market and arm’s-length terms and conditions, as demonstrated in Seller’s notice.

Section 8.04 Protection of Buyer’s Interest in Purchased Assets . With respect to each Purchased Asset, Seller shall take all action necessary or required by the Repurchase Documents, Asset Documents or Requirements of Law, or requested by Buyer, to perfect, protect and more fully evidence the security interest granted in the Repurchase Documents and Buyer’s ownership of and first priority perfected security interest in such Purchased Asset and related Asset Documents, including executing or causing to be executed (a) such other instruments or notices as may be necessary or appropriate and filing and maintaining effective UCC financing statements, continuation statements and assignments and amendments thereto, and (b) all documents necessary to both collaterally and absolutely and unconditionally assign all rights (but none of the obligations) of Seller under each Purchase Agreement, in each case as additional collateral security for the payment and performance of each of the Repurchase Obligations, to the extent permitted under each Purchase Agreement. Seller shall comply with all requirements of the Custodial Agreement with respect to each Underlying Asset, including the delivery to Custodian of all required Asset Documents. Seller shall (a) not assign, sell, transfer, pledge, hypothecate, grant, create, incur, assume or suffer or permit to exist any security interest in or Lien (other than Permitted Liens) on any Purchased Asset to or in favor of any Person other than Buyer, (b) defend such Purchased Asset against, and take such action as is necessary to remove, any such Lien, and (c) defend the right, title and interest of Buyer in and to all Purchased Assets against the claims and demands of all Persons whomsoever. Notwithstanding the foregoing, if Seller grants a Lien on any Purchased Asset in violation of this Section 8.04 or any other Repurchase Document, Seller shall be deemed to have simultaneously granted an equal and ratable Lien on such Purchased Asset in favor of Buyer to the extent such Lien has not already been granted to Buyer; provided, that such equal and ratable Lien shall not cure any resulting Event of Default. Seller shall not materially amend, modify, waive or terminate any provision of any Purchase Agreement, Servicing Agreement or Servicer Letter Agreement, nor consent to any amendment, modification, waiver or termination of any Trust Agreement, without the prior written consent of Buyer. Seller shall not, or permit Servicer to, extend, amend, waive, terminate, rescind, cancel, release or otherwise modify the material terms of or any collateral, guaranty or indemnity for, or exercise any material right or remedy of a holder (including all lending, corporate and voting rights, remedies, consents, approvals and waivers) of, any Underlying Asset or Asset Document except in accordance with the Servicing Standard. Seller shall mark its computer records and tapes to evidence the interests granted to Buyer hereunder. Seller shall not take any action to cause any Purchased Asset or Underlying Asset that is not evidenced by an instrument or chattel paper (as defined in the UCC) to be so evidenced. If a Purchased Asset or Underlying Asset becomes evidenced by an instrument or chattel paper, the same shall be immediately delivered to Buyer or Custodian at the direction of Buyer, as applicable, together with endorsements required by Buyer.

Section 8.05 Actions of Seller Relating to Distributions, Indebtedness, Guarantee Obligations, Contractual Obligations, Investments and Liens . Upon the occurrence of an Event of Default, Seller shall not declare or make any payment on account of, or set apart assets for, a sinking or similar fund for the purchase, redemption, defeasance, retirement or other acquisition of any Equity Interest of 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. Seller shall not contract, create, incur, assume or permit to exist any Indebtedness, Guarantee Obligations, Contractual Obligations or Investments, except to the extent (a) arising or existing under the Repurchase Documents, (b) existing as of the Closing Date, as referenced in the financial statements delivered to Buyer prior to the Closing Date, and any renewals, refinancings or extensions thereof in a principal amount not exceeding that outstanding as of the date of such renewal, refinancing or extension and (c) incurred after the Closing Date to originate or acquire Underlying Assets or to provide funding with respect to Underlying Assets. Seller shall not (a) contract, create, incur, assume or permit to exist any Lien on or with respect to any of its property or assets (including the Underlying Assets) of any kind (whether real or personal, tangible or intangible), whether now owned or hereafter acquired, except for Permitted Liens, or (b) except as provided in the preceding clause (a), grant, allow or enter into any agreement or arrangement with any Person that prohibits or restricts or purports to prohibit or restrict the granting of any Lien on any of the foregoing.

Section 8.06 Maintenance of Property and Insurance . Seller shall (a) keep all property useful and necessary in its business in good working order and condition, (b) maintain insurance on all its properties in accordance with customary and prudent practices of companies engaged in the same or a similar business, and (c) furnish to Buyer upon request information and certificates with respect to such insurance.

Section 8.07 Financial Covenants .

(a) Guarantor shall not permit the ratio of its Indebtedness to its Adjusted Tangible Net Worth to be greater than 3.00 to 1.00 at any time.

(b) Guarantor shall not permit its Liquidity to be equal to an amount less than five (5%) percent of its Indebtedness at any time.

(c) Guarantor shall not permit its Tangible Net Worth to be less than $310,000,000 plus seventy percent (70%) of the aggregate amount of any equity or capital raises after the Closing Date at any time.

Section 8.08 Delivery of Income . Seller shall, and pursuant to each Servicer Letter Agreement shall cause Servicer or Interim Servicer and all other applicable Persons to, deposit all Income for the related Pricing Period in respect of the Underlying Assets into the Waterfall Account in accordance with Section 5.01 hereof no later than (2) Business Days prior to each Remittance Date, subject to the remittance schedule of the related Purchase Agreement with respect to any Underlying Assets serviced by an Interim Servicer. Seller and Servicer (a) shall comply with and enforce the Servicer Letter Agreement and (b) shall not amend, modify, waive, terminate or revoke the Servicer Letter Agreement without Buyer’s consent. In connection with each principal payment or prepayment under a Underlying Asset, Seller shall provide or cause to be provided to Buyer and Custodian sufficient detail to enable Buyer and Custodian to identify the Underlying Asset to which such payment applies. If Seller receives any rights, whether in addition to, in substitution of, as a conversion of, or in exchange for any Underlying Assets, or otherwise in respect thereof, Seller shall accept the same as Buyer’s agent, hold the same in trust for Buyer and immediately deliver the same to Buyer or its designee in the exact form received, together with duly executed instruments of transfer, stock powers or assignment in blank and such other documentation as Buyer shall reasonably request. If any Income is received by Seller, Guarantor or any Affiliate thereof, Seller shall pay or deliver or cause to be delivered such Income to Buyer or Custodian on behalf of Buyer within two (2) Business Days after receipt, and, until so paid or delivered, hold such Income in trust for Buyer, segregated from other funds of Seller.

Section 8.09 Delivery of Financial Statements and Other Information . Seller shall deliver (or cause Servicer to deliver, as applicable) the following to Buyer, as soon as available and in any event within the time periods specified:

(a) within thirty (30) days after the end of each month, each fiscal quarter and each fiscal year of Guarantor, (i) the unaudited balance sheets of Guarantor as at the end of such period, (ii) the related unaudited statements of income, retained earnings and cash flows for such period and the portion of the fiscal year through the end of such period, setting forth in each case in comparative form the figures for the previous year, and (iii) a Compliance Certificate;

(b) within ninety (90) days after the end of each fiscal year of Guarantor, (i) the audited balance sheets of Guarantor as at the end of such fiscal year, (ii) the related statements of income, retained earnings and cash flows for such year, setting forth in each case in comparative form the figures for the previous year, (iii) an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall not be qualified as to scope of audit or going concern and shall state that said financial statements fairly present the financial condition and results of operations of Guarantor as at the end of and for such fiscal year in accordance with GAAP, (iv) a certification from such accountants that, in making the examination necessary therefor, no information was obtained of any Default or Event of Default except as specified therein, (v) projections of Guarantor of the operating budget and cash flow budget of Guarantor for the following fiscal year, and (vi) a Compliance Certificate;

(c) all reports submitted to Guarantor by independent certified public accountants in connection with each annual, interim or special audit of the books and records of Guarantor made by such accountants, including any management letter commenting on Guarantor’s internal controls;

(d) [reserved];

(e) [reserved];

(f) within four (4) Business Days after the end of each month, the Transaction Report;

(g) within eight (8) Business Days after the end of each month, a properly completed monthly servicing report, substantially in the form of Exhibit M , with respect to each Underlying Asset;

(h) on each Purchase Date, the Transaction Request identifying the related Purchased Assets and Underlying Assets, as provided in Section 3.01(a) ;

(i) within eight (8) Business Days after the end of each month, an REO Property Summary and an updated report setting forth each REO Property subject to a Transaction;

(j) [reserved];

(k) [reserved];

(l) [reserved];

(m) Within five (5) days after any material amendment, modification or supplement has been entered into with respect to the Servicing Agreement, a fully executed copy thereof, certified by Seller to be true, correct and complete;

(n) any other material agreements, correspondence, documents or other information not included in an Underwriting Package which is relevant to the Repurchase Documents or to Seller’s ability to perform its obligations thereunder or relevant to the Purchased Assets, as soon as possible after the discovery thereof by Seller, Guarantor or any Affiliate of Seller or Guarantor;

(o) as soon as available, and in any event within thirty (30) days of receipt, (x) copies of relevant portions of any final written Agency, FHA, VA and Governmental Authority and investor audits, examinations, evaluations, monitoring reviews and reports of its operations (including those prepared on a contract basis) which provide for or relate to (i) material corrective action required, (ii) material sanctions proposed, imposed or required, 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, or (iii) ”report cards,” “grades” or other classifications of the quality of Seller’s operations and (y) any other material issues raised upon examination of Seller or its facilities by any Governmental Authority; and

(p) such other information regarding the financial condition, operations or business of Guarantor as Buyer may reasonably request.

Section 8.10 Delivery of Notices . Seller shall immediately notify Buyer of the occurrence of any of the following of which Seller has Knowledge, together with a certificate of a Responsible Officer of Seller setting forth details of such occurrence and any action Seller has taken or proposes to take with respect thereto:

(a) a Representation Breach;

(b) any of the following: (i) with respect to any Underlying Asset or related Mortgaged Property: material change in Market Value, material loss or damage, material licensing or permit issues, violation of Requirements of Law, discharge of or damage from Materials of Environmental Concern or any other actual or expected event or change in circumstances that could reasonably be expected to result in a default or material decline in value or cash flow, and (ii) with respect to Seller: violation of Requirements of Law, material decline in the value of Seller’s assets or properties, an Internal Control Event or other event or circumstance that could reasonably be expected to have a Material Adverse Effect;

(c) the existence of any Default, Event of Default under any Repurchase Document, or material default under or related to a Purchased Asset, Asset Document, Indebtedness, Guarantee Obligation or Contractual Obligation of Seller;

(d) the resignation or termination of Servicer or Asset Manager under the Servicing Agreement or Asset Management Agreement, respectively, with respect to any Underlying Asset;

(e) the establishment of a rating by any Rating Agency applicable to Seller, Servicer, Guarantor or any Affiliate of thereof and any downgrade in or withdrawal of such rating once established;

(f) promptly upon Knowledge thereof, notice of any change in Guarantor’s status as a REIT;

(g) (1) any Reportable Event or failure to meet the minimum funding standard of Section 412 of the Code or Sections 302 or 303 of ERISA, including the failure to make on or before its due date a required installment under Section 430(j) of the Code or Section 303(j) of ERISA, or any request for a waiver under Section 412(c) of the Code for any Plan; a notice of intent to terminate any Plan or any action taken by Seller, Guarantor or an ERISA Affiliate to terminate any Plan or the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by Seller, Guarantor or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan; the complete or partial withdrawal from a Multiemployer Plan by Seller, Guarantor or any ERISA Affiliate that results in liability under Section 4201 or 4204 of ERISA (including the obligation to satisfy secondary liability as a result of a purchaser default) or the receipt by Seller, Guarantor or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA or the institution of a proceeding by a fiduciary of any Multiemployer Plan against Seller, Guarantor or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days; and the adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of the Code, would result in the loss of tax-exempt status of the trust of which such Plan is a part; and

(h) the commencement of, settlement of or material judgment in any litigation, action, suit, arbitration, investigation or other legal or arbitrable proceedings before any Governmental Authority that (i) affects Seller, Guarantor or any Affiliate thereof, any Underlying Asset or Mortgaged Property (excluding routine foreclosure or bankruptcy actions relating to such Mortgaged Property) (ii) questions or challenges the validity or enforceability of any Repurchase Document, Transaction, Purchased Asset or Asset Document, or (iii) individually or in the aggregate, if adversely determined, could reasonably be likely to have a Material Adverse Effect.

Section 8.11 [ Reserved ].

Section 8.12 [ Reserved ].

Section 8.13 Records .

(a) Seller shall collect and maintain or cause to be collected and maintained all Records in accordance with industry custom and practice for assets similar to the Underlying Assets, including those maintained pursuant to the preceding subparagraph, and all such Records constituting Asset Documents shall be in Custodian’s possession except as otherwise provided under the Custodial Agreement. Seller will not allow any such papers, records or files that are an original or an only copy and part of the Asset Documents to leave Custodian’s possession, except in accordance with the terms of the Custodial Agreement. Seller shall or shall cause Servicer to maintain all such Records not in the possession of Custodian in good and complete condition in accordance with industry practices for assets similar to the Underlying Assets and preserve them against loss.

(b) For so long as Buyer has an interest in or lien on any Purchased Asset, Seller will hold or cause to be held all related Records in trust for Buyer. Seller shall notify, or cause to be notified, every other party holding any such Records of the interests and liens in favor of Buyer granted hereby.

(c) Upon reasonable advance notice from Custodian or Buyer, Seller shall (x) make any and all such Records available to Custodian or Buyer to examine any such Records, either by its own officers or employees, or by agents or contractors, or both, and make copies of all or any portion thereof, and (y) permit Buyer or its authorized agents to discuss the affairs, finances and accounts of Seller with its respective chief operating officer and chief financial officer and to discuss the affairs, finances and accounts of Seller with its respective independent certified public accountants.

Section 8.14 No Pledge . Seller shall not pledge, transfer or convey any security interest in any Waterfall Account or the Price Differential Maintenance Account to any Person without the express written consent of Buyer.

Section 8.15 [ Reserved ].

Section 8.16 Maximum Aggregate Purchase Price . If at any time, the Aggregate Purchase Price exceeds the Maximum Aggregate Purchase Price, Seller shall, at Buyer’s request, repurchase Purchased Assets, or obtain the release of Underlying Assets pursuant to a Purchase Price Decrease, and remit to Buyer the Repurchase Price or Allocated Purchase Price with respect to each such Purchased Asset or Underlying Asset, as applicable, such that the Aggregate Purchase Price following such repurchase shall be less than or equal to the Maximum Aggregate Purchase Price, by 5:00 p.m. (New York City time) on the Business Day following Buyer’s request if made before 11:00 a.m. (New York City time) on a Business Day, or if such request is made after 11:00 a.m. (New York City time) on a Business Day, by no later than 4:00 p.m. (New York City time) on the second Business Day following such request.

Section 8.17 [ Reserved ].

Section 8.18 Distributions . If an Event of Default has occurred and is continuing, Seller shall not pay any dividends with respect to any capital stock or other equity interests in such entity, 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.

Section 8.19 Maintenance of Price Differential Maintenance Account . Seller shall at all times, maintain in the Price Differential Maintenance Account funds in an amount equal to the Price Differential Required Amount.

ARTICLE 9

SINGLE-PURPOSE ENTITY

Section 9.01 Covenants Applicable to each Trust . Each Trust shall (a) own no assets, and shall not engage in any business, other than the assets and transactions specifically contemplated by this Agreement and any other Repurchase Document, (b) not incur any Indebtedness or other obligation, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (i) with respect to the Asset Documents and the Retained Interests and (ii) as otherwise permitted under this Agreement, (c) not make any loans or advances to any Affiliate or third party and shall not acquire obligations or securities of its Affiliates, in each case other than in connection with the acquisition by a Trust of Mortgage Loans and REO Property to be included as Underlying Assets under the Repurchase Documents, (d) pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) only from its own assets, (e) comply with the provisions of its Governing Documents, (f) do all things necessary to observe organizational formalities and to preserve its existence, and shall not amend, modify, waive provisions of or otherwise change its Governing Documents, (g) maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates (except that such financial statements may be consolidated to the extent consolidation is required under GAAP or as a matter of Requirements of Law; provided, that (i) appropriate notation shall be made on such financial statements to indicate the separateness of such Trust from such Affiliate and to indicate that the assets and credit of such Trust are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (ii) such assets shall also be listed on such Trust’s own separate balance sheet) and file its own tax returns (except to the extent consolidation is required or permitted under Requirements of Law), (h) be, and at all times shall hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate), shall correct any known misunderstanding regarding its status as a separate entity, shall conduct business in its own name, and shall not identify itself or any of its Affiliates as a division of the other, (i) maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations and shall remain Solvent, (j) not commingle its funds or other assets with those of any Affiliate or any other Person and shall maintain its properties and assets in such a manner that it would not be costly or difficult to identify, segregate or ascertain its properties and assets from those of others, (k) maintain its properties, assets and accounts separate from those of any Affiliate or any other Person, (l) not hold itself out to be responsible for the debts or obligations of any other Person, (m) provide Buyer at least two (2) Business Days prior notice of the removal and/or replacement of any Trustee of such Trust, (n) use separate stationery, invoices and checks bearing its own name, (o) allocate fairly and reasonably any overhead for shared office space and for services performed by an employee of an Affiliate and (p) not pledge its assets to secure the obligations of any other Person. Each Trust shall have a Trustee serving as its trustee and shall not take, and shall not cause or permit its trustee to take, any Insolvency Action with respect to such Trust without the consent of 100% of the holders of Equity Interest of such Trust.

ARTICLE 10

EVENTS OF DEFAULT AND REMEDIES

Section 10.01 Events of Default . Each of the following events shall be an “ Event of Default ”:

(d) Seller fails to make a payment of (i) Margin Deficit or Repurchase Price (other than Price Differential) when due, whether by acceleration or otherwise, (ii) Price Differential within one (1) Business Day of when due, or (iii) any other amount within two (2) Business Days of when due, in each case under the Repurchase Documents;

(e) Seller fails to observe or perform in any material respect any other covenant or Repurchase Obligation of Seller under the Repurchase Documents and (except in the case of a failure to perform or observe the Repurchase Obligations of Seller under Section 8.04 and 18.08(a) ) such failure continues unremedied for five (5) Business Days after the earlier of receipt of notice thereof from Buyer or the discovery of such failure by Seller;

(f) Any Representation Breach (other than a Representation Breach regarding any representations and warranties set forth on Schedule 1-A , 1-B or 1-C and any information set forth in the Mortgage Loan Schedule or REO Property Schedule, breach of which shall be considered solely for the purpose of determining the Market Value of the Underlying Assets, unless (i) Seller shall have made any such representations and warranties with Knowledge that they were materially false or misleading at the time made, or (ii) Buyer determines that any such representations and warranties continue to be regularly made on a materially false or misleading basis), exists and continues unremedied for five (5) Business Days after the earlier of receipt of notice thereof from Buyer or the discovery of such failure by Seller;

(g) Seller or Guarantor defaults beyond any applicable grace period in paying any amount or performing any obligation under any Indebtedness, Guarantee Obligation or Contractual Obligation with an outstanding amount of at least $1,000,000 with respect to Seller, or $1,000,000 with respect to Guarantor, and the effect of such default is to permit the acceleration of the maturity of the related obligations of Seller or Guarantor, as applicable (regardless of whether such default is waived or such acceleration occurs);

(h) Seller, Guarantor or any Affiliate thereof defaults beyond any applicable grace period in paying any amount due to Buyer or any Affiliate of Buyer under any other financing, hedging, security or other agreement (other than under this Agreement) between Seller, Guarantor or any Affiliate thereof and Buyer or any Affiliate of Buyer;

(i) An Insolvency Event occurs with respect to Seller or Guarantor;

(j) A Change of Control occurs without Buyer’s prior written consent;

(k) A final judgment or judgments for the payment of money in excess of $1,000,000 with respect to Seller (excluding any judgment relating to any Underlying Asset), or $5,000,000 with respect to Guarantor in the aggregate is entered against Seller or Guarantor by one or more Governmental Authorities and the same is not satisfied, discharged (or provision has not been made for such discharge) or bonded, or a stay of execution thereof has not been procured, within ten (10) Business Days from the date of entry thereof;

(l) A Governmental Authority takes any action to (i) condemn, seize or appropriate, or assume custody or control of, all or any substantial part of the property of Seller or any Trust, (ii) displace the management of Seller or any Trust or curtail its authority in the conduct of the business of Seller or any Trust, (iii) terminate the activities of Seller or any Trust as contemplated by the Repurchase Documents, or (iv) remove, limit or restrict the approval of Seller or any Trust of the foregoing as an issuer, buyer or seller of securities, and in each case such action is not discontinued or stayed within thirty (30) days;

(m) Seller or Guarantor admits that it is not Solvent or is not able or not willing to perform any of its Repurchase Obligations, Contractual Obligations, Guarantee Obligations, Capital Lease Obligations or Off-Balance Sheet Obligations;

(n) Any provision of the Repurchase Documents, any right or remedy of Buyer or obligation, covenant, agreement or duty of Seller thereunder, or any Lien, security interest or control granted under or in connection with the Repurchase Documents or Purchased Assets terminates, is declared null and void, ceases to be valid and effective, ceases to be the legal, valid, binding and enforceable obligation of Seller or any other Person, or the validity, effectiveness, binding nature or enforceability thereof is contested, challenged, denied or repudiated by Seller or any other Person, in each case directly, indirectly, in whole or in part;

(o) Buyer ceases for any reason to have a valid and perfected first priority security interest in a material portion of the Purchased Assets;

(p) Seller, any Trust or Guarantor is required to register as an “investment company” (as defined in the Investment Company Act) or the arrangements contemplated by the Repurchase Documents shall require registration of Seller, any Trust or Guarantor as an “investment company”;

(q) Seller or any Trust or Trustee engages in any conduct or action where Buyer’s prior consent is required by any Repurchase Document and Seller or such Trust or Trustee fails to obtain such consent;

(r) Seller, any Trust or Servicer fails to deposit to the Waterfall Account all Income and other amounts as required by Section 5.01 and other provisions of this Agreement, and such failure continues unremedied for two (2) Business Days;

(s) Guarantor’s audited annual financial statements or the notes thereto or other opinions or conclusions stated therein are qualified or limited by reference to the status of Guarantor as a “going concern” or a reference of similar import, other than a qualification or limitation expressly related to Buyer’s rights in the Purchased Assets;

(t) (i) Altisource Asset Management Corporation ceases to be Asset Manager, (ii) Asset Manager becomes, in the reasonable opinion of Buyer, incapable of performing its duties as Asset Manager or otherwise fails to act on behalf of Seller and each Trust in principally the same or similar capacity as that held as of the date of this Agreement, or an Insolvency Event occurs with respect to Asset Manager, or (iii) Seller or any Trust appoints another asset manager or investment manager, and in the case of clauses (i), (ii) and (iii) above, such asset manager or investment manager shall not have been replaced with another person satisfactory to Buyer, as evidenced in writing by Buyer;

(u) Guarantor fails (i) to qualify as a REIT (without giving any effect to any cure or corrective periods or allowances), or (ii) to continue to be entitled to a dividend paid deduction under Section 857 of the Code with respect to dividends paid by it with respect to each taxable year for which it claims a deduction on its Form 1120- REIT filed with the United States Internal Revenue Service for such year, or the entering into by Guarantor of “prohibited transactions” as defined in Sections 857(b)(6)(B)(iii) of the Code (taking into account Sections 857(b)(6)(C), 857(b)(6)(D) and 857(b)(6)(E) of the Code) or (iii) to satisfy any of the income or asset tests required to be satisfied by a REIT;

(v) (i) Any Person shall engage in any non-exempt “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) a determination that a Plan is “at risk” (within the meaning of Section 303 (of ERISA) or any Lien in favor of the PBGC or a Plan shall arise on the assets of Seller, Guarantor or any ERISA Affiliate, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of Buyer, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Plan shall terminate for purposes of Title IV of ERISA, (v) Seller, Guarantor or any ERISA Affiliate shall, or in the reasonable opinion of Buyer is likely to, incur any liability in connection with a withdrawal from, or the insolvency or reorganization of, a Multiemployer Plan, (vi) Seller, Guarantor or any ERISA Affiliate shall file an application for a minimum funding waiver under Section 302 of ERISA or Section 412 of the Code with respect to any Plan, (vii) any obligation for post-retirement medical costs (other than as required by COBRA) exists, or (viii) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (viii) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or (ix) the assets of Seller or any Guarantor are treated as “plan assets” under 29 C.F.R. 2510.3-101 as modified by Section 3(42) of ERISA;

(w) Any material amendment, modification, waiver or termination of any provision of any Purchase Agreement, Servicing Agreement, Servicer Letter Agreement or Trust Agreement is made without the prior written consent of Buyer, which consent shall not be unreasonably withheld or delayed;

(x) There shall have occurred a Guarantee Default under the Guarantee Agreement;

(y) Failure of Seller to maintain in the Price Differential Maintenance Account at all times funds in an amount equal to the Price Differential Required Amount and such failure continues unremedied for two (2) Business Days;

(z) Any material failure of Servicer to service the Underlying Assets in accordance with the Servicing Standard, that is continuing and the servicing with respect thereto shall not have been transferred to a successor Servicer acceptable to Buyer within thirty (30) days following such failure; or

(aa) Any condition or circumstance exists which causes, constitutes or is reasonably likely to cause or constitute a Material Adverse Effect, as determined by Buyer.

Section 10.02 Remedies of Buyer as Owner of the Purchased Assets . If an Event of Default exists, at the option of Buyer, exercised by notice to Seller (which option shall be deemed to be exercised, even if no notice is given, automatically and immediately upon the occurrence of an Event of Default under Section 10.01(f) , (i) or (j) ), the Repurchase Date for all Purchased Assets shall be deemed automatically and immediately to occur (the date on which such option is exercised or deemed to be exercised, the “ Accelerated Repurchase Date ”). If Buyer exercises or is deemed to have exercised the foregoing option:

(d) All amounts in the Waterfall Account and all Income paid after the Accelerated Repurchase Date shall be retained by Buyer and applied in accordance with Article 5 .

(e) Buyer may complete any assignments, allonges, endorsements, powers or other documents or instruments executed in blank and otherwise obtain physical possession of all Records and all other instruments, certificates and documents then held by Custodian under the Custodial Agreement. Buyer may obtain physical possession of all Servicing Files and other files and records of Seller and Servicer. Seller shall deliver to Buyer such assignments and other documents with respect thereto as Buyer shall request.

(f) Buyer may immediately, at any time and from time to time, exercise either of the following remedies with respect to any or all of the Purchased Assets: (i) sell such Purchased Assets, direct the related Trustee to sell the related Underlying Assets, or terminate the related Trust and sell the related Underlying Assets, on a servicing-released basis and/or without providing any representations and warranties on an “as-is where is” basis, in a recognized market and by means of a public or private sale at such price or prices as Buyer accepts, and apply the net proceeds thereof in accordance with Article 5 , or (ii) retain such Purchased Assets, or terminate the related Trust and retain the related Underlying Assets, and give Seller credit against the Repurchase Price for such Purchased Asset or Underlying Asset (or if the amount of such credit exceeds the Repurchase Price allocable to such Purchased Assets and/or Underlying Assets, to credit against Repurchase Obligations due and any other amounts then owing to Buyer by any other Person pursuant to any Repurchase Document, in such order and in such amounts as determined by Buyer), in an amount equal to the Market Value of such Purchased Assets and/or Underlying Assets. Until such time as Buyer exercises either such remedy with respect to a Purchased Asset, Buyer may hold such Purchased Asset for its own account and retain all Income with respect thereto until the Repurchase Obligations have been paid in full. Buyer shall not be required to give any warranties as to the Purchased Assets or Underlying Assets with respect to any such disposition thereof. Buyer may specifically disclaim or modify any warranties of title or the like relating to the Purchased Assets and Underlying Assets. The foregoing procedure for disposition and liquidation of the Purchased Assets and/or Underlying Assets shall not be considered to adversely affect the commercial reasonableness of any sale thereof. Seller agrees that it would not be commercially unreasonable for Buyer to dispose of the Purchased Assets and/or Underlying Assets or any portion thereof by using Internet sites that provide for the auction of assets similar to the Purchased Assets and/or Underlying Assets, or that have the reasonable capability of doing so, or that match buyers and sellers of assets. For the avoidance of doubt, the parties agree that Buyer shall be entitled to place the Underlying Assets in a pool for issuance of mortgage backed securities at the then prevailing price for such securities and to sell such securities for such prevailing price in the open market.

(g) The Parties agree that the Purchased Assets and Underlying Assets are of such a nature that they may decline rapidly in value, and may not have a ready or liquid market. Accordingly, Buyer shall not be required to sell more than one Purchased Asset or direct the related Trustee to sell more than one Underlying Asset on a particular Business Day, to the same purchaser or in the same manner. Buyer may determine whether, when and in what manner a Purchased Asset or Underlying Asset shall be sold, it being agreed that both a good faith public and a good faith private sale shall be deemed to be commercially reasonable. Buyer shall not be required to give notice to Seller or any other Person prior to exercising any remedy in respect of an Event of Default. If no prior notice is given, Buyer shall give notice to Seller of the remedies exercised by Buyer promptly thereafter.

(h) Buyer shall have the right to direct Servicer to remit all collections thereon to Buyer, and if any such payments are received by Seller, Guarantor or Servicer, Seller shall not and shall not permit Guarantor or Servicer to commingle the amounts received with other funds of Seller, Guarantor or Servicer and shall promptly pay them over to Buyer. Buyer shall also have the right to terminate Servicer with or without cause.

(i) Upon the occurrence of one or more Events of Default, Buyer may apply any proceeds from the liquidation of the Purchased Assets and/or Underlying Assets to the Repurchase Prices hereunder and all other Repurchase Obligations in the manner Buyer deems appropriate until the Repurchase Obligations have been paid in full, and any remaining proceeds shall be paid to Seller.

(j) Seller shall be liable to Buyer for (i) any amount by which the Repurchase Obligations due to Buyer exceed the aggregate of the net proceeds and credits referred to in the preceding clause (d), (ii) the amount of all actual out-of-pocket expenses, including reasonable legal fees and expenses, actually incurred by Buyer in connection with or as a consequence of an Event of Default, (iii) any costs and losses payable under Section 12.03 , and (iv) any other actual loss, damage, cost or expense resulting from the occurrence of an Event of Default.

(k) Buyer shall be entitled to an injunction, an order of specific performance or other equitable relief to compel Seller to fulfill any of its obligations as set forth in the Repurchase Documents, including this Article 10 , if Seller fails or refuses to perform its obligations as set forth herein or therein.

(l) Seller hereby appoints Buyer as attorney-in-fact of Seller for purposes of carrying out the Repurchase Documents, including executing, endorsing and recording any instruments or documents and taking any other actions that Buyer deems necessary or advisable to accomplish such purposes, which appointment is coupled with an interest and is irrevocable.

(m) Buyer may, without prior notice to Seller, exercise any or all of its set-off rights including those set forth in Section 8 . This Section 10.02(k) shall be without prejudice and in addition to any right of set-off, combination of accounts, Lien or other rights to which any Party is at any time otherwise entitled.

(n) All rights and remedies of Buyer under the Repurchase Documents, including those set forth in Section 18.18 , are cumulative and not exclusive of any other rights or remedies that Buyer may have and may be exercised at any time when an Event of Default exists. Such rights and remedies may be enforced without prior judicial process or hearing. Seller agrees 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 hereby expressly waives any defenses Seller might have to require Buyer to enforce its rights by judicial process or otherwise arising from the use of nonjudicial process, disposition of any or all of the Purchased Assets and/or Underlying Assets, or any other election of remedies.

ARTICLE 11

SECURITY INTEREST

Section 11.01 Grant . (o) For all but U.S. federal and relevant state and local income and franchise tax purposes, Buyer and Seller intend that all Transactions shall be sales to Buyer of the Purchased Assets and not loans from Buyer to Seller secured by the Purchased Assets. However, to preserve and protect Buyer’s rights with respect to the Purchased Assets and under the Repurchase Documents in the event that any Governmental Authority recharacterizes the Transactions as other than sales, and as security for Seller’s performance of the Repurchase Obligations, Seller hereby grants, assigns and pledges to Buyer a fully perfected first priority security interest in all of its rights, title and interest in, to and under the Purchased Assets (which for this purpose shall be deemed to include the items described in the proviso in the definition thereof), and the transfers of the Purchased Assets to Buyer shall be deemed to constitute and confirm such grant, to secure the payment and performance of the Repurchase Obligations (including the obligation of Seller to pay the Repurchase Price, or if the Transactions are recharacterized as loans, to repay such loans for the Repurchase Price).

(p) Seller acknowledges and agrees that its rights with respect to the Purchased Assets (including without limitation, any security interest Seller may have in the Purchased Assets and any other collateral granted by Seller to Buyer pursuant to any other agreement) are and shall continue to be at all times junior and subordinate to the rights of Buyer hereunder. Seller further acknowledges that it has no rights to the Underlying Assets or Servicing Rights related to the Underlying Assets, except in its capacity as owner of the beneficial interest in the Trusts, and that such Underlying Assets and Servicing Rights are owned by the related Trust. Without limiting the generality of the foregoing and for the avoidance of doubt, in the event that Seller is deemed to retain any interest in any Underlying Asset or any residual Servicing Rights, Seller grants, assigns and pledges to Buyer a first priority security interest in all of its rights, title and interest in and to such Underlying Assets and Servicing Rights as indicated hereinabove. In addition, Seller shall and shall cause Servicer to grant, assign and pledge to Buyer a first priority security interest in and to all Servicing Records and rights to receive Servicing Records or other documents which constitute a part of the Servicing File with respect to each of the Underlying Assets, and all Income related to the Underlying Assets received by Seller or Servicer and all rights to receive such Income, and all products, proceeds and distributions relating to or constituting any or all of the foregoing (collectively, and together with the pledge of Underlying Assets and Servicing Rights in the immediately preceding sentence, the “ Related Credit Enhancement ”). The Related Credit Enhancement is hereby pledged as further security for Seller’s Repurchase Obligations to Buyer hereunder.

Section 11.02 Effect of Grant . If any circumstance described in Section 11.01 occurs, (a) this Agreement shall also be deemed to be a security agreement as defined in the UCC, (b) Buyer shall have all of the rights and remedies provided to a secured party by Requirements of Law (including the rights and remedies of a secured party under the UCC and the right to set off any mutual debt and claim) and under any other agreement between Buyer and Seller, (c) without limiting the generality of the foregoing, Buyer shall be entitled to set off the proceeds of the liquidation of the Purchased Assets against all of the Repurchase Obligations, without prejudice to Buyer’s right to recover any deficiency, (d) the possession by Buyer or any of its agents, including Custodian, of the Records, the Purchased Assets and such other items of property as constitute instruments, money, negotiable documents, securities or chattel paper shall be deemed to be possession by the secured party for purposes of perfecting such security interest under the UCC and Requirements of Law, and (e) notifications to Persons (other than Buyer) holding such property, and acknowledgments, receipts or confirmations from Persons (other than Buyer) holding such property, shall be deemed notifications to, or acknowledgments, receipts or confirmations from, securities intermediaries, bailees or agents (as applicable) of the secured party for the purpose of perfecting such security interest under the UCC and Requirements of Law. The security interest of Buyer granted herein shall be, and Seller hereby represents and warrants to Buyer that it is, a first priority perfected security interest. For the avoidance of doubt, (i) each Purchased Asset secures the Repurchase Obligations of Seller with respect to all other Transactions and all other Purchased Assets, including any Purchased Assets that are junior in priority to the Purchased Asset in question, and (B) if an Event of Default exists, no Purchased Asset relating to a Purchased Asset will be released from Buyer’s Lien or transferred to Seller until the Repurchase Obligations are indefeasibly paid in full. Notwithstanding the foregoing, the Repurchase Obligations shall be full recourse to Seller.

Section 11.03 Seller to Remain Liable . Buyer and Seller agree that the grant of a security interest under this Article 11 shall not constitute or result in the creation or assumption by Buyer of any Retained Interest or other obligation of Seller or any other Person in connection with any Purchased Asset, whether or not Buyer exercises any right with respect thereto. Seller shall remain liable under the Purchased Assets to perform all of Seller’s duties and obligations thereunder to the same extent as if the Repurchase Documents had not been executed.

Section 11.04 Rights with Respect to Trust Certificates . If Seller shall become entitled to receive or shall receive any certificate evidencing any option rights or any other equity interest in a Trust Certificate, whether in addition to, in substitution for, as a conversion of, or in exchange for the related Trust Certificate or otherwise in respect thereof, Seller shall assign and deliver the same forthwith to Buyer in the exact form received, duly indorsed by Seller, together with an undated transfer power, if required, covering such certificate duly executed in blank. Any sums paid upon or in respect of a Trust Certificate upon the liquidation or dissolution of the related Trust shall be paid over to Buyer and applied to the payment of the outstanding Repurchase Price.

Section 11.05 Waiver of Certain Laws . Seller agrees, to the extent permitted by Requirements of Law, that neither it nor anyone claiming through or under it will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption law now or hereafter in force in any locality where any Purchased Assets may be situated in order to prevent, hinder or delay the enforcement or foreclosure of this Agreement, or the absolute sale of any of the Purchased Assets, or the final and absolute putting into possession thereof, immediately after such sale, of the purchasers thereof, and Seller, for itself and all who may at any time claim through or under it, hereby waives, to the full extent that it may be lawful so to do, the benefit of all such laws and any and all right to have any of the properties or assets constituting the Purchased Assets marshaled upon any such sale, and agrees that Buyer or any court having jurisdiction to foreclose the security interests granted in this Agreement may sell the Purchased Assets as an entirety or in such parcels as Buyer or such court may determine.

ARTICLE 12

INCREASED COSTS; CAPITAL ADEQUACY

Section 12.01 Market Disruption . If prior to any Pricing Period, Buyer determines that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the LIBO Rate for such Pricing Period, Buyer shall give prompt notice thereof to Seller, whereupon the Pricing Rate for such Pricing Period, and for all subsequent Pricing Periods until such notice has been withdrawn by Buyer, shall be the Alternative Rate.

Section 12.02 Illegality . If the adoption of or any change in any Requirements of Law or in the interpretation or application thereof after the date hereof shall make it unlawful for Buyer to effect or continue Transactions as contemplated by the Repurchase Documents, (a) any commitment of Buyer hereunder to enter into new Transactions shall be terminated, (b) the Pricing Rate shall be converted automatically to the Alternative Rate on the last day of the then current Pricing Period or within such earlier period as may be required by Requirements of Law, and (c) if required by such adoption or change, the Facility Termination Date shall be deemed to have occurred.

Section 12.03 Breakfunding . Seller shall indemnify Buyer and hold Buyer harmless from any loss, cost or expense (including reasonable legal fees and expenses) which Buyer may sustain or incur arising from (a) the failure by Seller to terminate any Transaction after Seller has given a notice of termination pursuant to Section 3.05 , (b) any payment to Buyer on account of the outstanding Repurchase Price, including a payment made pursuant to Section 3.05 but excluding a payment made pursuant to Section 5.03 , on any day other than a Remittance Date (based on the assumption that Buyer funded its commitment with respect to the Transaction in the London Interbank Eurodollar market and using any reasonable attribution or averaging methods that Buyer deems appropriate and practical), (c) any failure by Seller to sell Eligible Assets to Buyer after Seller has notified Buyer of a proposed Transaction and Buyer has agreed to purchase such Eligible Assets in accordance with this Agreement, or (d) any conversion of the Pricing Rate to the Alternative Rate because the LIBO Rate is not available for any reason on a day that is not the last day of the then current Pricing Period.

Section 12.04 Increased Costs . If the adoption of or any change in any Requirements of Law or in the interpretation or application thereof by any Governmental Authority or compliance by Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority having jurisdiction over Buyer made after the date of this Agreement (a) shall subject Buyer to any Taxes of any kind whatsoever with respect to the Repurchase Documents, any Purchased Asset or any Transaction, or change the basis of taxation of payments to Buyer in respect thereof (except for Excluded Taxes and any changes in the rate of tax on Buyer’s overall net income), (b) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of Buyer, or (c) shall impose on Buyer any other condition; and the result of any of the preceding clauses (a), (b) and (c) is to increase the cost to Buyer, by an amount that Buyer deems to be material, of entering into, continuing or maintaining Transactions, or to reduce any amount receivable under the Repurchase Documents in respect thereof, then, in any such case, Seller shall pay to Buyer such additional amount or amounts as reasonably necessary to fully compensate Buyer for such increased cost or reduced amount receivable.

Section 12.05 Capital Adequacy . If Buyer determines that the adoption of or any change in any Requirements of Law regarding capital adequacy or in the interpretation or application thereof or compliance by Buyer or any corporation Controlling Buyer with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made after the date of this Agreement has or shall have the effect of reducing the rate of return on Buyer’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which Buyer or such corporation could have achieved but for such adoption, change or compliance (taking into consideration Buyer’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by Buyer to be material, then, in any such case, Seller shall pay to Buyer such additional amount or amounts as reasonably necessary to fully compensate Buyer for such reduction.

Section 12.06 Withholding Taxes . (i) All payments made by Seller to Buyer or any other Indemnified Person under the Repurchase Documents shall be made free and clear of and without deduction or withholding for or on account of any Taxes, except as required by law. If any Taxes are required by law (as determined in Seller’s good faith discretion) to be deducted or withheld from any amounts payable to Buyer and/or any other Indemnified Person, then Seller shall (i) make such deduction or withholding, (ii) pay the amount so deducted or withheld to the appropriate Governmental Authority not later than the date when due and (iii) to the extent the withheld or deducted Tax is an Indemnified Tax or Other Tax, pay to Buyer or other Indemnified Person such additional amounts (the “ Additional Amount ”) as may be necessary so that every net payment made under this Agreement after deduction or withholding for or on account of such Indemnified Tax or Other Tax (including any Taxes on such increase and any penalties) is not less than the amount that would have been paid absent such deduction or withholding.

(j) In addition, Seller agrees to pay to the relevant Governmental Authority in accordance with applicable law any Other Taxes that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement.

(k) Seller agrees to indemnify Buyer for the full amount of Indemnified Taxes (including Additional Amounts respect thereto) and Other Taxes, and the full amount of Taxes of any kind imposed by any jurisdiction on amounts payable under this Section 12.06(c) , provided that Buyer shall have provided Seller with evidence, reasonably satisfactory to Seller, of payment of Indemnified Taxes or Other Taxes, as the case may be.

(l) Buyer and any assignee of Buyer shall deliver to Seller and Guarantor:

(i) in the case of a Buyer or any assignee of Buyer which is a “U.S. Person” as defined in section 7701(a)(30) of the Code, a properly completed and executed Internal Revenue Service (“ IRS ”) Form W-9 certifying that it is not subject to backup withholding;

(ii) in the case of a Buyer or any assignee of Buyer which is not a “U.S. Person” as defined in Code section 7701(a)(30): (A) a properly completed and executed IRS Form W-8BEN or W-8ECI, as appropriate, evidencing entitlement to a zero percent or reduced rate of U.S. federal income tax withholding on any payments made hereunder; (B) in the case of such non-U.S. Person claiming exemption from the withholding of U.S. federal income tax under Code sections 871(h) or 881(c) with respect to payments of “portfolio interest,” a duly executed certificate to the effect that such non-U.S. Person is not (x) a “bank” described in Code section 881(c)(3)(A), (y) a “10 percent shareholder” of Seller, Guarantor of affiliate thereof, within the meaning of Code section 881(c)(3)(B), or (z) a “controlled foreign corporation” described in Code section 881(c)(3)(C); (C) to the extent such non-U.S. person is not the beneficial owner of the rights and obligations represented by this Agreement, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if such non-U.S. person is a partnership and one or more direct or indirect partners of such non-U.S. person are claiming the portfolio interest exemption, such non-U.S. person may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner; and (D) executed originals of any other form or supplementary documentation prescribed by law as a basis for claiming exemption from or a reduction in United States Federal withholding tax together with such supplementary documentation as may be prescribed by law to permit Seller or Guarantor to determine the withholding or deduction required to be made; provided , that such other form or supplementary documentation shall not be required if the delivery of such form of documentation would subject Buyer or the assignee of Buyer to any material unreimbursed expenses or would materially prejudice the legal or commercial position or would materially adversely affect such Buyer or such assignee of Buyer, as reasonably determined by Buyer or such assignee of Buyer; and

(iii) if a payment made to Buyer or an assignee of Buyer under this Agreement would be subject to U.S. federal withholding tax imposed by FATCA if such Buyer or assignee were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Buyer or assignee shall deliver to Seller or Guarantor at the time or times prescribed by law and at such time or times reasonably requested by Seller such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Seller as may be necessary for Seller to comply with their obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 12.06(d) , “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

The applicable IRS forms referred to above shall be delivered by Buyer on or before the Closing Date, and by each assignee of Buyer on or prior to the date of the assignment, to the extent permissible under applicable law at such respective times. Buyer agrees that if any form or certification previously delivered becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Seller in writing of its legal inability to do so.

(m) Without prejudice to the survival of any other agreement of Seller or Buyer hereunder, the agreements and obligations of Seller and Buyer contained in this Section 12.06 shall survive the termination of the Repurchase Documents, the repayment in full of the Repurchase Obligations or the assignment of any of the Parties’ rights hereunder. Nothing contained in this Section 12.06 shall require Buyer to make available any of its tax returns or other information that it deems to be confidential or proprietary.

(n) Promptly after Seller pays any Taxes referred to in this Section 12.06 , Seller will send Buyer appropriate evidence of such payment.

(o) Each party to this Agreement acknowledges that it is its intent for purposes of U.S. federal and relevant state and local income Taxes to treat each Transaction as an indebtedness secured by the Purchased Assets, and the Purchased Assets as owned by Seller in the absence of an Event of Default by Seller. Buyer and Seller agree that they will treat and report for all such purposes the Transactions entered into hereunder as one or more loans secured by the Purchased Assets, unless otherwise required by law or a final determination by any taxing authority.

Section 12.07 Payment and Survival of Obligations . Buyer may at any time send Seller a notice showing the calculation of any amounts payable pursuant to this Article 12 , and Seller shall pay such amounts to Buyer within ten (10) Business Days after Seller receives such notices. The obligations of Seller under this Article 12 shall apply to Eligible Assignees and Participants and survive the termination of the Repurchase Documents and the indefeasible payment in full of the Repurchase Obligations.

ARTICLE 13

INDEMNITY AND EXPENSES

Section 13.01 Indemnity .

(a) Seller shall release, defend, indemnify and hold harmless Buyer, Affiliates of Buyer and its and their respective officers, directors, shareholders, partners, members, owners, employees, agents, attorneys, Affiliates and advisors (each an “ Indemnified Person ” and collectively the “ Indemnified Persons ”), on a net after-Tax basis, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, Taxes (other than net income Taxes and franchise Taxes of Buyer), fees, costs, expenses (including reasonable legal fees and expenses), penalties or fines of any kind that may be imposed on, incurred by or asserted against such Indemnified Person (collectively, the “ Indemnified Amounts ”) in any way relating to, arising out of or resulting from or in connection with (i) the Repurchase Documents, the Records, the Purchased Assets, the Transactions, any Mortgaged Property or related property, or any action taken or omitted to be taken by any Indemnified Person in connection with or under any of the foregoing, or any transaction contemplated hereby or thereby, or any amendment, supplement or modification of, or any waiver or consent under or in respect of any Repurchase Document, Transaction, Purchased Asset or Records, (ii) any claims, actions or damages by an Underlying Obligor or lessee with respect to an Underlying Asset, (iii) any violation or alleged violation of, non-compliance with or liability under any Requirements of Law, (iv) ownership of, Liens on, security interests in or the exercise of rights or remedies under any of the items referred to in the preceding clause (i), (v) any accident, injury to or death of any person or loss of or damage to property occurring in, on or about any Mortgaged Property or on the adjoining sidewalks, curbs, parking areas, streets or ways, (vi) any use, nonuse or condition in, on or about, or possession, alteration, repair, operation, maintenance or management of, any Mortgaged Property or on the adjoining sidewalks, curbs, parking areas, streets or ways, (vii) any failure by Seller to perform or comply with any Repurchase Document, Asset Document or Purchased Asset, (viii) any claim by brokers, finders or similar Persons claiming to be entitled to a commission in connection with any lease or other transaction involving any Repurchase Document, Underlying Asset or Mortgaged Property, (ix) [reserved], (x) any Lien or claim arising on or against any Underlying Asset or related Mortgaged Property under any Requirements of Law or any liability asserted against Buyer or any Indemnified Person with respect thereto, (xi) (1) a past, present or future violation or alleged violation of any Environmental Laws in connection with any property or Mortgaged Property by any Person or other source, whether related or unrelated to Seller or any Underlying Obligor, (2) any presence of any Materials of Environmental Concern in, on, within, above, under, near, affecting or emanating from any Mortgaged Property, (3) the failure to timely perform any Remedial Work, (4) any past, present or future activity by any Person or other source, whether related or unrelated to Seller or any Underlying Obligor in connection with any actual, proposed or threatened use, treatment, storage, holding, existence, disposition or other release, generation, production, manufacturing, processing, refining, control, management, abatement, removal, handling, transfer or transportation to or from any Mortgaged Property of any Materials of Environmental Concern at any time located in, under, on, above or affecting any Mortgaged Property, (5) any past, present or future actual Release (whether intentional or unintentional, direct or indirect, foreseeable or unforeseeable) to, from, on, within, in, under, near or affecting any Mortgaged Property by any Person or other source, whether related or unrelated to Seller or any Underlying Obligor, (6) the imposition, recording or filing or the threatened imposition, recording or filing of any Lien on any Mortgaged Property with regard to, or as a result of, any Materials of Environmental Concern or pursuant to any Environmental Law, or (7) any misrepresentation or failure to perform any obligations pursuant to any Repurchase Document or Asset Document relating to environmental matters in any way, or (xii) Seller’s conduct, activities, actions and/or inactions in connection with, relating to or arising out of any of the foregoing clauses of this Section 13.01 , that, in each case, results from anything whatsoever other than any Indemnified Person’s gross negligence or intentional misconduct, as determined by a court of competent jurisdiction pursuant to a final, non-appealable judgment. In any suit, proceeding or action brought by an Indemnified Person in connection with any Purchased Asset or Underlying Asset for any sum owing thereunder, or to enforce any provisions of any Underlying Asset, Seller shall defend, indemnify and hold such Indemnified Person harmless from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the account debtor or Underlying Obligor arising out of a breach by Seller of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or Underlying Obligor from Seller. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 13.01 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by Seller, an Indemnified Person or any other Person or any Indemnified Person is otherwise a party thereto and whether or not any Transaction is entered into. This Section 13.01(a) shall not apply with respect to Indemnified Taxes or Other Taxes, which are expressly indemnified under Section 12.06 of this Agreement, unless such Taxes represent losses, claims, damages, etc. arising from any non-Tax claim.

(b) If for any reason the indemnification provided in this Section 13.01 is unavailable to the Indemnified Person or is insufficient to hold an Indemnified Person harmless, even though such Indemnified Person is entitled to indemnification under the express terms thereof, then Seller shall contribute to the amount paid or payable by such Indemnified Person as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative benefits received by such Indemnified Person on the one hand and Seller on the other hand, the relative fault of such Indemnified Person, and any other relevant equitable considerations.

(c) An Indemnified Person may at any time send Seller a notice showing the calculation of Indemnified Amounts, and Seller shall pay such Indemnified Amounts to such Indemnified Person within ten (10) Business Days after Seller receives such notices. The obligations of Seller under this Section 13.01 shall apply to Eligible Assignees and Participants and survive the termination of the Repurchase Documents and the repayment in full of the Repurchase Obligations.

(d) No Indemnified Person shall settle any claim that is subject to indemnification hereunder without Seller’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed, and which consent shall not be required if Seller is not performing in compliance with the other provisions of this Section 13.01 .

Section 13.02 Expenses . Seller shall promptly on demand pay to or as directed by Buyer all third-party out-of-pocket costs and expenses (including legal, accounting and advisory fees and expenses) incurred by Buyer in connection with (a) the development, evaluation, preparation, negotiation, execution, consummation, delivery and administration of, and any amendment, supplement or modification to, or extension, renewal or waiver of, the Repurchase Documents and the Transactions, (b) any Purchased Asset and/or Underlying Asset, including due diligence, inspection, testing, review, recording, registration, travel custody, care, insurance or preservation, (c) the enforcement of the Repurchase Documents or the payment or performance by Seller of any Repurchase Obligations, and (d) any actual or attempted sale, exchange, enforcement, collection, compromise or settlement relating to the Purchased Assets and/or Underlying Assets; provided , that if the Restatement Date occurs on or prior to January 31, 2015, the maximum amount of out-of-pocket legal fees payable by Seller under this Section 13.02 shall be $150,000.

ARTICLE 14

INTENT

Section 14.01 Intent .

(d) The Parties intend (i) for each Transaction to qualify for the safe harbor treatment provided by the Bankruptcy Code and for Buyer to be entitled to all of the rights, benefits and protections afforded to Persons under the Bankruptcy Code with respect to a “repurchase agreement” as defined in Section 101(47) of the Bankruptcy Code, a “securities contract” as defined in Section 741(7) of the Bankruptcy Code and a “master netting agreement” as defined in Section 101(38A) of the Bankruptcy Code, and that payments under this Agreement are deemed “margin payments” or “settlement payments,” as defined in Section 101 of the Bankruptcy Code, (ii) for the grant of a security interest set forth in Article 11 to also be a “securities contract” as defined in Section 741(7)(A)(xi) of the Bankruptcy Code, a “repurchase agreement” as that term is defined in Section 101(47)(A)(v) of the Bankruptcy Code and a “master netting agreement” as defined in Section 101(38A) of the Bankruptcy Code, and (iii) that Buyer (for so long as Buyer is a “financial institution,” “financial participant” or other entity listed in Section 555, 559, 561, 362(b)(6), 362(b)(7) or 362(b)(27) of the Bankruptcy Code) shall be entitled to the “safe harbor” benefits and protections afforded under the Bankruptcy Code with respect to a “repurchase agreement”, a “securities contract” and a “master netting agreement” including (x) the rights, set forth in Article 10 and in Section 555, 559 and 561 of the Bankruptcy Code, to liquidate the Purchased Assets and/or Underlying Assets and terminate this Agreement, (y) the right to offset or net out as set forth in Article 10 and Section 18.18 and in Sections 362(b)(6), 362(b)(7) or 362(b)(27) of the Bankruptcy Code, and (z) the non-avoidability of transfers made in connection with this Agreement as set forth in Sections 546(e), 546(f) and 546(j) of the Bankruptcy Code.

(e) Seller intends and affirms that Buyer’s rights to (i) liquidate Purchased Assets delivered to it and/or Underlying Assets delivered to the related Trustee in connection with Transactions hereunder and (ii) exercise any other remedies pursuant to Articles 10 and 11 and as otherwise provided in the Repurchase Documents are contractual rights to liquidate such Transactions as described in Section 555 and 561 of the Bankruptcy Code.

(f) The Parties acknowledge and agree that if a Party is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“ FDIA ”), then each Transaction hereunder is a “qualified financial contract,” as that term is defined in 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).

(g) The Parties acknowledge and agree 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 under any Transaction shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation,” respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA).

ARTICLE 15

DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

Section 15.01 Disclosure . The Parties acknowledge that they have been advised and understand that:

(a) in the case of Transactions in which one of the Parties is a broker or dealer registered with the Securities and Exchange Commission under Section 14 of the Securities Exchange Act of 1934, the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 do not protect the other Party with respect to any Transaction;

(b) in the case of Transactions in which one of the Parties is a government securities broker or a government securities dealer registered with the Securities and Exchange Commission under Section 14C of the Securities Exchange Act of 1934, the Securities Investor Protection Act of 1970 will not provide protection to the other Party with respect to any Transaction;

(c) in the case of Transactions in which one of the Parties is a financial institution, funds held by the financial institution pursuant to a Transaction are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable; and

(d) in the case of Transactions in which one of the Parties is an “insured depository institution” as that term is defined in Section 1813(c)(2) of Title 12 of the United States Code, funds held by the financial institution pursuant to a Transaction are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance Fund or the Bank Insurance Fund, as applicable.

ARTICLE 16

NO RELIANCE

Section 16.01 No Reliance . Each Party acknowledges, represents and warrants to the other Party that, in connection with the negotiation of, entering into, and performance under, the Repurchase Documents and each Transaction:

(q) It is not relying (for purposes of making any investment decision or otherwise) on any advice, counsel or representations (whether written or oral) of the other Party, other than the representations expressly set forth in the Repurchase Documents;

(r) It has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed necessary, and it has made its own investment, hedging and trading decisions (including decisions regarding the suitability of any Transaction) based on its own judgment and on any advice from such advisors as it has deemed necessary and not on any view expressed by the other Party;

(s) It is a sophisticated and informed Person that has a full understanding of all the terms, conditions and risks (economic and otherwise) of the Repurchase Documents and each Transaction and is capable of assuming and willing to assume (financially and otherwise) those risks;

(t) It is entering into the Repurchase Documents and each Transaction for the purposes of managing its borrowings or investments or hedging its underlying assets or liabilities and not for purposes of speculation;

(u) It is not acting as a fiduciary or financial, investment or commodity trading advisor for the other Party and has not given the other Party (directly or indirectly through any other Person) any assurance, guaranty or representation whatsoever as to the merits (either legal, regulatory, tax, business, investment, financial accounting or otherwise) of the Repurchase Documents or any Transaction; and

(v) No partnership or joint venture exists or will exist as a result of the Transactions or entering into and performing the Repurchase Documents.

ARTICLE 17

SERVICING

This Article 17 shall apply to all Underlying Assets to the extent that the servicing thereof is within the direct or indirect control of Seller or an Affiliate of Seller.

Section 17.01 Servicing of Underlying Assets .

(p) During the period any Underlying Assets are subject to a Transaction hereunder, Seller agrees that (i) the related Trust is the owner of the related Servicing Rights and all Servicing Files, for the exclusive benefit of holder of the related Trust Certificate, and (ii) Servicer shall service such Underlying Assets for the exclusive benefit of Buyer.

(q) Seller, on Buyer’s behalf, shall contract with Servicer to service the Underlying Assets consistent with the degree of skill and care that Seller customarily requires with respect to similar Underlying Assets owned or managed by it and in accordance with the Servicing Standard, which contract shall be collaterally assigned to Buyer to the extent it relates to the Underlying Assets. Servicer shall also (i) comply with all applicable Federal, State and local laws and regulations, (ii) maintain all state and federal licenses necessary for it to perform its servicing responsibilities hereunder and (iii) not impair the rights of Buyer in any Underlying Assets or any payment thereunder. The servicing of any Underlying Asset with Servicer may be terminated in accordance with Section 17.01(f) hereof.

(r) Seller shall cause Servicer to hold or cause to be held all escrow funds collected by Servicer with respect to any Underlying Assets in segregated trust accounts at Servicer and shall apply the same for the purposes for which such funds were collected.

(s) Seller shall cause Servicer to deposit all Income and Escrow Payments received by Servicer on the Underlying Assets into the applicable Waterfall Account in accordance with Section 5.01 hereof.

(t) As a condition precedent to Buyer funding any Transactions hereunder and following the termination of Servicer pursuant to the terms hereof and upon the appointment of any successor Servicer, Seller shall provide promptly to Buyer a Servicer Letter Agreement addressed to and executed by Servicer, advising Servicer of such matters as Buyer may reasonably request, including (i) recognition by Servicer of Buyer’s beneficial ownership interest in such Underlying Assets and the Servicing Agreement, (ii) that it owes its duties to Buyer as beneficial owner of the Underlying Assets (subject to Seller’s interim right to direct and control servicing prior to a termination of such rights as a result of a termination of Seller’s servicing rights pursuant to Section 17.01(f) hereof or an Event of Default under this Agreement or Servicer’s termination pursuant to Section 17.01(h) ), (iii) agreement by Servicer to comply with the Servicing Standards, and (iv) that upon receipt of notice of an Event of Default from Buyer, Servicer will follow the instructions of Buyer with respect to the Underlying Assets and any related Income and Escrow Payments with respect thereto.

(u) Any servicing rights provided to Seller hereunder shall terminate automatically at the end of each thirty (30) day anniversary of the Initial Purchase Date unless Buyer extends in writing such servicing rights for an additional thirty (30) days. Subject to the Servicing Agreement, Servicer’s rights to service the Underlying Assets shall terminate automatically at the end of each thirty (30) day anniversary of the Initial Purchase Date unless Buyer extends in writing (in the monthly report delivered by Buyer to Seller pursuant to Section 3.08(a) or in a separate writing) the Servicer’s right to service the Underlying Assets (such initial thirty (30) day period, together with each subsequent thirty (30) day period, the “ Servicing Term ”). Upon the occurrence of Buyer’s non-renewal of Seller’s servicing rights hereunder or Buyer’s non-renewal of any Servicing Term under the Servicing Agreement, Seller’s servicing rights hereunder or Servicer’s right to service the Underlying Assets, as applicable, shall automatically terminate, in each case without payment of any penalty or termination fee. Upon the occurrence of an Event of Default hereunder or a Servicer Termination Event, Buyer shall have the right to immediately terminate Seller’s servicing rights hereunder or Servicer’s right to service the Underlying Assets, as applicable, in each case without payment of any penalty or termination fee. Seller and Servicer shall cooperate in transferring Seller’s servicing rights hereunder or the servicing of the Underlying Assets, as applicable, to Buyer or its designee, at no cost or expense to Buyer, it being agreed that Seller will pay any fees and expenses required to terminate Seller’s servicing rights hereunder or the Servicing Agreement, as applicable, and transfer servicing.

(v) If Seller should discover that, for any reason whatsoever, Seller, Servicer or any entity responsible for managing or servicing any Underlying Assets has failed to perform fully Seller’s obligations under the Program Agreements or any of the obligations of such entities with respect to the Underlying Assets, Seller shall promptly notify Buyer.

(w) Upon the termination of Servicer’s rights to service the Underlying Assets, Seller shall cause Servicer to deliver all Servicing Files and the physical and contractual servicing to the designee of Buyer within thirty (30) days of such termination, unless otherwise directed in writing by Buyer. Such delivery of the Servicing Files by Servicer shall be in accordance with customary and prudent mortgage banking standards for the delivery of servicing for assets similar to the Underlying Assets and such transfer shall include the transfer of the gross amount of all escrows held for the related mortgagors (without reduction for unreimbursed advances or “negative escrows”).

(x) Buyer shall have the right to appoint a third party to perform due diligence with respect to Servicer at any time. Upon the occurrence of a Servicer Change of Control that is approved by Buyer, Seller shall cooperate and cause Servicer to cooperate with Buyer and/or its designees to provide access to Servicer’s servicing facilities, as applicable, including without limitation its books and records with respect to Servicer’s servicing portfolio and the related Underlying Assets and any other information Buyer may reasonably request regarding Servicer or its servicing activities. In addition to the foregoing, Seller shall permit Buyer to inspect upon reasonable prior written notice at a mutually convenient time, Servicer’s servicing facilities, as the case may be, for the purpose of satisfying Buyer that Servicer has the ability to service the Underlying Assets as provided in this Agreement. In addition, at any time that Servicer is not an Affiliate of Seller, Seller shall use its best efforts to enable Buyer to inspect the servicing facilities of Servicer and to cause Servicer to cooperate with Buyer and/or its designees in connection with any due diligence performed by Buyer and/or such designees in accordance with this Section 17.01(i) . Seller and Buyer further agree that all reasonable out-of-pocket costs and expenses incurred by Buyer in connection with any due diligence or inspection performed pursuant to this Section 17.01(i) shall be paid by Seller, subject to the cap set forth in Section 6.02(c) .

(y) As a condition precedent to Buyer funding any Transactions hereunder in which related Underlying Assets will be interim serviced by an Interim Servicer, Seller shall provide promptly to Buyer an Interim Servicer Letter Agreement (which condition precedent Buyer may waive in its sole discretion) addressed to and executed by each Interim Servicer, advising such Interim Servicer of such matters as Buyer may reasonably request, including (A) recognition by each Interim Servicer of Buyer’s beneficial ownership interest in such Underlying Assets and the related interim servicing agreement, (B) agreement by each Interim Servicer that it owes its duties to Buyer as beneficial owner of the Underlying Assets (subject to Seller’s interim right to direct and control servicing prior to a termination of such rights as a result of a termination of Seller’s servicing rights pursuant to Section 17.01(f) hereof or an Event of Default under this Agreement), (C) agreement by each Interim Servicer to comply in all material respects with the applicable Servicing Standards, except as otherwise provided in this Agreement, and (D) agreement by each Interim Servicer that upon receipt of notice of an Event of Default from Buyer, such Interim Servicer will follow the instructions of Buyer with respect to the Underlying Assets and any related Income and Escrow Payments with respect thereto. No Underlying Asset may be interim serviced by an Interim Servicer for a period greater than (i) thirty (30) days following such Underlying Asset becoming subject to a Transaction if Servicer is interim servicing or sub-servicing the related Underlying Asset, and (ii) sixty (60) days following such Underlying Asset becoming subject to a Transaction if a servicer other than Servicer is interim servicing or sub-servicing such Underlying Asset.

Section 17.02 Fees and Expenses of Servicer . All fees and expenses of Servicer shall be borne solely by Seller.

ARTICLE 18

MISCELLANEOUS

Section 18.01 Governing Law . This Agreement and any claim, dispute or controversy arising under or related to this Agreement or any of the other Repurchase Documents shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflicts of laws principles thereof other than Section 5-1401 of the New York General Obligations law, which shall govern.

Section 18.02 Submission to Jurisdiction; Service of Process . Each party irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to the Repurchase Documents, or for recognition or enforcement of any judgment, and each Party irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such State court or, to the fullest extent permitted by applicable law, in such Federal court. Each Party agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or the other Repurchase Documents shall affect any right that Buyer may otherwise have to bring any action or proceeding arising out of or relating to the Repurchase Documents against Seller or its properties in the courts of any jurisdiction. Seller irrevocably and unconditionally waives, to the fullest extent permitted by Requirements of Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to the Repurchase Documents in any court referred to above, and the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. Each Party irrevocably consents to service of process in the manner provided for notices in Section 18.12 . Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

Section 18.03 IMPORTANT WAIVERS .

(d) [RESERVED].

(e) TO THE EXTENT PERMITTED BY REQUIREMENTS OF LAW, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE BETWEEN THEM, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF, CONNECTED WITH OR RELATED TO THE REPURCHASE DOCUMENTS, THE PURCHASED ASSETS, THE TRANSACTIONS, ANY DEALINGS OR COURSE OF CONDUCT BETWEEN THEM, OR ANY STATEMENTS (WRITTEN OR ORAL) OR OTHER ACTIONS OF EITHER PARTY. NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

(f) TO THE EXTENT PERMITTED BY REQUIREMENTS OF LAW, EACH PARTY HEREBY WAIVES ANY RIGHT TO CLAIM OR RECOVER IN ANY LITIGATION WHATSOEVER WHETHER OR NOT INVOLVING ANY INDEMNIFIED PERSON, ANY SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES, WHETHER SUCH WAIVED DAMAGES ARE BASED ON STATUTE, CONTRACT, TORT, COMMON LAW OR ANY OTHER LEGAL THEORY, WHETHER THE LIKELIHOOD OF SUCH DAMAGES WAS KNOWN AND REGARDLESS OF THE FORM OF THE CLAIM OF ACTION. NO PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY UNINTENDED RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH ANY REPURCHASE DOCUMENT OR THE TRANSACTIONS.

(g) EACH PARTY CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF BUYER OR AN INDEMNIFIED PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY OR AN INDEMNIFIED PERSON WOULD NOT SEEK TO ENFORCE ANY OF THE WAIVERS IN THIS SECTION 18.03 IN THE EVENT OF LITIGATION OR OTHER CIRCUMSTANCES. THE SCOPE OF SUCH WAIVERS IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THE REPURCHASE DOCUMENTS, REGARDLESS OF THEIR LEGAL THEORY.

(h) EACH PARTY ACKNOWLEDGES THAT THE WAIVERS IN THIS SECTION 18.03 ARE A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT SUCH PARTY HAS ALREADY RELIED ON SUCH WAIVERS IN ENTERING INTO THE REPURCHASE DOCUMENTS, AND THAT SUCH PARTY WILL CONTINUE TO RELY ON SUCH WAIVERS IN THEIR RELATED FUTURE DEALINGS UNDER THE REPURCHASE DOCUMENTS. EACH PARTY FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED SUCH WAIVERS WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL AND OTHER RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

(i) THE WAIVERS IN THIS SECTION 18.03 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND SHALL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO ANY OF THE REPURCHASE DOCUMENTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

(j) THE PROVISIONS OF THIS SECTION 18.03 SHALL SURVIVE TERMINATION OF THE REPURCHASE DOCUMENTS AND THE INDEFEASIBLE PAYMENT IN FULL OF THE REPURCHASE OBLIGATIONS.

Section 18.04 Integration . The Repurchase Documents supersede and integrate all previous negotiations, contracts, agreements and understandings (whether written or oral) between the Parties, including the Original Agreement, relating to a sale and repurchase of Purchased Assets and the other matters addressed by the Repurchase Documents, and contain the entire final agreement of the Parties relating to the subject matter thereof.

Section 18.05 Single Agreement . Seller agrees that (a) each Transaction is in consideration of and in reliance on the fact that all Transactions constitute a single business and contractual relationship, and that each Transaction has been entered into in consideration of the other Transactions, (b) a default by it in the payment or performance of any its obligations under a Transaction shall constitute a default by it with respect to all Transactions, (c) Buyer may set off claims and apply properties and assets held by or on behalf of Buyer with respect to any Transaction against the Repurchase Obligations owing to Buyer with respect to other Transactions, and (d) payments, deliveries and other transfers made by or on behalf of Seller with respect to any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers with respect to all Transactions, and the obligations of Seller to make any such payments, deliveries and other transfers may be applied against each other and netted.

Section 18.06 Use of Employee Plan Assets . Each Party covenants that it will not use “plan assets” within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA in any Transaction.

Section 18.07 Survival and Benefit of Seller’s Agreements . The Repurchase Documents and all Transactions shall be binding on and shall inure to the benefit of the Parties and their successors and permitted assigns. All of Seller’s representations, warranties, agreements and indemnities in the Repurchase Documents shall survive the termination of the Repurchase Documents and the payment in full of the Repurchase Obligations, and shall apply to and benefit all Indemnified Persons, Buyer and its successors and assigns, Eligible Assignees and Participants. No other Person shall be entitled to any benefit, right, power, remedy or claim under the Repurchase Documents.

Section 18.08 Assignments and Participations .

(a) Seller shall not sell, assign or transfer any of its rights or the Repurchase Obligations or delegate its duties under this Agreement or any other Repurchase Document without the prior written consent of Buyer, and any attempt by Seller to do so without such consent shall be null and void.

(b) Buyer may at any time, without the consent of or notice to Seller or Guarantor, sell participations to any Person (other than a natural person or Seller, Guarantor or any Affiliate of Seller or Guarantor) (a “ Participant ”) in all or any portion of Buyer’s rights and/or obligations under the Repurchase Documents; provided , that (i) Buyer’s obligations under the Repurchase Documents shall remain unchanged, (ii) Buyer shall remain solely responsible to Seller for the performance of such obligations, and (iii) Seller shall continue to deal solely and directly with Buyer in connection with Buyer’s rights and obligations under the Repurchase Documents. No Participant shall have any right to approve any amendment, waiver or consent with respect to any Repurchase Document, except to the extent that the Repurchase Price or Price Differential of any Purchased Asset would be reduced or the Repurchase Date of any Purchased Asset would be postponed. Each Participant shall be entitled to the benefits of Article 12 to the same extent as if it had acquired its interest by assignment pursuant to Section 18.08(c) , but shall not be entitled to receive any greater payment thereunder than Buyer would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with Seller’s prior written consent. To the extent permitted by Requirements of Law, each Participant shall be entitled to the benefits of Sections 10.02(j) and 18.18 to the same extent as if it had acquired its interest by assignment pursuant to Section 18.08(c) .

(c) Buyer may at any time, without consent of Seller or Guarantor but upon notice to Seller, sell and assign to any Eligible Assignee all or any portion of all of the rights and obligations or duties of Buyer under the Repurchase Documents. Each such assignment shall be made pursuant to an Assignment and Acceptance substantially in the form of Exhibit K (an “ Assignment and Acceptance ”). From and after the effective date of such Assignment and Acceptance, (i) such Eligible Assignee shall be a Party and, to the extent provided therein, have the rights and obligations of Buyer under the Repurchase Documents with respect to the percentage and amount of the Repurchase Price allocated to it, (ii) Buyer shall, to the extent provided therein, be released from such obligations (and, in the case of an Assignment and Acceptance covering all or the remaining portion of Buyer’s rights and obligations under the Repurchase Documents, Buyer shall cease to be a Party), (iii) the obligations of Buyer shall be deemed to be so reduced, and (iv) Buyer will give prompt written notice thereof (including identification of the Eligible Assignee and the amount of Repurchase Price allocated to it) to each Party (but Buyer shall not have any liability for any failure to timely provide such notice). Any sale or assignment by Buyer of rights or obligations under the Repurchase Documents that does not comply with this Section 18.08(c) shall be treated for purposes of the Repurchase Documents as a sale by such Buyer of a participation in such rights and obligations in accordance with Section 18.08(b) ; provided , that no assignee shall be entitled to receive any greater payment thereunder than Buyer would have been entitled to receive had the assignment not occurred, unless the assignment is made with Seller’s prior written consent.

(d) Seller shall cooperate reasonably with Buyer in connection with any such sale and assignment of participations or assignments and shall enter into such restatements of, and amendments, supplements and other modifications to, the Repurchase Documents to give effect to any such sale or assignment; provided , that none of the foregoing shall change any economic or other material term of the Repurchase Documents in a manner adverse to Seller without the consent of Seller.

(e) Buyer shall have the right to partially or completely syndicate and or all of its rights under the Agreement and the other Repurchase Documents to any Eligible Assignee.

Section 18.09 Ownership and Hypothecation of Purchased Assets . Title to all Purchased Assets shall pass to and vest in Buyer on the applicable Purchase Dates. Subject to the terms of the Repurchase Documents, Buyer or its designee shall have free and unrestricted use of all Purchased Assets and be entitled to exercise all rights, privileges and options relating to the Purchased Assets as the owner thereof, including rights of subscription, conversion, exchange, substitution, voting, consent and approval, and to direct any servicer or trustee. Buyer or its designee may engage in repurchase transactions with the Purchased Assets or otherwise sell, pledge, repledge, transfer, hypothecate, or rehypothecate the Purchased Assets, all on terms that Buyer may determine; provided, that no such transaction shall affect the obligations of Buyer to transfer the Purchased Assets to Seller on the applicable Repurchase Dates free and clear of any pledge, Lien, security interest, encumbrance, charge or other adverse claim. In the event Buyer engages in a repurchase transaction with any of the Purchased Assets or otherwise pledges or hypothecates any of the Purchased Assets, Buyer shall have the right to assign to Buyer’s counterparty any of the applicable representations or warranties herein and the remedies for breach thereof, as they relate to the Purchased Assets that are subject to such repurchase transaction.

Section 18.10 Confidentiality . All information regarding the terms set forth in any of the Repurchase Documents or the Transactions shall be kept confidential and shall not be disclosed by either Party to any Person except (a) to the Affiliates of such Party or its or their respective directors, officers, employees, agents, advisors and other representatives who are informed of the confidential nature of such information and instructed to keep it confidential, (b) to the extent requested by any regulatory authority or required by Requirements of Law, (c) to the extent required to be included in the financial statements of either Party or an Affiliate thereof, (d) to the extent required to exercise any rights or remedies under the Repurchase Documents, Purchased Assets or Underlying Assets, (e) to the extent required to consummate and administer a Transaction, (f) to any actual or prospective Participant or Eligible Assignee which agrees to comply with this Section 18.10 ; provided, that no such disclosure made with respect to any Repurchase Document shall include a copy of such Repurchase Document to the extent that a summary would suffice, but if it is necessary for a copy of any Repurchase Document to be disclosed, all pricing and other economic terms set forth therein shall be redacted before disclosure to the extent permitted by applicable law.

Section 18.11 No Implied Waivers . No failure on the part of Buyer to exercise, or delay in exercising, any right or remedy under the Repurchase Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right or remedy thereunder preclude any further exercise thereof or the exercise of any other right. The rights and remedies in the Repurchase Documents are cumulative and not exclusive of any rights and remedies provided by law. Application of the Default Rate after an Event of Default shall not be deemed to constitute a waiver of any Event of Default or Buyer’s rights and remedies with respect thereto, or a consent to any extension of time for the payment or performance of any obligation with respect to which the Default Rate is applied. Except as otherwise expressly provided in the Repurchase Documents, no amendment, waiver or other modification of any provision of the Repurchase Documents shall be effective without the signed agreement of Seller and Buyer. Any waiver or consent under the Repurchase Documents shall be effective only if it is in writing and only in the specific instance and for the specific purpose for which given.

Section 18.12 Notices and Other Communications . Unless otherwise provided in this Agreement, all notices, consents, approvals, requests and other communications required or permitted to be given to a Party hereunder shall be in writing and sent prepaid by hand delivery, by certified or registered mail, by expedited commercial or postal delivery service, or by facsimile or email, to the address for such Party specified in Schedule 2 or such other address as such Party shall specify from time to time in a notice to the other Party. Any of the foregoing communications shall be effective when delivered or upon the first attempted delivery on a Business Day. A Party receiving a notice that does not comply with the technical requirements of this Section 18.12 may elect to waive any deficiencies and treat the notice as having been properly given.

Section 18.13 Counterparts; Electronic Transmission . This Agreement and any other Repurchase Document may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. The parties agree that this Agreement, any documents to be delivered pursuant to this Agreement, any other Repurchase Document and any notices hereunder may be transmitted between them by email and/or 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.

Section 18.14 No Personal Liability . No administrator, incorporator, Affiliate, owner, member, partner, stockholder, officer, director, employee, agent or attorney of Buyer, any Indemnified Person, Seller or Guarantor, as such, shall be subject to any recourse or personal liability under or with respect to any obligation of Buyer, Seller or Guarantor under the Repurchase Documents, whether by the enforcement of any assessment, by any legal or equitable proceeding, by virtue of any statute or otherwise; it being expressly agreed that the obligations of Buyer, Seller and Guarantor under the Repurchase Documents are solely their respective corporate, limited liability company or partnership obligations, as applicable, and that any such recourse or personal liability is hereby expressly waived. This Section 18.14 shall survive the termination of the Repurchase Documents and the repayment in full of the Repurchase Obligations.

Section 18.15 Protection of Buyer’s Interests in the Purchased Assets; Further Assurances .

(a) Seller shall cause the Repurchase Documents and/or all financing statements and continuation statements and any other necessary documents covering the right, title and interest of Buyer to the Purchased Assets to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, all in such manner and in such places as may be required by law fully to preserve and protect such right, title and interest. Seller shall deliver to Buyer file-stamped copies of, or filing receipts for, any document recorded, registered or filed as provided above, as soon as available following such recording, registration or filing. Seller shall execute any and all documents reasonably required to fulfill the intent of this Section 18.15 .

(b) Seller will promptly at its expense execute and deliver such instruments and documents and take such other actions as Buyer may reasonably request from time to time in order to perfect, protect, evidence, exercise and enforce Buyer’s rights and remedies under and with respect to the Repurchase Documents, the Transactions and the Purchased Assets.

(c) If Seller fails to perform any of its Repurchase Obligations, Buyer may (but shall not be required to) perform or cause to be performed such Repurchase Obligation, and the costs and expenses incurred by Buyer in connection therewith shall be payable by Seller. Without limiting the generality of the foregoing, Seller authorizes Buyer, at the option of Buyer and the expense of Seller, at any time and from time to time, to take all actions and pay all amounts that Buyer deems necessary or appropriate to protect, enforce, preserve, insure, service, administer, manage, perform, maintain, safeguard, collect or realize on the Purchased Assets and Buyer’s Liens and interests therein or thereon and to give effect to the intent of the Repurchase Documents. No Default or Event of Default shall be cured by the payment or performance of any Repurchase Obligation by Buyer on behalf of Seller. Buyer may make any such payment in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax Lien, title or claim except to the extent such payment is being contested in good faith by Seller in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP.

(d) Without limiting the generality of the foregoing, Seller will, no earlier than six (6) or later than three (3) months before the fifth (5th) anniversary of the date of filing of each UCC financing statement filed in connection with to any Repurchase Document or any Transaction, (i) deliver and file or cause to be filed an appropriate continuation statement with respect to such financing statement; provided that Buyer may elect to file such continuation statement, and (ii) deliver or cause to be delivered to Buyer an opinion of counsel, in form and substance reasonably satisfactory to Buyer, confirming and updating the opinion delivered pursuant to Section 6.01(a) with respect to perfection and otherwise to the effect that the security interests hereunder continue to be enforceable and perfected security interests, subject to no other Liens of record except as provided herein or otherwise permitted hereunder, which opinion may contain usual and customary assumptions, limitations and exceptions.

(e) Except as provided in the Repurchase Documents, the sole duty of Buyer, Custodian or any other designee or agent of Buyer with respect to the Purchased Assets and Underlying Assets shall be to use reasonable care in the custody, use, operation and preservation of the Purchased Assets and Underlying Assets in its possession or control. Buyer shall incur no liability to Seller or any other Person for any act of Governmental Authority, act of God or other destruction in whole or in part or negligence or wrongful act of custodians or agents selected by Buyer with reasonable care, or Buyer’s failure to provide adequate protection or insurance for the Purchased Assets or Underlying Assets. Buyer shall have no obligation to take any action to preserve any rights of Seller in any Purchased Asset or Underlying Assets against prior parties, and Seller hereby agrees to take such action. Buyer shall have no obligation to realize upon any Purchased Asset or Underlying Asset except through proper application of any distributions with respect to the Purchased Assets and Underlying Assets made directly to Buyer or its agent(s). So long as Buyer, Custodian or any other designee or agent of Buyer shall act in good faith in their handling of the Purchased Assets and Underlying Assets, Seller waives or is deemed to have waived the defense of impairment of the Purchased Assets or Underlying Assets by Buyer, Custodian or such designee or agent.

(f) At Buyer’s election, and at any time during the term of this Agreement after delivery by Buyer to Seller of prior written notice, Buyer may record any or all of the Assignment Documents (at Buyer’s sole cost and expense) as further evidence of Buyer’s ownership interest in the related Purchased Assets.

Section 18.16 Default Rate . To the extent permitted by Requirements of Law, Seller shall pay interest at the Default Rate on the amount of all Repurchase Obligations not paid when due under the Repurchase Documents until such Repurchase Obligations are paid or satisfied in full.

Section 18.17 Termination . This Agreement shall remain in effect until the Termination Date. However, no such termination shall affect Seller’s outstanding obligations to Buyer at the time of such termination, nor shall it affect the survivability of any provisions in this Agreement that, by their express terms, are intended to survive the termination of this Agreement or any of the other Repurchase Documents and the repayment in full of the Repurchase Obligations.

Section 18.18 Set-off . In addition to any rights now or hereafter granted under the Repurchase Documents, Requirements of Law or otherwise, Seller and Guarantor, each on behalf of itself and each of its respective Affiliates, hereby grants to Buyer and each Indemnified Person, to secure repayment of the Repurchase Obligations, a right of set-off upon any and all of the following: (i) monies, securities, collateral or other property of Seller and Guarantor and each of their respective Affiliates and any proceeds from the foregoing, now or hereafter held or received by Buyer, any Affiliate of Buyer or any Indemnified Person, for the account of Seller or such Affiliate of Seller, whether for safekeeping, custody, pledge, transmission, collection or otherwise, (ii) any and all deposits (general, specified, special, time, demand, provisional or final) and credits, claims or Indebtedness of Seller, Guarantor or any Affiliate of Seller or Guarantor at any time existing, (iii) any obligation owed by Buyer or any Affiliate of Buyer to Seller, Guarantor or any Affiliate of Seller or Guarantor and (iv) any Repurchase Obligations or Indebtedness owed by Seller, Guarantor or any Affiliate of Seller or Guarantor and any Indebtedness owed by Buyer or any Affiliate of Buyer to Seller, Guarantor or any Affiliate of Seller or Guarantor, in each case whether direct or indirect, absolute or contingent, matured or unmatured, whether or not arising under the Repurchase Documents and irrespective of the currency, place of payment or booking office of the amount or obligation and in each case at any time held or owing by Buyer, any Affiliate of Buyer or any Indemnified Person to or for the credit of Seller, Guarantor or any Affiliate of Seller or Guarantor, without prejudice to Buyer’s right to recover any deficiency; provided , that Buyer shall not exercise its right to set-off under this Section 18.18 with respect to any Affiliate of Guarantor unless an Event of Default has occurred and is continuing. Each of Buyer, each Affiliate of Buyer and each Indemnified Person is hereby authorized upon any amount becoming due and payable by Seller, Guarantor or any Affiliate of Seller or Guarantor to Buyer or any Indemnified Person under the Repurchase Documents, the Repurchase Obligations or otherwise or upon the occurrence of an Event of Default, without notice to Seller, Guarantor or any Affiliate of Seller or Guarantor, any such notice being expressly waived by Seller and each Affiliate of Seller to the extent permitted by any Requirements of Law, to set-off, appropriate, apply and enforce such right of set-off against any and all items hereinabove referred to against any amounts owing to Buyer or any Indemnified Person by Seller, Guarantor or any Affiliate of Seller or Guarantor under the Repurchase Documents and the Repurchase Obligations, irrespective of whether Buyer, any Affiliate of Buyer or any Indemnified Person shall have made any demand under the Repurchase Documents and regardless of any other collateral securing such amounts, and in all cases without waiver or prejudice of Buyer’s rights to recover any deficiency. Seller and all Affiliates of Seller shall be deemed directly indebted to Buyer and the other Indemnified Persons in the full amount of all amounts owing to Buyer and the other Indemnified Parties by Seller and all Affiliates of Seller under the Repurchase Documents and the Repurchase Obligations, and Buyer and the other Indemnified Persons shall be entitled to exercise the rights of set-off provided for above. ANY AND ALL RIGHTS TO REQUIRE BUYER OR OTHER INDEMNIFIED PERSONS TO EXERCISE THEIR RIGHTS OR REMEDIES WITH RESPECT TO THE PURCHASED ASSETS OR UNDERLYING ASSETS OR OTHER INDEMNIFIED PERSONS UNDER THE REPURCHASE DOCUMENTS, PRIOR TO EXERCISING THE FOREGOING RIGHT OF SET-OFF, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY SELLER AND EACH AFFILIATE OF SELLER.

Buyer or any Indemnified Person shall promptly notify Seller or such affected Affiliate of Seller after any such set-off and application made by Buyer or such Indemnified Person; provided that the failure to give such notice shall not affect the validity of such set-off and application. If an amount or obligation is unascertained, Buyer may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant Party accounting to the other Party when the amount or obligation is ascertained. Nothing in this Section 18.18 shall be effective to create a charge or other security interest. This Section 18.18 shall be without prejudice and in addition to any right of set-off, combination of accounts, Lien or other rights to which any Party is at any time otherwise entitled.

Section 18.19 Power of Attorney . Seller hereby authorizes Buyer to file such financing statement or statements relating to the Purchased Assets without Seller’s signature thereon as Buyer, at its option, may deem appropriate. Seller hereby appoints Buyer as Seller’s agent and attorney in fact to execute any such financing statement or statements in Seller’s name and to perform all other acts which Buyer deems appropriate to perfect and continue its ownership interest in and/or the security interest granted hereby, if applicable, and to protect, preserve and realize upon the Purchased Assets, in accordance with the terms of this Agreement including, but not limited to, the right to endorse notes, complete blanks in documents, transfer servicing (including, but not limited, to sending “good-bye letters” on behalf of Seller and Servicer to any Mortgagor in the form of Exhibit L with respect to Underlying Assets which are Mortgage Loans), and sign assignments on behalf of Seller as its agent and attorney in fact. This agency and power of attorney is coupled with an interest and is irrevocable without Buyer’s consent. Notwithstanding the foregoing, the power of attorney hereby granted may be exercised only during the occurrence and continuance of any Event of Default hereunder. Seller shall pay the filing costs for any financing statement or statements prepared pursuant to this Section 18.19 . In addition, Seller shall execute and deliver to Buyer a power of attorney in the form set forth in Exhibit I attached hereto (“ Seller’s Power of Attorney ”).

Section 18.20 Seller’s Waiver of Setoff . Seller hereby waives any right of setoff it may have or to which it may be or become entitled under the Repurchase Documents or otherwise against Buyer, any Affiliate of Buyer, any Indemnified Person or their respective assets or properties.

Section 18.21 Periodic Due Diligence Review . Buyer may perform continuing due diligence reviews with respect to the Purchased Assets, Underlying Assets, Seller and Affiliates of Seller, including ordering new third party reports, for purposes of, among other things, verifying compliance with the representations, warranties, ordering BPOs at any time during the term of this Agreement, covenants, agreements, duties, obligations and specifications made under the Repurchase Documents or otherwise. As often as commercially reasonable in Buyer’s judgment and upon reasonable prior notice to Seller, unless a Default or Event of Default exists, in which case no notice is required, Buyer or its representatives may during normal business hours inspect any properties and examine, inspect and make copies of the books and records of Seller and Affiliates of Seller, the Records and the Servicing Files. Seller shall make available to Buyer one or more knowledgeable financial or accounting officers and representatives of the independent certified public accountants of Seller for the purpose of answering questions of Buyer concerning any of the foregoing. Seller shall make commercially reasonable efforts to cause Servicer to cooperate with Buyer by permitting Buyer to conduct reasonable due diligence reviews of the related Servicing Files. Buyer may purchase Purchased Assets from Seller or fund a Purchase Price Increase based solely on the information provided by Seller to Buyer in the Underwriting Package and the representations, warranties, duties, obligations and covenants contained herein, and Buyer may at any time conduct a partial or complete due diligence review on some or all of the Purchased Assets or Underlying Assets, including ordering new credit reports and new appraisals on related Mortgaged Properties and otherwise regenerating the information used to originate and underwrite such Purchased Assets or Underlying Assets. Buyer may underwrite such Purchased Assets or Underlying Assets itself or engage a mutually acceptable third-party underwriter to do so. Seller shall be responsible for all of the due diligence costs and expenses incurred by Buyer; provided, that any due diligence expenses greater than $15,000 in the aggregate in any twelve (12) month period shall be subject to Seller’s prior approval, which approval shall not be unreasonably withheld.

Section 18.22 Time of the Essence . Time is of the essence with respect to all obligations, duties, covenants, agreements, notices or actions or inactions of the parties under the Repurchase Documents.

Section 18.23 Amendment and Restatement . This Agreement amends and restates in its entirety the Original Agreement. Nothing herein contained shall be construed (a) to be a novation of the Repurchase Obligations under the Original Agreement or (b) to release, cancel, terminate or otherwise impair the status or priority of the liens or security for the obligations secured by the Original Agreement. Further, Seller and Buyer acknowledge and agree that this Agreement shall not be considered a new contract, and that all rights, titles, powers, liens and security interests created by or under the Original Agreement or other agreements executed in connection with the transactions contemplated by this Agreement and the Original Agreement shall continue without interruption in full force and effect.

Section 18.24 Patriot Act Notice . Buyer hereby notifies Seller that Buyer is required by the Patriot Act to obtain, verify and record information that identifies Seller.

Section 18.25 Acknowledgement Of Anti-Predatory Lending Policies . Seller and Buyer each have in place internal policies and procedures that expressly prohibit their purchase of any High Cost Mortgage Loan.

Section 18.26 Successors and Assigns . Subject to the foregoing, the Repurchase Documents and any Transactions shall be binding upon and shall inure to the benefit of the Parties and their successors and permitted assigns.

[ONE OR MORE UNNUMBERED SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

SELLER:

ALTISOURCE RESIDENTIAL, L.P.

By: Altisource Residential GP, LLC, its general partner

By: Altisource Residential Corporation, the sole member of the general partner

By: /s/ Kenneth D. Najour

Name: Kenneth D. Najour

Title: Chief Accounting Officer

BUYER :

WELLS FARGO BANK, NATIONAL ASSOCIATION

By: /s/ Goetz Rokahr

Name: Goetz Rokahr

Title: Director

ACKNOWLEDGED BY:

GUARANTOR:

ALTISOURCE RESIDENTIAL CORPORATION

By: /s/ Kenneth D. Najour

Name: Kenneth D. Najour

Title: Chief Accounting Officer

Solely with respect to Sections 3.01(k) and 9.01 :

ARLP TRUST 3

By: WILMINGTON SAVINGS FUND SOCIETY, FSB, d/b/a, CHRISTIANA TRUST, not in its individual capacity but solely as Owner Trustee

By: /s/ Jeffrey R. Everhart

Name: Jeffrey R. Everhart

Title: AVP

ARLP TRUST 5

By: WILMINGTON SAVINGS FUND SOCIETY, FSB, d/b/a, CHRISTIANA TRUST, not in its individual capacity but solely as Owner Trustee

By: /s/ Jeffrey R. Everhart

Name: Jeffrey R. Everhart

Title: AVP

ARLP TRUST 6

By: WILMINGTON SAVINGS FUND SOCIETY, FSB, d/b/a, CHRISTIANA TRUST, not in its individual capacity but solely as Owner Trustee

By: /s/ Jeffrey R. Everhart

Name: Jeffrey R. Everhart

Title: AVP

SCHEDULE 1-A

58320.000354 EMF_US 52307710v6

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO

MORTGAGE LOANS

ARTICLE 19 Information . The information required to be set forth in the Mortgage Loan Schedule pursuant to Exhibit F with respect to such Mortgage Loan is complete, true and correct in all material respects.

ARTICLE 20 No Outstanding Charges . Prior to imminent loss (as determined by Servicer in its discretion), all governmental assessments, water, sewer and municipal charges, leasehold payments, ground rents or taxes or insurance premiums, which previously became due and owing have been paid, or an escrow of funds has been established, unless otherwise set forth on the related Mortgage Loan Schedule, in an amount sufficient to pay for every such item which remains unpaid and which has been assessed but is not yet due and payable.

ARTICLE 21 Original Terms Unmodified . Other than any loan modifications completed by Seller or Servicer in accordance with the Servicing Agreement, the terms of the Mortgage Note and Mortgage have not been impaired, waived, altered or modified in any respect, from the date of origination, except by a written instrument which has been or will be recorded if necessary where and as required by law. The material terms of any such modifications by Seller or Servicer or as required by law have been accurately reflected in the Mortgage Loan Schedule.

ARTICLE 22 No Defenses . To the best of Seller’s Knowledge, the Mortgage Loan is not subject to any right of rescission, set-off, counterclaim or defense, including, without limitation, the defense of usury, nor will the operation of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any right thereunder, render either the Mortgage Note or the Mortgage unenforceable, in whole or in part and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto.

ARTICLE 23 Hazard Insurance . The Mortgaged Property is insured by a fire and extended perils insurance policy, issued by a Qualified Insurer, and such other hazards as are customary in the area where the Mortgaged Property is located, and to the extent required by Seller as of the date of origination, against risks commonly insured against by Persons owning like properties in the locality of the Mortgaged Property, in an amount not less than the greatest of (i) 100% of the insurable value of the Mortgaged Property or (ii) the outstanding principal balance of the Mortgage Loan. If any portion of the Mortgaged Property is in an area identified by any federal Governmental Authority as having special flood hazards, and flood insurance is reasonably available, a flood insurance policy meeting the current guidelines of the Federal Emergency Management Agency is in effect with a generally acceptable insurance carrier, in an amount representing coverage not less than the least of (1) the outstanding principal balance of the Mortgage Loan, (2) the full insurable value of the Mortgaged Property, and (3) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended by the Flood Disaster Protection Act of 1974 unless such Property is a condominium. All such insurance policies (collectively, the “hazard insurance policy”) contain a standard mortgagee clause naming either of Seller or Servicer, its successors and assigns (including, without limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not be reduced, terminated or canceled without thirty (30) days’ prior written notice to the mortgagee. No such notice has been received by Seller or Servicer, as applicable. All premiums on such insurance policy that have become due have been paid. The related Mortgage obligates the Mortgagor to maintain all such insurance and, at such Mortgagor’s failure to do so, authorizes the mortgagee to maintain such insurance at the Mortgagor’s cost and expense and to seek reimbursement therefore from such Mortgagor.

ARTICLE 24 Compliance with Applicable Laws . Any and all Requirements of Law including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer credit protection, equal credit opportunity or disclosure laws applicable to the Mortgage Loan have been complied with in all material respects, the consummation of the transactions contemplated hereby will not involve the violation of any such laws or regulations, and Seller or Servicer, as applicable, shall maintain or shall cause its agent to maintain in its possession, available for the inspection of Buyer, and shall deliver to Buyer, upon demand, evidence of compliance with all such requirements.

ARTICLE 25 No Satisfaction of Mortgage . The Mortgage has not been satisfied, canceled, subordinated or rescinded, in whole or in part, and the Mortgaged Property has not been released from the Lien of the Mortgage, in whole or in part, nor has any instrument been executed that would affect any such release, cancellation, subordination or rescission.

ARTICLE 26 Location of Mortgaged Property . The Mortgaged Property is located in the jurisdiction identified in the related Mortgage Loan Schedule and consists of a single parcel of real property with a detached single family residence erected thereon, or a two- to four-family dwelling, or an individual condominium unit in a low-rise or high-rise condominium project, or an individual unit in a planned unit development or a de minimis planned unit development, or a manufactured home, or shares in a co-operative.

ARTICLE 27 Valid First Lien . The Mortgage is a valid, subsisting, enforceable and perfected first priority Lien and first priority security interest on the real property included in the Mortgaged Property, including all buildings on the Mortgaged Property and all installations and mechanical, electrical, plumbing, heating and air conditioning systems located in or annexed to such buildings, and all additions, alterations and replacements made at any time with respect to the foregoing. The Lien of the Mortgage is subject only to:


•	the Lien of current real property taxes and assessments not yet due and payable;


•	covenants, conditions and restrictions, rights of way, easements and other matters of the public record as of the date of recording acceptable to prudent mortgage lending institutions; and


•	other matters to which like properties are commonly subject which do not materially interfere with the benefits of the security intended to be provided by the Mortgage or the use, enjoyment, value or marketability of the related Mortgaged Property.

Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Mortgage Loan establishes and creates a valid, subsisting and enforceable first Lien and first priority security interest on the property described therein and Seller has full right to pledge and assign the same to Buyer. No Mortgage Loan is subject to one or more prior liens on the related Mortgaged Property securing financing obtained by the related Mortgagor and to Permitted Liens.

ARTICLE 28 Validity of Mortgage Documents . The Mortgage Note and the Mortgage and any other agreement executed and delivered by a Mortgagor or guarantor, if applicable, in connection with a Mortgage Loan are genuine, and each is the legal, valid and binding obligation of the maker thereof enforceable in accordance with its terms. To the best of Seller’s and Servicer’s Knowledge, no fraud, error, omission, misrepresentation, negligence or similar occurrence with respect to a Mortgage Loan has taken place on the part of any Person, including, without limitation, the Mortgagor, any appraiser, any builder or developer, or any other party involved in the origination of the Mortgage Loan.

ARTICLE 29 Full Disbursement of Proceeds . There is no further requirement for future advances under the Mortgage Loan, and, to the best of Seller’s and Servicer’s Knowledge, any and all requirements as to completion of any on-site or off-site improvement and as to disbursements of any escrow funds therefor have been complied with. To the best of Seller’s and Servicer’s Knowledge, all costs, fees and expenses incurred in making or closing the Mortgage Loan and the recording of the Mortgage were paid, and the Mortgagor is not entitled to any refund of any amounts paid or due under the Mortgage Note or Mortgage.

ARTICLE 30 Ownership . Seller has full right to sell the Mortgage Loan to Buyer free and clear of any encumbrance, equity, participation interest, Lien, pledge, charge, claim or security interest, and has full right and authority subject to no interest or participation of, or agreement with, any other party, to sell each Mortgage Loan pursuant to this Agreement and following the sale of each Mortgage Loan, Buyer will own such Mortgage Loan free and clear of any encumbrance, equity, participation interest, Lien, pledge, charge, claim or security interest subject to the terms of this Agreement. Each Mortgage Loan was (a) acquired and transferred on a legal true sale basis pursuant to a Purchase Agreement, (b) such Transferor received reasonably equivalent value in consideration for the transfer of such Mortgage Loan, (c) no transfer was made for or on account of an antecedent debt owed by such Transferor to Seller or an Affiliate of Seller and (d) no such transfer is or may be voidable or subject to avoidance under the Bankruptcy Code.

ARTICLE 31 Title Insurance . The Mortgage Loan is covered by an ALTA lender’s title insurance policy or other form of title insurance reasonably acceptable to Buyer, in each case in accordance with the Servicing Standard.

ARTICLE 32 No Mechanics’ Liens . To the best of Seller’s Knowledge, there are no valid and enforceable mechanics’ or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under the law could give rise to such liens) affecting the Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the Lien of the Mortgage in each case, which are material and adverse to Buyer.

ARTICLE 33 Customary Provisions . The Mortgage Note has a stated maturity. The Mortgage contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security provided thereby, including, (i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale, and (ii) otherwise by judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan and foreclosure on, or trustee’s sale of, the Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage Loan will be able to deliver good and merchantable title to the Mortgaged Property.

ARTICLE 34 Occupancy of the Mortgaged Property . Neither Seller nor Servicer has received notification from any Governmental Authority that the Mortgaged Property is in material non-compliance with laws or regulations with respect to the use and occupancy of the Mortgaged Property, is being used, operated or occupied unlawfully or has failed to have or obtain such inspection, licenses or certificates, as the case may be. Neither Seller nor Servicer has received notice of any violation or failure to conform with any such law, ordinance, regulation, standard, license or certificate.

ARTICLE 35 No Additional Collateral . The Mortgage Note is not secured by any collateral except the Lien of the corresponding Mortgage and the security interest of any applicable security agreement or chattel mortgage referred to in clause (9) above; provided that the presence of any Additional Collateral does not impact or delay the foreclosure process.

ARTICLE 36 Deeds of Trust . In the event the Mortgage constitutes a deed of trust, a trustee, authorized and duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in the Mortgage, and no fees or expenses are or will become payable by Custodian or Buyer to the trustee under the deed of trust, except in connection with a trustee’s sale after default by the Mortgagor.

ARTICLE 37 Transfer of Mortgage Loans . Except for Mortgage Loans intended for purchase by GNMA or registered with MERS, the Assignment of Mortgage is or shall be in recordable form and is acceptable for recording under the laws of the jurisdiction in which the Mortgaged Property is located.

ARTICLE 38 Due-On-Sale . Except for any Mortgage Loan intended for purchased by GNMA, the Mortgage contains an enforceable provision for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the mortgagee thereunder.

ARTICLE 39 Condemnation . There is no current or threatened condemnation proceeding with respect to the Mortgaged Property.

ARTICLE 40 Collection Practices; Escrow Deposits; Interest Rate Adjustments . The origination and collection practices used by Seller have been in all respects in compliance with the Servicing Standard, applicable laws and regulations, and have been in all respects legal and proper. With respect to escrow deposits and Escrow Payments, all such payments are in the possession of, or under the control of, Servicer. To the best of Seller’s and Servicer’s Knowledge, all Escrow Payments collected by Seller’s Servicer have been collected in full compliance with state and federal law. No escrow deposits or Escrow Payments or other charges or payments due Seller or Servicer, as applicable, have been capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest Rate adjustments have been made in strict compliance with state and federal law and the terms of the related Mortgage Note.

ARTICLE 41 Servicemembers Civil Relief Act . The Mortgagor has not notified Servicer or Seller, and neither Seller nor Servicer has any Knowledge, of any relief requested or allowed to the Mortgagor under the Servicemembers Civil Relief Act of 2003.

ARTICLE 42 Proceeds of Mortgage Loan . The proceeds of the Mortgage Loan have not been and shall not be used by Seller or Servicer to satisfy, in whole or in part, any debt owed or owing by the Mortgagor to Seller or Servicer or any Affiliate thereof or correspondent of Seller or Servicer, except in connection with a refinanced Mortgage Loan.

ARTICLE 43 No Exception . Except as disclosed in accordance with Section 3.2 of the Custodial Agreement, Custodian has not noted any material exceptions on a Mortgage Loan Schedule or the related exceptions report issued pursuant to the Custodial Agreement with respect to the Mortgage Loan which would materially adversely affect the Mortgage Loan or Buyer’s interest in the Mortgage Loan.

ARTICLE 44 Reserved .

ARTICLE 45 Consumer Litigation . Neither Seller nor Servicer has received notice from any Person (including without limitation any Governmental Authority) that any Mortgage Loan is subject to any consumer litigation which could have a material and adverse effect on the value of any such Mortgage Loan.

ARTICLE 46 Located in U.S. No collateral (including, without limitation, the related real property and the dwellings thereon and otherwise) relating to a Mortgage Loan is located in any jurisdiction other than in one of the fifty (50) states of the United States of America or the District of Columbia or a territory of the United States of America.

ARTICLE 47 Environmental . To the best of Seller’s and Servicer’s Knowledge, the Mortgaged Property is free, in all material respects, from any and all toxic or hazardous substances, other than those commonly used for homeowner repair and maintenance and/or household purposes, and to the best of Seller’s and Servicer’s Knowledge, there exists no pending action or proceeding directly involving the Mortgaged Property in which material compliance with any environmental law, rule or regulation is at issue.

ARTICLE 48 Assignment Documents . Buyer shall have received executed assignments in the name of Buyer of all Mortgage Loan Documents in appropriate form for recording in the jurisdiction in which the underlying real estate is located (the “ Assignment Documents ”) within sixty (60) days of the related Purchase Date unless expressly waived by Buyer.

ARTICLE 49 Predatory Lending Regulations; High Cost Loans . No Mortgage Loan is (a) subject to the provisions of the Homeownership and Equity Protection Act of 1994 as amended (“HOEPA”), (b) a “high cost” mortgage loan, “covered” mortgage loan, “high risk home” mortgage loan, or “predatory” mortgage loan or any other comparable term, no matter how defined under any federal, state or local law, (c) subject to any comparable federal, state or local statutes or regulations, or any other statute or regulation providing for heightened regulatory scrutiny or assignee liability to holders of such mortgage loans, or (d) a High Cost Loan or Covered Loan, as applicable (as such terms are defined in the current Standard & Poor’s LEVELS® Glossary Revised, Appendix E).

SCHEDULE 1-B

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO

REO PROPERTY

(1) Assets as Described . The information set forth in the REO Property Summary with respect to such REO Property is complete, true and correct.

(2) Ownership . The applicable Trust is the sole owner and it is the holder of the REO Property. The REO Property is free and clear of any Lien or encumbrance other than (A) Liens for real estate taxes not yet due and payable, (B) covenants, conditions and restrictions, rights of way, easements and other matters of public record as of the date of recording of the related security instrument, such exceptions appearing of record being acceptable to mortgage lending institutions generally, (C) homeowner association or other similar Liens not extinguished pursuant to the foreclosure under applicable state law (which related fees shall be paid within a reasonable time following such foreclosure), and (D) other matters to which like properties are commonly subject which do not, individually or in the aggregate, materially interfere with the use, enjoyment or marketability of the REO Property. Except with respect to any right of redemption to which such title may be subject as identified on the related REO Property Schedule, the applicable Trust has good and marketable title to the REO Property with full right to transfer and sell the REO Property to Buyer.

(3) Hazard Insurance . The REO Property is insured by a fire and extended perils insurance policy, issued by a Qualified Insurer, and such other hazards as are customary in the area where the REO Property is located, and to the extent required by Seller as of the date of origination, against risks commonly insured against by Persons owning like properties in the locality of the REO Property, in an amount not less than 100% of the insurable value of the REO Property. If any portion of the REO Property is in an area identified by any federal Governmental Authority as having special flood hazards, and flood insurance is reasonably available, a flood insurance policy meeting the current guidelines of the Federal Emergency Management Agency is in effect with a generally acceptable insurance carrier, in an amount representing coverage not less than the least of (x) 100% of the insurable value of the REO Property, and (y) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended by the Flood Disaster Protection Act of 1974, unless such REO Property is a condominium. All such insurance policies (collectively, the “hazard insurance policy”) contain a standard mortgagee clause naming either of Seller or Servicer, its successors and assigns (including, without limitation, subsequent owners of the REO Property), as mortgagee, and may not be reduced, terminated or canceled without thirty (30) days’ prior written notice to the mortgagee. No such notice has been received by Seller or Servicer, as applicable. All premiums on such hazard insurance policy that have become due have been paid.

(4) Taxes, Assessments and Other Charges . All required taxes, homeowner or similar association fees, charges, and assessments, governmental assessments, insurance premiums, water, sewer and municipal charges, leasehold payments or ground rents which previously became due and owing have been paid.

(5) Condemnation . There is no current or threatened condemnation proceeding with respect to the REO Property.

(6) Environmental . To the best of Seller’s and Servicer’s Knowledge, the REO Property is free, in all material respects, from any and all toxic or hazardous substances, other than those commonly used for homeowner repair and maintenance and/or household purposes, and to the best of Seller’s and Servicer’s Knowledge, there exists no pending action or proceeding directly involving the REO Property in which material compliance with any environmental law, rule or regulation is at issue.

(7) No Violation of Law . None of Seller, Servicer, or the applicable Trust has received any written notice that there exists a violation that would have a material adverse effect on the value of the REO Property or Buyer’s interest therein or of any local, state or federal environmental law, rule or regulation with respect to the REO Property. There has been no violation of any law or regulation or breach of any contractual obligation contained in any agreement included in the Asset Documents, by Seller or the applicable Trust, in connection with the management of the REO Property in each case which is material and adverse to the Buyer.

(8) Compliance . All parties which have had any interest in the REO Property following the most recent foreclosure, whether as owner, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (1) in compliance with any and all applicable licensing requirements of the laws of the state wherein the REO Property is located, and (2) organized under the laws of such state, or (3) qualified to do business in such state, or (4) federal savings and loan associations or national banks having principal offices in such state, or (5) not doing business in such state except, in each case, where any such failure is not material and adverse to Buyer.

(9) REO Property Undamaged . Except as disclosed in an REO Property Summary, each of Seller, Servicer and the applicable Trust has no Actual Knowledge of any REO Property that is damaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado, vandalism, natural disaster or other casualty which could have a material and adverse effect on the value of such REO Property.

(10) Eviction Proceedings . To the best of Seller’s Knowledge, any eviction proceeding relating to an REO Property that has been commenced has been commenced in accordance with applicable law and such eviction proceeding will not materially and adversely affect Buyer.

(11) No Cooperatives . Unless otherwise noted in the related REO Property Schedule, the REO Property is not a cooperative, except to the extent the purchase of same has been approved in writing by Buyer.

(12) Servicing . The REO Property has been and is currently being managed and maintained by the Servicer and any other prior property manager in compliance with all applicable laws and regulations and customary practices employed by managers of similar REO Property in accordance with the Servicing Agreement.

(13) No Litigation . Other than any customary claim or counterclaim arising out of any foreclosure or collection proceeding relating to any REO Property, there is no litigation, proceeding or governmental investigation pending, or any order, injunction or decree outstanding, existing or relating to Seller, the Trust or any of their Affiliates with respect to the REO Property that would materially and adversely affect the value of the REO Property.

(14) No Mechanics’ Liens . To the Seller’s Actual Knowledge, there are no valid and enforceable mechanics’ or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under the law could give rise to such liens) affecting the REO Property, which are material and adverse to Buyer.

(15) No Non-Terminable Leases; No New Leases . There are no existing lease agreements with any tenant with respect to the REO Property which (i) are not terminable upon the expiration of any notice period required by applicable law and would have a material adverse effect on the value of the REO Property or Buyer’s interest therein; or (ii) were entered into after the related foreclosure date.

(16) Management and Other Contracts . To the knowledge of Seller and Servicer, there are no material management, service, supply, security, maintenance or other similar contracts or agreements with respect to any REO Property which are not terminable at will and if not terminated would have a material adverse effect on the value of the REO Property or Buyer’s interest therein.

(17) No Occupants . Other than with respect to an REO Property as to which the redemption period has not yet expired or the eviction process has not yet been completed, to the knowledge of Seller and Servicer, no holdover borrower has any right to occupy or is currently occupying any REO Property.

SCHEDULE 1-C

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO

TRUST CERTIFICATES

(1) Seller has good and marketable title to, is the sole owner and holder of, such Trust Certificate, and has full right, power and authority to sell and assign such Trust Certificate. Other than consents and approvals obtained as of the related Purchase Date or those already granted in the documents governing such Trust Certificate, no consent or approval by any Person is required in connection with Buyer’s acquisition of such Trust Certificate, for Buyer’s exercise of any rights or remedies in respect of such Trust Certificate or for Buyer’s sale or other disposition of such Trust Certificate. No third party holds any “right of first refusal”, “right of first negotiation”, “right of first offer”, purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies.

(2) With respect to each Trust Certificate, Seller has delivered to Securities Custodian such certificated security registered in the name of Buyer.

(3) Each Trust Certificate constitutes 100% of the economic and beneficial ownership interest in the trust estate held by the related Trust, and has not been cancelled, satisfied or rescinded in whole or part nor has any instrument been executed that would effect a cancellation, satisfaction or rescission thereof.

(4) Upon consummation of the purchase contemplated to occur in respect of such Trust Certificate on the Purchase Date therefor, Seller will have validly and effectively conveyed to Securities Custodian all legal and beneficial interest in and to such Trust Certificate free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature encumbering such Trust Certificate, other than the security interests and Liens created in favor of Buyer pursuant to the Repurchase Documents or by or through Buyer.

(5) Each Trust Certificate has been duly and validly issued in compliance with the related Trust Agreement, as applicable, and as of the date of its issuance such Trust Certificate complied in all material respects with, or was exempt from, all requirements of federal, state or local law relating to the issuance thereof including, without limitation, any registration requirements of the Securities Act of 1933, as amended.

(6) There is no document that by its terms modifies or affects the rights and obligations of the holder of such Trust Certificate, or the terms of the related Trust Agreement or any other agreement relating to the Trust Certificate and, since issuance, there has been no material change or waiver to any term or provision of any such document, instrument or agreement.

(7) With respect to the Trust Agreement related to each Trust Certificate, there exists no (i) monetary default, breach or violation, (ii) material non-monetary default, breach or violation, or (iii) event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration under such Trust Agreement.

(8) No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority over Seller is required for any transfer or assignment of such Trust Certificate.

(9) Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of such Trust Certificate is or may become obligated.

SCHEDULE 2

NOTICE ADDRESSES AND WIRE INSTRUCTIONS

SELLER :

General Notices:

Altisource Residential, L.P.

402 Strand Street

Frederiksted, USVI 00840-3531

Notices regarding Events of Default or Termination:

Altisource Residential, L.P.

402 Strand Street

Frederiksted, USVI 00840-3531

For Payments to Seller:

BUYER :

Wells Fargo Bank, National Association

c/o Wells Fargo Securities LLC

550 S. Tryon Street

MAC D1086-051

Charlotte, North Carolina 28202

Telephone: 704-410-2495

Fax: (704) 410-0220

Attn: Goetz Rokahr

Email: goetz.rokahr@wellsfargo.com

For Payments to Buyer :

SCHEDULE 3

SCHEDULE OF EXCEPTIONS TO ANY REPRESENTATIONS AND WARRANTIES

None.

SCHEDULE 4

SCHEDULE OF INDEBTEDNESS

None.

Exhibit 10.25

FAY SERVICING, LLC,

as Servicer

and

ALTISOURCE RESIDENTIAL, L.P.,

as Initial Owner

_____________________________

FLOW SERVICING AGREEMENT

Dated as of January 24, 2015

Residential Mortgage Loans and REO Properties

TABLE OF CONTENTS

ARTICLE I. DEFINITIONS 1

ARTICLE II. OWNER ENGAGEMENT OF SERVICER AND COVENANTS 1

Section 2.01. Contract for Servicing; Possession of Servicing Files 1

Section 2.02. Assistance and Cooperation of Servicer 3

Section 2.03. Access to Information; Quality Control Procedures 5

Section 2.04. Tax and Flood Service Contracts 6

Section 2.05. Government Sponsored Programs and Legislation 7

ARTICLE III. SERVICING OF THE ASSETS 7

Section 3.01. Servicer to Service 7

Section 3.02. Servicing Requirements Imposed by Prior Sellers and Financing Parties 8

ARTICLE IV. OWNER REMITTANCE 8

Section 4.01. Remittances to Owner 8

Section 4.02. Statements to Owner 9

ARTICLE V. SERVICER 9

Section 5.01. Merger or Consolidation of Servicer 9

Section 5.02. Limitation on Liability of Servicer and Others 9

Section 5.03. Transactions with Related Persons 10

Section 5.04. Limitation on Resignation and Assignment by Servicer 10

Section 5.05. Annual Report and Officer’s Certificate; Audit Reports 11

Section 5.06. Disaster Recovery Plan 11

ARTICLE VI. REPRESENTATIONS AND WARRANTIES 12

Section 6.01. Representations and Warranties of Servicer 12

Section 6.02. Indemnification by Servicer 14

Section 6.03. Representations and Warranties of Owner 14

Section 6.04. Indemnification by Owner 15

Section 6.05. Third-Party Claims 15

ARTICLE VII. TERMINATION 16

Section 7.01. Termination With Cause 16

Section 7.02. Termination Without Cause 18

Section 7.03. Successor to Servicer 18

ARTICLE VIII. MISCELLANEOUS PROVISIONS 20

Section 8.01. Costs and Attorneys’ Fees 20

Section 8.02. Jurisdiction; Waiver of Jury Trial 20

Section 8.03. Notices 20

Section 8.04. Severability Clause 20

Section 8.05. Counterparts 21

Section 8.06. Governing Law 21

Section 8.07. Further Agreements; Waivers 21

Section 8.08. Intention of the Parties 21

Section 8.09. Successors and Assigns; Transfer of Mortgage Loans 21

Section 8.10. General Interpretive Principles 22

Section 8.11. Delivery of Reports; Reproduction of Documents 23

Section 8.12. [Reserved] 23

Section 8.13. Financial Statements; Servicing Facilities 23

Section 8.14. Reconstitution 23

Section 8.15. Compliance with REMIC Provisions 24

Section 8.16. Confidentiality 25

EXHIBITS


EXHIBIT A	DEFINITIONS


EXHIBIT B	FORM OF ACKNOWLEDGMENT AGREEMENT


EXHIBIT C	RESERVED


EXHIBIT D	FORM OF OFFICER’S CERTIFICATE


EXHIBIT E	FORM OF OPINION OF COUNSEL

EXHIBIT F SERVICING PERFORMANCE DUTIES AND STANDARDS

EXHIBIT G FORM OF POWER OF ATTORNEY

EXHIBIT H DATA TAPE FIELDS

This FLOW SERVICING AGREEMENT, dated as of January 24, 2015, is by and between ALTISOURCE RESIDENTIAL, L.P. (“ Initial Owner ”) and FAY SERVICING, LLC (“ Servicer ”).

W I T N E S S E T H:

WHEREAS, Initial Owner has acquired and from time to time intends to acquire nonperforming Mortgage Loans (as defined herein) pursuant to the terms of certain mortgage loan purchase agreements between Initial Owner (or a wholly owned trust) and certain third party sellers on a servicing-released basis;

WHEREAS, Initial Owner desires to retain Servicer to subservice and provide certain management and disposition services for the Assets (as defined herein) for the benefit of the applicable Owner (as defined herein) commencing on the related Servicing Commencement Date (as defined herein), and Initial Owner and Servicer desire to set forth the terms and conditions on which Servicer will subservice and provide management and disposition services for the Assets, all as provided in this Agreement;

WHEREAS, Initial Owner and Servicer intend to enter into an Acknowledgement Agreement (as defined herein) at the time any mortgage loans become subject to this Agreement;

WHEREAS, Initial Owner has transferred or intends to transfer its interest in the Mortgage Loans and its rights under this Agreement to one or more trusts at or about the time it acquires the Mortgage Loans, which trust shall be deemed to be the “Owner” under this Agreement with respect to such Mortgage Loans; and

WHEREAS, Initial Owner shall act as the administrator for each Owner and shall be authorized to act on behalf of each Owner under this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, and for other good and reasonable consideration, the receipt and adequacy of which is hereby acknowledged, Initial Owner and Servicer hereby agree as follows:

ARTICLE I. DEFINITIONS

Certain capitalized terms used in this Agreement shall be defined as per Exhibit A .

ARTICLE II. OWNER ENGAGEMENT OF SERVICER AND COVENANTS

Section 2.01. Contract for Servicing; Possession of Servicing Files .

(a) Owner shall notify Servicer not less than thirty (30) calendar days (or as otherwise mutually agreed upon by Owner and Servicer) prior to any proposed Servicing Commencement Date that it desires to have Servicer service the Mortgage Loans in the related Asset Pool pursuant to the terms of this Agreement and shall forward to Servicer the related Acknowledgement Agreement and a computer readable electronic transmission of the related Asset Servicing Schedule, containing the information specified in Exhibit I to the extent available; provided , however , that such data tapes are not required to be delivered with respect to any Mortgage Loan Servicer is servicing as of the date of such Acknowledgment Agreement. In the event that Servicer elects not to service such mortgage loans pursuant to the terms hereof, Servicer shall advise Owner in writing of such election within two (2) Business Days of receipt of the foregoing notice from Owner. Otherwise, Servicer shall countersign and return the Acknowledgment Agreement to Owner within three (3) calendar days of receipt thereof and each Mortgage Loan in the related Asset Pool shall be subject to this Agreement as of the related Servicing Commencement Date. Within thirty (30) days of each Servicing Commencement Date, Owner shall pay to Servicer, in immediately available funds wired to an account designed by Servicer, the Boarding Fee attributable to each Mortgage Loan transferred to Servicer on such Servicing Commencement Date, unless Servicer was servicing such Mortgage Loan as of the date of the related Acknowledgment Agreement.

(b) In accordance with Section 2.01(a) , as of each Servicing Commencement Date, Owner shall be deemed to have contracted with and engaged Servicer, and Servicer shall be deemed to have accepted such engagement, to perform the servicing and administration obligations and functions set forth in this Agreement for each Asset which is identified on the related Asset Servicing Schedule. Each Asset Servicing Schedule shall supplement this Agreement and be deemed to be a part hereof and be incorporated herein by reference. As compensation for such engagement, Owner agrees to pay Servicer, and Servicer agrees to accept as payment, the Servicing Fees as set forth in the Fee Letter. Servicer shall commence the servicing of an Asset hereunder on the applicable Servicing Commencement Date with respect to such Asset.

(c) With respect to each Mortgage Loan to be serviced hereunder, Owner shall use commercially reasonable efforts to cause the Prior Servicer to comply with the requirements set forth in Section 1(a) of Exhibit F in all material respects and shall cause the Prior Servicer to deliver to Servicer the Servicing File for each related Mortgage Loan not later than five (5) Business Days after the Servicing Commencement Date. Any fees and expenses incurred in transferring the Servicing File to Servicer shall be the obligation of Owner. In the event that the Servicing File fails to contain any material document that is necessary for Servicer to service the related Mortgage Loans on the date on which the Servicing File is required to be delivered to Servicer, Servicer shall notify Owner, and Owner shall use reasonable efforts, at Owner’s expense, to cause to be delivered promptly to Servicer any necessary missing documents therefrom, or, upon the request of Owner and at Owner’s expense, Servicer may, for a fee acceptable to Owner, undertake to obtain any missing documents therefrom.

(d) Owner and Servicer agree to cooperate with respect to all reasonable requests made by either such party to the other in connection with the transfer of servicing to Servicer pursuant to this Agreement. For the avoidance of doubt, any transfer of servicing of the Mortgage Loans to Servicer under this Agreement shall be on a subservicing basis and Owner shall retain full and complete ownership of the related servicing rights with respect to the Mortgage Loans.

(e) Servicer shall comply with all Applicable Requirements with respect to servicing transfers. In addition, Servicer shall comply with the CFPB’s rules and/or guidelines with respect to servicing transfers, including without limitation its Bulletin 2014-1 issued on August 19, 2014. Servicer and Owner shall provide all reasonable cooperation and assistance as may be requested by the other party in connection with compliance with such rules and/or guidelines. Servicer and Owner shall cooperate after the applicable Servicing Commencement Date to promptly resolve all customer complaints, disputes and inquiries related to activities that occurred prior to such transfer date or in connection with the transfer of servicing.

(f) Simultaneously with the execution and delivery of this Agreement, (1) Servicer shall execute and deliver to Owner an Officer’s Certificate in the form of Exhibit D hereto and an Opinion of Counsel in the form of Exhibit E hereto. If reasonably required by Servicer, Owner shall furnish Servicer with any powers of attorney in a form attached hereto as Exhibit H and other documents necessary or appropriate to enable Servicer to carry out its servicing and administrative duties under this Agreement.

(g) Record title to the Mortgage Loans shall be retained by Owner or its designee, and possession of any Servicing Files delivered to Servicer shall be held in trust for Owner as the owner thereof, for the sole purpose of servicing the Mortgage Loans. The ownership of each Mortgage Loan, including the Mortgage Note, the Mortgage, the Mortgage Loan Documents, the contents of the related Servicing File and all rights, benefits, proceeds and obligations arising therefrom or in connection therewith, is vested in Owner. All rights arising out of the Mortgage Loans including, but not limited to, all funds received on or in connection with the Mortgage Loans and all records or documents with respect to the Mortgage Loans prepared by or which come into the possession of Servicer shall be received and held by Servicer in trust for the benefit of Owner as the owner of the Mortgage Loans. Any portion of the Servicing Files held by Servicer shall be segregated from the other books and records of Servicer and shall be appropriately marked to clearly reflect the ownership of the Mortgage Loans by Owner. Servicer shall release its custody of the contents of the Servicing Files only in accordance with written instructions of Owner, except when such release is required as incidental to Servicer’s servicing of the Mortgage Loans.

(h) Servicer shall be responsible for maintaining, and shall maintain, a complete set of books and records for the Mortgage Loans which shall be clearly marked to reflect the ownership of the Mortgage Loans by Owner. Owner and its agents may, from time to time and at Owner’s cost and expense, upon reasonable prior notice, inspect any of Servicer’s books and records pertaining to this Agreement, including without limitation all Servicing Files, at reasonable times during Servicer’s normal business hours at Servicer’s offices.

Section 2.02. Assistance and Cooperation of Servicer .

(a) In the event Servicer’s membership in MERS is terminated for any reason and any of the Mortgage Loans then serviced by Servicer are MERS Designated Mortgage Loans, Servicer shall, upon Owner’s request and at Servicer’s own expense (without reimbursement), prepare and cause MERS to execute and deliver an assignment of Mortgage in recordable form to transfer the Mortgage from MERS to Owner or its designee and to execute and deliver such other notices, documents and other instruments as may be necessary or desirable to effect a transfer of such Mortgage Loan.

(b) Servicer shall provide Owner with prompt written notice regarding the occurrence of a MERS Event. Servicer shall, upon receipt of Owner’s written instructions and at Owner’s expense, promptly deregister and prepare and submit an assignment to remove from the MERS System each MERS Designated Mortgage Loan that is subject to a MERS Event within fifteen (15) Business Days of Servicer’s receipt of Owner’s consent. Servicer shall notify Owner upon the removal of a MERS Designated Mortgage Loan from the MERS System.

(c) Within ten (10) days of Owner’s request, Servicer, at Owner’s expense, shall furnish to each Mortgagor the Section 404 Notice to the extent required by Section 404 of the Helping Families Save Their Homes Act of 2009 (the “ Helping Families Act ”) in accordance with the provisions of the Helping Families Act. In addition, if requested by Owner, in connection with any Whole Loan Transfer or Securitization Transaction with respect to any of the Mortgage Loans, Servicer, at Owner’s expense, shall furnish to each related Mortgagor, within thirty (30) days following the closing date with respect to such Whole Loan Transfer or Securitization Transaction, a Section 404 Notice with respect to the assignment of such Mortgage Loan, which notice shall identify Owner’s assignee (with respect to a Whole Loan Transfer) or the Securitization Transaction trust (with respect to a Securitization Transaction), as applicable, as the new owner of the Mortgage Loan and include any other information required by the Helping Families Act. Servicer shall include in the Servicing File a copy of each Section 404 Notice furnished to a Mortgagor pursuant to this Section 2.02(c) .

(d) Within ten (10) days following the related Servicing Commencement Date (or such date otherwise agreed to by Servicer and Owner) and as required thereafter by the Privacy Laws (but not less than on a yearly basis), Servicer, at Owner’s expense, shall furnish to each Mortgagor each notice required to be provided to such Mortgagors in accordance with the Privacy Laws. Such notices shall be in the form provided by Owner or otherwise mutually agreed by Owner and Servicer.

(e) Servicer shall screen all existing Mortgagors and related mortgage participants upon any update to the Sanction Lists. Additionally, Servicer will screen, or take appropriate steps to ensure any Vendor engaged by Servicer will screen applicable wire and ACH transactions against the Sanctions Lists. Servicer’s policies and procedures shall detail steps (i) to identify and resolve potential matches against the Sanction Lists, (ii) to escalate all potential matches to Owner for mandatory review, and (iii) required for record retention in accordance with applicable Law.

Servicer shall maintain, policies, procedures, training and internal controls reasonably designed to detect and investigate potential suspicious activity and fraud by Mortgagors and related mortgage participants in compliance with the requirements of this Section 2.02(e) . Servicer will promptly disclose to Owner potentially suspicious or unusual activity detected as part of the services performed on behalf of Owner. Servicer shall coordinate the filing of any necessary Suspicious Activity Reports (“ SARs ”) with respect to the Mortgagors and related mortgage participants with Owner, if appropriate, and will maintain records of all such SARs filed and investigations performed in accordance with applicable Law. Servicer shall maintain reasonably adequate policies and procedures detailing steps (i) to conduct investigations in a timely manner that is consistent with applicable Law, (ii) to maintain appropriate records for reviews, investigations and escalations, and (iii) if applicable, to review requests made pursuant to Section 314(a) of the USA Patriot Act through the Financial Crimes Enforcement Network.

On a case-by-case basis, Owner may request additional documentation from Servicer as it relates to the requirements and subject matter of this Section 2.02(e) if such documentation is warranted to address potential law enforcement requests, regulatory inquiries, compliance testing, and any general inquiry and Servicer agrees to fully cooperate with Owner in obtaining and providing such additional information.

Section 2.03. Access to Information; Quality Control Procedures .

(a) Servicer shall provide to Owner, its regulators and any other state, federal or other regulatory authority that may exercise authority over Owner or its affiliates access to any documentation regarding the servicing of the Mortgage Loans (except for documents Servicer reasonably believes it is prohibited by its regulators from sharing with Owner). Such access shall be afforded without charge, but only upon reasonable request, during normal business hours and at the offices of Servicer. Servicer shall cooperate in good faith with Owner, its agents and regulators in responding to any reasonable inquiries regarding Servicer’s servicing of the Mortgage Loans and Servicer’s compliance with, and ability to perform its obligations under, the provisions of this Agreement, including without limitation inquiries regarding Servicer’s qualifications, expertise, capacity and staffing levels, training programs, work quality and workload balance, reputation (including complaints), information security, document custody practices, business continuity and financial viability, monitoring and oversight of its Vendors as well as the current accuracy of the representations and warranties made by Servicer in Section 6.01 . Owner may request, and Servicer shall cooperate with, periodic reviews of Servicer’s performance and competence under this Agreement to confirm timeliness, completeness and compliance with all applicable Laws and the provisions of this Agreement and to ensure that foreclosures are conducted in a manner consistent with all applicable Laws and any regulatory orders, directives or guidance applicable to Owner, Servicer or their respective affiliates.

Servicer shall conduct periodic reviews, according to a timeframe that is consistent with Applicable Requirements, of its Vendors that are involved in performing servicing activities related to this Agreement to confirm compliance, timeliness and completeness with the terms of this Agreement and all applicable Laws, including without limitation compliance with all applicable legal and regulatory requirements and guidance with respect to foreclosure proceedings applicable to Owner and Servicer.

Owner and its designees shall have the right to examine and audit Servicer’s mortgage loan servicing operations, including all of the servicing systems, computer systems, books, records or other information of Servicer, whether held by Servicer or by another on its behalf, with respect to or concerning this Agreement or the Mortgage Loans, during normal business hours or as otherwise acceptable to Servicer, upon at least fifteen (15) days’ advance written notice. Servicer shall facilitate such audits and in connection therewith shall provide Owner and its agents and its contractors reasonable access (on a supervised basis) to Servicer’s offices, servicing systems, computer systems, books and records concerning this Agreement, the Mortgage Loans and Servicer’s general servicing practices and procedures during normal business hours. Servicer also shall make available to Owner knowledgeable executive, financial and accounting officers for the purpose of answering questions regarding any of the foregoing.

(b) Servicer shall (i) maintain a log of all inquiries received from regulators or other governmental authorities (including, without limitation, the CFPB) relating to the Mortgage Loans, (ii) provide a copy of such log to Owner on a monthly basis, (iii) notify Owner promptly upon receipt from any such entity of an allegation of or inquiry relating to an alleged material violation of applicable Law, including, but not limited to, an allegation of discrimination by Servicer, and provide a copy of any such allegation or inquiry to Owner, and (iv) cooperate fully with Owner to respond promptly and completely to any such allegations or inquiries and similarly to any such allegations or inquiries received by Owner.

Servicer shall maintain a log of all complaints received by Servicer from a Mortgagor with respect to a Mortgage Loan serviced hereunder, including without limitation complaints alleging a violation of applicable Law, provide a copy of such log to Owner and copies of any correspondence or documentation relating to any such complaint promptly upon request by Owner. Servicer shall maintain a customer complaint management program, with sufficient qualified staffing and information system resources to timely respond to customer complaints and take appropriate corrective actions.

(c) Servicer shall have an internal quality control program that adheres to Applicable Requirements. The program shall include evaluating and monitoring the overall quality of Servicer’s loan servicing activities and any Vendors utilized by Servicer. The program shall be designed to (i) ensure that the Mortgage Loans are serviced in accordance with Applicable Requirements (including all applicable regulations, rules, directives and published guidance of the CFPB and any other applicable state or federal regulators or Governmental Authorities, as such may be amended, modified or supplemented from time to time) and this Agreement, as applicable, (ii) guard against dishonest, fraudulent, or negligent acts and against errors and omissions by Servicer’s officers, employees, or agents, and (iii) verify that all documents filed or otherwise utilized by Servicer or any Vendor in any foreclosure or bankruptcy proceeding or other foreclosure-related litigation and all compensation arrangements with such parties are consistent with this Agreement.

Servicer also shall maintain a MERS quality assurance plan designed to ensure compliance with all MERS requirements, Applicable Requirements and this Agreement and shall provide Owner with a copy of such plan as well as the results of any audit or review pursuant to such quality assurance plan on at least a quarterly basis. Servicer shall provide Owner with prompt notice of any material modification to its MERS quality assurance plan made after the date hereof and agrees to cooperate in good faith in addressing any questions or concerns of Owner regarding such modification. Servicer shall cooperate with any audit by Owner with respect to the MERS Designated Mortgage Loans and compliance with the MERS requirements, including providing access to any relevant documentation or information in connection therewith.

Section 2.04. Tax and Flood Service Contracts .

In the event that a Mortgage Loan is not subject to a fully assignable life of loan tax service contract and fully assignable flood zone determination contract, Servicer shall acquire a tax service contract or flood zone determination contract, as applicable, for any such Mortgage Loan at a cost not to exceed the amount set forth in the Fee Letter or otherwise mutually agreed by Owner and Servicer. Owner shall be responsible for any actual transfer fees required in connection with transferring tax service contracts or flood zone determination contracts to Servicer. Servicer shall deliver an invoice on a monthly basis to Owner with respect to the costs of acquiring or transferring any tax service contracts and flood zone determination contracts and Owner shall reimburse Servicer for such costs within thirty (30) days of receiving such invoice.

Section 2.05. Government Sponsored Programs and Legislation .

In response to economic events, federal, state and local authorities have enacted new legislation, rules, programs and regulations relating to the origination, servicing and modification of mortgage loans. Although Servicer may be participating in HAMP and other government sponsored programs, Servicer hereby agrees and acknowledges that it shall make modifications with respect to the Mortgage Loans only to the extent such modifications comply with the provisions of Exhibit F. Additionally, Owner and Servicer agree that Servicer may be required in the future to participate in other government or industry-sponsored programs or be bound by government legislation or regulations that may materially affect the terms of this Agreement. Notwithstanding such participation, to the extent permitted under Applicable Requirements, Servicer shall only offer modifications that comply with the provisions of Exhibit F. Notwithstanding the foregoing, unless otherwise directed by Owner or required under applicable Laws, Servicer will not participate in HAMP or other government sponsored programs with respect to any Mortgage Loans, unless the modifications of such Mortgage Loans were in process as of the related Servicing Commencement Date.

ARTICLE III. SERVICING OF THE ASSETS

Section 3.01. Servicer to Service .

(f) In accordance with the terms of this Agreement and the Applicable Requirements, and in cooperation with Owner, Servicer, as an independent contractor, shall service and administer each of the Assets on behalf of, and in the best interests of, Owner from and after the related Servicing Commencement Date. Servicer shall have full power and authority, acting alone or, to the extent contemplated by and in accordance with Applicable Requirements, through the utilization of a service provider, to do any and all things in connection with such servicing and administration which Servicer may deem necessary or desirable, consistent in each case with the terms of this Agreement and the Applicable Requirements.

(g) In servicing and administering the Mortgage Loans, Servicer shall employ collection procedures consistent with Applicable Requirements. Servicer shall not consent to the placement of any additional lien on the Mortgaged Property or any REO Property without notifying and obtaining the written consent of Owner. Servicer shall not consent to the placement of a lien on the Mortgaged Property or any REO Property senior to that of the related Mortgage.

(h) Servicer will ensure adequate staffing, training and procedures in fulfillment, collections, loss mitigation, customer service, customer complaint, foreclosure, REO Property and bankruptcy departments to ensure appropriate and timely communications with borrowers and to properly manage the Mortgage Loans and REO Properties.

(i) Unless otherwise agreed to by Servicer and Owner, Servicer shall be responsible for any and all acts of a service provider, other than any Custodian under a Custodial Agreement or any service providers for acts prior to the related Servicing Commencement Date, and Servicer’s utilization of such any service provider shall in no way relieve the liability of Servicer under this Agreement. Notwithstanding the provisions of any agreement between Servicer and such service provider, any of the provisions of this Agreement relating to agreements or arrangements between Servicer or a service provider or reference to actions taken through Servicer or otherwise, Servicer shall remain obligated and liable to Owner for the servicing and administration of the Assets in accordance with the provisions of this Agreement without diminution of such obligation or liability by virtue of such agreements or arrangements with the service provider or by virtue of indemnification from Servicer and to the same extent and under the same terms and conditions as if Servicer alone were servicing and administering the Assets.

Section 3.02. Servicing Requirements Imposed by Prior Sellers and Financing Parties .

Servicer acknowledges that Owner may acquire Mortgage Loans under a Mortgage Loan Purchase Agreement pursuant to which Owner (and its assigns) may be obligated to undertake or continue certain actions, or to not take certain actions, with respect to the Mortgage Loans, to meet certain timelines relating to such Mortgage Loans and to cooperate with respect to certain matters arising with respect to such Mortgage Loans (“Third Party Servicing Requirements”). In addition, an Owner may finance Mortgage Loans with one or more Financing Parties that may impose Third Party Servicing Requirements on Owner or its servicer. Owner shall cause any Third Party Servicing Requirements arising under a Mortgage Loan Purchase Agreement or in connection with a Financing Party to be set forth or referenced in the related Acknowledgement Agreement or in such other manner as mutually agreed by Owner and Servicer. To the extent referenced in the applicable Acknowledgment Agreement, Servicer shall perform such Third Party Servicing Requirements arising on and after the applicable Servicing Commencement Date and shall take such actions as are necessary for Owner to remain in compliance with such Third Party Servicing Requirements following the related Servicing Commencement Date.

ARTICLE IV. OWNER REMITTANCE

Section 4.01. Remittances to Owner .

(d) On each Remittance Date and on such other Business Day as Owner requests at least one (1) Business Day in advance thereof, Servicer shall cause to be distributed to Owner all amounts on deposit in the Custodial Account as of the close of business on the preceding Determination Date (net of charges against or withdrawals from the Custodial Account pursuant to Section 3(d) of Exhibit F ). All remittances made to Owner shall be made by wire transfer of immediately available funds to the account designated by Owner at a bank or other entity having appropriate facilities therefor identified by Owner to Servicer or by check mailed to the address of Owner.

(e) With respect to any remittance received by Owner on or after the Business Day following the Business Day on which such payment was due, then Servicer shall pay to Owner interest on any such late deposit at an annual rate equal to the prime rate as published as the average rate in The Wall Street Journal, adjusted as of the date of each change, plus three (3) percentage points, but in no event greater than the maximum amount permitted by applicable Law. Such interest shall be paid by Servicer to Owner on the date such late payment is made and shall cover the period commencing with the day following such Business Day and ending with the Business Day on which such payment is made, both inclusive. Such interest shall be remitted along with such late payment. The payment by Servicer of any such interest shall not be deemed an extension of time for payment or a waiver of any Event of Default by Servicer.

(f) Servicer shall prepare and file any and all tax returns, information statements or other filings required to be delivered to any governmental taxing authority pursuant to any Applicable Requirements with respect to the Mortgage Loans relating to the period the related Mortgage Loans are serviced under this Agreement.

Section 4.02. Statements to Owner .

On or prior to the eighth (8th) Business Day of every calendar month, and in accordance with Section 19 of Exhibit F , Servicer shall furnish to each Owner or its respective designee electronic monthly remittance reports as specified by such Owner or its designee, in each case relating to the period consisting of the preceding calendar month. Servicer shall provide separate accounting and reporting for each Owner.

ARTICLE V. SERVICER

Section 5.01. Merger or Consolidation of Servicer .

(a) Servicer shall keep in full effect its existence, rights and franchises, and shall obtain and preserve its qualification to do business and other regulatory approvals, licenses and qualifications in each jurisdiction in which such approvals, licenses and qualifications are or shall be necessary to protect the validity and enforceability of this Agreement or any of the Assets and to perform its duties under this Agreement.

(b) Any Person into which Servicer may be merged or consolidated, or any corporation, limited liability company or other entity resulting from any merger, conversion or consolidation to which Servicer shall be a party, or any Person succeeding to the business of Servicer, or any Person acquiring all or substantially all of the assets of Servicer, shall be the successor of Servicer 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; provided , however , that the successor or surviving party (i) be an established mortgage loan servicing institution that is a Fannie Mae or Freddie Mac approved seller/servicer in good standing and (ii) have a net worth of not less than $30,000,000.

Section 5.02. Limitation on Liability of Servicer and Others .

(a) Except as otherwise provided in Section 6.03 , neither Servicer nor any of the directors, officers, employees or agents of Servicer shall be under any liability to Owner for any action taken or for refraining from the taking of any action in good faith pursuant to this Agreement, or for errors in judgment; provided , however , that this provision shall not protect Servicer or any such person against any breach of warranties or representations made herein, or failure to perform its obligations in strict compliance with the provisions of this Agreement, or any liability which would otherwise be imposed by reason of any breach of the terms and conditions of this Agreement.

(b) Servicer and any director, officer, employee or agent of Servicer may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder.

(c) Except as otherwise set forth herein, Servicer shall not be under any obligation to appear in, prosecute or defend any legal action which is not incidental to its duties to service the Assets in accordance with this Agreement and which in its opinion may involve it in any expense or liability; provided , however , that Servicer may, with the consent of Owner, undertake any such action which it may deem necessary or desirable in respect of this Agreement and the rights and duties of the parties hereto. In such event, Servicer shall be entitled to reimbursement from Owner for the reasonable legal expenses and costs of such action.

(d) NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE PARTIES AGREE HERETO THAT NO PARTY HERETO SHALL BE LIABLE TO ANY OTHER PARTY HERETO FOR ANY SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES WHATSOEVER, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR ANY OTHER LEGAL OR EQUITABLE PRINCIPLES; PROVIDED , THAT, THE FOREGOING PROVISION SHALL NOT LIMIT OR RELIEVE ANY PARTY HERETO OF ANY OBLIGATION UNDER THIS AGREEMENT TO INDEMNIFY ANY OTHER PARTY HERETO AGAINST ANY DAMAGES IMPOSED UPON SUCH PARTY BY A FINAL ORDER OF ANY COURT OF COMPETENT JURISDICTION IN CONNECTION WITH ANY LEGAL ACTION BROUGHT AGAINST SUCH PARTY HERETO BY ANY THIRD PARTY.

Section 5.03. Transactions with Related Persons .

In carrying out its obligations and duties under this Agreement, Servicer may not contract with its affiliates without the prior written consent of Owner to the extent the costs or fees for providing services by such affiliates shall be reimbursable by Owner hereunder.

Section 5.04. Limitation on Resignation and Assignment by Servicer .

(a) Servicer shall not assign this Agreement or the servicing responsibilities hereunder or delegate its rights or duties hereunder or any portion hereof (other than any delegation to a service provider in accordance with the terms of this Agreement and Applicable Requirements) without the prior written consent of Owner, which consent shall not be unreasonably withheld. Servicer shall submit to Owner a request for consent to an assignment pursuant to this Section 5.04(a) not less than one-hundred eighty (180) days prior to the intended effective date of the proposed assignment.

(b) Servicer shall not resign from the obligations and duties hereby imposed on it except by mutual consent of Servicer and Owner or upon the determination that its duties hereunder are no longer permissible under applicable Laws and such incapacity cannot be cured by Servicer. Any such determination permitting the resignation of Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to Owner which Opinion of Counsel shall be in form and substance acceptable to Owner. Unless otherwise consented to by, and in the sole discretion of, Owner, no such resignation shall become effective until a successor shall have assumed Servicer’s responsibilities and obligations hereunder .

(c) Servicer shall not be entitled to any Deboarding Fees or termination fees in connection with any assignment or resignation pursuant to this Section 5.04 .

Section 5.05. Annual Report and Officer’s Certificate; Audit Reports .

(a) On or before March 31 ^st of each year commencing in 2016, Servicer, at its expense, shall cause a firm of independent public accountants which is a member of the American Institute of Certified Public Accountants to furnish a statement to the effect that such firm has examined certain documents and records relating to the servicing of residential mortgage loans by Servicer during such fiscal year and that such firm is of the opinion that the provisions of this or similar agreements have been complied with, and that, on the basis of such examination conducted substantially in compliance with the Uniform Single Attestation Program for Mortgage Bankers, nothing has come to their attention which would indicate that such servicing has not been conducted in compliance therewith, except for (i) such exceptions as such firm shall believe to be immaterial, and (ii) such other exceptions as shall be set forth in such statement.

(b) Servicer shall deliver to Owner, on or before March 31 ^st of each year, an Officer’s Certificate, stating that (i) a review of the activities of Servicer during the preceding calendar year and of Servicer’s performance under this Agreement has been made under the supervision of the officers executing such Officer’s Certificate, and (ii) to the best of such officers’ knowledge, based on such review, Servicer has fulfilled all its obligations under this Agreement throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officers and the nature and status thereof and the action being taken by Servicer to cure such default.

(c) Servicer shall furnish to Owner, promptly upon their becoming available, copies of all reports on SSAE 16 audits conducted with respect to Servicer and similar audit reports received by Servicer from time to time.

Section 5.06. Disaster Recovery Plan .

(a) Servicer shall, at its own expense, maintain a disaster recovery plan in support of the processing and related functions it performs for Owner under this Agreement that provides for disaster recovery and the resumption of business in the event that a disaster disrupts or impairs its provision of servicing pursuant to this Agreement. Servicer’s disaster recovery plan shall satisfy the standards generally prevailing in the professional mortgage loan servicing industry and shall include, at a minimum, procedures for back-up/restoration of operating and application software, procedures for the protection of Owner’s source documentation, procedures to address the loss of critical personnel, procedures and third-party agreements for replacement equipment (e.g. computer equipment), procedures and third-party agreements for off-site production facilities and procedures for restoring access to documents and data to Owner. Servicer agrees to release the information necessary to Owner, including a summary of its disaster recovery plan available for Owner to review upon request; provided , however , Servicer shall provide Owner with access to review a copy of the entire disaster plan upon Owner’s reasonable request. Servicer agrees to (i) annually test its disaster recovery plan, (ii) promptly take corrective action as necessary to comply with this Section 5.06 , and (iii) upon request, provide a written report thereof to Owner. Servicer shall notify Owner immediately of any change to Servicer’s disaster recovery plan and agrees to cooperate in good faith in addressing any questions or concerns of Owner regarding such changes.

(b) Servicer shall provide disaster recovery and backup capabilities and facilities through which it will be able to perform its obligations under this Agreement with minimal disruptions or delays. The recovery strategy shall, at a minimum, provide for recovery after short and long term disruptions in facilities, environmental support, workforce availability and data processing equipment. Servicer shall notify Owner immediately of the occurrence of any catastrophic event that affects or could affect Servicer’s performance of the services contemplated under this Agreement and report to Owner on at least an annual basis with respect to the effectiveness of its disaster recovery plan.

(c) The disaster recovery plan shall include appropriate provisions to ensure the continued availability of critical third-party services and to ensure an orderly transition to new service providers should that become necessary. Servicer shall undertake commercially reasonable efforts to make requests to any of its third party contractors providing critical services with respect to this Agreement to provide copies of their own disaster recovery plans or summaries thereof to Servicer and Servicer shall make such plans or summaries thereof available to Owner upon request to the extent so delivered to Servicer and not subject to a confidentiality agreement.

ARTICLE VI. REPRESENTATIONS AND WARRANTIES

Section 6.01. Representations and Warranties of Servicer .

Servicer, as a condition to the consummation of the transactions contemplated hereby, hereby makes the following representations and warranties to Owner as of each Servicing Commencement Date:

(e) Due Organization and Licensing . Servicer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has all licenses necessary to carry on its business as now being conducted and is licensed, qualified and in good standing in each state where licensing or qualification is required in connection with the performance by Servicer of its duties under this Agreement, and is in compliance with the laws of any such state to the extent necessary to ensure the enforceability of the terms of this Agreement;

(f) Authority and Validity. Servicer has the full power and authority to execute and deliver this Agreement and to perform in accordance herewith; the execution, delivery and performance of this Agreement (including all instruments of transfer to be delivered pursuant to this Agreement) by Servicer and the consummation of the transactions contemplated hereby have been duly and validly authorized; this Agreement evidences the valid, binding and enforceable obligation of Servicer and all requisite limited liability company action has been taken by Servicer to make this Agreement valid and binding upon Servicer in accordance with its terms, subject to applicable bankruptcy and insolvency laws affecting the rights of creditors generally and to general principles of equity (regardless of whether enforcement of such remedies is considered in a proceeding in equity or law);

(g) Ordinary Course of Business . The execution of this Agreement and the consummation of the transactions contemplated by this Agreement are in the ordinary course of business of Servicer;

(h) No Conflicts . Neither the execution and delivery of this Agreement, the acquisition of the servicing responsibilities by Servicer or the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement, will conflict with or result in a breach of any of the terms, conditions or provisions of Servicer’s organizational documents (including its limited liability company agreement) or any Law or any agreement or instrument to which Servicer is now a party or by which it is bound, or constitute a default or result in an acceleration under any of the foregoing, or result in the violation of any law, rule, regulation, order, judgment or decree to which Servicer or its property is subject, or impair the ability of Servicer to service the Assets, or impair the value of the Assets;

(i) Ability to Perform . Assuming the performance by Owner of its covenants hereunder in all material respects, Servicer does not believe, nor does it have any reason or cause to believe, that it cannot perform in all material respects each and every covenant of Servicer contained in this Agreement;

(j) No Pending Adverse Actions . There is no action, suit, proceeding or investigation pending, or to the best of Servicer’s knowledge, threatened which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of Servicer, or in any material impairment of the right or ability of Servicer to carry on its business substantially as now conducted or in any material liability on the part of Servicer, or that would draw into question the validity of this Agreement or of any action taken or to be taken in connection with the obligations of Servicer contemplated herein, or that would be likely to impair materially the ability of Servicer to perform under the terms of this Agreement;

(k) No Consent Required . No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by Servicer of or compliance by Servicer with this Agreement, or if required, such approval has been obtained prior to the related Servicing Commencement Date;

(l) No Default . Servicer is not in default, and no event or condition exists that after the giving of notice or lapse of time or both, would constitute an event of default under any material mortgage, indenture, contract, agreement, judgment, or other undertaking, to which Servicer is a party or which purports to be binding upon it or upon any of its assets, which default could impair the ability of Servicer to perform under the terms of this Agreement;

(m) Ability to Service . Servicer has been approved as a servicer of residential mortgage loans under all applicable Laws, has the facilities, procedures, and experienced personnel appropriate for the servicing of the Assets and is in good standing to enforce and service Mortgage Loans in each jurisdiction where the Mortgaged Properties are located;

(n) No Untrue Information . Neither this Agreement nor any statement, report, schedule or other document furnished or to be furnished pursuant to this Agreement or in connection with the transactions contemplated hereby contains any untrue statement of material fact or omits to state a material fact necessary to make the statements contained therein not misleading;

(o) MERS . Servicer is in good standing, and will comply in all material respects with the rules and procedures of MERS in connection with the servicing of the MERS Designated Mortgage Loans; and

(p) Agency Approval . Servicer is an approved seller/servicer of mortgage loans for Fannie Mae and has the facilities, procedures and experienced personnel necessary for the sound servicing of mortgage loans of the same type as the Mortgage Loans. Servicer is a HUD-approved servicer of mortgage loans. No event has occurred, including but not limited to a change in insurance coverage, which would make Servicer unable to comply with Fannie Mae or HUD eligibility requirements.

Section 6.02. Indemnification by Servicer .

(a) Servicer shall defend and indemnify the Owner Indemnified Parties and hold them harmless against any and all claims, losses, damages, liabilities, penalties, fines, forfeitures, reasonable legal fees (including legal fees incurred in connection with the enforcement of Servicer’s indemnification obligation under this Section 6.02 ) and related costs, judgments, and any other costs, fees and expenses that the Owner Indemnified Parties may sustain in any way related to (i) the breach of any representation, warranty, covenant or agreement made by Servicer in this Agreement, (ii) the failure of Servicer to perform its duties and service the Assets in material compliance with the terms of this Agreement or (iii) the taking by Servicer of any action that is not permitted by this Agreement.

Section 6.03. Representations and Warranties of Owner .

Owner, as a condition to the consummation of the transactions contemplated hereby, hereby makes the following representations and warranties to Servicer as of each Servicing Commencement Date:

(d) Due Organization and Licensing . Owner is an entity duly organized, validly existing and in good standing under the laws of the state in which it has been organized and Owner has all licenses necessary to carry on its business as now being conducted and is licensed, qualified and in good standing in each state where a Property is located if the laws of such state require licensing or qualification in order to conduct business of the type conducted by Owner, and in any event Owner is in compliance with the laws of any such state to the extent necessary to ensure the enforceability of the terms of this Agreement;

(e) Authority and Validity . Owner has the full trust power and authority to execute and deliver this Agreement and to perform in accordance herewith; the execution, delivery and performance of this Agreement (including all instruments of transfer to be delivered pursuant to this Agreement) by Owner and the consummation of the transactions contemplated hereby have been duly and validly authorized; this Agreement evidences the valid, binding and enforceable obligation of Owner and all requisite trust action has been taken by Owner to make this Agreement valid and binding upon Owner in accordance with its terms, subject to applicable bankruptcy and insolvency laws affecting the rights of creditors generally and to general principles of equity (regardless of whether enforcement of such remedies is considered in a proceeding in equity or law); and

(f) Assets . With respect to each Mortgage Loan, (i) Owner is the owner of all the right, title and interest in and to the Mortgage Loan and the servicing rights attributable to such Mortgage Loan free and clear of any claims or encumbrances other than in connection with the financing of the Mortgage Loans with a Financing Party, and (ii) unless otherwise disclosed on the related Asset Servicing Schedule, none of the Mortgage Loans is (A) a “high cost” loan under the Home Ownership and Equity Protection Act of 1994 or (B) a “high cost”, “threshold” or “predatory” loan under any applicable state, federal or local law.

Section 6.04. Indemnification by Owner .

Owner shall defend and indemnify the Servicer Indemnified Parties and hold them harmless against any and all claims, losses, damages, liabilities, penalties, fines, forfeitures, reasonable legal fees (including legal fees incurred in connection with the enforcement of Owner’s indemnification obligation under this Section 6.04 ) and related costs, judgments, and any other costs, fees and expenses that the Servicer Indemnified Parties may sustain in any way related to the breach of any representation, warranty, covenant or agreement made by Owner in this Agreement.

Section 6.05. Third-Party Claims .

Promptly after receipt by an indemnified party under this Article VI of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Article VI , notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve the indemnifying party from any liability which it may have to any indemnified party under this Article VI , except to the extent that it has been prejudiced in any material respect, or from any liability which it may have, otherwise than under this Article VI . In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided , that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party or parties shall have reasonably concluded that there may be legal defenses available to it or them and/or other indemnified parties which are different from or additional to those available to the indemnifying party, then the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party for expenses incurred by the indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (together with one local counsel, if applicable), approved by Owner in the case of Section 6.02 , (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized in writing the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii) .

ARTICLE VII. TERMINATION

Section 7.01. Termination With Cause .

(b) This Agreement shall be terminable at the sole option of Owner, if any of the following events of default (each, an “ Event of Default ”) occur:

(i) any failure by Servicer to remit payments to Owner required to be made under the terms of this Agreement which continues unremedied for a period of one (1) Business Day after the date upon which written notice of such failure, requiring the same to be remedied, shall have been given to Servicer by Owner; or

(ii) failure by Servicer duly to observe or perform in any material respect any other of the covenants or agreements on the part of Servicer set forth in this Agreement which continues unremedied for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to Servicer by Owner; or

(iii) failure by Servicer to maintain licenses or other qualifications to do business or service residential mortgage loans in any jurisdiction where such licenses or qualifications are required for the performance of any of Servicer’s duties under this Agreement; or

(iv) a decree or order of a court or agency or supervisory authority having jurisdiction for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, including bankruptcy, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against Servicer and such decree or order shall have remained in force undischarged or unstayed for a period of thirty (30) days; or

(v) Servicer shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to Servicer or of or relating to all or substantially all of its property; or

(vi) Servicer shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency, bankruptcy or reorganization statute, make an assignment for the benefit of its creditors, voluntarily suspend payment of its obligations or cease its normal business operations for five (5) or more Business Days; or

(vii) any representation or warranty made by Servicer is untrue or incomplete in any material respect and which continues unremedied for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to Servicer by Owner; or

(viii) any Governmental Authority or any person, agency or entity acting or purporting to act under the authorization of a Governmental Authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or substantial all of the property or assets of Servicer.

(c) Servicer shall immediately notify Owner of the occurrence of any Event of Default or of any event that, if not timely remedied, would become an Event of Default. Upon the occurrence of an Event of Default, in addition to all rights Owner may have at law or equity to damages or other relief, including injunctive relief and specific performance, Owner, by notice in writing to Servicer, may immediately terminate all the rights and obligations of Servicer under this Agreement and in and to the servicing contract established hereby and the proceeds thereof.

(d) Upon receipt by Servicer of such written notice, all authority and power of Servicer under this Agreement, whether with respect to the Assets or otherwise, shall pass to and be vested in Owner or a successor servicer appointed by Owner. Servicer shall prepare, execute and deliver to the Person designated by Owner any and all documents and other instruments, place in such Person’s possession all Servicing Files, and, in a timely manner, do or cause to be done all other acts or things necessary or appropriate to effect the purposes of such notice of termination, including the transfer of the servicing of the Assets and related documents. Servicer shall, in a timely manner, cooperate with Owner and any successor servicer in effecting the termination of the servicing responsibilities and rights hereunder and the transfer of the servicing of the Assets, including the transfer to such successor for administration by it of all cash amounts which shall at the time be credited by Servicer to the Custodial Account, Reserve Account or Escrow Account or thereafter received with respect to the Assets. In the event that Servicer is terminated as a result of an Event of Default, Servicer shall be entitled to the payment of all earned and unpaid Servicing Fees (other than the Incentive Fee, as such term is defined in the Fee Letter) and Ancillary Income and reimbursement for all unreimbursed Servicing Advances made through the date of such termination, but Servicer shall not be entitled to a Deboarding Fee with respect to any Assets. In addition, Servicer shall be responsible for all Servicing Transfer Costs and shall reimburse Owner for all Servicing Transfer Costs incurred within ten (10) Business Days of receipt of an invoice for such costs.

(e) Owner may waive any default by the other in the performance of its obligations hereunder and its consequences. Upon any waiver of a past default, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereon except to the extent expressly so waived.

Section 7.02. Termination Without Cause .

(g) This Agreement and Servicer’s rights hereunder with respect all of the Assets shall terminate upon the earliest to occur of the following: (i) the later of the final payment or other liquidation (or any advance with respect thereto) of the last Mortgage Loan or the disposition of any remaining REO Property and the remittance of all funds due hereunder; (ii) mutual consent of Servicer and Owner in writing; or (iii) at the sole option of Owner, without cause, upon thirty (30) days written notice to Servicer. Owner and Servicer shall comply with the duties and responsibilities set forth in Sections 7.01(c) and 7.03 hereof with respect to such termination.

(h) In the event Owner terminates Servicer without cause with respect to some or all of the Assets in accordance with Section 7.02(a)(iii) above, upon the transfer of servicing to such successor servicer (i) Owner shall be required to pay to Servicer all accrued and unpaid Servicing Fees, including all related Deboarding Fees, and (ii) Owner or a successor servicer shall reimburse Servicer for all unreimbursed Servicing Advances.

Section 7.03. Successor to Servicer .

(d) Upon the termination of this Agreement pursuant to Sections 5.04(b) , 7.01 or 7.02 , Servicer shall have no further responsibilities or duties under this Agreement with respect to matters arising in relation to the Assets following such termination, subject to Servicer’s obligations under this Section 7.03 . Immediately upon such termination, Servicer shall (x) remit to Owner (or other Person designated by Owner) by wire transfer in immediately available funds all amounts on deposit in the Reserve Account, (y) deliver promptly to Owner (or other Person designated by Owner) by wire transfer the funds in the Custodial Account and Escrow Account and all Mortgage Loan Documents and related documents and statements held by it hereunder and (z) account for all funds and shall execute and deliver such instruments and do such other things as may reasonably be required to more fully and definitively vest in any successor servicer all rights, powers, duties and responsibilities of Servicer.

(e) In the event that this Agreement is terminated pursuant to Sections 5.04(b) , 7.01 or 7.02 , Servicer shall discharge such duties and responsibilities during the period from the date it acquires knowledge of the impending termination until the effective date thereof with the same degree of diligence and prudence which it is obligated to exercise under this Agreement, and shall take no action whatsoever that might impair or prejudice the rights or financial condition of Owner or any successor servicer. The resignation of Servicer pursuant to Section 5.04(b) shall not become effective until a successor shall be appointed pursuant to this Section 7.03 and shall in no event relieve Servicer of the representations and warranties and covenants made pursuant to Section 6.01 and the remedies available to Owner with respect thereto, it being understood and agreed that the provisions of such Sections 6.01 , 6.02 and 6.05 , along with the provisions of Section 7.01(c) and this Section 7.03 , shall survive the termination of this Agreement.

(f) Within fifteen (15) Business Days (or as otherwise mutually agreed upon by Owner and Servicer) of the appointment of a successor servicer entity by Owner, Servicer shall prepare, execute and deliver to the successor entity any and all documents and other instruments, place in such successor’s possession all Servicing Files, and, in a timely manner, do or cause to be done all other acts or things necessary or appropriate to effect the purposes of such notice of termination, including the transfer of the Servicing Files and related documents and the transfer and endorsement or assignment of the related Mortgage Loans and related documents. Such actions shall be undertaken at Servicer’s sole expense. In addition, Servicer shall be responsible for notifying the related Mortgagors of any transfer of servicing in accordance with the requirements of the RESPA and the Cranston Gonzalez National Affordable Housing Act of 1990. Servicer shall, in a timely manner, cooperate with Owner and such successor servicer in effecting the termination of Servicer’s responsibilities and rights hereunder and the transfer of servicing responsibilities to the successor servicer, including the transfer to such successor for administration by it of all cash amounts which shall at the time be credited by Servicer to or held in the Custodial Account or Escrow Account or are received with respect to the Assets following such termination. With respect to any termination of this Agreement without cause pursuant to Section 7.02(a)(iii) above, Owner shall reimburse Servicer for all Servicing Transfer Costs. In the event that this Agreement is terminated pursuant to Sections 5.04(b) , 7.01 or 7.02(a)(ii) , Servicer shall be responsible for all Servicing Transfer Costs. In each case, the responsible party shall reimburse the other party for all Servicing Transfer Costs incurred within ten (10) Business Days of receipt of an invoice for such costs.

(g) In the event of a servicing transfer to a successor servicer, Servicer shall comply with all Applicable Requirements with respect to servicing transfers. In addition, Servicer shall comply with the CFPB’s rules and/or guidelines with respect to servicing transfers, including without limitation its Bulletin 2014-1 issued on August 19, 2014. Servicer and Owner shall provide all reasonable cooperation and assistance as may be requested by the other party in connection with compliance with such rules and/or guidelines. Servicer and Owner shall cooperate after the applicable servicing transfer date to promptly resolve all customer complaints, disputes and inquiries related to activities that occurred prior to such transfer date or in connection with the transfer of servicing.

(h) If any of the Mortgage Loans are MERS Designated Mortgage Loans, in connection with the termination or resignation of Servicer hereunder, Servicer shall cooperate with the successor servicer either (x) in causing MERS to execute and deliver an assignment of Mortgage in recordable form to transfer the Mortgage from MERS to Owner and to execute and deliver such other notices, documents and other instruments as may be necessary or desirable to effect a transfer of such Mortgage Loan or subservicing of such Mortgage Loan on the MERS System to the successor servicer or (y) in causing MERS to designate on the MERS System the successor servicer as the subservicer of such Mortgage Loan.

(i) Any termination or resignation of Servicer or termination of this Agreement pursuant to Sections 5.04 , 7.01 or 7.02 shall not affect any claims that Owner may have against Servicer arising out of Servicer’s actions or failure to act prior to any such termination or resignation.

ARTICLE VIII. MISCELLANEOUS PROVISIONS

Section 8.01. Costs and Attorneys’ Fees .

(i) Owner shall pay any commissions due its salesmen and the legal fees and expenses of its attorneys. Servicer shall pay any commissions due its salesmen and the legal fees and expenses of its attorneys.

(j) In the event a dispute arises between Servicer and Owner with respect to any of the rights and obligations of the parties pursuant to this Agreement, and such dispute is finally adjudicated by a court of law, by an arbitration panel or any other judicial process, then the losing party shall indemnify and reimburse the winning party for all reasonable attorneys’ fees and other costs and expenses related to the adjudication of said dispute.

Section 8.02. Jurisdiction; Waiver of Jury Trial .

Each of Owner and Servicer hereby irrevocably submits to the non-exclusive jurisdiction of the courts of the State of New York sitting in the borough of Manhattan and the Federal Courts of the United States of America for the Southern District of New York and any appellate court thereof in any action or proceeding arising out of or relating to this Agreement, and each of Owner and Servicer hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or in such Federal court. Each of Owner and Servicer hereby irrevocably consents to the fullest extent permitted under applicable Law, to the service of any summons and complaint and any other process by the mailing of copies of such process to them at their respective address specified in this Agreement. Each of Owner and Servicer hereby agrees, to the fullest extent permitted under applicable Law, that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, EACH OF OWNER AND SERVICER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

Section 8.03. Notices .

All notices, statements, demands, requests, directions, elections, consents or other communications shall be in writing (including any facsimile, email or communication by means of an electronic database which the parties have mutually agreed shall constitute a valid method of notification under this Section 8.03 ) and such notices, statements, demands, requests, elections, consents and other communications shall, when mailed, delivered by a nationally recognized overnight delivery service, communicated by facsimile transmission or emailed, be effective when received at the address for notices for the party to whom such notice or communication is to be given at address as set forth on the signature page hereto (or such other address as may hereafter be furnished to the other party by like notice).

Section 8.04. Severability Clause.

Any part, provision, representation or warranty of this Agreement which is prohibited or unenforceable or is held to be void or unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction as to any Asset shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereto waive any provision of law which prohibits or renders void or unenforceable any provision hereof. If the invalidity of any part, provision, representation or warranty of this Agreement shall deprive any party of the economic benefit intended to be conferred by this Agreement, the parties shall negotiate, in good-faith, to develop a structure the economic effect of which is as close as possible to the economic effect of this Agreement without regard to such invalidity.

Section 8.05. Counterparts .

This Agreement 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 Agreement and signature pages may be transmitted between them by facsimile or by electronic mail and that faxed and PDF signatures may constitute original signatures and that a faxed or PDF signature page containing the signature (faxed, PDF or original) is binding upon the parties.

Section 8.06. Governing Law .

THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

Section 8.07. Further Agreements; Waivers .

(a) Owner and Servicer 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.

(b) No term or provision of this Agreement may be waived or modified unless such waiver or modification is in writing and signed by the party against whom such waiver or modification is sought to be enforced.

Section 8.08. Intention of the Parties .

It is the intention of the parties that Owner is conveying, and Servicer is receiving, only a contract for servicing the Assets. Accordingly, the parties hereby acknowledge that Owner remains the sole and absolute owner of the Assets and all rights related thereto.

Section 8.09. Successors and Assigns; Transfer of Mortgage Loans .

This Agreement shall bind and inure to the benefit of and be enforceable by Servicer and Owner and the respective successors and assigns of Servicer and Owner. Owner shall have the right, without the consent of Servicer, to assign its interest under this Agreement with respect to the Mortgage Loans, in whole or in part, and designate any Person to exercise any rights of Owner hereunder, and the assignee or designee shall accede to the rights and obligations hereunder of Owner with respect to such Mortgage Loans. All references to Owner shall be deemed to include its assignee or designee. Servicer shall not be responsible for the preparation or recording of mortgage assignments or financing statement amendments in connection with such assignments; provided , however , that in the event Servicer agrees to record any mortgage assignment or financing statement, any expense, including the fees of third party service providers, incurred by Servicer in connection with the recordation of mortgage assignments shall be reimbursable as a Servicing Advance.

Servicer shall keep at its servicing office books and records in which, subject to such reasonable regulations as Servicer may prescribe, Servicer shall note transfers of Mortgage Loans. For the purposes of this Agreement, Servicer shall be under no obligation to deal with any Person with respect to this Agreement or the Mortgage Loans except for Owner unless Owner provides prior written notice to Servicer of a sale of one or more Mortgage Loans to such Person and the assumption by such Person of the obligations of Owner hereunder with respect to such Mortgage Loan(s). Upon receipt of such written notice, Servicer shall mark its books and records to reflect the ownership of such Mortgage Loan(s) by such assignee, and the previous Owner shall be released from its obligations hereunder attributable to the period after such assignment to the extent such obligations relate to such Mortgage Loan(s) sold by Owner. Owner shall be responsible for all costs incurred by Servicer in transferring the Mortgage Loans to such assignee.

Section 8.10. General Interpretive Principles .

For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a) The exhibits to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement.

(b) Capitalized terms used in this Agreement have the meanings assigned to them in this Agreement and all terms used in this Agreement shall include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender.

(c) Accounting terms used and not defined herein have the meanings assigned to them in accordance with United States generally accepted accounting principles.

(d) References herein to Articles and Sections are references to Articles and Sections of this Agreement or, where applicable, of the indicated Exhibit hereto.

(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.

(f) The terms “include” or “including” shall, in each place where they appear in this Agreement, be construed as if they were immediately followed by the phrase “without limitation”.

Section 8.11. Delivery of Reports; Reproduction of Documents .

This Agreement and all documents relating thereto, including (a) consents, waivers and modifications which may hereafter be executed, and (b) financial statements, certificates and other information previously or hereafter furnished, may be reproduced by any digital, electronic, imaged, photographic or other similar process. The parties agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

Section 8.12. [Reserved] .

Section 8.13. Financial Statements; Servicing Facilities .

In connection with marketing the Mortgage Loans, Servicer shall make available to Owner or any prospective purchaser a knowledgeable financial or accounting officer for the purpose of answering questions respecting recent developments affecting Servicer or the financial statements of Servicer (to the extent such information is generally available to the public), and to permit any prospective purchaser, upon reasonable written notice to Servicer and at a reasonable time during normal hours of operation for Servicer, to inspect Servicer’s servicing facilities for the purpose of satisfying such prospective purchaser that Servicer has the ability to service the Assets in accordance with the provisions of this Agreement.

Section 8.14. Reconstitution .

Servicer and Owner agree that with respect to some or all of the Mortgage Loans, Owner may effect one or more Whole Loan Transfers and/or one or more Securitization Transactions. With respect to each Whole Loan Transfer or Securitization Transaction, as the case may be, entered into by Owner, Servicer agrees:

(i) to fully cooperate with Owner and any prospective purchaser with respect to all reasonable requests and due diligence procedures including, without limitation, making a senior officer or officers of Servicer available to participate in due diligence calls and meetings with rating agencies, bond insurers and such other parties as Owner shall designate; to participate in meetings with prospective purchasers of the Mortgage Loans or interests therein, and providing information reasonably requested by such purchasers; and to reasonably cooperate with each applicable Rating Agency and any third-party due diligence provider in any requested pre-securitization loan-level review of the applicable Mortgage Loans and to provide any due diligence reports with respect to the Mortgage Loans and Servicer that are reasonably requested by any applicable Rating Agency pre- or post-securitization.

(ii) to execute any applicable Reconstitution Agreements and other agreements including, without limitation, indemnification and contribution agreements, that are mutually agreed upon by Servicer and the other parties thereto;

(iii) to deliver to Owner for inclusion in any prospectus or other offering material such publicly available information regarding Servicer, its financial condition and its mortgage loan delinquency, foreclosure and loss experience and any additional information reasonably requested by Owner (collectively, the “ Servicer Information ”), and to indemnify Owner and its affiliates for material misstatements or omissions contained in such Servicer Information;

(iv) to deliver such statements and audit letters of reputable, certified public accountants pertaining to the Servicer Information as shall be reasonably requested by Owner;

(v) to cooperate with Owner and any prospective purchaser with respect to the preparation, endorsement, assignment, or delivery, as the case may be, of any of the Mortgage Loan Documents and other related documents, with respect to servicing requirements reasonably requested by the rating agencies and credit enhancers;

(vi) in connection with any Securitization Transaction, to execute a pooling and servicing agreement, which pooling and servicing agreement may, at Owner’s direction, contain contractual provisions including, but not limited to, a customary certificate payment delay, servicer advances of delinquent scheduled payments of principal and interest through liquidation (unless deemed non-recoverable) and prepayment interest shortfalls (to the extent of the monthly servicing fee payable thereto), servicing representations and warranties which in form and substance conform to the representations and warranties in this Agreement and to secondary market standards for securities backed by mortgage loans and property similar to the Mortgage Loans and such provisions with regard to servicing responsibilities, investor reporting, segregation and deposit of principal and interest payments, custody of the Mortgage Loans, and other covenants as are required by Owner and one or more Rating Agencies. If Owner deems it advisable at any time to pool the Mortgage Loans with other mortgage loans for the purpose of resale or securitization, Servicer agrees to execute one or more servicing agreements between itself and a master servicer designated by Owner at Owner’s sole discretion, and/or one or more servicing agreements among Servicer, the Owner and a trustee designated by Owner at Owner’s sole discretion, such agreements in each case incorporating terms and provisions substantially identical to those described in this paragraph; and

(vii) to negotiate and execute a credit risk management agreement with a credit risk manager designated by Owner at Owner’s sole discretion.

All Mortgage Loans not sold or transferred pursuant to a Whole Loan Transfer or Securitization Transaction shall be subject to this Agreement and shall continue to be serviced in accordance with the terms of this Agreement and with respect thereto this Agreement shall remain in full force and effect.

Section 8.15. Compliance with REMIC Provisions .

If a REMIC election has been made with respect to the arrangement under which the Mortgage Loans and REO Properties are held, Servicer shall not take any action, cause the REMIC to take any action or fail to take (or fail to cause to be taken) any action that, under the REMIC Provisions, if taken or not taken, as the case may be, could (i) endanger the status of the REMIC as a REMIC or (ii) result in the imposition of a tax upon the REMIC (including but not limited to the tax on “prohibited transactions” as defined in Section 860F(a)(2) of the Code and the tax on “contributions” to a REMIC set forth in Section 860G(d) of the Code) unless Servicer has received an Opinion of Counsel (at the expense of the party seeking to take such action) to the effect that the contemplated action will not endanger such REMIC status or result in the imposition of any such tax.

Section 8.16. Confidentiality .

(a) In connection with this Agreement, Servicer on one hand and Owner on the other, intend to disclose to each other and their respective officers, agents, advisors, directors, representatives and employees (" Representatives ") certain information regarding the operation, businesses, properties, finances, contractual relationships, policies, procedures and practices of Servicer and its affiliates on one hand and Owner on the other. The terms of this Agreement and any and all such information disclosed by Servicer and/or its agents or advisors to Owner or its Representatives on one hand and by Owner and/or its agents or advisors to Servicer or its respective Representatives, whether before or after the date of this Agreement and whether oral or written in whatever form provided, is hereinafter referred to as " Confidential Information ." Such Confidential Information shall remain the sole property of Servicer on one hand and Owner on the other, as applicable and shall be used and handled in accordance with the terms and conditions set forth in this Agreement.

(b) Notwithstanding anything to the contrary herein, the term Confidential Information shall not include any such information that is or becomes available on a non-confidential basis from a source other than the Servicer on one hand or the Owner on the other or is or becomes generally available to the public other than as a result of an unauthorized disclosure by the Owner or its Representatives on one hand or the Servicer or its Representatives on the other.

(c) Without Servicer's prior written consent, Owner shall not, or permit any of its Representatives to, disclose to any person or entity the fact that Servicer has made any Confidential Information available to Owner, except to the extent that it is appropriate to do so in working with legal counsel, auditors and taxing authorities.

(d) Without Owner's prior written consent, Servicer shall not, or permit any of its Representatives to, disclose to any person or entity the fact that Owner has made any Confidential Information available to Servicer, except to the extent that it is appropriate to do so in working with legal counsel, auditors and taxing authorities.

(e) Owner may disclose any part or portion of the Confidential Information that the Owner is required to disclose pursuant to applicable Law, rule, regulation, subpoena, or similar court process; provided , that Owner shall (i) notify, to the extent permitted under applicable Law, Servicer in writing prior to any such disclosure so as to provide Servicer with a reasonable opportunity to seek to enjoin, prevent, stay or defer such disclosures, (ii) to the extent permissible under law, consult and cooperate with Servicer as to the content, nature, and timing of such disclosure, and (iii) in the event a protective order or another remedy is not timely obtained, disclose only such part or portion of such Confidential Information as is reasonably required pursuant to such applicable Law, rule, regulation, subpoena, or other similar process. Owner and its Representatives shall reasonably cooperate with any of Servicer's efforts to obtain reasonable assurance that confidential treatment will be accorded the Confidential Information so disclosed.

(f) Servicer may disclose any part or portion of the Confidential Information that Servicer is required to disclose pursuant to applicable Law, rule, regulation, subpoena, or similar court process; provided , that Servicer shall (i) notify, to the extent permitted under applicable Law, Owner in writing prior to any such disclosure so as to provide Owner with a reasonable opportunity to seek to enjoin, prevent, stay or defer such disclosures, (ii) to the extent permissible under law, consult and cooperate with Owner as to the content, nature, and timing of such disclosure, and (iii) in the event a protective order or another remedy is not timely obtained, disclose only such part or portion of such Confidential Information as is reasonably required pursuant to such applicable Law, rule, regulation, subpoena, or other similar process. Servicer and its Representatives shall reasonably cooperate with any of Owner's efforts to obtain reasonable assurance that confidential treatment will be accorded the Confidential Information so disclosed.

(g) Owner on one hand and Servicer on the other, acknowledge that money damages may not be a sufficient remedy for any breach of this Section 8.16 by the other party or their Representatives. Accordingly, in the event of any such breach of this Section 8.16 , in addition to any other remedies at law or in equity that Servicer may have on one hand and Owner may have on the other, the other party shall be entitled to seek equitable relief, including injunctive relief or specific performance or both.

(h) Notwithstanding anything herein to the contrary, Servicer or Owner (or any officers, agents, advisors, directors, representatives and employees of Servicer or Owner) may disclose to any and all persons, without limitation, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind that are provided to it relating to such tax treatment and tax structure.

(i) Each party's obligations under this Section 8.16 shall terminate not later than six (6) months after the termination of this Agreement.

IN WITNESS WHEREOF, Servicer and Owner have caused their names to be signed by their respective officers thereunto duly authorized, as of the date first above written, to this Agreement.

ALTISOURCE RESIDENTIAL, L.P. (as Initial Owner)

By: Altisource Residential GP, LLC, its general partner

By: Altisource Residential Corporation, its sole member

By: /s/ Stephen H. Gray
Name: Stephen H. Gray
Title: General Counsel and Secretary

Address for Notices :

Altisource Residential, L.P.

c/o Altisource Asset Management Corporation
402 Strand Street
Frederiksted, VI 00840-3531
Attention: Corporate Secretary
Facsimile: (340) 692-1046
Email: Stephen.Gray@AltisourceAMC.com

FAY SERVICING, LLC (as Servicer)

By: /s/ Loren Morris ___________________________
Name: Loren Morris
Title: EVP, General Counsel

Address for Notices :

Fay Servicing, LLC

440 South LaSalle Street, Suite 2000

Chicago, IL 60605

Attention: Edward Fay and Loren Morris

Facsimile: (312) 278-2534 and (312) 278-2536

Email:EFay@FayFinancial.com

and LMorris@FayFinancial.com

EXHIBIT A

DEFINITIONS

The following terms are defined as follows:

Acknowledgment Agreement : With respect to any Asset Pool, a servicing acknowledgment agreement, a form of which is attached as Exhibit B , which makes specific reference to this Agreement and identifies on the Servicing Asset Schedule attached thereto the Mortgage Loans in such Asset Pool for which servicing is to be transferred to Servicer on the applicable Servicing Commencement Date and become subject to this Agreement. Each Acknowledgment Agreement shall be incorporated herein by reference.

Affiliate : 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” when used with respect to any specified Person 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” and “controlled” have meanings correlative to the foregoing.

Agreement : This Flow Servicing Agreement, including all exhibits, schedules, amendments and supplements hereto.

Ancillary Income : All income (excluding interest income, Servicing Fees and Prepayment Charges), which Servicer is legally entitled to collect in accordance with Applicable Requirements, derived from the Mortgage Loans after the Servicing Commencement Date and actually collected, including interest received on funds deposited in any Escrow Account, insufficient fund fees, name change fees and other similar fees with respect to the Assets to the extent not otherwise prohibited or otherwise required to be paid to the applicable Mortgagor by the related Mortgage Loan Documents or applicable Laws.

Applicable Requirements : Shall mean, with respect to each Asset, as applicable to such Asset, those servicing, collection, resolution or disposition practices that are in all respects, legal, proper and customary in the mortgage servicing industry in accordance with: (a) the requirements of Laws; (b) the requirements under any PMI Policy or LPMI Policy; (c) any applicable forbearance plan or bankruptcy plan; (d) the terms of the related Mortgage Loan Documents; (e) the accepted mortgage servicing practices of prudent mortgage lending institutions which service Mortgage Loans (including, as and where applicable, Defaulted Mortgage Loans) or REO Properties of a type similar to such Asset, in the jurisdiction where the related Mortgaged Property or REO Property is located, and (f) the Servicing Duties and Performance Standards set forth in Exhibit F , in each case exercising a reasonable standard of care, and in all cases without regard to:

(i) any relationship that Servicer, any sub-servicer or any Affiliate of Servicer or any other sub-servicer may have with the related Mortgagor; or

(ii) the ownership, or servicing or management for others, by Servicer or any sub-servicer, of any other mortgage loans or property; provided , however , that such services are performed in compliance with the terms of this Agreement.

Asset : Each Mortgage Loan and REO Property identified on an Asset Servicing Schedule.

Asset Pool : One or more residential mortgage loans owned by an Owner and made subject to this Agreement on any given Servicing Commencement Date, as identified on the Servicing Asset Schedule attached to the related Acknowledgment Agreement.

Asset Servicing Schedule : The schedule of Assets subject to this Agreement and identified on the schedule attached to the related Acknowledgment Agreement, which schedule shall be in a form mutually agreed upon by Servicer and Owner from time to time. When an REO Property is acquired in respect of a Mortgage Loan included on any such Asset Servicing Schedule, such REO Property shall automatically be deemed to be added to such Asset Servicing Schedule.

Broker Price Opinion (BPO) : With respect to any Asset, the estimated value of the related Property, as determined by a real estate broker, other qualified Person as agreed to by Servicer and Owner, which considers, without limitation, the value of similar surrounding properties, sales trends in the neighborhood, and the general condition of the related Property.

Business Day : Any day other than (a) a Saturday or Sunday, or (b) a day on which banking and savings and loan institutions in the states of New York or Illinois are authorized or obligated by law or executive order to be closed.

CFPB : The Consumer Financial Protection Bureau, an independent federal agency operating as part of the United States Federal Reserve System.

Code : The Internal Revenue Code of 1986, as amended.

Collections : Any and all cash amounts received with respect to any Asset, including the amounts of any payments of principal and interest, along with the other items described in Section 3(b) of Exhibit F .

Condemnation Proceeds : All awards or settlements in respect of a Mortgaged Property, whether permanent or temporary, partial or entire, by exercise of the power of eminent domain or condemnation, to the extent not required to be released to a Mortgagor in accordance with the terms of the related Mortgage Loan Documents.

Consumer Information : Any personally identifiable information in any form (written, electronic or otherwise) relating to a Mortgagor, including, but not limited to: a Mortgagor’s name, address, telephone number, Mortgage Loan number, Mortgage Loan payment history, delinquency status, insurance carrier or payment information, tax amount or payment information; the fact that the Mortgagor has a relationship with Servicer, Owner or the originator of the related Mortgage Loan; and any other non-public personally identifiable information (including any "nonpublic personal information" of the "customers" and "consumers" as those terms are defined in the GLBA).

Custodial Account : The separate account or accounts created and maintained pursuant to Section 3(b) of Exhibit F .

Custodial Agreement : Any custodial agreement designated by Owner and between Owner and a Custodian.

Custodian : Each entity appointed by Owner to hold Mortgage Loan Documents relating to Assets serviced under this Agreement in custody for the benefit of Owner.

Deboarding Fee : With respect to each Mortgage Loan, the amount set forth in the Fee Letter, which amount shall be payable to Servicer in the event Servicer is terminated without cause pursuant to this Agreement. For the avoidance of doubt, a Deboarding Fee is not payable in connection with a a liquidation of a Mortgage Loan (other than a payoff in full) or the liquidation or transfer of an REO Property.

Default or Defaulted: With respect to an Asset, either an REO Property or a Mortgage Loan that is Delinquent or for which Servicer determines that a Delinquency is reasonably foreseeable.

Delinquent : Any Mortgage Loan for which the Monthly Payment due on a particular Due Date is not made by the close of business on the day that immediately precedes the next following Due Date.

Determination Date : The last day of each calendar month preceding a Remittance Date.

Due Date : The day of the calendar month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.

Environmental Problem Property : A Mortgaged Property or REO Property that is in violation of any environmental law, rule or regulation.

Escrow Account : The separate account or accounts operated and maintained pursuant to Section 3(f) of Exhibit F .

Escrow Payments : With respect to any Mortgage Loan, the amounts constituting ground rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage insurance premiums, fire and hazard insurance premiums, condominium charges, and any other payments required to be escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any other Mortgage Loan Document.

Event of Default : As defined in Section 7.01(a) .

Fee Letter : The fee letter between Servicer and Initial Owner setting forth the Servicing Fees and other fees and expenses payable to Servicer for providing services under this Agreement, as the same may be amended, modified, supplemented from time to time by Owner and Servicer.

Financing Party : With respect to any Mortgage Loan, a Person that provides financing to Owner with respect to such Mortgage Loan.

GLBA : The Gramm-Leach-Bliley Act of 1999, as amended, modified, or supplemented from time to time, and any successor statute, and all rules and regulations issued or promulgated in connection therewith.

Governmental Authority : The government of the United States or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government including, without limitation, the CFPB.

HAMP : The Home Affordability Modification Program implemented by the U.S. Department of Treasury.

Initial Owner : Altisource Residential, L.P. and its successors.

Insurance Proceeds : With respect to each Asset, proceeds of insurance policies insuring the Mortgage Loan, the related Mortgaged Property or the REO Property, as applicable, including the proceeds of any hazard or flood insurance policy, title insurance policy, LPMI Policy or PMI Policy.

Laws : Collectively, all Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents, orders or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law,.

Liquidation Proceeds : Cash proceeds received in connection with the liquidation or disposition of an Asset, whether through the sale or assignment of a Mortgage Loan, sale of the related Mortgaged Property, REO Property or otherwise.

Loan Modification : An agreement which revises the terms of a Mortgage Loan, including an agreement to modify a Mortgage Loan’s principal amount, monthly payment amounts or interest rate.

LPMI Policy : With respect to a Mortgage Loan, a policy of primary mortgage guaranty insurance issued by a Qualified Insurer that insures such Mortgage Loan and pursuant to which the related premium is paid by the lender of the Mortgage Loan with Servicer paying such premium on behalf of the lender from payments of interest made by the related Mortgagor in an amount as is set forth in the related Asset Servicing Schedule.

MERS : Mortgage Electronic Registration Systems, Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor thereto.

MERS : Mortgage Electronic Registration System, Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor thereto.

MERS Designated Mortgage Loan : A Mortgage Loan for which (a) Servicer has designated or will designate MERS as, and has taken or will take such action as is necessary to cause MERS to be, the mortgagee of record, as nominee for Owner, in accordance with MERS Procedure Manual and (b) Servicer has designated or will designate Owner as the Investor on the MERS System.

MERS Event : The occurrence of any of the following events: (a) an appellate court of competent jurisdiction in a particular state rules that MERS is not an appropriate, permissible or authorized system for transferring ownership of Mortgage Loans in that state; or (b) (i) a decree or order of a court or agency or supervisory authority having jurisdiction for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against MERS, and such decree or order shall have remained in force undischarged or unstayed for a period of sixty (60) days; or (ii) MERS shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities, voluntary liquidation or similar proceedings of or relating to MERS or of or relating to all or substantially all of its property; or (iii) MERS shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations. With respect to the event described in clause (a), a MERS Event will be deemed to have occurred with respect to all Mortgage Loans in the related state, and with respect to any of the events described in clause (b), a MERS Event will be deemed to have occurred with respect to all of the Mortgage Loans.

MERS Procedures Manual : The MERS Procedures Manual, as it may be amended, supplemented or otherwise modified from time to time.

MERS System : MERS mortgage electronic registry system, as more particularly described in the MERS Procedures Manual.

Monthly Payment : The scheduled monthly payment of principal and interest on a Mortgage Loan, excluding any final payment in full or any balloon payment due on maturity, but taking into account any change to such monthly payment pursuant to a Loan Modification.

Mortgage : The mortgage, deed of trust or other instrument creating a first lien on a Mortgaged Property securing a Mortgage Note (or a first lien on (i) in the case of a cooperative, the related shares of stock in the cooperative securing the Mortgage Note and (ii) in the case of a ground rent, the leasehold interest securing the Mortgage Note).

Mortgage Loan : An individual residential mortgage loan included in an Asset Pool and identified on the Servicing Asset Schedule attached to the related Acknowledgment Agreement, which shall be a first or second lien mortgage loan and which mortgage loan shall include the Mortgage Loan Documents, the Monthly Payments, Escrow Payments, Principal Prepayments, Prepayment Charges, Liquidation Proceeds, Condemnation Proceeds, Ancillary Income, Insurance Proceeds and all other rights, benefits, proceeds and obligations arising from or in connection with such Mortgage Loan. The Mortgage Loans serviced hereunder shall exclude the following types: (1) home equity line of credit, HELOC or open end first or second lien mortgage loans; and (2) buy-down mortgage loans.

Mortgage Loan Documents : With respect to each Mortgage Loan, the documents delivered to the related Custodian pursuant to the related Custodial Agreement.

Mortgage Loan Purchase Agreement : With respect to any Mortgage Loan, the agreement pursuant to which the Initial Owner (or other Owner) acquired such Mortgage Loan.

Mortgage Note : The note or other evidence of the indebtedness of a Mortgagor that is secured by a Mortgage.

Mortgaged Property : The real property (stock or leasehold estate, if applicable) consisting of a single family residence located in the United States that secures the repayment of the debt evidenced by a Mortgage Note.

Mortgagor : The obligor on a Mortgage Note.

Nonrecoverable Servicing Advance : Any Servicing Advance previously made or proposed to be made in respect of a Mortgage Loan or REO Property that, in the reasonable business judgment of Servicer, will not, or, in the case of a proposed Servicing Advance, would not be, ultimately recoverable from related late payments, Insurance Proceeds, Condemnation Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property as provided herein.

Officer’s Certificate : A certificate signed by a Servicing Officer and delivered to Owner as required by this Agreement.

Opinion of Counsel : A written opinion of counsel, who may be an employee of Servicer (except in the case of an Opinion of Counsel delivered pursuant to Section 5.03(b) , which must be delivered by independent legal counsel reasonably acceptable to Owner).

Owner : With respect to any Mortgage Loan, Initial Owner or the entity designated on the related Servicing Asset Schedule or otherwise designated in writing by Initial Owner to Servicer, and any Person who assumes the obligations of Owner hereunder with respect to one or more Mortgage Loans in accordance with the terms of this Agreement.

Owner Indemnified Parties : Owner, its successors or assigns, beneficial owners, officers, directors, agents and Affiliates.

Owner Instructions : Any written instructions, guidelines or policies regarding the servicing of the Mortgage Loans provided by Owner to Servicer.

Person : Any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof, or any other entity.

PMI Policy : With respect to a Mortgage Loan, a policy of primary mortgage guaranty insurance issued by a Qualified Insurer that insures such Mortgage Loan and is identified as having PMI insurance coverage in the related Asset Servicing Schedule.

Prepayment Charge : With respect to any Mortgage Loan, the charges or premiums, if any, due in connection with a full or partial prepayment of such Mortgage Loan in accordance with the terms thereof.

Principal Prepayment : Any payment or other voluntary recovery of principal on a Mortgage Loan which is received in advance of its scheduled Due Date, which is not accompanied by an amount of interest representing scheduled interest due on any date or dates in any month or months subsequent to the month of prepayment.

Prior Servicer : Any prior servicer (other than Servicer) of any or all of the Assets.

Privacy Laws : As defined in Section 18(a) of Exhibit F .

Property : With respect to an Asset, either the related Mortgaged Property or REO Property, as applicable.

Qualified Depository : A federal or state chartered depository institution the deposits in which are insured by the Federal Deposit Insurance Corporation to the applicable limits and the unsecured and uncollateralized short-term unsecured debt obligations of which (or, in the case of a depository institution that is a subsidiary of a holding company, the short-term unsecured debt obligations of such holding company) are rated “A-1” by Standard & Poor’s Ratings Services or “P-1” by Moody’s Investors Service, Inc. (or a comparable rating if another rating agency is specified by Owner by written notice to the Servicer) at the time any deposits are held on deposit therein.

Qualified Insurer : A mortgage guaranty insurance company duly authorized and licensed where required by law to transact mortgage guaranty insurance business and approved as an insurer by Fannie Mae or Freddie Mac and awarded a Financial Strength Rating (FSR) A- or better from A. M. Best Company, Inc.

Reconstitution : The actions required by Section 8.14 in connection with any Securitization Transaction or Whole Loan Transfer.

Reconstitution Agreement : The agreement or agreements entered into by Servicer and Owner and/or certain third parties on the Reconstitution Date or Dates with respect to any or all of the Mortgage Loans serviced hereunder, in connection with a Whole Loan Transfer or a Securitization Transaction as provided in Section 8.14 .

Reconstitution Date : The date or dates on which any or all of the Mortgage Loans subject to this Agreement shall be removed from this Agreement and reconstituted as part of a Whole Loan Transfer or Securitization Transaction pursuant to Section 8.14 .

REMIC : A “real estate mortgage investment conduit” within the meaning of Section 860D of the Code.

REMIC Provisions : Provisions of the federal income tax law relating to REMICs, which appear in Sections 860A through 860G of the Code, and related provisions, and proposed, temporary and final regulations and published rulings, notices and announcements promulgated thereunder, as the foregoing may be in effect from time to time.

Remittance Date : The eighth (8 ^th ) Business Day following the end of each calendar month.

REO Property : A Mortgaged Property acquired on behalf of Owner through foreclosure or by deed in lieu of foreclosure.

Reserve Account : The separate account or accounts operated and maintained pursuant to Section 3(h) of Exhibit F .

Reserve Required Amount : An amount equal to $15,000 for every $10 million in Unpaid Principal Balance; provided , however , the maximum amount required to be on deposit in a Reserve Account shall not exceed $500,000 at any time.

Sanctions Lists : The economic sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control.

Section 404 Notice : 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., the form of which shall be provided by Owner.

Securitization Transaction : Any transaction involving either (a) a sale or other transfer of some or all of the Mortgage Loans directly or indirectly by Owner to an issuing entity in connection with an issuance of publicly offered or privately placed, rated or unrated mortgage-backed securities or (b) an issuance of publicly offered or privately placed, rated or unrated securities, the payments on which are determined primarily by reference to one or more portfolios of residential mortgage loans consisting, in whole or in part, of some or all of the Mortgage Loans.

Servicer Indemnified Parties : Servicer, its successors or assigns, officers, directors and agents.

Servicing Advances : All customary, necessary and reasonable “out of pocket” costs and expenses (including reasonable attorneys’ fees and disbursements) incurred in the performance by Servicer of its servicing obligations, including the cost of (a) the preservation, restoration and protection of a Property, (b) any remedial, enforcement or loss mitigation actions relating to the Asset or any administrative or judicial proceedings relating to the Asset, including foreclosures, evictions, deed in lieu of foreclosures or loan modifications, (c) the management, liquidation, marketing, sale, renovation, repair, maintenance and preservation of the Property, including any REO Property, (d) taxes, assessments, water rates, sewer rents and other charges which are or may become a lien upon the Property, (e) insurance policy premiums and fire and hazard insurance coverage relating to the Property, (f) funding any negative escrow account balances outstanding upon the initial transfer of the Mortgage Loan to Servicer hereunder, and (g) in connection with the enforcement or liquidation of a Property which has a Superior Lien, any expenditures relating to the purchase, maintenance or monitoring of any Superior Lien pursuant to Exhibit F .

Servicing Commencement Date : With respect to an Asset, the date on which the servicing of such Asset is transferred from a Prior Servicer to Servicer, as identified in the related Acknowledgment Agreement.

Servicing Fees : With respect to each Asset being serviced subject to this Agreement, the servicing fees payable to Servicer as set forth in the Fee Letter.

Servicing File : As to a particular Mortgage Loan, the related computer files, data disks, books, records, data tapes, notes, copies of the related Mortgage Loan Documents held by the Custodian and all additional documents generated as a result of or utilized in originating and/or servicing such Mortgage Loan, which are delivered to or generated by Servicer and shall be held in trust for Owner by Servicer.

Servicing Officer : With respect to Servicer, any authorized individual that is involved in, or responsible for, the administration and servicing of the Mortgage Loans whose name appears on a list of servicing officers furnished by Servicer to Owner as of the date hereof, as such list may from time to time be amended.

Servicing Transfer Costs : All reasonable costs and expenses incurred in connection with the transfer of servicing to a successor servicer, including, without limitation, any reasonable costs or expenses associated with the complete transfer of all servicing data and the completion, correction or manipulation of such servicing data as may be required by Owner or a successor servicer to correct any errors or insufficiencies in the servicing data or otherwise enable Owner or successor servicer to service the Mortgage Loans properly and effectively, all costs and expenses incurred in connection with the transfer and delivery of the Mortgage Loans, if applicable, including without limitation recording fees, fees for title policy endorsements and continuations, fees for the preparation, delivery, tracking and recording of Assignments of Mortgages or any MERS transfer related costs related to a transfer of servicing and all costs associated with the transfer of (or, if not transferable to a successor servicer, the purchase of) tax service contracts and flood certification contracts and any expenses related to the transfer of the servicing related to the Mortgage Loans.

Superior Lien : With respect to any Asset, any mortgage loan having a lien on the related Property, or any other lien obligation on the related Property, which in either case is senior to Owner’s lien securing, or that previously secured, the related Mortgage Loan.

Third Party Servicing Requirements : As defined in Section 3.02 .

Vendors : Any third-party subservicer, subcontractor, vendor, agent or other service provider utilized by Servicer in connection with the servicing of the Mortgage Loans.

Whole Loan Transfer : Any sale or transfer of some or all of the Mortgage Loans by Owner to a third party, which sale or transfer is not a Securitization Transaction.

EXHIBIT B

FORM OF ACKNOWLEDGMENT AGREEMENT

Date: [__________]

Pursuant to that certain Flow Servicing Agreement, dated as of January 24, 2015 (the “ Agreement ”) between Altisource Residential, L.P. (“ Initial Owner ”) and Fay Servicing, LLC (“ Servicer ”), Initial Owner hereby engages Servicer to service the mortgage loans identified on the Servicing Asset Schedule attached hereto as Schedule I (the “ Mortgage Loans ”). With respect to each Mortgage Loan, the applicable Owner shall be the Owner identified on the Servicing Asset Schedule. Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Agreement.

Servicer hereby agrees to service the Mortgage Loans as of the Servicing Commencement Date and assumes all responsibilities to service the Mortgage Loans in accordance with the Agreement. In addition, pursuant to Section 3.02 of the Agreement, Servicer shall comply with the Third Party Servicing Requirements set forth on Schedule II .

The applicable Owner of the Mortgage Loans is entitled to the benefit of and to enforce all rights, representations, warranties, covenants, agreements and obligations owed to such Owner under the Agreement with respect to the Mortgage Loans.

As set forth in the Agreement, the following terms shall have the respective meanings set forth below with respect to the Asset Pool referenced hereby.


1.	Servicing Commencement Date: [____________]


2.	Mortgage Loan Purchase Agreement: [_______________]


3.	Financing Party: [__________________]

This Acknowledgement Agreement shall inure to the benefit of and be binding upon Initial Owner and its successors and assigns.

This Acknowledgement Agreement shall be construed in accordance with the laws of the State of New York, without regard to conflicts of law principles, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

This Acknowledgement Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original and all such counterparts taken together shall constitute one and the same instrument.

[Signature Page Follows]

IN WITNESS WHEREOF, Owner and Servicer have executed this Acknowledgement Agreement as the day and year first written above.

ALTISOURCE RESIDENTIAL, L.P., as Initial Owner

By: Altisource Residential GP, LLC, its general partner

By: Altisource Residential Corporation, its sole member

By:
Name:
Title:

FAY SERVICING, LLC, as Servicer

By:
Name:
Title:

Schedule I

Servicing Asset Schedule

Schedule II

Third Party Servicing Requirements

EXHIBIT C

RESERVED

EXHIBIT D

FORM OF OFFICER’S CERTIFICATE

I, Edward Fay, the duly appointed Chief Executive Officer of Fay Servicing, LLC (the “ Company ”), hereby certify as follows:

The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.

Attached hereto as Exhibit 1 is a true, correct and complete copy of the certificate of formation of the Company (the “Certificate”) which is in full force and effect on the date hereof and which has been in effect without amendment, waiver, rescission or modification.

Attached hereto as Exhibit 2 is a true, correct and complete copy of the operating agreement of the Company (the “ Operating Agreement ”) which is in effect on the date hereof and which has been in effect without amendment, waiver, rescission or modification.

Attached hereto as Exhibit 3 is a certified true and correct copy of the resolution of the Company authorizing Loren Morris, the duly appointed EVP, General Counsel of the Company to execute and deliver the Flow Servicing Agreement, dated of even date herewith (the “ Agreement ”), by and between the Company and Altisource Residential, L.P., and such resolution is in effect on the date hereof without amendment, waiver rescission or modification.

To the best of my knowledge, either (i) no consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Company of or compliance by the Company with the Agreement or the consummation of the transactions contemplated by the Agreement; or (ii) any required consent, approval, authorization or order has been obtained by the Company.

To the best of my knowledge, neither the consummation of the transactions contemplated by, nor the fulfillment of the terms of the Agreement, conflicts or will conflict with or results or will result in a breach of or constitutes or will constitute a default under the Certificate or Operating Agreement of the Company, the terms of any indenture or other agreement or instrument to which the Company is a party or by which it is bound or to which it is subject, or any statute or order, rule, regulations, writ, injunction or decree of any court, governmental authority or regulatory body to which the Company is subject or by which it is bound.

To the best of my knowledge, there is no action, suit, proceeding or investigation pending or threatened against the Company, which, in my judgment, either in any one instance or in the aggregate, would draw into question the validity of the Agreement or of any action taken or to be taken in connection with the transactions contemplated hereby, or would likely impair materially the ability of the Company to perform under the terms of the Agreement.

The Company is duly authorized to engage in the transactions described and contemplated in the Agreement.

[Signature Page Follows]

IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of the Company.

Dated:_____________________________ By:

Name: Edward Fay

[Seal] Title: Manager, CEO and President

I, ________________________, a Secretary of _____________________ , hereby certify that Edward Fay is the duly elected, qualified and acting Manager, CEO and President of the Company and that the signature appearing above is his genuine signature.

IN WITNESS WHEREOF, I have hereunto signed my name.

Dated: By:

Name:

[Seal] Title: Secretary

EXHIBIT E

FORM OF OPINION OF COUNSEL TO SERVICER

January 24, 2015

Dear Sirs:

You have requested my opinion, as General Counsel to Fay Servicing, LLC (the “ Servicer ”), with respect to certain matters in connection with the servicing by Servicer of the Mortgage Loans pursuant to that certain Flow Servicing Agreement, dated as of January 24, 2015 (the “ Servicing Agreement ”), by and between Servicer and Altisource Residential, L.P. (“ Owner ”). Capitalized terms not otherwise defined herein have the meanings set forth in the Servicing Agreement.

I have examined the following documents:

1. the Servicing Agreement; and

2. such other documents, records and papers as I have deemed necessary and relevant as a basis for this opinion.

To the extent deemed necessary and proper, I have relied upon the representations and warranties of Servicer contained in the Servicing Agreement. I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all documents.

Based upon the foregoing, it is my opinion that:

1. Servicer is a duly organized, validly existing limited liability company in good standing under the laws of the State of Delaware and is qualified and possesses all necessary licenses and other regulatory authorizations to service and administer the Assets in each of the states where the Mortgaged Properties and REO Properties are located.

2. Servicer has the power to engage in the transactions contemplated by the Servicing Agreement and all requisite power, authority and legal right to execute and deliver the Servicing Agreement, and to perform and observe the terms and conditions of such instruments.

3. The Servicing Agreement has been duly authorized, executed and delivered by Servicer and is a legal, valid and binding agreement enforceable in accordance with its respective terms against Servicer, subject to bankruptcy laws and other similar laws of general application affecting rights of creditors and subject to the application of the rules of equity, including those respecting the availability of specific performance, none of which will materially interfere with the realization of the benefits provided thereunder.

4. Either (i) no consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by Servicer of or compliance by Servicer with the Servicing Agreement, or the servicing of the Mortgage Loans or the consummation of the transactions contemplated by the Servicing Agreement; or (ii) any required consent, approval, authorization or order has been obtained by Servicer.

5. Neither the consummation of the transactions contemplated by, nor the fulfillment of the terms of, the Servicing Agreement conflicts or will conflict with or results or will result in a breach of, or constitutes or will constitute a default under, the limited liability company agreement of Servicer, the terms of any indenture or other agreement or instrument to which Servicer is a party or by which it is bound or to which it is subject, or violates any statute or order, rule, regulations, writ, injunction or decree of any court, governmental authority or regulatory body to which Servicer is subject or by which it is bound.

6. There is no action, suit, proceeding or investigation pending or, to the best of my knowledge, threatened against Servicer, which, in my judgment, either in any one instance or in the aggregate, would draw into question the validity of the Servicing Agreement or of any action taken or to be taken in connection with the transactions contemplated thereby, or would likely impair materially the ability of Servicer to perform under the terms of the Servicing Agreement.

This opinion is given to you for your sole benefit, and no other person or entity is entitled to rely hereon except that the purchaser or purchasers to which you resell the Mortgage Loans may rely on this opinion as if it were addressed to them as of its date, provided that Servicer remains Servicer of the Mortgage Loans under the Servicing Agreement.

Very truly yours,

Loren Morris

EVP, General Counsel

EXHIBIT F

SERVICING DUTIES AND PERFORMANCE STANDARDS

These Servicing Duties and Performance Standards (the “ Standards ”), as may be updated from time to time by written agreement of Servicer and Owner, are a part of, and incorporated into, that certain Flow Servicing Agreement, dated January 24, 2015 (the “ Agreement ”), by and between Servicer and Owner, pursuant to which Servicer will service certain Assets for the benefit of Owner.

In the event of any conflict between these Standards and the terms of the Agreement that precludes Servicer from complying with both of them, Servicer shall consult with Owner regarding the matter having given rise to such conflict and mutually determine the appropriate course of action. However, in no event shall Servicer proceed with instructions from Owner if such instructions are in conflict with any applicable Law; in any such instance, Servicer shall inform Owner in writing of such conflict and communicate its recommended course of action in light of such conflict.

Servicer shall at all times act in a manner to maximize returns on the Assets and that is in the best interests of, and for the benefit of, Owner (as determined by Servicer in its good faith reasonable judgment) and in accordance with the Applicable Requirements.

TABLE OF CONTENTS

SECTION 1. NEW LOAN BOARDING: 3

SECTION 2. VALUATION METHODOLOGY: 5

SECTION 3. CASH MANAGEMENT: 5

SECTION 4. ADJUSTABLE RATE MORTGAGES: 9

SECTION 5. ESCROW – PROPERTY TAX, HOA, AND INSURANCE: 10

SECTION 6. COLLECTION ACTIVITIES: 15

SECTION 7. PROPERTY INSPECTIONS: 15

SECTION 8. LOSS MITIGATION: 16

SECTION 9. LOAN MODIFICATIONS: 20

SECTION 10. SHORT REFINANCE: 20

SECTION 11. SHORT SALE: 21

SECTION 12. DEED IN LIEU OF FORECLOSURE: 21

SECTION 13. FORECLOSURE: 22

SECTION 14. REAL ESTATE OWNED AND PRE-REO: 24

SECTION 15. BANKRUPTCY: 25

SECTION 16. INVESTMENT MANAGEMENT: 26

SECTION 17. VENDOR MANAGEMENT: 27

SECTION 18. REGULATORY COMPLIANCE: 27

SECTION 19. STANDARD REPORTS: 30

SECTION 20. CERTAIN TERMS: 31

SECTION 1. NEW LOAN BOARDING:

When Servicer is notified that Owner has entered into a commitment to purchase a particular Asset Pool, Servicer and Owner shall immediately initiate contact with the existing servicer of such Asset Pool (the “ Transferring Servicer ”) to establish the requirements for, and to schedule the timely completion of, the boarding of the Assets in such Asset Pool on Servicer’s servicing platform. Servicer shall comply with the following checklist on processing tasks at boarding:



(1)	Receive Transfer Notice
(2)	Receive Transferring Servicer Contact information
(3)	Check if Transferring Servicer is a Black Knight Desktop/ Process Management client
(4)	Approve Good bye Letters
(5)	Receive Preliminary Data Tapes
(6)	Convert to Servicer’s Boarding Format
(7)	Request missing data content
(8)	Receive missing data content
(9)	Receive Final Executed Contract
(10)	Set up New Account MSP Account Headers
(11)	Desktop/Process Management Transfer (if applicable)
(12)	Receive Final Data Tape
(13)	Update final boarding forms and board in ELI
(14)	Day2 Boarding Transaction
(15)	Review / Compare new MSP data to final data tape
(16)	Exception Analysis of Board
(17)	Rework Loan Exceptions
(18)	Send out Welcome Kits - Hello Letters
(19)	Receive Loan Docs
(20)	Process Loan Docs through ACS / DocVelocity (FC2)
(21)	Receive Wire for Suspense
(22)	Receive Wire for Restricted Escrow
(23)	Receive Wire for Replacement Reserve
(24)	Receive Wire for Escrow Funds
(25)	Receive Wire for ANY Additional Funds
(26)	Balance Fund Receipts to MSP Balances
(27)	Prepare Tax / Insurance Review
(28)	Set up tax and insurance services
(29)	Send New Board Info to HAMP group processing
(30)	ARM Review
(31)	MOD Review / Step Info Entered
(32)	Receive TOS and TOB batch
(33)	Ensure MERS loans are updated to Servicer and Owner
(34)	Assure FHA/MI is updated to Servicer/ Owner in MI websites
(35)	Follow up on Transferring Servicer invoices if not received with initial drop
(36)	HAMP docs complete
(37)	Communicate any missing document/data/info to Owner
(38)	Servicer Statements out
(39)	Escrow Analysis Run
(40)	Perform outstanding FBA/MOD check
(41)	Prepare Data/Document sign-off
(42)	Special Loan sign-off
(43)	Front Office Sign-off
(44)	Default Sign-Off
(45)	Escrow Sign-Off
(46)	SVP Board Execution sign-off


b)	Collateral Files – With respect to each Asset, on or before the related Servicing Commencement Date, Owner, or the Custodian at Owner’s direction, shall provide Servicer with a report to account for:


(i)	Location of the collateral file for such Asset. If the Custodian is not in possession of the collateral file, then the report shall show the location of the file, the date it was checked out, and delivery tracking number.

(ii)

Location of individual collateral documents relating to such Asset including the Note, Recorded Mortgage/Deed of Trust, Title Policy, HUD-1, Loan Modification Agreement(s) (as applicable), and Lost Note Affidavit (as applicable). If the Custodian is not in possession of any of the individual collateral documents, then the report shall show the location of the individual collateral document that is missing, the date it was checked out, and the delivery tracking number.

Owner is responsible for ensuring that information on the reports is accurate and that all collateral files and individual collateral documents are properly accounted for. Servicer is not responsible for locating collateral files or individual collateral documents that were missing or mislabeled at the related Servicing Commencement Date. If needed, Servicer will hire an outside vendor to handle collateral repair and bill Owner at [115]% of Servicer’s actual out-of-pocket cost.

SECTION 2. VALUATION METHODOLOGY:

Servicer shall, with the prior written consent of Owner, order an exterior BPO with respect to a Mortgaged Property or REO Property as deemed reasonably necessary by Servicer to review a Mortgage Loan for loss mitigation, to prepare bidding instructions in advance of a foreclosure sale of a Mortgaged Property, in connection with the sale of an REO Property, or upon request by Owner.

SECTION 3. CASH MANAGEMENT:


a)	All full payments in respect of Mortgage Loans and Liquidation Proceeds shall, in accordance with Applicable Requirements, be posted to the applicable Asset, and remitted in accordance with the Agreement.

Custodial Account . For the Assets related to each Owner, Servicer shall segregate and hold all funds collected and received on the Assets separate and apart from any of its own funds and general assets (and separate and apart from the funds relating to the Assets of any other Owner or other Person) and shall establish one or more Custodial Accounts with respect to each Owner, in the form of time deposit or demand accounts. Each Custodial Account shall be established with a Qualified Depository, subject to the approval of Owner in each case, and shall be evidenced by a letter agreement in the form provided by Owner. A copy of such letter agreement shall be sent to Owner promptly after a Custodial Account is established. Funds deposited in the Custodial Account may be drawn on by Servicer solely in accordance with this Agreement. Servicer shall deposit in the Custodial Account within two (2) Business Days of Servicer’s receipt, and retain therein, the following collections received by Servicer and payments made by Servicer with respect to the Assets for each Owner after each related Servicing Commencement Date:


(i)	all payments of principal on the Mortgage Loans including Principal Prepayments and Prepayment Charges;


(ii)	all payment of interest on the Mortgage Loans;


(iii)	all Liquidation Proceeds;


(iv)	all Insurance Proceeds including amounts required to be deposited (other than proceeds to be held in the Escrow Account and applied to the restoration and repair of the Property or released to the Mortgagor in accordance with the Applicable Requirements);


(v)	all Condemnation Proceeds that are not applied to the restoration or repair of the related Property or released to the Mortgagor in accordance with the related Mortgage Loan Documents and Accepted Servicing Practices;


(vi)	all amounts received from the seller of the Asset or any other person giving representations and warranties with respect to the Asset, in connection with the repurchase of, or indemnification obligation with respect to, such Asset;


(vii)	all amounts received with respect to or related to any REO Property (other than any Liquidation Proceeds with respect thereto deposited in accordance with clause (iii) above;


(viii)	all amounts required to be deposited by Servicer in connection with any unpaid claims that are a result of a breach by Servicer or any subservicer of Servicer’s obligations under this Agreement or any Applicable Requirement; and


(ix)	any other amount required to be deposited into the Custodial Account pursuant to this Agreement.

The foregoing requirements for deposit into the Custodial Account shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments in the nature of Ancillary Income need not be deposited by Servicer into the Custodial Account. Any benefit derived from funds deposited in the Custodial Account by the depository institution shall accrue to the benefit of Servicer and Servicer shall be entitled to retain and withdraw such interest from the Custodial Account.


d)	Servicer from time to time shall be authorized to withdraw funds from the applicable Custodial Account with respect to an Owner for (and only for) the following reasons:


(i)	to pay itself any unpaid Servicing Fees, it being understood that Servicer’s rights to such payments shall be prior to Owner’s rights to remittances;


(ii)	to pay itself Ancillary Income and any interest earned on funds in the Custodial Account (all such interest to be withdrawn monthly not later than each Remittance Date), to the extent not retained or previously paid to Servicer;


(iii)	to make or allow remittances to Owner in accordance with Section 4.01 ; or


(iv)	to remove any funds deposited to the Custodial Account in error;


(v)	with the prior written consent of Owner, to make a deposit into the Reserve Account to the extent necessary to prevent an overdraft from occurring therein;


(vi)	if the depository of the Custodial Account ceases to be a Qualified Depository, to transfer funds to another Qualified Depository, subject to the prior written consent of Owner in each case; and


(vii)	to clear and terminate the Custodial Account upon the termination of this Agreement (with the proceeds of such withdrawal to be paid to Owner).

Escrow Account . For the Assets related to each Owner, Servicer shall segregate and hold all funds collected and received on the Mortgage Loans constituting Escrow Payments separate and apart from any of its own funds and general assets (and separate and apart from the funds relating to the Assets of any other Owner or other Person) and shall establish one or more Escrow Accounts with respect to each Owner, in the form of time deposit or demand accounts. Each Escrow Account shall be established with a Qualified Depository, subject to the approval of Owner in each case, and shall be evidenced by a letter agreement in the form provided by Owner. A copy of such letter agreement shall be sent to Owner promptly after an Escrow Account is established. Funds deposited in the Escrow Account may be drawn on by Servicer solely in accordance with Section 5(g) of these Standards. Servicer shall deposit in the Escrow Account or Accounts within two (2) Business Days of Servicer’s receipt, and retain therein:


(i)	all Escrow Payments collected on account of the Mortgage Loans with respect to the related Owner; and


(ii)	all amounts representing Insurance Proceeds or Condemnation Proceeds which are to be applied to the restoration or repair of any related Mortgaged Property and not to ground rents, taxes, assessments, water rates, hazard insurance premiums, PMI Policy or LPMI Policy premiums, if applicable, and similar items.

Servicer shall make withdrawals from the applicable Escrow Account with respect to an Owner only to effect such payments as are required under the Agreement and these Standards. Servicer shall be entitled to retain any interest paid on funds deposited in the Escrow Account by the depository institution, other than interest on escrowed funds required by Law to be paid to a Mortgagor. To the extent required by applicable Laws, Servicer shall pay, without reimbursement, interest on escrowed funds to the Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or that interest paid thereon is insufficient for such purposes. Servicer shall keep and maintain, in an electronic format acceptable to Owner, separate accounting, on a Mortgage Loan by Mortgage Loan basis and on an REO Property by REO Property basis , for the purpose of documenting the amount of and purpose for any deposit to or withdrawal from the Escrow Account and shall promptly furnish such documentation to Owner upon request.

Reserve Account . With respect to each Asset Pool related to each Owner, Servicer shall segregate and hold all funds collected and received on the Assets separate and apart from any of its own funds and general assets (and separate and apart from the funds relating to the Assets of any other Owner or other Person) and shall establish a Reserve Account with respect to each Owner, in the form of a time deposit or demand account. Each Reserve Account shall be established with a Qualified Depository, subject to the approval of Owner in each case, and shall be evidenced by a letter agreement in the form provided by Owner. A copy of such letter agreement shall be sent to Owner promptly after a Reserve Account is established. Funds deposited in the Reserve Account may be drawn on by Servicer solely in accordance with this Agreement. On the Servicing Commencement Date for an Asset Pool, Owner shall deposit in the Reserve Account cash proceeds in the amount agreed to by Servicer and Owner and set forth in the related Asset Servicing Schedule. In addition, with respect to each Asset Pool, the related Asset Servicing Schedule shall set forth the Reserve Required Amount, which Reserve Required Amount may be adjusted by the mutual agreement of Servicer and Owner to address the current and expected reimbursement and funding for Servicing Advances.


i)	Servicer from time to time shall withdraw funds from the Reserve Account for the following purposes:


(i)	to reimburse itself for unreimbursed Servicing Advances, including without limitation any previously made Servicing Advances that are subsequently determined to be Nonrecoverable Servicing Advances;


(ii)	to pay itself interest earned on funds deposited in the Reserve Account (all such interest to be withdrawn monthly not later than each Remittance Date), to the extent not retained or previously paid to Servicer;


(iii)	if the depository of the Reserve Account ceases to be a Qualified Depository, to transfer funds to another Qualified Depository, subject to the prior written consent of Owner in each case;


(iv)	to withdraw funds deposited in error; and


(v)	to clear and terminate the Reserve Account upon the termination of the Agreement (with the proceeds of such withdrawal to be paid to Owner).

Servicer shall keep and maintain, in an electronic format acceptable to Owner, separate accounting, on a Mortgage Loan by Mortgage Loan basis, and on an REO Property by REO Property basis, for the purpose of documenting the amount of and purpose for any deposit to or withdrawal from the Reserve Account and shall promptly furnish such documentation to Owner in relation to any such deposit or withdrawal where so requested by Owner. Notwithstanding any provision in this Agreement to the contrary, Servicer may not use funds in any Reserve Account relating to a particular Owner to make Servicing Advances or to reimburse Servicer for any Servicing Advances or any other amounts payable hereunder that are in relation to funds received with respect to Mortgage Loans or REO Properties that are not owned by such Owner. The Servicer shall maintain separate accounts, books and records for each Owner. Servicer shall diligently seek reimbursement and collection of Servicing Advances and other amounts advanced or funded by Servicer and Owner with respect to the Mortgage Loans and REO Properties. In the event that the Reserve Account is in an overdraft position and sufficient funds to cover such overdraft are not available in the Custodial Account, Servicer shall give written notice to Owner and Owner will have two (2) Business Days to fund such overdraft position in the Reserve Account.


k)	If a payment is received from a Mortgagor after foreclosure proceedings have commenced and the first legal action has occurred, Servicer shall, subject to modification based upon Servicer’s best practices, act as follows:


(i)	Servicer may deposit the payment in the Custodial Account and apply the payment amount to suspense if the Mortgagor is in an active loss mitigation status (short sale, loan modification, deed in lieu of foreclosure, etc.).


(ii)	Servicer shall not deposit the payment, which shall be returned to the Mortgagor if the Mortgagor is not in an active loss mitigation status.


(iii)	Other situations will be resolved on a case by case basis, with the prior written consent of Owner, and should be reviewed to maximize loan value.

If necessary, all Mortgage Loans will have force placed insurance (FPI), under a policy approved by Owner, beginning on the related Servicing Commencement Date. The policies will be cancelled once proof of insurance is obtained through boarding file or when received from the Mortgagor. Mortgage Loans will not be billed for the first sixty (60) days of force placed coverage, but if no policy is provided within those sixty (60) days, that period will be billed in addition to the premiums going forward. Any Mortgage Loan with sufficient proof of current coverage as of the related Servicing Commencement Date will not be subject to FPI.


m)	Servicer shall ensure that real estate taxes relating to Mortgaged Properties are paid in accordance with Section 5(n) below.


n)	Stop codes shall be placed on Mortgage Loans that have issues where application of funds is not permitted or would inhibit certain resolution processes (e.g., Mortgage Loans in active foreclosure or litigation).


o)	Servicer may, with the prior written approval of the related Owner, transfer the Reserve Account, Custodial Account or the Escrow Account to a different Qualified Depository. Servicer shall bear any expenses, losses or damages sustained by Owner if the Reserve Account, Custodial Account and/or the Escrow Account are not demand deposit accounts.

SECTION 4. ADJUSTABLE RATE MORTGAGE LOANS:

On each adjustment date, Servicer shall make interest rate adjustments for each Adjustable Rate Mortgage Loan (“ ARM ”) and shall adjust the Monthly Payment in compliance with the requirements of the related Mortgage and Mortgage Note and Applicable Requirements. Servicer shall execute and deliver the notices required by each Mortgage and Mortgage Note and Applicable Requirements regarding interest rate adjustments. Servicer also shall provide timely notification to Owner of all applicable data and information regarding such interest rate and Monthly Payment adjustments and Servicer’s methods of implementing such interest rate adjustments. Upon the discovery by Servicer or Owner that Servicer has failed to adjust a Mortgage Interest Rate or a Monthly Payment pursuant to the terms of the related Mortgage, Mortgage Note or Applicable Requirements, Servicer shall promptly deposit in the related Custodial Account from its own funds the amount of any interest loss caused thereby without reimbursement therefor.


b)	Servicer shall not have any liability for any failure to properly adjust a Mortgage Interest Rate or Monthly Payment to the extent that such failure is primarily due to the actions or inactions of the Prior Servicer. These actions or inactions include, but are not limited to: incomplete information, inaccurate information and/or incomplete documentation.

SECTION 5. ESCROW – PROPERTY TAX, HOA, AND INSURANCE:


a)	Withdrawals from the Escrow Account may be made by Servicer only:


(i)	to effect timely payments of ground rents, taxes, assessments, water rates, mortgage insurance premiums, condominium charges, fire and hazard insurance premiums or other items constituting Escrow Payments under the related Mortgage;


(ii)	to refund to any Mortgagor any funds found to be in excess of the amounts required under the terms of the related Mortgage Loan Documents;


(iii)	for application to restoration or repair of the Mortgaged Property required if appropriate conditions are met;


(iv)	for transfer to the Custodial Account in accordance with this Agreement;


(v)	to withdraw funds deposited into the Escrow Account in error; and


(vi)	to clear and terminate the Escrow Account on the termination of the Agreement (with the proceeds of such withdrawal to be paid as directed by Owner).


b)	Servicer will be responsible for the administration of the Escrow Account and will be obligated to make Servicing Advances to the Escrow Account in respect of its obligations under the Agreement, with such Servicing Advances being reimbursable from the Reserve Account to the extent not collected from the related Mortgagor or from amounts received with respect to the related Mortgage Loan.

With respect to each Mortgage Loan where the related Mortgage provides for Escrow Payments and with respect to each REO Property, Servicer shall maintain accurate records reflecting the status of ground rents, taxes, assessments, water rates, sewer rents and other charges (including any homeowners’ associate fees or assessments) which are or may become a lien upon the related Mortgaged Property or REO Property, and the status of fire and hazard insurance coverage and shall obtain, from time to time, all bills for the payment of such charges, including renewal premiums (such charges and renewals collectively, the “ Property Charges ”) and shall effect payment therefor prior to the applicable penalty or termination date. Servicer assumes full responsibility for the timely payment of all Property Charges irrespective of the related Mortgagor’s faithful performance in the payment of same or the making of required Escrow Payments.

To the extent that a Mortgage does not provide for Escrow Payments, subject to Applicable Requirements, Servicer shall make a Servicing Advance to effect payment of all Property Charges upon receipt of notice of any failure to pay on the part of the related Mortgagor, or at such time as Servicer reasonably determines to be in the best interest of Owner, in order to avoid the loss of the related Mortgaged Property by foreclosure from a tax or other lien. Servicer shall pay all late fees and penalties that are payable due to any delay in payment of Property Charges, without reimbursement to Servicer if the accrual of such late fees or penalties were the result of Servicer’s action or inaction. Servicer shall advance all unpaid penalties and fees payable due to any delay in payment of Property Charges caused by a Prior Servicer (“ Prior Servicer Penalties ”) and such Prior Servicer Penalties paid by Servicer shall be deemed to be Servicing Advances.


e)	Real Estate Taxes and Homeowners’ Association Fees/Assessments


(i)	Notifications of pending tax sales for non-payment must be monitored and researched, and taxes redeemed promptly where necessary.


(ii)	Notifications of pending foreclosure sales by homeowners associations for non-payment must be monitored and researched, and payments made promptly where necessary.


f)	Hazard Insurance

(i)

Servicer shall cause to be maintained for each first lien Mortgage Loan fire and hazard insurance with extended coverage as is customary in the area where the Mortgaged Property is located in an amount which is at least equal to the lesser of (A) the amount necessary to fully compensate for any damage or loss to the improvements which are a part of such property on a replacement cost basis or (B) the Unpaid Principal Balance of the Mortgage Loan and any mortgage loan senior to the Mortgage Loan, in each case in an amount not less than such amount as is necessary to prevent the Mortgagor and/or the Mortgagee from becoming a co-insurer. If the Mortgaged Property is in an area identified in the Federal Register by the Flood Emergency Management Agency as having special flood hazards and flood insurance has been made available, Servicer will cause to be maintained a flood insurance policy meeting the requirements of the current guidelines of the Federal Insurance Administration with a generally acceptable insurance carrier, in an amount representing coverage not less than the least of (X) the Unpaid Principal Balance of the Mortgage Loan and any mortgage loan senior to the Mortgage Loan, (Y) the maximum insurable value of the improvements securing such Mortgage Loan or (Z) the maximum amount of insurance which is available under the National Flood Insurance Act of 1968, as amended. Servicer shall also maintain on the REO Property for the benefit of the Owner, (1) fire and hazard insurance with extended coverage in an amount which is at least equal to the replacement cost of the improvements which are a part of such property, (2) public liability insurance and, (3) to the extent required and available under the National Flood Insurance Act of 1968, as amended, flood insurance in an amount as provided above. Any amounts collected by Servicer under any such policies other than amounts to be deposited in the Escrow Account and applied to the restoration or repair of the Mortgaged Property or REO Property, or released to the Mortgagor in accordance with Servicer's normal servicing procedures, shall be deposited in the Custodial Account, subject to withdrawal pursuant to the Standards. It is understood and agreed that no earthquake or other additional insurance is required to be maintained by Servicer or the Mortgagor or maintained on property acquired in respect of the Mortgage Loan, other than pursuant to such Applicable Requirements as shall at any time be in force and as shall require such additional insurance. All such policies shall be endorsed with standard mortgagee clauses with loss payable to Servicer and shall provide for at least thirty (30) days prior written notice of any cancellation, reduction in the amount of or material change in coverage to Servicer. Servicer shall not interfere with the Mortgagor's freedom of choice in selecting either his insurance carrier or agent; provided , however , that Servicer shall not accept any such insurance policies from insurance companies unless such companies currently reflect a general policy rating of B:VI or better in Best's Key Rating Guide or are otherwise a Qualified Insurer and are licensed to do business in the state wherein the Mortgaged Property is located.

(ii)

If a Mortgage Loan is secured by a unit in a condominium project, Servicer shall verify that the coverage required of the HOA, including hazard, flood, liability, and fidelity coverage, are being maintained and shall secure from the HOA its agreement to notify Servicer promptly of any material change in insurance coverages or of any condemnation or casualty loss that may have a material effect on the value of the Mortgaged Property as security. The Service shall promptly notify Owner in the event of such material change or cancellation.


(iii)	Subject to applicable Laws, Servicer should not force place insurance with respect to a Mortgage Loan as to which a Superior Lien exists, unless Servicer determines that there is enough equity, after taking into account the Superior Lien, to foreclose and that the holder of the Superior Lien has ceased maintaining coverage.

(iv)

Servicer agrees to indemnify Owner for any claims, losses, damages, penalties, fines, forfeitures, legal fees and related costs, judgments, and any other costs, fees and expenses that Owner may sustain in any way related to the failure by Servicer to comply with the Applicable Requirements resulting in the failure of the Mortgagor (or Servicer) to maintain hazard insurance or flood insurance with respect to the related Mortgaged Property which complies with the requirements of this section. If the Mortgagor fails or ceases to maintain hazard insurance or flood insurance with respect to the related Mortgaged Property, Servicer shall, if the Mortgaged Property is occupied, provide a Servicing Advance in an amount sufficient to maintain hazard and flood insurance coverages in appropriate amounts with respect to such Mortgaged Property, unless Owner has notified Servicer that it has provided a blanket insurance policy to cover the Mortgage Loans; provided , that, if the Mortgagor has vacated the Mortgaged Property, or if the Mortgagor’s existing policy has been canceled and the Mortgagor is unable to obtain conventional coverage, Servicer shall force-place such insurance.


g)	Mortgage Insurance (MI)

(i)

With respect to each first lien Mortgage Loan, Servicer will maintain or cause to be maintained in full force and effect (to the extent a Mortgage Loan has a PMI Policy as of the related Servicing Commencement Date and the Prior Servicer or Owner has provided the relevant information related to the PMI Policy to Servicer) a PMI Policy issued by a Qualified Insurer with respect to each Mortgage Loan for which such coverage is required. Such coverage will be maintained until the loan-to-value ratio of the related Mortgage Loan is reduced to 80% or less or such lesser percentage as may be stated in the related PMI Policy. Servicer will not cancel or refuse to renew any PMI Policy in effect on the Servicing Commencement Date that is required to be kept in force under this Agreement unless a replacement PMI Policy for such cancelled or non-renewed policy is obtained from and maintained with a Qualified Insurer. Servicer will maintain or cause to be maintained in full force and effect any LPMI Policy issued by a Qualified Insurer with respect to each Mortgage Loan for which such coverage is in existence or is obtained. Owner shall notify Servicer of any Mortgage Loan covered under an LPMI Policy. Servicer shall not take any action which would result in non-coverage under any applicable PMI Policy or LPMI Policy of any loss which, but for the actions of Servicer, would have been covered thereunder. In connection with any assumption or substitution agreement entered into or to be entered into pursuant to the Standards, Servicer shall promptly notify the insurer under the related PMI Policy or LPMI Policy, if any, of such assumption or substitution of liability in accordance with the terms of such policy and shall take all actions which may be required by such insurer as a condition to the continuation of coverage under the PMI Policy or LPMI Policy, as applicable. If such PMI Policy or LPMI Policy is terminated as a result of such assumption or substitution of liability, Servicer shall obtain a replacement PMI Policy or LPMI Policy, as applicable, as provided above.

(ii)

In connection with its activities as servicer, Servicer agrees to prepare and present, on behalf of itself and Owner, claims to the insurer under any PMI Policy and LPMI Policy in a timely fashion in accordance with the terms of such policies and, in this regard, to take such action as shall be necessary to permit recovery under any PMI Policy or LPMI Policy, as applicable, respecting a defaulted Mortgage Loan. Any amounts collected by the Servicer under any PMI Policy or LPMI Policy shall be deposited in the Custodial Account. The failure of a Qualified Insurer to pay all or part of a claim under a PMI Policy or LPMI Policy as a result of a breach by Servicer of its obligations hereunder or under such policy shall be treated as a mortgage insurer rejection and Servicer shall pay Owner the unpaid amount of such claim.

(iii)

Servicer shall comply with all provisions of applicable Laws relating to the cancellation of, or collection of premiums with respect to, PMI Policies, including the provisions of the Homeowners Protection Act of 1998, and all regulations thereunder, as amended from time to time. If a Mortgagor is required but fails to pay any PMI Policy premium, it shall be paid by Servicer as a Servicing Advance. Servicer shall be obligated to make premium payments with respect to all LPMI Policies required to be maintained by Servicer.


h)	Fidelity Bond and Errors and Omission Insurance

(i)

Servicer shall maintain with a Qualified Insurer, at its own expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad coverage on all officers, employees or other persons acting in any capacity requiring such persons to handle funds, money, documents or papers relating to the Mortgage Loans (“ Servicer Employees ”). Any such Fidelity Bond and Errors and Omissions Insurance Policy shall be in the form of the Mortgage Banker’s Blanket Bond and shall protect and insure Servicer against losses, including forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of such Servicer Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy also shall protect and insure Servicer against losses in connection with the failure to maintain any insurance policies required pursuant to this Agreement and the erroneous release or satisfaction of a Mortgage Loan without having obtained payment in full of the indebtedness secured thereby.

(ii)

No provision of this Agreement requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall diminish or relieve Servicer from its duties and obligations as set forth in the Agreement. The minimum coverage under any such Fidelity Bond and Errors and Omissions Insurance Policy shall be that which is acceptable for approval by Fannie Mae in the Fannie Mae MBS Selling and Servicing Guide or by Freddie Mac in the Freddie Mac Servicer’s Guide or, if higher, the minimum amount required under any other applicable Law to which Servicer is subject. Upon the execution of the Agreement and any other time upon the request of Owner, Servicer shall cause to be delivered to Owner a certified true copy of such Fidelity Bond and Errors and Omissions Insurance Policy. Further, such Fidelity Bond and Errors and Omissions Insurance Policy shall provide that the insurance provider shall give Owner thirty (30) days’ prior notice before such Fidelity Bond and Errors and Omissions Insurance Policy is terminated or materially modified.


i)	Insurance Claims


(i)	In the event of material damage to a Mortgaged Property, damage, claims must be filed with the appropriate insurer for repair or recovery of value.


(ii)	Servicer shall post all Insurance Proceeds received in respect of a Mortgaged Property to the Custodial Account, to the Escrow Account or disburse such Insurance Proceeds to the Mortgagor as provided in Section 3 of these Standards.


(iii)	Insurance Proceeds will be used to pay for repairs at the Mortgagor’s direction, with Servicer oversight and approval as provided in Section 5(j) below.


(iv)	The check in respect of Insurance Proceeds should be payable to the Mortgagor and Servicer jointly. If Owner is named as an additional loss payee, Servicer is hereby empowered to endorse any loss draft issued in respect of such a claim in the name of Owner.


j)	Restoration of Mortgaged Property


(i)	Servicer need not obtain the approval of Owner prior to releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be applied to the restoration or repair of the Mortgaged Property if such release is in accordance with Applicable Requirements and the terms of this Agreement.


(ii)	Servicer shall, at a minimum, comply with the following conditions in releasing any Insurance Proceeds or Condemnation Proceeds:


(1)	Servicer shall receive satisfactory independent verification of the completion of the restoration or repairs and the issuance of any required approvals with respect thereto;


(2)	Servicer shall take all steps necessary to preserve the priority of the Mortgage, including, but not limited to requiring waivers with respect to mechanics’ and material men’s liens;


(3)	Servicer shall verify that the Mortgage Loan is not in default; and


(4)	Pending repairs or restoration, Servicer shall place the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.

(iii)

If Servicer hereafter becomes aware that a Mortgaged Property is, or an REO Property becomes, an Environmental Problem Property, Servicer will notify Owner of the existence of the Environmental Problem Property. Additionally, Servicer shall set forth in such notice a description of such problem, a recommendation to Owner relating to the proposed action regarding the Environmental Problem Property and Servicer shall carry out the recommendation set forth in such notice unless otherwise directed by Owner in writing within five (5) Business Days after Owner’s receipt (or deemed receipt) of such notice.

SECTION 6. COLLECTION ACTIVITIES:

Continuously from the related Servicing Commencement Date until the principal and interest on the related Mortgage Loan are paid in full or the termination of this Agreement, Servicer will diligently collect all payments due under each Mortgage Loan when the same shall become due and payable and shall, to the extent such procedures shall be consistent with this Agreement, act in accordance with the terms and provisions of any related PMI Policy, LPMI Policy, Applicable Requirements and applicable Laws. Further, with respect to each Mortgage Loan which provides for Escrow Payments to be made, in accordance with Applicable Requirements, Servicer will ascertain and estimate annual ground rents, taxes, assessments, water rates, fire and hazard insurance premiums, mortgage insurance premiums, and all other charges that, as provided in the Mortgage, will become due and payable such that the installments payable by the Mortgagor will be sufficient to pay such charges as and when they become due and payable. Notwithstanding anything herein to the contrary, the Servicer shall have no obligation to collect, or make payments to the Owner with respect to, any prepayment penalties, late charges, fees or other items which are prohibited under applicable Laws.


b)	Servicer in its discretion may collect or may waive any applicable Prepayment Charge with respect to any Mortgage Loan which prepays.

SECTION 7. PROPERTY INSPECTIONS:


a)	If any Mortgage Loan is more than sixty (60) days delinquent with no contact with the Mortgagor in the last thirty (30) days, Servicer shall immediately inspect the Mortgaged Property and shall conduct subsequent inspections in accordance with Applicable Requirements. Servicer shall keep a written report of each such inspection.


b)	If an inspection reveals that the Mortgaged Property is vacant, the appropriate servicing department should be immediately notified and appropriate property preservation activities initiated. Inspections will recur every thirty (30) days unless the Mortgage Loan becomes current.


c)	Any property damage discovered during an inspection must be immediately communicated to the appropriate insurer for claim processing.


d)	Servicer shall inspect each Mortgaged Property as often as deemed necessary by Servicer to assure itself that the value of the Mortgaged Property is being preserved.

SECTION 8. LOSS MITIGATION:

With respect to the Mortgage Loans, (i) Servicer shall accept and continue processing any loan modification, deed in lieu, short sale, or other loss mitigation requests pending at the time of the applicable Servicing Commencement Date in accordance with Applicable Requirements, (ii) Servicer shall honor outstanding trial and permanent loan modification, deeds in lieu, short sales, or other loss mitigation agreements in accordance with Applicable Requirements, including without limitation any trial or permanent loan modifications made under HAMP, and (iii) Servicer shall correctly apply payments with respect to Mortgage Loans for which the related mortgagor is a debtor in a case under Chapter 13 of the United States Bankruptcy Code of 1986, as amended, at the time of the applicable Servicing Commencement Date.

Servicer will vigorously pursue any and all options for recovery and mitigation of losses due to non-payment. This includes short and long term repayment plans, forbearance agreements, stipulated agreements, modification of terms, negotiated short payoffs, short sales, deed-in-lieu, and deed-for-lease, if available. Additionally, if a Mortgage Loan in Default is an investment property, Servicer should pursue an assignment of rents under the terms of the appropriate addendum to the Mortgage as mutually agreed by Owner and Servicer.


c)	Effective monitoring and tracking of litigation involving the Mortgage Loans is required to ensure Servicer’s attorneys are addressing all issues timely to procure a prompt and judicious resolution.


d)	If a Mortgage Loan is covered by mortgage insurance (MI), Servicer will adhere to all MI requirements and obtain MI approval before proceeding with a loss mitigation solution.

Consistent with the terms of this Agreement and Owner Instructions, Servicer may waive, modify or vary any term of any Mortgage Loan or consent to the postponement of strict compliance with any such term or in any manner grant indulgence to any Mortgagor if in Servicer’s reasonable and prudent determination such waiver, modification, postponement or indulgence is not materially adverse to Owner; provided , however , that Servicer shall not, without the prior written consent of the Owner, permit any modification with respect to any Mortgage Loan that would change the Mortgage Interest Rate, forgive the payment thereof of any principal or interest payments, reduce the outstanding principal amount (except for actual payments of principal), extend the final maturity date with respect to such Mortgage Loan or any other act that could reasonably be expected to affect adversely Owner’s interest in the Mortgage Note, Mortgage Loan, Mortgage, Mortgaged Property, Mortgage Loan Documents or Servicing File related to a Mortgage Loan, including without limitation, approve a short payoff, a short sale, a deed-in-lieu of foreclosure or other settlement with a Mortgagor for less than the full amount due under any Mortgage Loan.

Subject to Owner Instructions, Servicer shall take such actions as it shall deem to be in the best interest of Owner and which are consistent with Applicable Requirements, the terms of this Agreement and all applicable Laws. Subject to the foregoing, Servicer shall continue, and is hereby authorized and empowered to execute and deliver on behalf of itself, and Owner, all instruments of satisfaction or cancellation, or of partial or full release, discharge and all other comparable instruments, with respect to the Mortgage Loans and with respect to the Mortgaged Properties. Servicer shall make all required Servicing Advances and shall service and administer the Mortgage Loans in accordance with Applicable Requirements, applicable Laws, the terms of this Agreement and the terms of the Mortgage Loan Documents and shall provide to the Mortgagor any reports required to be provided to it thereby.


g)	Owner may provide Servicer with Owner Instructions regarding certain servicing and loss mitigation decisions and procedures and Servicer shall comply with such Owner Instructions, subject to Applicable Requirements.

In the event that any payment under any Mortgage Loan is not postponed pursuant to a forbearance plan, Loan Modification, or trial period plan and is not paid when the same becomes due and payable (including any Defaulted Mortgage Loan), or in the event the Mortgagor fails to perform any other covenant or obligation under the Mortgage Loan and such failure continues beyond any applicable grace period, then Servicer shall pursue collection and default recovery actions with respect to such Mortgage Loan as provided herein. Servicer shall comply with these Standards and Applicable Requirements in servicing and administering any Assets constituting a Defaulted Mortgage Loan or an REO Property.

If Servicer is notified that any holder of a Superior Lien has accelerated or intends to accelerate the obligations secured by the Superior Lien, or has declared or intends to declare a default under the mortgage or the promissory note secured thereby, or has filed or intends to file a foreclosure action against a Mortgaged Property, then Servicer shall take, on behalf of Owner, whatever actions are necessary to protect the interests of Owner in accordance with the Applicable Requirements. With respect to an Asset subject to a Superior Lien, Servicer shall not make a Servicing Advance to pay such Superior Lien to the extent that it determines that such Servicing Advance would be a Nonrecoverable Servicing Advance. Servicer shall thereafter take such action as is necessary to recover such Servicing Advance .

If Servicer reasonably believes it to be in the best interest of Owner, Servicer shall use its best efforts to enforce any “due-on-sale” provision contained in any Mortgage Loan Documents and to deny assumption by the person to whom the Mortgaged Property has been or is about to be sold whether by absolute conveyance or by contract of sale, and whether or not the Mortgagor remains liable on the Mortgage or the Mortgage Note. When the Mortgaged Property has been conveyed by the Mortgagor, Servicer shall, to the extent it has knowledge of such conveyance, exercise its rights to accelerate the maturity of such Mortgage Loan under the “due-on-sale” clause applicable thereto, provided, however, that Servicer shall not exercise such rights if prohibited by applicable Laws from doing so or if the exercise of such rights would impair or threaten to impair any recovery under the related PMI Policy or LPMI Policy, if any.

If Servicer reasonably believes (1) enforcement of a “due-on-sale” clause is not in the best interest of Owner or (2) it is unable under applicable Laws to enforce such clause, Servicer shall enter into an assumption and modification agreement with the original Mortgagor and the person to whom the Mortgaged Property has been conveyed or proposed to be conveyed. Where an assumption is allowed pursuant to this clause (k) , Servicer, with the prior written consent of the primary mortgage insurer, if any, and to the extent required by the applicable PMI Policy, is authorized to prepare a substitution of liability agreement and any other document required in connection therewith to be entered into by Owner and the Person to whom the Mortgaged Property has been conveyed or is to be proposed to be conveyed pursuant to which the original Mortgagor is released from liability and such Person is substituted as Mortgagor and becomes liable under the related Mortgage Note. Any such substitution of liability agreement shall be in lieu of an assumption agreement.

Notwithstanding anything herein to the contrary, prior to its entering into any such assumption or substitution of liability, Servicer shall notify Owner in writing and obtain the written consent of Owner; provided , that Owner’s consent shall be deemed given if not denied within five (5) Business Days of Owner’s receipt of such notice. In connection with any such assumption or substitution of liability, Servicer shall follow the underwriting practices and procedures of prudent mortgage lenders in the respective states where the Mortgaged Properties are located. With respect to an assumption or substitution of liability, no material term of the Mortgage Loan may be changed, including without limitation, the Mortgage Interest Rate borne by the related Mortgage Note and the amount of the Monthly Payment. Servicer shall notify Owner that any such substitution of liability or assumption agreement has been completed and forward to the Custodian the original of any such substitution of liability or assumption agreement, which document shall be added to the related Mortgage Loan Documents and shall, for all purposes, be considered a part of such Servicing File to the same extent as all other documents and instruments constituting a part thereof.


m)	If the credit of the proposed transferee does not meet such underwriting criteria, Servicer shall diligently accelerate the maturity of the Mortgage Loan, to the extent permitted by the Mortgage Loan Documents and by applicable Laws.

With respect to any Defaulted Asset, Servicer will conduct its activities hereunder in compliance with Applicable Requirements with the goal of seeking recovery in a commercially reasonable manner, including without limitation the pursuit of any remedy or recovery in a manner that has the likelihood of realizing a commercially reasonable recovery of net proceeds taking into account considerations relevant to realization of such recovery, including for example: (A) the costs and expenses of obtaining such realization, (B) the probability or risks associated in obtaining such realization, including any risk of losses or liabilities, and measures to minimize potential losses or liabilities from such Asset, (C) the net present value of the expected net proceeds based on the expected timing of such realization, and (D) the current and expected residential real estate market conditions.

With respect to any Defaulted or Delinquent Mortgage Loan, subject to Owner Instructions, Servicer shall commence foreclosure proceedings in accordance with Applicable Requirements. In such connection, Servicer shall from its own funds make all necessary and proper Servicing Advances. Servicer shall take appropriate measures to ensure the accuracy of all documents filed or otherwise utilized by Servicer or its Vendor in any judicial or non-judicial foreclosure proceeding, related bankruptcy proceeding or in other foreclosure-related litigation, including but not limited to, documentation sufficient to establish ownership of the Mortgage Loan by Owner and the right to foreclose at the time the foreclosure action is commenced (it being understood that Servicer shall not be responsible for inaccuracies caused by Prior Servicers). All foreclosure attorneys, bankruptcy attorneys and eviction attorneys (collectively, “ Default Firms ”) to be used in connection with the servicing and administration of the Mortgage Loans and REO Properties shall be engaged in accordance with Applicable Requirements. Upon request, the Servicer shall provide Owner with an schedule of Default Firms being used by Servicer in connection with servicing the Mortgage Loans. Servicer shall be required to maintain, and to cause its Vendor to maintain, current and accurate records relating to foreclosure or related bankruptcy proceedings or related litigation, with a clear auditable trail of documentation capable of validating foreclosure that Servicer has produced, or has received from a Prior Servicer, and shall cause its Vendor to do the same.

Without limiting the foregoing and with respect to any Defaulted Asset, consistent with the terms of this Agreement and Applicable Requirements, Servicer may pursue other default recovery actions that it determines in its reasonable and prudent discretion will likely result in a commercially reasonable realization of proceeds or minimize the potential loss from such Mortgage Loan, including without limitation a short payoff, the sale or other disposition of such Mortgage Loan or REO Property, or a charge-off of such Mortgage Loan through the abandonment of the related foreclosure action or the release of the Mortgage.


q)	Repayment Plans: Servicer may place the Mortgagor on a formal repayment plan if the Mortgagor is able to cure the delinquency in twelve (12) months or less.


r)	Loss Mitigation Waterfall:


(i)	The Loss Mitigation Waterfall set forth in the following clause (ii) may be modified by Servicer with the approval of Owner to maximize the value to be obtained from individual Mortgage Loans. Recommended options will be based, in part, on analysis of credit, monthly expenses, income, assets, property value, and foreclosure status.


(ii)	Loss mitigation options should be reviewed by Servicer in the following order or as otherwise agreed to by Owner and Servicer for particular Mortgage Loans, subject to contrary requirements of applicable Laws and as available and mutually agreed by Servicer and Owner:


(1)	Refinance – only if immediately possible in the opinion of the lending partner of Servicer.


(2)	Repayment Plan – only if the Mortgagor will remain current long term in the opinion of Servicer.


(3)	Deferment – if the Mortgagor will remain current long term in the opinion of Servicer. Only one (1) deferment is allowed in any twelve (12) month period. Servicer has the option to skip this step in the waterfall at its discretion.


(4)	Loan Modification - preferred for a Mortgagor who qualifies for a Loan Modification and wishes to stay in the house over the long term. At Servicer’s discretion, a forbearance agreement or a trial period plan may be used prior to offering a permanent Loan Modification.


(5)	Short Sale – preferred for Mortgagors who do not qualify for a Loan Modification, but want to remain in the home for the short term.


(6)	Deed in Lieu – preferred for Mortgagors who do not qualify for a Loan Modification, plus have either vacated the Mortgaged Property or wish to do so in the near future.


(7)	Foreclosure – if all other options have been attempted or there is a need to clear title.


(iii)	Mortgaged Properties with values less than $60,000 should have a net present value analysis performed as requested by Owner and submitted to Owner for low value review and resolution evaluation.

SECTION 9. LOAN MODIFICATIONS:


a)	Servicer will send demand letters monthly for each Mortgage Loan that meet the following criteria: >60 days following the related Servicing Commencement Date, >75 days delinquent, >60 days since last contact with the Mortgagor, and no active loss mitigation, bankruptcy or foreclosure status.


b)	Loan Modification Required Documentation: Income verification as required by applicable Laws or in accordance with Servicer’s policies.


c)	For a Mortgage Loan that is insured by FHA: As required by applicable Laws.


d)	Servicer will file a Motion for Relief with the bankruptcy court when a Mortgagor does not reaffirm the related debt in CH 7 and is >45 days delinquent as of petition filing date and when a CH 13 Mortgagor’s account is >60 days delinquent post-petition on a Mortgagor paid plan.


e)	Servicer will require foreclosure attorneys and trustees and bankruptcy attorneys to adhere to the fee guidelines established under applicable Laws.


f)	HAMP eligible Loan Modifications should proceed in accordance with program requirements.

SECTION 10. SHORT REFINANCE:

In general, the Short Refinance program entails Servicer, through its affiliates and other third parties, working with the Mortgagor and employing various loss mitigation activities including but not limited to Loan Modifications, in order to improve the Mortgagor’s credit in order to qualify the Mortgagor for a new first lien mortgage loan whose principal balance may be lower than the current principal balance of the existing Mortgage Loan, pursuant to HUD or other publically or privately sponsored origination and refinance program guidelines. Servicer shall inform Mortgagors targeted for a Short Refinance of all relevant benefits and conditions of the program. A Short Refinance may or may not follow a Loan Modification.

SECTION 11. SHORT SALE:


a)	Valuations (BPOs) for short sale consideration should be less than 90 days old. If a valuation is greater than 90 days old, an updated interior valuation will be requested.


b)	Servicer will not pursue deficiency balances through legal remedies on short sales and deeds in lieu unless Servicer determines that it is prudent to pursue.


c)	Subject to applicable law, Servicer will pursue a deficiency balance, at its discretion, on foreclosed Mortgage Loans if it deems the benefit will outweigh the costs and Owner has given specific written authorization to do so.


d)	Deficiency Balances created through a Loan Modification at the time of short sale or short refinance with the Mortgagor may be transferred to Servicer’s Special Assets group, under which the Deficiency Balances will have none of the asset protection or servicing requirements of a normal Mortgage Loan.

SECTION 12. DEED IN LIEU OF FORECLOSURE:

If a short sale has been unsuccessful, or the Mortgagor does not wish to retain the Mortgaged Property, or is unwilling to make Mortgage Loan payments on the property, Servicer shall pursue a deed in lieu of foreclosure, if deemed appropriate after taking into account environmental, regulatory, senior liens, attachments, or other detrimental issues that could create a significant liability on Owner. To facilitate completion of the deed in lieu of foreclosure process and where in the best economic interests of Owner, Servicer may offer a Mortgagor an incentive to enter into an agreement to provide cash in exchange for a deed in lieu at some time in the future (the “Cash for Keys Agreement”). The Cash for Keys Agreement shall provide the following terms:


(i)	A date when the Mortgagor must vacate the Mortgaged Property, not to exceed 60 days from execution of the Cash for Keys Agreement;


(ii)	The Mortgagor must reasonably maintain the Mortgaged Property and reasonably cooperate with real estate agent designated by Servicer, including permitting showings of the Mortgaged Property;


(iii)	Servicer shall use best reasonable efforts to minimize payments to the Mortgagor, but not at the expense of timely execution of the Cash for Keys Agreement;


(iv)	Upon vacating, the Mortgagor will deliver the Mortgaged Property in broom clean condition; and


(v)	While still occupying the Mortgaged Property, the Mortgagor will cooperate with Servicer and allow listing agents, appraisers, inspectors, and other contractors to enter the Mortgaged Property upon reasonable notice (1-3 Business Days).


b)	Other Deed in Lieu requirements:


(i)	If there is a junior lien on the Mortgaged Property, Servicer must obtain written agreement from the junior lien holder before Servicer accepts the Deed in Lieu;


(ii)	Servicer must obtain a title report confirming that the Mortgagor can convey acceptable marketable title to the Mortgaged Property;


(iii)	Deed in Lieu is always delegated with clear title. If there are liens or judgments on the Mortgaged Property that require payment in excess of $15,000, prior written approval is required from Owner.

SECTION 13. FORECLOSURE:


a)	Servicer shall continually monitor Mortgage Loans that have been referred to foreclosure throughout the process to ensure that effective timelines are being met.


b)	Servicer shall follow the proper foreclosure procedure requirements under applicable Laws, including starting and/or reinstating judicial or non-judicial foreclosure, as applicable.

Servicer will select an attorney firm or trustee from its list of preferred vendors to complete foreclosure actions. Servicer will manage foreclosure processes through Black Knight Desktop/Process Management. Servicer will adhere to foreclosure timelines established by USFN, allowing adjustments for inherited actions, contested matters, and other third party delays when assessing timeline compliance.


d)	Servicer will require foreclosure attorneys and trustees to adhere to the fee guidelines established by Fannie Mae or, if stricter, such guidelines as are imposed under other applicable Laws.


e)	Servicer will obtain a valuation of the Mortgaged Property prior to the foreclosure sale where appropriate and determine the foreclosure bid amount in consultation with Owner.


f)	Notwithstanding the above, all foreclosure bids are capped by the total debt owed by the Mortgagor.


g)	In the event of a foreclosure and subsequent sale of the REO Property, Servicer will request Owner’s approval to secure a deficiency judgment, if permitted by law. If approved by Owner, Servicer will perform any and all actions required to secure a deficiency judgment.


h)	Foreclosure referrals should be signed off by a manager or foreclosure review committee of Servicer before being sent to the foreclosure attorney or trustee.

Throughout the foreclosure process and with respect to vacant properties, Servicer is responsible for procuring all property preservation functions to ensure that the condition and appearance of the Mortgaged Property are maintained. This includes securing the Mortgaged Property, mowing the grass, removing trash and other debris that violate applicable law or pose a health or safety hazard, winterizing the Mortgaged Property, etc.


j)	Servicer shall retain outside counsel and title firms with expertise in the given geography of the Mortgaged Property to review prior due diligence findings on title, order and review new title report for liens, judgments, assignment issues, and other defects. Said counsel shall perfect title defects prior to foreclosure sale.


k)	Prior to considering the Mortgage Loan for foreclosure sale, Servicer shall confirm that no pending loss mitigation options are active.


l)	If the Mortgagor has been referred to foreclosure, qualifies for a Loan Modification and is willing to execute modification documents, the foreclosure sale will be stopped unless the Mortgagor has defaulted on a related trial period plan, the foreclosure sale date is to occur within 30 days, or if otherwise instructed by Owner.


m)	Servicer shall manage the foreclosure process so as to preserve the insurance provided by the PMI Policy or LPMI Policy, where applicable.

To the extent the Servicing Asset Schedule notes the existence of a Superior Lien; Servicer shall (1) identify whether Servicer is also servicing the Superior Lien for Owner and (2) monitor the status of each Superior Lien in accordance with Applicable Requirements. If Servicer is servicing both the Mortgage Loan and Superior Lien for Owner, Servicer shall provide Owner with an electronic file identifying the related Mortgage Loan and Superior Lien within ten (10) business days of the related Servicing Commencement Date. If necessary to comply with Applicable Requirements, Servicer shall file (or cause to be filed) a request for notice of any action by a superior lien holder under a Superior Lien for the protection of Owner’s interest, where permitted by applicable Laws and whenever such Laws do not require that a junior lien holder be named as a party defendant in foreclosure proceedings in order to foreclose such junior lien holder’s equity of redemption. The cost of such filing shall be deemed a Servicing Advance.

Notwithstanding the foregoing provisions of these Standards, with respect to any Mortgage Loan as to which Servicer has received notice of, or has knowledge of, the presence of any toxic or hazardous substance on the related Mortgaged Property, Servicer shall not either (i) obtain title to such Mortgaged Property as a result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire possession of, or take any other action with respect to, such Mortgaged Property if, as a result of any such action, either Servicer or Owner would be considered to hold title to, to be a mortgagee-in-possession of, or to be an owner or operator of such Mortgaged Property within the meaning of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time, or any comparable law, unless Servicer has also previously determined, based on its reasonable judgment and a prudent report prepared by a Person who regularly conducts environmental audits using customary industry standards, that:


(i)	such Mortgaged Property is in compliance with applicable environmental laws or, if not, it would be in accordance with Applicable Requirements to take such action as necessary in order to bring the Mortgaged Property into compliance therewith; and

(ii)

there are no circumstances present at such Mortgaged Property relating to the use, management or disposal of any hazardous substances, hazardous materials, hazardous wastes, or petroleum-based materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any federal, state or local law or regulation, or that if any such materials are present for which such action could be required, that it would be in accordance with Applicable Requirements to take such action with respect to the affected Mortgaged Property.

The cost of the environmental audit report contemplated by this clause (q) and any opinion of counsel the Servicer reasonably determines that it needs to make a reasonable judgment with respect to its duties under this clause (q) shall be advanced by Servicer, subject to the Servicer’s right to be reimbursed therefor from the Reserve Account.

If Servicer determines, as described above, that it would be in accordance with Applicable Requirements to take such actions as are necessary to bring any such Mortgaged Property into compliance with applicable environmental laws, or to take such action with respect to the containment, clean-up or remediation of hazardous substances, hazardous materials, hazardous wastes, or petroleum-based materials affecting any such Mortgaged Property, then Servicer shall take such action as it deems to be in accordance with Applicable Requirements. The cost of any such compliance, containment, cleanup or remediation shall be advanced by Servicer, subject to Servicer’s right to be reimbursed therefor from the Reserve Account.

With respect to any Deficiency relating to a foreclosed Mortgage Loan, Owner may transfer the servicing from Servicer without cause to a successor servicer, and Servicer will only be entitled to previously accrued and unpaid Servicing Fees and reimbursement of all outstanding Servicing Advances for such foreclosed Mortgage Loan. Owner shall not be liable for any cost or fee, including, without limitation, any Deboarding Fee of any Deficiency transferred. A “Deficiency” means the rights from a foreclosed Mortgage Loan to pursue collection of a deficiency resulting from the receipt of proceeds from the foreclosure or other sale that are less than the total debt owing on such Mortgage Loan, as permitted under applicable Laws, or a Mortgage Loan as to which a deficiency judgment has been obtained.

SECTION 14. REAL ESTATE OWNED AND PRE-REO:


a)	Eviction Issues


(i)	REO eviction issues should be brought to Owner’s attention for timely resolution of barriers to eviction, i.e.:


(1)	Delays in eviction timelines.


(2)	Contested evictions or legal issues that arise during the eviction process.


(ii)	Subject to applicable Laws, the Cash for Keys (CFK) tool should be utilized in parallel with eviction. Owner will consider using higher amounts for Properties in locations with longer eviction timelines, and Properties in areas with strict tenant protection laws, e.g. Cambridge, MA; Brooklyn, NY; Newark, NJ.


b)	Servicer shall, itself or pursuant to an arrangement with a third party (the “ REO Designee ”) designated by Servicer in consultation with Owner, manage, conserve, protect, operate, and sell all REO Properties.


c)	In the event that title to a Mortgaged Property is acquired in foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale shall be issued in the name of the Owner or such other party (other than the Servicer) designated by the Owner, as nominee on behalf of the Owner.

Servicer shall manage, conserve, protect and operate each REO Property (and may temporarily rent the same) for Owner solely for the purpose of its prompt disposition and sale. Servicer shall cause each REO Property to be inspected promptly upon the acquisition of title thereto and shall cause each REO Property to be inspected at least annually thereafter. Servicer shall make or cause to be made a written report of each such inspection. Such reports shall be retained in the Servicing File and copies thereof shall be forwarded by Servicer to Owner upon request. Servicer shall attempt to sell the same (and may temporarily rent the same) on such terms and conditions as Servicer deems to be in the best interest of Owner.

With regard to all REO Properties, Servicer shall continue to be responsible for the payment of Property Charges as Servicing Advances, handling insurance claims and reimbursing the REO Designee for costs and expenses incurred in the performance of its responsibilities regarding the REO Properties as Servicing Advances. Servicer shall be obligated to reimburse the REO Designee only after Servicer has received an invoice or itemized account of costs and expenses. Servicer shall be reimbursed by Owner for any amounts it reimburses to an REO Designee pursuant to any such bill, provided that Servicer has reviewed the bill for appropriateness.


f)	Servicer shall make Servicing Advances for all payments necessary for the proper operation, management and maintenance of the REO Property, including the cost of maintaining any hazard insurance. Notwithstanding the foregoing, in the event any such cost exceeds $15,000, then Servicer shall obtain Owner’s prior written approval before making any such Servicing Advance.

SECTION 15. BANKRUPTCY:

Where a Mortgagor is in bankruptcy proceedings, delayed payments on the related Mortgage Loan from the bankruptcy trustee should be monitored and the trustee should be contacted to request remittance of available funds. Servicer will select an attorney firm from its list of preferred vendors to complete bankruptcy actions. Servicer will instruct counsel to file a Motion for Relief within seven (7) Business Days of the Mortgagor becoming greater than 60 days delinquent post-petition on a Mortgagor paid plan.


b)	All correspondence with a Mortgagor must include a statement indicating that, if the Mortgagor is in bankruptcy, the correspondence is not an attempt to collect a debt.


c)	Servicer must proactively monitor bankruptcy filings in order to identify Mortgagor bankruptcies at the time that they are filed.


d)	For each Mortgage Loan, Servicer is to check on a monthly basis using AACER or an equivalent source to determine whether the related Mortgagor is in bankruptcy.

Servicer will represent Owner’s interest in any bankruptcy proceedings relating to the Mortgagor, provided Owner has given Servicer its approval prior to such representation. The associated costs of protecting Owner’s interest in bankruptcy shall be paid as Servicing Advances in accordance with the Agreement. If the Mortgagor, a creditor, or a bankruptcy trustee proposes to reduce the unpaid principal balance of the Mortgage Note, reduce a Mortgage Loan’s interest rate, or otherwise modify a Mortgagor’s obligations under a Mortgage Loan, Servicer shall use reasonable efforts to challenge any such modification on a timely basis if a commercially reasonable and valid legal basis exists for such challenge, unless Owner agrees not to challenge such modification.


f)	Servicer must adhere to all applicable bankruptcy timelines and bankruptcy laws.


g)	Immediately upon identification that a Mortgagor is in bankruptcy, Servicer must suspend all debt collection activities and place appropriate flags and Stop Codes on the related Mortgage Loan to ensure collection efforts are suspended.


h)	Servicer should continue loss mitigation efforts throughout the bankruptcy process by working through the Mortgagor’s attorney, or if legally permissible, by providing the attorney with a copy of any correspondence sent to the Mortgagor. All loss mitigation must be approved by the appropriate bankruptcy authorities (trustees, etc.).


i)	Servicer will manage bankruptcy processes through Black Knight Desktop/Process Management.


j)	Servicer will file Proofs of Claim prior to established deadlines and Transfers of Claim within ten (10) business days of boarding.


k)	Servicer will file a Motion for Relief with the bankruptcy court when a Mortgagor does not reaffirm the related debt in CH 7 Bankruptcy and is greater than 60 days delinquent as of petition filing date and when a CH 13 Mortgagor’s account is greater than 60 days delinquent post-petition on a Mortgagor paid plan.

SECTION 16. INVESTMENT MANAGEMENT:


a)	Servicer will provide Owner and/or its agent portal access for the purpose of monitoring activity and loan workout progress with Mortgagors.

Servicer will assign specific, and dedicated, personnel in a sufficient number and having sufficient expertise to manage and service the Assets to include, but not limited to overall Account Manager, Collectors, Loss Mitigation Agents and REO specialists. Loss Mitigation agents are those agents which handle loans with over 30 day delinquency or at risk of imminent default or a single point of contact on all categories as deemed appropriate by Servicer.


c)	Servicer will make available the opportunity and working space for Owner to perform scheduled site visits to interact with management.


d)	Servicer will hold scheduled calls with Owner to review overall servicing performance.


e)	Servicer shall adhere to all MI guidelines for reporting, preservation of deficiency rights, and seek appropriate approvals from the MI company on loan workout solutions.


f)	Servicer shall file MI Claims as required to recover losses associated with completed foreclosures, short sales, and deeds in lieu.


g)	Servicer shall make available to Owner on occasion, access to allow Owner to monitor or otherwise manage its assets on-site at Servicer’s offices during regular business hours. Such on-site access shall include a means for Owner to view the status of its Assets, a phone and fax machine.

SECTION 17. VENDOR MANAGEMENT:

Any Vendor engaged by Servicer shall be engaged on commercially reasonable, arm’s length basis and at competitive rates of compensation. Upon request, Servicer shall provide Owner with the names of any Vendor used by Servicer in connection with the performance of any of its obligations under this Agreement. If Owner or Servicer identifies any Vendor as having been materially deficient, including as a result of reputational, financial, legal, expense or performance issues, Servicer shall take appropriate measures to assess if such deficiency can be corrected, and if not, to replace such Vendor for the obligations set forth in this Agreement as soon as reasonably practical with a Vendor acceptable under Applicable Requirements.

Servicer shall require that all Vendors, as a condition to their engagement by Servicer, agree (i) to be bound by provisions substantially similar in nature and in all material respects to provisions of this Agreement applicable to the services provided by such Vendor with respect to this Agreement (specifically, but not limited to, compliance with Applicable Requirements) and (ii) to implement policies and procedures relating to services provided with respect to this Agreement that comply with all applicable Laws and the servicing standards consistent with this Agreement.

At the request of Owner, Servicer shall use commercially reasonable efforts to cause its Vendors performing services with respect to the Mortgage Loans to respond to any reasonable inquiries by Owner or its regulators relating to any such Vendor’s performance of such services and compliance with all applicable Laws, including without limitation inquiries regarding such Vendor’s qualifications, expertise, capacity and staffing levels, training programs, work quality and workload balance, reputation (including complaints), information security, document custody practices, business continuity, and financial viability.

SECTION 18. REGULATORY COMPLIANCE:

Servicer shall perform and adhere to all applicable Laws, including those Laws governing the servicing of mortgage loans and the protection of consumer and owner interests. These include Laws relating to servicing practices that address customer care, disclosure and privacy and security of information (including, but not limited to, Consumer Information) handled by Servicer (the “ Privacy Laws ”). Servicer should expect to discuss and provide evidence of compliance activities and quality control disciplines that assess its compliance with all applicable Laws, including but not limited to the Fair Debt Collection Practices Act, Service members Civil Relief Act, Fair Credit Reporting Act, Equal Credit Opportunity Act, Fair Housing Act, Electronic Funds Transfer Act, the Truth-in-Lending Act, the Real Estate Settlement Procedures Act, the GLBA and applicable state Laws. Servicer is expected to adhere to its record retention policy in compliance with applicable Laws, including servicing licensing requirements. Servicer agrees and acknowledges that as to all Consumer Information received or obtained by it with respect to any Mortgagor, Servicer is hereby prohibited from disclosing or using any such information internally other than to carry out the express provision of this Agreement.

Servicer shall implement such physical and other security measures as shall be necessary to (i) ensure the security and confidentiality of Consumer Information which it has possession of or control over, (ii) protect against any threats or hazards to the security and integrity of such Consumer Information, and (iii) protect against any unauthorized access to or use of such Consumer Information.

Servicer shall notify Owner immediately (i.e., within twenty-four (24) hours) following discovery of any suspected breach or compromise of the security, confidentiality, or integrity of any Consumer Information. Servicer shall provide follow-up written notification within one (1) Business Day to Owner. Written notification provided pursuant to this paragraph shall include a brief summary of the available facts, the status of Servicer's investigation, and, if known, the potential number of Mortgagors affected, if applicable.


b)	Record Retention


i.	Servicer shall maintain records relating to the Assets for at least seven (7) years.


c)	MERS


i.	For so long as any of the Mortgage Loans are registered with MERS, Servicer shall comply with all rules and procedures of MERS in connection with the servicing of such Mortgage Loans.

For each Mortgage Loan, Servicer shall accurately and fully furnish, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (e.g., favorable and unfavorable) on its Mortgagor credit files on a monthly basis to each of the following credit repositories: Equifax Credit Information Services, Inc., Trans Union, LLC and Experian Information Solution, Inc.

Each party agrees that it shall comply with all applicable laws and regulations regarding the privacy or security of Customer Information shall maintain appropriate administrative, technical and physical safeguards to protect the security, confidentiality and integrity of Customer Information, including, if applicable, maintaining security measures designed to meet the Interagency Guidelines Establishing Standards for Safeguarding Customer Information, 66 Fed. Reg. 8616 and complying with the privacy regulations under Title V of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 et seq., and the rules promulgated thereunder. For purposes of this Section, “Customer Information” means any personal information concerning a Mortgagor that is disclosed by one party to the Agreement to the other.

In the event Servicer grants a satisfaction or release of a Mortgage without having obtained payment in full of the indebtedness secured by the Mortgage (other than in connection with loss mitigation activity related to a defaulted Mortgage Loan allowed under this Agreement and consistent with Applicable Requirements), Servicer shall, at Owner’s option, remit to or on behalf of Owner the actual unpaid principal balance of the related Mortgage Loan (after taking into account payments received with respect to such Mortgage Loan), including any accrued and unpaid interest thereon, by deposit thereof in the Custodial Account or by wire transfer to Owner of immediately available funds. The Fidelity Bond and Errors and Omissions Insurance Policy maintained by Servicer shall insure Servicer against any loss it may sustain with respect to any Mortgage Loan not satisfied in accordance with the procedures set forth herein.

Servicer shall file information reports with respect to the receipt of mortgage interest received in a trade or business, reports of foreclosures and abandonments of any Mortgaged Property and information returns relating to cancellation of indebtedness income with respect to any Mortgaged Property as required by Sections 6050H, 6050J and 6050P of the Code or any comparable or successor provisions. Such reports shall be in form and substance sufficient to meet the reporting requirements imposed by such Sections 6050H, 6050J and 6050P of the Code or any comparable or successor provisions.


h)	In addition to other reports required herein, following the foreclosure sale or abandonment of any Mortgaged Property or REO Property, Servicer shall report such foreclosure or abandonment as required pursuant to Section 6050J of the Code or any comparable or successor provisions.

With respect to the period that the related Mortgage Loans are being serviced by Servicer, Servicer shall prepare promptly each report required by Applicable Requirements including reports to be delivered to all governmental agencies having jurisdiction over the servicing of the Mortgage Loans and the Escrow Accounts, shall execute such reports or, if Owner must execute such reports, shall deliver such reports to Owner for execution prior to the date on which such reports are due and shall file such reports with the appropriate Persons. Servicer shall timely prepare and deliver to the appropriate Persons Internal Revenue Service forms 1098, 1099 and 1099A (or any similar replacement, amended or updated Internal Revenue Service forms) relating to any Mortgage Loan for the time period such Mortgage Loan has been serviced by Servicer. Owner shall be solely responsible for filing any other forms including, without limitation and to the extent applicable, forms 1041 and K-1 or any similar replacement, amended or updated Internal Revenue Service forms. The reports to be provided under this section shall cover the period through the end of the month following the termination of this Agreement or, in the case of reports to be sent to the Internal Revenue Service, the end of the calendar year following termination of the Agreement. To the extent it is an Applicable Requirement, Servicer shall promptly prepare all reports or other information required to respond to any inquiry from, or give any necessary instructions to, any mortgage insurer, provider of hazard insurance or other insurer or guarantor, taxing authority, tax service, or the Mortgagor.

SECTION 19. STANDARD REPORTS:

On or prior to the eighth (8 ^th ) Business Day of each month, Servicer will provide a standard remittance reporting package for the most recently completed calendar month for each Owner in electronic format substantially in such form as may be mutually agreed upon by Owner and Servicer, showing all collections of interest and principal (from whatever source) on the related Mortgage Loans and all collections in respect of the related Mortgaged Properties and REO Properties (including sale proceeds and rental payments) during the calendar month preceding the such eighth (8 ^th ) Business Day as well as the amounts, and a detailed description of all Servicing Advances incurred during such calendar month and all distributions from the Custodial Account during such calendar month. Servicer shall provide separate accounting and reporting for each Owner..


b)	With respect to each month, the corresponding individual loan accounting report shall be received by each Owner no later than the eighth (8 ^th ) Business Day occurring in the following month, which report shall contain the following:


i.	with respect to each Monthly Payment, the amount of such remittance allocable to principal (including a separate breakdown of any Principal Prepayment, including the date of such prepayment, and any prepayment penalties or premiums, along with a detailed report of interest on principal prepayment amounts);


ii.	with respect to each Monthly Payment, the amount of such remittance allocable to interest and assumption fees;


iii.	the amount of servicing compensation received by the Servicer during such month;


iv.	the loan level and aggregate outstanding principal balance of the Mortgage Loans as of the related Determination Date;


v.	the loan level and aggregate of any Servicing Advances and other expenses made and reimbursed to the Servicer during such month;


vi.	a listing of (a) the paid-through date of each Mortgage Loan, (b) the Mortgage Loans as to which foreclosure has commenced, (c) the Mortgage Loans with respect to which the related borrowers that have declared bankruptcy; and (d) the Mortgage Loans as to which REO Property has been acquired;


vii.	a trial balance, sorted in the Owner's assigned loan number order.


viii.	if applicable, the amount requested to be deposited into the Reserve Account (it being understood that the making of such deposit is subject to the agreement of Owner); and


ix.	non-cash adjustments due to modifications and liquidations for less than the full amount due.


c)	Servicer also shall provide Owner a monthly report of legal action(s) by individual Mortgagor(s) relating to the Mortgage Loans and against Servicer or Owner.

Servicer shall furnish to Owner such other periodic, special, or other reports or information, whether or not provided for herein, as shall be necessary, reasonable, and appropriate with respect to Owner or the purposes of this Agreement. All such other reports or information shall be provided by and in accordance with all reasonable instructions and directions which Owner may give. Servicer shall notify Owner with respect to the estimated cost of preparing any such other reports prior to their preparation. If any such other reports or information require Servicer to perform any additional programming functions to prepare such reports or information, the costs to prepare such reports or information shall be a Servicing Advance and Servicer shall be reimbursed for such Servicing Advances pursuant to the terms of this Agreement.

In addition to other reports required herein, Servicer shall furnish to Owner or its designee on or before the eighth (8 ^th ) Business Day of each calendar month a statement with respect to any REO Property covering the operation of such REO Property for the previous month and Servicer’s efforts in connection with the sale of such REO Property and any rental of such REO Property incidental to the sale thereof for the previous month. That statement shall be accompanied by such other information as Owner shall reasonably request.


f)	Upon the foreclosure sale of any Mortgaged Property or the acquisition thereof by Owner pursuant to a deed in lieu of foreclosure, Servicer shall submit to Owner a liquidation report with respect to such Mortgaged Property. Servicer must submit foreclosure sale results to Owner for all Mortgage Loans within five (5) Business Days after the foreclosure sale is held, in a form acceptable to Owner.

SECTION 20. CERTAIN TERMS:

For purposes of simplicity, these Standards utilize various terms (both capitalized and uncapitalized), acronyms and other abbreviated terms that are not fully defined herein. In each case, such terms and acronyms shall be given meanings which are consistent with their common usage in the professional mortgage loan servicing industry and the provisions of these Standards, including the provisions in which such terms and acronyms appear shall be interpreted and construed in accordance with the standards and practices generally prevailing in such industry.

EXHIBIT G

FORM OF POWER OF ATTORNEY

EXHIBIT H

DATA TAPE FIELDS

FIELD NAME

LOAN NUMBER

UNPAID PRIN BAL

ESCROW BALANCE

UNAPPLIED BALANCE (SUSPENSE) – If Applicable

HAZARD LOSS BALANCE – If applicable

CORPORATE ADVANCE BALANCE – If applicable

ORIGINAL LOAN AMOUNT

P&I PAYMENT

BORROWER 1 NAME

BORROWER 2 NAME

PROPERTY STREET

CITY

STATE

ZIP

PROPERTY TYPE

CURRENT RATE

ORIGINATION DATE

1ST PAYMENT DUE DATE

MATURITY DATE

NEXT PAYMENT DUE DATE

INTEREST PAID TO DATE

INTEREST CALCULATION METHOD

PMI POLICY NUMBER

APPRAISAL VALUE

APPRAISAL DATE

LIEN POSITION

NOTE TYPE

LOAN TERM MONTHS

BALLOON PAYMENTS (If applicable)

OCCUPANCY STATUS

BORROWER HOME TELEPHONE

BORROWER BUSINESS TELEPHONE

MAIL ADDRESS

MAIL CITY

MAIL STATE

MAIL ZIP

BWR 1 SOCIAL SEC

BWR 2 SOCIAL SEC

PREPAY PENALTY Y/N

LATE CHARGE DAYS

LATE CHARGE RATE

ESCROW (T&I) PAYMENT

FICO SCORE

1ST ADJUSTMENT PERIOD CAPS MAX

1ST ADJUSTMENT PERIOD CAPS MIN

REG CAPS MAX

REG CAPS MIN

1ST ADJUSTMENT PERIOD IN MONTHS

REG ADJ PERIOD IN MONTHS

ROUNDING BASIS

MARGIN

CEILING

FLOOR

NEXT CHG DATE

ROUNDING CODE

INDEX TYPE

LOOKBACK PERIOD IN DAYS

FLOOD Y/N

FLOOD_ZONE_NBR

MERS I.D.#

iii

Exhibit 10.26

SERVICING AGREEMENT

between

ALTISOURCE RESIDENTIAL, L.P.
Initial Owner

and

SERVIS ONE, INC.
D/B/A BSI FINANCIAL SERVICES
Servicer

FIXED RATE AND ADJUSTABLE RATE
MORTGAGE LOANS AND REO PROPERTIES

Dated as of January 29, 2015

TABLE OF CONTENTS

Page

ARTICLE I

DEFINITIONS


Section 1.01.	Definitions 1

ARTICLE II

OWNER’S ENGAGEMENT OF SERVICER TO PERFORM SERVICING RESPONSIBILITIES; SERVICING TRANSFER MATTERS


Section 2.01.	Servicing Transfer; Record Title and Possession of Mortgage

Servicing Files 14


Section 2.02.	Books and Records 16


Section 2.03.	Transfer of Mortgage Loans 17


Section 2.04.	Tax and Flood Service Contracts 17


Section 2.05.	Quality Control Procedures 17


Section 2.06.	Access to Information 18


Section 2.07.	Vendor Oversight 19


Section 2.08.	Section 404 Notices; Privacy Notices 20


Section 2.09.	Pending and Completed Loss Mitigation 20

ARTICLE III

REPRESENTATIONS


Section 3.01.	Representations, Warranties and Covenants of the Servicer 21


Section 3.02.	Representations, Warranties and Covenants of the Owner 22

ARTICLE IV

SERVICING OF MORTGAGE LOANS


Section 4.01.	Servicer to Act as the Servicer 23


Section 4.02.	Collection of Mortgage Loan Payments 24


Section 4.03.	Realization Upon Defaulted Mortgage Loans 24


Section 4.04.	Establishment of Custodial Accounts; Deposits in Custodial

Accounts 26


Section 4.05.	Permitted Withdrawals From the Custodial Account 27


Section 4.06.	Establishment of Escrow Accounts; Deposits in Escrow Accounts 29


Section 4.07.	Permitted Withdrawals From Escrow Account 29


Section 4.08.	Payment of Taxes, Insurance, and Other Charges; Maintenance of

Primary Insurance Policies and LPMI Policies; Collections

Thereunder 29

-i-


Section 4.09.	Transfer of Accounts 31


Section 4.10.	Maintenance of Hazard Insurance 31


Section 4.11.	Maintenance of Mortgage Impairment Insurance Policy 32


Section 4.12.	Restoration and Repair 32


Section 4.13.	Fidelity Bond, Errors and Omissions Insurance 33


Section 4.14.	Title, Management and Disposition of REO Property 34


Section 4.15.	Notification of Adjustments 35


Section 4.16.	Permitted Investments 35


Section 4.17.	Government Sponsored Programs and Legislation 36


Section 4.18.	Servicing Requirements Imposed by Prior Sellers and Financing

Parties 37


Section 4.19.	Disaster Recovery Plan 37

ARTICLE V

PAYMENTS TO THE OWNER


Section 5.01.	Distributions 38


Section 5.02.	Statements to the Owner 38


Section 5.03.	Real Estate Owned Property and Specially Serviced Loan Reports 39


Section 5.04.	Nonrecoverability; Reimbursement of the Servicer 40


Section 5.05.	Principal and Interest Advances 40

ARTICLE VI

GENERAL SERVICING PROCEDURES


Section 6.01.	Assumption Agreements 40


Section 6.02.	Satisfaction of Mortgages and Release of Mortgage Servicing Files 41


Section 6.03.	Servicing Compensation 42


Section 6.04.	Statement of Compliance 43


Section 6.05.	Annual Independent Certified Public Accountants’ Servicing

Report 43


Section 6.06.	Reports of Foreclosures and Abandonment of Mortgaged Property 43


Section 6.07.	Compliance with Privacy Laws 44


Section 6.08.	Reporting 44


Section 6.09.	Fair Credit Reporting Act 45


Section 6.10.	Sanctions Lists; Suspicious Activity Reports 45

ARTICLE VII

THE SERVICER


Section 7.01.	Indemnification; Third Party Claims 45


Section 7.02.	Merger or Consolidation of the Servicer 47

-ii-


Section 7.03.	Limitation on Liability of the Servicer and Others 47


Section 7.04.	Transactions with Related Persons 48


Section 7.05.	Servicer Not to Resign 48

ARTICLE VIII

DEFAULT


Section 8.01.	Events of Default 48


Section 8.02.	Waiver of Defaults 49

ARTICLE IX

TERM; TERMINATION


Section 9.01.	Term 50


Section 9.02.	Termination 50


Section 9.03.	Termination Without Cause 50


Section 9.04.	Termination with Cause 51


Section 9.05.	Transfer Procedures 51

ARTICLE X

MISCELLANEOUS PROVISIONS


Section 10.01.	Successor to the Servicer 52


Section 10.02.	Amendment 52


Section 10.03.	GOVERNING LAW 52


Section 10.04.	Notices 53


Section 10.05.	Severability Provisions 53


Section 10.06.	Exhibits 54


Section 10.07.	General Interpretive Principles 54


Section 10.08.	Reproduction of Documents 54


Section 10.09.	Provision of Information 54


Section 10.10.	Further Assurances 55


Section 10.11.	No Solicitations 55


Section 10.12.	Financial Statements; Servicing Facilities 55


Section 10.13.	Reconstitution 55


Section 10.14.	Jurisdiction; Waiver of Jury Trial 57


Section 10.15.	Assignment by the Owner 57


Section 10.16.	Limitation on Assignment by the Servicer 57


Section 10.17.	Compliance with REMIC Provisions 58


Section 10.18.	Confidentiality 58


Section 10.19.	Counterparts 59

-iii-

EXHIBITS


EXHIBIT A	FORM OF ACKNOWLEDGEMENT AGREEMENT


EXHIBIT B	CUSTODIAL ACCOUNT LETTER AGREEMENT


EXHIBIT C	ESCROW ACCOUNT LETTER AGREEMENT


EXHIBIT D	CONTENTS OF EACH MORTGAGE SERVICING FILE


EXHIBIT E	FORM OF MONTHLY REPORT


EXHIBIT F	FORM OF POWER OF ATTORNEY


EXHIBIT G	SERVICING TRANSFER INSTRUCTIONS


EXHIBIT H	DATA TAPE FIELDS


EXHIBIT I	SERVICING CRITERIA

THIS SERVICING AGREEMENT, dated as of January 29, 2015, is by and between ALTISOURCE RESIDENTIAL, L.P., a Delaware limited partnership (as further defined herein, the “ Initial Owner ” and as further defined herein, an “ Owner ”), and SERVIS ONE, INC. D/B/A BSI FINANCIAL SERVICES, a Delaware corporation (the “ Servicer ”).

W I T N E S S E T H:

WHEREAS, the Initial Owner has acquired and from time to time intends to acquire nonperforming Mortgage Loans pursuant to the terms of certain mortgage loan purchase agreements between the Initial Owner (or a wholly owned trust) and certain third party sellers on a servicing-released basis;

WHEREAS, the Servicer and the Initial Owner have agreed that the Servicer shall service certain of such Mortgage Loans and REO Properties on behalf of the applicable Owner commencing on the related Servicing Transfer Date (as defined herein) and terminating on the related Transfer Date (as defined herein), and the parties hereto desire to provide the mechanics of such servicing by the Servicer;

WHEREAS, the Initial Owner and the Servicer intend to enter into an Acknowledgement Agreement at the time any mortgage loans become subject to this Agreement;

WHEREAS, the Initial Owner has transferred or intends to transfer its interest in the Mortgage Loans and its rights under this Agreement to one or more trusts at or about the time it acquires the Mortgage Loans, which trust shall be deemed to be the “Owner” under this Agreement with respect to such Mortgage Loans;

WHEREAS, the Initial Owner shall act as the administrator for each Owner and shall be authorized to act on behalf of each Owner under this Agreement; and

NOW, THEREFORE, in consideration of the mutual covenants made herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Definitions . Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings specified in this Article:

“ Acceptable Servicing Practices ”: With respect to any Mortgage Loan or REO Property, those servicing, collection, resolution or disposition practices that are in all respects legal, proper and customary in the mortgage servicing industry in accordance with (a) Applicable Regulations, (b) the terms of the related Mortgage and Mortgage Note, (c) the accepted servicing practices of prudent mortgage lending institutions which service mortgage loans, defaulted mortgage loans and REO properties of the same type as such Mortgage Loan or REO Property in the jurisdiction where the related Mortgaged Property or REO Property is located, (d) any applicable forbearance plan or bankruptcy plan, and (e) the requirements of any applicable insurance policies or insurers, and in all cases without regard to:

1. any relationship that the Servicer, any sub-servicer or any affiliate of the Servicer or any other sub-servicer may have with the related Mortgagor; or

2. the ownership, or servicing or management for others, by the Servicer or any sub-servicer, of any other mortgage loans or property; provided , however , that such services are performed in compliance with the terms of this Agreement.

“ Acknowledgment Agreement ”: With respect to any Mortgage Loan Package, a servicing acknowledgment agreement, a form of which is attached as Exhibit A , which makes specific reference to this Agreement and identifies on the Mortgage Loan Schedule attached thereto the Mortgage Loans in such Mortgage Loan Package for which servicing is to be transferred to the Servicer on the applicable Servicing Transfer Date and become subject to this Agreement. Each Acknowledgment Agreement shall be incorporated herein by reference.

“ Adjustable Rate Mortgage Loan ”: A Mortgage Loan that provides for the adjustment of the Mortgage Interest Rate payable in respect thereto.

“ Adjustment Date ”: With respect to each Adjustable Rate Mortgage Loan, the date set forth in the related Mortgage Note on which the Mortgage Interest Rate on the Adjustable Rate Mortgage Loan will be adjusted in accordance with the terms of the related Mortgage Note.

“ Agreement ”: This Servicing Agreement including all exhibits hereto, amendments hereof and supplements hereto.

“ Ancillary Income ”: Income from the Mortgage Loans which the Servicer is legally entitled to collect (exclusive of the Servicing Fee) in accordance with Acceptable Servicing Practices, including, without limitation, late charges, prepayment penalties, reconveyance fees, insufficient fund fees, assumption fees, modification fees, HAMP servicer incentive fees (or similar servicer incentive fees under other government programs), fees associated with any payoff, interest on escrow accounts (but only to the extent that Applicable Regulations or the Mortgage Loan Documents do not require that such interest be paid to the applicable Mortgagor under a Mortgage Loan), interest on the Custodial Account, and all other incidental fees with respect to the Mortgage Loans. The Servicer shall be entitled to the Ancillary Income, other than prepayment penalties, which are payable to the Owner.

“ Annual Statement of Compliance ”: Shall have the meaning set forth in Section 6.04 .

“ Annual Independent Certified Public Accountants’ Servicing Report ”: Shall have the meaning set forth in Section 6.05 .

“ Applicable Regulations ”: As to any Mortgage Loan, all federal, state and local laws, statutes, rules and regulations applicable thereto, including without limitation the applicable rules and regulations of the CFPB.

“ Assignment of Mortgage ”: An individual assignment of the Mortgage, notice of transfer or equivalent instrument to give record notice of the sale of the Mortgage to the Owner, if required.

“ BCP ”: Shall have the meaning set forth in Section 4.19 .

“ Boarding Fee ”: For each Mortgage Loan, if applicable, the amount set forth on the Fee Letter. For the avoidance of doubt, a Boarding Fee shall not be payable if the Mortgage Loan is already boarded with the Servicer as of the date of the related Acknowledgment Agreement.

“ Business Day ”: Any day other than a Saturday, a Sunday or a day on which banking or savings and loan institutions in the State of New York, or the State in which the servicing operations of the Servicer are located are authorized or obligated by law or executive order to be closed.

“ CFPB” : The Consumer Financial Protection Bureau, an independent federal agency operating as part of the United States Federal Reserve System.

“ Code ”: The Internal Revenue Code of 1986, as amended.

“ Commission ”: The United States Securities and Exchange Commission.

“ Condemnation Proceeds ”: All awards or settlements in respect of a taking of a Mortgaged Property or REO Property by exercise of the power of eminent domain or condemnation.

“ Consumer Information ”: Any personally identifiable information in any form (written, electronic or otherwise) relating to a Mortgagor, including, but not limited to: a Mortgagor’s name, address, telephone number, Mortgage Loan number, Mortgage Loan payment history, delinquency status, insurance carrier or payment information, tax amount or payment information; the fact that the Mortgagor has a relationship with the Servicer, the Owner or the originator of the related Mortgage Loan; and any other non-public personally identifiable information (including any "nonpublic personal information" of the "customers" and "consumers" as those terms are defined in the GLBA).

“ Custodial Account ”: The separate account or accounts created and maintained pursuant to Section 4.04 .

“ Custodial Agreement ”: With respect to any Mortgage Loan, the agreement governing the retention on behalf of the related Owner of the originals of the related Mortgage Note, Mortgage, Assignment of Mortgage and each other Mortgage Loan Document.

“ Custodian ”: With respect to any Custodial Agreement, the custodian thereunder or its successor in interest or permitted assign, or any successor to the Custodian under the Custodial Agreement, as therein provided.

“ Cut-off Date ”: With respect to each Mortgage Loan, the date set forth in the applicable Acknowledgement Agreement, which shall be the applicable Servicing Transfer Date in the case of Mortgage Loans that were owned by the related Owner prior to such Servicing Transfer Date.

“ Deboarding Fee ”: With respect to each Mortgage Loan, if applicable, the amount set forth on the Fee Letter, which amount shall be payable to the Servicer in the event the Servicer is terminated without cause pursuant to this Agreement. For the avoidance of doubt, a Deboarding Fee is not payable in connection a liquidation of a Mortgage Loan (other than a payoff in full) or the liquidation or transfer of an REO Property.

“ Depositor ”: With respect to any Securitization Transaction, the Person identified in writing to the Servicer by the Owner as depositor for such Securitization Transaction.

“ Determination Date ”: The last day of each calendar month preceding a Remittance Date.

“ Due Date ”: The day of the month on which each Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.

“ Eligible Account ”: Either (a) a segregated account or accounts maintained with an institution whose deposits are insured by the FDIC, the unsecured and uncollateralized short term debt obligations of which (or, in the case of a depository institution or trust company that is the principal subsidiary of a holding company, the short-term unsecured obligations of such holding company) institution shall be rated “A-1” or higher by Standard & Poor’s Ratings Group and “P-1” or higher by Moody’s Investors Service, Inc., or (b) a segregated trust account or accounts maintained with the trust department of a federal or state chartered depository institution, having capital and surplus of not less than $100,000,000, acting in its fiduciary capacity. Eligible Accounts may bear interest.

“ Environmental Problem Property ”: A Mortgaged Property or REO Property that is in violation of any environmental law, rule or regulation.

“ Escrow Account ”: The separate trust account or accounts created and maintained pursuant to Section 4.06 .

“ Escrow Payments ”: The amounts constituting ground rents, taxes, assessments, water charges, mortgage insurance premiums, fire and hazard insurance premiums and other payments required to be escrowed by a Mortgagor with a Mortgagee pursuant to the terms of any Mortgage Loan.

“ Event of Default ”: Any one of the conditions or circumstances enumerated in Section 8.01 .

“ Exchange Act ”: The Securities Exchange Act of 1934, as amended.

“ Fannie Mae ”: Fannie Mae, or any successor organization.

“ FDIC ”: The Federal Deposit Insurance Corporation or any successor organization.

“ Fee Letter ”: The fee letter between the Servicer and the Initial Owner setting forth the Servicing Fees and other fees and expenses payable to the Servicer for providing services under this Agreement, as the same may be amended, modified, supplemented from time to time by the Parties.

“ Fidelity Bond ”: A fidelity bond to be maintained by the Servicer pursuant to Section 4.13 .

“ Financing Party ”: With respect to any Mortgage Loan, a Person that provides financing to the Owner with respect to such Mortgage Loan.

“ First Mortgage Loan ”: A Mortgage Loan that is secured by a first lien on the Mortgaged Property.

“ Fixed Rate Mortgage Loan ”: A Mortgage Loan wherein the Mortgage Interest Rate set forth in the Mortgage Note is fixed for the term of such Mortgage Loan.

“ Freddie Mac ”: Freddie Mac, or any successor organization.

“ GLBA ”: The Gramm-Leach-Bliley Act of 1999, as amended, modified, or supplemented from time to time, and any successor statute, and all rules and regulations issued or promulgated in connection therewith.

“ HAMP ”: The Home Affordability Modification Program implemented by the U.S. Department of Treasury.

“ HUD ”: The United States Department of Housing and Urban Development, or any successor thereto.

“ Initial Owner ”: Altisource Residential, L.P. and its successors.

“ Investment Account ”: As defined in Section 4.16 .

“ Lender Paid Mortgage Insurance Policy ” or “ LPMI Policy ”: A policy of mortgage guaranty insurance issued by a Mortgage Insurer in which the Owner or the Servicer of the Mortgage Loan is responsible for the premiums associated with such mortgage insurance policy.

“ LPMI Policy Proceeds ”: Proceeds of any Lender Paid Mortgage Insurance Policy.

“ Liquidation Proceeds ”: Amounts, other than Primary Insurance Proceeds, LPMI Policy Proceeds, Condemnation Proceeds and Other Insurance Proceeds, received by the Servicer in connection with the liquidation of a defaulted Mortgage Loan through trustee’s sale, foreclosure sale, sale of the Mortgaged Property or otherwise, other than amounts received following the acquisition of an REO Property pursuant to Section 4.14 .

“ Master Servicer ”: With respect to any Securitization Transaction, the “master servicer,” if any, specified by the Owner and identified in the related transaction documents.

“ MERS ”: Mortgage Electronic Registration System, Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor thereto.

“ MERS Designated Mortgage Loan ”: A Mortgage Loan for which (a) the Servicer has designated or will designate MERS as, and has taken or will take such action as is necessary to cause MERS to be, the mortgagee of record, as nominee for the Owner, in accordance with MERS Procedure Manual and (b) the Servicer has designated or will designate the Owner as the Investor on the MERS System.

“ MERS Event ”: The occurrence of any of the following events: (a) an appellate court of competent jurisdiction in a particular state rules that MERS is not an appropriate, permissible or authorized system for transferring ownership of Mortgage Loans in that state; or (b) (i) a decree or order of a court or agency or supervisory authority having jurisdiction for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against MERS, and such decree or order shall have remained in force undischarged or unstayed for a period of sixty (60) days; or (ii) MERS shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities, voluntary liquidation or similar proceedings of or relating to MERS or of or relating to all or substantially all of its property; or (iii) MERS shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations. With respect to the event described in clause (a) , a MERS Event will be deemed to have occurred with respect to all Mortgage Loans in the related state, and with respect to any of the events described in clause (b) , a MERS Event will be deemed to have occurred with respect to all of the Mortgage Loans.

“ MERS Procedures Manual ”: The MERS Procedures Manual, as it may be amended, supplemented or otherwise modified from time to time.

“ MERS System ”: MERS mortgage electronic registry system, as more particularly described in the MERS Procedures Manual.

“ Monthly Payment ”: The scheduled monthly payment of principal and interest on a Mortgage Loan which is payable by a Mortgagor under the related Mortgage Note as modified pursuant to any forbearance plan or bankruptcy plan agreement.

“ Monthly Report ”: A monthly report substantially in the form of Exhibit E hereto.

“ Moody’s ”: Moody’s Investors Service, Inc.

“ Mortgage ”: The mortgage, deed of trust or other instrument creating a first or second lien on Mortgaged Property securing the Mortgage Note.

“ Mortgage Impairment Insurance Policy ”: A mortgage impairment or blanket hazard insurance policy as described in Section 4.11 .

“ Mortgage Insurer ”: Any issuer of private mortgage insurance.

“ Mortgage Interest Rate ”: With respect to each Fixed Rate Mortgage Loan, the fixed annual rate of interest provided for in the related Mortgage Note and, with respect to each Adjustable Rate Mortgage Loan, the annual rate that interest accrues on such Adjustable Rate Mortgage Loan from time to time in accordance with the provisions of the related Mortgage Note, which rate, as of the Cut-off Date, shall be the rate set forth in the related Mortgage Loan Schedule as the Mortgage Interest Rate.

“ Mortgage Loan ”: An individual residential mortgage loan included in a Mortgage Loan Package and identified on the Mortgage Loan Schedule attached to the related Acknowledgement Agreement, but excluding any individual mortgage loans removed from the mortgage loans being serviced hereunder pursuant to the terms of this Agreement.

“ Mortgage Loan Documents ”: With respect to each Mortgage Loan, the documents delivered to the related Custodian pursuant to the related Custodial Agreement.

“ Mortgage Loan Package ”: One or more residential mortgage loans owned by an Owner and made subject to this Agreement on any given Servicing Transfer Date, as identified on the Mortgage Loan Schedule attached to the related Acknowledgment Agreement.

“ Mortgage Loan Purchase Agreement ”: With respect to any Mortgage Loan, the agreement pursuant to which the Initial Owner (or other Owner) acquired such Mortgage Loan.

“ Mortgage Loan Schedule ”: The list of Mortgage Loans subject to this Agreement and identified on the schedule attached to the related Acknowledgment Agreement.

“ Mortgage Note ”: The note or other evidence of the indebtedness of a Mortgagor secured by a Mortgage.

“ Mortgaged Property ”: A fee simple interest in, or a leasehold estate with respect to, real properties located in jurisdictions in which the use of leasehold estates for residential properties is a widely accepted practice, the real property (including all improvements, buildings, fixtures, building equipment and personal property thereon and all additions, alterations and replacements made at any time with respect to the foregoing) and all other collateral securing repayment of the debt evidenced by a Mortgage Note.

“ Mortgage Servicing File ”: The documents pertaining to each Mortgage Loan referred to on Exhibit D attached hereto, to the extent available, which are delivered in physical or electronic format to the Servicer in connection with the servicing of the Mortgage Loans, as well as any documents and information accumulated by Servicer in its role as servicer.

“ Mortgagee ”: The mortgagee or beneficiary named in the related Mortgage and the successors and assigns of such mortgagee or beneficiary.

“ Mortgagor ”: The obligor on a Mortgage Note, the owner of the Mortgaged Property and the grantor or mortgagor named in the related Mortgage and such grantor’s or mortgagor’s successors in title to the Mortgaged Property.

“ Net Investment Earnings ”: With respect to any Custodial Account or Escrow Account, for any period from any Remittance Date to the immediately succeeding Remittance Date, the amount, if any, by which the aggregate of all interest and other income realized during such period on funds held in such account, exceeds the aggregate of all losses, if any, incurred during such period in connection with the investment of such funds in accordance with Section 4.16 . Such losses shall include, and the Servicer shall be responsible for, any shortfalls in any Custodial Account or Escrow Account caused by a late payment on a Permitted Investment.

“ Net Investment Loss ”: With respect to any Custodial Account or Escrow Account, for any period from any Remittance Date to the immediately succeeding Remittance Date, the amount by which the aggregate of all losses, if any, incurred during such period in connection with the investment of funds held in such account in accordance with Section 4.16 , exceeds the aggregate of all interest and other income realized during such period on such funds. Such losses shall include, and the Servicer shall be responsible for, any shortfalls in any Custodial Account or Escrow Account caused by a late payment on a Permitted Investment.

“ Nonrecoverable Servicing Advance ”: Any Servicing Advance previously made or proposed to be made in respect of a Mortgage Loan or REO Property that, in the reasonable business judgment of the Servicer, will not, or, in the case of a proposed Servicing Advance, would not be, ultimately recoverable from related late payments, Other Insurance Proceeds, Primary Insurance Proceeds, LPMI Policy Proceeds, Condemnation Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property as provided herein.

“ Officer’s Certificate ”: A certificate signed by a Servicing Officer and delivered to the Owner as required by this Agreement.

“ Other Insurance Proceeds ”: Proceeds of any title policy, hazard policy or other insurance policy covering a Mortgage Loan, other than the Primary Insurance Proceeds or LPMI Policy Proceeds, if any, to the extent such proceeds are not to be applied to the restoration of the related Mortgaged Property or released to the Mortgagor in accordance with the procedures that the Servicer would follow in servicing mortgage loans held for its own account.

“ Owner ”: With respect to any Mortgage Loan, the Initial Owner or the entity designated on the related Mortgage Loan Schedule or otherwise designated in writing by the Initial Owner to the Servicer, and any Person who assumes the obligations of the Owner hereunder with respect to one or more Mortgage Loans in accordance with the terms of this Agreement.

“ Owner Instructions ”: Any written instructions, guidelines or policies regarding the servicing of the Mortgage Loans provided by the Owner to the Servicer.

“ Party ”: Each of the Owner and the Servicer.

“ Permitted Investments ”: Any one or more of the following obligations or securities having the required ratings, if any, provided for in this definition and which provides for a date of maturity as set forth in Section 4.16 :

(i) direct obligations of, or obligations fully guaranteed as to timely payment of principal and interest by, the United States or any agency or instrumentality thereof, provided such obligations are backed by the full faith and credit of the United States;

(ii) (A) demand and time deposits in, certificates of deposit of, bankers’ acceptances issued by or federal funds sold by any depository institution or trust company (including the Trustee or its agent acting in their respective commercial capacities) incorporated under the laws of the United States of America or any state thereof and subject to supervision and examination by federal and/or state authorities, so long as, at the time of such investment or contractual commitment providing for such investment, such depository institution or trust company (or, if the only Rating Agency is S&P, in the case of the principal depository institution in a depository institution holding company, debt obligations of the depository institution holding company) or its ultimate parent has a short-term uninsured debt rating of P-1 and A-1 from Moody’s and S&P, respectively, and provided that each such investment has an original maturity of no more than 365 days; and provided further that, if the only Rating Agency is S&P and if the depository or trust company is a principal subsidiary of a bank holding company and the debt obligations of such subsidiary are not separately rated, the applicable rating shall be that of the bank holding company; and (B) any other demand or time deposit or deposit which is fully insured by the FDIC;

(iii) repurchase obligations with a term not to exceed thirty (30) days with respect to any security described in clause (i) above and entered into with a depository institution or trust company (acting as principal) rated A-1 or higher by S&P and A2 or higher by Moody’s; provided , however , that collateral transferred pursuant to such repurchase obligation must be of the type described in clause (i) above and must (A) be valued daily at current market prices plus accrued interest, (B) pursuant to such valuation, be equal, at all times, to 105% of the cash transferred in exchange for such collateral and (C) be delivered in such a manner as to accomplish perfection of a security interest in the collateral by possession of certificated securities;

(iv) securities bearing interest or sold at a discount that are issued by any corporation incorporated under the laws of the United States of America or any state thereof and that are rated by each Rating Agency that rates such securities in its highest long-term unsecured rating categories at the time of such investment or contractual commitment providing for such investment;

(v) commercial paper (including both non-interest-bearing discount obligations and interest-bearing obligations payable on demand or on a specified date not more than thirty (30) days after the date of acquisition thereof) that is rated by each Rating Agency that rates such securities in its highest short-term unsecured debt rating available at the time of such investment;

(vi) units of money market funds that are rated in the highest rating category by S&P or Moody’s; and

(vii) if previously confirmed in writing to the Owner, any other demand, money market or time deposit, or any other obligation, security or investment, as may be acceptable to the Rating Agencies as a permitted investment of funds backing securities rated in the highest rating category of such Rating Agencies;

provided , however , that in each case (a) if the investment is rated by S&P, it shall not have an “r” highlighter affixed to its rating, (b) it shall have a predetermined fixed dollar of principal due at maturity that cannot vary or change and (c) any such investment that provides for a variable rate of interest must have an interest rate that is tied to a single interest rate index plus a fixed spread, if any, and move proportionately with such index; and provided , further , however , that no such instrument shall be a Permitted Investment (i) if both principal and interest payments derived from obligations underlying such instrument and the principal and interest payments with respect to such instrument provide a yield to maturity at the time of acquisition of greater than 120% of the yield to maturity at par of such underlying obligations or (ii) if such instrument may be redeemed at a price below the purchase price. Permitted Investments that are subject to prepayment or call may not be purchased at a price in excess of par.

“ Person ”: Any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, limited partnership, government or any agency or political subdivision thereof.

“ Primary Insurance Policy ”: Each policy of primary guaranty of mortgage insurance issued by a Qualified Insurer in effect with respect to any Mortgage Loan, or any replacement policy therefor obtained by the Servicer pursuant to Section 4.08 .

“ Primary Insurance Proceeds ”: Proceeds of any Primary Insurance Policy.

“ Prime Rate ”: The prime rate announced to be in effect from time to time, as published as the average rate in The Wall Street Journal.

“ Principal Prepayment ”: Any payment or other recovery of principal on a Mortgage Loan which is received in advance of its scheduled Due Date, which is not accompanied by an amount of interest representing scheduled interest due on any date or dates in any month or months subsequent to the month of prepayment and which reduces the Unpaid Principal Balance of such Mortgage Loans.

“ Privacy Laws ”: As defined in Section 6.07 .

“ Qualified Insurer ”: Any insurance company acceptable to Fannie Mae or Freddie Mac.

“ Rating Agency ”: Any one of Fitch, Inc., Moody’s or S&P.

“ Reconstitution ”: The actions required by Section 10.13 in connection with any Securitization Transaction or Whole Loan Transfer.

“ Reconstitution Agreement ”: The agreement or agreements entered into by the Servicer and the Owner and/or certain third parties on the Reconstitution Date or Dates with respect to any or all of the Mortgage Loans serviced hereunder, in connection with a Whole Loan Transfer or a Securitization Transaction as provided in Section 10.13 .

“ Reconstitution Date ”: The date or dates on which any or all of the Mortgage Loans subject to this Agreement shall be removed from this Agreement and reconstituted as part of a Whole Loan Transfer or Securitization Transaction pursuant to Section 10.13 .

“ Refinanced Mortgage Loan ”: A Mortgage Loan which was made to a Mortgagor who owned the Mortgaged Property prior to the origination of such Mortgage Loan.

“ Regulation AB ”: Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Commission in (a) the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,631 (Jan. 7, 2005)), (b) the adopting release (Asset-Backed Securities, Securities Act Release Nos. 33-9638 and 34-72982, 79 Fed. Reg. 57,183,57,346 (September 24, 2014)), or (c) by the staff of the Commission, or as may be provided by the Commission or its staff from time to time.

“ REMIC ”: A “real estate mortgage investment conduit” within the meaning of Section 860D of the Code.

“ REMIC Provisions ”: Provisions of the federal income tax law relating to REMICs, which appear in Sections 860A through 860G of the Code, and related provisions, and proposed, temporary and final regulations and published rulings, notices and announcements promulgated thereunder, as the foregoing may be in effect from time to time.

“ Remittance Date ”: The tenth (10 ^th ) day of each month, and if such day is not a Business Day, the immediately following Business Day.

“ REO Disposition ”: The final sale by the Servicer of any REO Property.

“ REO Property ”: As of any Determination Date for the purpose of calculating the relevant Servicing Fee, and the actual date of acquisition of title for all other purposes: any Mortgaged Property that was subject to a Mortgage Loan, after the Mortgaged Property has been acquired on behalf of the Owner pursuant to this Agreement through foreclosure or similar proceedings, acceptance of deed-in-lieu of foreclosure, acquisition of title in lieu of foreclosure or the acquisition of title by operation of law.

“ Reporting Date ”: The fifth (5 ^th ) day of each month, and if such day is not a Business Day, the immediately following Business Day.

“ S&P ”: Standard and Poor’s Ratings Services, a Standard & Poor’s Financial Services business.

“ Sanctions Lists ”: The economic sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control.

“ Section 404 Notice ”: 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., the form of which shall be provided by the Owner.

“ Securities Act ”: The Securities Act of 1933, as amended.

“ Securitization Transaction ”: Any transaction involving either (a) a sale or other transfer of some or all of the Mortgage Loans directly or indirectly by the Servicer to an issuing entity in connection with an issuance of publicly offered or privately placed, rated or unrated mortgage-backed securities or (b) an issuance of publicly offered or privately placed, rated or unrated securities, the payments on which are determined primarily by reference to one or more portfolios of residential mortgage loans consisting, in whole or in part, of some or all of the Mortgage Loans.

“ Servicer ”: Servis One, Inc. d/b/a BSI Financial Services, a Delaware corporation, its successors in interest, and any successor servicer under this Agreement appointed as herein provided.

“ Servicer Information ”: As defined in Section 10.13 .

“ Servicing Advances ”: All customary, reasonable and necessary “out of pocket” costs and expenses incurred by the Servicer in the performance of its servicing obligations, including, but not limited to, the cost of (i) the preservation, restoration and protection of the Mortgaged Property and the REO Property, (ii) any enforcement or judicial proceedings, including foreclosures, (iii) the management and liquidation of any REO Property, (iv) performance of the obligations under Sections 2.03 , 2.04 , 4.03 , 4.08 and, only to the extent related to the costs associated with recording instruments of satisfaction, 6.02 , (v) any amounts associated with third party credit counseling for a Mortgagor and (vi) any amounts required to be reimbursed to a Mortgagor upon a Principal Prepayment on a related Mortgage Loan for prepaid points, finance charges, fees and any other amounts pursuant to Applicable Regulations. Servicing Advances also include any reasonable “out-of‑pocket” costs and expenses (including legal fees) incurred by the Servicer in connection with executing and recording instruments of satisfaction, deeds of reconveyance or Assignments of Mortgage in connection with any satisfaction or foreclosures in respect of any Mortgage Loan to the extent not recovered from the Mortgagor or otherwise payable under this Agreement and obtaining or correcting any legal documentation required to be included in the Mortgage Files and necessary for the Servicer to perform its obligations under this Agreement, including correcting any outstanding title issues ( i.e. , any lien or encumbrance on the Mortgaged Property that prevents the effective enforcement of the intended lien position). The Servicer shall not be required to make any Nonrecoverable Servicing Advances.

“ Servicing Criteria ”: The “servicing criteria” set forth in Item 1122(d) of Regulation AB for which the Servicer or a Subservicer, as applicable, is responsible in its capacity as servicer as identified on a certification substantially in the form of Exhibit I hereto; provided , that such certification may be amended from time to time to reflect changes in Regulation AB.

“ Servicing Fee ”: With respect to each Mortgage Loan, the servicing fees payable to the Servicer as set forth on the Fee Letter.

“ Servicing Officer ”: With respect to the Servicer, any authorized individual that is involved in, or responsible for, the administration and servicing of the Mortgage Loans whose name appears on a list of servicing officers furnished by the Servicer to the Owner as of the date hereof, as such list may from time to time be amended.

“ Servicing Transfer Costs ”: All reasonable costs and expenses incurred in connection with the transfer of servicing to a successor servicer, including, without limitation, any reasonable costs or expenses associated with the complete transfer of all servicing data and the completion, correction or manipulation of such servicing data as may be required by the Owner or a successor servicer to correct any errors or insufficiencies in the servicing data or otherwise enable the Owner or successor servicer to service the Mortgage Loans properly and effectively, all costs and expenses incurred in connection with the transfer and delivery of the Mortgage Loans, if applicable, including without limitation recording fees, fees for title policy endorsements and continuations, fees for the preparation, delivery, tracking and recording of Assignments of Mortgages or any MERS transfer related costs related to a transfer of servicing and all costs associated with the transfer of (or, if not transferable to a successor servicer, the purchase of) tax service contracts and flood certification contracts and any expenses related to the transfer of the servicing related to the Mortgage Loans.

“ Servicing Transfer Date ”: With respect to each Mortgage Loan, the date reflected in the related Acknowledgement Agreement on which the Owner transfers the servicing of such Mortgage Loan to the Servicer or, to the extent servicing of such Mortgage Loan was previously transferred by the prior servicer to the Servicer prior to the Owner becoming owner of such Mortgage Loan, the Servicing Transfer Date shall be deemed to be the date reflected in the related Acknowledgement Agreement that the Servicer and the Owner agree shall be the date that such Mortgage Loan becomes subject to this Agreement.

“ Servicing Transfer Instructions ”: The servicing transfer instructions set forth in Exhibit G attached hereto, which may be modified from time to time by mutual agreement of the Parties.

“ Sponsor ”: With respect to any Securitization Transaction, the Person identified in writing to the Servicer by the Owner as sponsor for such Securitization Transaction.

“ Subcontractor ”: Any vendor, subcontractor or other Person that is not responsible for the overall servicing (as “servicing” is commonly understood by participants in the mortgage-backed securities market) of Mortgage Loans but performs one or more discrete functions identified in Item l122(d) of Regulation AB with respect to Mortgage Loans under the direction or authority of the Servicer or a Subservicer.

“ Subservicer ”: Any Person that services Mortgage Loans on behalf of the Servicer or any Subservicer and is responsible for the performance (whether directly or through Subservicers or Subcontractors) of a substantial portion of the material servicing functions identified in Item 1122(d) of Regulation AB that are required to be performed by the Servicer under this Agreement or any Reconstitution Agreement.

“ Termination Fee ”: With respect to any Mortgage Loan, if applicable, the amount set forth on the Fee Letter, which amount shall be payable to the Servicer in the event the Owner elects to terminate this Agreement with respect to all the Mortgage Loans without cause pursuant Section 9.01(a) during the twelve (12) month period following the date of this Agreement.

“ Third Party Servicing Requirements ”: Shall have the meaning assigned to such term in Section 4.18 .

“ Transfer Date ”: With respect to each Mortgage Loan or REO Property, the date designated by the Owner in a writing delivered to the Servicer, which date shall not be earlier than thirty (30) days after the Servicer’s receipt of such written notice, on which the Servicer transfers the servicing responsibilities of such Mortgage Loan or REO Property to the Owner or its designee.

“ Unpaid Principal Balance ”: As to each Mortgage Loan on any date of determination, the unpaid principal balance of the Mortgage Loan.

“ Vendor ”: Any third-party subservicer, subcontractor, vendor, agent or other service provider utilized by the Servicer in connection with the servicing of the Mortgage Loans.

“ Whole Loan Transfer ”: Any sale or transfer of some or all of the Mortgage Loans by the Owner to a third party, which sale or transfer is not a Securitization Transaction.

ARTICLE II

OWNER’S ENGAGEMENT OF SERVICER TO PERFORM SERVICING RESPONSIBILITIES; SERVICING TRANSFER MATTERS

Section 2.01. Servicing Transfer; Record Title and Possession of Mortgage Servicing Files . The Owner shall notify the Servicer not less than twenty (20) calendar days prior to any proposed Servicing Transfer Date that it desires to have the Servicer service the Mortgage Loans in the related Mortgage Loan Package pursuant to the terms of this Agreement and shall forward to the Servicer the related Acknowledgement Agreement and a computer readable electronic transmission of the related Mortgage Loan Schedule, containing the information specified in Exhibit H to the extent available; provided , however , that such data tapes are not required to be delivered with respect to any Mortgage Loan the Servicer is servicing as of the date of such Acknowledgment Agreement. In the event that the Servicer elects not to service such mortgage loans pursuant to the terms hereof, the Servicer shall advise the Owner in writing of such election within two (2) Business Days of receipt of the foregoing notice from the Owner. Otherwise, the Servicer shall countersign and return the Acknowledgment Agreement to the Owner within three (3) calendar days of receipt thereof and each Mortgage Loan in the related Mortgage Loan Package shall be subject to this Agreement as of the related Servicing Transfer Date. Within five (5) Business Days of each Servicing Transfer Date, the Owner shall pay to the Servicer, in immediately available funds wired to an account designed by the Owner, the Boarding Fee attributable to each Mortgage Loan transferred to the Servicer on such Servicing Transfer Date, unless the Servicer was servicing such Mortgage Loan as of the date of the related Acknowledgment Agreement.

With respect to each Mortgage Loan to be serviced hereunder, the Owner shall use commercially reasonable efforts to cause the prior servicer to comply with the Servicing Transfer Instructions in all material respects and shall cause the prior servicer to deliver to the Servicer the Mortgage Servicing File for each related Mortgage Loan not later than five (5) Business Days after the Servicing Transfer Date. Any fees and expenses incurred in transferring the Mortgage Servicing File to the Servicer shall be the obligation of the Owner. In the event that the Mortgage Servicing File fails to contain all of those items set forth in Exhibit D hereof on the date on which the Mortgage Servicing File is required to be delivered to the Servicer which are necessary to service the related Mortgage Loans, the Servicer shall notify the Owner, and the Owner shall use reasonable efforts, at the Owner’s expense, to cause to be delivered promptly to the Servicer any necessary missing documents therefrom, or, upon the request of the Owner and at the Owner’s expense, the Servicer may, for a fee acceptable to the Owner, undertake to obtain any missing documents therefrom. Notwithstanding anything to the contrary contained in this Agreement or otherwise, the Servicer shall have no liability for any breach of this Agreement resulting directly from the Owner’s failure to deliver to the Servicer, or the Servicer’s failure to receive, the complete Mortgage Servicing File for each Mortgage Loan, including but not limited to those items listed on Exhibit D , to the extent that any such documents are required to service the Mortgage Loans in accordance with the terms of this Agreement or any Reconstitution Agreement and the Servicer has provided the Owner with notice of any such missing documents. In the event the Servicer notifies the Owner that it is reasonably necessary to correct or cure any title or document defects prior to or following a Reconstitution with respect to a Mortgage Loan, in order for the Servicer to properly service such Mortgage Loan in accordance with this Agreement, the Owner shall either (i) cause, at its expense, a third party vendor to correct or cure such defects or (ii) direct the Servicer to do so and shall reimburse the Servicer for its reasonable costs incurred in connection with such correction or cure within thirty (30) days following the receipt of an invoice from the Servicer evidencing such cost.

With respect to each Mortgage Loan to be serviced hereunder, the Owner will use reasonable efforts to cause all funds, if any, in any escrow or custodial account kept by the prior servicer to be transferred to the Servicer not later than the Business Day following the Servicing Transfer Date. In the event that such funds are not delivered to the Servicer within three (3) Business Day following the Servicing Transfer Date, the Servicer will notify the Owner, and, notwithstanding anything to the contrary contained in this Agreement or otherwise, the Servicer shall have no liability for any breach of this Agreement resulting, directly or indirectly, from the Owner’s failure to deliver to the Servicer by such date all of such funds with respect to each Mortgage Loan. Notwithstanding any provision in this Agreement to the contrary, this paragraph shall not be applicable with respect to any Mortgage Loans to the extent (a) servicing of such Mortgage Loans was previously transferred by the prior servicer to the Servicer prior to the Owner becoming owner of such Mortgage Loans and (b) the Servicer was servicing such Mortgage Loan as of the date of the applicable Acknowledgment Agreement.

The Owner and the Servicer agree to cooperate with respect to all reasonable requests made by either such party to the other in connection with the transfer of servicing to the Servicer pursuant to this Agreement. For the avoidance of doubt, any transfer of servicing of the mortgage loans to the Servicer under this Agreement shall be on a subservicing basis and the Owner shall retain full and complete ownership of the related Servicing Rights with respect to the Mortgage Loans.

The Servicer shall comply with all Applicable Regulations with respect to servicing transfers. In addition, the Servicer shall comply with the CFPB’s rules and/or guidelines with respect to servicing transfers, including without limitation its Bulletin 2014-1 issued on August 19, 2014. The Servicer and the Owner shall provide all reasonable cooperation and assistance as may be requested by the other party in connection with compliance with such rules and/or guidelines. The Servicer and the Owner shall cooperate after the applicable Servicing Transfer Date to promptly resolve all customer complaints, disputes and inquiries related to activities that occurred prior to such transfer date or in connection with the transfer of servicing.

Record title to the Mortgage Loans shall be retained by the Owner or its designee, and possession of any Mortgage Servicing Files delivered to the Servicer shall be held in trust for the Owner as the owner thereof, for the sole purpose of servicing the Mortgage Loans. The ownership of each Mortgage Loan, including the Mortgage Note, the Mortgage, the Mortgage Loan Documents, the contents of the related Mortgage Servicing File and all rights, benefits, proceeds and obligations arising therefrom or in connection therewith, is vested in the Owner. All rights arising out of the Mortgage Loans including, but not limited to, all funds received on or in connection with the Mortgage Loans and all records or documents with respect to the Mortgage Loans prepared by or which come into the possession of the Servicer shall be received and held by the Servicer in trust for the benefit of the Owner as the owner of the Mortgage Loans. Any portion of the Mortgage Servicing Files held by the Servicer shall be segregated from the other books and records of the Servicer and shall be appropriately marked to clearly reflect the ownership of the Mortgage Loans by the Owner. The Servicer shall release its custody of the contents of the Mortgage Servicing Files only in accordance with written instructions of the Owner, except when such release is required as incidental to the Servicer’s servicing of the Mortgage Loans. Except as provided herein, the original Mortgage Loan Documents for each Mortgage Loan shall be retained by the Custodian pursuant to the Custodial Agreement. Any fees and expenses of the Custodian shall not be payable by the Servicer.

In the event the Servicer’s membership in MERS is terminated for any reason and any of the Mortgage Loans then serviced by the Servicer are MERS Designated Mortgage Loans, the Servicer shall, upon the Owner’s request and at Servicer’s own expense (without reimbursement), prepare and cause MERS to execute and deliver an Assignment of Mortgage in recordable form to transfer the Mortgage from MERS to the Owner or its designee and to execute and deliver such other notices, documents and other instruments as may be necessary or desirable to effect a transfer of such Mortgage Loan.

The Servicer shall provide the Owner with prompt written notice regarding the occurrence of a MERS Event. The Servicer shall, upon receipt of Owner’s written instructions and at the Owner’s expense, promptly deregister and prepare and submit an assignment to remove from the MERS System each MERS Designated Mortgage Loan that is subject to a MERS Event within fifteen (15) Business Days of the Servicer’s receipt of the Owner’s consent. The Servicer shall notify the Owner upon the removal of a MERS Designated Mortgage Loan from the MERS System.

Section 2.02. Books and Records . The Servicer shall be responsible for maintaining, and shall maintain, a complete set of books and records for the Mortgage Loans which shall be clearly marked to reflect the ownership of the Mortgage Loans by the Owner.

The Owner and its agents may, from time to time and at the Owner’s cost and expense, upon reasonable prior notice, inspect any of the Servicer’s books and records pertaining to this Agreement, including without limitation all Mortgage Servicing Files, at reasonable times during the Servicer’s normal business hours at the Servicer’s offices.

Section 2.03. Transfer of Mortgage Loans . The Owner shall have the right, without the consent of the Servicer, to assign its interest under this Agreement with respect to the Mortgage Loans, and designate any Person to exercise any rights of the Owner hereunder, and the assignee or designee shall accede to the rights and obligations hereunder of the Owner with respect to such Mortgage Loans. All references to the Owner shall be deemed to include its assignee or designee. The Servicer shall not be responsible for the preparation or recording of mortgage assignments or financing statement amendments in connection with such assignments; provided , however , that in the event the Servicer agrees to record any mortgage assignment or financing statement, any expense, including the fees of third party service providers, incurred by the Servicer in connection with the recordation of mortgage assignments shall be reimbursable as a Servicing Advance.

The Servicer shall keep at its servicing office books and records in which, subject to such reasonable regulations as the Servicer may prescribe, the Servicer shall note transfers of Mortgage Loans. For the purposes of this Agreement, the Servicer shall be under no obligation to deal with any Person with respect to this Agreement or the Mortgage Loans except for the Owner unless the Owner provides prior written notice to the Servicer of a sale of one or more Mortgage Loans to such Person and the assumption by such Person of the obligations of the Owner hereunder with respect to such Mortgage Loan(s). Upon receipt of such written notice, the Servicer shall mark its books and records to reflect the ownership of such Mortgage Loan(s) by such assignee, and the previous Owner shall be released from its obligations hereunder attributable to the period after such assignment to the extent such obligations relate to such Mortgage Loan(s) sold by the Owner. The Owner shall be responsible for all costs incurred by the Servicer in transferring the Mortgage Loans to such assignee.

Section 2.04. Tax and Flood Service Contracts . In the event that a Mortgage Loan is not subject to a fully assignable life of loan tax service contract and fully assignable flood zone determination contract, the Servicer shall acquire a tax service contract or flood zone determination contract, as applicable, for any such Mortgage Loan at a cost not to exceed the amount set forth on the Fee Letter or otherwise mutually agreed by the Parties. The Owner shall be responsible for any actual transfer fees required in connection with transferring tax service contracts or flood zone determination contracts to the Servicer. The Servicer shall deliver an invoice on a monthly basis to the Owner with respect to the costs of acquiring or transferring any tax service contracts and flood zone determination contracts and the Owner shall reimburse the Servicer for such costs within thirty (30) days of receiving such invoice.

Section 2.05. Quality Control Procedures .

(a) The Servicer shall have an internal quality control program that adheres to Applicable Regulations and Acceptable Servicing Practices. The program shall include evaluating and monitoring the overall quality of the Servicer’s loan servicing activities and any Vendors utilized by the Servicer. The program shall be designed to (i) ensure that the Mortgage Loans are serviced in accordance with Acceptable Servicing Practices (including all applicable regulations, rules, directives and published guidance of the CFPB and any other applicable state or federal regulators or Governmental Authorities, as such may be amended, modified or supplemented from time to time) and this Agreement, as applicable, (ii) guard against dishonest, fraudulent, or negligent acts and against errors and omissions by the Servicer’s officers, employees, or agents, and (iii) verify that all documents filed or otherwise utilized by the Servicer or any Vendor in any foreclosure or bankruptcy proceeding or other foreclosure-related litigation and all compensation arrangements with such parties are consistent with this Agreement.

(b) The Servicer also shall maintain a MERS quality assurance plan designed to ensure compliance with all MERS requirements, Acceptable Servicing Practices and this Agreement and shall provide the Owner with a copy of such plan as well as the results of any audit or review pursuant to such quality assurance plan on at least a quarterly basis. The Servicer shall provide the Owner with prompt notice of any material modification to its MERS quality assurance plan made after the date hereof and agrees to cooperate in good faith in addressing any questions or concerns of the Owner regarding such modification. The Servicer shall cooperate with any audit by the Owner with respect to the MERS Loans and compliance with the MERS requirements, including providing access to any relevant documentation or information in connection therewith.

Section 2.06. Access to Information .

(a) The Servicer shall provide to the Owner, its regulators and any other state, federal or other regulatory authority that may exercise authority over the Owner or its affiliates access to any documentation regarding the servicing of the Mortgage Loans (except for documents the Servicer reasonably believes it is prohibited by its regulators from sharing with the Owner). Such access shall be afforded without charge, but only upon reasonable request, during normal business hours and at the offices of the Servicer. The Servicer shall cooperate in good faith with the Owner, its agents and regulators in responding to any reasonable inquiries regarding the Servicer’s servicing of the Mortgage Loans and the Servicer’s compliance with, and ability to perform its obligations under, the provisions of this Agreement, including without limitation inquiries regarding the Servicer’s qualifications, expertise, capacity and staffing levels, training programs, work quality and workload balance, reputation (including complaints), information security, document custody practices, business continuity and financial viability, monitoring and oversight of its Vendors as well as the current accuracy of the representations and warranties made by the Servicer in Section 3.01 . The Owner may request, and the Servicer shall cooperate with, periodic reviews of the Servicer’s performance and competence under this Agreement to confirm timeliness, completeness and compliance with all Applicable Laws and the provisions of this Agreement and to ensure that foreclosures are conducted in a manner consistent with Applicable Laws and any regulatory orders, directives or guidance applicable to the Owner, the Servicer or their affiliates.

The Servicer shall conduct periodic reviews, according to a timeframe that is consistent with Acceptable Servicing Practices, of its Vendors that are involved in performing servicing activities related to this Agreement to confirm compliance, timeliness and completeness with the terms of this Agreement and Applicable Law, including without limitation compliance with all applicable legal and regulatory requirements and guidance with respect to foreclosure proceedings applicable to the Owner and the Servicer.

The Owner and its designees shall have the right to examine and audit the Servicer’s mortgage loan servicing operations, including all of the servicing systems, computer systems, books, records or other information of the Servicer, whether held by the Servicer or by another on its behalf, with respect to or concerning this Agreement or the Mortgage Loans, during normal business hours or as otherwise acceptable to the Servicer, upon at least fifteen (15) days’ advance written notice. The Servicer shall facilitate such audits and in connection therewith shall provide the Owner and its agents and its contractors reasonable access (an a supervised basis) to the Servicer’s offices, servicing systems, computer systems, books and records concerning this Agreement, the Mortgage Loans and the Servicer’s general servicing practices and procedures during normal business hours. The Servicer also shall make available to the Owner knowledgeable executive, financial and accounting officers for the purpose of answering questions regarding any of the foregoing.

(b) The Servicer shall (i) maintain a log of all inquiries received from regulators or other governmental authorities (including, without limitation, the CFPB) relating to the Mortgage Loans, (ii) provide a copy of such log to the Owner on a monthly basis, (iii) notify the Owner promptly upon receipt from any such entity of an allegation of or inquiry relating to an alleged material violation of Applicable Law, including, but not limited to, an allegation of discrimination by the Servicer, and provide a copy of any such allegation or inquiry to the Owner, and (iv) cooperate fully with the Owner to respond promptly and completely to any such allegations or inquiries and similarly to any such allegations or inquiries received by the Owner.

The Servicer shall maintain a log of all complaints received by the Servicer from a Mortgagor with respect to a Mortgage Loan serviced hereunder, including without limitation complaints alleging a violation of Applicable Law, provide a copy of such log to the Owner and copies of any correspondence or documentation relating to any such complaint promptly upon request by the Owner. The Servicer shall maintain a customer complaint management program, with sufficient qualified staffing and information system resources to timely respond to customer complaints and take appropriate corrective actions.

Section 2.07. Vendor Oversight . Any Vendor engaged by the Servicer shall be engaged on commercially reasonable, arm’s length basis and at competitive rates of compensation. Upon request, the Servicer shall provide the Owner with the names of any Vendor used by the Servicer in connection with the performance of any of its obligations under this Agreement. If the Owner or the Servicer identifies any Vendor as having been materially deficient, including as a result of reputational, financial, legal, expense or performance issues, the Servicer shall take appropriate measures to assess if such deficiency can be corrected, and if not, to replace such Vendor for the obligations set forth in this Agreement as soon as reasonably practical with a Vendor acceptable under Acceptable Servicing Practices.

The Servicer shall require that all Vendors, as a condition to their engagement by the Servicer, agree (i) to be bound by provisions substantially similar in nature and in all material respects to provisions of this Agreement applicable to the services provided by such Vendor with respect to this Agreement (specifically, but not limited to, compliance with Acceptable Servicing Practices) and (ii) to implement policies and procedures relating to services provided with respect to this Agreement that comply with all Applicable Law and the servicing standards consistent with this Agreement.

At the request of the Owner, the Servicer shall use commercially reasonable efforts to cause its Vendors performing services with respect to the Mortgage Loans to respond to any reasonable inquiries by the Owner or its regulators relating to any such Vendor’s performance of such services and compliance with Applicable Law, including without limitation inquiries regarding such Vendor’s qualifications, expertise, capacity and staffing levels, training programs, work quality and workload balance, reputation (including complaints), information security, document custody practices, business continuity, and financial viability.

Section 2.08. Section 404 Notices; Privacy Notices .

(a) Within ten (10) Business Days of the Owner’s request, the Servicer, at the Owner’s expense, shall furnish to each Mortgagor the Section 404 Notice to the extent required by Section 404 of the Helping Families Save Their Homes Act of 2009 (the “ Helping Families Act ”) in accordance with the provisions of the Helping Families Act. In addition, if requested by the Owner, in connection with any Whole Loan Transfer or Securitization Transaction with respect to any of the Mortgage Loans, the Servicer, at the Owner’s expense, shall furnish to each related Mortgagor, within thirty (30) days following the closing date with respect to such Whole Loan Transfer or Securitization Transaction, a Section 404 Notice with respect to the assignment of such Mortgage Loan, which notice shall identify the Owner’s assignee (with respect to a Whole Loan Transfer) or the Securitization Transaction trust (with respect to a Securitization Transaction), as applicable, as the new owner of the Mortgage Loan and include any other information required by the Helping Families Act. The Servicer shall include the Mortgage Servicing File a copy of each Section 404 Notice furnished to a Mortgagor pursuant to this Section 2.08 .

(b) Within ten (10) days following the related Servicing Transfer Date (or such date otherwise agreed to by the Servicer and the Owner) and as required thereafter by the Privacy Laws (but not less than on a yearly basis), the Servicer, at the Owner’s expense, shall furnish to each Mortgagor each notice required to be provided to such Mortgagors in accordance with the Privacy Laws. Such notices shall be in the form provided by the Owner or otherwise mutually agreed by the Parties.

Section 2.09. Pending and Completed Loss Mitigation . With respect to the Mortgage Loans, (a) the Servicer shall accept and continue processing any loan modification, deed in lieu, short sale, or other loss mitigation requests pending at the time of the applicable Servicing Transfer Date in accordance with Acceptable Servicing Practices, (b) the Servicer shall honor outstanding trial and permanent loan modification, deeds in lieu, short sales, or other loss mitigation agreements in accordance with Acceptable Servicing Practices, including without limitation any trial or permanent loan modifications made under HAMP, and (c) the Servicer shall correctly apply payments with respect to Mortgage Loans for which the related mortgagor is a debtor in a case under Chapter 13 of the United States Bankruptcy Code of 1986, as amended, at the time of the applicable Servicing Transfer Date.

ARTICLE III

REPRESENTATIONS

Section 3.01. Representations, Warranties and Covenants of the Servicer. The Servicer represents and warrants to, and covenants with, the Owner as of the date hereof and as of each Servicing Transfer Date that:

(a) The Servicer (i) is duly organized corporation, validly existing, and in good standing under the laws of the State of Delaware, (ii) has all licenses necessary to carry on its business as now being conducted, except for such licenses, the absence of which individually or in the aggregate, would not have a material adverse effect on the ability of the Servicer to conduct its business as it is presently conducted, (iii) is licensed, qualified and in good standing under the laws of each state where a Mortgaged Property or REO Property is located if the laws of such state require licensing or qualification in order to conduct business of the type conducted by the Servicer and (iv) is in compliance with the laws of any such state to the extent necessary to permit the servicing of the Mortgage Loans in accordance with the terms of this Agreement.

(b) The Servicer has the full power and authority to execute and deliver this Agreement, and to enter into and consummate all transactions contemplated by this Agreement. The Servicer has duly authorized the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement, and this Agreement, assuming due authorization, execution and delivery by the Owner, constitutes a legal, valid and binding obligation of the Servicer, enforceable against it in accordance with its terms, subject to applicable bankruptcy and insolvency laws affecting the rights of creditors generally and to general principles of equity (regardless of whether enforcement of such remedies is considered in a proceeding in equity or law).

(c) The execution and delivery of this Agreement by the Servicer, the servicing of the Mortgage Loans by the Servicer hereunder, the consummation of any other of the transactions contemplated hereunder, and the fulfillment of or compliance with the terms hereof are in the ordinary course of business of the Servicer, and will not (i) result in a breach of any term or provision of the organizational documents of the Servicer or (ii) conflict with, result in a breach, violate, or result in a default under or acceleration of, the terms of any material agreement, indenture or loan or credit agreement or other material instrument to which the Servicer is a party or by which it may be bound, or (iii) constitute a violation of any statute, rule, regulation, order, judgment or decree applicable to the Servicer of any court, regulatory body, administrative agency or governmental body having jurisdiction over the Servicer.

(d) The Servicer is an approved seller/servicer of mortgage loans for Fannie Mae and Freddie Mac and has the facilities, procedures and experienced personnel necessary for the sound servicing of mortgage loans of the same type as the Mortgage Loans. The Servicer is a HUD-approved servicer of mortgage loans. No event has occurred, including but not limited to a change in insurance coverage, which would make the Servicer unable to comply with Fannie Mae, Freddie Mac or HUD eligibility requirements.

(e) The Servicer does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant applicable to it and contained in this Agreement.

(f) There is no action, suit, proceeding or investigation pending or, to its best knowledge, threatened against the Servicer that, either individually or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of the Servicer, or in any material impairment of the right or ability of the Servicer to carry on its business substantially as now conducted or in any material liability on the part of the Servicer, or that would draw into question the validity of this Agreement or of any action taken or to be taken in connection with the obligations of the Servicer contemplated herein, or that would be likely to impair materially the ability of the Servicer to perform under the terms of this Agreement.

(g) No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Servicer of or compliance by the Servicer with this Agreement or the servicing of the Mortgage Loans as evidenced by the consummation of the transactions contemplated by this Agreement, or if required, such approval has been obtained prior to the related Servicing Transfer Date.

(h) The Servicer is in good standing, and will comply in all material respects with the rules and procedures of MERS in connection with the servicing of the MERS Designated Mortgage Loans.

Section 3.02. Representations, Warranties and Covenants of the Owner . The Owner represents and warrants to, and covenants with, the Servicer as of the date hereof and as of each Servicing Transfer Date that:

(a) The Owner is a legal entity duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it was organized and is in good standing under the laws of each state where required in order to perform its obligations hereunder.

(b) The Owner has the full power and authority to execute and deliver this Agreement, and to enter into and consummate all transactions contemplated by this Agreement. The Owner has duly authorized the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement, and this Agreement, assuming due authorization, execution and delivery by the Servicer, constitutes a legal, valid and binding obligation of the Owner, enforceable against it in accordance with its terms, subject to applicable bankruptcy and insolvency laws affecting the rights of creditors generally and to general principles of equity (regardless of whether enforcement of such remedies is considered in a proceeding in equity or law).

(c) The execution and delivery of this Agreement by the Owner, the consummation of any other transactions contemplated hereunder, and the fulfillment of or compliance with the terms hereof are in the ordinary course of business of the Owner and will not (i) result in a breach of any term or provision of the organizational documents of the Owner or (ii) conflict with, result in a breach, violate, or result in a default under or acceleration of, the terms of any agreement, indenture or loan or credit agreement or other material instrument to which the Owner is a party or by which it is bound, or (iii) constitute a material violation of any statute, rule or regulation, order, judgment or decree applicable to the Owner of any court, regulatory body, administrative agency or governmental body having jurisdiction over the Owner.

(d) There is no action, suit, proceeding or investigation pending or, to its best knowledge, threatened against the Owner that, either individually or in the aggregate, would draw into question the validity of this Agreement or that would impair materially the ability of the Owner to perform under the terms of this Agreement.

(e) With respect to each Mortgage Loan, (i) the Owner is the owner of all the right, title and interest in and to the Mortgage Loan and the servicing rights attributable to such Mortgage Loan free and clear of any claims or encumbrances other than in connection with the financing of the Mortgage Loans with a Financing Party, and (ii) unless otherwise disclosed on the related Mortgage Loan Schedule, none of the Mortgage Loans is (A) a “high cost” loan under the Home Ownership and Equity Protection Act of 1994 or (B) a “high cost”, “threshold” or “predatory” loan under any applicable state, federal or local law.

ARTICLE IV

SERVICING OF MORTGAGE LOANS

Section 4.01. Servicer to Act as the Servicer . The Servicer, as independent contract servicer, shall service and administer the Mortgage Loans on an actual/actual basis in accordance with this Agreement, the terms of the applicable Mortgage Loan Documents and Acceptable Servicing Practices, and shall have full power and authority, acting alone, to do or cause to be done any and all things in connection with such servicing and administration which the Servicer may deem necessary or desirable and consistent with the terms of this Agreement. The Servicer may perform its servicing responsibilities through agents or independent contractors, but shall not thereby be released from any of its responsibilities hereunder, and the Servicer shall diligently pursue all of its rights against such agents or independent contractors.

Consistent with the terms of this Agreement and Owner Instructions, the Servicer may waive, modify or vary any term of any Mortgage Loan or consent to the postponement of strict compliance with any such term or in any manner grant indulgence to any Mortgagor if in the Servicer’s reasonable and prudent determination such waiver, modification, postponement or indulgence is not materially adverse to the Owner; provided , however , that the Servicer shall not, without the prior written consent of the Owner, permit any modification with respect to any Mortgage Loan that would change the Mortgage Interest Rate, forgive the payment thereof of any principal or interest payments, reduce the outstanding principal amount (except for actual payments of principal), extend the final maturity date with respect to such Mortgage Loan or any other act that could reasonably be expected to affect adversely the Owner’s interest in the Mortgage Note, Mortgage Loan, Mortgage, Mortgaged Property, Mortgage Loan Documents or Mortgage Servicing File related to a Mortgage Loan, including without limitation, approve a short payoff, a short sale, a deed-in-lieu of foreclosure or other settlement with a Mortgagor for less than the full amount due under any Mortgage Loan. Subject to Owner Instructions, the Servicer shall take such actions as it shall deem to be in the best interest of the Owner and which are consistent with Acceptable Servicing Practices, the terms of this Agreement and all Applicable Regulations. Subject to the foregoing, the Servicer shall continue, and is hereby authorized and empowered to execute and deliver on behalf of itself, and the Owner, all instruments of satisfaction or cancellation, or of partial or full release, discharge and all other comparable instruments, with respect to the Mortgage Loans and with respect to the Mortgaged Properties. The Servicer shall make all required Servicing Advances and shall service and administer the Mortgage Loans in accordance with Acceptable Servicing Practices, Applicable Regulations, the terms of this Agreement and the terms of the Mortgage Loan Documents and shall provide to the Mortgagor any reports required to be provided to it thereby. If reasonably required by the Servicer, the Owner shall furnish the Servicer with any powers of attorney in a form attached hereto as Exhibit F and other documents necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties under this Agreement.

The Owner may provide the Servicer with Owner Instructions regarding certain servicing and loss mitigation decisions and procedures and the Servicer shall comply with such Owner Instructions, subject to Applicable Regulations.

In servicing and administering the Mortgage Loans, the Servicer shall employ collection procedures consistent with Acceptable Servicing Practices and Applicable Regulations. The Servicer shall not consent to the placement of any additional lien on the Mortgaged Property or any REO Property without notifying and obtaining the written consent of the Owner. The Servicer shall not consent to the placement of a lien on the Mortgaged Property or any REO Property senior to that of the related Mortgage.

The Servicer will ensure adequate staffing, training and procedures in fulfillment, collections, loss mitigation, customer service, customer complaint, foreclosure, REO Property and bankruptcy departments to ensure appropriate and timely communications with borrowers and to properly manage the Mortgage Loans and REO Properties.

Section 4.02. Collection of Mortgage Loan Payments . Continuously from the related Servicing Transfer Date until the principal and interest on the related Mortgage Loan are paid in full or the termination of this Agreement pursuant to Article IX hereof, the Servicer will diligently collect all payments due under each Mortgage Loan when the same shall become due and payable and shall, to the extent such procedures shall be consistent with this Agreement, act in accordance with the terms and provisions of any related Primary Insurance Policy, LPMI Policy, Acceptable Servicing Practices and Applicable Regulations. Further, with respect to each Mortgage Loan which provides for Escrow Payments to be made, in accordance with Acceptable Servicing Practices and Applicable Regulations, the Servicer will ascertain and estimate annual ground rents, taxes, assessments, water rates, fire and hazard insurance premiums, mortgage insurance premiums, and all other charges that, as provided in the Mortgage, will become due and payable such that the installments payable by the Mortgagor will be sufficient to pay such charges as and when they become due and payable. Notwithstanding anything herein to the contrary, the Servicer shall have no obligation to collect, or make payments to the Owner with respect to, any prepayment penalties, late charges, fees or other items which are prohibited under Applicable Regulations.

Section 4.03. Realization Upon Defaulted Mortgage Loans . In the event that any payment due under any Mortgage Loan is not paid when the same becomes due and payable, or in the event the Mortgagor fails to perform any other covenant or obligation under the Mortgage Loan and such failure continues beyond any applicable grace period, the Servicer shall take such action as is consistent with Acceptable Servicing Practices.

In connection with a foreclosure or other conversion, the Servicer shall exercise such rights and powers vested in it hereunder and use the same degree of care and skill in its exercise as prudent mortgage servicers would exercise or use under the circumstances in the conduct of their own affairs and consistent with Applicable Regulations and the Acceptable Servicing Practices with respect to mortgage loans in foreclosure or similar proceedings.

Subject to Owner Instructions, the Servicer shall commence foreclosure proceedings in accordance with Acceptable Servicing Practices. In such connection, the Servicer shall from its own funds make all necessary and proper Servicing Advances. The Servicer shall take appropriate measures to ensure the accuracy of all documents filed or otherwise utilized by the Servicer or its Vendor in any judicial or non-judicial foreclosure proceeding, related bankruptcy proceeding or in other foreclosure-related litigation, including but not limited to, documentation sufficient to establish ownership of the Mortgage Loan by the Owner and the right to foreclose at the time the foreclosure action is commenced (it being understood that the Servicer shall not be responsible for inaccuracies caused by prior servicers). All foreclosure attorneys, bankruptcy attorneys and eviction attorneys (collectively, “ Default Firms ”) to be used in connection with the servicing and administration of the Mortgage Loans and REO Properties shall be engaged in accordance with Acceptable Servicing Practices. Upon request, the Servicer shall provide the Owner with an schedule of Default Firms being used by the Servicer in connection with servicing the Mortgage Loans.

The Servicer shall be required to maintain, and to cause its Vendor to maintain, current and accurate records relating to foreclosure or related bankruptcy proceedings or related litigation, with a clear auditable trail of documentation capable of validating foreclosure that the Servicer has produced, or has received from a prior subservicer, and shall cause its Vendor to do the same.

In the event that the Owner directs the Servicer to charge off any Mortgage Loan or the Servicer, in accordance with Acceptable Servicing Practices, charges off any Mortgage Loan, the Servicer, at the Owner’s option, shall perform collection services with respect to such charged-off Mortgage Loan in accordance with a receivable collection agreement to be entered into with the Owner.

Notwithstanding the foregoing provisions of this Section 4.03 , with respect to any Mortgage Loan as to which the Servicer has received notice of, or has knowledge of, the presence of any toxic or hazardous substance on the related Mortgaged Property, the Servicer shall not either (i) obtain title to such Mortgaged Property as a result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire possession of, or take any other action with respect to, such Mortgaged Property if, as a result of any such action, either the Servicer or the Owner would be considered to hold title to, to be a mortgagee-in-possession of, or to be an owner or operator of such Mortgaged Property within the meaning of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time, or any comparable law, unless the Servicer has also previously determined, based on its reasonable judgment and a prudent report prepared by a Person who regularly conducts environmental audits using customary industry standards, that:

(A) such Mortgaged Property is in compliance with applicable environmental laws or, if not, it would be in accordance with Acceptable Servicing Practices to take such action as necessary in order to bring the Mortgaged Property into compliance therewith; and

(B) there are no circumstances present at such Mortgaged Property relating to the use, management or disposal of any hazardous substances, hazardous materials, hazardous wastes, or petroleum-based materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any federal, state or local law or regulation, or that if any such materials are present for which such action could be required, that it would be in accordance with Acceptable Servicing Practices to take such action with respect to the affected Mortgaged Property.

The cost of the environmental audit report contemplated by this Section 4.03 and any opinion of counsel the Servicer reasonably determines that it needs to make a reasonable judgment with respect to its duties under this Section 4.03 shall be advanced by the Servicer, subject to the Servicer’s right to be reimbursed therefor from the Custodial Account as provided in Section 4.05(ii) but subject to the provisions of Section 5.04 regarding nonrecoverability.

If the Servicer determines, as described above, that it would be in accordance with Acceptable Servicing Practices to take such actions as are necessary to bring any such Mortgaged Property into compliance with applicable environmental laws, or to take such action with respect to the containment, clean-up or remediation of hazardous substances, hazardous materials, hazardous wastes, or petroleum-based materials affecting any such Mortgaged Property, then the Servicer shall take such action as it deems to be in accordance with Acceptable Servicing Practices. The cost of any such compliance, containment, cleanup or remediation shall be advanced by the Servicer, subject to the Servicer’s right to be reimbursed therefor from the Custodial Account as provided in Section 4.05(ii) but subject to the provisions of Section 5.04 regarding nonrecoverability.

Section 4.04. Establishment of Custodial Accounts; Deposits in Custodial Accounts . For the Mortgage Loans or REO Properties related to each Owner, the Servicer shall segregate and hold all funds collected and received pursuant to each Mortgage Loan and REO Property separate and apart from any of its own funds and general assets (and separate and apart from the funds relating to the Mortgage Loans and REO Properties of any other Owner or other Person) and shall establish and maintain one (1) or more Custodial Accounts with respect to each Owner, in the form of time deposit or demand accounts. The creation of any Custodial Account shall be evidenced by a letter agreement in the form set forth in Exhibit B hereto. A copy of such letter agreement shall be sent to the Owner promptly after a Custodial Account is set up. The Custodial Account shall be an Eligible Account.

The Servicer shall deposit in the applicable Custodial Account on a daily basis within two (2) Business Days of receipt and acceptance, and retain therein, the following payments and collections received or made by it after the Cut-off Date with respect to the Mortgage Loans and REO Properties for each Owner:

(i) all payments on account of principal, including Principal Prepayments (and any prepayment penalties), on the Mortgage Loans;

(ii) all payments on account of interest on the Mortgage Loans;

(iii) all Liquidation Proceeds;

(iv) all Primary Insurance Proceeds, LPMI Policy Proceeds and Other Insurance Proceeds including amounts required to be deposited pursuant to Sections 4.10 and 4.11 , other than proceeds to be held in the Escrow Account and applied to the restoration or repair of the Mortgaged Property or released to the Mortgagor in accordance with the Servicer’s normal servicing procedures, the Mortgage Loan Documents or Applicable Regulations;

(v) all Condemnation Proceeds affecting any Mortgaged Property which are not released to the Mortgagor in accordance with the Servicer’s normal servicing procedures, the Mortgage Loan Documents or Applicable Regulations;

(vi) any amounts required to be deposited by the Servicer pursuant to Section 4.11 in connection with the deductible clause in any blanket hazard insurance policy, such deposit being made from the Servicer’s own funds, without reimbursement therefor;

(vii) any amounts required to be deposited by the Servicer in connection with any REO Property pursuant to Section 4.14 ; and

(viii) any amounts required to be deposited in the Custodial Account pursuant to Section 4.01 .

Any interest paid on funds deposited in the Custodial Account by the depository institution shall accrue to the benefit of the Servicer and the Servicer shall be entitled to retain and withdraw such interest from the Custodial Account pursuant to Section 4.05(iii) . Any funds on deposit in the Custodial Account may only be invested in accordance with Section 4.16 .

Section 4.05. Permitted Withdrawals From the Custodial Account . The Servicer may, from time to time, withdraw from the applicable Custodial Account with respect to an Owner for the following purposes:

(ix) to make payments to the Owner in the amounts and in the manner provided for in Section 5.01 after payments or reimbursements to the Servicer are made in accordance with this Agreement;

(x) to reimburse itself for Servicing Advances and any advances of principal and interest made with respect to any Mortgage Loan or REO Property pursuant to this Agreement and not previously reimbursed to the Servicer;

(xi) to pay to itself as servicing compensation any interest earned on funds in the Custodial Account (all such interest to be withdrawn monthly not later than each Remittance Date) and to pay itself any accrued but unpaid Servicing Fees, any unpaid Boarding Fees or Deboarding Fees with respect to any Mortgage Loan or REO Property, any other unpaid fees payable to the Servicer hereunder;

(xii) to reimburse itself for Nonrecoverable Servicing Advances made pursuant to this Agreement;

(xiii) to pay the premiums with respect to any Lender Paid Mortgage Insurance Policy;

(xiv) to reimburse itself for any deposits made by mistake or in error; and

(xv) to clear and terminate the Custodial Account upon the termination of this Agreement with the balance to be paid to the Owner.

The foregoing requirements for withdrawal from the Custodial Account shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments in the nature of late payment charges, assumption fees and related Ancillary Income need not be deposited by the Servicer in the Custodial Account. In the event that amounts on deposit in the Custodial Account are insufficient at any time to cover the payment of any Servicing Fees or reimbursement of Servicing Advances or other amounts payable to the Servicer under this Agreement, the Owner shall promptly reimburse the Servicer for such deficient amounts upon receipt of an invoice for the same from the Servicer. In the event there are insufficient funds in the Custodial Account to make a particular Servicing Advance, the Servicer may notify the Owner in writing of the amount and details regarding such Servicing Advance, and the Owner shall cause such amount to be remitted to the Servicer within three (3) Business Days of receiving such notification.

The Servicer shall keep and maintain, in an electronic format mutually acceptable to the Servicer and the Owner, separate accounting, on a Mortgage Loan by Mortgage Loan basis, and on an REO Property by REO Property basis, for the purpose of justifying any deposit or withdrawal from the Custodial Account, including without limitation separate accounting for Servicing Advances and Servicing Fees outstanding and/or reimbursed or paid with respect to each Mortgage Loan and REO Property. The Servicer shall diligently seek reimbursement and collection of Servicing Advances and other amounts advanced or funded by the Servicer and the Owner with respect to the Mortgage Loans. The Servicer shall also provide to the Owner, upon request, reasonable documentation related to any Advances and Servicing Fees and any other fees or amounts withdrawn by the Servicer pursuant to this Subsection 4.05 .

Notwithstanding any provision in this Agreement to the contrary, the Servicer may not use funds in any Custodial Account relating to a particular Owner to make Servicing Advances or to reimburse the Servicer for any Servicing Fees or any other amounts payable hereunder that are in relation to funds received with respect to Mortgage Loans or REO Properties that are not owned by such Owner. The Servicer shall maintain separate accounts, books and records for each Owner.

Section 4.06. Establishment of Escrow Accounts; Deposits in Escrow Accounts . For the Mortgage Loans related to each Owner, the Servicer shall segregate and hold all funds collected and received pursuant to each First Mortgage Loan which constitute Escrow Payments separate and apart from any of its own funds and general assets (and separate and apart from the funds relating to the Mortgage Loans for any other Owner or other Person) and shall establish and maintain one (1) or more Escrow Accounts with respect to each Owner, in the form of time deposit or demand accounts. The creation of any Escrow Account shall be evidenced by a letter agreement in the form set forth in Exhibit C hereto. A copy of such letter agreement shall be furnished to the Owner upon request. The Escrow Account shall be an Eligible Account. Any funds on deposit in any Escrow Account may only be invested in accordance with Section 4.16 .

The Servicer shall deposit in the applicable Escrow Account or Accounts on a daily basis within two (2) Business Days of receipt and acceptance, and retain therein, (i) all Escrow Payments collected on account of the Mortgage Loans with respect to the related Owner, for the purpose of effecting timely payment of any such items as required under the terms of this Agreement, and (ii) all Other Insurance Proceeds and any applicable Condemnation Proceeds which are to be applied only to the restoration or repair of any related Mortgaged Property and not to ground rents, taxes, assessments, water rates, hazard insurance premiums, Primary Insurance Policy premiums, if applicable, and similar items. The Servicer shall make withdrawals therefrom only to effect such payments as are required under this Agreement, and for such other purposes as shall be set forth in, or in accordance with, Section 4.07 . The Servicer shall be entitled to retain any interest paid on funds deposited in the Escrow Account by the depository institution other than interest on escrowed funds required by law to be paid to the Mortgagors and, to the extent required by the related Mortgage Loan or Applicable Regulations, the Servicer shall pay from its own funds interest on escrowed funds to the Mortgagor notwithstanding that the Escrow Account is non-interest bearing or that interest paid thereon is insufficient for such purposes, provided that the accounts are Eligible Accounts.

Section 4.07. Permitted Withdrawals From Escrow Account . Withdrawals from the applicable Escrow Account with respect to an Owner may be made by the Servicer (i) to effect timely payments of ground rents, taxes, assessments, water rates, hazard insurance premiums, Primary Insurance Policy premiums, if applicable, and similar items, (ii) to reimburse the Servicer for any unreimbursed Servicing Advance made by the Servicer with respect to a related Mortgage Loan but only from amounts received on the related Mortgage Loan which represent late payments of Escrow Payments thereunder, (iii) to refund to the Mortgagor any funds as may be determined to be overages, (iv) for transfer to the Custodial Account in accordance with the terms of this Agreement, (v) for application to restoration or repair of the Mortgaged Property, (vi) to pay to the Servicer, or to the Mortgagor to the extent required by the related Mortgage Loan or Applicable Regulations, any interest paid on the funds deposited in the Escrow Account, (vii) to clear and terminate the Escrow Account on the termination of this Agreement or (viii) to transfer to the Custodial Account any Other Insurance Proceeds.

Section 4.08. Payment of Taxes, Insurance, and Other Charges; Maintenance of Primary Insurance Policies and LPMI Policies; Collections Thereunder . With respect to each Mortgage Loan which provides for Escrow Payments to be made, the Servicer shall maintain accurate records reflecting the status of ground rents, taxes, assessments, water rates and other charges which are or may become a lien upon the Mortgaged Property and the status of Primary Mortgage Insurance premiums and fire and hazard insurance coverage and shall obtain, from time to time, all bills for the payment of such charges (including renewal premiums) and shall effect payment thereof prior to the applicable penalty or termination date, employing for such purpose deposits of the Mortgagor in the Escrow Account which shall have been estimated and accumulated by the Servicer in amounts sufficient for such purposes, as allowed under the terms of the Mortgage or Applicable Regulations. To the extent that any First Mortgage Loan does not provide for Escrow Payments, the Servicer shall ensure that any such payments are made by the Mortgagor. With respect to each First Mortgage Loan, subject to Acceptable Servicing Practices, the Servicer assumes full responsibility for the payment of all such bills and shall effect payments of all such bills irrespective of the Mortgagor’s faithful performance in the payment of same or the making of the Escrow Payments and shall make Servicing Advances from its own funds to effect such payments within the time period required to avoid the loss of the related Mortgaged Property by foreclosure from a tax or other lien. Additionally, for all tax penalties and interest levied prior to the transfer of the Mortgage Loans to the Servicer or as a result of the actions of the prior servicer or the Owner, the Servicer shall make Servicing Advances to effect such payments. Notwithstanding the foregoing, if the Servicer reasonably determines that such Servicing Advance would be a Nonrecoverable Servicing Advance, the Servicer shall have no obligation to make such Servicing Advance unless directed to do so by the Owner. The Servicer shall be entitled to immediate reimbursement for any Servicing Advance from any and all funds deposited in the Custodial Account whether or not the funds deposited in the Custodial Account relate to the Mortgage Loans or REO Properties for which the Servicing Advances were made.

With respect to each First Mortgage Loan, the Servicer will maintain or cause to be maintained in full force and effect (to the extent a Mortgage Loan has a Primary Insurance Policy as of the Servicing Transfer Date and the prior servicer or Owner has provided the relevant information related to the Primary Insurance Policy to the Servicer) a Primary Insurance Policy issued by a Qualified Insurer with respect to each Mortgage Loan for which such coverage is required. Such coverage will be maintained until the loan-to-value ratio of the related Mortgage Loan is reduced to 80% or less or such lesser percentage as may be stated in the related Primary Insurance Policy. The Servicer will not cancel or refuse to renew any Primary Insurance Policy in effect on the Servicing Transfer Date that is required to be kept in force under this Agreement unless a replacement Primary Insurance Policy for such cancelled or non-renewed policy is obtained from and maintained with a Qualified Insurer. The Servicer will maintain or cause to be maintained in full force and effect any LPMI Policy issued by a Mortgage Insurer with respect to each Mortgage Loan for which such coverage is in existence or is obtained. The Owner shall notify the Servicer of any Mortgage Loan covered under an LPMI Policy. The Servicer shall not take any action which would result in non-coverage under any applicable Primary Insurance Policy or LPMI Policy of any loss which, but for the actions of the Servicer, would have been covered thereunder. In connection with any assumption or substitution agreement entered into or to be entered into pursuant to Section 6.01 , the Servicer shall promptly notify the insurer under the related Primary Insurance Policy or LPMI Policy, if any, of such assumption or substitution of liability in accordance with the terms of such policy and shall take all actions which may be required by such insurer as a condition to the continuation of coverage under the Primary Insurance Policy or LPMI Policy, as applicable. If such Primary Insurance Policy or LPMI Policy is terminated as a result of such assumption or substitution of liability, the Servicer shall obtain a replacement Primary Insurance Policy or LPMI Policy, as applicable, as provided above.

In connection with its activities as servicer, the Servicer agrees to prepare and present, on behalf of itself and the Owner, claims to the insurer under any Primary Insurance Policy and LPMI Policy in a timely fashion in accordance with the terms of such policies and, in this regard, to take such action as shall be necessary to permit recovery under any Primary Insurance Policy or LPMI Policy, as applicable, respecting a defaulted Mortgage Loan. Pursuant to Section 4.04 , any amounts collected by the Servicer under any Primary Insurance Policy or LPMI Policy shall be deposited in the Custodial Account, subject to withdrawal pursuant to Section 4.05 . The failure of a Qualified Insurer to pay all or part of a claim under a Primary Insurance Policy or LPMI Policy as a result of a breach by the Servicer of its obligations hereunder or under such policy shall be treated as a mortgage insurer rejection and the Servicer shall pay the Owner the unpaid amount of such claim.

Section 4.09. Transfer of Accounts . The Servicer may transfer the Custodial Account or the Escrow Account to a different depository institution from time to time with reasonable prior notice to the Owner; provided , that each such account shall be an Eligible Account. Within three (3) Business Days of such transfer, the Servicer shall deliver to the Owner a new letter agreement, as required pursuant to Sections 4.04 and 4.06 .

Section 4.10. Maintenance of Hazard Insurance . The Servicer shall cause to be maintained for each First Mortgage Loan fire and hazard insurance with extended coverage as is customary in the area where the Mortgaged Property is located in an amount which is at least equal to the lesser of (i) the amount necessary to fully compensate for any damage or loss to the improvements which are a part of such property on a replacement cost basis or (ii) the Unpaid Principal Balance of the Mortgage Loan and any mortgage loan senior to the Mortgage Loan, in each case in an amount not less than such amount as is necessary to prevent the Mortgagor and/or the Mortgagee from becoming a co-insurer. If the Mortgaged Property is in an area identified in the Federal Register by the Flood Emergency Management Agency as having special flood hazards and flood insurance has been made available, the Servicer will cause to be maintained a flood insurance policy meeting the requirements of the current guidelines of the Federal Insurance Administration with a generally acceptable insurance carrier, in an amount representing coverage not less than the least of (i) the Unpaid Principal Balance of the Mortgage Loan and any mortgage loan senior to the Mortgage Loan, (ii) the maximum insurable value of the improvements securing such Mortgage Loan or (iii) the maximum amount of insurance which is available under the National Flood Insurance Act of 1968, as amended. The Servicer shall also maintain on the REO Property for the benefit of the Owner, (x) fire and hazard insurance with extended coverage in an amount which is at least equal to the replacement cost of the improvements which are a part of such property, (y) public liability insurance and, (z) to the extent required and available under the National Flood Insurance Act of 1968, as amended, flood insurance in an amount as provided above. Any amounts collected by the Servicer under any such policies other than amounts to be deposited in the Escrow Account and applied to the restoration or repair of the Mortgaged Property or REO Property, or released to the Mortgagor in accordance with the Servicer’s normal servicing procedures, shall be deposited in the Custodial Account, subject to withdrawal pursuant to Section 4.05 . It is understood and agreed that no earthquake or other additional insurance is required to be maintained by the Servicer or the Mortgagor or maintained on property acquired in respect of the Mortgage Loan, other than pursuant to such Applicable Regulations as shall at any time be in force and as shall require such additional insurance. All such policies shall be endorsed with standard mortgagee clauses with loss payable to the Servicer and shall provide for at least thirty (30) days prior written notice of any cancellation, reduction in the amount of or material change in coverage to the Servicer. The Servicer shall not interfere with the Mortgagor’s freedom of choice in selecting either his insurance carrier or agent; provided , however , that the Servicer shall not accept any such insurance policies from insurance companies unless such companies currently reflect a general policy rating of B:VI or better in Best’s Key Rating Guide or are otherwise a Qualified Insurer and are licensed to do business in the state wherein the Mortgaged Property is located.

If a Mortgage is secured by a unit in a condominium project, the Servicer shall verify that the coverage required of the owner’s association, including hazard, flood, liability, fidelity coverage and coverage for common areas, is being maintained in accordance with Acceptable Servicing Practices, and secure from the owner’s association its agreement to notify the Servicer promptly of any change in the insurance coverage or of any condemnation or casualty loss that may have a material effect on the value of the Mortgaged Property as security.

Section 4.11. Maintenance of Mortgage Impairment Insurance Policy . In the event that the Servicer shall obtain and maintain, at its own expense, a blanket policy issued by an insurer that has a general policy rating of B:VI or better in Best’s Key Rating Guide or is otherwise a Qualified Insurer insuring against fire and hazard losses on all of the Mortgage Loans, then, to the extent such policy provides coverage in an amount equal to the amount required pursuant to Section 4.10 and otherwise complies with all other requirements of Section 4.10 , it shall conclusively be deemed to have satisfied its obligations as set forth in Section 4.10 , it being understood and agreed that such policy may contain a deductible clause, in which case the Servicer shall, in the event that there shall not have been maintained on the related Mortgaged Property or REO Property a policy complying with Section 4.10 , and there shall have been a loss which would have been covered by such policy, deposit in the Custodial Account the amount not otherwise payable under the blanket policy because of such deductible clause. Any amounts collected by the Servicer under any such policy relating to a Mortgage Loan shall be deposited in the Custodial Account to the extent such amounts are not deposited in the Escrow Account. In connection with its activities as servicer of the Mortgage Loans, the Servicer agrees to prepare and present, on behalf of the Owner, claims under any such blanket policy in a timely fashion in accordance with the terms of such policy. The failure of a Qualified Insurer to pay all or part of a claim under a policy as a result of a breach by the Servicer of its obligations hereunder or under such policy shall be treated as a mortgage insurer rejection and the Servicer shall pay the Owner the unpaid amount of such claim. Upon request of the Owner, the Servicer shall cause to be delivered to the Owner a certified true copy of such policy and a statement from the insurer thereunder that such policy shall in no event be terminated or materially modified without thirty (30) days prior written notice to the Owner.

Section 4.12. Restoration and Repair . The Servicer need not obtain the approval of the Owner prior to releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be applied to the restoration or repair of the Mortgaged Property or REO Property if such release is in accordance with Acceptable Servicing Practices and the terms of this Agreement. At a minimum, the Servicer shall comply with the following conditions in connection with any such release of Insurance Proceeds or Condemnation Proceeds:

(i) the Servicer shall receive satisfactory independent verification of completion of repairs and issuance of any required approvals with respect thereto;

(ii) the Servicer shall take all steps necessary to preserve the priority of the lien of the Mortgage, including, but not limited to requiring waivers with respect to mechanics’ and materialmen’s liens;

(iii) the Servicer shall verify that the Mortgage Loan is not in default; and

(iv) pending repairs or restoration, the Servicer shall place the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.

If the Owner is named as an additional loss payee, the Servicer is hereby empowered to endorse any loss draft issued in respect of such a claim in the name of the Owner.

The Servicer shall inspect the Mortgaged Property as often as is deemed necessary by the Servicer to assure itself that the value of the Mortgaged Property is being preserved. In addition, if any Mortgage Loan is more than ninety (90) days delinquent, the Servicer shall immediately inspect the Mortgaged Property and shall conduct subsequent inspections in accordance with Acceptable Servicing Practices. The Servicer shall keep a written report of each such inspection.

If the Servicer hereafter becomes aware that a Mortgaged Property is, or an REO Property becomes, an Environmental Problem Property, the Servicer will notify the Owner of the existence of the Environmental Problem Property. Additionally, the Servicer shall set forth in such notice a description of such problem, a recommendation to the Owner relating to the proposed action regarding the Environmental Problem Property and the Servicer shall carry out the recommendation set forth in such notice unless otherwise directed by the Owner in writing within five (5) Business Days after the Owner’s receipt (or deemed receipt) of such notice but subject to the provisions of Section 5.04 regarding nonrecoverability.

Section 4.13. Fidelity Bond, Errors and Omissions Insurance . The Servicer shall maintain, at its own expense, a blanket Fidelity Bond and an errors and omissions insurance policy, with broad coverage with a Qualified Insurer on all officers, employees or other Persons acting in any capacity with regard to the Mortgage Loans to handle funds, money, documents and papers relating to the Mortgage Loans. The Fidelity Bond and errors and omissions insurance shall be in the form of the Mortgage Banker’s Blanket Bond and shall protect and insure the Servicer against losses, including forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of such Persons. Such Fidelity Bond and errors and omissions insurance policy shall also protect and insure the Servicer against losses in connection with the failure to maintain any insurance policies required pursuant to this Agreement and the release or satisfaction of a Mortgage Loan without having obtained payment in full of the indebtedness secured thereby. No provision of this Section 4.13 requiring the Fidelity Bond and errors and omissions insurance policy shall diminish or relieve the Servicer from its duties and obligations as set forth in this Agreement. The minimum coverage under any such bond and insurance policy shall be at least equal to the corresponding amounts required by Fannie Mae in the Fannie Mae MBS Selling and Servicing Guide or by Freddie Mac in the Freddie Mac Servicer’s Guide. Upon request of the Owner, the Servicer shall cause to be delivered to the Owner a certified true copy of the Fidelity Bond and errors and omissions insurance policy and a statement from the surety and the insurer that such Fidelity Bond and errors and omissions insurance policy shall in no event be terminated or materially modified without thirty (30) days’ prior written notice to the Owner.

Section 4.14. Title, Management and Disposition of REO Property . In the event that title to a Mortgaged Property is acquired in foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale shall be issued in the name of the Owner or such other party (other than the Servicer) designated by the Owner, as nominee on behalf of the Owner.

The Servicer shall manage, conserve, protect and operate each REO Property (and may temporarily rent the same) for the Owner solely for the purpose of its prompt disposition and sale. The Servicer shall cause each REO Property to be inspected promptly upon the acquisition of title thereto and shall cause each REO Property to be inspected at least annually thereafter. The Servicer shall make or cause to be made a written report of each such inspection. Such reports shall be retained in the Mortgage Servicing File and copies thereof shall be forwarded by the Servicer to the Owner upon request. The Servicer shall attempt to sell the same (and may temporarily rent the same) on such terms and conditions as the Servicer deems to be in the best interest of the Owner.

The Servicer shall deposit or cause to be deposited, on a daily basis in the Custodial Account, all revenues received with respect to each REO Property and shall withdraw therefrom funds necessary for the proper operation, management and maintenance of the REO Property, including the cost of maintaining any hazard insurance pursuant to Section 4.10 hereof and the reasonable fees of any managing agent acting on behalf of the Servicer.

The Servicer shall use commercially reasonable efforts to dispose of the REO Property as promptly as is practically consistent with protecting the Owner’s interest.

The Servicer shall also maintain on each REO Property fire and hazard insurance with extended coverage, liability insurance and, to the extent required and available under the National Flood Insurance Act of 1968, as amended, flood insurance, and all other insurance coverage required under Section 4.10 and in the amounts specified in Section 4.10 .

Each REO Disposition shall be carried out by the Servicer at such price and upon such terms and conditions as the Servicer reasonably determines to be in the best interest of the Owner and provided the sales price and the related terms and conditions are results of arm’s-length negotiation. If as of the date title to any REO Property was acquired by the Servicer there were outstanding unreimbursed Servicing Advances with respect to the REO Property, the Servicer, upon an REO Disposition of such REO Property, shall be entitled to reimbursement for any related unreimbursed Servicing Advances from proceeds received in connection with such REO Disposition. The proceeds from the REO Disposition, net of any amounts reimbursable to the Servicer hereunder, shall be deposited promptly in the Custodial Account following receipt thereof for distribution on the next Remittance Date in accordance with Section 5.01 . The Owner acknowledges and agrees that the Servicer or an affiliate may receive usual and customary real estate referral fees (not in excess of 1% of the unpaid principal balance of the Mortgage Loan) from real estate brokers in connection with the listing and disposition of REO Property to the extent permitted pursuant to Applicable Regulations.

Together with the statement furnished pursuant to the following paragraph, the Servicer shall furnish to the Owner on or before each Remittance Date a statement with respect to any REO Property covering the operation of such REO Property for the previous month and the Servicer’s efforts in connection with the sale of such REO Property and any rental of such REO Property incidental to the sale thereof for the previous month. That statement shall be accompanied by such other information as the Owner shall reasonably request.

Following the foreclosure sale or abandonment of any Mortgaged Property, the Servicer shall report such foreclosure or abandonment as required pursuant to Section 6050J of the Code or any successor provision thereof.

Section 4.15. Notification of Adjustments . On each Adjustment Date, the Servicer shall make interest rate adjustments for each Adjustable Rate Mortgage Loan and shall adjust the Monthly Payment in compliance with the requirements of the related Mortgage and Mortgage Note and Applicable Regulations. The Servicer shall execute and deliver the notices required by each Mortgage and Mortgage Note and Applicable Regulations regarding interest rate adjustments. The Servicer also shall provide timely notification to the Owner of all applicable data and information regarding such interest rate and Monthly Payment adjustments and the Servicer’s methods of implementing such interest rate adjustments. Upon the discovery by the Servicer or the Owner that the Servicer has failed to adjust a Mortgage Interest Rate or a Monthly Payment pursuant to the terms of the related Mortgage, Mortgage Note or Applicable Regulations, the Servicer shall promptly deposit in the Custodial Account from its own funds the amount of any interest loss caused thereby without reimbursement therefor.

Section 4.16. Permitted Investments .

(a) The Servicer may direct any depository institution maintaining any Custodial Account or Escrow Account (for purposes of this Section 4.16 , an “ Investment Account ”) to invest, or if it is such depository institution, may itself invest, the funds held therein only in one (1) or more Permitted Investments bearing interest or sold at a discount, and maturing, unless payable on demand, (i) no later than the Business Day immediately preceding the next succeeding date on which such funds are required to be withdrawn from such account pursuant to this Agreement, if a Person other than the depository institution maintaining such account is the obligor thereon and (ii) no later than the date on which such funds are required to be withdrawn from such account pursuant to this Agreement, if the depository institution maintaining such account is the obligor thereon. All such Permitted Investments shall be held to maturity, unless payable on demand. In the event amounts on deposit in an Investment Account are at any time invested in a Permitted Investment payable on demand, the Servicer shall:

(i) consistent with any notice required to be given thereunder, demand that payment thereon be made on the last day such Permitted Investment may otherwise mature hereunder in an amount equal to the lesser of (a) all amounts then payable thereunder and (b) the amount required to be withdrawn on such date; and

(ii) demand payment of all amounts due thereunder promptly upon determination by the Servicer that such Permitted Investment would not constitute a Permitted Investment in respect of funds thereafter on deposit in the Investment Account.

(b) Interest and investment income realized on funds deposited in any Custodial Account or Escrow Account, to the extent of the Net Investment Earnings, if any, with respect to such account for the period from the immediately preceding Determination Date to such Determination Date, shall be for the sole and exclusive benefit of the Servicer. In the event that any loss or late payment shall be incurred in respect of any Permitted Investment on deposit in any Custodial Account or Escrow Account, the Servicer shall deposit therein, no later than the Remittance Date, without right of reimbursement, the amount of Net Investment Loss, if any, with respect to such account for the period from the immediately preceding Determination Date to the current Determination Date. If the Servicer advances funds to cover a shortfall in any Custodial Account or Escrow Account due to a late payment on a Permitted Investment, the Servicer may withdraw the amount of such advance when the late payment on the Permitted Investment is made.

(c) Except as otherwise expressly provided in this Agreement, if any default occurs in the making of a payment due under any Permitted Investment, or if a default occurs in any other performance required under any Permitted Investment, the Servicer may and, upon the request of the Owner shall, take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate proceedings, it being understood that the Servicer will duly observe subsection (b) of this Section 4.16 notwithstanding any action taken or to be taken by the Servicer in accordance with this subsection (c) . The Servicer shall be responsible for all costs, expenses, fees, loss and damages, if any, resulting from taking any action contemplated under this Section 4.16(c) .

Section 4.17. Government Sponsored Programs and Legislation . In response to economic events, federal, state and local authorities have enacted new legislation, rules, programs and regulations relating to the origination, servicing and modification of mortgage loans. Although the Servicer may be participating in HAMP and other government sponsored programs, the Servicer hereby agrees and acknowledges that it shall make modifications with respect to the Mortgage Loans only to the extent such modifications comply with the provisions of Section 4.01 . Additionally, the Parties agree that the Servicer may be required in the future to participate in other government or industry-sponsored programs or be bound by government legislation or regulations that may materially affect the terms of this Agreement. Notwithstanding such participation, to the extent permitted under Applicable Regulations, the Servicer shall only offer modifications that comply with the provisions of Section 4.01 . Notwithstanding the foregoing, unless otherwise directed by the Owner or required under Applicable Regulations, the Servicer will not participate in HAMP or other government sponsored programs with respect to any Mortgage Loans, unless the modifications of such Mortgage Loans were in process as of the related Servicing Transfer Date.

Section 4.18. Servicing Requirements Imposed by Prior Sellers and Financing Parties . The Servicer acknowledges that the Owner may acquire Mortgage Loans under a Mortgage Loan Purchase Agreement pursuant to which the Owner (and its assigns) may be obligated to undertake or continue certain actions, or to not take certain actions, with respect to the Mortgage Loans, to meet certain timelines relating to such Mortgage Loans and to cooperate with respect to certain matters arising with respect to such Mortgage Loans (“ Third Party Servicing Requirements ”). In addition, an Owner may finance Mortgage Loans with one or more Financing Parties that may impose Third Party Servicing Requirements on the Owner or its servicer. The Owner shall cause any Third Party Servicing Requirements arising under a Mortgage Loan Purchase Agreement or in connection with a Financing Party to be set forth or referenced in the related Acknowledgement Agreement or in such other manner as mutually agreed by the Owner and the Servicer. To the extent referenced in the applicable Acknowledgment Agreement, the Servicer shall perform such Third Party Servicing Requirements arising on and after the Servicing Transfer Date and shall take such actions as are necessary for the Owner to remain in compliance with such Third Party Servicing Requirements following the related Servicing Transfer Date.

Section 4.19. Disaster Recovery Plan . The Servicer shall maintain its current business continuity plan (“ BCP ”) that addresses the continuation of services if an incident (act or omission) impairs or disrupts the Servicer’s obligation to provide the services contemplated under this Agreement. The Servicer agrees to provide the Owner with a summary of the material terms of its BCP upon the Owner’s request and shall provide the Owner with access to review a copy of the entire BCP. The Servicer warrants that the BCP conforms to generally accepted industry standards for business continuity planning (collectively, the “ BCP Standards ”), which include, but are not limited to, recovery strategy, loss of critical personnel, restoring access to documents and data to the Owner, documented recovery plans covering all areas of operations pursuant to this Agreement, vital records protection and testing plans. Consistent with Acceptable Servicing Practices, the Servicer will maintain and test the BCP at regular intervals (no less frequently than annually) to ensure that the BCP complies with BCP Standards and shall provide reporting of the test results to the Owner. The Servicer shall comply with the BCP during the term of this Agreement. The Servicer shall provide the Owner with prompt notice of any material modification to the BCP made after the date hereof and agrees to cooperate in good faith in addressing any questions or concerns of the Owner regarding such modification.

The Servicer shall provide disaster recovery and backup capabilities and facilities through which it will be able to perform its obligations under this Agreement with minimal disruptions or delays. The recovery strategy shall, at a minimum, provide for recovery after short and long term disruptions in facilities, environmental support, workforce availability and data processing equipment. The Servicer shall notify the Owner immediately of the occurrence of any catastrophic event that affects or could affect the Servicer’s performance of the services contemplated under this Agreement and report to the Owner on at least an annual basis with respect to the effectiveness of its disaster recovery plan. The testing and validation of the Servicer’s disaster recovery plan must occur on at least an annual basis and results of these tests will be provided to the Owner upon request.

The BCP shall include appropriate provisions to ensure the continued availability of critical third-party services and to ensure an orderly transition to new service providers should that become necessary. The Servicer shall undertake commercially reasonable efforts to make requests to any of its third party contractors providing critical services with respect to this Agreement to provide copies of their own business continuity plans or summaries thereof to the Servicer and the Servicer shall make such plans or summaries thereof available to the Owner upon request to the extent so delivered to the Servicer and not subject to a confidentiality agreement.

ARTICLE V

PAYMENTS TO THE OWNER

Section 5.01. Distributions . On each Remittance Date, the Servicer shall remit to each Owner all amounts credited to the Custodial Account as of the close of business on the preceding Determination Date (net of charges against or withdrawals from the Custodial Account pursuant to Section 4.05 ).

All remittances made to the Owner on each Remittance Date shall be made by wire transfer of immediately available funds to the account designated by the Owner at a bank or other entity having appropriate facilities therefor identified by the Owner to the Servicer or by check mailed to the address of the Owner.

With respect to any remittance received by the Owner on or after the Business Day following the Business Day on which such payment was due, the Servicer shall pay to the Owner interest on any such late payment at an annual rate equal to the Prime Rate, adjusted as of the date of each change, plus three percentage points, but in no event greater than the maximum amount permitted by Applicable Regulations. Such interest shall be paid by the Servicer to the Owner on the date such late payment is made and shall cover the period commencing with the day following such Business Day and ending with the Business Day on which such payment is made, both inclusive. Such interest shall be remitted along with such late payment. The payment by the Servicer of any such interest shall not be deemed an extension of time for payment or a waiver of any Event of Default by the Servicer.

The Servicer shall prepare and file any and all tax returns, information statements or other filings required to be delivered to any governmental taxing authority pursuant to any Applicable Regulations with respect to the Mortgage Loans relating to the period the related Mortgage Loans are serviced under this Agreement.

Section 5.02. Statements to the Owner . On each Reporting Date, the Servicer shall submit a Monthly Report for each Owner in electronic format substantially in the form set forth on Exhibit E hereto (or in such other form and manner as may be hereafter mutually agreed upon by the Owner and the Servicer), showing all collections of interest and principal (from whatever source) on the related Mortgage Loans and all collections in respect of the related Mortgaged Properties and REO Properties (including sale proceeds and rental payments) during the calendar month preceding the Reporting Date as well as the amounts, and a detailed description of all Servicing Advances incurred during such calendar month and all distributions from the Custodial Account during such calendar month. The Servicer shall provide separate accounting and reporting for each Owner.

With respect to each month, the corresponding individual loan accounting report shall be received by each Owner no later than the Reporting Date occurring in the following month, which report shall contain the following:

(ii) with respect to each Monthly Payment, the amount of such remittance allocable to principal (including a separate breakdown of any Principal Prepayment, including the date of such prepayment, and any prepayment penalties or premiums, along with a detailed report of interest on principal prepayment amounts);

(iii) with respect to each Monthly Payment, the amount of such remittance allocable to interest and assumption fees;

(iv) the amount of servicing compensation received by the Servicer during such month;

(v) the loan level and aggregate outstanding principal balance of the Mortgage Loans as of the related Determination Date;

(vi) the loan level and aggregate of any Servicing Advances and other expenses made and reimbursed to the Servicer during such month;

(vii) a listing of (a) the paid-through date of each Mortgage Loan, (b) the Mortgage Loans as to which foreclosure has commenced, (c) the Mortgage Loans with respect to which the related borrowers that have declared bankruptcy; and (d) the Mortgage Loans as to which REO Property has been acquired; and

(viii) a trial balance, sorted in the Owner’s assigned loan number order.

The Servicer also shall provide the Owner a monthly report of legal action(s) by individual Mortgagor(s) relating to the Mortgage Loans and against the Servicer or the Owner.

In addition, the Servicer will provide the Owner with daily on‑line access to loan level servicing information relating to the applicable Mortgage Loans contained on its loan servicing system. Within five (5) Business Days from receipt of the Owner’s request, the Servicer shall provide the Owner with loan-level servicing system collection comments and such other servicing system data as the Owner may reasonably request (in a format mutually agreed to by the Servicer and the Owner), including copies of invoices relating to Servicing Advances made pursuant to this Agreement. The Owner shall be responsible for the fees set forth on the Fee Letter with respect to web-system access.

Section 5.03. Real Estate Owned Property and Specially Serviced Loan Reports . Together with the statement furnished pursuant to Section 5.02 , with respect to any REO Property, the Servicer shall furnish to the Owner a statement covering the Servicer’s efforts in connection with the sale of such REO Property and any rental of such REO Property incidental to the sale thereof for the previous month, together with an operating statement. Such statement shall be in electronic media which will include the listing price, the anticipated sale price and the anticipated closing date. Additionally, with respect to any Mortgage Loan which has been delinquent for ninety (90) days or more and any REO Property, the Servicer shall furnish to the Owner a statement in electronic media which will include all information reasonably required by the Owner including, but not limited to: the reason for default, the current status of such Mortgage Loan (whether in foreclosure, bankruptcy, work-out or being resolved), the last comment on the account, the last paid date, the template dates from the servicing system (such as the estimated sale date), and the first legal action.

Upon the foreclosure sale of any Mortgaged Property or the acquisition thereof by the Owner pursuant to a deed in lieu of foreclosure, the Servicer shall submit to the Owner a liquidation report with respect to such Mortgaged Property. The Servicer must submit foreclosure sale results to the Owner for all Mortgage Loans within five (5) Business Days after the foreclosure sale is held, in a form acceptable to the Owner.

Section 5.04. Nonrecoverability; Reimbursement of the Servicer . Notwithstanding anything herein to the contrary, no Servicing Advance shall be required to be made hereunder if such Servicing Advance would, if made, constitute a Nonrecoverable Servicing Advance, unless otherwise directed by the Owner. The determination by the Servicer that any proposed Servicing Advance would constitute a Nonrecoverable Servicing Advance shall be evidenced by an Officer’s Certificate of the Servicer, delivered to the Owner with the following month’s Remittance Report, which details the reasons for such determination and contains an appraisal or broker price opinion of the value of the Mortgaged Property.

As of each Determination Date, to the extent that amounts deposited into the Custodial Account since the preceding Determination Date are insufficient to reimburse the Servicer for any unreimbursed Servicing Advance previously made by the Servicer and to pay the applicable Servicing Fees due to the Servicer, the Owner shall reimburse the Servicer for such unreimbursed amount and such accrued and unpaid Servicing Fee within ten (10) Business Days of receipt from the Servicer of an invoice for such unreimbursed amount.

Section 5.05. Principal and Interest Advances . The Servicer shall not have any obligations to advance payments of delinquent principal and interest on the Mortgage Loans unless the Servicer and the Owner agree by amendment to this Agreement to provide for such obligations.

ARTICLE VI

GENERAL SERVICING PROCEDURES

Section 6.01. Assumption Agreements . With respect to each Mortgage Loan the Servicer will, to the extent it has knowledge of any conveyance or prospective conveyance by any Mortgagor of the Mortgaged Property (whether by absolute conveyance or contract of sale, and whether or not the Mortgagor remains or is to remain liable under the Mortgage Note and/or the Mortgage), exercise its right to accelerate the maturity of such Mortgage Loan under any “due-on-sale” clause applicable thereto; provided , however , that the Servicer shall not exercise any such rights (a) if prohibited by law from doing so, or (b) if the exercise of such rights would impair or threaten to impair any recovery under the related Primary Insurance Policy or LPMI Policy, if any. If the Servicer reasonably believes it is unable under Applicable Regulations to enforce such “due-on-sale” clause, the Servicer will enter into an assumption agreement with the Person to whom the Mortgaged Property has been conveyed or is proposed to be conveyed, pursuant to which such Person becomes liable under the Mortgage Note and, to the extent permitted by applicable state law, the Mortgagor remains liable thereon. Where an assumption is allowed pursuant to this Section 6.01 , the Servicer, with the prior written consent of the primary mortgage insurer, if any, and to the extent required by the applicable Primary Insurance Policy, is authorized to prepare a substitution of liability agreement and any other document required in connection therewith to be entered into by the Owner and the Person to whom the Mortgaged Property has been conveyed or is to be proposed to be conveyed pursuant to which the original Mortgagor is released from liability and such Person is substituted as Mortgagor and becomes liable under the related Mortgage Note. Any such substitution of liability agreement shall be in lieu of an assumption agreement.

Notwithstanding anything herein to the contrary, prior to its entering into any such assumption or substitution of liability, the Servicer shall notify the Owner in writing and obtain the written consent of the Owner; provided , that the Owner’s consent shall be deemed given if not denied within five (5) Business Days of Owner’s receipt of such notice. In connection with any such assumption or substitution of liability, the Servicer shall follow the underwriting practices and procedures of prudent mortgage lenders in the respective states where the Mortgaged Properties are located. With respect to an assumption or substitution of liability, no material term of the Mortgage Loan may be changed, including without limitation, the Mortgage Interest Rate borne by the related Mortgage Note and the amount of the Monthly Payment. The Servicer shall notify the Owner that any such substitution of liability or assumption agreement has been completed and forward to the Custodian the original of any such substitution of liability or assumption agreement, which document shall be added to the related Mortgage Loan Documents and shall, for all purposes, be considered a part of such Mortgage Servicing File to the same extent as all other documents and instruments constituting a part thereof.

The Servicer shall forward to the Custodian or, at the request of the Owner, to the Owner or its designee, original documents evidencing an assumption, modification, consolidation or extension of any Mortgage Loan entered into in accordance with this Agreement within ten (10) Business Days of their execution; provided , however , that the Servicer shall provide the Custodian with the certified true copy of any such documents submitted for recordation within two weeks of its execution, and shall provide the original of any document submitted for recordation or copy of such document certified by the appropriate public recording office to be a true and complete copy of the original within ninety days of its submission for recordation.

Section 6.02. Satisfaction of Mortgages and Release of Mortgage Servicing Files . Upon the payment in full of any Mortgage Loan, or the receipt by the Servicer of a notification that payment in full will be escrowed in a manner customary for such purposes, the Servicer shall notify the Owner in accordance with Applicable Regulations that all amounts received or to be received in connection with such payment which are required to be deposited in the Custodial Account pursuant to Section 4.04 have been or will be so deposited, and shall request execution of any document necessary to satisfy the Mortgage Loan and delivery to it the portion of the Mortgage File held by the Owner or the Custodian. Upon receipt of such notice, the Owner shall, or shall instruct the Custodian to, promptly release the related mortgage documents to the Servicer and the Servicer shall prepare and process any satisfaction or release. The Owner agrees to use its reasonable efforts to cause the Custodian to deliver to the Servicer the original Mortgage Note for any Mortgage Loan not later than ten (10) Business Days after notification, or such earlier time necessary to assure that the Servicer will not be penalized under Applicable Regulations, following its receipt of a notice from the Servicer that such a payment in full has been received or that a notification has been received that such a payment in full shall be made. The Servicer shall use reasonable efforts to provide a follow-up notice to the Owner in the event that the Owner (or Custodian, as applicable) does not provide any such Mortgage Note to the Servicer within five (5) Business Days following its receipt of such notice from the Servicer to the extent that the Servicer determines that the Owner would otherwise miss a deadline for delivery of the satisfaction of such Mortgage Note.

In the event the Servicer grants a satisfaction or release of a Mortgage without having obtained payment in full of the indebtedness secured by the Mortgage (other than in connection with loss mitigation activity related to a defaulted Mortgage Loan allowed under this Agreement and consistent with Acceptable Servicing Practices), the Servicer shall, at Owner’s option, remit to or on behalf of the Owner the actual unpaid principal balance of the related Mortgage Loan (after taking into account payments received with respect to such Mortgage Loan), including any accrued and unpaid interest thereon, by deposit thereof in the Custodial Account or by wire transfer to Owner of immediately available funds. The Fidelity Bond maintained by the Servicer shall insure the Servicer against any loss it may sustain with respect to any Mortgage Loan not satisfied in accordance with the procedures set forth herein.

From time to time and as appropriate for the servicing or foreclosure of each Mortgage Loan, including for this purpose collection under any Primary Insurance Policy or LPMI Policy, the Owner or the Custodian, as the case may be, shall, upon request of the Servicer and delivery to the Owner or the Custodian, as the case may be, of a servicing receipt signed by a Servicing Officer, release the Mortgage Loan Documents held by the Owner or the Custodian, as the case may be, to the Servicer. Such servicing receipt shall obligate the Servicer to return the related Mortgage documents to the Owner or the Custodian, as the case may be, when the need therefor by the Servicer no longer exists, unless the Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been deposited in the Custodial Account.

Section 6.03. Servicing Compensation . As part of its compensation for its services hereunder, the Servicer shall be entitled to the Servicing Fees payable with respect to the Mortgage Loans and shall be entitled to withdraw the same from the Custodial Account or to be paid by the Owner to the extent not otherwise paid to, or received by, the Servicer. Additionally, the Servicer also shall be entitled to retain all Ancillary Income paid with respect to each Mortgage Loan, other than prepayment penalties, which are payable to the Owner.

With respect to any calendar month, in the event there are insufficient funds in the Custodial Account to pay the Servicer its Servicing Fees or to reimburse the Servicer for Servicing Advances, within five (5) Business Days following the related Determination Date, the Servicer shall provide the Owner with an invoice reflecting all items for which the Servicer is entitled to payment under this Agreement relating to the prior calendar month, together with customary backup support evidencing Servicing Advances made and Servicing Fees earned. The Owner shall remit such unpaid funds to the Servicer within five (5) Business Days from the date the Owner receives such invoice.

Section 6.04. Statement of Compliance . Not later than June 30 ^th of each calendar year commencing in 2016, the Servicer shall deliver to the Owner an Officer’s Certificate (each, an “ Annual Statement of Compliance ”) stating, as to each signatory thereof, that (i) a review of the activities of the Servicer during the preceding fiscal year of the Servicer and of performance under this Agreement has been made under such officers’ supervision and (ii) to the best of such officer’s knowledge, based on such review, the Servicer has fulfilled all of its obligations under this Agreement in all material respects throughout such year, or, if there has been a default in the fulfillment of any such obligation in any material respect, specifying each such default known to such officer and the nature and status thereof.

Section 6.05. Annual Independent Certified Public Accountants’ Servicing Report .

(a) The Servicer shall deliver to the Owner, not later than June 30 ^th of each year commencing in 2016, at its expense, from a firm of independent public accountants which is a member of the American Institute of Certified Public Accountants, a statement to the Owner to the effect that such firm has examined certain documents and records relating to the servicing of residential mortgage loans by the Servicer during the preceding fiscal year of the Servicer and that such firm is of the opinion that the provisions of this or similar Agreements have been complied with, and that, on the basis of such examination conducted substantially in compliance with the Uniform Single Attestation Program for Mortgage Bankers, nothing has come to their attention which would indicate that such servicing has not been conducted in compliance therewith, except for (i) such exceptions as such firm shall believe to be immaterial, and (ii) such other exceptions as shall be set forth in such statement.

(b) In lieu of the statement required pursuant to clause (a) above, the Servicer may provide the Owner with (i) a report (in form and substance reasonably satisfactory to the Owner) regarding the Servicer’s assessment of compliance with the Servicing Criteria during the preceding fiscal year, as required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB, and (ii) a report of a registered public accounting firm reasonably acceptable to the Owner that attests to, and reports on, the assessment of compliance made by the Servicer and delivered pursuant to the preceding clause (b)(i) , which attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act. By providing the Owner a copy of each report set forth in this clause (b) on an annual basis as described above, the Servicer shall be considered to have fulfilled its obligations under this Subsection 6.05 .

Section 6.06. Reports of Foreclosures and Abandonment of Mortgaged Property . The Servicer shall file, or cause to be filed, the information returns with respect to the receipt of mortgage interest received in a trade or business, the reports of foreclosures and abandonments of any Mortgaged Property and the information returns relating to cancellation of indebtedness income with respect to any Mortgaged Property required by Sections 6050H, 6050J, 6050P and any comparable or successor provisions of the Code, respectively. Such reports shall be in form and substance sufficient to meet the reporting requirements imposed by Sections 6050H, 6050J, 6050P of the Code and any comparable or successor provisions.

Section 6.07. Compliance with Privacy Laws .

(a) The Servicer shall comply with Applicable Law relating to privacy rights in connection with its performance under this Agreement including, without limitation, the GLBA as well as any Applicable Regulations relating to the protection or security of Consumer Information (the " Privacy Laws "). The Servicer agrees and acknowledges that as to all Consumer Information received or obtained by it with respect to any Mortgagor, the Servicer is hereby prohibited from disclosing or using any such information internally other than to carry out the express provision of this Agreement.

(b) Each party shall implement such physical and other security measures as shall be necessary to (a) ensure the security and confidentiality of Consumer Information which it has possession of or control over, (b) protect against any threats or hazards to the security and integrity of such Consumer Information, and (c) protect against any unauthorized access to or use of such Consumer Information.

(c) Each party shall notify the other party immediately (i.e., within twenty-four (24) hours) following discovery of any suspected breach or compromise of the security, confidentiality, or integrity of any Consumer Information. Each party shall provide follow-up written notification within one (1) Business Day to the other party in accordance with Section 10.04 . Written notification provided pursuant to this clause (c) shall include a brief summary of the available facts, the status of the such party's investigation, and, in the case of the Servicer, if known, the potential number of Mortgagors affected, if applicable.

Section 6.08. Reporting . With respect to the period that the related Mortgage Loans are being serviced by the Servicer, the Servicer shall prepare promptly each report required by Applicable Regulations including reports to be delivered to all governmental agencies having jurisdiction over the servicing of the Mortgage Loans and the Escrow Accounts, shall execute such reports or, if the Owner must execute such reports, shall deliver such reports to the Owner for execution prior to the date on which such reports are due and shall file such reports with the appropriate Persons. The Servicer shall timely prepare and deliver to the appropriate Persons Internal Revenue Service forms 1098, 1099 and 1099A (or any similar replacement, amended or updated Internal Revenue Service forms) relating to any Mortgage Loan for the time period such Mortgage Loan has been serviced by the Servicer. The Owner shall be solely responsible for filing any other forms including, without limitation and to the extent applicable, forms 1041 and K-1 or any similar replacement, amended or updated Internal Revenue Service forms. The reports to be provided under this section shall cover the period through the end of the month following the termination of this Agreement or, in the case of reports to be sent to the Internal Revenue Service, the end of the calendar year following termination of the Agreement. To the extent it is an Acceptable Servicing Practice, the Servicer shall promptly prepare all reports or other information required to respond to any inquiry from, or give any necessary instructions to, any mortgage insurer, provider of hazard insurance or other insurer or guarantor, taxing authority, tax service, or the Mortgagor.

Section 6.09. Fair Credit Reporting Act . With respect to each Mortgage Loan, the Servicer shall fully furnish, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (e.g., favorable and unfavorable) on its borrower credit files to Equifax, Experian and Trans Union Credit Information Company or their successors on a monthly basis.

Section 6.10. Sanctions Lists; Suspicious Activity Reports .

(b) The Servicer shall screen all existing Mortgagors and related mortgage participants upon any update to the Sanction Lists. Additionally, the Servicer will screen, or take appropriate steps to ensure any Vendor engaged by the Servicer will screen applicable wire and ACH transactions against the Sanctions Lists. The Servicer’s policies and procedures shall detail steps (i) to identify and resolve potential matches against the Sanction Lists, (ii) to escalate all potential matches to the Owner for mandatory review, and (iii) required for record retention in accordance with Applicable Law.

(c) The Servicer shall maintain, policies, procedures, training and internal controls reasonably designed to detect and investigate potential suspicious activity and fraud by Mortgagors and related mortgage participants in compliance with the requirements of this Section 6.10 . The Servicer will promptly disclose to the Owner potentially suspicious or unusual activity detected as part of the services performed on behalf of the Owner. The Servicer shall coordinate the filing of any necessary Suspicious Activity Reports (“ SARs ”) with respect to the Mortgagors and related mortgage participants with the Owner, if appropriate, and will maintain records of all such SARs filed and investigations performed in accordance with Applicable Law. The Servicer shall maintain reasonably adequate policies and procedures detailing steps (i) to conduct investigations in a timely manner that is consistent with Applicable Law, (ii) to maintain appropriate records for reviews, investigations and escalations, and (iii) if applicable, to review requests made pursuant to Section 314(a) of the USA Patriot Act through the Financial Crimes Enforcement Network.

(d) On a case-by-case basis, the Owner may request additional documentation from the Servicer as it relates to the requirements and subject matter of this Section 6.10 if such documentation is warranted to address potential law enforcement requests, regulatory inquiries, compliance testing, and any general inquiry and the Servicer agrees to fully cooperate with the Owner in obtaining and providing such additional information.

ARTICLE VII

THE SERVICER

Section 7.01. Indemnification; Third Party Claims .

(c) Subject to Section 7.03 , the Servicer agrees to indemnify the Owner and its present and former officers, directors, employees and agents and hold them harmless against any and all claims, losses, penalties, fines, forfeitures, legal fees (including legal fees incurred in connection with the enforcement of the Servicer’s indemnification obligation under this Section 7.01 ) and related costs, judgments, and any other costs, fees and expenses that the Owner or such Persons may sustain in any way which arise from (i) the failure of the Servicer to perform its duties and service the Mortgage Loans in strict compliance with the terms of this Agreement or (ii) the breach of any representation, warranty, covenant or agreement made by the Servicer hereunder. The Servicer shall not be liable, and assumes no liability, arising out of any act or omission to act of any servicer or sub-servicer (other than the Servicer), owner or originator of the Mortgage Loans or REO Properties before the related Servicing Transfer Date. Furthermore, the Servicer shall not be liable to the Owner with respect to action taken by the Servicer, or for refraining from taking any action, with respect to any Mortgage Loan or REO Property at and in conformity with the written direction of the Owner or for liability caused by or resulting from a delay occasioned by the Owner’s objection to a proposal by the Servicer hereunder, or for any liability caused by or resulting from the Owner’s breach of a representation or warranty herein or for any liability incurred by reason of the Owner’s willful misfeasance, bad faith or negligence in acting or refraining from acting or any failure of performance.

(d) The Owner agrees to indemnify the Servicer and its respective present and former officers, directors, employees and agents and hold them harmless against any and all claims, losses, penalties, fines, forfeitures, legal fees (including legal fees incurred in connection with the enforcement of the Owner’s indemnification obligation under this Section 7.01 ) and related costs, judgments, and any other costs, fees and expenses that the Servicer or such Persons may sustain in any way which arise from or are in connection with (i) the breach of any representation, warranty, covenant or agreement made by the Owner hereunder, (ii) any actions or omissions in respect of any Mortgage Loan or REO Property of any prior servicer or sub-servicer (other than the Servicer), owner or originator of a Mortgage Loan or REO Property and (iii) the Servicer’s taking of any action, or refraining from the taking of any action, with respect to any Mortgage Loan or REO Property at the written direction of the Owner.

(e) Promptly after receipt by an indemnified party under this Section 7.01 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7.01 , notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve the indemnifying party from any liability which it may have to any indemnified party under this Section 7.01 , except to the extent that it has been prejudiced in any material respect, or from any liability which it may have, otherwise than under this Section 7.01 . In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party or parties shall have reasonably concluded that there may be legal defenses available to it or them and/or other indemnified parties which are different from or additional to those available to the indemnifying party, then the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party for expenses incurred by the indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (together with one local counsel, if applicable), approved by the Owner in the case of subsection (a) , (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized in writing the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii) .

Section 7.02. Merger or Consolidation of the Servicer . The Servicer will keep in full effect its existence, rights and authorizations to service the Mortgage Loans in all states in which Mortgaged Property is located, and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is, or shall be, necessary to protect the validity and enforceability of this Agreement or any of the Mortgage Loans and to perform its duties under this Agreement.

Any Person into which the Servicer may be merged or consolidated, or any corporation, limited liability company or other entity resulting from any merger, conversion or consolidation to which the Servicer shall be a party, or any Person succeeding to the business of the Servicer, or any Person acquiring all or substantially all of the assets of the Servicer, shall be the successor of the Servicer 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; provided , however , that the successor or surviving party (i) be an established mortgage loan servicing institution that is a Fannie Mae or Freddie Mac approved seller/servicer in good standing and (ii) have a net worth of not less than $15,000,000.

Section 7.03. Limitation on Liability of the Servicer and Others . Except as otherwise provided in Section 7.01 , neither the Servicer nor any of the directors, officers, employees or agents of the Servicer shall be liable to the Owner for any action taken or for refraining from the taking of any action in good faith pursuant to this Agreement, or for errors in judgment; provided , however , that this provision shall not protect the Servicer or any such person against any failure to perform its obligations in strict compliance with this Agreement. The Servicer and any director, officer, employee or agent of the Servicer may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder. The Servicer shall be entitled to rely upon any notice, document, correspondence, request, directives or other communication received by it from the Owner that the Servicer believes to be genuine and to have been signed or presented by an authorized officer or representative of the Owner, and shall not be obligated to inquire as to the authority or power of any Person so executing or presenting any notice, document, correspondence, request, directive or other communication or as to the truthfulness of any statements therein. Except as otherwise set forth herein, the Servicer shall not be under any obligation to appear in, prosecute or defend any legal action which is not incidental to its duties to service the Mortgage Loans in accordance with this Agreement and which in its opinion may involve it in any expenses or liability; provided , however , that the Servicer may undertake any such action which it may deem necessary or desirable in respect to this Agreement and the rights and duties of the parties hereto. In such event, the reasonable legal expenses and reasonable costs of such action and any liability resulting therefrom shall be expenses, costs and liabilities for which the Owner will be liable, and the Servicer shall be entitled to be reimbursed therefor from the Owner upon written demand.

NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE PARTIES AGREE HERETO THAT NO PARTY HERETO SHALL BE LIABLE TO ANY OTHER PARTY HERETO FOR ANY SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES WHATSOEVER, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR ANY OTHER LEGAL OR EQUITABLE PRINCIPLES; PROVIDED , THAT, THE FOREGOING PROVISION SHALL NOT LIMIT OR RELIEVE ANY PARTY HERETO OF ANY OBLIGATION UNDER THIS AGREEMENT TO INDEMNIFY ANY OTHER PARTY HERETO AGAINST ANY DAMAGES IMPOSED UPON SUCH PARTY BY A FINAL ORDER OF ANY COURT OF COMPETENT JURISDICTION IN CONNECTION WITH ANY LEGAL ACTION BROUGHT AGAINST SUCH PARTY HERETO BY ANY THIRD PARTY.

Section 7.04. Transactions with Related Persons . In carrying out its obligations and duties under this Agreement, the Servicer may not contract with its affiliates without the prior written consent of the Owner to the extent the costs or fees for providing services by such affiliates shall be reimbursable by the Owner hereunder.

Section 7.05. Servicer Not to Resign . The Servicer shall not assign this Agreement or resign from the obligations and duties hereby imposed on it except: (a) as otherwise set forth in this Agreement; (b) by mutual consent of the Servicer and the Owner; or (c) upon the determination that its duties hereunder are no longer permissible under Applicable Regulations and such incapacity cannot be cured by the Servicer; provided , however , that the Servicer shall not be entitled to any Deboarding Fees or Termination Fees in connection with a resignation pursuant to this clause (c) . Any such determination permitting the resignation of the Servicer shall be evidenced by an opinion of counsel to such effect delivered to the Owner, which opinion of counsel shall be in form and substance acceptable to the Owner. No such resignation shall become effective until a successor shall have assumed the Servicer’s responsibilities and obligations hereunder in the manner provided in Section 10.01 .

ARTICLE VIII

DEFAULT

Section 8.01. Events of Default . Each of the following shall constitute an Event of Default by the Servicer:

(b) any failure by the Servicer to remit to the Owner any payment required to be made under the terms of this Agreement which continues unremedied for a period of one (1) Business Day after the date upon which written notice of such failure, requiring the same to be remedied, shall have been given to the Servicer by the Owner;

(c) any failure by the Servicer duly to observe or perform in any material respect any other of the covenants or agreements on the part of the Servicer set forth in this Agreement which continues un-remedied for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Servicer by the Owner;

(d) a decree or order of a court or agency or supervisory authority having jurisdiction for the appointment of a conservator or receiver or liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the Servicer and such decree or order shall have remained in force undischarged or unstayed for a period of sixty (60) days;

(e) the Servicer shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of assets and liabilities or similar proceedings of or relating to the Servicer or of or relating to all or substantially all of its property;

(f) the Servicer ceases to meet the qualifications of a Fannie Mae or Freddie Mac servicer and such approvals are not reinstated within thirty (30) days;

(g) the Servicer shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations; or

(h) any failure by the Servicer to maintain the material licenses to do business in any jurisdiction where the Mortgaged Property is located, but only to the extent such non-qualification materially and adversely affects such Party’s ability to perform its obligations hereunder;

then, and in each and every such case, so long as an Event of Default shall not have been remedied, the Owner, by notice in writing to the Servicer may, in addition to whatever rights the Owner may have at law or in equity to damages, including injunctive relief and specific performance, terminate all the rights and obligations of the Servicer as servicer under this Agreement in accordance with Section 9.04 . On or after the receipt by the Servicer of such written notice, all authority and power of the Servicer to service the Mortgage Loans under this Agreement shall on the date set forth in such notice pass to and be vested in the successor appointed pursuant to Section 10.01 .

Section 8.02. Waiver of Defaults . The Owner may waive any default by the Servicer in the performance of its obligations hereunder and its consequences. Upon any such waiver of a past default, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereon except to the extent expressly so waived.

ARTICLE IX

TERM; TERMINATION

Section 9.01. Term . This Agreement shall not be subject to a specific term; provided , however , that in the event the Owner elects to terminate this Agreement with respect to all of the Mortgage Loans without cause pursuant to Section 9.03(a) prior to the end of twenty-four (24) month period commencing on the date of this Agreement, the Owner shall pay the Servicer the applicable Termination Fee.

Section 9.02. Termination . This Agreement shall terminate upon any of the following: (i) the later of the final payment or other liquidation (or any advance with respect thereto) of the last Mortgage Loan or the disposition of any remaining REO Property and the remittance of all funds due hereunder; (ii) the mutual consent of the Servicer and the Owner in writing; (iii) termination by the Servicer or the Owner with or without cause under the terms of this Agreement; (iv) with respect to the related Mortgage Loans, a Securitization Transaction pursuant to Section 10.13 ; or (v) as soon as practicable, but no longer than thirty (30) days, after the expiration or earlier termination of that certain Asset Management Agreement, dated as of December 21, 2012, between Altisource Residential Corporation and Altisource Asset Management Corporation. The termination of this Agreement pursuant to this Article IX shall not release either party from liability for its own misrepresentation or for any breach by it of any covenant, agreement, representation or warranty herein arising prior to such termination.

Section 9.03. Termination Without Cause .

(a) The Owner may terminate, at its sole option, any rights the Servicer may have hereunder, without cause, as provided in this Section 9.03(a) with respect to one or more Mortgage Loans upon sixty (60) days prior written notice to the Servicer. In the event that the Servicer is terminated pursuant to this Section 9.03(a) , the Owner shall, subject to Section 9.01 , (i) pay the Servicer an amount equal to (1) the applicable Deboarding Fees and (2) all outstanding Servicing Advances and Servicing Fees (to the extent earned) and (ii) the Owner shall be responsible for all Servicing Transfer Costs and shall reimburse the Servicer for all Servicing Transfer Costs incurred by the Servicer within ten (10) Business Days of receipt of an invoice for such costs.

(b) Other than during the twelve (12) month period following the date of this Agreement, the Servicer may terminate, at its sole option, its obligations under this Agreement upon ninety (90) days prior written notice. Any such notice of termination shall be in writing and delivered to the Owner by registered mail as provided in Section 10.04 . If the event the Servicer terminates this Agreement pursuant to this Section 9.03(b) , (i) the Owner shall pay the Servicer all outstanding Servicing Advances and Servicing Fees (to the extent earned), but the Servicer shall not be entitled to any Deboarding Fees or Termination Fees and (ii) the Servicer shall be responsible for all Servicing Transfer Costs and shall reimburse the Owner for all Servicing Transfer Costs incurred by the Owner within ten (10) Business Days of receipt of an invoice for such costs.

Section 9.04. Termination with Cause . So long as an Event of Default shall have occurred and shall not have been remedied, the Owner, by notice in writing to the Servicer, may, in addition to whatever rights such party may have at law or equity to damages, including injunctive relief and specific performance, terminate all the rights and obligations of the Servicer under this Agreement. In the event the Owner terminates Servicer pursuant to this Section 9.04 , (i) the Owner shall pay the Servicer all outstanding Servicing Advances and Servicing Fees (to the extent earned), but the Servicer shall not be entitled to any Deboarding Fees or Termination Fees and (ii) the Servicer shall be responsible for all Servicing Transfer Costs and shall reimburse the Owner for all Servicing Transfer Costs incurred within ten (10) Business Days of receipt of an invoice for such costs.

Section 9.05. Transfer Procedures . In the event the Servicer is replaced or otherwise transfers servicing with respect to one or more Mortgage Loans pursuant to the terms of this Agreement, the Servicer agrees to cooperate with the Owner and with any party designated as the successor servicer or subservicer in transferring the servicing to such successor servicer. In addition, the Servicer shall be responsible for notifying the related mortgagors of any transfer of servicing in accordance with the requirements of the RESPA and the Cranston Gonzalez National Affordable Housing Act of 1990. On or before the Transfer Date with respect to one or more Mortgage Loans, the Servicer shall prepare, execute and deliver to the successor servicer any and all documents and other instruments, place in such successor’s possession all Mortgage Loan Documents necessary or appropriate to effect the purposes of such notice of termination, including but not limited to the transfer and endorsement or assignment of the related Mortgage Loans and related documents. If such transfer of servicing relates to a termination of the Servicer pursuant to Section 7.05(c) , Section 9.03(b) or Section 9.04 , such actions shall be undertaken at the Servicer’s sole expense, but shall otherwise be at the sole expense of the Owner. The Servicer shall reasonably cooperate with the Owner and the successor servicer in effecting the termination of the Servicer’s responsibilities and rights hereunder with respect to one or more Mortgage Loans.

In the event of a servicing transfer to a successor servicer, the Servicer shall comply with all Applicable Regulations with respect to servicing transfers. In addition, the Servicer shall comply with the CFPB’s rules and/or guidelines with respect to servicing transfers, including without limitation its Bulletin 2014-1 issued on August 19, 2014. The Servicer and the Owner shall provide all reasonable cooperation and assistance as may be requested by the other party in connection with compliance with such rules and/or guidelines. The Servicer and the Owner shall cooperate after the applicable Transfer Date to promptly resolve all customer complaints, disputes and inquiries related to activities that occurred prior to such transfer date or in connection with the transfer of servicing.

The Servicer shall be entitled to be reimbursed for all unreimbursed Servicing Advances and accrued and unpaid Servicing Fees, to the extent earned, and for any trailing expenses representing Servicing Advances for which invoices are received after the Transfer Date within ten (10) Business Days of receipt of invoices for such amounts.

ARTICLE X

MISCELLANEOUS PROVISIONS

Section 10.01. Successor to the Servicer . Prior to the termination of the Servicer’s responsibilities and duties under this Agreement pursuant to Section 7.05 , 8.01 or Article IX , the Owner shall succeed to and assume all of the Servicer’s responsibilities, rights, duties and obligations under this Agreement or appoint a successor which shall succeed to all rights and assume all of the responsibilities, duties and liabilities of the Servicer under this Agreement prior to the termination of the Servicer’s responsibilities, duties and liabilities under this Agreement. In connection with such appointment and assumption, the Owner may make such arrangements for the compensation of such successor out of payments on Mortgage Loans as it and such successor shall agree. In the event that the Servicer’s duties, responsibilities and liabilities under this Agreement should be terminated pursuant to the aforementioned Sections, the Servicer shall discharge such duties and responsibilities during the period from the date it acquires knowledge of such termination until the effective date thereof with the same degree of diligence and prudence which it is obligated to exercise under this Agreement, and shall take no action whatsoever that might impair or prejudice the rights or financial condition of its successor. The resignation or removal of the Servicer pursuant to the aforementioned Sections shall not become effective until the Owner succeeds to or a successor is appointed pursuant to this Section 10.01 .

Any termination or resignation of the Servicer or termination of this Agreement shall not affect any claims that the Owner may have against the Servicer, or any claims that the Servicer may have against the Owner, arising prior to any such termination or resignation.

The Servicer shall timely deliver to the successor the funds in the Custodial Account and the Escrow Account and the Mortgage Servicing Files and Mortgage Notes, if any, and related documents and statements held by it hereunder and the Servicer shall account for all funds. The Servicer shall comply with Section 9.05 and execute and deliver such instruments and do such other things all as may reasonably be required to more fully and definitely vest and confirm in the successor all such rights, powers, duties, responsibilities, obligations and liabilities of the Servicer.

If any of the Mortgage Loans are MERS Designated Mortgage Loans, in connection with the termination or resignation of the Servicer hereunder, the Servicer shall cooperate with the successor servicer either (x) in causing MERS to execute and deliver an assignment of Mortgage in recordable form to transfer the Mortgage from MERS to the Owner and to execute and deliver such other notices, documents and other instruments as may be necessary or desirable to effect a transfer of such Mortgage Loan or subservicing of such Mortgage Loan on the MERS System to the successor servicer or (y) in causing MERS to designate on the MERS System the successor servicer as the subservicer of such Mortgage Loan.

Section 10.02. Amendment . This Agreement may be amended from time to time by the Servicer and the Owner by written agreement signed by the Servicer and the Owner.

Section 10.03. GOVERNING LAW . THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

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Section 10.04. Notices . All demands, notices and communications hereunder shall be in writing and shall be deemed conclusively to have been given if personally delivered at or mailed by registered mail, postage prepaid, and return receipt requested or transmitted by email and confirmed by a similar mailed writing:

(i) in the case of the Servicer:

Servis One, Inc. d/b/a BSI Financial Services
1425 Greenway Drive, Suite 400,
Irving, Texas 75038
Attention: Gagan Sharma, President and CEO
Email: gagan@bsifinancial.com

with a copy to:

Servis One, Inc. d/b/a BSI Financial Services
1425 Greenway Drive, Suite 400,
Irving, Texas 75038
Attention: General Counsel
Email: jdorchuck@bsifinancial.com

(ii) in the case of an Owner:

Altisource Residential, L.P.,
c/o Altisource Asset Management Corporation
402 Strand Street
Frederiksted, VI 00840-3531
Attention: Corporate Secretary
Email: Stephen.Gray@AltisourceAMC.com

or such other address as may hereafter be furnished to the other party by like notice.

Section 10.05. Severability Provisions . If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, the invalidity of any such covenant, agreement, provision or term of this Agreement shall in no way affect the validity or enforceability of the other provisions of this Agreement; provided , however , that if the invalidity of any covenant, agreement or provision shall deprive any party of the economic benefit intended to be conferred by this Agreement, the parties shall negotiate in good faith to develop a structure the economic effect of which is identical to the economic effect of this Agreement.

Section 10.06. Exhibits . The exhibits of this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement.

Section 10.07. General Interpretive Principles . For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(i) 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;

(ii) accounting terms not otherwise defined herein have the meaning assigned to them in accordance with generally accepted accounting principles;

(iii) 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;

(iv) 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;

(v) 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

(vi) the term “include” or “including” shall mean without limitation by reason of enumeration.

Section 10.08. Reproduction of Documents . This Agreement and all documents relating thereto, including, without limitation, (i) consents, waivers and modifications which may hereafter be executed, (ii) documents received by any party at the closing, and (iii) financial statements, certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

Section 10.09. Provision of Information . In addition to the reports required under Section 5.02 during the term of this Agreement, the Servicer shall furnish to the Owner such other periodic, special, or other reports or information, whether or not provided for herein, as shall be necessary, reasonable, and appropriate with respect to the Owner or the purposes of this Agreement. All such other reports or information shall be provided by and in accordance with all reasonable instructions and directions which the Owner may give. The Servicer shall notify the Owner with respect to the estimated cost of preparing any such other reports prior to their preparation. If any such other reports or information require the Servicer to perform any additional programming functions to prepare such reports or information, the costs to prepare such reports or information shall be a Servicing Advance and the Servicer shall be reimbursed for such Servicing Advances pursuant to Section 4.05(ii) .

Section 10.10. Further Assurances . Each party to this Agreement agrees to execute and deliver such instruments and take such actions as the other party may, from time to time, reasonably request to effect the purpose and carry out the terms of this Agreement.

Section 10.11. No Solicitations . From and after the related Servicing Transfer Date, the Servicer agrees that it will not take any action or permit or cause any action to be taken by any of its agents or affiliates, or by any independent contractors on the Servicer’s behalf, to personally, by telephone or mail, solicit the Mortgagor under any Mortgage Loan to refinance a Mortgage Loan without the prior written consent of the Owner. Notwithstanding the foregoing, it is understood and agreed that the following shall not constitute solicitations under this Section 10.11 : (i) promotions undertaken by the Servicer or any affiliate thereof which are directed to the general public at large, including, without limitation, mass mailing based on commercially acquired mailing lists, newspaper, radio, Internet and television advertisements; and (ii) any solicitations made as part of a loss mitigation strategy for any defaulted Mortgage Loan.

Section 10.12. Financial Statements; Servicing Facilities . In connection with marketing the Mortgage Loans, the Servicer shall make available to the Owner or any prospective purchaser a knowledgeable financial or accounting officer for the purpose of answering questions respecting recent developments affecting the Servicer or the financial statements of the Servicer (to the extent such information is generally available to the public), and to permit any prospective purchaser, upon reasonable written notice to the Servicer and at a reasonable time during normal hours of operation for the Servicer, to inspect the Servicer’s servicing facilities for the purpose of satisfying such prospective purchaser that the Servicer has the ability to service the Mortgage Loans and REO Properties in accordance with the provisions of this Agreement.

Section 10.13. Reconstitution . The Servicer and the Owner agree that with respect to some or all of the Mortgage Loans, the Owner may effect one or more Whole Loan Transfers, and/or one or more Securitization Transactions. With respect to each Whole Loan Transfer or Securitization Transaction, as the case may be, entered into by the Owner, the Servicer agrees:

(i) to fully cooperate with the Owner and any prospective purchaser with respect to all reasonable requests and due diligence procedures including, without limitation, making a senior officer or officers of the Servicer available to participate in due diligence calls and meetings with rating agencies, bond insurers and such other parties as the Owner shall designate; to participate in meetings with prospective purchasers of the Mortgage Loans or interests therein, and providing information reasonably requested by such purchasers; and to reasonably cooperate with each applicable Rating Agency and any third-party due diligence provider in any requested pre-securitization loan-level review of the applicable Mortgage Loans and to provide any due diligence reports with respect to the Mortgage Loans and the Servicer that are reasonably requested by any applicable Rating Agency pre- or post-securitization.

(iii) to deliver to the Owner for inclusion in any prospectus or other offering material such publicly available information regarding the Servicer, its financial condition and its mortgage loan delinquency, foreclosure and loss experience and any additional information reasonably requested by the Owner (collectively, the “ Servicer Information ”), and to indemnify the Owner and its affiliates for material misstatements or omissions contained in such information;

(iv) to deliver such statements and audit letters of reputable, certified public accountants pertaining to the Servicer Information as shall be reasonably requested by the Owner;

(v) to cooperate with the Owner and any prospective purchaser with respect to the preparation, endorsement, assignment, or delivery, as the case may be, of any of the Mortgage Loan Documents and other related documents, with respect to servicing requirements reasonably requested by the rating agencies and credit enhancers;

(vi) in connection with any Securitization Transaction, to execute a pooling and servicing agreement, which pooling and servicing agreement may, at the Owner’s direction, contain contractual provisions including, but not limited to, a customary certificate payment delay, servicer advances of delinquent scheduled payments of principal and interest through liquidation (unless deemed non-recoverable) and prepayment interest shortfalls (to the extent of the monthly servicing fee payable thereto), servicing representations and warranties which in form and substance conform to the representations and warranties in this Agreement and to secondary market standards for securities backed by mortgage loans and property similar to the Mortgage Loans and such provisions with regard to servicing responsibilities, investor reporting, segregation and deposit of principal and interest payments, custody of the Mortgage Loans, and other covenants as are required by the Owner and one or more Rating Agencies. If the Owner deems it advisable at any time to pool the Mortgage Loans with other mortgage loans for the purpose of resale or securitization, the Servicer agrees to execute one or more servicing agreements between itself and a master servicer designated by the Owner at the Owner’s sole discretion, and/or one or more servicing agreements among the Servicer, the Owner and a trustee designated by the Owner at the Owner’s sole discretion, such agreements in each case incorporating terms and provisions substantially identical to those described in this paragraph; and

(vii) to negotiate and execute a credit risk management agreement with a credit risk manager designated by the Owner at the Owner’s sole discretion.

The Owner agrees to reimburse the Servicer for all reasonable out-of-pocket costs and expenses (including reasonable legal fees) incurred by the Servicer in connection with assisting the Owner with effecting any Whole Loan Transfer or Securitization Transaction as contemplated herein. All Mortgage Loans not sold or transferred pursuant to a Whole Loan Transfer or Securitization Transaction shall be subject to this Agreement and shall continue to be serviced in accordance with the terms of this Agreement and with respect thereto this Agreement shall remain in full force and effect.

Section 10.14. Jurisdiction; Waiver of Jury Trial . Each of the Owner and the Servicer hereby irrevocably submits to the non-exclusive jurisdiction of the courts of the State of New York sitting in the borough of Manhattan and the Federal Courts of the United States of America for the Southern District of New York and any appellate court thereof in any action or proceeding arising out of or relating to this Agreement, and each of the Owner and the Servicer hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or in such Federal court. Each of the Owner and the Servicer hereby irrevocably consents to the fullest extent permitted under Applicable Regulations, to the service of any summons and complaint and any other process by the mailing of copies of such process to them at their respective address specified in this Agreement. Each of the Owner and the Servicer hereby agrees, to the fullest extent permitted under Applicable Regulations, that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, EACH OF THE OWNER AND THE SERVICER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

Section 10.15. Assignment by the Owner . The Owner shall have the right, without the consent of the Servicer, to assign, in whole or in part, its interest under this Agreement with respect to some or all of the Mortgage Loans and/or REO Properties, and designate any Person to exercise any rights of the Owner hereunder, and the assignee or designee shall accede to the rights, and shall assume all of obligations hereunder, of the Owner with respect to such Mortgage Loans and the REO Properties, including, without limitation the obligation to reimburse the Servicer for any Servicing Advances, with respect to the period following the date of assignment. All references to the Owner in this Agreement shall be deemed to include its assignee or designee.

Section 10.16. Limitation on Assignment by the Servicer . The Owner has entered into this Agreement with the Servicer and, if applicable, subsequent purchasers will purchase the Mortgage Loans in reliance upon the independent status of the Servicer, and the representations as to the adequacy of its servicing facilities, plant, personnel, records and procedures, its integrity, reputation and financial standing, and the continuance thereof. Therefore, the Servicer shall not assign this Agreement or the servicing hereunder or delegate its rights or duties hereunder or any portion hereof without the prior written consent of the Owner, except: (a) as otherwise provided for in this Agreement, or (b) the Servicer, without the consent of the Owner, may retain third party contractors to perform certain servicing and loan administration functions, including without limitation, hazard insurance administration, tax payment and administration, flood certification and administration, collection services and similar functions; provided , that the retention of such contractors by the Servicer shall not limit the obligation of the Servicer to service the Mortgage Loans pursuant to the terms and conditions of this Agreement.

Section 10.17. Compliance with REMIC Provisions . If a REMIC election has been made with respect to the arrangement under which the Mortgage Loans and REO Properties are held, the Servicer shall not take any action, cause the REMIC to take any action or fail to take (or fail to cause to be taken) any action that, under the REMIC Provisions, if taken or not taken, as the case may be, could (i) endanger the status of the REMIC as a REMIC or (ii) result in the imposition of a tax upon the REMIC (including but not limited to the tax on “prohibited transactions” as defined in Section 860F(a)(2) of the Code and the tax on “contributions” to a REMIC set forth in Section 860G(d) of the Code) unless the Servicer has received an opinion of counsel (at the expense of the party seeking to take such action) to the effect that the contemplated action will not endanger such REMIC status or result in the imposition of any such tax.

Section 10.18. Confidentiality .

(a) In connection with this Agreement, the Servicer on one hand and the Owner on the other, intend to disclose to each other and their respective officers, agents, advisors, directors, representatives and employees (“ Representatives ”) certain information regarding the operation, businesses, properties, finances, contractual relationships, policies, procedures and practices of the Servicer and its affiliates on one hand and Owner on the other. The terms of this Agreement and any and all such information disclosed by the Servicer and/or its agents or advisors to the Owner or its Representatives on one hand and by the Owner and/or its agents or advisors to the Servicer or its respective Representatives, whether before or after the date of this Agreement and whether oral or written in whatever form provided, is hereinafter referred to as “ Confidential Information .” Such Confidential Information shall remain the sole property of the Servicer on one hand and the Owner on the other, as applicable and shall be used and handled in accordance with the terms and conditions set forth in this Agreement.

(c) Without the Servicer’s prior written consent, the Owner shall not, or permit any of its Representatives to, disclose to any person or entity the fact that the Servicer has made any Confidential Information available to the Owner, except to the extent that it is appropriate to do so in working with legal counsel, auditors and taxing authorities.

(d) Without the Owner’s prior written consent, the Servicer shall not, or permit any of its Representatives to, disclose to any person or entity the fact that the Owner has made any Confidential Information available to the Servicer, except to the extent that it is appropriate to do so in working with legal counsel, auditors and taxing authorities.

(e) The Owner may disclose any part or portion of the Confidential Information that the Owner is required to disclose pursuant to Applicable Regulations, rule, regulation, subpoena, or similar court process; provided , that the Owner shall (i) notify, to the extent permitted under law, the Servicer in writing prior to any such disclosure so as to provide the Servicer with a reasonable opportunity to seek to enjoin, prevent, stay or defer such disclosures, (ii) to the extent permissible under law, consult and cooperate with the Servicer as to the content, nature, and timing of such disclosure, and (iii) in the event a protective order or another remedy is not timely obtained, disclose only such part or portion of such Confidential Information as is reasonably required pursuant to such law, rule, regulation, subpoena, or other similar process. The Owner and its Representatives shall reasonably cooperate with any of the Servicer’s efforts to obtain reasonable assurance that confidential treatment will be accorded the Confidential Information so disclosed.

(f) The Servicer may disclose any part or portion of the Confidential Information that the Servicer is required to disclose pursuant to Applicable Regulations, rule, regulation, subpoena, or similar court process; provided , that the Servicer shall (i) notify, to the extent permitted under law, the Owner in writing prior to any such disclosure so as to provide the Owner with a reasonable opportunity to seek to enjoin, prevent, stay or defer such disclosures, (ii) to the extent permissible under law, consult and cooperate with the Owner as to the content, nature, and timing of such disclosure, and (iii) in the event a protective order or another remedy is not timely obtained, disclose only such part or portion of such Confidential Information as is reasonably required pursuant to such law, rule, regulation, subpoena, or other similar process. The Servicer and its Representatives shall reasonably cooperate with any of the Owner’s efforts to obtain reasonable assurance that confidential treatment will be accorded the Confidential Information so disclosed.

(g) The Owner on one hand and the Servicer on the other, acknowledge that money damages may not be a sufficient remedy for any breach of this Section 10.18 by the other party or their Representatives. Accordingly, in the event of any such breach of this Section 10.18 , in addition to any other remedies at law or in equity that the Servicer may have on one hand and the Owner may have on the other, the other party shall be entitled to seek equitable relief, including injunctive relief or specific performance or both.

(h) Notwithstanding anything herein to the contrary, the Servicer or the Owner (or any officers, agents, advisors, directors, representatives and employees of the Servicer or the Owner) may disclose to any and all persons, without limitation, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind that are provided to it relating to such tax treatment and tax structure.

(i) Each party’s obligations under this Section 10.18 shall terminate not later than six (6) months after the termination of this Agreement.

Section 10.19. Counterparts . This Agreement 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. Delivery of an executed signature page by facsimile shall constitute delivery of an original signature for the purposes of this Agreement.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREFORE, this Agreement has been executed as of the day and year first above written.

ALTISOURCE RESIDENTIAL, L.P.

By: Altisource Residential GP, LLC, its general partner

By: Altisource Residential Corporation, its sole member

By: /s/ Kenneth D. Najour
Name: Kenneth D. Najour
Title: Chief Accounting Officer

SERVIS ONE, INC.
d/b/a BSI FINANCIAL SERVICES

By: /s/ Jordan Dorchuck
Name: Jordan Dorchuck
Title: Executive Vice President

EXHIBIT A

FORM OF ACKNOWLEDGEMENT AGREEMENT

Date: [__________]

Pursuant to that certain Servicing Agreement, dated as of January 29, 2015 (the “ Agreement ”) between Altisource Residential, L.P. (the “ Initial Owner ”) and Servis One, Inc. d/b/a BSI Financial Services (the “ Servicer ”), the Initial Owner hereby engages the Servicer to service the mortgage loans identified on the Mortgage Loan Schedule attached hereto as Schedule I (the “ Mortgage Loans ”). With respect to each Mortgage Loan, the applicable Owner shall be the Owner identified on the Mortgage Loan Schedule. Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Agreement.

Servicer hereby agrees to service the Mortgage Loans as of the Servicing Transfer Date and assumes all responsibilities to service the Mortgage Loans in accordance with the Agreement. In addition, pursuant to Section 4.18 of the Agreement, the Servicer shall comply with the Third Party Servicing Requirements set forth on Schedule II .

Except as specified on Schedule III , each of the Initial Owner and the Servicer represents and warrants that its respective representations and warranties made in the Agreement are true and correct as of the Servicing Transfer Date or such other date as is specified in the Agreement.

As set forth in the Agreement, the following terms shall have the respective meanings set forth below with respect to the Mortgage Loan Package referenced hereby.


1.	Cut-off Date: [_____________]


2.	Servicing Transfer Date: [____________]


3.	Mortgage Loan Purchase Agreement: [_______________]


4.	Financing Party: [__________________]

This Acknowledgement Agreement shall inure to the benefit of and be binding upon the Initial Owner and its successors and assigns.

[Signature Page Follows]

IN WITNESS WHEREOF, the Owner and the Servicer have executed this Acknowledgement Agreement as the day and year first written above.

ALTISOURCE RESIDENTIAL, L.P., as Initial Owner

By: Altisource Residential GP, LLC, its general partner

By: Altisource Residential Corporation, its sole member

By:
Name: Ashish Pandey
Title: Chief Executive Officer

SERVIS ONE, INC.
d/b/a BSI FINANCIAL SERVICES, as Servicer

By:
Name:
Title:

Schedule I

Mortgage Loan Schedule

Schedule II

Third Party Servicing Requirements

Schedule III

Exceptions to Representations and Warranties

EXHIBIT B

CUSTODIAL ACCOUNT LETTER AGREEMENT

(Date)


To:	______________________________

______________________________

(the “ Depository ”)

As the “Servicer” under the Servicing Agreement, dated as of January 29, 2015, by and between Altisource Residential, L.P. and Servis One, Inc. d/b/a BSI Financial Services (the “ Agreement ”), we hereby authorize and request you to establish an account, as a Custodial Account pursuant to Section 4.04 of the Agreement, to be designated as “Servis One, Inc. d/b/a BSI Financial Services, Custodial Account in trust for Altisource Residential, L.P. - Residential Mortgage Loans.” All deposits in the account shall be subject to withdrawal therefrom by order signed by the Servicer. This letter is submitted to you in duplicate. Please execute and return one original to us.

SERVIS ONE, INC.
d/b/a BSI FINANCIAL SERVICES

By:
Name:
Title:

The undersigned, as “Depository,” hereby certifies that the above described account has been established under Account Number ___________________, at the office of the depository indicated above, and agrees to honor withdrawals on such account as provided above.

[NAME OF DEPOSITORY]

By:

Name:

Title:

EXHIBIT C

ESCROW ACCOUNT LETTER AGREEMENT

(date)


To:	______________________________

______________________________

(the “ Depository ”)

As the “Servicer” Servicing Agreement, dated as of January 29, 2015, by and between Altisource Residential, L.P. and Servis One, Inc. d/b/a BSI Financial Services (the “ Agreement ”), we hereby authorize and request you to establish an account, as an Escrow Account pursuant to Section 4.06 of the Agreement, to be designated as “Servis One, Inc. d/b/a BSI Financial Services, Escrow Account in trust for Altisource Residential, L.P. and various Mortgagors - Residential Mortgage Loans.” All deposits in the account shall be subject to withdrawal therefrom by order signed by the Servicer. This letter is submitted to you in duplicate. Please execute and return one original to us.

SERVIS ONE, INC.
d/b/a BSI FINANCIAL SERVICES

By:
Name:
Title:

[NAME OF DEPOSITORY]

By:

Name:

Title:

EXHIBIT D

CONTENTS OF EACH MORTGAGE SERVICING FILE

With respect to each Mortgage Loan, the Mortgage Servicing File shall include each of the following items, to the extent such items were delivered to the Servicer, which shall be available for inspection by the Owner or such other party designated by the Owner:


1.	Copies of the Mortgage Loan Documents.


2.	Residential loan application.


3.	Mortgage Loan closing statement.


4.	Verification of employment and income.


5.	Verification of acceptable evidence of source and amount of down payment.


6.	Credit report on Mortgagor.


7.	Residential appraisal report.


8.	Photograph of the Mortgaged Property.


9.	Survey of the Mortgaged Property.


10.	Copy of each instrument necessary to complete identification of any exception set forth in the exception schedule in the title policy, i.e., map or plat, restrictions, easements, sewer agreements, home association declarations, etc.


11.	All required disclosure statements and statement of Mortgagor confirming receipt thereof.


12.	If available, termite report, structural engineer’s report, water potability and septic certification.


13.	Sales contract.


14.	Hazard insurance policy.


15.	Tax receipts, insurance premium receipts, ledger sheets, payment history from date of origination, insurance claim files, correspondence, current and historical computerized data files, and all other processing, underwriting and closing papers and records which are customarily contained in a mortgage loan file and which are required to document the Mortgage Loan or to service the Mortgage Loan.


16.	Amortization schedule, if available.


17.	Payment history for Mortgage Loans.

EXHIBIT E

MONTHLY REPORT AND DELINQUENCY REPORT

[TO BE MUTUALLY AGREED UPON BY THE
INITIAL OWNER AND THE SERVICER ]

EXHIBIT F

FORM OF POWER OF ATTORNEY

LIMITED POWER OF ATTORNEY

[NAME OF OWNER], a [________], having its principal place of business at [__________], as the Owner (hereinafter called the “ Owner ”) hereby appoints Servis One, Inc. d/b/a BSI Financial Services (hereinafter called the “ Servicer ”), as its true and lawful attorney-in-fact to act in the name, place and stead of the Owner for the purposes set forth below.

The said attorneys-in-fact, and each of them, are hereby authorized, and empowered, as follows:

To execute, acknowledge, seal and deliver deed of trust/mortgage note endorsements, lost note affidavits, assignments of deed of trust/mortgage and other recorded documents, satisfactions/releases/reconveyances of deed of trust/mortgage, subordinations and modifications, tax authority notifications and declarations, deeds, bills of sale, and other instruments of sale, conveyance, and transfer, appropriately completed, with all ordinary or necessary endorsements, acknowledgments, affidavits, and supporting documents as may be necessary or appropriate to effect its execution, delivery, conveyance, recordation or filing.

To execute and deliver insurance filings and claims, affidavits of debt, substitutions of trustee, substitutions of counsel, non-military affidavits, notices of rescission, foreclosure deeds, transfer tax affidavits, affidavits of merit, verifications of complaints, notices to quit, bankruptcy declarations for the purpose of filing motions to lift stays, and other documents or notice filings on behalf of the Owner in connection with insurance, foreclosure, bankruptcy and eviction actions.


3.	To endorse any checks or other instruments received by the Servicer and made payable to the Owner.


4.	To pursue any deficiency, debt or other obligation, secured or unsecured, including but not limited to those arising from foreclosure or other sale, promissory note or check. This power also authorizes the Servicer to collect, negotiate or otherwise settle any deficiency claim, including interest and attorney’s fees.


5.	To do any other act or complete any other document that arises in the normal course of servicing of all Mortgage Loans and REO Properties, as defined in, and subject to the terms of, the Servicing Agreement, by and between the Servicer and Altisource Residential, L.P., dated as of January 29, 2015 (the “ Servicing Agreement ”).

In the event of any conflict between the terms of the Servicing Agreement and the terms hereof, the provisions of the Servicing Agreement shall control, and this Limited Power of Attorney does not constitute a waiver of any provisions of the Servicing Agreement.


Dated: ____________________	[_____________________________________]

Witness:

Name:

Title:

Name:

State of [________])

: ss

County of ___________)

BEFORE ME, _______________________, a Notary Public in and for the jurisdiction aforesaid, on this ______ day of _________________, personally appeared _________________________ who resides at ______________ ________________ and who is personally known to me (or sufficiently proven) to be a _________________________ and the person who executed the foregoing instrument by virtue of the authority vested in him/her and he/she did acknowledge the signing of the foregoing instrument to be his/her free and voluntary act and deed as a _________________________, for the uses, purposes and consideration therein set forth.

Witness my hand and official seal this _____ day of ______________.

____________________________________



	NOTARY STAMP

My Commission Expires: ____________________________

EXHIBIT G

SERVICING TRANSFER INSTRUCTIONS

[BSI SERVICING TRANSFER INSTRUCTIONS TO BE ATTACHED]

EXHIBIT H

DATA TAPE FIELDS/CONTENTS OF MORTGAGE LOAN SCHEDULE

FIELD NAME

LOAN NUMBER

UNPAID PRIN BAL

ESCROW BALANCE

UNAPPLIED BALANCE (SUSPENSE) – If Applicable

HAZARD LOSS BALANCE – If applicable

CORPORATE ADVANCE BALANCE – If applicable

ORIGINAL LOAN AMOUNT

P&I PAYMENT

BORROWER 1 NAME

BORROWER 2 NAME

PROPERTY STREET

CITY

STATE

ZIP

PROPERTY TYPE

CURRENT RATE

ORIGINATION DATE

1ST PAYMENT DUE DATE

MATURITY DATE

NEXT PAYMENT DUE DATE

INTEREST PAID TO DATE

INTEREST CALCULATION METHOD

PMI POLICY NUMBER

APPRAISAL VALUE

APPRAISAL DATE

LIEN POSITION

NOTE TYPE

LOAN TERM MONTHS

BALLOON PAYMENTS (If applicable)

OCCUPANCY STATUS

BORROWER HOME TELEPHONE

BORROWER BUSINESS TELEPHONE

MAIL ADDRESS

MAIL CITY

MAIL STATE

MAIL ZIP

BWR 1 SOCIAL SEC

BWR 2 SOCIAL SEC

PREPAY PENALTY Y/N

LATE CHARGE DAYS

LATE CHARGE RATE

ESCROW (T&I) PAYMENT

FICO SCORE

1ST ADJUSTMENT PERIOD CAPS MAX

1ST ADJUSTMENT PERIOD CAPS MIN

REG CAPS MAX

REG CAPS MIN

1ST ADJUSTMENT PERIOD IN MONTHS

REG ADJ PERIOD IN MONTHS

ROUNDING BASIS

MARGIN

CEILING

FLOOR

NEXT CHG DATE

ROUNDING CODE

INDEX TYPE

LOOKBACK PERIOD IN DAYS

FLOOD Y/N

FLOOD_ZONE_NBR

MERS I.D.#

OWNER NAME OR INVESTOR NUMBER

EXHIBIT I

SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE

The assessment of compliance to be delivered by the Servicer shall address, at a minimum, the criteria identified as below as “Applicable Servicing Criteria”:



SERVICING CRITERIA		APPLICABLE SERVICING CRITERIA
Reference	Criteria
	General Servicing Considerations
1122(d)(1)(i)	Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the transaction agreements.	X
1122(d)(1)(ii)	If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party’s performance and compliance with such servicing activities.	X
1122(d)(1)(iii)	Any requirements in the transaction agreements to maintain a back-up servicer for the mortgage loans are maintained.
1122(d)(1)(iv)	A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements.	X
1122(d)(1)(v)	Aggregation of information, as applicable, is mathematically accurate and the information conveyed accurately reflects the information	X
	Cash Collection and Administration
1122(d)(2)(i)	Payments on mortgage loans are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days following receipt, or such other number of days specified in the transaction agreements.	X
1122(d)(2)(ii)	Disbursements made via wire transfer on behalf of an obligor or to an investor are made only by authorized personnel.	X
1122(d)(2)(iii)	Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the transaction agreements.	X
1122(d)(2)(iv)	The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction agreements.	X
1122(d)(2)(v)	Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements. For purposes of this criterion, “federally insured depository institution” with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.	X
1122(d)(2)(vi)	Unissued checks are safeguarded so as to prevent unauthorized access.	X
1122(d)(2)(vii)	Reconciliations are prepared on a monthly basis for all asset-backed securities related bank accounts, including custodial accounts and related bank clearing accounts. These reconciliations are (A) mathematically accurate; (B) prepared within thirty (30) calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; (C) reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements.	X
	Investor Remittances and Reporting
1122(d)(3)(i)	Reports to investors, including those to be filed with the Commission, are maintained in accordance with the transaction agreements and applicable Commission requirements. Specifically, such reports (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the Commission as required by its rules and regulations; and (D) agree with investors’ or the trustee’s records as to the total unpaid principal balance and number of mortgage loans serviced by Subservicer.	X
1122(d)(3)(ii)	Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth in the transaction agreements.	X
1122(d)(3)(iii)	Disbursements made to an investor are posted within two business days to Subservicer’s investor records, or such other number of days specified in the transaction agreements.	X
1122(d)(3)(iv)	Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank statements.	X
	Pool Asset Administration
1122(d)(4)(i)	Collateral or security on mortgage loans is maintained as required by the transaction agreements or related mortgage loan documents.	X
1122(d)(4)(ii)	Mortgage loan and related documents are safeguarded as required by the transaction agreements	X
1122(d)(4)(iii)	Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements.	X
1122(d)(4)(iv)	Payments on mortgage loans, including any payoffs, made in accordance with the related mortgage loan documents are posted to Subservicer’s obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance with the related mortgage loan documents.	X
1122(d)(4)(v)	Subservicer’s records regarding the mortgage loans agree with Subservicer’s records with respect to an obligor’s unpaid principal balance.	X
1122(d)(4)(vi)	Changes with respect to the terms or status of an obligor’s mortgage loans (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with the transaction agreements and related pool asset documents.	X
1122(d)(4)(vii)	Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements.	X
1122(d)(4)(viii)	Records documenting collection efforts are maintained during the period a mortgage loan is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis, or such other period specified in the transaction agreements, and describe the entity’s activities in monitoring delinquent mortgage loans including, for example, phone calls, letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g., illness or unemployment).	X
1122(d)(4)(ix)	Adjustments to interest rates or rates of return for mortgage loans with variable rates are computed based on the related mortgage loan documents.	X
1122(d)(4)(x)	Regarding any funds held in trust for an obligor (such as escrow accounts): (A) such funds are analyzed, in accordance with the obligor’s mortgage loan documents, on at least an annual basis, or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable mortgage loan documents and state laws; and (C) such funds are returned to the obligor within thirty (30) calendar days of full repayment of the related mortgage loans, or such other number of days specified in the transaction agreements.	X
1122(d)(4)(xi)	Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by servicer at least thirty (30) calendar days prior to these dates, or such other number of days specified in the transaction agreements.	X
1122(d)(4)(xii)	Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from servicer’s funds and not charged to the obligor, unless the late payment was due to the obligor’s error or omission.	X
1122(d)(4)(xiii)	Disbursements made on behalf of an obligor are posted within two business days to the obligor’s records maintained by servicer, or such other number of days specified in the transaction agreements.	X
1122(d)(4)(xiv)	Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in accordance with the transaction agreements.	X
1122(d)(4)(xv)	Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements.

-v-

Exhibit 21

SUBSIDIARIES OF ALTISOURCE RESIDENTIAL CORPORATION

Altisource Residential, L.P., a Delaware limited partnership

Altisource Residential GP, LLC, a Delaware limited liability company

ARNS, Inc., a Delaware corporation

ARLP Trust, a Delaware statutory trust

ARLP Trust 2, a Delaware statutory trust

ARLP Trust 3, a Delaware statutory trust

ARLP Trust 4, a Delaware statutory trust

ARLP Trust 5, a Delaware statutory trust

ARLP Trust 6, a Delaware statutory trust

ARLP Trust 7, a Delaware statutory trust

ARLP Trust 8, a Delaware statutory trust

ARLP Trust 9, a Delaware statutory trust

ARLP Trust 10, a Delaware statutory trust

ARLP Trust 11, a Delaware statutory trust

ARLP Trust 12, a Delaware statutory trust

ARLP I, LLC, a Delaware limited liability company

ARLP Securitization Trust, Series 2014-1, a Delaware statutory trust

ARLP Securitization Trust, Series 2014-2, a Delaware statutory trust

NewSource Reinsurance Company Ltd., a Bermuda limited liability company

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements No. 333-185945, 333-189001 and 333-1943113 on Form S-8 of our report dated March 2, 2015, relating to the consolidated financial statements and financial statement schedules of Altisource Residential Corporation and subsidiaries (the “Company”) (which report expresses an unqualified opinion and includes an explanatory paragraph related to the significant related party transactions with Altisource Asset Management Corporation, Altisource Portfolio Solutions S.A., and Ocwen Financial Corporation and the potential implications to the Company should the related parties be unable to perform under their respective agreements or in the event that these arrangements are terminated) and our report dated March 2, 2015, relating to the effectiveness of the Company’s internal control over financial reporting appearing in this Annual Report on Form 10-K of the Company for the year ended December 31, 2014.

/s/ DELOITTE & TOUCHE LLP

Atlanta, Georgia

March 2, 2015

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Ashish Pandey , certify that:

1. I have reviewed this annual report on Form 10-K of Altisource Residential Corporation;

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 internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 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

(d) 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 2, 2015	By:	/s/	Ashish Pandey
				Ashish Pandey
				Chief Executive Officer

Exhibit 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Robin N. Lowe , certify that:

1. I have reviewed this annual report on Form 10-K of Altisource Residential Corporation;

(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 2, 2015	By:	/s/	Robin N. Lowe
				Robin N. Lowe
				Chief Financial Officer

Exhibit 32.1

Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Executive Officer of Altisource Residential Corporation (the “Company”), hereby certifies on the date hereof, pursuant to 18 U.S.C. §1350(a), as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the annual report on Form 10-K for the year ended December 31, 2014 (“Form 10-K”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.



Date:	March 2, 2015	By:	/s/	Ashish Pandey
				Ashish Pandey
				Chief Executive Officer

Exhibit 32.2

Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Financial Officer of Altisource Residential Corporation (the “Company”), hereby certifies on the date hereof, pursuant to 18 U.S.C. §1350(a), as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the annual report on Form 10-K for the year ended December 31, 2014 (“Form 10-K”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date:	March 2, 2015	By:	/s/	Robin N. Lowe
				Robin N. Lowe
				Chief Financial Officer